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EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
dated as of March 9, 1998
between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
and
XXXXX HEALTHPLAN SERVICES, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Certain Defined Terms........................................ 1
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale............................................ 5
SECTION 2.02. Purchase Price............................................... 5
SECTION 2.03. Closing...................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.01. Incorporation and Authority of the Seller.................... 8
SECTION 3.02. Incorporation and Qualification of the Company............... 8
SECTION 3.03. Capital Stock of the Company................................. 8
SECTION 3.04. No Conflict.................................................. 9
SECTION 3.05. Consents and Approvals....................................... 9
SECTION 3.06. Financial Information........................................ 9
SECTION 3.07. Litigation................................................... 9
SECTION 3.08. Material Contracts........................................... 10
SECTION 3.09. Compliance with Laws......................................... 10
SECTION 3.10. Real Property................................................ 11
SECTION 3.11. Tangible Personal Property................................... 11
SECTION 3.12. Employee Benefit Matters..................................... 12
SECTION 3.13. Transactions with Affiliates................................. 13
SECTION 3.14. No Adverse Changes........................................... 13
SECTION 3.15. Taxes........................................................ 13
SECTION 3.16. Brokers...................................................... 14
SECTION 3.17. Subsidiaries................................................. 14
SECTION 3.18. Environmental and Employee Safety Matters.................... 15
SECTION 3.19. Intellectual Property........................................ 15
SECTION 3.20. Insurance Policies........................................... 16
SECTION 3.21. Certain Business Practices................................... 16
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SECTION 3.22. No Misrepresentations........................................ 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Incorporation and Authority of the Purchaser................. 16
SECTION 4.02. No Conflict.................................................. 16
SECTION 4.03. Absence of Litigation........................................ 17
SECTION 4.04. Consents and Approvals....................................... 17
SECTION 4.05. Restricted Securities........................................ 17
SECTION 4.06. Investment Purpose........................................... 17
SECTION 4.07. Financing.................................................... 17
SECTION 4.08. Brokers...................................................... 17
SECTION 4.09. No Misrepresentations........................................ 17
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing..................... 18
SECTION 5.02. Investigation................................................ 18
SECTION 5.03. Access to Information........................................ 19
SECTION 5.04. Books and Records............................................ 20
SECTION 5.05. Confidentiality.............................................. 20
SECTION 5.06. Regulatory and Other Authorizations; Consents................ 20
SECTION 5.07. No Solicitation.............................................. 20
SECTION 5.08. Intellectual Property........................................ 21
SECTION 5.09. Transitional Systems Support Services........................ 21
SECTION 5.10. Further Action............................................... 21
SECTION 5.11. Covenant Not to Compete...................................... 21
SECTION 5.12. LegalCare.................................................... 22
SECTION 5.13. Prudential Health Care Pharmacy Services..................... 22
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Continuation of Benefits..................................... 22
SECTION 6.02. Severance Agreements......................................... 23
SECTION 6.03. Succession................................................... 23
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SECTION 6.04. Survival..................................................... 23
ARTICLE VII
TAX MATTERS
SECTION 7.01. Indemnity.................................................... 23
SECTION 7.02. Returns and Payments......................................... 24
SECTION 7.03. Refunds...................................................... 25
SECTION 7.04. Contests..................................................... 25
SECTION 7.05. Certain Audit Adjustments.................................... 26
SECTION 7.06. Cooperation and Exchange of Information...................... 27
SECTION 7.07. Conveyance Taxes............................................. 27
SECTION 7.08. Miscellaneous................................................ 27
SECTION 7.09. Section 338(h)(10) Election.................................. 28
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Seller...................... 28
SECTION 8.02. Conditions to Obligations of the Purchaser................... 29
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
SECTION 9.01. Survival..................................................... 30
SECTION 9.02. Indemnification by the Purchaser............................. 30
SECTION 9.03. Indemnification by the Seller................................ 32
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination................................................. 35
SECTION 10.02. Effect of Termination....................................... 35
SECTION 10.03. Waiver...................................................... 35
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ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses.................................................... 35
SECTION 11.02. Notices..................................................... 35
SECTION 11.03. Public Announcements........................................ 36
SECTION 11.04. Interpretation.............................................. 37
SECTION 11.05. Severability................................................ 37
SECTION 11.06. Disclosure Schedule......................................... 37
SECTION 11.07. Entire Agreement............................................ 37
SECTION 11.08. Assignment.................................................. 37
SECTION 11.09. No Third-Party Beneficiaries................................ 37
SECTION 11.10. Amendment................................................... 37
SECTION 11.11. Governing Law............................................... 37
SECTION 11.12. Counterparts................................................ 38
EXHIBITS
--------
1.01(C) - Reference Balance Sheet
5.09 - Form of Transitional Systems
7.09(a) - Asset Allocation
8.01(f) - Form of Assignment Agreement
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STOCK PURCHASE AGREEMENT dated as of March 9, 1998 between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a mutual insurance company domiciled in
the State of New Jersey (the "SELLER"), and XXXXX HEALTHPLAN SERVICES, INC., a
Florida corporation (the "PURCHASER").
WITNESSETH:
WHEREAS, the Seller owns all the authorized, issued and outstanding
shares of common stock, par value $10.00 per share (the "SHARES"), of Prudential
Service Bureau, Inc., a Kentucky corporation (the "COMPANY"); and
WHEREAS, the Seller wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Seller, the Shares on the terms and subject to the
conditions as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the Seller and the Purchaser
hereby agree as follows.
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ADJUSTMENT" has the meaning specified in Section 7.05.
"AFFILIATE" of a specified Person means a person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person.
"BOOK VALUE" means the excess of total assets over total
liabilities, each as reflected in the corresponding line items of any
specified balance sheet.
"BUSINESS" means the business of the Company as conducted
through the date hereof of providing health and welfare benefits
administration, including (i) flexible spending account administration,
(ii) benefit plan administration, (iii) COBRA administration, (iv) life
insurance record keeping and (v) various other administration services.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed
in the City of New York.
"CLOSING" has the meaning, specified in Section 2.03(a).
"CLOSING BALANCE SHEET" has the meaning specified in Section
2.02(c)(i).
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"CLOSING DATE" has the meaning specified in Section 2.03(a).
"COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" has the meaning specified in
Section 5.05.
"CONTEST" has the meaning specified in Section 7.04(b).
"CURRENT EMPLOYEE" means any employee employed by the Company
as of the Closing Date.
"DEPOSIT" has the meaning specified in Section 2.02(b).
"DESIGNATED AMOUNT" means $100,000.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule dated as
of the date hereof delivered to the Purchaser by the Seller.
"ENCUMBRANCE" means a pledge, lien, security interest,
mortgage, charge, adverse claim of ownership or use, or other
encumbrance of any kind.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Resource Conservation and Recovery Act of 1976, and the
Occupational Safety and Health Act of 1970, each as amended, together
with all other laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety,
including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"FORMER EMPLOYEE" means any person who, as of the Closing
Date, has a colorable claim to a benefit under any Plan or under any
employment or compensation arrangement.
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"GAAP" means United States generally accepted accounting
principles in effect as of the date of this Agreement.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"INDEPENDENT ACCOUNTING FIRM" has the meaning specified in
Section 2.02(c)(iv)(A).
"INTELLECTUAL PROPERTY" has the meaning specified in Section
5.08.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended.
"KNOWLEDGE OF THE SELLER" means actual knowledge of the
President, Comptroller and any Senior Vice President of the Company.
"LEGALCARE PURCHASERS" has the meaning specified in Section
5.12.
"LIABILITY" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means any change in, or effect on,
the Business as currently conducted by the Company that is or is
reasonably likely to be materially adverse to the results of operations
or the financial condition of the Company after giving effect to this
Agreement and the transactions contemplated hereby.
"MATERIAL CONTRACTS" has the meaning specified in Section
3.08(a).
"MULTIEMPLOYER PLAN" has the meaning specified in Section
3.12(b).
"MULTIPLE EMPLOYER PLAN" has the meaning specified in Section
3.12(b).
"PERSON" means an individual, corporation, partnership, joint
venture, limited liability company, person (including a "person" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), trust, association or other entity.
"PLANS" has the meaning specified in Section 3.12(a).
"PURCHASE PRICE" has the meaning specified in Section 2.02(a).
"PURCHASER'S ACCOUNTANTS" has the meaning specified in Section
2.02(c)(iv)(A).
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"XXXXXXX XXXXX" means Xxxxxxx Xxxxx & Associates, Inc.
"REFERENCE BALANCE SHEET" means the unaudited pro forma
balance sheet of the Company, including the notes thereto, reflected on
Exhibit 1.01(c) attached hereto.
"REQUIRED APPROVALS" has the meaning specified in Section
3.09.
"RETAINED LIABILITIES" has the meaning specified in Section
9.03(a)(ii).
"RETURNS" has the meaning specified in Section 3.15.
"SELLER'S ACCOUNTANTS" means Price Waterhouse LLP.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" of any Person means any corporation, limited
liability company, partnership, joint venture, trust, association or
other legal entity of which such Person (either alone or through or
together with any other subsidiary) owns, directly or indirectly, more
than 50% of the stock or other equity interests, the holders of which
are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
"TANGIBLE PERSONAL PROPERTY" means machinery, equipment,
vehicles and other tangible personal property.
"TAX" or "TAXES" means all income, gross receipts, gains,
sales, use, employment, franchise, profits, excise, property, value
added or other taxes, fees, stamp taxes and duties, assessments or
charges of any kind whatsoever (whether payable directly or by
withholding), together with any interest and penalties, additions to
tax or additional amounts with respect thereto imposed by any taxing
authority.
"TRANSITIONAL SYSTEMS SUPPORT SERVICES AGREEMENT" means the
Transitional Systems Support Services Agreement substantially in the
form attached hereto as Exhibit 5.09.
"TREASURY REGULATION" means any applicable final or temporary
regulation promulgated under the Internal Revenue Code.
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ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE. On the terms and subject to the
conditions set forth in this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller, on the Closing
Date, the Shares.
SECTION 2.02. PURCHASE PRICE. (a) The aggregate purchase price (the
"PURCHASE PRICE") for the Shares is $50,000,000, payable as provided in Section
2.03(c), subject to any adjustment required by Section 2.02(c).
(b) In connection with the execution of a Letter of Intent between
the parties dated February 26, 1998, the Purchaser delivered to the Seller a
non-refundable deposit of $2.0 million cash (the "DEPOSIT")to be credited
against the Purchase Price. If the transactions contemplated by this Agreement
are not consummated for any reason (other than a termination of this Agreement
pursuant to Section 10.01(c) or a termination on account of Seller's failure to
fulfill any obligation under this Agreement that has been the cause of, or has
resulted in, the failure of the Closing to occur prior to the date specified in
Section 10.01(b)), the Seller shall be entitled to retain the Deposit.
