EX-10.1



 





Exhibit 10.1




EXECUTION COPY




ASSET PURCHASE AGREEMENT




SALE OF CERTAIN ASSETS




OF




KEYLINK SYSTEMS, A BUSINESS




OF




AGILYSYS, INC.,




AND




AGILYSYS CANADA INC.




TO




ARROW ELECTRONICS, INC.,




ARROW ELECTRONICS CANADA LTD.,




AND




SUPPORT NET, INC.




DATED: January 2, 2007




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	PAGE
	ARTICLE 1
	 	PURCHASE OF ASSETS	 	1
	1.1
	 	Assets to Be Purchased by Buyers	 	1
	1.2
	 	Assets to be Retained by Sellers	 	3
	 
	 	 	 	 
	ARTICLE 2
	 	ASSUMPTION OF LIABILITIES	 	5
	2.1
	 	Assumed Liabilities	 	5
	2.2
	 	Liabilities to be Retained by Sellers	 	6
	 
	 	 	 	 
	ARTICLE 3
	 	CONSIDERATION	 	7
	3.1
	 	Purchase Price	 	7
	3.2
	 	Purchase Price Adjustment	 	7
	3.3
	 	Allocation of Purchase Price	 	8
	3.4
	 	Pre-Closing Lost Customers-Lost Oracle Sales Adjustment	 	9
	 
	 	 	 	 
	ARTICLE 4
	 	REPRESENTATIONS AND WARRANTIES OF SELLERS	 	9
	4.1
	 	Corporate Status	 	9
	4.1.1
	 	Organization and Power	 	9
	4.1.2
	 	Qualification	 	9
	4.2
	 	Sellers’ Enforceability	 	9
	4.3
	 	Governmental Approvals	 	10
	4.4
	 	Absence of Conflicts	 	10
	4.5
	 	Financial	 	10
	4.6
	 	Compliance with Laws	 	11
	4.7
	 	No Litigation	 	11
	4.8
	 	Title; Condition and Completeness of Assets	 	11
	4.9
	 	Inventories	 	11
	4.10
	 	No Changes	 	12
	4.11
	 	Intellectual Property	 	13
	4.12
	 	Environmental Matters	 	14
	4.13
	 	Employee Benefit Plans	 	16
	4.14
	 	Employees	 	17
	4.15
	 	Contracts	 	18
	4.16
	 	Sold Business Real Property	 	19
	4.17
	 	Taxes	 	20
	4.18
	 	Brokers and Finders	 	21
	4.19
	 	Sufficiency of the Assets	 	21
	4.20
	 	No Undisclosed Liabilities	 	21
	4.21
	 	No Affiliate Transactions	 	21
	4.22
	 	Accounts Receivable	 	21
	4.23
	 	Guarantees	 	22
	4.24
	 	Insurance	 	22
	4.25
	 	Warranties	 	22
	 
	 	 	 	 
	ARTICLE 5
	 	REPRESENTATIONS AND WARRANTIES OF BUYERS	 	22
	5.1
	 	Corporate Status	 	22
	5.2
	 	Buyers Enforceability	 	22
	5.3
	 	Consents	 	22
	5.4
	 	Absence of Conflicts	 	23






 









 






	 	 	 	 	 
	 	 	 	 	PAGE
	5.5
	 	No Litigation	 	23
	5.6
	 	Available Funds	 	23
	5.7
	 	Brokers and Finders	 	23
	 
	 	 	 	 
	ARTICLE 6
	 	CONDITIONS TO CLOSING	 	23
	6.1
	 	Conditions to Each Party’s Obligation to Effect the Closing	 	23
	6.2
	 	Sellers’ Deliveries	 	24
	6.3
	 	Buyers’ Deliveries	 	26
	 
	 	 	 	 
	ARTICLE 7
	 	CLOSING	 	26
	7.1
	 	Closing	 	26
	 
	 	 	 	 
	ARTICLE 8
	 	COVENANTS	 	27
	8.1
	 	Pre-Closing Covenants	 	27
	8.1.1
	 	Conduct of Sold Business	 	27
	8.1.2
	 	Access to Information	 	27
	8.1.3
	 	Reasonable Efforts	 	27
	8.1.4
	 	Supplemental Disclosure	 	28
	8.1.5
	 	Termination	 	28
	8.1.6
	 	Effect of Termination	 	29
	8.1.7
	 	Insurance; Letters of Credit; Surety Bonds	 	30
	8.1.8
	 	Approval of Agilysys Shareholders	 	31
	8.1.9
	 	Bulk Sales	 	32
	8.1.10
	 	No Solicitation	 	33
	8.1.11
	 	Canadian Clearance Certificates	 	33
	8.1.12
	 	Exclusivity	 	33
	8.1.13
	 	Employee Matters	 	33
	8.1.14
	 	Sellers’ Consents	 	34
	8.2
	 	Post Closing Covenants	 	34
	8.2.1
	 	Transfer of Assets	 	34
	8.2.2
	 	Employee and Related Matters	 	35
	8.2.3
	 	Use of Retained Intellectual Property	 	39
	8.2.4
	 	Tax Cooperation	 	39
	8.2.5
	 	GST	 	40
	8.2.6
	 	Section 22 Election	 	40
	8.2.7
	 	Payment of Certain Taxes	 	40
	8.2.8
	 	Assumed Liabilities	 	40
	8.2.9
	 	Noncompetition	 	40
	8.2.10
	 	Nonsolicitation	 	41
	8.2.11
	 	Investment Canada	 	41
	8.2.13
	 	Product Liability Claims	 	41
	8.3
	 	Miscellaneous Covenants	 	42
	8.3.1
	 	Publicity	 	42
	8.3.2
	 	Expenses	 	42
	8.3.3
	 	No Assignment	 	42
	8.3.4
	 	Further Assurances	 	42
	 
	 	 	 	 
	ARTICLE 9
	 	INDEMNIFICATION	 	42
	9.1
	 	Survival	 	42
	9.2
	 	Indemnification By Sellers	 	43






 









 






	 	 	 	 	 
	 	 	 	 	PAGE
	9.3
	 	Indemnification By Buyers	 	43
	9.4
	 	Limitations on Indemnification by Sellers	 	44
	9.5
	 	Limitations on Indemnification by Buyers	 	44
	9.6
	 	Notice of Non-Third Party Claim	 	45
	9.7
	 	Third Party Claims	 	46
	9.8
	 	Disputes Involving Claims for Indemnification	 	48
	9.9
	 	Exclusive Remedy	 	48
	 
	 	 	 	 
	ARTICLE 10
	 	CONSTRUCTION	 	48
	10.1
	 	Notices	 	48
	10.2
	 	Binding Effect	 	49
	10.3
	 	Headings	 	49
	10.4
	 	Exhibits and Schedule	 	49
	10.5
	 	Counterparts	 	49
	10.6
	 	Consent to Jurisdiction and Governing Law	 	50
	10.7
	 	Waivers	 	50
	10.8
	 	Pronouns	 	50
	10.9
	 	Time Periods	 	50
	10.10
	 	No Strict Construction	 	50
	10.11
	 	Modification	 	50
	10.12
	 	Entire Agreement	 	50
	10.13
	 	No Third Party Beneficiary Rights	 	50
	10.14
	 	Definitions	 	50






 









 






	 	 	 
	SCHEDULES:	 	 
	 
	 	 
	1.1(a)
	 	Sold Business Real Property Leases
	1.1(b)
	 	Sold Business Owned Real Property
	1.1(c)
	 	Tangible Personal Property
	1.1(d)
	 	Sold Business Marks
	1.1(f)
	 	Customer and Sales Information
	1.1(g)
	 	Prepaid Expenses and Deposits
	1.1(h)
	 	Assumed Contracts
	1.1(k)
	 	Software
	2.1(a)
	 	Accounts Payable
	2.1(b)
	 	Material Contract Breaches
	3.2
	 	Summary of Significant Reserve Policies
	3.3
	 	Allocation of Purchase Price
	4.4
	 	Conflicts
	4.5
	 	Financial Statements
	4.6
	 	Material Permits and Licenses
	4.7
	 	Litigation
	4.8
	 	Title
	4.9
	 	Inventories
	4.10
	 	No Changes
	4.10(i)
	 	Changes to Benefit Plans
	4.11(a)
	 	Registered Sold Business Marks
	4.11(b)
	 	Sold Business Intellectual Property
	4.11(d)
	 	Intellectual Property Infringement
	4.12(g)
	 	Environmental
	4.13(a)
	 	Benefit Plans
	4.13(b)
	 	Acceleration
	4.14(a)
	 	Sold Business Employees
	4.14(b)
	 	Employees
	4.15(c)
	 	Material Contracts
	4.15(d)(i)
	 	Material Contracts delivered to Buyers
	4.16(b)
	 	Sold Business Real Property
	4.17
	 	Taxes
	4.18
	 	Sellers’ Brokers and Finders
	4.20
	 	No Undisclosed Liabilities
	4.21(a)
	 	No Affiliate Transactions
	4.21(b)
	 	Arm’s Length Basis
	4.22
	 	Accounts Receivable
	4.23
	 	Guarantees
	4.24
	 	Insurance
	4.25
	 	Warranties
	5.7
	 	Buyers’ Brokers and Finders
	8.1.7(c)
	 	Surety Bonds
	8.1.13
	 	Employee Matters
	8.2.2(i)
	 	Change of Control Agreements
	10.14(a)
	 	Knowledge
	10.14(b)
	 	Terminated Suppliers







 










 





ASSET PURCHASE AGREEMENT




     THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into as of the 2nd day of January,
2007 by and among AGILYSYS, INC., an Ohio corporation (“Agilysys”), AGILYSYS CANADA INC., an
Ontario corporation (“Agilysys Canada” and, together with Agilysys, “Sellers”), and Arrow
Electronics, Inc., a New York corporation (“Buyer”), Support Net, Inc., an Indiana corporation (“US
Buyer”), and Arrow Electronics Canada Ltd., a Canadian corporation (“Canadian Buyer”, and together
with Buyer and US Buyer, “Buyers”).



RECITALS




     WHEREAS, subject to the terms and conditions set forth in this Agreement, Buyers wish to
acquire certain of the assets of Sellers relating to Sellers’ business, as presently conducted, of
distributing enterprise computer technology products through their reseller channel, which is
operated by Sellers as “Keylink Systems” (the “Sold Business”);



     WHEREAS, US Buyer is prepared to assume the “Assumed Liabilities” (as defined below) of
Agilysys, and Canadian Buyer is prepared to assume the Assumed Liabilities of Agilysys Canada; and



     WHEREAS, on and subject to the terms and conditions set forth herein, Agilysys desires to sell
and US Buyer desires to purchase, the “Purchased Assets” (as defined below) of Agilysys, and
Agilysys Canada desires to sell and Canadian Buyer desires to purchase, the Purchased Assets of
Agilysys Canada.



     NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the
parties hereby agree as follows:



SECTION 1.

PURCHASE OF ASSETS




     SECTION 1.1. Assets to Be Purchased by Buyers. Subject to Section 1.2, Sellers hereby
agree to sell, convey, assign, transfer and deliver to Buyers, and Buyers agree to purchase as of
the Closing, (i) all of the assets used in connection with the Sold Business other than the assets
which are used by both the Sold Business and the other businesses of Sellers, as the same exist on
the Closing Date, including those reflected in the unaudited balance sheet of the Sold Business as
of September 30, 2006 (the “Balance Sheet”) (subject to any adjustments thereto contained in the
Final Balance Sheet) and (ii) all of the related work papers, documents and records generated by
Sellers and their accountants in connection therewith, including, without limitation, the
following:




          (a) So long as Sellers shall have delivered to Buyers consents to assignment from
the respective lessors with respect thereto, the rights, subject to the obligations,
under the leases together with all amendments, modifications and supplements thereto
(the “Sold Business Real Property Leases”), for the real property
set forth on Schedule 1.1(a) (the “Sold Business Leased Real Property”),
and all



1









 







leasehold interests therein and all rights of Sellers to leasehold improvements
located thereon to the extent covered by the Sold Business Real Property Leases, and all
fixtures, machinery, installations and equipment attached thereto and located thereon;




          (b) All right, title and interest in and to the real property, and all rights,
title, privileges and appurtenances thereto (including, without limitation, all
development rights, air rights, mineral rights and water rights related thereto), listed
on Schedule 1.1(b) (the “Sold Business Owned Real Property” and, together with
the Sold Business Leased Real Property, the “Sold Business Real Property”) and all
fixtures, machinery, installations and equipment attached thereto and located thereon;




          (c) All right, title and interest in and to the furniture, fixtures, improvements,
supplies, computers, machinery, equipment and other tangible personal property
described, or of the type listed, on Schedule 1.1(c), which schedule shall be
updated as of two days prior to the Closing (“Tangible Personal Property”);




          (d) All right, title and interest in and to the Marks listed on Schedule
1.1(d) hereto and all other Marks used exclusively in connection with the Sold
Business, together with the goodwill associated therewith (the “Sold Business Marks”),
the Trade Secrets that are used exclusively in connection with the Sold Business (“Sold
Business Trade Secrets”), the copyrights that are owned by Sellers that are used
exclusively in connection with the Sold Business and any applications and registrations
therefor (the “Sold Business Copyrights” and collectively with the Sold Business Marks
and the Sold Business Trade Secrets, the “Sold Business Intellectual Property”),
together with all rights of Sellers to recover damages for any past, present or future
infringement, misappropriation or other violation of the Sold Business Intellectual
Property;




          (e) All right, title and interest in the inventories of the Sold Business,
including all products, supplies and packaging materials, on hand or in route to Sellers
from suppliers (collectively, the “Inventory”);




          (f) Sellers’ customer lists (subject to applicable privacy Laws) as set forth on
Schedule 1.1(f), which schedule shall be updated as of two days prior to the
Closing, customer files, sales literature and all related documentation as in effect at
the Closing and used exclusively in connection with the Sold Business;




          (g) The prepaid expenses, prepaid deposits, retainers, customer deposits, credits,
advances, and security deposits of Sellers in respect of the Sold Business including,
without limitation, those set forth in Schedule 1.1(g); provided,
however, that prepaid expenses shall not include any expenses associated with
Terminated Suppliers;




          (h) All of Sellers’ rights and interests in and to all of the contracts which are
utilized exclusively in connection with the Sold Business including, without limitation,
Material Contracts and other contracts relating to suppliers and
customers, open purchase orders and open sales orders, including without limitation



2









 







those contracts that are identified, or of the type listed, on Schedule 1.1(h)
(collectively, the “Assumed Contracts”);




          (i) All books, records, files and papers, whether in hard copy or computer format,
of Sellers to the extent they contain information relating to the Sold Business or to
any of the Transferred Employees. To the extent any such books, records, files and
papers are (i) also used in connection with any of Sellers’ businesses other than the
Sold Business, (ii) are required by Law to be retained by Sellers or (iii) relate to any
income tax credit, bankruptcy or creditors’ rights claims or other credit, Sellers may
deliver copies or other reproductions from which information solely concerning Sellers’
businesses other than the Sold Business has been deleted;




          (j) Except as listed in Section 1.2(b), all accounts and notes receivable and other
claims for money due Sellers in existence as of the close of business on the Closing
Date which have been generated in the ordinary course of business by the Sold Business
(collectively, the “Accounts Receivable”); provided, however, that the
Accounts Receivable shall not include any accounts receivable (A) subject to any third
party collection procedures or any other actions or proceedings which have been
commenced in connection therewith or (B) related to the Pre-Closing Lost Customers;




          (k) All software (including without limitation all web-based technology and
software related to such web-based technology and customer-facing software used or held
for use exclusively by the Sold Business) listed on Schedule 1.1(k) and other
copyrightable subject matter that is used exclusively in the Sold Business, and all
tangible materials that embody any Sold Business Intellectual Property; and




          (l) All rights, title and interests, subject to the obligations, under any leases
for Tangible Personal Property (the “Tangible Personal Property Leases”).



     The above-described assets to be purchased and sold pursuant to this Agreement are referred to
as the “Purchased Assets.” Notwithstanding the forgoing, to the extent that Agilysys Canada has
any right, title and interest in any of the Purchased Assets prior to the Closing, such assets
shall be acquired by Canadian Buyer (the “Canadian Purchased Assets”).



     SECTION 1.2. Assets to be Retained by Sellers. Sellers shall retain and Buyers shall
not purchase from Sellers any properties or assets of Sellers which are not included among
the Purchased Assets including, but not limited to, the following properties and assets of Sellers:




          (a) All cash on hand and checks received pending collection as of the close of business
on the Closing Date, notes, bank deposits, certificates of deposit, marketable securities
and other cash equivalents, including, but not limited to, the
consideration payable by Buyers to Sellers under this Agreement in respect of the
Purchase Price;



3









 






          (b) All income and other tax credits, all tax refund claims (including any credits for
deferred taxes) and all bankruptcy or creditors’ rights claims; provided,
however, that with respect to any tax certiorari or other proceedings for the
reduction of real estate taxes, Sellers shall only be entitled to that portion of any net
tax refund, after deducting Buyers’ costs of prosecuting the same, attributable to the
period prior to the Closing;




          (c) All rights of Sellers under this Agreement and the agreements and instruments
delivered to Sellers by Buyers pursuant to this Agreement;




          (d) All rights to (i) all Marks, Trade Secrets, and copyrights and applications and
registrations therefor, not specifically covered by Section 1.1(d), together with any and
all goodwill associated therewith, and (ii) all software and other Intellectual Property not
specifically covered by Section 1.1(k) (collectively, the “Retained Intellectual Property”);




          (e) All capital stock of, or ownership interest in, any entity owned by Sellers;




          (f) All books, records, files and papers, whether in hard copy or computer format, that
(i) Sellers shall be required to retain pursuant to any statute, rule, regulation,
ordinance, contract or agreement, (ii) contain information relating to any employee of
Sellers other than a Transferred Employee or any business or activity of Sellers or their
Affiliates not relating exclusively to the Sold Business or (iii) relate to any income tax
credit, bankruptcy or creditors’ rights claims or other credit;




          (g) The minute books, stock transfer books and corporate seals of Sellers and any other
books and records of Sellers relating to the Retained Assets or the Retained Liabilities;




          (h) Insurance policies carried by or covering Sellers and all credits or other amounts
due or to become due on account of or with respect to such policies;




          (i) All accounts receivable of Sellers not generated by the Sold Business;




          (j) All rights and interests in and under the Retained Benefit Plans (as defined below)
and related instruments and records;




          (k) All rights of Sellers under all contracts and agreements to which Sellers are a
party that do not constitute Assumed Contracts;




          (l) All real property and leasehold interests of Sellers not listed on Schedules
1.1(a) or 1.1(b) (the “Retained Real Property”);




          (m) All inventory, machinery, equipment and tangible assets located at the Retained
Real Property and not otherwise part of the Tangible Personal Property, Inventory or subject
to the Tangible Personal Property Leases;



4









 






          (n) All claims, causes of action, choses in action, rights of recovery and rights of
set off of any kind against any Person arising out of or relating to events prior to the
Closing which do not arise out of the Purchased Assets or the Assumed Liabilities; and




          (o) All other assets of Sellers not specifically included among the Purchased Assets
and transferred to Buyers pursuant to Section 1.1.



     The above-described assets to be retained by Sellers pursuant to this Agreement are referred
to as the “Retained Assets.”



SECTION 2.

