Stock Purchase Agreement Dated February 26, 1998

STOCK PURCHASE AGREEMENT


DATED FEBRUARY 26, 1998,


AND EFFECTIVE AS OF FEBRUARY 1, 1998,


BY AND AMONG


ABR INFORMATION SERVICES, INC.,
A FLORIDA CORPORATION,


CHARING COMPANY, INC.
A WISCONSIN CORPORATION,


DONALD A. SMART,
RICHARD L. BONDOW,
JOHN C. HAASE,
JODI K. HOLMAN,
DANIEL J. JARECKI, AND
DONALD W. SCHMIDT,
AS SHAREHOLDERS,


AND


DONALD A. SMART,
AS SHAREHOLDERS' AGENT


2


STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS


1. PURCHASE AND SALE OF SHARES......................................... 1


2. PURCHASE PRICE - PAYMENT............................................ 1
2.1. Purchase Price......................................... 1
2.2. Payment of Purchase Price.............................. 5


3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF
COMPANY AND SHAREHOLDERS............................................ 7
3.1. Corporate.............................................. 7
3.2. Shareholders........................................... 8
3.3. No Violation........................................... 9
3.4. Financial Statements................................... 9
3.5. Tax Matters............................................ 10
3.6. Accounts Receivable.................................... 11
3.7. Absence of Certain Changes............................. 11
3.8. Absence of Undisclosed Liabilities..................... 13
3.9. No Litigation.......................................... 13
3.10. Compliance With Laws and Orders........................ 14
3.11. Title to and Condition of Properties................... 16
3.12. Insurance.............................................. 17
3.13. Contracts and Commitments.............................. 18
3.14. Labor Matters.......................................... 20
3.15. Employee Benefit Plans................................. 21
3.16. Employment Compensation................................ 25
3.17. Trade Rights........................................... 25
3.18. Major Customers and Suppliers.......................... 26
3.19. Service Warranty and Liability......................... 27
3.20. Bank Accounts.......................................... 27
3.21. Affiliates' Relationships to Company................... 27
3.22. Assets Necessary to Business........................... 28
3.23. No Brokers or Finders.................................. 28
3.24. Year 2000 Compliance .................................. 28
3.25. Systems Performance .................................. 28
3.26. Disclosure............................................. 29


4. REPRESENTATIONS AND WARRANTIES OF BUYER............................. 29
4.1. Corporate.............................................. 29
4.2. Authority.............................................. 29
4.3. No Brokers or Finders.................................. 30
4.4. Disclosure............................................. 30
4.5. Investment Intent...................................... 30


5. COVENANTS........................................................... 31
5.1. Section 338(h)(10) Election............................ 31
5.2. Employment and Noncompetition Agreement................ 32
5.3. Noncompetition; Confidentiality........................ 32
5.4. General Releases....................................... 34
5.5. Errors and Omissions Gap Coverage...................... 34


ii


3


6. INDEMNIFICATION..................................................... 34
6.1. By Shareholders........................................ 34
6.2. By Buyer............................................... 34
6.3. Indemnification of Third-Party Claims.................. 35
6.4. Payment................................................ 36
6.5. Indemnification for Environmental Matters.............. 36
6.6. Limitations on Indemnification......................... 37
6.7. No Waiver.............................................. 38
6.8. Exclusive Remedies . . . . . .......................... 38


7. CLOSING............................................................. 39
7.1. Documents to be Delivered by Company and
Shareholders........................................... 39
7.2. Documents to be Delivered by Buyer..................... 40


8. TERMINATION......................................................... 41


9. RESOLUTION OF DISPUTES.............................................. 41
9.1. Arbitration............................................ 41
9.2. Arbitrators............................................ 42
9.3. Procedures; No Appeal.................................. 42
9.4. Authority.............................................. 42
9.5. Entry of Judgment...................................... 42
9.6. Confidentiality........................................ 42
9.7. Continued Performance.................................. 42
9.8. Tolling................................................ 43


