**Exhibit2.1**

 

EXECUTION COPY

 

**AGREEMENT AND PLANOF MERGER**

** **

by and among

 

**JACK HENRY &ASSOCIATES, INC.**

the “Parent”

 

**PEACHTREEACQUISITION CORPORATION**

the “Merger Sub”

 

and

 

**GOLDLEAF FINANCIAL SOLUTIONS, INC.**

the “Company”

 

Dated as of August 16,2009

 

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**TABLEOF CONTENTS**

 
| ARTICLE I  CERTAIN DEFINITIONS                                      |                                                   | 1      |
|---------------------------------------------------------------------|--------------------------------------------------------|--------|
| 1.1                                                                 | Definitions                                            |   | 1 |
|                                                                |                                                   |   |   |
| ARTICLE II THE MERGER                                               |                                                   | 7      |
| 2.1                                                                 | The  Merger                                            |   | 7 |
| 2.2                                                                 | Effective  Time                                        |   | 7 |
| 2.3                                                                 | Closing  of the Merger                                 |   | 8 |
| 2.4                                                                 | Effects  of the Merger; Further Actions                |   | 8 |
| 2.5                                                                 | Charter  and Bylaws                                    |   | 8 |
| 2.6                                                                 | Board  and Officers of the Surviving Corporation       |   | 8 |
| 2.7                                                                 | Effect  on Capital Stock                               |   | 9 |
| 2.8                                                                 | Company  Options                                       |   | 9 |
| 2.9                                                                 | Exchange  Procedures                                   |   | 10 |
|                                                                |                                                   |   |   |
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY           |                                                   | 11     |
| 3.1                                                                 | Incorporation;  Authorization                          |   | 12 |
| 3.2                                                                 | Capitalization;  Structure                             |   | 13 |
| 3.3                                                                 | Sufficiency  of Assets                                 |   | 14 |
| 3.4                                                                 | Financial  Statements; SEC Reports; Absence of Changes |   | 14 |
| 3.5                                                                 | Undisclosed  Liabilities; Material Adverse Effect      |   | 16 |
| 3.6                                                                 | Litigation;  Orders                                    |   | 17 |
| 3.7                                                                 | Compliance  with Laws; Permits                         |   | 17 |
| 3.8                                                                 | Contracts                                              |   | 18 |
| 3.9                                                                 | Real  Property                                         |   | 18 |
| 3.10                                                                | Taxes                                                  |   | 18 |
| 3.11                                                                | ERISA                                                  |   | 20 |
| 3.12                                                                | Environmental  Matters                                 |   | 23 |
| 3.13                                                                | Intellectual  Property                                 |   | 23 |
| 3.14                                                                | Brokers,  Finders                                      |   | 25 |
| 3.15                                                                | Labor  Matters                                         |   | 25 |
| 3.16                                                                | Insurance                                              |   | 25 |
| 3.17                                                                | Company  Information                                   |   | 25 |
| 3.18                                                                | Opinion  of Financial Advisor                          |   | 25 |
| 3.19                                                                | Required  Vote of the Company Stockholders             |   | 26 |
| 3.20                                                                | Required  Consents                                     |   | 26 |
| 3.21                                                                | Affiliate  Transactions                                |   | 26 |
|                                                                |                                                   |   |   |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND  MERGER SUB |                                                   |   |
| 4.1                                                                 | Incorporation;  Authorization                          |   | 26 |
| 4.2                                                                 | Litigation                                             |   | 27 |
| 4.3                                                                 | Financial  Capability                                  |   | 28 |
| 4.4                                                                 | Interim  Operations of Merger Sub                      |   | 28 |
| 4.5                                                                 | Solvency of the Company Following the Merger           |   | 28 |

 

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| 4.6                                                                 | Proxy  Statement Information                                 |   | 28     |
|---------------------------------------------------------------------|--------------------------------------------------------------|--------|--------|
| 4.7                                                                 | Brokers,  Finders                                            |   | 28     |
|                                                                |                                                         |   |   |
| ARTICLE V COVENANTS OF THE COMPANY AND PARENT                       |                                                         | 29     |
| 5.1                                                                 | Investigation  of Business; Access to Properties and Records |   | 29     |
| 5.2                                                                 | Agreement  to Cooperate                                      |   | 29     |
| 5.3                                                                 | Further  Assurances                                          |   | 30     |
| 5.4                                                                 | Conduct  of Business                                         |   | 31     |
| 5.5                                                                 | Public  Announcements                                        |   | 33     |
| 5.6                                                                 | Indebtedness                                                 |   | 34     |
| 5.7                                                                 | Directors’  and Officers’ Indemnification          |   | 34     |
| 5.8                                                                 | Shareholder  Approval                                        |   | 35     |
| 5.9                                                                 | Restrictions  on Parent and the Company                      |   | 35     |
| 5.10                                                                | Merger  Sub                                                  |   | 35     |
| 5.11                                                                | Acquisition  Proposals                                       |   | 35     |
| 5.12                                                                | Notice  of Developments                                      |   | 36     |
| 5.13                                                                | State  Takeover Laws                                         |   | 37     |
| 5.14                                                                | Exchange  De-listing                                         |   | 37     |
| 5.15                                                                | Rule 16b-3                                              |   | 37     |
| 5.16                                                                | Shareholder  Litigation                                      |   | 37     |
| 5.17                                                                | Benefit  Plans                                               |   | 37     |
|                                                                |                                                         |   |   |
| ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO  CLOSE    |                                                         | 38     |
| 6.1                                                                 | Company  Shareholder Approval                                |   | 38     |
| 6.2                                                                 | No  Injunction                                               |   | 38     |
|                                                                |                                                         |   |   |
| ARTICLE VII CONDITIONS OF PARENT’S OBLIGATION TO CLOSE         |                                                         | 38     |
| 7.1                                                                 | Covenants                                                    |   | 38     |
| 7.2                                                                 | Representations  and Warranties                              |   | 38     |
| 7.3                                                                 | Certificate                                                  |   | 38     |
| 7.4                                                                 | Consents                                                     |   | 38     |
| 7.5                                                                 | Payoff  Letters                                              |   | 38     |
|                                                                |                                                         |   |   |
| ARTICLE VIII CONDITIONS TO THE COMPANY’S OBLIGATIONS TO  CLOSE |                                                         | 39     |
| 8.1                                                                 | Covenants                                                    |   | 39     |
| 8.2                                                                 | Representations  and Warranties                              |   | 39     |
| 8.3                                                                 | Certificates                                                 |   | 39     |
| 8.4                                                                 | Merger  Consideration and Other Payments                     |   | 39     |
|                                                                |                                                         |   |   |
| ARTICLE IX TERMINATION                                              |                                                         | 39     |
| 9.1                                                                 | Termination                                                  |   | 39     |
| 9.2                                                                 | Procedure  and Effect of Termination                         |   | 40     |
| 9.3                                                                 | Limitation  on Parent Liability                              |   | 41     |
|                                                                |                                                         |   |   |
| ARTICLE X MISCELLANEOUS                                             |                                                         | 41     |
| 10.1                                                                | Notices                                                      |   | 41     |
| 10.2                                                                | Governing Law                                                |   | 42     |

 

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| 10.3                       | Entire  Agreement                        |   | 42     |
|----------------------------|------------------------------------------|--------|--------|
| 10.4                       | Expenses                                 |   | 42     |
| 10.5                       | Counterparts                             |   | 43     |
| 10.6                       | Successors  and Assigns                  |   | 43     |
| 10.7                       | Enforcement                              |   | 43     |
| 10.8                       | Amendments  and Waivers                  |   | 44     |
| 10.9                       | No  Implied Representation; Non-Survival |   | 44     |
| 10.10                      | Construction  of Certain Provisions      |   | 44     |
| 10.11                      | Headings                                 |   | 45     |
| 10.12                      | Knowledge                                |   | 45     |
| 10.13                      | Third-party  Beneficiaries               |   | 45     |
| 10.14                      | Partial  Invalidity                      |   | 45     |
| 10.15                      | Waiver  of Jury Trial                    |   | 45     |
|                       |                                     |   |   |
| **SCHEDULES**              |                                     |   |
| Disclosure Schedule        |                                     |   |
| Parent Disclosure Schedule |                                     |   |
|                       |                                     |   |
| **EXHIBITS**               |                                     |   |   |
| Exhibit A:            | Officers of Surviving  Corporation       |   |   |
| Exhibit B:            | Required Consents                        |   |   |
| Exhibit C:            | Payoff Letters                           |   |   |

 

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**AGREEMENT AND PLAN OF MERGER**

** **

THIS AGREEMENT AND PLAN OFMERGER (this “Agreement”), dated as of August [16], 2009, is by and amongJack Henry & Associates, Inc., a Delaware corporation (“Parent”), Peachtree Acquisition Corporation, aDelaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), andGoldleaf Financial Solutions, Inc., a Tennessee corporation (“Company”).

 

WHEREAS, the respectiveBoards of Directors of the Company, Parent and Merger Sub have determined toengage in a business combination transaction on the terms and subject to theconditions stated herein;

 

WHEREAS, the respectiveBoards of Directors of Parent, Merger Sub and the Company have approved thisAgreement, and deem it advisable and in the best interests of their respectiveshareholders to consummate the merger of Merger Sub with and into the Companyon the terms and conditions set forth herein (the “Merger”) whereby****the Company would be the surviving entity;

 

WHEREAS, the Board ofCompany has recommended that this Agreement be adopted by the Company’s shareholders;

 

WHEREAS, upon theconsummation of the Merger, each issued and outstanding share of common stock,no par value, of the Company (the “Company Common Stock”) will be convertedinto the right to receive $0.98 per share in cash, upon the terms and subjectto the conditions of this Agreement;

 

NOW, THEREFORE, inconsideration of and reliance upon the premises and the representations,warranties, covenants and agreements contained in this Agreement, and for othergood and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, and intending to be legally bound hereby, the parties heretoagree as follows:

 

**ARTICLE  ICERTAIN DEFINITIONS**

** **

1.1           Definitions.  As used in this Agreement the following termsshall have the following respective meanings:

 

“**Acquisition Proposal**” shall mean any bona fide writtenproposal, other than the Merger, regarding, (i) any merger, consolidation,share exchange, business combination, recapitalization, reorganization,liquidation, dissolution or other similar transaction or series of relatedtransactions involving the Company or any of its Subsidiaries as a result ofwhich any Person would acquire the securities or assets described in either ofclauses (ii) or (iii) below; (ii) any direct or indirectpurchase or sale, lease, exchange, transfer or other disposition of theconsolidated assets (including stock of the Company’s Subsidiaries) of theCompany and its Subsidiaries, taken as a whole, constituting 10% or more of thetotal consolidated assets of the Company and its Subsidiaries, taken as awhole, or accounting for 10% or more of the total consolidated revenues of theCompany and its Subsidiaries, taken as a whole, in any one 

 

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transactionor in a series of transactions; or (iii) any direct or indirect purchaseor sale of or tender offer, exchange offer or any similar transaction or seriesof related transactions engaged in by any Person involving 10% or more of theoutstanding shares of Company Common Stock.

 

“**Affiliate**” shall mean, with respect to any Person, any otherPerson, directly or indirectly, controlling, controlled by or under commoncontrol with such first Person.  A Personshall be deemed to control another Person if such first Person possesses,directly or indirectly, the power to direct or to cause the direction of themanagement and policies of such other Person, whether through the ownership ofvoting securities, by contract or otherwise.

 

“**Agreement**” shall have the meaning set forth in the Preamble.

 

“**AlogentNotes**” shall mean those certain promissory notes with an aggregateoriginal principal amount of $7,000,000, delivered to former shareholders ofAlogent Corporation, and having a 24 month term and a 7.0% annual interestrate, and convertible, at the option of the holder, into shares of CompanyCommon Stock at a conversion price of $4.50 per share.

 

“**Articles of Merger**” shall have the meaning set forth in Section 2.2.

 

“**Audited Financial Statements**” shall have the meaning set forthin Section 3.4(a).

 

“**Balance Sheet**” shall have the meaning set forth in Section 3.4(a).

 

“**Board ofDirectors**” shall mean, with respect to any Person, the board ofdirectors of such person.

 

“**Business Condition**” shall mean, with respect to any Person,the condition (business, financial or otherwise), assets and results ofoperations of such Person and its Subsidiaries taken as a whole.

 

“**Certificate**” shall mean, with respect to shares of CompanyCommon Stock, certificates that, immediately prior to the Effective Time,represented any such shares, and with respect to Company Options, theappropriate corresponding documentation that, immediately prior to theEffective Time, represented such Company Options.

 

“**Closing**” shall have the meaning set forth in Section 2.3.

 

“**Closing Date**” shall have the meaning set forth in Section 2.3.

 

“**Code**” shall mean the Internal Revenue Code of 1986, asamended.

 

“**Common Stock Merger Consideration**” shall have the meaning setforth in Section 2.7(a).

 

“**Company**” shall have the meaning set forth in the Preamble.

 

“**Company Common Stock**”****shall have the meaning setforth in the Recitals.

 

“**Company Equity Incentive Plans**” shall have the meaning setforth in Section 2.8(a).

 

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“**CompanyIntellectual Property**” shall have the meaning set forth in Section 3.13(b).

 

“**Company Options**” shall have the meaning set forth in Section 2.8(a).

 

“**Company Permits**” shall have the meaning set forth in Section 3.7(b).

 

“**Company Plans**” shall have the meaning set forth in Section 3.11(a).

 

“**Company Required Governmental Approvals**” shall have themeaning set forth in Section 3.1(d).

 

“**Company Shareholder Approval**” shall have the meaning set forthin Section 3.1(b).

 

“**Confidentiality Agreement**” shall have the meaning set forth isSection 5.1(b).

 

“**Credit Facility**” shall mean the Company’s Second Amended andRestated Credit Agreement with Bank of America, N.A., Wachovia Bank, N.A., andThe People’s Bank of Winder, dated November 30, 2006, as amended on January 17,2008, December 24, 2008, and February 18, 2009.

 

“**DGCL**” shall mean the Delaware General Corporation Law.

 

“**Disclosure Schedule**” shall have the meaning set forth in Article III.

 

“**Effective Time**” shall have the meaning set forth in Section 2.2.

 

“**Employee Benefit Plan**” shall mean each “employee benefit plan”within the meaning of Section 3(3) of ERISA.

 

“**Encumbrance**”****shall mean any mortgage, pledge, hypothecation,assignment, deposit arrangement, encumbrance, lien (statutory or other),charge, or preference, priority or other security interest or preferentialarrangement of any kind or nature whatsoever (including any conditional sale orother title retention agreement) and any financing lease having substantiallythe same economic effect as any of the foregoing.

 

“**End Date**”shall have the meaning set forth in Section 9.1(b).

 

“**Environmental Laws**” shall mean all Laws relating to pollution,or protection of human health from Hazardous Materials or the environment(including, ambient air, surface water, groundwater, land surface or subsurfacestrata), including Laws relating to emissions, discharges, releases orthreatened releases of Hazardous Materials into the environment, or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage,disposal, transport or handling of Hazardous Materials, as well as allauthorizations, codes, decrees, injunctions, judgments, licenses, notices,orders, permits, plans or regulations issued, entered, promulgated or approvedthereunder.

 

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“**Environmental Permits**” shall mean any permit, approval,license or other authorization required for the Company to conduct its businessunder or issued pursuant to any applicable Environmental Law.

 

“**ERISA**” shall mean the Employee Retirement Income Security Actof 1974, as amended.

 

“**ERISA Affiliate**” shall mean, with respect to any entity, tradeor business, any other entity, trade or business that is, or was at therelevant time, a member of a group described in Section 414(b), (c), (m) or(o) of the Code or Section 4001(b)(1) of ERISA that includes orincluded the first entity, trade or business, or that is, or was at therelevant time, a member of the same “controlled group” as the first entity,trade or business pursuant to Section 4001(a)(14) of ERISA.

 

“**Exchange Act**” shall mean the Securities Exchange Act of 1934,as amended.

