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EXHIBIT 10.1
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ACQUISITION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
QUADRAMED CORPORATION AND PYRAMID HEALTH ACQUISITION CORPORATION,
AND
PYRAMID HEALTH GROUP, INC. AND ITS STOCKHOLDERS
DATED
JUNE 1, 1998
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ACQUISITION AGREEMENT AND PLAN OF MERGER
This Acquisition Agreement and Plan of Merger (the "Agreement") is dated
June 1, 1998 by and among QuadraMed Corporation, a Delaware corporation
("QuadraMed"), and Pyramid Health Acquisition Corporation, a Delaware
corporation ("Acquisition Co."), on the one hand, and Pyramid Health Group,
Inc., a Delaware corporation (the "Company"), Xxxxx X. Xxxxx (the "Majority
Stockholder"), and Sprout Capital V, Sprout Growth, L.P., Sprout Growth, Ltd.,
DLJ Venture Capital Fund, Xxxxxx Partners 2, L.P., Toronto Dominion Investments,
Inc., Scottish Investment Trust, PLC, Xxxxx Xxxxxx, Xxxxxx X. Xxxxx, Trustee of
the Xxxxx Family Trust dated 1/6/89, Xxxxxxx X. Xxxxxxxx, Compex Investors I,
L.P., Compex Investors II, L.P., Mehta Family Partners, L.P., Transcorp C/F
Xxxxx X. Xxxxx A/C IRC-6699-OT, Transcorp C/F Xxxxx X. Xxxxx A/C KPS-0227-00,
Transcorp C/F Xxxx X. Xxxxx A/C IRZ-8055-OC, Transcorp C/F Xxxxx X. Xxxxx A/C
IRZ-8054-OC, Transcorp C/F Xxxxx X. Xxxxx A/C TP2-87332, Xxxxxx Xxxx, Trustee of
the Xxxx X. Xxxxx 1996 Trust, Xxxxxx Xxxx, Trustee of the Xxxxx X. Xxxxx 1996
Trust and Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X. Xxxxx Trust of April 9,
1985, who, together with the Majority Stockholder are all of the stockholders of
the Company (each, a "Stockholder" and collectively, the "Stockholders"), on the
other hand.
WHEREAS, QuadraMed is a duly incorporated Delaware corporation engaged in
the business of developing, marketing and selling software products and
consulting services to healthcare providers and payors.
WHEREAS, Acquisition Co. is a duly incorporated Delaware corporation
formed by QuadraMed for the purpose of the Merger (as defined below)
contemplated by this Agreement, with authorized capital stock consisting of
1,000 shares of Common Stock, $0.001 par value, of which all 1,000 shares are
duly and validly issued and outstanding and owned by QuadraMed.
WHEREAS, the Company is a duly incorporated Delaware corporation engaged
in the medical records management business, with authorized capital stock
consisting of 14,000,000 shares of Common Stock, $0.01 par value, of which
523,547 shares are duly and validly issued, outstanding and entitled to vote as
of June 1, 1998, and 3,565,553 shares of Preferred Stock, $0.01 par value, of
which 1,700,000 shares of Series A Convertible Preferred Stock are duly and
validly issued, outstanding and entitled to vote as of June 1, 1998, 1,227,775
shares of Series B Convertible Preferred Stock are duly and validly issued,
outstanding and entitled to vote as of June 1, 1998 and 60,000 shares of Series
C Convertible Preferred Stock are duly and validly issued, outstanding and
entitled to vote as of June 1, 1998.
WHEREAS, the Holders of $8,000,000 in principal amount of 10% Convertible
Subordinated Notes issued by the Company (the "Noteholders") have the right to
vote on all matters submitted to the Stockholders of the Company as if such 10%
Convertible Subordinated Notes had been fully converted into Common Stock of the
Company.
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WHEREAS, the Stockholders and the Noteholders and the respective Boards of
Directors of QuadraMed, Acquisition Co. and the Company have approved the
acquisition of the Company by QuadraMed via merger (the "Merger") of Acquisition
Co. with and into the Company.
WHEREAS, it is intended that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Code (as defined
below) and be accounted for as a pooling of interests under the requirements of
Opinion No. 16 (Business Combinations) of the Accounting Principles Board of the
American Institute of Certified Public Accountants.
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by each signatory hereto, it is agreed as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Acquisition Co. Common Stock" shall mean the Common Stock of
Acquisition Co., $0.001 par value.
1.2 "Affiliate" shall mean any person directly or indirectly controlled
by, controlling or under common control with any party to this Agreement.
1.3 "Closing" shall mean the closing of the transactions contemplated in
this Agreement.
1.4 "Closing Consideration" shall mean 2,740,000 newly-issued shares of
QuadraMed Common Stock (as defined below) payable at the Closing pro rata to all
of the Stockholders.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
1.6 "Company Common Stock" shall mean all of the issued and outstanding
Common Stock of the Company, $0.01 par value, all of which shares are held by
the Stockholders as of the date hereof.
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1.7 "Company Financial Statements" shall mean the consolidated unaudited
balance sheet of the Company as of March 31, 1998 and the related statements of
operations, stockholders' equity and cash flows for the twelve (12) month period
then ended, as prepared by the Company.
1.8 "Company Convertible Notes" shall mean those certain 10% Convertible
Subordinated Notes issued by the Company pursuant to that certain 10%
Convertible Subordinated Note Purchase Agreement dated October 31, 1988 by and
between the Company and the Noteholders, as amended.
1.9 "Company Preferred Stock" shall mean all of the issued and
outstanding preferred stock of the Company, $0.01 par value, all of which shares
are held by the Stockholders as of the date hereof.
1.10 "Company Stock" shall mean the Company Common Stock and the Company
Preferred Stock.
1.11 "Company Subsidiaries" shall mean any Person which is an Affiliate
of the Company including, without limitation, Hospital Correspondence
Corporation, Pyramid Health Solutions, Inc. and Pyramid Health Technologies and
excluding Compex Legal Services, Inc.
1.12 "Contract" shall mean any existing written or oral contract,
subcontract, understanding, lease, policy, commitment, sales order, purchase
order, warranty, indenture, mortgage, note, bond, instrument, license agreement
or other agreement, commitment or undertaking of any nature.
1.13 "Conversion Ratio" shall mean the quotient obtained by dividing the
aggregate number of QuadraMed Shares (as defined below) delivered as the Closing
Consideration by the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time (as defined below).
1.14 "Daily Price" of the QuadraMed Shares shall mean the last reported
sales price on such day reported by the National Association of Securities
Dealers, Inc. Automated Quotation System.
1.15 "Delaware Code" shall mean the Delaware General Corporation Law.
1.16 "Effective Time" shall mean the date and time the Certificate of
Merger (as defined below) is filed with and accepted by the Delaware Secretary
of State.
1.17 "Employee Benefit Plan(s)" shall mean any "employee benefit plan" as
defined in Section 3(3) of ERISA (as defined below) and any other plan, policy,
program, practice or arrangement providing compensation or other benefits to any
current or former officer or
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employee of the Company or any beneficiary or dependent thereof that is or was
maintained by the Company.
1.18 "Encumbrance" shall mean any mortgage, chattel mortgage, conditional
sales Contract, infringement, interference, option, right of first refusal,
preemptive right, community property interest or restriction of any nature
(including any restriction on the voting of any security, any restriction on the
transfer of any security or other asset, any restriction on the receipt of
income derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise of transfer of any other attribute of
ownership of any asset), pledge, liability, lien, charge, security interest,
encumbrance, option, lease, license, easement or similar interest.
1.19 "Environmental Law" shall mean all applicable federal, state and
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directives, requests, licenses,
authorizations, permits and agreements issued or signed by any federal, state or
local government authority, relating to environmental, health or safety matters,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Water Act of 1977, the Clean
Air Act, the Resource Conservation and Recovery Act of 1976, the Federal
Insecticide, Fungicide and Rodenticide Act, the Toxic Substances Control Act,
the Emergency Planning and Community Right-to-Know Act of 1986, the Occupational
Safety and Health Act of 1970 and the Safe Drinking Water Act, all as amended,
and any state and local counterparts to such acts as existing at the time of
Closing.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all regulations promulgated thereunder.
1.21 "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.
1.22 "GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
1.23 "Governmental Body" shall mean any nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature, any federal, state, local, municipal, foreign or other government or any
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or Person and any court or other tribunal).
1.24 "Government Communications" shall mean all written inspection
reports, complaints and other communications received by the Company or oral
communications received by officers of the Company from any Governmental Body.
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1.25 "Hazardous Substance(s)" shall mean any substance, the presence of
which requires investigation or remediation under any Environmental Law or under
common law, any toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous substance which is regulated by
any Environmental Law, any substance, the presence of which causes or threatens
to cause a material nuisance upon property presently and/or previously owned,
leased or otherwise operated or used by the Company (or poses or threatens to
pose a hazard to the health or safety of persons on or about the property of the
Company or adjacent properties) and radon, ureaformaldehyde, polychlorinated
biphenyls, asbestos or asbestos-containing materials, petroleum and petroleum
products.
1.26 "Intellectual Property" shall mean all inventions, all improvements
thereto, and all patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, trademarks, service marks, trade dress,
logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, mask works and all
applications, registrations and renewals in connection therewith, trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals), proprietary software, other proprietary rights
and copies and tangible embodiments thereof (in whatever form or medium).
1.27 "IRS" shall mean the United States Internal Revenue Service or any
successor entity.
1.28 "Knowledge" shall mean that an individual will be deemed to have
Knowledge of a particular fact or other matter if such individual is actually
aware of such fact or other matter or a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter. A Person (as defined below), other than an
individual, will be deemed to have Knowledge of a particular fact or other
matter if any individual who is serving as a director, officer, partner,
executor or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
1.29 "Legal Requirement" shall mean any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
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1.30 "Licenses" shall mean all material licenses, permits, approvals and
registrations issued by a Governmental Body necessary for the ownership of the
Company properties and the conduct of its business as currently conducted.
1.31 "Material Adverse Effect" shall mean any material adverse effect on
the business, assets, liabilities, properties, operations, prospects or
condition (financial or otherwise) of the Company and the Company Subsidiaries
taken as a whole.
1.32 "Person" shall mean an individual, a partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture or any other entity of whatever nature.
1.33 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.34 "QuadraMed Common Stock" shall mean the shares of Common Stock of
QuadraMed, $0.01 par value.
1.35 "QuadraMed SEC Filings" shall mean any and all documents, reports
and other filings made by QuadraMed with the SEC (as defined below) since March
31, 1998, including, without limitation, the Proxy Statement for the Annual
Meeting of Stockholders held May 28, 1998, the 1997 Annual Report to
Stockholders, Report on Form 8-K dated April 28, 1998, Report on Form 8-K dated
May 4, 1998, Amendment No. 1 to Form 10-K, Amendment No. 4 to Form S-3,
Amendment No. 4 to Form S-4, Medicus Proxy/QuadraMed Prospectus, and Report on
Form 10-Q for the Quarter ended March 31, 1998.
1.36 "QuadraMed Shares" shall mean the shares of QuadraMed Common Stock
issuable as the Closing Consideration.
1.37 "Real Property" shall mean all of the land, buildings, plants,
facilities, installations, fixtures and other structures and improvements leased
to the Company pursuant to the Real Property Leases (as defined below), and any
parcels of land owned by the Company, together with all privileges and easements
appurtenant thereto, and any and all buildings, plants, facilities,
installations, fixtures and other structures and improvements situated or
located on such land or attached thereto.
1.38 "Real Property Leases" shall mean, collectively, any written real
property leases to which the Company is a party.
1.39 "Regulatory Action(s)" shall mean any material claim, demand, action
or proceeding brought or instigated by any governmental authority in connection
with any Environmental Law (including, without limitation, civil, criminal
and/or administrative proceedings), whether or not seeking costs, damages,
penalties or expenses.
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1.40 "SEC" shall mean the United States Securities and Exchange
Commission, or any successor entity.
