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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ADVENT INVESTMENTS, INC.
AND
ENVOY CORPORATION
EXECUTION DATE: JUNE 14, 1997
CLOSING DATE: ____________, 1997
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of June 14,
1997, by and between ENVOY Corporation, a Tennessee corporation ("Buyer"), and
Advent Investments, Inc., a Delaware corporation ("Seller").
RECITALS
1. Seller is (i) the sole stockholder of Healthcare Data Interchange
Corporation, a Delaware corporation, (the "Company"), and (ii) an indirect
wholly-owned subsidiary of Aetna U.S. Healthcare Inc. (formerly U.S.
Healthcare, Inc.), a Pennsylvania corporation ("Guarantor").
2. Seller desires to sell, and Buyer desires to purchase, all of the
issued and outstanding shares of capital stock (the "Shares") of the Company,
for the consideration and on the terms set forth in this Agreement.
3. Seller's performance hereunder is being guaranteed by Guarantor by
the execution, concurrently with the execution hereof, of a guarantee, which
guarantee is in the form of Exhibit A attached hereto.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"APPLICABLE CONTRACT"--any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or will become subject to
any obligation or liability, or (c) by which either the Company or any of the
Assets are or will become bound.
"ASSETS"--all of the assets, properties and rights listed in Schedule 3.7
hereto.
"BUSINESS"--the electronic data interchange business of the Company conducted
for the benefit of Aetna U.S. Healthcare, the health business unit of Aetna Inc.
(a Connecticut corporation) and its affiliates ("Aetna").
"CONSENT"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
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"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by this
Agreement, including (a) the sale of the Shares by Seller to Buyer; (b) the
execution, delivery and performance of the Services Agreement (as defined in
Section 2.4 hereof); (c) the performance by Buyer and Seller of their respective
pre-closing covenants and obligations under this Agreement; and (d) Buyer's
acquisition and ownership of the Shares and exercise of control over the
Business and the Assets.
"CONTRACT"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DISCLOSURE LETTER"--the disclosure letter delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE"--any charge, claim, equitable interest, lien, option, pledge,
security interest, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages, expense,
liability, obligation, or other responsibility arising from or under any
environmental law, Occupational Safety and Health Law or Legal Requirement and
consisting of or relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
environmental law or Occupational Safety and Health Law;
(c) financial responsibility under environmental law or Occupational Safety
and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable environmental law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under environmental law or Occupational Safety and Health Law.
The terms "removal", "remedial", and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
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"GAAP"--generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY"--any (a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign, or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); (d) multi-national
organization or body; or (e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HSR ACT"--the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or any
successor law, and regulations issued pursuant to that Act or any successor law.
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MATERIAL ADVERSE EFFECT"--means a material adverse effect, change or
development on the assets, business, revenues, expenses, operations or condition
(financial or otherwise) of the specified Person(s).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, designed to provide safe and healthful working
conditions.
"ORDER"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court or other Governmental
Body.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if (a) such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person and (b) such action is
not required to be authorized by the board of directors of such Person (or by
any Person or group of Persons exercising similar authority).
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of incorporation and
the bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) any charter
or similar document adopted or filed in connection with the creation, formation,
or organization of a Person; and (e) any amendment to any of the foregoing.
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"PERSON"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PROCEEDING"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative or investigative)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body.
"RELATED PERSON"--with respect to a particular individual: (a) each other member
of such individual's Family and (b) any Person that is directly or indirectly
controlled by such individual or one or more members of such individual's
Family. With respect to a specified Person other than an individual, any Person
that directly or indirectly controls, is directly or indirectly controlled by,
or is directly or indirectly under common control with such specified Person.
For purposes of this definition, the "Family" of an individual includes
(a) the individual, (b) the individual's spouse and former spouses, and (c) any
other natural person who is related to the individual or the individual's spouse
living in the same household.
"REPRESENTATIVE"--with respect to a particular Person, any director, officer,
agent, or other authorized representative of such Person, including legal
counsel, accountants and financial advisors.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" against a Person if any demand or statement has
been made (orally or in writing) to a Representative of the Person (in his or
her capacity as such Representative) that would reasonably lead a prudent Person
to conclude that such a claim, Proceeding, dispute, action, or other matter will
be asserted, commenced, taken, or otherwise pursued with a Government Body in
the reasonable future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares. Subject to the terms and conditions of this Agreement, at
the Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller, free and clear of any Encumbrance.
2.2 Purchase Price. The purchase price (the "Purchase Price") for the
Shares will be $36,411,960 in cash, paid at Closing (defined below), by wire
transfer to the Seller.
2.3 Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer at Two Lakeview Place, 00
Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, at 10:00 a.m. (local
time) on the later of (i) July 31, 1997 or (ii) the date that is five (5)
business days following the termination of the applicable waiting period under
the HSR Act, or at such other time and place as the parties hereto shall
mutually agree (the "Closing Date").
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2.4 Closing Obligations. At the Closing:
(a) Seller will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;
(ii) a copy of resolutions of the Board of Directors of Seller,
certified by the secretary of Seller, authorizing the execution,
delivery and performance of this Agreement and the other documents
referred to herein to be executed by Seller, and the consummation of
the Contemplated Transactions;
(iii) resignations of the officers and directors of the Company,
effective as of the Closing Date, and the corporate minutes and stock
records of the Company;
(iv) the Services Agreement (the "Services Agreement") by and
among Buyer and the Guarantor, substantially in the form of Exhibit
2.4 hereto, duly executed by an authorized officer of the Guarantor;
(v) a certificate executed by Seller representing and warranting
to Buyer that (A) each of Seller's representations and warranties in
this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if
made on the Closing Date (giving full effect to any supplements to the
Disclosure Letter that were delivered to Buyer prior to the Closing
Date in accordance with Section 5.5) and (B) the conditions specified
in Article 9 have been satisfied;
(vi) such instruments of conveyance and transfer, in form and
substance reasonably satisfactory to Buyer, as shall be effective to
vest the applicable right to all of the Assets in the Company and
simultaneously with such delivery, will take such steps as may be
reasonably necessary to place the Company in actual possession and
operating control of applicable rights to the Assets and the Business;
(vii) The Lease Agreement (as defined in Section 5.11) duly
executed by an authorized officer of Guarantor and its affiliates, as
appropriate.
(viii) such other certificates and documents as Buyer or its
counsel may reasonably request in connection with the Contemplated
Transactions.
(b) Buyer will deliver to Seller;
(i) the consideration as set forth in Section 2.2;
(ii) copy of resolutions of the Board of Directors of Buyer,
certified by the secretary of Buyer, authorizing the execution,
delivery and performance of this
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Agreement and the other documents referred to herein to be executed by
Buyer, and the consummation of the transactions contemplated hereby;
(iii) a certificate executed by Buyer to the effect that (A) each
of Buyer's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date and (B) the conditions specified in Article 10 have been
satisfied;
(iv) the Services Agreement, duly executed by an authorized
officer of Buyer;
(v) The Lease Agreement (as defined in Section 5.11) duly
executed by an authorized officer of Buyer.