ASSUMPTION OF LIABILITIES




     SECTION 2.1. Assumed Liabilities. Buyers hereby agree to assume at the Closing and to
pay, perform and discharge when due and indemnify and hold Sellers harmless against the following
liabilities and obligations of Sellers incurred exclusively in connection with the Sold Business,
as the same shall exist at the Closing (such liabilities and obligations are hereinafter referred
to as the “Assumed Liabilities”):




          (a) All accounts payable and accrued expenses relating to the Sold Business incurred in
the ordinary course of business consistent with past practice as of the Closing Date to the
extent reflected or reserved against in the Audited Balance Sheet, including, without
limitation, those listed on Schedule 2.1(a) hereto; provided,
however, that such accounts payable and accrued expenses shall not include any
liabilities associated with any of the Disputed Payables or any Retained Benefit Plan;




          (b) Sellers’ liabilities, obligations and duties under all Assumed Contracts, Sold
Business Real Property Leases (so long as Sellers have delivered to Buyers consents to
assignment from the respective lessors with respect thereto) and Tangible Personal Property
Leases; provided, however, Buyers shall not assume any liabilities,
obligations or duties under such Assumed Contracts, Sold Business Real Property Leases or
Tangible Personal Property Leases for any material breach thereof by Sellers for any period
prior to the Closing unless such breach is listed on Schedule 2.1(b);




          (c) (i) All liabilities and obligations that arise after the Closing with respect to or
relating to the Purchased Assets, except for any liabilities or obligations otherwise
retained by Sellers under Sections 2.2 or this Section 2.1, and (ii) Assumed Litigation
subject to Section 9.2;




          (d) Any liability under the Worker Adjustment and Retraining Notification Act (“WARN”)
or any similar Law to which Transferred Employees are entitled, either now or hereafter, in
connection with the transactions contemplated hereby;




          (e) All liabilities and obligations specifically assumed by Buyers pursuant to Section
8.2.2; and



5









 






          (f) Product liability claims arising out of claims of third parties for damage or
injury suffered as the result of defective products sold by Sellers prior to the Closing
Date for which Buyers receive reimbursement or indemnification by a supplier of the Sold
Business (the “Assumed Product Liabilities”).



     Notwithstanding the foregoing, to the extent that prior to the Closing, any of the Assumed
Liabilities are the liabilities or obligations of Agilysys Canada, such Assumed Liabilities shall
be assumed by Canadian Buyer (“Canadian Liabilities”).



     SECTION 2.2. Liabilities to be Retained by Sellers. Sellers shall retain all
liabilities and obligations of Sellers not expressly assumed by Buyers pursuant to Section 2.1,
including, without limitation the following liabilities and obligations of Sellers (all such
retained liabilities and obligations are hereinafter referred to as the “Retained Liabilities”):




          (a) All liabilities and obligations of Sellers under this Agreement and the agreements
and instruments delivered by Sellers to Buyers pursuant to this Agreement;




          (b) Any obligation to pay Sellers’ fees or expenses incurred in connection with this
Agreement or the consummation of the transactions contemplated hereby, including, without
limitation, fees and expenses of brokers, finders, investment bankers, attorneys,
consultants, accountants or representatives (except as otherwise set forth in Section
3.2(d));




          (c) Sellers’ liability for any severance or termination pay under any Retained Benefit
Plan, this Agreement, or any other policy or contract of Sellers (collectively “Severance”),
to any individuals who are Sold Business Employees, either now or hereafter, in connection
with the transactions contemplated hereby or otherwise;




          (d) All liabilities and obligations (i) under Sellers’ “change of control” agreements
to which any individuals who are Sold Business Employees are entitled, either now or
hereafter, in connection with the transactions contemplated hereby or otherwise, and (ii)
relating to the vesting of participants and beneficiaries accounts under the retirement plan
of Seller;




          (e) Except as otherwise expressly provided in Section 8.2.2, any liabilities or
obligations with respect to any Sold Business Employee that accrued or arose prior to the
Closing, including without limitation with respect to any benefits under any Retained
Benefit Plans (regardless of when such liabilities accrued or arose);




          (f) All liabilities and obligations for taxes relating to the Sold Business for all
periods (or portions thereof) ending on or prior to the Closing Date, and all liabilities
for deferred Taxes;




          (g) All actions or proceedings pending against Sellers or relating to the Sold Business
prior to the Closing Date, other than Assumed Litigation subject to Section 9.2;



6









 






          (h) All Retained Environmental Liabilities (regardless of whether such liabilities are
liabilities or obligations of Sellers);




          (i) All obligations with respect to the Sold Business for repair or replacement of, or
refund for, damaged, defective or returned goods sold by Sellers prior to the Closing Date
(the “Returned Goods”);




          (j) All liabilities with respect to the Sold Business arising out of claims of third
parties for damage or injury suffered as the result of defective products sold by Sellers
prior to the Closing Date other than Assumed Product Liabilities (the “Product
Liabilities”); and




          (k) All liabilities with respect to the City of Solon, Enterprise Zone Agreement, dated
April 20, 1998.



SECTION 3.

CONSIDERATION




     SECTION 3.1. Purchase Price. The aggregate purchase price for the Purchased Assets
shall be an amount equal to Four Hundred Eighty Five Million Dollars ($485,000,000) (the “Purchase
Price”), and the assumption by Buyers at the Closing of the Assumed Liabilities. At the Closing,
Buyers shall pay the Purchase Price by wire transfer of immediately available funds to such account
as Sellers may reasonably direct by written notice delivered to Buyers by Sellers at least two (2)
Business Days prior to the Closing Date. Buyers and Sellers acknowledge and agree that no amount
of the Purchase Price is received, receivable or allocated explicitly to the covenants contained in
Section 8.2.9.



     SECTION 3.2. Purchase Price Adjustment.




          (a) Audited Balance Sheet Preparation. No later than 60 days after the Closing
Date, Sellers shall deliver to Buyers a balance sheet of the Sold Business dated as of the
Closing Date audited by Ernst & Young (the “Independent Auditors”) in accordance with the
standards of the Public Company Accounting Oversight Board (United States) (the “Audited
Balance Sheet”). The Audited Balance Sheet will be prepared in accordance with generally
accepted accounting principles using Sellers’ historical internal accounting practices and
prepared in a manner consistent with the Balance Sheet. Audited Balance Sheet items listed
on Schedule 3.2(a) will be estimated consistent with the methodology set forth in Schedule
3.2(a) which is consistent with the methodology used in preparation of the Financial
Statements (as defined in Section 4.5). As part of the preparation of the Audited Balance
Sheet, Buyers shall have the right to jointly conduct with Sellers a complete physical
inventory of the Sold Business as of the Closing Date and the results thereof shall be
reflected in the Audited Balance Sheet. The Audited Balance Sheet shall fairly present in
all material respects the financial position of the Sold Business as of the Closing Date. Buyers and Sellers shall equally share the
cost of the preparation and audit of the Audited Balance Sheet.




          (b) Audited Balance Sheet Review. All work papers, documents and records used
or generated by Sellers and the Independent Auditors in connection with the



7









 







preparation of the Audited Balance Sheet, along with access to Sellers’ accountants and management
personnel, will be made available to Buyers. Unless Buyers give Sellers written notice of
their objection by the thirtieth (30th) day after Buyers’ receipt of the Audited Balance
Sheet, the Audited Balance Sheet will become final and binding on the parties and will be
deemed to be the “Final Balance Sheet.”




          (c) Audited Balance Sheet Dispute. If Buyers object (as provided in the last
sentence of Section 3.2(b)) to the Audited Balance Sheet and Buyers and Sellers are able to
resolve their dispute within fifteen (15) days after Sellers’ receipt of Buyers’ written
objection, the Audited Balance Sheet (reflecting the resolution) will be final and binding
on the parties and will be deemed to be the “Final Balance Sheet.” If Buyers object (as
provided in the last sentence of Section 3.2(b)) to the Audited Balance Sheet and Buyers and
Sellers are unable to resolve their dispute within fifteen (15) days after Sellers’ receipt
of Buyers’ written objection, the dispute will be resolved by Price Waterhouse Coopers or
any other mutually acceptable certified public accounting firm (the “Independent
Accountants”). The Independent Accountants will be instructed to perform their services as
expeditiously as possible. The resolution of the Independent Accountants shall be presented
in an “Arbitrator’s Award Report,” prepared by the Independent Accountants, which shall be
final and binding on the parties. Buyers and Sellers shall each be given the opportunity to
submit any documents to the Independent Accountants, with a copy to the other party, which
that party believes will assist the Independent Accountant in the production of the
Arbitrator’s Award Report. The decision of the Independent Accountants as reflected in the
Arbitrator’s Award Report shall be reflected in a Final Balance Sheet to be issued by
Sellers as soon as possible thereafter.




          (d) Cost of Independent Accountants. The fees and expenses of the Independent
Accountants for the resolution of the dispute shall be shared equally by Buyers and Sellers.




          (e) Working Capital Adjustment. The Purchase Price shall be subject to
adjustment as follows (“Working Capital Adjustment”): If Working Capital is less than the
Target Working Capital, the Purchase Price shall be decreased in amount equal to the
difference between the Target Working Capital and the amount of the Working Capital. If the
Working Capital is greater than the Target Working Capital, the Purchase Price shall be
increased in an amount equal to the difference between the amount of the Working Capital and
the Target Working Capital. As used herein, “Working Capital” is defined as current assets
(included in Purchased Assets) less current liabilities (included in Assumed Liabilities),
as reflected on the Final Balance Sheet. Payments owed to either Buyers or Sellers as a
result of the Working Capital Adjustment shall be made within 5 days after issuance of the
Final Balance Sheet, by wire transfer of immediately available funds. Any such payments
shall be an adjustment to the Purchase Price.



     SECTION 3.3. Allocation of Purchase Price. The aggregate fair market values of the
Purchased Assets and the allocation of the Purchase Price and Assumed Liabilities that are
liabilities for income tax purposes among the Purchased Assets as of the Closing Date for purposes
of Section 1060 of the Internal Revenue Code and for all Canadian and other tax



8









 







purposes will be agreed to no less than three (3) business days before the Closing and such allocation shall be
attached to this Agreement as Schedule 3.3. Such allocation shall be amended to update any
adjustment to the Purchase Price. Buyers and Sellers agree to be bound by such fair market value
determination and allocation, as it may be amended from time to time, and to complete and attach
Internal Revenue Service Form 8594 to their respective U.S. tax returns accordingly and to file all
comparable Canadian and other tax returns accordingly.



     SECTION 3.4. Pre-Closing Lost Customers-Lost Oracle Sales Adjustment. Sellers shall
notify Buyers promptly in the event that (i) any of the contracts of customers of the Sold Business
(either with Sellers or with suppliers of the Sold Business) for the purchase of products from the
Sold Business have been terminated prior to the Closing Date (the “Pre-Closing Lost Customers”) or
(ii) as of the Closing Date, Oracle has not consented to the transaction contemplated by this
Agreement (the “Oracle Refusal”). In the event that Buyers receive notice or become aware of any
Pre-Closing Lost Customers or of an Oracle Refusal then, in addition to any adjustment pursuant to
Section 3.2, the Purchase Price shall be reduced by an amount equal to the product of (x) the
amount by which the sum of (a) the sales to such Pre-Closing Lost Customers during the twelve (12)
month period ending September 30, 2006 (the “Pre-Closing Lost Sales”) and (b) sales of Oracle
products during the twelve (12) month period ending September 30, 2006 (the “Oracle Lost Sales”),
exceeds $200 million, multiplied by (y) 0.35 (the “Lost Customers Multiple”).



SECTION 4.

REPRESENTATIONS AND WARRANTIES OF SELLERS




     Sellers represent and warrant (jointly and severally) to Buyers that:



     SECTION 4.1. Corporate Status.




          (a) Organization and Power. Agilysys and Agilysys Canada are corporations duly
organized, validly existing and in good standing under the Laws of the State of Ohio and the
Province of Ontario, Canada, respectively. Sellers have full corporate power to: (a) own, lease
and operate the Purchased Assets and carry on the Sold Business as and where such Purchased Assets
are now owned or leased and as such Sold Business is presently being conducted by each of them; and
(b) execute, deliver and perform this Agreement and all other agreements and documents to be
executed and delivered by such Seller in connection herewith.




          (b) Qualification. With respect to the operation of the Sold Business, each Seller is
qualified to do business as a foreign or extra-provincial corporation in each jurisdiction where the failure to be so qualified could result
in a Material Adverse Effect.



     SECTION 4.2. Sellers’ Enforceability. The execution and delivery of this Agreement
and, subject to the approval of the shareholders of Agilysys, the due consummation by Sellers of
the transactions contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Sellers. This Agreement constitutes (and each document and
instrument contemplated by this Agreement, when executed and delivered in accordance with the
provisions hereof, will constitute) a valid and legally binding agreement of Sellers enforceable in



9









 







accordance with its terms, subject to (i) the effect of bankruptcy, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the enforcement of
creditors’ rights generally, and (ii) general equitable principles (whether considered in a
proceeding at equity or at Law).



     SECTION 4.3. Governmental Approvals. Subject to the parties’ waiver of applicable
bulk sales Laws, no authorization, approval, consent or order of, or registration, declaration or
filing with, any federal, state, territorial, municipal, local, provincial or foreign governmental,
regulatory, or other public body or any subdivision, agency, instrumentality, or court (a
“Governmental Authority”) is required in connection with the execution, delivery or performance of
this Agreement by Sellers or any other agreement, instrument or document to be delivered by or on
behalf of Sellers in connection herewith, except for (a) such consents, filings and approvals as
may be required pursuant to the Hart Scott Rodino Act (“HSR”) or by the Competition Act (Canada)
(the “Competition Act”), and (b) such other orders, authorizations, registrations, declarations or
filings with any Governmental Authority the failure of which to be obtained or made will not (x)
materially impair the ability of Sellers to perform their obligations hereunder or (y) prevent the
consummation of any of the transactions contemplated hereby.



     SECTION 4.4. Absence of Conflicts. Subject to receipt of the approvals, consents,
orders, declarations and other matters set forth in Section 4.3 and except as set forth on
Schedule 4.4, neither the execution, delivery nor performance of this Agreement or any of
the other agreements, instruments or documents to be delivered by or on behalf of Sellers in
connection herewith will result in the acceleration of any of the Assumed Liabilities or the
creation of any Lien on any of the Purchased Assets (other than Permitted Liens and the Liens
created by Buyers as of the Closing Date) or conflict with, violate or result in any material
breach of or constitute a material default under (whether upon notice or the passage of time or
both) any (i) Law applicable to Sellers, (ii) instrument to which any Seller is a party or by which
any Seller is bound relating to the Sold Business, excluding any supplier contracts, customer
contracts, purchase orders, sales orders, and any non-disclosure agreements, the violation,
conflict, breach or default of which would not reasonably be likely to result in a Material Adverse
Effect, (iii) any provision of the Articles of Incorporation or Code of Regulations, as amended, or
any similar document, of any Seller, or (iv) such other orders, authorizations, registrations,
declarations or filings the failure of which to be obtained or made would not (x) reasonably be
likely to result in a Material Adverse Effect, (y) materially impair the ability of Sellers to
perform their obligations hereunder, or (z) prevent the consummation of any of the transactions
contemplated hereby.



     SECTION 4.5. Financial. The unaudited balance sheet and the related Statement of Net
Sales, Cost of Goods Sold and Direct Operating Expenses (the “Statement of Operations”) of the Sold
Business for the fiscal year ended March 31, 2006, and at and for the six month period ended
September 30, 2006, are attached hereto as Schedule 4.5, together with reconciling statements tying
such Statement of Operations for the fiscal year ended March 31, 2006 to the income statement
provided in the Proxy Statement (together, the “Financial Statements”). Except as set forth on
Schedule 4.5, such Financial Statements (i) are true and accurate in all material respects, (ii)
have been prepared from the books and records of Sellers regularly maintained by management and
used to prepare the consolidated financial statements of Sellers in accordance with the principles
stated therein, (iii) were prepared in accordance with GAAP,



10









 







and (iv) fairly present in all material respects the Sold Business’ results of operations and financial condition with respect to
the items set forth therein as if it had been conducted as a separate entity during such period and
based upon the assets acquired and liabilities assumed as stipulated in this Agreement, excluding
certain cost allocations and subject to the absence of footnote disclosure. In addition, the
Statement of Operations presented in the Financial Statements does not contain any extraordinary or
non-recurring income or any other income not earned in the ordinary and customary course of the
Sold Business, except as set forth therein. Sellers have maintained the books and records of the
Sold Business in a manner sufficient to permit the preparation of its financial statements in
accordance with GAAP as in effect from time to time.



     SECTION 4.6. Compliance with Laws. With respect to the operation of the Sold
Business, Sellers currently are not, nor have they been in the past three years, in violation of
any Law, excluding any violation which would not reasonably be likely to result in a Material
Adverse Effect. Sellers have all material permits and licenses necessary to conduct the Sold
Business as conducted by Sellers immediately prior to the Closing. Schedule 4.6 lists all
such material permits and licenses.



     SECTION 4.7. No Litigation. With respect to the operation of the Sold Business,
except as set forth on Schedule 4.7, there is no claim, litigation, action, suit, hearing,
investigation or proceeding pending or, to the Knowledge of Sellers, threatened against any Seller
which could (i) reasonably be likely to result in a Material Adverse Effect, or (ii) prevent,
prohibit or make illegal the consummation of the transactions contemplated by this Agreement. To
the Knowledge of Sellers, there are no facts or circumstances that could reasonably be expected to
lead to a claim, litigation, action, suit, hearing, investigation or proceeding that would be
required to be disclosed pursuant to the prior sentence.



     SECTION 4.8. Title; Condition of Assets. (a) Sellers have good, valid and marketable
title to, or a valid leasehold interest in, the Purchased Assets free of all Liens other than
Permitted Liens and Liens listed on Schedule 4.8.




          (b) Except for the Tangible Personal Property leased pursuant to the Tangible Personal
Property Leases, no Person, other than Sellers, owns or primarily utilizes any material Tangible
Personal Property. To the Knowledge of Sellers, the Tangible Personal Property is in good and
normal operating condition, normal wear and tear excepted.



     SECTION 4.9. Inventories. Except as set forth on Schedule 4.9(a), all items
contained in the Inventory of the Sold Business (except as otherwise reserved for in the Audited
Balance Sheet) existing at the Closing will be of a quality and quantity salable in the ordinary
course of the Sold Business. Adequate reserves for bad or obsolete inventory are maintained and
reflected in the Financial Statements and the Audited Balance Sheet. As of the Closing Date, the
Inventory shall be sufficient to permit Buyers to supply the customers of the Sold Business in the
ordinary course of business consistent with past practice. Except as set forth in Schedule 4.9(b),
none of the Inventory was purchased from a source other than the manufacturer thereof or a
distributor duly licensed or franchised to distribute such items by such manufacturer and, except
for Inventory purchased for customer specific requirements (so long as such Inventory is subject to
a contract for the purchase thereof by such customer), all such items of Inventory meet the



11









 







requirements for return to the manufacturer under the applicable franchise agreement other than as
a result of quantity limitations with respect to such return rights. Except as set forth on
Schedule 4.9(c), none of the Sellers have sold any inventory of the Sold Business, which the
purchaser thereof has the right to return to Sellers or cause the seller thereof to repurchase for
any reason except (i) pursuant to the standard product warranties of Sellers for product quality or
mistake in shipment or implied warranties at law for title against infringement and (ii) to the
extent the same will be reflected in reserves on the Audited Balance Sheet.