1.41 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.42 "Surviving Corporation" shall mean the Company as the surviving
corporation following the Merger.
1.43 "Tax(es)" shall mean all taxes, charges, fees, levies or other
assessments of any nature whatsoever (including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes, customs,
duties, fees, assessments or charges of any kind whatsoever) together with any
interest and any penalties, additions to tax or additional amounts imposed,
assessed or collected by any Governmental Body (domestic or foreign) upon the
Company to which reference is being made or any Affiliate thereof or upon any
consolidated, combined or unitary group of which any such entity is or was a
member.
1.44 "Tax Return(s)" shall mean all federal, state, foreign, local and
other tax returns, reports and statements heretofore required to be filed by the
Company to which reference is being made or by any consolidated, combined or
unitary group of which the Company is or was a member.
ARTICLE II.
THE MERGER
2.1 Merger. Subject to the terms and conditions hereof, the Merger shall
be consummated in accordance with the Delaware Code as promptly as practicable
following the satisfaction or waiver of the conditions set forth in Articles
VIII, IX and X. At the Effective Time, subject to the terms and conditions of
this Agreement and in accordance with the laws of Delaware, the separate
corporate existence of Acquisition Co. shall cease and Acquisition Co. shall be
merged with and into the Company, which shall be the Surviving Corporation.
2.2 Company Common Stock, Company Preferred Stock and Company
Convertible Notes.
(a) On or prior to the Closing, the Company and each of the
Stockholders agree that each share of the Company Preferred Stock and Company
Convertible Notes shall be converted into Company Common Stock by the holders
thereof as follows: the 1,700,000 shares of Series A Convertible Preferred Stock
of the Company issued and outstanding shall be converted into 2,379,995 shares
of Company Common Stock, the 1,227,775 shares of Series B Convertible Preferred
Stock issued and outstanding shall be converted into 1,718,880 shares of Company
Common Stock, the 60,000 shares of Series C Convertible Preferred Stock issued
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and outstanding shall be converted into 2,750,076 shares of the Company Common
Stock and ninety percent (90%) of the principal amount of the Company
Convertible Notes shall be converted into a total of 1,421,315 shares of Company
Common Stock. The Company and each of the Stockholders agrees to take all
actions and execute all documents reasonably necessary to evidence and
effectuate the conversions set forth in this Section 2.2(a). The post-conversion
numbers set forth above reflect a 1.4 to 1 split of the Company's Common Stock
effectuated on October 1, 1997.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the Stockholders, be converted into the right
to receive a portion of the Closing Consideration as indicated on Schedule
2.2(b) upon surrender at the Closing of the certificates representing such
shares. Each share of Company Stock held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be cancelled and
retired and cease to exist, without any conversion thereof. The stock transfer
books of the Company shall be closed with respect to all shares of such capital
stock outstanding immediately prior to the Effective Time. No further transfer
of any such shares of the Company's capital stock shall be made on such stock
transfer books after the Effective Time.
(c) At or as soon as practicable after the Effective Time, each
holder of the Company Stock certificates shall surrender such certificates in
exchange for one (1) or more certificates representing QuadraMed Common Stock.
Upon surrender of a Company Stock certificate to QuadraMed for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by QuadraMed, the holder of such Company Stock
certificate shall be entitled to receive in exchange therefor one (1) or more
certificates representing the number of whole shares of QuadraMed Common Stock
that such holder has the right to receive pursuant to the provisions of this
Section 2.2, and the Company Stock certificates so surrendered shall be
cancelled. Until surrendered as contemplated by this Section 2.2, each Company
Stock certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive upon such surrender one (1) or more
certificates representing shares of QuadraMed Common Stock (and cash in lieu of
any fractional share of QuadraMed Common Stock) as contemplated by this Section
2.2. If any Company Stock certificate shall have been lost, stolen or destroyed,
QuadraMed may, in its discretion and as a condition precedent to the issuance of
any certificate representing QuadraMed Common Stock, require the owner of such
lost, stolen or destroyed Company Stock certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as QuadraMed may reasonably direct)
as indemnity against any claim that may be made against QuadraMed or the
Surviving Corporation with respect to such Company Stock certificate. No
dividends or other distributions declared or made with respect to QuadraMed
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Company Stock certificate with respect to the shares
of QuadraMed Common Stock represented thereby, and no cash payment in lieu of
any fractional share shall be paid to any such holder, until such holder
surrenders the Company Stock certificate in accordance with this Section 2.2 (at
which
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time such holder shall be entitled to receive all such dividends and
distributions and such cash payment). No fractional shares of QuadraMed Common
Stock shall be issued in connection with the Merger, and no certificates for any
such fractional shares shall be issued. In lieu of such fractional shares, any
holder of Company Stock who would otherwise be entitled to receive a fraction of
a share of QuadraMed Common Stock (after aggregating all fractional shares of
QuadraMed Common Stock issuable to such holder) shall, upon surrender of such
holder's Company Stock certificate(s) be paid in cash the dollar amount (rounded
to the nearest whole cent) without interest, determined by multiplying such
fraction by the Daily Price on the Closing. QuadraMed and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable to any holder or former holder of Company Stock
pursuant to this Agreement such amounts as QuadraMed or the Surviving
Corporation may be required to deduct or withhold therefrom under the Code or
under any provision of state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid. Neither QuadraMed nor the Surviving
Corporation shall be liable to any holder or former holder of Company Stock for
any shares of QuadraMed Common Stock (or dividends or distributions with respect
thereto) or for any cash amounts, delivered to any public official pursuant to
any applicable abandoned property, escheat or similar law.
(d) Each of the Noteholders shall be paid an amount equal to ten
percent (10%) of the principal amount of each Company Convertible Note and all
accrued but unpaid interest due thereunder through the Closing, payable by check
to be mailed to the address of such Noteholder in the Company's records or by
wire transfer pursuant to instructions delivered by such Noteholder to QuadraMed
at least two (2) business days prior to the Closing.
(e) Each certificate representing QuadraMed Shares shall (unless
otherwise permitted by the provisions of the Agreement) be stamped or otherwise
imprinted with a legend substantially similar to the following (in addition to
any legend required under applicable state securities laws or as provided
elsewhere in this Agreement):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
(f) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any Stockholder thereof if the Stockholder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
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(g) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.3 Options.
(a) At the Effective Time, each outstanding and unexercised
Company stock option (whether vested or unvested) outstanding under the Pyramid
Health Group 1997 Employee and Consultant Stock Option Plan (the "Option Plan")
and each outstanding warrant to purchase the Company's Series B Convertible
Preferred Stock issued pursuant to that certain letter agreement dated August
11, 1993 by and between the Company and certain investors in the Company
Convertible Notes (the "Warrant(s)") shall cease to represent a right to acquire
shares of Company Common Stock or Company Preferred Stock as set forth on
Schedule 2.3(a), as the case may be, and shall be converted automatically into
an option to purchase shares of QuadraMed Common Stock in an amount and at an
exercise price determined as provided below.
(b) The number of shares of QuadraMed Common Stock subject to the
new option shall be equal to the product of the number of shares of Company
Common Stock subject to the original option or Warrant multiplied by the
Conversion Ratio, provided that any fractional shares of QuadraMed Common Stock
resulting from such multiplication shall be rounded to the nearest share.
(c) The exercise price per share of QuadraMed Common Stock under
the new option or Warrant shall be equal to the quotient obtained by dividing
the exercise price per share of Company Common Stock under the original option
by the Conversation Ratio, provided that such exercise price shall be rounded to
the nearest cent.
(d) The adjustment provided herein with respect to any options
that are "incentive stock options" (as defined in Section 422 of the Code) shall
be and are intended to be effected in a manner consistent with Section 424(a) of
the Code. The duration and other terms of the new option shall be the same as
the original option except that all references to the Company shall be deemed to
be references to QuadraMed.
(e) Each Company stock option shall be assumed by QuadraMed in
accordance with the terms (as in effect as of the date of this Agreement) of the
Option Plan and the stock option agreement by which such Company stock option is
evidenced. All restrictions on the exercise of each such assumed Company stock
option shall continue in full force and effect, and the term, exercisability,
vesting schedule and other provisions of such Company stock option shall
otherwise remain unchanged.
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2.4 Acquisition Co. Common Stock. Each share of Acquisition Co. Common
Stock issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of QuadraMed, be
converted into such number of newly issued shares of the common stock of the
Surviving Corporation equal to the number of shares of Acquisition Co. Common
Stock then outstanding.
2.5 Execution of Certificate of Merger. At the Closing, the Company
shall complete and execute a Certificate of Merger, substantially in the form
attached hereto as Exhibit "A" and incorporated herein by this reference (the
"Certificate of Merger"), and shall cause the Certificate of Merger to be
delivered to the Delaware Secretary of State for filing as provided in Section
251 of the Delaware Code. The parties hereto will also execute and deliver such
other documents or certificates as may be required to effect the Merger.
2.6 Effect of the Merger. The Merger shall have the effects set forth in
Section 259 of the Delaware Code.
2.7 Certificate of Incorporation; Bylaws. As of the Effective Time, the
Certificate of Incorporation of Acquisition Co. shall be the Certificate of
Incorporation of the Surviving Corporation, and the Bylaws of Acquisition Co.
shall be the Bylaws of the Surviving Corporation.
2.8 Directors. The directors of Acquisition Co. as of the Effective Time
shall be the directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
2.9 Officers. The officers of Acquisition Co. as of the Effective Time
shall be the officers of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or otherwise provided by
law.
2.10 Closing. Unless this Agreement shall have been terminated pursuant
to the provisions of Article XIII, the Closing of the transactions contemplated
by this Agreement shall take place either by facsimile (with original signature
pages to immediately follow by overnight courier) or at the principal executive
offices of QuadraMed, 00 Xxxx Xxx Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 0X, Xxxxxxxx,
Xxxxxxxxxx 00000 as soon as practicable following the satisfaction or waiver of
the conditions set forth in Articles VIII, IX and X.
2.11 Closing Obligations of Company and Stockholders. At the Closing, the
Company and the Stockholders shall deliver or cause to be delivered to QuadraMed
and Acquisition Co.:
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(a) the Certificate of Merger duly executed for filing;
(b) the closing certificate required by Section 9.3 below;
(c) the opinion of counsel required by Section 9.4 below;
(d) a certificate of the Secretary of the Company attesting to the
incumbency of the officers executing the Agreement and the other agreements and
certificates delivered by the Company at the Closing and certifying to the
authenticity of the Certificate of Incorporation and Bylaws of the Company, each
as amended;
(e) the Non-Competition and Non-Interference Agreements,
substantially in the form attached hereto as Exhibit "B" and incorporated herein
by this reference (the "Non-Competition Agreements"), executed by the Majority
Stockholder and Xxxxxx Xxxxxx, Xxxxxxx XxXxxx and Xxxxxx Xxxxx;
(f) Evidence reasonably satisfactory to counsel to QuadraMed
evidencing the conversion of all of the Company Preferred Stock and Company
Convertible Notes to Company Common Stock as set forth in Section 2.2(a).
(g) the audited Company Financial Statements, audited by KPMG Peat
Marwick, the Company's independent certified public accounting firm, including
notes thereto (the "Audited Company Financial Statements").
(h) the Release, substantially in the form attached hereto as
Exhibit "C" and incorporated herein by this reference, executed by the Majority
Stockholder;
(i) the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit "D" and incorporated herein by this reference (the
"Registration Rights Agreement"), executed by each of the Stockholders;
(j) resignation letters of each of the officers and directors of
the Company dated effective as of the Closing;
(k) a certificate of good standing for the Company issued by the
Delaware Secretary of State not more than ten (10) days prior to the Closing
Date; and
(l) such other documents as may be reasonably requested by counsel
for QuadraMed and Acquisition Co. as necessary to consummate the transactions
contemplated by this Agreement.