(vi) such other certificates of documents as Seller or its
counsel may reasonably request in connection with the Contemplated
Transactions.
2.5 Post-Closing Adjustments. Buyer and Seller agree that on and as of the
Closing Date the Company shall have no current assets or current liabilities.
Sixty days after the Closing Date, (i) Buyer will prepare and deliver to Seller
a list of all current liabilities of the Company as of the Closing Date
exceeding $5,000 which have not been paid by Seller, and Seller will promptly
reimburse Buyer or the Company (in the case of liabilities paid by Buyer or the
Company) or promptly pay all such liabilities and (ii) Seller will prepare and
deliver to Buyer a list of all current assets of the Company as of the Closing
Date exceeding $5,000 for which the Buyer or the Company have received or will
receive a benefit after the Closing Date, and Buyer or the Company will promptly
reimburse Seller for all such assets. For purposes of this Section 2.5: (a)
"current assets" shall mean cash, cash equivalents, accrued income and accounts
receivable, all as determined in accordance with GAAP; and (b) "current
liabilities" shall mean liabilities for customer deposits and prepayments,
deferred revenues, accounts payable and accrued expenses, current portion of
long-term debt, accrued interest on long-term debt or any intercompany
indebtedness or indebtedness to any affiliates of the Company, or any Tax
obligations, all as determined in accordance with GAAP.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
3.1 Organization and Good Standing.
(a) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. The Company
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used
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by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified would not result in a
Material Adverse Effect on the Company.
(b) Seller has delivered to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
(c) The Company neither owns nor has an equity interest in, directly or
indirectly, any other corporation, partnership, joint venture or other business
organization.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding obligation
of Seller, enforceable against Seller in accordance with its terms. Seller has
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Company, or (B)
any resolution adopted by the board of directors or the stockholders
of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the Contemplated Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the
Company, Seller or any of the assets owned or used by the Company may
be subject, except where such contravention, conflict, violation or
challenge would not result in a Material Adverse Effect on the
Company;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the Business, or any of the assets owned or used
by the Company, except where such contravention, conflict, violation
or breach would not result in a Material Adverse Effect on the
Company;
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract, except where such contravention, conflict, violation or
breach would not result in a Material Adverse Effect on the Company;
or
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(v) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the Company,
except where such Encumbrance would not result in a Material Adverse
Effect on the Company.
Except as set forth in Part 3.2 of the Disclosure Letter or otherwise
contemplated by this Agreement, neither Seller nor the Company are or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 Capitalization. The authorized capital stock of the Company consists of
4,000 authorized shares of Common Stock, par value $.01 per share (the "Common
Stock"), of which 345 shares are issued and outstanding, 1,000 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common Stock"), of which
100 shares are issued and outstanding, and 50 shares of Preferred Stock, par
value $.01 per share, of which no shares are issued and outstanding. Seller owns
all of the issued and outstanding shares of Common Stock and Class B Common
Stock, which shares constitute the Shares. Seller is and will be on the Closing
Date the record and beneficial owner and holder of the Shares, free and clear of
all Encumbrances. All of the outstanding capital stock of the Company has been
duly authorized and validly issued and is fully paid and nonassessable. There
are no Contracts relating to the issuance, sale or transfer of any capital stock
of the Company that have not been terminated. None of the outstanding capital
stock of the Company was issued in violation of the Securities Act of 1933, as
amended (the "Securities Act"), or any other Legal Requirement. The Company does
not own or have any Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business.
3.4 Financial Statements. Seller has delivered to Buyer: (a) unaudited
balance sheets of the Company as of December 31, 1994, 1995 and 1996, and the
related unaudited consolidated statements of income, changes in stockholders'
equity, and cash flow for each of the fiscal years then ended and (b) an
unaudited consolidated balance sheet of the Company as of April 31, 1997 (the
"Interim Balance Sheet") and the related unaudited consolidated statements of
income, changes in stockholders' equity, and cash flow for the four months then
ended, including in each case the notes thereto. Such financial statements and
notes thereto fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the respective dates and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the unaudited year end balance sheet dated December 31, 1996 (the
"Balance Sheet")); the financial statements referred to in this Section 3.4
reflect the consistent application of such accounting principles throughout the
periods involved. No financial statements of any Person other than the Company
are required by GAAP to be included in the consolidated financial statements of
the Company.
3.5 Books and Records. The books of account, minute books, stock record
books and other records of the Company all of which have been made available to
Buyer, are complete and
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correct in all material respects and have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of
internal controls. Except as set forth in Part 3.5 of the Disclosure Letter, the
minute books of the Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards of
Directors and committee of the Boards of Directors of the Company, and no
meeting of any such stockholders, Boards of Directors or committee has been held
for which minutes have not been prepared and are not contained in such minute
books. Except as set forth in Section 2.4(a)(iii), all of those books and
records will be in possession of the Company at the Closing.
3.6 Title to Properties; Encumbrances. The Company neither owns nor leases
any real property (including, without limitation any interests in and rights to
real property). The Company owns all the properties and assets (whether tangible
or intangible) that it purports to own, including all of the properties and
assets reflected in the Balance Sheet and the Interim Balance Sheet (except for
personal property sold since the date of the Balance Sheet and the Interim
Balance Sheet, as the case may be, in the Ordinary Course of Business), and all
of the properties and assets purchased or otherwise acquired by the Company
since the date of the Interim Balance Sheet (except for personal property
acquired and sold since the date of the Interim Balance Sheet in the Ordinary
Course of Business and consistent with past practice), except where the failure
to own any such properties or assets would not, in the aggregate, have a
Material Adverse Effect on the Company. Except as set forth in Part 3.6 of the
Disclosure Letter, all of the Assets are free and clear of all Encumbrances
whatsoever, except for (i) liens for current personal property taxes not yet due
and payable, (ii) worker's, carrier's, and materialman's liens and (iii) any
Encumbrances which in the aggregate would not have a Material Adverse Effect on
the Company.
3.7 Assets. Schedule 3.7 contains an accurate and complete list of the
Assets. The equipment of the Company is structurally sound, is in good operating
condition and repair, and is adequate for the uses to which they are being put,
and none of such equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The equipment of the Company will be sufficient for the continued conduct
of the Business after the Closing in substantially the same manner as conducted
prior to the Closing.
3.8 No Undisclosed Material Liabilities. Except as set forth in Part 3.8 of
the Disclosure Letter, the Company has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) which would in the aggregate have a Material Adverse Effect except
for liabilities or obligations reflected or reserved against in the Balance
Sheet or the Interim Balance Sheet and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
3.9 Taxes.
(a) For purposes of this Agreement.
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(i) The term "Code" means the Internal Revenue Code of 1986, as
amended. All citations to the Code or to the regulations promulgated
thereunder shall include any amendments or any substitute or successor
provisions thereto.
(ii) The term "Post-Acquisition Date Tax Period" means any of the
following periods: (A) any period which begins on or after and ends
after the Closing Date; and (B) for any period which includes but does
not end on the Closing Date, the portion of such period which begins
on the Closing Date.