     SECTION 4.10. No Changes. Except as contemplated herein or set forth on Schedule
4.10, since September 30, 2006, (i) there has not occurred any Special Closing
Condition—Material Adverse Effect, (ii) the Sold Business has been operated only in the ordinary
course consistent with past practice and (iii) there has not been any event or development which,
individually or together with any other such event, would reasonably be expected to result in a
Special Closing Condition—Material Adverse Effect. Without limiting the foregoing, except as
disclosed on Schedule 4.10, since September 30, 2006, with respect to the Sold Business,
Sellers have not:




          (a) Transferred, assigned, conveyed or liquidated any of the Purchased Assets or any
portion of the Sold Business, other than Inventory and Tangible Personal Property in the
ordinary course of business;




          (b) Suffered any change in their business, operations, or financial condition which
would result in a Material Adverse Effect and to the Knowledge of Sellers there is no event
which would reasonably be likely to result in any such Material Adverse Effect;




          (c) Suffered any destruction, damage or loss, relating to the Purchased Assets or the
Sold Business not covered by insurance, which, in the aggregate, exceeds two hundred fifty
thousand dollars ($250,000);




          (d) Suffered, permitted or incurred the imposition of any Lien or claim upon any of the
Purchased Assets or the Sold Business, except for any Permitted Lien;




          (e) Committed, suffered, permitted or incurred any default in liability or obligation
which, in the aggregate, could be reasonably likely to result in a Material Adverse Effect;




          (f) Made or agreed to any material change in the terms of any Sold Business Real
Property Lease, Tangible Personal Property Lease or any Material Contract which (i) is not
in the ordinary course of business or (ii) is in the ordinary course of business but
involves future payments or receipts, performance of services, or delivery of goods to or by
Sellers of an amount or value in the aggregate in excess of two hundred fifty thousand
dollars ($250,000);




          (g) Waived, canceled, sold or otherwise disposed of, for less than the face amount
thereof, any claim or right relating exclusively to the Purchased Assets or the Sold
Business which (i) is not in the ordinary course of business or (ii) is in the ordinary



12









 







course of business but involves an amount or value in the aggregate in excess of two hundred
fifty thousand dollars ($250,000);




          (h) Paid, agreed to pay or incurred any obligation for any payment of any bonus to, or
granted any increase in the compensation of any Sold Business Employee (except in the
ordinary course consistent with past practice and in any event not to exceed four percent
(4%) in the aggregate;




          (i) Except as set forth in Schedule 4.10(i), amended, terminated, adopted or
increased benefits under any Benefit Plan;




          (j) Paid, agreed to pay or incurred any obligation for any payment of any indebtedness
affecting the Purchased Assets or the Sold Business except current liabilities incurred in
the ordinary course of business;




          (k) Delayed or postponed the payment of any liabilities associated with the Purchased
Assets or Sold Business, whether current or long term, or failed to pay in the ordinary
course of business any such liability on a timely basis consistent with prior practice;




          (l) Materially changed (i) any investment, accounting, financial reporting, inventory,
credit, allowance or Tax practice or policy of the Sold Business or (ii) any method of
calculating bad debt, inventory, contingency or other reserve of the Sold Business for
accounting, financial reporting or Tax purposes;




          (m) Acquired any asset, other than Inventory and Tangible Personal Property, in the
ordinary course of business consistent with past practice in excess of two hundred fifty
thousand dollars ($250,000);




          (n) Entered into any transaction in connection with the Sold Business with any officer,
director or Affiliate of Sellers (i) outside the ordinary course of business consistent with
past practice or (ii) other than on an arm’s-length basis;




          (o) Discontinued sales, marketing and promotional activities relating to the Sold
Business not in the ordinary course of business;




          (p) Failed to comply, in any material respect, with all Laws applicable to the Sold
Business; or




          (q) Entered into a contract to do or engage in any of the foregoing.



     SECTION 4.11. Intellectual Property.




          (a) Schedule 4.11(a) sets forth an accurate and complete list of all
registered Marks used exclusively in connection with the Sold Business (collectively,
the “Registered Sold Business Marks”). Sellers own no patent, patent application,
registered copyright or application to register copyright that is used exclusively in
connection with the Sold Business. No Registered Sold Business Mark is involved in



13









 







any opposition or cancellation proceeding and, to Sellers’ Knowledge, no such proceeding is
threatened. All fees that are due and owing with respect to any of the Registered Sold
Business Marks have been paid. All Registered Sold Business Marks are subsisting and,
to the Knowledge of Sellers, valid and enforceable, and Sellers have received no notice
or claim challenging the validity or enforceability of any Sold Business Mark;




          (b) Sellers own exclusively all of the Sold Business Intellectual Property free and
clear of all Liens (except Permitted Liens) or other material restrictions. Except as
set forth in Schedule 4.11(b), the Sold Business Intellectual Property and the
rights licensed from a third party licensor under any license agreement that constitutes
an Assumed Contract (a “Third Party License”) constitute all of the Intellectual
Property that is used or held for use exclusively in connection with the conduct of the
Sold Business and all the Intellectual Property that is necessary to conduct the Sold
Business in the manner in which it heretofore has been conducted. To the Knowledge of
Sellers, no loss or expiration of any of the material Intellectual Property used
exclusively in connection with the Sold Business is threatened or pending. No Seller
has transferred ownership of, or granted any exclusive license with respect to, any Sold
Business Intellectual Property;




          (c) Sellers have taken reasonable steps to maintain the confidentiality of all
material Trade Secrets that have been used exclusively in connection with the Sold
Business; and




          (d) Except as set forth on Schedule 4.11(d), to the Knowledge of Sellers,
none of the products or services that have been distributed, sold or offered in the
operation of the Sold Business, nor any technology or materials used in connection
therewith has infringed upon or misappropriated any Intellectual Property of any third
party in any material respect, and Sellers have not received any written notice or claim
asserting that any such infringement or misappropriation has occurred. To the Knowledge
of Sellers, no third party is misappropriating or infringing any material Sold Business
Intellectual Property in a manner that reasonably would be expected to have a Material Adverse Effect on the Sold Business. To the Knowledge
of Sellers, no Sold Business Intellectual Property is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use or licensing thereof by
Sellers.



     SECTION 4.12. Environmental Matters.




          (a) Sellers have not received since January 1, 2000 any written or oral notice of
violation, information request, demand or claim of liability or potential liability
related to the Sold Business or the Purchased Assets under or pursuant to any
Environmental Law from any Governmental Authority, which notice, request, demand or
claim has not been fully corrected and resolved (including the payment of any fines or
penalties);




14










 






          (b) Since January 1, 2000, no notice under applicable Environmental Laws
reporting the release of any Hazardous Substance into the environment has been filed by
Sellers with respect to the Sold Business or the Purchased Assets and no such notice has
been required to be filed, by or on behalf of Sellers related to the Sold Business or
the Purchased Assets;




          (c) Sellers have not received any oral or written notice from any Governmental
Authority or other Person alleging that any Seller, with respect to the Sold Business
Real Property, is a responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601, et seq. (“CERCLA”),
any state superfund Laws or comparable Laws relating to Remediation;




          (d) Neither Sellers, the Sold Business nor, to the Knowledge of Sellers, any other
Person has Managed, Released or disposed of any Hazardous Substances on, in, under or
from the Sold Business Real Property in an amount or concentration that would create a
legal duty on Sellers, the Sold Business or any purchaser of the Sold Business to
perform or be liable for any Remediation and none of the Sellers with respect to the
Sold Business or the Purchased Assets has assumed any obligations or liabilities of any
other Person arising under any Environmental Law;




          (e) With respect to the Purchased Assets and the operation of the Sold Business,
Sellers and the Sold Business (i) are in material compliance with Environmental Laws,
and (ii) have obtained, maintain in full force and effect and are in material compliance
with all permits, licenses, certificates and approvals required under Environmental Law
with respect to the Sold Business or the Purchased Assets (and all such permits,
licenses, certificates and approvals are listed on Schedule 4.6), and no actions
are pending, or to the Knowledge of the Sellers, threatened to revoke, cancel,
terminate, restrict or modify any such permits, licenses, certificates or approvals;




          (f) To the Knowledge of Sellers there are not and have not been, any underground
storage tanks, asbestos-containing materials in any form or condition, polychlorinated
biphenyls in electrical equipment, landfills, impoundments or waste disposal areas at
any of the Sold Business Real Property;




          (g) Attached as Schedule 4.12(g) is a listing of all reports, studies,
analyses, tests and monitoring results related to the environmental condition of the
Sold Business and the Purchased Assets (including without limitation, Phase I and Phase
II investigation reports) of which Sellers have Knowledge, copies of which have been
made available to Buyers; and




          (h) Neither Seller nor the Sold Business: (i) have ever manufactured, produced,
repaired, installed, sold, conveyed or otherwise put into the stream of commerce any
product, merchandise, manufactured good, part, component or other
item comprised of or containing asbestos; or (ii) have been the subject of any
claims



15









 







or litigation arising out of the alleged exposure to asbestos or
asbestos-containing material.


For the purposes hereof, “Environmental Laws” shall mean all applicable Laws regulating: (i) the
Management, Release or Remediation of Hazardous Substances, (ii) the exposure of persons to
Hazardous Substances or (iii) protection of the Environment, including without limitation: CERCLA;
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq.; the Clean
Water Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401,
et seq.; and the Toxic Substances Control Act, 15 U.S.C. § 2601, et
seq. and any requirements promulgated pursuant to these applicable Laws.




     SECTION 4.13. Employee Benefit Plans.




          (a) Schedule 4.13 lists (i) each material “employee benefit plan” (as such
term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”)) currently maintained or contributed to by (or required to be
maintained or contributed to by) Sellers or any ERISA Affiliate with respect to any Sold
Business Employee, and (ii) each employment agreement or other material plan, policy,
program, agreement, arrangement or understanding, whether written or oral, whether
formal or informal, relating to change in control, retention, equity, retirement,
compensation, deferred compensation, incentives, bonuses, severance, fringe benefits,
equity compensation, salary continuation or any other employee benefits currently
maintained or contributed to by (or required to be maintained or contributed to by)
Sellers or any ERISA Affiliate for the benefit of any Sold Business Employee
(collectively referred to herein as the “Benefit Plans”). For purposes of this
Agreement, “Retained Benefit Plan” means each Benefit Plan and each other plan, program,
agreement or arrangement applicable to any Sold Business Employee in connection with his
or her employment with the Sold Business or by Sellers or any affiliate of Sellers.
Sellers have made available to Buyers complete copies of all Benefit Plans including all
amendments thereto. None of the Benefit Plans (i) is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code, or is a multiemployer plan (as defined in Section
3(37) of ERISA), or (ii) provides or promises post-retirement health or life benefits to
any Sold Business Employee or beneficiary of any Sold Business Employee except to the
extent required under COBRA; nor have Sellers ever established, sponsored, maintained or
been obligated to make contributions to, any such Benefit Plan. No Seller nor any ERISA
Affiliate has incurred any liability under Title IV of ERISA and no event has occurred
and no condition exists that would subject the Sold Business, either directly or by
reason of any Seller’s affiliation with any ERISA Affiliate to any material tax, lien,
penalty or other liability imposed by ERISA, the Code or other applicable law with
respect to any Benefit Plan. “ERISA Affiliate” is any trade or business (whether or not
incorporated) under common control with Sellers and which, together with Sellers, is
treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code.




          (b) No Retained Benefit Plan or any obligation related thereto is required to be
transferred or assigned to Buyers either by operation of law or



16









 







otherwise. Except as disclosed in Schedule 4.13(b), no payment or benefit under any Benefit Plan,
including without limitation any severance or parachute payment plan or agreement will
be established or become accelerated, vested, funded or payable by reason of any
transaction contemplated under this Agreement or any other agreements and documents to
be executed or delivered in connection herewith.




          (c) Since September 30, 2006, no promises or commitments have been made, or other
agreement entered into by any Seller to amend any Benefit Plan, to provide increased
benefits thereunder or to establish any additional Benefit Plan except in the ordinary
course of business consistent with past practice.




          (d) Each Benefit Plan intended to qualify under Section 401(a) of the Code has
either received a favorable determination letter from the IRS as to its qualified status
or the remedial amendment period for each such Benefit Plan has not yet expired. Each
trust established in connection with any Benefit Plan intended to be exempt from federal
taxation under Section 501(a) of the Code is so exempt. To the Knowledge of Sellers, no
fact or event has occurred that would adversely affect the exempt status of any such
trust or affect the qualified status, or registered status of any Benefit Plan
maintained by any of the Sellers. All employer payments, contributions or premiums
required to be remitted or paid to or in respect of each Benefit Plan have been remitted
and paid in a timely fashion in accordance with the terms thereof, all applicable
actuarial reports and all Law.



     SECTION 4.14. Employees.




          (a) Schedule 4.14(a) contains a complete and accurate list, as of the date
hereof, of the following information for the employees of Sellers who, as of the date
hereof, are engaged full time in the conduct of the Sold Business or who are engaged
full time by Seller and devote a majority of their responsibilities and time in the
conduct of the Sold Business (“Sold Business Employees”): name (subject to applicable
privacy Laws); job title; current compensation; target incentive for fiscal 2006; years
of service and exempt or non-exempt status.




          (b) Except as disclosed in Schedule 4.14(b), (i) no Sold Business Employee
is presently a member of a collective bargaining unit with respect to his or her
employment with Sellers and, to the Knowledge of Sellers, there are no threatened or
contemplated attempts to organize, for collective bargaining purposes, any of the Sold
Business Employees, and (ii) no unfair labor practice complaint or sex, age, race or
other discrimination claim or any other claim of Law violation relating to the
employment of Sold Business Employees has been brought during the last three (3) years
against any Seller by any Sold Business Employee, or any person or entity acting for or
on behalf of any Sold Business Employee, individually or collectively, or with respect
to the conduct of the Sold Business before any Governmental Authority, and, to the
Knowledge of Sellers, there is no reasonable basis for such a claim.



17









 





     SECTION 4.15. Contracts.




          (a) Each Assumed Contract and Tangible Personal Property Lease is valid, binding
and enforceable against Sellers in accordance with its terms, except that such
enforcement may be subject to (i) the effect of bankruptcy, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the
enforcement of creditors’ rights generally, and (ii) general equitable principles
(regardless of whether enforceability is considered in a proceeding at Law or in
equity). To the Knowledge of Sellers, each of the Assumed Contracts and Tangible
Personal Property Leases is in full force and effect against each other party thereto.




          (b) Except as set forth on Schedule 2.1(b) or Schedule 4.15(b),
Sellers have performed in all material respects all material obligations required to be
performed by them to date under, and are not in material default under, any Assumed
Contract or Tangible Personal Property Lease, and no event has occurred which, with due
notice or lapse of time or both, would constitute such a default by Sellers. To the
Knowledge of Sellers, no other party to any Assumed Contract or Tangible Personal
Property Lease is in material default in respect thereof, and no event has occurred
which, with due notice or lapse of time or both, would constitute such a default.
Sellers will make available to Buyers or their representatives true, correct and
complete copies of all written Assumed Contracts and Tangible Personal Property Leases.




          (c) Schedule 4.15(c) contains a true, correct and complete list, as of the
date hereof, of each of the following Assumed Contracts:




     (i) All written contracts (other than Benefit Plans) providing for a commitment
of employment of, or the provision of consultation services by, any Sold Business
Employee;




     (ii) All partnership or joint venture agreements with any Person exclusively in
connection with the Sold Business;




     (iii) All contracts relating to the future disposition or acquisition of any
Purchased Assets, other than dispositions or acquisitions of Inventory or Tangible
Personal Property in the ordinary course of business consistent with past practice;




     (iv) All Tangible Personal Property Leases and Sold Business Real Property
Leases;




     (v) Schedule 1.1(h) lists all material contracts and agreements with
customers, suppliers, manufacturers, resellers, distributors, dealers, sales
agencies or franchises with whom any Seller deals exclusively in connection with the
Sold Business, other than purchase orders, sales orders and nondisclosure
agreements;



18









 






     (vi) All agreements or contracts between a Seller or an Affiliate of Seller on
the one hand and the Sold Business on the other hand; and




     (vii) All agreements or contracts that (A) involve the payment or potential
payment, pursuant to the terms of any such contract, by or to any Seller of more
than $100,000 annually and (B) cannot be terminated within sixty (60) days after
giving notice of termination without resulting in any material cost or penalty to
any Seller, other than purchase orders, sales orders and nondisclosure agreements.




          (d) Sellers have delivered to Buyers true and complete copies of the Assumed
Contracts disclosed pursuant to Section 4.15(c)(i), (ii), (iii), (iv), (vi) and (vii)
and all material Assumed Contracts with customers, suppliers, manufacturers, resellers,
distributors, dealers, sales agencies or franchises with whom any Seller deals
exclusively in connection with the Sold Business (other than purchase orders, sales
orders and nondisclosure agreements) set forth in Schedule 4.15(d)(i), all
amendments and supplements thereto and all waivers of any terms thereof (the “Material
Contracts”). All of the Assumed Contracts for which true and complete copies were not
delivered to Buyers have been entered into in the ordinary course of business.



     SECTION 4.16. Sold Business Real Property.




          (a) Schedule 1.1(b) is a true, correct and complete list of all of the real
property presently owned by Sellers and included in the Sold Business. Schedule
1.1(a) is a true, correct and complete list of all real property presently leased
by, subleased to, or otherwise occupied by, Sellers and included in the Sold Business.
The properties listed on Schedules 1.1(a) and 1.1(b) constitute the Sold
Business Real Property. Sellers have not entered into any leases or granted any rights
of first refusal, options to purchase or rights of occupancy except the Sold Business
Real Property Leases and the Sold Business Owned Real Property is not subject to any
leases, rights of first refusal, options to purchase or rights of occupancy. To the
Knowledge of Sellers, each of the Sold Business Real Property Leases is in full force
and effect against each other party thereto, and each Seller holds a valid and existing
leasehold interest under each of the Sold Business Real Property Leases to which it is a
party free and clear of all Liens, except for any Permitted Lien.




          (b) Each Sold Business Real Property Lease is valid, binding and enforceable
against Sellers in accordance with its terms, except that such enforcement may be
subject to (i) the effect of bankruptcy, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting the enforcement of creditors’
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding at law or in equity). Sellers have
performed in all material respects all material obligations required to be performed by
them to date under, and are not in material default under, any Sold Business Real



19









 







Property Lease, and no event has occurred which, with due notice or lapse of time or
both, would constitute such a default by Sellers. To the Knowledge of Sellers, no other
party to any Sold Business Real Property Lease is in material default in respect
thereof, and no event has occurred which, with due notice or lapse of time or both,
would constitute such a default. Sellers have not given a notice of default, nor have
Sellers received a notice of default under any Sold Business Real Property Lease.
Sellers have made available to Buyers or their representatives true, correct and
complete copies of all Sold Business Real Property Leases. Sellers have made available
to Buyers or their representatives copies of Seller’s title insurance policies and
surveys for the Sold Business Owned Real Property. Except as set forth on Schedule
4.16(b), Sellers own in fee simple, with good, insurable (to the extent provided in
the Title Policy) and marketable title, each parcel of Sold Business Owned Real Property
free and clear of all Liens (other than Permitted Liens). Sellers have not received
written notice of any pending or threatened condemnations, planned public improvements,
annexation, special assessments, zoning or subdivision changes, or other adverse claims
affecting the Sold Business Owned Real Property and/or the Sold Business Real Property
Leases. To Sellers’ Knowledge, all of the buildings, material fixtures and other
improvements situated on the Sold Business Owned Real Property are in good condition,
reasonable wear and tear excepted, and have been maintained in the normal course of
business consistent with Sellers’ past practice.