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2.12 Closing Obligations of QuadraMed and Acquisition Co. At the Closing,
QuadraMed and Acquisition Co. shall deliver or cause to be delivered to the
Company and the Stockholders:
(a) the closing certificate required by Section 10.3 below;
(b) the opinion of counsel required by Section 10.4 below;
(c) a certificate of the Secretary of each of QuadraMed and
Acquisition Co. attesting to the incumbency of the officers executing the
Agreement and the other agreements and certificates delivered by QuadraMed and
Acquisition Co. at the Closing;
(d) the Non-Competition Agreements, executed by QuadraMed and
Acquisition Co.;
(e) the Registration Rights Agreement, executed by QuadraMed; and
(f) such other documents as may be reasonably requested by counsel
for the Company and the Stockholders as necessary to consummate the transactions
contemplated by this Agreement.
2.13 Private Placement. The QuadraMed Shares to be issued to the
Stockholders pursuant to this Agreement will be exempt from registration
requirements of the Securities Act pursuant to the private placement exemption
provided by Regulation D promulgated under the Securities Act and/or Section
4(2) of the Securities Act, and applicable state securities laws. The
Stockholders hereby agree to take all actions and execute all documents to
qualify issuance of the QuadraMed Shares for such exemptions.
2.14 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of Section
368 of the Code.
2.15 Pooling of Interests. The parties intend that the Merger be treated
as a "pooling of interests" for accounting purposes. Each party will take all
actions and execute all documents reasonably necessary to effectuate the same.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE MAJORITY STOCKHOLDER
The Company and the Majority Stockholder hereby jointly and severally
represent and warrant to QuadraMed and Acquisition Co. as follows:
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3.1 Organization and Good Standing. The Company and each of the Company
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has full corporate power
and authority to own, lease and operate its assets and properties and to carry
on its businesses and to enter into, deliver and perform its obligations under
and to consummate the transactions contemplated by this Agreement. Except as set
forth in Schedule 3.1, neither the Company nor any of the Company Subsidiaries
have conducted any business or otherwise used, for any purpose or any
jurisdiction, any fictitious name, assumed name, trade name or other name.
3.2 Certificate of Incorporation and Bylaws; Records. The Company has
delivered to QuadraMed and Acquisition Co. accurate and complete copies of (i)
the Certificate of Incorporation and Bylaws of the Company and each of the
Company Subsidiaries, including all amendments thereto, (ii) the stock records
of the Company and each of the Company Subsidiaries and (iii) the minutes and
other records of the meetings and other proceedings (including any actions taken
by written consent or otherwise without a meeting) of the stockholders of the
Company and each of the Company Subsidiaries, the Board of Directors of the
Company and each of the Company Subsidiaries and all committees of the Board of
Directors of the Company and each of the Company Subsidiaries. There have been
no formal meetings or other proceedings of the stockholders of the Company or
any of the Company Subsidiaries, the Board of Directors of the Company or any of
the Company Subsidiaries or any committee of the Board of Directors of the
Company or any of the Company Subsidiaries that are not fully reflected in such
minutes or other records. There has not been any violation of any of the
provisions of the Certificate of Incorporation or Bylaws of the Company and each
of the Company Subsidiaries, and the Company nor any of the Company Subsidiaries
has taken any action that is inconsistent in any material respect with any
resolution adopted by the stockholders of the Company and each of the Company
Subsidiaries, the Board of Directors of the Company and each of the Company
Subsidiaries or any committee of the Board of Directors of the Company and each
of the Company Subsidiaries. The books of account, stock records, minute books
and other records of the Company and each of the Company Subsidiaries are
accurate, up-to-date and complete in all material respects, and have been
maintained in accordance with prudent business practices.
3.3 Qualifications To Do Business. The Company and each of the Company
Subsidiaries are qualified to do business and are in good standing in each
jurisdiction (listed on Schedule 3.3 to this Agreement) where the character or
location of property owned and leased, the employment of personnel or the nature
of the businesses and activities conducted by the Company and each of the
Company Subsidiaries, as the case may be, require such qualification, licensing
or domestication, except in such jurisdictions where the failure to be so
qualified, licensed or domesticated and to be in good standing, individually or
in the aggregate, would not have a Material Adverse Effect. Except for the
jurisdictions listed on Schedule 3.3, neither the Company nor any of the Company
Subsidiaries is required to file franchise, income or other tax returns in any
jurisdiction based upon the ownership or use of property therein or the
derivation of income therefrom.
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3.4 Capitalization. The authorized capital stock of the Company consists
of 14,000,000 shares of Common Stock, $.01 par value, of which 523,547 shares
have been issued and are outstanding as of the date of this Agreement, and
3,565,553 shares of Preferred Stock, $0.01 par value, of which 1,700,000 shares
of Series A Convertible Preferred Stock are duly and validly issued, outstanding
and entitled to vote as of the date of this Agreement, 1,227,775 shares of
Series B Convertible Preferred Stock are duly and validly issued, outstanding
and entitled to vote as of the date of this Agreement and 60,000 shares of
Series C Convertible Preferred Stock are duly and validly issued, outstanding
and entitled to vote as of the date of this Agreement. All of the outstanding
shares of Company Stock have been duly authorized and validly issued, and are
fully paid and non-assessable. Schedule 3.4 provides an accurate and complete
description of the terms of each repurchase option which is held by the Company
and to which any of such shares is subject. All outstanding shares of Company
Stock have been issued and granted in compliance with all applicable securities
laws and other applicable Legal Requirements and all requirements set forth in
applicable Contracts. All securities repurchased, redeemed or otherwise
reacquired by the Company were reacquired in compliance with the Delaware Code
and all other applicable Legal Requirements and all requirements set forth in
applicable restricted stock purchase agreements and other applicable Contracts.
3.5 Ownership of Shares; No Change. Other than restrictions on transfer
imposed by the Securities Act, as of the date of this Agreement and as of the
Closing, the Stockholders do and will own all of the issued and outstanding
Company Stock. Each of the shares of Company Stock to be tendered by the
Stockholders at the Closing is free and clear of any Encumbrance, and at the
Closing, each of such shares of Company Stock will be free of any such
Encumbrance. The Stockholders have full power and authority to convey good
marketable title to the shares of Company Stock owned by them free and clear of
any Encumbrances. Except as set forth on Schedule 3.5, there has been no change
in the capital stock or other equity interests of the Company within the two (2)
year period ending on the Effective Time of this Agreement.
3.6 Subsidiaries and Other Affiliates. Except as set forth on Schedule
3.6, the Company does not have any subsidiaries. Except as set forth on Schedule
3.6, all issued and outstanding shares or other equity interests in each of the
Company Subsidiaries is owned directly by the Company free and clear of any
Encumbrances. Except as set forth on Schedule 3.6, there are not as of the date
hereof, and at the Effective Time, there will not be, any other shares of
capital stock or other equity interest of any of the Company Subsidiaries
authorized or outstanding or any subscriptions, options, conversion or exchange
rights, warrants, repurchase or redemption agreements or other agreements,
claims or commitments of any nature whatsoever obligating any of the Company
Subsidiaries to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed, additional shares of
capital stock or other securities or equity interests of any of the Company
Subsidiaries obligating the Company or any of the Company Subsidiaries to grant,
extend, or enter into any such agreement. There are no shareholder agreements,
voting trusts, proxies or
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other agreements, instruments or other understandings with respect to the
capital stock of any of the Company Subsidiaries.
3.7 Authority.
(a) The Company has the necessary corporate power and authority to
enter into and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
by the Company have been duly authorized by the Board of Directors and
Stockholders of the Company in accordance with applicable law. No further
corporate action will be necessary on the part of the Company to make this
Agreement valid and binding upon the Company in accordance with its terms. This
Agreement has been duly and validly authorized, executed and delivered by the
Company and this Agreement (assuming due authorization, execution and delivery
by the other parties hereto) constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms (except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors generally or by general
principles of equity). Neither the execution, delivery nor performance of this
Agreement by the Company, nor the consummation of the transactions contemplated
hereby, nor compliance by the Company with the terms and provisions of this
Agreement or the Certificate of Merger will result in any material respect in a
violation or breach of any term or provision of the Company's Certificate of
Incorporation or Bylaws, or of any statute, rule or regulation applicable to the
Company or its businesses, properties, assets or personnel, or conflict with or
constitute a violation or breach of, or a default under (or an event which, with
the passage of time or the giving of notice, or both, would constitute a default
under), nor give any party a right to accelerate the due date of any
indebtedness or obligation under, any indenture, mortgage, deed of trust,
Contract or agreement to which the Company is a party or to which its properties
or assets are subject, or any instrument, judgment, decree, writ or other
restriction to which the Company is a party or by which the Company or its
businesses, properties, assets or personnel are bound.
(b) Except for filing the Certificate of Merger with the Delaware
Secretary of State and obtaining any necessary third-party consents set forth on
Schedule 3.7, the Company is not required to obtain the consent of any
third-party or to submit any notice, report or other filing with any federal,
state or local governmental authority in connection with the execution or
delivery or performance by the Company of this Agreement or the consummation of
the transactions contemplated herein.
3.8 Company Financial Statements. The Company has delivered to QuadraMed
true, complete and correct copies of the Company Financial Statements, and, as
of the Closing, will deliver to QuadraMed true, complete and correct copies of
the Audited Company Financial Statements. Except as set forth on Schedule 3.8,
the Company Financial Statements present fairly the consolidated financial
condition of the Company and the consolidated assets
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and liabilities of the Company as of the respective dates of and at said dates
and the results of its operations, changes in stockholders' equity and cash
flows for the periods therein specified, and have been prepared from the books
and records of the Company in accordance with GAAP, consistently applied and
maintained throughout the periods indicated. There will be no material variation
between the Company Financial Statements and the Audited Company Financial
Statements which would cause a Material Adverse Effect.
3.9 Undisclosed Liabilities. Except for liabilities disclosed or
provided for on the Company Financial Statements, liabilities incurred in the
ordinary course of business consistent with past practice since March 31, 1998
and liabilities set forth on Schedule 3.9, neither the Company nor any of the
Company Subsidiaries have any material direct or indirect indebtedness,
liability, losses or obligation, accrued, absolute or contingent (whether or not
of a kind required by GAAP to be set forth on a balance sheet).
3.10 Absence of Certain Changes. Except as set forth on Schedule 3.10 or
as provided for in this Agreement, since March 31, 1998, the Company and each of
the Company Subsidiaries has conducted its business only in the ordinary course
and consistent with prior practice, and the Company has not:
(a) discharged or satisfied any Encumbrances or paid any
obligation or liability, absolute, accrued, contingent or otherwise, whether due
or to become due, other than current liabilities shown on the Company Financial
Statements and current liabilities incurred since March 31, 1998 in the ordinary
course of business and consistent with prior practice;
(b) declared or made any payment of any dividend, or made any
other distribution upon or in respect of any of its shares of capital stock, or
purchased, retired or redeemed any of the shares of its capital stock or any
other securities, including any warrants or options to purchase any capital
stock, or obligated itself to do any of the foregoing;
(c) subjected (or permitted to be subjected) any of its property,
business or assets, tangible or intangible to any Encumbrances except in the
ordinary course of business consistent with prior practice and except for
Encumbrances for current taxes which are not yet due and payable;
(d) sold, transferred, leased to others or otherwise disposed of
any of its assets or cancelled or compromised any debt or claim, or waived or
released any claim or right of substantial value except in the ordinary course
of business consistent with prior practice;
(e) terminated or received any notice of termination of any
Contract, lease or other agreement or suffered any damage, destruction or loss
(whether or not covered by insurance) which, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect;
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(f) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or
had any material change in its relations with its employees, agents,
distributors, formulators, customers or suppliers;
(g) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, or entered into any
agreement or commitment relating to, any license, patent, copyright, trademark,
trade name, permit, consent, approval, invention, product registration or
similar rights, domestic or foreign, or modified any existing rights with
respect thereto;
(h) adopted, entered into or amended any Employee Benefit Plan or
made any change in the actuarial methods or assumptions used in funding or
determining benefit equivalences thereunder, or, except in the ordinary course
of business consistent with prior practice, made any change in the rate of
compensation, commission, bonus, deferred compensation arrangement or other
direct or indirect remuneration payable, or paid or agreed or orally promised to
pay, conditionally or otherwise, any bonus (cash or non-cash), extra
compensation, deferred compensation arrangement or severance or vacation pay, to
any stockholder, director, officer, employee, salesman or distributor of the
Company or hired or entered into any employment agreement or arrangement with
any person;
(i) issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or warrants with
respect thereto, or acquired any capital stock or other securities of any
Person, or any equity interest in any Person or otherwise made any loan or
advance to or investment in any Person, except for short-term investments in
cash and cash equivalents made in the ordinary course of business and consistent
with prior practice;
(j) made any capital expenditures or capital additions or
betterments or commitments therefor in excess of $50,000 individually or
$100,000 in the aggregate;
(k) instituted, settled or agreed to settle, or suffered any
material adverse determination in, any litigation, action or proceeding before
any court or governmental body (domestic or foreign) relating to the Company or
its businesses, assets or properties;
(l) accepted any Contract for performance of services or orders in
a material amount from any hospital, health care provider or other customer
under conditions relating to price, terms of payment, time of delivery or
performance or like matters differing in a material fashion from the conditions
regularly and usually specified on acceptance of Contracts or orders for similar
services or merchandise from said customer or customers who are similarly
situated, or made any change in its selling, pricing, advertising or personnel
practices, inconsistent with its prior practices and prudent business practices
prevailing in the industry;
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(m) revalued any of its assets or written off as uncollectible any
notes or accounts receivable which, individually or in the aggregate, is
material to the Company or its businesses, except writedowns and write-offs in
the ordinary course of business.