(iii) The term "Pre-Acquisition Date Tax Period" means any of the
following periods: (A) any period which begins before and ends on or
before the Closing Date; and (B) for any period which includes but
does not end on the Closing Date, the portion of such period which
ends on the Closing Date.
(iv) The term "Returns" mean all returns, declaration, reports,
statements and other documents required to be filed by the Company in
respect of Taxes, either separately or as a member of a consolidated
group of corporations, and the term "Return" means any of the
foregoing Returns.
(v) The term "Taxes" means any federal, District of Columbia,
state, local or foreign government (or subdivision or agency thereof)
taxes, charges, fees, levies or other assessments, including, without
limitation, net income, gross receipts, profits, sales, use,
franchise, license, payroll, excise, property or other taxes, together
with any interest and any penalties additions to tax, or additional
amounts with respect thereto, and the term "Tax" means any one of the
foregoing Taxes.
(b) Except as set forth in Part 3.9 of the Disclosure Letter,
Seller represents and warrants the following:
(i) Filing of Returns. All Returns required to be filed on or
prior to the Closing Date have been properly completed and filed on a
timely basis, or an appropriate extension has been obtained or
requested. Part 3.9 of the Disclosure Letter lists each jurisdiction
in which the Company currently is required to file Returns. Except as
provided in Part 3.9 of the Disclosure Letter, no claim is outstanding
against the Company by a taxing authority in a jurisdiction where the
Company does not file Returns that they are or may be subject to
taxation by that jurisdiction.
(ii) Payment of Taxes. With respect to all amounts of Taxes
imposed on the Company or for which the Company is or could be liable,
whether to a taxing authority (as, for example, under law) or to other
persons or entities (as, or example, under law) or to other persons or
entities (as, for examples, under tax allocation agreements) with
respect to all Pre-Acquisition Date Tax Periods, all applicable tax
laws and agreements will have been fully complied with in all material
respects and all such amounts required to be paid by the
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Company or by Seller on the Company's behalf to a taxing authority or
other will have been paid in all material respects, or shall be paid
in accordance with Section 2.5.
(iii) Audit History. The Returns of the Company have been audited
by the IRS or relevant state tax authorities or are closed by the
applicable statute of limitations for those taxable years as indicated
in Part 3.9 of the Disclosure Letter. Except as set forth in Part 3.9
of the Disclosure Letter, no issues have been raised with respect to
the Company that are currently pending by any taxing authority in
connection with any of the Returns. Except as set forth in Part 3.9 of
the Disclosure Letter, no waivers of statutes of limitation with
respect to the Returns have been given by or requested from the
Company or a parent of the Company on the Company's behalf.
(iv) Other Consolidated Group. Except as set forth in Part 3.9 of
the Disclosure Letter, neither the Company nor any corporation to
which the Company is a successor, directly or indirectly, by merger or
otherwise, (A) has been a member of an affiliated group of
corporations (as defined in Section 1504(a) of the Code) other than
the group in which the Guarantor or Aetna is the common parent or (B)
has filed or been included in a combined, consolidated, or unitary
income tax return other than the return of the Guarantor or Aetna or a
member of the Guarantor's or Aetna's affiliated group.
3.10 No Material Adverse Change. Since the date of the Interim Balance
Sheet, there has not been any Material Adverse Effect on the Business, and no
event has occurred or circumstance exists that would result in such a Material
Adverse Effect.
3.11 Employee Benefit Plans and Arrangements. The Company does not
sponsor or maintain any Employee Benefit Plan, whether formal or informal,
whether or not set forth in writing, and whether covering one person or more
than one person. Neither the Buyer nor the Company shall be subject to any
obligation or liability under or a participant in any Employee Benefit Plan of
the Seller and its affiliates after the Closing Date. For the purposes hereof,
the term "Employee Benefit Plan" includes all plans, funds, programs, policies,
arrangements, practices, customs and understandings providing benefits of
economic value to any employee, former employee, or present or former
beneficiary, dependent or assignee of any such employee or former employee other
than regular salary, wages or commissions paid substantially concurrently with
the performance of the services for which paid. Without limitation, the term
"Employee Benefit Plan" includes all employee welfare benefit plans within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), all employee pension benefit plans within the meaning of
Section 3(2) of ERISA.
3.12 Intellectual Property Matters.
(a) General. Except for those listed on Part 3.12 of the
Disclosure Letter, the Company in the conduct of the Business did not and does
not utilize any patent, trademark, trade name, service xxxx, copyright,
software, trade secret or know-how, which are material to the Business (the
"Intellectual Property Assets"). The Intellectual Property Assets are either
owned by
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the Company free and clear of any material Encumbrance or held by the
Company pursuant to validly issued licenses, which are in full force and effect.
The Company does not infringe upon or unlawfully or wrongfully use any
Intellectual Property Assets owned or claimed by another. The Company is not in
default under, and has not received any notice of any claim of infringement or
any other claim or proceeding relating to any Intellectual Property Assets.
(b) The Software.
(i) The computer software of the Company included in the
Intellectual Property Assets (the "Software") performs in all
material respects in accordance with the documentation and other
written material used in connection with the Software and is free
of defects in programming and operation, is in machine-readable
form, contains all current revisions of such software, and
includes all computer programs, materials, tapes, know-how,
object and source codes, other written materials, know-how and
processes related to the Software. The Company has delivered to
Buyer complete and correct copies of (A) all copies of the
Software and (B) all user and technical documentation related to
the Software.
(ii) No employee of the Company is, or is now expected to
be, in default under any term of any employment contract,
agreement or arrangement relating to the Software or
noncompetition arrangement, or any other Contract or any
restrictive covenant relating to the Software or its development
or exploitation. The Software was developed entirely by the
employees or agents of the Company during the time they were
employees or agents only of the Company and such Software does
not include any inventions of the employees or agents made prior
to the time such employees or agents became employees or agents
of the Company nor any Intellectual Property Assets of any
previous employer of such employee or agent. The Company has not
granted to any other person or entity any license, option or
other rights to develop, sell or exploit in any manner the
Software, whether requiring the payment or royalties or not.
(iii) The Company has kept secret and has not disclosed the
source code for the Software to any person or entity other than
certain employees and agents of the Company who are subject to
the terms of a binding confidentiality agreement with respect
thereto. The Company has taken all appropriate measures to
protect the confidential and proprietary nature of the Software,
including without limitation the use of confidentiality
agreements with all of its employees having access to the
Software source and object code. The Company has not applied for,
and no copyrights are, registered for any part of the Software.
3.13 Environmental Matters. Except as set forth in Part 3.13 of
the Disclosure Letter:
(a) The Company has obtained all Governmental Authorizations
which are required in connection with the conduct of the Business
under regulations relating to pollution or protection of the
environment, including regulations relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or
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industrial, toxic or hazardous substances or wastes into the
environment (including without limitation ambient air, surface
water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or
wastes, except where the failure to obtain such Governmental
Authorizations would not result in a Material Adverse Effect on
the Company. The Company and Seller agree to cooperate with Buyer
in connection with Buyer's application for the transfer, renewal
or issuance of any permits, licenses, approvals or other
authorizations or to satisfy any regulatory requirements
involving its business, if any. The Company is in material
compliance in the conduct of the Business with all terms and
conditions of such Governmental Authorizations.
