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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(D) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): May 30, 1996
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SunGard/(R)/ Data Systems Inc.
(Exact name of registrant as specified in its charter)
Delaware 7379 51-0267091
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1285 Drummers Lane, Wayne Pennsylvania 19087
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (610) 341-8700
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(Former name and former address, if changes since last report)
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Item 5. Other Events
------------
See press release attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
2.1 Stock Purchase and Sale Agreement dated May 30, 1996 by and
among SunGard Data Systems Inc., National Computer Systems,
Inc. and NCS Holdings, Inc.
99.1 Press Release dated May 31, 1996.
______________
SIGNATURE
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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: June 7, 1996
SUNGARD DATA SYSTEMS INC.
By: /s/ Lawrence A. Gross
____________________________________
Lawrence A. Gross
Vice President and
General Counsel
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Exhibit Index
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Exhibit
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2.1 Stock Purchase and Sale Agreement dated May 30, 1996 by
and among SunGard Data Systems Inc., National Computer
Systems, Inc. and NCS Holdings, Inc.
99.1 Press Release dated May 31, 1996
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Exhibit 2.1
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STOCK PURCHASE AND SALE AGREEMENT
dated as of May 30, 1996
by and among
SUNGARD DATA SYSTEMS INC.,
NATIONAL COMPUTER SYSTEMS, INC.
and
NCS HOLDINGS, INC.
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TABLE OF CONTENTS
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ARTICLE I--SALE OF SHARES, CLOSING AND DEFINITIONS..................................... 1
1.01 Purchase and Sale........................................................... 1
1.02 Purchase Price.............................................................. 1
1.03 The Closing................................................................. 1
1.04 Agreement with Respect to Section 338(h)(10) Election....................... 2
1.05 Definitions................................................................. 2
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF PARENT................................... 6
2.01 Incorporation and Corporate Power........................................... 6
2.02 Execution, Delivery; Valid and Binding Agreements........................... 6
2.03 No Conflict................................................................. 6
2.04 Governmental Authorities; Consents.......................................... 7
2.05 Subsidiaries................................................................ 7
2.06 Common Stock and Securities; Corporate Records.............................. 7
2.07 Financial Statements........................................................ 8
2.08 No Material Adverse Effect.................................................. 9
2.09 Real Properties............................................................. 9
2.10 Tax Matters................................................................. 9
2.11 Contracts and Commitments................................................. 10
2.12 Intellectual Property Rights.............................................. 12
2.13 Litigation................................................................ 12
2.14 Employee Benefit Plans.................................................... 13
2.15 Compliance with Laws...................................................... 13
2.16 Brokerage................................................................. 13
2.17 Insurance................................................................. 14
2.18 Other Disclosure.......................................................... 14
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF BUYER................................. 14
3.01 Incorporation and Corporate Power.......................................... 14
3.02 Execution, Delivery; Valid and Binding Agreement........................... 14
3.03 No Conflict................................................................ 14
3.04 Governmental Bodies; Consents.............................................. 15
3.05 Brokerage.................................................................. 15
3.06 Investment Representations................................................. 15
3.07 Financing.................................................................. 15
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ARTICLE IV--COVENANTS OF PARENT....................................................... 15
4.01 Conduct of the Business.................................................... 15
4.02 Access to Books and Records................................................ 16
4.03 HSR Filing................................................................. 17
4.04 Conditions................................................................. 17
ARTICLE V--COVENANTS OF BUYER......................................................... 17
5.01 HSR Filing................................................................. 17
5.02 Conditions................................................................. 17
ARTICLE VI--CONDITIONS TO CLOSING..................................................... 17
6.01 Conditions to Buyer's Obligation........................................... 17
6.02 Conditions to Seller's and Parent's Obligation............................. 20
ARTICLE VII--TERMINATION.............................................................. 21
7.01 Termination................................................................ 21
7.02 Effect of Termination...................................................... 21
7.03 Earnest Money Payment...................................................... 21
ARTICLE VIII--ADDITIONAL AGREEMENTS................................................... 22
8.01 Tax Matters................................................................ 22
8.02 Employees and Employee Benefit Matters..................................... 23
8.03 Insurance.................................................................. 25
8.04 Cash Management............................................................ 25
8.05 Names...................................................................... 25
8.06 Other Transition Matters................................................... 26
8.07 Books and Records.......................................................... 26
8.08 Confidentiality............................................................ 27
8.09 Additional Consents........................................................ 27
8.10 Further Assurances......................................................... 27
ARTICLE IX--SURVIVAL; INDEMNIFICATION................................................. 28
9.01 Survival of Representations and Warranties................................. 28
9.02 Indemnification by Parent.................................................. 28
9.03 Indemnification by Buyer................................................... 29
9.04 Method of Asserting Claims................................................. 29
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ARTICLE X--MISCELLANEOUS.............................................................. 30
10.01 Press Releases and Announcements........................................... 30
10.02 Expenses................................................................... 30
10.03 Amendment and Waiver....................................................... 30
10.04 Notices.................................................................... 31
10.05 Assignment................................................................. 31
10.06 Severability............................................................... 31
10.07 Complete Agreement......................................................... 32
10.08 Counterparts............................................................... 32
10.09 Governing Law; Venue....................................................... 32
10.10 Effect of Headings......................................................... 32
</TABLE>
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STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 30, 1996,
is made and entered into by and among SunGard Data Systems Inc., a Delaware
corporation ("Buyer"), National Computer Systems, Inc., a Minnesota corporation
("Parent"), and NCS Holdings, Inc., a Minnesota corporation and wholly-owned
subsidiary of Parent ("Seller").
WHEREAS, Seller owns 1,000 shares (the "Shares") of common stock, par value
$1.00 per share (the "Common Stock"), of NCS Financial Systems, Inc., a
Minnesota corporation (the "Company"), and the Shares constitute all of the
issued and outstanding shares of capital stock of the Company; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the Shares
on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer, Parent and
Seller hereby agree as follows:
ARTICLE I
SALE OF SHARES, CLOSING AND DEFINITIONS
1.01 Purchase and Sale. Seller agrees to sell to Buyer, and Buyer
-----------------
agrees to purchase from Seller, all of the right, title and interest of Seller
in and to the Shares at the Closing (as defined in Section1.03) on the terms and
subject to the conditions set forth in this Agreement.
1.02 Purchase Price. In consideration of the transfer to Buyer of the
--------------
Shares, Buyer will pay to Seller on the Closing Date (as defined in Section
1.03) the total amount of Ninety-Five Million Dollars ($95,000,000) (the
"Purchase Price") in cash, less the Deposit Amount (as defined in Section1.05).
1.03 The Closing.
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(a) The closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of Dorsey & Whitney LLP, 220South
Sixth Street, Minneapolis, Minnesota, at 9:00 a.m. on July 1, 1996 (the "Closing
Date"), or at such other place and later date promptly following satisfaction or
waiver of the closing conditions set forth in Article VI mutually agreeable to
Buyer and Seller.
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(b) Subject to the conditions set forth in this Agreement, the
parties agree to consummate the following "Closing Transactions" on the Closing
Date:
(i) Seller will assign and transfer to Buyer good and valid title in
and to the Shares, free and clear of all Liens (as defined in Section
1.05), by delivering to Buyer a stock certificate or certificates
representing the Shares, duly endorsed for transfer or accompanied by duly
executed stock powers;
(ii) Buyer shall pay the Purchase Price, less the Deposit Amount, to
Seller by wire transfer of immediately available funds to an account
designated by Seller to Buyer prior to the Closing; and
(iii) Each of the parties shall deliver to the other the documents
required to be delivered pursuant to Article VI and such other documents as
are reasonably requested by the other party or parties to fully consummate
the transactions contemplated by this Agreement.
1.04 Agreement with Respect to Section 338(h)(10) Election. Buyer
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and Parent agree to make an election under Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the treasury regulations
promulgated thereunder (the "Treasury Regulations") in form and substance
satisfactory to Buyer and Parent, with respect to the Company, and to file such
election in the manner required by applicable Treasury Regulations. Prior to
the Closing Date, Buyer and Parent shall agree on a list of assets to which the
modified "aggregate deemed sale price" (as defined in the Treasury Regulations)
of the assets of the Company shall be allocated. Such allocation shall be
determined by the parties, after taking into account the applicable Treasury
Regulations and the fair market value of such assets. Buyer shall prepare for
filing all of the tax returns, information returns and statements ("Reports")
that may be required by Section 338(h)(10) of the Code. At least 10 days prior
to filing such Reports, Buyer shall deliver drafts thereof to Parent for
Parent's review and comment thereon. Buyer and Parent shall file all other
returns and tax information on a basis that is consistent with such Reports
prepared by Buyer. Buyer and Parent shall jointly comply with the requirements
under any applicable state and local law so that the joint election under
Section338(h)(10) of the Code is also valid and effective for purposes of such
state and local law.
1.05 Definitions. The terms defined in this Section 1.05 shall have
-----------
the meanings herein specified for all purposes of this Agreement.
"Agreement" is defined in the introductory paragraphs.
"Annual Financial Statements" is defined in Section 2.07.
"Basket Amount" is defined in Section 9.02(b).
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"Business" means the business of developing, selling, licensing and
supporting systems for asset and investment management reporting and
recordkeeping primarily for bank trust departments and other organizations with
trust powers (including applications for personal trust, corporate trust and
private banking), which business (i) is currently conducted by the Company, the
Financial Systems division of the Parent and NCS-IPB and (ii) is more fully
described as Parent's Financial Systems segment in Parent's Annual Report on
Form 10-K for the fiscal year ended January 31, 1996 ("the Form 10-K Report").
"Buyer" is defined in the introductory paragraphs.
"Buyer Indemnified Parties" is defined in Section 9.02(a).
