NATIONAL DATA CORPORATION
EXHIBIT 2
FORM 8-K
STOCK PURCHASE AGREEMENT
AMONG
BLUE CROSS AND BLUE SHIELD OF VIRGINIA,
CONSOLIDATED HEALTHCARE, INC.
AND
NATIONAL DATA CORPORATION
December 5, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS
1.1 Definitions 2
ARTICLE II - PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares 9
2.2 Purchase Price 9
2.3 Adjustment to the Purchase Price 9
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER AND TRIGON
3.1 Organization of Seller 13
3.2 Authority Relative to this Agreement 13
3.3 Organization and Qualification of Company 13
3.4 Subsidiaries 14
3.5 Capitalization; Validity of Shares 15
3.6 No Violation 17
3.7 Consents and Approvals 18
3.8 Compliance with Law 18
3.9 Licenses and Permits 18
3.10 Financial Statements 19
3.11 Absence of Change 20
3.12 Tax Matters 22
3.13 Labor and Employment Matters 24
3.14 Litigation 25
3.15 Assets 25
3.16 Leases 26
3.17 Material Contracts 26
3.18 Intellectual Property 29
3.19 Insurance 30
3.20 Employee Benefit Plans 31
3.21 Finders 34
3.22 Representations as to Trigon Matters 35
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization; Authority Relative to this Agreement 37
4.2 No Conflict 37
4.3 Consents and Approvals 38
4.4 Litigation 38
4.5 Investment Representation 39
4.6 Finders 39
4.7 No Reliance 39
ARTICLE V - ADDITIONAL AGREEMENTS
5.1 Conduct of Business of the Company 39
5.2 Forbearance by the Company 41
5.3 Investigation of Business and Properties 44
5.4 Confidentiality 45
5.5 Subsequent Events 47
5.6 HSR Filings 47
5.7 Expenses 48
5.8 Public Announcements 48
5.9 Efforts to Consummate 49
5.10 Pre-Closing Affiliate Transactions 49
5.11 Further Assurances 50
5.12 Preparation of Financial Statements 50
5.13 No Solicitation 51
5.14 Veritus Service Agreement 51
ARTICLE VI - EMPLOYEES AND EMPLOYEE MATTERS
6.1 Company Employees 52
6.2 Employee Incentive Plans 52
6.3 Administration 53
6.4 Severance Plan 54
ARTICLE VII - TAX MATTERS
7.1 Allocation of Tax Liability 55
7.2 Returns and Payments. 57
7.3 Cooperation and Exchange of Information. 59
7.4 Tax Sharing Indemnification. 60
7.5 Method of Asserting Tax Claims 61
7.6 Section 338(h)(10) Election; Allocation of Purchase Price 62
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF BUYER
8.1 Representations and Warranties 64
8.2 Performance of this Agreement 65
8.3 Corporate Authorization 65
8.4 Consents and Approvals 65
8.5 Injunction, Litigation, etc. 65
8.6 Legislation 66
8.7 Resignations 66
8.8 Opinion of Counsel of Seller 66
8.9 Expiration of HSR Waiting Period 66
8.10 Related Agreements 66
8.11 Release of Intercompany Obligations 66
ARTICLE IX - CONDITIONS TO OBLIGATIONS OF SELLER
9.1 Representations and Warranties 67
9.2 Performance of this Agreement 67
9.3 Corporate Authorization 68
9.4 Injunction, Litigation, etc. 68
9.5 Legislation 68
9.6 Opinion of Counsel for Buyer 68
9.7 Expiration of HSR Waiting Period 69
ARTICLE X - CLOSING
10.1 Time and Place of Closing 69
10.2 Deliveries by Seller 69
10.3 Deliveries by Buyer 70
ARTICLE XI - INDEMNIFICATION
11.1 Indemnification by Seller and Trigon 71
11.2 Indemnification by Buyer 72
11.3 Third Party Claims 72
11.4 Limitations on Indemnification 75
11.5 Survival; Investigation 77
11.6 Tax Benefits; Insurance Proceeds 77
11.7 Tax Characterization 78
ARTICLE XII - TERMINATION, AMENDMENT AND WAIVER
12.1 Termination 78
12.2 Effect of Termination 78
12.3 Amendment 79
12.4 Extension; Waiver 79
ARTICLE XIII - GENERAL PROVISIONS
13.1 Notices 79
13.2 Governing Law 81
13.3 Headings 81
13.4 Counterparts 81
13.5 Miscellaneous 81
13.6 Severability 81
SCHEDULES
1.1 - Certain Persons With Knowledge
3.4 - Subsidiaries
3.5 - Capitalization
3.6 - Violations
3.7 - Consents and Approvals
3.8 - Compliance with Laws
3.9 - Licenses and Permits
3.10 - Financial Statements
3.11 - Absence of Change
3.12 - Tax Matters
3.13 - Labor and Employment Matters
3.14 - Litigation
3.15 - Personal Property
3.16 - Leases
3.17 - Material Contracts
3.18 - Intellectual Property
3.19 - Insurance
3.20 - Employee Benefit Plans
6.1 - Company Employees
6.4(a) - Severance Payments for Certain Individuals
6.4(b) - Chicago Consolidation Terminated Employees
6.4(c) - Severance Plan
EXHIBITS
Exhibit A - Waiver of the First Right of Refusal by
Veritus Inc. under the Veritus Service Agreement
Exhibit B - EDI Open Network Service Agreement
Exhibit C - Noncompetition Agreement
Exhibit D - Sublease
Exhibit E - Transition Services Agreement
Exhibit F - Opinion of Counsel to Seller
Exhibit G - Opinion of Counsel to Buyer
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
December 5, 1996, is made among BLUE CROSS AND BLUE SHIELD OF
VIRGINIA, a Virginia corporation doing business as Trigon Blue
Cross Blue Shield ("Trigon"), CONSOLIDATED HEALTHCARE, INC., a
Virginia corporation and a wholly-owned subsidiary of Trigon
("Seller"), and NATIONAL DATA CORPORATION, a Delaware corporation
("Buyer").
INTRODUCTION
A. Seller owns all of the 100 issued and outstanding
shares (the "Company Shares") of common stock of Health
Communication Services, Inc., a Virginia corporation (the
"Company"), and one share of the issued and outstanding capital
stock of Health Communication Services (Bermuda) Ltd. (together
with the Company Shares, the "Shares").
B. Seller desires to sell and Buyer desires to purchase
the Shares on the terms and for the consideration hereinafter set
forth.
C. Seller has obtained from Veritus Inc. a waiver of a
right of first refusal in favor of Veritus Inc. with respect to
certain provider contracts in western Pennsylvania, which waiver
is attached hereto as Exhibit A (the "Waiver").
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
I.1 Definitions. The following terms, as used herein, have
the following meanings:
"Acceptance Notice" has the meaning set forth in Section
2.3.
"Acquisition Proposal" has the meaning set forth in
Section 5.13.
"Adjusted Working Capital" shall mean (a) all current assets
of the Company and its Subsidiaries on a consolidated basis
(excluding for purposes of this calculation (i) cash, (ii) cash
equivalents, (iii) accounts receivable of the Company and its
Subsidiaries greater than sixty (60) days past due and (iv) all
receivables or other amounts with respect to Intercompany
Obligations owed to the Company or its Subsidiaries by Trigon and
its Affiliates) less (b) all liabilities of the Company and its
Subsidiaries on a consolidated basis (excluding for purposes of
this calculation (i) all liabilities or other amounts with
respect to Intercompany Obligations owed by the Company and its
Subsidiaries to Trigon and its Affiliates and (ii) current and
deferred income taxes attributable to periods ending on the
Closing Date), each as would be reflected on the financial
statements of the Company and its Subsidiaries on a consolidated
basis prepared at any relevant time, as such terms are used in
conformity with generally accepted accounting principles applied
on a basis consistent with the basis on which the Audited Company
Financial Statements have been prepared.
"Adjusted Working Capital Schedule" has the meaning set
forth in Section 2.3.
"Affiliate" of a Person means a Person who, directly or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person.
"Audited Company Financial Statements" has the meaning set
forth in Section 3.10.
"Chicago Consolidation" means the reorganization of the
Company's Chicago, Illinois operations, which includes
substantial reductions of its work force located in Chicago,
offers to relocate a number of employees from Chicago to
Richmond, Virginia and moving certain personal property to
Richmond, which reorganization has been disclosed to Buyer and is
intended to be completed by January 2, 1997.
"Closing" has the meaning set forth in Section 10.1.
"Closing Date" has the meaning set forth in Section 10.1.
"Closing Date Adjusted Working Capital" has the meaning set
forth in Section 2.3.
"Closing Date Balance Sheet" has the meaning set forth in
Section 2.3.
"CMC Dispute" has the meaning set forth in Section 5.1.
"Confidentiality Agreement" means the Confidentiality
Agreement dated October 3, 1996 between Trigon and Buyer.
"COBRA" has the meaning set forth in Section 3.20.
"Company" has the meaning set forth in the Introduction.
"Company Employees" has the meaning set forth in
Section 6.1.
"Company Information" has the meaning set forth in
Section 5.4.
"Company Shares" has the meaning set forth in the
Introduction.
"CPA Firm" has the meaning set forth in Section 2.3.
"Deductible Amount" shall mean $1,540,000.
"DOL" has the meaning set forth in Section 3.20.
"EDI Open Network Service Agreement" means the EDI Network
Service Agreement between Trigon and the Company, as amended, in
the form of attached Exhibit B.
"Encumbrances" means liens, mortgages, charges, security
interests and other defects in title generally considered to be
encumbrances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section 3.20.
"Environmental Laws" means any federal, state, or local
statute, law, rule, regulation, ordinance, decree, agreement, or
order now or hereafter enacted or promulgated or issued by any
governmental body, agency, or authority relating to environmental
pollution or protection of the environment or employee health and
safety, including, without limitation, the Comprehensive
Environmental Recovery Compensation and Liability Act, 42 U.S.C.
9601 et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, 42 U.S.C. 6901 et seq. ("RCRA"), and the Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1802, each as amended, and rules
and regulations promulgated thereunder.
"Evaluation Material" has the meaning set forth in
Section 5.4.
"401(k) Plan" has the meaning set forth in Section 3.20.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Incentive Plans" has the meaning set forth in Section 3.20.
"Intellectual Property" has the meaning set forth in
Section 3.18.
"Intercompany Obligations" means all accounts, liabilities
and obligations, as shown on the general ledgers of Trigon or the
Company and its Subsidiaries as of any relevant date, of (a) the
Company and its Subsidiaries, on the one hand, to Trigon and its
Affiliates, on the other hand, or (b) of Trigon and its
Affiliates, on the one hand, to the Company and its Subsidiaries,
on the other hand; provided, however, that Intercompany
Obligations shall exclude any accounts, liabilities or
obligations between the Company and its Subsidiaries or arising
out of any of the EDI Open Network Service Agreement, the
Sublease or the Transition Services Agreement.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
"Interim Unaudited Company Financial Statements" has the
meaning set forth in Section 3.10.
"Leases" has the meaning set forth in Section 3.16.
"Legal Action" has the meaning set forth in
Subsection 11.3(ii).
"Licenses and Permits" has the meaning set forth in
Section 3.9.
"Losses" has the meaning set forth in Section 11.1.
"Material Adverse Effect" means a material adverse effect on
the assets, financial condition, business or results of
operations of the Company and its Subsidiaries taken as a whole.
"Material Contracts" has the meaning set forth in
Section 3.17.
"Non-Competition Agreement" means the Non-Competition
Agreement between Trigon and Buyer in the form of attached
Exhibit C.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plans" has the meaning set forth in
Section 3.20(a).
"Permitted Encumbrances" means (i) statutory liens for
current taxes or assessments not yet due or payable; (ii)
mechanics', carriers', workers', repairers' and other similar
liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the
part of the Company or any of its Subsidiaries; (iii) purchase
money security interests or other Encumbrances created in the
ordinary course of business and (iv) such other Encumbrances as
are not material in amount or character, individually or in the
aggregate, to the operations of the Company and its Subsidiaries,
taken as a whole.
"Person" means an individual, a corporation, a partnership,
an association, a labor union, a trust or any other entity or
organization, including without limitation a government, a
governmental body, a political subdivision or an agency or
instrumentality thereof.
"Purchase Price" has the meaning set forth in Section 2.2.
"Related Agreements" means (i) the EDI Open Network Service
Agreement,(ii) the Non-Competition Agreement, (iii) the
Transition Services Agreement and (iv) the Sublease.
"Restoration Plan" has the meaning set forth in Section 6.2.
"Review Period" has the meaning set forth in Section 2.3.