(b) Seller has no knowledge of, nor has it received notice
of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent material compliance or
continued compliance with those laws or any regulations, code,
plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, or
which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related
to any Environmental, Health and Safety Liabilities. There is no
civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation,
investigation, or proceeding pending or Threatened against the
Company in connection with the conduct of the Business relating
in any way to any Environmental, Health and Safety Liabilities.
3.14 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Part 3.14 of the Disclosure
Letter:
(i) The Company is, and at all times has been, in
compliance in all material respects with each Legal
Requirement that is or was applicable to it or to the
conduct or operation of the Business or the ownership or use
of any of the Assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute
or result in a material violation by the Company of, or a
failure on the part of the Company to comply with, any Legal
Requirement, or (B) may give rise to any material obligation
on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any
nature; and
(iii) The Company has not received any notice or other
communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any
actual, alleged, possible, or potential obligation on the
part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
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(b) Part 3.14 of the Disclosure Letter contains a complete and accurate
list of each material Governmental Authorization that is held by the Company or
that otherwise relates to the Business or to any of the Assets. Except as set
forth in Part 3.14 of the Disclosure Letter:
(i) The Company is, and at all times has been, in compliance in all
material respects with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part
3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or
indirectly in a material violation of or a failure to comply with any term
or requirement of any Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure Letter;
(iii) The Company has not received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all material applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed
in Part 3.14 of the Disclosure Letter have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other material
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the material Governmental Authorizations
necessary to permit Buyer to lawfully conduct and operate the Business in the
manner currently conducted and operated and to permit Buyer to own and use the
Assets in the manner in which the Company currently owns and uses such Assets.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there
is no material pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the Business or any of the Assets;
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(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the knowledge of Seller, (1) no such Proceeding has been Threatened,
and (2) no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding. Seller has made
available to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.15 of the Disclosure Letter.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which the Company or any of the Assets
is subject or that relates to the Business or any of the Assets which
has or will have a Material Adverse Effect;
(ii) no officer, director, agent, or employee of the Company is
subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or
practice relating to the Business which has or will have a Material
Adverse Effect;
(iii) The Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to
which it or any of the Assets is or has been subject or that relates
to the Business or any of the Assets which has or will have a Material
Adverse Effect;
(iv) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which the Company, or any of the assets owned or used by the
Company, is subject which has or will have a Material Adverse Effect;
and
(v) The Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or requirement of
any material Order to which the Company or any of the Assets is or has
been subject which has or will have a Material Adverse Effect.
3.16 Contracts; No Defaults.
(a) Part 3.16 of the Disclosure Letter contains a complete and
accurate list, and Seller has delivered to Buyer true and complete copies, of
each material Applicable Contract relating to the Business. Each Applicable
Contract identified or required to be identified in Part 3.16 of the Disclosure
Letter is in full force and effect and is valid and enforceable in all material
respects in accordance with its terms.
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(b) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person and no such Person
has made written demand for such renegotiation.
3.17 Insurance. The Assets, properties and operations of the Company are
insured under various policies of general liability and other forms of
insurance, all of which are described in Part 3.17 of the Disclosure Letter,
which discloses for each policy the risks insured against, coverage limits,
deductible amounts, all outstanding claims thereunder, and whether the terms of
such policy provide for retrospective premium adjustments. All such policies are
in full force and effect in accordance with their terms in all material
respects, no notice of cancellation has been received, and there is no existing
default or event which, with the giving of notice or lapse of time or both,
would constitute a material default thereunder. Such policies are in amounts
which are adequate in relation to the Business and the Assets and all premiums
to date have been paid in full.
3.18 Employees.
(a) Part 3.18 of the Disclosure Letter contains a complete and accurate
list of the following information for each employee of the Company and the
Business, including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or payable and any change
in compensation since January 1, 1997; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under the Company's
pension, retirement, profit-sharing, thrift-savings, deferred compensation,
stock bonus, stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), severance pay, insurance,
medical, welfare, or vacation plan, other employee pension benefit plan or
employee welfare benefit plan, or any other Employee Benefit Plan or any
director plan.
(b) Except as set forth in Part 3.18 of the Disclosure Letter, no
employee or director of the Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of Buyer to conduct its business, including any
Proprietary Rights Agreement with the Company by any such employee or director.
Except as set forth in Part 3.18 of the Disclosure Letter, to Seller's
knowledge, no director, officer, or other key employee of the Company intends to
terminate his employment with the Company.
(c) The Company does not have any retired employees, agents or
directors of the Company, or their dependents, who receive benefits or are
entitled to receive any of the following benefits in the future: pension
benefit, pension option election, retiree medical insurance coverage, retiree
life insurance coverage, and other benefits.
3.19 Labor Relations; Compliance. The Company has never been a party to any
collective bargaining or other labor Contract (except for the non-compete
agreements as specified in Part 3.18 of the Disclosure Letter). There has not
been, there is not presently pending or existing, and there
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is not threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any Proceeding against or affecting the Business
or the Assets relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting the Company or its premises, or (c) any application for certification
of a collective bargaining agent. There is no lockout of any employees by the
Company, and no such action is contemplated by the Company. The Company has
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. The Company is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
3.20 Certain Payments. The Company has not, directly or indirectly, (a)
made any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any Person, private or public, regardless of form, whether
in money, property, or services, or (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Company.
3.21 Relationships with Related Persons. Except as set forth in Part 3.21
of the Disclosure Letter, neither Seller nor any Related Person of Seller is a
party to any Contract with, or has any claim or right against, the Company.
3.22 Brokers or Finders. Except as set forth in Part 3.22 of the Disclosure
Letter, neither Seller nor any Related Person of Seller and their agents have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement. Seller will indemnify and hold Buyer harmless from any payment
for brokerage or finders' fees or agents' commissions or other similar payment
alleged to be due as a result of the action of Seller or its officers or agents
in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly organized
and validly existing under the laws of the State of Tennessee.
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4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and to perform its obligations under this
Agreement.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions by Buyer
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of Buyer, or (B) any resolution
adopted by the board of directors or the stockholders of Buyer;
(ii) contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions, except where such contravention, conflict,
violation or challenge would not result in a Material Adverse Effect on the
Buyer; or
(iii) contravene, conflict with, or result in a violation or result
in a violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify, any Contract
to which Buyer is a party or by which Buyer may be bound, except where such
contravention, conflict, violation, or breach would not result in a
Material Adverse Effect on the Buyer.
(c) Except for First Union National Bank, Buyer is not and will not be
required to give any notice or to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 Certain Proceedings. There is no material pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's knowledge, no such Proceeding has been
Threatened.