(n) entered into any agreement or made any commitment to take any
of the actions described in paragraphs (a) through (m) above; or
(o) experienced any Material Adverse Effect.
3.11 Assets.
(a) Except as set forth on Schedule 3.11, the Company and each of
the Company Subsidiaries has good and marketable title to, or a valid leasehold
interest in or other legal right to use, all of the properties and assets it
owns or uses in its business. None of such assets or properties are subject to
any Encumbrances, except (i) Encumbrances and leases incurred or made in the
ordinary course of business which are not substantial in character, amount or
extent and do not materially impair the usefulness of such properties and assets
in the conduct of the business of the Company, (ii) liens for Taxes, assessments
or other governmental charges or levies which are either not yet delinquent or
are being contested in good faith and by appropriate proceedings, can be paid
without penalty and which do not materially impair the usefulness of such
properties and assets in the conduct of the business of the Company or the
Company Subsidiaries or (iii) as reflected on the Company Financial Statements.
(b) Except as set forth on Schedule 3.11, all of such properties
and assets owned, leased or used by the Company or any of the Company
Subsidiaries have been maintained in accordance with customary industry
practices, are in good operating condition and repair except for normal wear and
tear, are suitable for the purposes used, are directly related to the business
of the Company or any of the Company Subsidiaries and are adequate and
sufficient for all current operations of the business of the Company and each of
the Company Subsidiaries. The Company and each of the Company Subsidiaries has
delivered to QuadraMed and Acquisition Co. a complete list, which is true and
correct as of its date in all material respects, of all equipment, machinery,
tools, equipment, motor vehicles and other tangible personal property and
supplies owned, leased or used by the Company, except for items having a cost
less than $25,000.
3.12 Real Property Matters. Neither the Company nor any of the Company
Subsidiaries owns any Real Property. The Real Property includes all land used
for the conduct of the business and operations of the Company. Except as set
forth on Schedule 3.12, no Hazardous Substances have been used in the
construction or repair of, or any alterations or additions to, or are currently
located in or on, any portion of the Real Property. The Company has delivered to
QuadraMed and Acquisition Co. true, correct and complete copies of the Real
Property Leases and copies of all reports of any engineers, environmental
consultants or other
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consultants in its possession relating to any of the Real Property. Each of the
Real Property Leases is valid and enforceable in accordance with its terms, the
Company has not received any notice of any, and there exists no event of default
or event which constitutes or would constitute (with notice or lapse of time or
both) a default in any material respect under any Real Property Lease and all
lessors (and, if applicable, all mortgagees with respect to Real Property Leases
covering Real Property which is encumbered by a mortgage) under the Real
Property Leases (or mortgages) have consented (where such consent is necessary)
to the consummation of the transactions contemplated by this Agreement without
requiring modification in the rights or obligations thereunder (except where the
failure to obtain such consent would not constitute a Material Adverse Effect).
None of the property subject to any Real Property Lease is subject to any
Encumbrance, easement, right-of-way, building or use restriction, exception,
variance, reservation or limitation as might in any material respect interfere
with or impair the present and continued use thereof in the usual and normal
conduct of the business and operations of Company.
3.13 Intellectual Property. Schedule 3.13 sets forth all Intellectual
Property of the Company or any of the Company Subsidiaries. The Company and the
Company Subsidiaries own, or are licensed to, or otherwise have, the right to
use the Intellectual Property that is required for the conduct of the business
of the Company and the Company Subsidiaries. Except as set forth on Schedule
3.13, neither the Company nor any of the Company Subsidiaries is in violation
of, or infringing upon, any patent, trademark, service xxxx, trade name,
copyright or franchise of any third-party, and no claims have been asserted, nor
is there any litigation pending or, to the Knowledge of the Company, the Company
Subsidiaries and the Majority Stockholder, threatened claiming such
infringement. Except as set forth on Schedule 3.13, neither the Company nor any
of the Company Subsidiaries has licensed or encumbered any of its Intellectual
Property to any third-party, nor have any other distribution rights been granted
by the Company or any of the Company Subsidiaries to a third-party. Except as
set forth on Schedule 3.13, neither the Company nor any of the Company
Subsidiaries has entered into any other agreements whereby the Company or any of
the Company Subsidiaries has been appointed as a distributor or licensee of any
products, patents or trademarks owned by a third-party. Except as set forth on
Schedule 3.13, neither the Company nor any of the Company Subsidiaries has
entered into any agreement which restricts or affects the use of any of the
Intellectual Property. Neither the Company nor any of the Company Subsidiaries
is in breach of any agreement set forth in Schedule 3.13, nor have any claims
with respect to any such agreement been asserted nor is there any litigation
pending or, to the Knowledge of the Company, the Company Subsidiaries and the
Majority Stockholder, threatened claiming any such breach, nor have any claims
been asserted that any of the terms and conditions of such agreements violate
the laws of any jurisdiction or treaty. Except as set forth in Schedule 3.13,
the Company or the Company Subsidiaries own or have licensed from third-parties,
and have the right to use, all necessary Intellectual Property in order to
conduct its business in all material respects as currently conducted and has
used reasonable efforts to protect its rights in and to maintain the secrecy of
its trade secrets and other proprietary rights and information. The Intellectual
Property conforms in all material respects with any
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specification, documentation, performance standard, representation or statement
made or provided with respect to, by or on behalf of the Company or any of the
Company Subsidiaries.
3.14 Proprietary Information of Third Parties. To the Knowledge of the
Company, the Company Subsidiaries and the Majority Stockholder, no third-party
has claimed or has reason to claim that any Person employed by, or serving as an
independent contractor of, the Company or any of the Company Subsidiaries has
(i) violated or may be violating any terms or conditions of his or her
employment, non-competition or non-disclosure agreement with such third-party,
(ii) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third-party or (iii)
interfered or may be interfering in the employment relationship between such
third-party and any of its present or former employees.
3.15 Tax Matters.
(a) All Tax Returns and reports of the Company and each of the
Company Subsidiaries required by law to be filed as of the Closing have been or
will be duly filed, and all Taxes imposed upon the Company or any of the Company
Subsidiaries, or any of their respective properties, assets or income which are
due and payable as of the Closing or claimed by any taxing authority to be due
and payable as of the Closing have been paid or reserved for as of the Closing,
other than taxes, assessments, fees and charges being contested in good faith by
the Company or any of the Company Subsidiaries concerning an amount which in the
aggregate, is not material to the business of the Company or any of the Company
Subsidiaries.
(b) Except as set forth on Schedule 3.15, there are no claims for
Taxes pending against the Company or any of the Company Subsidiaries and neither
the Company nor any of the Company Subsidiaries knows of any threatened claim
for Tax deficiencies or any basis for such claims, and there are not now in
force any waivers or agreements by the Company or any of the Company
Subsidiaries for the extension of time for the assessment of any tax, nor has
any such waiver or agreement been requested by the IRS or any other taxing
authority. Except as set forth on Schedule 3.15, neither the federal income Tax
Returns of the Company nor any of the Company Subsidiaries have been examined by
the IRS. Except as set forth on Schedule 3.15, no material issues have been
raised in any examination by any taxing authority with respect to the businesses
and operations of the Company or any of the Company Subsidiaries which, by
application of similar principles, reasonably could be expected to result in a
proposed adjustment to the liability of the Company or any of the Company
Subsidiaries for Taxes for any other period not so examined.
(c) Neither the Company nor any of the Company Subsidiaries has
liability for any federal, state or other Taxes of any other Person, including,
without limitation, by reason of the application of Treas. Reg. Section
1.1502-6.
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(d) Neither the Company nor any of the Company Subsidiaries is
required to file any tax returns or to pay any Taxes in foreign countries. The
Company and each of the Company Subsidiaries has paid or is withholding and will
pay when due to the proper taxing authorities all withholding amounts required
to be withheld with respect to all Taxes on income, unemployment, social
security or other similar programs or benefits with respect to salary and other
compensation of directors, officers and employees of the Company or any of the
Company Subsidiaries. The Company and each of the Company Subsidiaries has filed
all Tax Returns, including IRS Forms 1099, required to be filed and has reported
accurately all information required to be included on such Tax Returns.
(e) Except as set forth on Schedule 3.15, neither the Company nor
any of the Company Subsidiaries has executed a waiver or consent extending any
statute of limitation for the assessment or collection of any tax, which waiver
or consent remains in effect. Except as set forth on Schedule 3.15, neither the
Company nor any of the Company Subsidiaries has received a tax ruling or entered
into any agreement with any taxing authority, which ruling or agreement has or
could have an effect on the Taxes of the Company or any of the Company
Subsidiaries payable on or after the Closing.
(f) Except as set forth on Schedule 3.15, neither the Company nor
any of the Company Subsidiaries has been included in a federal consolidated
income tax return and/or state consolidated, combined or unitary income tax
return. Neither the Company nor any of the Company Subsidiaries has at any time
consented to have the provisions of Section 341(f) of the Code apply to it. None
of the Stockholders is a "foreign person" as that term is defined in Section
1445(f)(3) of the Code. Neither the Company nor any of the Company Subsidiaries
is a party to any tax sharing agreement. Neither the Company nor any of the
Company Subsidiaries is and will not be required to recognize after the Closing
any taxable income in respect of accounting method adjustments required to be
made under any applicable tax law, other than as set forth on Schedule 3.15
(which describes such adjustment, the reason therefor and the amount or
estimated amount of such adjustment). Neither the Company nor any of the Company
Subsidiaries has made or become obligated to make, and will not as a result of
any event connected with the transactions contemplated by this Agreement become
obligated to make, any "excess parachute payment" as defined in Section 280G of
the Code (without regard to subsection (b)(4) thereof).
