EXHIBIT 99.1
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (the "Agreement"), dated
September 20, 1999 (the "Agreement Date"), is made and entered into by and
between Foundation Health Systems, Inc., formerly known as Health Systems
International, Inc. ("Foundation"), on the one hand, and Per-Se Technologies,
Inc., a Delaware corporation formerly known as Medaphis Corporation ("Per-Se"),
on the other, in connection with the settlement (the "Settlement", as described
and defined more fully below) of the claims described below. Foundation and
Per-Se are sometimes referred to hereinafter collectively as the "Parties".
INTRODUCTION:
WHEREAS, Per-Se acquired Health Data Sciences Corporation ("HDS")
pursuant to the terms of a Merger Agreement dated May 31, 1996 (the "Merger
Agreement"), in a tax-free merger in which all of the shareholders of HDS,
including Foundation, received shares of the Common Stock of Per-Se in exchange
for their shares of HDS (the "Merger");
WHEREAS, Foundation has asserted claims against Per-Se under the
Securities Act of 1933, as amended (the "Securities Act"), and related common
law and state statutory claims, for alleged damages that relate to or arise out
of certain alleged breaches in the representations and warranties of Per-Se
contained in the Merger Agreement, certain alleged material misstatements and
omissions in the Registration Statement/Prospectus dated May 31, 1996, delivered
in connection with the Merger, and certain other alleged acts or omissions of
Per-Se and certain related persons in connection with the Merger;
WHEREAS, Per-Se and the related persons deny all liability;
WHEREAS, Per-Se and Foundation have entered into an agreement dated as
of August 23, 1999 (the "Current Agreement"), pursuant to which Foundation sold
976,771 shares of Common Stock received by Foundation in the Merger without
prejudice to any of its claims against Per-Se;
WHEREAS, the Parties now desire to settle their differences arising out
of the above-referenced facts and the Merger.
AGREEMENT:
NOW, THEREFORE, IT IS HEREBY AGREED by and among the Parties that upon
the
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Initial Closing (as defined below) the Released Claims (as defined below)
will be finally and fully compromised and settled, as follows:
1.0 THE SETTLEMENT CONSIDERATION.
1.1 THE SETTLEMENT SHARES. In a private placement transaction
exempt from registration under the Securities Act and state securities laws or
some other applicable exemption from registration under the Securities Act and
state securities laws, Per-Se shall, on the date hereof, issue and deliver to
Foundation Six Million Two Hundred Thousand (6,200,000) shares of Per-Se Common
Voting Stock, par value $.01 per share ("Common Stock") (the "Settlement
Shares"), subject to and in accordance with the provisions set forth herein.
1.2 TARGET CONSIDERATION. (a) The "Target Consideration" shall
be Sixteen Million Eight Hundred Thirty-Four Thousand Six Hundred Sixteen
Dollars ($16,834,616) (the "Initial Amount") plus the Interest Amount. The
Target Consideration shall consist of the sum of (i) the aggregate proceeds
received by Foundation, net of all discounts, commissions and registration
expenses ("Net Proceeds"), from the sale of: (A) the Settlement Shares (or such
portion thereof as is necessary to generate Net Proceeds equal to the Target
Consideration); and (B) the Additional Shares (as defined below), if any.
"Interest Amount" means the sum of (i) the aggregate amount of the Daily
Interest Amount for the period commencing one hundred eighty (180) days or, if
an Acceleration Event occurs, one hundred twenty (120) days from the date hereof
through and including the date of the Final Closing and (ii) the Blackout Period
Amount. "Daily Interest Amount" for any day shall mean an amount equal to the
product of (i) the Prime Rate and (ii) the Remaining Balance. "Prime Rate" means
the quotient obtained by dividing the annual rate of interest publicly announced
by Wachovia Bank of Georgia, N.A. (or any successor thereto) in Atlanta, Georgia
as its reference or prime rate by 365. "Remaining Balance" means the excess of
the Initial Amount over the Net Proceeds theretofore received by Foundation from
the sale of the Settlement Shares and Additional Shares, if any and (the
Settlement Shares and the Additional Shares, if any being referred to
collectively as the "Shares"). "Blackout Period Amount" means an amount equal to
the product of (a) the Prime Rate, (b) the Remaining Amount (as defined below)
and (c) the number of days Foundation is prohibited from selling any Shares
pursuant to Section 3 of the Registration Rights Agreement (as defined below).
"Acceleration Event" means the date on which Per-Se offers, agrees to issue, or
issues, any shares of Per-Se capital stock (including the Common Stock) or any
options, warrants or any other debt or equity securities exercisable for, or
convertible into, Per-Se capital stock except (i) pursuant to this Agreement,
(ii) pursuant to (x) written agreements in effect on the date hereof, (y)
securities outstanding on the date hereof or (z) employee and director stock
option plans, in effect on the date hereof, in the ordinary course, (iii) to new
management employees in connection with their initial employment by Per-Se and
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(iv) Common Stock issued in connection with a bona-fide acquisition or joint
venture transaction with an unrelated third party negotiated on an arms
length basis involving the issuance of securities not to exceed,
individually, or in the aggregate for all such transactions, 5% of Per-Se's
outstanding Common Stock outstanding on the date hereof (subject to
appropriate adjustment in the event of a reverse stock split or other
reclassification of the Common Stock).
(b) Following the effectiveness of each registration statement
covering the Settlement Shares or Additional Shares, if any, (each a
"Registration Statement") as contemplated in that Registration Rights Agreement,
substantially in the form of Exhibit A hereto, by and between Foundation and
Per-Se (the "Registration Rights Agreement"), Foundation may sell the Shares
subject to the restrictions in this clause (b). Subject to the proviso to this
sentence and the last sentence of this clause (b), no sale of Shares shall be
consummated at a gross sale price below $3 13/32 without the express approval by
Per-Se of the terms of such sale (including, but not limited to, the sale
price); provided, however, that if at the end of the sixty (60) day period
commencing with the effective date (the "Initial Date") of the Registration
Statement covering the Settlement Shares (the "Initial Registration Statement"),
the aggregate Net Proceeds received by Foundation from the sale of Shares does
not exceed $8,500,000, Foundation shall be free to sell without restriction or
consent of Per-Se additional Shares in an amount such that the aggregate Net
Proceeds received by Foundation from the sale of Shares equals the Target
Consideration. If at the end of the one hundred twenty (120) day period
commencing with the effective date of the Initial Registration Statement
Foundation shall not have received aggregate Net Proceeds from the sale of
Shares equal to the Target Consideration, then Foundation shall be free to sell
any and all remaining Shares without restriction or consent of Per-Se until the
aggregate Net Proceeds received by Foundation from the sale of Shares equals the
Target Consideration.
(c) If, at any time prior to the Final Closing, the sum of
("Target Proceeds") (x) the aggregate Net Proceeds from the sale of Shares
theretofore received by Foundation ("Share Proceeds") and (y) the Estimated
Remaining Proceeds does not equal or exceed the Target Consideration, Per-Se
shall, within three Trading Days following notice from Foundation (an
"Additional Shares Notice") issue additional shares of Common Stock (the
"Additional Shares") to Foundation in an amount equal to the Shortfall Amount
divided by the Designated Price (The issuance date of the Additional Shares
being referred to as the "Additional Issuance Date"). "Shortfall Amount" means
the excess of the Target Consideration over the Target Proceeds. "Estimated
Remaining Proceeds" means the product of (x) the Designated Price and (y) the
number of Shares then held by Foundation. "Designated Price" means, on any
particular date, eighty percent (80%) of the average Current Market Price per
share of Common Stock for the immediately preceding five Trading Days. "Current
Market Price" shall mean when used with reference to
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shares of Common Stock, the closing price of the Common Stock on the NASDAQ
National Market (or such other national stock exchange (or NASDAQ Small-Cap
Market) on which the Common Stock principally trades). "Trading Day" means a
day on which the NASDAQ National Market is open for the transaction of
business. At such time as Share Proceeds equal or exceed the Target
Consideration, Foundation shall cease all further sales of Shares. If Share
Proceeds from the sale of Shares received by Foundation exceed the Target
Consideration (a "Surplus Amount"), at the Final Closing Foundation shall pay
to Per-Se, by certified or cashier's check or wire transfer of immediately
available funds, the Surplus Amount and transfer to Per-Se all of
Foundation's right, title and interest in and to all remaining unsold Shares
(the "Surplus Shares"). Foundation may not deliver more than one Additional
Shares Notice in any five Trading Day period.
(d) At any time during the period commencing 200 days or,
if an Acceleration Event occurs, 120 days after execution of this Agreement
and ending on the Final Closing, Foundation may, upon two Trading Days notice
to Per-Se, elect to require Per-Se to make payment to Foundation by wire
transfer of immediately available funds, in an amount equal to the lesser of
(x) $2 million and (y) the Remaining Amount. "Remaining Amount" means the
excess of Target Consideration over Share Proceeds.