(c) The Purchase Price shall be subject to adjustment, if any,
after the Closing Date as specified in this Section 2.02(c).
(i) CLOSING BALANCE SHEET. As soon as practicable, but in any
event within 90 calendar days following the Closing Date, the Seller
shall deliver to the Purchaser an audited balance sheet (and the
related notes and schedules thereto) of the Company (the "CLOSING
BALANCE SHEET")as of the Closing Date, together with the report thereon
of the Seller's Accountants, stating that the Closing Balance Sheet
fairly presents the financial position of the Company at the Closing
Date in conformity with GAAP applied on a basis consistent with those
applied in the preparation of the Reference Balance Sheet, subject to
the adjustments and exceptions set forth in Section 3.06. Certain of
such adjustments were made to exclude the assets and liabilities
related to fulfillment center activities, which the Purchaser and the
Seller agree shall remain with the Company after the Closing. The
Closing Balance Sheet will reflect the retention by the Company of
fulfillment center activities.
(ii) COOPERATION. During the preparation of the Closing
Balance Sheet by the Seller and the period of any dispute referred to
in Section 2.02(c)(iv), the Purchaser, upon reasonable notice, shall
provide the Seller and Seller's Accountants full access to the books,
records, facilities and employees of the Purchaser, the Company and its
successors, if any, and shall cooperate fully with Seller's
Accountants, in each case to the extent reasonably required by the
Seller and Seller's Accountants in order to prepare the Closing Balance
Sheet and to investigate the basis for any such dispute; provided,
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however, that (A) any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operation of the
Business and (B) the Purchaser shall not be required to supply the
Seller with any information which the Purchaser shall be under a legal
obligation not to supply.
(iii) PURCHASE PRICE ADJUSTMENT. Subject to the limitation set
forth in Section 2.02(c)(iv)(C), within 10 Business Days after the date
of receipt by the Purchaser of the Closing Balance Sheet:
(A) in the event that the Book Value of the Company reflected
on the Closing Balance Sheet is less than $11.3 million by at least the
Designated Amount, the Seller shall pay to the Purchaser, as an
adjustment to the Purchase Price, in immediately available funds, an
amount equal to such deficiency over the Designated Amount; and
(B) in the event that the Book Value of the Company reflected
on the Closing Balance Sheet exceeds $11.3 million by at least the
Designated Amount, the Purchaser shall pay to the Seller, as an
adjustment to the Purchase Price, in immediately available funds, an
amount equal to such excess over the Designated Amount.
(iv) DISPUTES. (A) The Purchaser may dispute any amounts
reflected on the Closing Balance Sheet to the extent that the net
effect of such disputed amounts in the aggregate would be to reduce the
Book Value of the Company reflected on the Closing Balance Sheet by
more than the Designated Amount, but only on the basis that the amounts
reflected on the Closing Balance Sheet were not arrived at in
accordance with GAAP applied on a basis consistent with those applied
in the preparation of the Reference Balance Sheet, with only such
deviations from such generally accepted principles as are referred to
in the notes to the Reference Balance Sheet or in accordance with the
pro forma adjustments described therein; provided, however, that the
Purchaser shall notify the Seller and Seller's Accountants in writing
of each disputed item, specifying the amount thereof in dispute and
setting forth, in detail, the basis for such dispute, within 20
Business Days of the Purchaser's receipt of the Closing Balance Sheet.
In the event of such a dispute, Xxxxxx Xxxxxxxx LLP ("PURCHASER'S
ACCOUNTANTS") and Seller's Accountants shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall
be final, binding and conclusive on the parties hereto. If any such
resolution by Purchaser's Accountants and Seller's Accountants leaves
in dispute amounts the net effect of which in the aggregate would not
be to reduce the Book Value of the Company reflected on the Closing
Balance Sheet by at least the Designated Amount, all the amounts
remaining in dispute shall then be deemed to have been resolved in
favor of the amounts set forth on the Closing Balance Sheet, and such
resolution shall be final, binding and conclusive on the parties
hereto. If Purchaser's Accountants and Seller's Accountants are unable
to reach a resolution with such effect, Purchaser's Accountants and
Seller's Accountants shall submit the items remaining in dispute that
the Purchaser shall be entitled to dispute by the terms of this Section
2.02(c)(iv) for resolution to an independent accounting firm of
national reputation as may
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be mutually acceptable to the Seller and the Purchaser (the
"INDEPENDENT ACCOUNTING FIRM"), which shall, within 30 Business Days of
such submission, determine and report to the Seller and the Purchaser
upon such remaining disputed items, and such report shall have the
legal effect of an arbitral award and shall be final, binding and
conclusive on the Seller and the Purchaser. The fees and disbursements
of the Independent Accounting Firm shall be allocated between the
Purchaser and the Seller in the same proportion that the aggregate
amount of such remaining disputed items so submitted to the Independent
Accounting Firm which is unsuccessfully disputed by each such party (as
finally determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed items so submitted.
(B) No adjustment to any amount payable by the Seller or the
Purchaser pursuant to Section 2.02(c)(iii) shall be made with respect
to amounts disputed by the Purchaser pursuant to this Section
2.02(c)(iv), unless the net effect of the amounts successfully disputed
by the Purchaser in the aggregate is to reduce the Book Value of the
Company reflected on the Closing Balance Sheet by at least the
Designated Amount, in which case such adjustment shall only be made in
an amount equal to any excess over the Designated Amount.
(C) Any amount that is subject to dispute under this Section
2.02(c)(iv) shall be paid by the Seller or the Purchaser, as the case
may be, in immediately available funds, within five Business Days
following the resolution of such dispute and in an amount in accordance
with such resolution.
(D) In acting under this Agreement, Seller's Accountants,
Purchaser's Accountants and the Independent Accounting Firm shall be
entitled to the privileges and immunities of arbitrators.
(v) INTEREST. Any payment required to be made by the Seller or
the Purchaser pursuant to Section 2.02(c)(iii) shall bear interest from
the Closing Date through the date of payment at the rate of interest
publicly announced by the Xxxxxx Guaranty Trust Company in New York,
New York from time to time as its reference rate from the Closing Date
to the date of such payment plus 2.0%.
SECTION 2.03. CLOSING. (a) Subject to the terms and conditions of this
Agreement, the sale and purchase of the Shares contemplated hereby shall take
place at a closing at the offices of King & Xxxxxxxx, 0000 Avenue of the
Americas, New York, New York (the "CLOSING")at 10:00 a.m., local time, on the
third Business Day following expiration or termination of the applicable waiting
periods under the HSR Act or at such other time or on such other date or at such
other place as the Seller and the Purchaser may mutually agree upon in writing
(the day on which the Closing takes place being the "CLOSING DATE"). The Seller
and the Purchaser shall use their commercially reasonable efforts to effectuate
the Closing on or before March 31, 1998.
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(b) At the Closing, the Seller shall deliver or cause to be delivered
to the Purchaser (i) stock certificates evidencing the Shares duly endorsed in
blank or accompanied by stock powers duly executed in blank, in proper form for
transfer and (ii) a certificate of the Seller pursuant to Section 8.02(a).
(c) At the Closing, the Purchaser shall deliver to the Seller (i) the
Purchase Price, less the Deposit, by wire transfer in immediately available
funds to an account designated by the Seller in writing at least two Business
Days prior to the Closing Date and (ii) a certificate of the Purchaser pursuant
to Section 8.01(a).
(d) Notwithstanding Section 2.02, such sale and purchase of the Shares
shall be deemed for all purposes to have taken place as of the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
SECTION 3.01. INCORPORATION AND AUTHORITY OF THE SELLER. The Seller is
a mutual insurance company domiciled, validly existing and in good standing
under the laws of the State of New Jersey and has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Seller, and (assuming due authorization,
execution and delivery by the Purchaser) this Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws affecting
the rights of creditors generally.
SECTION 3.02. INCORPORATION AND QUALIFICATION OF THE COMPANY. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Kentucky and has the corporate power and
authority to own, operate or lease the properties and assets now owned, operated
or leased by the Company and to carry on the Business as it is now being
conducted by the Company. The Company is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except for such failures which,
when taken together with all other such failures, would not have a Material
Adverse Effect.
SECTION 3.03. CAPITAL STOCK OF THE COMPANY. The Shares constitute all
the authorized, issued and outstanding shares of capital stock of the Company.
The Shares have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any pre-emptive rights. There
are no options, warrants or rights of conversion or other rights, agreements,
arrangements or commitments relating to the capital stock of the
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Company obligating the Company to issue, transfer or sell any of its shares of
capital stock or securities convertible into or exchangeable for such shares of
capital stock. The Seller owns the Shares, free and clear of all Encumbrances,
except for any Encumbrances arising out of, under or in connection with this
Agreement.
SECTION 3.04. NO CONFLICT. Assuming all consents, approvals,
authorizations and other actions described in Section 3.05 have been obtained
and all filings and notifications listed in Section 3.05 of the Disclosure
Schedule have been made, and except as may result from any facts or
circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement by the Seller do not and will not (a) violate or
conflict with the organizational documents of the Seller, (b) conflict with or
violate any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to the Seller, the Company or the Business
that is material to the operation of the Business, or (c) except as set forth in
Section 3.04(c) of the Disclosure Schedule or as would not, individually or in
the aggregate, have a Material Adverse Effect, result in any breach of, or
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on, any of the assets or properties of the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or
properties to which the Company is a party or by which any of such assets or
properties is bound or affected.
SECTION 3.05. CONSENTS AND APPROVALS. The execution and delivery of
this Agreement by the Seller do not, and the performance of this Agreement by
the Seller will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or regulatory
authority, except (a) as described in Section 3.05 of the Disclosure Schedule,
(b) the notification requirements of the HSR Act, (c) where failure to obtain
such consent, approval, authorization or action, or to make such filing or
notification, would not prevent the Seller from performing any of its material
obligations under this Agreement or would not have a Material Adverse Effect and
(d) as may be necessary as a result of any facts or circumstances relating
solely to the Purchaser.
SECTION 3.06. FINANCIAL INFORMATION. The Reference Balance Sheet was
prepared in accordance with GAAP subject (i) to one exception, the
reclassification of an intracompany note payable to shareholder's equity and
(ii) to a series of adjustments referred to in the notes set forth on Exhibit
l.01(c), which relate to liabilities being assumed by Seller and intercompany
activity between the Company and other areas of Seller. Subject to the above
statements, the Reference Balance Sheet fairly presents in all material respects
the Company's financial position as of December 31, 1997, and no material
liability of the Company that is required in accordance with GAAP to be
reflected on the Reference Balance Sheet is not reflected on the Reference
Balance Sheet.