4.4 Brokers or Finders. Except for financial advisory fees to SouthCoast
Capital Corporation, Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement. Buyer will indemnify and hold Seller harmless from any payment for
brokerage or finders' fees or agents' commissions or other similar payment
alleged to be due as a result of the action of Buyer or its officers or agents
in connection with this Agreement.
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5. COVENANTS OF SELLER
5.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, Seller will cause each of its Representatives to, (a) afford Buyer
and its Representatives (collectively, "Buyer's Advisors") reasonable access to
the Company's personnel, properties, contracts, books and records, and other
documents and data relating to the Business, (b) make available during normal
business hours to Buyer's Advisors copies of all such contracts, books and
records, and other existing documents and data relating to the Business as
Buyer's Advisors may reasonably request, and (c) furnish Buyer's Advisors with
such additional financial, operating, and other data and information as Buyer's
Advisors may reasonably request, including, without limitation, such information
as is necessary for Buyer and Buyer's Advisors to prepare and complete audited
financial statements that meet the reporting requirements of Form 8-K under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
Furthermore, Seller agrees that it will, and will cause its affiliates to
reasonably cooperate with Buyer and Buyer's Advisors to the extent necessary to
enable Buyer and Buyer's Advisors to prepare such audited financial statements
within the legally required time after the Closing Date.
5.2 Operation of the Business. Between the date of this Agreement and the
Closing Date, Seller will, and will cause the Company to:
(a) conduct the Business only in the Ordinary Course of Business;
(b) use its best efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company; and
(c) confer with Buyer concerning operational matters of a material
nature.
5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
not (and will cause each of its Related Persons not to), without the prior
consent of Buyer, take any affirmative action or fail to take any reasonable
action within its control as a result of which any of the following changes or
events is likely to occur:
(a) change in the Company's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; purchase,
redemption, retirement, or other acquisition by the Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
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(c) payment or increase by the Company of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or employee or entry
into any employment, severance, or similar Contract with any director, officer,
or employee, except in the Ordinary Course of Business;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other Employee Benefit Plan for or with any employees of the
Company, except in the Ordinary Course of Business;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely affecting
the properties, Assets, Business, financial condition, or prospects of the
Company, except in the Ordinary Course of Business;
(f) entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any Contract or transaction, involving a
total remaining commitment by or to the Company of at least $50,000;
(g) other than the sales of Inventory in the Ordinary Course of
Business, sale, lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of the Company, including the sale, lease, or
other disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to the
Company in excess of $50,000;
(i) change in the accounting methods used by the Company; or
(j) agreement, whether oral or written, by the Company to do any of the
foregoing.
5.4 Required Approvals and Consents. As promptly as practicable after the
date of this Agreement, Seller will, and will cause each of its Related Persons
to, make all filings required by Legal Requirements to be made by them and
obtain all Consents necessary to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Seller will, and will
cause the Company and its Related Persons to, cooperate with Buyer with respect
to all filings that Buyer elects to make or is required by Legal Requirements to
make and obtain all Consents necessary in connection with the Contemplated
Transactions.
5.5 Transfer of Assets. Prior to the Closing Date, Seller will, and will
cause its affiliates to, take such actions as are necessary to vest the
applicable right to all of the Assets in the Company, and to take such steps as
may be reasonably necessary to place the Company in actual possession and
operating control of the applicable rights to the Assets and the Business.
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5.6 Notification. Between the date of this Agreement and the Closing Date,
Seller will promptly notify Buyer in writing if Seller becomes aware of any fact
or condition that causes or constitutes a breach of any of Seller's
representations and warranties as of the date of this Agreement. Should any such
fact or condition require any change in the Disclosure Letter if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition, Seller will promptly deliver to Buyer a supplement to the Disclosure
Letter specifying such change. During the same period, Seller will promptly
notify Buyer of the occurrence of any breach of any covenant in this Section 5
or of the occurrence of any event that may make the satisfaction of the
conditions in Section 9 impossible or unlikely.
5.7 Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, all indebtedness owed to the Company by any Related
Person of the Company (including Seller) will be paid in full prior to Closing.
5.8 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 11, Seller will not, and will cause each of its
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of the Company, or any of the capital stock of the Company, or any
merger, consolidation, business combination, or similar transaction involving
the Company.
5.9 Best Efforts. Between the date of this Agreement and the Closing Date,
Seller will use its best efforts to cause the conditions in Section 9 to be
satisfied.
5.10 Lease Agreement. Seller agrees that on the Closing Date, Seller will,
and will cause the Guarantor or its applicable affiliate to, enter into a lease
agreement for a period of 180 days following the Closing Date (the "Lease
Agreement") with Buyer and the Company, which Lease Agreement shall be on terms
and conditions that are mutually agreeable to each of the parties thereto and
which will provide Buyer and the Company with the right to use and access any
real property, leaseholds, buildings, structures, office space (including,
without limitation, any conference rooms and training rooms) and equipment
currently used in the Company's conduct of the Business. Lease payments (if any)
pursuant to the Lease Agreement shall not exceed $2,700 per month times the
average number of Retained Employees in the month utilizing such property. Buyer
and the Company shall be entitled to terminate the Lease Agreement at any time
without penalty.
6. COVENANTS OF BUYER.
6.1 Required Approvals and Consents. As promptly as practicable after the
date of this Agreement, Buyer will make all filings required by Legal
Requirements to be made by it to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and will
cause each Related Person to, (i) cooperate with Seller with respect to all
filings that Seller is required by Legal Requirements to make in connection with
the Contemplated
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Transactions, and (ii) cooperate with Seller in obtaining all Consents
identified in Part 3.2 of the Disclosure Letter; provided that this Agreement
will not require Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a Governmental Authorization.
6.2 Notification. Between the date of this Agreement and the Closing Date,
Buyer will promptly notify Seller in writing if Buyer becomes aware of any fact
or condition that causes or constitutes a breach of any of Buyer's
representations and warranties as of the date of this Agreement. During the same
period, Buyer will promptly notify Seller of the occurrence of any breach of any
covenant in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 10 impossible or unlikely.
6.3 Best Efforts. Except as set forth in the proviso to Section 6.1,
between the date of this Agreement and the Closing Date, Buyer will use its best
efforts to cause the conditions in Section 10 to be satisfied.
6.4 Access and Investigation. Between the date of this Agreement and the
Closing Date, Buyer will cause each of its Representatives to, (a) afford Seller
and its Representatives (collectively, "Seller's Advisors") reasonable access to
Buyer's personnel, properties, contracts, books and records, and other documents
and data, (b) make available during normal business hours to Seller and Seller's
Advisors copies of all such contracts, books and records, and other existing
documents and data relating to the Business as Seller may reasonably request,
and (c) furnish Seller and Seller's Advisors with such additional financial,
operating, and other data and information as Seller may reasonably request.
7. COVENANTS OF BUYER AND SELLER
7.1 Compliance with the HSR Act. If the Contemplated Transactions are
subject to the filing requirements of the HSR Act, or approval by the U.S.