(e) Notwithstanding anything to the contrary, at any time
following the Initial Closing, Per-Se may upon three Trading Days' notice to
Foundation, elect to make a Close-out Payment to Foundation. The receipt by
Foundation of a Close-out Payment and the return to Per-Se of all Shares then
held by Foundation shall constitute a Final Closing. "Close-out Payment" means
an amount in cash equal to the Remaining Amount.
2.0 RELEASES.
2.1 GENERAL RELEASE BY FOUNDATION. Subject to and
conditioned upon the occurrence of the Initial Closing, including, but not
limited to, the delivery and registration of the Settlement Shares and, the
receipt by Foundation of $4,612,500 (the "D&O Settlement Amount") pursuant to
the D&O Settlement Agreement (as defined below), Foundation on behalf of
itself and for each and all of its respective predecessors, parents,
subsidiaries, successors, assigns, heirs, agents and others claiming through
or under it (for which it has the power and authority), shall have and shall
hereby be deemed to have, fully, finally and forever released, relinquished,
and discharged all "Foundation Released Claims" (as defined below) against
the "Per-Se Released Persons" (as defined below).
(a) "Foundation Released Claims" collectively means
all claims,
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demands, rights, liabilities, and causes of action, known or unknown, accrued
or unaccrued, fixed or contingent, direct or derivative, individual or
representative, of every nature and description whatsoever, from the
beginning of time down to the date of this Agreement arising out of or
relating to Foundation's investment in HDS, any business relationship or
contract between Foundation and HDS or Per-Se, Foundation's purchase, sale,
or ownership of Per-Se Common Stock, options, or other Per-Se securities or
pursuant to or in connection with the Merger, or arising out of or relating
to any of the claimed acts, omissions, misrepresentations, facts, events,
matters, transactions, or occurrences referred to in the introduction to this
Agreement, or as alleged in 1996 MEDAPHIS CORPORATION SECURITIES LITIGATION,
(N.D. Ga.), Civil Action No. 1:96-CV-2088-TWT ("Medaphis II"), or HEALTH
SYSTEMS INTERNATIONAL, INC. V. MEDAPHIS CORPORATION, (Super. Ct. L.A. County,
CA), No. BC 160414 (the "Pending Matter"), including, without limitation, any
of Per-Se's restatements of any of its financial statements, excepting from
such release only those rights and obligations expressly created by or
presented by the terms of this Agreement.
(b) "Per-Se Released Persons" means Per-Se and
each of its respective past or present directors; officers; employees;
partners; principals; agents; underwriters; issuers; insurers; co-insurers;
reinsurers; shareholders; attorneys (including, without limitation, King &
Spalding; Xxxxxxx Xxxx, Slate, Meager & Xxxx LLP (solely with respect to work
performed for Per-Se); Paul, Hastings, Xxxxxxxx & Xxxxxx; and any present and
former partners or employees thereof); accountants (except for the firm of
Deloitte Touche including, without limitation, with respect to any claims
asserted in or which could be asserted in the action entitled XXXXXX CAPITAL
INVESTORS v. DELOITTE & TOUCHE, LLP.) investment bankers (solely with respect
to work performed for Per-Se); advisors (solely with respect to work
performed for Per-Se); brokerage firms (solely with respect to work performed
for Per-Se); personal representatives; predecessors; successors; parents;
subsidiaries; divisions; assigns; spouses; heirs; associates; affiliates, any
members of their immediate families; any person, firm, trust, corporation,
officer, director, or other individual or entity in which any Defendant has a
controlling interest or which is related to or affiliated with any Defendant
or any trust of which any Defendant is the settlor or which is for the
benefit of any Defendant or member of his or her family; and shall include
any individual, group, or entity who directly or indirectly participated in
the dissemination of information about Per-Se or who directly or indirectly
is responsible for any of the damages alleged by Foundation, including,
without limitation, any securities analysts or brokerage firms.
2.2 GENERAL RELEASE BY PER-SE. Subject to the satisfaction of
the conditions to the Initial Closing, including, but not limited to, the
delivery and registration of the Settlement Shares, Per-Se, on behalf of itself
and for each and all of its respective predecessors, parents, partners,
subsidiaries, affiliates, associates, successors, assigns, agents and others
claiming through
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or under it (for which it has power and authority), shall have and shall
hereby be deemed to have, fully, finally, and forever released, relinquished,
and discharged all "Per-Se Released Claims" (as defined below) against the
"Foundation Released Persons" (as defined below).
(a) "Per-Se Released Claims" collectively means all
claims, demands, rights, liabilities, and causes of action, known or unknown,
accrued or unaccrued, fixed or contingent, direct or derivative, individual or
representative, of every nature and description whatsoever, from the beginning
of time down to the date of this Agreement arising out of or relating to
Foundation's investment in HDS, any business relationship or contract between
Foundation and HDS or Per-Se, Foundation's ownership of Per-Se Common Stock or
arising out of or relating to the Merger and any related agreements or
transactions excepting therefrom only those rights and obligations expressly
created or preserved by the terms of this Agreement.
(b) "Foundation Released Persons" means Foundation
and its respective past or present directors, officers, employees, partners,
principals, agents, underwriters, issuers, insurers, co-insurers, reinsurer,
shareholders, attorneys, (including, without limitation Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx; and any present or former partners or employees of the
foregoing firm), accountants (solely with respect to work performed for
Foundation), investment bankers (solely with respect to work performed for
Foundation), advisors (solely with respect to work performed for Foundation),
brokerage firms (solely with respect to work performed for Foundation),
predecessors, successors, parents, subsidiaries, divisions, assigns, associates
and affiliates. The Per-Se Released Claims and the Foundation Released Claims
sometimes are referred to collectively as the "Released Claims".
2.3 CALIFORNIA CIVIL CODE. Effective as of the Initial Closing
and the giving of the releases described above, the Parties knowingly,
voluntarily, and expressly waive and relinquish any and all rights that they may
have under Section 1542 of the California Civil Code, or any similar provision
or law of any jurisdiction or any similar or analogous principle of common law.
California Civil Code Section 1542 provides:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.
3.0 CLOSINGS AND CONDITIONS.
3.1 INITIAL AND SUBSEQUENT CLOSINGS. Subject to the
satisfaction or waiver of the conditions set forth in section 3.2 below, a
closing (the "Initial Closing") shall occur on the date on
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which the Initial Registration Statement is declared effective by the
Securities Exchange Commission (the "Commission") or as soon thereafter as
the conditions in Section 3.2 are satisfied. A closing shall also occur on
the date on which each Registration Statement covering Additional Shares
issued pursuant to Section 1.2(c) is declared effective by the Commission (a
"Subsequent Closing" and, together with the Initial Closing, referred to
herein as an "Interim Closing"). A closing (the "Final Closing") shall also
occur on the third Trading Day following the receipt by Foundation of Share
Proceeds and cash from Per-Se pursuant to Section 1.2(c) or (d) equal to the
Target Consideration.
3.2 CONDITIONS TO INITIAL CLOSING.
(a) CONDITIONS TO FOUNDATION'S OBLIGATIONS. The
obligations of Foundation to consummate the transactions contemplated by the
Agreement are subject to the fulfillment (or written waiver) on or before the
Initial Closing of each of the following conditions:
(i) PERFORMANCE. Per-Se shall have performed
and complied in all material respects with all agreements, obligations, and
conditions contained in this Agreement and the Registration Rights Agreement
that are required to be performed or complied with by it on or before the
Initial Closing, and Per-Se shall have delivered to Foundation a certificate of
its President and Chief Financial Officer, dated as of the date of the Initial
Closing, to that effect.
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(ii) COMPLIANCE WITH LAWS. All applicable
federal and state laws shall have been complied with by Per-Se in connection
with the issuance of the Settlement Shares to Foundation in a qualifying
private placement or pursuant to some other applicable exemption from
registration under the Securities Act and state securities laws.
(iii) PROCEEDINGS AND DOCUMENTS. Foundation
shall have received the legal opinion (the "Legal Opinion") of Xxxxxx & Bird
LLP (which opinion may rely on the legal opinion of the General Counsel to
Per-Se solely as to matters of Per-Se's Board of Directors approvals and
related corporate approval matters) and Xxxxxx, Xxxxxx & Xxxxx LLP, (or such
other outside law firms acceptable to Foundation) dated the date of the
Initial Closing in substantially the form of Exhibit B with such assumptions
and exceptions as are customary. All corporate and other proceedings in
connection with the transactions contemplated herein and all documents
incident thereto shall be reasonably satisfactory in form and substance to
counsel to Foundation, and they shall have received all such counterpart
original and certified or other copies of such documents as they may
reasonably request executed by Per-Se.
(iv) NO INJUNCTION. At the time of the Initial
Closing there shall be no effective injunction, writ, or preliminary
restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the
transactions contemplated herein may not be consummated as herein provided;
no proceeding or lawsuit shall have been commenced by any governmental agency
or regulatory agency for the purpose of obtaining any such injunction, writ,
or preliminary restraining order; and no written notice shall have been
received from any such agency indicating an intent to restrain, prevent,
materially delay, or restructure the transactions contemplated by this
Agreement. There shall be no lawsuit filed or threatened that challenges this
Agreement, the Registration Rights Agreement, the Take-Down Agreement, or the
D&O Settlement Agreement or any of the transactions contemplated hereby or
thereby.