     SECTION 4.17. Taxes. All Taxes owed by Sellers with respect to the Sold Business have
been paid other than Taxes which are not yet due or which, if due, are not delinquent or are being
contested in good faith by appropriate proceedings or have not been finally determined, and for
which, in each case, adequate reserves have been established on the Balance Sheet or in the books
and records of Sellers. All Tax returns required to be filed by Sellers with respect to the Sold
Business, have been duly and timely filed and are true, correct and complete in all material
respects. Sellers shall also be responsible for any retroactively assessed taxes that arise out of
or relate to the Sold Business or revenues received from the Sold Business for the period of time
prior to the Closing Date. Except as set forth on Schedule 4.17, there are no Tax claims,
audits or proceedings pending or, to Sellers’ Knowledge, threatened in connection with the Sold
Business. There are not currently in force any waivers or agreements binding upon Sellers for the
extension of time for the assessment or payment of any Tax. With respect to the Sold Business,
each Seller has properly withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any shareholder, employee, creditor, independent
contractor, or other third party. Agilysys Canada has remitted to the appropriate Governmental or
Regulatory Authority, when required by law to do so, all amounts collected by it on account of
federal goods and services tax (“GST”) and applicable provincial sales Taxes. Agilysys Canada is
duly registered under the Excise Tax Act (Canada) with respect to the GST and the Harmonized Sales
Tax and its registration number is 13831 7615. Agilysys Canada is duly registered under the Quebec
Sales Tax Act with respect to the Quebec Sales Tax and its registration number is 1016808951.
Agilysys Canada is not a non-resident of Canada within the meaning of the Income Tax Act (Canada).
Except as set forth on Schedule 4.17, no Seller is a party to or bound by any Tax
allocation or Tax sharing agreement with any other Person and neither has any contractual
obligation to indemnify any other Person with respect to Taxes. “Tax” means any net income tax,
alternative or add-on minimum tax, franchise, gross income,



20









 




adjusted gross income or gross receipts tax, payroll tax, real or personal
property tax, sales or use tax, goods and services tax, employer health tax, or value-added tax,
together with any interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority responsible for the imposition of any such tax.




     SECTION 4.18. Brokers and Finders. Except as listed on Schedule 4.18, no
broker, finder, advisor or other Person acting in a similar capacity has participated on behalf of
Sellers in bringing about the transactions herein contemplated, rendered any services with respect
thereto or been in any way involved therewith.



     SECTION 4.19. Sufficiency of the Assets. The Purchased Assets, when taken together
with the services and assets provided under the Transition Services Agreement and “corporate
overhead” services such as legal, accounting, finance, tax, information technology support and
treasury, are all of the assets necessary to permit Buyers to carry on the Sold Business in all
respects as presently conducted by Sellers.



     SECTION 4.20. No Undisclosed Liabilities. Except as reflected or reserved against on
the Balance Sheet or as disclosed in Schedule 4.20, there are no liabilities against,
relating to or affecting the Sold Business or any of the Purchased Assets, other than liabilities
since September 30, 2006 (i) incurred in the ordinary course of business consistent with past
practice or (ii) which, individually or in the aggregate, are not material to the Sold Business.
On the Closing Date, there will be no liabilities, contingent or otherwise, of the Sold Business
which are, in accordance with Section 3.2, required to be reserved against or disclosed on the
Audited Balance Sheet which are not so reserved or disclosed.



     SECTION 4.21. No Affiliate Transactions.




          (a) Except as disclosed on Schedule 4.21(a), (i) none of Sellers or
officer, director or Affiliate of Sellers provides or causes to be provided any assets,
services or facilities used or held for use in connection with the Sold Business, and
(ii) the Sold Business does not provide or cause to be provided any assets, services or
facilities to any such Seller or any officer, director or Affiliate of such Seller.




          (b) Except as disclosed on Schedule 4.21(b), each of the transactions
listed on Schedule 4.21(a) is engaged on an arm’s-length basis.



     SECTION 4.22. Accounts Receivable. Except as set forth on Schedule 4.22, the
Accounts Receivable (i) arose from bona fide sales transactions in the ordinary course of business
and are payable on ordinary trade terms, (ii) are legal, valid and binding obligations of the
respective debtors enforceable in accordance with their terms, (iii) are not subject to any valid
set-off or counterclaim, (iv) do not represent obligations for goods sold on consignment, on
approval or on a sale-or-return basis or subject to any other repurchase or return arrangement, (v)
are collectible in the ordinary course of business consistent with past practice in the aggregate
recorded amounts thereof, net of any applicable reserve
reflected on the Balance Sheet and the Audited Balance Sheet, and (vi) are not the subject of
any actions or proceedings brought by or on behalf of any Seller.



21









 





     SECTION 4.23. Guarantees. Except as set forth on Schedule 4.23, none of the
Assumed Liabilities are guaranteed by or subject to a similar contingent obligation of any Person,
nor have Sellers guaranteed or become subject to a similar contingent obligation in respect of the
liabilities of any customer, supplier, or other Person to whom Sellers sell goods or provide
services in the conduct of the Sold Business or with whom Sellers otherwise have significant
business relationships in the conduct of the Sold Business.



     SECTION 4.24. Insurance. Schedule 4.24 sets forth a true, correct and
complete summary of all casualty, general liability, product liability and all other types of
occurrence-based insurance (other than those relating to Benefit Plans) maintained with respect to
the Sold Business or any of the Sold Business Real Property or assets, together with the carriers
and liability limits for each such policy. Such insurance is sufficient to cover the losses and
liabilities of the Sold Business in accordance with industry standards.



     SECTION 4.25. Warranties. Schedule 4.25 contains an accurate description of
the standard warranty policies of the Sold Business. Except as set forth on Schedule 4.25,
there are no material exceptions to the standard warranty policies applicable to any products sold
by the Sold Business.



SECTION 5.

REPRESENTATIONS AND WARRANTIES OF BUYERS




     Buyers hereby represent and warrant (jointly and severally) to Sellers that:



     SECTION 5.1. Corporate Status. Buyer is a corporation duly organized, validly
existing and in good standing under the Laws of the State of New York, US Buyer is a corporation
duly organized, validly existing and in good standing under the Laws of the State of Indiana, and
Canadian Buyer is a corporation duly organized, validly existing and in good standing under the
Laws of Ontario. Buyers have full corporate power to execute, deliver and perform this Agreement
and all other agreements and documents to be executed and delivered by them in connection herewith.



     SECTION 5.2. Buyers Enforceability. The execution and delivery of this Agreement and
the due consummation by Buyers of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Buyers, and this Agreement constitutes
(and each document and instrument contemplated by this Agreement, when executed and delivered in
accordance with the provisions hereof, will constitute) a valid and legally binding agreement of
Buyers enforceable in accordance with its terms, subject to (a) the effect of bankruptcy,
fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting
the enforcement of creditors’ rights generally, and (b) general equitable principles (whether
considered in a proceeding at equity or at Law).



     SECTION 5.3. Consents. No authorization, approval, consent or order of, or
registration, declaration or filing with, any Governmental Authority or other Person is required in
connection with the execution, delivery or performance of this Agreement by Buyers or any other
agreement, instrument or document to be delivered by or on behalf of Buyers in connection herewith,
except for (a) such filings and approvals as may be required pursuant to HSR or by the



22









 




Competition
Act, and (b) such other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not materially impair the ability of
Buyers to perform their obligations hereunder or (c) prevent the consummation of the transactions
contemplated hereby.




     SECTION 5.4. Absence of Conflicts. Subject to receipt of such approvals, consents,
orders, declarations and other matters set forth in Section 5.3, neither the execution nor delivery
nor performance of this Agreement or any of the other agreements, instruments or documents to be
delivered by or on behalf of Buyers in connection herewith, conflicts with, violates or results in
any material breach of or constitute a default under (whether upon notice or the passage of time or
both) any (a) judgment, decree, order, statute, rule or regulation applicable to Buyers, (b)
instrument to which Buyers are a party or by which Buyers are bound, or (c) any provision of the
Certificate of Incorporation, By-laws or other constituent documents of Buyers.



     SECTION 5.5. No Litigation. There is no claim, litigation, investigation or
proceeding pending or, to the knowledge of Buyers, threatened against Buyers which would challenge,
prevent or delay the consummation of the transactions contemplated by this Agreement.



     SECTION 5.6. Available Funds. Buyers have sufficient funds available to consummate
the transactions contemplated by this Agreement.



     SECTION 5.7. Brokers and Finders. Except as listed on Schedule 5.7, no
broker, finder, advisor or other Person acting in a similar capacity has participated on behalf of
Buyers in bringing about the transaction herein contemplated, or rendered any services with respect
thereto or been in any way involved therewith.



SECTION 6.

CONDITIONS TO CLOSING




     SECTION 6.1. Conditions to Each Party’s Obligation to Effect the Closing. The
respective obligations of each party to effect the transaction contemplated hereby shall be subject
to the fulfillment prior to the Closing of the following conditions:




          (a) No Order. No Governmental Authority or court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law which is then in
effect and has the effect of making this Agreement or the transactions contemplated
hereby illegal;




          (b) Governmental Approvals. All required approvals pursuant to HSR and
the Competition Act shall have been obtained or the waiting period shall have expired
and all other authorizations, consents, orders, declarations or approvals of, or filings
with, or terminations or expirations of waiting periods imposed by, any other
Governmental Authority (other than pursuant to applicable bulk sales Law), the failure
of which to obtain could result in a Material Adverse Effect (assuming the transaction
had taken place) shall have been obtained, shall have occurred or shall have been filed,
as applicable; and



23









 






          (c) Shareholder Approval. The shareholders of Agilysys shall have duly
approved the transactions contemplated by this Agreement.



     SECTION 6.2. Sellers’ Deliveries. The obligation of Buyers to effect the transaction
contemplated hereby shall be subject to the performance or delivery by Sellers (or the express
waiver thereof in writing by Buyers or by Buyers’ performance or delivery hereunder) to Buyers of
the following at or before the Closing, all of which deliveries shall be reasonably acceptable to
Buyers and their counsel:




          (a) (i) Sellers shall have performed in all material respects their agreements,
covenants and obligations contained in this Agreement required to be performed on or
prior to the Closing and, except as provided in Section 6.2(a)(ii), each of the
representations and warranties (without giving effect to any “material,” “materiality,”
“Material Adverse Effect” or “Special Closing Condition—Material Adverse Effect”
qualification on such representations and warranties) of Sellers contained in this
Agreement shall be true and correct on and as of the Closing as if made on and as of
such date (or, as to any representation or warranty made as of a specified date earlier
than the Closing Date, such earlier date) in each case except if such failure to be true
and correct does not constitute a Material Adverse Effect in excess of $10,000,000;
provided, however, that a representation or warranty will not be untrue
for purposes of Section 6.2(a)(i) if an Assumed Contract is terminated because of the
execution of this Agreement or the transactions contemplated by this Agreement,
including, without limitation, the attempted assignment of such Assumed Contract by
Sellers to Buyers; and




          (ii) Notwithstanding Section 6.2(a)(i) above, with respect to the representations and
warranties made by Sellers in Sections 4.7, 4.10(b), 4.10(c), 4.14(b), 4.15(b), and 4.20
such representations and warranties (without giving effect to any “material,” “materiality,”
“Material Adverse Effect” or “Special Closing Condition—Material Adverse Effect”
qualification on such representations and warranties) shall be true and correct on and as of
the Closing Date as if made on and as of such date (or, as to any representation or warranty
made as of a specified date earlier than the Closing Date, such earlier date), except if
such failure to be true and correct does not constitute a Special Closing
Condition—Material Adverse Effect.




          (b) A bill of sale in a customary form reasonably acceptable to the parties, signed
by Sellers, transferring to the applicable Buyer the applicable Purchased Assets;




          (c) An instrument in a form reasonably acceptable to the parties, evidencing
Sellers’ assignment, subject to Section 8.3.4, to Buyers of the Assumed Liabilities and
all of Sellers’ rights under the Assumed Contracts;




          (d) A certificate, with attachments, with respect to the matters set forth in
Section 6.2(a) and as to each Seller’s charter documents, corporate resolutions and
incumbency of officers, signed by the duly authorized President and Secretary or
Assistant Secretary of each Seller;



24









 






          (e) A Procurement Agreement in the form attached hereto as Exhibit A (the
“Procurement Agreement”) signed by Sellers;




          (f) A Transition Agreement in the form attached hereto as Exhibit B (the
“Transition Agreement”) signed by Sellers;




          (g) Certificates of good standing as of the most recent practicable date from the
Secretary of State or equivalent Governmental Authority where each of the Sellers is
incorporated;




          (h) A limited warranty deed in a customary form reasonably acceptable to the
parties transferring to Buyer title to the Sold Business Owned Real Property;




          (i) An instrument in a form reasonably acceptable to the parties, evidencing
Sellers’ assignment to Buyers of the rights to the Sold Business Intellectual Property;




          (j) On the Closing Date, the Title Company (at Buyer’s sole cost and expense) shall
issue to Buyers or be irrevocably committed to issue to Buyers an extended coverage ALTA
owner’s form title policy (the “Title Policy”), in the amount of the Purchase Price
allocable to the Sold Business Owned Real Property, insuring that fee simple title to
the Sold Business Owned Real Property is vested in Buyers subject only to the Permitted
Liens. Buyers shall be entitled to request that the Title Company provide such
endorsements (or amendments) to the Title Policy as Buyers may reasonably require,
provided that (a) such endorsements (or amendments) shall be at no cost to, and shall
impose no additional liability on, Sellers, (b) Buyers’ obligations under this Agreement
shall not be conditioned upon Buyers’ ability to obtain such endorsements and, if Buyers
are unable to obtain such endorsements, Buyers shall nevertheless be obligated to
proceed to close the transaction contemplated by this Agreement without reduction of or
set off against the Purchase Price, and (c) the Closing shall not be delayed as a result
of Buyers’ request. Buyer and Seller shall each pay half of all escrow fees of the
Title Company; and




          (k) An assignment and assumption of lease with respect to each of the Sold Business
Real Property Leases in a customary form reasonably acceptable to the parties.




          (l) IBM shall not have withdrawn its consent to the transaction contemplated by
this Agreement (including to the assignment of its agreement to Buyers), as received by
Buyers prior to the execution of this Agreement.




          (m) Sellers shall have obtained the Sellers’ Consents.




          (n) Agilysys shall have provided a certificate dated the Closing Date substantially
in the form of Exhibit C stating that such Person is not a “foreign” person within the
meaning of Section 1445 of the Code, which certificates shall set forth all information
required by, and shall otherwise be executed in accordance with,



25









 







Treasury Regulation
Section 1.1445-2(b)(2). In addition, Sellers shall have (i) provided a certificate
dated the Closing Date pursuant to any applicable provincial retail sales tax or similar
Laws confirming that all taxes collectible or payable by Agilysys Canada under such Laws
have been paid or (ii) established adequate reserves for the payment of such taxes.



     SECTION 6.3. Buyers’ Deliveries. The obligation of Sellers to effect the transaction
contemplated hereby shall be subject to the delivery by Buyers (or the express waiver thereof in
writing by Sellers or by Sellers’ performance or delivery hereunder) to Sellers of the following at
or before the Closing, all of which deliveries shall be reasonably acceptable to Sellers and their
counsel:




          (a) Buyers shall have performed in all material respects each of their agreements,
covenants and obligations contained in this Agreement required to be performed on or
prior to the Closing, and each of the representations and warranties of Buyers contained
in this Agreement shall be true and correct in all material respects on and as of the
Closing as if made on and as of such date, and each of the representations and
warranties made as of a specified date prior to Closing shall have been true and correct
in all material respects as of such earlier date, in each case except as contemplated or
permitted by this Agreement;




          (b) Immediately available funds by wire transfer in the amount of the Purchase
Price;




          (c) An instrument of assumption evidencing Buyers’ assumption of the Assumed
Liabilities in accordance with Section 2.1 in a form reasonably acceptable to the
parties;




          (d) A certificate, with attachments, with respect to the matters set forth in
Section 6.3(a) and as to Buyers’ charter documents, corporate resolutions, and
incumbency of officers signed by the duly authorized Presidents and Secretaries of
Buyers;




          (e) The Procurement Agreement signed by Buyers;




          (f) The Transition Agreement signed by Buyers; and




          (g) Certificates of good standing as of the most recent practicable date from the
Secretaries of State where Buyers are incorporated.



SECTION 7.

CLOSING




     SECTION 7.1. Closing. The consummation of the purchase and sale of the Purchased
Assets and the other transactions contemplated by this Agreement (the “Closing”) will take place at
10:00 a.m. on the last business day of the month in which the Shareholder Approval is received,
provided, that all of the conditions set forth in Article 6.1 hereof shall have been fulfilled or
waived (the “Closing Date”) at the offices of Milbank, Tweed, Hadley & McCloy



26









 




LLP, One Chase Manhattan Plaza, New York, NY 10005, unless another time or location is agreed upon by Buyers and
Sellers.




SECTION 8.

COVENANTS




     SECTION 8.1. Pre-Closing Covenants.



          8.1.1  Conduct of Sold Business. During the period from the date of this Agreement
through the Closing, Sellers shall, in all material respects, carry on the Sold Business in, and
not enter into any material transaction other than as contemplated by this Agreement or other than
in accordance with, the ordinary course of business. Without limiting the generality of the
foregoing, and, except as otherwise contemplated by this Agreement, Sellers shall not, with respect
to the Sold Business, without the prior written consent of Buyers, take any of the actions
described in Section 4.10 other than as provided in Section 8.1.10.




          8.1.2 Access to Information.





          (a) Upon reasonable notice, Sellers shall afford to Buyers, and to Buyers’
accountants, counsel, financial advisers and other representatives, reasonable access,
and permit them to make such inspections as they may reasonably require during normal
business hours during the period from the date of this Agreement through the Closing, to
the Sold Business Real Property, to the management personnel, officers, Sold Business
Employees and accountants and to the Sellers’ books and records as they relate to the
Sold Business. In no event shall Sellers be required to supply to Buyers, or to Buyers’
accountants, counsel, financial advisors or other representatives, any (i) sensitive
personnel information which, if furnished to Buyers, could subject Sellers to liability,
or (ii) information relating to indications of interest from, or discussions with, any
other potential acquirers of the Sold Business which were or are received or conducted
prior to or after the date hereof.




          (b) Buyers will, and will cause their directors, officers, employees, associates,
agents and advisors, subsidiaries and Affiliates (collectively, “Representatives”) to,
hold any information concerning the Sold Business (whether prepared by Sellers, or their
advisors or otherwise and irrespective of the form of communication) which has been or
will be furnished to Buyers or their
Representatives by or on behalf of Sellers in accordance with the terms of the
letter agreement dated as of December 14, 2004 (the “Confidentiality Agreement”),
between Buyer and JP Morgan on behalf of Agilysys. Sellers will, and will cause their
Representatives to hold any information concerning Buyers (whether prepared by Buyers,
or their advisors or otherwise irrespective of the form of communication), which has
been or will be furnished to Sellers or their Representatives by or on behalf of Sellers
confidential in accordance with the terms of the Confidentiality Agreement.



