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EXHIBIT 2.1
AGREEMENT OF MERGER
AMONG
ALLTEL HEALTHCARE INFORMATION SERVICES, INC.
ALLTEL INFORMATION SERVICES, INC.
ECLIPSYS CORPORATION
AND
ECLIPSYS SOLUTIONS CORP.
Dated as of January 24, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS...........................................................................1
1.1. Meeting Date..........................................................................1
1.2. Subsidiary............................................................................1
1.3. Parent................................................................................1
1.4. Definition Cross-Reference Index......................................................2
ARTICLE II. MERGER AND CLOSING....................................................................3
2.1. Merger................................................................................3
2.2. Closing...............................................................................3
2.3. Effects of the Merger .......................................................4
2.4. Certificate of Incorporation; By-Laws.................................................4
2.5. Directors.............................................................................4
2.6. Officers..............................................................................4
ARTICLE III. EFFECTS OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS..............................................................4
3.1. Effect on Capital Stock...............................................................4
3.2. Exchange of Certificates..............................................................5
ARTICLE IV. COVENANTS AND AGREEMENTS..............................................................6
4.1. Notice................................................................................6
4.2. Reasonable Best Efforts; Contracts....................................................8
4.3. Tax Returns and Audits...............................................................10
4.4. Insurance............................................................................11
4.5. Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.................................11
4.6. Litigation...........................................................................12
4.7. Minimum Net Worth and Working Capital; Cash And
Accounts Payable at the Effective Time..........................................12
4.8. Pro Ration of Revenues and Expenses..................................................12
4.9. Transition Services ......................................................13
4.10 Adjustments Relating to Cash Receipts and Cash Payment
for January Period to the Effective Time........................................13
ARTICLE V. REPRESENTATIONS AND WARRANTIES.......................................................15
5.1. Representations and Warranties of Seller and the
Company.........................................................................15
5.2. Representations and Warranties of Buyer..............................................26
5.3. No Other Representations and Warranties by the
Company and Seller; Etc. .......................................................29
5.4. No Other Representations and Warranties by
Buyer and Acquisition Sub.......................................................30
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ARTICLE VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
SELLER AND THE COMPANY...............................................................31
6.1. Representations and Warranties True..................................................31
6.2. Performance of Obligations and Agreements............................................31
6.3. Resolutions of Buyer.................................................................31
6.4. Resolutions of Acquisition Sub.......................................................31
6.5. No Casualty..........................................................................32
6.6. Closing Certificate..................................................................32
6.7. No Litigation........................................................................32
6.8. Preferred Stock and Warrant Purchase Agreement.......................................32
ARTICLE VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF BUYER AND ACQUISITION SUB....................................................32
7.1. Representations and Warranties True..................................................33
7.2. Performance of Obligations and Agreements............................................33
7.3. Resolutions..........................................................................33
7.4. No Casualty..........................................................................33
7.5. Closing Certificate..................................................................33
7.6. No Litigation........................................................................33
ARTICLE VIII. RECIPROCAL CONDITIONS PRECEDENT......................................................34
8.1. No Injunctions or Restraints.........................................................34
8.2. Amended and Restated Certificate of Incorporation of Buyer...........................34
8.3. Registration Rights Agreement........................................................34
8.4. Stockholders Agreement...............................................................34
8.5. Management and Services Agreement....................................................34
8.6. HSR..................................................................................35
ARTICLE IX. AMENDMENTS...........................................................................35
ARTICLE X. SURVIVAL AND INDEMNIFICATION.........................................................35
10.1. Survival.............................................................................35
10.2. Seller Indemnification...............................................................35
10.3. Buyer Indemnification................................................................36
10.4. Indemnification Procedure............................................................37
10.5. Indemnification as Sole Remedy.......................................................39
10.6. Indemnification Limitations..........................................................39
10.7. Indemnification Payments in Preferred Stock..........................................40
ARTICLE XI. EMPLOYEES AND EMPLOYEE MATTERS.......................................................40
11.1. General Provisions...................................................................40
11.2. Service..............................................................................41
11.3. No Duplicate Benefits................................................................41
11.4. Benefits.............................................................................41
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11.5. Welfare Plans........................................................................42
11.6. Severance............................................................................43
11.7. Third-Party Rights...................................................................43
11.8. WARN Act and Health Care Continuance ...........................43
11.9. LTD Recipients.......................................................................43
11.10. WC Recipients........................................................................44
11.11. Pension Plans........................................................................35
11.12. Certain Rights to Distributions......................................................35
11.13. Withdrawal from Plans................................................................35
11.14. Seller Assistance....................................................................35
ARTICLE XII. NON-COMPETITION......................................................................46
12.1. Acknowledgments......................................................................46
12.2. Non-Compete..........................................................................46
12.3. Confidential Information.............................................................47
12.4. Rights and Remedies Upon Breach......................................................48
12.5. Severability of Covenants............................................................48
12.6. Blue Penciling.......................................................................49
12.7. Enforceability in Jurisdictions......................................................49
ARTICLE XIII. GENERAL PROVISIONS...................................................................49
13.1. Notices..............................................................................49
13.2. Choice of Law........................................................................50
13.3. Successors...........................................................................50
13.4. Assignment...........................................................................50
13.5. Counterparts.........................................................................50
13.6. Entire Agreement.....................................................................50
13.7. No Third-Party Beneficiaries.........................................................51
13.8. Remedies.............................................................................51
13.9. Severability.........................................................................51
13.10. Headings.............................................................................51
13.11. Indemnification of Directors and Officers............................................51
13.12. Taxes................................................................................51
13.13. Publicity............................................................................52
13.14. Expenses.............................................................................52
13.15. Trademark Phaseout and Corporate Name Change.........................................52
13.16. Preferred Stock Valuation............................................................53
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EXHIBITS
EXHIBIT A CERTIFICATE OF MERGER
EXHIBIT B AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF BUYER
EXHIBIT C REGISTRATION RIGHTS AGREEMENT
EXHIBIT D STOCKHOLDERS AGREEMENT
EXHIBIT E MANAGEMENT AND SERVICES AGREEMENT
EXHIBIT F PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT
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AGREEMENT OF MERGER
This AGREEMENT OF MERGER (the "Agreement"), is entered into as of
January 24, 1997, by and among ALLTEL Healthcare Information Services, Inc., a
Delaware corporation (the "Company"), the Company's sole stockholder, ALLTEL
Information Services, Inc., an Arkansas corporation ("Seller"), Eclipsys
Corporation, a Delaware corporation ("Buyer"), and Eclipsys Solutions Corp., a
Delaware corporation ("Acquisition Sub").
The Company and Buyer are collectively referred to as the "Constituent
Corporations". The respective Boards of Directors of the Constituent
Corporations consider the acquisition by Buyer of the Company through a merger
in accordance with this Agreement to be in the respective best interests of the
Constituent Corporations and their stockholders. To that end, each of the Board
of Directors of the Constituent Corporations has approved this Agreement and the
form of Certificate of Merger attached hereto as Exhibit A (the "Certificate of
Merger").
THEREFORE, in consideration of their respective agreements and
undertakings, the Company, Seller, Buyer and Acquisition Sub agree as follows:
ARTICLE I
DEFINITIONS
1.1. Meeting Date. The term "Meeting Date" means the date upon which
the stockholders of the Company meet to vote upon the Merger (as defined herein)
or, in lieu thereof, the effective date of the requisite written consents in
favor of the Merger under Section 228 of the General Corporation Law of the
State of Delaware (the "DGCL").
1.2. Subsidiary. The term "Subsidiary" means any corporation,
partnership, limited liability company or other entity of which the Company or
the Buyer, as the case may be, beneficially owns, directly or indirectly, 50% or
more of the outstanding voting securities ordinarily entitled to vote for the
election of directors (or persons performing similar functions).
1.3. Parent. The term "Parent" means any corporation or other entity
that beneficially owns, directly or indirectly, 50% or more of the outstanding
voting securities of the Company or Buyer, as the case may be, or any Parent
thereof, if any, ordinarily entitled to vote for the election of directors (or
persons performing similar functions).
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1.4. Definition Cross-Reference Index. As used in this Agreement, the
following terms are defined in the following sections of the Agreement:
Term Section
---- -------
Acquisition Sub Preamble
Act 5.1(x)
Agreement Preamble
Buyer Preamble
Buyer Indemnitees 10.2
Certificate of Merger Preamble
Closing 2.2
Code 5.1(n)
Company Preamble
Company Affiliate 5.1(n)
Company Indemnitees 10.3
Company Plans 5.1(n)
Company Reports 5.1 (f)
Company Software 5.1(r)
Constituent Corporations Preamble
Debtor Relief Laws 5.1(a)
DGCL 1.1
Effective Date 2.2
Effective Time 2.1
Equipment Leases 5.1(j)
Excluded Employees 11.1
ERISA 5.1(n)
HSR Act 4.5
Indemnifying Party 10.4(a)
Indemnitee 10.4(a)
Leases 5.1(j)
Licenses 5.1(t)
Liens 5.1(d)
LTD Recipients 11.1
Material Adverse Effect 5.1(a)
Meeting Date 1.1
Merger 2.1
Non-transferred Marks 13.15(a)
Parent 1.3
Real Property Leases 5.1(j)
Recent Company Balance Sheet 5.1 (f)
Restricted Seller 12.1
Restrictive Covenants 12.4
Seller Preamble
Subsidiary 1.2
Surviving Corporation 2.1
Tax Return 4.3(a)
Taxes 4.3(j)
Third Party Claim 10.4(a)
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Transferred Employees 11.1
WARN Act 11.8
WC Recipients 11.1
ARTICLE II
MERGER AND CLOSING
2.1. Merger. In accordance with the provisions of this Agreement and in
accordance with the DGCL and the form of the Certificate of Merger, at the
Effective Time (as defined herein), the Company shall be merged with and into
Acquisition Sub, the separate existence of the Company shall cease and
Acquisition Sub shall be the surviving corporation (the "Surviving
Corporation"). The merger effected at the Effective Time is referred to herein
as the "Merger". On the Effective Date (as defined herein) (or on such other
date as the Company and the Buyer may agree in writing), the Certificate of
Merger or other appropriate documents shall, in accordance with the DGCL, be
executed by the parties thereto and filed with the Secretary of State of
Delaware. The term "Effective Time", as used in this Agreement, means the date
and time on which the Merger becomes effective under Delaware law.
2.2. Closing. The closing of the Merger (the "Closing") shall take
place at the offices of the Buyer's attorneys in New York, New York, commencing
at 10:00 A.M. local time on the business day in which all of the necessary
conditions of the parties to Closing set forth in Articles VI, VII and VIII
shall have been waived or satisfied (other than conditions with respect to
actions the respective parties will take at the Closing itself) or such other
place, time and date as the parties may mutually agree (the "Effective Date").
For purposes of this Agreement, Buyer shall be deemed to own the Company and the
Company Subsidiaries for the entire 24-hour period of the Effective Date,
notwithstanding the fact that the Effective Time shall occur sometime other than
at 12:00 a.m. of the Effective Date.
2.3. Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
2.4. Certificate of Incorporation; By-Laws.
(a) The Certificate of Incorporation of Acquisition Sub, as in
effect immediately prior to the Effective Time, shall, from and after the
Effective Time, be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided therein or by applicable law.
(b) The By-laws of the Acquisition Sub as in effect at the
Effective Time shall, from and after the Effective Time, be the By-laws of the
Surviving Corporation until thereafter amended as provided therein or by
applicable law.
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2.5. Directors. The directors of Acquisition Sub at the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation, until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
2.6. Officers. The officers of Acquisition Sub at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation, until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECTS OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT
CORPORATIONS
3.1. Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of (a) any shares of
Common Stock, par value $.01 per share, of the Company (the "Company Common
Stock") or any other shares of capital stock of the Company or (b) any shares of
capital stock of Acquisition Sub:
(a) Common Stock of Acquisition Sub. Each share of Common
Stock, par value $.01 per share, of Acquisition Sub (the "Acquisition Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall
remain outstanding as one share, par value $.01 per share, of the Surviving
Corporation, which will be duly authorized, validly issued, fully paid and
nonassessable.
(b) Conversion of Company Common Stock. Each share of Company
Common Stock outstanding and issued to the Seller immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
3.1(c)) shall be converted into the right to receive (i) $107,500.00 per share,
without interest, which shall be payable by Acquisition Sub to Seller at the
Effective Time by wire transfer of immediately available funds to an account
specified by Seller, (ii) 2,077,497 shares, par value $.01 per share, of Series
D Convertible Preferred Stock of the Buyer (the "Series D Preferred Stock"),
which will be duly authorized, validly issued, fully paid and nonassessable and
(iii) 20.0 shares, par value $.01 per share, of Series C 8.5% Cumulative
Redeemable Preferred Stock of the Buyer (the "Series C Preferred Stock"), which
will be duly authorized, validly issued, fully paid and non assessable (clauses
(i), (ii) and (iii) are hereinafter referred to as the "Merger Consideration").
(c) Cancellation of Treasury Stock. Each share of the Company
Common Stock that is owned by the Company, any Subsidiary of the Company, ALLTEL
Corporation, a Delaware corporation ("ALLTEL Corporation"), or any Subsidiary of
ALLTEL Corporation (other than the shares of Company Common Stock owned by the
Seller), if any, shall automatically
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be canceled and retired and shall cease to exist, and no cash or other
consideration shall be delivered or deliverable in exchange therefor.
(d) Cancellation and Retirement of Company Common Stock. At
the Effective Time, all certificates representing shares of Company Common Stock
(other than certificates representing shares canceled in accordance with Section
3.1(c)) issued and outstanding immediately prior to the Effective Time, shall no
longer be deemed outstanding, and each holder of a certificate representing any
such shares of Company Common Stock shall cease to have any rights with respect
thereto, upon payment of the Merger Consideration.
3.2. Exchange of Certificates. The Merger Consideration paid upon the
surrender for exchange of certificates previously representing shares of Company
Common Stock in accordance with this Article III shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock previously represented by such certificates.
ARTICLE IV
COVENANTS AND AGREEMENTS
The Seller, the Company, Buyer and Acquisition Sub covenant and agree
as follows:
4.1. Notice. Buyer shall immediately notify Seller and the Company, if
its senior management (as defined below) learns or discovers on the basis of
actual knowledge that any of Seller's, the Company's, Buyer's, or Acquisitions
Sub's representations, warranties, agreements or conditions to Closing become
untrue or incapable of fulfillment. Seller shall immediately notify Buyer if its
senior management (as defined below) learns or discovers on the basis of actual
knowledge that-any of Buyer' s, Acquisition Sub's, the Company's, or Seller's
representations, warranties, agreements or conditions to Closing become untrue
or incapable of fulfillment. For purposes of this Section, Buyer's senior
management shall consist of Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxx and Xxxxx
Xxxxxxxxx, and Seller's senior management shall consist of Xxxxxxx X.
Xxxxxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxxx (Seller's senior management is hereinafter referred to
collectively as the "Executive Group").
4.2. Reasonable Best Efforts: Contracts.
(a) The Company, Seller, Buyer and Acquisition Sub shall take
all necessary action and use their respective reasonable best efforts to obtain
all necessary consents, authorizations and approvals and to make all necessary
filings required to carry out the Merger and transactions contemplated by this
Agreement and the Certificate of Merger, to satisfy the conditions specified in
Articles VI, VII and VIII hereof at the earliest practicable date and otherwise
to perform their respective obligations under this Agreement; provided, however,
that the foregoing shall not impose upon any of the parties hereto any
obligation to effect any payment
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(except as otherwise owed) or to incur any further or additional liability to
any third party in order to obtain any such consent, approval or authorization.
In the event any third party requests a payment or additional liability, the
appropriate party shall notice all other parties to this Agreement about the
specific nature of the request and work together to otherwise obtain such
consent.