(v) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Per-Se contained in this Agreement shall be
true and correct when made and on and as of the date of the Initial Closing
with the same effect as though such representations and warranties had been
made on and as of the Initial Closing and Per-Se shall have delivered to
Foundation a certificate of its President and Chief Financial Officer, dated
as of the Initial Closing, to that effect.
(vi) STATUS.
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(a) Foundation shall have received the
D&O Settlement Amount pursuant to the D&O Settlement Agreement.
(b) The Initial Registration Statement
shall have been declared effective and no stop order shall have been issued
by the Commission.
(c) The Registration Rights Agreement
shall be in full force and effect.
(d) Foundation, Per-Se and Xxxxxxxxx,
Lufkin & Xxxxxxxx ("DLJ") shall have entered into an agreement (the
"Take-Down Agreement"), in substantially the form attached hereto as Exhibit
D, pursuant to which DLJ shall assist Foundation in the sale of Shares and
the Take-Down Agreement shall be in full force and effect.
(e) Foundation shall have been satisfied,
in its sole discretion, with the results of the due diligence investigation
of Per-Se undertaken by DLJ and/or others in connection with the sale of
Shares pursuant to the Registration Statement.
(vii) NASDAQ LISTING. The Settlement Shares
shall have been approved for listing on the NASDAQ National Market (or
another national securities exchange (or NASDAQ Small-Cap Market) on which
the Common Stock may hereafter be listed or quoted), subject only to official
notice of issuance by Per-Se.
(viii) NO BANKRUPTCY. Per-Se shall not,
voluntarily or involuntarily, have entered into any bankruptcy,
reorganization, or similar proceeding to seek protection from creditors or to
reorganize its affairs under the Federal Bankruptcy Act or otherwise become
insolvent or unable to pay its debts and liabilities as they accrue which, in
the case of an involuntary bankruptcy, reorganization or similar proceeding
shall not have been dismissed within sixty (60) days of commencement of the
proceeding.
(ix) QUALIFICATIONS. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory
agency of the United States or any state that are required in connection with
the lawful issuance of the Settlement Shares pursuant to this Agreement shall
be duly obtained and effective as of the Initial Closing.
(x) ORDER. An order from the Los Angeles
Superior Court, substantially in the form attached hereto as Exhibit C, shall
have been issued in the Pending Matter.
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(b) CONDITIONS TO PER-SE'S OBLIGATIONS. The
obligations of Per-Se to consummate the transactions contemplated by the
Agreement are subject to the fulfillment (or waiver) on or before the Initial
Closing of each of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Foundation contained in this Agreement
shall be true and correct when made on and as of the Initial Closing, with
the same effect as though such representations and warranties had been made
on and as of the Initial Closing, and Foundation shall have delivered to
Per-Se a certificate from its President and Chief Financial Officer, dated as
of the date of the Initial Closing, to that effect.
(ii) PERFORMANCE. Foundation shall have
performed and complied in all material respects with all agreements,
obligations, and conditions contained in this Agreement that are required to
be performed or complied with by it on or before the Initial Closing.
(iii) PROCEEDINGS AND DOCUMENTS. All corporate
and other proceedings in connection with the transactions contemplated at the
Initial Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to counsel to Per-Se, and Per-Se shall
have received all such counterpart original and certified or other copies of
such documents as it may reasonably request executed by Foundation.
(iv) NO INJUNCTION. At the time of the Initial
Closing there shall be no effective injunction, writ, or preliminary
restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the
transactions contemplated hereby may not be consummated as herein provided;
no proceedings or lawsuit shall have been commenced by any governmental or
regulatory agency for the purpose of obtaining any such injunction, writ, or
preliminary restraining order; and no written notice shall have been received
from any such agency indicating an intent to restrain, prevent, materially
delay, or restructure the transactions contemplated by this Agreement.
(v) ORDER. An order from the Los Angeles
Superior Court, substantially in the form attached hereto as Exhibit C, shall
have been issued in the Pending Matter.
3.3 SUBSEQUENT CLOSINGS.
At each Subsequent Closing, Per-Se shall:
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(i) cause to be delivered to Foundation the
Legal Opinion dated as of the date of the Subsequent Closing.
(ii) cause the Additional Shares to be listed
on the NASDAQ National Market (or such other national stock exchange (or
NASDAQ Small-Cap Market) on which the Common Stock may hereafter be listed or
quoted).
(iii) perform and comply in all material
respects with all agreements, obligations and conditions contained in this
Agreement and the Registration Rights Agreement that are required to be
performed or complied with by it on or before the Subsequent Closing, and
shall deliver to Foundation a certificate of Per-Se's President and Chief
Financial Officer, dated as of the date of the Subsequent Closing, to that
effect.
(iv) deliver to Foundation a certificate of
Per-Se's President and Chief Financial Officer, dated as of the date of the
Subsequent Closing, to the effect that each of the representations and
warranties of Per-Se contained in this Agreement are true and correct in all
material respects as of the Additional Issuance Date and as of the date of
the Subsequent Closing with the same effect as though such representations
and warranties had been made on and as of the Additional Issuance Date and
the Subsequent Closing (except that Per-Se may (a) effect a reverse stock
split as may be necessary to comply with the listing requirements of the
NASDAQ National Market and (b) issues shares of its capital stock as
contemplated or permitted by this Agreement).
3.4 FINAL CLOSING.
(i) RECEIPT OF NET CASH AMOUNT. Foundation shall have
received Net Proceeds from the sale of Shares and cash from Per-Se pursuant to
this Agreement equal to the Target Consideration.
(ii) RECEIPT OF SURPLUS AMOUNT AND SURPLUS SHARES. At
the Final Closing, Foundation shall deliver to Per-Se the Surplus Amount and the
Surplus Shares.
(iii) RECEIPT OF RECEIVABLES AMOUNT. At the Final
Closing, Foundation shall deliver to Per-Se the Receivables Amount. "Receivables
Amount" means the amounts set forth below for the appropriate date of the Final
Closing; provided, however, if an Acceleration Event occurs, the Receivables
Amount shall be $0 for a Final Closing occurring more than 125 days after the
Initial Date:
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Receivables Amount Date of Final Closing
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$1,426,539 within 35 days of the Initial Date
$1,248,221 35 days and prior to 65 days from the Initial Date
$1,069,904 65 days and prior to 95 days from the Initial Date
$ 891,587 95 days and prior to 125 days from the Initial Date
$ 713,269 125 days and prior to 155 days from the Initial Date
$ 534,952 155 days and prior to 185 days from the Initial Date
$ 356,634 185 days and prior to 215 days from the Initial Date
$ 178,317 215 days and prior to 245 days after the Initial Date
$0 245 or more days after the Initial Date.
3.5 LOCATION. The Interim Closings and Final Closing shall
take place at Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 at 9:00 a.m. on the dates provided herein or at
such other place or time as the parties shall mutually agree.
4.0 ADDITIONAL AGREEMENTS.
4.1 NASDAQ NATIONAL MARKET ADDITIONAL SHARES NOTIFICATION.
Per-Se shall file an additional shares notification with the NASDAQ National
Market (or any national securities exchange (or NASDAQ Small-Cap Market) on
which the Common Stock may hereafter be principally listed or quoted) to approve
for listing, subject to official notice of issuance, the Shares and shall cause
the Shares to be approved for quotation and trading on the NASDAQ National
Market (or any national securities exchange (or NASDAQ Small Cap Market) on
which Per-Se Common Stock may hereafter be listed or quoted).
4.2 PUBLIC ANNOUNCEMENTS. The timing and content of all
statements,
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announcements, and filings regarding any aspect of this Agreement to the
financial community, government agencies, employees, or the general public
shall be mutually agreed upon in advance (unless Per-Se or Foundation are
advised by counsel that any such announcement or other disclosure not
mutually agreed upon in advance is required to be made by law or applicable
rule of the NASDAQ National Market or the New York Stock Exchange, Inc., as
applicable, and then only after making a reasonable attempt to comply with
the provisions of this Section 4.2).
4.3 FURTHER ASSURANCES. Each Party will diligently perform all
acts, and execute and deliver all documents, reasonably necessary to effect all
provisions of this Agreement and the agreements executed in connection herewith.
4.4 TAX MATTERS. The Parties agree that, for Federal and state
income tax purposes, they will treat and report the issuance of the Shares (or
any other consideration to be paid to Foundation hereunder) as additional
consideration delivered to Foundation in connection with the Merger, with no
portion being treated or reported as imputed interest. The Parties further agree
not to take any position inconsistent with such treatment before any taxing or
other governmental authorities.