 

“**Financial Statements**” shall have the meaning set forth in Section 3.4(a).

 

“**Foreign Plans**” shall have the meaning set forth in Section 3.11(d).

 

“**GAAP**” shall mean United States generally accepted accountingprinciples, as in effect from time to time, consistently applied with pastpractice.

 

“**Governmental Authority**” shall have the meaning set forth in Section 3.1(d).

 

“**Governmental Order**” shall have the meaning set forth in Section 3.6.

 

“**Hazardous Materials**” shall mean (i) any petroleum orpetroleum products, radioactive materials, asbestos that is friable, ureaformaldehyde foam insulation, transformers or other equipment that containdielectric fluid containing levels of poly-chlorinated biphenyls, and radon gasat levels exceeding the EPA guidance level of four picocuries per liter, and (ii) anychemicals, materials or substances defined as “hazardous materials,” “extremelyhazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxicpollutants” or words of similar import under any applicable Environmental Law.

 

“**InformationTechnology Assets**” means the computer software, firmware,middleware, servers, systems, networks, workstations, data communicationslines, and all other information technology equipment, used by and under thecontrol of the Company and its Subsidiaries.

 

“**Intellectual Property**” means all United States intellectualproperty including without limitation all (i) trademarks, service marksand trade dress; (ii) patents and inventions and discoveries, whetherpatentable or not; (iii) Trade Secrets; (iv) copyrights; (v) alldisclosures, applications and registrations for any of the foregoing; and (vi) allextensions, modifications, renewals, divisions, continuations,continuations-in-part, reissues, restorations and reversions related to any ofthe foregoing

 

“**IntellectualProperty Contract**” means any material contract to which the Companyor any of its Subsidiaries is a party that grants to the Company or any of itsSubsidiaries a right to 

 

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usethe Intellectual Property of another Person, other than licenses for“off-the-shelf,” “shrinkwrap,” “click-wrap” or otherwise generally availablesoftware that has not been modified or customized for the Company or itsSubsidiaries.

 

“**InternalControls**” shall have the meaning set forth in Section 3.4(e).

 

“**InterimFinancial Statements**” shall have the meaning set forth in Section 3.4(a).

 

“**Knowledge of the Company**” shall have the meaning set forth in Section 10.12.

 

“**Knowledge ofthe Parent**” shall have the meaning set forth in Section 10.12.

 

“**Law**” shall mean any United States federal, state or local orforeign law, statute, standard, ordinance, code, rule, regulation, or anysimilar provision having the force or effect of law.

 

“**Lease**”and “Leases” shall have the meaning set forth in Section 3.9(b).

 

“**Leased Real Property**” shall have the meaning set forth in Section 3.9(b).

 

“**Letter of Transmittal**” shall have the meaning set forth in Section 2.9(b).

 

“**Liabilities**” shall have the meaning set forth in Section 3.5.

 

“**Material Adverse Effect**” shall mean an effect or change thatindividually or in the aggregate, as applicable, has a material adverse effect (A) onthe Business Condition of the Company and its Subsidiaries taken as a whole(that is not cured prior to Closing), other than the following changes oreffects: (i) those generally affecting the industries in which the Companyand its Subsidiaries operate, or the economy or the general financial, creditor securities markets in the United States, including effects on suchindustries, economy or markets resulting from (a) any regulatory andpolitical conditions or developments, (b) any outbreak or escalation ofhostilities, declared or undeclared acts of war or terrorism; or (c) anypandemic or natural disaster; (ii) those reflecting or resulting fromchanges or proposed changes in Law or GAAP (or the interpretation thereof)generally applicable to companies engaged in the industries in which theCompany and its Subsidiaries operate; (iii) those resulting from actionsor omissions of the Company or any of its Subsidiaries which Parent hasrequested or to which Parent has consented, in each case in writing; (iv) thosewhich have resulted proximately from the announcement of the Merger or thisAgreement or the transactions contemplated hereby (including any loss ordeparture of employees, or adverse developments in relationships withcustomers, suppliers, distributors, financing sources, strategic partners orother business partners, to the extent but only to the extent so resulting); or(v) any decline in the market price or trading volume of the CompanyCommon Stock or any failure, in and of itself, of the Company to meet any internalor public projections, forecasts or estimates of revenues or earnings; or (B) onthe ability of the Company to consummate timely the transactions contemplatedby this Agreement.

 

“**Material****Contracts**”shall have the meaning set forth in Section 3.8.

 

“**Merger**” shall have the meaning set forth in the Recitals.

 

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“**Merger Sub**” shall have the meaning set forth in the Preamble.

 

“**Merger Sub Common Stock**” shall have the meaning set forth in Section 2.7(c).

 

“**Obligations**” shall mean the obligations described in the****Credit Facility and the Alogent Notes.

 

“**Parent**” shall have the meaning set forth in the Preamble.

 

“**Parent Disclosure Schedule**” shall have the meaning set forthin Article IV.

 

“**Parent Required Governmental Approvals**” shall have the meaningset forth in Section 4.1(d).

 

“**Paying Agent**” shall have the meaning set forth in Section 2.9(a).

 

“**Person**” shall mean any individual, corporation, partnership,limited liability company, joint venture, trust, unincorporated organization,or other form of business or legal entity.

 

“**Plans**” shall have the meaning set forth in Section 3.11(a).

 

“**Proxy Statement**” shall have the meaning set forth in Section 5.8.

 

“**Qualified Plans**” shall have the meaning set forth in Section 3.11(a).

 

“**SEC**” shall mean the Securities and Exchange Commission.

 

“**SEC Reports**” shall have the meaning set forth in Section 3.4(b).

 

“**Securities Act**” shall mean the Securities Act of 1933, asamended, and the rules and regulations promulgated thereunder.

 

“**Significant Employee**” shall have the meaning set forth in Section 5.4(b)(viii).

 

“**SpecialMeeting**”****shall have themeaning set forth in Section 5.8.

 

“**Subsidiary**” or “**Subsidiaries**”shall mean any corporation, partnership, joint venture or other legal entity ofwhich the Company (either alone or through or together with any otherSubsidiary thereof), owns, directly or indirectly, stock or other equityinterests the holders of which are generally entitled to more than 50% of thevote for the election of the board of directors or other governing body of suchcorporation or other legal entity.

 

“**SuperiorProposal**” shall mean an Acquisition Proposal (except that solely forpurposes of the definition of “Superior Proposal” all references in thedefinition of “Acquisition Proposal” to “10%” shall be deemed to be referencesto 25%) that the Board of Directors of the Company believes in good faith,after consultation with its legal and financial advisors, (i) ifconsummated would be more favorable to the Company or its shareholders from afinancial point of view than the transactions contemplated by this Agreement,taking into account the terms and conditions of such a proposal and likelihoodand timing of consummation thereof and all legal, financial, 

 

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regulatoryand other aspects thereof, the identity of the Person making the proposal, andthe Company’s liability to pay the fee set forth in Section 9.2(b) hereofand (ii) is reasonably capable of being consummated on the terms soproposed, taking into account all financial, regulatory, legal and otheraspects of such proposal.

 

“**Surviving Corporation**” shall have the meaning set forth in Section 2.1.

 

“**Tax Return**” shall have the meaning set forth in Section 3.10(c).

 

“**Taxes**” shall have the meaning set forth in Section 3.10(b).

 

“**TBCA**” shall mean the Tennessee Business Corporation Act.

 

“**Tennessee Secretary**” shall have the meaning set forth in Section 2.2.

 

“**TradeSecrets**” shall mean information, without regard to form, including,but not limited to, technical, nontechnical or financial data, a formula,pattern, compilation, program, device, method, technique, process, or planthat: (A) derives independent economic value, actual or potential, fromnot being generally known to, and not being readily ascertainable by propermeans by other persons who can obtain economic value from its disclosure oruse; and (B) is the subject of efforts that are reasonable under thecircumstances to maintain its secrecy.

 

**ARTICLE  IITHE MERGER**

** **

2.1           The Merger.  At the Effective Time, and subject to andupon the terms and conditions of this Agreement and in accordance with theTBCA, Merger Sub shall be merged with and into the Company and the separatecorporate existence of Merger Sub shall cease. The Company shall continue as the surviving corporation in the Merger(sometimes referred to as the “Surviving Corporation”) under the laws of theState of Tennessee, and as of the Effective Time shall be a wholly-ownedsubsidiary of Parent.

 

2.2           Effective Time.  As soon as practicable after the satisfactionor waiver of the conditions set forth in Articles VI, VII and VIII, but on orprior to the Closing Date, the Company, Parent and Merger Sub will cause thearticles of merger with respect to the Merger meeting the applicablerequirements of the TBCA (“Articles of Merger”) to be executed and filed withthe Secretary of State of the State of Tennessee in accordance with theprovisions of the TBCA.  The Merger shallbecome effective at such time as the Articles of Merger have been duly filedwith the Secretary of State of the State of Tennessee (the “TennesseeSecretary”), or at such later time as is agreed between the parties andspecified in the Articles of Merger (“Effective Time”).  If the Tennessee Secretary requires anychanges in the Articles of Merger as a condition to filing or issuing acertificate to the effect that the Merger is effective, Merger Sub, Parentand/or the Company shall execute any necessary document incorporating such changes,provided such changes are not inconsistent with and do not result in anymaterial change in the terms of this Agreement.

 

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2.3           Closing of the Merger.  Unless this Agreement shall have beenterminated and the transactions herein contemplated shall have been abandonedpursuant to Article IX, and subject to the satisfaction or waiver of eachof the conditions contained in Articles VI, VII and VIII, the closing of theMerger (“Closing”) shall take place at 10:00 a.m., Central time, on thesecond business day after satisfaction or waiver of the conditions set forth inArticles VI, VII and VIII (the “Closing Date”), at the offices of HarwellHoward Hyne Gabbert & Manner, P.C., 315 Deaderick Street, Nashville,Tennessee, unless another time, date or place is agreed to in writing by theparties hereto.

 

2.4           Effects of the Merger; FurtherActions.

 

(a)           From and after the Effective Time, the Merger shall havethe effects set forth in the Articles of Merger and in the applicableprovisions of the TBCA.  Without limitingthe generality of the foregoing, at the Effective Time, all the property,rights, privileges, powers and franchises of the Company and Merger Sub shallvest in the Surviving Corporation following the Merger, and all debts,liabilities and duties of the Company and Merger Sub shall become the debts,liabilities and duties of the Surviving Corporation following the Merger.

 

(b)           If at any time after the Effective Time any further actionis necessary to vest in the Surviving Corporation the title to all property orrights of Merger Sub or the Company, the authorized officers and directors ofthe Surviving Corporation are fully authorized in the name of Merger Sub or theCompany, as the case may be, to take, and shall take, any and all such lawfulaction.

 

(c)           At the Effective Time, by virtue of the Merger and withoutany action on the part of the Company, Parent, Merger Sub, or the holdersthereof, all shares of Company Common Stock shall no longer be outstanding andshall automatically cease to exist and each holder of a Certificate shall ceaseto have any rights with respect thereto, except the right to receive for eachshare of Company Common Stock, the Common Stock Merger Consideration inaccordance with Section 2.7(a). Notwithstanding anything to the contrary herein, upon surrender of anyCertificate representing fractional shares of Company Common Stock, the holderthereof shall be paid the cash value of such fraction, which shall be equal tosuch fraction multiplied by the Common Stock Merger Consideration.

 

2.5           Charter and Bylaws.  At the Effective Time:

 

(a)           The Charter of the Merger Sub, as in effect immediatelyprior to the Effective Time, shall be the Charter of the Surviving Corporationuntil thereafter changed or amended as provided therein or by applicable Law.

 

(b)           The bylaws of the Merger Sub, as in effect immediatelyprior to the Effective Time, shall be the bylaws of the Surviving Corporationuntil thereafter changed or amended as provided therein or by applicable Law.

 

2.6           Board and Officers of theSurviving Corporation.  At theEffective Time:

 

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(a)           The directors of Merger Sub immediately prior to theEffective Time shall be the initial directors of the Surviving Corporationfollowing the Merger, each to hold office until the earlier of suchindividual’s resignation or removal or until a successor is duly elected andqualified, as the case may be.

 

(b)           The officers of the Surviving Corporation following theMerger shall be the persons set forth on Exhibit A attached hereto,each to hold office until the earlier of such individual’s resignation orremoval or until a successor is duly elected and qualified, as the case may be.

 

2.7           Effect on Capital Stock.  As of the Effective Time, by virtue of theMerger and without any action on the part of the Company, Parent, Merger Sub orany holder of any shares of Company Common Stock or any shares of capital stockof Merger Sub:

 

(a)           Conversion of Company Common Stock.  Subject to the terms and upon the conditionsherein, each share of Company Common Stock issued and outstanding immediatelyprior to the Effective Time (other than shares to be cancelled in accordancewith Section 2.7(b)) shall be converted into the right to receive anamount equal to $0.98 in cash without interest (“Common Stock MergerConsideration”).

 

(b)           Cancellation of Company-Owned Stock and Parent-Owned Stock.  Each share of Company Common Stock that isowned by Parent, Merger Sub or the Company (or any of their respective director indirect wholly-owned Subsidiaries) issued and outstanding immediately priorto the Effective Time (i) shall automatically be cancelled and retired,and (ii) shall cease to exist, and no consideration shall be delivered inrespect thereto.

 

(c)           Common Stock of Merger Sub.  Each share of common stock, par value $0.0001per share, of Merger Sub (“Merger Sub Common Stock”) issued and outstandingimmediately prior to the Effective Time shall be converted into one validlyissued, fully paid and nonassessable share of common stock of the SurvivingCorporation.

 

(d)           Restricted Company Common Stock.  Except as separately agreed to in writingprior to Closing by Parent and any Person holding restricted shares of CompanyCommon Stock, all such restrictions which remain in effect immediately prior tothe Effective Time shall immediately lapse and such Company Common Stock willbe treated for all purposes in accordance with Section 2.7(a) hereof.

 

2.8           Company Options.  Subject to and upon the terms and conditionsherein, all stock options (the “Company Options”) granted under a stock optionplan set forth on Section 3.2 of the Disclosure Schedule, and individualstock option grants that are not governed by the terms of a stock option planbut that were made pursuant to a single form of option grant, (together the“Company Equity Incentive Plans”), or otherwise, which remain outstanding andunvested immediately prior to the Effective Time shall immediately vest andbecome exercisable pursuant to the provisions of the Company Equity IncentivePlans at the Effective Time. Pursuant to the terms hereof, all Company Optionsshall be immediately cancelled concurrently with the Effective Time and eachholder of a Company Option that is outstanding immediately prior to 

 

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the Effective Time shall be entitled to receive an amount in cash equalto the product of (i) the number of shares (or fraction thereof) ofCompany Common Stock subject to such Company Option at the time of suchcancellation, multiplied by (ii) the positive difference between (A) theCommon Stock Merger Consideration, and (B) the per share exercise price ofsuch Company Option.  In the event thatthe per share exercise price of a Company Option exceeds the Common StockMerger Consideration, such Company Option shall be cancelled pursuant to theterms hereof concurrent with the Effective Time without payment therefor.

 

2.9           Exchange Procedures.

 

(a)           Paying Agent. Prior to the Effective Time, for the benefit of holders of CompanyCommon Stock and Company Options, Parent shall designate, or shall cause to bedesignated (pursuant to an agreement in form and substance reasonablyacceptable to Parent and the Company), a bank or trust company reasonablyacceptable to the Company to act as agent for the payment of the cash amountscontemplated pursuant to Section 2.7(a) and Section 2.8 uponsurrender of Certificates in accordance with this Article II (“PayingAgent”), from time to time at or after the Effective Time. Prior to theEffective Time, Parent shall deposit, or cause Merger Sub to deposit, with thePaying Agent cash in the amounts sufficient for the payment of the aggregateamounts payable pursuant to Section 2.7(a) and Section 2.8.