SECTION 3.07. LITIGATION. Except as set forth in Section 3.07 of the
Disclosure Schedule, there are no claims, actions, proceedings or investigations
pending or, to the Seller's
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knowledge, threatened against the Company or any of its assets or properties,
before any court, arbitrator or administrative, governmental or regulatory
authority or body. Except as set forth in Section 3.07 of the Disclosure
Schedule, neither the Company nor any of its assets or properties is subject to
any order, writ, judgment, injunction, decree, determination or award.
SECTION 3.08. MATERIAL CONTRACTS. (a) Section 3.08(a) of the Disclosure
Schedule lists each of the following contracts of the Company (such contracts
being "MATERIAL CONTRACTS"):
(i) the twenty contracts with customers of the Company
projected as of the date of this Agreement to generate the greatest
amount of 1998 revenues;
(ii) all existing software license agreements utilized in
the Business which involve an aggregate payment or commitment per
contract on the part of the counterparty or counterparties thereto of
more than $10,000 per annum (exclusive of such licenses used in
connection with the services to be provided pursuant to the
Transitional Systems Support Services Agreement);
(iii) any agreement for the employment of any individual on
a full-time, part-time, consulting, or other basis or providing
severance benefits;
(iv) all other contracts (excluding leases listed in
Section 3.10(a) of the Disclosure Schedule) to which the Company or its
affiliates are a party made other than in the ordinary course of
business which are material to the Business as a whole.
(v) all existing contracts that obligate the Company for
an amount in excess of $50,000 per annum.
(vi) all contracts or agreements that limit the ability of
the Company to compete in any line of business or with any person or
entity in any geographic area or during any period of time.
(b) Except as described in Section 3.08(b) of the Disclosure
Schedule, each Material Contract necessary to carry on the Business as currently
conducted is, to the knowledge of the Seller, valid and binding and in full
force and effect. Except as set forth in Section 3.08(a)(i) of the Disclosure
Schedule, each of the customer contracts listed in Section 3.08(a)(i) of the
Disclosure Schedule is terminable with notice of 90 days or less and the Seller
makes no representation that such customers will not exercise their right to
terminate. The Company is not in material default under the terms of any
Material Contract.
SECTION 3.09. COMPLIANCE WITH LAWS. Except as set forth in Section
3.09(a) of the Disclosure Schedule, the Company has or has effected all material
permits, licenses, approvals, authorizations, registrations, qualifications and
filings with and under all Federal, state and local laws, authorities and
agencies, that are required to enable the Company to carry on the Business as
currently conducted (collectively, the "REQUIRED APPROVALS").
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All the Required Approvals are in full force and effect and no suspension of
them is, to the knowledge of the Seller, threatened. The Company is not in
material violation of any applicable material ordinance, law, rule, regulation,
order, judgment or decree, except as set forth in Section 3.09(b) of the
Disclosure Schedule. Section 3.09(c) of the Disclosure Schedule sets forth each
state in which the Company is currently licensed as a third party administrator
or in which such license is pending.
SECTION 3.10. REAL PROPERTY. (a) Section 3.10(a) of the Disclosure
Schedule lists (i) each parcel of real property leased by the Company from a
third person and each material parcel of real property currently leased by the
Company to a third person and (ii) the identity of the lessor and lessee of each
such parcel of real property.
(b) The Company has made available to the Purchaser copies of the
leases and subleases set forth in Section 3.10(a) of the Disclosure Schedule.
Except as (i) described in Section 3.10(b) of the Disclosure Schedule, or (ii)
as would not materially adversely affect the present use of such property or as
would not have a Material Adverse Effect, with respect to each such lease or
sublease:
(i) such lease or sublease is in full force and effect
and is a legal, valid and binding obligation of the Company and is
enforceable by the Company in accordance with its terms;
(ii) the Company is in peaceful and undisturbed possession
of the space and/or estate under such lease or sublease; and, to the
knowledge of the Seller, no rights adverse to the rights of the Company
have been asserted by any third persons; and
(iii) no notice of default under such lease or sublease has
been received by the Company which is still in effect; and the Company
is not in material breach or default of any such lease or sublease, and
no event has occurred which, with notice or lapse of time or both,
would constitute such a breach or default or permit termination,
modification or acceleration under such lease or sublease.
SECTION 3.11. TANGIBLE PERSONAL PROPERTY. (a) Except for changes made
in the ordinary course of business since the date of the Reference Balance
Sheet, the Company owns the Tangible Personal Property reflected on the
Reference Balance Sheet, free and clear of all Encumbrances, except (i) as
described in Section 3.11(a) of the Disclosure Schedule, (ii) Encumbrances
incurred in the ordinary course of business, (iii) Encumbrances for Taxes and
assessments not yet payable, (iv) Encumbrances for Taxes, assessments and
charges and other governmental claims the validity of which are being contested
in good faith as set forth in Section 3.11(a) of the Disclosure Schedule, and
(v) Encumbrances and imperfections of title the existence of which, individually
or in the aggregate, do not materially adversely affect the present use of such
Tangible Personal Property or do not have a Material Adverse Effect.
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(b) Except (i) as described in Section 3.11(b) of the Disclosure
Schedule, or (ii) as would not materially adversely affect the present use of
the Tangible Personal Property leased by the Company or as would not have a
Material Adverse Effect, with respect to each such lease:
(A) such lease is in full force and effect and is a legal,
valid and binding obligation of the Company and is enforceable by the
Company in accordance with its terms;
(B) the Company is in peaceful and undisturbed possession of
the Tangible Personal Property subject to such lease; and
(C) there has been no notice of default under any lease
received by the Company which is still in effect; and the Company is
not in material breach or default of any such lease, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default or permit the termination, modification or acceleration
of such lease.
SECTION 3.12. EMPLOYEE BENEFIT MATTERS. (a) Section 3.12(a) of the
Disclosure Schedule contains a true and complete list of all employee benefit
plans (within the meaning of Section 3(3) of ERISA) and all material bonus,
stock option, stock purchase, incentive, deferred compensation, retiree medical
or life insurance, supplemental retirement, severance or other employee benefit
plans, programs or arrangements, and all material employment or compensation
agreements, in each case for the benefit of, or relating to, current employees
and former employees of the Company (collectively, the "PLANS").
(b) Except as disclosed in Section-3.12(b) of the Disclosure
Schedule, none of the. Plans is a multiemployer plan, within the meaning of
Section 3(37) or 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN") or a single
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company could incur liability under Section 4063 or 4064 of ERISA (a
"MULTIPLE EMPLOYER PLAN").
(c) To the knowledge of the Seller, all Plans are in compliance in
all material respects with the requirements prescribed by applicable statutes,
orders or governmental rules or regulations currently in effect with respect
thereto, and the Company has performed all material obligations required to be
performed by it under, and is not in any material respect in default under or in
violation of, any of the Plans.
(d) Except as set forth in Section 3.12(d) of the Disclosure
Schedule, each Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code has heretofore been determined by the Internal Revenue
Service to so qualify, and each trust created thereunder has heretofore been
determined by the Internal Revenue Service to be exempt from tax under the
provisions of Section 501(a) of the Internal Revenue Code and, to the knowledge
of the Seller, nothing has occurred since the date of the most recent
determination that would be reasonably
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likely to cause any such Employee Plan or trust to fail to qualify under Section
401(a) or 501(a) of the Internal Revenue Code.
(e) The Company has not incurred any material liability to the
Pension Benefit Guaranty Corporation or any "withdrawal liability" within the
meaning of Section 4201 of ERISA, in either case relating to any Plan or any
pension plan maintained by any company which would be treated as a single
employer with the Company, under Section 4001 of ERISA.
(f) The Seller has made available to the Purchaser full and
complete copies of all Plans and, where applicable, summary plan descriptions as
filed pursuant to ERISA with respect to the Plans
(g) To the knowledge of the Seller, no claim, lawsuit,
arbitration, or other action (other than routine claims for benefits) has been
threatened, asserted, or instituted against any Plan, any trustee or fiduciaries
thereof, the Company, or any of the assets of any trust maintained under any
Plan.
SECTION 3.13. TRANSACTIONS WITH AFFILIATES. Except as set forth in
Section 3.13 of the Disclosure Schedule, on the Closing Date, the Company is not
a party to any material written contract, lease or agreement with the Seller (or
any affiliate of the Seller), including any material written contract, lease or
agreement pursuant to which the Company is obligated to pay money or provide
goods, services or property for use in or in connection with the Business.
SECTION 3.14. NO ADVERSE CHANGES. Since the date of the Reference
Balance Sheet, except as contemplated by this Agreement, (i) there have been no
events that, individually or in the aggregate, have had or would reasonably be
expected to have a Material Adverse Effect; (ii) the Company has conducted the
Business in the ordinary course of business and consistent with past practice;
(iii) the Company has not increased the salary of any officer (except in the
ordinary course of business, consistent with past practices); (iv) the Company
has not waived any material rights that could reasonably be expected to have a
Material Adverse Effect; and (v) the Company has not made any distribution to
its shareholder.
SECTION 3.15. TAXES. (a) Except as set forth in Section 3.15(a) of the
Disclosure Schedule and except for such matters that would not have a Material
Adverse Effect,
(i) to the Seller's knowledge, the Company has timely
filed or been included in, or will timely file or be included in, all
returns required to be filed by it or in which it is required to be
included with respect to Taxes for any period ending on or before the
Closing Date, taking into account any extension of time to file granted
to or obtained on behalf of the Seller or the Company;
(ii) all Taxes shown to be payable on such returns have
been paid or will be paid;
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(iii) no deficiency for any material amount of Tax has been
asserted or assessed by a taxing authority against the Company;
(iv) the Company has not received any written notification
from an authority in a jurisdiction where the Company does not file Tax
returns, reports, declarations, claims for refund, forms, or
information returns or statements relating to Taxes, including any
schedules or attachments thereto, and including any amendment thereof
("RETURNS"), that it is or may be subject to taxation by that
jurisdiction;
(v) there are no security interests in any of the assets
of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax;
(vi) there is no waiver by the Company that is currently
in effect of any statute of limitations in respect of Taxes (other than
income Tax) or any agreement that is currently in effect to an
extension of time with respect to a Tax (other than income Tax)
assessment or deficiency:
(vii) the Company is not and has never been a party to any
Tax allocation or sharing agreement or arrangement other than any such
agreement or arrangement that will be terminated as of the Closing Date
pursuant to Section 7.08(c);
(viii) the Company has not filed a consent under Internal
Revenue Code ss.341(f) concerning collapsible corporations;
(ix) as of the date hereof, no Internal Revenue Code
ss.481 adjustment will be required to be taken into account by the
Company on any federal income Return for any period ending after the
Closing Date; and
(x) as of the date hereof, the Company is not the holder
of any debt obligations as to which it will be required to report
imputed interest income under any provision of the Internal Revenue
Code or report income under the installment method described in
Internal Revenue Code ss.453.
