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Exhibit 2.7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of the 5th day of January 2001, by and among MEDI, INC., a California
corporation ("PURCHASER") and HEALTH MANAGEMENT SYSTEMS, INC., a New York
corporation ("HMS"), and its wholly owned subsidiaries, QUALITY MEDI-CAL
ADJUDICATION INCORPORATED, a California corporation ("CA SUB") and HEALTH
RECEIVABLES MANAGEMENT, INC., a Delaware corporation ("DE SUB"). HMS, CA Sub and
DE Sub are collectively referred to herein as "SELLER."
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONs.
1.1 Certain Definitions. All capitalized terms defined in this
Agreement shall have the defined meanings when used in this Agreement or in any
Transaction Contract or other document made or delivered pursuant to this
Agreement, unless otherwise defined or the context otherwise requires. The
following terms shall have the following meanings:
"ACTION" means any litigation, action, suit, proceeding, arbitration or
claim before any court or Governmental Authority, or any investigation by any
Governmental Authority.
"AFFILIATE" shall mean, with respect to any specified Person, (i) any
other Person who, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person,
(ii) any other Person who is a director, officer, manager, member, partner or
trustee of the specified Person or a Person described in clause (i) of this
definition or any spouse of the specified Person or any such other Person, or
(iii) any relative of the specified Person or any other Person described in
clause (ii) of this definition.
"BEST EFFORTS" shall mean the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that the result
is achieved as expeditiously as practicable under the circumstances; provided,
however, that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to (i) take actions that would
result in a material adverse change in the benefits to such Person under this
Agreement or the transactions contemplated by this Agreement, (ii) make any
significant cash payments or (iii) incur any significant liability or
obligation.
"BEST KNOWLEDGE" with respect to any Person shall mean and include (i)
actual knowledge of the Person, which for Seller shall mean the actual knowledge
of Xxxxxxx Xxxxx, Xxxxxx Xxxxxxxxxx and Xxxxxxx Xxxxx and (ii) that knowledge
which a prudent businessperson could have obtained in the management of his
business after making due inquiry, and after exercising due diligence, with
respect thereto.
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"BUSINESS" means the EDI business of Seller, consisting of, without
limitation, the EDI business conducted by Seller at its Sacramento, California
facility and Chicago, Illinois facility and the Business Office Services
business conducted at its Sacramento, California facility.
"BUSINESS IP" shall mean all IP that Seller owns, licenses and/or uses in
connection with the Business.
"CHARTER DOCUMENTS" shall mean the Certificate or Articles of
Incorporation and By-Laws of a corporation.
"CONTRACT" shall mean any written or oral note, bond, debenture, mortgage,
license, agreement, commitment, contract or understanding.
"COPYRIGHTS" shall mean all United States and foreign copyrights, whether
or not registered.
"CURRENT BALANCE SHEET" shall mean the unaudited balance sheet of the
Business as at October 31, 2000.
"CURRENT FINANCIAL STATEMENTS" shall mean the Current Balance Sheet and
the income statement related unaudited statement of operations of the Business
for the year ended October 31, 2000.
"EMPLOYEE PLANS" with respect to any Person shall mean any plan,
arrangement or Contract providing compensation or benefits to, for or on behalf
of employees and/or directors of such Person, including employment, deferred
compensation, retirement or severance Contracts; plans pursuant to which Equity
Securities are issued, including, without limitation, stock purchase, stock
option and stock appreciation rights plans; and bonus, thrift, pension, savings,
insurance, profit sharing, severance, loan guaranty, employee loan or incentive
compensation plans or arrangements; and supplemental unemployment benefit,
hospitalization or other medical, life, dental, vision, health care or other
insurance.
"ENVIRONMENTAL LAWS" shall mean all laws, licenses, permits, approvals,
plans, authorizations, concessions, franchises, and similar items, of all
Governmental Authorities and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to Hazardous Substances or
the protection of the environment in any respect, including, without limitation:
(i) all requirements, including, without limitation, those pertaining to
notification, warning, reporting, licensing, permitting, investigation, and
remediation of Hazardous Substances; (ii) all requirements pertaining to the
protection of employees or the public from exposure to Hazardous Substances or
injuries or harm associated therewith; and (iii) the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C.Section 9601 et seq.), the
Resource Conservation and Recovery Act (49 U.S.C.Section 6901 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C.Section 1801 et seq.), the
Clean Air Act (42 U.S.C.Section 7401 et seq.), the Occupational Safety and
Health Act (29 U.S.C.Section 600 et seq.), and all
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similar federal, state, local and municipal Laws as they may from time to time
be modified, amended or superseded.
"EQUITY SECURITIES" of any Person shall mean the capital stock,
partnership interests or membership interests of such Person and/or any Stock
Equivalents of such Person.
"EXPLOIT" shall mean manufacture, advertise, license, market, merchandise,
promote, publicize, sell, use, supply or distribute, and "EXPLOITATION" and
"EXPLOITED" shall have a correlative meaning.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"HAZARDOUS SUBSTANCE" means those substances defined as hazardous
substances in 42 U.S.C. Section 9601(14) and all other substances defined as
hazardous under other applicable Laws.
"INDEBTEDNESS" means, with respect to any Person, (i) any liability,
contingent or otherwise, (a) for borrowed money, capitalized lease obligations,
purchase money obligations or other obligations relating to the deferred
purchase price of assets or property or (b) evidenced by a note, bond,
debenture, letter of credit or similar instrument given in connection with the
acquisition, other than in the ordinary course of business consistent with past
practice, of any property, assets, securities or otherwise, including, without
limitation, indebtedness created or arising under conditional sale or other
title retention agreements (even though the rights and remedies of Seller or
lender under the agreements in the event of default are limited to repossession
or sale of the property), (ii) any liability of others described in the
preceding clause which such Person has guaranteed or which otherwise is its
legal liability, (iii) all indebtedness referred to above secured by (or for
which the holder of the indebtedness has an existing right, contingent or
otherwise, to be secured by), any Lien upon the property of such Person, whether
or not the obligations secured thereby have been assumed, and (iv) any
amendment, renewal, extension or refunding of any liability referred to in
clauses (i), (ii) and (iii) above; provided, however, that Indebtedness does not
include any trade payables of any Person incurred in the ordinary course of
business consistent with past practice. The amount of Indebtedness of any Person
at any date shall be the outstanding balance at the date of all unconditional
obligations as described above and the maximum amount of any contingent
obligations at such date.
"IP" shall mean Patents, Trademarks, Copyrights, Know-How and other rights
and property commonly referred to as intellectual property, and rights or
licenses to use the same, and any and all applications therefor.
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"KNOW-HOW" shall mean all inventions, processes, systems, methodologies,
controls, trade secrets, know-how (including, without limitation, proprietary
know-how and use and application know-how), product designs, drawings,
technology, other intangibles, technical information, safety information,
engineering data and design and engineering specifications, research records,
market surveys, promotional literature, supplier and customer lists, similar
data and formulas and processes.
"LAW" shall mean any federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including, without limitation, any judicial or administrative order, consent,
decree or judgment.
"LIEN" shall mean any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"MATERIAL ADVERSE EFFECT" means any change or effect that is, or is
reasonably likely to be, materially adverse to the Business and the Assets,
taken as a whole.
"NOTE" shall mean the note, attached hereto as Exhibit A, providing for a
payment in the aggregate amount of approximately $275,000 by Purchaser to
Seller.
"PATENTS" shall mean all patents (including, without limitation, all
reissues, divisions, continuations, continuations in part and extensions
thereof), patent applications and patent disclosures docketed and all other
patent rights.
"PERSON" shall mean an individual or a partnership, corporation, trust,
association, limited liability company, Governmental Authority or other entity.
"PREMISES" shall mean the premises located at 00000 Xxx Xxxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxx 00000 and 00000 Xxx Xxxxxxxxxxx Xxxx, Xx. 0000,
Xxxxxxxxxx, Xxxxxxxxxx 00000.
"SECURITY AGREEMENT" shall mean the Security Agreement attached hereto as
Exhibit B.
"SERVICE AGREEMENT" shall mean the exclusive EDI Service Agreement
attached hereto as Exhibit C.
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"SERVICE CREDITS" shall mean credits available to offset up to fifty
percent (50%) of the fees and other amounts charged under the Service Agreement,
to be applied pursuant to the terms of the Service Agreement, in the aggregate
amount of $2,063,000; provided, that such amount shall be adjusted either
upwards or downwards, on a dollar for dollar basis, to the extent the dollar
amount of the Accounts Receivable, fixed assets and prepaid expenses reflected
on Schedule 2.1.2 is either greater than (upward adjustment) or less than
(downward adjustment) the dollar amount of the Accounts Receivable, fixed assets
and prepaid expenses reflected on the Current Balance Sheet and the notes and
schedules thereto.
"STOCK EQUIVALENTS" of any Person shall mean options, warrants, calls,
rights, commitments, convertible securities and other securities pursuant to
which the holder, directly or indirectly, has the right to acquire (with or
without additional consideration) capital stock, partnership interests or
membership interests of such Person.
"SUBSIDIARY" of any Person shall mean any entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are owned
directly or indirectly by such Person.
"SYSTEMS" shall mean all items, products or systems of Seller used in the
operation of the Business which incorporate the processing of dates and
date-related data (including, without limitation, calculating, comparing and
sequencing) that are operationally material to the Business as conducted by
Seller or its agents or other third Persons, including, without limitation,
computer systems, infrastructure items, software applications, hardware, and
related equipment and utilities.