(b) To the extent any of the consents that are set forth in
Schedule 5.1 (b) are not obtained as of the Effective Time, Seller shall
continue to use its reasonable best efforts to obtain such consents after the
Effective Time for a period of not less than 12 months after the Effective Time.
Seller's failure to obtain any one or more of the consents set forth on Schedule
5.1(b) by the Effective Date shall not be the basis of any party hereto not
closing the Merger.
Except as otherwise provided in Section 4.2(d), if (i) at any time during such
12-month period, a third party refuses or has failed to provide its consent as
required by Schedule 5.1 (b) with respect to any contract involving the receipt
of money and such third party terminates, or ceases to make payments under, any
such contract involving the receipt of money by virtue of the failure to obtain
such consent, then Seller shall pay to Buyer not later than 30 days after such
termination or cessation , the amount representing fair compensation to Buyer
for the harm caused by the failure to obtain such consent, which amount the
Seller and Buyer covenant and agree shall be not less than, with respect to each
such contract, the product of (x) the present value of the amount of lost
revenue to the Surviving Corporation and/or its Subsidiaries arising out of the
termination of, or cessation of payment under, such contract multiplied by (y)
.25 and (ii) at any time during such 12-month period, a third party refuses or
has failed to provide its consent as required by Schedule 5.1(b) with respect to
any contract (other than any contract involving the receipt of money) and such
third party terminates, or ceases to make payments under, any such contract with
the Surviving Corporation and/or its Subsidiaries by virtue of the failure to
obtain such consent, then Seller and Buyer shall, during the 30 days after such
termination or cessation, negotiate in good faith to agree upon and Seller shall
pay to Buyer, an amount representing fair compensation to Buyer for the harm
caused by the failure to obtain such consent. Except as otherwise provided in
Section 4.2(d), if at any time after the first anniversary of the Effective
Date, a third party refuses or has failed to provide its consent as required by
Schedule 5.1(b) and such third party terminates, or ceases to make payments
under, its contracts with the Surviving Corporation and/or its Subsidiaries by
virtue of the failure to obtain such consent, then Seller shall have no
obligation to pay the Buyer any amount for the harm caused by the failure to
obtain such consent.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, on and after the Effective Date, by virtue of the Merger, neither the
Asset Purchase Agreement, dated as of July 1, 1994, between Advanced Medical
Information Technologies, Inc. and TDS Healthcare Systems Corporation, as
amended (the "ADMIT Contract"), the Development, License and Marketing
Agreement, dated as of June 26, 1996, between IMN LLC and the Company, and the
Option Agreement, dated as of June 26, 1996, between Xxxxxxxxxx Investments,
Inc. and the Company (collectively, the Development, License and Marketing
Agreement and the Option Agreement shall be referred to hereinafter as the "IMN
Contracts") shall be vested in, and none of the liabilities arising thereunder
shall be attached to or be the
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obligations of, the Buyer, Acquisition Sub, the Surviving Corporation and its
Subsidiaries and the Seller shall enjoy all of the rights, including, without
limitation, all products, documents, and other assets, and be subject to all of
obligations and liabilities, thereunder. notwithstanding the immediately
preceding sentence, Buyer, the Surviving Corporation and its Subsidiaries (and
not the Seller) shall be responsible for providing alternative solutions to the
customers of the Surviving Corporation and its Subsidiaries under each
appropriate customer contract with respect to the products that were to be
developed under the ADMIT Contract and the IMN Contracts, including, without
limitation, being solely responsible and liable for the failure to timely
deliver any such alternative solution, and, except for each of the individuals
identified as an Excluded Employee (as hereinafter defined) on Schedule 11.1,
all of the employees of the Company and the Company Subsidiaries who are
performing services with respect to the ADMIT Contract and the IMN Contracts
shall constitute Transferred Employees (as hereinafter defined). Seller, in its
sole discretion, shall have the right to terminate, continue or restructure the
ADMIT Contract and the IMN Contracts without violation of Section 11.1 hereof.
Seller and the Company each represents to Buyer and the Acquisition Sub that the
software described in the ADMIT Contract and IMN Contracts are not imbedded
within the TDS 7000 Series software, and, in accordance with the terms of the
ADMIT Contract and IMN Contracts can be separately licensed by the Company.
Additionally, if required by Seller, Buyer or the Surviving Corporation will
make available the services of the Transferred Employees who were dedicated to
the performance of the services under the ADMIT Contract and/or IMN Contracts,
if and for so long as such Transferred Employees remain employed with the
Surviving Corporation for the period from the Effective Date through the end of
the time period requested by Seller, which period shall not be greater than 180
days, provided that if Seller requires an extension of such period and makes a
request to Buyer therefor, then Buyer may extend such period by not greater than
an additional 180 days, which extension shall not be unreasonably withheld. In
return, Seller agrees to reimburse Buyer or the Surviving Corporation for the
cost of any requested Transferred Employee's salary (including commissions) and
benefits, which shall be calculated on the basis of 20% of the cost of such
person's salary and commissions, and all out-of-pocket travel-related expenses
of such requested Transferred Employees.
(d) Notwithstanding that Systematics Telecommunications
Services, Inc. now known as Seller is the party whose name is on the Data
Processing Agreement, Software License Agreement and Disaster Recovery
Agreement, each dated August 1, 1992 (collectively, the "Xxxxxxx Agreements")
with Xxxxxxx California Corporation ("Xxxxxxx"), the parties agree to treat
these agreements as included in the Merger. If Xxxxxxx attempts to terminate,
declares a breach or stops making any payments under one or more of the Xxxxxxx
Agreements solely by virtue of the failure to obtain Beverly's consent to
Seller's assignment to the Company or to the Merger, Buyer agrees to immediately
notify Seller of this occurrence or, if Seller receives notice of such
occurrence, it shall immediately notify Buyer, and in either case, Buyer and
Seller shall work jointly to convince Xxxxxxx to revoke the termination or
breach and resume making payments. Additionally, in order to cure any possible
default or breach, Buyer may or, if requested by the Seller, shall assign one or
more of the Xxxxxxx Agreements to Seller, as well as all other necessary
personnel and assets dedicated to the performance of the Xxxxxxx Agreements in
order to enable Seller to be able to perform under the Xxxxxxx Agreements. In
the event of such assignment, Seller
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shall remit to Buyer $2.0 million (face amount) of Series C Preferred Stock and
Buyer shall be entitled to reduce the Management Services Fees (as such term is
defined in the Services Agreement) by $1,000,000.00 from the December 15, 1997
payment and $250,000.00 from each of the March 31, 1998 through and including
the June 30, 1999 payments. Further, in the event that despite Seller's and
Buyer's efforts to work together, Xxxxxxx is able to terminate any one or more
of the Xxxxxxx Agreements, regardless of whether Seller requested and Buyer
assigned that Xxxxxxx Agreement to Seller, Buyer and Seller agree to share the
loss associated with such termination equally, based on a mutually agreeable
combination of Series C Preferred Stock and changes in the amount of payments
made by Buyer to Seller under the Services Agreement, including, without
limitation, any loss of revenue or profit with respect to Buyer's and Seller's
ongoing services for Xxxxxxx and/or other out-of. pocket direct damages actually
incurred by Seller and its affiliates and Buyer and its affiliates. For purposes
of this Agreement, this subsection (d) and not Section 4.2(b) or any other
section of this Agreement shall govern the parties handling of the Xxxxxxx
Agreements with respect to the subject matter hereof. Also, any payments by one
party to the other under this subsection (d) shall not be included in any
calculation of either the Basket Amount (as hereinafter defined) or the
aggregate amounts for indemnification as provided for in Section 10.6.
Notwithstanding anything to the contrary set forth in this Agreement, this
Section 4.2(d) shall terminate on the first anniversary of the date hereof.
4.3. Tax Returns and Audits.
(a) Any return, report, information return or other document
(each a "Tax Return") with respect to Taxes (as defined below) that is required
to be filed with respect to the Company or its Subsidiaries for a taxable period
ending on or before the Effective Date will be prepared and filed by the Seller
(or Seller's Parent (as appropriate)) on behalf of the Company or such Company
Subsidiary, in a manner consistent with prior years' tax returns using, to the
extent permitted by law, consistent methods, conventions and elections to those
previously used by such Company or Company Subsidiary. Buyer will prepare and
file all Tax Returns with regard to the operations and assets of the Company and
its Subsidiaries for all tax periods after the Effective Date.
(b) The Company and Seller shall consult with Buyer and
Acquisition Sub on a timely basis regarding any Tax Return filed prior to the
Effective Date and all actions to be taken or decisions to be made in the course
of any audit or examination, or any subsequent proceedings, including settlement
or other dispositions thereof, with respect to any Taxes relating to taxable
periods of the Company or Company Subsidiaries ending on or before the Effective
Date.
(c) Each of the parties hereto shall provide the other parties
with such assistance as may reasonably be requested by such other parties in
connection with the preparation of any Tax Return (including an amendment
thereof), any audit or other examination by any taxing authority, and any
judicial or administrative proceedings related to the liability of the Company
or the Company Subsidiaries for Taxes with respect to taxable periods of the
Company or Company Subsidiaries ending on or before the Effective Date; and each
of the parties shall retain, until the expiration of all applicable statutes of
limitation (including extensions), and provide
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the other parties with copies of; any records or information which may be
relevant to such return, claim for refund, audit or examination, proceedings or
determination.
(d) Any refunds or credits of Taxes other than Assumed Taxes
(as hereinafter defined), to the extent that such refunds or credits relate to a
taxable year or tax period of the Company or the Company Subsidiaries ending on
or prior to the Effective Date, shall be for the account of Seller, and, to the
extent that such refunds or credits relate to a taxable year or tax period
beginning after the Effective Date, shall be for the account of Buyer. Buyer
shall cause the Surviving Corporation and its Subsidiaries to use their
reasonable best efforts to seek and shall cause the Surviving Corporation and
its Subsidiaries promptly to forward to or reimburse Seller for any such refunds
or credits due Seller after receipt thereof; and Seller shall promptly forward
or reimburse Buyer for any refunds or credits due Buyer after receipt thereof.
Beginning after the Effective Date, within 30 days after the payment by the
Surviving Corporation and its Subsidiaries of all Taxes due by the Company and
the Company Subsidiaries for any tax period ending on or prior to the Effective
Date, Seller shall pay to Buyer the amount of Taxes, if any, other than the
Assumed Taxes, paid by the Surviving Corporation and its Subsidiaries. For
purposes of this Agreement, "Assumed Taxes" shall mean those taxes referred to
on Schedule 4.10 under the captions "State Unemployment Taxes," "Federal
Unemployment Taxes," "Property Tax Payable," "Sales and Franchise Taxes
Payable," "Personal Property Taxes Accrual" and "Provision for Expat Tax."
(e) Seller agrees effective on the Effective Date, to cause
the Company and the Company Subsidiaries to be excluded from any tax sharing
agreements and from and after such date neither the Surviving Corporation nor
any of its Subsidiaries shall have any rights or obligations thereunder.
(f) Seller agrees to cause the Company and the Company
Subsidiaries to make an election pursuant to Section 197(f)(9)(B)(ii) of the
Internal Revenue Code of 1986, as amended (the "Code"), with respect to the
disposition of their assets pursuant to the Merger.
(g) Seller and Buyer covenant and agree that the fair market
value of the Merger Consideration received by Seller in the Merger shall be
allocated among the assets of the Company in the manner required by Section 1060
of the Code, as determined by Buyer in its sole and absolute discretion. Each
party shall file all necessary income tax returns and execute such elections
and/or agreements as may be required by federal, state and local taxing
authorities in a manner consistent with such allocation.
(h) To the extent applicable, the current fiscal year of the
Company and the Company Subsidiaries will be treated as two separate tax years,
one beginning on January 1, 1996 (or, in the event of an Effective Date after
December 31, 1996, January 1, 1997) and ending on the Effective Date and the
other beginning on the date after the Effective Date and ending at the end of
the 1996 (or, in the event of an Effective Date after December 31, 1996, 1997)
fiscal year of the Company and the Company Subsidiaries. The books and records
of the Company and the
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Company Subsidiaries will be closed at the close of business on the day
immediately prior to the Effective Date.
(i) Subject to Section 11.4(d), Seller shall have the right,
at its expense, to conduct the contest and/or settlement of any issue raised in
any official inquiry, examination or proceeding that could result in an official
determination with respect to Taxes due or payable for any taxable year or
period ending on or before the Effective Date with respect to which Seller has
an obligation to indemnify Buyer, the Company and the Company Subsidiaries;
provided, that, any contest and/or settlement of any issue raised in an official
inquiry, examination or proceeding that could reasonably be expected to result
in an official determination with respect to Taxes due or payable that relate to
a period beginning before and ending after the Effective Date will be conducted
by Buyer and Seller, jointly; provided, further, that neither Buyer nor Seller
shall settle, compromise or consent to any such official determination without
obtaining the consent of the other, which consent shall not be unreasonably
withheld.
(j) For purposes of this Section, "Taxes" means all taxes,
charges, fees, levies or other assessments, including deficiencies, interest,
additions to tax and penalties with respect thereto, imposed by any United
States federal, state or local taxing authority or by any foreign taxing
authority, including, but not limited to, income, gross receipts, excise,
property, sales, transfer, payroll, license, ad valorem, value added,
withholding, social security, national insurance (or other similar contributions
or payments), franchise and other taxes.
4.4. Insurance. In the event the Company or its Subsidiaries suffer any
loss prior to the Closing or attributable to events or activities prior to the
Closing that is covered by insurance, the Seller will bear the risk thereof, and
the parties will cooperate in seeking indemnification for such loss from the
applicable insurer.
4.5. Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976. Seller and
Buyer have previously filed with the Pre-merger Notification Office of the
Federal Trade Commission and the Antitrust Division of the Department of
Justice, Notification Pre-merger Reports (if applicable), as required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rulings promulgated thereunder (the "HSR Act") with respect to the Merger. Buyer
and Seller shall cooperate with each other to the extent reasonably necessary to
supply any information to the Federal Trade Commission or the Antitrust Division
of the Department of Justice relating to the Merger as required under the HSR
Act. Seller and Buyer agree to split equally the costs and expenses (including
filing fees) relating to the foregoing.
4.6. Litigation. From and after the Effective Date, (a) the Seller
shall (i) defend the Surviving Corporation and its Subsidiaries from and against
all of the lawsuits, governmental investigations and proceedings set forth on
Schedule 5.1 (l) and (ii) bear all of the expenses (including, without
limitation, the fees, charges and other disbursements of counsel) incurred by
the Seller or otherwise with respect thereto and (b) any settlement, compromise
or consent to the entry of any judgment with respect to such lawsuits,
governmental investigations and proceedings (i) shall include an unconditional
release of the Surviving Corporation and its Subsidiaries and (ii) shall not
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require the consent of the Surviving Corporation or its Subsidiaries unless such
settlement, compromise or judgment creates an obligation of the Surviving
Corporation and/or its Subsidiaries. notwithstanding the foregoing, Buyer and
the Surviving Corporation shall be responsible for responding to, defending (if
necessary) and bearing all expenses after the Effective Date with respect to the
"Written Claim Regarding Intellectual Property" described in paragraph II of
Schedule 5.1(r). Each of Seller and Buyer and the Surviving Corporation shall
provide, when and if requested by the other party, without cost, all reasonably
requested assistance to the other party to assist such other party in resolving
each of the above matters. The Seller, the Company, the Buyer and Acquisition
Sub covenant and agree that the $250,000 payable prior, on or after January 15,
1997 pursuant to the release and settlement agreement entered into in connection
with the matter ALLTEL Healthcare Information Services Inc. x. Xxxxxx Medical
Center described on Schedule 5.1(w) shall be for the account of the Seller and
all of such amount shall be forwarded promptly to the Seller if and to the
extent it is received by the Buyer.
4.7. Minimum Net Worth and Working Capital: Cash and Accounts Payable
at the Effective Time. At December 31, 1996, the Company had a net worth of not
less than $ 11 million, working capital of not less than $4 million and an
intercompany payable to the Seller of not less than $50 million.