10. MISCELLANEOUS....................................................... 43
10.1. Disclosure Schedule.................................... 43
10.2. Further Assurance...................................... 43
10.3. Disclosures and Announcements.......................... 44
10.4. Assignment; Parties in Interest........................ 44
10.5. Law Governing Agreement................................ 44
10.6. Amendment and Modification............................. 44
10.7. Notice................................................. 44
10.8. Expenses............................................... 46
10.9. Tax Records............................................ 47
10.10. Entire Agreement....................................... 47
10.11. Counterparts........................................... 47
10.12. Headings............................................... 47
10.13. Shareholders' Agent; Power of Attorney................. 47
10.14. Glossary of Terms...................................... 49


iii


4


DISCLOSURE SCHEDULE


Schedule 3.1.(c) - Foreign Corporation Qualification Schedule 3.1.(e) - Directors and Officers of the
Company Schedule 3.1.(f) - Shareholder List Schedule 3.2.(c) - Title Exceptions Schedule 3.3 - Violation, Conflict, Default Schedule 3.4 - Financial Statements Schedule 3.5.(b) - Tax Returns (Exceptions to
Representations) Schedule 3.5.(d) - Consolidated Group Membership Schedule 3.6 - Accounts Receivable (Aged Schedule) Schedule 3.7 - Certain Changes Schedule 3.8 - Off-Balance Sheet Liabilities Schedule 3.9 - Litigation Matters Schedule 3.10.(a) - Non-Compliance with Laws Schedule 3.10.(b) - Licenses and Permits Schedule 3.10.(c) - Environmental Matters (Exceptions
to Representations) Schedule 3.11 - Liens Schedule 3.11.(c) - Real Property Schedule 3.12 - Insurance Schedule 3.13.(b) - Personal Property Leases Schedule 3.13.(d) - Significant Sales Commitments Schedule 3.13.(e) - Contracts with Affiliates and
Certain Others Schedule 3.13.(g) - Collective Bargaining Agreements Schedule 3.13.(h) - Loan Agreements, etc. Schedule 3.13.(i) - Guarantees Schedule 3.13.(l) - Material Contracts Schedule 3.14 - Labor Matters Schedule 3.15.(a) - Employee Plans/Agreements Schedule 3.15.(e) - Controlled Group, Etc. Schedule 3.15.(f) - Employee Plans/Agreements Payments
and Compliance Schedule 3.16 - Employment Compensation Schedule 3.17 - Trade Rights Schedule 3.18.(a) - Major Customers Schedule 3.18.(b) - Major Suppliers Schedule 3.18.(c) - Sales Representatives Schedule 3.19 - Service Warranty, Warranty Expense
and Liability Claims Schedule 3.20 - Bank Accounts Schedule 3.21.(a) - Contracts with Affiliates Schedule 3.21.(c) - Obligations of and to Affiliates Schedule 3.24 - Year 2000 Noncompliance Schedule 5.1 - Purchase Price Allocation


iv


5


STOCK PURCHASE AGREEMENT


STOCK PURCHASE AGREEMENT (this "Agreement"), dated February 26, 1998, and effective as of February 1, 1998, by and among ABR Information Services, Inc., a Florida corporation ("Buyer"), Charing Company, Inc., a Wisconsin corporation ("Company"), Donald A. Smart, Richard L. Bondow, John C. Haase, Jodi K. Holman, Daniel J. Jarecki and Donald W. Schmidt (individually "Shareholder" and together the "Shareholders"), and Donald A. Smart (the Shareholders' Agent").


RECITALS


1. Company is engaged in the business of providing pension administrative services to third parties (the "Charing Business"). Shareholders own all of the issued and outstanding shares (the "Shares") of capital stock of Company.


2. Company's facilities consist solely of leased offices at 7 North Pinckney Street, Suite 100, Madison, Wisconsin 53703 (the "Madison office"), 16655 West Bluemound Road, Suite 290, Brookfield, Wisconsin 53005 (the "Brookfield office"), and 505 King Street, Suite 200, P.O. Box 3059, Lacrosse, Wisconsin 54602- 3059 (the "Lacrosse office") (collectively, the "Facilities").