 

(b)           Exchange Procedure. Promptly following the Effective Time, Parent shall cause the PayingAgent to mail to each holder of record of a Certificate (i) a form ofletter of transmittal (the “Letter of Transmittal”) in customary form (with norepresentations or warranties other than with respect to ownership) thatspecifies that delivery shall be effected and risk of loss and title to theCertificates shall pass only upon proper delivery of the Certificates to thePaying Agent, and (ii) instructions for use in effecting the surrender ofCertificates in exchange for the amount of cash such holder shall be entitledto receive pursuant to Section 2.7(a) and Section 2.8. Followingthe Closing, upon surrender of a Certificate for cancellation to the PayingAgent, together with such Letter of Transmittal, duly completed and validlyexecuted, and such other documents as reasonably may be required by the PayingAgent consistent with this Section 2.9, the holder of such Certificateshall be entitled to receive in exchange therefor the amount of cash into whichthe shares or options formerly represented by such Certificate shall have beenconverted pursuant to Section 2.7(a) and Section 2.8, and theCertificate so surrendered shall forthwith be cancelled.  Parent’s agreement with the Paying Agentshall provide that, upon surrender of a Certificate for cancellation to thePaying Agent, any holder of shares of Company Common Stock (including sharesissuable upon the exercise of Company Options) shall be entitled to receivepayment of (1) the amount of cash such holder shall be entitled to receivepursuant to Section 2.7(a) in respect of the shares of Company CommonStock, and (2) the amount of cash such holder shall be entitled to receivepursuant to Section 2.8(a) in respect of any Company Options held bysuch holder on the Closing Date.

 

(c)           Stock Transfer Books.  At the Effective Time, the stock transferbooks of the Company shall be closed, and there shall be no furtherregistration of transfers on the stock transfer books of the SurvivingCorporation of the shares of Company Common 

 

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Stock or Company Options that were outstandingimmediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to theSurviving Corporation or the Paying Agent for transfer or for any other reason,they shall be cancelled and exchanged as provided in this Article II.

 

(d)           Unclaimed Funds. All funds held by the Paying Agent for payment to the holders ofunsurrendered Certificates and unclaimed at the end of one year after theEffective Time shall be returned to Parent, after which time any holder ofunsurrendered Certificates shall look as a general creditor only to theSurviving Corporation for payment of such funds to which such holder may bedue, subject to applicable Law.  None ofParent, Merger Sub, the Company or the Paying Agent shall be liable to anyPerson in respect of any cash delivered to a public official pursuant to anyapplicable abandoned property, escheat, or similar Law.

 

(e)           Lost Documents. If any Certificate shall have been lost, stolen or destroyed, upon themaking of an affidavit of that fact by the Person claiming such Certificate tobe lost, stolen or destroyed and, if required by the Surviving Corporation, theposting by such person of a bond, in such reasonable amount as the SurvivingCorporation may direct, as indemnity against any claim that may be made againstit with respect to such Certificate, the Paying Agent shall pay in respect ofsuch lost, stolen or destroyed Certificate the amount of cash contemplatedpursuant to Section 2.7(a) or Section 2.8, as the case may be.

 

(f)            Withholding Rights.  Parent, the Surviving Corporation or thePaying Agent shall be entitled to deduct and withhold from the considerationotherwise payable pursuant to this Agreement to any holder of shares of CompanyCommon Stock and Company Options such amounts as Parent, the SurvivingCorporation or the Paying Agent is required to deduct and withhold with respectto the making of such payment under the Code, or any provision of U.S. state,local, or foreign tax Law.  To the extentthat amounts are so withheld and paid over to the appropriate taxing authorityby Parent, the Surviving Corporation or the Paying Agent, such withheld amountsshall be treated for all purposes of this Agreement as having been paid to theholder of the shares of Company Common Stock and Company Options in respect ofwhich such deduction and withholding was made by Parent, the SurvivingCorporation or the Paying Agent.

 

**ARTICLE  III**

** **

**REPRESENTATIONS AND WARRANTIES OF THE COMPANY**

** **

The Company herebyrepresents and warrants to Parent that, except as disclosed (i) to theextent it is reasonably apparent that such disclosure relates to therepresentations and warranties contained herein, in any report, schedule orform filed with, or furnished to, the SEC after December 31, 2007 andprior to August 1, 2009, and publicly available prior to the date of thisAgreement (other than any forward-looking disclosures set forth in any riskfactor section and any other disclosures included therein to the extent theyare primarily predictive, cautionary or forward-looking in nature), or (ii) inthe disclosure schedule dated as of the date of this Agreement delivered by theCompany to Parent (“Disclosure Schedule”):

 

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3.1           Incorporation; Authorization.

 

(a)           The Company is a corporation duly organized, validlyexisting and in good standing under the Laws of the jurisdiction of itsorganization.  Each of the Subsidiariesof the Company is duly organized, validly existing and, except as would not,individually or in the aggregate, be reasonably likely to have a MaterialAdverse Effect, in good standing under the Laws of the jurisdiction of itsorganization.  Each of the Company andits Subsidiaries has all requisite power and authority to own, lease andoperate its properties and assets and to carry on its business as it is nowbeing conducted, and is duly qualified to transact business in eachjurisdiction in which the nature of property owned or leased by it or theconduct of its business requires it to be so qualified, except where thefailure to be duly qualified to transact business, has not had or would not,individually or in the aggregate, be reasonably likely to have a MaterialAdverse Effect. True and complete copies of the Charter and bylaws, or otherorganizational documents (in each case, together with all amendments thereto)of the Company and each of its Subsidiaries have been delivered or madeavailable to Parent.  The Company and theSubsidiaries are not in material default or in violation of any provisions oftheir respective organizational documents.

 

(b)           The Company has all requisite corporate power andauthority to execute and deliver this Agreement, to perform its obligationshereunder and, subject to the approval of the shareholders of the Company asrequired by the TBCA (“Company Shareholder Approval”), to consummate thetransactions contemplated hereby.  Theexecution and delivery of this Agreement, the performance of the Company’sobligations hereunder and the consummation of the transactions contemplatedhereby have been duly and validly authorized by the Board of Directors of theCompany, and no other corporate proceedings or actions on the part of theCompany, the Board of Directors of the Company or the shareholders of theCompany are necessary to authorize the execution and delivery of thisAgreement, to perform the Company’s obligations hereunder and, except for theCompany Shareholder Approval, to consummate the transactions contemplatedhereby. This Agreement has been duly executed and delivered by the Company,and, assuming the due execution and delivery of this Agreement by Parent andMerger Sub, this Agreement constitutes the legal, valid and binding obligationof the Company, enforceable against the Company in accordance with its terms, exceptfor (i) the effect of any applicable bankruptcy, insolvency,reorganization, moratorium and similar Laws relating to or affecting the rightsof creditors generally and (ii) the effect of equitable principles ofgeneral application.

 

(c)           The execution, delivery and performance of this Agreementand the consummation of the transactions contemplated hereby will not (i) violateany provision of the Charter or bylaws, or similar organizational documents, ofthe Company or any of its Subsidiaries, (ii) violate or conflict with anyprovision of or result in the imposition of any lien upon or the creation of asecurity interest in any of the Company’s or any of its Subsidiaries’ assets orproperties, or (iii) violate or conflict with any Law to which the Companyor any of its Subsidiaries is subject, except as described in the DisclosureSchedule or for those that, in the case of clauses (ii) and (iii) above,would not have a Material Adverse Effect.

 

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(d)           No material registrations, filings, applications, notices,consents, approvals, orders, qualifications, authorizations or waivers arerequired to be made, filed, given or obtained by the Company or any of itsSubsidiaries with, to or from any foreign, federal, state, local or othergovernmental or administrative authority or regulatory agency, commission,department or other governmental or administrative subdivision, court, tribunalor body (each, a “Governmental Authority”) in connection with the execution anddelivery of this Agreement or the consummation of the transactions contemplatedhereby, except for (i) those set forth in the Disclosure Schedule, (ii) thosearising from the Exchange Act, (iii) the filing and recordation ofappropriate merger documents as required by the TBCA and other appropriatedocuments with the relevant Governmental Authorities of other states in whichthe Company is authorized to do business, (iv) applicable requirements ofthe Nasdaq Global Market, or (v) those that become applicable solely as aresult of the status or identity of Parent or its Affiliates (clauses (i) through(v) collectively, the “Company Required Governmental Approvals”).

 

(e)           The Board of Directors of the Company, at a meeting dulycalled and held, unanimously adopted resolutions that are in full force andeffect as of the date of this Agreement, (i) approving and declaringadvisable the Merger and this Agreement, (ii) declaring that the Mergerand this Agreement are fair and in the best interests of the Company’sshareholders, (iii) recommending that the Company’s shareholders approveand adopt this Agreement, and (iv) exempting, to the extent necessary,this Agreement and the transactions contemplated hereby from the restrictionsof the Tennessee Business Combination Act.

 

(f)            The only vote of the holders of any class or series ofcapital stock of the Company necessary to approve this Agreement, the Mergerand the other transactions contemplated hereby is the affirmative vote of theholders of a majority of the outstanding shares of Company Common Stock.

 

(g)           Dissenters’ rights under Chapter 23 of the TBCA are notavailable to the Company’s shareholders for the transactions contemplated bythis Agreement.

 

3.2           Capitalization; Structure.

 

(a)           The authorized capital stock of the Company consists of100,000,000 shares of Company Common Stock and 20,000,000 shares of CompanyPreferred Stock.  As of the date of thisAgreement, (i) 19,463,238****sharesof Company Common Stock are issued and outstanding (including 240,000 shares ofrestricted Company Common Stock described in (iii) below; (ii) noshares of Company Preferred Stock are issued and outstanding; (iii) 3,333,308shares of Company Common Stock have been reserved for issuance under theCompany Equity Incentive Plans, of which Company Options to purchase 2,528,156shares of Company Common Stock are currently outstanding and 240,000****shares of restricted Company Common Stockare currently outstanding; and (iv) 1,555,556 shares of Company CommonStock have been reserved for issuance pursuant to the Alogent Notes, of whichno shares of Company Common Stock are currently outstanding. The Company holds19,454****shares of its capital stockin its treasury.  Except as set forth inthis Section 3.2 or as set forth in the Disclosure Schedule, neither the 

 

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Company nor any of its Subsidiaries hasissued, granted or entered into any options, warrants, calls, commitments,securities, agreements or other rights of any kind to acquire, or anysecurities that, upon conversion, exchange or exercise would require or giveany Person the right to require the issuance, sale or transfer of, orobligations to issue, sell or transfer, shares of capital stock of any classof, or other debt obligations of or equity interests in, the Company or of anyof its Subsidiaries.

 

(b)           Section 3.2 of the Disclosure Schedule sets forth (i) eachof the Company’s Subsidiaries and the ownership interest of the Company in eachSubsidiary.  Except as otherwise set forthin the Disclosure Schedule, all of the outstanding shares of capital stock orother equity interests of each of the Company’s Subsidiaries have been dulyauthorized, have been validly issued and are fully paid and nonassessable, havenot been issued in violation of any preemptive rights, redemption rights orrepurchase rights and, at Closing, will be owned by the Company directly orindirectly, free and clear of all Encumbrances that would prevent anySubsidiary of the Company from conducting its business as of the Effective Timein substantially the same manner such businesses are conducted on the datehereof, or Encumbrances imposed by applicable securities laws.

 

(c)           Neither the Company nor any of its Subsidiaries has anyoutstanding bonds, debentures, notes or other obligations, the holders of whichhave the right to vote with the stockholders of the Company on any matter.

 

(d)           There are no stockholder agreements, voting trusts orother agreements to which the Company or any of its Subsidiaries is a partywith respect to the voting of any capital stock of the Company or any of itsSubsidiaries.

 

(e)           To the Knowledge of the Company, each Option (i) wasgranted in compliance with all applicable Laws and all of the terms andconditions of the Company Plan under which it was issued, (ii) has anexercise price per share of Company Common Stock equal to or greater than thefair market value of a share of Company Common Stock on the date of such grant,(iii) has a grant date identical to the date on which the Company’s Boardof Directors or committee thereof actually awarded such Option, and (iv) qualifiesfor the tax and accounting treatment afforded to such Option in the Company’sTax Returns and the financial statements included in the Company’s SEC Reports.

 

3.3           Sufficiency of Assets.  The assets of the Company and itsSubsidiaries constitute assets sufficient in all material respects to conductthe business of the Company and its Subsidiaries as conducted as of the date ofthis Agreement.

 

3.4           Financial Statements;SEC Reports; Absence of Changes.

 

(a)           Prior to the date hereof, the Companyhas made available (i) the Company’s Form 10-K for 2008 including anaudited consolidated balance sheet of the Company and its Subsidiaries as of December 31,2008 (“Balance Sheet”), and the related audited consolidated statements ofoperations, shareholders’ equity and cash flows for the year ended December 31,2008 (including the notes thereto) (the “Audited 

 

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Financial Statements”) and (ii) theCompany’s Form 10-Q for the quarter ended March 31, 2009 includingthe unaudited consolidated balance sheet of the Company and its Subsidiaries asof March 31, 2009 and the related unaudited consolidated statements ofoperations, shareholders’ equity and cash flows for the quarter ended March 31,2009 (the “Interim Financial Statements” and together with the AuditedFinancial Statements, the “Financial Statements”).  The Financial Statements have been prepared,in all material respects, in conformity with the practices consistently appliedby the Company and its Subsidiaries in the immediately preceding fiscal periods(except as may be indicated in the notes thereto to the contrary or, in thecase of the Interim Financial Statements, as permitted by the instructions to Form 10-Qpromulgated by the SEC) and present fairly, in all material respects, theconsolidated financial position, cash flows and results of operations of theCompany and its Subsidiaries, for the periods and as of the dates set forththerein, in each case in conformity with GAAP, subject, in the case of theInterim Financial Statements, to normal year-end audit adjustments.  The books and records of the Company and itsSubsidiaries are being maintained in accordance with GAAP and all otherapplicable legal and accounting requirements and reflect actual transactions.

 

(b)           Since January 1, 2007, the Company and itsSubsidiaries have filed or furnished, and will file or furnish after the dateof this Agreement, as applicable, all required reports, schedules, forms,certifications, and other documents required to be filed by them with the SECunder the Securities Act or the Exchange Act as the case may be (together withall exhibits and schedules thereto and documents incorporated therein byreference, the “SEC Reports”).  At thetime filed or to be filed after the date of this Agreement (or if amended orsuperseded by a subsequent filing, at the time of such subsequent filing) or declaredeffective, the SEC Reports (i) were or will be prepared in all materialrespects in accordance with the requirements of the Securities Act or theExchange Act, and in each case the published rules and regulations of theSEC thereunder, each as applicable to the SEC Reports, and (ii) did notand will not contain any untrue statement of a material fact or omit to state amaterial fact required to be stated therein or necessary in order to make thestatements therein, in light of the circumstances under which they were made,not misleading.

 

(c)           Since March 31, 2009, the Company and itsSubsidiaries have conducted the businesses of the Company and its Subsidiaries,taken as a whole, only in, and have not engaged in any material transactionother than according to, the ordinary and usual course of such businesses andthere has not been:

 

(i)            any material loss, damage or destruction to, or anymaterial interruption in the use of, the Company’s assets (whether or notcovered by insurance);

 

(ii)           any declaration, setting aside or payment of any dividendor other distribution in respect of the Company Common Stock;

 

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(iii)          any amendment to the charter or bylaws of the Company, orany recapitalization, reclassification of shares, stock split, reverse stocksplit or similar transaction;

 

(iv)          any changes of its methods of accounting or accountingpractices in any respect other than those required by GAAP;

 

(v)           any “off balance sheet” transaction;

 

(vi)          any material transaction or any other material action takenoutside the ordinary course of business or inconsistent with its pastpractices; and

 

(vii)         any agreement or commitment to take any of the actionsreferred to in clauses (i) through (vi) above.