(b) Section 3.15(b) of the Disclosure Schedule lists all Returns
filed with respect to the Company for taxable periods ended on or after December
31, 1995, lists all such Returns that have been audited, and lists all such
Returns that currently are the subject of audit.
SECTION 3.16. BROKERS. Except for Xxxxxxx Xxxxx, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Seller. The Seller is solely
responsible for the fees and expenses of Xxxxxxx Xxxxx.
SECTION 3.17. SUBSIDIARIES. The Company has no subsidiaries.
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SECTION 3.18. ENVIRONMENTAL AND EMPLOYEE SAFETY MATTERS. (a) Except as
set forth in Section 3.18(a) of the Disclosure Schedule, to the knowledge of the
Seller, the Company and its affiliates have complied, in all material respects,
with all Environmental, Health, and Safety Laws related to the conduct of the
Business, and no action, suit, proceedings, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against it
alleging any failure so to comply, except where such non-compliance would not
have a Material Adverse Effect. Without limiting the generality of the preceding
sentence, the Company and its affiliates have obtained, and been in compliance
with all of the terms and conditions of all permits, licenses, and other
authorizations that are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables that are contained in, all Environmental,
Health, and Safety Laws related to the conduct of the Business.
(b) There are no conditions existing prior to the Closing and
caused by the Seller at any of the leased premises of the Company which could
subject the Seller to any environmental Liability which would have a Material
Adverse Effect.
(c) To the knowledge of the Seller, all properties and equipment
used in the Business of the Company are free of underground storage tanks,
underground injection xxxxx, radioactive materials. asbestos and PCB's.
(d) Except as set forth in Section 3.18(d) of the Disclosure
Schedule, there are no environmental reports, assessments, audits or studies
relating to the Company or to any property currently or formerly owned (within
the last five years), operated or leased by the Company that are either in the
possession or control of the Company.
SECTION 3.19. INTELLECTUAL PROPERTY. (a) The Company owns or has the
right to use pursuant to license, sublicense, agreement, or permission all
Intellectual Property set forth on Section 3.19 of the Disclosure Schedule.
Except as set forth in Section 5.08 of this Agreement, each item of Intellectual
Property owned or used by the Company immediately prior to the Closing hereunder
shall be owned or available for use by the Company on substantially similar
terms and conditions immediately subsequent to the Closing hereunder.
(b) The Company has not materially interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the directors and officers (and
employees with responsibility for Intellectual Property matters) of the Company
has ever received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation (including any
claim that the Company must license or refrain from using any Intellectual
Property rights of any third party). To the knowledge of the Seller, no third
party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the Company.
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(c) Notwithstanding the foregoing, no representation, express or
implied, is made herein as to the planning, research and development and/or
implementation of computer software and systems currently utilized or
contemplated to be utilized by the Company in connection with the operation of
the Business, including representations as to the adequacy, capabilities and
fitness of the foregoing for their intended or contemplated purpose.
SECTION 3.20. INSURANCE POLICIES. Section 3.20 of the Disclosure
Schedule sets forth a summary description of all insurance policies with respect
to the Company. The Company has complied with all the provisions of such
policies in all material respects, and the policies are in full force and
effect. Such policies provide coverage in amounts and covering such rights as
are adequate in accordance with customary industry practice.
SECTION 3.21. CERTAIN BUSINESS PRACTICES. The Company has not made,
and, to the knowledge of the Seller, no officers, directors, employees,
consultants, agents or representatives of the Company have made, directly or
indirectly, with respect to the Business, any bribes, kickbacks, or other
illegal payments or illegal political contributions, illegal payments from
corporate funds to governmental officials in their individual capacities, or
illegal payments from corporate funds to obtain or retain business either within
the United States or abroad.
SECTION 3.22. NO MISREPRESENTATIONS. None of the representations and
warranties of the Seller set forth in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
render the same not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
SECTION 4.01. INCORPORATION AND AUTHORITY OF THE PURCHASER. The
Purchaser is a corporation duly incorporated, validly existing and with active
status under the laws of Florida and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Purchaser, and (assuming due authorization,
execution and delivery by the Seller) constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms.
SECTION 4.02. NO CONFLICT. Except as may result from any facts or
circumstances relating solely to the Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate
or conflict with the Articles of Incorporation or By-laws of the Purchaser, (b)
conflict with or violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Purchaser, or (c)
result in any breach of, or constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default) under, or give to
others any rights of termination, amendment,
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acceleration or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of the Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument relating to such assets or properties to which the Purchaser or
any of its respective subsidiaries is a party or by which any of such assets or
properties is bound or affected, which would have, or is reasonably likely to
have, a material adverse effect on the ability of the Purchaser to consummate
the transactions contemplated by this Agreement.
SECTION 4.03. ABSENCE OF LITIGATION. There are no claims, actions,
proceedings or investigations, either at law or in equity, pending or, to the
knowledge of the Purchaser, threatened which seek to delay or prevent the
consummation of the transactions contemplated hereby or which would be
reasonably likely to adversely affect, restrict or delay the Purchaser's ability
to consummate the transactions contemplated hereby.
SECTION 4.04. CONSENTS AND APPROVALS. The execution and delivery of
this Agreement by the Purchaser do not, and the performance of this Agreement by
the Purchaser will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or regulatory
authority, except (a) as described in a writing delivered to the Seller by the
Purchaser on the date hereof, (b) the notification requirements of the HSR Act,
(c) where failure to obtain such consent, approval, authorization or action, or
to make such filing or notification, would not prevent the Purchaser from
performing any of its material obligations under this Agreement and (d) as may
be necessary as a result of any facts or circumstances relating solely to the
Seller.
SECTION 4.05. RESTRICTED SECURITIES. The Purchaser understands and
agrees that the Shares have not been registered under the Securities Act or any
state securities laws, and that the Shares may not be resold without
registration under the Securities Act and any applicable state securities laws
or pursuant to an exemption therefrom.
SECTION 4.06. INVESTMENT PURPOSE. The Purchaser is acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution or other disposition thereof.
SECTION 4.07. FINANCING. The Purchaser has readily available sufficient
funds necessary to consummate the transactions contemplated by this Agreement.
SECTION 4.08. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
SECTION 4.09. NO MISREPRESENTATIONS. None of the representations and
warranties of the Purchaser set forth in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
render the same not misleading.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. CONDUCT OF BUSINESS PRIOR TO THE CLOSING.
(a) The Seller covenants and agrees that, between the date hereof and the
Closing Date, it shall not permit the Company to conduct the Business other than
in the ordinary course and consistent with its prior practice except as
described in Section 5.01 of the Disclosure Schedule. As an amplification of the
foregoing, the Seller agrees, except as described in Section 5.01 of the
Disclosure Schedule or as consented to by the Purchaser, it will not permit the
Company, prior to the Closing, to (i) change its accounting methods, principles
or practices, (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of the
Shares or redeem, repurchase or otherwise acquire any equity securities issued
by the Company, (iii) revalue any of its assets, including writing off notes or
accounts receivable, other than in the ordinary course of business, (iv)
establish or materially increase any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or
otherwise increase the compensation payable or to become payable to any officers
or key employees of the Company, except in the ordinary course of business
consistent with past practice or as may be required by law or (v) enter into any
employment or severance agreement with any of its employees or establish, adopt,
or enter into any collective bargaining agreement.
(b) The Seller covenants and agrees that, prior to the Closing, it
will cause the Company to use commercially reasonable efforts to preserve intact
the business organization of the Business, to keep available to the Purchaser
the services of substantially all of the employees of the Company (but the
Seller shall have no liability to the Purchaser for the failure to keep the
services of any employees who voluntarily resign from employment by the
Company).
(c) Except in connection with the name change of the Seller as
contemplated in Section 5.08, the Seller covenants and agrees that, prior to the
Closing, it will not permit the Company to amend its Certificate of
Incorporation or By-laws or merge or consolidate, or obligate itself to do so,
with or into any other entity, without the prior written consent of the
Purchaser.
(d) Prior to the Closing, the Seller shall confer, to the extent
reasonably practicable, with the Purchaser on a regular basis and report on
significant operational matters and material decisions affecting the Business.
SECTION 5.02. INVESTIGATION. (a) The Purchaser acknowledges and agrees
that it (i) has made its own inquiry and investigation into, and, based thereon,
has formed an independent judgment concerning, the Company and the Business,
(ii) has been furnished with or given adequate access to such information about
the Company and the Business, as it has requested, and (iii) will not assert any
claim against the Seller or any of its directors, officers, employees,
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agents, stockholders, affiliates, consultants, investment bankers or
representatives, or hold the Seller or any such persons liable, for any
inaccuracies, misstatements or omissions with respect to information (other
than, with respect to the Seller, the representations and warranties contained
in this Agreement) furnished by the Seller or such persons concerning the
Seller, the Company and the Business.
(b) In connection with the Purchaser's investigation of the
Company and the Business, the Purchaser received from the Seller certain
estimates, projections and other forecasts for the Company, and certain plan and
budget information. The Purchaser acknowledges that there are uncertainties
inherent in attempting to make such estimates, projections, forecasts, plans and
budgets, that the Purchaser is familiar with such uncertainties, that the
Purchaser is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections, forecasts, plans and
budgets so furnished to it, and that the Purchaser will not assert any claim
against the Seller or any of its affiliates or any of its directors, officers,
employees, agents, stockholders, affiliates, consultants, investment bankers or
representatives, or hold the Seller or any such persons liable with respect
thereto. Accordingly, the Seller makes no representation or warranty, either
express or implied, with respect to any estimates, projections, forecasts, plans
or budgets referred to in this Section 5.02.
SECTION 5.03. ACCESS TO INFORMATION. (a) From the date hereof until the
Closing, upon reasonable notice, the Seller shall, and shall cause each of its
and each of the Company's officers, directors, employees, auditors and agents
to, (i) afford the officers, employees and authorized agents and representatives
of the Purchaser reasonable access, during normal business hours, to the
offices, properties, books and records of the Company and (ii) furnish to the
officers, employees and authorized agents and representatives of the Purchaser
such additional financial and operating data and other information regarding the
assets, properties, goodwill and business of the Company as the Purchaser may
from time to time reasonably request; provided, however, that such investigation
shall not unreasonably interfere with any of the businesses or operations of the
Company, the Seller or any of its affiliates or subsidiaries.