"Section 338(h)(10) Election" has the meaning set forth in
Section 7.6.
"SERP" has the meaning set forth in Section 6.2.
"Settlement Period" has the meaning set forth in Section
2.3.
"Shares" has the meaning set forth in the Introduction.
"Sublease" means the Sublease of certain office space
between Trigon, as sublessee, and the Company, as sublessor, in
the form of attached Exhibit D.
"Subsidiary" with respect to any party to this Agreement,
means any corporation or other business entity, whether or not
incorporated, of which at least 50% of the securities or
interests having, by their terms, ordinary voting power to elect
members of the Board of Directors, or other persons performing
similar functions with respect to such entity, is held directly
or indirectly by such party.
"Survival Date" has the meaning set forth in Section 11.5.
"Tax" or "Taxes" means all taxes, charges, fees, levies or
other assessments, including, without limitation, income, excise,
property, sales and franchise taxes, imposed by the United
States, or any state, county, local or foreign government or
subdivision or agency thereof, and including any interest,
penalties or additions attributable thereto.
"Tax Indemnitee" has the meaning set forth in Section 7.5.
"Tax Indemnitor" has the meaning set forth in Section 7.5.
"to the knowledge of Seller" means to the actual knowledge
of those persons listed on Schedule 1.1.
"Transition Services Agreement" means the Transition
Services Agreement between Trigon and the Company in the form of
attached Exhibit E.
"Trigon Information" has the meaning set forth in Section
5.4.
"Valuation Report" has the meaning set forth in Section 2.3.
"Veritus Service Agreement" shall mean that certain Service
Agreement dated as of December 31, 1993 by and between the
Company and Veritus Inc., a Pennsylvania non-profit corporation
doing business as Blue Cross of Western Pennsylvania.
"Waiver" has the meaning set forth in the Introduction.
"Welfare Plans" has the meaning set forth in Section
3.20(a).
ARTICLE II
PURCHASE AND SALE OF SHARES
II.1 Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, at the Closing, Seller agrees to
sell the Shares to Buyer and Buyer agrees to purchase the Shares
from Seller for the consideration hereinafter set forth.
II.2 Purchase Price. Subject to adjustment as set forth in
Section 2.3, the aggregate consideration to be paid for the
Shares (the "Purchase Price") shall be $77,000,000. At the
Closing, Buyer will pay Seller the Purchase Price in the manner
hereinafter set forth in Article X.
II.3 Adjustment to the Purchase Price.
As promptly as practical, but in no event more than sixty
(60) days after the Closing, Trigon shall prepare and deliver to
Buyer a balance sheet of the Company as of the close of business
on (i) December 31, 1996, if the Closing Date occurs on December
31, 1996 through and including January 10, 1997 and (ii) the
Closing Date if the Closing Date occurs on or after January 11,
1997 (the "Closing Date Balance Sheet"), prepared in conformity
with generally accepted accounting principles applied on a basis
consistent with the basis on which the Audited Company Financial
Statements have been prepared, except that the effect of the
Company's adoption of FAS 121 shall not be reflected. In
addition, Trigon shall prepare and deliver to Buyer a schedule of
the Adjusted Working Capital of the Company as of the date of the
Closing Date Balance Sheet and derived from the Closing Date
Balance Sheet (the "Adjusted Working Capital Schedule"), which
shall reflect Trigon's computation of the Adjusted Working
Capital as of such date (the "Closing Date Adjusted Working
Capital"). Buyer shall grant Trigon and its representatives
reasonable access during normal business hours to the premises,
systems, employees and books and records of the Company and its
Subsidiaries, including any work papers, as may be reasonably
necessary in order to permit Trigon to prepare the Closing Date
Balance Sheet and the Closing Date Adjusted Working Capital
Schedule. Buyer shall grant Trigon similar access during the
Review Period (as hereinafter defined) and the Settlement Period
(as hereinafter defined) in order to enable Buyer and Trigon to
reach an understanding, if necessary, with respect to any
disagreement regarding the computation of the Closing Date
Adjusted Working Capital.
Buyer shall review the Closing Date Balance Sheet and the
Adjusted Working Capital Schedule during the thirty (30) day
period commencing upon Buyer's receipt thereof (the "Review
Period"). Buyer may accept the computation by Trigon of the
Closing Date Adjusted Working Capital by giving Trigon written
notice of such acceptance ("Acceptance Notice") at any time
during the Review Period. If Buyer does not so accept, Trigon
and Buyer shall meet as often as necessary during the fifteen
(15) day period immediately following the Review Period (the
"Settlement Period") in an attempt to agree upon a final
computation of the Closing Date Adjusted Working Capital. During
the Review Period and the Settlement Period, Trigon shall give
Buyer reasonable access during normal business hours to its
premises and any systems, employees and books and records of the
Company and its Subsidiaries, including any work papers, to the
extent that they are reasonably necessary to reach an
understanding with respect to the computation of the Closing Date
Adjusted Working Capital.
If Buyer and Trigon are unable to agree on the computation
of the Closing Date Adjusted Working Capital by the end of the
Settlement Period, all matters in dispute (including any dispute
over the Closing Date Balance Sheet) shall be referred to a
nationally recognized public accounting firm (other than the
respective independent auditors of Buyer and Trigon) upon which
Buyer and Trigon mutually agree in writing (the "CPA Firm"),
within five business days after the expiration of the Settlement
Period. The CPA Firm, acting as experts and not as arbitrators,
shall determine all matters in dispute and render a report
thereon (the "Valuation Report") to Buyer and Trigon within
thirty days from the date such matters are referred to it, or
such other period of time (not to exceed an additional twenty
(20) calendar days) as the CPA Firm may need to render such
Valuation Report, and, upon delivery of the Valuation Report to
Trigon and Buyer, it shall be final and binding on Trigon and
Buyer.
Buyer and Trigon each shall permit the CPA Firm such access
to their respective premises and employees and the premises,
systems, employees and books and records of or relating to the
Company and its Subsidiaries, including any work papers, as the
CPA Firm may reasonably require and shall render to the CPA Firm
all such reasonable assistance as the CPA Firm may deem necessary
or advisable in connection with discharging its duties as
described in this Section 2.3. The fees and expenses of the CPA
Firm shall be shared equally by Buyer and Trigon.
By the third day (or the next succeeding business day if
such day is not a business day) following (i) Trigon's receipt of
an Acceptance Notice, (ii) agreement by Buyer and Trigon with
respect to the computation of the Closing Date Adjusted Working
Capital or (iii) the delivery by the CPA Firm of the Valuation
Report to Buyer and Trigon, as the case may be, payment shall be
made in accordance with the following paragraph.
If the Closing Date Adjusted Working Capital is less than
($52,054) (i.e., the Adjusted Working Capital deficit is greater
than the negative amount of $52,054), Seller shall pay to Buyer,
in immediately available funds, the amount of such difference,
without interest. If the Closing Date Adjusted Working Capital
is greater than ($52,054) (i.e., the Adjusted Working Capital
deficit is less than the negative amount of $52,054 or there is
positive Adjusted Working Capital), Buyer shall pay to Seller,
in immediately available funds, the amount of such difference,
without interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND TRIGON
Seller, on a several basis, represents and warrants to Buyer
the following with respect to the matters referred to in
Sections 3.1 through 3.21 and Trigon, on a several basis,
represents and warrants to Buyer only the matters referred to in
Section 3.22:
III.1 Organization of Seller. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the Commonwealth of Virginia.
III.2 Authority Relative to this Agreement. Seller has
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by Seller of this Agreement, the
consummation by it of the transactions contemplated hereby and
the performance by it of its obligations hereunder will have been
duly authorized by the Board of Directors of Seller on or before
the Closing Date, and no other corporate proceedings on the part
of Seller will be necessary with respect thereto. This Agreement
has been duly executed and delivered by Seller. This Agreement
constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms except as
its terms may be limited by (i) bankruptcy, insolvency or similar
laws affecting creditors' rights generally or (ii) general
principles of equity, whether considered in a proceeding in
equity or at law.
III.3 Organization and Qualification of Company. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia and
has corporate power and authority to own, lease and use all of
its properties and assets and to carry on its business as now
being conducted. The Company is duly qualified and in good
standing to do business in each jurisdiction in which the
character of the property owned or leased by it, or the nature of
the business conducted by it, makes such qualification necessary
except in those jurisdictions where the failure to be duly
qualified and in good standing does not and cannot reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect. Seller has heretofore delivered to Buyer
complete and correct copies of the Articles of Incorporation and
Bylaws of the Company, as currently in effect.
III.4 Subsidiaries. Each Subsidiary of the Company is
listed on Schedule 3.4. Except for the one (1) share of capital
stock of Health Communication Services (Bermuda) Ltd. to be
transferred from Seller to Buyer at Closing in connection with
the transactions contemplated hereby, the Company (or in certain
cases noted in Schedule 3.4, a Subsidiary of the Company) owns
all of the outstanding stock of each Subsidiary. Except as noted
on Schedule 3.4, each such Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has corporate power and
authority to own, lease and use all of its properties and assets
and to carry on its business as now conducted. Each such
Subsidiary is duly qualified and in good standing to do business
in each jurisdiction in which the character of the property owned
or leased by it, or the nature of the business conducted by it,
makes such qualification necessary except in those jurisdictions
where the failure to be duly qualified and in good standing does
not and cannot reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Seller has heretofore
delivered to Buyer complete and correct copies of the Articles of
Incorporation and Bylaws or comparable organizational documents
of each of the Company's Subsidiaries, as currently in effect.
III.5 Capitalization; Validity of Shares.
(a) The authorized capital stock of the Company
consists of 5,000 shares of common stock, $1.00 par value. The
Company Shares, all of which are owned by Seller free of
Encumbrances, are the only shares of the Company's capital stock
issued and outstanding. All of the Company Shares are validly
issued and outstanding, fully paid and nonassessable, have been
issued in compliance in all material respects with applicable
federal, state and local laws, rules and regulations and are
owned, beneficially and of record, by Seller. There is no
subscription right, option, warrant, convertible security or
other right (contingent or otherwise) presently outstanding for
the purchase, acquisition or sale of any shares of capital stock
of the Company or any securities convertible into or exchangeable
for such capital stock or other securities of the Company. There
are no stock appreciation rights, phantom stock or similar rights
in existence with respect to the Company's capital stock, no
agreements purporting to restrict the transfer of such capital
stock and no voting agreements, voting trusts, proxies or other
arrangements restricting or affecting the voting of such capital
stock. No shares of capital stock of the Company are currently
pledged or held as security by any Person. At the Closing, Seller
will convey to Buyer good and valid title to the Shares free of
Encumbrances.
(b) The authorized capital stock of each Subsidiary of
the Company consists of the number of shares of capital stock
shown opposite the name of such Subsidiary on Schedule 3.5. The
number of shares of capital stock of each such Subsidiary that is
issued and outstanding is as shown on Schedule 3.5, and all such
issued and outstanding shares of capital stock are duly and
validly issued, fully paid and nonassessable, have been issued in
compliance in all material respects with applicable federal,
state and local laws, rules and regulations and are owned,
beneficially and of record, as indicated on Schedule 3.5. There
is no subscription right, option, warrant, convertible security
or other right (contingent or otherwise) presently outstanding
for the purchase, acquisition or sale of any shares of capital
stock of any Subsidiary of the Company or any securities
convertible into or exchangeable for such capital stock or other
securities of any such Subsidiary. There are no stock
appreciation rights, phantom stock or similar rights in existence
with respect to any such Subsidiary's capital stock, no
agreements purporting to restrict the transfer of such capital
stock and no voting agreements, voting trusts, proxies or other
arrangements restricting or affecting the voting of such capital
stock. No shares of capital stock of any Subsidiary of the
Company are currently pledged or held as security by any Person.