"Buyer Losses" is defined in Section 9.02(a).
"Cap Amount" is defined in Section 9.02(b).
"Claim" is defined in Section 9.04(a).
"Closing" is defined in Section 1.03.
"Closing Date" is defined in Section 1.03.
"Closing Transactions" is defined in Section 1.03(b).
"Code" is defined in Section 1.04.
"Common Stock" is defined in the introductory paragraphs.
"Company" is defined in the introductory paragraphs.
"Confidentiality Agreement" means the confidentiality agreement by
and between Buyer and Parent dated February 27, 1996.
"Deposit Amount" means (a) the Earnest Money Payment plus (b) the
total amount of interest earned by Parent from its investment of the Earnest
Money Payment in a commercially available money market account of the type
typically invested in by Parent during the period beginning on the date that the
Earnest Money Payment is available for investment through the date prior to the
Closing Date, or the date prior to payment of the Deposit Amount pursuant to
Section 7.03 in the event of termination of this Agreement, as the case may be.
"Disclosure Schedule" is defined in Article II.
"Earnest Money Payment" is defined in Section 7.03.
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"Employees" means all of the employees of the Parent, the Company and
NCS-IPB employed primarily in the Business, including all such employees who may
be on leave or disability as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Form 10-K Report" is defined in the definition of "Business" in this
Section 1.05.
"GAAP" is defined in Section 2.07.
"Governmental Body" means any federal, state or local governmental
authority or regulatory body.
"HSR Act" is defined in Section 2.04.
"Indemnified Party" is defined in Section 9.04.
"Intellectual Property Rights" means all rights to any trademark,
trademark application, service mark, service mark application, patent, patent
application, copyright, copyright application, legally protectable design or
formula or invention, logo, trade name, brand name, product name or trade
secret.
"Knowledge" means with respect to those certain representations and
warranties set forth in Article II that are based upon the knowledge of Parent,
the actual knowledge of the elected officers of Parent, Seller and the Company,
and James Afdahl (Corporate Controller of Parent), Carl W. Genk (President of
Parent's Financial Systems division), Michael R. Cox (Director of Product
Management of Parent's Financial Systems division), Stephen J. Smith (Vice
President and General Manager of Parent's Financial Systems division), Marilyn
Mcluckie (Vice President and General Manager Series 7 of Parent's Financial
Systems division), Frederick C. Aumann, III (Vice President and General Manager
Series 11 of Parent's Financial Systems division) and Harold C. Finders
(Managing Director of NCS-IPB).
"Latest Balance Sheet" is defined in Section 2.07.
"Latest Financial Statements" is defined in Section 2.07.
Leases" is defined in Section 2.09.
"Lien" means any security interest, pledge, mortgage, claim, lien or
encumbrance.
"Material Adverse Effect" means (a) a material adverse effect on the
business, financial condition or results of operations of the Business taken as
a
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whole, (b) the creation of any Lien upon the Shares, (c) any event or action
that would give any person or entity other than Buyer any equity interest in the
Business after the Closing or (d) any event or action that would prohibit or
materially restrict the transactions contemplated by this Agreement.
"NCS Indemnified Parties" is defined in Section 9.03(a).
"NCS-IPB" means NCS-IPB SA, a Swiss corporation.
"NCS Losses" is defined in Section 9.03(a).
"Notifying Party" is defined in Section 9.04.
"Parent" is defined in the introductory paragraphs.
"Plans" is defined in Section 2.14.
"Purchase Price" is defined in Section 1.02.
"Reports" is defined in Section 1.04.
"Requirements of Laws" means any laws, statutes, regulations, rules,
codes or ordinances enacted, adopted, issued or promulgated by any Governmental
Body.
"Returns" is defined in Section 2.10(a).
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Seller" is defined in the introductory paragraphs.
"Shares" is defined in the introductory paragraphs.
"Software" means any computer program, operating system, application
system, firmware or software of any nature, whether operational, under
development or inactive, including all object code, source code, and
documentation therefor, whether in machine-readable form, programming language
or other language or symbols, and whether stored, encoded, recorded or written
on disk, tape, film, memory device, paper or other media of any nature.
"Taxes" is defined in Section 2.10(b).
"Treasury Regulations" is defined in Section 1.04.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent hereby represents and warrants to Buyer that, except as set
forth in the Disclosure Schedule delivered by Parent to Buyer on the date hereof
(the "Disclosure Schedule") (which Disclosure Schedule (i) sets forth the
exceptions to the representations and warranties contained in this Article II
and (ii) identifies by section number the representations and warranties to
which such exceptions principally apply):
2.01 Incorporation and Corporate Power. Each of Seller and Parent is
---------------------------------
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota and has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
Seller is a wholly-owned subsidiary of Parent. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota, and each of Parent and the Company has the corporate power and
authority to own and operate its properties and to carry on its business as now
conducted. The copies of the Company's articles of incorporation and bylaws
which have been furnished by the Company to Buyer prior to the date hereof
reflect all amendments made thereto and are correct and complete as of the date
hereof. The Company is qualified to do business as a foreign corporation in all
jurisdictions in which the failure to do so would or could reasonably be
expected to result in a Material Adverse Effect. The jurisdictions where the
Company is qualified to do business as a foreign corporation are listed in the
Disclosure Schedule. The Disclosure Schedule sets forth a list of all
corporate, fictitious and other names under which the Business has been
conducted at any time since January 1, 1991.
2.02 Execution, Delivery; Valid and Binding Agreements. The
-------------------------------------------------
execution, delivery and performance of this Agreement by Seller and Parent and
the consummation of the transactions contemplated to be performed by Seller and
Parent hereby have been duly and validly authorized by all requisite corporate
action of Seller and Parent. This Agreement has been duly executed and
delivered by Seller and Parent and constitutes a valid and binding obligation of
Seller and Parent, enforceable against Seller and Parent in accordance with its
terms.
2.03 No Conflict. The execution, delivery and performance of this
-----------
Agreement by Seller and Parent and the consummation by Seller and Parent of the
transactions contemplated hereby, do not conflict with or result in any breach
of any of the provisions of, constitute a default under, result in a violation
of, result in the creation of a right of termination or acceleration under or
result in any Lien upon any of the Shares under the provisions of the articles
of incorporation or bylaws of Seller or Parent or the articles of incorporation
or bylaws of the Company or NCS-IPB or any indenture, mortgage, lease, loan
agreement or other agreement or
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instrument by which Seller, Parent, the Company or NCS-IPB is bound or affected,
or any law, statute, rule or regulation or order, judgment or decree to which
Seller, Parent, the Company or NCS-IPB is subject, in each case the result of
which would or could reasonably be expected to have a Material Adverse Effect.
2.04 Governmental Authorities; Consents. Except for the applicable
----------------------------------
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act")
and federal securities laws, neither Seller, Parent, the Company nor NCS-IPB is
required to submit any notice, report or other filing to or with any
Governmental Body in connection with the execution or delivery by Seller and
Parent of this Agreement or the consummation of the transactions contemplated
hereby, except where failure to so submit such notice, report or other filing
would not or could not reasonably be expected to result in a Material Adverse
Effect. No consent, approval or authorization of any Governmental Body or any
other person or entity is required to be obtained by Seller, by Parent, by the
Company or by NCS-IPB in connection with Seller's and Parent's execution,
delivery and performance of this Agreement or the transactions contemplated
hereby, except where failure to so obtain such consent, approval or
authorization would not or could not reasonably be expected to result in a
Material Adverse Effect.
2.05 Subsidiaries. Except as otherwise set forth in the Disclosure
------------
Schedule, the Company does not own any stock, partnership interest, joint
venture interest or any other ownership interest issued by any other
corporation, organization or entity. All issued and outstanding shares of
capital stock of any entity set forth in the Disclosure Schedule are owned by
the Company, either directly or through one or more other subsidiaries, free and
clear of all Liens. NCS-IPB is duly organized and validly existing as a
corporation under the laws of Switzerland, is qualified to do business in
Luxembourg and has no locations or employees in any other jurisdictions.
2.06 Common Stock and Securities; Corporate Records. The authorized
----------------------------------------------
capital stock of the Company consists of 100,000 shares of Common Stock, of
which 1,000 shares are issued and outstanding, all of which are owned
beneficially and of record by Seller, free and clear of any Liens. All of the
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no other equity or debt securities authorized,
issued or outstanding. The Company is not a party to or bound by any agreements
which provide for the sale or issuance of capital stock by the Company, and the
Company has not granted any outstanding rights, subscriptions, warrants, options
or conversion rights to purchase or otherwise acquire from the Company any
shares of capital stock or other debt or equity securities of the Company.
Copies of the contents of the Company's minute books and stock books have been
made available to Buyer. To the knowledge of Parent, the minute books of the
Company contain true and correct minutes of all meetings and consents in lieu of
meetings of the Board of Directors and of the shareholders of the Company since
the time of its incorporation. The
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Disclosure Schedule sets forth a list of all bank and other financial and
investment accounts and all safes and lock boxes of the Company or NCS-IPB, and
the names of all officers or other individuals who have access thereto or are
authorized to make withdrawals therefrom or dispositions thereof.