          8.1.3 Reasonable Efforts. Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other




27









 







party in doing, all things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this Agreement, including (a)
the obtaining of all necessary actions or non-actions, waivers, consents and approvals from any
applicable Governmental Authority and the making of all necessary registrations and filings and the
taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by any Governmental Authority, (b) the obtaining of all necessary
consents, approvals or waivers from third parties, (c) the obtaining of all necessary consents,
approvals and waivers from shareholders, if any, required to approve the transaction contemplated
hereby; (d) the defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order entered by any
Governmental Authority vacated or reversed, and (e) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this Agreement;
provided, however, that notwithstanding any provision hereof to the contrary, none
of the parties shall have any obligation to dispose of any assets, terminate any lines of business
or pay any fee to any third party for the purpose of obtaining a consent (other than customary
filing fee of Governmental Authorities) or any costs and expenses of any third party resulting from
the process of obtaining such consent. In this regard, each party (a) shall make an appropriate
filing pursuant to the HSR Act and as required by the Competition Act with respect to the
transaction contemplated hereby within ten (10) business days following the execution of this
Agreement, (b) shall cooperate and coordinate such filing with the other parties. In addition,
Sellers shall (x) identify to Buyers the key employees of the Sold Business, (y) cooperate and
assist Buyers in entering into employment agreements covering employment with Sold Business after
Closing, with such key employees on terms satisfactory to Buyers, and (z) assist and cooperate with
Buyers in arranging meetings with key customers of the Sold Business regarding the transaction
contemplated by this Agreement.




          8.1.4 Supplemental Disclosure. Sellers will notify Buyers in writing (where
applicable, through updates to the disclosure schedules hereto (the “Schedules”)) of, and
contemporaneously will provide Buyers with true and complete copies of any and all information or
documents relating to, and will use commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practicable after it becomes known to Sellers,
occurring after the date of this Agreement that causes or will cause any covenant or agreement of
Sellers under this Agreement to be breached or that renders or will render untrue any
representation or warranty of Sellers contained in this Agreement as if the same were made on or as
of the date of such event,
transaction or circumstance. No notice given pursuant to this Section 8.1.4 or update to any
schedule contemplated by Article 1 or Article 2 of this Agreement shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein (other than with respect to the
determinations of whether a Material Adverse Effect or a Special Closing Condition-Material Adverse
Effect has occurred under Section 6.2(a)) or shall in any way limit Buyers’ right to seek indemnity
under Article 9.




          8.1.5 Termination. This Agreement may be terminated at any time prior to the Closing:





          (a) By mutual consent of Sellers and Buyers;




28










 






          (b) By either Sellers or Buyers if (i) the Closing has not been effected on
or prior to the close of business on five (5) months from the date of this Agreement
(the “Drop Dead Date”); provided, however, that the right to terminate
this Agreement pursuant to this clause shall not be available to any party whose failure
to fulfill any obligation of this Agreement has been the cause of, or resulted in, the
failure of the Closing to have occurred on or prior to the aforesaid date, or (ii) any
Governmental Authority shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; provided further, however, that if the
parties are diligently and in good faith progressing to Closing, Sellers are diligently
working to obtain Shareholder Approval, or the parties are diligently working to gain
HSR approval for the transactions contemplated hereby, either party may extend such date
for one thirty (30) day period by giving written notice thereof to the other party;




          (c) By Sellers or Buyers if this Agreement shall fail to receive the requisite vote
for approval at the Shareholders’ Meeting (as defined below);




          (d) By Sellers if there has been a material breach by Buyers of any material
representation or warranty or any covenant herein in each case which breach has not been
cured within thirty (30) days following receipt by Buyers of notice of such breach, and
will result in the failure to satisfy any of the conditions set forth in Section 6.3; or




          (e) By Buyers if there has been a material breach by Sellers of any material
representation or warranty herein or any covenant in each case which breach has not been
cured within thirty (30) days following receipt by Sellers of notice of such breach, and
will result in the failure to satisfy any of the conditions set forth in Section 6.2.



          8.1.6 Effect of Termination.





          (a) In the event of termination of this Agreement by either Sellers or Buyers, as
provided in Section 8.1.5, this Agreement shall forthwith become void and there shall be
no liability or obligation hereunder on the part of Buyers or Sellers or their
respective shareholders, officers, employees, directors or agents (except as set forth
in Section 8.1.2(b), Section 8.3.1 and Section 8.3.2 which shall survive the
termination); provided, however, that nothing contained in this Section
8.1.6 shall relieve any party hereto from any liability for any breach of this Agreement
in the event of termination pursuant to Sections 8.1.5(b), (c), (d), or (e); and
provided further, however, that in the event of termination
pursuant to (i) Section 8.1.5(b), if the Closing has not been effected due to the
failure of the Proxy Statement to be cleared by the SEC or the Shareholders’ Meeting to
have occurred prior to the Drop Dead Date, or (ii) Section 8.1.5(c), no party shall be
entitled to recover for any Losses



29









 







(as hereinafter defined) in excess of its actual out-of-pocket costs and expenses
incurred since November 29, 2004 in the event of such a termination.




          (b) Notwithstanding anything contained in Section 8.1.6(a), in the event that the
Agilysys Board has received a Proposal and thereafter this Agreement is terminated in
accordance with Section 8.1.5 (other than pursuant to Section 8.1.5(a), (b) (provided
Sellers have not failed to fulfill any obligation under this Agreement that has been the
cause of, or resulted in, the failure of the Closing to have occurred on or prior to the
Drop Dead Date) or (d)), and within one (1) year of such termination, Sellers enter into
a definitive agreement with a third party for a Superior Offer, then, within ten (10)
days after the closing of the transaction contemplated by such definitive agreement,
Sellers shall pay to Buyers, as their sole and exclusive remedy for such termination, a
termination fee equal to two percent (2%) of the Purchase Price less the
aggregate amount of out-of-pocket expenses previously paid by Sellers to Buyers pursuant
to this Section 8.1.6 (the “Acquisition Termination Fee”).




          (c) Notwithstanding anything contained in Section 8.1.6(a), the Agilysys Board may
withdraw, modify or change its Recommendation in a manner adverse to the interest of the
Buyers, if facts or occurrences arising after the date hereof cause the Agilysys Board,
after consultation with its outside legal counsel and a financial advisor of national
recognized reputation, to determine in good faith that failure to take such action would
be inconsistent with its fiduciary duties under applicable Law. In such event, if this
Agreement is thereafter terminated in accordance with Section 8.1.5(c) and Sellers have
not received a Proposal prior thereto, then, within ten (10) days after such
termination, Sellers shall pay to Buyers, as their sole and exclusive remedy for such
termination, a termination fee equal to one percent (1%) of the Purchase Price
less the aggregate amount of out-of-pocket expenses previously paid by Sellers
to Buyers pursuant to this Section 8.1.6 (the “Modification Termination Fee” and
together with the Acquisition Termination Fee, the “Termination Fee”).




          (d) Sellers acknowledge that the agreements contained in this Section 8.1.6 are an
integral part of the transactions contemplated in this Agreement, that the damages
resulting from termination of this Agreement under circumstances where a Termination Fee
are payable are uncertain and incapable of accurate calculation and that the amounts
payable pursuant to this Section 8.1.6 are reasonable forecasts of the actual damages
which may be incurred and constitute liquidated damages and not a penalty, and that,
without these agreements, Buyers would not enter into this Agreement; accordingly, if
Sellers fail to promptly pay the Termination Fee, and, in order to obtain such payments
Buyers commences a suit which results in a judgment against Sellers for the Termination
Fee, Sellers shall pay to Buyers its costs and expenses (including reasonable attorney’s
fees) in connection with such suit.



          8.1.7 Insurance; Letters of Credit; Surety Bonds.




30









 









          (a) From the date of this Agreement through the Closing, Sellers shall keep and
maintain insurance upon the Purchased Assets and in respect of the kinds of risk
currently insured against, in accordance with their current practices.




          (b) All insurance policies covering the Purchased Assets, the Sold Business and the
Sold Business Employees maintained by or on behalf of Sellers may be terminated on the
Closing Date and, from and after the Closing Date, Sellers shall have no obligation of
any kind to maintain any form of insurance covering all or any party of the Purchased
Assets, the Sold Business or the Sold Business Employees.




          (c) On or prior to the Closing Date, Buyers will, in a manner satisfactory to
Sellers, ensure that Sellers and their Affiliates are released from all obligations of
Sellers and their Affiliates under all letters of credit, surety and performance bonds,
guarantees and other financial support arrangements maintained by Sellers or any of
their Affiliates in connection with the Sold Business or the Sold Business Employees and
disclosed on Schedule 8.1.7(c).



          8.1.8 Approval of Agilysys Shareholders.





          (a) Shareholders’ Meeting. Agilysys, acting through the board of directors
of Agilysys (the “Agilysys Board”), shall, in accordance with applicable Law and the
Agilysys Articles of Incorporation and Code of Regulations, (i) duly call, give notice
of, convene and hold an annual or special meeting of its shareholders (the
“Shareholders’ Meeting”) as promptly as practicable for the purpose of considering and
taking action on this Agreement and the transactions contemplated hereby (“Shareholder
Approval”), and (ii) subject to the last sentence of this Section 8.1.8(a), (A) include
in the preliminary proxy statement to be prepared in accordance with Section 8.1.8(b)
(if necessary), and not subsequently withdraw or modify in any manner adverse to Buyer,
the Recommendation, and (B) use reasonable efforts to obtain such approval and adoption.
At the Shareholders’ Meeting, Buyer shall cause all Agilysys shares then owned by it
and its subsidiaries, if any, to be voted in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby. Notwithstanding anything contained
in this Agreement to the contrary, the Agilysys Board may determine to withdraw, modify
or change such Recommendation if, (i) facts or occurrences arising after the date hereof
cause the Agilysys Board, after consultation with its outside legal counsel and a
financial advisor of national recognized reputation, to determine in good faith that
failure to take such action would be inconsistent with its fiduciary duties under
applicable Law, (ii) Agilysys uses reasonable best efforts to provide to Buyers at least
two (2) days prior written notice that it intends (or may intend) to take any such
action, (iii) Agilysys provides immediate written notice to Buyers that it has taken
such action, and (iv) the Agreement and the transactions contemplated hereby are still
submitted by the Agilysys Board to Agilysys’ shareholders for Shareholder Approval
(excluding the Recommendation or including a modified or changed Recommendation, as
applicable); provided, however, if Agilysys has received a Proposal, it
may only withdraw, modify or change its Recommendation as provided in the preceding
sentence after it has first: (x) given Buyers prompt written notice advising Buyers
of



31









 







(1) the decision of the Agilysys Board to take such action and (2) the material terms
and conditions of the Proposal, including the identity of the party making such
Proposal; (y) given Buyers five business days (or three business days in the event of
each subsequent material revision to such Proposal) after delivery of such notice to
propose revisions to the terms of this Agreement (or make another proposal); and, (z)
has otherwise complied with the conditions in parts (i) — (iv) of the preceding
sentence.




          (b) Proxy Statement. Within five (5) days following the signing of this
Agreement, Agilysys shall prepare and provide to Buyers a draft of the preliminary proxy
statement (the “Proxy Statement”) to be filed with the SEC under the Exchange Act.
Agilysys shall file the Proxy Statement with the SEC within thirty-five (35) days
following the signing of this Agreement, and shall use commercially reasonable efforts
to have the Proxy Statement cleared by the SEC as promptly as practicable. Buyers and
Sellers shall cooperate with each other in the preparation of the Proxy Statement, and
Agilysys shall notify Buyers of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any requests by the SEC for any amendment or supplement
thereto or for additional information and shall provide to Buyers promptly copies of all
correspondence between Agilysys or any representative of Agilysys and the SEC. Agilysys
shall give Buyers and their counsel the opportunity to review the Proxy Statement,
including all amendments and supplements thereto, prior to its being filed with the SEC
and shall give Buyers and their counsel the opportunity to review all responses to
requests for additional information and replies to comments prior to same being filed
with, or sent to, the SEC. Each of Buyers and Sellers agree to use commercially
reasonable efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC and to cause the Proxy
Statement and all required amendments and supplements thereto to be mailed to the
shareholders of Agilysys entitled to vote at the Shareholders’ Meeting at the earliest
practicable time. Subject to Section 8.1.8(a), the Proxy Statement shall include the
recommendation to the shareholders of Agilysys in favor of approval and adoption of this
Agreement and approval of the transactions contemplated by this Agreement (the
“Recommendation”).



          8.1.9 Bulk Sales. Buyers and Sellers agree that the sale of the Purchased Assets may
be considered to constitute a “sale in bulk” within the meaning of the Bulk Sales Act (Ontario) and
other comparable legislation of other jurisdictions the laws of which may apply to the transactions
contemplated in this Agreement. The parties agree that compliance with the provisions of such
legislation is not practicable and therefore Buyers agree to waive compliance with the said
provisions and Sellers hereby covenant and agree to be solely responsible for compliance therewith
and further covenant to fully indemnify and hold harmless Buyers from and against any and all
actions, proceedings, suits, claims, liabilities, damages, expenses and demands arising, directly
or indirectly, as a result of or in relation to the failure of Sellers to comply with the
requirements of such legislation in connection with the transactions contemplated in this
Agreement.




32









 








          8.1.10 No Solicitation. Except as is necessary to ascertain the value of a Proposal,
Sellers will not take, nor will they permit any Affiliates of Sellers (or authorize or permit any
investment banker, financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of Sellers or any such Affiliates) to take, directly or indirectly, any action to
solicit, encourage, receive, negotiate, assist or otherwise facilitate (including by furnishing
confidential information with respect to the Sold Business or permitting access to the Purchased
Assets and Sold Business Real Property and books and Records of Sellers) any offer or inquiry from
any Person concerning the direct or indirect acquisition of the Sold Business by any Person other
than any Buyers or their Affiliates. If any Seller or any such Affiliate (or any such Person
acting for or on their behalf) receives from any Person any offer, inquiry or informational request
referred to above, such Seller will promptly advise such Person, by written notice, of the terms of
this Section 8.1.10 and will promptly, orally and in writing, advise Buyers of such offer, inquiry
or request and deliver a copy of such notice to Buyers.




          8.1.11 Canadian Clearance Certificates. Agilysys Canada shall use commercially
reasonable efforts to furnish to the Canadian Buyer a certificate obtained by Agilysys Canada from
each provincial or territorial tax authority where such certificate is required to be obtained
confirming that no retail sales tax, worker’s compensation provision or health services tax
(including applicable interest and penalties) is payable with respect to the Purchased Assets to be
purchased by the Canadian Buyer. Furthermore, Agilysys Canada shall use commercially reasonable
efforts to obtain a certificate pursuant to any applicable provincial retail sales tax, health
services tax or similar Laws confirming that all taxes collectible or payable by Agilysys Canada
under such Laws have been paid.




          8.1.12 Exclusivity. Except as is necessary to ascertain the value of a Proposal,
Sellers will not take, nor will they permit any Affiliates of Sellers (or authorize or permit any
investment banker, financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of Sellers or any such Affiliates) to take, directly or indirectly, any action to
solicit, encourage, receive, negotiate, assist or otherwise facilitate any offer or inquiry from
any Person concerning the direct or indirect acquisition of the Sold Business by any Person other
than (i) any Buyers or their Affiliates or (ii) any other Person which has proposed any Business
Combination to which any Seller or any Affiliate of any Seller is a party and which directly or
indirectly involves the Sold Business, provided that the Person making such proposal expressly
recognizes the rights of Buyers hereunder in a written instrument reasonably satisfactory to
Buyers.




          8.1.13 Employee Matters. Except as may be required by Law or as agreed to by Buyers,
Sellers will refrain from directly or indirectly:





          (a) making any representation or promise, oral or written, to any Sold Business
Employee concerning any Retained Benefit Plan, except for statements as to the rights or
accrued benefits of any Sold Business Employee under the terms of any Retained Benefit
Plan;




          (b) making any increase in the salary, wages or other compensation of any Sold
Business Employee other than as set forth in Schedule 8.1.13 or stay bonuses in
amounts mutually agreed to by Sellers and Buyers; provided that Sellers may



33









 







increase base salaries of Transferred Employees in the ordinary course consistent with past practice so
long as the aggregate amount of such increase does not exceed 4% of the aggregate base
salaries for Transferred Employees as determined as of the date hereof;




          (c) adopting, entering into or becoming bound by any Retained Benefit Plan,
severance-related or employment-related Contract with respect to the Sold Business or any
of the Sold Business Employees, or amending, modifying or terminating (partially or
completely) any such Retained Benefit Plan, severance-related or employment-related
Contract, except to the extent required by applicable Law; or




          (d) establishing or modifying any (i) targets, goals, pools or similar provisions in
respect of any fiscal year under any Retained Benefit Plan or collective bargaining
agreement for Sold Business Employees or (ii) salary ranges, increase guidelines or
similar provisions in respect of any Benefit Plan or other compensation arrangement with
or for Sold Business Employees or collective bargaining agreement with respect to Sold
Business Employees, except as set forth in Schedule 8.1.13.



          8.1.14 Sellers’ Consents. Sellers shall use their reasonable efforts to promptly
obtain the consents of the lenders under (i) Agilysys’ Credit Agreement dated as of October 18,
2005 and (ii) Agilysys’ Amended and Restated Inventory Financing (Unsecured) with IBM Credit LLC
made as of October 18, 2005 (collectively, the “Sellers’ Consents”).




     SECTION
8.2. Post Closing Covenants.



          8.2.1 Transfer of Assets.





          (a) Sellers shall, at their expense, remove and transport any Retained Assets
located at the Sold Business Real Property without damage to such Sold Business Real
Property or the Purchased Assets located thereat or significant disruption of Buyers’
business conducted at such Sold Business Real Property provided that Buyers shall
reasonably cooperate with Sellers during normal business hours in effecting such
process.




          (b) Notwithstanding Section 8.2.1(a) and subject to the Transition Agreement,
Buyers and Sellers agree that, commencing on the Closing Date and for such period of
time after as Sellers may elect but in no event later than 90 days after the Closing
Date (the “Interim Period”), any Retained Assets located at the Sold Business Real
Property, may remain at such property. During the Interim Period and subject to Section
8.2.1(a), Sellers shall have the right to remove such Retained Assets from the Sold
Business Real Property after providing reasonable notice. Sellers shall bear all risk
of loss with respect to such assets, including with regard to
the removal and transport of such assets from the Sold Business Real Property
following Closing. The cost of removing and transporting such Retained Assets from the
Sold Business Real Property and obtaining any permits and the payment of any
de-commissioning costs shall be borne solely by Sellers.



34









 






          (c) Following the Closing, in order for Buyers and their Affiliates to comply with
the requirements of Section 404 of the Sarbanes Oxley Act of 2002, Sellers shall afford
Buyers, and Buyers’ accountants, counsel, financial advisors and other representatives,
reasonable access upon reasonable notice during normal business hours to documentation
regarding process narratives and process flow documentation of Sellers insofar as they
relate to the Sold Business and limited access to Sellers’ Sarbanes Oxley Act Compliance
Team (for a period of six (6) months). Buyers shall be entitled to make copies of such
documentation regarding process narratives and process flow documentation in order to
comply with the requirements of Section 404 of the Sarbanes Oxley Act of 2002. The use
and disclosure of any information contained in such documentation shall be limited
solely to such use and disclosure as is necessary in order for Buyers to comply with the
requirements of Section 404 of the Sarbanes Oxley Act of 2002 or as otherwise required
by Law.



          8.2.2 Employee and Related Matters.





          (a) Termination of Employment from Sellers. Sellers shall terminate the
employment of the Transferred Employees, other than those Transferred Employees set
forth on Schedule 8.2.2(a), effective as of the Closing or such later time as
such individual becomes a Transferred Employee under Section 8.2.2(b) (as applicable,
the “Effective Time”).