"TRADEMARKS" shall mean all trademark, service xxxx and trade name rights,
including, without limitation, all registrations of trademarks and of other
marks, all registrations of trade names, labels and other trade rights and
applications for any of the foregoing.
"TRANSACTION CONTRACTS" shall mean this Agreement, the Security Agreement,
the Service Agreement, the Transitional Services Agreement, the Note and each
other Contract executed and delivered by any party hereto in connection with the
transactions contemplated by this Agreement.
"TRANSFER" shall mean sell, assign, transfer, pledge, license, grant a
security interest in, or otherwise dispose of, with or without consideration,
and "TRANSFERRED" shall have a correlative meaning.
"TRANSITION SERVICES AGREEMENT" shall mean the Transition Services
Agreement attached hereto as Exhibit D.
"YEAR 2000 COMPLIANT" shall mean that all Systems accurately process dates
and date-related data (including, without limitation, calculating, comparing and
sequencing) in all material respects before, during and after the year 2000.
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1.2 Other Definitions. The following terms shall have
the meanings given the terms in the Sections set forth below:
TERM SECTION
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Accounts Receivable 2.1
Acquisition Proposal 8.3
Assets 2.1
Associated Costs 3.3
Assumed Contracts 2.1
Assumed Liabilities 3.1
Claim 12.4
Claim Notice 12.4
Closing 5.1
Closing Date 5.1
Damages 12.2
Direct Claim 12.4
Employees 6.17
Excluded Assets 2.2
Excluded Contracts 2.2
Excluded Liabilities 3.2
Floor 12.7
Indemnified Party 12.4
Indemnifying Party 12.4
Notices 16.1
Permits 2.1
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Purchase Price 4
Purchaser Indemnified Party 12.2
Purchaser Indemnified Parties 12.2
Records 11.4
Seller Disclosure Letter 6
Severance Payments 11.5
Software 2.1
Tangible Personal Property 2.1
Third Party Claim 12.4
Transferred Employees 11.5
Uncollectable Accounts 11.6
Unpaid Liability 3.3
2. SALE AND PURCHASE OF ASSETS.
2.1 Transfer of Assets. On the terms and subject to the conditions
of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey
and deliver to Purchaser (or to any Subsidiary of Purchaser to whom such right
is assigned), and Purchaser shall purchase from Seller, all of Seller's right,
title and interest in, under and to all of the assets, properties and rights of
every kind, nature and description, tangible or intangible, real or personal,
and the goodwill of and relating to the Business (the "ASSETS"), including, but
not limited to, the following:
2.1.1 all furniture, fixtures, machinery, equipment, office
materials and supplies, vehicles, computer hardware, data processing equipment
and other tangible personal property necessary for or used in the Business and
all related warranties and similar rights, including, without limitation, all
such items listed on Schedule 2.1.1 (the "TANGIBLE PERSONAL PROPERTY");
2.1.2 all accounts and other receivables relating to the
Business which are outstanding at the Closing (collectively, the "ACCOUNTS
RECEIVABLE"), which Accounts Receivable and an aging schedule relating thereto
shall be listed on Schedule 2.1.2 to be provided to Purchaser by Seller at the
Closing;
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2.1.3 all prepaid and deferred expenses and deposits relating
to the Business or the Assets, including prepaid insurance relating specifically
to the Business or the Assets, all such items listed on Schedule 2.1.3.
2.1.4 all Business IP;
2.1.5 all computer databases and software owned by,
or licensed to, Seller for use in connection with the Business
("SOFTWARE");
2.1.6 all Contracts relating to the Business that are
identified as an "ASSUMED CONTRACT" on Schedule 2.1.6; provided, however, that
if Purchaser, after the Closing discovers a Contract that Purchaser deems in
good faith material to the Business, but such Contract is not identified as an
"Assumed Contract," Seller agrees to assign (promptly upon the request of
Purchaser) such Contract to Purchaser for no additional payment;
2.1.7 all lists, records, files, books and documents
(including, without limitation, credit information) in whatever form or medium
(electronic, paper or otherwise) relating to past, current or prospective
customers, suppliers, subscribers, agents, publishers, clearing houses and other
Persons relating to the Business or the Assets, and other business and financial
records, files, books and documents in whatever form or medium (electronic,
paper or otherwise) held by Seller relating to the Business or the Assets, but
excluding all primarily relating to Excluded Liabilities or minute books,
capital records and other documents of Seller that are not reasonably of use to
Purchaser in the conduct of the Business;
2.1.8 all governmental franchises, licenses, approvals,
authorizations and permits (collectively, "PERMITS") that are held or used by
Seller in connection with the Business or the Assets;
2.1.9 the ownership and/or leasehold interest and all
improvements (leasehold or otherwise) of Seller in the Premises;
2.1.10 all claims, causes of action, rights of recovery and
rights of set-off of any kind of Seller relating primarily to the Business or
the Assets, including, without limitation, any Liens for the benefit of or any
rights to payment or to enforce payment in connection with the Business or the
Assets;
2.1.11 all rights to and under any noncompetition,
confidentiality, trade secret or other similar agreements or arrangements of
Seller and relating to the Business or the Assets, including, without
limitation, all causes of action or rights to xxx for past infringement or
breaches thereunder possessed by Seller; and
2.1.12 all other assets of the Business (except the Excluded
Assets), wherever located, tangible or intangible.
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2.2 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Assets shall not include, and Seller is not under
this Agreement selling, assigning, transferring or conveying to Purchaser, the
following assets (the "EXCLUDED ASSETS"):
2.2.1 prepaid state income or franchise taxes, prepaid federal
income taxes and prepaid insurance not relating specifically to the Business or
Assets;
2.2.2 all insurance policies maintained by or on
behalf of Seller not relating primarily to the Business or the Assets;
2.2.3 any right, title or interest of Seller in any refunds or
credits of income taxes receivable after the Closing not relating primarily to
the Business;
2.2.4 all rights of Seller under any Transaction
Contract;
2.2.5 the records relating to the organization of
Seller and the operation of Seller as a corporation that are not
reasonably of use to Purchaser in the conduct of the Business;
2.2.6 all rights of Seller under any Contracts which are
identified as "EXCLUDED CONTRACTS" on Schedule 2.2.6 or relate to Indebtedness
of Seller; and
2.2.7 the assets identified on Schedule 2.2.7.
2.3 Delivery of Possession of Assets. At the Closing, Seller shall,
at Seller's expense, deliver possession of the Assets being transferred by
Seller to Purchaser at the Premises and 000 Xxxx Xxxxxxx Xxxx., Xx. 000,
Xxxxxxx, Xxxxxxxx 00000. If at any time after the Closing Date Seller comes into
possession of any Asset, Seller shall promptly notify Purchaser and promptly
deliver possession of the Asset to Purchaser at such location as is designated
by Purchaser.
2.4 Right of Endorsement. After the Closing Date, Purchaser shall
have the absolute and unconditional right and authority to endorse, without
recourse, the name of Seller on any check or any other evidence of indebtedness
received by Purchaser exclusively on account of any of the Assets, and Seller
shall deliver to Purchaser at the Closing a letter of instruction executed by
Seller sufficient to permit Purchaser to deposit such checks or other evidences
of indebtedness in bank accounts in the name of Purchaser.
2.5 Consent to Assignment. This Agreement shall not constitute an
agreement to assign any interest in any Contract or Permit or any claim, right
or benefit arising thereunder or resulting therefrom, if an attempted assignment
thereof without the consent required or necessary of any third Person would
constitute a breach or violation thereof or affect adversely the rights of
Purchaser or Seller thereunder. If a consent of any third Person which is
required in order to assign any such interest is not obtained prior to the
Closing Date,
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or if an attempted assignment would be ineffective or would adversely affect the
ability of Seller to convey its interest to Purchaser or the rights of Purchaser
thereunder, Seller shall cooperate with Purchaser in any lawful arrangement to
provide that Purchaser shall receive Seller's entire interest in the benefits
under any such Contract or Permit, including, without limitation, enforcement
for the benefit of Purchaser of any and all rights of Seller against any other
party thereto arising out of the breach or cancellation thereof by such party or
otherwise; provided, however, that nothing contained in this Section 2.5 shall
affect the liability, if any, of Seller pursuant to this Agreement for failing
to have disclosed the need for such consent or approval; and provided, further,
that nothing contained in this Section 2.5 shall obligate Purchaser to waive the
satisfaction of the conditions precedent set forth in Section 9 of this
Agreement, including, without limitation, Section 9.4 of this Agreement.
3. ASSUMED LIABILITIES.
3.1 Assumed Liabilities. Subject to the provisions of this
Agreement, Purchaser agrees that upon transfer of the Assets on the Closing
Date, it shall assume, perform and fulfill as they become due, to the extent not
paid, satisfied, performed, discharged or fulfilled by Seller on or before the
Closing Date, the executory obligations of Seller to be performed after the
Closing Date under the Assumed Contracts that are actually transferred to
Purchaser hereunder, excluding any obligations or liabilities arising from any
breach, default, or other act or omission thereunder or noncompliance therewith
by Seller on or before the Closing Date (the "ASSUMED LIABILITIES"). It is not
the intention of either Purchaser or Seller that the assumption by Purchaser of
the Assumed Liabilities shall in any way enlarge the rights of third Persons
under any Contracts with Purchaser or Seller. Nothing contained in this
Agreement shall in any way prevent Purchaser from contesting in good faith any
of the Assumed Liabilities; provided no such contest shall relieve Purchaser of
its obligations under this Agreement to Seller with respect thereto.