2.07 Financial Statements. Parent has delivered to Buyer copies of
--------------------
(a)the unaudited balance sheet, as of April 30, 1996, of the Business (the
"Latest Balance Sheet") and the unaudited statement of earnings of the Business
for the 3-month period ended April 30, 1996 (such statement and the Latest
Balance Sheet being herein referred to as the "Latest Financial Statements"),
and (b)the unaudited balance sheets, as of January 31, 1996 and January 31,
1995, of the Business and the unaudited statement of earnings of the Business
for each of the years ended January 31, 1996 and January 31, 1995 (collectively,
the "Annual Financial Statements"). The Latest Financial Statements and the
Annual Financial Statements are based upon the information contained in the
books and records of the Business (which books and records are and have been
properly maintained to facilitate the preparation of financial statements in
accordance with United States generally accepted accounting principles ("GAAP"))
and fairly present, in all material respects, the financial condition of the
Business as of the dates thereof and the results of operations for the Business
for the periods indicated therein. The Latest Financial Statements and the
Annual Financial Statements have been prepared in accordance with GAAP
consistently applied, except that they (i) do not contain all required
footnotes, (ii) may not contain prior period comparative data and, as to the
Latest Financial Statements, year end adjustments, (iii) do not include any
current or deferred income tax assets or liabilities and (iv) do not include
certain other disclosures that may be required to be presented under GAAP. To
the extent that any such disclosures, in the form of footnotes or otherwise, are
omitted from the Latest Financial Statements and Annual Financial Statements and
are not otherwise included in the Disclosure Schedules, such omission does not
cause the representation that the financial statements fairly present, in all
material respects, the financial condition of the Business as of the dates
thereof and the results of operations for the Business for the periods indicated
therein, to be untrue. The Parent, NCS-IPB or the Company has good and valid
title to all of the assets of the Business, free and clear of any material Liens
other than those reflected in the Latest Financial Statements, disclosed in the
Disclosure Schedule or arising out of customer and related transactions that
have arisen after the date of the Latest Financial Statements in the ordinary
course of business, and except for any assets that are licensed or leased from
third parties, and effective on or prior to the Closing, all such assets of the
Business held in the name of Parent shall have been transferred to the Company.
The Business has no material obligations, fixed or contingent, that are not
reflected or described in the Latest Financial Statements or disclosed in the
Disclosure Schedule, except for obligations arising out of customer and related
transactions that have arisen after the date of the Latest Financial Statement
in the ordinary course of business.
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2.08 No Material Adverse Effect. Since the date of the Latest
--------------------------
Balance Sheet, there has been no Material Adverse Effect, and the Business has
been conducted in the ordinary course of business consistent in all material
respects with past practices.
2.09 Real Properties. Parent, NCS-IPB and the Company do not own any
---------------
real property primarily used or occupied by the Business. The real property
demised by the leases described in the Disclosure Schedule (the "Leases")
constitutes all of the real property primarily used or occupied by the Business.
To the Knowledge of Parent, as of the date of this Agreement, the Leases are in
full force and effect, and Parent, the Company or NCS-IPB holds a valid and
existing leasehold interest under each of the Leases for the term set forth
under such caption in the Disclosure Schedule. To the Knowledge of Parent, none
of Parent, NCS-IPB, the Company or the landlord is in default, and no
circumstances exist which, if unremedied, would, either with or without notice
or the passage of time or both, result in such default under any of the Leases.
To the Knowledge of Parent, no occupancy, maintenance or use of the leased
premises is in breach or violation of any applicable contract or Requirement of
Laws, and no notice from any lessor, Governmental Body or other person or entity
has been received by Parent, the Company or NCS-IPB or served upon any of the
leased premises claiming any breach or violation of any applicable contract or
Requirement of Laws. To the Knowledge of Parent, there are not any hazardous
substances on or under any such leased premises.
2.10 Tax Matters.
-----------
(a) Parent, NCS-IPB or the Company has (i) properly prepared and
timely filed (or has had properly prepared and timely filed on behalf of the
Business) all returns, declarations, reports, estimates, information returns and
statements, including those filed on a consolidated or unitary basis with Parent
with respect to the Business ("Returns"), required to be filed or sent prior to
the Closing Date in respect of any Taxes payable by Parent, NCS-IPB or the
Company or required to be filed or sent by any taxing authority having
jurisdiction over Parent, NCS-IPB or the Company; and (ii) timely and properly
paid (or has had timely and properly paid on behalf of the Business) prior to
the Closing Date all Taxes shown to be due and payable on such Returns. No
deficiency for any Taxes has been asserted or assessed against Parent, NCS-IPB
or the Company with respect to the Business that has not been resolved and paid
in full. The Disclosure Schedule sets forth all tax years of Parent, NCS-IPB or
the Company that have been audited or are currently under audit with respect to
the Business, any filings currently in effect that extend the deadline for the
filing of any Returns by Parent, NCS-IPB or the Company, and any agreements or
waivers currently in effect that provide for an extension of time for the
assessment of any Tax against Parent, NCS-IPB or the Company with respect to the
Business. Parent, NCS-IPB or the Company has properly withheld from payments to
its employees, agents, representatives, contractors and suppliers all amounts
required to be withheld for Taxes with respect to the Business and has
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timely paid (or has had timely paid on its behalf) prior to the Closing Date
such Taxes to the proper taxing authorities.
(b) For purposes of this Agreement, "Taxes" means any foreign,
federal, state or local income, earnings, profits, gross receipts, franchise,
capital stock, net worth, sales, use, occupancy, general property, real
property, personal property, intangible property, transfer, fuel, excise,
payroll, withholding, unemployment compensation, social security, value added,
retirement or other tax, or any foreign, federal, state or local organization
fee, qualification fee, annual report fee, occupation fee, assessment, sewer
rent or other fee or charge in the nature of a tax, or any interest or penalty
thereon.
2.11 Contracts and Commitments. (a) The Disclosure Schedule lists
-------------------------
the following written agreements relating to the operation of the Business to
which the Company, NCS-IPB or Parent is a party or by which it is bound and
which are currently in effect:
(i) customer agreements, including agreements relating to the
license of software and the purchase and/or lease of computer hardware from
the Business by the end user customer;
(ii) agreements under which the Business has assigned the rights to
payments under certain of the agreements listed above to any person or
entity;
(iii) reseller agreements entered into for the resale of computer
hardware;
(iv) agreements for the employment in the Business of any officer,
individual employee or other person on an employment, independent
contractor or consulting basis or relating to severance pay or severance
benefits for any such person;
(v) agreements relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a Lien on any of the assets of the Business;
(vi) guarantees of any obligation entered into by the Company or NCS-
IPB;
(vii) each lease, license or agreement relating to the Business
under which Parent, the Company or NCS-IPB is lessee of, or holds or
operates any property, real or personal, or any Software or Intellectual
Property Rights owned by any other party, for which the annual payment
exceeds $50,000 or the total commitment exceeds $200,000;
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(viii) each lease, license or agreement (excluding any customer
agreements) relating to the Business under which Parent, the Company or
NCS-IPB is lessor or licensor of, or permits any other person to hold or
operate, any property, real or personal, or any Software or Intellectual
Property Rights for which the annual payment exceeds $50,000 or the total
commitment exceeds $200,000;
(ix) agreements for the distribution of the products of the
Business (including any distributor, sales and original equipment
manufacturer contract);
(x) agreements or commitments for capital or other expenditures in
excess of $200,000;
(xi) agreements for the sale of any capital or other assets in
excess of $200,000;
(xii) agreements under which any material product line, business
line, or subsidiary of the Business was acquired at any time since January
1, 1991, or earlier if any material part of such agreement continues in
effect; or
(xiii) any other agreements which, to Parent's Knowledge, are
material to the Business.
(b) To the Parent's Knowledge, Parent, NCS-IPB or the Company, as
the case may be, and the other party or parties thereto have performed all
obligations required to be performed by it in connection with the contracts or
commitments disclosed in the Disclosure Schedule, except where the failure to
perform such obligations would not and could not reasonably be expected to have
a Material Adverse Effect, and Parent, NCS-IPB and the Company are not in
receipt of any written claim of material default under any contract or
commitment disclosed in the Disclosure Schedule.
(c) Copies of each agreement referred to in the Disclosure
Schedule have been made available to Buyer.
(d) There are no currently outstanding written proposals or offers
submitted by the Business (other than such proposals or offers made in the
ordinary course of business relating to customer or related transactions) to any
person or entity which, if accepted, would result in a legally binding contract
of the type required to be disclosed under Section 2.11(a). To the Knowledge of
Parent, the Company has no material oral contracts or currently outstanding oral
proposals or offers submitted by the Company (other than such proposals or
offers made in the ordinary course of business relating to customer or related
transactions) to any person or entity which, if accepted, would result in a
legally binding contract of the type required to be disclosed under Section
2.11(a). To the Knowledge of Parent,
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<PAGE>
there are no written contracts between Parent, NCS-IPB or the Company and any of
their affiliates relating primarily to the Business, or between the Company (or
any of its affiliates) and any current or former shareholder, director, officer
or employee, of the Company or any of its affiliates or predecessors relating
primarily to the Business.
2.12 Intellectual Property Rights. The Disclosure Schedule describes
----------------------------
the trademark and service mark registrations, trademark and service mark
applications, unregistered trademarks and service marks, patents, patent
applications, copyright registrations and copyright applications that are used
in the conduct of the Business and are material to the Business, and the product
name of the software products licensed, maintained or under development by the
Business that are material to the Business. Parent, NCS-IPB or the Company owns
and possesses all right, title and interest in, or holds a valid license
(pursuant to license agreements identified in the Disclosure Schedule or falling
below the required thresholds in the Disclosure Schedule) to, the Intellectual
Property Rights and the Software set forth in the Disclosure Schedule, except
where the failure to own or possess such right would not or could not reasonably
be expected to result in a Material Adverse Effect. Parent, the Company and
NCS-IPB have not received any written notice of any infringement,
misappropriation or violation by the Business of any Software or Intellectual
Property Rights of any other person or entity, and, to the Knowledge of Parent,
no such infringement, misappropriation or violation has occurred. To the
Knowledge of Parent, no person or entity has infringed or misappropriated any
Software or Intellectual Property Rights set forth in the Disclosure Schedule.