(b) In order to facilitate the resolution of any claims made by or
against or incurred by the Seller prior to the Closing for six years, after the
Closing, upon reasonable notice, the Purchaser shall (i) afford the officers,
employees and authorized agents and representatives of the Seller reasonable
access, during normal business hours, to the offices, properties, books and
records of the Purchaser and the Company with respect to the Business, (ii)
furnish to the officers, employees and authorized agents and representatives of
the Seller such additional financial and other information regarding the
Business as the Seller may from time to time reasonably request and (iii) make
available to the Seller the employees of the Company or the Purchaser whose
assistance, testimony or presence is necessary to assist the Seller in
evaluating any such claims and in defending such claims, including the presence
of such persons as witnesses in hearings or trials for such purposes; provided,
however, that such investigation shall not unreasonably interfere with the
business or operations of the Purchaser or any of its affiliates or
subsidiaries.
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SECTION 5.04. BOOKS AND RECORDS. (a) The Purchaser agrees that it shall
preserve and keep all books and records of the Company in the Purchaser's
possession for a period of at least six years from the Closing Date. After such
six-year period, before the Purchaser shall dispose of any of such books and
records, at least 90 calendar days' prior written notice to such effect shall be
given by the Purchaser to the Seller, and the Seller shall be given an
opportunity, at its cost and expense, to remove and retain all or any part of
such books and records as the Seller may select. During such six-year period,
duly authorized representatives of the Seller shall, upon reasonable notice,
have access thereto during normal business hours to examine, inspect and copy
such books and records.
(b) If, in order properly to prepare documents required to be
filed with governmental authorities or its financial statements, it is necessary
that either party hereto or any successors be furnished with additional
information relating to the Company or the Business, and such information is in
the possession of the other party hereto, such party agrees to use its
commercially reasonable efforts to furnish such information to such other party,
at the cost and expense of the party being furnished such information.
SECTION 5.05. CONFIDENTIALITY. The terms of the letter agreement dated
as of December 5, 1997 (the "CONFIDENTIALITY AGREEMENT") between the Seller and
the Purchaser are hereby incorporated by reference and shall continue in full
force and effect for a period of one year after the Closing, and at the end of
such time the Confidentiality Agreement and the obligations of the Purchaser
under this Section 5.05 shall terminate; provided, however, that the
Confidentiality Agreement shall terminate only in respect of that portion of the
Information (as defined in the Confidentiality Agreement) exclusively relating
to the transactions contemplated by this Agreement. If this Agreement is, for
any reason, terminated prior to the Closing, the Confidentiality Agreement shall
continue in full force and effect in respect of such Information.
SECTION 5.06. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. Each party
hereto will use commercially reasonable efforts to obtain all authorizations,
consents, orders and approvals of all Federal, state and local regulatory bodies
and officials that may be or become necessary for its execution and delivery of,
and the performance of its obligations pursuant to, this Agreement and will
cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby within ten Business Days of
the date hereof and to supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act. The parties
hereto will not take any action that will have the effect of delaying, impairing
or impeding the receipt of any required approvals.
SECTION 5.07. NO SOLICITATION. For a period of one year following the
Closing, (a) the Seller shall not, directly or indirectly, actively solicit or
induce any member of senior management of the Company to leave such employment
and become an employee of the Seller or any of its affiliates and, (b) the
Purchaser and the Company shall not, directly or indirectly, actively solicit or
induce any member of senior management of the Seller or any affiliate of the
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Seller to leave such employment and become an employee of the Purchaser or any
of its affiliates; provided, however, that nothing in this Section 5.07 shall
prohibit the Seller or any of its affiliates or the Purchaser or any of its
affiliates from employing any person (i) who contacts them on his or her own
initiative and without any direct or indirect solicitation by the Seller or any
of its affiliates or the Purchaser or any of its affiliates, as the case may be,
or (ii) who applies for employment as a result of the general solicitation for
open positions by the Seller or any of its affiliates or the Purchaser or any of
its affiliates, as the case may be; provided, further, that nothing in this
Section 5.07 shall prohibit the Seller or Purchaser from soliciting or employing
any person that is no longer employed by the Company, Purchaser or the Seller,
as the case may be.
SECTION 5.08. INTELLECTUAL PROPERTY. As of the Closing Date, any and
all trademarks, servicemarks, logos, tradenames, corporate names and copyright
registrations of the Seller and/or the Company, including the name "Prudential"
and "Prudential Service Bureau, Inc." or any derivative thereof containing the
word "Prudential" (collectively, the "INTELLECTUAL PROPERTY"), shall cease to be
used by the Company, and any and all rights thereto shall remain with the Seller
after the Closing and shall not be used by the Purchaser or any of its
affiliates; provided, however, that any advertising that has been contracted for
as of the date of this Agreement to appear on a date or dates after the Closing
Date shall not be deemed to be a violation of the foregoing. The Purchaser shall
change the name of the Company concurrently with the Closing, and shall amend
the Certificate of Incorporation of the Company to reflect such name change, to
delete any reference to "Prudential."
SECTION 5.09. TRANSITIONAL SYSTEMS SUPPORT SERVICES. The Seller shall
make available to the Purchaser certain services pursuant to the Transitional
Systems Support Services Agreement attached hereto as Exhibit 5.09 to be
executed by the parties at Closing.
SECTION 5.10. FURTHER ACTION. Each of the parties hereto shall execute
and deliver such documents and other papers and take such further actions as may
be reasonably required to carry out the provisions hereof and give effect to the
transactions contemplated hereby. The parties agree that, in connection with
obtaining the consent referred to in item 2.c. of Section 3.04(c) of the
Disclosure Schedule, to the extent that any payments are required to be made to
obtain such consent (i) the Seller shall pay the first $50,000 of any payment
that is an upfront fee or a marginal increase in the rent under the lease
referred to in such Section of the Disclosure Schedule for its remaining term
and (ii) the Seller and the Purchaser shall split 50-50 any payments that are
required to be paid in excess of such $50,000.
SECTION 5.11. COVENANT NOT TO COMPETE. For a period of two years from
and after the Closing Date, the Seller shall not engage directly or indirectly
in the Business in North America as it relates to flexible spending account
administration and COBRA administration; provided, however, that the foregoing
shall not prevent the Seller or any of its affiliates from (i) investing in
businesses that compete with the Business to the extent that any such investment
constitutes ownership of less than 15 % of the outstanding stock of a publicly
traded company, (ii) acquiring and continuing the operations of any entity or
business less than 25% of the
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revenues of which are derived from business substantially similar to any of the
Business of the Company, (iii) entering into or maintaining any accommodations
with respect to flexible spending account administration and COBRA
administration to current or future clients of the Seller or its affiliates to
the extent that such accommodations are not a substantial or primary part of the
services provided to such clients and (iv) engaging in customary investment
activities conducted by the Seller and its affiliates. The parties acknowledge
that the Seller engages in retirement plan administration, life insurance record
keeping, and long-term care insurance record keeping, and notwithstanding the
foregoing, the Seller shall be entitled to continue to provide these services to
current and future clients.
SECTION 5.12. LEGALCARE. The parties hereto acknowledge that the
Company and the Seller currently provide certain services to Xxxxxxxxxx Xxxx
Life Insurance Company and Forum Insurance Company (the "LegalCare Purchasers")
in connection with their purchase of the LegalCare business from certain
affiliates of the Seller. The parties hereto agree that (i) after the Closing,
each of the Seller and the Company shall continue to provide the services that
it respectively provided to the LegalCare Purchasers prior to Closing and (ii)
they shall notify the LegalCare Purchasers that the LegalCare Purchasers will be
billed by the Company and the Seller separately and directly for the services
rendered by them after the Closing. If the Company or the Seller, as the case
may be, receives payments from the LegalCare Purchasers that are due to the
other party, the recipient of such payment shall remit the payment to the other
party.
SECTION 5.13. PRUDENTIAL HEALTH CARE PHARMACY SERVICES. The Purchaser
and the Seller agree that the arrangements in effect as of the date of this
Agreement between the Company and Prudential HealthCare Pharmacy Services shall
continue on the same terms and conditions until April 1, 1999.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. CONTINUATION OF BENEFITS. The Purchaser shall (or shall
cause any other appropriate subsidiary or affiliate of the Purchaser to) provide
the Company's employees with benefits that are not less favorable to such
employees than the benefits provided to employees of the Purchaser having
similar rank. To the extent that service is relevant for vesting, eligibility or
benefit calculations or allowances (including entitlement to vacation and sick
days) under any plan or arrangement maintained in order to provide the benefits
described in the previous sentence, such plan or arrangement shall credit
employees of the Company for service on or prior to the Closing Date with the
Company or any affiliate of the Company (as the case may be). Nothing in this
Section 6.01 shall be construed in any way to increase or extend the obligations
of the Purchaser or the Company under the terms of any employee benefit plan or
to restrict existing rights of the Company to terminate or modify any such plan.
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SECTION 6.02. SEVERANCE AGREEMENTS. In addition to the obligations set
forth in Section 6.01, the Purchaser shall cause the Company to comply with its
obligations pursuant to the Company's severance agreements with the individuals
listed in Section 6.02 of the Disclosure Schedule, unless such employee is
terminated within 90 days of the Closing Date. In such case, the Seller and the
Purchaser shall share equally such severance obligations under such agreements;
provided, however, that the Seller shall not be obligated to pay in excess of
$500,000 in the aggregate in respect of such obligations; and provided further
that the Purchaser shall not be obligated to pay any severance obligations of
the Company to Xxxxx Xxxxxxxxxx or the relocation obligations of the Seller in
respect of the employees of the Company listed in Section 6.02 of the Disclosure
Schedule.
SECTION 6.03. SUCCESSION. In the event the Purchaser or the Company or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Purchaser or the Company, as the case may be, shall assume the obligations set
forth in this Article VI.
SECTION 6.04. SURVIVAL. This Article VI shall survive the Closing as
provided in Section 9.01.
ARTICLE VII
TAX MATTERS
SECTION 7.01. INDEMNITY. (a) From and after the Closing Date, the
Seller shall indemnify the Purchaser and the Company against all Taxes (i)
imposed on the Company with respect to any taxable period or portion thereof
that ends on or before the Closing Date or (ii) imposed on the Seller or any
member of an affiliated group with which the Seller files a consolidated or
combined income tax return (other than the Company) with respect to any taxable
period that ends on or before the Closing Date or includes the Closing Date;
provided, however, that the Seller shall not be obligated to indemnify the
Purchaser for any Tax resulting from, attributable to, or caused by (A) an
actual or deemed election under Section 338 of the Internal Revenue Code with
respect to the transactions contemplated by this Agreement (other than an
election to apply Section 338(h)(10) of the Internal Revenue Code), (B) a
reduction in any net operating loss, capital loss or tax credit carryover
allocable to the Company (except as provided in Section 7.05), or (C) any
transaction of the Company occurring after the Closing that is not in the
ordinary course of business.