3.2 Liabilities Not Assumed. Purchaser shall not and does not assume
any liabilities, obligations or commitments of Seller of any kind, known or
unknown, contingent or otherwise, of whatsoever kind or nature, not specifically
included within the Assumed Liabilities, and the same shall remain the sole
responsibility of Seller (which liabilities, obligations and commitments are
referred to in this Agreement as the "EXCLUDED LIABILITIES"). The Excluded
Liabilities include, without limitation, the following liabilities that are
expressly excluded from the liabilities, obligations, and commitments being
assumed by Purchaser pursuant to Section 3.1:
3.2.1 any Indebtedness of Seller, other than the Assumed
Liabilities set forth in Section 3.1, regardless of whether it is related to the
Business;
3.2.2 any liabilities or obligations of Seller for the fees
and expenses of its counsel, accountants and other agents and representatives
and all other expenses incurred by Seller (including, without limitation,
broker's fees) incident to the negotiation, preparation and execution of the
Transaction Contracts and the performance by Seller of its obligations
thereunder;
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3.2.3 any liabilities or obligations of Seller arising out of
or related to local, state, federal or foreign income taxes or assessments,
including, without limitation, any such taxes arising by virtue of the
transactions contemplated by this Agreement;
3.2.4 all claims, penalties, fines, or other liabilities
arising from any violation or alleged violation of any law, rule, regulation or
order from any federal, state, local or foreign governmental authority,
including but not limited to the Federal Trade Commission or any similar or
related state agencies governing interstate and intrastate trade;
3.2.5 any liabilities or obligations of Seller with respect to
employee compensation or employee benefits of any nature, including, without
limitation, accrued wages, retirement benefits, vacation and sick pay, and
severance, owed to any of Seller's employees or former employees or their
beneficiaries that arise out of the employment relationship between Seller and
any of its employees or former employees or the termination of that relationship
(provided, this Section 3.2.6 shall not be interpreted to limit Purchaser's
obligation under Section 11.5.2); and
3.2.6 any payroll taxes payable by Seller.
3.3 Right of Set Off. If Seller fails to make any payment with
respect to any of the Excluded Liabilities (each, an "UNPAID LIABILITY"),
Purchaser may elect to pay such Unpaid Liability, and any other costs and
charges, if any, associated with the Unpaid Liability (the "ASSOCIATED COSTS"),
if Purchaser determines, in its sole discretion, that such payment is necessary
or desirable to allow the Business to continue on an uninterrupted basis;
provided, however, that Purchaser shall have provided Seller with not less than
ten (10) days' prior written notice of its intent to pay the Unpaid Liability
and/or Associated Costs, and Seller shall have failed to pay the Unpaid
Liability and/or Associated Costs and/or that, with respect to any Unpaid
Liability, Seller notifies Purchaser in writing within such ten (10) day period
that Seller intends to defend or contest the Unpaid Liability, and Seller fails
to discharge said Unpaid Liability within ten (10) days after the Unpaid
Liability is reduced to a final judgment or otherwise becomes a Lien on any
assets of Purchaser or the Business. If Purchaser pays any Unpaid Liability or
Associated Costs, Purchaser shall have the right (in addition to Purchaser's
rights to indemnification under Section 12.2 hereof) to offset the amount of
such Unpaid Liability and/or Associated Costs, up to a maximum amount of
$100,000, against the Service Credits or any other amounts owing Seller under
the provisions of any Transaction Contract.
3.4 Right of Enforcement and Settlement. From and after the Closing
Date, Purchaser shall have complete control over the payment, settlement or
other disposition of the Assumed Liabilities and the right to commence, conduct
and control all negotiations and proceedings with respect thereto. Seller shall
notify Purchaser promptly of any claim made with respect to any Assumed
Liability, and no Seller Party shall, except with Purchaser's prior written
consent, which consent may be withheld by Purchaser in its absolute discretion,
voluntarily make any payment of, settle or offer to settle, or consent to any
compromise or admit liability with respect to, any Assumed Liability. Each
Seller Party
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shall cooperate with Purchaser in any reasonable manner requested by Purchaser
in connection with any negotiations or proceedings involving any Assumed
Liabilities.
4. PURCHASE PRICE.
The purchase price to be paid by Purchaser for the Assets (the
"PURCHASE PRICE") shall consist of: (a) cash in the amount of $450,000; plus (b)
the Note; plus (c) the Service Credits; plus (d) the assumption by Purchaser on
the Closing Date of the Assumed Liabilities.
5. CLOSING AND DELIVERIES.
5.1 The Closing. The closing of the purchase and sale of the Assets
and the assumption of the Assumed Liabilities pursuant to Sections 2 and 3 of
this Agreement (the "CLOSING") shall take place on January 12, 2001 at 10:00
a.m., Los Angeles time, or at such other place or time as the parties to this
Agreement shall mutually agree upon in writing. The date of the Closing is
referred to in this Agreement as the "CLOSING DATE". Notwithstanding the actual
Closing Date, Purchaser and Seller have agreed that the purchase and sale of the
Assets and the Assumption of the Assumed Liabilities shall be deemed to be
effective as of January 1, 2001.
5.2 Deliveries by Purchaser at the Closing. At the
Closing, Purchaser shall deliver to Seller:
5.2.1 $450,000 by delivery of a cashiers check or by
wire transfer to an account designated by Seller;
5.2.2 the Note;
5.2.3 the fully executed copies of the Transaction
Contracts; and
5.2.4 a xxxx of sale and an assignment and assumption
agreement.
5.3 Deliveries by Seller at the Closing. At the Closing,
Seller shall deliver or cause to be delivered to Purchaser:
5.3.1 such bills of sale, endorsements, assignments,
subleases, and other good and sufficient instruments of conveyance, transfer and
assignment, including, without limitation, a xxxx of sale, as shall be necessary
to vest in Purchaser good title in and to the Assets free and clear of any and
all Liens; and
5.3.2 possession of the Assets in accordance with
Section 2.3.
5.4 Further Assurances. At the Closing, each party to this Agreement
shall deliver or cause to be delivered, as appropriate, such further
certificates, consents and other documents as may be necessary to carry out the
terms of this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
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Except as set forth in the disclosure letter delivered by Seller to
Purchaser concurrently with the execution and delivery of this Agreement, which
letter shall refer to the relevant Sections of this Agreement (the "SELLER
DISCLOSURE LETTER"), Seller represents and warrants to Purchaser as follows:
6.1 Organization, Standing and Corporate Power. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of their states of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted.
6.2 Authority; Enforceability; Effect of Agreement.
6.2.1 Seller has full power and authority to enter into,
execute and deliver each Transaction Contract to which it is a party and perform
its obligations thereunder. Each Transaction Contract to which Seller is a party
has been duly authorized by all necessary corporate action of Seller. This
Agreement has been, and at the Closing each other Transaction Contract to which
Seller is a party will be, duly executed and delivered by Seller. Assuming each
Transaction Contract to which Seller is a party is duly executed and delivered
by Purchaser to the extent it is a party thereto, this Agreement constitutes
and, at the Closing, each other Transaction Contract to which Seller is a party
will constitute, a valid and legally binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally, or the
availability of equitable remedies.
6.2.2 The execution and delivery by Seller of each Transaction
Contract to which Seller is a party does not, and compliance by Seller with the
provisions of each such Transaction Contract will not, (A) conflict with or
result in a breach or default under the Charter Documents of Seller or any of
the terms, conditions or provisions of any Assumed Contract or any other
Contract to which Seller is a party or otherwise bound, or to which the Business
or Asset are subject; (B) violate any Law applicable to Seller or the Business;
or (C) result in the creation or imposition of any Lien on any Assets.
6.3 Assets.
6.3.1 Seller has good and marketable title to all of the
Assets. At the Closing, Purchaser shall receive good and marketable title to the
Assets, free and clear of all Liens.
6.3.2 The Assets consist of all of the properties and assets
used or usable in the conduct of the Business, including, without limitation,
all of the properties and assets reflected on the Current Balance Sheet. Each
item of Tangible Personal Property included in the Assets is in good operating
condition and repair, ordinary wear and tear excepted, for the requirements of
the Business as currently conducted.
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6.4 Accounts Receivable. The Seller Disclosure Letter sets forth a
true and complete schedule of the Accounts Receivable of the Business as of the
date of the Current Balance Sheet, including, without limitation, the names of
the account debtors, the balance amount and aging as of the date indicated
therein. The Accounts Receivable, whether reflected on the Current Balance Sheet
or subsequently created, and all books, records and documents relating to such
Accounts Receivable, are genuine and accurate. All Accounts Receivable of
Seller, whether reflected on the Current Balance Sheet or subsequently created:
(A) constitute bona fide and valid rights of Seller to collect payments from
other Persons; (B) represent credit extended in a manner consistent with
Seller's trade practices; (C) are not subject to any defense, counterclaim or
offset; and (D) except for reserves for bad debts set forth in the Current
Balance Sheet, are fully collectable within twelve (12) months of the respective
dates on which such Accounts Receivable were billed. Since the date of the
Current Balance Sheet: (i) there have not been any write-offs as uncollectable
of any Accounts Receivable of Seller; and (ii) Seller has not taken, or caused
to be taken, any action to accelerate collection of any of its Accounts
Receivable.
6.5 Assumed Contracts. True and correct copies of each Assumed
Contract so identified on Schedule 2.1.6, including, without limitation, all
amendments and modifications thereof and waivers thereunder, have been made
available to Purchaser or its counsel. The Assumed Contracts constitute all
Contracts pursuant to which Business receives income or revenues or are
otherwise material to the Business. Each Assumed Contract is in full force and
effect unless otherwise indicated on Schedule 2.1.6, and is the valid and
binding obligation of the Seller and, to the Best Knowledge of Seller, each
other party to the Assumed Contract and are fully assignable to Purchaser.