To the Knowledge of Parent, Parent, NCS-IPB or the Company has the right, free
and clear of any material Liens, to use, modify, create derivative works for and
otherwise exploit all of the Software and Intellectual Property Rights described
in the Disclosure Schedule, other than the Software and Intellectual Property
Rights identified in the Disclosure Schedule as being licensed or otherwise
subject to third party rights pursuant to an agreement and other than such
Software and Intellectual Property Rights licensed or otherwise subject to third
party rights pursuant to an agreement that falls below the required thresholds
in the Disclosure Schedule. As to the Software and Intellectual Property Rights
licensed or otherwise subject to third party rights pursuant to an agreement,
Parent, NCS-IPB or the Company has the rights stated in the applicable license
or agreement. Notwithstanding the foregoing, the preceding two sentences shall
not be construed as a representation or warranty that Parent, NCS-IPB or the
Company has any rights greater than are available under applicable laws and
regulations. Parent has used reasonable measures to maintain its proprietary
Software as trade secrets of the Business and has a general practice of imposing
reasonable confidentiality restrictions on its customers, employees and
contractors.
2.13 Litigation. There are no actions, suits, proceedings,
----------
injunctions, judgments, orders, decrees or rulings pending against the Company
or NCS-IPB or affecting the Business or, to the Knowledge of Parent, threatened
against the Company or NCS-IPB or affecting the Business, and, in both
instances, which
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would, if finally determined adversely to the Company or NCS-IPB or the
Business, have a Material Adverse Effect.
2.14 Employee Benefit Plans. The Disclosure Schedule sets forth a
----------------------
list of all of the Employees whose annual compensation exceeds $50,000,
including names, positions and current compensation. Parent, the Company and
NCS-IPB have no union or collective bargaining contract in effect or being
negotiated that relates to or affects the Employees. All employee benefit plans
(as defined in Section 3(3) of ERISA) and any other benefit or welfare plan,
trust agreement or arrangement including, without limitation, any bonus,
vacation, severance, group insurance, hospitalization, deferred compensation,
pension, profit-sharing, payroll savings, retirement, death benefit, stock
option, equity award or fringe benefit plan, which the Company or Parent
maintains or to which the Company or Parent contributes for the benefit of the
Employees, former employees or retired employees of the Business (collectively,
the "Plans") comply in all respects with the requirements of ERISA and the Code,
except for such failures to comply which could not reasonably be expected to
have a Material Adverse Effect. The Plans are listed in the Disclosure Schedule
and copies or descriptions of the Plans have been made available to Buyer.
Section 2.14 of the Disclosure Schedule identifies all bonus arrangements with
the Employees entered into by Parent, NCS-IPB or the Company in connection with
the transactions contemplated by this Agreement. There would not be and could
not reasonably be expected to be a Material Adverse Effect on the Company under
Title IV of ERISA if any Plan were terminated as of the Closing Date, and the
Company does not have, has not incurred and will not incur any withdrawal
liability to any multiemployer plan under ERISA (as amended by the Multiemployer
Pension Plan Amendments Act of 1980). Except as set forth in the Disclosure
Schedule, no event has occurred or will occur which will result in liability to
the Company in connection with any employee pension benefit plan (as defined in
Section 3(2) of ERISA) established, maintained or contributed to, currently or
previously, by the Company or any other entity which, together with the Company,
constitute elements of a controlled group of corporations (within the meaning of
Section 414(b) of the Code), or a group or trades or businesses under common
control (within the meaning of Section 414(c) of the Code or Section 4001 of
ERISA), or an affiliated service group (within the meaning of Section 414(m) of
the Code), or another arrangement covered by Section 414(o) of the Code.
2.15 Compliance with Laws. The Company is not in violation of or
--------------------
default under any Requirement of Laws applicable to it, the effect of which,
individually or in the aggregate with other such violations or defaults, would
or could reasonably be expected to have a Material Adverse Effect.
2.16 Brokerage. No third party shall be entitled to receive any
---------
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller,
Parent or
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the Company, other than the fees and expenses of Smith Barney, Inc., which will
be paid by Parent.
2.17 Insurance. The insurance policies (excluding group insurance
---------
policies disclosed under Section 2.14) maintained by or for the benefit of the
Business are believed by Parent to be reasonably adequate for the business
engaged in by the Business, and none of Parent, NCS-IPB or the Company has
received any notice of cancellation with respect to any such insurance policies.
2.18 Other Disclosure. As of the date of filing with the Securities
----------------
and Exchange Commission, the Form 10-K Report did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading in any material
respect. The business segment information regarding the Business set forth in
the Form 10-K Report sets forth in all material respects the information
required by the applicable provisions of Regulation S-X and Regulation S-K under
the Securities Exchange Act of 1934, as amended. To the Knowledge of Parent,
there is no fact that currently has or currently could reasonably be expected to
have a Material Adverse Effect that has not been disclosed to Buyer in this
Agreement, the Latest Financial Statements, the Annual Financial Statements or
the Disclosure Schedule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller and Parent that:
3.01 Incorporation and Corporate Power. Buyer is a corporation duly
---------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has the requisite corporate power and authority to execute and
deliver this Agreement and perform its obligations hereunder.
3.02 Execution, Delivery; Valid and Binding Agreement. The execution,
------------------------------------------------
delivery and performance of this Agreement by Buyer and the consummation of the
transactions contemplated to be performed by Buyer hereby have been duly and
validly authorized by all requisite corporate action of Buyer. This Agreement
has been duly executed and delivered by Buyer and constitutes the valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
3.03 No Conflict. The execution, delivery and performance of this
-----------
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under or result in a violation of the
provisions of
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the articles of incorporation or bylaws of Buyer or any indenture, mortgage,
lease, loan agreement (except as disclosed by Buyer in Schedule 3.03) or other
agreement or instrument by which Buyer is bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which Buyer is
subject.
3.04 Governmental Bodies; Consents. Except for the applicable
-----------------------------
requirements of the HSR Act and federal securities laws, Buyer is not required
to submit any notice, report or other filing with any Governmental Body in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any Governmental Body or any other party or person is required
to be obtained by Buyer in connection with its execution, delivery and
performance of this Agreement or the transactions contemplated hereby.
3.05 Brokerage. No third party shall be entitled to receive any
---------
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer.
3.06 Investment Representations. The Shares are being purchased for
--------------------------
Buyer's own account and not with the view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act.
3.07 Financing. As of the date hereof, Buyer has the ability to and
---------
intends to finance the aggregate of the Purchase Price with cash on hand
(meaning those assets designated on Buyer's balance sheet as cash and
equivalents and short-term investments) and will not take any action which would
impair its ability to finance the Purchase Price.
ARTICLE IV
COVENANTS OF PARENT
-------------------
4.01 Conduct of the Business. From the date hereof until the Closing
-----------------------
Date, Parent shall consult with appropriate representatives of Buyer, as
reasonably requested by Buyer, on a regular basis to report on the general
status of ongoing operations of the Business, and Parent shall inform Buyer of
new facts or developments that are material to the Business. Parent agrees to
observe, with respect to the Business, and to cause the Company and NCS-IPB to
observe each term set forth in this Section 4.01 and agrees that, from the date
hereof until the Closing Date, unless otherwise consented to by Buyer in
writing:
(a) The Business shall be conducted only in the ordinary course of
business consistent in all material respects with past practices. Without
limiting the generality of the foregoing, the accounts receivable of the
Business shall be collected
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and the accounts payable of the Business shall be paid only in the ordinary
course of business consistent with past practices. Parent shall use commercially
reasonable efforts to preserve the Business' organization and relationships
intact;
(b) Parent, the Company and NCS-IPB shall not, directly or indirectly,
do or permit to occur any of the following: (i)issue or sell any additional
shares of, or any options, warrants, conversion privileges or rights of any kind
to acquire any shares of, debt or equity securities of the Company or NCS-IPB,
(ii)sell, pledge, dispose of or encumber any assets of the Business, except in
the ordinary course of business consistent in all material respects with past
practices; (iii)amend or propose to amend the articles of incorporation or
bylaws of the Company or NCS-IPB; (iv)split, combine or reclassify any
outstanding shares of capital stock of the Company or NCS-IPB, or declare, set
aside or pay any dividend or other distribution payable in cash, stock, property
or otherwise with respect to shares of common stock of the Company or NCS-IPB;
(v)redeem, purchase or acquire or offer to acquire any shares of common stock or
other securities of the Company or NCS-IPB; (vi)have the Company or NCS-IPB
acquire (by merger, exchange, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership, joint venture or other business
organization or division or material assets thereof relating primarily to the
Business; (vii) change or adopt any employee benefit plan (except as set forth
in the Disclosure Schedule); and (viii)incur any obligation, make any loan, or
enter into any contract, commitment or transaction, all relating primarily to
the Business (other than contracts, commitments or transactions with customers
or related transactions and except as set forth on the Disclosure Schedule)
whether or not in the ordinary course of business, involving an amount exceeding
$200,000 in any single case; or (ix) enter into or propose to enter into, or
modify or propose to modify, any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section4.01(b); and
(c) Parent shall not cancel or terminate its current insurance
policies or cause any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the canceled, terminated or
lapsed policies for substantially similar premiums are in full force and effect.
4.02 Access to Books and Records. Between the date hereof and the
---------------------------
Closing Date, Parent shall and shall cause the Company and NCS-IPB to afford to
Buyer and its authorized representatives access at reasonable times and upon
reasonable notice to the offices, properties, books, records, selected officers
and selected employees of the Business, and shall deliver to Buyer copies of the
Business' monthly financial statements (prepared in their customary manner and
form) promptly after they are prepared in the ordinary course of business, and
such other documents reasonably requested by Buyer. Parent shall include Buyer
(at its address set forth in Section 10.04) on Parent's mailing list of persons
who are sent copies of Parent's reports filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
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<PAGE>
4.03 HSR Filing. As promptly as practicable after the execution of
----------
this Agreement, Parent shall make or cause to be made its filings under the HSR
Act regarding the transfer of the Shares and shall provide a copy thereof to
Buyer. Parent will coordinate and cooperate with Buyer in exchanging such
information, and will provide such reasonable assistance as Buyer may request,
in connection with the filings by Buyer and Parent under the HSR Act and under
federal securities laws.