          (b) Employment by Buyers. Buyers shall offer employment to all Sold
Business Employees, commencing as of the Effective Time, at the same work location or at
a work location that is within reasonable proximity to such location and at compensation
levels which, when taken as a whole, are the same or no less favorable than those levels
in effect with Sellers as of the Closing Date and at benefit levels which, when taken as
a whole, are substantially similar to those generally provided to the similarly situated
employees of Buyers’ North American Computer Products Business. Each Sold Business
Employee (i) who accepts Buyers’ offer of employment and becomes an employee of Buyers as
of the Effective Time or (ii) whose employment agreement is assumed by Buyers as of the
Closing Date shall thereafter be a “Transferred Employee”; provided,
however that no Sold Business Employee who is on a leave of absence or another
leave shall become a Transferred Employee unless and until he or she returns from that
leave. In addition, Buyers agree that in connection with its employment of any
Transferred Employees, Buyers shall: (i) give full credit for years of service with
Sellers or their predecessors for purposes of (A) eligibility and vesting under Buyers’
employee benefit plans, programs and arrangements and (B) determining compensation
levels, seniority and other terms and conditions of employment, termination and
severance, (ii) waive any waiting periods
for participation, coverage or benefits, (iii) waive any exclusions for benefits for
pre-existing conditions, and (iv) with respect to Buyers’ group health plans, provide
credit for co-payments and deductibles made by Transferred Employees under Sellers’ group
health plans.



35









 






          (c) Certain Employment Liabilities. Sellers shall indemnify and hold Buyers
and its affiliates harmless against all liabilities, claims, expenses, costs and losses
(i) related to any Transferred Employee that arise from or are based on events occurring
at or prior to the Effective Time, (ii) related to any current or former employee of
Sellers who are not Transferred Employees or (iii) related to or arising under any
Retained Benefit Plan, (iv) related to unpaid bonuses and incentive payments earned by
Transferred Employees prior to the Effective Time in accordance with the terms and
conditions of any applicable Retained Benefit Plan as in effect on the date hereof. For
the sake of clarity, all liabilities, obligations, commitments, costs or expenses
relating in any way to the Sold Business Employees arising prior to the Effective Time or
arising under any Retained Benefit Plan, including, without limitation, any change of
control or other payments arising as a result of the transactions contemplated by this
Agreement, shall be the sole responsibility of Sellers and their Affiliates, and Sellers
and their Affiliates shall indemnify and hold harmless Buyer against all claims,
payments, expenses, costs and losses incurred or accrued by Buyer with respect thereto.
Except as provided herein, all liabilities, obligations, commitments, costs or expenses
relating in any way to the Transferred Employees that arise after the Effective Time
(other than arising under any Retained Benefit Plan) shall be the sole responsibility of
Buyer, and Buyer shall indemnify and hold harmless Sellers against all claims, payments,
expenses, costs and losses incurred or accrued by Sellers with respect thereto.
Notwithstanding the foregoing, Buyers shall assume those liabilities described in Section
8.2.2(c)(i) or (iv) to the extent such liabilities are included on the Audited Balance
Sheet.




          (d) Health Care Flexible Spending Account. Prior to the Closing, Seller
shall amend any health flexible spending accounts in which any Transferred Employee
participates immediately prior to the Closing (“Seller’s Health FSA”) to provide that
each Transferred Employee may continue to submit eligible medical care expenses incurred
prior to the end of 2006 for reimbursement from Seller after the Closing Date; provided
that the aggregate amount of such reimbursements shall be limited to the amount of salary
deferral contributions made by such Transferred Employee to Seller’s Health FSA.




          (e) COBRA. Sellers shall provide any COBRA notices and continuation health
care coverage with respect to all individuals who are not Transferred Employees or their
qualified dependents, and to the Transferred Employees (other than those Transferred
Employees employed by Agilysys Canada) and their qualified dependents.




          (f) 401(k) Plan. Prior to the Closing Date, Buyers shall establish or
designate a defined contribution plan with a cash or deferred arrangement pursuant to
Section 401(k) of the Code which shall cover the Transferred Employees (other than
those Transferred Employees employed by Agilysys Canada) (“Buyers’ 401(k) Plan”).
As of the Effective Time, the Transferred Employees who were covered under the Retirement
Plan of Agilysys, Inc. (“Sellers’ 401(k) Plan”) shall be eligible to participate in
Buyers’ 401(k) Plan without regard to any service requirements thereunder. Buyers’
401(k) Plan will recognize the service of the Transferred



36









 







Employees (other than those Transferred Employees employed by Agilysys Canada) with Sellers and its predecessors for
purposes of eligibility to participate, vesting and early retirement eligibility under
Buyers’ 401(k) Plan to the extent such service would be recognized under Sellers’ 401(k)
Plan. Buyers shall amend Buyers’ 401(k) Plan to ensure that Buyers’ 401(k) Plan will
accept direct rollovers of eligible rollover distributions (and notes or similar
instruments reflecting participant loans) from Sellers’ 401(k) Plan.




          (g) Benefit Equalization Plan. Within a reasonable period of time after the
Effective Time, Buyers shall provide to the Transferred Employees (other than those
Transferred Employees employed by Agilysys Canada) then in its employ who were
participants in the Agilysys, Inc. Benefit Equalization Plan (the “BEP”) at the Effective
Time, the opportunity to participate in a nonqualified deferred compensation plan of
Buyers to the extent such a plan is available to similarly situated employees of Buyers.




          (h) Canadian Employees. Canadian Buyer shall provide or establish benefit
plans and group RRSP plans for the Transferred Employees employed by Agilysys Canada that
provide, when taken as a whole, the same or no less favorable benefits as those generally
provided by Buyers to its similarly situated employees as of the Closing Date.




          (i) Change of Control. Sellers hereby represent and warrant to Buyers that
(i) except as set forth on Schedule 8.2.2(i), no Sold Business Employee is
covered by a change in control agreement and (ii) the transaction contemplated by this
Agreement shall not trigger any “change of control,” as such term is defined in any
employment agreement with or relating to any Sold Business Employees.




          (j) No Right to Continued Employment. Nothing contained in this Agreement
shall confer upon any Transferred Employee any right to continued employment by Buyers,
nor shall anything herein interfere with the right of Buyers to terminate the employment
of any Transferred Employee, with or without cause, subject to applicable Law. Nothing
contained in this Agreement shall interfere with the right of Buyers to amend, modify or
terminate at any time or in any respect any of the terms and conditions of employment
for, or compensation of, its employees (including Transferred Employees), including
without limitation its employee benefit plans and payroll practices.




          (k) Excluded Employees. Notwithstanding any other provision of this
Agreement, and unless as otherwise required by applicable Law, no Sold Business Employee
who is on any type of authorized leave of absence as of the Closing will become a
Transferred Employee if such Sold Business Employee does not return to
work on the earlier of the expiration of his or her authorized leave and a date that
is six (6) months following the Closing.




          (l) Waiver of Rights Under Existing Non-Solicitation Agreements. Sellers
hereby waive, only in so far as it relates exclusively to the Sold Business, with



37









 







respect to the solicitation of employment or employment by Buyers of any Sold Business Employee,
any claims or rights Sellers may have against Buyers or any such Sold Business Employee
under any non-hire, non-solicitation, non-competition, confidentiality or employment
agreement or any cause of action based on similar rights arising by contract, at common
law or by statute or regulation. Sellers hereby assign, to the extent legally permissible
and only in so far as they relate exclusively to the Sold Business, to Buyers all of
Sellers’ rights to enforce the provisions of any non-competition agreement between any of
Sellers and any Transferred Employee and any non-hire, non-solicitation, confidentiality,
assignment of inventions or similar agreement between such Sellers and any Transferred
Employee.




          (m) Retention Bonuses. Schedule 8.2.2(m) sets forth the terms and
conditions of a stay bonus program that Sellers shall implement effective as of the date
hereof (the “Stay Bonus Plan”). Buyers shall be responsible for all payments or benefits
that are earned by Transferred Employees after the Closing Date under the terms of the
Stay Bonus Plan. Sellers and Buyers shall each be responsible for the cost of 50% of all
payments or benefits earned by Transferred Employees under the Stay Bonus Plan
(regardless of when paid) during the period beginning immediately following the date
hereof and ending on the Closing Date; provided, however, that the maximum amount of such
payments for which Sellers shall be responsible shall not exceed Five Hundred Thousand
Dollars ($500,000). Promptly after the Closing Date, Buyers shall reimburse Seller for
any amounts owed by Buyers under the preceding sentence that are paid by Seller, it being
understood that Buyers shall have no obligations hereunder if the Closing does not occur.
Seller shall promptly reimburse Buyers for the cost of any payment or benefit required to
be made or provided by Seller hereunder promptly after any such payment is made or
benefit provided by any Buyer. A payment or benefit shall be considered to be “earned”
hereunder on the date Transferred Employee has a vested right to such payment or benefit.




          (n) (i) Prior to Closing, Sellers shall use commercially reasonable efforts to enter
into a new employment agreement (collectively, the “New Employment Agreements”) with each
of the Sold Business Employees listed on Schedule 8.2.2(n)(i), and each such New
Employment Agreement shall (A) be in substantially the same form, and contain
substantially the same terms and conditions (including, without limitation, a one (1)
year term) as each such Sold Business Employee’s current employment agreement, other than
with respect to an increase in compensation in accordance with Section 8.1.13(b) and (B)
contain a provision that provides that (I) such New Employment Agreement may be assigned
or transferred by Sellers to Buyers without constituting a termination of employment by
Sellers or giving rise to any termination rights of such Sold Business Employee, and (II)
if one exists, an assignment or transfer of such Sold Business Employee’s change of
control agreement (each, a “Change of Control Agreement”) to Buyers shall not constitute
a termination of employment by Sellers or give rise to any termination rights of such
Sold Business Employee.



38









 






          (ii) At Closing, Sellers shall transfer and assign, and Buyers shall assume,
each New Employment Agreement (or other employment agreement for the Sold Business
Employees listed on Schedule 8.2.2(n)(i) which remains in effect at such
time) and Change of Control Agreement for each Sold Business Employee a party
thereto, provided, that, any change of control payment made by Buyers within twelve
(12) months from Closing pursuant to a Change of Control Agreement on account of the
termination of a Sold Business Employee’s employment shall be the sole
responsibility of Sellers and their Affiliates, and Sellers and their Affiliates
shall indemnify and hold harmless Buyers against all Losses incurred or accrued by
Buyers with respect thereto. Notwithstanding anything contained herein to the
contrary, the indemnity obligations of Sellers for the change of control payments
referenced in this Section 8.2.2(n)(ii) shall be reduced by any severance amounts
which would otherwise be owed to such Sold Business Employees pursuant to any
employee benefit plans, programs or arrangements, including, without limitation, any
termination or severance policies, of Buyers as a result of such Sold Business
Employee’s status as a Transferred Employee following the Closing if the Change of
Control Agreements did not exist.



          8.2.3 Use of Retained Intellectual Property. Buyers will, as promptly as practicable
following the Closing Date, but in no event later than six (6) months after the Closing Date,
remove or obliterate all trade names, trademarks and service marks included in the Retained
Intellectual Property from its signs, purchase orders, invoices, sales orders, labels, letterheads,
shipping documents and other materials and Buyers shall not put into use after the Closing Date any
such materials not in existence on the Closing Date that bear any such trade name, trademark or
service mark included in the Retained Intellectual Property or any names, marks or logos similar
thereto. Notwithstanding the foregoing, Buyers shall be entitled for a period of six (6) months
following the Closing Date to use (i) any signs, purchase orders, invoices, sales orders, labels,
letterheads or shipping documents that otherwise constitute Purchased Assets existing on the
Closing Date and (ii) any inventories that bear any such trade name, trademark or service mark
included in the Retained Intellectual Property or any name, mark or logo similar thereto that
otherwise constitute Purchased Assets, in each case where the removal of any such trade name,
trademark or service mark or any such similar name, mark or logo would not be commercially
reasonable.




          8.2.4 Tax Cooperation. Buyers and Sellers agree to retain and furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such working papers and
information relating to the Purchased Assets and the Sold Business and to provide such assistance
as is reasonably necessary for the preparation and filing of all Tax returns, the making of any
election related to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax return. Sellers and
Buyers shall cooperate with each other in the conduct of any audit or other proceeding related to Taxes
involving the Sold
Business and each shall execute and deliver such powers of attorney and other documents as are
necessary to carry out the intent of this Section 8.2.4.




39









 








          8.2.5 GST. Sellers and Buyers acknowledge and agree that the Canadian Purchased
Assets constitute a business of Agilysys Canada and comprise all or substantially all of the
property reasonably necessary for Canadian Buyer to be capable of carrying on the business as a
business. Canadian Buyer and Agilysys Canada shall jointly elect under subsection 167(1) of Part
IX of the Excise Tax Act (Canada), section 75 of the Quebec Sales Tax Act, and any equivalent or
corresponding provision under any applicable provincial or territorial legislation imposing a
similar value added or multi-staged tax, that no tax be payable with respect to the purchase and
sale of the Canadian Purchased Assets under this Agreement and shall make such election(s) in
prescribed form containing prescribed information. Canadian Buyer shall file such election(s) in
compliance with the requirements of the applicable legislation. Buyer agrees to indemnify and hold
harmless Agilysys Canada in respect of any tax, penalties, and interest that may be assessed
against Agilysys Canada in the event and to the extent that the applicable Governmental Authority
takes the positions that the election(s) may not be made in respect of the transactions
contemplated by this Agreement.




          8.2.6 Section 20 and Section 22 Elections. If applicable, Canadian Buyer and Agilysys
Canada shall make the joint election under subsections 20(24) and (25) of the Income Tax Act
(Canada) and the comparable provisions of any applicable provincial legislation and Canadian Buyer
and Agilysys Canada shall cooperate fully in the filing of such elections in the manner required by
the Income Tax Act (Canada) and applicable provincial legislation. In accordance with the
requirements of the Income Tax Act (Canada), the regulations thereunder, the administrative
practice and policy of the Canada Revenue Agency and any applicable equivalent or corresponding
provincial or territorial legislative, regulatory and administrative requirements, Canadian Buyer
and Agilysys Canada shall make and file, in a timely manner, a joint election(s) to have the rules
in Section 22 of the Income Tax Act (Canada), and any equivalent or corresponding provision under
applicable provincial or territorial tax Law, apply in respect of the Accounts Receivable being
sold by Agilysys Canada and shall designate that portion of the Purchase Price allocated to the
Accounts Receivable being sold by Agilysys Canada in accordance with the allocation described in
Section 3.3.




          8.2.7 Payment of Certain Taxes. Sellers agree to timely pay all Taxes imposed on or
relating to all Purchased Assets payable in respect of all periods (or portions thereof) pending on
or prior to the Closing Date and Buyers agree to timely pay all such Taxes on all Purchased Assets
payable in respect of periods (or portions thereof) thereafter. Sellers shall be responsible for
preparing and filing all Tax returns and related filings with respect to the Purchase Assets that
are required to be filed on or before the Closing Date and Buyers shall be responsible for
preparing and filing all other Tax returns and related filings with respect to the Purchase Assets.
Except as provided in Section 8.2.5, Buyers and Sellers shall share equally all recording fees and
transfer, documentary, sales, use or other Taxes assessed upon or with respect to the transfer of
the Purchased Assets to Buyers. The party responsible for filing any returns due in respect of
such Taxes shall timely file such returns notices and the other party shall cooperate in such
filing.




          8.2.8 Assumed Liabilities. Buyers shall pay, discharge and perform, as and when the
same shall become due, all of the Assumed Liabilities.




          8.2.9 Noncompetition.





40










 





               (a) Agilysys agrees that it will not, and will cause its subsidiaries, including
Agilysys Canada, not to, for a period of five (5) years from the Closing Date, without the prior
written consent of Buyers, either directly or indirectly, (i) engage or participate anywhere in the
world other than Canada in (other than through the ownership of 5% or less of any class of
securities registered under the Securities Exchange Act of 1934, as amended or of an otherwise
publicly traded company) any line of business which comprised the Sold Business on the Closing
Date; or (ii) cause or attempt to cause any officer, employee or consultant of Buyers engaged in
the Sold Business to resign or sever a relationship with Buyers. Agilysys further acknowledges the
covenant by Agilysys Canada, below, and agrees to not do anything, directly or indirectly, to
impair the same. Notwithstanding the foregoing, Buyers acknowledge and agree that
Agilysys may continue to own an equity interest in and continue to maintain other business
relationships with Magirus AG and such equity interest and relationships shall not constitute a
violation of this Section 8.2.9(a).



               (b) Agilysys Canada acknowledges the above covenant by Agilysys and agrees that it will not
for a period of five (5) years from the Closing Date, without the prior written consent of Buyers,
either directly or indirectly, (i) engage or participate anywhere in Canada in (other than through
the ownership of 5% or less of any class of securities registered under the Securities Exchange Act
of 1934, as amended or of an otherwise publicly traded company) any line of business which
comprised the Sold Business on the Closing Date; or (ii) cause or attempt to cause any officer,
employee or consultant of Buyers engaged in the Sold Business to resign or sever a relationship
with Buyers (the “Canada Non-Competition Covenant”). Notwithstanding the foregoing, Buyers
acknowledge and agree that Agilysys Canada may continue to own an equity interest in and continue
to maintain other business relationships with Magirus AG and such equity interest and relationships
shall not constitute a violation of this Section 8.2.9(b).



          8.2.10 Nonsolicitation. Sellers will not, for a period of five (5) years from the
Closing Date, without the prior written consent of Buyers, directly or indirectly, (i) solicit the
employment of any Transferred Employee other than through general advertising not specifically
directed at such employee, (ii) hire any Transferred Employee of Buyers other than is permitted by
clause (i) above, or (iii) solicit, entice, induce or encourage any Transferred Employee to
terminate his or her relationship with Buyers in order to become an employee of Sellers;
provided, however, that Sellers shall not be restricted from soliciting the
employment of or hiring any Transferred Employees that have previously been terminated by Buyers or
have terminated their employment with Buyers other than as a result of Sellers’ violation of this
Section 8.2.10.



          8.2.11 Investment Canada. Canadian Buyer shall within the prescribed time file a
notification regarding the purchase of the Canadian Purchased Assets as required under the
Investment Canada Act.



          8.2.12 Product Liability/Returned Goods. In the event that any person asserts a claim
for Product Liabilities or for Returned Goods in connection with any products sold by Sellers prior
to the Closing Date, Buyers shall provide reasonable assistance to Sellers to notify the supplier
of such product of the claim and to request such supplier to fulfill its responsibility in respect of such claim. In
the event that the supplier does not assume



41









 




responsibility for any such claim, Buyers shall, at the
request of Sellers, provide replacement product to Sellers at cost.




     SECTION 8.3. Miscellaneous Covenants.



          8.3.1 Publicity. Prior to the Closing Date, neither Sellers nor Buyers shall issue
any press release or otherwise make any public statements with respect to the transactions
contemplated by this Agreement except as may be required by applicable Law or pursuant to any
listing agreement with any national securities exchange, without the other’s prior consent thereto.



          8.3.2 Expenses. Except to the extent otherwise specifically provided herein, Buyers
shall pay all the expenses incident to the transactions contemplated by this Agreement which are
incurred by Buyers or their representatives, and Sellers shall pay all the expenses incident to the
transactions contemplated by this Agreement which are incurred by Sellers or their representatives.



          8.3.3 No Assignment. No assignment by either party of this Agreement or any right or
obligation hereunder, in whole or in part, may be made without the prior written consent of the
other party. Any assignment attempted without that consent will be void and of no effect;
provided, however, that Buyers may assign their rights under this Agreement to an
Affiliate of Buyers’ so long as they remain obligated hereunder.