Seller has performed all of the obligations required to be performed by it to
date under each Assumed Contract to which it is a party or is otherwise subject,
and Seller is not in breach of or default under any Assumed Contract, and no
event has occurred or circumstance exists which, with notice or lapse of time or
both, would constitute a breach of or default by Seller under any Assumed
Contract, except for a breach or default which would not reasonably have a
Material Adverse Effect on the Business or the Assets. To the Best Knowledge of
Seller, each other party to each Assumed Contract has performed all of the
obligations required to be performed by it to date under each Assumed Contract
and is not in breach of or in default under such Assumed Contract, and no event
has occurred or circumstance exists which, with notice or lapse of time or both,
would constitute a breach of or default by such other party under any Assumed
Contract.
6.6 Intellectual Property.
6.6.1 The Seller Disclosure Letter contains a true and
complete list of all Patents, Trademarks and registered Copyrights included as
part of the Business IP. The Business IP constitutes all IP that is required to
enable Seller to conduct the Business as now conducted. Seller has not received
any written notice of infringement or other written complaint or is otherwise
aware of any complaint to the effect that Seller or any of its Affiliates has
violated or infringed the IP or any other proprietary rights of others. Seller
has full right and authority to utilize the Business IP in the manner currently
utilized and as may be required to operate the Business as currently operated.
No royalties, honoraria, damages or fees are payable by Seller to other Persons
by reason of the ownership or use by Seller of any
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Business IP. To the Best Knowledge of Seller, no Person has interfered with,
infringed upon, misappropriated, or otherwise violated any IP right of Seller
relating to the Business or the Assets.
6.6.2 Except as set forth on the Seller Disclosure Letter,
Seller is the sole and exclusive owner (legal and beneficial) of the Business
IP, including the Trademarks identified on Section 6.6 of the Seller Disclosure
Letter in any and all forms and embodiments thereof in each Jurisdiction, and to
the goodwill attached to such Trademarks in each Jurisdiction, in the class or
classes identified on Section 6.6 of the Seller Disclosure Letter with respect
to such Jurisdiction. Section 6.6 of the Seller Disclosure Letter sets forth a
list of all countries, states or other jurisdictions in which each such
Trademark is registered or in which registration applications are pending (the
"JURISDICTIONS"), the date(s) of registration (or application), the class(es) of
registration and the name of the Person in which each such Trademark is
registered.
6.6.3 Seller agrees for the express benefit of Purchaser, that
following the Closing it will have no continuing right, title or interest in or
to any the Business IP.
6.7 Financial Statements.
6.7.1 Seller has delivered the Current Financial Statements to
Purchaser. The Current Financial Statements have been prepared from the books
and records of Seller in accordance with GAAP consistently applied throughout
the periods involved and fairly present the financial position and results of
operations of the Business as at the dates of and for the periods set forth in
the Current Financial Statements in accordance with GAAP. Both parties agreed
that the presentation of the Current Financial Statements are solely prepared
for the consummation of this Transaction and is not in accordance with GAAP.
6.7.2 Seller does not have any material liabilities or
obligations relating to the Business, either accrued, absolute, contingent or
otherwise, which have not been reflected on the Current Balance Sheet, other
than trade payables and obligations incurred in the ordinary course of business
consistent with past practice after the date of the Current Balance Sheet. Both
parties agreed that the presentation of the Current Financial Statements are
solely prepared for the consummation of this Transaction and is not in
accordance with GAAP.
6.8 Absence of Certain Changes and Events.
6.8.1 Since November 1, 2000, Seller has conducted the
Business only in the ordinary course of business consistent with past practice
and there has not been (i) any material damage, destruction or loss relating to
the Tangible Personal Property, whether or not insured, (ii) any material
liability created or incurred with respect to the Business, other than accounts
payable, accrued expenses and deferred revenues created or incurred in the
ordinary course of business consistent with past practice and in amounts not
unusual in respect of the Business as customarily conducted, (iii) any Lien
created on any Asset, (iv)
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except in the ordinary course of business consistent with past practice, any
material increase in, or commitment or plan adopted to increase, the wages,
salaries, compensation, pension or other benefits or payments to any employees
engaged in the Business, (v) any material capital expenditures or commitment to
make any such expenditures with respect to the Assets or the Business, (vi) any
rights of substantial value waived with respect to the Assets or the Business
which could reasonably have a Material Adverse Effect on the Business or the
Assets, (vii) any transfer of any material assets of the Business other than in
the ordinary course of business consistent with past practice, or (viii) any
material adverse change in the Business or Assets.
6.9 Litigation and Proceedings. There is no pending or, to the Best
Knowledge of Seller, threatened Action (or basis for any Action) to which Seller
is a party or involving the Business or any of the Assets. Neither Seller nor
the Business nor the Assets is subject to any judgment, order, writ, injunction,
decree or regulatory directive or agreement of any Governmental Authority.
6.10 Brokers. Seller has not retained or otherwise engaged or
employed any broker, finder or any other Person, or paid or agreed to pay any
fee or commission to any agent, broker, finder or other Person, for or on
account of acting as a finder or broker in connection with this Agreement or the
transactions contemplated hereby.
6.11 Creditor Issues. The transfer of the Assets to Purchaser is not
being made with the actual intent to hinder, delay or defraud any creditor of
Seller. Seller believes it is receiving reasonably equivalent value in exchange
for the transfer of the Assets. Seller is not engaged or about to engage in a
business or a transaction following the Closing for which the remaining assets
of Seller would be unreasonably small in relation to the business or
transaction, and Seller has not incurred, nor shall it incur debts beyond its
ability to pay them as they become due. Seller is not insolvent nor shall it
become insolvent as a result of the transactions contemplated by this Agreement.
6.12 No Consents Required. There are no approvals, authorizations,
consents, orders or other actions of, or filings with, any Person that are
required to be obtained or made by Seller in connection with the execution of,
and the consummation of the transactions contemplated under, this Agreement and
the other Transaction Contracts, including, but not limited to, the assignment
of the Assumed Contracts.
6.13 Environmental Compliance Matters. (i) Seller is, and at all
times has been, in full compliance with, and has not been and is not in
violation of or liable under, any Environmental Law; (ii) the Premises
constitute all of the real property used or occupied by Seller in connection
with the Business; (iii) Seller has inspected the Premises and, to its Best
Knowledge, there are no Hazardous Substances incorporated in or deposited,
stored or buried at or upon the Premises; (iv) to the Best Knowledge of Seller
the Premises have never been used as a waste disposal site or a storage site for
petroleum products or chemicals; (v) to the Best Knowledge of Seller no existing
structures on the Premises contain asbestos; (vi) to the Best Knowledge of
Seller there are no underground storage tanks on the Premises; (vii) Seller has
not knowingly allowed any Person occupying the Premises to bring Hazardous
Substances onto the Premises or to process or store any Hazardous Substances on
the Premises and no
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Hazardous Substance has been released into the environment by Seller; (viii) to
the Best Knowledge of Seller, there are no complaints on file or matters pending
in any federal or state environmental protection offices involving any
allegation of Hazardous Substances on the Premises or other violations of
Environmental Laws; and (ix) Seller has not received notice from any
environmental board, agency or authority requiring the removal of any Hazardous
Substances or other alleged harmful materials or wastes, or advising of any
pending or contemplated search or investigation of the Premises or any portion
of the Premises with respect the removal of any Hazardous Substances or other
alleged harmful materials or wastes or the violation of any Environmental Law.
6.14 Compliance With Applicable Law. Seller has complied with, and
the Business has been conducted in compliance with, all applicable Laws in all
material respects; except where such noncompliance could not reasonably have a
Material Adverse Effect on the Business or the Assets.
6.15 Permits. The Seller Disclosure Letter lists all federal, state,
local and foreign Permits issued by any Governmental Authority in respect of the
Business or the Assets. Seller has all Permits and other rights that are
required in order for Seller to conduct the Business as presently conducted, and
to the Best Knowledge of Seller there is no basis for the denial of any Permits
or other rights in the future.
6.16 Employee Benefits. All Employee Plans of any kind or nature
maintained by or on behalf of Seller comply with and are and have been operated
in compliance with all applicable Laws including Employment Retirement Income
Security Act of 1974, as amended.
6.17 Employees.
6.17.1 Seller is and has been in compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation, any
such Laws respecting employment discrimination, sexual harassment, occupational
safety and health, immigration status, and unfair labor practices. There are no
pending or, to the Best Knowledge of Seller, threatened unfair labor practice
charges or employee grievance charges against or otherwise directly affecting
Seller.
6.17.2 There is no request for union representation, labor
strike, dispute, slowdown or stoppage pending or, to the Best Knowledge of
Seller, threatened against or directly affecting Seller.
6.17.3 No grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending and no claims therefor
exist before any Governmental Authority.
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6.17.4 Seller has no employment contracts with its employees
and the employment of Seller's employees is terminable at will without cost to
Seller except for payment of accrued salaries or wages and vacation pay
6.17.5 There is no collective bargaining agreement that is
binding on Seller or other written or oral agreement with respect to collective
bargaining with any union or group of employees.
6.17.6 Seller has not experienced any material work stoppage
in the last thirty-six (36) months.
6.17.7 Seller is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to the date hereof or amounts
required to be reimbursed to such employees.