4.8. Pro Ration of Revenues and Expenses. With respect to all revenues
earned and routine and ordinary course expenses incurred by the Company during
those days in January 1997 prior to the Effective Date and by the Surviving
Corporation during those days in January 1997 on and after the Effective Date,
(a) all of the revenues and routine and ordinary course expenses for such month
shall be pro rated (based on 31 days elapsed), (b) Seller shall be entitled to
receive the amount of revenues earned during such month equal to the product of
(i) the amount of revenues earned by the Company during those days in January
1997 prior to the Effective Date and the Surviving Corporation during those days
in January 1997 on and after the Effective Date multiplied by (ii) a fraction,
the numerator of which shall be the number of days between January 1 and the
Effective Date (excluding the Effective Date) and the denominator of which shall
be 31, (c) Seller shall incur the amount of routine and ordinary course expenses
incurred during such month equal to the product of (i) the amount of such
expenses incurred by the Company during those days in January 1997 prior to the
Effective Date and the Surviving Corporation during those days in January 1997
on and after the Effective Date multiplied by (ii) a fraction, the numerator of
which shall be the number of days between the Effective Date and January 31
(excluding the Effective Date) and the denominator of which shall be 31, (d) the
Surviving Corporation shall be entitled to receive the amount of revenues earned
during such month equal to the product of (i) the amount of revenues earned by
the Company during those days in January 1997 prior to the Effective Date and
the Surviving Corporation during those days in January 1997 on and after to the
Effective Date multiplied by (ii) a fraction, the numerator of which shall be
the number of days between the Effective Date and January 31 (including the
Effective Date) and the denominator of which shall be 31 and (e) the Surviving
Corporation shall incur the amount of routine and ordinary course expenses
incurred during such month equal to the product of (i) the amount of such
expenses incurred by the Company during those days in January 1997 prior to the
Effective Date and the Surviving Corporation during those days in January 1997
on and after the Effective Date
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multiplied by (ii) a fraction the numerator of which shall be the number of days
between the Effective Date and January 31 (including the Effective Date) and the
denominator of which shall be 31. This Section 4.8 is for financial, tax and
accounting purposes only, and is not intended to influence how cash is exchanged
between the parties relating to the month of January, 1997.
4.9. Transition Services. From and after the Effective Date and for
the period of time set forth in Schedule 4.9 for each specific transition
service described therein, Seller shall provide the Surviving Corporation and
its Subsidiaries a general ledger accounting system and an accounts payable
system, administer and maintain payroll processing and systems and certain other
transition services for the Surviving Corporation and its Subsidiaries, in each
case (a) as currently provided to the Company and the Company Subsidiaries as
more fully described on Schedule 4.9 and (b) for a fee as set forth on Schedule
4.9.
4.10 Adjustments Relating to Cash Receipts and Cash Payments for
January Period to the Effective Time.
(a) On or prior to the Effective Time, the Company shall
transfer the accrued liabilities as of the Effective Time referred to on
Schedule 4.10 under the captions "Profit Sharing Contribution Payable," "Money
Maker Contribution Payable," "Executive Parachutes," "Monitored Care (ADMIT)
Reserve" and "Accounts Payable - Xxxxxx Xxxxx" to Seller, and Seller shall be
solely responsible for paying or otherwise resolving all such liabilities except
as provided in the following sentence with respect to the Profit Sharing
Contributions Payable. Unless otherwise provided for in this Agreement
(including without limitation, the pursuant to this Article IV, Article V,
Article X and Article XI to the extent applicable), Buyer and the Surviving
Corporation, in accordance with Section 259 of the DGCL, shall be solely
responsible for paying or reimbursing Seller for all of the liabilities of the
Company and its Subsidiaries as such liabilities exist as of the Effective Date,
whether accrued, unaccrued, contingent, known, or unknown, including, without
limitation those categories of liabilities which are set forth o the Accounts
Payable Detail and Accrued Liabilities Detail of Schedule 4.10 as of the
Effective Date. In addition, (i) Buyer or the Surviving Corporation shall be
responsible for paying or reimbursing, as the case may be, Seller for the cost
of all payroll deductions, salaries, commissions, bonuses, deferred compensation
and all other related payments made by the Company and the Company Subsidiaries
to its employees with respect to their January 24, 1997 payroll and (ii) Buyer
or the Surviving Corporation shall pay the Seller $1.0 million toward the Profit
Sharing Contribution Payable on or before March 31, 1997. For purposes of the
immediately preceding sentence, Buyer agrees to reimburse Seller for the total
amount disbursed by the Company and the Company Subsidiaries with respect to the
January 24, 1997 payroll on or prior to January 31, 1997. Buyer represents and
warrants to Seller that the above two described payments to Seller shall not
constitute Subordinated Debt (as such term is defined in the Subordination
Agreement dated as of the date hereof between Buyer and its stockholders).
(b) No later than January 30, 1997, Seller shall provide to
Buyer a certificate executed by a senior accounting officer of Seller
(accompanied by reasonable supportive documentation and calculations) (the
"Section 4.10 Certificate") showing, on a daily basis, all cash
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collected by Seller for the account of the Company's and the Company
Subsidiaries' United States operations during the period from January 1, 1997
through the Effective Date (excluding the Effective Date) (the "Cash Received")
and all cash disbursed by or for the account of the Company's and the Company
Subsidiaries' United States operations during the period from January 1, 1997
through the Effective Date (excluding the Effective Date) (the "Cash
Disbursed"). Any cash collected by the Company's and the Company Subsidiaries'
United States operations before (but not including) the Effective Date which has
not been distributed to Seller shall not be included in the Section 4.10
Certificate calculation and shall be for the account of the Surviving
Corporation and the Company Subsidiaries to keep. Similarly, any invoices which
either have been received by the Company and its Subsidiaries before (but not
including) the Effective Date but which have not been received by Seller in
Little Rock for processing or have been received by Seller in Little Rock but
not processed or paid by Seller before the Effective Date shall not be included
in the Section 4.10 Certificate and shall be for the account of the Surviving
Corporation and its Subsidiaries to pay. Seller agrees to use its reasonable
best efforts to pay all invoices up to the amount of Cash Received.
(c) If Cash Received is greater than Cash Disbursed as set
forth in the Section 4.10 Certificate, then Seller shall pay this excess to
Buyer on the date on which Buyer reimburses Seller for the total amount
disbursed by the Company and the Company Subsidiaries with respect to the
January 24, 1997 payroll pursuant to subsection (a) above.
(d) As of the Effective Date, the intercompany payable due
from the Company to Seller shall be converted to capital and the balance shall
be reduced to zero.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of Seller and the Company. Seller
and the Company jointly and severally represent and warrant to Buyer and
Acquisition Sub as follows, except in each case as set forth in a disclosure
schedule attached hereto as Schedule 5.1.
(a) Due Organization. The Seller and the Company each is duly
incorporated, validly existing and in good standing under the laws of the State
of Arkansas and the State of Delaware, respectively. The Company and each
Company Subsidiary has the necessary corporate power and authority to own its
properties and to carry on its business as now being conducted, is qualified to
do business and is in good standing in all jurisdictions in which it is required
to be so qualified, and has received all necessary authorizations, consents and
approvals of governmental authorities necessary to the ownership of its
properties and assets and to the conduct of its business, except where the
failure to be so qualified or to have such authorizations, consents and
approvals would not have a material adverse effect on the financial condition,
operating results, assets or services (a "Material Adverse Effect") of the
Seller, the Company and the Company Subsidiaries. Schedule 5.1(a) lists each
state in which the Company or any Subsidiary thereof is qualified as a
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foreign corporation. The Company has delivered to the Buyer complete and correct
copies of its Certificate of Incorporation and Bylaws and those of each Company
Subsidiary. This Agreement has been, and the Certificate of Merger will be, duly
executed by the Company and Seller and constitutes or will constitute, as the
case may be, a valid and binding obligation of the Company and Seller,
enforceable against each of them in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by general principles of equity
(collectively, "Debtor Relief Laws").
(b) Power and Authority and Conflict. Each of the Company and
the Seller has the necessary corporate power and authority to enter into and
carry out the terms of this Agreement and, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and Seller and the consummation by the Company and the Seller of the
transactions contemplated hereby and the Certificate of Merger have been duly
authorized by all necessary corporate action on the part of the Company and the
Seller (including, without limitation, all necessary corporate action of the
stockholders of each of the Company and the Seller). The execution and delivery
of this Agreement by the Company and the Seller do not, and the consummation of
the transactions contemplated hereby will not, violate any provision of the
Certificate of Incorporation or the Bylaws of the Company or the Seller, in each
case as amended, or, except as identified on the list attached hereto as
Schedule 5.1(b), violate or require any consent or approval of any governmental
authority or any third party under any mortgage, indenture, loan agreement,
note, debenture, security agreement, lease, contract, agreement, instrument,
order, arbitration award, judgment or decree to which the Company, the Seller or
any of their respective Subsidiaries or Parents is a party or by which the
Company, the Seller or any of their respective Subsidiaries or Parents is bound.
(c) Capital Stock. The Company's authorized, issued,
outstanding and reserved capital stock is, as of the date of this Agreement, as
set forth on Schedule 5.1(c) hereto, and all of the outstanding shares of its
capital stock have been duly authorized and validly issued and are fully paid
and nonassessable. There are no outstanding options, warrants, convertible
securities, subscriptions or other rights or agreements providing for the
issuance or delivery of any additional shares of capital stock of the Company or
obligating the Company to issue, deliver or sell any option, warrant,
convertible security, subscription or similar right. Seller is the record and
beneficial owner of all of the Company's issued and outstanding stock.
(d) Other Interests. Attached hereto as Schedule 5.1(d) is a
list true and complete as of the date hereof, which sets forth the name and
jurisdiction of incorporation or organization of each Company Subsidiary and the
percentage of each class of securities or equity interests of each such Company
Subsidiary that is owned by the Company, any Company Subsidiary or any Company
Parent. Each Company Parent, the Company, and each Company Subsidiary, as
appropriate, own such percentages of each class of securities or equity
interests of such Subsidiary, free and clear of all liens, security interests,
charges and encumbrances (collectively, "Liens"). All of the issued and
outstanding shares of capital stock of each Company Subsidiary are duly
authorized and validly issued and are fully paid and non-assessable, and each
Company Subsidiary is duly incorporated, validly existing and in good standing
under the laws of
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the jurisdiction of its incorporation. There are no outstanding options,
warrants, convertible securities, subscriptions or other rights or agreements
providing for the issuance or delivery of any shares of capital stock of any
Company Subsidiary, and no authorized but unissued or treasury shares of capital
stock of any Company Subsidiary are subject to any existing option, warrant,
call or put.
(e) Dividends and Distributions. Except as set forth on
Schedule 5.1(e), the Company has not, since December 31, 1995, declared or paid
any dividends (whether in cash, stock or other assets of the Company) on its
capital stock.
(f) Financial Statements. The Company has delivered to Buyer
true and complete copies of(i) unaudited balance sheets of the Company and its
Subsidiaries as of December 31, 1994 and 1995 and the related unaudited
statement of operations for the years then ended, and (ii) an unaudited balance
sheet of the Company as of December 31, 1996 (the "Recent Company Balance
Sheet"), and the related unaudited statement of operations for the year then
ended (collectively the "Company Reports"). Each of the balance sheets included
in the Company Reports fairly presents the financial position of the Company and
its Subsidiaries as of its date, and each of the statements of operations
included in the Company Reports fairly presents the results of operations of the
Company and its Subsidiaries for the periods set forth therein (subject to
normal year-end adjustments), in each case in accordance with generally accepted
accounting principles consistently applied during the period involved (except as
otherwise noted in the Company Reports). The parties hereto each agrees and
acknowledges that Buyer has informed Seller that after the Effective Date, Buyer
plans to restate the balance sheet of the Company in accordance with the
adjustments described on the September 30, 1996 draft balance sheet attached
hereto as Schedule 5.1(f) (the "Adjustments") and that such Adjustments are
being made in accordance with generally accepted accounting principles as
recommended by Buyer's accountants based on Buyer's plan to operate the
Surviving Corporation and its Subsidiaries after the Effective Date and not
because the Company's representations and warranties set forth in the
immediately preceding sentence or this Section 5.1 are not true and correct.
(g) Due Authorization. The Board of Directors of the Company
and Seller have duly authorized this Agreement, the Certificate of Merger, and
the transactions contemplated hereby and thereby in accordance with the DGCL
(with respect to the Company) and Arkansas law (with respect to the Seller) and
the Bylaws of the Company. The Board of Directors of ALLTEL Corporation has duly
authorized the Merger and the transactions contemplated hereby in accordance
with the DGCL and the bylaws of ALLTEL Corporation.
(h) No Ownership of Real Estate; Assets. The Company and each
Company Subsidiary (i) do not own any land, buildings or other interests of any
kind in any real property (regardless of where located) and (ii) hold an
interest as a lessee under the leasehold interests disclosed in Schedule 5.1(j).
Except as set forth on Schedule 5.1(h), the Company and the Company Subsidiaries
own and have good and marketable title to all of their respective assets and
properties used in its business as reflected as owned in the Company Reports, in
each case free and
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clear of any Liens, except for Liens described in the notes to the Company
Reports or created by the Buyer and/or the Surviving Corporation.
(i) Accounts Receivable. Schedule 5.1(i) sets forth a true and
complete list of all accounts receivable of the Company as of the Recent Company
Balance Sheet, which includes an aging of sh accounts receivable. All accounts
receivable of the Company have arisen from bona fide transactions in the
ordinary course of the Company's business and except as set forth on Schedule
5.1(i), to the knowledge of Messrs. Xxxxxxxxxx and Xxxxxxxx, no payor is
contesting or disputing, and the Company has not received any notice in writing
or, to the knowledge of Messrs. Xxxxxxxxxx and Xxxxxxxx, orally of any contest
or dispute with respect to, such accounts receivable.
(j) Leases. Schedule 5.1(j) sets forth all leases of real
property to which the Company and each Subsidiary thereof are a party (the "Real
Property Leases"). Schedule 5.1(j) also sets forth all leases of equipment to
which either the Company and each Subsidiary are a party that obligate the
Company to expend more than $100,000.00 during 1996 (the "Equipment Leases" and,
together with the Real Property Leases, the "Leases"). The Company has
heretofore delivered to Buyer true and complete copies of all instruments listed
on Schedule 5.1(j). Except as set forth on Schedule 5.1(j), all of such leases
to which either the Company or any of its Subsidiaries is a party are legal,
valid and binding; neither the Company nor, to the best of Seller's and the
Company's knowledge, any other party is in default thereunder, nor has any
notice of default been received; the Company and each Company Subsidiary has
paid in full or accrued all amounts due thereunder as of the Effective Date and
the Company's or Company Subsidiary's, as the case may be, interest in the
leasehold interest thereunder are free and clear of any and all liens,
mortgages, security interests or other encumbrances, except as set forth on
Schedule 5.1(j).
(k) Liabilities. The Company has no liabilities of any kind,
other than:
(i) those set forth, reserved against or described
on or in the Recent Company Balance Sheet;
(ii) those incurred by the Company in the ordinary
course of business since the date of the Recent Company Balance Sheet;
(iii) those liabilities not required by generally
accepted accounting principles to be set forth on a financial statement
or the notes thereto; and
(iv) those described or disclosed on, or which may
arise out of or with respect to the matters or contracts described or
disclosed on, the Schedules to this Agreement, or those which may arise
out of or with respect to matters or contracts that would be required
to be disclosed on such Schedules but for the limitations on such
disclosure contained in the representations and warranties relating to
such Schedules.