3. Buyer desires to purchase the Shares from Shareholders and Shareholders desire to sell the Shares to Buyer, upon the terms and conditions herein set forth.


4. Shareholders wish to designate Donald A. Smart as their agent and attorney-in-fact, with the authority to act on their behalf in connection with the sale of the Shares to Buyer.


NOW THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows.


1. PURCHASE AND SALE OF SHARES


Subject to the terms and conditions of this Agreement, effective as of the Effective Date (as hereinafter defined) Shareholders shall sell to Buyer and Buyer shall purchase from Shareholders all of the Shares.


2. PURCHASE PRICE - PAYMENT


2.1. Purchase Price.


2.1.(a) Amount. The aggregate purchase price (the "Purchase
Price") payable for the Shares shall be the sum of


6


(a) SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) and (b) a
contingent payment (the "Contingent Payment") based on the Charing
Business' incremental increase in pretax profitability for the
twelve-month period commencing February 1, 1998 and ending on January 31,
1999 (the "1998 Period") as compared to the twelve-month period
commencing February 1, 1997 and ending on January 31, 1998 (the "1997
Period"). All payments of Purchase Price are to be made for pro rata
distribution among the Shareholders in accordance with their respective
shareholdings in the Company.


2.1.(b) Calculation of Contingent Payment. The Contingent Payment
shall equal the product of (i) six, multiplied by (ii) the dollar amount
obtained by subtracting the Company's net earnings before income taxes
("EBIT") for the 1997 Period ("1997 EBIT") from the Company's EBIT for
the 1998 Period ("1998 EBIT"). Thus, if for example, Company's 1997 EBIT
equalled $1,100,000 and Company's 1998 EBIT equals $1,300,000, then the
Contingent Payment will equal $1.2 million (six times $0.2 million),
resulting in an aggregate Purchase Price of $8.7 million.


2.1.(c) Calculation of EBIT. The calculation of Company's EBIT for
any period shall include revenue received from pension administration
services provided by Company but shall not include revenue received from
COBRA administration services or other services not performed by Company
as of the date hereof but offered by Buyer or any of its subsidiaries or
affiliates. Except as expressly provided herein, the calculation of EBIT
for any period shall be made in accordance with generally accepted
accounting principles applied on a consistent basis, subject to the
following adjustments:


(i) Any depreciation or amortization adjustments
resulting solely from the transactions contemplated by this
Agreement shall not be included for purposes of calculating 1998
EBIT.


(ii) Notwithstanding Company's actual expenses for the
1998 Period relating to items and functions (such as property and
casualty insurance, errors and omissions insurance, health and
welfare programs, accounting functions and human resource
functions) that Shareholders' Agent and Buyer mutually agree shall
be provided to Company by Buyer or another subsidiary thereof,
Company shall record as an expense for purposes of calculating
1998 EBIT the same dollar amount as it recorded in calculating
1997 EBIT with respect to such items and functions.


(iii) The reasonable costs and expenses of Morton, Nehls &
Tierney, S.C. associated with the


2


7


preparation of Company's audited financial statements for the 1996
and 1997 calendar years and Company's federal and State of
Wisconsin tax returns for the 1997 calendar year and 1998 S
corporation fiscal period of January 1 through January 31, shall
be borne by Company, but shall not be included for purposes of
calculating 1997 EBIT or 1998 EBIT.


(iv) To the extent that any employee of Company shall be
required to travel to Buyer's Florida offices at Buyer's request,
Buyer shall make and pay for directly all necessary travel and
lodging arrangements.


(v) The calculation of 1998 EBIT shall not exclude any
expense item (or series of related items) relating to personnel
matters or exceeding $10,000 annually, unless such exclusion has
been preapproved in writing by Buyer.


(vi) Shareholders' Agent shall review with Buyer on a
monthly basis any and all expense items Shareholders' Agent
desires to exclude for purposes of calculating 1998 EBIT.