6.17.8 The Seller Disclosure Letter lists the name, job title,
current base salary or hourly wage and date of hire of all employees employed by
Seller in connection with the Business, including, without limitation,
individuals on short-term disability who were so employed immediately before
their disability (collectively, the "EMPLOYEES"). As to any individual on
short-term disability, the Seller Disclosure Letter indicates the reason for
such absence and the date the individual is reasonably expected to return to
active employment. The Seller will pay all accumulated vacation pay accrued for
each Employee through the Closing Date. Seller has not taken any actions that
were calculated to dissuade, or have the effect of dissuading, any present
employees, representatives or agents of Seller from commencing an association
with Purchaser after the Closing Date. To the Best Knowledge of Seller, no
Employee intends to terminate his or her employment with Seller.
6.18 Tax Matters. All tax returns required to be filed by Seller
have been filed and all such returns are true, complete, and correct in all
material respects, and all taxes that are due or claimed to be due from Seller
have been paid other than those (i) currently payable without penalty or
interest or (ii) being contested in good faith and by appropriate proceedings
and for which adequate reserves, if necessary, have been established in
accordance with GAAP. None of the tax returns of Seller is currently being
examined by the United States Internal Revenue Service or any other Governmental
Authority.
6.19 Customers and Suppliers. No material customer or supplier of
the Business has canceled or otherwise terminated, or notified Seller in writing
that it intends to cancel or terminate, its relationship with Seller or the
Business, and Seller does not have any knowledge that any material customer or
supplier of the Business intends to cancel or otherwise terminate its
relationship with Seller or the Business.
6.20 Other Relationships. Neither of Seller nor its Affiliates has
any interest (other than as a holder of less than five percent (5%) of the
outstanding securities of a publicly traded company), either directly or
indirectly, in any Person (whether as an employee, officer, director,
shareholder, agent, independent contractor, security holder, creditor,
consultant, or
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otherwise) that presently (i) provides any services or products, or engages in
any activity which is the same, similar to or competitive with any activity or
business in which the Business is now engaged; (ii) is a supplier of, customer
of, creditor of, or has an existing contractual relationship with the Business;
or (iii) has any direct or indirect interest in any Asset.
6.21 Conflicts of Interest. Neither Seller nor any officer,
employee, agent or any other Person acting on behalf of Seller has, directly or
indirectly, given or agreed to give or receive any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business consistent with past practice) to or from any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
Governmental Authority or other Person who was, is, or may be in a position to
help or hinder the Business (or assist in connection with any actual or proposed
transaction therewith) which (i) might subject Purchaser or Seller to any
Damages in any Action, (ii) if not given in the past, might have had a Material
Adverse Effect on the Business or (iii) if not continued in the future, might
have a Material Adverse Effect on the Business.
6.22 Year 2000. All Systems are Year 2000 Compliant provided that
all other technology used with the Systems properly exchange data with them.
6.23 Material Misstatements and Omissions. No representations and
warranties by Seller in this Agreement, or any exhibit, schedule or certificate
furnished by Seller to Purchaser pursuant to this Agreement, contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as follows:
7.1 Organization, Standing and Corporate Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and corporate
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted.
7.2 Authority; Enforceability; Effect of Agreement.
7.2.1 Purchaser has full corporate power and corporate
authority to enter into, execute and deliver each Transaction Contract to which
it is a party and perform its obligations thereunder. Each Transaction Contract
to which Purchaser is a party has been duly authorized by all necessary
corporate action of Purchaser. This Agreement has been, and at the Closing each
other Transaction Contract to which Purchaser is a party will be, duly executed
and delivered by Purchaser. Assuming each Transaction Contract to which
Purchaser is a party is duly executed and delivered by Seller to the extent it
is a party thereto, this Agreement constitutes and, at the Closing, each other
Transaction Contract to which Purchaser is a party will constitute, a valid and
legally binding obligation of Purchaser,
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enforceable against Purchaser in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights
generally, or the availability of equitable remedies.
7.2.2 The execution and delivery by Purchaser of each
Transaction Contract to which it is a party do not, and compliance by Purchaser
with the provisions thereof will not, (A) conflict with or result in a breach or
default under the Charter Documents of Purchaser or any of the terms, conditions
or provisions of any Contract to which Purchaser is a party or otherwise bound;
or (B) violate any Law applicable to Purchaser ; or (C) result in the creation
or imposition of any Lien on any asset of Purchaser.
7.3 Brokers. Purchaser has not retained or otherwise engaged or
employed any broker, finder or any other Person, or paid or agreed to pay any
fee or commission to any agent, broker, finder or other Person, for or on
account of acting as a finder or broker in connection with this Agreement or the
transactions contemplated hereby.
7.4 No Consents Required. There are no approvals, authorizations,
consents, orders or other actions of, or filings with, any Person that are
required to be obtained or made by Purchaser in connection with the execution
of, and the consummation of the transactions contemplated under, this Agreement.
7.5 Material Misstatements and Omissions. No representations and
warranties by Purchaser in this Agreement, or any exhibit, schedule or
certificate furnished by Purchaser to Seller pursuant to this Agreement,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
8. CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING.
8.1 Conduct of Business. Prior to the Closing, except as
contemplated by the Transaction Contracts or with the prior written consent of
Purchaser, Seller agrees:
8.1.1 to conduct the Business according to its ordinary and
usual course of business consistent with past practice;
8.1.2 not to Transfer any material Assets;
8.1.3 not to amend, modify or terminate, or grant any waiver
of any right under, any Assumed Contract;
8.1.4 to comply with all of its obligations and duties under
each Assumed Contract and not to create or permit to exist any default or event
of default on behalf of Seller under any Assumed Contract, or any event or
circumstance which, with lapse of time or notice, or both, would constitute a
default under an Assumed Contract which could reasonably have a Material Adverse
Effect on the Business or the Assets;
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8.1.5 to use its Best Efforts to preserve intact the Business
and its goodwill, keep available the services of all Employees and maintain
satisfactory relationships with those Persons having business relationships with
the Business;
8.1.6 to duly comply in all material respects with
all Laws applicable to Seller and to the conduct of the Business;
8.1.7 to maintain the Assets in a good condition and
state of repair;
8.1.8 not to incur any fixed or contingent obligation or enter
into any material Contract or other transaction or arrangement relating to the
Business or the Assets which (i) may not be terminated by Seller on thirty (30)
days' notice or less without cost or liability, (ii) which is not in the
ordinary course of the business consistent with past practice, and (iii) which
is not transferable or assignable to Purchaser;
8.1.9 not to commit any act or omit to do any act which would
be or result in a breach of any of its obligations, duties, agreements or
representations under any Contract to which it is a party or to which it enters
into subsequent to the date of this Agreement which would reasonably be expected
to have a Material Adverse Effect on the Business or the Assets;
8.1.10 to bear the risk of loss or damage to the Assets on and
prior to the Closing Date; and, if any Asset is damaged on or prior to the
Closing Date by any casualty, Seller shall give Purchaser immediate written
notice of such damage, and, if such damage or destruction in the aggregate is
material, shall afford Purchaser, in its sole and absolute discretion, the right
to cancel, terminate or delay the Closing under this Agreement; provided,
however, if Purchaser does not elect to cancel, terminate or delay the Closing,
Seller shall, at Purchaser's election, either (i) restore such Asset to its
condition prior to such damage, or (ii) if Purchaser elects not to require
Seller to restore such Asset to its prior condition, or if the same is for any
other reason not so restored to the reasonable satisfaction of Purchaser prior
to the Closing Date, pay to Purchaser at the Closing an amount equal to the
difference between the replacement cost of such Asset (determined as the price
at which a substantially similar item could then be purchased plus all
applicable taxes and shipping, installation and related costs) and the book
value of such Asset on the date of such casualty; any amount payable by Seller
to Purchaser under this Section 8.1.10 shall be credited against the Purchase
Price otherwise payable by Purchaser on the Closing Date;
8.1.11 to maintain the books, records and accounts of the
Business in the ordinary course of business consistent with past practice;
8.1.12 not to enter into any Contract of any kind or nature
concerning the Business with any Affiliate of Seller; and
8.1.13 not to enter into any transaction or perform any act
which would reasonably be anticipated to make any of the representations,
warranties or agreements
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of Seller contained in this Agreement false or misleading in any material
respect if made again immediately after such transaction or act.
8.2 Inspection of Records. Between the date of this Agreement and
the Closing, Seller shall allow the duly authorized officers, attorneys,
accountants and other representatives of Purchaser access at all reasonable
times to the records and files, correspondence, audits and properties, as well
as to all information in each case relating to the Business and the Assets.
8.3 Acquisition Proposals. During the period from the date of this
Agreement and extending through the earlier of termination of this Agreement or
the Closing, Seller agrees that (i) Seller shall not, and Seller shall direct
and cause its officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant)
not to, initiate, solicit, intentionally encourage or accept the submission of
any proposal or offer with respect to an acquisition, sale, consolidation or
similar transaction involving all or any significant portion of the Assets or
the Business (any such proposal or offer being hereinafter referred to as an
"ACQUISITION PROPOSAL") or engage in any negotiations or discussions concerning,
or provide any confidential information or data to, any Person relating to an
Acquisition Proposal, and (ii) Seller will notify Purchaser immediately if any
Acquisition Proposal is received by Seller or any negotiations or discussions
relating to a potential Acquisition Proposal are sought to be initiated or
continued with Seller.
8.4 Other Agreements. Purchaser and Seller each agree to
enter into the Service Agreement and Transitional Services Agreement at
the Closing.