 

(d)           (i) The Company has established and maintains disclosurecontrols and procedures (as defined in Rule 13a-15 under theExchange Act); (ii) such disclosure controls and procedures are designedto ensure that material information relating to the Company, including itsconsolidated Subsidiaries, is recorded or made known on a timely basis to theCompany’s principal executive officer and its principal financial officer byothers within those entities, particularly during the periods in which periodicreports required under the Exchange Act are being prepared; and (iii) suchdisclosure controls and procedures are currently effective in timely alertingthe Company’s principal executive officer and principal financial officer tomaterial information required to be included in the Company’s periodic reportsrequired under the Exchange Act.

 

(e)           (i) The Company and its Subsidiaries have establishedand maintained a system of internal control over financial reporting (asdefined in Rule 13a-15 under the Exchange Act (“Internal Controls”)and (ii) such Internal Controls are sufficient to provide reasonableassurance regarding the reliability of the Company’s financial reporting andpreparation of Company financial statements for external purposes in accordancewith GAAP.

 

(f)            There are no outstanding loans or extensions of creditmade by the Company or any of its Subsidiaries to any executive officer (asdefined in Rule 3b-7 of the Exchange Act) or director of the Company.  The Company has not, since the enactment ofthe Sarbanes-Oxley Act, taken any action prohibited by Section 402thereof.

 

3.5           Undisclosed Liabilities; MaterialAdverse Effect.  Except as set forthin Section 3.5 of the Disclosure Schedule, neither the Company nor any ofits Subsidiaries has any outstanding claims, liabilities, or indebtedness(whether accrued, absolute, contingent or otherwise, and whether due or tobecome due) (“Liabilities”), except Liabilities (i) disclosed in theFinancial Statements; (ii) incurred after the date of the InterimFinancial Statements in the ordinary course of business or in connection withthis Agreement or the Merger or the other transactions contemplated hereby; (iii) thathave been discharged or paid in full prior to the date hereof; (iv) thatare of a nature not required to be reflected in the consolidated financialstatements of the Company and its Subsidiaries prepared in accordance with GAAPconsistently applied; or (v) that, individually or in the aggregate, wouldnot be material to the Company and 

 

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its Subsidiaries taken as whole. Since the date of the Interim FinancialStatements, there has not occurred any circumstance or event that, individuallyor in the aggregate, would be reasonably likely to have a Material AdverseEffect.

 

3.6           Litigation; Orders.  Except as set forth in Section 3.6 ofthe Disclosure Schedule, there are no lawsuits; actions; administrative,arbitration or other proceedings; or governmental investigations pendingagainst the Company or any of its Subsidiaries. To the Knowledge of the Company, there are no lawsuits, actions or otherproceedings or governmental investigations threatened against the Company orany of its Subsidiaries that, as of the date of this Agreement, seek torestrain or prohibit or otherwise challenge the consummation, legality orvalidity of the transactions contemplated hereby. Except as set forth in theDisclosure Schedule there are no judgments or outstanding orders, injunctions,decrees, stipulations or awards (whether rendered by a Governmental Authorityor by an arbitrator (each a “Governmental Order”) against the Company or any ofits Subsidiaries.  Neither the Companynor any of its Subsidiaries is subject to any cease-and-desist or other Orderor enforcement action issued by, or is a party to any written agreement,consent agreement or memorandum of understanding with, or is party to anycommitment letter or similar undertaking to, or is subject to any Order ordirective by, or has been since January 1, 2007, a recipient of anysupervisory letter from, or has been ordered to pay any material civil moneypenalty by, or since January 1, 2007, has adopted any policies, proceduresor board resolutions at the request or suggestion of any Governmental Entity,in each case that currently restricts in any material respect the conduct ofits business, its credit or risk management policies, its management or itsbusiness, nor has the Company or any of its Subsidiaries been advised since January 1,2007, by any Governmental Entity that it is considering issuing, initiating,ordering or requesting any such order or supervisory letter.

 

3.7           Compliance with Laws; Permits.

 

(a)           Except as set forth in Section 3.7 of the DisclosureSchedule, to the Knowledge of the Company neither the Company nor any of itsSubsidiaries is in violation of, or has been given written notice of any materialviolation of, any Law.

 

(b)           Except as set forth in Section 3.7 of the DisclosureSchedule, the Company and its Subsidiaries have all permits, licenses,franchises, variances, exemptions, orders and other governmentalauthorizations, consents and approvals that are material to the Company and itsSubsidiaries that are necessary to conduct their businesses substantially aspresently conducted (collectively, “Company Permits”).  The Company and its Subsidiaries are not inmaterial violation of the terms of any Company Permits.

 

(c)           Neither the Company nor any of its Subsidiaries maintainsor conducts, or has maintained or conducted, any business, investment,operation or other activity in or with: (i) any country or person targetedby any of the economic sanctions of the United States of America administeredby the United States Treasury Department’s Office of Foreign Assets Control; or(ii) any person appearing on the list of Specially Designated Nationalsand Blocked Persons issued by the United States Treasury Department’s Office.

 

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3.8                                 Contracts.  Section 3.8 of the Disclosure Schedulecontains a list of all written or oral contracts, agreements, guarantees orother commitments to which the Company or any Subsidiary is a party and whichfall within any of the following categories: (i) “material contracts”within the meaning of Item 601(b)(10) of Regulation S-K promulgated by theSEC; (ii) joint venture, partnership and similar agreements;(iii) any contract with an employee of the Company or any Subsidiary that providesfor employment for a fixed term or for severance benefits upon termination;(iv) contracts that contain minimum noncontingent purchase conditions orrequirements in excess of $150,000 in fiscal year 2008 (or for fiscal year2009, $75,000 through June 30, 2009); (v) any agreement pertaining toany acquisition, divestiture, merger or acquisition of assets that containrepresentations, covenants, indemnities or other obligations, whether fixed orcontingent, that are on this date still in effect; (vi) any agreement prohibitingthe payment of dividends or distributions in respect of the capital stock ofthe Company or any of its Subsidiaries; and (vii) indentures, mortgages,promissory notes, loan agreements, guarantees of amounts in excess of $150,000,letters of credit or other agreements or instruments of the Company or anySubsidiary or commitments for the borrowing or the lending of amounts in excessof $150,000 by the Company or any Subsidiary. The contracts and other commitments described in this Section 3.8are collectively referred to as “Material Contracts,” whether or not listed inSection 3.8 of the Disclosure Schedule. All of the Material Contracts are valid and binding obligations of theCompany or a Subsidiary and, to the Knowledge of the Company, the valid andbinding obligation of each other party thereto, except as would not have aMaterial Adverse Effect.  Neither theCompany nor any Subsidiary nor, to the Knowledge of the Company, any otherparty thereto, is in violation of or in default in respect of, nor has thereoccurred any event or condition which with the passage of time or giving ofnotice (or both) could constitute a default under, any Company MaterialContract which, in any such case, would have a Material Adverse Effect.

 

3.9                                 Real Property.

 

(a)                                  Neither theCompany nor any of its Subsidiaries owns any real property.

 

(b)                                 Section 3.9of the Disclosure Schedule sets forth a list of the locations for the realproperties leased or subleased by the Company and its Subsidiaries (each, a“Lease” and collectively, the “Leases”; the property covered by Leases isreferred to herein as the “Leased Real Property”).  Each of the Leases constitutes the valid andlegally binding obligation of the Company or its Subsidiaries, enforceable inaccordance with its terms, except as enforceability may be limited byapplicable bankruptcy, insolvency, reorganization, moratorium, fraudulenttransfer and similar Laws of general applicability relating to or affectingcreditors’ rights or by general equity principles, or except as would not havea Material Adverse Effect.  Each Lease isin full force and effect, and the Company or a Subsidiary holds a validleasehold interest in the Leased Real Property, subject to the terms of theapplicable Lease.

 

3.10                           Taxes.

 

(a)                                  Except as setforth in the Disclosure Schedule: (i) the Company and its Subsidiarieshave duly and timely filed with the appropriate taxing authorities all materialTax Returns required to be filed by the Company and its Subsidiaries;(ii) such Tax 

 

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Returns were correct and complete in allmaterial respects, and (iii) the Company and its Subsidiaries(X) have timely paid in full all material Taxes of the Company and itsSubsidiaries shown on such Tax Returns, and (Y) have not given orrequested with respect to the Company and its Subsidiaries any waivers ofstatutes of limitations or extensions of time with respect to an assessment ofdeficiency in connection with any Taxes or Tax Returns, except as would not havea Material Adverse Effect. There are no material liens for Taxes upon theassets of the Company or of its Subsidiaries except for statutory liens forcurrent Taxes not yet due.  Except as setforth in the Disclosure Schedule, neither the Company nor any of itsSubsidiaries has any unpaid deficiency or assessment from any taxing authoritywith respect to material Taxes or material Tax Returns of the Company or any ofits Subsidiaries.  Except as set forth inthe Disclosure Schedule, no dispute, claim, adverse adjustment or deficiencyfor any Taxes has been proposed, asserted or assessed (in each case, inwriting) against the Company or any of its Subsidiaries.  Neither the Company nor any of itsSubsidiaries is liable for Taxes of any other Person under Treasury Regulation1.1502-6 (or any similar provision of Law), as a transferee or successor, bycontract or otherwise.  The unpaid Taxesof the Company and its Subsidiaries (i) did not as of March 31, 2009exceed the reserve for Taxes (other than deferred Taxes established to reflectbook-tax timing differences) set forth on the Company’s financial statementsand (ii) do not exceed by a material amount that reserve as adjusted forthe passage of time through the Closing Date in accordance with the past customand practice of the Company in filing its Tax Returns.

 

(b)                                 For thepurposes of this Agreement, “Taxes” shall mean all federal, state, local andforeign taxes, charges, fees, imposts or other governmental assessments, of anykind whatsoever, including all net income, gross income, sales, use, franchise,profits, service, gross receipts, capital, ad valorem, value added, transfer,inventory, capital stock, license, social security, unemployment, severance,stamp, recording, occupation, withholding, payroll, employment, excise, orproperty taxes and estimated taxes, custom duties, fees or assessments,together with interest and any penalties with respect thereto.

 

(c)                                  For purposes ofthis Agreement, “Tax Return” shall mean any return, declaration, report, estimate,schedule, information return or other document (including any related orsupporting information) with respect to Taxes, including any amendmentsthereto.

 

(d)                                 There are nomaterial Encumbrances for unpaid Taxes on any assets of the Company or any ofits Subsidiaries.

 

(e)                                  Except as setforth in the Disclosure Schedule, there is no material pending audit,examination, investigation, dispute, proceeding or claim to any Taxes on theCompany or any of its Subsidiaries.

 

(f)                                    Except as setforth in the Disclosure Schedule, the Company and its Subsidiaries havewithheld or collected and paid over to the appropriate Taxing authority ordeposited in accordance with applicable Laws all material Taxes required tohave been withheld or collected and paid or deposited in connection withamounts paid or owing to any employee, independent contractor, creditor,stockholder or other third party.

 

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(g)                                 Except as setforth in the Disclosure Schedule, neither the Company nor any of itsSubsidiaries has executed any outstanding waiver of any statute of limitationson or extension of the period for the assessment or collection of any Tax, andno such waivers of statutes of limitation or extensions have been requestedfrom the Company or any Subsidiary.

 

(h)                                 Neither theCompany nor any of its Subsidiaries (i) has ever been a member of anaffiliated group (within the meaning of Section 1504(a) of the Code)filing a consolidated federal income Tax Return (other than a group the commonparent of which was the Company), (ii) owes any material amount under anyTax sharing, indemnification or allocation agreement (other than a writtenagreement between or among the Company and its Subsidiaries), (iii) is orhas ever been a party to any Tax sharing or Tax allocation agreement,arrangement or understanding (other than a written agreement or writtenunderstanding between or among the Company and its Subsidiaries) or(iv) has any material liability for the Taxes of any Person (other thanthe Company or any of its Subsidiaries) under Treasury RegulationsSection 1.1502-6 (or any similar Law).

 

(i)                                     No closingagreements, private ruling letters, technical advance memoranda or similaragreement or rulings have been entered into or issued by any taxing authoritywith respect to the Company or any Subsidiary, and neither the Company nor anyof its Subsidiaries have outstanding any ruling request, request for consent tochange a method of accounting, subpoena or request for information with or froma Taxing authority in connection with any Tax matter.

 

(j)                                     Except asdisclosed in the Disclosure Schedule, neither the Company nor any of itsSubsidiaries has or has ever had a fixed place of business or permanentestablishment in any foreign country.

 

3.11                           ERISA.

 

(a)                                  The DisclosureSchedule contains a true and complete list of all employee benefit plans,arrangements, policies, payroll practices or commitments (whether or not anEmployee Benefit Plan), including any bonus plans, incentive plans, deferredcompensation plans, vacation plans, stock purchase and stock option plans,profit-sharing, savings, retirement, life, health, disability or accidentinsurance plans, equity plans, and severance plans, programs and policiesmaintained, contributed to, sponsored or participated in by the Company and itsSubsidiaries in which any current or former employees, officers, contractors ordirectors (or their dependents) of the Company or its Subsidiaries participateor with respect to which the Company or its Subsidiaries has or could have anydirect or indirect, actual or contingent liability or obligation (individuallyeach a “Plan” or “Company Plan” and collectively, the “Plans” or the “CompanyPlans”).  The Disclosure Scheduleidentifies each Plan that is intended to be a “qualified plan” within themeaning of Section 401(a) of the Code (“Qualified Plans”).  None of the Company, the Company’sSubsidiaries nor any of their respective ERISA Affiliates has any liabilitywith respect to any Employee Benefit Plan other than the Company Plans.

 

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(b)                                 With respect toeach Qualified Plan, either (i) the Internal Revenue Service has issued afavorable determination letter or, in the case of a prototype plan, a currentopinion letter with respect to such Qualified Plan and the related trust withinthe preceding three years that has not been revoked or (ii) such QualifiedPlan has applied to the Internal Revenue Service for a favorable determinationletter, which application remains pending on the date hereof and, to theKnowledge of the Company, there are no facts or existing circumstances thatwould reasonably be expected to result in denial of such application. To theKnowledge of the Company, there are no facts or existing circumstances thatcould adversely affect the qualified status of any Qualified Plan or therelated trust.

 

(c)                                  (i)  AllPlans are in material compliance with and have been administered in materialcompliance with all applicable requirements of Law, including the Code andERISA, and have been operated in accordance with their terms; (ii) no“prohibited transaction” (as defined in Section 4975 of the Code) hasoccurred with respect to any Plan which would subject any Plan (or its relatedtrust), the Company or any of its Subsidiaries to a material tax or penaltyimposed under Section 4975 of the Code; (iii) no Plan is subject toTitle IV or Section 302 of ERISA or Section 412 or 4971 of the Code(a “Title IV Plan”) or a “multiemployer plan” within the meaning ofSection 3(37) and 4001(a)(3) of ERISA or a “multiple employer plan”within the meaning of Sections 4063 and 4064 of ERISA orSection 413(c) of the Code (a “Multiemployer Plan”) and the Companyhas not incurred any material liability under Title IV of ERISA which has notbeen satisfied in full, and no event has occurred and no condition exists thatwould result in the Company incurring a material liability under Title IV ofERISA; and (iv) none of the Company, its Subsidiaries or any of their respectiveERISA Affiliates is required to contribute to, or during the six-year periodending on the Closing Date will have been required to contribute to, aMultiemployer Plan.

 

(d)                                 All CompanyPlans maintained outside the United States by the Company or any of itsSubsidiaries (“Foreign Plans”) are maintained in material accordance withapplicable law and their terms, and there are no material undisclosedliabilities with respect to such plans or arrangements.

 

(e)                                  No Company Planprovides medical benefits (whether or not insured), with respect to current orformer employees for periods extending beyond their retirement or othertermination of employment, other than pursuant to Section 4980B of theCode or as mandated by applicable Law.