Federal Trade Commission (the "FTC") and the Antitrust Division of the U.S.
Department of Justice (the "DOJ"), the parties shall promptly comply with the
applicable requirements under the HSR Act (and in any event shall make such
filing if necessary within 10 days after the date hereof), shall furnish all
information and file with the FTC and the DOJ all documents required thereunder,
or as may be reasonably requested by the FTC or the DOJ, and shall furnish to
each other copies of those portions of the documents filed which are not
confidential. In such event, the parties shall cooperate fully and shall use
their commercially reasonable efforts to expedite compliance with the HSR Act.
7.2 Employee Benefit Matters.
(a) Unless otherwise agreed to prior to the Closing, with respect to
each individual listed on Part 3.18 of the Disclosure Letter who, as of the
Closing Date, is an employee of or for the Company (including persons absent
from service for any reason, including, but not limited to, illness, disability,
family and medical leave or other leave of absence, whether paid or unpaid)
("Retained Employees"), Buyer, the Company, or an affiliate of Buyer or the
Company will
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either (i) continue the employment of each such Retained Employee for the period
from the Closing Date until December 31, 1997, at an annual base salary equal to
or greater than the annual base salary of such Retained Employee in effect on
the date hereof, or (ii) for the period from the Closing Date until December 31,
1997, in the event a Retained Employee is terminated, cause such Retained
Employee to be entitled to severance benefits as provided in Section 7.2(c)
below. Without limiting the generality of the foregoing, Seller agrees to, or
cause the Guarantor or its affiliates to, offer employment to at least 22 of the
individuals listed on Part 3.18 of the Disclosure Letter (with the identity of
such individuals to be mutually agreed upon by the parties hereto prior to the
Closing Date), and Buyer shall not be obligated to pay any of the severance
benefits specified in Section 7.2(c) below for such individuals.
(b) Effective as of the Closing Date, Buyer shall cause all Retained
Employees to become eligible for and covered under all pension, health and
welfare benefit plans sponsored by Buyer for the benefit of its employees,
including all payroll health benefits, 401(k) and other appropriate benefit
programs offered to similarly situated employees of Buyer. Without limiting the
generality of the foregoing, Buyer will (i) grant Retained Employees full credit
for all service with Seller and its affiliates for all purposes, including
eligibility and vesting under any such benefit plans; (ii) cause all health and
welfare plans in which Retained Employees participate to waive any and all
pre-existing condition exclusions and waiting period requirements and to
recognize, to the extent participation commences other than at the beginning of
a plan year, expenses previously incurred for the period from January 1, 1997,
to the Closing Date for purposes of applicable deductible rules; and (iii)
continue short-term disability benefit payments under the Short-term Disability
Plan, as described in Schedule 7.2(b)(iii) for any Retained Employee receiving
such benefits as of the Closing Date, for as long as such Retained Employee
remains eligible for such benefits under such plan.
(c) For the period from the Closing Date through December 31, 1997,
Buyer shall maintain and make available to Retained Employees a severance
benefit plan that provides a salary continuation and severance benefit plan
identical to the Salary Continuation and Severance Benefit Plan described in
Schedule 7.2(c).
(d) For the period from the Closing Date through December 31, 1997,
Buyer shall (i) honor or cause the Company to honor the pre-closing incentive
programs applicable to Retained Employees described in Schedule 7.2(d)(i), (ii)
not require Retained Employees to make contributions toward the cost of medical,
dental and disability benefit coverage in excess of the amount required to be
contributed by Retained Employees for such benefits as set forth in Schedule
7.2(d)(ii), and (iii) permit Retained Employees to accrue the number of vacation
days calculated under the vacation policy applicable to such Retained Employees
as of the date hereof, described in Schedule 7.2(d)(iii), provided that any such
vacation days must be utilized by Retained Employees prior to December 31, 1997.
(e) Nothing in this Section 7.2 is intended to cause such employer to
employ a Retained Employee on a basis other than as an employee at will. No
provision of this Section 7.2
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shall create any third party beneficiary rights in any Retained Employee in
respect of continued employment or any benefit that may be provided pursuant to
this Section 7.2.
8. TAX MATTERS.
8.1 Termination of Existing Tax-Sharing Agreements and Responsibility for
1997.
(a) On or prior to the Closing Date, Seller shall terminate any
tax-sharing agreements or similar arrangements with respect to or involving the
Company. The Company shall not be bound thereby or have any liability thereunder
for amounts due in respect of Pre-Acquisitions Date Tax Periods, except as
provided in Section 8.1(b) hereof.
(b) Buyer and Seller acknowledge that the Company will be required to
join in the filing of a consolidated federal income tax return with the
affiliated group of which Aetna is the common parent Seller for the period from
January 1, 1997, to the Closing Date (the "Consolidated Return Period"). Seller
shall be responsible for paying the actual federal income tax due for the period
in 1997 ending on the Closing Date.
(c) For any state or local income or franchise tax return that involved
a period beginning before and ending after the Closing Date (a "Straddle
Period"), regardless of who pays the Tax to the governmental authority, Seller
shall be responsible for the portion of the Tax attributable to the
Pre-Acquisition Date Tax Period. The allocation of total Tax paid in connection
with any such Return between the Pre-Acquisition Date Tax Period any the
Post-Acquisition Date Tax Period shall be in proportion to the number of days in
each such period. If Buyer or the Company should pay more Tax after the Closing
Date with regard to a Return for a Straddle Period than required by the
foregoing allocation, then Seller shall reimburse Buyer or the Company for the
excess amount paid by Buyer or the Company after the Closing Date. If Seller or
the Company should pay more Tax before the Closing Date with regard to a Return
for a Straddle Period than required by the foregoing allocation, then Buyer
shall reimburse Seller for the excess amount paid by Seller or the Company
before the Closing Date.
8.2 Records Retention. Seller and Buyer shall:
(a) each provide the other, and Buyer shall cause the Company to
provide Seller, with such assistance as may be reasonably requested by any of
them in connection with the preparation of any Return, audit or other
examination by any taxing authority or judicial or administrative proceedings
relating to any liability for Taxes;
(b) each retain and provide the other, and Buyer shall cause the
Company to retain and provide Seller, with any records or other information that
may be relevant to such Return, audit or examination, proceeding or
determination; and
(c) each provide the other with any final determination of any such
audit or examination, proceeding or determination that affects any amount
required to be shown on any
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Return for any period. Without limiting the generality of the foregoing, Buyer
shall retain, and shall cause the Company to retain, and Seller shall retain
until the applicable statutes of limitations (including any extension) have
expired, copies of all Returns, supporting work schedules and other records or
other information that may be relevant to such Returns for all tax periods, or
portions thereof ending before or including the Closing Date and shall not
destroy or otherwise dispose of any such records without first providing the
other party with a reasonable opportunity to review and copy the same.