4.04 Conditions. Parent shall use its good faith efforts to cause the
----------
conditions set forth in Section6.01 to be satisfied and to consummate the
transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof. Parent shall promptly notify Buyer if, to the Knowledge
of Parent, any such condition becomes impossible to be satisfied. Parent shall
promptly advise Buyer of the receipt of any bona fide proposal received by
Parent, NCS-IPB or the Company after the date of this Agreement from a party
other than Buyer regarding such party's interest in acquiring the Business or a
material part thereof.
ARTICLE V
COVENANTS OF BUYER
------------------
Buyer covenants and agrees with Seller and Parent as follows:
5.01 HSR Filing. As promptly as practicable after the execution of
----------
this Agreement, Buyer shall make its filing under the HSR Act regarding the
purchase of the Shares and shall provide a copy thereof to Parent. Buyer will
coordinate and cooperate with Parent in exchanging such information, and will
provide such reasonable assistance as Parent may request, in connection with the
filings by Buyer and Parent under the HSR Act and under federal securities laws.
5.02 Conditions. Buyer shall use its good faith efforts to cause the
----------
conditions set forth in Section6.02 to be satisfied and to consummate the
transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof. Buyer shall promptly notify Parent if, to the knowledge
of Buyer, any such condition becomes impossible to be satisfied.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
6.01 Conditions to Buyer's Obligation. The obligation of Buyer to
--------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions:
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(a) The representations and warranties set forth in ArticleII
(without regard to any knowledge qualification, materiality threshold or
reference to Material Adverse Effect) shall be true and correct in all respects
at and as of the Closing Date as though then made (provided that those
representations or warranties made as of a specified date shall only need to
have been true on and as of such date), except for any inaccuracies which,
individually or in the aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect; and there shall not have been any Material
Adverse Effect; provided, however, that there shall be deemed not to be a
Material Adverse Effect to the extent that such effect is the result of
conditions or factors affecting the economy generally or the industry in which
the Company operates or the result of the announcement of the transactions
contemplated by this Agreement;
(b) Seller and Parent shall have performed in all material respects
all of the covenants and agreements required to be performed and complied with
by them under this Agreement at or prior to the Closing;
(c) The applicable waiting periods under the HSR Act shall have
expired or been terminated, and no Governmental Body shall have taken or
threatened in writing any action to require any party to divest itself of any
assets in order to consummate the transactions contemplated by this Agreement;
(d) No action, suit, or proceeding brought by a Governmental Body or
other person or entity that is not frivolous shall be pending before any court
or quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator having jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or require any party to this Agreement to pay material damages as a result of
such consummation, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (iii) have a Material
Adverse Effect, and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect; and
(e) On the Closing Date, Seller and Parent shall have delivered to
Buyer all of the following:
(i) certificate of the President or a Vice President of Parent, dated
the Closing Date, stating that the conditions set forth in subsections (a)
and (b) above have been satisfied;
(ii) the stock certificate or certificates representing the Shares,
duly endorsed for transfer or accompanied by a duly executed stock power,
and the stock certificate(s) representing the Company's ownership of NCS-
IPB;
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(iii) the Company's and NCS-IPB's minute books, stock transfer
records, corporate seal and other materials related to the Company's and
NCS-IPB's corporate administration;
(iv) resignations (effective as of the Closing Date) from such of
the Company's and NCS-IPB's officers and directors as Buyer shall have
requested prior to the Closing Date;
(v) a copy of the articles of incorporation of the Company,
certified by the Secretary of State of the State of Minnesota, and
Certificates of Good Standing from the Secretary of State of the State of
Minnesota evidencing the good standing of the Company, Seller and Parent in
such jurisdiction, and Certificates of Good Standing from the appropriate
officials of the States of Alabama, Georgia, Massachusetts and Pennsylvania
evidencing the good standing of the Company in such jurisdictions; and
(vi) a copy of each of (X) the text of the resolutions adopted by
the Board of Directors of Seller and Parent, and the shareholder of Seller
if required, authorizing the execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated by
this Agreement, and (Y) the bylaws of the Parent and Seller; along with
certificates executed on behalf of each of Seller and Parent, respectively,
by its corporate secretary certifying to Buyer that such copies are true,
correct and complete copies of such resolutions and bylaws, respectively,
and that such resolutions and bylaws were duly adopted and have not been
amended or rescinded;
(vii) copies of assignments or other transfer documents, in form
and substance reasonably satisfactory to Buyer and Parent, evidencing the
transfer by Parent to the Company, effective on or prior to the Closing
Date, of all Intellectual Property Rights, Software, contracts, outstanding
shares of NCS-IPB capital stock and other assets owned or held by or in the
name of Parent that are used primarily in the Business;
(viii) copies of any consents, approvals and authorizations of any
third party to contracts between such party and Parent, the Company and/or
NCS-IPB relating primarily to the Business (but excluding any contracts
individually designated in Section 2.11(a)(iii) and Section 2.07 of the
Disclosure Schedule as contracts that will not be transferred to the
Company in connection with the transactions contemplated hereby) required
in connection with the transactions contemplated by this Agreement;
provided, however, that any such consents, approvals and authorizations
need not be delivered to Buyer on or prior to the Closing Date if (a) the
failure to obtain such consents, approvals and authorizations will not and
would not reasonably be expected to have a Material Adverse Effect or (b)
the parties shall have agreed to pursue an alternative means of avoiding
such Material
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<PAGE>
Adverse Effect without obtaining such consents, approvals or
authorizations; and
(ix) a statement from Parent regarding the interest earned on the
Deposit Amount.
6.02 Conditions to Seller's and Parent's Obligation. The obligation
----------------------------------------------
of Seller and Parent to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions on or
before the Closing Date:
(a) The representations and warranties set forth in ArticleIII shall
be true and correct in all material respects as of the Closing Date, as though
made on and as of such date;
(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing;
(c) The applicable waiting periods under the HSR Act shall have
expired or been terminated, and no Governmental Body shall have taken or
threatened in writing any action to require any party to divest itself of any
assets in order to consummate the transactions contemplated by this Agreement;
(d) No action, suit, or proceeding brought by a Governmental Body
that is not frivolous shall be pending before any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator having jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or require any party to this
Agreement to pay material damages as a result of such consummation, (ii) cause
any of the transactions contemplated by this Agreement to be rescinded following
consummation, or (iii) have a Material Adverse Effect, and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect; and
(e) On the Closing Date, Buyer will have delivered to Seller and
Parent all of the following:
(i) a certificate of the President or a Vice President of Buyer,
dated the Closing Date, stating that the conditions set forth in
subsections(a) and (b) above have been satisfied; and
(ii) a copy of each of (X) the text of the resolutions adopted by the
Board of Directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the consummation of all of the
transactions contemplated by this Agreement, and (Y) the bylaws of the
Buyer;
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<PAGE>
along with certificates executed on behalf of Buyer by its corporate
secretary certifying to Parent that such copies are true, correct and
complete copies of such resolutions and bylaws, respectively, and that such
resolutions and bylaws were duly adopted and have not been amended or
rescinded.
ARTICLE VII
TERMINATION
-----------
7.01 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) by the mutual consent of Buyer and Parent;
(b) by Buyer or Parent if the transactions contemplated hereby have
not been consummated by December 31, 1996; provided that, neither Buyer nor
Parent will be entitled to terminate this Agreement pursuant to this
Section7.01(b) if such party's willful breach of this Agreement has prevented
the consummation of the transactions contemplated hereby.
7.02 Effect of Termination. In the event of termination of this
---------------------
Agreement by Buyer or Parent as provided in Section7.01, this Agreement shall
become void and there shall be no liability on the part of Buyer or Parent, or
their respective shareholders, officers, or directors, (i) except with respect
to willful breaches of this Agreement prior to the time of such termination and
(ii) except that the Confidentiality Agreement shall survive according to its
own terms and conditions and Sections 10.01, 10.02, 10.04 and 10.09 hereof shall
survive indefinitely. Parent shall be entitled to retain the Earnest Money
Payment in the event of any termination of this Agreement, except as may be
expressly otherwise provided in Section 7.03.
7.03 Earnest Money Payment. As of the date hereof, Buyer has paid to
---------------------
Seller by check the amount of Five Million Dollars ($5,000,000) as an earnest
money payment (the "Earnest Money Payment") which funds will earn interest as
set forth in the definition of Deposit Amount in Section 1.05. The Deposit
Amount is nonrefundable, except in the event of a termination pursuant to
Section 7.01(b) resulting from any reason other than a willful breach of this
Agreement by Buyer, in which case the Deposit Amount shall be promptly paid to
Buyer by Seller.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
---------------------
8.01 Tax Matters.
-----------
(a)(i) Income for Periods through Closing Date. Parent shall prepare
---------------------------------------
or cause to be prepared and shall file or cause to be filed on a timely basis,
for taxable periods of the Company ending on or prior to the Closing Date, all
Returns with respect to the Company which are filed on a consolidated or unitary
basis with Parent ("Consolidated Returns"). Parent shall prepare or cause to be
prepared and shall provide to Buyer at least 20 days before the due date
therefor (as extended by any proper extension which Buyer shall cause the
Company or NCS-IPB to file at Parent's request), for taxable periods of the
Company or NCS-IPB ending on or prior to the Closing Date, all Returns with
respect to the Company or NCS-IPB which are not filed on a consolidated or
unitary basis with Parent ("Separate Company Returns"). Parent will include the
income of the Company or NCS-IPB for all applicable periods ending on or prior
to the Closing Date on all such Returns and shall pay or cause to be paid all
Taxes shown on all such Returns. Buyer shall review such Separate Company
Returns (but shall not change their content without Parent's consent) and shall
cause the Company or NCS-IPB to timely file such Separate Company Returns. The
income of the Company or NCS-IPB through the Closing Date shall be computed as
if its taxable year ended on and included the Closing Date. The Company and
NCS-IPB shall provide to Parent such information as may be required for Parent
to prepare such Returns. The income of the Company to be included on Returns
pursuant to this Section 8.01 shall include any income or gain from the deemed
asset sale resulting from the Section 338(h)(10) election provided in Section
1.04.