III.6 No Violation. Except as set forth in Schedule
3.6, the execution and delivery by Seller of this Agreement do
not, and the consummation by Seller of the transactions
contemplated hereby and the performance by Seller hereunder will
not (i) violate, conflict with or result in a breach of any
provision of the Articles of Incorporation or Bylaws of Seller,
or the Articles of Incorporation or Bylaws or comparable
organizational documents of the Company or any Subsidiary of the
Company, (ii) except for consents or approvals required to be
obtained as set forth in Schedule 3.7, constitute a breach of,
result in a default or give rise to any right of termination,
modification or acceleration under the provisions of any material
agreement, indebtedness, lease, commitment, license, franchise,
permit, authorization, arrangement, concession or other material
instrument or obligation to which Seller, the Company or any
Subsidiary of the Company is a party or by which it or any of its
respective assets or the Shares may be bound, (iii) constitute an
imposition of any material Encumbrance, restriction or charge
upon the business or any assets of the Company or any of its
Subsidiaries, or (iv) conflict with, violate or result in a
breach of or constitute a default under any law or regulation, or
any judgment, order or decree of any court, governmental body,
commission, agency or arbitrator applicable to Seller, the
Company, or any Subsidiary of the Company, their respective
assets or the Shares, excluding from the foregoing clause (iv)
such matters as do not and cannot reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
III.7 Consents and Approvals. Except as set forth in
Schedule 3.7, there is no requirement applicable to Seller, the
Company or any of its Subsidiaries to make any filing or
registration with, give any notice to, or obtain any
authorization, permit, license, consent or approval of, any
Person as a condition to the consummation of the transactions
contemplated by this Agreement, excluding from the foregoing such
filings, registrations, notices, authorizations, permits,
licenses, consents or approvals which, if not made, given or
obtained, would not have, individually or in the aggregate, a
Material Adverse Effect.
III.8 Compliance with Law. Except as set forth in
Schedule 3.8 and in Schedule 3.9 relating to Licenses and
Permits, to the knowledge of Seller, the Company has operated in
substantial compliance with all applicable laws, statutes, rules
and regulations, federal, state or local, domestic or foreign,
including, without limitation, Environmental Laws, except for
such violations thereof as do not and cannot reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
III.9 Licenses and Permits. The term "Licenses and
Permits" as used herein means governmental licenses, permits,
approvals and authorizations, whether federal, state or local,
domestic or foreign. Except as set forth in Schedule 3.9, to the
knowledge of Seller, the Company and each of its Subsidiaries
have all of the Licenses and Permits required to conduct their
businesses as presently being conducted, except for such
Licenses and Permits the failure of which to have does not and
cannot reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Schedule 3.9 contains a
complete list of all material Licenses and Permits, all of which,
to the knowledge of Seller, are in full force and effect. No
notice of a violation of any such License or Permit has been
received by Seller and, to the knowledge of Seller, no proceeding
is pending or threatened to revoke any of them.
III.10 Financial Statements. Attached as Schedule 3.10
are true, correct and complete copies of (i) the audited
consolidated financial statements, including the notes thereto,
of the Company and its Subsidiaries for the years ending December
31, 1994 and 1995, (the "Audited Company Financial Statements")
together with the reports on such statements of the Company's
auditors and (ii) the unaudited consolidated financial statements
of the Company and its Subsidiaries for the nine month period
ended September 30, 1996 (the "Interim Unaudited Company
Financial Statements"). The Audited Company Financial Statements
have been prepared from the books and records of the Company and
its Subsidiaries and present fairly the consolidated financial
position of the Company and its Subsidiaries as of such dates and
the results of their operations and changes in financial position
for such periods and have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis. The Interim Unaudited Company Financial Statements have
been prepared from the books and records of the Company and its
Subsidiaries and, except as disclosed on Schedule 3.10, present
fairly the consolidated financial position of the Company and its
Subsidiaries as of the date indicated and the results of their
operations and changes in financial position for the period
indicated and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
III.11 Absence of Change. Except as set forth in
Schedule 3.11 or as otherwise contemplated by this Agreement,
since September 30, 1996 there has not been:
(i) any change, event or condition of any
character (other than matters of public knowledge or
other matters relating to general economic conditions
or the industry or industries in which the Company or
any of its Subsidiaries operates) including, without
limitation, any damage, destruction or loss (whether or
not covered by insurance) which has had or could
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(ii) any guarantee, obligation or liability
incurred by the Company or any Subsidiary of the
Company other than guarantees, obligations and
liabilities arising in the ordinary course of business
and Intercompany Obligations;
(iii) any general increase in the compensation
of the employees of the Company or any Subsidiary of
the Company;
(iv) any increase in the compensation or
benefits paid or payable by the Company or any
Subsidiary of the Company to any officer or director
thereof;
(v) any entry into or amendment to any
employment agreement to which any employee of the
Company or any Subsidiary of the Company is a party;
(vi) any sale of assets of the Company or any
Subsidiary of the Company other than de minimis sales
or sales in the ordinary course of business;
(vii) any direct or indirect redemption,
purchase or other acquisition of any shares of the
capital stock of the Company or any of its
Subsidiaries;
(viii) any split, combination or other similar
change in the outstanding capital stock of the Company;
(ix) any declaration, setting aside or
payment of any dividend (whether in cash, capital stock
or property) with respect to the Shares;
(x) any issuance by the Company or any of
its Subsidiaries of any shares of capital stock, or any
securities or obligations convertible into or
exchangeable for, or giving any Person the right to
acquire from the Company or any of its Subsidiaries,
any shares of its capital stock;
(xi) any mortgage, pledge or imposition of
any Encumbrance upon any of the Company's assets,
tangible or intangible, other than Permitted
Encumbrances;
(xii) any sale, assignment, transfer, license
or sublicense by the Company or any of its Subsidiaries
to another Person of any Intellectual Property, other
than in the ordinary course of business;
(xiii) any change in the Company's accounting
policies or practices;
(xiv) any compromise, cancellation, waiver or
release of any material claim other than in the
ordinary course of business;
(xv) any entry into by the Company or any of
its Subsidiaries of any agreements with any Affiliate
of the Company (other than a Subsidiary of the
Company), any officer or director of the Company or any
of its Subsidiaries or any Affiliate of any such
officer or director, except for Intercompany
Obligations and the Related Agreements;
(xvi) any conduct by the Company or its
Subsidiaries of its business other than in the ordinary
and usual course and in a manner consistent with past
practices; or
(xvii) any agreement to do any of the
foregoing.
III.12 Tax Matters. The Company and its Subsidiaries
have filed (or Trigon has filed on their behalf), in a timely
manner, all federal, state, local and foreign Tax returns,
reports and declarations required of them by applicable law and
have paid or made provision for the payment of all Taxes which
have or may become due on account of such filings. To the
knowledge of Seller, such Tax returns are correct in all material
respects. Neither the Company nor any of its Subsidiaries, nor
any predecessor of any of the foregoing, has been a member of a
group of corporations filing a consolidated or combined federal
or state income Tax return other than a group the common parent
of which is Trigon. Except as set forth in Schedule 3.12,
neither the Company nor any of its Subsidiaries is a party to any
Tax sharing or allocation agreement. The federal Tax returns for
Seller and the Company have been audited by the Internal Revenue
Service through 1991 and all Taxes resulting therefrom or from
any concluded litigation regarding Taxes have been paid in full.
Except as set forth in Schedule 3.12, neither the Company nor any
of its Subsidiaries is being examined by any other Tax authority.
Except as set forth in Schedule 3.12, neither the Company nor any
of its Subsidiaries has received any assessment for unpaid Taxes
or agreed to any extension of time for the assessment of any
Taxes. Neither the Company nor any of its Subsidiaries has a
liability for unpaid Taxes, other than with respect to (i) Taxes
which will be accrued on the Closing Date Balance Sheet or (ii)
Taxes which are, individually or in the aggregate, immaterial in
amount.
Seller will cause all required income Tax returns pertaining
to the Company's operations for Tax reporting periods ending on
or before the close of business on the Closing Date to be filed
on a timely basis and in a materially correct manner and shall
cause all applicable income Taxes with respect to such periods to
be paid. Seller will cause Tax returns for all Taxes other than
income Taxes to be filed if such returns are due prior to the
Closing Date. There are no Tax liens upon any property or assets
of the Company or the Subsidiaries except liens for current Taxes
not yet due and payable.
III.13 Labor and Employment Matters. Schedule 3.13 sets
forth a complete and correct list of each employment and
severance agreement (other than agreements delivered to Buyer as
required by Section 3.17) to which the Company or any of its
Subsidiaries is a party. Neither the Company nor any of its
Subsidiaries is a party to nor is bound by any collective
bargaining agreements, nor have any of them experienced any
strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes within the past five (5) years.
There are no controversies, claims or grievances pending or, to
the knowledge of Seller, threatened between the Company and
Company Employees, which have or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect. To the knowledge of Seller, neither the Company nor any
of its Subsidiaries is experiencing any organizational effort by
or on behalf of any labor union. Copies of each of the agreements
set forth on Schedule 3.13 have been delivered to Buyer.
Schedule 3.13 sets forth a true, complete and correct list of all
employees of the Company and its Subsidiaries as of the date of
this Agreement. As of the date of this Agreement, the Company
and its Subsidiaries have sufficient employees to conduct their
businesses as currently being conducted. Except as set forth in
Schedule 3.13, none of such employees are shared with or perform
duties for any employer other than the Company or its
Subsidiaries.
III.14 Litigation. Except as set forth in Schedule 3.14,
there are no actions, suits, claims, investigations or
proceedings pending, or to the knowledge of Seller, threatened
against the Company or any of its Subsidiaries, before any court,
governmental body, commission, agency or arbitrator, domestic or
foreign. Neither the Company nor any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction or
decree of any court or governmental agency, and there are no
unsatisfied judgments against any of them.
III.15 Assets.
(a) The Company and its Subsidiaries do not own any
real property.
(b) Each of the Company and its Subsidiaries has good
and valid title to all of the personal property, tangible or
intangible, owned by it, free and clear of Encumbrances, except
for Permitted Encumbrances. Schedule 3.15 contains a complete
and accurate list in all material respects of all items of
tangible personal property owned or leased by the Company and its
Subsidiaries. As of the date of this Agreement, all items of
tangible personal property owned or leased by the Company and its
Subsidiaries are sufficient for the conduct of their respective
businesses as currently being conducted. To the knowledge of
Seller, the items of tangible personal property used by the
Company and its Subsidiaries in their operations are, in the
aggregate, in good working order and usable in a manner
consistent with past use, reasonable wear and tear excepted,
except for those matters which do not or could not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
III.16 Leases. Schedule 3.16 sets forth a complete list
of each lease agreement to which the Company or any of its
Subsidiaries is a party, whether as lessor or lessee, which
relates to either real or personal property. The leases listed
in Schedule 3.16 are referred to herein as the "Leases." Except
as set forth in Schedule 3.16, to the knowledge of Seller, each
Lease is in full force and effect, and no event has occurred or
condition exists which constitutes a breach of the provisions of
any Lease by the Company or any of its Subsidiaries, as the case
may be, or to the knowledge of Seller, by any other party
thereto. True, correct and complete copies of all of the Leases
including all amendments thereto, have been previously delivered
to Buyer.
III.17 Material Contracts. Schedule 3.17 sets forth a
complete and correct list of information, in the case of clauses
(a) and (b), and, in the case of the remaining clauses of this
Section 3.17, each of the following types of contracts,
agreements or commitments to which the Company or any of its
Subsidiaries is a party or by which it or its respective
properties or assets are bound (to the extent such contracts,
agreements or commitments are not otherwise disclosed in
Schedules 3.12, 3.16, 3.18 and 3.20 to this Agreement):
(a) customers of the Company and its Subsidiaries
which have paid revenue to the Company and its
Subsidiaries during the first nine months of 1996 or
have entered into contracts, agreements or commitments
with the Company or its Subsidiaries between October 1,
1996 and November 30, 1996;
(b) vendors of the Company and its Subsidiaries
which have been paid by the Company or its Subsidiaries
during the first nine months of 1996 or with respect to
which the Company or its Subsidiaries have incurred
material obligations between October 1, 1996 and
November 30, 1996;
(c) contracts, agreements or commitments which
provide for the sale, lease or other transfer, after
the date hereof and other than in the ordinary course
of business, of any of the material assets of the
Company or any of its Subsidiaries;
(d) contracts, agreements or commitments which
relate to the employment, retirement or termination of
the services of any officer or former officer of the
Company or any of its Subsidiaries;
(e) notes, debentures, bonds, equipment trust
agreements, letter of credit agreements, loan
agreements, or other contracts for the borrowing or
lending of money, other than intercompany agreements
with respect thereto involving Seller or its Affiliates
(other than any Subsidiary of the Company);
(f) contracts limiting or restraining the Company
or any of its Subsidiaries from engaging or competing
in any manner or in any business;
(g) agreements with any Affiliate of the Company
(other than any Subsidiary of the Company), any officer
or director of the Company or any of its Subsidiaries
or any Affiliate of any such officer or director;
(h) agreements not terminable upon ninety (90)
days' notice covering the employment of any present
employee or consultant of the Company or any of its
Subsidiaries where the annual compensation of such
employee or consultant is $50,000 or more;
(i) agreements which obligate the Company or any
of its Subsidiaries to act as a guarantor or surety;
and
(j) software license agreements and other
agreements relating to the Intellectual Property that
are material to the business of the Company or any of
its Subsidiaries as such business is now being
conducted.