 

(f)                                    Except asdisclosed in the Disclosure Schedule, the consummation of the transactionscontemplated by this Agreement will neither entitle any current or formeremployee or other service provider of the Company or any Subsidiary toseverance benefits or any other payment under any Company Plan nor cause anyamounts payable under any Company Plan to fail to be deductible for federalincome tax purposes by virtue of Section 280G of the Code.  The Company has provided copies of allagreements with employees that provide any form of severance benefits.

 

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(g)                                 With respect toeach of the Plans, all contributions or premium payments due and payable on orbefore Closing have been timely made, and to the extent not presently payable,appropriate reserves have been established for the payment and properly accruedin accordance with customary accounting practices.

 

(h)                                 With respect toeach Plan, the Company has heretofore delivered or made available to Parenttrue and complete copies of each of the following documents: (i) a copy ofthe Plan (including all amendments thereto) and any insurance policies, trustagreements or other funding vehicles related to any Plan; (ii) a copy ofthe four (4) most recent annual reports, if required to be filed with theInternal Revenue Service under ERISA (including schedules, attachments,financial statements, and accountant’s opinion); (iii) a copy of the mostrecent Summary Plan Description (as defined in ERISA), if applicable;(iv) with respect to each Qualified Plan, the most recent determinationletter received from the Internal Revenue Service; (v) all collectivebargaining or other agreements pursuant to which contributions to a CompanyBenefit Plan have been made or an obligation incurred by the Company or anySubsidiary; and (vi) all material communications with any governmentalentity (including the DOL, the Internal Revenue Service and the PBGC).

 

(i)                                     The terms ofeach of the Company Plans which is a “nonqualified deferred compensation plan”within the meaning of Code section 409A (and associated Treasury Departmentguidance, including, but not limited to, all transition guidance) comply withCode section 409A (and associated Treasury Department guidance, including, butnot limited to, all transition guidance), each such “nonqualified deferredcompensation plan” has been operated in compliance with Code section 409A (andassociated Treasury Department guidance, including, but not limited to, alltransition guidance), and no such “nonqualified deferred compensation plan” hasbeen materially modified within the meaning of Code section 409A (andassociated Treasury Department guidance). None of the Company, the Subsidiaries, nor any of their respective ERISAAffiliates has any indemnity obligation for any Taxes imposed under Codesection 409A.

 

(j)                                     To the extentpermitted by applicable law and the applicable Company Plan, each Company Plancan be amended or terminated at any time, without consent from any other partyand without liability other than for benefits accrued as of the date of suchamendment or termination (other than charges incurred as a result of suchtermination).  Each of the Company, theSubsidiaries, and each of their respective ERISA Affiliates has made full andtimely payment of all amounts required to be contributed or paid as expenses oraccrued such payments in accordance with normal procedures under the terms ofeach Company Plan and applicable law, and each of the Company, theSubsidiaries, and each of their respective ERISA Affiliates shall continue todo so through the Closing.

 

(k)                                  No Company Planis under audit or is the subject of an investigation by the Internal RevenueService, the U.S. Department of Labor, the Pension Benefit GuarantyCorporation, the Securities and Exchange Commission or any other governmentalentity, nor is any such audit or investigation pending or, to the Knowledge ofthe Company, threatened.  With respect toeach Company Plan for which financial 

 

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statements are required by ERISA, there hasbeen no adverse change in the financial status of such Company Plan since thedate of the most recent such statements provided to Parent. Each Company Planthat is intended to qualify under Code section 401(a) so qualifies and itsrelated trust is exempt from taxation under Code section 501(a).

 

(l)                                     Each CompanyPlan that is a pension plan within the meaning of ERISA section3(2) (regardless of whether the plan is covered by ERISA) but is notqualified under Code section 401(a) or 403(a) is exempt fromPart 2, 3 and 4 of Title I of ERISA as an unfunded plan that is maintainedprimarily for the purpose of providing deferred compensation for a select groupof management or highly compensated employees, pursuant to ERISA sections201(2), 301(a)(3) and 401(a)(1).  Noassets of the Company or any ERISA Affiliates are allocated to or held in a“rabbi trust” or similar funding vehicle.

 

(m)                               No event hasoccurred and there exists no condition or set of circumstances that presents amaterial risk that any Qualified Plan has or is likely to experience a partialtermination within the meaning of Code section 411(d)(3).

 

3.12                           EnvironmentalMatters.  Except as would not have aMaterial Adverse Effect: (i) the operations and activities conducted bythe Company and its Subsidiaries are in compliance with all applicableEnvironmental Laws and Environmental Permits; (ii) the Company and itsSubsidiaries are not subject to any pending or, to the Knowledge of theCompany, threatened action by or before any Governmental Authority under anyEnvironmental Law; and (iii) to the Knowledge of the Company there hasbeen no release of any Hazardous Material into the environment by the Companyor its Subsidiaries, except to the extent such release is not in violation ofor does not give rise to any liability under any applicable Environmental Laws.

 

3.13                           IntellectualProperty.

 

(a)                                  Section 3.13(a) ofthe Disclosure Schedule sets forth a true and complete list of all(i) registered Intellectual Property owned by the Company and itsSubsidiaries, indicating for each registered item the registration orapplication number, the record owner and the applicable filing jurisdiction,and (ii) material unregistered Intellectual Property and domain namesowned by the Company and its Subsidiaries.

 

(b)                                 There are nopending or, to the Knowledge of the Company, threatened claims by any personalleging infringement, misappropriation or other violation by the Company orany of its Subsidiaries of any other person’s Intellectual Property.  To the Knowledge of the Company, (i) theconduct of the current business of the Company and its Subsidiaries does notmisappropriate, infringe or otherwise violate any United States IntellectualProperty of any other Person, and (ii) either the Company or a Subsidiaryof the Company owns, or is licensed or otherwise possesses adequate rights touse, all Intellectual Property material to their respective businesses ascurrently conducted (“Company Intellectual Property”), and all such rightsshall survive unchanged the consummation of the transactions contemplated inthis Agreement.

 

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(c)                                  In the pastfive years, neither the Company nor any of its Subsidiaries has made any claimof misappropriation, infringement or other violation by others of its rightsin, to or in connection with the Intellectual Property of the Company or any ofits Subsidiaries.  To the Knowledge ofthe Company, no Person is misappropriating, infringing or otherwise violatingany Intellectual Property of the Company or any of its Subsidiaries.

 

(d)                                 Thetransactions contemplated by this Agreement will not place the Company or itsSubsidiaries in breach or default of any Intellectual Property Contract, ortrigger any modification, termination or acceleration or cause any additionalfees to be due thereunder, or create any license under or Encumbrance onIntellectual Property owned by the Parent or its Subsidiaries.  Each Intellectual Property Contract is validand binding on the Company and/or its Subsidiaries, as applicable and, to theKnowledge of the Company, is valid and binding on each other party thereto,except as would not have a Material Adverse Effect.  Neither the Company nor any of itsSubsidiaries nor, to the Knowledge of the Company, any other party, is inbreach or default under any such Intellectual Property Contract. No party toany Intellectual Property Contract has given the Company or its Subsidiariesnotice of its intention to cancel, terminate, change the scope of rights under,or fail to renew any Intellectual Property Contract

 

(e)                                  The Company andits Subsidiaries take reasonable actions to protect, maintain and preserve the(A) operation and security of their Information Technology Assets,(B) confidentiality of material data, information, and Trade Secretsowned, held or used by the Company or its Subsidiaries, and (C) thematerial Intellectual Property owned by the Company and its Subsidiaries(including by having and enforcing a policy that appropriate employees,consultants and agents execute non-disclosure and invention assignmentagreements for the benefit of the Company and/or its Subsidiaries).  The Company and its Subsidiaries abide by allLaws and internal policies regarding the collection, use and disclosure ofpersonally identifiable and other confidential information, including customerand client information.  To the Knowledgeof the Company, none of the Company’s or its Subsidiaries’ current employees haveany patents issued or applications pending for any device, process, design orinvention of any kind now used or needed by the Company in the operation of itsbusiness, which patents or applications have not been assigned or licensed tothe Company.

 

(f)                                    TheIntellectual Property owned by the Company and its Subsidiaries is not subjectto any pending or outstanding order, judgment, injunction, decree, ordinance,regulation or ruling of any Governmental Authority that question or seek tocancel, limit, challenge or modify the ownership, validity, enforceability,registerability, use or right to use the Intellectual Property owned by theCompany and its Subsidiaries, or that would restrict, impair or otherwisematerially adversely affect the Company’s or its Subsidiaries’ use thereof ortheir rights thereto. To the Knowledge of the Company, the materialIntellectual Property owned by the Company and its Subsidiaries is valid andenforceable, subject to any registration requirements applicable before anyunregistered Intellectual Property may be enforced.

 

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(g)                                 Operations atthe Company’s data centers have not been interrupted in the last three years ina manner that materially impaired the ability of the Company to deliver itsproducts and services to customers.

 

3.14                           Brokers,Finders.  Except for the Company’srelationship with Raymond James and as set forth in the Disclosure Schedule,neither the Company, any of its Subsidiaries, nor any party acting on theirbehalf has employed, paid or become obligated to pay any fee or commission toany broker, finder, consultant or other intermediary in connection with thetransactions contemplated by this Agreement or the sale process undergone bythe Company and its financial advisors leading to this transaction who or thatmight be entitled to a fee or commission in connection with such transactions.

 

3.15                           Labor Matters.  Neither the Company nor any of itsSubsidiaries is a party to, or bound by, any collective bargaining agreement,contract or other agreement or understanding with a labor union or labororganization applicable to their respective employees. Neither the Company norany of its Subsidiaries is subject to a dispute, strike or work stoppage,except as would not, individually or in the aggregate, result in any materialliability to the Company or any of its Subsidiaries.  There are no organizational efforts withrespect to the formation of a collective bargaining unit presently being madeor threatened involving employees of the Company or any of its Subsidiaries.

 

3.16                           Insurance.  Neither the Company nor any of itsSubsidiaries has received any written notice, or, to the Knowledge of theCompany, threats of cancellation or non-renewal of, or, since March 31,2009, any material increase of premiums with respect to, any material policiesof insurance currently maintained by the Company and its Subsidiaries.  To the Knowledge of the Company, there are noclaims by the Company or any of its Subsidiaries under any of such policiesrelating to the business, assets or properties of the Company or itsSubsidiaries as to which any insurance company is denying liability ordefending under a reservation of rights or similar clause.

 

3.17                           CompanyInformation.  The ProxyStatement will not at the time of the mailing of the Proxy Statement to thestockholders of the Company, at the time of the Company Meeting, and at thetime of any amendments thereof or supplements thereto, contain any untruestatement of a material fact or omit to state any material fact required to bestated therein or necessary in order to make the statements therein, in lightof the circumstances under which they were made, not misleading; *provided* that no representation is made by the Company withrespect to information supplied by or related to or the sufficiency ofdisclosures related to, Parent or Merger Sub. The Proxy Statement will comply as to form in all material respects withthe requirements of the Exchange Act, except that no representation is made bythe Company with respect to information supplied by or related to Parent orMerger Sub.

 

3.18                           Opinion ofFinancial Advisor.  The Boardof Directors of the Company has received the opinion of Raymond James, dated asof the date hereof, to the effect that, as of the date hereof, the Merger Considerationis fair to the holders of the Company Common Stock from a financial point ofview.

 

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3.19                           Required Voteof the Company Stockholders.  The affirmative vote of the holders ofoutstanding shares of Company Common Stock, voting together as a single class,representing at least a majority of all the votes then entitled to vote at ameeting of stockholders, is the only vote of holders of securities of theCompany which is required to approve this Agreement, the Merger and the othertransactions contemplated hereby.

 

3.20                           RequiredConsents.  Except asset forth on the Disclosure Schedule and Section 3.19 hereof, no consentor approval from any Person is required to approve or give full effect to thisAgreement, the Merger and the other transactions contemplated hereby.

 

3.21                           AffiliateTransactions.  Except asset forth in the Disclosure Schedule, there are no Contracts or arrangementsthat are in existence as of the date of this Agreement under which the Companyhas any existing or future material liabilities between the Company or any ofits Subsidiaries, on the one hand and, on the other hand, any (i) presentofficer or director of either the Company or any of its Subsidiaries or anyperson that has served as such an officer or director within the past two yearsor any of such officer’s or director’s immediate family members,(ii) record or beneficial owner of more than 5% of the Common Shares as ofthe date hereof, or (iii) to the Knowledge of the Company, any Affiliateof any such officer, director or owner (other than the Company or any of itsSubsidiaries), in each case that is of a type that would be required to bedisclosed in the Company SEC Documents pursuant to Item 404 of Regulation S-Kthat has not been so disclosed (each, an “Affiliate Transaction”).  The Company has made available to Parentcopies of each Contract or other relevant documentation (including anyamendments or modifications thereto) available as of the date hereof providingfor each Affiliate Transaction.

 

**ARTICLE  IVREPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB**

** **

Exceptas set forth in the disclosure schedule dated as of the date of this Agreementdelivered by Parent and Merger Sub to the Company (“Parent Disclosure Schedule”),each of Parent and Merger Sub hereby jointly and severally represents andwarrants to the Company that:

 

4.1                                 Incorporation;Authorization.

 

(a)                                  Each of Parentand Merger Sub is a corporation duly organized, validly existing and in goodstanding under the Laws of the jurisdiction of its organization.  Each of Parent and Merger Sub has allrequisite power and authority to own, lease, and operate its properties andassets and to carry on its business as it is now being conducted, and is dulyqualified to transact business in each jurisdiction in which the nature ofproperty owned or leased by it or the conduct of its business requires it to beso qualified, except where the failure to be duly qualified to transactbusiness would not, individually or in the aggregate, reasonably be expected toimpair in any material respect the ability of Parent or Merger Sub to performits obligations under this Agreement or have a material adverse effect on theParent and its subsidiaries, taken as a whole, or prevent or delay theconsummation of the Merger or the other transactions contemplated by thisAgreement. True and complete copies of the certificate of incorporation andbylaws, or other 

 

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organizational documents (in each case,together with all amendments thereto) of the Parent and Merger Sub have beendelivered or made available to Company. Parent and Merger Sub are not in material default or in violation of anyprovisions of their respective organizational documents.

 

(b)                                 Each of Parentand Merger Sub has all requisite corporate power and authority to execute anddeliver this Agreement, to perform its obligations hereunder and to consummatethe transactions contemplated hereby. The execution and delivery of this Agreement, the performance of each ofParent’s and Merger Sub’s obligations hereunder, and the consummation of thetransactions contemplated hereby have been duly and validly authorized by therespective Boards of Directors of Parent and Merger Sub, and no other corporateproceedings or actions on the part of Parent or Merger Sub or the shareholdersthereof are necessary to authorize the execution and delivery of thisAgreement, to perform the Parent and Merger Sub’s obligations hereunder, and toconsummate the transactions contemplated hereby.  This Agreement has been duly executed anddelivered by each of Parent and Merger Sub, and, assuming the due execution anddelivery of this Agreement by the Company, this Agreement constitutes thelegal, valid and binding obligation of each of Parent and Merger Sub,enforceable against each in accordance with its terms, except for (i) theeffect of any applicable bankruptcy, insolvency, reorganization, moratorium andsimilar Laws relating to or affecting the rights of creditors generally and(ii) the effect of equitable principles of general application.

 

(c)                                  The execution,delivery and performance of this Agreement and the consummation of thetransactions contemplated hereby will not (i) violate any provision of thecertificate of incorporation or bylaws, or similar organizational documents ofParent or Merger Sub, (ii) violate or conflict with any provision of, orresult in the imposition of any lien upon or the creation of a securityinterest in any of the Parent’s or Merger Sub’s assets or properties, or(iii) violate or conflict with any Law to which Parent or Merger Sub issubject except for those that, in the case of clause (ii) and(iii) above, would not reasonably be expected to impair in any materialrespect the ability of Parent or Merger Sub to perform its obligations underthis Agreement or have a material adverse effect on the Parent and itsSubsidiaries, taken as a whole, or prevent or delay the consummation of theMerger or the other transactions contemplated by this Agreement.