(ii) Income for Periods Straddling the Closing Date. With respect to
----------------------------------------------
each jurisdiction in which one Return (a "Full Year Return") for the period from
February 1, 1996 to December 31, 1996 will be required (i.e., no Consolidated
Return or short-period Separate Company Return may be filed), Parent shall
prepare or cause to be prepared and shall provide to Buyer by December 31, 1996
a separate company Return for the Company or NCS-IPB for the short period ending
on the Closing Date, on a pro forma basis as if a short-period Separate Company
Return were required ("Pro Forma Return"). Pro Forma Returns shall be prepared
on the same basis as short-period Separate Company Returns under Section 8.01.
Pro Forma Returns shall not be filed, but Parent shall pay to the Company or
NCS-IPB the amount of Taxes shown thereon. Buyer shall prepare or cause to be
prepared the Full Year Returns, and shall cause the Company or NCS-IPB to timely
file the Full Year Returns and pay the amount of Taxes shown thereon.
(b) Income for Periods After Closing Date. Buyer shall prepare or
-------------------------------------
cause to be prepared and shall file or cause to be filed on a timely basis, for
all taxable periods of the Company or NCS-IPB beginning on or after the Closing
Date, all
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Returns with respect to the Company or NCS-IPB, whether filed on a consolidated,
unitary or separate company basis, and shall pay or cause to be paid all Taxes
shown on such Returns. Parent shall provide to Buyer such information as may be
required for Buyer to prepare such Returns. If any such Return includes any
income or gain from the deemed asset sale resulting from the Section 338(h)(10)
election provided in Section 1.04, then Parent shall reimburse to Buyer the
amount of Taxes attributable thereto.
(c) Control of Audits. Parent shall have sole control over all audits
-----------------
and other proceedings which relate to Taxes of the Company or NCS-IPB for any
period that ends on or before the Closing Date. Buyer shall have sole control
over all audits and other proceedings which relate to Taxes of the Company or
NCS-IPB for any period that begins on or after the Closing Date. Parent and
Buyer shall cooperate as to any audits or other proceedings which relate to
Taxes of the Company or NCS-IPB for any period that straddles the Closing Date.
(d) Transfer Taxes. Notwithstanding any other provisions of this
--------------
Agreement to the contrary, (i) Buyer shall pay all sales, use, stock transfer,
stamp, recording, real property transfer and similar taxes, if any, required to
be paid in connection with the sale of Shares contemplated by this Agreement,
(ii) Seller shall pay all sales, use, stock transfer, stamp, recording, real
property transfer and similar taxes, if any, required to be paid in connection
with the transfer on or prior to the Closing Date by Parent to the Company of
the assets referred to in Section 6.01(vii), and (iii) Seller shall pay all
sales, use, stock transfer, stamp, recording, real property transfer and similar
taxes, if any, required to be paid in connection with the deemed asset sale
resulting from the Section 338(h)(10) election provided in Section 1.04.
8.02 Employees and Employee Benefit Matters.
--------------------------------------
(a) On or prior to the Closing Date, all of the Employees who are
employed by Parent shall become employees of the Company, and, effective as of
the Closing, Buyer will cause the Company and NCS-IPB, as the case may be, to
continue to employ the Employees on substantially the same terms in effect for
such Employees while they were employees of Parent (immediately prior to their
transfer to the Company) or NCS-IPB (immediately prior to Closing); provided
that no provision of this Agreement shall prohibit the Company or NCS-IPB after
the Closing Date from terminating the employment of any Employees.
(b)(i) Buyer shall not adopt, assume, contribute to or otherwise
become a sponsoring employer of any employee pension benefit plan of the Seller
or Parent. Seller and Parent shall take such actions as are necessary to
provide that the Employees shall cease to be eligible to participate in and
accrue benefits under any employee pension benefit plan maintained by Seller or
Parent for the Employees as of the Closing Date. There shall be no transfer of
assets or liabilities from any employee pension benefit plan of Seller or Parent
to any plan of Buyer. Parent shall take such actions as are necessary to fully
vest the respective accrued benefits of the
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<PAGE>
Employees in Parent's Employee Stock Ownership Plan. Parent shall authorize lump
sum distributions of vested benefits to the Employees in connection with the
transactions under this Agreement from Parent's employee pension benefit plans
pursuant to Section 401(k)(10) of the Code and Parent shall permit the Employees
who so elect, to make a "direct rollover" of their accounts with Parent to any
similar plan of Buyer.
(ii) Subject to the general requirements of this Section 8.02, Buyer
shall be free to establish such employee pension benefit plans as it deems
appropriate for the Employees. Buyer shall recognize the Employees' years of
service recognized by the Parent, NCS-IPB and the Company for the purpose of
determining eligibility, vesting and accrual of benefits under such employee
pension benefit plans.
(iii) Parent shall within a reasonable period of time after the
Closing Date take such action as is necessary for it to provide the Employees
employed in the Business as of the Closing Date with a partial year matching
contribution under Parent's 401(k) Profit Sharing Plan without regard to the
plan's "last day requirement" in such amount and in such manner as is reasonably
determined by Parent.
(iv) Parent shall be responsible for any payments under the bonus
arrangements with the Employees entered into in connection with the transactions
contemplated by this Agreement, which arrangements are listed in Section 2.14 of
the Disclosure Schedule referencing Employee bonus arrangements.
(c)(i) Buyer shall not adopt, assume, contribute to or otherwise
become a sponsoring employer of any employee welfare benefit plan of Parent.
Parent's plans shall be responsible for claims incurred on or before the Closing
Date but shall not be responsible for any claims incurred after the Closing
Date. There shall be no transfer of assets or liabilities from any employee
welfare benefit plan of Parent to any plan of Buyer.
(ii) Notwithstanding any eligibility provision that may be generally
effective for new employees of Buyer, effective immediately after the Closing
Date, each Employee, spouse or dependent shall be eligible to be covered by a
group health plan (as such term is defined in Sections 601 et. seq. of ERISA)
which exists or which shall be created by Buyer for this purpose on terms and
conditions which are substantially equivalent to the terms and conditions
applicable to other, similarly situated, employees of Buyer. Such group health
plan shall not contain any exclusion or limitation with respect to any
preexisting condition (as that term is used in Section 602(2)(D) of ERISA) of
any Employee, spouse or dependent.
(iii) Notwithstanding any eligibility provision that may be
generally effective for new employees of Buyer, effective immediately after the
Closing Date, each Employee, spouse or dependent shall be eligible to be covered
by a group life
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<PAGE>
insurance plan which exists or which shall be created by Buyer for this purpose
on terms and conditions which are substantially equivalent to the terms and
conditions applicable to other, similarly situated, employees of Buyer. Such
group life insurance plan shall not contain any exclusion or limitation with
respect to any preexisting condition of any Employee, spouse or dependent.
(iv) Buyer shall cause the Company to preserve, and provide all
Employees with, all accrued vacation and accrued sick time that each such
Employee has earned as an employee of Parent, the Company and NCS-IPB as of the
Closing Date.
(v) Subject to the general requirements of this Section 8.02(c) and
the foregoing requirements regarding group health and life plans, Buyer shall be
free to establish such employee welfare benefit plans as it deems appropriate
for the Employees. Buyer shall recognize any prior service with Parent, the
Company and NCS-IPB for the purpose of determining eligibility, vesting and
accrual of benefits under such employee welfare benefit plans. Buyer shall
recognize the Employees' years of service recognized by the Parent, NCS-IPB and
the Company for the purpose of determining eligibility, vesting and accrual of
benefits under such employee welfare benefit plans.
8.03 Insurance. The parties acknowledge that both Parent and Buyer
---------
maintain centralized insurance programs for their respective affiliated groups.
Parent and Buyer shall cooperate with each other, taking into account the extent
to which their respective policies are "occurrence" or "claims made" policies,
in order to maintain appropriate insurance coverage for the Business without any
lapses in coverage caused by the sale of Shares contemplated hereby. Parent and
Buyer shall cooperate with each other in the handling of insurance claims
relating to the Business that straddle the Closing Date.
8.04 Cash Management. The parties acknowledge that the cash
---------------
generated by and used in the Business (other than the cash of NCS-IPB) is swept
out of or funded into the Business, as the case may be, by Parent on a daily
basis. The parties also acknowledge that both Parent and Buyer maintain
centralized cash management programs for their respective affiliated groups. To
the fullest extent practicable, Parent shall cause all intercompany receivables
and payables involving the Business to be satisfied by Closing. Parent and
Buyer shall cooperate with each other in order to transfer cash management
functions for the Business from Parent to Buyer on or as soon as is reasonably
practical after the Closing Date. To the extent that such transfer is not
completed on the Closing Date, Parent and Buyer shall cooperate with each other
in order to maintain appropriate funding for the Business during a reasonable
transition period and to fairly allocate the receipts and disbursements of the
Business between Parent and Buyer.