8.5 Best Efforts. Between the date of this Agreement and the
Closing, each of the parties to this Agreement will use its or his Best Efforts
to cause the conditions to the obligations of the other parties set forth in
Sections 9 or 10 of this Agreement, as the case may be, to be satisfied.
8.6 Notices. Seller shall promptly notify Purchaser of: (i) any
material development concerning the Business; (ii) any material change in the
Assets or financial condition of the Business or event which Seller believes
could cause a material change in the Assets or financial condition of the
Business; and (iii) any Action regarding the Business.
9. CONDITIONS TO THE OBLIGATIONS OF PURCHASER.
The obligation of Purchaser to take the actions required to be taken by it
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Purchaser in
writing, in whole or in part):
9.1 Representations and Warranties. The representations and
warranties of Seller contained in this Agreement subject to materiality or
Material Adverse Effect qualifications shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on the Closing
Date with the same force and effect as though made on and as of the Closing
Date, except that any such representation or warranty made as of a
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specified date (other than the date of this Agreement) shall only need to have
been true on and as of such date.
9.2 Performance. Seller shall have performed in all material
respects all obligations and complied in all material respects with all
covenants required by any Transaction Contract to be performed or complied with
by Seller on or prior to the Closing Date.
9.3 Release of Liens. Seller shall have delivered to Purchaser any
required releases and/or termination statements, releasing all Liens in favor of
any third Person in or to any of the Assets, except those which relate to the
Assumed Liabilities.
9.4 Consents. Seller shall have delivered to Purchaser all consents
and approvals of Governmental Authorities and other Persons necessary for the
Seller's unconditional consummation of the transactions contemplated hereby.
9.5 Certificate. Seller shall have delivered to Purchaser a
certificate, dated the Closing Date and executed by Seller, certifying that the
conditions specified in Sections 9.1, 9.2, 9.3 and 9.4 have been satisfied.
9.6 No Actions. No Action pertaining to the transactions
contemplated by this Agreement or to their consummation shall have been
instituted or threatened on or prior to the Closing Date.
9.7 Service Agreement. Seller shall have executed and
delivered to Purchaser the Service Agreement.
9.8 Transitional Services Agreement. Seller, and if
appropriate, certain former employees of Seller, shall have executed
and delivered to Purchaser the Transitional Services Agreement.
9.9 Assumed Contracts At Closing. All Assumed Contracts with any of
the parties listed on Schedule 9.9 hereto shall have been transferred and
assigned to Purchaser or provision shall have been made, satisfactory to
Purchaser, for the transfer or assignment of each such Assumed Contract. The
parties agree that a verbal consent from the Client with respect to each such
assignment shall satisfy the condition set forth in this Section 9.9.
10. CONDITIONS TO THE OBLIGATIONS OF SELLER.
The obligation of Seller to take the actions required to be taken by it at
the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by Seller in writing, in
whole or in part):
10.1 Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement subject to materiality or
Material Adverse Effect qualifications shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on the Closing
Date with the same force and effect as though made on
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and as of the Closing Date, except that any such representation or warranty made
as of a specified date (other than the date of this Agreement) shall only need
to have been true on and as of such date.
10.2 Performance. Purchaser shall have performed all obligations and
complied with all covenants required by any Transaction Contract to be performed
or complied with by it on or prior to the Closing Date.
10.3 Consents. Purchaser shall have delivered to Seller all consents
and approvals of Governmental Authorities and other Persons necessary for the
Purchaser's unconditional consummation of the transactions contemplated hereby.
10.4 Certificate. Purchaser shall have delivered to Seller a
certificate, dated the Closing Date and executed by Purchaser, certifying that
the conditions specified in Sections 10.1, 10.2 and 10.3 have been satisfied.
10.5 No Actions. No Action pertaining to the transactions
contemplated by this Agreement or to their consummation shall have been
instituted or threatened on or prior to the Closing Date.
10.6 Security Agreement. Purchaser shall have executed
and delivered to Seller the Security Agreement.
10.7 Service Agreement. Purchaser shall have executed and
delivered to Seller the Service Agreement.
10.8 Transition Services Agreement. Purchaser shall have
executed and delivered to Seller the Transition Services Agreement.
10.9 Note. Purchaser shall have executed and delivered to
Seller the Note.
11. FURTHER AGREEMENTS OF THE PARTIES.
11.1 Further Agreements of Seller. Seller shall upon the request of
Purchaser from time to time execute and deliver to Purchaser such further bills
of sales, endorsements and other good and sufficient instruments of title,
conveyance, transfer and assignment as may be necessary or desirable in order to
vest in Purchaser, free and clear of all Liens except for Liens relating to the
Assumed Liabilities, all right, title and interest in and to any and all of the
Assets.
11.2 Purchase Price Allocation. Seller and Purchaser
agree that the Purchase Price shall be allocated among the Assets as
set forth on Schedule 11.2 to this Agreement.
11.3 Confidentiality. Purchaser and Seller hereby acknowledge and
agree that any and all information which has been disclosed by one to the other,
its directors, partners, members, managers, employees, consultants, agents and
shareholders during the
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discussions and negotiations leading to the execution of this Agreement, and all
information to be disclosed by one to the other, its directors, employees,
consultants and agents and shareholders during the period commencing on the date
of execution of this Agreement through the Closing or termination of this
Agreement, shall constitute confidential information and trade secrets of the
disclosing party, and as such are secret, confidential and unique and constitute
the exclusive trade secrets and property of such party. Such information has
been made known and available to the other party and its respective employees,
consultants and agents strictly in connection with the negotiation and execution
of this Agreement and the consummation of the transactions provided for herein.
Each party hereby acknowledges and agrees that any use or disclosure of any such
confidential information or trade secrets, other than pursuant to this
Agreement, would be wrongful and would cause irreparable injury to the other.
Accordingly, each party hereby expressly agrees, for itself and on behalf of its
shareholders, partners, members and directors, if any, and its principal
officers, managers, employees, agents, consultants and representatives, that it
and they will not at any time prior to the Closing or at any time thereafter,
use or disclose, other than in accordance with the terms and provisions of this
Agreement, any of such confidential information or trade secrets; provided, that
any of the parties hereto may use or disclose such confidential information or
secrets of another party without restriction if such information or secrets (i)
were or are available to such party on a non-confidential basis from a source
other than the other party, or (ii) were or become generally available to the
public (other than as a result of an impermissible disclosure by such party or
its Affiliates); and provided, further, that if a party is required (by oral
question, interrogatories, requests for information or documents, subpoena or
similar process) to disclose any of such information or secrets of another
party, such disclosure be made without liability hereunder (although notice of
such requirement shall be given to the other party so that, if practicable, the
other party may seek a protective order against such disclosure).
Notwithstanding the foregoing, no provision of this Section 11.3 shall in any
manner whatsoever prevent or inhibit Purchaser from using or disclosing any such
confidential information relating to the Business or the Assets in any manner
Purchaser shall deem fit from and after the Closing; provided further, Seller
agrees, for itself or himself and its or his Affiliates, officers, managers,
partners, members, employees, agents, consultants and representatives, that it
or they will not at any time from and after the Closing Date use or disclose any
such confidential information which either (i) concerns Purchaser or its
business or operations or (ii) relates to the Business or is included in the
Assets. Notwithstanding the foregoing, no provision of this Section 11.3 shall
in any manner whatsoever prevent Seller from making the disclosure, if any,
required by the Securities and Exchange Act of 1934, as amended. Each party
acknowledges that, in the event of a violation by the other of the terms and
provisions of this Section 11.3, the remedies at law would not be adequate; and
accordingly, in such event such party may proceed to protect and enforce its
rights under this Section 11.3 by a suit in equity for specific performance and
temporary, preliminary and permanent injunctive relief from violation of any of
the provisions of this Section 11.3 from any court of competent jurisdiction
without the necessity of proving the amount of any actual damages to the party
resulting from the breach.
11.4 Access to Books and Records. Purchaser and Seller shall grant
to each other access to the books, records, papers and documents relating to the
business of Seller (i)
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in the case of Purchaser, included in the Assets, and (ii) in the case of
Seller, not included in the Assets which relate, directly or indirectly, to the
operation of the Business (the "RECORDS"). Such access shall be given upon the
reasonable request of the requesting party during normal business hours and upon
five (5) business days prior notice. Each party shall maintain the Records in
its possession for a period of three (3) years from and after the Closing Date,
and each shall first offer to the other such of the Records as it may hereafter
desire to dispose of or destroy at least thirty (30) days prior to initiating
any disposition or destruction whether prior to or following the aforementioned
three (3) year period.
11.5 Employees.
11.5.1 Effective as of the first business day following the
Closing Date, Seller shall terminate those Employees selected by Purchaser that
are listed on Schedule 11.5.1. Effective as of the first business day following
the Closing Date, Purchaser shall offer employment to such Employees on such
terms and conditions as Purchaser shall determine in its sole discretion. All
Employees to whom Purchaser offers employment and who accept such employment are
herein referred to as the "TRANSFERRED EMPLOYEES." Nothing in this Section 11.5
shall limit Purchaser's authority to terminate the employment of any Transferred
Employee at any time for whatever reason after the Closing Date.