Each of (i) the contracts relating to customers specified in
clause (a) of this Section 3.17 that generated greater than
$100,000 of revenue, (ii) the vendor contracts specified in
clause (b) of this Section 3.17 for which the Company paid
amounts greater than $100,000 and (iii) the contracts, agreements
or commitments set forth in the remaining clauses (c) through (j)
of this Section 3.17 is referred to in this Agreement as a
"Material Contract." Except as set forth in Schedule 3.17 and
except for such matters as would not or could not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect, (x) all written contracts have been duly and
validly executed by the Company or one of its Subsidiaries, as
the case may be, and, to the knowledge of Seller, are in full
force and effect as of the date hereof; (y) there exists no
breach, violation or default by the Company or any of its
Subsidiaries under any written contract, and to the knowledge of
Seller, no event has occurred or condition or state of facts
exists which, after notice or the passage of time or both, would
constitute a default by the Company or any of its Subsidiaries
under any such Material Contract; and (z) there has been no
receipt of notice of actual cancellation, non-renewal or
termination of any Material Contract. Complete copies of all
Material Contracts have previously been delivered to Buyer or
will be delivered to Buyer within 5 business days of the date
hereof.
III.18 Intellectual Property. The term "Intellectual
Property" means the corporate name, trade names, trademarks,
service marks, copyrights, inventions, trade secrets, software,
and other property rights, including without limitation rights to
telephone numbers generally considered to be intellectual
property. As of the Closing Date, the Intellectual Property which
the Company owns, or has valid rights to use, in conjunction with
the services to be provided to the Company or its Subsidiaries by
Trigon pursuant to the Transition Services Agreement, will be
reasonably sufficient to permit the Company to conduct its
business as presently conducted in all material respects,
including the performance of the Company of its obligations under
the EDI Open Network Services Agreement. Schedule 3.18 contains
a complete and correct list of all Intellectual Property that is
material to the operation of the business of the Company or to
the operation of the business of any Subsidiary of the Company.
No action suit, claim, investigation or proceeding is pending or,
to the knowledge of Seller, threatened against Trigon, Seller,
the Company or any of the Company's Subsidiaries alleging that
the use of any of the Intellectual Property utilized in the
conduct of the Company's business infringes upon the rights of
any other Person. To the knowledge of Seller, (i) neither the
Company nor any of its Subsidiaries is infringing upon any
intellectual property right of any other Person, and (ii) no
other Person is infringing upon any intellectual property rights
of the Company or any of its Subsidiaries.
III.19 Insurance. Schedule 3.19 sets forth a list of
casualty insurance policies currently maintained by the Company
or any of its Subsidiaries and all surety and other bonds to
which the Company or any of its Subsidiaries are party. The
Company is not in default in any material respect under any
provision of any such policy or bond nor has it failed to give
notice or present any material claim thereunder in a timely
manner so as to bar recovery of any valid claim. Except as set
forth in Schedule 3.19, there are presently no claims pending
under such policies of insurance and to the knowledge of Seller,
there exists no event that would cause the Company or any of its
Subsidiaries to be required to give notice thereof in order to
assert a claim under such policies.
III.20 Employee Benefit Plans.
(a) Schedule 3.20 lists all of the employee benefit
plans and programs including, without limitation, all retirement,
savings and other employee pension benefit plans as defined in
Section 3(2) of ERISA ("Pension Plans") maintained, sponsored or
contributed to by the Company or any of its Subsidiaries
currently or within the five years preceding the date of this
Agreement, all health, severance, insurance, disability and other
employee welfare benefit plans as defined in Section 3(1) of
ERISA ("Welfare Plans") and all bonus, deferred compensation,
incentive, vacation and other similar plans ("Incentive Plans")
that are maintained, sponsored or contributed to by the Company
or by any Subsidiary of the Company. True and complete copies of
all Pension Plans, Welfare Plans and Incentive Plans have been
provided or made available to Buyer.
(b) As to each of the Pension Plans, to the knowledge
of Seller, the Company and each of its Subsidiaries have
complied, in all material respects, with all governing documents
and all applicable laws and regulations in administering such
plans, including specifically the applicable provisions of Title
I and Title IV of ERISA. The HCS 401(k) Plan sponsored by the
Company (the "401(k) Plan") is the only Pension Plan intended to
satisfy the requirements of Section 401(a) of the Internal
Revenue Code and to have a trust exempt under Section 501(a) of
the Internal Revenue Code. To the knowledge of Seller, the
401(k) Plan has been administered so as to comply, in all
material respects, with the applicable qualification provisions
of Section 401 of the Internal Revenue Code. The 401(k) Plan has
heretofore been determined by the Internal Revenue Service to so
qualify under the applicable qualification provisions of Section
401 of the Internal Revenue Code and the exemption provisions of
Section 501(a) of the Internal Revenue Code. To the knowledge of
Seller, nothing has occurred since the date of the most recent
determination that would be reasonably likely to cause the 401(k)
Plan or its trust to fail to qualify or be exempt under Sections
401(a) and 501(a) of the Internal Revenue Code. To the knowledge
of Seller, no prohibited transaction, as defined in Section 4975
of the Internal Revenue Code, which is not exempt, has occurred
with respect to the 401(k) Plan.
(c) To the knowledge of Seller, each of the Welfare
Plans and Incentive Plans have complied, in all material
respects, with the governing document of such Welfare Plan and
Incentive Plan and all applicable laws and regulations in the
administration thereof including, without limitation, the
provisions of ERISA when applicable. To the knowledge of Seller,
neither the Company nor any of its Subsidiaries has any liability
for retiree or life insurance benefits under any of the Welfare
Plans (except for obligations under Section 4980B of the Internal
Revenue Code and Sections 601 to 608 of ERISA ("COBRA")). To the
knowledge of Seller, any Welfare Plan providing group health
benefits to Company Employees that is subject to COBRA has been
administered, in all material respects, in compliance with COBRA.
(d) None of the Pension Plans is a "multiemployer
plan" as defined in Section 3(37) of ERISA.
(e) To the knowledge of Seller, there are no claims
(other than claims for benefits in the ordinary course) which
have been threatened, asserted or instituted against the Pension
Plans, Welfare Plans or Incentive Plans, any related trust, or
any fiduciary, administrator or sponsor of such Plan.
(f) Except as set forth in Schedule 3.20 with respect
to the HCS 401(k) Restoration Plan, neither the execution and
delivery by Seller of this Agreement nor the consummation by
Seller of the transactions contemplated hereby will (i) result in
any material payment (including, without limitation, any
severance payment or payment of unemployment compensation) by the
Company or any of its Subsidiaries to any Company Employee or
(ii) materially increase or accelerate any compensation or
benefits otherwise payable by the Company or any of its
Subsidiaries to any Company Employee.
(g) To the knowledge of Seller, neither the Company
nor any of its Subsidiaries is obligated, contingently or
otherwise, to pay any amount which would be treated as an excess
parachute payment, as defined in Section 280G(b)(1) of the
Internal Revenue Code.
(h) The Company shall not be obligated to contribute
cash or other property to the trust under the SERP (as
hereinafter defined) after the Closing Date or to fund such
benefits outside of the trust. There are no restrictions on
Buyer's rights to terminate the SERP as to benefits that have not
accrued after the Closing Date.
(i) As to the SERP and the Restoration Plan (as
hereinafter defined), the Company has filed or caused to be filed
with the Department of Labor ("DOL") the statement described in
DOL Regulation section 2520.104-23(b), within one hundred and
twenty (120) days after the earlier of the Company's adoption of
such plan or its effective date.
(j) Except as specifically set forth in Article VI,
neither Buyer nor any ERISA Affiliate of Buyer shall have any
liability or obligation with respect to (i) employment-related
liabilities, whether contingent or otherwise, arising out of any
individual's employment or working relationship with Seller or
its ERISA Affiliates other than the Company; or (ii) any benefit
plan, program, arrangement or policy maintained or contributed to
by Seller or any ERISA Affiliate of Seller other than the
Company. An "ERISA Affiliate" of any entity is any other entity
which, together with such entity, would be treated as a single
employer under Internal Revenue Code Section 414.
III.21 Finders. Except for Xxxxx Xxxxxx & Co. no broker,
finder or investment banker is entitled to any fee or commission
from Seller for services rendered on behalf of Seller in
connection with the transactions contemplated by this Agreement.
Seller is solely responsible for the fees and expenses of Xxxxx
Xxxxxx & Co.
III.22 Representations as to Trigon Matters.
(a) Trigon is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Virginia.
(b) Trigon has corporate power and authority to
execute and deliver this Agreement and the Related Agreements to
which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by
Trigon of this Agreement and the Related Agreements to which it
is a party, the consummation by it of the transactions
contemplated hereby and thereby and the performance by it of its
obligations hereunder and thereunder have been duly authorized by
the Board of Directors of Trigon, and no other corporate
proceedings on the part of Trigon are necessary with respect
thereto. This Agreement and the Related Agreements to which it
is a party have been duly executed and delivered by Trigon. This
Agreement and the Related Agreements to which Trigon is a party
constitute the valid and binding obligations of Trigon,
enforceable against Trigon in accordance with their respective
terms except as such terms may be limited by (i) bankruptcy,
insolvency or similar laws affecting creditors' rights generally
or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
(c) The execution and delivery by Trigon of this
Agreement and the Related Agreements do not, and the consummation
by Trigon of the transactions contemplated hereby and thereby,
and the performance by Trigon hereunder and thereunder will not
(i) violate, conflict with or result in a breach of any provision
of the Articles of Incorporation or Bylaws of Trigon, (ii) except
for consents or approvals required to be obtained as set forth in
Schedule 3.7, constitute a breach of, result in a default or give
rise to any right of termination, modification or acceleration
under the provisions of any material agreement, indebtedness,
lease, commitment, license, franchise, permit, authorization,
arrangement, concession or other material instrument or
obligation to which Trigon is a party relating to the EDI Open
Network Service Agreement or the Transition Services Agreement,
(iii) constitute an imposition of any material Encumbrance,
restriction or charge upon the business or any assets of Trigon
relating to the EDI Open Network Service Agreement or the
Transition Services Agreement, or (iv) conflict with, violate or
result in a breach of or constitute a default under any law or
regulation, or any judgement, order or decree of any court,
governmental body, commission, agency or arbitrator applicable to
Trigon or its assets, excluding from the foregoing clause (iv)
such matters as do not and cannot reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(d) Except as set forth in Schedule 3.7, there is no
requirement applicable to Trigon to make any filing or
registration with, give any notice to, or obtain any
authorization, permit, license, consent or approval of, any
Person as a condition to the consummation of the transactions
contemplated by this Agreement or the Related Agreements,
excluding from the foregoing such filings, registrations,
notices, authorizations, permits, licenses, consents or approvals
which, if not made, given or obtained, would not have,
individually or in the aggregate, a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Trigon the
following:
IV.1 Organization; Authority Relative to this Agreement.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and has corporate power
and authority to enter into this Agreement, to consummate the
transactions contemplated hereby. The execution and delivery by
Buyer of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of Buyer and no other corporate proceedings on the part
of Buyer are necessary with respect thereto. This Agreement has
been duly executed and delivered by Buyer. This Agreement
constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms except as its terms
may be limited by (i) bankruptcy, insolvency or similar laws
affecting creditors' rights generally or (ii) general principles
of equity, whether considered in a proceeding in equity or at
law.
IV.2 No Conflict. The execution and delivery by Buyer of
this Agreement does not, the consummation by Buyer of the
transactions contemplated hereby and the performance by Buyer
hereunder will not (i) violate or result in a breach of any
provisions of the Certificate of Incorporation or Bylaws of
Buyer, (ii) constitute a breach of, result in a default or give
rise to any right of termination, modification or acceleration
under the provisions of any material agreement, indebtedness,
lease, or other material instrument or obligation to which Buyer
is a party or by which it or any of its respective assets may be
bound, or (iii) conflict with, violate or result in a breach of
or constitute a default under any material law or regulation, or
any material judgment, order or decree of any court, governmental
body, commission, agency or arbitrator applicable to Buyer or its
assets.
IV.3 Consents and Approvals. Except for the applicable
provisions of the HSR Act, there is no requirement applicable to
Buyer to make any filing with, or to obtain the consent or
approval of any governmental agency or other Person as a
condition to the consummation of the transactions contemplated by
this Agreement, except for any such filing, consent or approval
which if not made, given or obtained, would not have,
individually or in the aggregate, a material adverse effect on
Buyer's ability to consummate the transactions contemplated by
this Agreement.