8.05 Names. On or promptly after the Closing Date, Buyer shall cause
-----
both the Company and IPB to change their corporate names to names that do not
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<PAGE>
include "NCS", "National Computer Systems" or any substantially similar letters
or word. As soon as is reasonably practicable after the Closing Date, Buyer
shall change its use of and abandon any registered or pending trademarks,
service marks or other names of the Company's Business, and all other names,
product designations and the like, which contain "NCS" or "National Computer
Systems" to a mark or name that does not include such letters or words or any
substantially similar letters or words, except for any use that is permitted
pursuant to the terms of a pre-existing written marketing agreement with Parent
dated December 31, 1990. Notwithstanding any other provision of this Agreement,
after the Closing Date, the Company, NCS-IPB and Buyer shall neither use nor
have any right to use the letters "NCS," the name "National Computer Systems,"
any logo of Parent, or any substantially similar letters, word or logo in any
corporate, business or product name (whether or not combined with any other
letters, word or logo) or for any other purpose except to the extent reasonably
necessary to describe the transactions contemplated by this Agreement, to
implement the terms of this Agreement, or, for a period not to exceed 90 days
after the Closing Date, to use up existing quantities of sales and marketing
materials and similar items.
8.06 Other Transition Matters. After the Closing Date, Parent and
------------------------
Seller shall fully cooperate to transfer to Buyer the full ownership, control
and enjoyment of the Business, and shall promptly deliver to Buyer all documents
and other items received by Parent or Seller or found to be in their possession
that pertain primarily to the Business. For a period of 90 days after the
Closing Date, Parent shall continue to provide accounting and other certain
transitional administrative support to the Business, consistent with past
practices, as is reasonably requested by Buyer, and Parent and Buyer shall fully
cooperate to transition such functions to the Company, NCS-IPB and Buyer as
quickly as is reasonably practical. If such transition is not completed within
such period for reasons other than Buyer's fault, then Parent shall in good
faith negotiate a reasonable extension of such transition period solely for
purposes of allowing Buyer, the Company and NCS-IPB continued use of the
Parent's Access accounting system. Parent will cooperate with Buyer and provide
such reasonable assistance as Buyer may request in connection with the audit of
the financial statements of the Business that will be required for Buyer's Form
8-K filing with respect to its purchase of the Shares pursuant to this
Agreement.
8.07 Books and Records. After the Closing Date, Parent and Seller, on
-----------------
the one hand, and Buyer, the Company and NCS-IPB, on the other hand, shall
retain all accounting, tax, payroll and similar books and records pertaining to
the Business for a period of at least seven years after the annual period to
which they relate, and shall provide access to such books and records and
related information to the other party and its representatives, and allow them
to make copies thereof and extracts therefrom, upon their reasonable request and
at their expense. Such access shall be provided during normal business hours,
and the requesting party shall in good faith attempt to minimize any disruption
to the other party's business. Parent shall provide the Company with any
personnel records (and Parent shall retain
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<PAGE>
copies thereof) of Employees of the Business not located at the offices of the
Business.
8.08 Confidentiality. After the Closing Date (for a period of five
---------------
years with respect to all confidential or proprietary property, knowledge or
information of the Business other than proprietary Software and for a period of
seven years with respect to proprietary Software of the Business), Parent and
Seller shall not, directly or indirectly, (a) communicate, publish or otherwise
disclose to any person or entity, or use for the benefit of any person or
entity, any confidential or proprietary property, knowledge or information of
the Business or proprietary Software of the Business, no matter when or how such
knowledge or information was obtained, or (b) use or refer to any such
confidential or proprietary property, knowledge or information for any purpose
including without limitation the purpose of developing, marketing or selling any
Software that is competitive with any proprietary Software of the Business. The
preceding restrictions on confidential or proprietary property, knowledge,
information or Software shall not include any information that is generally
known or is available to the public, nor shall it include any trade secrets,
know-how, property, knowledge or information of Parent that are applicable to
any other business of Parent or any other confidential or proprietary property,
knowledge or information of Parent that does not pertain primarily to the
Business. Notwithstanding the foregoing, Buyer acknowledges that Parent has the
right to use the general know how and proprietary information possessed by
Parent in the data collection storage and retrieval businesses, and such use is
not in any way restricted as a result of the transfer of the OpTrieve products
of the Business and the provisions of this Section 8.08.
8.09 Additional Consents. After the Closing Date, Parent shall use
-------------------
reasonable efforts to obtain all third party consents, approvals and
authorizations referred to in Section 6.01(e)(viii) that have not been obtained
on or prior to the Closing Date and shall deliver copies to Buyer, and Parent
agrees to indemnify and hold harmless Buyer, the Company and NCS-IPB against any
loss, liability, deficiency, damage, expense or cost (including reasonable legal
expenses) resulting from Parent's failure to obtain such consents, approvals and
authorizations on or prior to the Closing Date. In connection with Parent's
efforts to satisfy the closing conditions set forth in Sections 6.01(e)(vii) and
(viii) and its obligations to obtain consents, approvals and authorizations
pursuant to this Section 8.09, Buyer and its affiliates will cooperate with
Parent and shall, to the extent reasonably practicable, provide appropriate
guarantees of the Company or its affiliates in order to facilitate the receipt
of any required consents, approvals or authorizations and to replace existing
Parent guarantees (including, without limitation, the Parent guarantees referred
to in Section 2.11(a)(v) of the Disclosure Schedule).
8.10 Further Assurances. After the Closing Date, at any party's
------------------
request and without further consideration but at the expense of the requesting
party, the other party or parties shall promptly execute and deliver all such
further agreements and documents and perform such further actions as the
requesting party
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<PAGE>
reasonably requests, in order to fully consummate the transactions contemplated
by this Agreement and carry out the purposes and intent of this Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
-------------------------
9.01 Survival of Representations and Warranties. Notwithstanding any
------------------------------------------
investigation made by or on behalf of any of the parties hereto or the results
of any such investigation and notwithstanding the participation of such party in
the Closing, the representations and warranties contained in ArticleII and
Article III hereof shall survive the Closing for a period of 12 months following
the Closing Date and thereafter shall terminate.
9.02 Indemnification by Parent. (a) Subject to the limitations of
-------------------------
Section 9.02(b), Parent agrees to indemnify in full Buyer, the Company, NCS-IPB
and their officers, directors, employees, agents and shareholders (collectively,
the "Buyer Indemnified Parties") and hold them harmless against any loss,
liability, deficiency, damage, expense or cost (including reasonable legal
expenses) (collectively, "Buyer Losses"), which Buyer Indemnified Parties may
suffer, sustain or become subject to, as a result of (i)any misrepresentation in
any of the representations and warranties of Parent contained in this Agreement,
(ii) any breach of, or failure to perform, any agreement of Seller or Parent
contained in this Agreement required to be performed on or before the Closing
Date, or (iii) any deficiency or adjustment for Taxes and related interest,
penalties or expenses assessed against or imposed upon Buyer, the Company or
NCS-IPB (or any successor or affiliate of the Company or NCS-IPB), (X) with
respect to the Business during any period ending on or before the Closing Date,
(Y) for or with respect to any income or gain from the deemed asset sale
resulting from the Section 338(h)(10) election provided in Section 1.04, or (Z)
any deficiency or adjustment for taxes assessed against or imposed upon Buyer or
the Company (or any successor or affiliate of the Company) resulting from the
fact that the Company (or any predecessor of the Company) was a member of an
affiliated group at any time on or before the Closing Date whether such
deficiency or adjustment arises under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law) as transferee or
successor, by contract or otherwise.
(b) Parent shall be liable to the Buyer Indemnified Parties for any
Buyer Losses (i) only if Buyer or another Buyer Indemnified Party delivers to
Parent written notice, setting forth in reasonable detail the identity, nature
and amount of Buyer Losses related to such claim or claims prior to the 12-month
anniversary of the Closing Date; (ii) only if the aggregate amount of all Buyer
Losses exceeds $1,000,000 (the "Basket Amount"), in which case Parent shall be
obligated to indemnify the Buyer Indemnified Parties only for the excess of the
aggregate amount of all such Buyer Losses over the Basket Amount; and (iii)
provided that notwithstanding anything herein to the contrary, the maximum
aggregate liability
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<PAGE>
of Parent under this Article IX shall not exceed an amount equal to 25% of the
Purchase Price (the "Cap Amount").
9.03 Indemnification by Buyer. (a) Subject to the limitations of
------------------------
Section 9.03(b), Buyer agrees to indemnify in full Parent and Seller, and their
officers, directors, employees, agents and shareholders (collectively, the "NCS
Indemnified Parties") and hold them harmless against any losses ("NCS Losses")
which any of the NCS Indemnified Parties may suffer, sustain or become subject
to as a result of (i) any misrepresentation in any of the representations and
warranties of Buyer contained in this Agreement, or (ii) any breach of, or
failure to perform, any agreement of Buyer contained in this Agreement required
to be performed on or before the Closing Date.
(b) Buyer shall be liable to the NCS Indemnified Parties for any NCS
Losses (i) only if Parent or another NCS Indemnified Party delivers to Buyer
written notice, setting forth in reasonable detail the identity, nature and
amount of NCS Losses related to such claim or claims prior to the six month
anniversary of the Closing Date.