11.5.2 Seller shall be solely responsible for any liability,
claim or expense (including, without limitation, reasonable attorneys' fees)
with respect to employee compensation or employee benefits of any nature owed to
any of Seller's employees or former employees or their beneficiaries that arise
out of the employment relationship between Seller and any of their employees or
former employees or the termination of that relationship and Seller shall
indemnify and hold Purchaser harmless to the extent Purchaser incurs any such
liability, claim or expense relating thereto. Notwithstanding the foregoing, to
the extent the actual severance payments paid to the employees listed on
Schedule 11.5.2 (the "SEVERANCE PAYMENTS"), on or after the Closing Date, are
greater than $50,000 in the aggregate, Purchaser agrees to pay to Seller in cash
at Closing, , an amount equal to fifty percent (50%) of the amount by which the
Severance Payments exceeds $50,000.
11.6 Accounts Receivable. Purchaser shall provide a report to the
Seller approximately ninety (90) days after the Closing Date concerning the
collection status of the Accounts Receivable listed on Schedule 2.1.2 and notify
the Seller of the potential uncollectible accounts (the "UNCOLLECTIBLE
ACCOUNTS") defined as those that the Client is disputing for Seller's failure to
perform and those that the Seller has identified as "at-risk" on Schedule 11.6.
Seller will use its Best Efforts in assisting the Purchaser on collecting funds
from the Uncollectible Accounts. If any Uncollectible Accounts remain
outstanding twelve (12) months after the Closing Date, the Seller shall purchase
the remaining Uncollectible Accounts, immediately upon the request of Purchaser,
for a purchase price equal to the face value of such Uncollectible Accounts. The
purchase price for such Uncollectible Accounts shall be paid, at the election of
Purchaser, with either cash, cashiers check, wire transfer or a dollar for
dollar reduction of the Service Credits. The purchase obligation of Seller
contained in this Section 11.6 is the sole remedy of Purchaser with respect to
any Uncollectible Accounts.
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12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY.
12.1 Survival of Representations and Warranties. All representations
and warranties made in this Agreement or made in any document delivered pursuant
to this Agreement by or on behalf of any party as well as the indemnifications
set forth in Sections 12.2 and 12.3 shall survive the execution and delivery of
this Agreement and the Closing, regardless of notice of or any investigation or
right of investigation made prior to or after the date of this Agreement by or
on behalf of any party, for a period of eighteen (18) months.
12.2 Indemnification By Seller. Seller shall indemnify, save and
hold harmless Purchaser and each of its respective officers, directors,
employees, agents and Affiliates, and each of its successors and assigns
(individually, a "PURCHASER INDEMNIFIED PARTY" and collectively, the "PURCHASER
INDEMNIFIED PARTIES") from and against any and all costs, losses, claims,
liabilities, fines, penalties, incidental and consequential damages, lost
profits and expenses (including, without limitation, interest which may be
imposed in connection therewith and court costs and reasonable fees and
disbursements of counsel) ("DAMAGES") incurred in connection with, arising out
of, resulting from or incident to:
12.2.1 all liabilities of or claims against the Purchaser
Indemnified Parties of any nature, whether accrued, absolute, contingent or
otherwise, arising out of the Assets or the Business and attributable to any
state of facts existing or any event occurring at or prior to the Closing
(whether known or unknown to Seller or Purchaser), to the extent not included in
the Assumed Liabilities;
12.2.2 any breach of, or any inaccuracy in any of, the
representations or warranties, or any default in any agreements, made by Seller
in any Transaction Contract, any exhibit or schedule thereto or any certificate,
instrument or writing delivered in connection therewith;
12.2.3 any taxes of any kind whatsoever, or expenses, interest
or penalties relating thereto, which arise out of or result from the
transactions contemplated by this Agreement, other than sales tax and taxes
relating to the conduct of the business of Purchaser from and after the Closing
Date; or
12.2.4 any Action, compromise, settlement, assessment or
judgment arising out of or incidental to any of the matters indemnified against
in this Section 12.2. If, by reason of the claim of any third Person relating to
any of the matters subject to indemnification under this Section 12.2, a Lien,
attachment, garnishment or execution is placed upon any of the property or
assets of any Purchaser Indemnified Party, Seller shall also, promptly upon
demand, furnish an indemnity bond satisfactory to such Purchaser Indemnified
Party to obtain the prompt release of such Lien, attachment, garnishment or
execution.
12.3 Indemnification By Purchaser. Purchaser shall indemnify, save
and hold harmless Seller and each of its respective officers, directors,
partners, members, managers, employees, agents and Affiliates, and each of their
successors and assigns
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(individually, a "SELLER INDEMNIFIED PARTY" and collectively, the "SELLER
INDEMNIFIED PARTIES") from and against any and all Damages incurred in
connection with, arising out of, resulting from or incident to:
12.3.1 all liabilities of or claims against the Seller
Indemnified Parties of any nature, whether accrued, absolute, contingent or
otherwise, (a) with respect to the Assumed Obligations or (b) attributable to
any state of facts existing or any event occurring after the Closing Date
(whether known or unknown to Seller or Purchaser), to the extent arising out of
the operation by Purchaser of the Business acquired from Seller hereunder,
except, in each case, if such liability or claim results from or arises in
connection with the breach of any of the representations, warranties, covenants
or agreements made by Seller in any Transaction Contract, any schedule or
exhibit thereto or any certificate or instrument delivered in connection
therewith;
12.3.2 any breach of, or any inaccuracy in any of, the
representations or warranties, or any default in any agreements, made by
Purchaser in any Transaction Contract, any exhibit or schedule thereto or any
certificate, instrument or writing delivered in connection therewith; or
12.3.3 any Action, compromise, settlement, assessment or
judgment arising out of or incidental to any of the matters indemnified against
in this Section 12.3. If, by reason of the claim of any third Person relating to
any of the matters subject to indemnification under this Section 12.3, a Lien,
attachment, garnishment or execution is placed upon any of the property or
assets of any Seller Indemnified Party, Purchaser shall also, promptly upon
demand, furnish an indemnity bond satisfactory to such Seller Indemnified Party
to obtain the prompt release of such lien, attachment, garnishment or execution.
12.4 Notice of Claim. If a claim for Damages (a "CLAIM") is to be
made by a party entitled to indemnification hereunder (the "INDEMNIFIED PARTY")
against the indemnifying party (the "INDEMNIFYING PARTY"), the Indemnified Party
shall give written notice (the "CLAIM NOTICE") to the Indemnifying Party, which
notice shall specify whether the Claim arises as a result of a claim by a Person
against the Indemnified Party (a "THIRD PARTY CLAIM") or whether the Claim does
not so arise (a "DIRECT CLAIM"), and shall also specify (to the extent that the
information is available) the factual basis for the Claim and the amount of the
Damages, if known. If the Claim is a Third Party Claim, the Indemnified Party
shall provide the Claim Notice as soon as practicable after such party becomes
aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought hereunder. If any Action is filed against any
Indemnified Party, written notice thereof shall be given to the Indemnifying
Party as promptly as practicable (and in any event within fifteen (15) days
after the service of the citation or summons). The failure of any Indemnified
Party to give timely notice hereunder shall not affect rights to indemnification
hereunder, except to the extent that the Indemnifying Party has been damaged by
such failure.
12.5 Defense of Claims. With respect to a Third Party Claim, if
after receipt of the Claim Notice the Indemnifying Party acknowledges in writing
to the Indemnified Party that the Indemnifying Party shall be obligated under
the terms of its
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indemnity hereunder in connection with such Third Party Claim, the Indemnifying
Party shall be entitled, if it so elects at its own cost, risk and expense, (i)
to take control of the defense and investigation of such Action, (ii) to employ
and engage attorneys of its own choice, but, in any event, reasonably acceptable
to the Indemnified Party, to handle and defend the same unless the named parties
to such action or proceeding (including, without limitation, any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and the
Indemnified Party has been advised in writing by counsel that there may be one
or more legal defenses available to such Indemnified Party that are different
from or additional to those available to the Indemnifying Party, in which event
the Indemnified Party shall be entitled, at the Indemnifying Party's cost, risk
and expense, to separate counsel of one firm (in addition to appropriate local
counsel) of its own choosing, and (iii) to compromise or settle such Action,
which compromise or settlement shall be made only with the written consent of
the Indemnified Party, such consent not to be unreasonably withheld or delayed.
If the Indemnifying Party fails to assume the defense of such Claim
within fifteen (15) days after receipt of the Claim Notice, the Indemnified
Party against which such Claim has been asserted will (upon delivering notice to
such effect to the Indemnifying Party) have the right to undertake, at the
Indemnifying Party's cost and expense, the defense, compromise or settlement of
such Claim on behalf of and for the account and risk of the Indemnifying Party.
If the Indemnified Party assumes the defense of the Claim, the Indemnified Party
will keep the Indemnifying Party reasonably informed of the progress of any such
defense, compromise or settlement. The Indemnifying Party shall be liable for
any settlement of any action effected pursuant to and in accordance with this
Section 12.5 and for any final judgment (subject to any right of appeal) and the
Indemnifying Party agrees to indemnify and hold harmless the Indemnified Party
from and against any Damages by reason of such settlement or judgment.
12.6 Offset Against Service Credits. Seller hereby recognizes,
acknowledges and agrees that, notwithstanding anything to the contrary contained
in this Agreement, and in addition to any other remedy which is otherwise
available at law, in equity, by statute or otherwise, Purchaser may reduce the
amount of the Service Credits or any amount owed by Purchaser to Seller in
satisfaction of Seller's indemnification obligations set forth in Section 12 to
the extent a final judgment has been issued against the Seller.