 

(d)                                 Noregistrations, filings, applications, notices, consents, approvals, orders,qualifications, authorizations or waivers are required to be made, filed, givenor obtained by Parent or Merger Sub with, to or from any Governmental Authorityin connection with the execution and delivery of this Agreement or theconsummation of the transactions contemplated hereby, except for (i) or(ii) the filing and recordation of appropriate merger documents asrequired by the DGCL and other appropriate documents with the relevantGovernmental Authorities of other states in which the Merger Sub is authorizedto do business (clauses (i) and (ii) above, collectively, the “ParentRequired Governmental Approvals”).

 

4.2                                 Litigation.  There are no pending or, to the Knowledge ofParent, threatened actions, suits or proceedings, either at law or in equity,which would reasonably be expected to 

 

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impair in any material respect the ability of Parent or Merger Sub toperform its obligations under this Agreement or have a material adverse effecton the Business Condition of Parent and its Subsidiaries, taken as a whole, orprevent or impede or delay the consummation of the Merger or the other transactionscontemplated hereby.

 

4.3                                 FinancialCapability.  Parent andMerger Sub have, or will have at Closing, all funds necessary for theconsummation of the Merger and transactions contemplated by this Agreement,including any funds necessary to pay the Common Stock Merger Consideration andto repay the disclosed indebtedness of the Company that will be repayable(including at the option of the relevant creditor), and, in each case, allassociated costs and expenses, upon or following consummation of the Merger andother transactions contemplated by this Agreement. Parent and Merger Sub haveprovided to Company all documentation evidencing access to such funds.

 

4.4                                 InterimOperations of Merger Sub. Merger Sub was formed solely for the purpose of engaging in thetransactions contemplated by this Agreement, and has engaged in no business andhas incurred no liabilities other than in connection with the transactionscontemplated by this Agreement.

 

4.5                                 Solvency of theCompany Following the Merger.  Immediately after the Effective Time andafter giving effect to the Merger and the transactions contemplated by thisAgreement, the Company and each of its Subsidiaries will not (i) beinsolvent (either because its financial condition is such that the sum of its debtsis greater than the fair market value of its assets or because the fairsaleable value of its assets is less than the amount required to pay itsprobable liability on its existing debts as they mature), (ii) haveunreasonably small capital with which to engage in its business or(iii) have incurred debts beyond its ability to pay as they become due.

 

4.6                                 Proxy StatementInformation.  Theinformation supplied by Parent and Merger Sub for inclusion in the ProxyStatement on the date such Proxy Statement (and the date of any amendment orsupplement thereto) is first sent or provided to shareholders of the Companywill not contain any untrue statement of a material fact or omit to state anymaterial fact required to be stated therein or necessary in order to make thestatements made therein, in the light of the circumstances under which they aremade, not misleading.  Notwithstandingthe foregoing, Parent and Merger Sub make no representation or warranty withrespect to any information supplied by or on behalf of the Company that iscontained in the Proxy Statement or any amendment or supplement thereto.

 

4.7                                 Brokers,Finders.  Except as set forth in theParent Disclosure Schedule, neither Parent nor any party acting on its behalfhas employed, paid or become obligated to pay any fee or commission to anybroker, finder, consultant or other intermediary in connection with thetransactions contemplated by this Agreement who or that might be entitled to afee or commission from the Company in connection with such transactions.

 

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**ARTICLE  VCOVENANTS OF THE COMPANY AND PARENT**

** **

5.1                                 Investigationof Business; Access to Properties and Records.

 

(a)                                  After the dateof this Agreement, to the extent reasonably requested, upon reasonable advancenotice and subject to applicable Law, the Company shall afford to the officers,employees and authorized representatives of Parent (including its attorneys andaccountants and any financial institution providing or proposing to provide orunderwrite financing in connection with the transactions contemplated hereby)reasonable access during normal business hours to the properties, books,contracts, commitments, personnel, financial and operating data and records ofthe Company and its Subsidiaries, and shall furnish to Parent or its authorizedrepresentatives, such additional information concerning the Company, itsSubsidiaries and their properties, assets, employees, businesses and operationsas shall be reasonably requested. Parent and Merger Sub covenant that any suchaccess shall be conducted in such a manner as not to interfere unreasonablywith the operations of the Company or its Subsidiaries.

 

(b)                                 Any informationprovided to Parent or Merger Sub or their respective representatives pursuantto this Agreement shall be held by Parent, Merger Sub and their representativesin accordance with, and shall be subject to the terms of that certainConfidentiality Agreement, dated as of July 2, 2009 by and between theCompany and Parent (the “Confidentiality Agreement”), which is herebyincorporated in this Agreement by reference as though fully set forth in thisAgreement and shall continue in force until the Effective Time, at which timesuch Confidentiality Agreement shall terminate; provided that Parent, MergerSub and the Company may disclose such information as may be necessary inconnection with seeking the Parent Required Governmental Approvals, the CompanyRequired Governmental Approvals and the Company Shareholder Approval; providedfurther that if this Agreement is terminated in accordance with Article IXof this Agreement prior to the Effective Time, the Confidentiality Agreementshall remain in full force and effect, in accordance with its terms.

 

5.2                                 Agreement toCooperate.

 

(a)                                  Prior toClosing, subject to the terms and conditions of this Agreement, each of theCompany, on the one hand, and each of Parent and Merger Sub, on the other hand,shall use its reasonable best efforts to take, or cause to be taken, allactions and to do, or cause to be done, all things necessary, proper oradvisable under applicable law and regulations to consummate and make effectiveas promptly as practicable the Merger and other transactions contemplated bythis Agreement; provided, however, except as otherwise provided in theDisclosure Schedule, and except as set forth specifically elsewhere in thisAgreement, nothing herein shall require the Company or any of its Subsidiariesto make any out-of-pocket expenses, accrue any liability for its account ormake any accommodation or concession to Parent, Merger Sub or any third-partyin connection with the foregoing. Neither the Company nor any of its Subsidiaries shall 

 

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incur any expenses in connection with orrelated to this Agreement or the Merger in excess of $2,240,000 in theaggregate without Parent’s prior written consent.

 

(b)                                 In addition toand without limitation of the foregoing, each of Parent, Merger Sub and theCompany undertakes and agrees to (i) file (and Parent agrees to cause anyPerson that may be deemed to be the ultimate parent entity or otherwise tocontrol Parent to file, if such filing is required by Law) as soon aspracticable, and in any event prior to ten business days after the date hereof,any form or report required by any other Governmental Authority, including,without limitation, any foreign antitrust authority, relating to antitrust,competition, trade or other regulatory matters, and (ii) take any act,make any undertaking or receive any clearance or approval required by any GovernmentalAuthority or applicable Law. Each of Parent and the Company shall(i) respond as promptly as practicable to any inquiries or requestsreceived from any Governmental Authority for additional information ordocumentation, and (ii) not enter into any agreement with any GovernmentalAuthority not to consummate the transactions contemplated by this Agreement,except with the prior consent of the other parties hereto (which consent shallnot be unreasonably withheld or delayed). Parent and the Company shall take any and all commercially reasonablesteps necessary to avoid or eliminate each and every impediment under anyantitrust, competition, or trade law that may be asserted by any GovernmentalAuthority with respect to the Merger so as to enable the Effective Time tooccur as soon as reasonably possible and to avoid any suit or proceeding, whichwould otherwise have the effect of preventing or delaying the EffectiveTime.  Each party shall (i) promptlynotify the other party of any written communication to that party or itsAffiliates from any Governmental Authority and, subject to applicable law,permit the other party to review in advance any proposed written communicationto any of the foregoing; (ii) not agree to participate, or to permit itsaffiliates to participate, in any substantive meeting or discussion with anyGovernmental Authority in respect of any filings, investigation or inquiryconcerning this Agreement or the Merger unless it consults with the other partyin advance and, to the extent permitted by such Governmental Authority, givesthe other party the opportunity to attend and participate thereat; and(iii) furnish the other party with copies of all correspondence, filings,and communications between them and their affiliates and their respectiverepresentatives on the one hand, and any Governmental Authority or members oftheir respective staffs on the other hand, with respect to this Agreement andthe Merger (except that the Company shall be under no obligation of any kind toprovide any other party documents, material or other information relating tothe valuation of the Company or to alternatives to the proposed Merger and thisAgreement).

 

5.3                                 FurtherAssurances.  Subject tothe terms and conditions of this Agreement and not in limitation of any suchprovisions, including Section 5.2, each party hereby agrees to use allreasonable best efforts to take, or cause to be taken, all action, and to do,or cause to be done, all things necessary, proper or advisable under applicablelaws to satisfy all conditions to, and to consummate, the transactionscontemplated by this Agreement and to carry out the purposes hereof, includingto perform and cause to be performed any further acts and to execute anddeliver and cause to be executed and delivered any documents that may bereasonably necessary to carry out the provisions of this Agreement; providedthat, except as otherwise provided in this 

 

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Agreement, the Company shall not be required to pay any considerationfor any third-party consent or waiver in excess of $250,000 in the aggregate.

 

5.4                                 Conduct ofBusiness.

 

(a)                                  Except asotherwise permitted or required by the terms of this Agreement and theDisclosure Schedule, from the date of this Agreement until Closing (or earliertermination of this Agreement), the Company shall, and shall cause each of itsSubsidiaries to, (i) operate and carry on its business only in theordinary course consistent with past practice, (ii) use reasonable effortsconsistent with good business practice to keep and maintain its respectiveassets and properties in normal operating condition and repair, reasonable wearand tear and damage by fire or other casualty excepted, and (iii) usereasonable efforts to maintain the present business organization of the Companyand its Subsidiaries intact and preserve the goodwill of the suppliers,contractors, licensors, employees, customers, distributors and others havingsignificant business relations with them in all material respects.

 

(b)                                 Except ascontemplated by this Agreement, as set forth in the Disclosure Schedule or asotherwise required to maintain the business and assets of the Company and itsSubsidiaries, consistent with past practice, the Company shall not, and shallnot cause or allow any of its Subsidiaries to, without the prior consent inwriting of Parent (which consent shall not be unreasonably withheld,conditioned or delayed):

 

(i)                                     amend itsCharter or bylaws or equivalent organizational documents or amend the terms of theiroutstanding equity securities;

 

(ii)                                  issue or agreeto issue (by the issuance or granting of options, warrants or rights topurchase Company Common Stock, Company Preferred Stock or other capital stockof the Company or otherwise) any shares of Company Common Stock or othercapital stock of the Company, any securities exchangeable for or convertibleinto Company Common Stock or other capital stock of the Company, or any othersecurities, except that the Company may issue or agree to issue shares of capitalstock of the Company upon exercise of the Company Options and the conversion ofthe Alogent Notes outstanding on the date hereof pursuant to the terms of suchsecurities on the date hereof;

 

(iii)                               split, combine,or reclassify any shares of Company Common Stock or other capital stock of theCompany or declare, set aside or pay any dividends or make any otherdistributions (whether in cash, stock or other property) in respect of CompanyCommon Stock or other capital stock of the Company, except for the payment ofdividends or distributions by a wholly-owned Subsidiary to the Company oranother wholly-owned Subsidiary;

 

(iv)                              redeem,purchase or otherwise acquire for any consideration (A) any outstandingshares of its capital stock or securities carrying the right to acquire, orwhich are convertible into or exchangeable or exercisable for, with or 

 

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without additionalconsideration, such stock, (B) any other securities of the Company or anyof its Subsidiaries, or (C) any interest in any of the foregoing;

 

(v)                                 except in theordinary course of business consistent with past practice and for indebtednessincurred under the Credit Facility, incur any indebtedness for borrowed moneyin excess of $200,000;

 

(vi)                              make anyacquisition or lease, assignment, transfer or disposition (or series of relatedacquisitions or leases, assignments, transfers or dispositions) of stock orassets of any third-party in excess of $200,000 in the aggregate other thaninventory, supplies, or other assets in the ordinary course of businessconsistent with past practice;

 

(vii)                           merge orconsolidate with any corporation or other entity, or adopt a plan of completeor partial liquidation, dissolution, bankruptcy, restructuring, recapitalizationor other reorganization, other than transactions solely between or among theCompany and/or among its wholly-owned Subsidiaries;

 

(viii)                        enter into,amend or modify any employment, consulting or similar contract with, orincrease the compensation and/or benefits of any employee whose base salary isin excess of $75,000 as of the date of this Agreement (a “SignificantEmployee”);

 

(ix)                                except forincreases in compensation and benefits that are required by applicable law or acontract or commitment in effect on the date of this Agreement, increase thecompensation and/or benefits of employees in an amount in excess of 1% of theaggregate of all employees’ annual base salaries and wages, as of the datehereof;

 

(x)                                   (A) adopt,amend or terminate any Employee Benefit Plan, severance plan or collectivebargaining agreement, except as required by law or by the terms of any suchplan or agreement or any contract as in existence on the date of thisAgreement, or (B) grant or make any loan, bonus, fees, incentivecompensation, service award or other like benefit, to or for the benefit of anyofficer or Significant Employee except pursuant to the Employee Benefit Plansdescribed in Section 3.11 of the Disclosure Schedule;

 

(xi)                                mortgage,pledge, or otherwise voluntarily encumber any part of its assets, tangible orintangible, other than pledges or encumbrances pursuant to the Credit Facilityor other permitted borrowings in the ordinary course of business consistentwith past practice;

 

(xii)                             except asrequired by GAAP, make any material change in its accounting principles or themethods by which such principles are applied for financial reporting purposes;

 

(xiii)                          pay, discharge,compromise, satisfy, cancel or forgive any debts or claims or rights of thirdparties (or series of rights, debts or claims) involving, 

 

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individually or in theaggregate, consideration in excess of $150,000 except in the ordinary course ofbusiness consistent with past practice;

 

(xiv)                         except aspermitted under Section 5.4(b)(v), cancel or terminate, or amend, modifyor waive in any material way the terms of, any agreement, contract orcommitment to which it is a party or by which it or any of its assets arebound, which (A) provides for payment by or to the Company or itsSubsidiaries in excess of $200,000 over the life of such agreement, contract orcommitment or (B) involves the performance of services or the delivery ofgoods by or to the Company or its Subsidiaries of an amount or value in excessof $200,000 over the life of such agreement, contract or commitment, in eachcase, other than in the ordinary course of business consistent with pastpractice;

 

(xv)                            make aninvestment in, make a loan or advance or agreement to loan or advance to, enterinto any joint venture, partnership or other similar arrangement for theconduct of business with, or guarantee indebtedness for borrowed money of anythird-party or any portion of the assets of any Person that constitutes adivision or operating unit of such third-party; for purposes of thisSection 5.4(b)(xv) it is acknowledged and agreed that such transactionssolely between the Company and any of its Subsidiaries shall not be prohibited;

 

(xvi)                         make, change orrevoke any material Tax election, elect or change any method of accounting forTax purposes, settle any material action in respect of Taxes or enter into anymaterial agreement or contract in respect of Taxes with any GovernmentalAuthority, except in each case, in the ordinary course of business orconsistent with past practice;

 

(xvii)                      grant anylicense or sublicense or amend the terms of any material rights with respect toany Intellectual Property, other than in the ordinary course of businessconsistent with past practice;

 

(xviii)                   make any capitalexpenditures not contemplated by the capital expenditure budget previously madeavailable to Parent;

 

(xix)                           enter into anynew line of business or materially change its risk, investment, asset liabilitymanagement and operating policies, except as required by applicable Law;

 

(xx)                              hire any newemployee, unless such hiring is in the ordinary course of business consistentwith past practice and is with respect to any employee with a base salary andbonus opportunity of less than $200,000 per year; or

 

(xxi)                           agree, commitor resolve to do or authorize any of the foregoing.