(vii) Buyer (or any subsidiary of Buyer) may generate new
pension administrative services sales revenue for Company during
the 1998 Period ("New Company Revenue"). Company may generate for
Buyer during the 1998 Period new COBRA administrative services
sales revenue (or other new business for similar administrative
services not performed by Company as of the date hereof) ("New
Buyer Revenue"). If New Company Revenue and/or New Buyer Revenue
is generated during the 1998 Period, Buyer and Company agree to
make a reasonable determination of the sales and other reasonable
costs incurred (A) by Company to obtain the New Buyer Revenue and
(B) by Buyer to obtain the New Company Revenue, for purposes of
calculating Company's 1998 EBIT. The mutually agreed upon costs
incurred by Buyer (or any subsidiary of Buyer) in generating the
New Company Revenue shall be included for purposes of calculating
the 1998 EBIT. The mutually agreed upon costs incurred by Company
in generating New Buyer Revenue shall be excluded for purposes of
calculating the 1998 EBIT. The New Company Revenue shall be
included in calculating 1998 EBIT and the New Buyer Revenue shall
be excluded in calculating 1998 EBIT.


(viii) The $9,800 Wisconsin recycling tax for the Company's
fiscal period from January 1 through February 1, 1998, shall be
paid by Company when due and shall be excluded from the
calculation of 1997 EBIT and 1998 EBIT.


3


8


(ix) The imputed interest expense on the Buyer
Distribution Loan (as hereinafter defined) shall be included in
the calculation of 1998 EBIT.


2.1.(d) Distribution of 1997 EBIT. The Company's EBIT for calendar
year 1997 and EBIT for the period from January 1, 1998 through January
31, 1998 ("January 1998 EBIT") shall be distributed pro rata to the
Shareholders on or before the Closing Date in accordance with their
respective shareholdings in the Company as set forth in Schedule 3.1(f);
provided, however, that (i) the Company shall have a minimum net worth as
of both the Effective Date and the Closing Date of $100,000, and (ii) at
no time from the Effective Date through the Closing Date shall the
Company's cash balance fall below $100,000. Anything in this Agreement to
the contrary notwithstanding, for purposes of calculating the January
1998 EBIT, the $10,000 fee paid by the Company to Morton, Nehls &
Tierney, S.C. for preparing the Company's audited financial statements
for the 1996 and 1997 calendar years shall not be deducted as an expense
of the Company for January, 1998. To the extent possible, the
distribution of calendar year 1997 EBIT and January 1998 EBIT shall be
funded out of the Company's available cash (subject to the foregoing
minimum net worth and available cash requirements). The balance of the
cash necessary to fund said distribution of calendar year 1997 EBIT and
January 1998 EBIT shall be provided in accordance with Section 2.1(e).


2.1.(e) Distribution Loan. Buyer agrees to loan Company on the
Closing Date an amount equal to (i) the Company's accrued Shareholder
distribution amount of $337,838 as of December 31, 1997, plus (ii)
January 1998 EBIT, minus (iii) the total Shareholder distributions made
by Company to the Shareholders on or before the Closing Date which
Company was permitted to make from its available cash under Section
2.1(d) and still meet the financial covenants stated therein. The loan
described in this Section 2.1(e) is referred to herein as the "Buyer
Distribution Loan." The proceeds of the Buyer Distribution Loan shall
then be distributed to the Shareholders on the Closing Date so that by
the Closing Date, the Shareholders shall have received total
distributions equal to the Company's $337,838 accrued Shareholder
distribution amount as of December 31, 1997, plus January 1998 EBIT. The
Buyer Distribution Loan shall be repaid in full by Company to Buyer
during the 1998 Period. To the extent it is repaid after such time, the
unpaid principal balance as of such date shall be charged in full against
1998 EBIT, provided that the Distribution Loan has been repaid through
such date to the


4


9


extent of available cash flow of the Company during the 1998 Period.