3.16 Legal and Regulatory Matters. Except as set forth on Schedule 3.16
(i) there is no claim, suit, action, arbitration, governmental investigation or
other proceeding, nor any order, decree or judgment pending or in effect, or, to
the Knowledge of the Company, the Company Subsidiaries and the Majority
Stockholder, threatened by, against or relating to the Company or any of the
Company Subsidiaries, or any of their respective properties, or the transactions
contemplated hereby, (ii) there are no judgments, decrees or orders enjoining
the Company or any of the Company Subsidiaries in respect of, or the effect of
which is to prohibit any business practice or the acquisition of any property or
the conduct of any material aspect of the business of the Company or any of the
Company Subsidiaries, (iii) the Company
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and each of the Company Subsidiaries have complied and are complying with all
material Legal Requirements applicable to each of them or their properties,
assets, personnel or business, non-compliance with which could have a Material
Adverse Effect, (iv) the Company and each of the Company Subsidiaries have
obtained all material Licenses necessary for the ownership of their respective
properties and the conduct of their respective businesses as currently
conducted, and all such Licenses are currently in full force and effect and (v)
the Company and each of the Company Subsidiaries have provided QuadraMed and
Acquisition Co. with access to all Government Communications and have delivered
to QuadraMed and Acquisition Co. a true and complete copy of all Government
Communications received by the Company and each of the Company Subsidiaries
since March 31, 1998, and all Government Communications as to which any material
unresolved issue remains.
3.17 Employees. Except as set forth on Schedule 3.17, neither the Company
nor any of the Company Subsidiaries has been or is a party to any collective
bargaining agreements with respect to any of their employees or with respect to
any Contract or agreement with a labor union or any local or subdivision
thereof, nor have they been charged with any unresolved unfair labor practices,
nor, to the Knowledge of the Company, the Company Subsidiaries and the Majority
Stockholder, are there any present union organizing activity among any of their
employees. To the Knowledge of the Company, the Company Subsidiaries and the
Majority Stockholder, there are no material controversies, claims, suits,
actions or proceedings pending or threatened between the Company or any of the
Company Subsidiaries and their respective employees. The Company and each of the
Company Subsidiaries has complied in all material respects with all laws and
regulations relating to the employment of labor, including, without limitation,
any provisions thereof relating to wages, hours, employment practices, terms and
conditions of employment, collective bargaining, equal opportunity or similar
laws and the payment of social security and similar taxes, and is not liable for
any arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing.
3.18 Xxxxxxxx; Customers. Except as set forth on Schedule 3.18, (i) all
xxxxxxxx to customers which are party to Contracts of the Company or any of the
Company Subsidiaries have been accurate in all material respects and (ii) to the
Knowledge of the Company, the Company Subsidiaries and the Majority Stockholder,
there are no existing, threatened or suspected disputes, offsets or
counterclaims regarding any services rendered or xxxxxxxx to such customers.
3.19 Insurance. Schedule 3.19 sets forth a list of all policies or
binders of fire, liability, product liability, xxxxxxx'x compensation,
vehicular, directors and officers, and other insurance held by or on behalf of
the Company and each of the Company Subsidiaries. Such policies and binders are
in full force and effect, are reasonably believed to be adequate for the
businesses engaged in by the Company and each of the Company Subsidiaries, and
are in conformity with the requirements of all leases or other agreements to
which the Company or any of the Company Subsidiaries is a party and, to the best
of the Knowledge of the Company,
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the Company Subsidiaries and the Majority Stockholder, are valid and enforceable
in accordance with their terms. Neither the Company nor any of the Company
Subsidiaries is in material default with respect to any provision contained in
any such policy or binder nor has the Company or any of the Company Subsidiaries
failed to give any notice or present any material claim under any such policy in
a due and timely fashion. There are no outstanding unpaid claims under any such
policy or binder. Neither the Company nor any of the Company Subsidiaries has
received notice of cancellation or non-renewal of any such policy or binder.
3.20 Non-Assignable Rights. Except as set forth on Schedule 3.20, neither
the execution, delivery nor performance of this Agreement by the Company or any
of the Company Subsidiaries nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in a breach or termination
of, or prevent the Company or any of the Company Subsidiaries from realizing the
benefits otherwise obtainable by the Company or any of the Company Subsidiaries
under, any permits or property interests of the Company or any of the Company
Subsidiaries, or any Contract, agreement, arrangement or commitment of the
Company or any of the Company Subsidiaries, or (ii) require the affirmative
consent or approval of any third-party, except where such breach or termination
or the failure to obtain such consent would not constitute a Material Adverse
Effect.
3.21 Personnel. Schedule 3.21 sets forth (i) the names of all directors,
officers of the Company and each of the Company Subsidiaries and employees of
the Company and each of the Company Subsidiaries earning over $75,000 per year,
indicating the positions within the Company or the Company Subsidiaries held by
each such person and the current annual salary rates for each such person, and
(ii) a description of the Company's and each of the Company Subsidiaries'
policies regarding severance or other benefits that may be payable to any
employee of the Company or any of the Company Subsidiaries if his or her
employment were terminated.
3.22 Major Customers. Schedule 3.22 sets forth the complete and correct
list of the twenty (20) largest customers of the Company and each of the Company
Subsidiaries, in terms of revenue recognized in respect of such customers during
the fiscal year ended March 31, 1998, showing the amount of revenue recognized
for each such customer during such periods. Except as set forth and described on
Schedule 3.22, to the Knowledge of the Company, the Company Subsidiaries or the
Majority Stockholder, neither the Company nor any of the Company Subsidiaries
has received any notice or other communication (written or oral) from any of the
customers listed on Schedule 3.22 hereto terminating or reducing in any material
respect, or setting forth an intention to termination or reduce in the future,
or otherwise reflecting a material adverse change in, the business relationship
between such customer and the Company or any of the Company Subsidiaries.
3.23 Consultants, Sales Representatives and Other Agents. Schedule 3.23
sets forth a complete and correct list of the names of each consultant, sales
representative or other agent (other than any person performing solely clerical
functions) currently engaged by the Company
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or any of the Company Subsidiaries who is not an employee of the Company or any
of the Company Subsidiaries and who has received compensation in excess of
$50,000 with respect to the fiscal year ending March 31, 1998, the commission
rates or other compensation applicable with respect to each such person and the
amount of commissions or other compensation earned by each such person for the
fiscal period ending March 31, 1998. Complete and correct copies of all current
agreements between the Company or any of the Company Subsidiaries and any such
person have previously been delivered or made available to QuadraMed and
Acquisition Co.
3.24 Employee Benefit Plans.
(a) Schedule 3.24 lists each Employee Benefit Plan of the Company
or any of the Company Subsidiaries. Neither the Company or any of the Company
Subsidiaries has any Affiliates for the purpose of ERISA. Each Employee Benefit
Plan is in substantial compliance with applicable law and has been administered
and operated in all material respects in accordance with its terms. Each
Employee Benefit Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter from
the IRS and no event has occurred and no condition exists which could reasonably
be expected to result in the revocation of any such determination. No event
which constitutes a "reportable event" (as defined in Section 4043(b) of ERISA)
for which the thirty (30) day notice requirement has not been waived by the PBGC
has occurred with respect to any Employee Benefit Plan. Other than as
contemplated in Section 5.9 below, no Employee Benefit Plan subject to Title IV
of ERISA has been terminated or is or has been the subject of termination
proceedings pursuant to Title IV of ERISA.
(b) Full payment has been made of all amounts which the Company or
any of the Company Subsidiaries was required under the terms of the Employee
Benefit Plan(s) to have paid as contributions to such Employee Benefit Plan(s)
on or prior to the date hereof (excluding any amounts not yet due) and no
Employee Benefit Plan which is subject to Part 3 of Subtitle B of Title 1 of
ERISA has incurred any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived.
(c) To the Knowledge of the Company, the Company Subsidiaries and
the Majority Stockholder, neither the Company nor any of the Company
Subsidiaries, nor any other "disqualified person" or "party in interest" (as
defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Employee
Benefit Plan(s) that could reasonably be expected to result in the imposition of
a material penalty pursuant to Section 502(i) of ERISA, damages pursuant to
Section 409 of ERISA or a tax pursuant to Section 4975(a) of the Code.
(d) No material liability, claim, action or litigation, has been
made, commenced or threatened with respect to any Employee Benefit Plan(s)
(other than for benefits payable in the ordinary course and PBGC insurance
premiums). No Employee Benefit Plan or
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related trust owns any securities in violation of Section 407 of ERISA. With
respect to all Employee Benefit Plan(s) which are subject to Title IV of ERISA,
as of the most recent actuarial valuation prepared for each such Employee
Benefit Plan, the aggregate present value of the accrued liabilities thereof did
not exceed the aggregate fair market value of the assets allocable thereto. The
Company does not presently nor has it at any time in the past maintained a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA). To the
Knowledge of the Company, the Company Subsidiaries and the Majority Stockholder,
there are no actions, suits or claims (other than routine claims for benefits)
pending or threatened against any Employee Benefit Plan of the Company or any of
the Company Subsidiaries or their respective assets, or arising out of such
Employee Benefit Plan(s) and, to the Knowledge of the Company, the Company
Subsidiaries and the Majority Stockholder, no facts exist which could give rise
to any such actions, suits or claims or that might have a material adverse
effect on such Employee Benefit Plan(s). There has been no act or omission by
the Company or any of the Company Subsidiaries that has given rise or may give
rise to any finds, penalties, taxes or late charges under Section 502(c), (i) or
(l), Section 407(1) of ERISA or Chapter 43 of the Code.
3.25 Accounts Receivable. Except as set forth on Schedule 3.25, the
accounts receivable of the Company and each of the Company Subsidiaries
represent valid claims, and, to the Knowledge of the Company, the Company
Subsidiaries and the Majority Stockholder, no counterclaims or offsetting claims
with respect to such receivables are pending or threatened, except for amounts
reserved in the Financial Statements of the Company and each of the Company
Subsidiaries against such receivables for allowances and discounts, and all such
accounts receivable are collectible in the ordinary course of business.
3.26 Compliance with Environmental Laws. Except as set forth on Schedule
3.26 (i) the Company and each of the Company Subsidiaries and all their
respective operations are and have been in compliance with all Environmental
Laws as currently in effect except where such noncompliance would not result in
a Material Adverse Effect, (ii) neither the Company nor any of the Company
Subsidiaries, nor any of their respective predecessors used, released or
disposed of any Hazardous Substance in any manner that could reasonably be
expected to result in material liability, (iii) none of the property leased or
operated by the Company or any of the Company Subsidiaries is contaminated by
any Hazardous Substance in a manner which requires investigation or corrective
action under applicable Environmental Laws, (iv) none of the property leased or
operated by the Company or any of the Company Subsidiaries is affected by any
condition that could reasonably be expected to result in material liability
under any Environmental Law as currently in effect and (v) there is and has been
no condition, activity or event respecting the Company or any of the Company
Subsidiaries or any of the properties leased or operated by it that could
reasonably be expected to subject QuadraMed or the Surviving Corporation to any
material liability under any Environmental Law as currently in effect.
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3.27 Bank and Brokerage Accounts. Schedule 3.27 lists (i) the names and
addresses of all banks and brokerage firms in which the Company or any of the
Company Subsidiaries has accounts or safe deposit boxes, lock boxes, vaults and
the account numbers relating thereto, (ii) the name of each person authorized to
draw on any such account or have access to any such boxes or vaults and (iii)
the names of all Persons, if any, holding tax or other powers of attorney from
the Company or any of the Company Subsidiaries and a summary of the terms
thereof.