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(l) Investigation or Litigation. Except as set forth on
Schedule 5.1(1), there is no pending or, to the best of Seller's and the
Company's knowledge, threatened lawsuit or governmental investigation or
proceeding against Seller, the Company or any Company Subsidiary, which would,
if adversely determined, have (i) a Material Adverse Effect on the Company or
any Company Subsidiary or (ii) have a Material Adverse Effect on the ability of
the Company or Seller to perform their obligations under this Agreement. There
is no outstanding order, injunction, judgment, or decree of any court or
government agency against Seller, the Company or any Company Subsidiary which
purports to enjoin or restrain the execution, delivery or performance by Seller
or the Company of this Agreement or any action taken or to be taken by Seller or
the Company pursuant to this Agreement.
(m) Arrangements for Compensation or Benefits. Except as set
forth on Schedule 5.1(m), neither the Company nor any Company Subsidiary is a
party to or bound by any written employment, "change of control", bonus,
incentive compensation, deferred compensation, profit sharing, stock option,
stock purchase, employee benefit, welfare benefit or other agreement, plan or
arrangement providing for compensation or benefits to any employee or any
director of the Company or any Company Subsidiary.
(n) Employee Benefits. Each "employee benefit plan" and
"welfare benefit plan" and any related trusts subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and any other material plan or
arrangement, to which the Company, any Company Subsidiary or Company Parent or
any other trade or business, whether or not incorporated, that would be
aggregated with any of the foregoing for any purpose relevant to ERISA or the
Code provisions referenced below (a "Company Affiliate") is a party or subject
(the "Company Plans"), complies in all material respects in form and operation
with the requirements of ERISA and any other applicable statutes, orders,
governmental rules and regulations, and there is no material liability with
respect to any failure to file any required reports with respect to the Company
Plans. Except as set forth on Schedule 5.1(n), there are no actions, suits or
claims, other than routine claims for benefits in the ordinary course, with
respect to the Company Plans, pending or to the best knowledge of the Company
threatened. Neither the Company nor any Company Affiliate is or has been under
any obligation to make any payment or contribution to any Multiemployer Plan (as
defined in ERISA), and neither the Company nor any Company Affiliate has any
accrued or contingent liability under ERISA for any complete or partial
withdrawal from any such Multiemployer Plan. Neither the Company nor any Company
Affiliate has incurred any material liability for any tax or civil penalty
imposed by the Code or ERISA with respect to any Company Plan. With respect to
each Company Plan that is a Defined Benefit Plan or a Defined Contribution Plan
(in each case, as defined in ERISA) (i) if intended to be tax-qualified, the
plan complies in all material respects with the requirements of a "qualified
plan" under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) all applicable contributions for all periods ending prior to the
Effective Date (including periods from the first day of the then current plan
year to the Effective Date) have been made or accrued and reflected on the
Company's consolidated financial statements (to the extent required); (iii) all
reporting requirements under ERISA and the Code have been satisfied in all
material respects; (iv) no Company Plan subject to Title IV of ERISA has been
terminated, nor has any proceeding been
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initiated to terminate any such Company Plan, nor is there any fact, event or
circumstance existing with respect to any such Company Plan that is subject to a
notice requirement that has not been waived other than the transaction
contemplated by this Agreement; (v) no Company Plan has incurred any
"accumulated funding deficiency" (as defined in the Code), whether or not
waived; and (vi) neither the Company, nor, to the best of Seller's and the
Company's knowledge, any administrator or fiduciary of any Company Plan has
engaged in any transaction subject to, nor is the Company or any Company
Affiliate subject to, any potential material liability under ERISA.
(o) Tax Matters. Except as set forth on Schedule 5.1(o), the
Company and each Company Subsidiary have timely filed all Tax Returns with
respect to Taxes required to have been filed by them to the date hereof, or, in
the alternative, have obtained extensions for filing in accordance with
established procedures. All such Tax Returns correctly set forth the Tax
liability of taxpayers filing such returns or reports as of the dates of their
filing. The Company and each of its Subsidiaries have paid all Taxes (including
interest and penalties) shown as due on the Tax Returns. Except as set for the
Schedule 5.1(o), no audit is in progress, no extension of time is in force with
respect to any date on which any Tax Return was or is to be dated and no waiver
or agreement is in force for the extension of time for the assessment or payment
of any Tax. Except as set forth in Schedule 5.1(o), neither the Company nor its
Subsidiaries has agreed to or is required to make any adjustments under Section
481(a) of the Code by reason of a change in accounting method or otherwise.
(p) Absence of Certain Changes. Since September 30, 1996, the
Company and each Company Subsidiary have conducted their business only in, and
have not engaged in any transaction other than according to, the ordinary and
usual course of such businesses consistent with past practices and, except as
set forth on the list attached hereto as Schedule 5.1 (p), there has not been
any Material Adverse Effect on the Company or any Company Subsidiary.
(q) Legal and Contractual Compliance. The Company and each
Company Subsidiary have complied in all respects with all applicable laws,
rules, regulations, and ordinances of any government or governmental agency
having jurisdiction, including, without limitation, all Trademark (as defined
hereinafter) or Copyright (as defined hereinafter) rules and regulations, zoning
and occupational safety laws, any antitrust, trade regulation and trade
practices laws, environmental laws and laws relating to employment, except to
the extent that the failure to comply with such laws, rules, regulations and
ordinances would not have a Material Adverse Effect on the Company or the
applicable Company Subsidiary. Except as set forth on Schedule 5.1(q), neither
the Company nor any Company Subsidiary is and, to the knowledge of the Company,
no other party thereto is, in violation of or in default under any terms or
provisions of any mortgage, indenture, loan agreement, note, debenture, security
agreement, Lease, license, contract, agreement, instrument, order, arbitration
award, judgment or decree, except to the extent that such violation or default
would not have a Material Adverse Effect on the Company or the applicable
Company Subsidiary.
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(r) Intellectual Property.
(i) Set forth on Schedule 5.1(r) is a correct and
complete list of all Company Software, Copyrights, Patents, Trademarks,
Internet Assets, Mask Works and other proprietary rights that are
necessary for the conduct of the business as presently conducted
(collectively, "Intellectual Property") by the Company and each Company
Subsidiary. The Company and each Company Subsidiary, as appropriate,
own the entire right, title and interest in, or is licensed or
otherwise has the right to use, sell, license and dispose of; the
Intellectual Property, free and clear of all Liens. Except as set forth
in Schedule 5.1(r), neither the Intellectual Property nor the Company's
or the Company Subsidiaries' use or licensing thereof infringes upon or
violates any Intellectual Property rights of any third party. No claim
with respect to the Intellectual Property by or against any employee of
the Company or any Company Subsidiary, as the case may be, who has or
has had access to any of the Intellectual Property has been made or now
exists. Neither the Company nor the Seller is aware of any breach of
any confidentiality agreement in favor of the Company or any Company
Subsidiary relating to the Intellectual Property by employees or former
employees of the Company or the Company Subsidiaries or by third
parties which would have a Material Adverse Effect on the Company or
the Company Subsidiaries.
(ii) None of the Intellectual Property listed on
Schedule 5.1(r) is subject to any outstanding writ, order, injunction
or decree, and no action, suit, proceeding, hearing, investigation,
litigation is pending or to the knowledge of the Company or the Seller,
threatened, which challenges the validity, enforceability, use or
ownership of the item.
(iii) Except as set forth on Schedule 5.1(r), no
litigation is pending and no written claim has been made against the
Company or any Company Subsidiary or, to the knowledge of the Company
or the Seller, is threatened, contesting the right of the Company or
any Company Subsidiary to use the Intellectual Property or to sell or
license to any third party the Intellectual Property presently sold or
licensed to such third party.
(iv) The Company and the Company Subsidiaries have
not either received any written notice or, to the knowledge of Xxxxxxx
X. Xxxxxxxxxx, oral notice from any third party indicating that any
other third party is infringing upon or otherwise violating the
Intellectual Property rights of the Company or any Company Subsidiary,
or sent any written notice or, to the knowledge of Xxxxxxx X.
Xxxxxxxxxx, oral notice to any third party claiming that such third
party is infringing upon or otherwise violating the Intellectual
Property rights of the Company or any Company Subsidiary. To the
knowledge of Xxxxxxx X. Xxxxxxxxxx, no third party is infringing upon
or otherwise violating the Intellectual Property rights of the Company
or any Company Subsidiary.
(v) For the purposes of the Agreement, the
following terms shall have the following meanings:
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"Company Software" means all of the computer software
products, including, without limitation, source code, object code and
documentation of the Company and the Company Subsidiaries (whether or not such
software product has been released), but excluding any computer software
products under the ADMIT Contract and the IMN Contracts.
"Copyrights" means any foreign or United States
copyright registrations and applications for registration thereof, and any
non-registered copyrights of the Company and the Company Subsidiaries.
"Internet Assets" means any internet domain names and
other computer user identifiers and any rights in and to sites on the Worldwide
Web, including right in and to any test, graphics, audio and video files or
other code incorporated in such sites, of the Company and the Company
Subsidiaries.
"Mask Works" means any mask works and registrations
and applications or registrations thereof of the Company and the Company
Subsidiaries.
"Patents" means any foreign or United States patents
and patent applications, including any divisions, continuations,
continuations-in-part, substitutions or reissues thereof, whether or not patents
are issued on such applications and whether or not such applications are
modified, withdraw or resubmitted of the Company and the Company Subsidiaries.
"Trademarks" means any foreign or United States
trademarks, service marks, trade dress, trade names, brand names, designs and
logos, corporate names, product or service identifiers, whether registered or
unregistered, and all registrations and applications for registration thereof of
the Company and the Company Subsidiaries.
(s) Customer Agreements. All licenses, assignments and other
agreements (other than nondisclosure agreements) pursuant to which the Company
or any Company Subsidiary has made any of the Company Software, equipment or
services available to any of its customers are listed on Schedule 5.1(s). Each
such license, assignment or other agreement is valid, enforceable and in full
force and effect, subject to the terms and conditions of each such license,
assignment and other agreement, except as enforcement may be limited by Debtor
Relief Laws; neither the Company nor any Subsidiary thereof is and, to the
knowledge of the Company, no other party thereto is, in default thereunder where
the effect of such default would have a Material Adverse Effect on the Company
or the applicable Company Subsidiary; no event has occurred which, with the
passage of time or the giving of notice, would result in a default (where such
default would have a Material Adverse Effect) by the Company, or any Company
Subsidiary. The relationships of the Company and the Company Subsidiaries with
its customers are good commercial working relationships and, except as set forth
on the Schedule 5.1(s), as of the date of the Agreement, no person has
threatened in writing or, to the knowledge of Messrs. Xxxxxxxxxx and Xxxxxxx,
orally to cancel or otherwise terminate the relationship of such person with the
Company or any of the Company Subsidiaries.
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(t) Governmental Licenses. Set forth on Schedule 5.1(t) is a
true and complete list of all licenses, permits, certificates, franchises,
ordinances, registrations or other rights, applications and authorizations filed
with, granted or issued by or entered by any governmental agency or authority
that are currently held by the Company or any of its Subsidiaries (collectively,
"Licenses"). The Company or its Subsidiary is the exclusive holder of the
Licenses identified on Schedule 5.1(t). The Licenses are in full force and
effect and are not subject to any restrictions or conditions that would have a
Material Adverse Effect on the Company or any of its Subsidiaries. All of such
Licenses are necessary for the reasonable conduct of the business of the Company
and the Company Subsidiaries and neither the Seller nor the Company has been
informed in writing or received written notice that the Company or any Company
Subsidiary is required to obtain any additional License to conduct its business.
(u) Brokers or Finders. Except as set forth on Schedule
5.1(u), neither the Seller, the Company nor any of its Subsidiaries has incurred
any liability for any brokerage fees, commissions, finders' fees or similar fees
or expenses in connection with this Agreement or the transactions contemplated
hereby.
(v) Questionable Payments. Neither Seller, the Company, any of
the Company Subsidiaries, nor to the best of Seller's and the Company's
knowledge, any of their respective present respective directors, officers or
employees or any other person associated with or acting on behalf of the Company
or any of its Subsidiaries has, directly or indirectly (i) used any of the
Company's or any of its Subsidiaries' funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any unlawful payment to government officials or employees or to political
parties or campaigns; (iii) established or maintained any unlawful or unrecorded
fund of monies or other assets; (iv) made any false or fictitious entry on the
books or records of the Company or any of its Subsidiaries; (v) made any bribe,
rebate, payoff influence payment, kickback or other unlawful payment; or (vi)
made any bribe or other payment of a similar or comparable nature to any person
or entity, private or public, regardless of form, to obtain favorable treatment
in securing business or to obtain special concessions or treatment.
(w) Contracts. Except as set forth on Schedules 5.1 (j),
5.1(s) and 5.1(w), there are no written or, to the knowledge of the Executive
Group, oral contracts, licenses, commitments or undertakings, with which the
Company or any Company Subsidiary is bound which will be in effect after the
Effective Date:
(i) extending for a period of longer than 12
months,
(ii) involving expenditures or receipts in excess of
$100,000 per year, or
(iii) relating to the borrowing of money or
guaranteeing of any obligation for borrowed money.
All of the contracts, licenses, commitments or undertakings identified on
Schedule 5.1(w) are valid, enforceable and in full force and effect, except as
enforcement may be limited by Debtor Relief
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Laws; each of the Company and each Company Subsidiary that is a party thereto
has paid in full or accrued all applicable amounts due thereunder. Neither the
Company nor any Subsidiary thereof, nor any other party thereto, is in default
thereunder where the effect of such default would have a Material Adverse Effect
on the Company or the applicable Company Subsidiary; and no event has occurred
which, with the passage of time or the giving of notice, would result in a
default (where such default would have a Material Adverse Effect on the Company
or the applicable Subsidiary) by the Company, any Company Subsidiary or any
other party thereto; and are not subject to any restrictions or conditions that
would have a Material Adverse Effect on the business of the Company or any of
its Subsidiaries as presently conducted.
(x) Investment Intent. Seller understands that the Series C
Preferred Stock and the Series D Preferred Stock to be received from Buyer in
the Merger has not been registered under the Securities Act of 1933, as amended
(the "Act"), in reliance upon exemptions contained in the Act or interpretations
thereof, and cannot be offered for sale, sold or otherwise transferred unless
such Preferred Stock subsequently is so registered or qualified for exemption
from registration under the Act. Such Preferred Stock is being acquired under
this Agreement by Seller in good faith solely for its own account, for
investment and not with a view toward resale or other distribution within the
meaning of the Act. Such Preferred Stock will not be offered for sale, sold or
otherwise transferred by Seller without either registration or exemption under
the Act and applicable state securities laws. Seller has such knowledge and
experience in financial and business matters that Seller is capable of
evaluating the merits and risks of Seller's investment in the Preferred Stock.
Seller has had the opportunity to review financial and other materials of Buyer
and to ask questions and obtain information from officers of Buyer. Seller
understands and is able to bear any economic risks associated with such
investment (including the necessity of holding such Preferred Stock for an
indefinite period of time, inasmuch as such Preferred Stock has not been
registered under the Act). The Seller agrees to the imprinting, so long as
required by law, of a legend on certificates representing its Series C Preferred
Stock, Series D Preferred Stock and shares of common stock issuable upon
conversion of its Series D Preferred Stock, to the following effects:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS
OR PURSUANT TO A WRITTEN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THE CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
AMENDED
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AND RESTATED STOCKHOLDERS AGREEMENT, DATED JANUARY 24, 1997, AMONG
ECLIPSYS CORPORATION, PARTNERS HEALTHCARE SYSTEM, INC., GENERAL
ATLANTIC PARTNERS 38, L.P., GENERAL ATLANTIC PARTNERS 28, L.P., GAP
COINVESTMENT PARTNERS, L.P., XXXXXX X. XXXXXX, WILFAM LTD., ALLTEL
INFORMATION SERVICES, INC., FIRST UNION CORPORATION, BT INVESTMENT
PARTNERS, INC., XXXXX XXXXXX ASSOCIATES IHS L.P., XXXXXX XXXXXXXXXX,
ST. XXXX VENTURE CAPITAL IV, L.L.C. AND XXXXX XXXXXXXX, JR., A COPY OF
WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY
WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE
COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH
THE TERMS OF THE STOCKHOLDERS AGREEMENT.