(b) From and after the Closing Date, the Purchaser and the Company
shall indemnify the Seller against all Taxes (i) imposed on the Company with
respect to its income, business, property or operations for any taxable period
or portion thereof that begins after the Closing Date, and (ii) resulting from,
attributable to, or caused by any transactions of the Company occurring after
the Closing that is not in ordinary course of business.
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(c) For purposes of Sections 7.01(a) and (b), in the case of Taxes
that are payable with respect to a taxable period that begins before the Closing
Date and ends after the Closing Date, the portion of any such Tax that is
allocable to the portion of the period ending on the Closing Date shall: (i) in
the case of Taxes that are either (x) based upon or related to income or
receipts or (y) imposed in connection with any sale, other transfer or
assignment or any deemed sale, transfer or assignment of property (real or
personal, tangible or intangible) (other than conveyances pursuant to this
Agreement, as provided under Section 7.07), be deemed equal to the amount which
would be payable if the taxable year ended on the Closing Date, and (ii) in the
case of Taxes imposed on a periodic basis with respect to the assets of the
Company or otherwise measured by the level of any item, be deemed to be the
amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period) multiplied by a fraction the numerator of which is the number
of calendar days in the portion of such period ending on the Closing Date and
the denominator of which is the number of calendar days in the entire period.
For purposes of clause (i) above, any exemption, deduction, credit or other item
that is calculated on an annual basis shall be allocated to the period beginning
before the Closing Date and, pursuant to clause (i) treated as ending on the
Closing Date, based on the pro rata portion of such item determined by
multiplying the total amount of such item times a fraction, the numerator of
which is the number of calendar days in the period up to and including the
Closing Date and the denominator of which is the total number of calendar days
in the entire period.
SECTION 7.02. RETURNS AND PAYMENTS. (a) From the date of this Agreement
through and after the Closing Date, the Seller shall prepare and file or
otherwise furnish to the appropriate party (or cause to be prepared and filed or
so furnished) in a timely manner all Returns, with respect to the Company for
any taxable period ending on or before the Closing Date, and the Purchaser shall
do the same for any taxable period ending after the Closing Date. Returns filed
by the Purchaser for any taxable period that includes the Closing Date shall be
prepared in a manner consistent with past practices employed by the Seller with
respect to the Company or by the Company. With respect to any Return required to
be filed with respect to the Company after the Closing Date and as to which an
amount of Tax is allocable to the Seller under Section 7.01(c), the Purchaser
shall provide the Seller and its authorized representatives with a copy of such
completed Return and a statement (including all necessary supporting schedules
and information required to support such statement) that certifies and sets
forth the calculation of the amount of tax shown on such Return that is
allocable to the Seller pursuant to Section 7.01(c) at least 30 days prior to
the due date (including any extension thereof) for the filing of such Return,
and the Seller and its authorized representatives shall have the right to review
and approve (which approval shall not be unreasonably withheld) such Return and
statement (including any supporting Schedules or other documents relevant
thereto) prior to the filing of such Return. The Seller and the 'Purchaser agree
to consult and to attempt in good faith to resolve any issues arising as a
result of the review and approval of such Return and statement by the Seller or
its authorized representatives. If the Seller and Purchaser cannot resolve any
such issues, such issues shall be resolved by an independent accounting firm
selected by the Purchaser's and Seller's accounting firms and such resolution
shall be final and binding on the Purchaser and the Seller.
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(b) The Seller and the Purchaser shall each pay or cause to be
paid when due and payable all Taxes that have not been paid as of the Closing
Date that are allocable to them pursuant to the provisions of Section 7.01.
(c) Payment of any amounts due under this Article VII shall be
made (i) with respect to agreed amounts, at least three calendar days before the
payment of any such Tax is due, provided that no such payment shall be due prior
to 15 Business Days following receipt of written notice that payment of such Tax
is due, or (ii) within 15 Business Days following either an agreement between
the Seller and the Purchaser that an amount is payable by the Seller or the
Purchaser to the other or within 15 Business Days of a "determination" as
defined in section 1313(a) of the Internal Revenue Code.
SECTION 7.03. REFUNDS. Any refunds received by the Purchaser or the
Company or any successor to any of the foregoing (including any equivalent
benefit to any such entity through a reduction in Tax liability for a
post-Closing Date period) of Taxes in respect of the Company relating to taxable
periods or portions thereof ending on or before the Closing Date shall be for
the account of the Seller, and the Purchaser shall pay over to the Seller any
such refund (or the amount of any equivalent benefit) within five Business Days
of the earlier of receipt or entitlement thereto. The Purchaser shall, if the
Seller so requests, cause the relevant entity to file for and obtain any refunds
or equivalent amounts to which the Seller is entitled under this Section 7.03.
The Purchaser shall permit the Seller to prepare any documentation relating to
such claims and to control any procedure or action necessary to obtain such
refund and shall cause the relevant entity to authorize by appropriate
power-of-attorney such persons as the Seller shall designate to represent such
entity with respect to such refund claim and the Seller shall reimburse the
Purchaser for all its reasonable out-of-pocket expenses in connection therewith.
SECTION 7.04. CONTESTS. (a) After the Closing, the Purchaser shall
promptly notify the Seller in writing of the commencement of any Tax audit or
administrative or judicial proceeding and shall also separately notify the
Seller in writing of any demand or claim on the Purchaser or the Company which,
if determined adversely to the taxpayer or after the lapse of time would be
grounds for indemnification by the Seller under this Article VII. Such notice
shall contain factual information (to the extent known to the Purchaser or the
Company) describing the asserted Tax liability in reasonable detail and shall
include copies of any notice or other document received from any taxing
authority in respect of any such asserted Tax liability. If the Purchaser fails
to give the Seller prompt notice of an asserted Tax liability as required by
this Section 7.04, then (i) if the Seller is precluded by the failure to give
prompt notice from contesting the asserted Tax liability in the appropriate
administrative or judicial forums, then the Seller shall not have any obligation
to indemnify the Purchaser for any loss or damage arising out of such asserted
Tax liability, and (ii) if the Seller is not so precluded from contesting but
such failure to give prompt notice results in a detriment to the Seller, then
any amount which the Seller is otherwise required to pay the Purchaser pursuant
to this Article VII with respect to such liability shall be reduced by the
amount of such detriment.
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(b) The Seller may elect to direct, through counsel of its own
choosing and at its own expense, any audit, or administrative or judicial
proceeding involving any asserted liability with respect to which indemnity may
be sought under this Article VII (any such audit or proceeding relating to an
asserted Tax liability are referred to herein collectively as a "CONTEST"). If
the Seller elects to direct the Contest of an asserted Tax liability, it shall
within 30 calendar days of receipt of the notice of an asserted Tax liability
notify the Purchaser of its intent to do so, and the Purchaser shall cooperate
in good faith and shall cause the Company or its successor to cooperate in good
faith, at the Seller's expense, in each phase of such Contest. If the Seller
contests its obligation to indemnify the Purchaser under Section 7.01 and the
Purchaser elects to proceed with the Contest, the Seller shall only be obligated
to pay the Purchaser's expenses in connection with such Contest in the event it
is determined that the Seller is obligated to pay such asserted liability under
Section 7.01. If the Seller elects not to direct the Contest or fails to notify
the Purchaser of its election as herein provided, the Purchaser or the Company
may pay, compromise or contest such asserted liability, at the Seller's expense;
provided, however, that if the Seller has acknowledged its obligations under
Section 7.01 with respect to such asserted liability, the Purchaser may not
contest such asserted liability. However, in such case, neither the Purchaser
nor the Company (including any designated representative of either) may settle
or compromise any asserted liability over the objection of the Seller; provided,
however, that the Seller's consent to settlement or compromise shall not be
unreasonably withheld (provided that in the event the Seller withholds consent,
the Seller shall then be obligated to direct such Contest). In any event, each
of the Purchaser (or the Company) and the Seller may participate, at its own
expense, in the Contest. If the Seller chooses to direct the Contest, the
Purchaser shall promptly empower and shall cause the Company or its successor
promptly to empower (by power-of-attorney and such other documentation as may be
appropriate) such representatives of the Seller as it may designate to represent
the Purchaser or the Company or its successor in the Contest insofar as the
Contest involves an asserted Tax liability for which the Seller would be liable
under this Article VII.
SECTION 7.05. CERTAIN AUDIT ADJUSTMENTS. If an audit adjustment or
other adjustment resulting from any judicial or administrative proceeding, claim
for refund or amended return ("ADJUSTMENT") after the date hereof, both (i)
increases any Tax which is allocated to the Seller under Section 7.01 (or
reduces a loss, credit or other Tax benefit otherwise available to the Seller)
for a period ending on or before the Closing Date and (ii) decreases a Tax
liability (or increases a loss, credit or other Tax benefit) of the Purchaser or
the Company for a period ending after the Closing Date, then, when and to the
extent that the Purchaser (or the Company) derives a benefit from such
Adjustment (through a reduction of Taxes, refund of Taxes paid or credit against
Taxes due), the Purchaser shall promptly pay to the Seller an amount equal to
the amount of such refund, reduction or credit (unless the Seller has previously
been compensated for such benefit under Section 7.03). Similarly, if an
Adjustment both (i) decreases a Tax liability (or increases a loss, credit or
other Tax benefit) which is allocated to the Seller under Section 7.01 for a
period ending on or before the Closing Date and (ii) increases any Tax of the
Purchaser or the Company (or reduces a loss, credit or other Tax benefit
otherwise available to any such corporation) for a period ending after the
Closing Date, then, when and to the extent that the Seller derives a benefit
from such Adjustment (through a refund or reduction of Taxes
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paid or credit against Taxes due), the Seller shall promptly pay to the
Purchaser an amount equal to the amount of such refund, reduction or credit.