9.04 Method of Asserting Claims. As used herein, an "Indemnified
--------------------------
Party" shall refer to a "Buyer Indemnified Party" or "NCS Indemnified Party," as
applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Buyer Losses or NCS Losses (any such third party action or proceeding
being referred to as a "Claim"), the Notifying Party shall give the Indemnifying
Party prompt notice thereof. The failure to give such notice shall not affect
any Indemnified Party's ability to seek reimbursement unless such failure has
materially and adversely affected the Indemnifying Party's ability to defend
successfully a Claim. The Indemnifying Party shall be entitled to contest and
defend such Claim. The Notifying Party shall be entitled at any time, at its
own cost and expense (which expense shall not constitute a Buyer Loss or an NCS
Loss unless the Notifying Party reasonably determines, on the written advice of
counsel, that the Indemnifying Party, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its or their own choosing. If the
Notifying Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense. Neither
the Notifying Party nor the Indemnifying Party may concede, settle or compromise
any Claim without the consent of the other party, which consents will not be
unreasonably withheld.
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<PAGE>
(b) After the Closing, the rights set forth in this Article IX
shall be each party's sole and exclusive remedies against the other party hereto
for misrepresentations or breaches of covenants contained in this Agreement
except for breaches of any covenants contained in Article VIII, Section 1.04 and
Section 10.2 required to be performed after the Closing Date. Notwithstanding
the foregoing, nothing herein shall prevent any of the Indemnified Parties from
bringing an action based upon allegations of fraud, intentional
misrepresentation or intentional breach of an obligation of or with respect to
any party in connection with this Agreement and the limitations set forth in
this Article IX shall not apply thereto. The time limits set forth in Sections
9.01, 9.02(b) and 9.03(b), the Basket Amount and the Cap Amount shall not apply
in the case of any indemnification relating to title to the Shares. The time
limits set forth in Sections 9.01, 9.02(b) and 9.03(b), the Basket Amount and
the Cap Amount shall not apply in the case of any indemnification relating to
Taxes, and such indemnification obligations shall survive until any claim,
action or suit relating to Taxes is barred by the applicable statutes of
limitations.
(c) Any indemnification payable under this Article IX shall be, to
the extent permitted by law, an adjustment to the Purchase Price.
ARTICLE X
MISCELLANEOUS
-------------
10.01 Press Releases and Announcements. No party hereto shall
--------------------------------
issue any press release (or make any other public announcement) related to this
Agreement or the transactions contemplated hereby without prior written approval
of the other parties hereto, except as may be necessary to comply with
applicable Requirements of Laws, including securities laws. If any such press
release or public announcement is so required, the party making such disclosure
shall consult with the other parties prior to making such disclosure, and the
parties shall act in good faith to agree upon a text for such disclosure which
is satisfactory to all parties.
10.02 Expenses. Except as otherwise expressly provided for herein,
--------
Seller, Parent and Buyer will pay all of their own expenses (including
attorneys' and accountants' fees) in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not).
10.03 Amendment and Waiver. This Agreement may not be amended or
--------------------
waived except in a writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective
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<PAGE>
to modify or amend any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
10.04 Notices. All notices, demands and other communications to
-------
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered or mailed by first class mail, return receipt requested, or when
receipt is acknowledged, if sent by facsimile, telecopy or other electronic
transmission device. Notices, demands and communications to Buyer, Parent and
Seller will, unless another address is specified in writing, be sent to the
address indicated below:
Notices to Buyer: with a copy to:
- ---------------- --------------
SunGard Data Systems Inc. Blank, Rome, Comisky & McCauley
1285 Drummers Lane, Suite 300 1100 Four Penn Center Plaza
Wayne, Pennsylvania 19087 Philadelphia, Pennsylvania 19103
Attention: Lawrence A. Gross Attention: Fred Blume
Vice President and Telephone: (215) 569-5512
General Counsel Fax: (215) 569-5555
Telephone: (610) 341-8896
Fax: (610) 341-8115
Notices to Seller and Parent: with a copy to:
- ---------------------------- --------------
National Computer System, Inc. Dorsey & Whitney LLP
11000 Prairie Lakes Drive 220 South Sixth Street
Eden Prairie, Minnesota 55344 Minneapolis, Minnesota 55402
Attention: Michael C. Brewer Attention: Michael Trucano
Vice President and Telephone: (612) 340-2673
General Counsel Fax: (612) 340-8738
Telephone: (612) 829-3120
Fax: (612) 829-3066
10.05 Assignment. This Agreement and all of the provisions hereof
----------
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
party hereto without the prior written consent of the other parties hereto.
10.06 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
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<PAGE>
10.07 Complete Agreement. This Agreement, the Disclosure Schedule
------------------
and the Confidentiality Agreement contain the complete agreement among the
parties and supersede any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
10.08 Counterparts. This Agreement may be executed in one or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
10.09 Governing Law; Venue. The internal law, without regard to
--------------------
conflicts of laws principles, of the State of Minnesota will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement. Any
action relating to or arising out of this Agreement shall be brought in a court
of competent jurisdiction in the State of Minnesota or the Commonwealth of
Pennsylvania.
10.10 Effect of Headings. The subject headings of the articles,
------------------
sections and paragraphs of this Agreement are included for convenience only and
shall not affect the construction or interpretation of any of their provisions.
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<PAGE>
IN WITNESS WHEREOF, Buyer, Parent and Seller have executed this
Agreement as of the date set forth in the first paragraph.
SUNGARD DATA SYSTEMS INC.
By /s/ Richard C. Tarbox
--------------------------------------------
Its Vice President - Corporate Development
-----------------------------------------
NATIONAL COMPUTER SYSTEMS, INC.
By /s/ Russell A. Gullotti
---------------------------------------------
Russell A. Gullotti
Chairman, President and
Chief Executive Officer
NCS HOLDINGS, INC.
By /s/ Jeffrey W. Taylor
---------------------------------------------
Its President
------------------------------------------
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<PAGE>
SCHEDULES
TO
STOCK PURCHASE AND SALE AGREEMENT
Schedule Description
- -------- -----------
2.01 Incorporation and Corporate Power
2.03 No Conflict
2.04 Consents
2.05 Subsidiaries
2.06 Common Stock and Other Securities; Corporate Records
2.07 Financial Statements
2.08 Material Adverse Effect
2.09 Real Properties
2.10 Tax Matters
2.11 Contracts and Commitments
2.12 Intellectual Property Rights
2.13 Litigation
2.14 Employee Benefit Plans
3.03 Incorporation and Corporate Power
4.01 Conduct of the Business
- --------------------------------------------------------------------------------
THE REGISTRANT AGREES TO FURNISH SUPPLEMENTALLY A COPY OF
ANY OMITTED SCHEDULE TO THE COMMISSION UPON REQUEST.
<PAGE>
Exhibit 99.1
[LETTERHEAD OF SUNGARD APPEARS HERE]
May 31, 1996
Michael J. Ruane Internet
(610) 341-8709 www.sungard.com
SunGard Data Systems Inc. To Acquire
NCS Financial Systems, Inc.
Wayne, PA -- SunGard Data Systems Inc. announced today that it has entered
into a definitive agreement to acquire NCS Financial Systems, Inc., a
subsidiary of National Computer Systems, Inc. (Nasdaq: NLCS). The
acquisition, which is subject to regulatory approval and other closing
conditions, is expected to be finalized in July 1996.
NCS Financial provides turnkey trust accounting and corporate trust systems
to banks and other financial institutions. The company's major products
include Trustware/(R)/ Series 7 and Series 11, trust accounting systems
that are used by U.S. financial institutions, and BondMaster/(R)/, a
recordkeeping product for corporate trustees. NCS Financial has
approximately 350 employees at its principal locations in: Atlanta,
Georgia; Cambridge, Massachusetts; Geneva, Switzerland; Huntsville,
Alabama; and Wayne, Pennsylvania.
SunGard will pay $95.0 million in cash to acquire NCS Financial Systems,
which for its fiscal year ended January 31, 1996 had revenues and operating
income of $58.1 million and $9.7 million, respectively. SunGard expects
that a portion of the purchase price representing acquired in-process
research and development will be charged to earnings during 1996 and that,
except for the one-time charge, the acquisition will provide a positive
contribution to SunGard's earnings.
James L. Mann, chairman and chief executive officer of SunGard, stated,
"This acquisition represents an exciting extension of our investment
support systems business. NCS Financial Systems' trust management and
corporate trust systems are fine additions to our product lines. Like
SunGard, the company is organized around entrepreneurial business units
focused on individual products. NCS Financial will become part of our
Trust and Shareholder Systems Group, which is headed by Philip L. Dowd."
Russell A. Gullotti, chairman, president and chief executive officer of
National Computer Systems, added, "Given our strategic decision to sell NCS
Financial Systems, we are very pleased that SunGard is the acquiror.
SunGard is a very successful company with a fine reputation for quality
service and careful attention to customer needs. The opportunity to share
applications knowledge and technical expertise should enhance the product
lines of both SunGard and NCS Financial Systems."
<PAGE>
SunGard's business is computer service and application software. The
Company provides proprietary investment support systems, comprehensive
computer disaster recovery services, and proprietary healthcare information
systems. Its common stock is reported on The Nasdaq Stock Market and The
London Stock Exchange under the symbol SNDT.
- --------------------------------------------------------------------------------
"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995
Statements about the Company's 1996 outlook and all other statements in this
release other than historical facts are forward-looking statements. Since these
statements involve risks and uncertainties and are subject to change at any
time, the Company's actual results could differ materially from expected
results. The Company derives most of its forward-looking statements from its
operating budgets and forecasts which are based upon many detailed assumptions.
While the Company believes that its assumptions are reasonable, it cautions that
there are inherent difficulties in predicting certain important factors,
especially the timing and magnitude of software sales, the timing and scope of
technological advances, the performance of recently acquired businesses, the
prospects for future acquisitions, and the overall condition of the financial
services industry. These factors, as and when applicable, are discussed in the
Company's filings with the Securities and Exchange Commission, including its
most recent Form 10-K, a copy of which may be obtained from the Company without
charge.
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This statement is available in the United Kingdom from SunGard
Systems Ltd., 10 Devonshire Square, London, EC2M 4YP