3.28 Contracts. Except as set forth on Schedule 3.28, neither the Company
nor any of the Company Subsidiaries is a party to any of the following
contracts, agreements or arrangements, the loss of which would have a Material
Adverse Effect:
(a) Contracts in effect with any customer of the Company or any of
the Company Subsidiaries, including, without limitation, all consulting services
agreements, software license agreements and other licenses, software development
agreements, purchase commitments or installation agreements and maintenance or
service agreements (collectively, the "Customer Contracts");
(b) Contract for the employment or retention of, or collective
bargaining, severance or termination agreement with, any of its directors,
officers, employees, consultants or agents or groups of employees;
(c) profit sharing, thrift, bonus, incentive, deferred
compensation, stock option, stock purchase, severance pay, pension, retirement,
hospitalization, insurance or other Employee Benefit Plan, agreement or
arrangement;
(d) Contract for the sale of any of its assets, property or rights
outside the ordinary course of business consistent with prior practice (other
than this Agreement);
(e) Contract that contains any provisions requiring the Company or
any of the Company Subsidiaries to indemnify or act as an indemnitor, guarantor,
surety, co-signer, co-maker or endorser for any other person or entity;
(f) Contract restricting the Company or any of the Company
Subsidiaries from conducting business anywhere in the world;
(g) agreement, note, debenture, loan, mortgage, indenture or other
obligation for or relating to borrowed money or commitments for obtaining
borrowed money;
(h) Contract, lease or commitment which involves the future
payment by or to it of more than $50,000, except (i) Contracts or commitments
for the sale of goods or purchase or lease of equipment, tooling, supplies,
services or raw materials in each case entered into in the ordinary course of
business consistent with prior practice for periods of less
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than ninety (90) days and (ii) Contracts which may be cancelled by it upon
thirty (30) or fewer days notice without payment of any penalty or fee in
connection therewith;
(i) letter of credit or power of attorney;
(j) joint venture Contract or similar arrangement or agreement
which is likely to involve future payments by it;
(k) personal service, vendor licensing, distributor, supplier,
dealer, franchise, advertising, sales or manufacturer's representative, agency
or other similar Contract; or
(l) Contract to which any stockholder, officer or director of the
Company or any of the Company Subsidiaries or any "affiliate" or "associate" of
such persons (as such terms are defined in the rules and regulations promulgated
under the Securities Act), is presently a party, including, without limitation,
any agreement or other arrangement providing for the furnishing of services by,
rental of real or personal property from, or otherwise requiring payments to,
any such person or entity.
Except as set forth on Schedule 3.28, all Contracts required to be listed on
Schedule 3.28 are valid and binding, enforceable in accordance with their
respective terms and in full force and effect, and the continuation, validity
and effectiveness of such items will in no way be affected by the consummation
of the transactions contemplated by this Agreement. Neither the Company or any
of the Company Subsidiaries nor, to the Knowledge of the Company or any of the
Company Subsidiaries, any other party thereto, is, in any material respect, in
breach of any provision of or in default under any term of any such agreement,
and there exists no condition or event which after lapse of time or notice (or
both) would constitute any such breach or default or result in any right to
accelerate or loss of rights. True and complete copies of all such Contracts
have been made available to QuadraMed and Acquisition Co. A substantial majority
of the Customer Contracts entered into within the prior three (3) years conforms
substantially to one of the forms attached hereto as Schedule 3.28 (the
"Customer Contract Forms").
3.29 Related Party Relationships. Except as set forth on Schedule 3.29,
no Stockholder owning greater than a five percent (5%) interest in the Company
or any of the Company Subsidiaries, no affiliate or member of the immediate
family of any such Stockholder, and no officer or director or member of the
immediate family of such officer or director of the Company or any of the
Company Subsidiaries possesses, directly or indirectly, any beneficial interest
in, or is a director, officer or employee of, or member of the immediate family
of a director, officer or employee of, any Person that is a client, supplier,
customer, lessor, lessee, lender, creditor, borrower, debtor or contracting
party with or of the Company or any of the Company Subsidiaries (except as a
stockholder holding less than one percent
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(1%) interest in a corporation whose shares are traded on a national or regional
securities exchange or in the over-the-counter market).
3.30 Pooling of Interests. Neither the Company nor any of the Company
Subsidiaries has knowledge of facts or circumstances in respect of the Company
or any of the Company Subsidiaries or its accounting procedures which would have
the effect of precluding accounting for the transactions contemplated hereby as
a pooling of interests.
3.31 Material Misstatements or Omissions. The statements, representations
and warranties of the Company, each of the Company Subsidiaries and the Majority
Stockholder contained in this Agreement (including the exhibits and schedules
hereto) and in each document, statement, certificate or exhibit furnished or to
be furnished by or on behalf of the Company, each of the Company Subsidiaries or
each of the Stockholders pursuant hereto, or in connection with the transactions
contemplated hereby, taken together, do not contain and will not contain any
untrue statement of a material fact and do not or will not omit to state a
material fact necessary to make the statements or facts contained herein or
therein, in light of the circumstances made, not misleading.
3.32 Broker's Fees. Except as set forth on Schedule 3.32, there are no
broker's or finder's fees or obligations due to any Persons engaged by the
Company, any of the Company Subsidiaries or the Stockholders or any of the
Company's employees, officers or directors in connection with the transactions
contemplated by this Agreement, except for the fees and expenses of its counsel
and accountants.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to QuadraMed and
Acquisition Co. as follows (such representations and warranties do not lessen or
obviate the representations and warranties of the Company and the Stockholders
set forth in Article III above):
4.1 Requisite Power and Authority. Such Stockholder has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to carry out its provisions. All action on such
Stockholder's part required for the lawful execution and delivery of this
Agreement has been or will be effectively taken prior to the Closing. Upon
execution and delivery, this Agreement will be the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms.
4.2 Investment Representations. Such Stockholder understands that the
QuadraMed Shares have not been registered under the Securities Act. Such
Stockholder also understands that the QuadraMed Shares are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon such Stockholder's
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representations and warranties contained in this Agreement. Such Stockholder
hereby represents and warrants as follows:
(a) Such Stockholder is an "accredited investor" as defined in
Rule 501(a) of the Securities Act.
(b) Such Stockholder has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to QuadraMed so that he, she or it is capable of evaluating the merits and risks
of his, her or its investment in QuadraMed and has the capacity to protect his,
her or its own interests. Such Stockholder must bear the economic risk of this
investment indefinitely unless the QuadraMed Shares are registered pursuant to
the Securities Act, or an exemption from registration is available. Such
Stockholder understands that QuadraMed has no present intention of registering
the QuadraMed Shares. Such Stockholder also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow such
Stockholder to transfer all or any portion of the QuadraMed Shares under the
circumstances, in the amounts or at the times such Stockholder might propose.
(c) Such Stockholder is acquiring the QuadraMed Shares for such
Stockholder's own account for investment only, and not with a view towards their
distribution.
(d) Such Stockholder represents that by reason of his, her or its
business or financial experience, such Stockholder has the capacity to protect
his, her or its own interests in connection with the transactions contemplated
in this Agreement. Further, such Stockholder is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement.
(e) Such Stockholder has received and read the QuadraMed SEC
Filings and has had an opportunity to discuss QuadraMed's business, management
and financial affairs with directors, officers and management of QuadraMed and
has had the opportunity to review QuadraMed's operations and facilities. Such
Stockholder has also had the opportunity to ask questions of and receive answers
from QuadraMed and its management regarding the terms and conditions of this
investment.
(f) Such Stockholder acknowledges and agrees that the QuadraMed
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Such
Stockholder has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act as in effect from time to time, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the
availability of certain current public information about QuadraMed, the resale
occurring not less than one (1) year after a party has purchased and paid for
the security to be sold, the sale being through an
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unsolicited "broker's transaction" or in transactions directly with a market (as
said term is defined under the Exchange Act) and the number of shares being sold
during any three (3) month period not exceeding specified limitations.
(g) Such Stockholder resides in the state or province identified
in the address of such Stockholder set forth on the signature page to this
Agreement.
4.3 Transfer Restrictions. Such Stockholder acknowledges and agrees that
the QuadraMed Shares are subject to restrictions on transfer set forth in this
Section 4.3. Such Stockholder agrees not to make any disposition of all or any
portion of the QuadraMed Shares unless and until: (i) there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or (ii) the transferee (except for transfers in compliance with Rule
144) has agreed in writing to be bound by the terms of this Agreement, such
Stockholder shall have notified QuadraMed of the proposed disposition and shall
have furnished QuadraMed with a detailed statement of the circumstances
surrounding the proposed disposition and if reasonably requested by QuadraMed,
such Stockholder shall have furnished QuadraMed with an opinion of counsel,
reasonably satisfactory to QuadraMed, that such disposition will not require
registration of such shares under the Securities Act. Notwithstanding the
provisions of clauses (i) and (ii) above, no such registration statement or
opinion of counsel shall be necessary for a transfer by such Stockholder to a
family member of such Stockholder or trust for the benefit of such Stockholder;
provided, however, that in each case the transferee will be subject to the terms
of this Agreement to the same extent as if he, she or it were an original
Stockholder hereunder.
4.4 Accounting Treatment. Such Stockholder understands and agrees that
it is intended that the Merger will be treated as a "pooling of interests" in
accordance with generally accepted accounting principles and the applicable
General Rules and Regulations published by the SEC. Such Stockholder further
understands that such Stockholder may be deemed to be an "affiliate" of the
Company for purposes of application of the "pooling of interests" requirements,
although nothing contained herein should be construed as an admission of either
such conclusion. Accordingly, the shares of Company Common Stock held, and
QuadraMed Common Stock to be held, may only be disposed of in conformity with
the limitations described herein.
4.5 Reliance Upon Representations, Warranties and Covenants. Such
Stockholder has been informed that the treatment of the Merger as a "pooling of
interests" for financial accounting purposes is dependent upon the accuracy of
such Stockholder's representations and warranties set forth herein, and upon
such Stockholder's compliance with such Stockholder's covenants set forth
herein. Such Stockholder understands that the representations, warranties and
covenants of such Stockholder set forth herein will be relied upon by QuadraMed,
the Company and their respective counsel and accounting firms.
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4.6 Pooling of Interests. Notwithstanding any other provision of this
Agreement to the contrary, such Stockholder will not sell, transfer, exchange,
pledge or otherwise dispose of, or in any other way reduce such Stockholder's
risk of ownership or investment in, or make any offer or agreement relating to
any of the foregoing with respect to, any Company Stock or any rights, options
or warrants to purchase Company Stock, or any QuadraMed Common Stock (i) during
the thirty (30) day period immediately preceding the Closing Date of the Merger
and (ii) until such time after the Effective Time of the Merger as QuadraMed has
publicly released a report including the combined financial results of QuadraMed
and for a period of at least thirty (30) days of combined operations of
QuadraMed and the Company within the meaning of Accounting Series Release No.
130, as amended, of the SEC. Nothing in this Section 4.6 will be deemed to
prohibit charitable contributions of such securities without consideration to
transferees who agree to all of the restrictions in this Agreement.
ARTICLE V.
COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
The Company and each of the Stockholders hereby jointly and severally
covenant and agree as follows:
5.1 Further Efforts. Each of the Company and the Stockholders agree to
use diligent efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Merger and the other
transactions contemplated hereby in accordance with the terms of this Agreement.
In case at any time any further action is necessary or desirable to carry out
the purposes of this Agreement, each of the Company and the Stockholders will
use diligent efforts to effectuate all such action. As soon as reasonably
practicable after the date hereof, and in any event on or prior to the Closing,
each of the Company and the Stockholders will use reasonable diligent efforts to
obtain the consents of all necessary governmental entities and other persons to
the Merger.
5.2 Confidentiality. In the event of the termination of this Agreement,
the Company and its representatives and the Stockholders shall keep all
information with respect to QuadraMed which has been disclosed to the Company
pursuant to this Agreement confidential, shall utilize the information solely in
connection with the transactions contemplated by this Agreement and shall
promptly return to QuadraMed all written information provided to the Company by
QuadraMed.
5.3 Public Announcement. So long as this Agreement is in effect, neither
the Company, the Stockholders nor any of their Affiliates shall issue or cause
the issuance or the publication of any press release or any other public
announcement (including, without limitation, disclosure to employees) with
respect to the Merger or any other transaction contemplated by this Agreement
without the prior review and written consent of QuadraMed.
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5.4 Conduct of Business. From and after the date of this Agreement to
and including the Effective Time, the Company shall and the Stockholders shall
cause the Company to carry on its businesses in all material respects in the
usual and ordinary course and will not change the character of such businesses,
use all reasonable efforts to preserve and maintain each of its respective
business organizations intact, to preserve each of their respective goodwill, to
retain its present employees and to maintain its relationships with suppliers
and customers so that all of them will be preserved for the Surviving
Corporation on and after the Effective Time.