IV.4 Litigation. No action, suit, claim, investigation or
proceeding is pending or, to the knowledge of Buyer, threatened
against Buyer which seeks to prevent, restrict or delay
consummation of the transactions contemplated by this Agreement.
IV.5 Investment Representation. Buyer is acquiring the
Shares for investment and not with a view to their sale or
distribution other than in a sale or distribution which is
registered under applicable securities laws or is exempt from
such registration, and Buyer will accept certificates for the
Shares with a legend thereon in form and substance reasonably
satisfactory to Buyer indicating this fact.
IV.6 Finders. No broker, finder or investment banker is
entitled to any fee or commission from Buyer for services
rendered on behalf of Buyer in connection with the transactions
contemplated by this Agreement.
IV.7 No Reliance. Buyer represents and warrants that in
entering into this Agreement Buyer has relied solely on the
representations, warranties and covenants of Seller and Trigon
contained in this Agreement, the Schedules hereto and any
documents delivered by Seller to Buyer pursuant to Article III
hereof and has not relied on any other information provided to
Buyer by Seller, Trigon, the Company, any Subsidiaries or
Affiliates of the Company or the officers, directors, agents or
representatives of any of them.
ARTICLE V
ADDITIONAL AGREEMENTS
V.1 Conduct of Business of the Company. From the date
hereof until the Closing and except as otherwise specified herein
or in a Schedule hereto, Seller will cause the Company to (i)
conduct its business only in the ordinary and usual course and in
a manner substantially consistent with past practices, (ii)
maintain in good repair, at its expense, all of its material
properties necessary to the operation of the business of the
Company and its Subsidiaries, and (iii) use its commercially
reasonable best efforts to preserve its present relationships
with licensors, suppliers, dealers, customers and others having
material business relationships with the Company or any of its
Subsidiaries and maintain the material rights and franchises of
the Company and its Subsidiaries. Trigon and Seller will cause
the management of the Company to meet with Buyer as reasonably
requested on a regular basis to discuss the general status of the
ongoing operations of the Company and any material developments
relating to its business. Trigon and Seller will as promptly as
practicable notify Buyer (w) of any emergency or material change
in the normal conduct of the business or operations of the
Company and its Subsidiaries, (x) of the threat of, or initiation
of, any litigation involving the Company or any of its
Subsidiaries, (y) of the initiation of any investigation of the
Company or any of its Subsidiaries by any party, whether private
or governmental, and (z) of any material budget revisions
involving the business of the Company and its Subsidiaries; will
keep Buyer reasonably informed of developments with respect to
such events; and will afford Buyer's representatives access that
is reasonable under the circumstances to all materials in its
possession relating thereto upon reasonable notice.
Notwithstanding the foregoing, Seller and its Affiliates
(other than the Company and its Affiliates) may, in their sole
discretion and without any need to consult with Buyer, take any
action they deem appropriate with respect to any litigation,
arbitration or other proceeding Seller and such Affiliates may be
a party to, whether actual or threatened, relating to disputes
with the selling shareholders of Computerized Medical
Communications, Inc. and its affiliate CMC Technologies Corp.
(collectively, the "CMC Dispute"), including, but not limited to,
settlement, indemnification, release or forbearance; provided,
however, that no such action shall restrict or adversely affect
the Company or any of its Subsidiaries. To the extent reasonably
requested by Seller or such Affiliates after the Closing Date,
Buyer will make available to Seller or such Affiliates on a
timely basis and during normal business hours such books,
records, documents and employees of the Company and its
Subsidiaries as Seller may deem necessary or advisable in order
to deal with the CMC Dispute. Any reasonable third-party out-of-
pocket expenses incurred by the Company or its Affiliates as a
result of the preceding sentence shall be reimbursed by Trigon as
promptly as practicable after presentation of a reasonably
detailed invoice describing such expenses.
V.2 Forbearance by the Company. Except as contemplated by
this Agreement, from the date hereof until the Closing, without
written consent of Buyer, neither Trigon nor Seller will permit
the Company or any of the Company's Subsidiaries to:
(i) sell or dispose of a material portion of
its assets except in the ordinary and usual course of
business;
(ii) incur any obligations for borrowed
money, or mortgage, pledge or otherwise encumber any of
its assets or suffer the imposition of any Encumbrance
or allow any Encumbrance to exist (except for Permitted
Encumbrances) upon such assets except in the ordinary
and usual course of business consistent with past
practice, except for Intercompany Obligations;
(iii) enter into, amend, terminate or assign
any Material Contract or Lease or waive, release,
compromise or assign any material rights or claims
(other than in connection with the CMC Dispute);
(iv) make any capital expenditures or incur
any obligation or liability for borrowed money, other
than in the ordinary and usual course of business;
(v) merge or consolidate with, acquire any
or all of the capital stock or assets of or make any
material investment in any other Person, other than in
the ordinary and usual course of business;
(vi) assume, guarantee, endorse or otherwise
become responsible for the obligations of any other
Person, or make loans or advances to any other Person,
except in the ordinary and usual course of business
consistent with past practice;
(vii) increase in any manner the compensation
or benefits of any Company Employees unless such action
is required by an existing agreement, a copy of which
has previously been provided to Buyer, except for
normal increases for Company Employees (other than
executive officers) based on length of employment with
the Company or any of its Subsidiaries consistent with
past practices;
(viii) commence or settle any litigation (other
than the CMC Dispute) involving any liability of the
Company or any of its Subsidiaries for money damages or
restrictions upon its operations;
(ix) change in any manner the Company's
accounting policies or practices;
(x) split, combine or otherwise change its
capital stock, or redeem or otherwise acquire any of
its shares;
(xi) with respect only to the Company,
declare, set aside or pay any dividend or other
distribution (whether in cash or property) with respect
its capital stock;
(xii) issue or sell any shares of its capital
stock or any securities or obligations convertible into
or exchangeable for, or giving any Person any right to
acquire any shares of its capital stock;
(xiii) amend its Articles of Incorporation or
Bylaws;
(xiv) cancel or allow any of its existing
insurance policies covering the Company or its
Subsidiaries to lapse unless such policies are
simultaneously replaced by policies with comparable
coverage;
(xv) adopt any new plan, program, policy or
arrangement which, if it existed as of the Closing
Date, would constitute a Pension Plan or Welfare Plan;
(xvi) enter into any agreements with any
Affiliate of the Company (other than a Subsidiary of
the Company), any officer or director of the Company or
any of its Subsidiaries or any Affiliate of any such
officer or director, except for Intercompany
Obligations and the Related Agreements; or
(xvii) enter into an agreement to do any of the
things described in clauses (i) through (xvi) above.
V.3 Investigation of Business and Properties. From the
date hereof until the Closing, Trigon and Seller will, and will
cause the Company to, afford Buyer and its representatives,
including, without limitation, its attorneys, accountants and
financial advisors, upon reasonable notice, full reasonable
access during normal business hours to the officers, employees,
properties, contracts, and books and records of the Company, in
order to enable Buyer to make a full investigation of the
condition of the Company. In addition Seller and the Company
will, and will cause the Company to, furnish Buyer with such
financial, operating and additional data relating to the Company
and its Subsidiaries as Buyer may reasonably request in making
such investigation.
V.4 Confidentiality.
(a) The information which Buyer has acquired about the
Company or its Subsidiaries pursuant to the Confidentiality
Agreement or acquires about the Company or its Subsidiaries as a
result of the investigations permitted by this Agreement is
termed "Evaluation Material." Buyer agrees that neither it nor
any of its representatives will use any such material for any
purpose not related to the transactions contemplated by this
Agreement and will not disclose any such material to anyone
except its representatives who may need such information to
perform their respective duties and have been informed of its
confidential nature and directed to treat it confidentially. If
the transactions contemplated by this Agreement are not
consummated, Buyer agrees that it and its representatives will
return any written Evaluation Material in their possession, or
will destroy and will not retain any such material, any copies
thereof or any notes or memoranda made using such material.
(b) Information which Buyer or its Affiliates
(including, as of the Closing Date, the Company and its
Subsidiaries) has acquired or is in possession of about Trigon
and its Affiliates and their respective businesses and affairs as
of the Closing Date is termed "Trigon Information". Buyer agrees
that, for a period of three years after the Closing Date, neither
it nor any of its Affiliates (including, after the Closing Date,
the Company and its Affiliates) will use any such Trigon
Information for any purpose not relevant to the transactions
contemplated by this Agreement or the Related Agreements and will
not disclose any such information to anyone except its
representatives who need to know such information to perform
their respective duties and have been informed of its
confidential nature and directed to treat it confidentially.
(c) Information which Trigon and its Affiliates (other
than the Company and its Subsidiaries) has acquired or is in
their possession of about the business and affairs of the Company
and its Subsidiaries as of the Closing Date is termed "Company
Information". Trigon and its Affiliates agree that, for a period
of three years after the Closing Date, neither Trigon, its
Affiliates nor any of their representatives will use any such
Company Information for any purposes not related to the
transactions contemplated by this Agreement or the Related
Agreements and will not disclose any such information to anyone
except their representatives who need to know such information to
perform their respective duties and have been informed of its
confidential nature and directed to treat it confidentially;
provided, however, that the foregoing shall not prevent in any
manner Trigon's ability to conduct its business, other than
Company-related business, as such was conducted prior to the
Closing Date.
(d) The parties agree that monetary damages alone
would not be a satisfactory remedy for a breach of this Section
5.4 by a party hereto, and that if any provision of this Section
5.4 is breached, the non-breaching party is entitled to
injunctive relief as well as monetary damages.
(e) Notwithstanding the foregoing provisions of this
Section 5.4, a party hereto may use and disclose Evaluation
Material and information obtained from the Evaluation Material,
Trigon Information or Company Information, as applicable, to the
extent that (i) it acquired such information on a non-
confidential basis prior to receipt thereof from another party
hereto or a representative of another party hereto or (ii) such
information has become generally available to the public other
than as a result of a breach of this Agreement. Furthermore, a
party hereto may disclose such information to the extent that it
is required to do so to comply with a governmental or judicial
order or decree, but upon receiving notice that any such order or
decree has been issued or is being sought, it will promptly
notify the other parties hereto and will, at such other party's
expense, cooperate with such other party's efforts to contest the
issuance of such order or decree.
V.5 Subsequent Events. If any event shall occur prior to
the Closing which, had it occurred prior to the execution of this
Agreement, should have been disclosed by a party to this
Agreement in a representation and warranty or otherwise, then
upon the happening of such event, such party shall promptly
disclose the happening of such event to the other party hereto.
V.6 HSR Filings. On or before December 5, 1996, Seller and
Buyer will each use its best efforts to file with the United
States Federal Trade Commission and the Antitrust Division of the
United States Department of Justice, pursuant to the HSR Act,
Notification and Report Forms with respect to the transactions
contemplated by this Agreement and each of them will respond as
promptly as is practicable to all inquiries received from either
agency for additional information or documentation. Buyer shall
pay all the filing fees under the HSR Act.
V.7 Expenses. Except as otherwise provided in this
Agreement and the Related Agreements, all costs and expenses
incurred in connection with this Agreement and the Related
Agreements and the transactions contemplated hereby and thereby
will be paid by the party incurring such costs and expenses, it
being understood that Seller (and not the Company or its
Subsidiaries) shall be responsible for paying the fees and
expenses of Seller's and its Affiliate's counsel and accountants
in connection with such transactions and any payments required in
obtaining the consents listed on Schedule 3.7.
V.8 Public Announcements. The parties will consult with
one another before issuing any press releases or otherwise making
any public statements with respect to this Agreement and the
transactions contemplated hereby and will not issue any such
press release or make any such public statement without the
consent of the other unless such action is deemed necessary or
advisable by counsel to the issuing party in order to satisfy
such party's disclosure obligations imposed by law, in which case
the party deeming it necessary or advisable to make such release
or statement shall provide a copy thereof to the other party
before it is publicly released or made.
V.9 Efforts to Consummate. Each of the parties agrees to
use its commercially reasonable best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws to
consummate, as promptly as practicable, the transactions
contemplated hereby, including, but not limited to, the obtaining
of all necessary consents, waivers, authorizations, orders and
approvals of third parties, whether private or governmental,
required of it. Each party agrees to cooperate fully with the
other party in assisting it to comply with the provisions of this
Section. Notwithstanding the foregoing, neither party shall be
required to initiate any litigation, make any substantial payment
or incur any material economic burden, except for a payment
otherwise required of it, to obtain any consent, approval or
waiver.