2.1.(f) Interest on Buyer Distribution Loan. The calculation of
Company's 1998 EBIT shall include an imputed interest expense to Company
equal to interest calculated on the outstanding principal balance of the
Buyer Distribution Loan which remains unpaid from time to time, at the
rate announced from time to time by NationsBank, N.A. (or its successor)
as its prime rate. Interest on the Buyer Distribution Loan calculated
under this Section 2.1(f) shall commence on the date the Buyer
Distribution Loan is made to the Company and continue until the Buyer
Distribution Loan is repaid.


2.2. Payment of Purchase Price. The Purchase Price shall be paid by Buyer as follows:


2.2.(a) Cash to Shareholders' Agent. At the Closing, Buyer shall
deliver to the Shareholders' Agent the sum of Seven Million Dollars
($7,000,000.00), to be allocated among the Shareholders pro rata in
accordance with their respective shareholdings in Company as set forth in
Schedule 3.1.(f).


2.2.(b) Contingent Payment. The initial calculation of the
Contingent Payment shall be made by the Shareholders' Agent, who shall
deliver his calculation within thirty (30) days following the end of the
1998 Period to Buyer for its review and comment. If Shareholders' Agent
and Buyer are able to agree in writing upon the amount of the Contingent
Payment within fifteen (15) days following delivery of the initial
calculation to Buyer, then Buyer shall pay such amount. Such payment of
the Contingent Payment, if any, shall be made to the Shareholders' Agent
within forty-five (45) calendar days following the close of the 1998
Period. In the event Buyer and Shareholders' Agent cannot agree on the
amount of the Contingent Payment within forty-five (45) calendar days
following the close of the 1998 Period, then the determination of the
contingent payment shall be submitted to binding arbitration in
accordance with Article 9 of this Agreement.


2.2.(c) Purchase Price Holdback.


(i) On the Closing Date, Buyer will transfer the sum of
Five Hundred Thousand Dollars ($500,000) to a segregated
interest-bearing account with a bank or other financial
institution with a combined capital and surplus in excess of
$50,000,000, which amount shall be held by Buyer in such account
for the purpose of securing the indemnification obligations of
Company and Shareholders under this Agreement. For purposes
hereof, "Holdback Period" shall mean the


5


10


period commencing on the date hereof and ending one (1) year from
the date hereof, subject to extension as hereinafter provided.


(ii) If, prior to the expiration of the Holdback Period,
Buyer determines to assert a claim for indemnification under
Article 6 of this Agreement, then Buyer shall give the
Shareholders' Agent written notice of such claim (for purposes of
this Section 2.2(c), a "Claim Notice"), specifying in reasonable
detail the basis therefor and the amount and calculation thereof.
If the Shareholders' Agent does not deliver to Buyer written
notice of an objection to the claim for indemnification within
twenty (20) days after receipt of the Claim Notice relating
thereto, Buyer shall be entitled to withdraw the dollar amount of
its claim (as set forth in the Claim Notice) from the segregated
account. If the Shareholders' Agent shall timely deliver to Buyer
such written notice of objection, then Buyer shall not make a
withdrawal from the segregated account with respect to the claim
set forth in the Claim Notice until: (x) Buyer and Shareholders'
Agent have executed joint written instructions referring to such
Claim Notice and directing Buyer to withdraw, for Buyer's own
account, funds from the segregated account; or (y) Buyer has
received a copy of a judgment, decree or order of a court, or copy
of an arbitration award, adjudicating the dispute with respect to
such claim for indemnification; whereupon Buyer shall withdraw
from the segregated account, for Buyer's own account, such amount
as provided therein.


(iii) If Buyer has not delivered a Claim Notice to
Shareholders' Agent prior to the expiration of the Holdback
Period, or if any and all Claim Notices delivered to Shareholders'
Agent during the Holdback Period have been resolved pursuant to
subsection (ii) above, then Buyer shall deliver to Shareholders'
Agent the portion of the funds held in the segregated account
equal to (x) $500,000, less (y) any amounts withdrawn by Buyer as
provided herein, plus (z) any interest earned wit ...