5.5 Access and Information. The Company will grant unrestricted access
to QuadraMed and its counsel, accountants and other representatives, during
reasonable working hours throughout the period from the date hereof to the
Closing and upon reasonable prior notice, to all of the Company and the
Company's properties, books, Contracts, commitments and records, and will
furnish QuadraMed during such period with access to key Company employees and to
all such information concerning the affairs of the Company as QuadraMed
reasonably requests, including copies and/or extracts of pertinent records,
documents and Contracts. The Company will cause its accountants to furnish to
QuadraMed during such period any and all of its statements, working papers and
other records and data as QuadraMed reasonably may request. No investigation by
QuadraMed or its counsel, accountants and other representatives as contemplated
by this Section 5.5 shall affect any representation or warranty given by the
Company or the Stockholders under this Agreement.
5.6 Financial Information. From and after the date hereof and until the
Closing, the Company will deliver to QuadraMed as soon as practicable and in any
event within twenty-one (21) days after the end of each month, an unaudited
balance sheet of the Company as at the end of such month and unaudited
statements of operations and of cash flows of the Company for such month and for
the current fiscal year to the end of such month.
5.7 Subsequent Events. The Company shall promptly, and in any event
prior to the Closing, advise QuadraMed in writing of the occurrence of any event
or the existence of any state of facts which would render any representation or
warranty of the Company hereunder inaccurate or which would preclude
satisfaction of any condition contained in Article VIII or Article IX of this
Agreement; provided, however, that no such notification shall affect any such
representation, warranty or condition.
5.8 Exclusive Dealing. From the execution of this Agreement until the
Effective Time or the earlier termination of this Agreement, the Company and
each of the Stockholders will not directly or indirectly, through any
representative or otherwise, solicit or entertain offers from, negotiate with or
in any manner encourage, discuss, accept or consider any proposal of any other
person relating to the acquisition of the Company's capital stock, its assets or
business, in whole or in part, whether directly or indirectly, through purchase,
merger, consolidation or otherwise (other than sales of inventory in the
ordinary course), and will immediately notify QuadraMed in writing regarding any
contact between the Company,
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the Stockholders and any other Person or their respective representatives
regarding any such offer or proposal or any related inquiry.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF QUADRAMED AND ACQUISITION CO.
QuadraMed and Acquisition Co. hereby jointly and severally represent and
warrant to the Company and the Stockholders as follows:
6.1 Organization and Good Standing. QuadraMed and Acquisition Co. are
both corporations duly organized, validly existing and in good standing under
the laws of the State of Delaware.
6.2 Authority.
(a) QuadraMed and Acquisition Co. have the necessary corporate
power and authority to enter into and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by QuadraMed and Acquisition Co. have been duly
authorized by the Board of Directors of each of QuadraMed and Acquisition Co. in
accordance with applicable law. No further corporate action will be necessary on
the part of QuadraMed or Acquisition Co. to make this Agreement valid and
binding upon QuadraMed and Acquisition Co. in accordance with its terms. This
Agreement has been duly and validly authorized, executed and delivered by
QuadraMed and Acquisition Co. and this Agreement (assuming due authorization,
execution and delivery by the other parties hereto) constitutes the legal, valid
and binding obligation of QuadraMed and Acquisition Co., enforceable in
accordance with its terms (except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws affecting the
rights of creditors generally or by general principles of equity).
(b) Except for filing the Certificate of Merger with the Delaware
Secretary of State, QuadraMed and Acquisition Co. are not required to obtain the
consent of any third-party or to submit any notice, report or other filing with
any federal, state or local governmental authority in connection with the
execution or delivery or performance by QuadraMed and Acquisition Co. of this
Agreement or the consummation of the transactions contemplated herein.
6.3 QuadraMed Shares. As of the Closing, the QuadraMed Shares will have
been duly reserved for delivery pursuant to the terms of this Agreement and
will, when so delivered and paid for, be duly authorized, validly issued, fully
paid and nonassessable shares and will be free and clear of all Encumbrances.
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6.4 QuadraMed SEC Filings. The QuadraMed SEC Filings, copies of which
have been furnished to each Stockholder, have been duly filed, were in
substantial compliance with the requirements of their respective report forms,
were complete and correct in all material respects as of the dates at which the
information therein was furnished, as of such date, contained no untrue
statement of a material fact nor omitted to state a material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements of
QuadraMed and the related notes and schedules included in the QuadraMed SEC
Filings comply in all material respects with the requirements of the Exchange
Act and present fairly the consolidated financial position in accordance with
generally accepted accounting principles of QuadraMed, as of the dates
indicated, and the results of its operations and changes in financial position
for the periods therein specified (subject, in the case of unaudited interim
financial statements, to normal year-end adjustments). Since the date of the
filing with the SEC of QuadraMed's most recent 10-Q, there has been no material
adverse change in the financial condition or results of operations of QuadraMed
that has resulted in a Material Adverse Effect on QuadraMed.
6.5 Broker's Fees. Except as set forth on Schedule 6.5, there are no
broker's or finder's fees or obligations due to any Persons engaged by QuadraMed
or any of QuadraMed's employees, officers or directors in connection with the
transactions contemplated by this Agreement, except for the fees and expenses of
its counsel and accountants.
6.6 Pooling of Interests. QuadraMed has no knowledge of facts or
circumstances in respect of QuadraMed or its accounting procedures which would
have the effect of precluding accounting for the transactions contemplated
hereby as a pooling of interests.
ARTICLE VII.
COVENANTS OF QUADRAMED AND ACQUISITION CO.
QuadraMed and Acquisition Co. hereby jointly and severally covenant and
agree as follows:
7.1 Further Efforts. QuadraMed agrees to use diligent efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger and the other transactions contemplated
hereby in accordance with the terms of this Agreement. In case at any time any
further action is necessary or desirable to carry out the purposes of this
Agreement, QuadraMed and Acquisition Co. will use diligent efforts to effectuate
all such action. As soon as reasonably practicable after the date hereof, and in
any event on or prior to the Closing, QuadraMed and Acquisition Co. will use
reasonable diligent efforts to obtain the consents of all necessary governmental
entities and other persons to the Merger.
7.2 Confidentiality. In the event of the termination of this Agreement,
QuadraMed and its representatives shall keep all information with respect to the
Company which has been
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disclosed to QuadraMed pursuant to this Agreement confidential, shall utilize
the information solely in connection with the transactions contemplated by this
Agreement and shall promptly return to the Company all written information
provided to QuadraMed by the Company.
7.3 Public Announcement. So long as this Agreement is in effect,
QuadraMed shall not, and shall cause its Affiliates not to, issue or cause the
issuance or the publication of any press release or any other public
announcement (including, without limitation, disclosure to employees) with
respect to the Merger or any other transaction contemplated by this Agreement
without the prior review, and consultation with, the Company with respect to
such press release or other public announcement. Notwithstanding the foregoing,
the Company and the Stockholders acknowledge and agree that QuadraMed may issue
a press release regarding the execution of this Agreement and may make any
filings required pursuant to the Exchange Act, which document shall be presented
to the Company for review and comment prior to issuance or filing.
7.4 Subsequent Events. QuadraMed shall promptly, and in any event prior
to the Closing, advise the Company in writing of the occurrence of any event or
the existence of any state of facts which would render any representation or
warranty of QuadraMed hereunder inaccurate or which would preclude satisfaction
of any condition contained in Article VIII or Article X of this Agreement;
provided, however, that no such notification shall affect any such
representation, warranty or condition.
ARTICLE VIII.
GENERAL CONDITIONS PRECEDENT
The obligation of the parties to effect the transactions contemplated by
this Agreement and to take the other actions required to be taken by them at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions:
8.1 No Injunctions. No injunction or restraining or other order issued
by a court of competent jurisdiction which prohibits the consummation of the
transactions contemplated shall be in effect (each party agreeing to use
reasonably diligent efforts to have any such injunction or order lifted), and no
governmental action or proceeding shall have been commenced or threatened in
writing seeking any injunction or restraining or other order that seeks to
prohibit, restrain, invalidate or set aside consummation of the transactions
contemplated by this Agreement.
8.2 No Governmental Proceedings. No action will have been taken, and no
statute, rule or regulation will have been enacted, by any Governmental Body
that would render the consummation of the Merger illegal.
8.3 Governmental Approvals. All governmental filings or approvals
required in connection with the consummation of the transactions contemplated by
this Agreement,
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including, without limitation, compliance with all applicable federal and state
securities laws, shall have been made or received.
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATION
OF QUADRAMED AND ACQUISITION CO. TO CLOSE
The obligation of QuadraMed and Acquisition Co. to effect the transactions
contemplated by this Agreement and to take the other actions required to be
taken by QuadraMed and Acquisition Co. 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 QuadraMed or Acquisition Co., in whole or in
part):
9.1 Accuracy of Representations and Warranties. All of the
representations and warranties of the Company and the Stockholders in this
Agreement, considered collectively, and each of such representations and
warranties, considered individually, must be accurate in all material respects
when made, and as of the Closing as if made on the Closing.
9.2 Performance. All of the covenants and obligations that the Company
and the Stockholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing, including, without limitation, those
contained in Section 2.11 above, considered collectively, and each of these
covenants and obligations, considered individually, must have been duly
performed and complied with in all material respects.
9.3 Closing Certificate. QuadraMed and Acquisition Co. shall have
received from the Company and each of the Stockholders a certificate, dated as
of the Closing, certifying that the conditions specified in Sections 9.1 and 9.2
above have been fulfilled.
9.4 Opinion of Counsel. QuadraMed and Acquisition Co. shall have
received an opinion, dated as of the Closing, of Xxxxxxx & XxXxxxxx, counsel for
the Company and the Stockholders, in form and substance reasonably acceptable to
counsel for QuadraMed and Acquisition Co. and substantially in the form attached
hereto as Exhibit "E" and incorporated herein by this reference.
9.5 Due Diligence. QuadraMed and Acquisition Co. shall have completed
and approved their due diligence review of the business affairs and operations
of the Company as determined in their sole and absolute discretion.
9.6 No Claims. There must not have been made or threatened by any Person
(other than a Stockholder) any claim asserting that such Person is the holder or
the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any capital stock of, or any other voting, equity or ownership
interest in the Company or is entitled to all or any portion of the Closing
Consideration.
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9.7 No Proceedings. No action, suit or proceeding shall be pending or
threatened against the Company or any of the Stockholders before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would prevent consummation of any of
the transactions contemplated by this Agreement or cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling or charge shall be in effect).
9.8 No Material Adverse Effect. Since March 31, 1998, the Company and
the Company Subsidiaries shall not have experienced any Material Adverse Effect.
9.9 Third-Party Consents. All necessary third-party consents or
approvals identified in Schedule 3.7 shall have been obtained on or prior to the
Closing.
9.10 Satisfaction of Closing Obligations. The Company and the
Stockholders shall have delivered and/or satisfied each of the obligations set
forth in Section 2.11 above.
9.11 Proceedings Satisfactory to Counsel. All proceedings taken by the
Company and the Stockholders and all instruments executed and delivered by the
Company and the Stockholders on or prior to the Closing in connection with the
transactions contemplated herein shall be reasonably satisfactory in form and
substance to the counsel for QuadraMed and Acquisition Co.
ARTICLE X.
CONDITIONS PRECEDENT TO OBLIGATION OF
THE COMPANY AND THE STOCKHOLDERS TO CLOSE
The obligation of the Company and the Stockholders to effect the
transactions contemplated by this Agreement and to take the other actions
required to be taken by the Company and the Stockholders 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 the Company and the
Stockholders, in whole or in part):
10.1 Accuracy of Representations and Warranties. All of the
representations and warranties of QuadraMed and Acquisition Co. in this
Agreement, considered collectively, and each of such representations and
warranties, considered individually, must be accurate in all material respects
when made, and as of the Closing as if made on the Closing.