 

5.5                                 PublicAnnouncements.  The partieshave agreed to an initial press release that shall be released as soon aspracticable after the date hereof, and the parties further agree that anyfuture press release or public announcement concerning the transactionscontemplated hereby shall not be issued by the Company, Parent or Merger Subwithout the prior consent of Parent 

 

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and the Company, except as such release or public announcement may berequired by Law, in which case the party required to issue the release orannouncement shall allow Parent and the Company, as applicable, reasonable timeto comment on such release or announcement in advance of its issuance.

 

5.6                                 Indebtedness.  On the Closing Date, simultaneously withClosing, Parent shall cause all outstanding Obligations to be paid in full,providing funds to the Company to do so if necessary, and immediately upon suchpayment and any other payments in connection thereto, cause the Credit Facilityand Alogent Notes to be cancelled and be of no further force and effect.

 

5.7                                 Directors’ andOfficers’ Indemnification.

 

(a)                                  For a period ofsix years from the Effective Time, the provisions of the Charter and bylaws, orsimilar organization documents, of the Surviving Corporation and of each of itsSubsidiaries concerning elimination of liability and indemnification ofdirectors and officers shall not be amended in any manner that would adverselyaffect the rights thereunder of any Person that is as of the date of thisAgreement an officer or director of the Company or of any such Subsidiaryexcept as may be required by applicable law. From and after the Effective Time,Parent shall assume, be jointly and severally liable for with the Company, andhonor, guaranty and stand surety for, and shall cause the Company to honor, inaccordance with their respective terms, such obligations.  In addition to the foregoing, from and afterthe Closing Date, to the extent permitted by applicable law, Parent and theSurviving Corporation, jointly and severally, shall indemnify, hold harmlessand defend each Person who is a current or former officer or director of theCompany or any of its Subsidiaries against all losses and expenses (includingall losses, costs, obligations, liabilities, settlement payments, awards,judgments, fines, penalties, damages (including compensatory, punitive andconsequential damages), demands, claims, actions, causes of action,assessments, deficiencies and other charges and attorneys’ fees) arising out ofor pertaining to acts or omissions (or alleged acts or omissions) by them intheir capacities as such, which acts or omissions occurred at or prior toClosing. To the maximum extent permitted by applicable law, the indemnificationand related rights hereunder shall be mandatory rather than permissive, andParent and/or the Surviving Corporation shall promptly advance expenses inconnection with such indemnification to the fullest extent permitted underapplicable law; provided that, to the extent required by law, the Person towhom expenses are advanced provides an undertaking to repay such advances if itis ultimately determined that such Person is not entitled to indemnification.At Closing, Parent shall assume and become liable for, jointly and severallywith the Surviving Corporation and each such Subsidiary, any liability and allobligations of the Company and each such Subsidiary under such provisions.

 

(b)                                 Parent agreesthat the Company and, from and after the Effective Time, the SurvivingCorporation, shall cause to be maintained in effect for not less than six yearsfrom the Effective Time the current policies of directors’ and officers’fiduciary and liability insurance maintained by the Company by purchasing apolicy providing “tail” coverage for a period of not less than six years fromthe Effective Time with a carrier (or carriers) and in a form reasonably agreedupon by Company.  Parent shall 

 

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make available to Company evidence of saidcoverage immediately prior to the Effective Time.

 

(c)                                  Following theEffective Time, the provisions of this Section 5.7 are (i) intendedto be contractual rights for the benefit of, and shall be enforceable by, eachPerson entitled to indemnification hereunder, and each such Person’s heirs,representatives, successors or assigns, it being expressly agreed that suchPersons shall be third-party beneficiaries of this Section, and (ii) inaddition to, and not in substitution for, any other rights to indemnificationor contribution that any such Person may have by contract or otherwise.

 

(d)                                 Parent shallpay all reasonable expenses, including reasonable attorneys’ fees, that may beincurred by any director or officer in enforcing the indemnity and otherobligations provided in this Section 5.7.

 

(e)                                  In the eventParent, the Surviving Corporation or any of their respective successors orassigns (i) consolidates with or merges into any other Person and shallnot be the continuing or surviving corporation or entity in such consolidationor merger or (ii) transfers all or substantially all of its properties andassets to any Person, then and in either such case, proper provision shall bemade so that the successors and assigns of Parent or the Surviving Corporation,as the case may be, shall assume the obligations set forth in thisSection 5.7.

 

5.8                                 ShareholderApproval.  The Companyshall, promptly after the date hereof, prepare and file with the SEC a proxystatement (the “Proxy Statement”) and thereafter use its reasonable bestefforts to obtain Company ShareholderApproval at a meeting of the Company’s shareholders called for suchpurpose (the “Special Meeting”).

 

5.9                                 Restrictions onParent and the Company. Parent and the Company agree that, from and after the date hereof andprior to the Effective Time, and except as may be agreed in writing by theother parties hereto or as may be expressly permitted pursuant to thisAgreement, it shall not, and shall not permit any of its Subsidiaries to,agree, in writing or otherwise, to take any action that could reasonably beexpected to delay the consummation of the Merger or result in the failure tosatisfy any condition to consummation of the Merger.

 

5.10                           Merger Sub.  Parent will take all action necessary(i) to cause Merger Sub to perform its obligations under this Agreementand to consummate the Merger on the terms and conditions set forth in thisAgreement, and (ii) to ensure that, prior to the Effective Time, MergerSub shall not conduct any business or activities or make any investments otherthan as specifically contemplated by this Agreement, or incur or guarantee anyindebtedness.

 

5.11                           AcquisitionProposals.

 

(a)                                  Withoutlimiting any of its other obligations under this Agreement, the Company agreesthat it and its Subsidiaries and the officers and directors of it and itsSubsidiaries shall not, and that it shall direct and use its reasonable bestefforts to cause the Company’s and the Company Subsidiaries’ employees, agents,advisors and representatives (including any investment banker, attorney oraccountant retained by it or 

 

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any of the Company Subsidiaries) not to,directly or indirectly, (i) initiate, solicit, encourage or facilitate(including by way of furnishing information) any inquiries or the making of anyproposal or offer (including without limitation an offer to shareholders of theCompany) for, or a transaction to effect, an Acquisition Proposal;(ii) engage or participate in any negotiation concerning an AcquisitionProposal; (iii) provide any confidential information or data to any Personrelating to an Acquisition Proposal, or knowingly facilitate any effort or attemptto make or implement an Acquisition Proposal; (iv) approve or recommend,or propose publicly to approve or recommend, any Acquisition Proposal; or(v) approve or recommend, or propose to approve or recommend, or executeor enter into, any letter of intent, agreement in principle, merger agreement,acquisition agreement, option agreement or other similar agreement related toany Acquisition Proposal, or propose or agree to do any of the foregoing.

 

(b)                                 Notwithstandinganything to the contrary contained in Section 5.11(a) or elsewhere inthis Agreement, to the extent the Company receives an unsolicited AcquisitionProposal which did not result from any breach of Section 5.11(a) andthe Board of Directors of the Company, after consultation with independentlegal counsel, determines in good faith that any action otherwise prohibited bySection 5.11(a) is necessary for the Board of Directors of theCompany to comply with its fiduciary duties under applicable law, the Companyand its representatives may take any action otherwise prohibited by clauses(i), (ii) and (iii) of Section 5.11(a) with respect to(including, without limitation, participate in discussions or negotiationswith, and furnish non-public information to, and afford access to the properties,books, records, officers, employees and representatives of the Company to) anyPerson after such Person has delivered, or that the Board of Directors of theCompany believes in good faith is reasonably likely to deliver, to the Companya Superior Proposal; provided, however, that prior to taking such action, theCompany shall (to the extent practicable) provide a minimum of 48 hours writtenprior notice to Parent to the effect that it is taking such action. Subject tosuch notice and to Article IX, in the event the Company receives aSuperior Proposal, nothing contained in this Agreement shall prevent the Boardof Directors of the Company from executing or entering into an agreementrelating to such Superior Proposal, holding a meeting of the Company’sshareholders for the purpose of obtaining shareholder approval of thetransactions contemplated by the Superior Proposal, and recommending suchSuperior Proposal to its shareholders, and taking any other act in furtheranceof such Superior Proposal if the Board of Directors of the Company (afterconsultation with independent legal counsel and outside financial advisors)determines in good faith that such action regarding the Superior Proposal isnecessary for the Board of Directors of the Company to comply with its fiduciaryduties under applicable law; in such case, the Board of Directors of theCompany may withdraw, modify or refrain from making its recommendation of theMerger and this Agreement.

 

5.12                           Notice ofDevelopments.  Each partyhereto shall give prompt written notice to the other party of (i) theoccurrence, or failure to occur, of any event, which occurrence or failure tooccur would be reasonably likely to cause any representation or warranty madeby such party in this Agreement, the Disclosure Schedule, the Parent DisclosureSchedule, or the Guarantee to be materially untrue or inaccurate and(ii) any failure by such other party to comply with, 

 

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perform or satisfy any covenant, condition or agreement to be compliedwith, performed by or satisfied by it under this Agreement.

 

5.13                           State TakeoverLaws.  If any “fair price,” “businesscombination” or “control share acquisition” statute or other similar Law is ormay become applicable to the Merger, the Company, Merger Sub and Parent shalleach take such commercially reasonable actions as are necessary so that thetransactions contemplated in this Agreement may be consummated as promptly aspracticable on the terms and subject to the conditions of this Agreement.

 

5.14                           ExchangeDe-listing.  Prior tothe Closing, the Company shall cooperate with Parent and use reasonable bestefforts to take, or cause to be taken, all actions, and do or cause to be doneall things, reasonably necessary, proper or advisable on its part underapplicable Laws and rules and policies of the NASDAQ to enable thede-listing by the Surviving Corporation of the Company Common Stock from theNASDAQ Global Market and the deregistration of the Company Common Stock underthe Exchange Act as promptly as practicable after the Effective Time.

 

5.15                           Rule 16b-3.  Prior to the Effective Time, the Companyshall be permitted to take such steps as may be reasonably necessary oradvisable hereto to cause dispositions of Company equity securities (including derivativesecurities) pursuant to the transactions contemplated by this Agreement by eachindividual who is a director or officer of the Company to be exempt underRule 16b-3 promulgated under the Exchange Act.

 

5.16                           ShareholderLitigation.  The Companyshall control, and the Company shall give Parent the opportunity to participatein the defense of, any litigation brought by shareholders of the Companyagainst the Company and/or its directors relating to the transactionscontemplated by this Agreement; provided, however, that the Company shall notcompromise, settle, come to an arrangement regarding or agree to compromise,settle or come to an arrangement regarding any such litigation, or consent tothe same, without the prior written consent of Parent.

 

5.17                           Benefit Plans.

 

(a)                                  If and to theextent reasonably requested by Parent, the Company shall amend or terminate anyCompany Plan; provided, however, any such amendment or termination shall complywith all applicable laws and shall not be required if (i) otherwiseprohibited by the terms of any applicable collective bargaining agreements, or(ii) any such requested amendment or termination would cause the Companyto incur any material liability or other material obligation.  Any such amendment or termination may be madeconditional upon Closing provided that such amendment or termination becomeeffective immediately prior thereto.

 

(b)                                 Parent agreesthat it will notify the Company at least five (5) days prior to Closing asto (i) whether it wishes the Company to assign and transfer to Parent anyof its health or other benefit plan policies of insurance and (ii) whether(A) it will continue to sponsor the Company’s 401(k) profit sharingplan either as a merged plan with Parent’s existing 401(k) profit sharingplan or as a separate plan or (B) it desires that the Company’s401(k) profit sharing plan be terminated prior to Closing.

 

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**ARTICLE  VICONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO CLOSE**

** **

Therespective obligations of the Company, Parent and Merger Sub to consummate theMerger shall be subject to the satisfaction or waiver, on or prior to theClosing Date, of the following conditions:

 

6.1                                 CompanyShareholder Approval.  ThisAgreement and the Merger shall have been approved and adopted by the requisiteaction of the shareholders of the Company.

 

6.2                                 No Injunction.  At the Closing Date, there shall be no Law orGovernmental Order that is in effect that restrains or prohibits theconsummation of the Merger; provided that, with respect to any GovernmentalOrder, the party against whom such Governmental Order is directed shall haveused its commercially reasonable efforts to have such Governmental Ordervacated or lifted.

 

**ARTICLE  VIICONDITIONS OF PARENT’S OBLIGATION TO CLOSE**

** **

Parent’sobligation to consummate the Merger shall be subject to the satisfaction orwaiver, on the Closing Date, of the following conditions:

 

7.1                                 Covenants.  The Company shall have performed in allmaterial respects all of its obligations hereunder required to be performed byit at or prior to Closing.

 

7.2                                 Representationsand Warranties.  Therepresentations and warranties of the Company contained in this Agreement shallbe true and correct at and as of Closing, as though made at and as of such time(or, if made as of a specific date, at and as of such date), except(i) for changes contemplated by this Agreement, and (ii) with respectto the representations and warranties made in Sections 3.1(d), 3.3, 3.4(b),3.4(c), 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16,3.17, 3.20, and 3.21 (in each case, without giving effect to any “materiality”or “Material Adverse Effect” qualifiers set forth therein) where such failureto be true and correct, individually or in the aggregate, has not had, andwould not be reasonably expected to have, a Material Adverse Effect.

 

7.3                                 Certificate.  Parent shall have received a certificatesigned on behalf of the Company by an executive officer of the Companyindicating that the conditions provided in Sections 7.1 and 7.2 have beensatisfied.

 

7.4                                 Consents.  The consents disclosed in Exhibit Battached hereto will have been obtained.

 

7.5                                 Payoff Letters.  The payoff letters disclosed in Exhibit Cattached hereto will have been delivered.

 

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**ARTICLE  VIII**

 

**CONDITIONSTO THE COMPANY’S OBLIGATIONS TO CLOSE**

 

TheCompany’s obligations to consummate the Merger are subject to the satisfactionor waiver, on the Closing Date, of all of the following conditions:

 

8.1                                 Covenants.  Each of Parent and Merger Sub shall haveperformed in all material respects all of their obligations hereunder requiredto be performed by them at or prior to Closing.

 

8.2                                 Representationsand Warranties.  Therepresentations and warranties of Parent and Merger Sub contained in thisAgreement shall be true and correct at and as of Closing, as though made at andas of such time (or, if made as of a specific date, at and as of such date),except where such failure to be true and correct has not had and would notreasonably be expected to materially impair, delay or prevent consummation ofthe Merger.

 

8.3                                 Certificates.  The Company shall have received a certificatesigned on behalf of Parent by an executive officer of Parent indicating thatthe conditions provided in Sections 8.1 and 8.2 have been satisfied.

 

8.4                                 MergerConsideration and Other Payments.  The Paying Agent shall have received,concurrent with Closing, on behalf of the holders of outstanding shares ofCompany Common Stock and Company Options, the Common Stock Merger Considerationto be paid in accordance with Sections 2.7(a) and 2.8.  The Company shall have received all fundsnecessary to pay the Obligations and any other indebtedness of the Company thatwill be repayable concurrent with Closing (including at the option of therelevant creditor).