(y) Outstanding Borrowing. Schedule 5.1(y) sets forth (i) the
amount of all indebtedness of the Company and each Company Subsidiary, (ii) the
Liens that relate to such indebtedness and that encumber the assets of the
Company and each Company Subsidiary and (iii) the name of each lender thereof.
(z) Insurance. The Company and its Subsidiaries are covered by
insurance policies reasonably sufficient for all applicable requirements of law
and provide insurance in such amounts and against such risks as the Company
believes is reasonably customary for companies engaged in its business.
5.2. Representations and Warranties of Buyer. Buyer and Acquisition Sub
jointly and severally represent and warrant to the Company and Seller as
follows, except in each case as set forth in a disclosure schedule attached
hereto as Schedule 5.2.
(a) Due Organization. Buyer and Acquisition Sub each is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, has the necessary corporate power and authority
to own its properties and to carry on its business as it is now being conducted,
is qualified to do business and is in good standing in all jurisdictions in
which it is required to be so qualified except where the failure to be so
qualified would not have a Material Adverse Effect on the Buyer or Acquisition
Sub, as the case may be. This Agreement has been, and the Certificate of Merger
will be, duly executed by Buyer and Acquisition Sub, and constitutes or will
constitute, as the case may be, a valid and binding obligation of Buyer and
Acquisition Sub enforceable against each of them in accordance with its terms,
except as enforcement may be limited by Debtor Relief Laws.
(b) Power and Authority; Conflict. Buyer and Acquisition Sub
each has the necessary corporate power and authority to enter into and carry out
the terms of this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the Certificate of
Merger by Buyer and Acquisition Sub and the consummation by
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Buyer and Acquisition Sub of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of Buyer
and Acquisition Sub (including, without limitation, all necessary corporate
action of the stockholders of each of the Buyer and the Acquisition Sub). The
execution and delivery of this Agreement by Buyer and Acquisition Sub do not,
and the consummation of the transactions contemplated hereby will not, violate
any provision of the Certificate of Incorporation or the Bylaws of Buyer or
Acquisition Sub in each case as amended, and will not violate or require any
consent or approval of (other than the filing of a notification and report form
with the Federal Trade Commission and the Antitrust Division of the Justice
Department under the HSR Act in accordance with Section 4.8 hereof) any
government authority or of any third party under any mortgage, indenture, loan,
agreement, note, debenture, security agreement, lease, contract, agreement,
instrument, order, arbitration award, judgment or decree to which Buyer is a
party or by which Buyer is bound.
(c) Capitalization. At the Effective Time, after giving effect
to the transactions contemplated by this Agreement and the Preferred Stock and
Warrant Purchase Agreement, dated the date hereof (the "Preferred Stock
Agreement"), among Buyer, General Atlantic Partners 38, L.P. ("GAP LP"), General
Atlantic Partners 28, L.P. ("GAP 28"), GAP Coinvestment Partners, L.P., ("GAP
Coinvestment"), First Union Corporation ("FUCP"), BT Investment Partners, Inc.
("BT"), Wilfam Ltd. ("Wilfam"), Xxxxx Xxxxxx Associates IHS, L.P. ("Xxxxx
Xxxxxx"), Xxxxxx Xxxxxxxxxx ("Xxxxxxxxxx"), St. Xxxx Venture Capital IV, L.L.C.
("St. Xxxx"), Xxxxx Xxxxxxxx, Jr. ("Karmanos") and Seller, the authorized
capital stock of Buyer consists of (i) 30,000,000 shares, par value $.0l per
share, of Common Stock of Buyer (the "Class A Common Stock"), of which 3,626,667
shares are issued and outstanding, (ii) 3,000,000 shares, par value $.01 per
share, of Non-Voting Common Stock of Buyer (the "Class B Common Stock"), of
which no shares are issued and outstanding, (iii) 30,000 shares, par value $.01
per share, of Series B 8.5% Cumulative Redeemable Preferred Stock of Buyer (the
"Series B Preferred Stock"), all of which are outstanding and issued to FUCP and
BT, (iv) 25,000 shares of Series C Preferred Stock, of which 20,000 shares are
outstanding and issued to Seller, (v) 7,200,000 shares of Series D Preferred
Stock, of which 7,058,786 shares are outstanding and issued to GAP LP, GAP
Coinvestment, Wilfam, Brean Murray, Manolovici, St. Xxxx, Karmanos and Seller,
(vi) 920,000 shares, par value $.01 per share, of Series B Convertible Preferred
Stock of Buyer, of which 896,431 shares are outstanding and issued to FUCP and
BT, (vii) 1,530,000 shares, par value S.01 per share, of Series F Convertible
Preferred Stock of Buyer (the "Series F Preferred Stock"), of which 1,478,097
shares shall be outstanding and issued to GAP 28, GAP Coinvestment, Xxxxx Xxxxxx
and Manolovici and (viii) 2,000,000 shares, par value $.01 per share, of
undesignated preferred stock of Buyer, of which 1,000,000 shares were previously
designated as Series A Preferred Stock and issued to GAP 28, GAP Coinvestment,
Xxxxx Xxxxxx and Manolovici and have been retired in accordance with the
Certificate of Incorporation of Buyer upon the exchange of shares of Series A
Preferred Stock for shares of Series F Preferred Stock as more fully described
in Section 2.6 of the Preferred Stock Agreement. Schedule 5.2(c) sets forth a
true and complete list of the stockholders of the Buyer and, opposite the name
of each stockholder, the amount of all outstanding capital stock and common
stock equivalents owned by such stockholder. Buyer has reserved (1) an aggregate
of 7,058,786 shares of Class A Common Stock for issuance upon conversion of the
Series D Preferred Stock, (2) an aggregate of 2,696,146 shares of Class A Common
Stock for issuance upon conversion of the
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Class B Common Stock, (3) an aggregate of 896,431 shares of Class B Common Stock
for issuance upon conversion of the Series B Preferred Stock, (4) an aggregate
of 1,478,097 shares of Class A Common Stock for issuance upon conversion of the
Series F Preferred Stock and (5) an aggregate of 1,799,715 shares of Class B
Common Stock for issuance upon exercise of certain warrants issued to FUCP and
BT pursuant to the Preferred Stock Agreement. Except as set forth on Schedule
5.2(c), there are no other options, warrants, conversion privileges,
subscription or purchase rights or other rights presently outstanding to
purchase or otherwise acquire (i) any authorized but unissued, unauthorized or
treasury shares of Buyer's capital stock, (ii) any common stock equivalents or
(iii) other securities of Buyer. The Series C Preferred Stock and the Series D
Preferred Stock are duly authorized, and on the Effective Date, will be validly
issued, fully paid and nonassessable and will be issued in compliance with the
registration and qualification requirements of all applicable federal and
Arkansas securities laws. The shares of Class A Common Stock issuable upon
conversion of the Series D Preferred are duly authorized and, when issued in
compliance with the provisions of the Amended and Restated Certificate of
Incorporation of Buyer, will be validly issued, fully paid and nonassessable.
(d) Other Interests. Buyer owns all of the issued and
outstanding capital stock of Acquisition Sub, free and clear of all Liens.
Acquisition Sub is Buyer's only Subsidiary. All of the issued and outstanding
shares of capital stock of Acquisition Sub are duly authorized and validly
issued and are fully paid and non-assessable. There are no outstanding options,
warrants, convertible securities, subscriptions or other rights or agreements
providing for the issuance or delivery of any shares of capital stock of any
Acquisition Sub, and no authorized but unissued treasury shares of capital stock
of any Acquisition Sub are subject to any existing option, warranty, call or
put.
(e) Due Authorization. The Board of Directors of Buyer and
Acquisition Sub have duly authorized this Agreement, the Certificate of Merger
and the transactions contemplated hereby and thereby in accordance with the DGCL
and the Bylaws of Buyer and Acquisition Sub.
(f) No Litigation. Except as set forth on Schedule 5.2(f),
there is no pending or, to the best of Buyer's or Acquisition Sub's knowledge,
threatened lawsuit or governmental investigation or proceeding against Buyer or
Acquisition Sub which would if adversely determined (i) have a Material Adverse
Effect on Buyer or any Buyer Subsidiary or (ii) have a Material Adverse Effect
on the ability of Buyer or Acquisition Sub to perform their obligations under
this Agreement. There is no outstanding order, injunction, judgment, or decree
of any court or governmental agency against Buyer or Acquisition Sub which
purports to enjoin or restrain the execution, delivery or performance by Buyer
or Acquisition Sub of this Agreement, or any action taken or to be taken by
Buyer or Acquisition Sub pursuant to this Agreement.
(g) Brokers or Finders. Neither the Buyer nor Acquisition Sub
has incurred any liability for any brokerage fees, commissions, finders' fees or
similar fees or expenses in connection with this Agreement or the transactions
contemplated hereby. General Atlantic Partners, LLC is not receiving from the
Buyer or Acquisition Sub a brokerage fee or commission in connection with this
transaction.
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(h) Acquisition Sub. Other than the actions referred to in
this Agreement, Acquisition Sub has taken no other action and conducted no other
business and owns no other assets or incurred no other liabilities or
obligations.
5.3. No Other Representations and Warranties by the Company and Seller,
Etc.
(a) NO ADDITIONAL REPRESENTATIONS OR WARRANTIES. EXCEPT AS
PROVIDED IN SECTION 5.1(a) THROUGH 5.1(z), EACH OF SELLER, THE COMPANY, AND THE
COMPANY SUBSIDIARIES IS MAKING NO REPRESENTATION OR WARRANTY OF ANY KIND
EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSES AND ANY
WARRANTIES PROVIDED UNDER APPLICABLE ENVIRONMENTAL LAWS IN CONNECTION WITH THIS
AGREEMENT, SELLER (INCLUDING THE ASSETS AND BUSINESS THEREOF), THE COMPANY
(INCLUDING THE ASSETS AND BUSINESS THEREOF) THE COMPANY SUBSIDIARIES,(INCLUDING
THE ASSETS AND BUSINESS THEREOF), AND BUYER AGREES AND ACKNOWLEDGES THAT ALL
SUCH REPRESENTATIONS AND WARRANTIES ARE EXCLUDED AND DISCLAIMED.
(b) Without limiting the generality of the foregoing, but
subject to the express representations and warranties made by the Company and
Seller in Section 5.1, neither the Company nor Seller makes any representation
and warranty to Buyer with respect to:
(i) Any projections, estimates or budgets heretofore
delivered to or made available to Buyer of future revenues, future
expenses or future expenditures, future results of operations (or any
component thereof) or future financial condition (or any component
thereof) of the Company or its Subsidiaries or the business and
operations of the Company or its Subsidiaries; or
(ii) Any other information or documents made
available to Buyer with respect to the Company or the business and
operations of the Company, except to the extent that such information
or documents is set forth, listed, disclosed or described on, or
attached to, any Schedule hereto.
5.4. No Other Representations and Warranties by Buyer and Acquisition
Sub.
(a) NO ADDITIONAL REPRESENTATIONS OR WARRANTIES. EXCEPT AS
PROVIDED IN SECTION 5.2(a) THROUGH 5.2(h), EACH OF BUYER AND ACQUISITION SUB IS
MAKING NO REPRESENTATION OR WARRANTY OF ANY KIND EXPRESS, IMPLIED OR STATUTORY,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSES AND ANY WARRANTIES PROVIDED UNDER APPLICABLE
ENVIRONMENTAL LAWS IN CONNECTION WITH THIS AGREEMENT, BUYER (INCLUDING THE
ASSETS AND BUSINESS THEREOF), AND ACQUISITION SUB,
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(INCLUDING THE ASSETS AND BUSINESS THEREOF), AND THE COMPANY AND SELLER EACH
AGREE AND ACKNOWLEDGES THAT ALL SUCH REPRESENTATIONS AND WARRANTIES ARE EXCLUDED
AND DISCLAIMED.
(b) Without limiting the generality of the foregoing, but
subject to the express representations and warranties made by Buyer in Section
5.2, Buyer makes no representation and warranty to the Company and Seller with
respect to:
(i) Any projections, estimates or budgets heretofore
delivered to or made available to the Company and Seller of future
revenues, future expenses or future expenditures, future results of
operations (or any component thereof) or future financial condition (or
any component thereof) of Buyer or the Surviving Corporation and its
Subsidiaries or the business and operations of Buyer or the Surviving
Corporation and its Subsidiaries; or
(ii) Any other information or documents made
available to the Company and Seller with respect to Buyer or the
business and operations of Buyer except to the extent that such
information or documents is set forth, listed, disclosed or described
on, or attached to, any Schedule hereto.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SELLER AND THE COMPANY
The obligations of Seller and of the Company to effect the Merger are
subject to and shall be conditioned upon the satisfaction, or waiver (in whole
or in part) in writing by Seller and the Company, of each of the following
conditions:
6.1. Representations and Warranties True. The representations and
warranties of Buyer and Acquisition Sub contained in Section 5.2 hereof shall be
true and correct in all material respects on and as of the Effective Date,
except insofar as any of those representations and warranties relate solely to a
particular date or period, in which case they shall be true and correct in all
material respects on and as of the Effective Date with respect to such date or
period.
6.2. Performance of Obligations and Agreements. Buyer and Acquisition
Sub shall have performed in all material respects all of its obligations and
agreements and fulfilled all conditions contained in this Agreement to be
performed or complied with by it on or before the Effective Date.
6.3. Resolutions of Buyer. Buyer shall have delivered to Seller and the
Company copies of the resolutions of the Board of Directors and stockholders
holding the requisite number of shares of Buyer, authorizing and approving the
execution of this Agreement, the Certificate of Merger,
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and the consummation of the transactions contemplated hereby, certified as true
and correct on the Effective Date by its Secretary or an Assistant Secretary of
Buyer.
6.4. Resolutions of Acquisition Sub. Acquisition Sub shall have
delivered to Seller and the Company copies of the resolutions of the Board of
Directors and stockholders of Acquisition Sub holding the requisite number of
shares of Acquisition Sub, authorizing and approving the execution of this
Agreement, the Certificate of Merger, and the consummation of the transactions
contemplated thereby, certified as true and correct on the Effective Date by its
Secretary or Assistant Secretary of Acquisition Sub.
6.5. No Casualty. Prior to the Effective Date, there shall not have
occurred any fire, flood, hurricane or other casualty to any of the facilities
of Buyer or any of its Subsidiaries (whether or not insured) as a result of
which Buyer's or any of its Subsidiaries' ability to conduct its operations is
materially diminished.
6.6. Closing Certificate. Each of Buyer and Acquisition Sub shall have
delivered to Seller and the Company (a) a certificate in form and substance
reasonably satisfactory to the Seller and the Company dated as of the Effective
Date and signed by its President or a Vice President, certifying as to the
matters set forth in Sections 6.1 and 6.2, and (b) a certificate of the
Secretary or an Assistant Secretary of each of Buyer and Acquisition Sub
certifying as to the incumbency of the officers of Buyer and Acquisition Sub.
6.7. No Litigation. No action, suit, proceeding, claim or dispute shall
have been brought or otherwise arisen at law, in equity, in arbitration or
before any governmental authority against the Buyer or Acquisition Sub, which
would, if adversely and finally determined, (a) have a Material Adverse Effect
on the Buyer or Acquisition Sub or (b) have a Material Adverse Effect on the
ability of the Buyer or Acquisition Sub to perform its obligations under this
Agreement and to effect the Merger.