V.10 Pre-Closing Affiliate Transactions. (a) Immediately
prior to Closing, Seller and the Company will eliminate and pay
off all Intercompany Obligations. In paying off or otherwise
eliminating such Intercompany Obligations, the Company may use
any and all cash or cash equivalents in the possession of the
Company and shall set off against such Intercompany Obligations
owed by it any amounts of Intercompany Obligations owed to the
Company by Seller or its Affiliates. If, after giving effect to
the foregoing, any cash or cash equivalents are in the Company's
possession, the Company will declare a special dividend in an
amount equal to such cash or cash equivalents to be paid to
Seller immediately prior to Closing.
(b) If the Closing Date Balance Sheet is as of a date other
than the Closing Date, the Company may use cash and cash
equivalents to pay off or otherwise eliminate Intercompany
Obligations or declare a special dividend as provided in
paragraph (a) above, but only in an amount equal to cash and cash
equivalents on hand as of the date of the Closing Date Balance
Sheet.
V.11 Further Assurances. Each party shall, upon request of
the other, at any time and from time to time execute,
acknowledge, deliver and perform all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and
instruments of further assurances as may reasonably be necessary
or appropriate to carry out the provisions and intent of this
Agreement.
V.12 Preparation of Financial Statements. Seller and Trigon
shall cooperate with Buyer in connection with the preparation or
delivery of any audited financial statements relating to the
Company and its Subsidiaries as may be required to be included in
a current report on Form 8-K to be filed by Buyer with the
Securities and Exchange Commission in connection with the
transactions contemplated by this Agreement, such financial
statements to be in form and with such consents as may be
necessary under the rules and regulations applicable to current
reports on Form 8-K. Buyer shall reimburse Seller and Trigon for
all out-of-pocket third party expenses incurred in connection
with such cooperation as promptly as practicable after
presentation of a reasonably detailed invoice describing such
expenses.
V.13 No Solicitation. After the execution of this Agreement
and until its termination, neither Trigon nor Seller shall, nor
shall it authorize or permit any officer, director or employee of
or any investment banker, attorney or other advisor or
representative of Trigon or Seller to (i) solicit or initiate, or
encourage the solicitation of, any Acquisition Proposal (other
than from Buyer), (ii) participate in any discussions or
negotiations regarding, or furnish to any Person (other than
Buyer) any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that
would constitute, or may reasonably be expected to constitute,
any Acquisition Proposal or (iii) enter into any agreement or
understanding with any Person (other than Buyer) with respect to
an Acquisition Proposal. "Acquisition Proposal" shall mean a
proposal relating to an acquisition of the Company or any of its
Subsidiaries, whether structured in the form of a sale of capital
stock, a sale of all or substantially all of the assets of the
Company and its Subsidiaries, a merger, a consolidation or a
share exchange. Trigon and its Affiliates agree to notify Buyer
promptly upon the receipt of an unsolicited Acquisition Proposal.
V.14 Veritus Service Agreement. Buyer will cooperate in
good faith with Trigon's and Seller's efforts to make mutually
satisfactory arrangements to release Trigon, and substitute
Buyer, as guarantor of the Company's obligations under the
Veritus Service Agreement arising after the Closing Date.
ARTICLE VI
EMPLOYEES AND EMPLOYEE MATTERS
VI.1 Company Employees. Seller has delivered to Buyer
Schedule 6.1 which is a list of all of the employees of the
Company and its Subsidiaries ("Company Employees") as of November
27, 1996, whether salaried or hourly. At and after the Closing
Date except as expressly provided in this Article VI, the Company
will be responsible for wages, salaries and other employee
benefits for the Company Employees.
VI.2 Employee Incentive Plans.
(a) Participation in Buyer's Plans. Effective as of
the Closing Date, Buyer will make its employee benefit plans,
arrangements and programs available to Company Employees on the
same terms applicable to Buyer's employees. Buyer agrees to
credit Company Employees with their terms of service with the
Company, any Subsidiary of the Company or Seller or Trigon for
purposes of eligibility to participate in Buyer's employee
benefit plans as defined in Section 3(3) of ERISA and any other
compensatory plans or programs of Buyer.
(b) The Company's Pension Plans. The Company shall
maintain its 401(k) Plan through the Closing Date. The Company
shall retain all rights and obligations to maintain the Company's
Supplemental Executive Retirement Plan (the "SERP") after the
Closing Date. Prior to the Closing Date, the SERP shall be
amended, with the consent of each participant, to constitute a
defined contribution plan, rather than a defined benefit plan, so
that each participant's benefits are based solely on the amount
credited to such participant's account under the SERP. In
connection with maintaining the SERP, at the Closing, Buyer shall
replace the trustees of the HCS Supplemental Retirement Trust.
After the Closing Date, Buyer will ensure that all payments under
the HCS 401(k) Restoration Plan (the "Restoration Plan") will be
made to the beneficiaries of the Restoration Plan in accordance
with its terms, after which time Buyer may terminate the
Restoration Plan in accordance with its terms.
(c) COBRA. Trigon and Trigon's Welfare Plans shall be
responsible for obligations under COBRA with respect to
qualifying events of Company Employees and their dependents
through the Closing Date, and Buyer and Buyer's welfare plans
shall be responsible for such COBRA obligations effective as of
the date following the Closing Date.
VI.3 Administration. Trigon and Buyer shall each make its
appropriate employees available to the other at such reasonable
times as may be necessary for the proper administration by the
other of any and all matters relating to Company Employees. If,
as a result of the transactions contemplated by this Agreement,
reports to any governmental agency are required to be filed with
respect to any of Trigon's Pension Plans, Welfare Plans or
Incentive Plans, Trigon will file such reports and Buyer shall
cooperate to the extent necessary for the preparation of such
filings.
VI.4 Severance Plan. (a) The Company shall be responsible
for any severance payments for Company Employees who are
terminated prior to the Closing Date including any Company
Employees terminated in connection with the Chicago
Consolidation. Trigon shall or Trigon shall cause Seller to be
responsible for any severance payments for the individuals listed
on attached Schedule 6.4(a) arising under the employment
agreements of such individuals listed on Schedule 3.17 hereto.
Trigon shall or Trigon shall cause Seller to be responsible for
any severance payments that are not adequately accrued or
reserved on the Closing Date Balance Sheet for Company Employees
listed on Schedule 6.4(b) terminated in connection with the
Chicago Consolidation after the Closing Date. For a period of
six months following the Closing Date, Buyer agrees to honor the
severance arrangements contained in the employment agreements
with Xxxx Xxxxxxx and Xxxxxxx Xxxxxxx delivered to Buyer and, as
to all other Company Employees, to provide severance benefits
which are not less favorable than the benefits provided under the
Company's Severance Plan as in existence on the Closing Date as
set forth on Schedule 6.4(c).
(b) Seller and its Affiliates agree that for a period
of one year from the Closing Date, Seller and its Affiliates will
not solicit for employment or employ any employees of the Company
and its Subsidiaries unless such employees are terminated by
Buyer, the Company or any Subsidiary. If a Company Employee is
terminated by Buyer, the Company or its Affiliates within six
months after the Closing Date and is subsequently hired by Seller
or its Affiliates during such six-month period, Seller or such
Affiliate shall be responsible and hereby agrees to pay any such
severance with respect to which Buyer or the Company would
otherwise be responsible under Section 6.4(a) above.
ARTICLE VII
TAX MATTERS
VII.1 Allocation of Tax Liability.
(a) Seller and Trigon shall indemnify and hold Buyer,
the Company and its Subsidiaries harmless from (i) any liability
of the Company for Taxes related or allocable to a period ending
on or before the Closing Date (including any Taxes related to the
election described in Section 7.6) and (ii) any liability of
Seller or any member of its affiliated group other than the
Company or the Subsidiaries whenever arising. Buyer shall
indemnify and hold Seller and Trigon harmless from and against
any Liability for Taxes of the Company or any of its Subsidiaries
related to any period following the Closing Date.
(b) Subject to the provisions of Section 7.2(f) below,
in the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the
Closing Date, the portion of any such Tax that is allocable to
the portion of the period ending on the Closing Date shall: (i)
in the case of Taxes that are either (x) based upon or related to
income or receipts or (y) imposed in connection with any sale,
other transfer or assignment or any deemed sale, transfer or
assignment of property (real or personal, tangible or
intangible), be deemed equal to the amount that would be payable
if the taxable year ended on the Closing Date, and (ii) in the
case of Taxes imposed on a periodic basis with respect to the
assets of the Company or otherwise measured by the level of any
item, be deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears
basis, the amount of such Taxes for the immediately preceding
period) multiplied by a fraction the numerator of which is the
number of calendar days in the portion of such period ending on
the Closing Date and the denominator of which is the number of
calendar days in the entire period. For purposes of clause (i)
above, any exemption, deduction, credit or other item that is
calculated on a periodic basis shall be allocated to the period
beginning before the Closing Date and, pursuant to clause (i)
treated as ending on the Closing Date, based on the pro rata
portion of such item determined by multiplying the total amount
of such item times a fraction, the numerator of which is the
number of calendar days in the period up to and include the
Closing Date and the denominator of which is the total number of
calendar days in the entire period.
(c) On or prior to the Closing Date, Trigon and Seller
shall release the Company and its Subsidiaries from any and all
Tax sharing agreements and such agreements shall have no further
force and effect with respect to the Company and its
Subsidiaries. From and after the Closing Date, any Tax-related
obligations between the Company and its Subsidiaries and Seller
shall be evidenced solely by the terms of this Agreement.
VII.2 Returns and Payments.
(a) With respect to any Tax return required to be
filed with respect to the Company after the Closing Date and as
to which Tax is exclusively allocable to Seller under Section
7.1, Seller shall have exclusive authority to report for Tax
purposes the operations of the Company. The Company will furnish
Tax information to Seller for inclusion in its federal
consolidated income Tax Return for the period that includes the
Closing Date in accordance with Company's past custom and
practice. Buyer shall be responsible for preparing and filing all
other Tax returns.
(b) Seller and Buyer shall each pay or cause to be
paid when due and payable all Taxes that have not been paid as of
the Closing Date that are allocable to them pursuant to the
provisions of Section 7.1.
(c) Payment of any amounts due under this Article
shall be made (i) with respect to agreed amounts, at least three
calendar days before the payment of any such Tax is due, provided
that no such payment shall be due prior to 10 business days
following receipt of written notice that payment of such Tax is
due, or (ii) within 10 business days following either an
agreement between Seller and Buyer that an amount is payable by
Seller or Buyer to the other or a "determination" as defined in
section 1313(a) of the Code.
(d) All Taxes paid by Seller pursuant to this
Section 7.2 shall be repaid to Seller by Buyer or the Company to
the extent of amounts for Taxes accrued on the Closing Date
Balance Sheet and included in the computation of Adjusted Working
Capital. Any payment pursuant to the preceding sentence shall be
reduced by the amount of any Taxes paid by Buyer or the Company
that were not accrued on the Closing Date Balance Sheet and that
were allocated to Seller pursuant to this Section 7.1.
(e) Seller shall have the authority to amend any Tax
returns relating to Taxes of the Company or its Subsidiaries for
any period before the Closing Date and Buyer waives any right
that it may have to amend any such returns and shall cause the
Company to refrain from amending such Tax returns. Buyer shall
promptly pay to Seller any refunds of Taxes received by the
Company, the Subsidiaries or Buyer with respect to Taxes
allocable to Seller, and Seller shall be entitled to all benefits
with respect to such refunds or any right to receive such
refunds, including without limitation any refunds arising from
amended returns filed for any period before the Closing Date.
Any amendment by Seller may only be made in a manner that causes
any Tax return so amended to continue to be correct in all
material respects.
(f) If any audit, amended Tax return, or other action
results in a reduction of Taxes, such reduction (including any
interest paid thereon) when realized shall be paid promptly: (i)
to Seller if the deduction, loss or other item giving rise to the
refund is attributable to operations occurring on or before the
Closing Date and (ii) to the Company or Buyer if such deduction,
loss or other item is attributable to operations occurring after
the Closing Date. The parties shall lend mutual assistance to
each other in taking such action as may be necessary to obtain a
refund including the preparation, filing and processing of any
requisite amended Tax return or other documents.
(g) Seller and Buyer agree to the "closing of the
books" election under Treasury Regulation Section 1.382-6(b).
Seller shall use the Closing Date Balance Sheet in the
preparation of Tax returns of the Company for periods before the
Closing Date and Buyer shall use the Closing Date Balance Sheet
in the preparation of Tax returns of the Company for periods
after the Closing Date.