 

**ARTICLE  IXTERMINATION**

** **

9.1                                 Termination.  Anything in this Agreement to the contrarynotwithstanding, this Agreement may be terminated at any time prior to Closingby:

 

(a)                                  the mutualwritten consent of the Company and Parent;

 

(b)                                 either Companyor Parent, in the event that the Effective Time shall not have occurred on orbefore December 31, 2009 (the “End Date”); *provided,however*, that (i) the right to terminate this Agreementpursuant to this Section 9.1(b) shall not be available at any timeduring which any legal proceeding is pending between the Company and eitherParent (or any of its Affiliates) or any Company shareholder(s) inconnection with this Agreement or any of the transactions contemplated hereby,and (ii) the right to terminate this Agreement pursuant to this Section 9.1(b) shallnot be available to any party hereto whose actions or omissions have been thecause of, or resulted in, either (A) the failure to satisfy the conditionsto the obligations of the terminating party to consummate the Merger prior tothe End Date, or (B) the failure of the Effective Time to have occurredprior to the End Date;

 

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(c)                                  either theCompany or Parent, if an injunction, order, decree or ruling shall have beenentered permanently restraining, enjoining or otherwise prohibiting theconsummation of the Merger and such injunction shall have become final andnon-appealable, provided that the party seeking to terminate this Agreementpursuant to this Section 9.1(c) shall have used its reasonable bestefforts to remove such injunction, order, decree or ruling as and to the extentrequired by this Agreement;

 

(d)                                 either theCompany or Parent, if the Special Meeting (including any adjournments andpostponements thereof) shall have concluded and the Company ShareholderApproval contemplated by this Agreement shall not have been obtained; provided,however, that the right to terminate this Agreement pursuant to this Section 9.1(d) shallnot be available to any party whose breach of a representation or warranty orfailure to fulfill any obligation under this Agreement caused the failure toobtain the Company Shareholder Approval;

 

(e)                                  either Companyor Parent if before Closing the Board of Directors of the Company or anycommittee thereof shall have (i) materially breached the covenants setforth in Section 5.11; (ii) recommended a Superior Proposal or failedto publicly announce its recommendation against a Superior Proposal within tenbusiness days after the first public announcement of or filing with the SECregarding the Superior Proposal; (iii) withdrawn, modified or amended itsapproval or recommendation of this Agreement or the Merger or failed toreaffirm its approval or recommendation of this Agreement or the Merger withinten business days upon Parent’s reasonable request at any time after the firstpublic announcement of or filing with the SEC regarding an AcquisitionProposal; (iv) have executed an agreement in principle or definitiveagreement relating to a Superior Proposal or similar business combination witha third-party; or (v) have resolved to do any of the foregoing.

 

9.2                                 Procedure andEffect of Termination.

 

(a)                                  In the event oftermination of this Agreement by a party hereto entitled to terminate thisAgreement pursuant to Section 9.1, written notice thereof shall forthwithbe given by the terminating party to the other party hereto, and this Agreementshall thereupon terminate and become void and have no effect, and the transactionscontemplated hereby shall be abandoned without further action by the partieshereto, except that the provisions of Sections 5.1(b), 9.2(b), and Article Xshall survive the termination of this Agreement; provided, however, that suchtermination shall not relieve any party hereto of any liability for any willfulbreach of any covenant or agreement of such party contained in this Agreement.

 

(b)                                 The Companyshall pay to Parent a fee equal to $1,500,000 (the “Termination Fee”) by wiretransfer of immediately available funds (i) in the event that thisAgreement is terminated pursuant to Section 9.1 (e) or (ii) inthe event that Parent or the Company terminates this Agreement pursuant to Section 9.1(d) andany Person shall have made an Acquisition Proposal (except that solely forpurposes of this usage, all references in the definition of “AcquisitionProposal” to “10%” shall be deemed to be references to 25%) after the date ofthis Agreement which proposal has been publicly

 

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disclosed and not withdrawnprior to the termination of this Agreement by any party pursuant to Section 9.1(d).  The Termination Fee shall be payable no laterthan five business days after such termination. The Company acknowledges thatthe agreements contained in this Section 9.2(b) are an integral partof the transactions contemplated in this Agreement, and that, without theseagreements, the Parent and Merger Sub would not enter into this Agreement.  The Company and Parent, on behalf ofthemselves and their Affiliates, agree that any payment required to be madepursuant to Section 9.2(b) shall be in full satisfaction of anyexpense reimbursement claims and shall represent liquidated damages and not apenalty, and shall be the exclusive remedy of the Parent and its Affiliates forany loss suffered as a result of the failure of the Merger to be consummatedand upon payment in accordance herewith neither the Company nor its Affiliatesshall have any further liability or obligation relating to or arising out ofthis Agreement or the transactions contemplated herein.

 

9.3                                 Limitation onParent Liability. Notwithstanding anything to the contrary herein, the maximum aggregateliability of Parent and Merger Sub hereunder shall be limited to the sum of$20,000,000.  In no event shall theCompany or its Affiliates seek or permit to be sought on behalf of the Companyor its shareholders any damages or any other recovery, judgment or damages ofany kind, including consequential, indirect, or punitive damages, from theParent Group or the Merger Sub in excess of this amount.

 

**ARTICLE  XMISCELLANEOUS**

 

10.1                           Notices  All notices and other communications given ormade pursuant to this Agreement shall be in writing and shall be deemed to havebeen duly given or made (i) five business days after being sent byregistered or certified mail, return receipt requested, (ii) upondelivery, if hand delivered, (iii) one business day after being sent byprepaid overnight courier with guaranteed delivery, with a record of receipt,or (iv) upon transmission with confirmed delivery if sent by telecopy, ineach case, to the appropriate address or number as set forth below.

 

(a)                                  Notices to theCompany shall be addressed to:

 

Goldleaf Financial Solutions, Inc.

350 Technology Blvd., Suite 200

Norcross, Georgia 30092

Attn: G. Lynn Boggs

Facsimile:(678) 966-0877

 

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with a copy to:

 

Harwell Howard Hyne Gabbert & Manner, P.C.

315 Deaderick Street

Suite 1800

Nashville, Tennessee 37238

Attn:  David Cox

Facsimile: (615) 251-1056

 

orat such other address and to the attention of such other Person as the Companymay designate by written notice to the other party hereto.

 

(b)                                 Notices toParent or Merger Sub shall be addressed to:

 

Jack Henry & Associates, Inc.

663 W. Highway 60

P.O. Box 807

Monett, Missouri  65708-8215

Attn:  Robert T. Schendel,General Counsel

Facsimile:  (877) 419-3299

 

with a copy to:

 

Stinson Morrison Hecker LLP

1201 Walnut Street, Suite 2900

Kansas City, Missouri 64106-2150

Attn:  Thomas J. Lynn

Facsimile: (816) 412-1242

 

orat such other address and to the attention of such other Person as Parent andMerger Sub may designate by written notice to the Company.

 

10.2                           Governing Law. THISAGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATIONAND EFFECT, BY THE LAWS OF THE STATE OF TENNESSEE APPLICABLE TO CONTRACTSEXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TOTHE CHOICE OF LAW PRINCIPLES OF SUCH STATE.

 

10.3                           EntireAgreement. This Agreement, the Disclosure Schedule, theParent Disclosure Schedule, and the Confidentiality Agreement contain theentire agreement between the parties with respect to the subject matter of thisAgreement and supersede all prior agreements, understandings, and negotiations,both written and oral, between the parties with respect to the subject matterof this Agreement.

 

10.4                           Expenses.  Except as otherwise set forth in thisAgreement or the Disclosure Schedule, each party shall be responsible for andshall pay all costs and expenses incurred by such party in connection with thisAgreement and the transactions contemplated by this

 

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Agreement, whether the Merger is or is notconsummated.  No later than three (3) businessdays prior to the Closing Date, the Company shall deliver to Parent pay-offletters or final invoices for the parties disclosed in Section 10.4 of theDisclosure Schedule.  The pay-off lettersor final invoices shall provide that the amounts set forth therein representpayment in full for all fees and expenses payable by the Company in connectionwith the transactions contemplated by this Agreement.  All such amounts shall be paid by wiretransfer from Company or Parent at or prior to Closing.

 

10.5                           Counterparts.  This Agreement may be executed in one or morecounterparts, all of which shall be considered one and the same agreement, andshall become effective against the parties that have executed and delivered theAgreement when one or more counterparts have been signed by Parent, Merger Suband the Company and delivered to Parent, Merger Sub and the Company.

 

10.6                           Successors andAssigns.  Neither this Agreement nor anyof the rights, interests or obligations hereunder shall be assigned by any ofthe parties hereto without the prior written consent of the other party.Subject to the foregoing, this Agreement shall be binding upon and inure to thebenefit of the parties hereto and their respective successors or assigns,heirs, legatees, distributees, executors, administrators and guardians. At theelection of Parent, any direct or indirect wholly-owned subsidiary of Parentmay be substituted for Merger Sub as a constituent corporation in the Merger,so long as such substitution would not reasonably be expected to (i) imposeany material delay in the obtaining of, or significantly increase the risk ofnot obtaining any Company Required Governmental Approval or Parent RequiredGovernmental Approval or the expiration or termination of any applicablewaiting period, (ii) significantly increase the risk of any GovernmentalAuthority entering an order prohibiting the consummation of the Merger, (iii) significantlyincrease the risk of not being able to remove any such order on appeal or otherwise,(iv) materially delay the consummation of the Merger or (v) otherwisenegatively affect the Company or its shareholders. If the requirements of theprevious sentence are met and Parent wishes to designate another wholly-owneddirect or indirect subsidiary to be a constituent corporation in lieu of MergerSub, then all references herein to Merger Sub shall be deemed references tosuch other subsidiary, except that all representations and warranties madeherein with respect to Merger Sub as of the date of this Agreement shall bedeemed representations and warranties made with respect to such othersubsidiary as of the date of such designation.

 

10.7                           Enforcement.  The parties agree that irreparable damagewould occur in the event that any of the provisions of this Agreement were notperformed in accordance with their specific terms or were otherwise breached.It is accordingly agreed that prior to the termination of this Agreement inaccordance with Article IX the parties shall be entitled to an injunctionor injunctions to prevent breaches of this Agreement and to enforcespecifically the terms and provisions of this Agreement exclusively in anyfederal or state court located in the Middle District of Tennessee, this beingin addition to any other remedy which they are entitled at law or inequity.  In addition, each of the partieshereto irrevocably agrees that any legal action or proceeding with respect tothis Agreement and the rights and obligations arising hereunder, or forrecognition and enforcement of any judgment in respect of this Agreement andthe rights and obligations arising hereunder brought by the other party heretoor its successors or assigns, shall be brought and determined exclusively inany federal or state court located in the Middle District of Tennessee. Each ofthe parties hereto hereby irrevocably submits with regard to any such

 

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action or proceeding for itself and inrespect of its property, generally and unconditionally, to the personaljurisdiction of the aforesaid courts and agrees that it will not bring anyaction relating to this Agreement or any of the transactions contemplatedhereby in any court other than the aforesaid courts. Each of the parties heretohereby irrevocably waives, and agrees not to assert, by way of motion, as adefense, counterclaim or otherwise, in any action or proceeding with respect tothis Agreement, (a) any claim that it is not personally subject to thejurisdiction of the above-named courts for any reason other than the failure toserve in accordance with this Section 10.7, (b) any claim that it orits property is exempt or immune from jurisdiction of any such court or fromany legal process commenced in such courts (whether through service of notice,attachment prior to judgment, attachment in aid of execution of judgment,execution of judgment or otherwise) and (c) to the fullest extentpermitted by the applicable Law, any claim that (i) the suit, action orproceeding in such court is brought in an inconvenient forum, (ii) thevenue of such suit, action or proceeding is improper or (iii) thisAgreement, or the subject mater hereof, may not be enforced in or by suchcourts.

 

10.8                           Amendments andWaivers.  This Agreement, and the termsand provisions of this Agreement, may be waived or amended only by aninstrument or instruments in writing signed, in the case of an amendment, bythe Company, Parent and Merger Sub, or in the case of a waiver, by the partyagainst whom the waiver is to be effective. The failure of any party hereto toenforce at any time any provision of this Agreement shall not be construed tobe a waiver of such provision, nor in any way to affect the validity of thisAgreement or any part of this Agreement or the right of any party thereafter toenforce each and every such provision. The waiver by any party hereto of abreach of any term or provision of this Agreement shall not be construed as awaiver of any subsequent breach.

 

10.9                           No ImpliedRepresentation; Non-Survival. Notwithstanding anythingcontained in Article III or IV or any other provision of this Agreement,it is the explicit intent of each party hereto that the Company is making norepresentation or warranty whatsoever, express or implied, beyond thoseexpressly given in this Agreement, including any implied warranty orrepresentation as to condition, merchantability or suitability as to any of theproperties or assets of the business of the Company and its Subsidiaries, andit is understood that Parent and Merger Sub take the business of the Companyand its Subsidiaries as is and where is. It is understood that any estimates,projections or other predictions contained or referred to in the DisclosureSchedule or the Parent Disclosure Schedule or in the materials that have beenprovided to Parent are not and shall not be deemed to be representations orwarranties of the Company. The representations, warranties, and covenants(other than those covenants which by their terms contemplate performance afterthe Effective Time) in this Agreement shall terminate at the Effective Time.

 

10.10                     Construction ofCertain Provisions.  It isunderstood and agreed that the specification of any dollar amount in therepresentations and warranties contained in this Agreement or the inclusion ofany specific item in the Disclosure Schedule or the Parent Disclosure Scheduleis not intended to imply that such amounts or higher or lower amounts, or theitems so included or other items, are or are not material, and no party shalluse the fact of the setting of such amounts or the fact of the inclusion of anysuch item in the Disclosure Schedule or the Parent Disclosure Schedule in anydispute or controversy between the parties as to whether any obligation, itemor matter not described in this Agreement or included in the

 

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Disclosure Schedule or the Parent DisclosureSchedule is or is not material for purposes of this Agreement.

 

10.11                     Headings. The Section andArticle headings contained in this Agreement are inserted for convenienceof reference only and will not affect the meaning or interpretation of thisAgreement. All references to Sections or Articles contained in this Agreementmean Sections or Articles of this Agreement, unless otherwise stated.

 

10.12                     Knowledge. For thepurposes of this Agreement references to the “Knowledge of the Company” in thisAgreement, or words of similar import, shall mean the knowledge of the Company’sofficers and division heads listed in Section 10.12 of the Disclosure Schedule,and references to the “Knowledge of Parent” in this Agreement, or words ofsimilar import, shall mean the knowledge of Parent’s officers and divisionheads listed in Section 10.12 of the Parent Disclosure Schedule.

 

10.13                     Third-partyBeneficiaries. Section 5.7, insofar as it relates todirector and officer indemnification and insurance, shall inure for the benefitof, and shall be enforceable by, such directors and officers entitled to suchindemnification. Except as otherwise provided by the terms hereof, thisAgreement shall not confer upon any Person not a party hereto (or theirsuccessors and assigns permitted by Section 10.6) any rights or remedieshereunder.

 

10.14                     PartialInvalidity. Wherever possible, each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but in case any one or more of the provisions containedin this Agreement shall, for any reason, be held to be invalid, illegal orunenforceable in any respect, such invalidity, illegality or unenforceabilityshall not affect any other provisions of this Agreement, and this Agreementshall be construed as if such invalid, illegal or unenforceable provision orprovisions had never been contained in this Agreement, unless the deletion ofsuch provision or provisions would result in such a material change as to causecompletion of the transactions contemplated hereby to be unreasonable.

 

10.15                     Waiver of JuryTrial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISEUNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, ANDTHEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVETO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISINGOUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT ORATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCHOTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THEFOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONSOF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER VOLUNTARILY, AND (iv) ITHAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUALWAIVERS AND CERTIFICATIONS IN THIS SECTION 10.15.

 

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INWITNESS WHEREOF, this Agreement has been signed by or on behalf of each of theparties as of the day first above written.

 
|   | **PARENT:**                             |
|--------|-----------------------------------------|
|   |                                    |
|   | JACK HENRY &  ASSOCIATES, INC. |
|   |                                    |
|   |                                    |   |
|   | By:                                     | /s/ Jack Prim |
|   | Name:                                   | Jack Prim |
|   | Title:                                  | CEO |
|   |                                    |
|   |                                    |
|   | **MERGER  SUB:**                        |
|   |                                    |
|   | PEACHTREE ACQUISITION  CORPORATION      |
|   |                                    |
|   |                                    |   |
|   | By:                                     | /s/ Jack Prim |
|   | Name:                                   | Jack Prim |
|   | Title:                                  | President |
|   |                                    |
|   |                                    |
|   | **COMPANY:**                            |
|   |                                    |
|   | GOLDLEAF  FINANCIAL SOLUTIONS, INC.     |
|   |                                    |
|   |                                    |   |
|   | By:                                     | /s/ Lynn Boggs |
|   | Name:                                   | Lynn Boggs |
|   | Title:                                  | CEO |

 

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