SECTION 7.06. COOPERATION AND EXCHANGE OF INFORMATION. The Seller and
the Purchaser will provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any Tax return,
amended return or claim for refund, determining a liability for Taxes or a right
to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of relevant Tax returns or portions thereof, together with
accompanying schedules and related work papers and documents relating to rulings
or other determinations by taxing authorities, but in no event shall the Seller
or the Purchaser be required to disclose to the other any information relating
to the operations of either, as the case may be, other than information relating
to the Company. The Seller and the Purchaser shall make its employees available
on a mutually convenient basis to provide explanations of any documents or
information provided hereunder. The Seller and the Purchaser will retain all
returns, schedules and work papers and all material records or other documents
relating to Tax matters of the Company for its taxable period first ending after
the Closing Date and for all prior taxable periods until the later of: (i) the
expiration of the statute of limitations of the taxable periods to which such
returns and other documents relate, without regard to extensions except to the
extent notified by the other party in writing of such extensions for the
respective Tax periods; or (ii) six years following the due date (without
extension) for such returns. After such time, before the Purchaser shall dispose
of any of such books and records, at least 90 calendar days prior written notice
to such effect shall be given by the Purchaser to the Seller, and the Seller
shall be given an opportunity, at its cost and expense, to remove and retain all
or any part of such books and records as the Seller may select. Any information
obtained under this Section 7.06 shall be kept confidential, except as may be
otherwise necessary in connection with the filing of returns or claims for
refund or in conducting an audit or other proceeding.
SECTION 7.07. CONVEYANCE TAXES. The parties shall share equally any
sales, use, transfer, stamp, stock transfer, withholding, real property transfer
or gain value added, transfer, registration, or recording Taxes or fees, or any
similar Taxes or fees incurred as a result of the transactions contemplated
hereby.
SECTION 7.08. MISCELLANEOUS. (a) The Seller and the Purchaser agree to
treat all payments made by either to or for the benefit of the other (including
any payments to the Company) under this Article VII, and any other payments made
under the Agreement as adjustments to the Purchase Price.
(b) For purposes of this Article VII, the "Purchaser" and the
"Seller", respectively, shall include each member of the affiliated group of
persons of which it is or becomes a member.
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(c) The Seller shall cause any tax-sharing agreements or
arrangements with the Company to be terminated as of the Closing Date, with no
amounts payable thereunder after the Closing other than those amounts payable
thereunder in respect of current tax payable accounts.
SECTION 7.09. SECTION 338(H)(10) ELECTION. (a) The Seller agrees that,
if the Purchaser notifies the Seller in writing of the Purchaser's intention to
make an election under Section 338(h)(10) of the Internal Revenue Code within 90
days of the Closing Date, the Seller shall (i) make, cooperate in making, or
cause to be made a joint election under Internal Revenue Code ss. 338(h)(10) and
the regulations thereunder (and any corresponding election under any state,
local or foreign tax law) with respect to the purchase of the stock of the
Company pursuant to this Agreement; (ii) take all actions that are necessary to
ensure that such elections are valid; and (iii) refrain from taking any actions
that could result in such elections being invalid.
(b) In the event that the election or elections described in
Section 7.09(a) are made, the Purchaser and the Seller agree that the Purchase
Price and the applicable liabilities of the Company (plus related items) will be
allocated to the assets of the Company for all applicable Tax purposes in a
manner consistent with the fair market values set forth in the allocation
schedule attached hereto as Exhibit 7.09. The Seller, the Purchaser and the
Company agree that they will file all applicable Returns in a manner consistent
with such values, unless making such a filing would not be in accordance with
applicable law.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations
of the Seller to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
and warranties of the Purchaser contained in this Agreement shall be true and
correct as of the Closing in all material respect, with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, and all the covenants contained in
this Agreement to be complied with by the Purchaser on or before the Closing
shall have been complied with in all material respects, and the Seller shall
have received a certificate of the Purchaser to such effect signed by a duly
authorized officer thereof;
(b) SELLER'S APPROVAL BY BOARD OF DIRECTORS. The Board of
Directors of the Seller shall have authorized and approved all of the
transactions set forth in this Agreement;
(c) HSR ACT. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Shares contemplated hereby shall
have expired or shall have been terminated; and
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(d) NO ORDER. No United States or state governmental authority or
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
parties hereto shall use their reasonable best efforts to have any such order or
injunction vacated.
(e) The Purchaser shall have executed and delivered the
Transitional Systems Support Services Agreement.
(f) The Company and the Seller shall have executed and delivered
the Assignment attached hereto as Exhibit 8.01(f) providing for the assignment
to the Seller as joint owners of all rights to certain software owned by the
Company.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
and warranties of the Seller contained in this Agreement shall be true and
correct, in all material respects, other than such representations and
warranties as are made as of another date, and all the covenants contained in
this Agreement to be complied with by the Seller on or before the Closing shall
have been complied with, and the Purchaser shall have received a certificate of
the Seller to such effect signed by a duly authorized officer thereof;
(b) HSR ACT. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Shares contemplated hereby shall
have expired or shall have been terminated; and
(c) NO ORDER. No United States or state governmental authority or
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting consummation of such transactions; provided, however, that the
parties hereto shall use their reasonable best efforts to have any such order or
injunction vacated.
(d) The Seller shall have executed and delivered the Transitional
Systems Support Services Agreement.
(e) The parties shall have received the consent referred to in
item 2.c. of Section 3.04(c) of the Disclosure Schedule.
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ARTICLE IX
SURVIVAL AND INDEMNIFICATION
SECTION 9.01. SURVIVAL. Subject to the limitations and other provisions
of this Agreement, the representations, warranties, covenants and agreements of
the parties hereto contained herein shall survive the Closing and shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Seller or the Purchaser, for a period of 18 months after the Closing
Date; provided, however, that the representations and warranties set forth in
Section 3.15 and the agreements set forth in Sections 5.03(b), 5.04, 5.05, 5.06,
5.07, 5.08 and 5.09 and Articles VI, VII, IX and XI shall remain in full force
and effect until the applicable period set forth in such section has expired or,
if no period is set forth, until the period under the statute of limitations
expires.
SECTION 9.02. INDEMNIFICATION BY THE PURCHASER. (a) The Purchaser
agrees, subject to the other terms and conditions of this Agreement, to
indemnify the Seller against and hold the Seller harmless from all liabilities
of and damages to the Seller arising out of (i) the material breach of any
representation, warranty, covenant or agreement of the Purchaser herein (other
than Article VII, it being understood that the sole remedy for breach thereof
shall be pursuant to Article VII), (ii) the conduct of the Business by the
Purchaser following the Closing and (iii) any and all claims against the Seller
brought by any current or former employee of the Purchaser that relate to such
employee's terms and conditions of employment arising under any federal, state
or local law, ordinance or regulation or under common law. Anything in Section
9.01 to the contrary notwithstanding, no claim may be asserted nor may any
action be commenced against the Purchaser for breach of any representation,
warranty, covenant or agreement contained herein, unless written notice of such
claim or action is received by the Purchaser describing in detail the facts and
circumstances with respect to the subject matter of such claim or action on or
prior to the date on which the representation, warranty, covenant or agreement
on which such claim or action is based ceases to survive as set forth in Section
9.01, irrespective of whether the subject matter of such claim or action shall
have occurred before or after such date.
(b) No claim may be made against the Purchaser for indemnification
pursuant to Section 9.02(a) with respect to any item of liability or damage,
unless the aggregate of all such liabilities and damages of the Seller with
respect to Section 9.02(a) shall exceed an amount equal to $300,000, and the
Purchaser shall only be required to pay or be liable for the amount of any such
liabilities and damages in excess of $300,000. The Seller shall not be
indemnified pursuant to Section 9.02(a) with respect to any individual item of
liability or damage if the aggregate of all liabilities and damages of the
Seller for which the Seller has received indemnification pursuant to Section
9.02(a) shall have exceeded an amount equal to 10% of the Purchase Price. For
the purposes of this Section 9.02(b), in computing such individual or aggregate
amounts of claims, the amount of each claim shall be deemed to be an amount (i)
net of any Tax benefit to the Seller or any affiliate thereof and (ii) net of
any insurance proceeds and any indemnity,
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contribution or other similar payment recoverable by the Seller or any affiliate
from any third party with respect thereto.
(c) Payments by the Purchaser pursuant to Section 9.02(a) shall be
limited to the amount of any liability or damage that remains after deducting
therefrom any Tax benefit to the Seller or any affiliate thereof and any
insurance proceeds and any indemnity, contribution or other similar payment
recoverable by the Seller from any third party with respect thereto. A Tax
benefit will be considered to be recognized by the Seller for purposes of this
Section 9.02 in the tax period in which the indemnity payment occurs, and the
amount of the Tax benefit shall be determined by assuming that the Seller is in
the maximum applicable statutory tax bracket after any deductions or other
allowances reportable with respect to a payment hereunder.
(d) The Seller agrees to give the Purchaser prompt written notice
of any claim, assertion, event or proceeding by or in respect of a third party
of which it has knowledge concerning any liability or damage as to which it may
request indemnification hereunder. The Purchaser shall have the right to direct,
through counsel of its own choosing, the defense or settlement of any such claim
or proceeding at its own expense. If the Purchaser elects to assume the defense
of any such claim or proceeding, the Seller may participate in such defense, but
in such case the expenses of the Seller shall be paid by the Seller. The Seller
shall provide the Purchaser with access to its records and personnel relating to
any such claim, assertion, event or proceeding during normal business hours and
shall otherwise cooperate with the Purchaser in the defense or settlement
thereof, and the Purchaser shall reimburse the Seller for all its reasonable
out-of-pocket expenses in connection therewith. If the Purchaser elects to
direct the defense of any such claim or proceeding, the Seller shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability, unless the Purchaser consents in writing to such payment or unless
the Purchaser, subject to the last sentence of this Section 9.02(d), withdraws
from the defense of such asserted liability, or unless a final judgment from
which no appeal may be taken by or on behalf of the Purchaser is entered against
the Seller for such liability. If the Purchaser shall fail to defend, or if,
after commencing or undertaking any such defense, the Purchaser fails to
prosecute or withdraws from such defense, the Seller shall have the right to
undertake the defense or settlement thereof, at the Purchaser's expense. If the
Seller assumes the defense of any such claim or proceeding pursuant to this
Section 9.02(d) and proposes to settle such claim or proceeding prior to a final
judgment thereon or to forgo appeal with respect thereto, then the Seller shall
give the Purchaser prompt written notice thereof and the Purchaser shall have
the right to participate in the settlement or assume or reassume the defense of
such claim or proceeding.
(e) Anything in this Article IX to the contrary notwithstanding,
the Purchaser shall have no obligation under this Article IX to indemnify the
Seller with respect to any matter that was the subject of a dispute with respect
to the Closing Balance Sheet pursuant to the terms of Section 2.02(b) but did
not result in an adjustment to the Purchase Price pursuant to Section 2.02(b).
Any such matter shall be disregarded for all purposes of this Section 9.02.
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(f) Except as set forth in this Agreement, the Purchaser is not
making any representation, warranty, covenant or agreement with respect to the
matters contained herein.