8.3 Tax Proceedings. Seller shall exercise at its expense complete control
over the handling, disposition and settlement of any governmental inquiry,
examination or proceeding that could result in a determination with respect to
Taxes due or payable by Buyer or the Company for which Seller may be liable or
against which Seller may be required to indemnify Buyer or the Company pursuant
hereto. Seller shall, however, promptly notify the Company if, in connection
with any such inquiry, examination or proceeding, any government authority
proposes in writing to make any assessment or adjustment with respect to Tax
items of the Company, which assessments or adjustments could affect the Company
following the Closing Date, and shall consult with the Company with respect to
any such proposed assessment or adjustment. Buyer shall notify Seller in writing
promptly upon learning of any such inquiry, examination or proceeding. Buyer's
failure to notify Seller of any such inquiry, examination or proceeding will not
relieve Seller of any liability that it may have to the Buyer, except to the
extent that Seller demonstrates that the defense of such action is prejudiced by
Buyer's failure to give such notice. Buyer shall cooperate with Seller, as
Seller may reasonably request, in any such inquiry, examination or proceeding.
8.4 Cooperation on Tax Matters.
(a) Except as otherwise provided in Section 8.4(b) hereof, Buyer and
Seller agree that Seller shall be responsible for the preparation and filing of
any Returns of the Company for any Pre-Acquisition Date Tax Period which are due
as of the Closing Date. Seller shall be responsible for the preparation, and
Buyer shall cause the Company to file, any Returns of the Company for any
Pre-Acquisition Date Tax Period which are due after the Closing Date. Seller
shall be responsible for the payment of any taxes under such returns. When
permitted under state or local law, Buyer and Seller agree that any state or
local Return which includes any part of the Pre-Acquisition Date Tax Period
shall be closed on the Closing Date.
(b) For any state or local Return that includes both the
Pre-Acquisition Date Tax Period and the Post-Acquisition Date Tax Period, Buyer
and Seller agree that Buyer shall be responsible for the preparation and filing
of any such Return, provided, however, that Seller may participate in the
preparation of such Return. For purposes of this Section 8.4(b), "participate"
shall mean and include, but shall not be limited to, the right at Seller's
expense to review any Return and necessary work papers and procedures used to
prepare any such Return and to discus any such Return, work papers and
procedures with both Buyer and its independent accounting firm which advises,
reviews or prepares such Return. If a consolidated return is prepared for that
period, access shall be limited to activities of the Company and will not
include any other entity.
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8.5 Certain Refunds. Buyer shall promptly pay or shall cause prompt payment
to be made to Seller of all refunds (including interest received thereon) of
Taxes for any Pre-Acquisition Date Tax Period of the Company received after the
Closing Date by the Company, Buyer or any affiliate of Buyer or the Company.
Seller shall promptly pay or shall cause prompt payment to be made to the
Company of all refunds (including interest received thereon) of Taxes for any
Post-Acquisition Date Tax Period of the Company received after the Closing Date
by Seller or any affiliate of Seller.
8.6 Section 338 Election. At Buyer's option, Seller will join with Buyer in
making an election on IRS Form 8023 under Sections 338(g) and 338(h)(10) of the
Code (and any corresponding election under state or local tax law) (collectively
a "Section 338(h)(10) Election") with respect to the purchase and sale of the
Shares. The Seller will, or will cause the Guarantor or any of its affiliates
to, pay any Taxes attributable to the making of the Section 338(h)(10) election
and will indemnify Buyer and the Company against any claims arising out of any
failure to pay such Taxes, without offset for any tax benefit that Buyer or the
Company may receive during periods ending after the Closing Date on account of
the Section 338(h)(10) Election. Seller also will, or will cause the Guarantor
or any of its affiliates to, pay any state and local Taxes (and indemnify the
Buyer and the Company against any claim arising out of any failure to pay such
Taxes) attributable to an election under state or local law similar to the
election available under Section 338(g) of the Code (or which results from the
making of an election under Section 338(g) of the Code) with respect to the
purchase and sale of the Shares where the state or local Tax jurisdiction (i)
does not provide or recognize the Section 338(h)(10) Election or (ii) does not
apply its provisions corresponding to Section 338(h)(10) of the Code to the
purchase and sale of the Shares (for example, because the Company files a
separate tax return in such jurisdiction). Seller and Buyer agree that the
Purchase Price and the liabilities of the Company (plus other relevant items)
will be allocated to the Assets of the Company for all purposes (including Tax
and financial accounting purposes) in a manner consistent with the fair market
values of such Assets as agreed by Buyer and Seller, but as to the Assets where
agreement is not reached within 60 days after the Closing Date, fair market
value shall be based on a reasonable appraisal of such Assets to be obtained by
Buyer within 90 days following the Closing Date. Seller shall have the right to
approve the party selected to make any appraisal, which approval shall not be
unreasonably withheld. Buyer, the Company and Seller will file all Returns
(including amended Returns and claims for refund) and information reports in a
manner consistent with such allocation.
8.7 Indemnification. Seller shall indemnify and hold harmless the Company
and Buyer for all claims for Taxes imposed on the Company for Pre-Acquisition
Date Tax Periods. Buyer and the Company shall indemnify and hold harmless Seller
for any claims for Taxes imposed on the Company for Post-Acquisition Date Tax
Periods.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer 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 Buyer, in whole or in part):
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9.1 Accuracy of Representations. Seller's representations and warranties
must have been accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Disclosure Letter.
9.2 Performance.
(a) All of the covenants and obligations that Seller is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered by Seller pursuant to
Section 2.4 must have been delivered, and each of the other covenants and
obligations in Sections 5.4 and 5.9 must have been performed and complied with
in all respects.
9.3 Consents. Each of the Consents identified in Part 3.2 of the Disclosure
Letter must have been obtained and must be in full force and effect.
9.4 No Proceedings. Since the date of this Agreement, there must not have
been commenced or Threatened against Buyer, or against any Person affiliated
with Buyer, any Proceeding involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions.
9.5 No Claim Regarding Ownership or Sale Proceeds. There must not have been
made or Threatened by any Person any claim asserting that such Person (a) is the
holder or the beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any stock of, or any other voting, equity, or ownership
interest in, the Company or any of the applicable rights to any material Assets
which is owned by or being transferred (pursuant to Section 5.5 hereof) to the
Company, or (b) is entitled to all or any portion of the Purchase Price payable
for the Shares.
9.6 HSR Act Approval. Seller and Buyer and any other person (as defined in
the HSR Act) required in connection with the Contemplated Transactions to file a
Notification and Report Form for Certain Mergers and Acquisitions with the FTC
and the DOJ pursuant to the HSR Act shall have made such filing, all applicable
waiting periods with respect to each such filing (including any extensions
thereof) shall have expired or been terminated and no actions shall have been
instituted which are still pending on the Closing Date by the FTC or the DOJ
challenging or seeking to enjoin the consummation of the Contemplated
Transactions.
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller 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 whole or in part):
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10.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all respects as of the date of this Agreement and must be accurate
in all respects as of the Closing Date as if made on the Closing Date.
10.2 Performance.
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4, and each of the other covenants and
obligations in Sections 6.1 and 6.3 hereof must have been performed and complied
with in all respects.