6.8. Preferred Stock and Warrant Purchase Agreement. On the date
hereof, Buyer, GAP LP, GAP 28, GAP Coinvestment, FUCP, BT, Wilfam, Brean Murray,
Manolovici, St. Xxxx and Karmanos shall have executed and delivered the
Preferred Stock Agreement, and such Preferred Stock Agreement shall be in full
force and effect with no defaults thereunder.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AND
ACQUISITION SUB
The obligations of Buyer and Acquisition Sub to effect the Merger are
subject to and shall be conditioned upon the satisfaction, or waiver (in whole
or in part) in writing by Buyer and Acquisition Sub, of each of the following
conditions:
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7.1. Representations and Warranties True. The representations and
warranties of the Company and Seller contained in Section 5.1 shall be true and
correct in all material respects on and as of the Effective Date, and except
insofar as any of those representations and warranties relate solely to a
particular date or period, in which case they shall be true and correct in all
material respects on and as of the Effective Date with respect to such date or
period.
7.2. Performance of Obligations and Agreements. The Company and Seller
each shall have performed in all material respects all of their respective
obligations and agreements and fulfilled all conditions contained in this
Agreement to be performed or complied with by it on or before the Effective
Date.
7.3. Resolutions. The Company shall have delivered to Buyer and
Acquisition Sub copies of the resolutions of the Company's Board of Directors
and resolutions of the Company's stockholders and resolutions of the Board of
Directors and stockholders of Seller authorizing and approving the execution of
this Agreement, the Certificate of Merger and the consummation of the
transactions contemplated hereby, certified as true and correct on the Effective
Date by its Secretary or an Assistant Secretary of the Company (in the case of
resolutions delivered by the Company) and the Seller (in the case of resolutions
delivered by the Seller).
7.4. No Casualty. Prior to the Effective Date, there shall not have
occurred any fire, flood, hurricane or other casualty to any of the facilities
of the Company or any of its Subsidiaries (whether or not insured) as a result
of which the Company's or any of its Subsidiaries' ability to conduct its
operations is materially diminished.
7.5. Closing Certificate. Each of Seller and the Company shall have
delivered to Buyer and Acquisition Sub (a) a certificate, in form and substance
reasonably satisfactory to Buyer and Acquisition Sub, dated as of the Effective
Date and signed on its behalf by its President or a Vice President, certifying
as to the matters set forth in Sections 7.1 and 7.2 and (b) a certificate of the
Secretary or an Assistant Secretary of each of Seller and the Company certifying
as to the incumbency of the officers of Seller and the Company.
7.6. No Litigation. No action, suit, proceeding, claim or dispute shall
have been brought or otherwise arisen at law, in equity, in arbitration or
before any governmental authority against the Company or Seller, which would, if
adversely and finally determined, (a) have a Material Adverse Effect on the
Company or the Company Subsidiaries or (b) have a Material Adverse Effect on the
ability of the Company or Seller to perform its obligations under this Agreement
and to effect the Merger.
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ARTICLE VIII
RECIPROCAL CONDITIONS PRECEDENT
The obligations of each of Seller and the Company and each of Buyer and
Acquisition Sub to effect the Merger are subject to and shall be conditioned
upon the satisfaction, or waiver (in whole or in part) in writing by the
Company, Seller, Buyer, and Acquisition Sub of each of the following conditions
prior to the Effective Date:
8.1. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction prohibiting the consummation of the transactions
contemplated by this Agreement (each party agreeing to use its reasonable best
efforts, including appeals to higher courts, to have any such order, injunction,
legal restraint or prohibition set aside or lifted), and no action shall have
been taken, and no statute, rule or regulation shall have been enacted, by any
state or federal government or governmental agency or regulatory body having
jurisdiction that would prevent the consummation of the Merger.
8.2. Amended and Restated Certificate of Incorporation of Buyer. Buyer
shall have filed and the Delaware Secretary of State shall have accepted Buyer's
Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit B, and such Amended and Restated Certificate of Incorporation shall not
have been further amended.
8.3. Registration Rights Agreement. On the Effective Date, Buyer and
Seller shall have executed and delivered the Registration Rights Agreement, in
the form attached hereto as Exhibit C, and such Registration Rights Agreement
shall be in full force and effect with no defaults thereunder.
8.4. Stockholders Agreement. On the Effective Date, Buyer and Seller
shall have executed and delivered a Stockholders Agreement of Buyer, in the form
attached hereto as Exhibit D, and such Stockholders Agreement shall be in full
force and effect with no defaults thereunder.
8.5. Management and Services Agreement. On the Effective Date, Buyer
and Seller shall have executed and delivered a Management and Services Agreement
(the "Services Agreement"), in the form attached hereto as Exhibit E, and such
Services Agreement shall be in full force and effect with no defaults
thereunder.
8.6. HSR. The parties shall have received confirmation or notice that
all waiting periods under the HSR Act with respect to the filing contemplated by
Section 4.5 shall have terminated or expired by their own terms.
ARTICLE IX
AMENDMENTS
Subject to applicable law, this Agreement may be amended in any respect
by an instrument in writing authorized by Seller, the Company, the Buyer and
Acquisition Sub.
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ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1. Survival. All representations and warranties contained in this
Agreement shall survive the Effective Date until December 31, 1997, except that
the representations and warranties contained in (i) Section 5.1(c), (u), and
(x), Sections 5.2(c), and (g), Section 5.3 and Section 5.4 shall survive the
Effective Date, without limitation as to time, and (ii) with respect to any
claim based upon, arising out of; or otherwise in respect of; any inaccuracy in
or any breach of any representation or warranty of Seller contained in this
Agreement related to Taxes (a "Tax Claim"), on the later of (x) the date upon
which the liability to which any such Tax Claim may relate is barred by all
applicable statutes of limitation or (y) the date upon which any claim for
refund or credit related to such Tax Claim is barred by all applicable statutes
of limitations.
10.2. Seller Indemnification. Subject to the provisions of this Article
X, Seller agrees to indemnify, defend, and hold harmless Buyer, Acquisition Sub,
the Surviving Corporation and its Subsidiaries and each of their respective
officers, directors, employees, and affiliates (the "Buyer Indemnitees") against
and in respect of:
(i) Any and all loss, cost, liability, claim
(including any claim brought through a derivative action by an person
claiming through or in ALLTEL Corporation's name) and expense
(including, without limitation, reasonable attorneys' fees and costs
incurred by the Buyer Indemnitees in any action between the
indemnifying party and the Buyer Indemnitees or between the Buyer
Indemnitees and any third party) resulting from, relating to, or
arising out of (1) any breach of the representations and warranties on
the part of Seller or the Company made in this Agreement; (2) any
breach of any agreement, covenant, or obligation on the part of Seller
or the Company made in this Agreement or in any certificate or document
delivered by Seller or the Company under this Agreement; and (3) all of
the matters set forth on Schedule 5.1(1).
(ii) Any and all Taxes due or payable by (1) the
Company, the Company Subsidiaries or any member of any affiliated
group, within the meaning of Section 1504 of the Code or any comparable
provision of state, local or foreign law, of which the Company or any
Company Subsidiary is or has been a member (the "Affiliated Groups")
for any taxable year or tax period ending on or prior to the Effective
Date other than Assumed Taxes, and (2) any member of the Affiliated
Groups (other than the Company and the Company Subsidiaries) for any
taxable year or tax period. Taxes for which Seller and the Company
shall be liable pursuant to the preceding sentence shall include,
without limitation, any liability for Taxes that arises because the
Company and/or the Company Subsidiaries cease on the Effective Date to
be a member of the Affiliated Groups of which they had been members.
(iii) Any and all loss, cost, liability and expense
(including, without limitation, reasonable attorneys' fees and costs)
resulting from, relating to or arising out of
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any Tax sharing agreement to which the Company and/or a Company
Subsidiary is or has been a party prior to the Effective Date.
(iv) Any and all loss, cost, liability, claim
(including any claim brought through a derivative action by an person
claiming through or in ALLTEL Corporation's name) and expense
(including, without limitation, reasonable attorneys' fees and costs
incurred by the Buyer Indemnitees in any action between the
indemnifying party and the Buyer Indemnitees or between the Buyer
Indemnitees and any third party) resulting from, relating to, or
arising out of the ADMIT Contract and the IMN Contracts, including,
without limitation, any breach of any representation, warranty,
covenant or obligation therein.
10.3. Buyer Indemnification. Subject to the provisions of this Article
X, Buyer, Acquisition Sub, the Surviving Corporation and its Subsidiaries,
jointly and severally, agree to indemnify, defend, and hold harmless Seller and
each of the Seller's officers, directors, employees, and affiliates (the
"Company Indemnitees") against and in respect of:
(i) Any and all loss, cost, liability claim and
expense (including, without limitation, reasonable attorneys' fees and
costs) incurred by the Company Indemnitees in any action between the
indemnifying party and the Company Indemnitees or between the Company
Indemnitees and any third party resulting from, relating to or arising
out of any breach of(1) the representations or warranties on the part
of Buyer made under this Agreement; and (2) any agreement, covenant, or
obligation on the part of Buyer or Acquisition Sub made in this
Agreement or in any certificate or document delivered by Buyer or
Acquisition Sub under this Agreement.
(ii) Any and all loss, cost, liability claim of
expense (including without limitation, reasonable attorneys' fees and
costs) incurred by the Company Indemnities resulting from, relating to
or arising out of Seller's guaranty obligations under the guaranty
agreements set forth on Schedule 5.1(b) based on any actions or
inactions of the Surviving Corporation or its Subsidiaries after the
Effective Date.
10.4. Indemnification Procedure.
(a) If a Buyer Indemnitee or a Company Indemnitee, as the case
may be, entitled to assert a claim for breach of a representation, warranty,
agreement, covenant or obligation contained in this Agreement (an "Indemnitee")
receives notice of the assertion by a third party of any claim or of the
commencement by any such person of any investigation, action or proceeding (a
"Third Party Claim") with respect to which another party hereto (an
"Indemnifying Party") may have liability based on a breach of a representation,
warranty, agreement, covenant or obligation contained in this Agreement, the
Indemnitee shall give the Indemnifying Party prompt notice thereof after receipt
of such notice of such Third Party Claim in reasonable detail and shall indicate
the amount (estimated if necessary) of the damage that has been or may be
sustained by the Indemnitee. The receipt of such notice shall be a condition
precedent to any liability of the
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Indemnifying Party for any Third Party Claim under the provisions contained in
this Agreement; provided, however, that the rights of the Indemnitee to be
indemnified or compensated hereunder in respect of any Third Party Claim will
only be affected by its failure to give prompt notice to the Indemnifying Party
of such Third Party Claim if and to the extent that such failure prejudices that
Indemnifying Party in the defense of such Third Party Claim.
(b) If the Indemnifying Party elects to compromise or defend
such Third Party Claim, it shall do so at its own expense with counsel
reasonably satisfactory to the Indemnitee, and it shall within ten (10) business
days notify the Indemnitee of its intent to do so, it shall consult with the
Indemnitee and keep the Indemnitee informed as to matters concerning such Third
Party Claim during the course of such compromise or defense and the Indemnitee
shall cooperate, at the expense (including, without limitation, out-of-pocket
expenses and reasonable attorneys' fees) of the Indemnifying Party, in the
compromise of; or defense against, such Third Party Claim; provided, however,
that the Indemnitee may, at its own expense, retain separate counsel to
participate in its defense at the Indemnitee's own expense. Notwithstanding the
foregoing, in any Third Party Claim in which both the Indemnifying Party, on the
one hand, and the Indemnitee, on the other hand, are, or are reasonably likely
to become, a party, the Indemnitee shall have the right to employ separate
counsel at its own expense and to control its own defense of such Third Party
Claim.
(c) If the Indemnifying Party elects not to compromise or
defend against the Third Party Claim, or fails to notice the Indemnitee of its
election as herein provided or fails to defend any such Third Party Claim, the
Indemnitee may pay (without prejudice of any of its rights as against the
Indemnifying Party), compromise or defend such Third Party Claim The
Indemnifying Party shall give the Indemnitee thirty (30) days notice of its
intent to cease defending the Indemnitee with respect to such Third Party Claim
and the Indemnitee shall be fully indemnified hereunder for any additional
damages suffered by the Indemnitee.
(d) The Indemnifying Party may not settle, compromise or
consent to the entry of any judgment with respect to any pending or threatened
Third Party Claim unless such settlement, compromise or consent includes an
unconditional release of the Indemnitee from all liability arising out of or
that may arise out of such Third Party Claim.
(e) Any claim which does not result from a Third Party Claim
shall be asserted by written notice given by the party claiming indemnity to the
party from which indemnity is claimed.
(f) In connection with the obligation of the Indemnifying
Party to indemnifying for expenses as set forth above, the Indemnifying Party
shall, upon presentation of appropriate invoices containing reasonable detail,
reimburse each Indemnitee for all such expenses (including reasonable fees,
disbursements and other charges of counsel incurred by the Indemnitee in any
action between the Indemnifying Party and the Indemnitee or between the
Indemnitee and any third party or otherwise) as they are incurred by such
Indemnitee; provided, however, that if such expenses arise out of any Third
Party Claim commenced by the Indemnitee, the Indemnifying
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Party shall reimburse such Indemnitee for all such expenses only (1) after the
final resolution or disposition of such Third Party Claim and (2) if such
Indemnitee prevails in such Third Party Claim; provided further, that the
Indemnifying Party shall not be liable for the fees, disbursements and charges
of more than one counsel to all Indemnitees; and provided further, that if an
Indemnitee is reimbursed hereunder for any expenses, such reimbursement of
expenses shall be refunded to the extent it is finally judicially determined
that the Losses in questions primarily from the misconduct or negligence of such
Indemnitee.
(g) If and to the extent that such indemnification is
unenforceable for any reason, the Indemnifying Party shall make contribution to
the payment and satisfaction of such Losses to the extent permissible under
applicable laws, but not otherwise greater than provided for herein.
(h) To the extent the matter which serves as the basis for a
claim hereunder may be covered by insurance carriers under applicable insurance
policies covering such matter, the indemnitee shall use its reasonable best
efforts to seek recovery in good faith for such matter from such insurers.
Notwithstanding the foregoing, the Indemnitee shall not be obligated to exhaust
its remedies against such insurance carriers in the event such carriers fail to
accept responsibility for such matter and the Indemnitee shall be able to fully
assert its rights of indemnification against the Indemnifying Party hereunder;
provided, that in such event the Indemnitee shall assign its right of recovery
with respect to such matter against such insurance carrier to the Indemnifying
Party. Any claim hereunder shall be reduced by the amounts actually recovered by
the Indemnitee from its insurance carriers and any amounts recovered by the
Indemnitee subsequent to the payment by the Indemnifying Party with respect to
the same claim shall be remitted to the Indemnifying Party; provided, that such
remittance shall not exceed the amount of such indemnification payment by the
Indemnifying Party.
10.5. Indemnification as Sole Remedy. The parties agree that, except as
specifically provided in Section 13.8 and Article XII, the indemnification
provided in this Article X is the sole and exclusive remedy available to the
parties hereto for any claims arising under this Agreement and for the
transaction contemplated thereby, regardless whether a remedy otherwise would
have been sought on the basis of contract, quasi-contract, tort, strict
liability, or absolute liability (whether statutory or common law) and
regardless whether or to that extent any statute or common law rule (including,
without limitation, under any of the environmental laws) permits the waiver or
exclusion thereof in the case of any party to this Agreement or its successors
or assigns.