10.2 Performance. All of the covenants and obligations that QuadraMed and
Acquisition Co. are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing, including, without limitation, those
contained in Section 2.12 above, considered collectively, and each of these
covenants and obligations, considered individually, must have been performed and
complied with in all material respects.
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10.3 Closing Certificate. The Company and the Stockholders shall have
received from QuadraMed and Acquisition Co. a certificate, dated as of the
Closing, certifying that the conditions specified in Sections 10.1 and 10.2
above have been fulfilled.
10.4 Opinion of Counsel. The Company and the Stockholders shall have
received an opinion, dated as of the Closing, of Xxxxxx Xxxxxx Xxxxxxx XxXxxxxx
Xxxxxx & Fognani, L.L.P., counsel for QuadraMed and Acquisition Co., in form and
substance reasonably acceptable to counsel for the Company and the Stockholders
and substantially in the form attached hereto as Exhibit "F" and incorporated
herein by this reference.
10.5 Satisfaction of Closing Obligations. QuadraMed and Acquisition Co.
shall have delivered and/or satisfied each of the obligations set forth in
Section 2.12 above.
10.6 Proceedings Satisfactory to Counsel. All proceedings taken by
QuadraMed and Acquisition Co. and all instruments executed and delivered by
QuadraMed and Acquisition Co. on or prior to the Closing in connection with the
transactions contemplated herein shall be reasonably satisfactory in form and
substance to the counsel for Company and the Stockholders.
ARTICLE XI.
POST-CLOSING COVENANTS
The parties hereby agree as follows with respect to the period following
the Closing:
11.1 Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request, at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor under
Article XII below).
ARTICLE XII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties and covenants of the Company, the Majority
Stockholder and QuadraMed Acquisition Co. contained in Agreement will survive
until the Closing and remain operative and in full force and effect until the
Effective Time, at which time they will expire.
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ARTICLE XIII.
TERMINATION
13.1 Termination. This Agreement and the Merger contemplated hereby may
be terminated at any time prior to the Closing, whether before or after approval
of this Agreement and the Merger by the Stockholders, as follows, and in no
other manner:
(a) by mutual written consent of QuadraMed and the Company;
(b) by QuadraMed or the Company if any of the conditions set forth
in Article VIII shall not have been satisfied as June 30, 1998;
(c) by QuadraMed if any of the conditions set forth in Article IX
shall not have been satisfied as of June 30, 1998;
(d) by the Company if any of the conditions set forth in Article X
shall not have been satisfied as of June 30, 1998; or
(e) by either QuadraMed or the Company if the Closing shall have
not been consummated on or before July 31, 1998; provided, however, that with
respect to paragraphs (b) through (d) above, that the terminating party has
complied with or performed or tendered performance of all covenants and
agreements, and satisfied all conditions contained herein which are to be
complied with, performed or satisfied by such party immediately prior to or at
the Closing; provided, further, that a party shall promptly notify the other
parties hereto in writing if it becomes aware of circumstances which would cause
such other party to breach or be unable to comply with or perform the conditions
set forth in Article VIII, IX or X as is appropriate.
13.2 Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 13.1 above, all further obligations of the
parties hereto under this Agreement shall terminate without further liability of
any party to another, and each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance of and compliance with all agreements and conditions contained
herein or therein on its part to be performed or complied with, including the
fees, expenses and disbursements of its counsel and financial advisors;
provided, however, that the obligations of the Company contained in Section 5.2
above and the obligations of QuadraMed and Acquisition Co. contained in Section
7.2 above shall survive any such termination; and provided, further, that
nothing herein shall relieve any party of any liability with respect to or
arising out of any breach of its obligations, covenants or agreements hereunder
and such termination shall not constitute an election of remedies nor limit the
non-breaching parties from pursuing whatever rights and remedies they may have
at law, in equity or otherwise.
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13.3 Waiver of Conditions. If any of the conditions specified in Article
VIII above have not been satisfied, QuadraMed and the Company may nevertheless
mutually agree to proceed with the transactions contemplated hereby. If any of
the conditions specified in Article IX above have not been satisfied, QuadraMed
and Acquisition Co. may nevertheless at the election of QuadraMed and
Acquisition Co. proceed with the transactions contemplated hereby. If any of the
conditions specified in Article X above have not been satisfied, the Company and
the Stockholders may nevertheless at the election of the Company and the
Stockholders proceed with the transactions contemplated hereby.
ARTICLE XIV.
GENERAL
14.1 Power of Attorney. Each of the Stockholders hereby irrevocably
appoints Xxxxx X. Xxxxx as their attorney-in-fact for purposes of this Agreement
and any exhibit or schedule hereto or any certificate, document or instrument
delivered on behalf of the Company or the Stockholders and Xxxxx X. Xxxxx hereby
accepts his appointment as attorney-in-fact. QuadraMed and Acquisition Co. shall
be entitled to deal exclusively with Xxxxx X. Xxxxx on all matters relating to
this Agreement, and shall be entitled to rely conclusively (without further
evidence of any kind whatsoever) on any document executed or purported to be
executed on behalf of any Stockholder by Xxxxx X. Xxxxx, and on any other action
taken or purported to be taken on behalf of any Stockholder by Xxxxx X. Xxxxx,
is fully binding upon such Stockholder. The power of attorney granted herein
shall be irrevocable and be deemed to be coupled with an interest.
14.2 Payment of Expenses. The Stockholders and QuadraMed will pay all of
their respective costs and expenses incurred by such party in connection with
the transactions contemplated by this Agreement, regardless of whether the
Merger is consummated; provided, however, that the costs and expenses of counsel
incurred by the Company and the Stockholders in connection with the transactions
contemplated hereby may be paid from the Company's corporate funds up to a
maximum of $25,000 and the other costs and expenses incurred by the Company
(including the fees and expenses of the Company's accountants and financial
advisors) shall be borne by the Company.
14.3 Amendments. Subject to applicable law, this Agreement, the
Certificate of Merger and any exhibit attached hereto or thereto may be amended
by the parties hereto at any time prior to the Effective Time; provided,
however, that any such amendment must be in writing and executed by all parties
hereto.
14.4 Assignment. The rights under this Agreement shall not be assignable
nor the duties delegable by any party without the written consent of the other
parties and nothing contained in this Agreement, express or implied, is intended
to confer upon any person or entity, other than the parties hereto and their
successors in interest and permitted assignees, any rights or remedies under or
by reason of this Agreement unless so stated to the contrary.
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14.5 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally, by facsimile transmission, or when mailed, by United
States certified or registered mail, prepaid, to the parties or their assignees
at the following addresses or facsimile numbers (or at such other address as
shall be given in writing by any party):
If to QuadraMed/Acquisition Co.: QuadraMed Corporation
Attention: Xxxxx X. Xxxxxxx, Esq.
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 0X
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
With a required copy to: Xxxxxx Xxxxxx Xxxxxxx XxXxxxxx
Xxxxxx & Fognani, L.L.P.
Attention: Xxxxxx X. Xxxxxx, Esq.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
If to the Company/Stockholders: Pyramid Health Group, Inc.
Attention: Xxxxx X. Xxxxx
000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
With a required copy to: Xxxxxxx & XxXxxxxx
Attention: Xxxxx X. Xxxxxx, Esq.
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
14.6 Further Assurances. QuadraMed and Acquisition Co., on the one hand,
and the Company or the Stockholders, on the other hand, agree that from time to
time after the Closing, at the request of any other party and without further
consideration or consent, they will execute and deliver such additional
instruments as any other party may reasonably request to confirm more
effectively the status of the Merger, and, from and after the date hereof if
there are any rights of the Company vis-a-vis third-parties which would not
continue beyond the time of the Merger without the consent of any such
third-party, to try with the cooperation and assistance of each other to obtain
such consent promptly.
14.7 Entire Agreement. This Agreement (including all exhibits and
schedules attached hereto and all documents delivered as provided for herein)
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and the
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transactions contemplated hereby and supersedes all prior negotiations,
discussions, agreements and undertakings, both written and oral, among the
parties hereto, with respect to the subject matter hereof.
14.8 Counterparts; Facsimile. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile (with originals to follow by United States mail), and such
facsimile shall be conclusive evidence of the consent and ratification of the
signatories hereto.
14.9 Governing Law; Venue. This Agreement shall be construed by and
enforced in accordance with the laws of the State of Delaware without giving
effect to the principles of the conflicts of laws. The exclusive venue for any
controversy arising out of the terms of this Agreement or the breach thereof
shall be the Superior Court of California for the County of San Francisco or the
United States District Court for the Northern District of California.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
QUADRAMED QUADRAMED CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
ACQUISITION CO. PYRAMID HEALTH ACQUISITION CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
COMPANY PYRAMID HEALTH GROUP, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
MAJORITY STOCKHOLDER
____________________________________________
Xxxxx X. Xxxxx
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
46
STOCKHOLDERS SPROUT CAPITAL V
By: DLJ Associates V
General Partner
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
SPROUT GROWTH, L.P.
By: DLJ Growth Associates
General Partner
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
SPROUT GROWTH, LTD.
By: DLJ Growth Partners
Attorney-In-Fact
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
47
DLJ VENTURE CAPITAL FUND
By: DLJ Fund Associates
General Partner
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
XXXXXX PARTNERS 2, L.P.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: Federal Reserve Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
TORONTO DOMINION INVESTMENTS, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 000 Xxx Xxxxxx
Post Office Box 1
Ernst & Xxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
48
SCOTTISH INVESTMENT TRUST, PLC
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0 Xxxxx Xxxxx
Xxxxxxxxx, XX0 0XX
Xxxxxxxx
Xxxxx Xxxxxx
Address: 0000 Xxxx Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
--------------------------------------------
Xxxxxx X. Xxxxx, Trustee of the Xxxxx Family
Trust dated 1/6/89
Address: 0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
--------------------------------------------
Xxxxxxx X. Xxxxxxxx
Address: 000 Xxxxx Xxxxxxxx, #0
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
49
COMPEX INVESTORS I, L.P.
By: MBI Investment Partners, L.P.
Its: General Partner
By: Mehta & Company, Inc.
Its: General Partner
By:_________________________________________
Xxxxx X. Xxxxx, President
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
COMPEX INVESTORS II, L.P.
By: MBI Investment Partners, L.P.
Its: General Partner
By: Mehta & Company, Inc.
Its: General Partner
By:_________________________________________
Xxxxx X. Xxxxx, President
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
MEHTA FAMILY PARTNERS, L.P.
By:_________________________________________
Xxxxx X. Xxxxx, General Partner
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
50
TRANSCORP C/F XXXXX X. XXXXX
a/c IRC-6699-OT
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
TRANSCORP C/F XXXXX X. XXXXX
a/c KPS-0227-00
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
TRANSCORP C/F XXXX X. XXXXX
a/c IRZ-8055-OC
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
TRANSCORP C/F XXXXX X. XXXXX
a/c IRZ-8054-OC
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
51
TRANSCORP C/F XXXXX X. XXXXX
a/c TP2-87332
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
____________________________________________
Xxxxxx Xxxx, Trustee of the Xxxx X. Xxxxx-
1996 Trust
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
____________________________________________
Xxxxxx Xxxx, Trustee of Xxxxx X. Xxxxx-1996
Trust
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
____________________________________________
Xxxxxx X. Xxxxx, Trustee of the Shared X.
Xxxxx Trust of April 9, 1985
Address: 0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
[COUNTERPART SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
52
EXHIBIT "A"
CERTIFICATE OF MERGER
53
EXHIBIT "B"
NON-COMPETITION AND NON-INTERFERENCE AGREEMENT
54
EXHIBIT "C"
RELEASE
55
EXHIBIT "D"
REGISTRATION RIGHTS AGREEMENT
56
EXHIBIT "E"
OPINION OF COUNSEL FOR COMPANY AND STOCKHOLDERS
57
EXHIBIT "F"
OPINION OF COUNSEL FOR QUADRAMED AND ACQUISITION CO.