10.3 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by
Seller to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
10.4 HSR Act Approval. Seller and Buyer and any other person (as defined in
the HSR Act) required in connection with the Contemplated Transactions to file a
Notification and Report Form for Certain Mergers and Acquisitions with the FTC
and the DOJ pursuant to the HSR Act shall have made such filing, all applicable
waiting periods with respect to each such filing (including any extensions
thereof) shall have expired or been terminated and no actions shall have been
instituted which are still pending on the Closing Date by the FTC or the DOJ
challenging or seeking to enjoin the consummation of the Contemplated
Transactions.
11. TERMINATION
11.1 Termination Events. This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) by either Buyer or Seller if a material breach of any provision of
this Agreement has been committed by the other party and such breach has not
been waived or cured prior to the Closing after reasonable notice of such
breach;
(b) (i) by Buyer if any of the conditions in Section 9 has not been
satisfied as of the Closing Date and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller, if any of the conditions in Section
10 has not been satisfied of the Closing Date and Seller has not waived such
condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
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(d) by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before September
30, 1997, or such later date as the parties may agree upon.
12. INDEMNIFICATION; REMEDIES
12.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement and
any certificate delivered pursuant to this Agreement will survive the Closing
for a period ending on September 30, 1998. The right to indemnification, payment
of Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation.
12.2 Indemnification and Payment of Damages by Seller. Seller will
indemnify and hold harmless Buyer and the Company (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage, expense (including reasonable costs of
defense and reasonable attorneys' fees), whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by Seller in this
Agreement or any certificate delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of such Seller
in this Agreement; or
(c) any product shipped or any services provided by the Company prior
to the Closing Date.
12.3 Indemnification and Payment of Damages by Buyer. Buyer will indemnify
and hold harmless Seller, and will pay to the Seller the amount of any Damages
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Buyer in this
Agreement or in any certificate or document delivered by Buyer pursuant to this
Agreement, or
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement.
12.4 Time Limitations. If the Closing occurs, Seller will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, other than those in Sections
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3.9 or Article 8 unless on or before September 30, 1998, Buyer notifies Seller
of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by Buyer; a claim with respect to Section 3.9 or Article
8, may be made at any time prior to the applicable statute of limitations,
inclusive of any extensions thereof. If the Closing occurs, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Article 8, unless on or before
September 30, 1998, Seller notifies Buyer of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Seller.
12.5 Limitations on Amount. The parties will have no liability (for
indemnification or otherwise) with respect to the matters described in Sections
12.2 and 12.3 (other than with respect to a claim pursuant to Sections 2.5, 3.9
or Article 8) until the total of all Damages with respect to such matters
exceeds $1,000,000 in the aggregate, and then shall be liable for all Damages;
provided, however, that in no event shall a party be liable for Damages in
excess of the Purchase Price. However, this Section 12.5 will not apply to any
breach of any representations and warranties of which such parties had knowledge
at any time prior to the date on which such representation and warranty is made
or any intentional breach by such parties of any covenant or obligation, and
such parties will be jointly and severally liable for all Damages with respect
to such breaches.
12.6 Procedure For Indemnification--Third Party Claims.
(a) Promptly after receipt by an indemnified party under Section 12.2
or Section 12.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
(b) If any Proceeding referred to in Section 12.6(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 12 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims
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made in that Proceeding are within the scope of and subject to indemnification;
(ii) no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent unless (A) there is
no finding or admission of any violation of Legal Requirements or any violation
of the rights of any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is monetary
damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within ten days after the indemnified party's notice is given,
give notice to the indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will be bound by any determination made
in such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) The parties hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on the indemnifying party with respect to such a claim
anywhere in the world.
12.7 Procedure For Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
13. GENERAL PROVISIONS
13.1 Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
13.2 Public Announcements. No public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, until such time and in such manner as the parties mutually agree. Unless
consented to by both parties in advance or required by Legal Requirements, prior
to the Closing, each party shall keep this Agreement strictly
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confidential and may not make any disclosure of this Agreement to any
Person. Seller and Buyer will consult with each other concerning the means by
which the Company's employees, customers, and suppliers and others having
dealings with the Company will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
13.3 Confidentiality. Between the date of this Agreement and the Closing
Date, Buyer and Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and Seller to
maintain in confidence any written, oral, or other information obtained in
confidence from another party, Seller or Buyer in connection with this Agreement
or the Contemplated Transactions, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, each party waives
any cause of action, right, or claim arising out of the access of the other
party (or the other party's representatives) to any trade secrets or other
confidential information of Buyer, Seller or the Company except for the
intentional competitive misuse by Buyer or Seller of such trade secrets or
confidential information.
13.4 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller:
Advent Investments, Inc.
c/o Aetna U.S. Healthcare Inc.
000 Xxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
Facsimile No:(000) 000-0000
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With a copy to:
Xxxxx X. Xxxxx, Esq.
Aetna US Healthcare Inc.
000 Xxxxx Xxxx
X.X. Xxx 0000
Blue Xxxx, Xxxxxxxxxxxx 00000
Facsimile No.:(000) 000-0000
Buyer:
ENVOY Corporation
Two Lakeview Place
00 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxx X. Xxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Vice President and General Counsel
Two Lakeview Place
00 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
13.5 Further Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
13.6 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving
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such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
13.7 Entire Agreement and Modification. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
13.8 Disclosure Letter
(a) The disclosures in the Disclosure Letter, and those in any
supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
13.9 Assignments, Successors, and No Third-Party Rights. Neither party may
assign any of its rights under this Agreement without the prior consent of the
other parties except that Buyer may assign any of its rights under this
Agreement to any subsidiary or affiliate of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
13.10 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.11 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13.12 Time of Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
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13.13 Governing Law. This Agreement will be governed by the laws of the
State of Delaware without regard to conflicts of laws principles.
13.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER: SELLER:
ENVOY CORPORATION ADVENT INVESTMENTS, INC.
By: /s/ Xxxx X. Xxxx, Xx. By: /s/ Xxx Xxx
----------------------- ------------------------
Title: Chairman and Co-CEO Title: Vice President
-------------------- ----------------------
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Exhibits and Schedules to Stock Purchase Agreement
Exhibit A (Guaranty Agreement)
Exhibit 2.4 (Services Agreement)
Disclosure Letter
a) Schedule 3.2
b) Schedule 3.5
c) Schedule 3.6
d) Schedule 3.7
e) Schedule 3.8
f) Schedule 3.9
g) Schedule 3.12
h) Schedule 3.13
i) Schedule 3.14
j) Schedule 3.15
k) Schedule 3.16
l) Schedule 3.17
m) Schedule 3.18
n) Schedule 3.21
o) Schedule 3.22
Schedules
a) 7.2(b)(iii) - Short term Disability Payment Amounts
b) 7.2(c) - Salary Continuation and Salary Benefit Plan
c) 7.2(d)(i) - Pre-Closing Incentive Program Amounts
d) 7.2(d)(ii) - Health Plan Contribution Amounts
e) 7.2(d)(iii) - Vacation Days
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