          8.3.4 Further Assurances. Each party hereto agrees that, as requested by the other
party after the Closing, it will do all such further acts as may be required to effect the
transactions contemplated hereby. To the extent Sellers are not able to obtain the requisite
consents to assign to Buyers any of the Assumed Contracts which require such consents, Sellers
agree to enter into mutually agreeable agreements with Buyers for each such Assumed Contract for
which consent to assignment was not obtained, under which Buyers shall, to the extent practicable
and possible, obtain the reasonably equivalent corresponding rights and benefits of any such
Assumed Contracts and the reasonably equivalent corresponding obligations and liabilities
thereunder, so that Buyers are, to the extent practicable and possible, put in substantially the
same position they would have been in had such consent been obtained by Sellers. Such agreements
may be in the form of a subcontract, sub-license or sub-lease to a Buyer or Sellers appointing the
relevant Buyer as agent to such Seller to perform under such Assumed Contract, or any other
arrangement which the relevant Buyer could enforce for the benefit of such Buyer, with the relevant
Buyer assuming such Seller’s obligations, and any and all rights and benefits of such Seller
against a third party thereto.



SECTION 9.

INDEMNIFICATION




     SECTION 9.1. Survival. Each of the representations, warranties and covenants set
forth in this Agreement shall survive the Closing:




          (a) Indefinitely with respect to (i) the representations and warranties contained
in Sections 4.1(a), 4.2, 4.8(a), 4.18, 5.1, 5.2 and 5.7 and (ii) the covenants and
agreements contained in Sections 1.1, 1.2, 2.1, 2.2, 8.1.2(b), and 8.3.2;



42









 






          (b) Until sixty (60) days after the expiration of all applicable statutes of
limitation (including all periods of extension, whether automatic or permissive) with
respect to matters covered by Sections 4.12, 4.13, 4.14, 4.17 and 8.2.4 through 8.2.7;




          (c) Until such date that is eighteen (18) months after the Closing Date, in the
case of all other representations and warranties and any covenant or agreement to be
performed in whole or in part on or prior to the Closing; or




          (d) With respect to each other covenant or agreement contained in this Agreement,
until sixty (60) days following the last date on which such covenant or agreement is to
be performed or, if no such date is specified, indefinitely.



     SECTION 9.2. Indemnification By Sellers. Subject to one or more provisions of this
Article 9, Buyers and their Affiliates (collectively, the “Seller Indemnified Parties”) shall be
entitled to indemnification from Sellers for all Losses directly or indirectly incurred by or
sought to be imposed upon the Seller Indemnified Parties arising out of or relating to any (i)
breach of any covenant or agreement made by Sellers in or pursuant to this Agreement, (ii) breach
of any representations and warranties made by Sellers in this Agreement, (iii) of the Retained
Liabilities, (iv) Assumed Litigation in excess of $5,000,000 or (v) the contract provision
described in item 2(a) of Schedule 4.25, and (vi) post-Closing liabilities of Buyers to IBM
relating to the Sold Business arising from Sellers’ actions or inactions prior to Closing that are
not reflected on the Audited Balance Sheet (unless Buyers have already been indemnified for such
liabilities pursuant to sub-clause (1) below of this Section 9.2). “Losses” or “Loss” as used in
this Agreement, means all liabilities, losses, damages, fines, fees, costs and expenses, including
reasonable attorneys’ fees. In addition to the foregoing, during the period beginning on the
Closing and ending on the one year anniversary thereof, the Seller Indemnified Parties shall be
entitled to indemnification from Sellers for all Losses directly or indirectly incurred by or
sought to be imposed upon the Seller Indemnified Parties resulting from, arising out of or
relating to (1) 100% of liabilities related to trade activities with suppliers of the Sold Business
arising from Sellers’ actions or inactions prior to Closing unrecorded on the Audited Balance Sheet
(unless Buyers have already been indemnified for such liabilities pursuant to sub-clause (vi) of
this Section 9.2) and (2) amounts not collectable from IBM for customer and debit claims, to the
extent of (A) 80% of such customer and debit claims that are aged less than six (6) months as of
the Closing Date, (B) 90% of such customer and debit claims that are aged between six (6) months
and twelve (12) months as of the Closing Date and (C) 100% of such customer and debit claims that
are aged more than twelve (12) months as of the Closing Date; provided, however, that, in each
case, Seller Indemnified Parties use commercially reasonable efforts to resolve such matters during
such period.



     SECTION 9.3. Indemnification By Buyers. Subject to one or more provisions of this
Article 9, Sellers and their Affiliates (collectively, the “Buyer Indemnified Parties”) shall be entitled to indemnification from
Buyers for all Losses directly or indirectly incurred by or sought to be imposed upon the Buyer
Indemnified Parties resulting from any (i) breach of any covenant or agreement made by Buyers in or
pursuant to this Agreement, (ii) breach of any representations and warranties made by Buyers in
this Agreement, (iii) of the Assumed Liabilities or (iv) operation of the Sold Business
post-Closing.



43









 





     SECTION 9.4. Limitations on Indemnification by Sellers. The indemnification of the
Seller Indemnified Parties provided for in Section 9.2 shall be limited in certain respects as
follows:




          (a) Any claim by the Seller Indemnified Parties for Indemnification pursuant to
Section 9.2 shall be required to be made by delivery of a written notice describing the
basis for such claim in reasonable detail, to Sellers prior to the end of the applicable
period for survival set forth in Section 9.1;




          (b) The Seller Indemnified Parties shall be entitled to indemnification for matters
described in Section 9.2(ii) only to the extent that the aggregate amount of all such
Seller Indemnified Parties’ claims for indemnification under Section 9.2(ii), as finally
resolved, exceeds 1% of the Purchase Price;




          (c) The maximum aggregate liability of Sellers for indemnification under Section
9.2(ii) herein shall in no event exceed 20% of the Purchase Price;




          (d) The Seller Indemnified Parties’ right to indemnification shall be reduced to
the extent the subject matter of the claim is covered by and paid pursuant to a warranty
or indemnification from a third party;




          (e) The Seller Indemnified Parties’ right to indemnification shall be reduced to
the extent they receive insurance proceeds with respect to such Losses;




          (f) The Seller Indemnified Parties’ right to indemnification shall be limited to
the extent the Losses are reflected in the Final Balance Sheet such that the amount
payable to the Seller Indemnified Parties under such an indemnification claim shall be
reduced dollar for dollar by the amount of the Losses reflected in the Final Balance
Sheet, but only to the extent Buyer’s actually receive any purchase price adjustment
they are entitled to under Section 3.2(e); and




          (g) The Seller Indemnified Parties shall not be entitled to indemnification with
respect to Losses resulting from the termination or non-renewal of any Assumed Contract
with any supplier or customer by such supplier or customer other than for cause;
provided, however, notwithstanding anything contained herein or in any
Assumed Contract to the contrary, the termination or non-renewal of any Assumed Contract
with any supplier or customer of the Sold Business resulting from the consummation of
the transactions contemplated by this Agreement, including, without limitation, as a
result of the assignment, or attempted assignment, of such Assumed Contract by Sellers
to Buyers without first obtaining the consent of such supplier or customer, shall not
constitute “for cause” for purposes of this Agreement. Notwithstanding the foregoing, the provisions of this Section 9.4(g) shall not
limit, or otherwise effect, the rights of the Seller Indemnified Parties under Sections
3.4, 6.2(m) and 8.2.9.



     SECTION 9.5. Limitations on Indemnification by Buyers. The indemnification of the
Buyer Indemnified Parties provided for in Section 9.3 shall be limited in certain respects as
follows:



44









 






          (a) Any claim by the Buyer Indemnified Parties for Indemnification pursuant to
Section 9.3 shall be required to be made by delivery of a written notice describing the
basis for such claim in reasonable detail, to Buyers prior to the end of the applicable
period for survival set forth in Section 9.1;




          (b) The Buyer Indemnified Parties shall be entitled to indemnification for matters
covered by Section 9.3(ii) only to the extent that the aggregate amount of all such
Buyer Indemnified Parties’ claims for indemnification under Section 9.3(ii), as finally
resolved, exceeds 1% of the Purchase Price;




          (c) The maximum aggregate liability of Buyers for indemnification under Section
9.3(ii) herein shall in no event exceed 20% of the Purchase Price;




          (d) The Buyer Indemnified Parties’ right to indemnification shall be reduced to the
extent the subject matter of the claim is covered by and paid pursuant to a warranty or
indemnification from a third party; and




          (e) The Buyer Indemnified Parties’ right to indemnification shall be reduced to the
extent they receive insurance proceeds with respect to such Losses.



     SECTION 9.6. Notice of Non-Third Party Claim.




          (a) Promptly after acquiring knowledge of any Losses for which a Seller Indemnified
Party is entitled to indemnification pursuant to this Article 9, Buyers shall give
written notice thereof to Sellers accompanied by an affidavit of the chief executives or
chief financial officers of Buyers setting forth with reasonable particularity the
underlying facts (either, as of the date of such affidavit, actually known or in good
faith believed by the affiant to exist) sufficient to establish a good faith estimate,
if known, of the Losses incurred or to be incurred relating thereto; and including
copies of all written documentation and summarizing all oral information actually known
or in good faith believed by the affiant to exist relating to the circumstances or
events underlying the indemnification claim. In the event Buyers make a claim which is
determined by a court of competent jurisdiction to be without reasonable basis in law or
fact, Buyers shall bear all reasonable costs and expenses (including court costs and
reasonable attorney’s and accountant’s fees) incurred by Sellers in investigating and
defending against such claim.




          (b) Promptly after acquiring knowledge of any Losses for which a Buyer Indemnified
Party is entitled to indemnification pursuant to this Article 9, Sellers shall give written notice thereof to Buyers accompanied by an affidavit of
the chief executive or chief financial officer of Agilysys setting forth with reasonable
particularity the underlying facts (either, as of the date of such affidavit, actually
known or in good faith believed by the affiant to exist) sufficient to establish, as of
the date of such affidavit, the breach of a specified representation or warranty and
setting forth a good faith estimate, if known, of the Losses incurred or to be incurred
relating thereto; and including copies of all written documentation and summarizing



45









 






all oral information actually known or in good faith believed by the affiant to exist
relating to the circumstances or events underlying the indemnification claim.



     SECTION 9.7. Third Party Claims.




          (a) Notice. In order for a party (the “Indemnitee”) to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of or
involving a claim or demand made by any Person against the Indemnitee (a “Third Party
Claim”), such Indemnitee must notify the party from who indemnification hereunder is
sought (the “Indemnitor”) in writing of the Third Party Claim no later than thirty (30)
days after such claim or demand is first asserted. Such notice shall state in
reasonable detail the amount of or estimated amount of such claim, and shall identify
the specific basis or bases for such claim, including the representation, warranties or
covenants alleged to have been breached. Failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the Indemnitor shall
have been actually prejudiced as a result of such failure. Thereafter, the Indemnitee
shall deliver to the Indemnitor, without undue delay, copies of all notices and
documents (including court papers) received by the Indemnitee relating to the Third
Party Claim so long as any such disclosure could not reasonably be expected to have an
adverse effect on the attorney client or any other privilege that may be available to
the Indemnitee in connection therewith.




          (b) Control.




     (i) If a Third Party Claim is made against an Indemnitee, the Indemnitor shall
be entitled to participate, at its expense, in the defense thereof. Notwithstanding
the foregoing, if the Indemnitor irrevocably admits to the Indemnitee in writing its
obligation to indemnify the Indemnitee for all liabilities and obligations relating
to such Third Party Claim, the Indemnitor may elect to assume and control the
defense thereof (by providing notice to Indemnitee of such election within thirty
(30) days following delivery of notice of a Third Party Claim by Indemnitee to
Indemnitor) with counsel reasonably satisfactory to the Indemnitee, at the sole cost
and expense of the Indemnitor, such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently prosecuted by the
Indemnitor to a final conclusion or will be settled in accordance with 9.7(c). If
the Indemnitor assumes such defense, the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnitor, it being understood that the
Indemnitor shall control such defense; provided, however, that the
Indemnitee may at any time prior to the Indemnitor’s delivery of the notice to
the Indemnitee of the Indemnitor’s election to assume the defense of any Third
Party Claim, file any motion, answer or other pleadings or take any other action
that is reasonably necessary or appropriate to protect the Indemnitee’s interests.
Notwithstanding anything to the contrary provided in the immediately preceding
sentence, the Indemnitor will pay the Indemnitee’s costs and expenses with respect
to its separate counsel if (x) in the Indemnitee’s good faith judgment, it is
advisable, based on advice of counsel, for the Indemnitee to be represented by



46









 







separate counsel because a conflict or potential conflict exists between the
Indemnitor and the Indemnitee or (y) the named parties to such Third Party Claim
include both the Indemnitor and the Indemnitee and the Indemnitee determines in good
faith, based on advice of counsel, that defenses are available to it that are
unavailable to the Indemnitor.




     (ii) If the Indemnitor fails to notify the Indemnitee within thirty (30) days
following delivery of notice of a Third Party Claim by Indemnitee to Indemnitor that
the Indemnitor desires to defend the Third Party Claim pursuant to this Section 9.7,
or if the Indemnitor gives such notice but fails to prosecute diligently or settle
the Third Party Claim, then the Indemnitee will have the right to defend, at the
sole cost and expense of the Indemnitor, the Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently prosecuted by the
Indemnitee in good faith or will be settled at the discretion of the Indemnitee
(with the consent of the Indemnitor, which consent will not be unreasonably
withheld). The Indemnitee will have full control of such defense and proceedings,
including any compromise or settlement thereof (subject to the previous sentence);
provided, however, that if requested by the Indemnitee, the
Indemnitor will, at the sole cost and expense of the Indemnitor, provide reasonable
cooperation to the Indemnitee and its counsel in contesting any Third Party Claim
which the Indemnitee is contesting.




          (c) Settlement. If the Indemnitor so assumes the defense of any Third
Party Claim, all of the indemnified parties shall cooperate with the Indemnitor in the
defense or prosecution thereof. Such cooperation shall include, at the expense of the
Indemnitor, the retention and (upon Indemnitor’s request) the provision to the
Indemnitor of records and information which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. If the
Indemnitor has assumed the defense of a Third Party Claim, (i) the Indemnitee shall not
admit any liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the Indemnitor’s prior written consent (which consent shall not be
unreasonably withheld), (ii) the Indemnitee shall agree to any settlement, compromise or
discharge of any Third Party Claim which the Indemnitor may recommend and which by its
terms releases the Indemnitee from any liability in connection with such Third Party
Claim, and (iii) the Indemnitor shall not, without the written consent of the
Indemnitee, enter into any settlement, compromise or discharge or consent to the entry
of a judgment which imposes any obligation or restriction upon Indemnitee.




          (d) Cooperation. Each party shall make available to the other all records
and other materials reasonably required to contest any Third Party Claim and shall
cooperate fully with the other in the defense of all such claims. Information disclosed
by one party to the other shall be kept confidential. The party not in control of the
Third Party Claim shall have the right to be represented by counsel of its own choosing
and at its own expense. The party in control shall keep the other informed of all
material developments in connection with any Third Party Claim.



47









 





     SECTION 9.8. Disputes Involving Claims for Indemnification. If the Indemnitor
notifies the Indemnitee that it does not dispute its liability to the Indemnitee with respect to
any claim for indemnification hereunder, or fails to notify the Indemnitee within thirty (30) days
following delivery of notice of any such claim by Indemnitee to Indemnitor whether the Indemnitor
disputes its liability to the Indemnitee with respect to such claim, the Loss arising from such
claim will be conclusively deemed a liability of the Indemnitor and the Indemnitor shall pay the
amount of such Loss to the Indemnitee on demand following the final determination thereof. If the
Indemnitor has timely disputed its liability with respect to such claim, the Indemnitor and the
Indemnitee will proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within thirty (30) days following receipt of an Indemnitee of a
written notice from an Indemnitor stating that it disputes all or any portion of a claim for
indemnification hereunder, such dispute shall be resolved by litigation in a court of competent
jurisdiction.



     SECTION 9.9. Exclusive Remedy. Except as provided in Section 8.1.6, each party shall
have no liability to the other party with respect to any breach or nonfulfillment of any covenant
or any other matter or claim relating to or arising out of this Agreement, except that with respect
to any breach of, inaccuracy in, or violation of any representation or warranty or nonfulfillment
of any covenant for which a right to claim indemnification is provided in this Article 9, a claim
or an action under and pursuant to the terms, conditions and limitations of this Article 9 shall be
the sole and exclusive right and remedy of a party seeking indemnification, and such party shall
not have any other claim, cause of action, right, or remedy for such breach, inaccuracy, violation
or nonfulfillment based upon this Agreement, any provision of any federal, state or provincial
securities or other Law (including CERCLA and similar contribution rights) or based upon any other
cause of action arising at law or in equity; provided, however, that if for any
reason a court of competent jurisdiction shall refuse to enforce this provision, and shall permit a
party seeking indemnification to assert any action based other than upon the right to claim
indemnification as provided in this Article 9, such party agrees that the amount of such other
claim shall be subject to and limited by the provisions of this Article 9. The provisions of this
Section 9.9 shall not preclude the prosecution of any action or proceeding based on fraud.



SECTION 10.

CONSTRUCTION




     SECTION 10.1. Notices. All notices shall be in writing delivered as follows:



	 	 	 	 	 	 	 
	 

	 	(a)
	 	If to Sellers, to:
	 	Agilysys, Inc.

2255 Glades Road, Suite 301

Boca Raton, Florida 33431

Attention: Chief Executive Officer

Facsimile: (561) 999-8765
	 
	 	 	 	 	 	 
	 

	 	 	 	With copies to:
	 	Agilysys, Inc.

2255 Glades Road, Suite 301

Boca Raton, Florida 33431

Attention: Vice President and Corporate Counsel

Facsimile: (561) 999-8765






48









 






	 	 	 	 	 	 	 
	 



	 	 	 	And:
	 	Calfee, Halter & Griswold LLP

1400 McDonald Investment Center

800 Superior Avenue

Cleveland, Ohio 44114-2688

Attention: Lawrence N. Schultz, Esq.

Facsimile: (216) 241-0816
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	If to Buyers, to:
	 	Arrow Electronics, Inc.

50 Marcus Drive

Melville, NY 11747

Attention: Peter Brown, Senior Vice President

and General Counsel

Facsimile No.: (631) 391-4379
	 
	 	 	 	 	 	 
	 

	 	 	 	With copies to:
	 	Milbank, Tweed, Hadley & Mccloy LLP

1 Chase Manhattan Plaza

New York, NY 10005

Attn: Howard Kelberg, Esq.

Facsimile No.: (212) 530-5219





or to such other address as may have been designated in a prior notice. Notices may be sent by (a)
overnight courier, (b) confirmed facsimile transmission, or (c) registered or certified mail,
postage prepaid, return receipt requested; and shall be deemed to have been given (a) in the case
of overnight courier, the next business day after the date sent, (b) in the case of facsimile
transmission, on the date of confirmation of such transmission, and (c) in the case of mailing,
three business days after being mailed, and otherwise notices shall be deemed to have been given
when received by the Person to whom the notice is addressed or any other Person with apparent
authority to accept notices on behalf of the Person to whom the notice is addressed.




     SECTION 10.2. Binding Effect. Except as may be otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.



     SECTION 10.3. Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or interpretation of this
Agreement.



     SECTION 10.4. Exhibits and Schedule. The Exhibits and Schedules referred to in this
Agreement shall be deemed to be a part of this Agreement. All Schedules referred to in this
Agreement shall be initialed by the party delivering the same and dated the date of delivery.



     SECTION 10.5. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which together shall constitute one and the
same document. This Agreement shall be effective upon execution and delivery of either manually
signed or facsimile signed signature pages.



49









 





     SECTION 10.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware applicable to a contract executed and performed
in such State, without giving effect to the conflicts of laws principles thereof.