VII.3 Cooperation and Exchange of Information. Seller
and Trigon, on the one hand, and Buyer, on the other hand, will
provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any
Tax return, amended return or claim for refund, determining a
liability for Taxes or a right to a refund of Taxes or a right to
a refund of Taxes or participating in or conducting any audit or
other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of relevant Tax
returns or portions thereof, together with accompanying schedules
and related work papers and documents relating to rulings or
other determinations by taxing authorities, but in no event shall
Seller or Buyer be required to disclose to the other any
information relating to the operations of either, as the case
may be, other than information relating to a liability for Taxes
of the Company. Trigon, Seller and Buyer shall make their
respective employees available on a mutually convenient basis to
provide explanations of any documents or information provided
hereunder. Trigon, Seller and Buyer will retain all Tax returns,
schedules and work papers and all material records or other
documents relating to Tax matters of the Company for its taxable
period first ending after the Closing Date and for all prior
taxable periods until the expiration of the statute of
limitations of the taxable periods to which such returns and
other documents relate, without regard to extensions (but taking
into account any extended statute of limitations applicable to a
year in which a net operating loss is reported) except to the
extent notified by the other party in writing of such extensions
for the respective Tax periods. After such time, before Buyer
shall dispose of any of such books and records, at least 90
calendar days prior written notice to such effect shall be given
by Buyer to Seller, and Seller shall be given an opportunity, at
its cost and expense, to remove and retain all or any part of
such books and records as Seller may select. Any information
obtained under this Section 7.3 shall be kept confidential,
except as may be otherwise necessary in connection with the
filing of returns or claims for refund or in conducting an audit
or other proceeding.
VII.4 Tax Sharing Indemnification. Trigon and Seller
agree to indemnify Buyer from and against any loss Buyer may
suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of the Company for Taxes of any
person other than the Company or any of its Subsidiaries (i)
under Reg. Sec. 1.1502-6 (or any similar provision of state, local
or foreign law), (ii) as a transferee or successor, (iii) by
contract, or (iv) otherwise.
VII.5 Method of Asserting Tax Claims.
(a) After the closing, Buyer and Seller each shall
promptly notify the other party in writing of the commencement of
any Tax audit or administrative or judicial proceeding affecting
the Taxes of the Company, which, if determined adversely to the
taxpayer or after the lapse of time would be grounds for
indemnification of either Seller or Buyer ("Tax Indemnitee") by
the other party ("Tax Indemnitor"). Such notice shall contain
factual information describing the asserted Tax liability in
reasonable detail and shall include copies of any notice or other
document received from any taxing authority in respect of any
such asserted Tax liability. If either Buyer or Seller fails to
give the other party prompt notice of an asserted Tax liability
as required by this Section, then (a) if the Tax Indemnitor is
precluded by the failure to give prompt notice from contesting
the asserted Tax liability in the appropriate administrative or
judicial forums, then such party shall not have any obligation to
indemnify the other party for any loss or damage arising out of
such asserted Tax liability, or (b) if the Tax Indemnitor is not
so precluded from contesting the asserted Tax liability but such
failure to give prompt notice results in a detriment to the Tax
Indemnitor, then any amount which the Tax Indemnitor is otherwise
required to pay with respect to such liability shall be reduced
by the amount of such detriment.
(b) With respect to any Tax return for which Seller is
responsible, Seller shall have exclusive authority to supervise
any Tax audit and have final decision authority with respect to
settlement of any audit adjustments of the Company and its
Subsidiaries. Seller will allow the Company to participate at its
own expense in any audits of any Tax returns to the extent that
such returns relate to the Company. Seller will not settle any
such audit in a manner that would have a Material Adverse Effect
on the Company after the Closing Date unless such settlement
would be reasonable in the case of a person that owned the
Company both before and after the Closing Date.
(c) With respect to any Tax return for which Buyer is
responsible, Buyer shall have exclusive authority to supervise
any Tax audit and have final decision authority with respect to
settlement of any audit adjustments of the Company and its
Subsidiaries. Buyer will not settle any such audit in a manner
that would have a Material Adverse Effect on the Company's Taxes
for the period prior to the Closing, unless such settlement would
be reasonable in the case of a person that owned the Company,
both before and after the Closing Date.
VII.6 Section 338(h)(10) Election; Allocation of
Purchase Price. Seller and Buyer hereby acknowledge and agree,
at Buyer's election, to make an election pursuant to Section
338(h)(10) of the Code and any corresponding election under
applicable state law (collectively, the "Section 338(h)(10)
Election") in connection with the purchase of the Company Shares
and to take any and all actions required to properly effect the
Section 338(h)(10) Election, including filing any applicable
forms and/or statements with the Internal Revenue Service, and
Seller agrees not to take any action before or after the Closing
inconsistent with the Section 338(h)(10) Election. In addition,
Seller and Buyer agree to make, at the option of Buyer, a Section
338(h)(10) Election, and to take any and all actions required to
properly effect the Section 338(h)(10) Election, with respect to
all Subsidiaries of the Company other than Computerized Medical
Communications, Inc. Trigon shall acknowledge, agree, and
consent to the making of the Section 338(h)(10) Election, and to
take any and all actions required to properly effect the Section
338(h)(10) Election, including filing any applicable forms and/or
statements with the Internal Revenue Service. Seller agrees that
pursuant to Section 338(h)(10) of the Code, Seller shall not
recognize gain or loss for federal income Tax purposes (and,
where applicable, for state income Tax purposes) with respect to
the sale of the Company Shares contemplated by this Agreement.
Instead, the Company shall recognize gain or loss as if it had
sold all of its assets to Buyer in a single transaction as of the
Closing Date. Such gain or loss shall be reported by the Company
on its federal income Tax return for the year which ends as of
the Closing Date and which is included in the consolidated
federal and, if applicable, state income Tax return of Trigon.
Seller shall be liable for and shall pay all Taxes in connection
with the Section 338(h)(10) Election and as provided in the
consolidated return regulations then in effect. In connection
with the Section 338(h)(10) Election, Buyer shall provide Seller
with a proposed allocation of the Purchase Price among the assets
of the Company which shall reflect an agreed fair market value of
at least $6 million for the stock of Computerized Medical
Communications, Inc. Seller, Buyer and the Company shall
cooperate in agreeing to the Purchase Price allocation within
ninety (90) days following the Closing.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions
contemplated by this Agreement shall be subject, to the
satisfaction of each of the following conditions all or any of
which may be waived, in whole or in part, by Buyer for the
purpose of consummating such transactions, but without prejudice
to any other right or remedy which Buyer may have hereunder as a
result of any misrepresentation by, or breach of any agreement,
covenant or warranty of Seller contained in this Agreement:
VIII.1 Representations and Warranties. Except for
changes expressly contemplated by this Agreement, each of the
representations and warranties of Seller contained in this
Agreement (which representations and warranties include the
information in the Schedules corresponding thereto) shall be true
and correct in all material respects as of the date of this
Agreement and as of the Closing, except to the extent that any
representation or warranty is made as of a specific date, in
which case such representation or warranty shall be true in all
material respects as of such date, and Seller shall have
delivered to Buyer a certificate to that effect signed by a duly
authorized officer.
VIII.2 Performance of this Agreement. Seller shall have,
and shall have caused the Company to have, performed and complied
in all material respects with all of the agreements, covenants,
stipulations, terms and conditions applicable to it under this
Agreement required to be performed or complied with by Seller on
or prior to Closing and shall have delivered to Buyer a
certificate to that effect signed by a duly authorized officer.
VIII.3 Corporate Authorization. All corporate action
required to be taken by Seller in connection with the
transactions contemplated hereby shall have been taken, all
documents incident thereto shall be reasonably satisfactory in
substance and form to Buyer and Buyer shall have received such
originals or copies of such documents as it may reasonably
request.
VIII.4 Consents and Approvals. The consents and
approvals listed on Schedule 3.7 shall have been obtained and all
waiting periods specified by law with respect thereto shall have
passed.
VIII.5 Injunction, Litigation, etc. No order of any
court or governmental agency shall be in effect which restrains
or prohibits the consummation of the transactions contemplated by
this Agreement or which would limit or affect the ability of
Buyer to own and control the Company, and there shall not be
pending nor shall there have been threatened, any investigation,
action or proceeding by or before any such court or governmental
agency seeking to prohibit or delay or challenging the validity
of the transactions contemplated by this Agreement.
VIII.6 Legislation. No statute, rule or regulation shall
have been proposed or enacted which prohibits or might prohibit,
restrict or delay the consummation of the transactions
contemplated by this Agreement.
VIII.7 Resignations. Such directors of the Company as
Buyer shall request shall have resigned as of the Closing.
VIII.8 Opinion of Counsel of Seller. Buyer shall have
received an opinion from McGuire, Woods, Battle & Xxxxxx, L.L.P.,
Richmond, Virginia, counsel for Seller, in substantially the form
attached hereto as Exhibit F.
VIII.9 Expiration of HSR Waiting Period. Any waiting
period (and any extension thereof) applicable to the consummation
of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated.
VIII.10 Related Agreements. To the extent that Seller, or
Trigon is a party thereto, all Related Agreements shall have been
executed and delivered by Seller or Trigon and the other parties
thereto.
VIII.11 Release of Intercompany Obligations. Buyer shall
have received a complete release from Seller and the Company of
all Intercompany Obligations dated as of the Closing Date in form
and substance reasonably satisfactory to Buyer.
VIII.12 Veritus Waiver. The Waiver shall be in full force
and effect.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller and Trigon to consummate the
transactions contemplated by this Agreement shall be subject to
the satisfaction of each of the following conditions all or any
of which may be waived, in whole or in part, by Seller and Trigon
for the purpose of consummating such transactions, but without
prejudice to any other right or remedy which Seller and Trigon
may have hereunder as a result of any misrepresentation by, or
breach of any agreement, covenant or warranty of Buyer contained
in this Agreement.
IX.1 Representations and Warranties. Except for changes
expressly contemplated by this Agreement, each of the
representations and warranties of Buyer contained in this
Agreement (which representations and warranties include the
information in the schedules corresponding thereto) shall be true
and correct in all material respects as of the date of this
Agreement and as of the Closing and Buyer shall have delivered to
Seller a certificate to that effect signed by a duly authorized
officer.
IX.2 Performance of this Agreement. Buyer shall have
performed and complied with in all material respects all of the
agreements, covenants, stipulations, terms and conditions
applicable to it under this Agreement required to be performed or
complied with by Buyer on or prior to Closing and shall have
delivered to Seller a certificate to that effect signed by a duly
authorized officer.
IX.3 Corporate Authorization. All corporate action required
to be taken by Buyer in connection with the transactions
contemplated in this Agreement shall have been taken, all
documents incident thereto shall be reasonably satisfactory in
substance and form to Seller, and Seller shall have received all
such originals or copies of such documents as it may reasonably
request.
IX.4 Injunction, Litigation, etc. No order of any court or
governmental agency shall be in effect which restrains or
prohibits the consummation of the transactions contemplated by
this Agreement and there shall not be pending nor shall there
have been threatened any investigation, action or proceeding by
or before any such court or governmental agency seeking to
prohibit or delay or challenging the validity of any of the
transactions contemplated by this Agreement.
IX.5 Legislation. No statute, rule or regulation shall have
been proposed or enacted which prohibits or might prohibit,
restrict or delay the consummation of the transactions
contemplated hereby.
IX.6 Opinion of Counsel for Buyer. Seller shall have
received an opinion from E. Xxxxxxx Xxxxxx, general counsel for
Buyer, in substantially the form attached hereto as Exhibit G.
IX.7 Expiration of HSR Waiting Period. Any waiting period
(and any extension thereof) applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act
shall have expired or been terminated.
IX.8 Related Agreements. To the extent that Buyer or the
Company is a party thereto, all Related Agreements shall have
been executed and delivered by Buyer or the Company, as the case
may be.
ARTICLE X
CLOSING
X.1 Time and Place of Closing. The closing (the "Closing")
shall take place at the offices of McGuire, Woods, Battle &
Xxxxxx, L.L.P. in Richmond, Virginia, beginning at 10:00 a.m.
local time on (i) December 31, 1996 if all of the closing
conditions have been fulfilled or waived, (ii) as soon as
reasonably possible after the last of the closing conditions is
fulfilled or waived if the Closing does not take place on
December 31, 1996, or (iii) such other date as may be agreed upon
by the Parties (any of which dates is referred to as the "Closing
Date"). The Closing shall be effective as of the close of
business on the Closing Date.
X.2 Deliveries by Seller. At the Closing, Seller shall
deliver to Buyer the following:
(i) the certificates representing the Shares
duly endorsed or with blank stock powers attached
thereto duly signed by Seller;
(ii) the certificates required by Sections
8.1 and 8.2;
(iii) evidence that the corporate action
described in Section 8.3 has been taken;
(iv) copies of the consents required by
Section 8.4;
(v) the resignations required by Section
8.7;
(vi) a certificate from the State Corporation
Commission of Virginia of the Company's good standing
in Virginia as of the most recent date obtainable;
(vii) the Opinion of Counsel required by
Section 8.8;
(viii) executed originals of each of the
Related Agreements to which Seller, Trigon or the
Company is a party; and
(ix) such additional documents as Buyer may
reasonably request.