10.6. Indemnification Limitations. Notwithstanding the foregoing
provisions of this Article X and the other provisions of this Agreement, Seller
shall not be obligated to indemnify any one or more of the Buyer Indemnitees
under Section 10.2(i) and Buyer, Acquisition Sub, the Surviving Corporation and
its Subsidiaries shall not be obligated to indemnify any one or more of the
Company Indemnitees under Section 10.3(i) unless, until, and then only to the
extent that the losses, costs, liabilities, claims, and expenses (including,
without limitation, reasonable attorneys' fees and costs) with respect to which
indemnification is sought by all Buyer Indemnitees or by all Company
Indemnitees, as the case may be, exceed in the aggregate $1,000,000.00 (the
"Basket
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Amount") whereupon the Indemnifying Party shall be obligated to pay in full all
amounts for indemnification, including the Basket Amount; provided, however,
that in no event shall the aggregate amounts for indemnification under this
Article X exceed $13,000,000.00 in the aggregate; provided further, that the
obligation of Seller to indemnify the Buyer Indemnitees with respect to a breach
of Section 4.7 shall not be subject to the Basket Amount; and provided further,
that the indemnification obligations of Seller under Section 4.2(d) and the
foregoing indemnification obligations of Seller under Section 10.2(i) with
respect to a breach of Sections 5.1(c), (u), and (x) shall not be limited by
this Section 10.6 and of Buyer, Acquisition Sub, the Surviving Corporation and
its Subsidiaries under Section 10.3(i) with respect to a breach of Sections
5.2(c) and (g) shall not be limited by this Section 10.6. In the event of any
breach of a representation and warranty that is qualified by materiality, the
full amount of the appropriate party's losses, costs, liabilities, claims and
expenses shall be subject to indemnification reimbursement in accordance with
Section 10.2 or 10.3.
10.7. Indemnification Payments in Preferred Stock. With respect to the
amount of any indemnification obligations of Seller under Section 10.2 to any of
the Buyer Indemnitees, 100% of such amount shall be paid by Seller to such Buyer
Indemnitees in Series C Preferred Stock. For purposes of determining the number
of shares of Series C Preferred Stock to be paid pursuant to the preceding
sentence, the fair market value of each share of Series C Preferred Stock shall
be equal to the face amount thereof Similarly, with respect to the amount of any
indemnification obligations of Buyer, Acquisition Sub, the Surviving Corporation
and its Subsidiaries under Section 10.3 to any of the Company Indemnitees, 100%
of such amount shall be paid to such Company Indemnitees through the issuance by
Buyer of additional fully paid and nonassessable shares of Series C Preferred
Stock. For purposes of determining the number of shares of Series C Preferred
Stock to be issued by Buyer pursuant to the preceding sentence, the fair market
value of each share of Series C Preferred Stock shall be equal to the face
amount thereof.
ARTICLE XI
EMPLOYEES AND EMPLOYEE MATTERS
11.1. General Provisions. On the Effective Date, Buyer shall cause the
Surviving Corporation and its Subsidiaries to continue to employ all of the
active employees of the Company and the Company Subsidiaries (the "Transferred
Employees"), other than the individuals listed on Schedule 11.1 (the "Excluded
Employees"), at and with reasonably comparable, industry competitive salaries
and employee benefit plans. For purposes of this Article XI, Transferred
Employees include those employees who are on military leave, other approved
leaves of absence, short-term disability, non-occupational disability, and
employees on layoff with recall rights as of the Effective Date, the names of
which are listed on Schedule 11.1 (excluding employees on long-term disability
"LTD Recipients") or workers' compensation ("WC Recipients"). Sections 11.9 and
11.10 sets forth the obligations of Buyer and Seller with regard to WC
Recipients and LTD Recipients. Upon Closing, all Transferred Employees shall
cease benefit accrual under any Company Plans described in Section 5.1(n). As of
the Effective Date, all Transferred Employees
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shall become fully vested, if not already so, in their accrued benefits under
the ALLTEL Corporation Profit Sharing Plan and ALLTEL Corporation Thrift Plan
(collectively, the "Pension Plans"). As of the Effective Date, all stock options
granted by the Company to certain of the Transferred Employees under the
Company's 1987 Stock Option Plan for Employees. and 1989 Stock Option Plan for
Non-Employees are fully vested and fully exercisable in accordance with the
terms of such 1987 Stock Option Plan for Employees and/or 1989 Stock Option Plan
for Non-Employees and the related stock option agreements under both plans. As
of the Effective Date, the Company's 1987 Stock Option Plan for Employees and
1989 Stock Option Plan for Non-Employees shall be terminated, except that. such
termination shall not adversely affect any options heretofore granted by the
Company under each such stock option plan. As of the Effective Date, all stock
options granted by ALLTEL Corporation to certain of the Transferred Employees
under the ALLTEL Corporation 1991 Stock Option Plan for Employees and/or ALLTEL
Corporation 1994 Stock Option Plan for Employees are neither fully vested nor
fully exercisable, but only vested and exercisable for each applicable
Transferred Employee in accordance with the terms of the ALLTEL Corporation 1991
Stock Option Plan for Employees and/or ALLTEL Corporation 1994 Stock Option Plan
for Employees and the related stock option agreements under both plans. No
provision of this Agreement shall be construed to prohibit the Surviving
Corporation, its Subsidiaries or its Parent from having the right to terminate
the employment of any Transferred Employee, with or without cause, after the
Effective Date, or to amend or terminate any employee benefit plan, established,
maintained or contributed to by the Surviving Corporation or its Subsidiaries or
its Parent after the Effective Date.
11.2. Service. Buyer will recognize the Transferred Employees' service
with the Company and the Company Subsidiaries as if such service had been
rendered to Buyer for purposes of vacation, severance, group insurance, welfare
benefit plan and pension vesting and eligibility for all such benefits as are
offered by Buyer.
11.3. No Duplicate Benefits. Nothing in this Agreement shall cause
duplicate benefits to be paid or provided to a Transferred Employee, including
under any employee pension, benefit, or welfare plan or bonus plan. Nothing in
this Section shall cause severance to be provided to or with respect to the
Transferred Employees.
11.4. Benefits. Transferred Employees shall not accrue benefits under
any employee benefit policies, plans, arrangements, programs, practices and
agreements of Seller or Seller's Parent or any Subsidiaries of Seller's Parent
on and after the Effective Date, except that, Transferred Employees who on the
Effective Date would be immediately eligible for retiree medical coverage under
the terms of the ALLTEL Corporation Health and Dental Care Plan, as in effect on
the Effective Date, shall be eligible to elect to continue coverage under the
retiree medical provisions of the ALLTEL Corporation Health and Dental Care Plan
for up to 31 days immediately after the Effective Date, subject to all
requirements of the ALLTEL Corporation Health and Dental Care Plan.
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11.5. Welfare Plans.
(a) On or prior to February 1, 1997, each Transferred Employee
will be covered under the applicable medical, dental, accident, life, short and
long-term disability, non-occupational disability, and other employee welfare
benefit plans of Buyer or the Surviving Corporation as set forth on Schedule
11.5, which shall be in effect on or prior to February 1, 1997 without change
from the plans set forth on Schedule 11.5 and which may be changed from time to
time after February 1, 1997 with respect to each Transferred Employee, without
regard to any applicable eligibility and coverage requirements of such plans.
(b) Seller shall have responsibility for any claims arising
from disabilities, losses, or any other expenses resulting from covered losses,
incurred under their welfare plans which occurred prior to the Effective Date.
Buyer shall be responsible for any claims arising from disabilities, losses or
any other expenses resulting from covered losses, or losses under Buyer's
welfare plans occurring to the Transferred Employees on or after the Effective
Date. Subject to Section 11.8 (relating to COBRA), Seller shall have no
obligation or liability to maintain or keep in force any welfare or other plans
for Transferred Employees, including but not limited to retiree medical, health,
dental, accident, life, retiree life, short and long-term disability, or
non-occupational disability on or subsequent to the Effective Date. Buyer shall
not be liable for and shall refer to Seller any claim made by a Transferred
Employee on or after the Effective Date, arising from a disability or any other
expense resulting from a loss incurred on or prior to the Effective Date. Seller
shall not be liable for and shall refer to Buyer any claim made by a Transferred
Employee on or after the Effective Date, arising from a disability or any other
expense resulting from a loss incurred on and after the Effective Date.
(c) Subject to the provisions of this Agreement, Seller and
Buyer each shall assist and cooperate with the other in the disposition of
claims made under their respective welfare plans and in providing each other
with any records, documents or other information within its control or to which
it has access that is reasonably requested by the other as is necessary or
appropriate to the disposition, settlement, or defense of claims.
11.6. Severance. Seller shall be responsible for any termination or
severance payments to any of its employees arising because of termination of
employment with the Seller prior to the Effective Date except as expressly
provided herein. Buyer shall be responsible for any termination severance
payments (including, without limitation, payments attributable to accrued or
unaccrued vacation benefits) to any Transferred Employee arising because of
termination of employment with Buyer or Buyer's Subsidiaries on or after the
Effective Date.
11.7. Third-Party Rights. Nothing in this Agreement, express or
implied, shall confer upon any employee of Buyer, the Company, the Company
Subsidiaries, Seller or any of their affiliates or any legal representatives
thereof or any collective bargaining agent any rights or remedies, including any
right to employment, or continued employment for any specific period. Nothing in
this Agreement, express or implied, shall be deemed to confer upon any person
(or any beneficiary) any rights under or with respect to any plan, program, or
arrangement described in or contemplated by this Agreement, and each person (or
any beneficiary) shall be entitled to look only to the express terms of any such
plan, program, or agreement. Nothing in this Agreement, express
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or implied, shall create a third-party beneficiary relationship or otherwise
confer any benefit, entitlement, or right upon any person or entity other than
the parties to this Agreement and their respective corporate affiliates.
11.8. WARN Act and Health Care Continuance. Buyer shall be responsible
for providing or discharging any and all notifications, benefits, and
liabilities to Transferred Employees, those employees listed on Schedule 11.1,
and government agencies required by the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN Act") or by any other applicable law relating to
plant closings or employee separations or severance pay that are first required
to be provided or discharged on or after the Effective Date, including
pre-closing notice or liabilities if actions by Buyer after the Effective Date
result in a notice requirement or liability under such laws. Seller and its
employee benefit plans shall comply with the requirements of COBRA for all
Transferred Employees who are qualified COBRA beneficiaries with respect to the
ALLTEL Corporation Health and Dental Care Plan as a result of the Merger. Buyer
and its employee benefit plans shall comply with the requirements of COBRA for
all Transferred Employees who are qualified COBRA beneficiaries with respect to
any healthcare plan of Buyer, the Surviving Corporation or its Subsidiaries
beginning on or after the Effective Date.
11.9. LTD Recipients. Schedule 11.9 sets forth all Transferred
Employees who constitute LTD Recipients. All LTD Recipients shall continue to
receive (or to be eligible to receive) benefits under Seller's long-term
disability plan after the Effective Date. As long as the LTD Recipient remains
eligible to receive benefits under Seller's long-term disability plan, the
following provisions shall apply: (a) the LTD Recipient shall be treated as a
disabled individual who is not a Transferred Employee under Seller's other
employee benefit plans or programs and (b) Buyer shall not be required to
provide coverage or benefits to the LTD Recipient under the employee benefit
plans or programs maintained by Buyer.
If any LTD Recipient recovers from his or her disabling condition,
Seller shall have no obligation to offer or provide any employment to such LTD
Recipient. If the LTD Recipient begins active service with Buyer, such LTD
Recipient shall be a Transferred Employee under this Agreement and the following
provisions shall apply: (a) the LTD Recipient shall cease to be eligible for
coverage and benefits under any employee benefit plans or programs maintained by
Seller; (b) the LTD Recipient shall become eligible for coverage and benefits
under any employee benefit plans or programs maintained by Buyer under the same
terms and conditions that apply to other Transferred Employees; and (c) if the
LTD Recipient received disability benefits under Seller's long-term disability
plan' the LTD Recipient's period of disability shall be treated as a period of
service under the employee benefit plans and programs of Buyer to the same
extent as if it had been a period of disability covered by a long-term
disability plan of Buyer.
11.10. WC Recipients. Schedule 11.10 sets forth all Transferred
Employees who constitute WC Recipients. All WC Recipients shall continue to
receive workers' compensation benefits under Seller's workers' compensation
insurance policy after the Effective Date. As long as the WC Recipient remains
eligible to receive workers' compensation benefits under Seller's workers'
compensation insurance (or the applicable Seller's Pension Plan), the following
provisions
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shall apply: (a) the WC Recipient shall be treated as an individual who is not a
Transferred Employee under Seller's other employee benefit plans or programs
except Seller's separation pay policy; (b) Buyer shall not be required to
provide coverage or benefits to the WC Recipient under the comparable employee
benefit plans or programs maintained by Buyer except WC Recipients shall be
covered by the Buyer separation or severance pay policy as of the Effective
Date.
If any WC Recipient recovers from his or her disabling condition,
Seller shall have no obligation to offer or provide any employment to such WC
Recipient. Buyer shall employ any WC Recipient who is able to return to active
work and who has a contractual or legal right to reemployment or reinstatement.
If the WC Recipient returns to active service with Buyer, such WC Recipient
shall be a Transferred Employee under this Agreement and the following
provisions shall apply: (a) the WC Recipient shall cease to be eligible for
coverage and benefits under any employee benefit plans or programs maintained by
Seller; (b) the WC Recipient shall become eligible for coverage and benefits
under any employee benefit plans or programs maintained by Buyer, under the same
terms and conditions that apply to other Transferred Employees; and (c) the WC
Recipient's period on workers' compensation shall be treated as a period of
service under the employee benefits plans and programs of Buyer to the same
extent as if the WC Recipient received benefits under a workers' compensation
policy of Buyer.
11.11. Pension Plans. All contributions to Pension Plans in respect of
Transferred Employees relating to periods on or prior to the Closing shall be
made by the Seller in accordance with the terms of each such Pension Plan.
11.12. Certain Rights to Distributions.
(a) Each Transferred Employee shall be entitled after the
Effective Date to a distribution of his or her benefits under the ALLTEL
Corporation Profit Sharing Plan and ALLTEL Corporation Thrift Plan only as
permitted under applicable provisions of the Code, and the rules and regulations
thereunder, regarding the permissibility of Plan distributions in the
circumstances of the transaction contemplated by this Agreement, the
permissibility of which shall be determined by, and in the sole discretion of,
the plan administrator or administrative committee under the Plans.
(b) Each eligible person, including, without limitation,
Transferred Employees, Excluded Employees and employees of the Company and the
Company Subsidiaries who resigned or were terminated between January 1, 1997 and
the Effective Date, shall be entitled after the Effective Date to a distribution
of his or her benefits under the bonus, commission and deferred compensation
plan of the Company and the Company Subsidiaries only as permitted under such
applicable plans or as otherwise agreed to by the President, Healthcare
Division, of the Company using his sole and reasonable discretion, up to but not
exceeding the respective amounts of bonus accrual, commission accrual (plus the
amount of under-accrual of commission liability up to a maximum of $35,000.00
which shall be funded from any bonus accrual liability as of December 31, 1996)
and deferred compensation accrual as of December 31, 1996 set forth on Schedule
4.10
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(Accrued Liabilities Detail). The payment of such bonuses, commissions and
deferred compensation is described in Schedule 4.11 (b)(iii) and (iv).
11.13. Withdrawal from Plans. Prior to the Effective Date, Seller shall
cause the Company and the Company Subsidiaries to withdraw from any plan or
arrangement maintained by ALLTEL Corporation or any of its Subsidiaries in which
each of the Company and the Company Subsidiaries is a participating employer as
of the Effective Date, in the manner, if any, that such plan or arrangement
specifies for withdrawal of a participating employer.
11.14. Seller Assistance. From and after the Effective Date and for a
period of three months thereafter, Seller shall, if requested by Buyer, (a)
provide Buyer with Company and Company Subsidiary employee census information
and medical claims experience information to the extent available to Seller; (b)
provide Buyer with current premium and administrative service fee information
for the Company's welfare plans; (c) introduce Buyer to Seller's insurance
company vendors and account managers and request that these vendors cooperate in
providing insurance quotes to Buyer; and (d) cooperate with Buyer and its
selected insurance companies by providing pre-Effective Date claim and benefit
information for Transferred Employees to enable Buyer to process claims and
provide credits for deductibles and co-payments within Buyer's plans.