4.5 NO REDUCTION OF MINIMUM CASH PAYMENT. Per-Se covenants and
agrees that until the Final Closing, except as expressly contemplated herein, it
will not take or permit to be taken any action (other than in the ordinary
course of business operations), including, without limitation, any amendment of
the Indenture, dated as of February 26, 1998 (the "Indenture") among Per-Se, the
Subsidiary Guarantors and State Street Bank and Trust, as Trustee, that has the
effect, directly or indirectly, of reducing the amount of cash that is permitted
to be paid by Per-Se to Foundation pursuant to Section 1.2(d) without
constituting an Event of Default under the Indenture.
4.6 LEGAL MATTERS. Prior to the Initial Closing, the parties
shall present a joint motion to the Los Angeles Superior Court in the Pending
Matter to retain jurisdiction in the matter pursuant to Section 664.6, and to
toll all applicable statutes, rules or court orders affecting timely prosecution
of the Pending Matter, including the 5-year dismissal statute.
4.7 REPRESENTATIONS. Prior to the Final Closing, Per-Se shall
take no action (or suffer to occur any action or omission) that causes or is
reasonably likely to cause any of the representations or warranties in this
Agreement to be untrue or incorrect in any material respect on the date of any
Interim Closing or on any Additional Issuance Date.
4.8 CONTINUED LISTING. At all times prior to the Final
Closing, Per-Se shall cause the outstanding shares of Common Stock to be listed
on the NASDAQ National Market (or
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another national securities exchange or NASDAQ Small-Cap Market).
4.9 DISMISSAL OF CLAIMS; CONTINUING JURISDICTION. Concurrently
with the Initial Closing, Foundation shall dismiss with prejudice the claims in
the Pending Matter, subject to the retained jurisdiction of the Court to enforce
the terms of this Settlement Agreement, the Registration Rights Agreement and
the other agreements executed in connection herewith.
4.10 ISSUANCE OF ADDITIONAL SHARES. Per-Se shall comply with
all applicable federal and state laws in connection with the issuance of the
Additional Shares to Foundation in a qualifying private placement or pursuant to
some other applicable exemption from registration under the Securities Act and
state securities laws.
4.11 PAYMENT OF THE RECEIVABLES AMOUNT. At the Final Closing,
Foundation shall pay to Per-Se, by certified or cashier's check or wire transfer
of immediately available funds, the Receivables Amount.
5.0 REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES OF PER-SE. Per-Se
represents and warrants to Foundation as follows:
A. DULY ORGANIZED, VALIDLY EXISTING, GOOD STANDING. Per-Se is
a duly organized and validly existing corporation in good standing under the
laws of the State of Delaware and is qualified to do business and is in good
standing as a foreign corporation in all jurisdictions where the nature of the
property owned by it or leased by it, or the nature of the business conducted by
it, makes such qualification necessary and the absence of which qualification
would not, individually or in the aggregate, have a material adverse effect on
the business, condition (financial or otherwise), assets or results of
operations of Per-Se and its subsidiaries, taken as a whole (a "Material Adverse
Effect"). Per-Se has the corporate power and authority to own its properties, to
transact the business in which it is engaged, and to perform its obligations
under this Agreement, the Registration Rights Agreement and the other agreements
executed in connection herewith.
B. AUTHORITY. The execution and delivery by Per-Se of this
Agreement, the Registration Rights Agreement and the other agreements executed
in connection herewith, and the issuance and delivery by Per-Se of the Shares
have been duly authorized and all necessary corporate action has been taken, and
such issuance and deliveries will not contravene or conflict with, or, except as
expressly contemplated by this Agreement, require any approval, authorization,
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permit of or filing with or pursuant to (i) the Certificate of Incorporation
or Bylaws of Per-Se, (ii) any law, rule or regulation, or (iii) any agreement
to which Per-Se is a party, except, solely in the case of clause (iii) such
contravention or conflict that would not, individually or in the aggregate,
have a Material Adverse Effect. Subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium, or similar laws
from time to time in effect affecting creditor's rights generally and (ii)
general principles of equity (including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness), whether such
proceedings are considered in a proceeding at law or in equity, this
Agreement, the Registration Rights Agreements and the other agreements
executed in connection herewith have been duly executed and delivered by
Per-Se and constitute legal, valid and binding obligations of Per-Se,
enforceable against Per-Se in accordance with their terms.
C. CAPITALIZATION. The authorized capital stock of Per-Se
consists of 200,000,000 shares of Common Stock, $.01 par value per share (the
"Common Stock"), 600,000 shares of Non-Voting Common Stock, $.01 par value
per share (the "Non-Voting Common Stock"), and 20,000,000 shares of Preferred
Stock, no par value (the "Preferred Stock"), of which 84,733,413 shares of
Common Stock and no shares of Non-Voting Common Stock or Preferred Stock are
issued and outstanding as of August 25, 1999. All of the issued and
outstanding shares of Common Stock are validly issued, fully paid and
non-assessable. As of August 25, 1999, there are outstanding warrants to
acquire 5,910,275 shares of Common Stock. As of August 25, 1999, there are
outstanding options to acquire 9,978,852 shares of Common Stock. Except as
set forth in this Section, there are no outstanding securities convertible
into, exchangeable for, or carrying the right to acquire, or any voting
agreements with respect to, any equity securities of Per-Se, or
subscriptions, warrants, options, rights or other arrangements or commitments
obligating Per-Se to issue or acquire any of its equity securities or any
ownership interest therein. The Shares when issued pursuant to this
Agreement, will be validly issued, fully paid and nonassessable, and will be
free and clear of any liens or encumbrances, except restrictions on transfer
in compliance with federal and state securities laws. The Shares, when
issued, will be issued in compliance with all applicable federal and state
securities laws in a qualifying private placement or pursuant to some other
applicable exemption from registration under the Securities Act and state
securities laws.
D. NO UNTRUE STATEMENTS. Since January 1, 1999 Per-Se has
filed all forms, reports and documents ("Per-Se SEC Reports") required to be
filed with the Commission. Since January 1, 1999 all of the filings of Per-Se
with the Commission conform to the disclosure requirements of the federal
securities laws in all material respects and none of such filings contains or
contained at the time of filing an untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of Per-Se's subsidiaries is required to file any forms,
reports
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or other documents with the Commission. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in
the Per-Se SEC Reports was prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto), and each fairly
presents in all material respects the consolidated financial position of
Per-Se and its subsidiaries as at the respective date thereof and the
consolidated results of their operations and cash flows and stockholders'
equity for the periods indicated, except that the unaudited interim financial
statements (i) were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount and
(ii) do not contain the footnotes required by generally accepted accounting
principles. Since June 30, 1999, there has not been any change which would
have a Material Adverse Effect nor has there been any damage, destruction or
loss, whether covered by insurance or not, having a Material Adverse Effect.
E. CONTRACTS. Neither Per-Se nor any of its Subsidiaries has
breached, is in default under, or has received written notice of any breach of
or default under, any material agreement, contract or other instrument to which
it is a party; to the knowledge of Per-Se, no other party to any such agreement,
contract or other instrument has breached or is in default of any of its
obligations thereunder; and each of such agreements, contracts and other
instruments is in full force and effect, except in any such case for breaches,
defaults or failures to be in full force and effect that have not had and could
not reasonably be expected to have a Material Adverse Effect.
F. COMPLIANCE WITH LAWS. Neither Per-Se nor any person or any
entity acting on its behalf, has taken or will take any action which might
subject the issuance of the Settlement Shares or the Additional Shares to
Foundation to the registration requirements of the Securities Act or any state
securities laws. Neither Per-Se nor any of its subsidiaries is in conflict with,
or in default or violation of, any law, rule or regulation applicable to Per-Se
or any of its Subsidiaries or by which any of their respective properties are
bound or affected (except for violations which would not have a Material Adverse
Effect).
G. NO UNDISCLOSED LIABILITIES. Neither Per-Se nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) adequately provided for or disclosed in the audited
balance sheet (including any related notes thereto) of Per-Se for the period
ending December 31, 1998 included in the Per-Se SEC Reports (the "Per-Se 1998
Balance Sheet"), (b) which should not be reflected under generally accepted
accounting principles on the Per-Se 1998 Balance Sheet, (c) incurred since
December 31, 1998 in the ordinary course of business consistent with past
practice, (d) incurred in connection with this Agreement or (e) disclosed in
Per-Se SEC Reports.
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H. NASDAQ. The outstanding shares of Common Stock are
listed on the NASDAQ National Market (or another national securities exchange
(or NASDAQ Small-Cap Market) on which the Common Stock principally trades),
and the Company's listing agreement with respect thereto is in full force and
effect. Except as set forth in Schedule H, (i) no event has occurred, and no
facts exist, that could cause NASDAQ to delist or suspend from trading the
Common Stock and (ii) no action has been taken or threatened by NASDAQ with
respect to the delisting or suspension from trading of the Common Stock.
I. OWNERSHIP OF CLAIMS. Per-Se (i) has not prior to the
date hereof, sold, transferred, conveyed, encumbered, or assigned any portion
of such rights as are being settled and released in this Agreement; and (ii)
is the sole and exclusive holder of such rights.
J. MINIMUM CASH PAYMENT. As of the date hereof, at least
$2 million may be paid by Per-Se to Foundation hereunder without causing an
Event of Default under the Indenture.
K. NO CHANGE. Since June 30, 1999, except as disclosed in
filings with the Commission prior to the date hereof or otherwise disclosed
in this Agreement, no change (or any condition, event or development
involving a prospective change) has occurred or been threatened which would
have or could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on (a) the business, properties,
operations, condition (financial or other), prospects, liabilities or
capitalization of Per-Se, (b) the ability of Per-Se to perform its
obligations under this Agreement or any agreement executed in connection
herewith or (c) the validity or enforceability of this Agreement or any
agreement to be executed in connection herewith.
5.2 REPRESENTATIONS AND WARRANTIES OF FOUNDATION.
Foundation represents and warrants to Per-Se as follows:
A. DULY ORGANIZED, VALIDLY EXISTING, GOOD STANDING. Foundation
is a duly organized and validly existing corporation in good standing under the
laws of the State of Delaware and has the corporate power and authority to own
its properties, to transact the business in which it is engaged, and to perform
its obligations under this Agreement.
B. AUTHORITY. The execution and delivery by Foundation of this
Agreement, the Registration Rights Agreement and the other agreements executed
in connection herewith have been duly authorized and all necessary corporate
action has been taken, and such execution and delivery will not contravene or
conflict with the Certificate of Incorporation or Bylaws of Foundation. Subject
to (i) applicable bankruptcy, insolvency, reorganization, fraudulent
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transfer, moratorium, or similar laws from time to time in effect affecting
creditor's rights generally and (ii) general principles of equity (including,
without limitation, standards of materiality, good faith, fair dealing and
reasonableness), whether such proceedings are considered in a proceeding at
law or in equity, this Agreement, the Registration Rights Agreement and the
other agreements executed in connection herewith have been duly executed and
delivered by Foundation and constitute legal, valid and binding obligations
of Foundation, enforceable against Foundation, in accordance with their terms.
C. OWNERSHIP OF CLAIMS. Foundation (i) has not prior to the
date hereof, sold, transferred, conveyed, encumbered, or assigned any portion of
such rights as are being settled and released in this Agreement; and (ii) is the
sole and exclusive holder of such rights.
6.0 TERMINATION.
6.1 TERMINATION AND ABANDONMENT. This Agreement may be
terminated at any time prior to Final Closing:
(a) By written agreement among Per-Se and Foundation;
(b) By Foundation, if an agreement (the "D&O
Settlement Agreement") settling Foundation's claims against the directors and
officers of Per-Se in connection with the Merger, in form and substance
satisfactory to Foundation, shall not have been executed and delivered on or
prior to September 24, 1999;
(c) By Foundation, if the condition set forth in
Section 3.2(a)(vi)(a) shall not have been satisfied on or prior to October 1,
1999;
(d) By Foundation, if the Take-Down Agreement shall
not have been executed and delivered on or prior to the date the Initial
Registration Statement is filed with the Commission; or
(e) By Foundation, if the conditions set forth in
Section 3.2(a) for an Initial Closing are not complied with or performed and
such noncompliance or nonperformance has not been cured or eliminated after
diligent efforts by Per-Se (or by its nature cannot be cured or eliminated) on
or before 60 days after execution of this Agreement (the "TERMINATION DATE").
6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith become void,
except for this Section 6.2 and
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Sections 7.0 and 8.13, which shall survive such termination.
7.0 INDEMNIFICATION.
7.1 INDEMNIFICATION BY PER-SE. Per-Se shall indemnify and hold
harmless Foundation and each of its respective affiliates, directors, officers,
employees, agents (including, without limitation, DLJ or any other broker hired
to conduct due diligence of Per-Se or to arrange for the sale of Shares),
successors and assigns and other persons, if any, who control or are otherwise
affiliated (within the meaning of the Securities Act) with Foundation (the
"Foundation Indemnified Parties") from and against any cost, damage,
disbursement, expense, liability, judgment, loss, deficiency, obligation,
penalty, or settlement of any kind or nature, whether foreseeable or
unforeseeable, including, but not limited to, interest or other carrying costs,
penalties, reasonable legal, accounting and other professional, expert witness
and consultant fees and reasonable expenses incurred in the investigation,
collection, prosecution, and defense of claims and amounts paid in settlement
(collectively, "Losses") that may be imposed on, incurred, or suffered by the
Foundation Indemnified Parties as a result of any of the following matters:
(a) The inaccuracy or breach of any of the
representations, warranties, covenants, or obligations of Per-Se contained
herein, in the Registration Rights Agreement or in any other document delivered
by Per-Se to Foundation pursuant to the terms and provisions hereof; or in
connection with the consummation of the transactions contemplated hereby; or
(b) Any untrue statement or alleged untrue statement
of a material fact contained in a registration statement or other Commission
filing or report submitted by Per-Se with respect to this Agreement or the
Settlement, or in any amendment or supplement thereto, or in any state
application for qualification, permit, exemption, or registration as a
broker/dealer, or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading; PROVIDED,
HOWEVER, that Per-Se shall not be liable, in any such case, to the extent that
any such cost, damage, disbursement, expense, liability, judgment, loss,
deficiency, obligation, penalty, or settlement arises out of or is based solely
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, or any such amendment or
supplement thereto, or in any such statement, application for qualification,
permit, exemption or registration as a broker/dealer, or in any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to Per-Se by or on behalf of any Foundation Indemnified Party
specifically for use therein.
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7.2 INDEMNIFICATION BY FOUNDATION. Foundation shall
indemnify and hold harmless Per-Se and each of the respective affiliates,
directors, officers, employees, agents, successors and assigns and other
persons, if any, who control or are otherwise affiliated (within the meaning
of the Securities Act) with Per-Se (collectively, the Per-Se Indemnified
Parties") from and against any cost, damage, disbursement, expense,
liability, judgment, loss, deficiency, obligation, penalty, or settlement of
any kind or nature, whether foreseeable or unforeseeable, including, but not
limited to, interest or other carrying costs, penalties, reasonable legal,
accounting and other professional, expert witness and consultant fees and
reasonable expenses incurred in the investigation, collection, prosecution,
and defense of claims and amounts paid in settlement (collectively, "Losses")
that may be imposed on, incurred, or suffered by any such Per-Se Indemnified
Party as a result of any of the following matters:
(a) The inaccuracy of breach of any of the
representations, warranties, covenants or obligations of Foundation contained
herein, in the Registration Rights Agreement or in any other document delivered
by Foundation pursuant to the terms and provisions hereof; or
(b) Solely to the extent to which it results directly
from written information supplied by Foundation specifically for inclusion
therein and not corrected by Foundation prior to the effective date of the
Registration Statement, any untrue statement or alleged untrue statement of a
material fact with respect to Foundation contained in a registration statement
or other Commission filing or report submitted by Per-Se with respect to this
Agreement or the Settlement Shares, or in any amendment or supplement thereto,
or in any state application for qualification, permit, exemption, or
registration as a broker/dealer, or in any amendment or supplement thereto, or
arising out of or are based upon any omission or alleged omission to state
therein a material fact with respect to Foundation required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made with respect to Foundation, not misleading.
7.3 PROCEDURES. If any action indemnifiable under this Section
7.0 shall be brought, asserted, or threatened against any person indemnified
under this Section 7.0, the indemnified person shall promptly notify the
indemnifying person. A failure to notify the indemnifying person timely or at
all shall reduce the liabilities and obligations of the indemnifying person
under this Section 7.0 only to the extent the indemnifying person actually shall
be prejudiced by the failure. The indemnifying person shall assume the defense
of the action, including the employment of counsel reasonably satisfactory to
both the indemnified and indemnifying person and the payment of all related fees
and expenses, but the indemnified person may employ separate counsel in the
action and participate in the defense of the action at its own expense. The
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indemnified person, however, may by written notice to the indemnifying person
assume the defense of the action, including the employment of counsel, at the
expense of the indemnifying person (except that the indemnifying person shall
not be liable for the fees and expenses of more than one such separate
counsel with respect to the action) if:
(a) The indemnifying person fails to take one or more
of the following acts without a delay that reasonably could be expected to be
prejudicial to the interests of the indemnified person: (i) acknowledge in
writing to the indemnified person the liability of the indemnifying person to
the indemnified person under this Section 7.0 with respect to the action, (ii)
assume the defense, or (iii) employ counsel reasonably satisfactory to the
indemnified person;
(b) The persons against whom the action shall have
been brought, asserted, or threatened (including any impleaded parties) include
both the indemnified person and the indemnifying person and there may be one or
more legal defenses available to the indemnified person that are different from
or in addition to those available to the indemnifying person; or
(c) The indemnified person reasonably believes that
the action or an unfavorable resolution of the action may materially and
adversely affect the business, properties, operations, prospects, or condition
(financial or otherwise) of the indemnified person and its affiliates other than
as a result of the payment of money damages or seeks injunctive or other
equitable relief.
If the indemnified person has assumed the defense of
the action pursuant to any of the conditions stated above, then the indemnifying
person shall not have the right to assume the defense of the action on behalf of
the indemnified person and the indemnified person shall have the right to
control the defense, compromise, or settlement of any action indemnifiable under
this Section 7.0 on behalf of and for the account and risk of the indemnifying
person. The indemnifying person shall be bound by the result of the defense of
any action, whether the defense shall have been assumed by the indemnifying
person or by the indemnified person, and shall indemnify the indemnified persons
against, and hold the indemnified person harmless from, any loss in any way
relating to or allegedly arising in connection with the matters which shall be
the basis of the action or otherwise connection to the action, except that the
indemnifying person shall not be liable for the payment of the amount of money
damages provided in a settlement of any action indemnifiable under this Section
7.0 defended by the indemnified person pursuant to Subsections 7.3(b) or 7.3(c)
above that shall have been effected without the written consent of the
indemnifying person, which consent shall not be unreasonably withheld or
delayed.
7.4 APPEAL. Notwithstanding anything in this Section 7.0 to
the contrary, if, in
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connection with an action indemnifiable under this Section 7.0, a court,
governmental body, or other authority of competent jurisdiction or other
person having authority or jurisdiction over a matter or matters related to
the action shall have rendered, entered, or granted a binding judgment,
decision, ruling, order, matter or matters providing for the payment of money
damages or the claimant and the indemnifying party shall have agreed to
settle the action for an amount of money damage without reservation of any
rights or defenses against the indemnified person, and if the indemnified
person elects to appeal the judgment, decision, ruling, order, or award or
amount of the proposed settlement, as the case may be, then the indemnified
person may continue to defend the action, free of any participation by the
indemnifying person, but the amount of any ultimate liability under this
Section 7.0 with respect to Losses related to or allegedly rising in
connection with the matter or matters that shall have been comprehended by
the judgment, decision, ruling, order, or award or by the proposed
settlement, as the case may be, shall then be limited to the amount of the
judgment, ruling, order, or award or the amount of the proposed settlement,
as the case may be, plus the other indemnified losses of the indemnified
person relating to the matter or matters through the date of its election to
appeal or its rejection of the proposed settlement, as the case may be.
7.5 CONTRIBUTION. If the indemnification provided for in
this Section 7.0 is unavailable to an indemnified person(s) (other than by
reason of exceptions provided in this Section 7.0), or is insufficient to
hold harmless an indemnified person in respect of any losses, then the
indemnifying person, in lieu of indemnifying the indemnified person, shall
contribute to the amount paid or payable by the indemnified person as a
result of the losses in the proportion that is appropriate to reflect the
relative fault of the indemnifying person, on the one part, and the
indemnified person, on the other part, in connection with the events or
circumstances which results in the losses as well as any other relevant
equitable considerations. The relative fault of the indemnifying person, on
the one hand, and of the indemnified person, on the other hand, shall be
determined by reference to, among other things, those persons' relative
intent, knowledge, access to information, and opportunity to correct or
prevent the events or circumstances resulting in the losses.
7.6 NO LIMITATION ON OTHER RIGHTS OF RECOVERY. The
indemnification set forth in this Section 7.0 shall be in addition to any other
obligations or liabilities of persons to an indemnified person hereunder at
common law or otherwise and shall remain operative and in full force and effect
regardless of any investigation made or omitted by or on behalf of any
indemnified party and shall survive the transfer of any shares by Foundation.
The provisions of this Section 7.0 shall not eliminate or otherwise limit the
right of any indemnified person hereunder or any other person to seek or recover
contribution, damages or otherwise enforce (including through specific
performance) its rights without regard to the provisions of this Section 7.0.
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8.0 MISCELLANEOUS PROVISIONS.
8.1 COOPERATION AND INTENT. The Parties agree to the
following:
(a) That it is their intent to consummate all of the
transactions contemplated by this Agreement; and
(b) That they agree to cooperate to the extent
necessary to effectuate and implement all terms and conditions of this Agreement
and, subject to their fiduciary obligations, to exercise their reasonable best
efforts to promptly accomplish the terms and conditions of this Agreement.
8.2 THIRD-PARTY BENEFICIARIES.Except as expressly set forth in
this Agreement, nothing herein expressed or implied is intended, or shall be
construed, to confer upon or give any person, firm or corporation, other than
Foundation and Per-Se, any rights or remedies under or by reason of this
Agreement.
8.3 NO ADMISSION OF LIABILITY. Neither this Agreement nor any
act performed or document executed pursuant to or in furtherance of this
Agreement or the Settlement:
(a) Is or may be deemed to be, or may be used as an
admission of, or evidence of, the validity of any Released Claim, or of any
alleged wrongdoing or liability of Per-Se, the Per-Se Released Persons,
Foundation or the Foundation Released Persons or any of them; or
(b) Is or may be deemed to be, or may be used as
an admission of, or evidence of, any alleged fault or omission of Per-Se,
Foundation, any Foundation Released Persons, or any Per-Se Released Persons,
in any civil, criminal, or administrative proceeding in any court,
administrative agency, or other tribunal, other than in such proceedings as
may be necessary to consummate or enforce this Agreement, except that Per-Se,
Foundation, any Foundation Released Person, or any Per-Se Released persons,
or any of them, may file the Agreement in any action that may be brought
against them in order to support a claim, defense, or counterclaim based on
principles of res judicata, collateral estoppel, release, judgment bar or
reduction, or any other theory of claim preclusion or issue preclusion or
similar claim, defense, or counterclaim.
8.4 GOOD FAITH: BENEFIT OF COUNSEL. Each of the Parties intend
the Agreement to be final and complete resolution of all disputes asserted which
could be asserted by such Party against Per-Se or Foundation, as applicable, and
the Foundation Released Persons or Per-Se
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Released Persons with respect to the Released Claims. The Parties agree that
the amount paid and the other terms of the Agreement were negotiated at arms'
length in good faith by the Parties and reflect a Settlement that was reached
voluntarily after consultation with experienced counsel.
8.5 ENTIRE AGREEMENT. This Agreement, the Registration
Rights Agreement, the Take-Down Agreement, D&O Settlement Agreement and
Current Agreement constitutes the entire agreement among the Parties with
respect to the subject matter hereof, and no representations, warranties, or
inducements have been made to any Parties concerning the foregoing other than
the representations, warranties, and covenants contained and memorialized in
the foregoing agreements. The Parties further agree, to the extent permitted
by law, that all previous agreements that were made, if any, relating to the
confidentiality of information and requirements for return or destruction of
documents shall survive this Agreement.
8.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts. All executed counterparts and each of them shall be deemed
to be one and the same instrument. Counsel for the Parties shall exchange
among themselves original signed counterparts.
8.7 SUCCESSOR AND ASSIGNS. This Agreement shall be binding
upon, and inure to the benefit of, the successors and assigns of the Parties
hereto.
8.8 GOVERNING LAW. This Agreement shall be considered to have
been negotiated, executed, and delivered, and to be wholly performed, in the
State of California, and the rights and obligations of the Parties to this
Agreement shall be governed by, construed, and enforced in accordance with the
laws of the State of California without giving effect to that state's choice of
law or conflicts of law principles.
8.9 AMENDMENTS; WAIVERS. This Agreement may be modified only
by a written instrument signed by all the Parties hereto. No delay on the part
of any Party to this Agreement in the exercise of any power or right under this
Agreement shall operate as a waiver thereof, nor shall waiver or single or
partial exercise of any power or right constitute a waiver of or preclude
further exercise thereof or the exercise of any other power or right.
8.10 EXPENSES. Except as otherwise provided herein, Per-Se and
Foundation will bear their own expenses with respect to the negotiation,
execution, and delivery of the Agreement and the performance of their
obligations hereunder.
8.11 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by
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registered or certified mail (return receipt requested) or sent via facsimile
(with confirmation of receipt) to the parties at the following address (or at
such other address for a Party as shall be specified by like notice):
If to Per-Se:
Per-Se Technologies, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Foundation:
Foundation Health Systems, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
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Notice given by personal delivery, courier service, or mail shall be
effective upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any Party may change any address to which notice is given to it by giving notice
as provided above of such change of address.
8.12 HEADINGS. The headings of the several sections and
subsections of this Agreement are for convenience or reference only and are not
intended to supplement or change the terms of this Agreement.
8.13 CONSEQUENCES OF BREACH. If either party breaches a
provision of this Agreement or the Registration Rights Agreement, the other
party shall have the non-exclusive right to apply EX PARTE to the Los Angeles
Superior Court in the Pending Matter, for an order enforcing the terms of the
Agreement pursuant to California Code of Civil Procedure Section 664.6. The
prevailing party on any such application shall be entitled to recover from the
other party its attorney's fees and costs expended on the application and its
disposition. In the event of a breach by Per-Se that can be cured by prompt
performance by Per-Se, then Foundation shall be entitled to an order compelling
such performance, in addition to damages resulting from the breach. If the
breach is not capable of prompt cure by Per-Se, then Foundation shall be
entitled to a final judgment in the amount of the then Remaining Amount plus any
additional damages resulting from the breach and attorneys fees and costs.