(g) The Seller hereby acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification provisions set
forth in this Article IX and in Article VII. In furtherance of the foregoing,
the Seller hereby waives, to the fullest extent permitted under applicable law,
any and all rights, claims and causes of action it may have against the
Purchaser arising under or based upon any Federal, state or local statute, law,
ordinance, rule or regulation (including any such rights, claims or causes of
action arising under or based upon common law or otherwise).
(h) The Purchaser shall have no liability under any provision of
this Agreement for any liabilities and damages to the extent that such
liabilities and damages relate to actions taken by the Seller or any of its
affiliates after the Closing Date, and in no event shall the Purchaser be
liability for consequential damages. The Seller shall take all reasonable steps
to mitigate all such liabilities and damages upon and after becoming aware of
any event which could reasonably be expected to give rise to such liabilities
and damages.
SECTION 9.03. INDEMNIFICATION BY THE SELLER. (a) The Seller agrees,
subject to the other terms and conditions of this Agreement, to indemnify the
Purchaser against and hold it harmless from all liabilities of and damages to
the Purchaser arising out of:
(i) the material breach of any representation, warranty,
covenant or agreement of the Seller herein (other than Section 3.15 and
Article VII, it being understood that the sole remedy for breach
thereof shall be pursuant to Section 3.15 and Article VII); and
(ii) (A) the retention by the Company prior to the Closing of
COBRA payments received from participants and held in interest bearing
accounts until they are remitted to the employer or carrier, (B)
failure by the Company prior to the Closing to comply with any
applicable laws of escheatment and (C) the failure by the Company prior
to the Closing to register or obtain licenses in accordance with the
third party administrator statute in any state where such is required
of the Company in the conduct of the Business, but solely to the extent
the liabilities or damages resulting from the failure to be so
registered or so licensed arise from the operation of the Business
prior to the Closing (collectively, the "RETAINED LIABILITIES"). The
eighteen-month time limitation set forth in Section 9.01 shall not
apply to the Retained Liabilities;
Anything in Section 9.01 to the contrary notwithstanding, no claim may be
asserted nor any action commenced against the Seller for breach of any
representation, warranty, covenant or agreement contained herein or pursuant to
Section 9.03(a)(ii), unless written notice of such claim or action is received
by the Seller describing in detail the facts and circumstances with respect to
the subject matter of such claim or action on or prior to the date on which the
representation,-warranty, covenant or agreement or the event set forth in
Section 9.03(a)(ii) on which such claim
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or action is based ceases to survive as set forth in Section 9.01, irrespective
of whether the subject matter of such claim or action shall have occurred before
or after such date.
(b) No claim may be made against the Seller for indemnification
pursuant to Section 9.03(a)(i) with respect to any item of liability or damage,
unless the aggregate of all such liabilities and damages of the Purchaser with
respect to Section 9.03(a)(i) shall exceed an amount equal to $300,000, and the
Seller shall only be required to pay or be liable for the amount of any such
liabilities and damages in excess of $300,000. The Purchaser shall not be
indemnified pursuant to Section 9.03(a)(i) with respect to any individual item
of liability or damage if the aggregate of all liabilities and damages of the
Purchaser for which the Purchaser has received indemnification pursuant to
Section 9.03(a)(i) shall have exceeded an amount equal to 10% of the Purchase
Price. For the purposes of this Section 9.03(b), in computing such individual or
aggregate amounts of claims, the amount of each claim shall be deemed to be an
amount (i) net of any Tax benefit to the Purchaser or any affiliate thereof,
(ii) net of any insurance proceeds and any indemnity, contribution or other
similar payment recoverable by the Purchaser or any affiliate from any third
party with respect thereto, (iii) net of any reserves provided for the item in
question in the Closing Balance Sheet and (iv) net of any adjustments to the
Purchase Price paid pursuant to Section 2.02 with respect to the subject matter
in dispute. This Section 9.03(b) shall not apply to any Retained Liabilities or
to any of the Seller's obligations with respect to Xxxxx Xxxxxxxxxx, as provided
in Section 6.02 of this Agreement.
(c) Payments by the Seller pursuant to Section 9.03(a) shall be
limited to the amount of any liability or damage that remains after deducting
therefrom (i) any Tax benefit to the Purchaser or any affiliate thereof, (ii)
any insurance proceeds and any indemnity, contribution or other similar payment
recoverable by the Purchaser or any affiliate from any third party with respect
thereto, (iii) any reserves provided for the item in question on the Closing
Balance Sheet and (iv) any adjustments to the Purchase Price paid pursuant to
Section 2.02 with respect to the subject matter in dispute. A Tax benefit will
be considered to be recognized by the Purchaser or any affiliate for purposes of
this Section 9.03 in the tax period in which the indemnity payment occurs, and
the amount of the Tax benefit shall be determined by assuming that the Purchaser
and any affiliate is in the maximum applicable statutory tax bracket after any
deductions or other allowances reportable with respect to a payment hereunder.
(d) The Purchaser agrees to give the Seller prompt written notice
of any claim, assertion, event or proceeding by or in respect of a third party
of which the Purchaser has knowledge concerning any liability or damage as to
which the Purchaser may request indemnification hereunder or any liability or
damage as to which the amounts referred to in Section 9.03(b) may be applied.
The Seller shall have the right to direct, through counsel of its own choosing,
the defense or settlement of any such claim or proceeding at its own expense. If
the Seller elects to assume the defense of any such claim or proceeding, the
Purchaser may participate in such defense, but in such case the expenses of the
Purchaser shall be paid by the Purchaser. The Purchaser shall provide the Seller
with access to its records and personnel relating to any such claim, assertion,
event or proceeding during normal business hours and shall otherwise cooperate
with the Seller in the defense or settlement thereof, and the Seller shall
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reimburse the Purchaser for all its reasonable out-of-pocket expenses in
connection therewith. If the Seller elects to direct the defense of any such
claim or proceeding, the Purchaser shall not pay, or permit to be paid, any part
of any claim or demand arising from such asserted liability unless the Seller
consents in writing to such payment or unless the Seller, subject to the last
sentence of this Section 9.03(d), withdraws from the defense of such asserted
liability or unless a final judgment from which no appeal may be taken by or on
behalf of the Seller is entered against the Purchaser for such liability. If the
Seller shall fail to defend, or if after commencing or undertaking any such
defense, fail to prosecute or withdraws from such defense, the Purchaser shall
have the right to undertake the defense or settlement thereof, at the Seller's
expense. If the Purchaser assumes the defense of any such claim or proceeding
pursuant to this Section 9.03(d) and proposes to settle such claim or proceeding
prior to a final judgment thereon or to forgo any appeal with respect thereto,
then such party shall give the Seller prompt written notice thereof and the
Seller shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding.
(e) Anything in this Article IX to the contrary notwithstanding,
the Seller shall have no obligation under this Article IX to indemnify the
Purchaser with respect to any matter that was the subject of a dispute with
respect to the Closing Balance Sheet pursuant to the terms of Section 2.02(b)
but did not result in an adjustment to the Purchase Price pursuant to Section
2.02(b). Any such matter shall be disregarded for all purposes of this Section
9.03.
(f) The Purchaser hereby acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification provisions set
forth in this Article IX and in Article VII. In furtherance of the foregoing,
the Purchaser hereby waives, to the fullest extent permitted under applicable
law, any and all rights, claims and causes of action it (or, after the Closing,
the Company) may have against the Seller arising under or based upon any
Federal, state or local statute, law, ordinance, rule or regulation (including
any such rights, claims or causes of action arising under or based upon common
law or otherwise).
(g) Except as set forth in this Agreement, the Seller is not
making any representation warranty, covenant or agreement with respect to the
matters contained herein.
(h) The Seller shall have no liability under any provision of this
Agreement for any liabilities and damages to the extent that such liabilities
and damages relate to actions taken by the Purchaser or any of its affiliates,
including the Company, after the Closing Date and in no event shall the Seller
be liable for consequential damages. The Purchaser shall take and shall cause
the Company to take all reasonable steps to mitigate all such liabilities and
damages upon and after becoming aware of any event which could reasonably be
expected to give rise to such liabilities and damages.
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ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the Seller and the Purchaser;
or
(b) by either the Seller or the Purchaser, if the Closing shall
not have occurred prior to the date two months after the date of this Agreement;
provided, however, that the right to terminate this Agreement under this Section
10.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of or shall have
resulted in the failure of the Closing to occur prior to such date.
Time shall be of the essence in this Agreement.
SECTION 10.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 10.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto (a)
except as set forth in Section 5.05 and Section 11.01 and (b) except that
nothing herein shall relieve either party from liability for any willful breach
hereof.
SECTION 10.03. WAIVER. At any time prior to the Closing, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party to be bound thereby and shall not be
construed as a waiver of any subsequent breach or waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. EXPENSES. All costs and expenses, including fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses whether or not the Closing
shall have occurred.
SECTION 11.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by
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telecopy, or by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to the Seller:
The Prudential Insurance Company of America
000 Xxxxx Xxxxxx
Xxxxxx, XXX XXXXXX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000)000-0000
with a copy to:
King & Spalding
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
(b) if to the Purchaser:
Xxxxx HealthPlan Services, Inc.
c/o HealthPlan Services Corporation
0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx III and Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Holland & Knight LLP
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
SECTION 11.03. PUBLIC ANNOUNCEMENTS. No party to this Agreement shall
make any public announcements in respect of this Agreement or the transactions
contemplated herein or otherwise communicate with any news media without prior
notification to the other party, and the parties shall cooperate as to the
timing and contents of any such announcement.
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SECTION 11.04. INTERPRETATION. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Unless otherwise
indicated herein or the context otherwise requires, the singular shall include
the plural. The word "or" shall not be deemed exclusive.
SECTION 11.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 11.06. DISCLOSURE SCHEDULE. Disclosure of information in any
portion of the Disclosure Schedule shall be deemed disclosure in any other
portion of the Disclosure Schedule if an appropriate cross reference is
contained in such Disclosure Schedule.
SECTION 11.07. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, other
than the Confidentiality Agreement between the Seller and the Purchaser with
respect to the subject matter hereof and except as otherwise expressly provided
herein.
SECTION 11.08. ASSIGNMENT. This Agreement shall not be assigned by
either party hereto without the consent of the other party.
SECTION 11.09. NO THIRD-PARTY BENEFICIARIES. Except as provided in
Article VI, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.10. AMENDMENT. This Agreement may not be amended or modified
except by an instrument in writing signed by the Seller and the Purchaser.
SECTION 11.11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
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SECTION 11.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By
------------------------------------
Name:
Title:
XXXXX HEALTHPLAN SERVICES, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By/s/ Xxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
Prudential Insurance Company
of America
XXXXX HEALTHPLAN SERVICES, INC.
By
---------------------------------------
Name:
Title:
