ASSET PURCHASE AGREEMENT
AMONG
ENTERPRISE SYSTEMS, INC.,
CONTINENTAL HEALTHCARE SYSTEMS, INC.
AND
INFORMATION HANDLING SERVICES GROUP, INC.
DATED MAY 28, 1996
TABLE OF CONTENTS
Page
PURCHASE AND SALE OF ASSETS............................................ 1
Assets to be Transferred............................................... 1
Excluded Assets........................................................ 3
ASSUMPTION OF CERTAIN LIABILITIES...................................... 5
Certain Liabilities to be Assumed...................................... 5
Liabilities Not to be Assumed.......................................... 5
PURCHASE PRICE - PAYMENT............................................... 7
Purchase Price......................................................... 7
Payment of Purchase Price.............................................. 7
Payments Received...................................................... 7
Prorations............................................................. 8
Other Payments and Adjustments......................................... 8
Allocation of Purchase Price........................................... 9
REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDER.............. 9
Corporate.............................................................. 9
Authority.............................................................. 10
No Violation........................................................... 10
Financial Statements................................................... 11
Tax Matters............................................................ 11
Accounts Receivable.................................................... 11
Relationships.......................................................... 12
Absence of Certain Changes............................................. 12
Absence of Undisclosed Liabilities..................................... 13
No Litigation.......................................................... 13
Compliance with Laws and Orders........................................ 13
Title to and Condition of Properties................................... 14
Insurance.............................................................. 15
Contracts and Commitments.............................................. 15
Labor Matters.......................................................... 17
Employee Benefit Plans................................................. 17
Employment Compensation................................................ 19
Intellectual Property.................................................. 19
Product Development and Claims......................................... 21
Affiliates' Relationships to Company................................... 22
Stockholder............................................................ 22
Assets Necessary to Matkon Business.................................... 22
No Brokers or Finders.................................................. 22
Disclosure............................................................. 22
REPRESENTATIONS AND WARRANTIES OF BUYER................................ 23
Corporate.............................................................. 23
Authority.............................................................. 23
No Violation........................................................... 23
No Brokers or Finders.................................................. 24
Disclosure............................................................. 24
TRANSFEREE LIABILITY................................................... 24
Payment of Creditors................................................... 24
Severance.............................................................. 24
OTHER MATTERS.......................................................... 24
CHS-Canada Agreement................................................... 24
Libertyville........................................................... 24
Warehouse.............................................................. 24
Allocation of Assets and Space......................................... 24
Noncompetition......................................................... 25
Confidential Information............................................... 25
Unemployment Compensation.............................................. 26
Assistance............................................................. 26
Records Retention...................................................... 26
Communication Software License......................................... 26
Indemnification Agreement.............................................. 26
Transfer of Licenses-In/VAR Contracts.................................. 27
Consents to Assignments................................................ 27
Franciscan Agreement................................................... 27
INDEMNIFICATION........................................................ 28
By Company and Stockholder............................................. 28
By Buyer............................................................... 28
Indemnification of Third-Party Claims.................................. 29
Payment................................................................ 29
Limitations on Indemnification......................................... 30
CLOSING................................................................ 31
Documents to be Delivered by Company and Stockholder................... 31
Documents to be Delivered by Buyer..................................... 32
RESOLUTION OF DISPUTES................................................. 32
Arbitration............................................................ 32
Arbitrators............................................................ 33
Procedures; No Appeal.................................................. 33
Authority.............................................................. 33
Entry of Judgment...................................................... 33
Confidentiality........................................................ 33
Continued Performance.................................................. 34
Tolling................................................................ 34
MISCELLANEOUS.......................................................... 34
Further Assurance...................................................... 34
Disclosures and Announcements.......................................... 34
Assignment; Parties in Interest........................................ 34
ii
Equitable Relief....................................................... 35
Law Governing Agreement................................................ 35
Amendment and Modification............................................. 35
Notice................................................................. 35
Expenses............................................................... 36
Entire Agreement....................................................... 37
Counterparts........................................................... 37
Headings............................................................... 37
Glossary of Terms...................................................... 37
iii
DISCLOSURE SCHEDULE
-------------------
Schedule 1.1(a) - Software
Schedule 1.1(b) - Personal Property
Schedule 1.1(c) - Inventory
Schedule 1.1(d) - Personal Property Leases
Schedule 2.1 - Miscellaneous Assumed Contracts
Schedule 3.6 - Allocation of Purchase Price
Schedule 4.1(c) - Foreign Corporation Qualification
Schedule 4.3 - Consents and Violations
Schedule 4.4 - Financial Statements
Schedule 4.6 - Accounts Receivable (Billed and Unbilled)
Schedule 4.7 - Changes in Relationships
Schedule 4.8 - Material Changes
Schedule 4.9 - Undisclosed Liabilities
Schedule 4.10 - Litigation Matters
Schedule 4.11(b) - Licenses and Permits
Schedule 4.13 - Insurance
Schedule 4.14(a) - Licenses-Out
Schedule 4.14(b) - Licenses-In
Schedule 4.14(i) - Other Material Contracts
Schedule 4.14(j) - No Default
Schedule 4.15 - Labor Matters
Schedule 4.16(a) - Employee Plans/Agreements
Schedule 4.17 - Employees and Compensation
Schedule 4.18(a) - Intellectual Property
Schedule 4.18(h) - Form of Non-Disclosure Agreement
Schedule 4.19 - Product Development and Claims
Schedule 4.20 - Affiliate Relationships
Schedule 7.13 - Certain Assumed Contracts Requiring Consents
EXHIBITS
--------
Exhibit A Plan of Separation
Exhibit B Company Counsel Opinion
Exhibit C Buyer Counsel Opinion
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "AGREEMENT") dated May 28, 1996, by and
among Enterprise Systems, Inc., a Delaware corporation ("BUYER"), Continental
Healthcare Systems, Inc., a Delaware corporation ("COMPANY"), and Information
Handling Services Group, Inc., a Delaware corporation ("STOCKHOLDER").
RECITALS
A. Company, is engaged in the business of designing, developing,
marketing, selling and servicing a variety of healthcare information systems,
which includes a line of systems and products relating to materials management,
including the product lines and software described in Schedule 1.1(a) hereto
(such line of business is hereafter referred to as the "MATKON BUSINESS").
B. Stockholder is the owner of all the issued and outstanding capital
stock of Company.
C. Buyer desires to purchase from Company, Company desires to sell to
Buyer, and Stockholder desires to cause Company to sell to Buyer, the Matkon
Business.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree
as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Assets to be Transferred. Subject to the terms and conditions of
this Agreement, simultaneously with the execution of this Agreement by the
parties, Company shall sell, transfer, convey, assign and deliver to Buyer (or
upon Buyer's request, to one or more wholly-owned subsidiaries of Buyer as
designated by Buyer), and Buyer shall purchase and accept, the Matkon Business
and all rights, properties and assets (of every kind, nature, character and
description, whether real, personal or mixed, whether tangible or intangible,
whether accrued, contingent or otherwise, and wherever situated) used in or
pertaining to the Matkon Business, together with all rights and privileges
associated with such assets and with the Matkon Business, other than the
Excluded Assets (as hereinafter defined) (collectively the "PURCHASED ASSETS").
The Purchased Assets shall include, but not be limited to, the following:
1.1.(a) Intellectual Property. Any and all of the following which is
owned by, licensed by, licensed to, used or held for use by Company (including
all copies and embodiments thereof, in electronic, written or other media) in
connection with or which
is related to the Matkon Business: (i) all registered and unregistered U.S. and
foreign trademarks, trade dress, service marks, logos, trade names, corporate
names (including the names "Matkon," "Matkon 2000," "Interkon" and "Matkon
Synergy" and all applications to register the same ("TRADEMARKS"); (ii) all
issued U.S. and foreign patents and pending patent applications, patent
disclosures and improvements thereto ("PATENTS"); (iii) all registered and
unregistered copyrights, mask work rights and all applications to register the
same ("COPYRIGHTS"); (iv) all computer software and databases, object and source
code, routines, subroutines and algorithms, and related documentation owned,
developed, under development or used by Company or under development for Company
by third parties including, but not limited to, the software and systems
identified on Schedule 1.1.(a) ("SOFTWARE"); (v) all categories of trade
secrets, know-how, inventions (whether or not patentable and whether or not
reduced to practice), processes, procedures, drawings, specifications, designs,
plans, proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans,
customer and supplier lists and information and other confidential and
proprietary information ("PROPRIETARY RIGHTS"); (vi) all licenses and agreements
pursuant to which Company has acquired rights in or to any of the Trademarks,
Patents, Copyrights, Software or Proprietary Rights or any software or other
intellectual property or proprietary Rights incorporated therein or used in
connection therewith ("LICENSES-IN"), all of which are set forth on Schedule
4.14(b); and (vii) all licenses and agreements pursuant to which Company has
licensed or transferred any rights to any of the Trademarks, Patents,
Copyrights, Software or Proprietary Rights, all of which are set forth on
Schedule 4.14(a) ("LICENSES-OUT") (collectively, "INTELLECTUAL PROPERTY").
1.1.(b) Personal Property. All computer hardware, machinery,
equipment, vehicles, tools, supplies, spare parts, furniture, leasehold
improvements and all other personal property (other than personal property
leased pursuant to Personal Property Leases as hereinafter defined) owned,
utilized or held for use by Company on the date hereof primarily for use
by or in connection with the Matkon Business including, but not limited to,
the items described on Schedule 1.1(b) and any assets which are to be
transferred to Buyer as provided in the Plan of Separation (as hereinafter
defined).
1.1.(c) Inventory. All inventories of computer hardware, raw
materials, work-in-process and finished goods (including all such in transit),
and service and repair parts, supplies and components held for resale by
Company for use in connection with the Matkon Business on the date hereof,
together with related packaging materials including, but not limited to, the
items described on Schedule 1.1(c) (collectively, "INVENTORY").
1.1.(d) Personal Property Leases. The leases of machinery,
equipment, vehicles, furniture and other personal property leased by
Company for use by or in connection with the Matkon Business, but only
such leases set forth in Schedule 1.1.(d) ("PERSONAL PROPERTY LEASES").
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1.1.(e) Contracts. All of Company's rights in, to and under all
contracts, licenses, leases, installment sales contracts, purchase orders and
sales orders of Company associated with or related to the Matkon Business,
including Licenses-Out, to the extent such contracts are Assumed Contracts
(as hereinafter defined) ("CONTRACTS").
1.1.(f) Literature. All sales literature, promotional literature,
advertising materials, catalogs and similar materials for use in connection
with the Matkon Business.
1.1.(g) Records and Files. All records and files of every kind
associated with or related to the Matkon Business including, without
limitation, invoices, customer and vendor lists, blueprints, specifications,
designs, drawings, and operating and marketing plans, and all other documents,
tapes, discs, programs or other embodiments of information related thereto.
1.1.(h) Accounts Receivable. All accounts receivable, whether
billed or unbilled, associated with or related to the Matkon Business.
1.1.(i) Licenses and Permits. All licenses, permits, approvals and
certifications primarily associated with the Matkon Business.
1.1.(j) Other Assets. All lease receivables, bonds, all causes of
action arising out of occurrences before or after the Closing, and other
intangible rights and assets associated with or related to the Matkon Business.
1.2. Excluded Assets. The provisions of Section 1.1 notwithstanding,
Company shall not sell, transfer, assign, convey or deliver to Buyer, and Buyer
will not purchase or accept, the following assets used in, associated with or
related to the Matkon Business (collectively, the "EXCLUDED ASSETS"):
1.2.(a) Cash and Cash Equivalents. All cash and cash equivalents,
other than xxxxx cash balances at Company's various places of business.
1.2.(b) Consideration. The consideration delivered by Buyer to
Company pursuant to this Agreement.
1.2.(c) Tax Credits and Records. Federal, state and local income
and franchise tax credits and tax refund claims, any amounts due under tax
sharing agreements and associated returns and records; provided, however,
Buyer shall have reasonable access to such returns and records and may make
excerpts therefrom and copies thereof.
1.2.(d) Corporate Franchise. Company's franchise to be a
corporation, its certificate of incorporation, corporate seal, stock books,
minute books and other corporate
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records having exclusively to do with the corporate organization and
capitalization of Company.
1.2.(e) Lutheran Invoices. An interest in the amount of $360,924.94
in the accounts receivable represented by invoice #97796 dated May 17, 1996
("FIRST LUTHERAN INVOICE") issued to Lutheran Health Systems ("LUTHERAN")
pursuant to that Software License and Equipment Purchase Agreement dated May 13,
1996 and a receivable for $362,402.00 remaining to be billed ("SECOND LUTHERAN
INVOICE") for base system hardware for Lutheran processing centers 1 and 4
(collectively, the "LUTHERAN INVOICES").
1.2.(f) Pharmakon Assets. All rights, properties and assets
primarily used in or pertaining to the Company's healthcare information
systems relating to the Pharmakon pharmacy management or to any other lines
of business of the Company, other than the Matkon Business, and any assets
which are to remain with the Company as provided in the Plan of Separation.
1.2.(g) Mainframe Computer. All computer hardware and related
assets used by the Company which is owned by the Company's Affiliate and
located in Englewood, Colorado.
1.2.(h) Excluded Contracts. Rights under contracts not assumed
by Buyer.
1.2.(i) Continental Name. All registered and unregistered U.S.
and foreign trademarks, trade dress, service marks, logos, trade names and
corporate names with respect to the names "Continental Healthcare Systems",
"Continental", "Information Handling Services", "IHS Group", "IHS" or any
variation thereof or any name or xxxx similar thereto.
1.2.(j) Accounting Records. All corporate accounting journals
and corporate books of account.
1.2.(k) Benefits Plans. All assets relating to employee benefit
plans.
1.2.(l) Insurance Policies. All insurance policies, rights to
prepaid premiums and claims against insurers under such policies.
1.2.(m) Prepayments. All prepayments.
1.2.(n) Communications Software. Communications routines used
by both the Matkon Business and other lines of business of the Company
(the "COMMUNICATIONS SOFTWARE") (except as set forth in Section 7.10).
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2. ASSUMPTION OF CERTAIN LIABILITIES
2.1. Certain Liabilities to be Assumed. Subject to the terms and
conditions of and simultaneously with the execution of, this Agreement, Buyer
shall assume and agree to perform the Company's Liabilities associated with the
Matkon Business arising after or remaining to be performed after the date hereof
under and pursuant to Contracts described in any of Schedule 1.1(d), 4.14(a) and
2.1 (collectively, the "ASSUMED LIABILITIES" or the "ASSUMED CONTRACTS") and no
other Liabilities except as otherwise provided in this Agreement. As used in
this Agreement, the term "LIABILITY" shall mean and include any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, liquidated or unliquidated, secured or unsecured.
2.2. Liabilities Not to be Assumed. Except as and to the extent
specifically set forth in Section 2.1 or in any other provision of this
Agreement, Buyer is not assuming any Liabilities of Company and all such
Liabilities shall be and remain the responsibility of Company. Company shall,
in the ordinary course of business through and from and after the date hereof,
pay any and all obligations of the Matkon Business not assumed by Buyer
hereunder. In particular, and notwithstanding the provisions of Section 2.1,
Buyer is not assuming and Company shall not be deemed to have transferred to
Buyer any of the following Liabilities of Company:
2.2.(a) Certain Contracts. The Liabilities of Company under and
pursuant to the following contracts and leases:
(i) Software Development Agreement dated March 31, 1994
by and between Wipro Systems Limited and Company;
(ii) Independent Contractor Agreement executed December 9,
1994 by and between Wipro Systems Limited and Company;
(iii) Amendment No. 1 dated September 29, 1995 to the
Independent Contractor Agreement executed December 9, 1994 by and between
Wipro Systems Limited and Company;
(iv) Software License and Equipment Purchase Agreement
(the "FRANCISCAN AGREEMENT") dated January 4, 1995 by and between
Franciscan Health System ("FRANCISCAN") and Company (but only with
respect to the obligation to reimburse Franciscan for the cost of a third
party's accounts payable module);
(v) Business Park Gross Lease dated as of August 23, 1995
by and between The Realty Associates Fund III, L.P. and Company;
5
(vi) Lease Agreement dated December 24, 1985 by and
between Commerce Plaza Partners I, L.P. and Company, as amended as of
June 7, 1995; and
(vii) Computer Software Systems License Agreements between
Company and Xxxxxx Laboratories.
2.2.(b) Taxes Arising from Transaction. Any taxes applicable to,
imposed upon or arising out of the sale or transfer of the Purchased Assets
to Buyer and the other transactions contemplated by this Agreement, including
but not limited to any income, transfer, sales, use, gross receipts or
documentary stamp taxes; provided, that any sales taxes arising from or related
to the Purchase Price paid or to be paid to Company shall be paid one-half by
Company and one-half by Buyer.
2.2.(c) Insured Claims. Any Liability of Company insured against,
to the extent such Liability is or will be paid by an insurer for matters
arising or events or actions which occurred before the date hereof.
2.2.(d) Product Liability. Any Liability of Company arising out of
or in any way relating to or resulting from any Software or system installed
or sold or product manufactured, assembled or sold prior to the date hereof
(including any Liability of Company for claims made for injury to person,
damage to property or other damage, whether made in product liability, tort,
breach of warranty or otherwise), except only that Buyer is assuming Company's
Liabilities (including any of the foregoing Liabilities) under and pursuant to
the Assumed Contracts.
2.2.(e) Litigation Matters. Any Liability with respect to any action,
suit, proceeding, arbitration, investigation or inquiry, whether civil,
criminal or administrative pending on the date hereof ("LITIGATION"), whether or
not described in Schedule 4.10.
2.2.(f) Transaction Expenses. All Liabilities incurred by Company
in connection with this Agreement and the transactions contemplated herein.
2.2.(g) Liability for Breach. Liabilities of Company for any breach
or failure, arising prior to the date hereof, to perform any of Company's
covenants and agreements contained in, or made pursuant to, this Agreement, or
any other contract (other than contracts for software or hardware which have
not been fully installed, all of which are set forth in the Unbilled
Recievables (the "CURRENT INSTALLATION CONTRACTS")), whether or not assumed
hereunder.
2.2.(h) Liabilities to Affiliates. Liabilities of Company to its
present or former Affiliates. Unless otherwise defined, for purposes of this
Agreement, the term "AFFILIATE" shall mean (i) any corporation, partnership,
trust, person or other entity directly or indirectly controlling, controlled
by, or under common control with, an
6
individual or entity; (ii) any officer, director or holder or beneficial owner
of five percent (5%) or more of the outstanding voting securities, of an entity;
or (iii) the spouse; descendants, parents or siblings of a natural person. For
the purposes of clause (ii), the term "BENEFICIAL OWNER" shall include any group
of individuals acting in concert. A party shall be deemed the "beneficial
owner" of any securities held by any person whose ownership would be attributed
to such party under Section 318 of the Internal Revenue Code of 1986, as
amended. For the purposes hereof, "PERSON" shall mean any individual, trust,
corporation, partnership, limited liability company or other business
association or entity, court, governmental body or governmental agency.
2.2.(i) Violation of Laws or Orders. Liabilities of Company for any
violation of or failure to comply with any statute, law, ordinance, rule or
regulation (collectively, "LAWS") or any order, writ, injunction, judgment, plan
or decree (collectively, "ORDERS") of any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other
governmental body, whether federal, state, municipal, foreign or other
(collectively, "GOVERNMENT ENTITIES").
2.2.(j) Severance and Sick Pay. Liabilities, if any, of Company
with respect to the payment of accrued sick pay or severance arrangements with
respect to employees of Company.
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price ("PURCHASE PRICE") for the
Purchased Assets shall be $13,892,926.00.
3.2. Payment of Purchase Price. The Purchase Price shall be paid by
Buyer simultaneously with the execution of this Agreement as follows:
3.2.(a) Assumption of Liabilities. Buyer shall deliver to Company
such documents and instruments as are reasonably required to evidence the
assumption of the Assumed Liabilities.
3.2.(b) Cash to Company. Buyer shall deliver to Company the Purchase
Price by wire transfer of immediately available funds to an account designated
by the recipient.
3.3. Payments Received. After the date hereof, Buyer shall have the
right and authority to collect, for its own account, all Billed Receivables
(as hereinafter defined) and Unbilled Receivables (as hereinafter defined) and
to endorse with the name of Company any checks received by Buyer on account of
such Billed Receivables or Unbilled Receivables. The Company agrees that any
payments received with respect to the Matkon Business with respect to the
Purchased Assets after May 20, 1996 shall be
7
held in trust for the benefit of Buyer (other than the Lutheran Invoices) and
for a period of one year following the date hereof, Company, Stockholder and
their Affiliates shall cooperate with Buyer in the collection of Billed
Receivables and Unbilled Receivables. Company, Stockholder or their Affiliates
shall promptly transfer or deliver to Buyer any cash or other property received
by them after May 20, 1996 in respect of any Billed Receivables or Unbilled
Receivables or otherwise with respect to the Matkon Business that are included
in the Purchased Assets. The Company has satisfied all requirements required to
issue the First Lutheran Invoice in accordance with the contract with Lutheran.
The Company will satisfy all requirements to issue the Second Lutheran Invoice
in accordance with the contract with Lutheran except for the provision of
installation and implementation services required under the contract. Company
has purchased and will pay for all computer and other equipment covered by the
Second Lutheran Invoice (which is not included in Inventory), and Company will
reimburse Buyer for the cost of preparing, storing and delivering such
equipment.
3.4. Prorations. The following prorations relating to the Purchased
Assets will be made as of the date hereof, with Company liable to the extent
such items relate to any time period up to and including the date hereof and
Buyer liable to the extent such items relate to periods subsequent to the date
hereof. The net amount of all such prorations will be settled and paid within
30 days after the date hereof. If the actual expense is not payable within 30
days after the date hereof, the proration shall be made as soon as possible
after the amounts become known.
3.4.(a) Personal property taxes, real estate taxes and assessments,
and other taxes, if any, on or with respect to the Purchased Assets.
3.4.(b) Rents, additional rents, taxes and other items payable by
Company under any lease, license, permit, contract or other agreement or
arrangement to be assigned to or assumed by Buyer.
3.4.(c) The amount of rents, taxes and charges for sewer, water,
fuel, telephone, electricity and other utilities; provided that, if practicable,
meter readings shall be taken at the date hereof and the respective obligations
of the parties determined in accordance with such readings.
3.5. Other Payments and Adjustments. Company will timely pay to all
employees of the Company who are employed by Buyer after the Closing ("AFFECTED
EMPLOYEES") the amount of wages and other remuneration due with respect to
periods to and including the date hereof, the amount of bonuses due to employees
for all such periods and commission for all contracts executed or other sales
made prior to and including the date hereof, whether or not due and payable as
of the date hereof. Notwithstanding any policy or agreement to the contrary,
such payments shall be made regardless of whether or not individuals are
employed by Company at the time such payments are to be made. Buyer shall
assume any and all obligations with respect to all
8
vacation unpaid by Company as of the date hereof attributable to any period or
partial period of employment by Company prior to the date hereof, for Affected
Employees who have not as of the date hereof taken vacation time earned prior to
the date hereof. Buyer shall accord each Affected Employee credit for the
length of service of such employee with the Company for purposes of Buyer's
vacation policy. Company, at its expense, shall cause its health insurance
coverage, as it exists on the date of this Agreement, to cover all Affected
Employees until June 1, 1996, and at Buyer's request and expense, until July 1,
1996. Thereafter, each Affected Employee shall, to the extent eligible, be
covered by Buyer's health insurance plan as then in effect.
3.6. Allocation of Purchase Price. The aggregate Purchase Price
(including the assumption by Buyer of the Assumed Liabilities) shall be
allocated among the Purchased Assets for tax purposes in accordance with
Schedule 3.6, subject to the valuation to be performed by Buyer's valuation
consultant. If the allocation set forth in Schedule 3.6 does not correspond with
such valuation, the parties shall make adjustments in accordance with such
valuation as they reasonably agree. Company and Buyer will follow and use such
allocation in all tax returns, filings or other related reports made by them to
any governmental agencies. To the extent that disclosures of this allocation are
required to be made by the parties to the Internal Revenue Service ("IRS") under
the provisions of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "CODE") or any regulations thereunder, Buyer and Company will disclose such
reports to the other prior to filing with the IRS.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDER
Company and Stockholder, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof, shall be unaffected by any investigation made by Buyer
(provided, however, that Buyer represents to Company and Stockholder that Buyer
does not have knowledge that any of Company's and Stockholder's representations
and warranties set forth herein are false), and shall survive the Closing of the
transactions provided for herein.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Stockholder is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
4.1.(b) Corporate Power. Company has all requisite corporate power
and authority to own, operate and lease its properties, to carry on its Matkon
Business as and where such is now being conducted, and Company and Stockholder
have all required
9
corporate power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by them pursuant hereto
and to carry out the transactions contemplated hereby and thereby.
4.1.(c) Qualification. Company is duly licensed or qualified to do
business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by it,
or the nature of its business, makes such licensing or qualification necessary
except where failure to qualify would not have a material adverse effect on the
Matkon Business. The states in which Company is licensed or qualified to do
business are set forth in Schedule 4.1.(c).
4.1.(d) No Subsidiaries. Company does not own any interest in any
corporation, partnership or other entity with respect to the Matkon Business.
4.2. Authority. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Company and
Stockholder pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors and Stockholder of Company, respectively. No other or further
corporate act or proceeding on the part of Company or Stockholder is necessary
to authorize this Agreement or the other documents and instruments to be
executed and delivered by Company or Stockholder pursuant hereto or the
consummation of the transactions contemplated hereby and thereby. This
Agreement constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Company or Stockholder pursuant
hereto will constitute, valid and binding agreements of Company, enforceable in
accordance with their respective terms.
4.3. No Violation. Except as set forth in Schedule 4.3, neither the
execution and delivery of this Agreement or the other documents and instruments
to be executed and delivered by Company or Stockholder pursuant hereto, nor the
consummation by Company and Stockholder of the transactions contemplated hereby
and thereby (i) will violate any applicable Law or Order; (ii) will require any
authorization, consent, approval, exemption or other action by or notice to any
Government Entity by Company or Stockholder (including, without limitation,
under any "plant closing" or similar law); or (iii) subject to obtaining the
consents required under any Assumed Contracts, will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
(as hereinafter defined) upon any of the assets of Company under, any term or
provision of the charter or By-Laws of Company or Stockholder or of any
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which Company or Stockholder is a party or by which
Company or Stockholder or any of its assets or properties may be bound or
affected.
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4.4. Financial Statements. Included as Schedule 4.4 are true and
complete copies of the financial statements of Company consisting of (i) balance
sheets of Company as of November 30, 1994 and 1995 (the "BALANCE SHEETS"), and
the related statements of income for the years then ended; (ii) balance sheet of
Company as of April 30, 1996, the related statement of income for the five
months then ended; and (iii) the pro forma balance sheet of the Matkon Business
as of November 30, 1995, and the related statement of income for the year then
ended and the pro forma balance sheet of the Matkon Business as of April 30,
1996, and the related statement of income for the five months then ended. All
such financial statements have been prepared in accordance with Company's
accounting policies, consistently applied, and for the November 30 financial
statements, in accordance with accounting principles that are reviewed annually
by Price Waterhouse and approved for consolidation in Stockholder's audited
financial statements, and on that basis fairly present the financial position
and the results of operations of the Matkon Business and Company (to the extent
they reflect the assets, operations or results of the Matkon Business) as of the
dates and for the periods indicated.
4.5. Tax Matters.
4.5.(a) Taxes. All federal and all material state, foreign, county,
local and other tax returns required to be filed by or on behalf of Company
have been timely filed (or filing extensions applied for) and when filed were
true and correct in all material respects, and the taxes shown as due thereon
were paid or adequately accrued (and accrued amounts will be paid when due) and
the Company is not liable for any additional taxes or tax payments. Company
has duly withheld and paid all taxes which it was required to withhold and pay
relating to salaries and other compensation heretofore paid to the employees
of Company.
4.5.(b) Other. Company has not (i) filed any consent or agreement
under Section 341(f) of the Code, (ii) applied for any tax ruling, (iii)
entered into a closing agreement with any taxing authority, or (iv) filed
an election under Section 338(g) or Section 338(h)(10) of the Code (nor has a
deemed election under Section 338(e) of the Code occurred).
4.6. Accounts Receivable. Schedule 4.6 sets forth an accurate, correct
and complete description of all Billed Receivables and Unbilled Receivables of
Company as of May 20, 1996, with an indication of which have been billed (and
the aging) and which are unbilled. The Purchase Price reflects a discounted
amount paid for Billed Receivables, and no representation is made as to
collectibility. "BILLED RECEIVABLES" shall mean accounts receivable of Company
for which invoices have been delivered to customers and which represent valid
billing pursuant to arm's length sales actually made, billed, dated and
delivered in the ordinary course of business in accordance with the terms of the
underlying contracts pursuant to which Company was entitled to issue invoices
and Company met all contractual conditions required under the applicable
contract to issue such invoices. The members of the executive management
committee of
11
Company are not aware of any material disputes, counterclaims or claims for
offset with respect to Billed Receivables which have been issued within 90 days
of the date hereof. All unbilled accounts receivable ("UNBILLED RECEIVABLES")
represent accounts for receivables recorded in the ordinary course of business
pursuant to arm's length sales.
4.7. Relationships. Except as set forth on Schedule 4.7, the members of
the executive management committee of Company do not have actual knowledge, that
(i) any material customer will not continue to be a customer of the Matkon
Business after the date hereof, (ii) any customer intends to return the core
modules of Matkon software or ADS software or cancel any material agreement with
the Company relating to the Matkon Business; (iii) any material supplier will
not continue to supply the Matkon Business with substantially the same quantity
and quality of goods or services at competitive prices; or (iv) any employee of
Company which Buyer has indicated a willingness to hire would not accept
employment with Buyer.
4.8. Absence of Certain Changes. Except as and to the extent set forth
in Schedule 4.8, since April 30, 1996 there has not been:
4.8.(a) Adverse Change. Any material adverse change in the
financial condition, assets, Liabilities, business or operations of the
Matkon Business;
4.8.(b) Damage. Any material loss, damage or destruction, whether
covered by insurance or not, affecting the Matkon Business or Purchased Assets;
4.8.(c) Increase in Compensation. Any increase in the compensation,
salaries or wages payable or to become payable to any employee or agent of
Company (including, without limitation, any increase or change pursuant to any
bonus, pension, profit sharing, retirement or other plan or commitment), or any
bonus or other employee benefit granted, made or accrued other than in the
ordinary course of business;
4.8.(d) Labor Disputes. Any labor dispute or disturbance, other
than routine individual grievances which are not material to the Matkon
Business, financial condition or results of operations of the Matkon Business;
4.8.(e) Commitments. Any commitment or transaction by Company with
respect to the Matkon Business (including, without limitation, any borrowing
or capital expenditure) other than in the ordinary course of business
consistent with past practice;
4.8.(f) Disposition of Property. Any sale, lease or other transfer
or disposition of any properties or assets of the Matkon Business, except for
the sale of inventory items or licenses entered into in the ordinary course of
business;
4.8.(g) Amendment of Contracts. Any entering into, amendment or
termination by Company of any contract, or any waiver of material rights
thereunder,
12
associated with or related to the Matkon Business which is not listed on a
schedule hereto;
4.8.(h) Matkon Business. Any material change in the manner in which
the Matkon Business has been conducted;
4.8.(i) Accounting Principles. Any change in the accounting
principles, methods or practices (except as contemplated by this Agreement)
or any change in the depreciation or amortization policies or rates; or
4.8.(j) Unusual Events. Any other event or condition not in the
ordinary course of business that is materially adverse to the Matkon Business.
4.9. Absence of Undisclosed Liabilities. Except as and to the extent
specifically disclosed, reflected or reserved against in the balance sheet of
the Company dated as of April 30, 1996 or in Schedule 4.9 or any other schedules
to this Agreement, Company does not have any Liabilities with respect to the
Matkon Business required to be disclosed, reflected or reserved against in a
balance sheet prepared in accordance with generally accepted accounting
principles other than commercial liabilities and obligations incurred since
April 30, 1996 in the ordinary course of Matkon Business and consistent with
past practice and none of which has or will have a material adverse effect on
the Matkon Business, financial condition or results of operations of the Matkon
Business.
4.10. No Litigation. Except as set forth in Schedule 4.10, there is no
Litigation pending or, to the knowledge of Company or Stockholder threatened
against Company, its directors (in such capacity), or any of its assets related
to or which might be reasonably anticipated to affect the Matkon Business or the
Purchased Assets. Schedule 4.10 also identifies all Litigation to which Company
or any of its directors have been parties since January 1, 1994 which is related
to or which might be reasonably anticipated to affect the Matkon Business or the
Purchased Assets. Except as set forth in Schedule 4.10, neither Company nor any
of the Purchased Assets is subject to any Order.
4.11. Compliance with Laws and Orders.
4.11.(a) Compliance. Company is in compliance in all material
respects with all applicable Laws and Orders with respect to the Matkon
Business, including, without limitation, those applicable to discrimination
in employment, occupational safety and health, trade practices, competition
and pricing, product warranties, zoning, building and sanitation, employment,
retirement and labor relations, product advertising and the Environmental Laws
(as hereinafter defined). Company has not received notice of any violation or
alleged violation of, and is subject to no Liability for past or continuing
violation of, any Laws or Orders. All material reports and returns required
to be filed by Company with any Government Entity have been filed, and were
accurate and complete when filed.
13
4.11.(b) Licenses and Permits. Company has all material licenses,
permits, approvals, authorizations and consents of all Government Entities
and all certification organizations required for the conduct of the Matkon
Business (as presently conducted) and operation of its facilities. All such
licenses, permits, approvals, authorizations and consents are described in
Schedule 4.11.(b), are in full force and effect. Except as set forth in
Schedule 4.11.(b), Company (including its operations, properties and assets)
is and has been in compliance in all material respects with all such permits
and licenses, approvals, authorizations and consents.
4.11.(c) Environmental Matters. The applicable Laws relating to
pollution or protection of the environment, including Laws relating to
emissions, discharges, generation, storage, releases or threatened releases
of pollutants, contaminants, chemicals or industrial, toxic, hazardous or
petroleum or petroleum-based substances or wastes ("WASTE") into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Waste including, without limitation, the Clean Water Act, the Clean
Air Act, the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response Compensation Liability
Act ("CERCLA"), as amended, and their state and local counterparts are herein
collectively referred to as the "ENVIRONMENTAL LAWS". Without limiting the
generality of the foregoing provisions of this Section 4.11, Company is in
compliance in all material respects with all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in any regulations,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder. There is no Litigation nor any
demand, claim, hearing or notice of violation pending or, to the knowledge of
Company or Stockholder, threatened against Company relating in any way to the
Environmental Laws or any Order issued, entered, promulgated or approved
thereunder. There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans which may
interfere with or prevent compliance or continued compliance in all material
respects with the Environmental Laws or with any Order issued, entered,
promulgated or approved thereunder, or which may give rise to any material
Liability, including, without limitation, Liability under CERCLA or similar
state or local Laws, or otherwise form the basis of any material Litigation,
hearing, notice of violation, study or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened
release into the environment, of any Waste.
4.12. Title to and Condition of Properties.
4.12.(a) Marketable Title. Company has good and valid title to all
the Purchased Assets (other than Purchased Assets leased or licensed by the
Company), free
14
and clear of all mortgages, liens (statutory or otherwise), security interests,
claims (with respect to title), pledges, equities, options, conditional sales
contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or encumbrances of
any nature whatsoever (collectively, "LIENS") other than Liens that do not
interfere in any material way with the operation of the Matkon Business
("PERMITTED LIENS"). Except as disclosed in any Schedule hereto and for any
consents required for the assignment of contracts, none of the Purchased Assets
are subject to any restrictions with respect to the transferability thereof.
Company has complete and unrestricted power and right to sell, assign, convey
and deliver the Purchased Assets (other than Purchased Assets leased or licensed
by the Company) to Buyer as contemplated hereby. At Closing, Buyer will receive
good and valid title to all the Purchased Assets (other than Purchased Assets
leased or licensed by the Company), free and clear of all Liens of any nature
whatsoever except for Permitted Liens.
4.12.(b) Condition. All tangible assets constituting Purchased Assets
hereunder are in good operating condition and repair (subject to ordinary wear
and except for surplus assets not necessary for the conduct of business as
currently conducted), free from any defects (except such minor defects as do not
interfere with the use thereof in the conduct of the normal operations of the
Matkon Business), have been maintained consistent with the standards generally
followed in the industry and are sufficient to carry on the Matkon Business as
conducted during the preceding 12 months.
4.12.(c) Inventory. All Inventory reflected on the April 30, 1996
balance sheet consists of a quality and quantity usable and salable in the
ordinary course of Matkon Business, has a commercial value at least equal to
the value shown on the Balance Sheet and is valued in accordance with generally
accepted accounting principles. Except as set forth in Schedule 1.1(c)., all
inventory of Company is located at the Company's two leased facilities in
Overland Park, Kansas.
4.13. Insurance. Set forth in Schedule 4.13 is a complete and accurate
list and description of all policies of fire, liability, product liability,
workers compensation, health and other forms of insurance presently in effect
with respect to the Matkon Business.
4.14. Contracts and Commitments.
4.14.(a) Licenses-Out. Schedule 4.14.(a) contains a complete and
accurate list of all Licenses-Out or other contracts currently in effect with
customers arising from or related to the Matkon Business. Copies of all such
agreements have heretofore been made available to Buyer.
4.14.(b) Licenses-In and VAR Contracts. Schedule 4.14.(b) contains
a complete and accurate list of all value added reseller contracts or similar
arrangements to which the Company is a party and all Licenses-In contracts.
Any amounts accrued, owed
15
or owing by Company for activities under such contracts through the date hereof
shall be paid by the Company on a timely basis.
4.14.(c) Personal Property Leases. Except as set forth in Schedule
1.1.(d) Company has no leases of personal property for use by or in connection
with the Matkon Business.
4.14.(d) Purchase Commitments. Company has no outstanding purchase
commitments for inventory items or supplies.
4.14.(e) Powers of Attorney. Company has not given a power of
attorney, which is currently in effect, to any person, firm or corporation
for any purpose whatsoever.
4.14.(f) Collective Bargaining Agreements. Company is not a party
to any collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups.
4.14.(g) Contracts Subject to Renegotiation. To Company's knowledge,
it is not a party to any contract with any governmental body which by its
terms is subject to renegotiation.
4.14.(h) Burdensome or Restrictive Agreements. Company is not a
party to nor is it bound by any agreement requiring Company to assign any
interest in any Intellectual Property (except for the Licenses-Out), or
prohibiting or restricting Company from competing in the Matkon Business in
any geographical area or soliciting customers for the Matkon Business or
otherwise restricting it from carrying on the Matkon Business anywhere in
the world.
4.14.(i) Other Material Contracts. Company has no material lease,
license, contract or commitment involving or related to the Matkon Business
or Purchased Assets, except as explicitly described in Schedule 4.14.(i) or
in any other schedule hereto.
4.14.(j) No Default. Except as set forth in Schedule 4.14.(j),
Company is not in material default under any lease, contract or commitment
referred to in this Section 4.14 or otherwise relating to the Matkon Business
(other than the Current Installation Contracts), nor has any event or omission
occurred which through the passage of time or the giving of notice, or both,
would constitute a material default thereunder or cause the acceleration of
any of Company's obligations thereunder or result in the creation of any Lien
on any of the Purchased Assets and, to the knowledge of Company or Stockholder,
no third party is in material default under any such lease, contract or
commitment to which Company is a party, nor has any event or omission occurred
which, through the passage of time or the giving of notice, or both, would
constitute a default thereunder or give rise to an automatic termination, or
the right of discretionary termination, thereof.
16
Company has not received any written notice of default under the Current
Installation Contracts.
4.15. Labor Matters. Except as set forth in Schedule 4.15, within the
last five years Company has not experienced any labor strikes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its Matkon Business and none are pending. Except to the extent
set forth in Schedule 4.15. Company is in compliance in all material respects
with all applicable laws respecting employment and employment practices, terms
and conditions of employment wages and hours, and is not engaged in any unfair
labor practice; there is no unfair labor practice charge or complaint against
Company pending or, to the knowledge of Company or Stockholder, threatened with
respect to the Affected Employees or the Matkon Business; and there are no
administrative charges or court complaints against Company concerning alleged
employment discrimination or other employment related matters pending or, to the
knowledge of Company or Stockholder, threatened before the U.S. Equal Employment
Opportunity Commission or any Government Entity with respect to the Affected
Employees or the Matkon Business. None of the Affected Employees are employed
pursuant to a written employment agreement.
4.16. Employee Benefit Plans.
4.16.(a) For purposes of this Agreement, the term "PLANS" means (i) all
employee benefit plans as defined in Section 3(3) of ERISA; (ii) all other
severance pay, deferred compensation, excess benefit, vacation, stock, stock
option, and incentive plans, contracts, schemes, programs, funds, commitments,
or arrangements of any kind; and (iii) all other plans, contracts, programs,
funds, commitments, or arrangements providing money, services, property, or
other benefits, whether written or oral, qualified or nonqualified, funded or
unfunded, and including any that have been frozen or terminated, which pertain
to any employee, former employee, director, officer, stockholder, consultant, or
independent contractor of Company or any ERISA Affiliate of Company and (i) to
which Company or any ERISA Affiliate of Company is or has been a party or by
which any of them is or has been bound or (ii) with respect to which Company or
any ERISA Affiliate of Company has made any payments or contributions since
December 31, 1985 or (iii) to which Company or any ERISA Affiliate of Company
may otherwise have any liability (including any such plan or arrangement
formerly maintained by Company or any ERISA Affiliate of Company.) All Plans of
Company are listed and briefly described in Schedule 4.16.(a). "ERISA AFFILIATE"
shall mean any corporation or other business entity that is included in a
controlled group of corporations within which Company is also included, as
provided in Section 414(b) of the Code; or which is a trade or business under
common control with Company, as provided in Section 414(c) of the Code; or which
constitutes a member of an affiliated service group within which Company is also
included, as provided in Section 414(m) of the Code; or which is required to be
aggregated with Company pursuant to regulations issued under Section 414(o) of
the Code.
17
4.16.(b) Each Plan is in compliance with its terms and with ERISA and other
applicable laws (including, without limitation, compliance with the health care
continuation requirements of COBRA and any proposed regulations promulgated
thereunder), and all agreements and instruments applicable to any Plan. Company
and each applicable ERISA Affiliate have received favorable determination
letters as to the qualification under the Code of each pension plan, as defined
in Section 3(2) of ERISA ("PENSION PLAN"), and there have been no amendments or
other developments since the date of such determination letters which would
cause the loss of such qualified status. No violation of ERISA has at any time
occurred in connection with the administration of any of the Plans, and there
are no actions, suits, or claims (other than routine, non-contested claims for
benefits) pending or, to the knowledge of Company or Stockholder, threatened
against the Plans, or any administrator or fiduciary thereof, which could result
in any liability.
4.16.(c) Neither Company nor any ERISA Affiliate nor any of their
employees, stockholders, or directors have engaged in any transaction in
connection with which any of them would be subject either to civil penalty
assessed pursuant to Section 502 of ERISA or a tax imposed by Section 4975 of
the Code. The execution and performance of this Agreement will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. None of the assets of any of the Plans is or has been invested
in any property constituting employer real property or any employer security
within the meaning of Section 407(d) of ERISA.
4.16.(d) Full payment as of the date hereof has been made of (i) all
amounts which Company and any ERISA Affiliate of Company are required, under the
terms of all Plans, to have paid as contributions to such Plans. Further, no
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, exists with respect to any Plan, nor
has there been any lien imposed under Section 412(n) of the Code. The execution
and performance of this Agreement will not constitute a stated triggering event
under any Plan that will result in any payment (whether of severance pay or
otherwise) becoming due to any employee of Company or any ERISA Affiliate of
Company.
4.16.(e) Neither Company nor any ERISA Affiliate currently maintains,
administers or contributes, or at any time in the past has maintained,
administered or contributed to a multiemployer plan as defined in Section 3(37)
of ERISA, or a defined benefit plan as defined under Section 3(35) of ERISA with
respect to the Matkon Business.
4.16.(f) Company covenants and agrees that it shall be solely liable and
responsible for, and shall pay, all claims, if any, arising under each employee
benefit plan, arrangement, or practice of Company (other than accrued vacation
as of the date hereof), including but not limited to, all claims for sick pay or
severance pay or similar
18
arrangements and Company shall offer coverage to any employee as required by
COBRA.
4.17. Employment Compensation. Schedule 4.17 contains a true and correct
list of all Affected Employees (and any current consultants) who perform
services in connection with the Matkon Business. In the case of salaried
employees such list identifies the current annual rate of compensation (and
anticipated bonus payments) for each employee and in the case of hourly or
commission employees identifies the rate of compensation.
4.18. Intellectual Property.
4.18.(a) Schedule 4.18.(a) contains a complete list (other than items
set forth on Schedules 1.1(a) and 4.14(b)) and an accurate functional
description by category and indication of status (completed or in process) of
all Patents, Trademarks, Software and Licenses-In which are owned, licensed by,
licensed to, used or held for use in the Matkon Business as such Matkon Business
is currently conducted (other than "off the shelf" software, the license fees
for which are immaterial), or as to which Company has a contractual right.
4.18.(b) The rights of Company in and to each item of the Intellectual
Property other than Intellectual Property subject to Licenses-In ("OWNED
INTELLECTUAL PROPERTY") are owned outright by Company, free and clear of any
security interests. Except as set forth on Schedule 4.18(a) all of Company's
rights in and to such Intellectual Property are freely assignable in its own
name, including the right to create derivatives, and Company is under no
obligation to pay any royalty or other compensation to any third party or to
obtain any approval or consent for use of any of the Owned Intellectual
Property. None of the Owned Intellectual Property is subject to any outstanding
judgment, order, decree, stipulation, injunction or charge; no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand is
pending or, to the knowledge of Company or Stockholder, threatened, which
challenges the legality, validity, enforceability, use or ownership of any of
the Owned Intellectual Property; and, except pursuant to the Licenses-Out,
Company has never agreed to indemnify any person for or against any
interference, infringement, misappropriation, or other conflict with respect to
Owned Intellectual Property.
4.18.(c) No material breach or default (or event which with notice or
lapse of time or both would result in a material breach or default) by Company
exists under any License-In or other agreement pursuant to which Company uses
any Intellectual Property, and, subject to obtaining any necessary consents to
transfer such licenses, the consummation of the transactions contemplated by
this Agreement will not violate or conflict with or constitute a breach or
default (or an event which, with notice or lapse of time or both, would
constitute a breach or default) or result in a forfeiture under, or constitute a
basis for termination of, any such License-In or other agreement.
19
4.18.(d) Company owns or has the right to use all the Intellectual
Property necessary to provide, produce, sell and license the Software, systems,
services and products currently provided, produced, sold and licensed by the
Matkon Business, and to conduct Matkon Business as presently conducted, and,
subject to obtaining any necessary consents to the transfer of Licenses-In, the
consummation of the transactions contemplated hereby will not alter or impair
any such rights, including any right of Company to use or sublicense any
Intellectual Property owned by others. The Intellectual Property includes all
patents, trademarks, trade names, service marks, copyrights and trade secrets,
and the Software (together with the Licenses-In) includes all software, which
are necessary to operate the Matkon Business as it is presently conducted.
4.18.(e) The Owned Intellectual Property does not infringe any
trademark, trade name, copyright, trade secret, patent, right of publicity,
right of privacy or other proprietary right of any person give rise to an
obligation to render an accounting to any person as a result of co-authorship,
co-invention or an express or implied contract for any use or transfer. Company
has received no notice of any adversely held patent, invention, trademark,
copyright, service xxxx, trade name or trade secret of any other person alleging
or threatening to assert that Company's use of any of the Intellectual Property
infringes upon or is in conflict with any intellectual property or proprietary
rights of any third party. Neither Company nor Stockholder has any knowledge of
any basis for any charge or claim, threatened claim or any suit or action
asserting any such infringement or conflict by the Owned Intellectual Property
or asserting that Company does not have the legal right to own, enforce, sell,
license, sublicense, lease or otherwise use any Owned Intellectual Property, and
neither Company nor Stockholder has any knowledge of any facts which should give
such person reason to believe that there exists any basis for such claim,
threatened claim or suit or that any such claim, threatened claim or suit may be
asserted or instituted in the future.
4.18.(f) Company has not sent or otherwise communicated to any other
person any notice, charge, claim or assertion of, and neither Company nor
Stockholder has any knowledge of, any present, impending or threatened
infringement by any other person of any Owned Intellectual Property.
4.18.(g) All Company's Trademarks listed in Schedule 4.18.(a) as having
been issued by, registered with or filed with the United States Patent and
Trademark Office or the corresponding offices of other countries identified in
Schedule 4.18.(a) have been so duly registered, filed in or issued, as the case
may be, and have been properly maintained and renewed in accordance with all
applicable provisions of law and administrative regulations in the United States
and each such other country. Company has used reasonable efforts to protect its
rights in the Owned Intellectual Property and any related apparatus or processes
and to maintain the confidentiality of its trade secrets, know-how and other
confidential Owned Intellectual Property, and neither Company nor Stockholder is
aware of any acts or omissions, the result of which would be to
20
compromise the rights of Company to apply for or enforce appropriate legal
protection of Owned Intellectual Property.
4.18.(h) It is the Company's policy to have each employee of the
Company hired since 1986 to sign an employee nondisclosure agreement
substantially in the form of Schedule 4.18.(h) (and all but approximately five
Matkon-related employees have executed such agreements) and Company is hereby
assigning to Buyer all of Company's rights under such agreements with respect to
the Matkon employees. No employees or independent contractors of Company have
any valid claims or rights to any of the Owned Intellectual Property. To the
knowledge of Company and Stockholder, no employee of Company is a party to or
otherwise bound by any agreement with or obligated to any other person
(including, any former employer) which in any respect conflicts with any
obligation, commitment or job responsibility of such employee to Company under
any agreement to which currently he or she is a party or otherwise.
4.18.(i) Schedule 4.14.(a) identifies each person to whom Company has
sold, licensed, leased or otherwise transferred or granted any interest or
rights to any Owned Intellectual Property, and the date of each such sale,
license, lease or other transfer or grant. Company has previously made available
to Buyer complete and accurate copies of all documents relating to each such
sale, license, lease or other transfer or grant. Company has made available to
Buyer copies of all copyright and trademark registration certificates.
4.18.(j) Without limiting the generality of the foregoing, Company has
never used, adopted, appropriated or disclosed to any person, and none of
Company's owned Software, systems or products incorporates, is based upon or is
derived or adapted from, or was developed using, any proprietary rights, trade
secrets, source code, intellectual property or confidential information of any
other person in violation of any statutory or common law obligation or any
agreement. In addition, Company is not in default under that certain License
Agreement between Company and Healthcare Purchasing Partner, Inc. (formerly
known as Health One) dated July 1, 1992 (the "HEALTH ONE AGREEMENT"); Company
has the right to assign its interest as set forth under the Health One
Agreement, including a nonexclusive license to use the software and the property
covered under the Health One Agreement; and neither Company nor Buyer will have
any further obligations to make royalty payments or satisfy other obligations
under the Health One Agreement.
4.18.(k) Dealers and Distributors. Company does not use any sales
representatives, dealers, distributors or franchisees in connection with the
Matkon Business.
4.19. Product Development and Claims. Schedule 4.19 sets forth the
Company's good faith estimate of the hours as of March 31, 1996 to complete all
Assumed Contracts and fulfill all requirements to allow Unbilled Receivables as
of March 31, 1996 to be billed to customers in accordance with the underlying
contracts. The amount of the
21
"Deferred Revenue" liability for the Matkon Business on the Company's May 20,
1996 balance sheet exceeds the cost (based on Company's current business
practices) of work to be performed by the Matkon Business with respect to the
Unbilled Receivables and any claims or demands of customers of the Matkon
Business outstanding on the date hereof. Schedule 4.19 lists all customers who
have terminated, canceled or allowed to expire service or maintenance agreements
for the Software during the twelve months prior to the date hereof. Except as
set forth in Schedule 4.19, the Software owned by the Company conforms,
functions and operates in all material respects in accordance with its
specifications, and neither Company nor Stockholder is aware of any defects in
the design, coding, implementation or operation of the Software owned by the
Company that would substantially impair the operation of the Software owned by
the Company. The foregoing representation shall not apply with respect to any
Software under development, including, without limitation, the accounts payable
module. The Software owned by the Company complies with all governmental
standards and specifications currently in effect.
4.20. Affiliates' Relationships to Company. All lease, contract,
agreement or other arrangement (other than those relating to employment) with
respect to the Matkon Business between Company and any Affiliate are described
on Schedule 4.20. No Affiliate of the Company has any direct or indirect
interest in any entity which does business with Company or is competitive with
Company's Matkon Business. All obligations of, or services provided to, any
Company Affiliate, and all obligations of, or services provided to Company to
any Company Affiliate, are listed on Schedule 4.20.
4.21. Stockholder. Stockholder owns all of the capital stock of Company.
Stockholder has a net worth in excess of $90,000,000.
4.22. Assets Necessary to Matkon Business. The Purchased Assets include
all property and assets tangible and intangible, and all contracts, leases,
licenses and other agreements (except for the Excluded Assets and Licenses-
In), which are necessary to permit Buyer to carry on, or currently used or held
for use in, the Matkon Business as currently conducted by the Company.
4.23. No Brokers or Finders. Neither Company nor Stockholder nor any of
their respective directors, officers, employees, Stockholder or agents have
retained, employed or used any broker or finder in connection with the
transactions provided for herein or the negotiation thereof.
4.24. Disclosure. No representation or warranty by Company and/or
Stockholder in this Agreement, nor any statement, certificate, schedule,
document or exhibit furnished by Company or Stockholder on the date hereof
pursuant to this Agreement contains or shall contain any untrue statement of
material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading.
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5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Company and
Stockholder, each of which is true and correct on the date hereof (provided that
Company represents to Buyer that Company does not have knowledge that any of
Buyer's representations and warranties set forth herein are false), shall be
unaffected by any investigation heretofore or hereafter made by Company or any
notice to Company, and shall survive the Closing of the transactions provided
for herein.
5.1. Corporate.
5.1.(a) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.1.(b) Corporate Power. Buyer has all requisite corporate power to
enter into this Agreement and the other documents and instruments to be executed
and delivered by Buyer and to carry out the transactions contemplated hereby and
thereby.
5.2. Authority. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Buyer. No other corporate
act or proceeding on the part of Buyer is necessary to authorize this Agreement
or the other documents and instruments to be executed and delivered by Buyer
pursuant hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
will constitute, valid and binding agreements of Buyer, enforceable in
accordance with their respective terms.
5.3. No Violation. Neither the execution and delivery of this Agreement
or the other documents and instruments to be executed and delivered by Buyer
pursuant hereto, nor the consummation by Buyer of the transactions contemplated
hereby and thereby (a) will violate any applicable Law or Order, (b) will
require any authorization, consent, approval, exemption or other action by or
notice to any Government Entity by Buyer (including, without limitation, under
any "plant closing" or similar law) or (c) will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the assets of Buyer under, any term or provision of the charter or
By-Laws of Buyer of any contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Buyer is a party
or by which Buyer or any of its assets or properties may be bound or affected.
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5.4. No Brokers or Finders. Other than Broadview Associates, L.P. (whose
fees will be paid by Buyer), neither Buyer nor any of its directors, officers,
employees or agents have retained, employed or used any broker or finder in
connection with the transactions provided for herein or the negotiation thereof.
5.5. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit
furnished by Buyer on the date hereof pursuant to this Agreement or in
connection with transactions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained therein not misleading.
6. TRANSFEREE LIABILITY
6.1. Payment of Creditors. Company and Stockholder covenant and agree to
pay the amounts due from the Company to its creditors related to the Matkon
Business and the Purchased Assets.
6.2. Severance. Company shall be solely responsible for, and shall pay
or cause to be paid, severance payments, other termination benefits; accrued
sick pay, COBRA obligations or any other Liability, if any, to employees of
Company who may become entitled to such benefits by reason of termination of
employment by Company or the failure by Buyer to hire as an employee of Buyer
any employee of Company. This provision shall not be deemed to imply that any
such benefits or rights exist.
7. OTHER MATTERS
7.1. CHS-Canada Agreement. Stockholder shall cause the agreement of
CHS-Canada Inc. related to the Matkon Business to be assigned to Buyer.
7.2. Libertyville. Company agrees to allow Buyer, without cost, sixty
(60) days from the date hereof in which to vacate the facility located in
Libertyville, Illinois.
7.3. Overland Park. Company and Buyer agree to allow Buyer, without
cost, sixty (60) days from the date hereof in which to vacate the warehouse
located at 9243 Cody, Overland Park, Kansas.
7.4. Allocation of Assets and Space. Company and Buyer agree to comply
with the Plan of Separation attached hereto as Exhibit A, pursuant to which
Buyer shall be allocated sufficient assets and physical space for Buyer to carry
on the Matkon Business as such business has been conducted during the past
twelve months without acquiring assets or rights in addition to the Purchased
Assets other than replacement for Excluded Assets. Company, Stockholder and
Buyer agree and acknowledge that the Plan
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of Separation may require modification and adaptation based upon future events
and needs and the parties agree to cooperate with one another in amending the
Plan of Separation to take into account such developments. In addition,
Company, Stockholder, Buyer and their respective Affiliates hereby agree to
cooperate with each other to facilitate the Plan of Separation and to resolve
any differences or disputes that arise in connection with the Plan of
Separation.
7.5. Noncompetition. Subject to the Closing, and as an inducement to
Buyer to execute this Agreement and complete the transactions contemplated
hereby, and in order to perserve the goodwill associated with the Matkon
Business being acquired pursuant to this Agreement, Company, Stockholder and all
entities controlled by, controlling or under common control with, Company or
Stockholder hereby covenant and agree that for a period of five (5) years from
the date hereof, they will not, directly or indirectly: (i) engage in, continue
in or carry on any business which competes with the Matkon Business, including
owning or controlling any financial interest in any corporation, partnership,
firm or other form of business organization which is so engaged; (ii) consult
with, advise or assist in any way, whether or not for consideration, any
corporation, partnership, firm or other business organization which is now or
becomes a competitor of Buyer in the Matkon Business with respect to the portion
of the business competitive with the Matkon Business (except for the ownership
of five percent (5%) or less of any class of stock of any publicly traded
company); or (iii) knowingly hire, offer to hire, solicit for employment, or
engage directly or indirectly as a consultant, any person who, at any time
during such five year period, has been an employee of Buyer, until such person
has been separated from employment by the Buyer for at least 180 days.