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IN WITNESS WHEREOF, the undersigned Parties have executed this
Settlement Agreement and Release effective as of the date first set forth above.
Dated: September 20, 1999
PER-SE TECHNOLOGIES, INC.
By: /s/ XXXXXXXX X.X. XXXXX
Name: XXXXXXXX X.X. XXXXX
Title: EXECUTIVE VICE PRESIDENT
FOUNDATION HEALTH SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXXX
Name: XXXXXXX X. XXXXXX
Title: VICE PRESIDENT, ASST. GENERAL
COUNSEL AND ASST. SECRETARY
EXHIBIT B TO SETTLEMENT AGREEMENT AND RELEASE
FORM OF OPINION TO BE RENDERED BY XXXXXX & BIRD AND/OR XXXXXX, XXXXXX &
XXXXX LLP (OR SUCH OTHER OUTSIDE LAW FIRMS ACCEPTABLE TO FOUNDATION) IN
CONNECTION WITH THE INTERIM CLOSINGS UNDER THE SETTLEMENT AGREEMENT AND RELEASE,
DATED SEPTEMBER 20, 1999, BY AND BETWEEN FOUNDATION HEALTH SYSTEMS, INC.
("FOUNDATION") AND PER-SE TECHNOLOGIES, INC. ("PER-SE") (THE "SETTLEMENT
AGREEMENT"). CAPITALIZED TERMS USED HEREIN WITHOUT DEFINITION HAVE THE MEANINGS
GIVEN IN THE SETTLEMENT AGREEMENT.
1. Per-Se is a corporation in good standing under the laws of the State
of Delaware, with the corporate power and authority under such laws to execute,
deliver and perform its obligations and consummate the transactions contemplated
under the Settlement Agreement, the Registration Rights Agreement, and all other
agreements executed or to be executed by Per-Se in connection therewith
(together the "Agreements").
2. The Agreements have been duly authorized, executed and delivered by
Per-Se and constitute the legal, valid and binding obligations of Per-Se,
enforceable against Per-Se in accordance with their respective terms (subject to
applicable bankruptcy, insolvency, and other similar laws affecting the
enforceability of creditor's rights generally).
3. The Shares delivered at the Interim Closing have been duly
authorized and validly issued and, upon consummation of the Interim Closing at
which this opinion is being delivered, are fully paid and nonassessable and are
free of all restrictions on transfer, voting or preemptive rights, rights of
first refusal and similar rights to subscribe for or purchase any of the Shares,
other than restrictions imposed by action of Foundation or pursuant to
applicable United States federal or state securities laws.
4. The execution and delivery of the Agreements by Per-Se do not, and
if Per-Se were now to perform its obligations under the Agreements such
performance would not, violate or result in a breach of any term of Per-Se'
certificate of incorporation or bylaws, nor conflict with or constitute a breach
of, or a default under, or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any of the property or assets of Per-Se
pursuant to, any written material agreement or instrument to which Per-Se is a
party, nor result in any violation of any existing law, regulation of the United
States or the states of Delaware, Georgia or California, or ruling, judgment,
injunction, order or decree known to us after reasonable inquiry to be
applicable to Per-Se or any of its respective properties or assets. With your
permission, we assume that a "written material agreement" includes only these
agreements listed as an exhibit (or incorporated by reference) in any Per-Se SEC
Reports filed with the Commission since January 1, 1999.
5. To our knowledge after reasonable inquiry no consent, approval,
authorization or other order of, or registration or filing with, any United
States federal or state court, regulatory body, administrative agency is
required for Per-Se to consummate the transactions contemplated by the
Agreements, other than in connection with the Registration Rights Agreement (a)
under the Securities Act of 1933, as amended (the "Securities Act"), and (b) as
may be required under state securities or blue sky laws, which consents,
approvals, authorizations and filings have been obtained or made.
6. To our knowledge after reasonable inquiry, there are no legal or
governmental proceedings pending or threatened against Per-Se, or to which
Per-Se or any of its properties or assets is subject, that could have a material
adverse effect on the financial condition, results of operations, business,
properties, assets or liabilities of Per-Se or on Per-Se' ability to perform or
observe any obligation or condition under the Agreements.
7. To our knowledge after reasonable inquiry, no holder of securities
of Per-Se has rights to the registration of shares of Common Stock or other
securities, because of the filing of the Registration Statement by Per-Se or the
offering contemplated thereby.
8. The Common Stock of Per-Se issued and outstanding as of the date
hereof is listed on the NASDAQ National Market, and, to our knowledge (a)
Per-Se' listing agreement with respect to the Common Stock is in full force and
effect, (b) except as set forth on Schedule H to the Agreement, there are no
threatened actions existing with respect to the delisting or suspension from
trading of the Common Stock and (c) except as set forth on Schedule H to the
Agreement, no action has been taken or threatened by Nasdaq or Per-Se with
respect to the delisting or suspension from trading of the Common Stock.
9. The Shares have been approved for quotation on the NASDAQ National
Market, subject only to official notice of issuance.
10. Per-Se is not an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or a "holding company," or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1933, as
amended.
11. In reliance, in part, upon Foundation's representations and
warranties under the Registration Rights Agreement and upon representations and
warranties made by Per-Se in its certificate attached hereto, the offer and sale
of the Shares pursuant to the Settlement Agreement is exempt from the
registration requirements of Section 5 of the Securities Act.
12. The registration statement provided for in the Registration Rights
Agreement (the "Registration Statement") has been declared effective by the
Securities and Exchange Commission (the "Commission") under the Securities Act.
To our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for such purpose have been
instituted or are pending or are contemplated or threatened. Any required filing
of the prospectus (the "Prospectus") and any supplement thereto pursuant to Rule
424(b) under the Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
13. The Registration Statement, the Prospectus filed therewith, and
each amendment or supplement to the Registration Statement and the Prospectus,
as of their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or in
2
exhibits to or excluded from the Registration Statement, as to which we
express no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations thereunder.
In addition, although we do not pass upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above) and any supplements or amendments thereto or any documents
incorporated or deemed to be incorporated by reference therein, nothing has come
to our attention that would lead us to believe that either the Registration
Statement or any supplements or amendments thereto or the documents incorporated
or deemed to be incorporated by reference therein, at the time the Registration
Statement or such amendments became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, contained an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that we express no belief as to the financial statements or schedules
or other financial or statistical data derived therefrom, included in the
Registration Statement or the Prospectus or any amendments or supplements
thereto or any documents incorporated or deemed to be incorporated by reference
therein).
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EXHIBIT D TO SETTLEMENT AGREEMENT AND RELEASE
This AGREEMENT, dated as of September 20, 1999, is by and among Per-Se
Technologies, Inc., a Delaware corporation formerly known as Medaphis
Corporation having its principal offices at 0000 Xx. Xxxxxxxxx Xxxxxxx Xxxxx
000, Xxxxxxx, Xxxxxxx 00000 (the "COMPANY"), Foundation Health Systems, Inc., a
Delaware corporation having its principal offices at 00000 Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("FOUNDATION") and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, a Delaware corporation having its principal offices at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("DLJ").
W I T N E S SE T H:
WHEREAS, the Company has filed a registration statement (the "INITIAL
REGISTRATION STATEMENT"), including a prospectus (the "PROSPECTUS"), on Form S-3
(File No. 333-_____________) relating to up to 6,200,000 shares (the "ORIGINAL
SHARES") of Common Stock, $.01 per value per share (the "COMMON STOCK") of the
Company in satisfaction of the rights of Foundation under a Settlement Agreement
and Release (the "SETTLEMENT AGREEMENT") dated September , 1999 by and between
the Company and Foundation and a Registration Rights Agreement (the
"REGISTRATION RIGHTS AGREEMENT") dated September , 1999 between the Company and
Foundation;
WHEREAS, upon notice from Foundation, the Company will file a
registration statement (the "SUBSEQUENT REGISTRATION STATEMENT" and, together
with the Initial Registration Statement, the "REGISTRATION STATEMENT") relating
to the additional shares, if any, (the "ADDITIONAL SHARES" and, together with
the Original Shares, the "SHARES") to be issued to Foundation pursuant to the
Settlement Agreement (all references to the Registration Statement or the
Prospectus shall include documents incorporated therein by reference);
WHEREAS, DLJ may, from time to time, offer and sell such Shares on
behalf of Foundation; and
WHEREAS, DLJ may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933, as amended (the "SECURITIES ACT");
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto hereby agree as follows:
1. AGREEMENTS OF THE COMPANY
a) To advise DLJ promptly and, if requested by DLJ, to confirm such
advice in writing, (i) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of
the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any
amendment to the Registration Statement becomes effective, and (iv)
of the happening of any event during the period referred to in
Section 1(d) below which makes any statement of a material fact made
in the Registration Statement or the Prospectus untrue or which
requires any additions to or changes in the Registration Statement or
the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the
Company will use its best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time.
b) To furnish to DLJ 2 signed copies of the Registration Statement
as first filed with the Commission and of each amendment to it,
including all exhibits, and to furnish to DLJ such number of
conformed copies of the Registration Statement as so filed and of
each amendment to it, without exhibits, as DLJ may reasonably
request.
c) To prepare the Prospectus, the form and substance of which shall
be satisfactory to DLJ and Foundation, and to file the Prospectus in
such form with the Commission within the applicable period specified
in Rule 424(b) under the Act; during the period specified in Section
1(d) below, not to file any further amendment to the Registration
Statement and not to make any amendment or supplement to the
Prospectus of which DLJ and Foundation shall not previously have been
advised or to which DLJ or
Foundation shall reasonably object after being so advised; and,
during such period, to prepare and file with the Commission,
promptly upon DLJ's and Foundation's reasonable request, any
amendment to the Registration Statement or amendment or supplement
to the Prospectus which may be necessary or advisable in connection
with the distribution of the Shares by you, and to use its best
efforts to cause any such amendment to the Registration Statement
to become promptly effective.
d) Prior to 10:00 A.M., New York City time, on the first business
day after the date of this Agreement and from time to time thereafter
for such period as in the opinion of counsel for DLJ and Foundation a
prospectus is required by law to be delivered in connection with
sales by DLJ or a dealer, to furnish in New York City to DLJ and any
dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus and any documents incorporated therein
by reference) as DLJ or such dealer may reasonably request.
e) If during the period specified in Section 1(d) above, any event
shall occur or condition shall exist as a result of which, in the
opinion of counsel for DLJ or Foundation, it becomes necessary to
amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of
counsel for DLJ or Foundation, it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare
and file with the Securities and Exchange Commission (the
"Commission") an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended
or supplemented, will not in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will
comply with applicable law, and to furnish to DLJ and to any dealer
as many copies thereof as DLJ or such dealer may reasonably request.
f) To make available to DLJ and to Foundation all financial and
other information concerning its business and operations which DLJ or
Foundation reasonably request and will provide access to the
Company's officers, directors, employees, independent accountants and
legal counsel.
g) Prior to any offer or sale of the Shares, and each time the
Company prepares or files financial statements, the Company shall
provide DLJ and Foundation with:
i) A certificate signed by the Company's Chief Executive
Officer or Chief Financial Officer confirming that the
representation and warranties of the Company in this Agreement
are true and correct on and as of the date of such certificate
with the same force and effect as if made on and as of such
date, and that the Company has complied with all of the
agreements herein contained and required to be complied with
or satisfied by the Company on or prior to such date.
ii) A letter, in form and substance satisfactory to DLJ and
Foundation, from PricewaterhouseCoopers LLP, independent public
accountants, containing the information and statements of the
type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and
the Prospectus.
iii) An opinion (satisfactory to DLJ, Foundation and their
respective counsel) to the effect that (A) the Registration
Statement and the Prospectus and any supplement or amendment
thereto (except for the financial statements and other financial
data included therein as to which no opinion need be expressed)
comply as to form with the Act, (B) such counsel has no reason
to believe that at the time the financial statements were
prepared, the Registration Statement and the Prospectus included
therein (except for the financial statements and other financial
data as to which such counsel need not express any belief)
contain any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (C) such
counsel has no reason to believe that the Prospectus, as amended
or supplemented, if applicable (except for the financial
statements and other financial data, as aforesaid) contains any
untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
h) Once the obligations of the Company are satisfied under the
Settlement Agreement and the Registration Rights Agreements, the
Company shall instruct DLJ in writing to stop offering and selling
the Shares. DLJ may continue to offer and sell the Shares until it
receives such instructions.
2
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
a) (i) Each document, if any, filed, or to be filed pursuant to the
Securities Exchange Act of 1934 as amended (the "Exchange Act") and
incorporated by reference in the Prospectus complied or will comply
when so filed in all material respects with the Act; (ii) the
Registration Statement when it became effective, did not contain and,
as amended, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Act, and (iv) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this paragraph do not
apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to DLJ or Foundation
furnished to the Company in writing by DLJ or Foundation expressly
for use therein.
b) The consolidated financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), together with related schedules and
notes, present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its
subsidiaries on the basis stated therein at the respective dates or
for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the
supporting schedules, if any, included in the Registration Statement
present fairly in accordance with generally accepted accounting
principles the information required to be stated therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) are, in all material respects, accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
3. INDEMNIFICATION
a) The Company agrees to indemnify and hold harmless DLJ and its
affiliates, Foundation and its affiliates and the respective
directors, officers, agents and employees and each person, if any,
who controls DLJ or Foundation within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act
(collectively, "DLJ PARTIES" or the "FOUNDATION PARTIES"), from and
against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses
reasonably incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such
losses, claims, damages liabilities or judgments) caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereof),
or the Prospectus (as amended or supplemented), or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
therein not misleading (a "CLAIM"), except insofar as any Claim is
based upon information relating to DLJ or Foundation, as the case may
be, furnished to the Company in writing by DLJ or Foundation, as the
case may be, expressly for use in the Registration Statement or
Prospectus. The Company shall not indemnify DLJ for any liability
caused by DLJ's failure to deliver a prospectus in connection with
its sale of the Shares.
b) Foundation agrees to indemnify and hold harmless the DLJ Parties
and the Company and its affiliates, and the respective directors,
officers, agents and employees and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, "COMPANY
PARTIES"), from and against any and all Claims, but only insofar as
such Claim is based upon information relating to Foundation furnished
to the Company or DLJ in writing by Foundation expressly for use in
the Registration Statement or Prospectus. Foundation shall not
indemnify DLJ for any liability caused by DLJ's failure to deliver a
prospectus in connection with its sale of the Shares.
c) DLJ agrees to indemnify and hold harmless the Company Parties
and the Foundation Parties from
3
and against any and all Claims, but only insofar as such Claim is
based upon information relating to DLJ furnished to the Company in
writing by DLJ expressly for use in the Registration Statement or
Prospectus.
d) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to this Agreement
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly
notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party shall
assume the defense of such action, including the employment of
counsel reasonably satisfactory to the indemnified party and the
payment of all fees and expenses of such counsel, as incurred.
e) Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the indemnifying
party, (ii) the indemnifying party shall have failed to assume the
defense of such action or employ counsel reasonably satisfactory to
the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified party
and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any one action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all
indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in
writing by DLJ in the case of parties indemnified pursuant to
Sections 3(a) and 3(b) and the Company in the case of parties
indemnified pursuant to Section 3(c).
f) The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all Claims by reason of
any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is
entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party)
and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent
to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been
sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are or could have
been the subject matter of such action and (ii) does not include a
statement or an admission of fault; culpability or a failure to act,
by or on behalf of the indemnified party.
4. CONTRIBUTION
a) To the extent the indemnification provided for in this Agreement
is unavailable to an indemnified party or insufficient in respect of
any Claim, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of such Claim (i) in such
proportion as is appropriate to reflect the relative benefits
received by the indemnifying party, on the one hand, and the
indemnified party, on the other hand, from the sale or (ii) if the
allocation provided by clause 4(a)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 4(a)(i) above but
also the relative fault of the indemnifying party, on the one hand,
and indemnified party, on the other hand in connection with the
Claim, as well as any other relevant equitable considerations. The
relative benefits received by either the Company on the one hand, and
DLJ, on the other hand, shall be deemed to be in the same proportion
as the total net proceeds from the sale of Shares (after deducting
commissions, but before
4
deducting expenses) received by Foundation and the total commissions
received by DLJ bear to the total price of the Shares sold. The
parties acknowledge that the sale of the Shares constitutes payment
of the settlement to Foundation, and Foundation shall be deemed not
to be receiving any benefit therefrom. The relative fault of the
Company, Foundation and DLJ shall be determined by reference to,
among other things, whether the Claim relates to information
supplied by the Company, Foundation or DLJ, and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent the misstatement or omission or alleged
misstatement or omission causing such Claim.
b) The Company, Foundation and DLJ agree that it would not be just
and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of
the Claim referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above,
any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any Claim.
c) Notwithstanding the provisions of this Xxxxxxx 0, XXX shall not
be required to contribute any amount in excess of the amount by which
the total price at which the Shares sold by it exceeds the amount of
any damages which DLJ has otherwise been required to pay by reason of
such Claim.
d) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
e) The indemnity and contribution provisions contained in this
Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any DLJ Parties, any Company
Parties or any Foundation Parties and (iii) the sale of any Shares.
5. MISCELLANEOUS
a) The remedies provided for in this Agreement are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
b) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together
constitute a single instrument, with the same legal effect as if all
signatures appeared on the same instrument.
c) This Agreement, its enforcement, and any disputes among the
parties hereto shall be governed by the law of the State of New York,
excluding its conflict of laws rules, and its provisions shall be
binding upon the parties hereto and their successors and assigns.
5
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above mentioned.
PER-SE TECHNOLOGIES, INC.
By: _______________________________
Name:
Title:
FOUNDATION HEALTH SYSTEMS, INC.
By: _______________________________
Name:
Title:
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:________________________________
Name:
Title:
6