ARTICLE XII
NON-COMPETITION
12.1. Acknowledgments. Each of Seller and their respective Subsidiaries
(other than the Company and the Company Subsidiaries) (each, a "Restricted
Seller") acknowledges that (i) the Company and the Company Subsidiaries are
engaged in, among other things, the business of outsourcing comprehensive
information systems and software to medium and large hospitals (over 150 beds)
and developing, selling and implementing clinical, financial and administrative
software for application in the medium and large hospital (over 150 beds) market
and (ii) its relationship with the Company and the Company Subsidiaries has
given it, and the Seller's relationship with the Buyer, the Surviving
Corporation and its Subsidiaries will continue to give it, trade secrets of and
confidential information concerning the Buyer, the Surviving Corporation and its
Subsidiaries.
12.2. Non-Compete. For a period of two years from and after the
Effective Date (the "Restricted Period"), each Restricted Seller shall not on a
worldwide basis engage in the business of outsourcing comprehensive information
systems and software to medium and large hospitals (over 150 beds) and
developing, selling and implementing clinical, financial, administrative and
decision support software for application in the medium and large hospital (over
150 beds) market and developing, selling and implementing physician billing
services in the physician practice management market (the "Restricted
Business"), including, without limitation, developing the Restricted Business on
its own or acquiring, partnering with or otherwise contracting with any third
party to acquire the Restricted Business; provided, however, that
notwithstanding the foregoing, a Restricted Seller may acquire a corporation,
partnership, limited liability company or
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other entity engaged in, or owning or having a Subsidiary, segment or division
engaged in, the Restricted Business so long as less than 15% of the revenues of
such corporation, partnership, limited liability company or other entity on a
consolidated basis (including such Subsidiary, segment or division, if any) are
derived from the Restricted Business; provided further, that at no time after
the consummation of any acquisition permitted by the preceding proviso shall the
Restricted Sellers on a consolidated basis derive greater than 10% of their
aggregate revenues from the Restricted Businesses so acquired; and provided
further, that this Section 12.2 shall not prevent or otherwise limit each
Restricted Seller's ability to (a) provide the Network Services, the
Professional Services, the Software Services, the Computing Services and the
Carrier Services (as each such term is defined in the Services Agreement) to the
medium and large hospital (over 150 beds) market and the physician practice
management market, (b) provide any service or activity requested by or sold to
any customer of any Restricted Seller, including, without limitation, any of the
exclusions set forth in the foregoing clause (a), (c) provide the services
currently provided by such Restricted Seller to support its products, (d)
provide all products and services pursuant to the ADMIT Contract and/or the IMN
Contracts to the medium and large hospital (over 150 beds) market and the
physician practice management market, (e) engage in the Restricted Business to
the extent necessary to perform under the Contracts (as that term is defined in
that certain letter between Seller and Buyer dated as of the date hereof (the
"Letter")), in the event Seller exercises its right to cause Buyer to assign the
Contracts to Seller under the Letter or (f) engage in the Restricted Business in
the event (i) there shall occur (x) the voluntary or involuntary liquidation,
dissolution or winding up of Buyer or the Surviving Corporation, (y) the sale of
all or substantially all of the assets of Buyer or the Surviving Corporation or
(z) the acquisition by any person, directly or indirectly, in one or a series of
related transactions, of 50% or more of the voting securities of Buyer pursuant
to, without limitation, a sale of voting securities, merger, tender offer,
exchange offer, reorganization or other business combination and (ii) Xxxxxx
Xxxxxx shall cease to be the President of the Buyer. This Section 12.2 shall in
no way restrict Seller from engaging in a transaction that would cause a Change
of Control (as such term is defined in the Services Agreement), in which case
Buyer would be able to exercise its rights under Section 18 of the Services
Agreement.
12.3. Confidential Information.
(a) Confidential Information; Personal Relationships. Each
Restricted Seller promises and agrees that, during the Restricted Period and at
any time thereafter, it will not disclose to any person not authorized by the
Buyer, the Surviving Corporation or their respective Subsidiaries, and that it
will not use for the benefit of itself or others, any confidential information
or trade secrets of the Buyer, or any confidential information or trade secrets
of the Surviving Corporation or any of its Subsidiaries and other affiliates
thereof obtained by it while the Surviving Corporation and its Subsidiaries
were, directly or indirectly, Subsidiaries of such Restricted Sellers.
Additionally, each of Buyer, the Surviving Corporation and its Subsidiaries
promises and agrees that, during the Restricted Period and at any time
thereafter, it will not disclose to any person not authorized by Seller or its
respective Subsidiaries, and that it will no use for the benefit of itself or
others, any confidential information or trade secrets of the Seller and any of
its Subsidiaries (other than the Company and the Company Subsidiaries) and other
affiliates thereof obtained by it. The
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above two sentences, however, shall not preclude the Restricted Sellers or
Buyer, the Surviving Corporation and its Subsidiaries, as the case may be, from
use or disclosure of information if (i) use or disclosure of such information
shall be required by applicable law or order of any governmental body, (ii) use
or disclosure of such information is reasonable required in connection with any
bona fide third party claim against or involving such Restricted Seller or
Buyer, the Surviving Corporation and its Subsidiaries, (iii) such information is
readily ascertainable from public or published information or trade sources
(other than information known generally to the public as a result of a violation
of this Section 12.3 by any Restricted Seller or Buyer, the Surviving
Corporation and its Subsidiaries) or is known or subsequently developed by such
Restricted Seller or Buyer, the Surviving Corporation and its Subsidiaries
outside of its affiliation with the Surviving Corporation or (iv) use or
disclosure thereof to customers is necessary pursuant to or contemplated by the
Services Agreement.
12.4. Rights and Remedies Upon Breach. If any Restricted Seller
breaches (or threatens to commit a breach) any of the provisions of Sections
12.2 and 12.3 (the "Restrictive Covenants") or Buyer, the Surviving Corporation
and its Subsidiaries breaches (or threatens to commit a breach) Section 12.3,
the non-breaching party shall have the following rights and remedies, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of; any other
rights and remedies available to the non-breaching party at law or in equity:
(a) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants may cause irreparable injury to the non- breaching party
and that money damages would not provide an adequate remedy to the non-breaching
party.
(b) Accounting. The right and remedy to require each breaching
party to account for and pay over to the non-breaching party all profits,
derived or received by such breaching party as the result of any transactions by
such breaching party constituting a breach of the Restrictive Covenants.
12.5. Severability of Covenants. Each party acknowledges and agrees
that as to it the Restrictive Covenants are reasonable and valid in geographical
and temporal scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof; is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect without regard to the invalid portions.
12.6. Blue Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof; is unenforceable because of the
duration or geographic scope of such provision, such court shall have the power
to reduce the duration or scope of such provision, as the case may be, and, in
its reduced form, such provision shall then be enforceable.
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12.7. Enforceability in Jurisdictions. If the course of any one or more
of such jurisdictions hold the Restrictive Covenants unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of the parties that
such determination not bar or in any way affect each party's right to the relief
provided above in the courts of any other jurisdiction within the geographical
scope of the Restrictive Covenants in such other respective jurisdictions, the
Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
ARTICLE XIII
GENERAL PROVISIONS
13.1. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (and shall be deemed to
have been duly received if so given) if personally delivered or sent by
facsimile transmission, receipt confirmed, or by registered or certified mail,
return receipt requested, postage prepaid, to Seller, or to the chief executive
officer of the Company, at the following address:
If to Buyer:
Eclipsys Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
and if to Seller, to the President of Seller, with a copy to the General Counsel
of Seller, at the following address
ALLTEL Information Services, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Phone: (000)000-0000
Telecopy: (000) 000-0000
13.2. Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws
(except to the extent that the provisions of Delaware law shall be mandatorily
applicable to this Agreement). Any action, suit or other proceeding initiated by
any party hereto against any other party under or in connection with this
Agreement shall be brought exclusively in any Federal or state court in the
State of Delaware, as the party bringing such action, suit or proceeding shall
elect, having jurisdiction over the subject matter thereof In
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accordance with Title 6, Section 2708 of the Delaware Code Annotated, the
parties hereto hereby submit themselves to the jurisdiction of any such court
for the purpose of any such action and agree that service of process on them in
any such action, suit or proceeding may be effected by the means by which
notices are to be given to it under this Agreement.
13.3. Successors. References in this Agreement to particular persons,
firms, agencies, statutes, regulations and the like shall be considered as
references to any successors thereto.
13.4. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder is otherwise assignable, or
shall be assigned, by any of the parties without the prior written consent of
the other parties, which consent shall not be unreasonably withheld, provided
that Buyer and Acquisition Sub may assign its rights under this Agreement as
collateral security to its lenders.
13.5. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
13.6. Entire Agreement. This Agreement (together with the Exhibits and
Schedules hereto) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements and
understandings relating thereto. Any waiver of any term or condition of this
Agreement, or any amendment or supplementation of this Agreement, shall be
effective only if in writing. A waiver of any breach or failure to enforce any
of the terms or conditions of this Agreement shall not in any way affect, limit
or waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of this Agreement.
13.7. No Third-Party Beneficiaries. Subject to Article X, this
Agreement and any other agreement attached hereto as a schedule or exhibit do
not and are not intended to confer any rights or remedies upon any person other
than the parties who are signatories hereto or thereto.
13.8. Remedies. The parties hereto acknowledge that the remedy at law
for any breach of the obligations undertaken by the parties hereto is and will
be insufficient and inadequate and the parties hereto shall be entitled to
equitable relief; in addition to remedies at law. In the event of any action to
enforce the provisions of this Agreement, each of the parties hereto waive the
defense that there is an adequate remedy at law. Without limiting any remedies
any party may otherwise have, in the event any other party refuses to perform
its obligations under this Agreement, the parties shall have, in addition to any
other remedy at law or in equity, the right to specific performance.
13.9. Severability. In the event that any provision contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions of this Agreement
shall not be in any way impaired.
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13.10. Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and will not affect the Agreement's
construction or interpretation.
13.11. Indemnification of Directors and Officers. Each of Acquisition
Sub and the Surviving Corporation agree that for a period of not less than three
years after the Effective Time, it shall not amend the existing provisions of
the Certificate of Incorporation or the Bylaws of the Surviving Corporation and
its Subsidiaries relating to the indemnification of the Company's or any of the
Company Subsidiaries' (whether based on actions or omissions prior to the
Effective Date) current officers and directors, provided that such officers and
directors shall pursue all of their rights under applicable directors and
officers liability insurance policies and assign any such rights and payments
thereunder to the Surviving Corporation to the extent of any indemnification
(including payment of legal expenses) paid by the Surviving Corporation.
13.12. Taxes. All stamp, transfer, documentary, sales, use,
registration and other such Taxes and fees (including, without limitation, any
penalties and interest) incurred in connection with this Agreement and the
transactions contemplated by this Agreement ("Transfer Taxes"), if any, will be
paid by Seller. Seller will, at its own expense, prepare and properly file true,
complete and accurate Tax Returns and other documentation with respect to
Transfer Taxes on a timely basis. Buyer will cooperate with Seller in the
preparation of such Tax Returns.
13.13. Publicity. Buyer, the Company and Seller will consult with one
another before issuing, and provide one another the opportunity to review,
comment upon and consent to (which consent shall not be unreasonably withheld)
any press release or other public statements with respect to the transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement prior to such consultation and consent, except as
may be required by applicable law, court process or by any stock exchange rule
or regulation.
13.14. Expenses. Except as otherwise provided for in Section 4.9 of
this Agreement each party shall pay any expenses (including, without limitation,
attorneys' fees) incurred by it incident to this Agreement, the Certificate of
Merger, and in consummating the transactions provided for herein.
13.15. Trademark Phaseout and Corporate Name Change.
(a) Buyer acknowledges that Seller or its affiliates are the
owners of; and have permitted the Company and the Company Subsidiaries to use,
the trade names, trade dress, trademarks, service marks, logos and related
intangible property (collectively, the "Non-transferred Marks") used in
connection with the business, as listed on Schedule 13.15 (I), and Buyer
understands and agrees that the Non-transferred Marks, or any right or license
of the Surviving Corporation and its Subsidiaries to the Non-transferred Marks
are not being transferred to the Surviving Corporation pursuant to this
Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in the
use of the Non-transferred Marks, and Buyer agrees that it shall cause the
Surviving Corporation and its Subsidiaries not to use the Non-transferred Marks
(or any names or Non-transferred Marks confusingly similar to the Non-
transferred Marks) except as expressly set
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forth in this Section 13.15. After the Effective Date, Buyer shall cause the
Surviving Corporation and its Subsidiaries to replace all Non-transferred Marks
of Seller not later than 12 months after the Effective Date for Non-transferred
Marks affixed to items used in the Surviving Corporation and its Subsidiaries'
conduct of their business, including, without limitation, buildings, vehicles,
tools, tool boxes, kits (safety and others), signs, manual covers and notebooks,
provided that the Buyer shall have no such obligations to replace any
Non-transferred Marks on (i) any items that remain in the files of the Surviving
Corporation or its Subsidiaries, (ii) any items that are used or circulated
internally by the Buyer, the Surviving Corporation and its Subsidiaries and are
not circulated to third parties, (iii) any contracts and agreements of the
Company or the Company Subsidiaries in force and effect on and after the
Effective Date that were entered into by the Company or the Company Subsidiaries
on or prior to the Effective Date or (iv) any brochures, handouts or marketing
materials printed, created or developed by the Company or the Company
Subsidiaries on or prior to the Effective Date that are distributed or
disseminated by the Company or the Company Subsidiaries on or prior to the
Effective Date or by the Surviving Corporation or its Subsidiaries at any time
prior to the first anniversary of the Effective Date. Buyer recognizes the value
of the goodwill associated with the Non-transferred Marks, and acknowledges that
the Non-transferred Marks and all rights therein and the goodwill pertaining
thereto belong exclusively to Seller.
(b) Buyer and Seller understand and agree that the trade
names, trade dress, trademarks, service marks, logos, and related intangible
property (collectively the "Transferred Marks") used in connection with the
Company's and Company Subsidiaries' business as listed on Schedule 13.15(II) are
being transferred to the Surviving Corporation pursuant to this Agreement.
(c) Within two business days after the Effective Date, Buyer
shall take all action necessary to change the corporate name of the Surviving
Corporation and its Subsidiaries so as to reflect that the Surviving Corporation
and its Subsidiaries are no longer affiliates of Seller.
13.16. Preferred Stock Valuation. Seller covenants and agrees with
Buyer and Acquisition Sub that Seller shall deliver to Buyer and the Surviving
Corporation, not later than 90 days after the Effective Date, the written
determination by an investment banking firm selected by Seller of the aggregate
fair market value of each of the Series C Preferred Stock and the Series D
Preferred Stock, and such determination shall be binding upon Seller, Buyer and
the Surviving Corporation.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed as of the date first above written, and such party's signature
constitutes the affirmation of such party, under penalties of perjury, that this
Agreement is such party's act and deed, and that the facts stated herein by such
party are true.
ALLTEL INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxx
--------------------------------------------
Name: Xxxxxxx X. Xxx
Title: President
ALLTEL HEALTHCARE INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxx
--------------------------------------------
Name: Xxxxxxx X. Xxx
Title: President
ECLIPSYS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
ECLIPSYS SOLUTIONS CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
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Exhibits to Exhibit 2.1, the Agreement of Merger among the Registrant
ALLTEL Healthcare Information Services, Inc., and Eclipsys Solutions Corp.,
dated as of January 24, 1997, have been omitted pursuant to Item 601(b)(2) of
Commission Regulation S-K. The following is a list of omitted Exhibits, which
the Registrant agrees to furnish supplementally to the Commission upon request:
EXHIBITS:
A Certificate Of Merger
B Amended And Restated Certificate Of Incorporation Of Buyer
C Registration Rights Agreement
D Stockholders Agreement
E Management And Services Agreement
F Preferred Stock And Warrant Purchase Agreement