X.3 Deliveries by Buyer. At the Closing Buyer shall
deliver to Seller the following:
(i) the Purchase Price by wire transfer of
immediately available funds;
(ii) the certificates required by Sections
9.1 and 9.2;
(iii) evidence that the corporate action
described in Section 9.3 has been taken;
(iv) the Opinion of Counsel required by
Section 9.6;
(v) executed originals of each of the
Related Agreements to which Buyer or the Company is a
party; and
(vi) such additional documents as Seller may
reasonable request.
ARTICLE XI
INDEMNIFICATION
XI.1 Indemnification by Seller and Trigon. Subject to
Article VII and the limitations contained in this Article, Seller
and Trigon will, jointly and severally, indemnify and hold Buyer
harmless from any claim, damage, loss, liability, penalty or
expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys fees) (collectively,
"Losses") arising out of:
(i) any breach of a representation or
warranty made by Seller or Trigon in this Agreement;
(ii) the breach of any agreement of Seller or
Trigon contained in this Agreement;
(iii) the CMC Dispute;
(iv) (a) employment-related liabilities,
whether contingent or otherwise, arising out of any
individual's employment or working relationship with
the Seller or its ERISA Affiliates other than the
Company or any of the Company's Subsidiaries and (b)
any benefit plan, program arrangement or policy
maintained or contributed to by the Seller or any ERISA
Affiliate of the Seller other than the Company or any
of its Subsidiaries; or
(v) any liabilities, obligations or debts of
the Company or any of its Subsidiaries of any nature
incurred or arising from the operations of the Company
or its Subsidiaries prior to the Closing Date, whether
accrued, absolute or contingent, or whether due or to
become due, except as shown or adequately reserved
against in the Closing Date Balance Sheet or disclosed
as a liability, obligation or debt in a Schedule
hereto.
XI.2 Indemnification by Buyer. Subject to the limitations
contained in this Article, Buyer will indemnify and hold Seller
and Trigon harmless from any Losses arising out of:
(i) any breach of a representation or
warranty made by Buyer in this Agreement;
(ii) the breach of any agreement of Buyer
contained in this Agreement; or
(iii) the performance by the Company, or
failure by the Company to perform, after the Closing
Date of its obligations under the Veritus Service
Agreement.
XI.3 Third Party Claims. Except as provided in Article VII,
if any party is obligated to indemnify another under Sections
11.1 or 11.2 of this Agreement with respect to claims with
respect to Losses resulting from the assertion of liability by
Persons not parties to this Agreement (including governmental
claims for penalties, fines and assessments), such obligation
shall be subject to the following terms and conditions:
(i) The indemnified party shall give prompt
written notice to the indemnifying party of any
assertion of liability by a third party which might
give rise to a claim for indemnification based on the
foregoing provisions of this Article, which notice
shall state the nature and basis of the assertion and
the amount thereof, to the extent known, provided,
however, that no delay on the part of the indemnified
party in giving notice shall relieve the indemnifying
party of any obligation to indemnify unless and only to
the extent that the indemnifying party is materially
prejudiced by such delay.
(ii) If any action, suit or proceeding (a
"Legal Action") is brought against any party with
respect to which the other may have liability under the
foregoing provisions of this Article, the Legal Action
shall be defended by the indemnifying party and such
defense shall include all proceedings for appeal or
review which counsel shall deem appropriate.
(iii) Notwithstanding the provisions of the
previous subsection of this Agreement, until the
indemnifying party shall have assumed the defense of
any such Legal Action, the defense shall be handled by
the indemnified party. Furthermore, if the Legal
Action primarily involves other than money damages and
seeks injunctive or other equitable relief, the
indemnifying party shall not be entitled to assume the
defense of the Legal Action and the defense shall be
handled by the indemnified party. If the defense of
the Legal Action is handled by the indemnified party
under the provisions of this subsection, the
indemnifying party shall pay all legal and other
expenses reasonably incurred by the indemnified party
in conducting such defense.
(iv) In any Legal Action initiated by a third
party and defended by the indemnifying party (A) the
indemnified party shall have the right to be
represented by advisory counsel and accountants, but at
its own expense, unless (1) the indemnifying party has
failed or refused to perform its obligations under this
Section 11.3, (2) the indemnifying party's defense
would result in a conflict of interest under which it
would not be appropriate under legal ethics rules for
counsel for the indemnifying party to represent the
indemnified party or (3) the employment of such counsel
and the payment of such fees and expenses by the
indemnifying party shall have been specifically
authorized by the indemnifying party in connection with
the defense of such action, suit or proceeding, (B) the
indemnifying party shall keep the indemnified party
fully informed as to the status of such Legal Action at
all stages thereof, whether or not the indemnified
party is represented by its own counsel, (C) the
indemnifying party shall make reasonably available to
the indemnified party, and its attorneys, accountants
and other representatives, all books and records of the
indemnifying party relating to such Legal Action and
(D) the parties shall render to each other such
assistance as may be reasonably required in order to
ensure the proper and adequate defense of such Legal
Action.
(v) Subject to the provisions of Section 5.1
with respect to the CMC Dispute, in any Legal Action
initiated by a third party and defended by the
indemnifying party, the indemnifying party shall not
make any settlement of any claim without the written
consent of the indemnified party, which consent shall
not be unreasonably withheld. Without limiting the
generality of the foregoing, it shall not be deemed
unreasonable to withhold consent to a settlement
involving injunctive or other equitable relief against
the indemnified party or its assets, employees or
business, or relief which the indemnified party
reasonably believes could establish a custom or
precedent which will be materially adverse to the best
interests of its continuing business.
XI.4 Limitations on Indemnification.
(a) Notwithstanding the foregoing provisions of this
Article, neither Trigon nor Seller shall be liable under
Section 11.1(i) and 11.1(v)unless and until the aggregate amount
of Losses thereunder exceeds the Deductible Amount, and
thereafter Buyer shall be entitled to indemnification thereunder
only for the aggregate amount of such liability in excess of the
Deductible Amount; provided, however, that each individual claim
of $5,000 or less shall not be indemnifiable, and shall not be
included in determining whether the Deductible Amount has been
reached, and provided further that the limitations in this
paragraph (a) shall not apply to a breach of the representation
and warranty contained in Section 3.4(a)
(b) Notwithstanding the foregoing provisions of this
Article, Buyer shall not be liable under Section 11.2(i) unless
and until the aggregate amount of Losses thereunder exceeds the
Deductible Amount and thereafter Seller shall be entitled to
indemnification thereunder only for the aggregate amount of such
liability in excess of the Deductible Amount.
(c) Seller's indemnification obligations for breaches
of representations and warranties contained in this Agreement,
excluding a breach of the representations and warranties
contained in Section 3.4(a), and for the matters referred to in
Section 11.1(v), shall be limited to $25,667,000 in the
aggregate, and Seller's obligation for breach of the
representations and warranties contained in Section 3.4(a) shall
be limited to the Purchase Price.
(d) All damages to which an indemnified party may be
entitled pursuant to the provisions of this Article shall be net
of any insurance coverage with respect thereto in accordance with
Section 11.6. No director or officer of an indemnifying party
shall have any liability to an indemnified party as a result of a
breach of a representation or warranty contained in this
Agreement.
XI.5 Survival; Investigation. The representations and
warranties of a party contained in this Agreement and the
obligation of Seller set forth in Section 11.1(v) shall survive
any investigation by the other party and shall not terminate
until the date that is twenty (20) months after the Closing Date
(the "Survival Date") at which time they shall lapse; provided,
however, that the representations and warranties set forth in
Sections 3.4(a) and 3.12 shall survive the Closing for the
applicable statute of limitations. The indemnification provided
by Sections 11.1(ii), 11.2(ii) and 11.2(iii) shall survive the
Closing for the applicable statute of limitations and that
provided by Sections 11.1(iii) and (iv) herein shall survive
indefinitely. Notwithstanding the provisions of the preceding
sentence, any representation or warranty in respect of which
indemnification may be sought under Section 11.1(i) or Section
11.2(i) or any obligation under Section 11.1(v) shall survive the
Survival Date if written notice, given in good faith, of the
specific breach thereof or claim thereunder is given to the
indemnifying party prior to the Survival Date, whether or not
liability has actually been incurred.
XI.6 Tax Benefits; Insurance Proceeds. In determining the
amount of any Losses for which any party is entitled to
indemnification under this Agreement, the gross amount thereof
will be adjusted for any correlative Tax benefit or insurance
benefit or proceeds realized or to be realized by such party
(such correlative insurance benefit shall be net of any
retroactive insurance premium which becomes due as a result of
such claim).
XI.7 Tax Characterization. The payment of indemnified
liabilities pursuant to this Agreement shall be considered
adjustments to the Purchase Price for Tax purposes.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
XII.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(i) by mutual consent of Seller and Buyer;
(ii) by either party if there has been a
material breach by the other party of a representation,
warranty or agreement contained herein or if any
condition which must be met by the other party becomes
impossible to fulfill;
(iii) by Seller or Buyer if the Closing has
not occurred by February 11, 1997; provided, however,
that in the event that approval under the HSR Act is
not obtained by such date, then if the Closing has not
occurred by March 15, 1997.
XII.2 Effect of Termination. If this Agreement is
terminated as provided in Section 12.1, it shall become wholly
void and of no further force and effect and there shall be no
further liability or obligation on the part of either party
except to pay such expenses as are required of it hereunder and
to comply with the confidentiality provisions of Section 5.4, but
such termination shall not constitute a waiver by either party of
any claims it may have for damages caused by reason of a material
breach of a representation, warranty or agreement made by the
other party.
XII.3 Amendment. This Agreement and the Exhibits hereto
may be amended at any time prior to the Closing provided that any
such amendment is approved in writing by each of the parties.
All representations and warranties of Seller and Buyer which are
true and correct as modified pursuant to the preceding sentence
shall be deemed true and correct for the purposes of Sections 8.1
and 9.1.
XII.4 Extension; Waiver. At any time prior to the
Closing either party to this Agreement may (i) extend the time
for the performance of any of the obligations of the other party,
(ii) waive a breach of a representation or warranty of the other
party, or (iii) waive compliance by the other party with any of
the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in a written
instrument signed by the party giving the extension or waiver.
ARTICLE XIII
GENERAL PROVISIONS
XIII.1 Notices. All notices and other communications
given hereunder shall be in writing. Notices shall be effective
when delivered, if delivered personally. Otherwise, they shall
be effective when sent to the parties at the addresses or numbers
listed below, as follows: (i) on the business day delivered (or
the next business day following delivery if not delivered on a
business day) if sent by a local or long distance courier,
prepaid telegram, telefax or other facsimile means, or (ii) three
days after mailing if mailed by registered or certified U.S.
mail, postage prepaid and return receipt requested.
If to Seller to:
Trigon Blue Cross Blue Shield
0000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx,
Chief Financial Officer
Telefax No.: 000-000-0000
with a copy to:
McGuire, Woods, Battle & Xxxxxx, L.L.P.
1 Xxxxx Center, 000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: R. Xxxxxx Xxxxx, Esq.
Telefax No.: 000-000-0000
If to Buyer to:
National Data Corporation
Xxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
with a copy to:
National Data Corporation
Xxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: E. Xxxxxxx Xxxxxx
Xxxxxx & Bird
0000 X. Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Any Person may change the address or number to which notices are
to be delivered to him, her or it by giving the other Persons
named above notice of the change in the manner set forth above.
XIII.2 Governing Law. This Agreement shall be governed
in all respects by the laws of the Commonwealth of Virginia
without regard to its choice of law rules.
XIII.3 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect
the meaning or interpretation of the Agreement.
XIII.4 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
XIII.5 Miscellaneous. This Agreement (i) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof; (ii) is not intended to and
shall not confer upon any Person, other than the parties hereto,
any rights or remedies with respect to the subject matter hereof;
and (iii) shall not be assigned by operation of law or otherwise.
XIII.6 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
BLUE CROSS AND BLUE SHIELD OF VIRGINIA
By: /s/ Xxxxxx X. Xxxxx
Title: Senior Vice President & Chief Financial Officer
CONSOLIDATED HEALTHCARE, INC.
By: /s/ Xxxxxx X. Xxxxx
Title: Treasurer
NATIONAL DATA CORPORATION
By: /s/ E. Xxxxxxx Xxxxxx
Title: Secretary