12.7 Limitations. Neither the Purchaser Indemnified Parties nor the
Seller Indemnified Parties shall be entitled to recover under Sections 12.2 or
12.3 unless the aggregate amount of indemnifiable Damages incurred by Purchaser
Indemnified Parties on the one hand or the Seller Indemnified Parties on the
other hand exceeds $50,000 (the "FLOOR"), at which time such claim for
indemnification may be made for all Damages, in excess of the Floor. In
addition, neither the Purchaser Indemnified Parties nor Seller Indemnified
Parties shall be entitled to recover an amount hereunder with respect to all
Damages in excess of the Purchase Price. Notwithstanding anything to the
contrary herein contained, the limitations contained in this Section 12.7 shall
not be interpreted to limit an Indemnifying Party's liability in the event of
fraud by such Indemnifying Party in connection with this Agreement.
Notwithstanding the foregoing, the provision of this Section 12.7 shall in no
way affect the rights of the parties under Section 3.3.
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13. TAXES.
13.1 Payment of Taxes; Filing of Returns. Seller shall remain liable
for the filing of all tax returns and reports and for the payment of all
foreign, federal, state and local taxes of Seller relating to the operation of
the business of Seller and to the Assets for any period ending on or prior to
the Closing Date, and for the payment of all taxes attributable to or relating
to the consummation of the transactions contemplated herein, and Seller shall,
jointly and severally, indemnify and hold Purchaser harmless from and against
all liability in connection therewith.
13.2 Sales Taxes. Purchaser and Seller believe that no sales tax is
required to be paid to any taxing authority. However, in the event that any
taxing authority shall determine otherwise and shall assess sales tax against
Seller, all sales and use taxes, including interest, penalties and any other
additions to such sales and use taxes, imposed by any governmental or taxing
authority upon or incurred by any of the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be borne by Purchaser,
and the Seller and Purchaser shall then be mutually responsible for the filing
of all necessary tax returns and reports with respect to any such taxes.
14. NONCOMPETITION.
14.1 Covenant Not to Compete. For a period of three years from the
Closing Date, Seller shall not, directly or indirectly, (i) engage anywhere in
the world in a business which competes with the Business, or (ii) induce or
attempt to induce (A) any employee of Purchaser to leave the employ of Purchaser
or in any way interfere adversely with the relationship between any such
employee and Purchaser, (B) any employee of Purchaser to work for, render
services or provide advice to or supply confidential business information or
trade secrets of Purchaser to any third Person, or (C) any customer, supplier,
agent, publisher, clearing house, licensee, licensor or other business relation
of Purchaser to cease doing business with Purchaser or in any way interfere with
the relationship between any such customer, supplier, agent, publisher, clearing
house, licensee, licensor or other business relation and Purchaser. Except as
otherwise provided by this Agreement or the other Transaction Contracts, for a
period of three years from the Closing Date, Purchaser shall not, directly or
indirectly, engage anywhere in the world in a business which competes with the
remaining business of Seller as it is currently conducted with its current
existing clients. The Purchaser will be allowed to compete with the Seller on
any potential future clients who have elected to solicit an open bid from
prospective service provider. The ownership by Seller or Purchaser of five
percent (5%) or less of the outstanding capital stock of any corporation engaged
in any business which competes with any line of business engaged in by Purchaser
or Seller, where the capital stock of the corporation is listed on a national
securities exchange or actively quoted on the Nasdaq Stock Market, shall not be
deemed a violation by Seller or Purchaser of this Section 14.
14.2 Remedies. Seller acknowledges and agrees that, in the event of
a violation by it of the terms and provisions of this Section 14, the remedies
at law would not be adequate. Accordingly, in such event Purchaser may proceed
to protect and enforce its rights
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under this Section 14 by a suit in equity for specific performance and
temporary, preliminary and permanent injunctive relief from violation of any of
the provisions of this Section 14 from any court of competent jurisdiction
without the necessity of proving the amount of any actual damages to Purchaser
resulting from the breach.
14.3 Modification. If for any reason there should be a determination
by a court of competent jurisdiction that the provisions of this Section 14 are
too broad or unreasonable (or otherwise objectionable) and therefore
unenforceable, the provisions of this Section 14 shall be deemed modified, and
fully enforceable as so modified, to the extent that the court would find them
to be fair, reasonable and enforceable under the circumstances.
14.4 Transfers to Third Parties. The parties acknowledge that Seller
is currently considering a possible restructuring of its business, which
restructuring may result in a transfer of certain of Seller's assets or
operations to unaffiliated entities involved in the EDI business. The parties
agree that such transfers shall not be deemed to constitute violations of the
provisions of this Section 14 or analogous provisions contained in any other
Transaction Contract.
15. TERMINATION.
15.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual agreement, in
writing, of each of the parties to this Agreement.
15.2 Termination by Purchaser. Purchaser may (but shall not be
obligated to) terminate this Agreement prior to the Closing by giving written
notice to Seller if:
15.2.1 there has been a material violation or breach by
Seller of any agreement, covenant, representation or warranty contained in
any Transaction Contract, which violation or breach shall not have been
cured or corrected within ten (10) days after receipt of notice thereof;
15.2.2 the Closing does not occur on or prior to January
31, 2001, or such later date as may be agreed to in writing by the parties;
15.2.3 Purchaser exercises its termination rights under
Section 8.1 hereof; or
15.2.4 any of the conditions in Section 9 have not been
satisfied as of the Closing or if Purchaser is made aware and determines in its
reasonable discretion that any condition in Section 9 will not be satisfied as
of the Closing (other than through the failure of Purchaser to comply with its
obligations under any Transaction Contract) and Purchaser has not expressly
waived such condition in writing on or before the Closing.
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15.3 Termination by Seller. Seller may (but shall not be obligated
to) terminate this Agreement on behalf of itself prior to the Closing by giving
written notice to Purchaser if:
15.3.1 there has been a material violation or breach by
Purchaser of any agreement, covenant, representation or warranty contained in
any Transaction Contract, which violation or breach shall not have been cured or
corrected within ten (10) business days after receipt of notice thereof;
15.3.2 the Closing does not occur on or prior to
January 31, 2001, or such later date as may be agreed to in writing by
the parties; or
15.3.3 any of the conditions in Section 10 have not been
satisfied as of the Closing or if Seller is made aware and determines in its
reasonable discretion that any condition in Section 10 will not be satisfied as
of the Closing (other than through the failure of Seller to comply with its
obligations under any Transaction Contract) and Seller has not expressly waived
such condition in writing on or before the Closing.
15.3.4 Effect of Termination. In the event of such
termination, no party shall have any obligation or liability to any other party
in respect to this Agreement, except for any breach of this Agreement occurring
prior to such termination, and provided that Sections 11.3 and 16.9 shall remain
in full force and effect.
16. MISCELLANEOUS.
16.1 Notices. All notices, requests, demands and other
communications (collectively, "NOTICES") given pursuant to this Agreement shall
be in writing, and shall be delivered by personal service, courier, facsimile
transmission (which must be confirmed) or by United States first class,
registered or certified mail, postage prepaid, to the following addresses:
(i) if to Purchaser, to:
Medi, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxx
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: V. Xxxxxx Xxxxxx
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(ii) if to Seller to:
Health Management Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxxxx, Rhine & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: [(000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Any Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third (3rd) day following deposit in the United States mails.
Any party may from time to time change its address for further Notices hereunder
by giving notice to the other parties in the manner prescribed in this Section.
16.2 Entire Agreement. This Agreement, the other Transaction
Contracts and the exhibits and schedules thereto contain the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto any rights or remedies under or by way of this Agreement.
16.3 Assignment. No party may assign its rights or obligations under
this Agreement, and any attempted or purported assignment or any delegation of
any party's duties or obligations arising under this Agreement to any Person
shall be deemed to be null and void, and shall constitute a material breach by
such party of its duties and obligations under this Agreement. This Agreement
shall inure to the benefit of and be binding upon any successors of each party
by way of merger or consolidation.
16.4 Waiver and Amendment. No provision of this Agreement may be
waived unless in writing signed by all the parties to this Agreement, and waiver
of any one provision of this Agreement shall not be deemed to be a waiver of any
other provision. This Agreement may be amended only by a written agreement
executed by all of the parties to this Agreement.
16.5 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California without giving
effect to the principles of conflicts of law thereof.
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16.6 Severability. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
16.7 Captions. The various captions of this Agreement are for
reference only and shall not be considered or referred to in resolving questions
of interpretation of this Agreement.
16.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
16.9 Costs and Attorneys' Fees. If any Action is instituted to
remedy, prevent or obtain relief from a default in the performance by any party
to this Agreement of its obligations under this Agreement, the prevailing party
shall recover its reasonable attorneys' fees incurred in each and every such
Action, including, without limitation, any and all appeals or petitions
therefrom.
16.10 Rights Cumulative. No right granted to the parties under this
Agreement on default or breach is intended to be in full or complete
satisfaction of any Damages arising out of such default or breach, and each and
every right under this Agreement, or under any other document or instrument
delivered hereunder, or allowed by law or equity, shall be cumulative and may be
exercised from time to time.
16.11 Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Person by reason of the rule
of construction that a document is to be construed more strictly against the
Person who itself or through its agent prepared the same, it being agreed that
all parties have participated in the preparation of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been made and entered into as of
the date and year first above written.
MEDI, INC.,
a California corporation
By:
------------------------------
Name: Xxxxx Xxx
Title: Chief Executive Officer
HEALTH MANAGEMENT
SYSTEMS, INC.,
a New York corporation
By:
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Division Vice President
HEALTH RECEIVABLES MANAGEMENT, INC.,
a Delaware corporation
By:
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Division Vice President
QUALITY MEDI-CAL ADJUDICATION
INCORPORATED,
a California corporation
By:
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Division Vice President
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