     SECTION 10.7. Waivers. Compliance with the provisions of this Agreement may be
waived only by a written instrument specifically referring to this Agreement and signed by the
party waiving compliance. No course of dealing, nor any failure or delay in exercising any right,
shall be construed as a waiver, and no single or partial exercise of a right shall preclude any
other or further exercise of that or any other right.



     SECTION 10.8. Pronouns. The use of a particular pronoun herein shall not be
restrictive as to gender or number but shall be interpreted in all cases as the context may
require.



     SECTION 10.9. Time Periods. Any action required hereunder to be taken within a
certain number of days shall be taken within that number of calendar days unless otherwise
expressly provided; provided, however, that if the last day for taking such action
falls on a weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.



     SECTION 10.10. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule
of strict construction will be applied against either party.



     SECTION 10.11. Modification. No supplement, modification or amendment of this
Agreement shall be binding unless made in a written instrument which is signed by all of the
parties and which specifically refers to this Agreement.



     SECTION 10.12. Entire Agreement. This Agreement and the agreements and documents
referred to in this Agreement or delivered hereunder are the exclusive statement of the agreement
among the parties concerning the subject matter hereof. All negotiations among the parties are
merged into this Agreement, and there are no representations, warranties, covenants, understandings, or agreements, oral or otherwise,
in relation thereto among the parties other than those incorporated herein and to be delivered
hereunder. Notwithstanding the foregoing, the confidentiality provisions set forth in the
Confidentiality Agreement shall survive this Agreement, except that effective upon Closing, Buyers
will no longer be subject to any confidentiality provisions contained in the Confidentiality
Agreement to the extent they relate solely to the Sold Business. In the event this Agreement is
terminated without the Closing occurring, then the obligations set forth in the aforesaid
Confidentiality Agreement shall survive the termination hereof in accordance with the terms thereof
and hereof.



     SECTION 10.13. No Third Party Beneficiary Rights. This Agreement shall inure solely
to the benefit of each party hereto and its successors and permitted assigns and nothing in this
Agreement, express or implied, shall confer upon any other Person any rights, benefits or remedies
of any nature whatsoever.



     SECTION 10.14. Definitions.



          “Accounts Receivable” has the meaning set forth in Section 1.1(j).



50









 





          “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”).



          “Agilysys” shall mean Agilysys, Inc.



          “Agilysys Board” has the meaning set forth in Section 8.1.8(a).



          “Agilysys Canada” shall mean Agilysys Canada, Inc.



          “Arbitrator’s Award Report” has the meaning set forth in Section 3.2(c).



          “Assumed Contracts” has the meaning set forth in Section 1.1(h).



          “Assumed Liabilities” has the meaning set forth in Section 2.1.



          “Assumed Product Liabilities” has the meaning set forth in Section 2.1(f).



          “Assumed Litigation” means the litigation disclosed in Schedules 4.14(b) and 4.11(d), except
for item 1 of 4.11(d)— “the Vigilos Inc. litigation.”



          “Audited Balance Sheet” has the meaning set forth in Section 3.2(a).



          “Balance Sheet” has the meaning set forth in Section 1.1.



          “Benefit Plans” has the meaning set forth in Section 4.13(a).



          “BEP” has the meaning set forth in Section 8.2.2(g).



          “Business Combination” shall mean with respect to any Person, any merger, consolidation or
combination to which such Person is a party, any sale, dividend, split or other disposition of
capital stock or other equity interests of such Person or any sale, dividend or other disposition
of all or substantially all of the assets and properties of such Person.



          “Buyer” means Arrow Electronics, Inc., a New York corporation.



          “Buyers” means Buyer together with Canadian Buyer.



          “Buyers’ 401(k) Plan” has the meaning set forth in Section 8.2.2(f).



          “Buyer Indemnified Parties” has the meaning set forth in Section 9.3.



          “Canadian Buyer” means Arrow Electronics Canada Ltd., a Canadian corporation.



          “Canadian Liabilities” has the meaning set forth in Section 2.1



          “Canadian Purchased Assets” has the meaning set forth in Section 1.1.



          “CERCLA” has the meaning set forth in Section 4.12(c).



51









 





          “Change of Control Agreements” has the meaning set forth in Section 8.2.2(n)(i).



          “Closing” has the meaning set forth in Section 7.1.



          “Closing Date” has the meaning set forth in Section 7.1.



          “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and
regulations and pronouncements promulgated thereunder.



          “Competition Act” has the meaning set forth in Section 4.3.



          “Confidentiality Agreement” shall have the meaning set forth in Section 8.1.2(b).



          “Disputed Payables” shall mean any accounts payable or other liabilities of the Purchased
Assets or the Sold Business existing at the Closing which Sellers are disputing and any such
accounts payable or other liabilities of the Purchased Assets or the Sold Business arising
thereafter on account of any period prior to the Closing and not included in the Audited Balance
Sheet, including without limitation the IBM Disputed Payables.



          “Drop Dead Date” has the meaning set forth in Section 8.1.5(b).



          “Effective Time” has the meaning set forth in Section 8.2.2(a).



          “Environment” means any ambient, workplace or indoor air, surface water, drinking water,
groundwater, land surface, subsurface strata, river sediment, plant or animal life, natural
resources, workplace, and real property and the physical buildings, structures, improvements and
fixtures thereon.



          “Environmental Laws” has the meaning set forth at the end of Section 4.12.



          “Environmental Liabilities” shall mean any liabilities or obligations arising under
Environmental Laws (whether known or unknown, foreseen or unforeseen, contingent or otherwise,
fixed or absolute or present or arising in the future), including without limitation any
liabilities or obligations arising from any of the following conditions or events, regardless of
when arising or occurring: (a) pollution, contamination or any other adverse environmental
conditions (including, but not limited to, any adverse environmental conditions either on-site or
off-site); (b) the presence, release, threatened release or exposure to Hazardous Substances; (c)
the on-site or off-site transportation, storage, treatment, recycling, disposal or arrangement for
disposal of Hazardous Substances; or (d) any violation of any Environmental Law.



          “ERISA” has the meaning set forth in Section 4.13.



          “ERISA Affiliate” has the meaning set forth in Section 4.13.



          “Final Balance Sheet” has the meaning set forth in Section 3.2(b).



          “Financial Statements” has the meaning set forth in 4.5.



52









 





          “GAAP” means generally accepted accounting principles.



          “Governmental Authority” has the meaning set forth in Section 4.3.



          “GST” has the meaning set forth in Section 4.17.



          “Hazardous Substance” means any substance or material: (i) the Release or presence of which
requires investigation or Remediation under any Environmental Law; (ii) that is defined as a
“pollutant,” “contaminant,” “solid waste,” “hazardous waste,” “hazardous material” or “hazardous
substance” under any Environmental Law; (iii) that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic or mutagenic or otherwise hazardous; or (iv) without
limitation, that is or contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBs) or asbestos.



          “HSR” has the meaning set forth in Section 4.3.



          “IBM Disputed Payables” shall mean any accounts payable or other liabilities payable by
Sellers to IBM with respect to the Purchased Assets or the Sold Business which Sellers are
disputing and any such accounts payable or other liabilities of the Purchased Assets or the Sold
Business arising thereafter (on account of any period prior to the Closing Date) and not included
in the Audited Balance Sheet.



          “Indemnitee” has the meaning set forth in Section 9.7(a).



          “Indemnitor” has the meaning set forth in Section 9.7(a).



          “Independent Accountants” has the meaning set forth in Section 3.2(c).



          “Interim Period” has the meaning set forth in Section 8.2.1(b).



          “Intellectual Property” means any of the following, whether protected, created or arising
under the laws of the United States or any other jurisdiction: (a) patents and patent applications,
(b) Marks, (c) copyrights (registered or unregistered), and applications for registration of
copyrights, (d) internet domain names and (e) Trade Secrets.



          “Inventory” has the meaning set forth in Section 1.1(e).



          “Keylink Systems” has the meaning set forth in the Recitals.



          “Knowledge” means the actual knowledge of any officer or employee of Sellers listed on
Schedule 10.14(a).



          “Law” means any federal, state, provincial, local or foreign statute, law (including, without
limitation, common law), ordinance, regulation, rule or code, decree, injunction or order.



          “Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien, charge or claim.



53









 





          “Losses” has the meaning set forth in Section 9.2.



          “Lost Customers Multiple” has the meaning set forth in Section 3.4.



          “Management” means with respect to any Hazardous Substance, the use, possession, distribution,
processing, manufacturing, generation, treatment, storage, recycling, transportation, Release,
Remediation or disposal or arrangement for disposal of such Hazardous Substance.



          “Marks” means registered and unregistered trademarks and service marks, trade names and
similar rights and applications to register any of the foregoing, whether protected, created or
arising under the laws of the United States or any other jurisdiction.



          “Material Adverse Effect” means a material adverse effect on the business, condition,
financial or otherwise, assets, liabilities, or results of operations of the Sold Business, taken
as a whole, reasonably expected to result in the occurrence of a Loss to the Sold Business,
individually or in the aggregate, equal to or greater than $2,500,000; except to the extent
resulting from (i) any change in general United States or global economic conditions, or (ii) any
change in general economic conditions in the industry in which the Sold Business operates which
changes do not affect Sellers disproportionately relative to other entities, or (iii) the
termination or modification of any Assumed Contract with any supplier or customer by such supplier
or customer other than for cause; provided, however, that a Material Adverse Effect
will not result if an Assumed Contract is terminated because of the execution of this Agreement or
the transactions contemplated by this Agreement, including, without limitation, the attempted
assignment of such Assumed Contract by Sellers to Buyers.



          “Material Contracts” has the meaning set forth in Section 4.15(c).



          “New Employment Agreements” has the meaning set forth in Section 8.2.2(n)(i).



          “Operative Agreements” means, collectively, the Procurement Agreement and the Transition
Agreement.



          “Oracle Lost Sales” has the meaning set forth in Section 3.4.



          “Oracle Refusal” has the meaning set forth in Section 3.4.



          “Permitted Lien” shall mean (i) mechanics’, carriers’, repairmen’s or other like Liens arising
or incurred in the ordinary course of business, in each case, less than $10,000, (ii) Liens arising
under conditional sales contracts and equipment leases with third parties entered into in the
ordinary course of business and under which Sellers are not in default, (iii) Liens for current
Taxes, assessments (both general and special) and utilities not yet due and payable or which may
hereafter be paid without penalty or which are being contested in good faith and, in connection
therewith, appropriate reserves have been set aside in accordance with GAAP, (iv) immaterial
imperfections of title or encumbrances, if any, that do not, individually or in the aggregate,
impair the continued use and operation of any asset to which they relate in the conduct of the Sold
Business as presently conducted, (v) Sold Business Real Property Leases, Tangible Personal Property
Leases, (vi) easements, covenants, rights-of-way and other similar



54









 




restrictions, conditions of record or encumbrances and shown on the surveys provided to Buyers, and (vii) (A) zoning, building
and other similar restrictions or encumbrances imposed by applicable Laws, (B) Liens that have been
placed by any developer, landlord or other third party on property over which Seller has easement
rights or, on any Sold Business Real Property, under any lease or subordination or similar
agreements relating thereto, and (C) unrecorded easements, covenants, rights of way or other
similar restrictions on the Sold Business Real Property none of which, individually or in the
aggregate, materially impair the continued use and operation of such Sold Business Real Property in
the conduct of the Sold Business.




          “Person” shall mean any individual, corporation, company, limited liability company,
partnership, joint venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other entity or organization.



          “Pre-Closing Lost Customers” has the meaning set forth in Section 3.4.



          “Pre-Closing Lost Sales” has the meaning set forth in Section 3.4.



          “Procurement Agreement” has the meaning set forth in Section 6.2(e).



          “Product Liabilities” has the meaning set forth in Section 2.2(j).



          “Proposal” means a written unsolicited proposal from a third party to consummate a merger,
stock sale, asset sale or other transaction that could reasonably be expected to result in the sale
of all or substantially all of the Sold Business that the Agilysys Board believes in good faith to
be bona fide and which is received by Sellers after the date hereof.



          “Proxy Statement” has the meaning set forth in Section 8.1.8(b).



          “Purchased Assets” has the meaning set forth at the end of Section 1.1.



          “Purchase Price” has the meaning set forth in Section 3.1.



          “Recommendation” has the meaning set forth in Section 8.1.8(b).



          “Registered Sold Business Marks” has the meaning set forth in Section 4.11(a).



          “Release” when used in connection with Hazardous Substances, shall have the meaning ascribed
to that term in 42 U.S.C. 9601(22), but not subject to the exceptions in Subsection (A) and (D) of
42 U.S.C. 9601(22).



          “Remediation” means (a) any remedial action, response or removal as those terms are defined in
42 U.S.C. § 9601; or (b) any “corrective action” as that term has been construed by Governmental
Authorities pursuant to 42 U.S.C. § 6924.



          “Representatives” has the meaning set forth in Section 8.1.2(b).



          “Retained Assets” has the meaning set forth at the end of Section 1.2.



          “Retained Benefit Plan” has the meaning set forth in Section 4.13(a).



55









 





          “Retained Environmental Liabilities” shall mean any Environmental Liabilities, whenever
arising or occurring, and regardless of whether known to Buyers or set forth on any schedule to
this Agreement, arising from or relating to (i) the Retained Assets, or (ii) otherwise arising from
or relating to Sellers or any of their respective predecessors or Affiliates, the Purchased Assets,
the Sold Business or the Sold Business Real Property, except for any Environmental Liabilities
where the facts or events underlying such liabilities are first created or first caused by the
operation of the Sold Business by Buyers after the Closing Date.



          “Retained Liabilities” has the meaning set forth in Section 2.2.



          “Retained Intellectual Property” has the meaning set forth in Section 1.2(d).



          “Retained Real Property” has the meaning set forth in Section 1.2(l).



          “Returned Goods” has the meaning set forth in Section 2.2(i).



          “Schedules” has the meaning set forth in Section 8.1.4.



          “Seller Indemnified Parties” has the meaning set forth in Section 9.2.



          “Sellers” shall mean Agilysys and Agilysys Canada.



          “Seller’s Health FSA” has the meaning set forth in Section 8.2.2(d).



          “Sellers’ Consents” has the meaning set forth in Section 8.1.14.



          “Sellers’ 401(K) Plan” has the meaning set forth in Section 8.2.2(f).



          “Severance” has the meaning set forth in Section 2.2(c).



          “Shareholder Approval” has the meaning set forth in Section 8.1.8(a).



          “Shareholders’ Meeting” has the meaning set forth in Section 8.1.8(a).



          “Sold Business” has the meaning set forth in the Recitals.



          “Sold Business Copyrights” has the meaning set forth in Section 1.1(d).



          “Sold Business Employees” has the meaning set forth in Section 4.14(a).



          “Sold Business Intellectual Property” has the meaning set forth in Section 1.1(d).



          “Sold Business Leased Real Property” has the meaning set forth in Section 1.1(a).



          “Sold Business Marks” has the meaning set forth in Section 1.1(d).



          “Sold Business Owned Real Property” has the meaning set forth in Section 1.1(b).



          “Sold Business Real Property” has the meaning set forth in Section 1.1(b).



56









 





          “Sold Business Real Property Leases” has the meaning set forth in Section 1.1(a).



          “Sold Business Trade Secrets” has the meaning set forth in Section 1.1(d).




“Special Closing Condition—Material Adverse Effect” means a Material Adverse Effect
on the business, condition, financial or otherwise, assets, liabilities or results
of operations of the Sold Business, taken as a whole, reasonably expected to result
in the occurrence of a Loss to the Sold Business, individually or in the aggregate,
equal to or greater than $25,000,000; except to the extent resulting from (i) any
change in general United States or global economic conditions, or (ii) any change in
general economic conditions in the industry in which the Sold Business operates
which changes do not affect Sellers disproportionately relative to other entities,
or (iii) the termination or modification of any Assumed Contract with any supplier
or customer by such supplier or customer other than for cause; provided,
however, that a Special Closing Condition — Material Adverse Effect will not
result if an Assumed Contract is terminated because of the execution of this
Agreement or the transactions contemplated by this Agreement, including, without
limitation, the attempted assignment of such Assumed Contract by Sellers to Buyers.



          “Stay Bonus Plan” has the meaning set forth in Section 8.2.2(m).



          “Superior Offer” means a merger, stock sale, asset sale or other transaction that could
reasonably be expected to result in the sale of all or substantially all of the Sold Business that
the Agilysys Board believes in good faith to be bona fide and which the Agilysys Board determines
in its good faith judgment (after consultation with its financial advisor) to be more
favorable to the holders of common stock of Agilysys than the transactions contemplated by
this Agreement (taking into account the anticipated timing, financing and other closing conditions,
prospects for completion of such proposal, the Termination Fee payable under this Agreement and all
financial, regulatory, legal and other aspects of such proposal).



          “Tangible Personal Property” has the meaning set forth in Section 1.1(c).



          “Tangible Personal Property Leases” has the meaning set forth in Section 1.1(l).



          “Target Working Capital” shall mean, in the event the Closing Date is (a) March 31, 2007, the
dollar amount equal to the greater of (i) 11% of the revenues of the Sold Business for the three
month period ending on the Closing Date and (ii) $32 million, (b) April 30, 2007, the dollar amount
equal to the greater of (i) 14% of the revenues of the Sold Business for the three month period
ending on the Closing Date and (ii) $38 million or (c) May 31, 2007, the dollar amount equal to the
greater of (i) 11% of the revenues of the Sold Business for the three month period ending on the
Closing Date and (ii) $32 million. For purposes of clarification, revenues shall be calculated in
accordance with GAAP.



          “Tax” has the meaning set forth in Section 4.17.



          “Terminated Suppliers” shall mean the suppliers of any terminated franchised lines of the Sold
Business listed on Schedule 10.14(b), together with any other suppliers of the



57









 




Sold Business that
terminate their respective franchised lines of business from the date of the Agreement until
Closing.




          “Third Party Claim” has the meaning set forth in Section 9.7(a).



          “Third Party License” has the meaning set forth in Section 4.11(b).



          “Title Company” shall mean Chicago Title Insurance Company or such other company designated by
Buyers.



          “Title Policy” has the meaning set forth in Section 6.2(j).



          “Transition Agreement” has the meaning set forth in Section 6.2(f).



          “Transferred Employee” has the meaning set forth in Section 8.2.2(b).



          “Trade Secrets” means know-how, processes, methods, concepts, inventions, databases, technical
data, customer lists. marketing and other business plans and other proprietary or confidential
information that derives economic value from not being generally known to other persons who can
obtain economic value from its disclosure.



          “US Buyer” means Support Net, Inc., an Indiana corporation.



          “WARN” has the meaning set forth in Section 2.1(d).



[signature page follows]




58









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	AGILYSYS, INC.

 	 
	 	By:  	/s/ Arthur Rhein
 	 
	 	 	Its: Chairman 	 
	 	 	 	 
	 
	 	AGILYSYS CANADA INC.

 	 
	 	By:  	/s/ Arthur Rhein
 	 
	 	 	Its: Chairman 	 
	 
	 	 	(“Sellers”) 	 
	 
	 	ARROW ELECTRONICS, INC.

 	 
	 	By:  	/s/ William E. Mitchell
 	 
	 	 	Its: Chairman, President & CEO 	 
	 	 	 	 
	 
	 	SUPPORT NET, INC.

 	 
	 	By:  	/s/ Peter S. Brown
 	 
	 	 	Its: Senior Vice President 	 
	 	 	 	 
	 
	 	ARROW ELECTRONICS CANADA LTD.

 	 
	 	By:  	/s/ Peter S. Brown
 	 
	 	 	Its: President 	 
	 
	 	 	(“Buyers”) 	 



59