In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this covenant not to
compete shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such over broad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
7.6. Confidential Information. Neither Company nor Stockholder nor their
Affiliates shall at any time subsequent to the Closing use for any purpose,
disclose to any person, or keep or make copies of documents, tapes, discs,
programs or other information storage media containing, any confidential
information concerning the Matkon Business, the Purchased Assets, or the Assumed
Liabilities, all such information being deemed to be transferred to the Buyer
hereunder (other than the Excluded Assets) and except as required for financial
reporting, tax returns and in connection with the Claims. For purposes here of,
"CONFIDENTIAL INFORMATION" shall mean and include, without limitation, all Owned
Intellectual Property in which Company has an interest, all customer and vendor
lists and related information of the Matkon Business, all information concerning
systems, processes, products, costs, prices, sales, marketing and distribution
methods,
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properties and assets, liabilities, financials, employees, all privileged
communications and work product of the Matkon Business, and any other
confidential information related to the Matkon Business.
7.7. Unemployment Compensation. Company shall, upon the request of
Buyer, cooperate with Buyer in any efforts by Buyer to obtain the transfer of
Company's rating or portion of any nonrefundable unemployment compensation funds
applicable to employees hired by Buyer, to the extent transferable.
7.8. Assistance. Through and for a period of six months after the
Closing, Company, Stockholder and their Affiliates shall, and shall cause their
respective employees who have knowledge of the operation and records of the
Matkon Business, to provide without charge such assistance, including but not
limited to providing all non-confidential information in their possession, to
Buyer, at reasonable times and places mutually convenient to the parties, as is
reasonably requested by Buyer in connection with the Matkon Business. In
addition, Company and its Affiliates shall provide such cooperation as Buyer or
its auditors may reasonably request in connection with the preparation of
audited financial statements incorporating or relating to the Matkon Business.
7.9. Records Retention. Company and Buyer shall each provide the other
with such assistance as may be reasonably requested by either of them in
connection with the preparation of financial statements or any return, audit or
other examination by any taxing authority or judicial or administrative
proceedings, and retain and provide the other with access to or copies of any
records or other information related to the Matkon Business or Purchased Assets.
Without limiting the generality of the foregoing, Buyer and Company or their
respective Affiliates shall each retain, for five years after the date hereof,
copies of all records or information related to the Matkon Business or Purchased
Assets, and shall not destroy or otherwise dispose of any such records without
first providing the other party with a reasonable opportunity to review and copy
the same.
7.10. Communication Software License. Company hereby grants to Buyer the
perpetual, royalty-free, transferable right and license to use the Communication
Software. Buyer agrees that such license shall be nonexclusive; provided,
however, that Company may only license Communications Software in connection
with the sale of its other businesses.
7.11. Indemnification Agreement. Buyer covenants to use its best efforts
to cause Company to be released from the indemnification agreement between
Company and the insurance company issuing the bond to San Francisco General
Hospital. In the event that such a release cannot be obtained, Buyer hereby
agrees to indemnify, defend and hold harmless Company from and against all
Liabilities incurred under such indemnification agreement.
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7.12. Transfer of Licenses-In/VAR Contracts. Company shall use its best
efforts (which shall not be deemed to include providing any guarantees, deposits
or other financial assistance) to secure, on Buyer's behalf, agreements between
Buyer and the third parties to each of the Licenses-In/VAR contracts set forth
in Schedule 4.14(b) attached hereto on terms no less favorable than those
contained in such contracts currently.
7.13. Consents to Assignments.
(a) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign or transfer any of
the Assumed Contracts or part thereof or right or benefit arising thereunder or
resulting therefrom if any attempted assignment or transfer thereof, without the
consent of a third party thereto, would constitute a breach thereof. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights of Buyer so that Buyer would not in fact
receive all such rights, Company and Buyer (i) shall cooperate in endeavoring
to obtain such consent promptly at no cost to either party and (ii) if any such
consent is unobtainable, shall cooperate in any reasonable arrangement (the
"Assignment Substitute") designed to provide Buyer the benefits under any such
Assumed Contract or part thereof or any right or benefit arising thereunder or
resulting therefrom, including enforcement for the benefit of Buyer of any and
all rights of Company against a third party arising out of the breach or
cancellation by such third party or otherwise. Buyer shall, to the extent
necessary, perform under the Assignment Substitute without a fee to Company
except for the consideration to be paid under such contract.
(b) Notwithstanding anything in this Section 7.13 to the
contrary, if no consent to assignment is obtained for Assumed Contracts set
forth in Schedule 7.13, Company and Stockholder, jointly and severally, hereby
agree to indemnify Buyer from and against all amounts required to be refunded to
customers, and all lost profits on Unbilled Receivables relating to, such
Assumed Contracts for which no consent is obtained. With respect to Company's
contract with North Broward Hospital District, the indemnification provided for
under this paragraph 7.13(b) shall not apply if consent is denied as a result of
Buyer's failure of performance under such contract after the date hereof (other
than failure of performance solely with respect to the accounts payable module).
Upon obtaining consent to assignment of a contract, the indemnity in this
paragraph will terminate with respect to such contract.
7.14. Franciscan Agreement. Company and Stockholder, jointly and
severally, agree to indemnify Buyer from and against all amounts due and owing
from Company (or Buyer) under the Franciscan Agreement for the provision of an
accounts payable system from a third party provider. Buyer agrees to use its
reasonable efforts to attempt to convince Franciscan to accept one of Buyer's
accounts payable modules in satisfaction of such obligation under the Franciscan
Agreement. Buyer agrees to provide status reports related to progress under the
Franciscan Agreement at the request of the Company.
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8. INDEMNIFICATION
8.1 By Company and Stockholder. Subject to the terms and conditions of
this Article 8, Company and Stockholder, jointly and severally, hereby agree to
indemnify, defend and hold harmless Buyer, and its directors, officers,
employees and controlled and controlling persons (hereinafter "Buyer's
Affiliates"), from and against all Claims (as hereinafter defined) asserted
against, resulting to, imposed upon, or incurred by Buyer, Buyer's Affiliates or
the Matkon Business and Purchased Assets transferred to Buyer pursuant to this
Agreement, directly or indirectly, by reason of, arising out of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Company
or Stockholder contained in this Agreement (regardless of whether such breach is
deemed "material"); (b) the breach of any covenant of Company or Stockholder
contained in this Agreement (regardless of whether such breach is deemed
"material"); (c) any Claim brought by or on behalf of any broker or finder
retained, employed or used by Company or any of its directors, officers,
employees, stockholders or agents in connection with the transactions provided
for herein or the negotiation thereof, whether or not disclosed herein; or (d)
any Claim of or against Company, the Purchased Assets or the Matkon Business
prior to the date hereof arising out of the Company's operation of the Matkon
Business not specifically assumed by Buyer pursuant hereto.
As used in this Article 8, the term "Claim" shall include: (i) all
Liabilities; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, penalties and settlements; (iii) all
demands, claims, suits, actions, causes of action, proceedings and assessments,
whether or not ultimately determined to be valid; and (iv) all costs and
expenses (including, without limitation, interest (including prejudgment
interest in any litigated or arbitrated matter), court costs, fees and expenses,
and expenses of attorneys and expert witnesses) or investigating, defending or
asserting any of the foregoing or of enforcing this Agreement.
8.2. By Buyer. Subject to the terms and conditions of this Article 8,
Buyer hereby agrees to indemnify, defend and hold harmless Company, its
directors, officers, employees and controlled and controlling persons, and
Stockholder, its directors, officers, employees and controlled and controlling
persons from and against all Claims asserted against, resulting to, imposed upon
or incurred by any such person or entity, directly or indirectly, by reason of,
arising out of or resulting from (a) the inaccuracy or breach of any
representation or warranty of Buyer contained in this Agreement (regardless of
whether such breach is deemed "material"); (b) the breach of any covenant of
Buyer contained in this Agreement (regardless of whether such breach is deemed
"material"); (c) the Assumed Liabilities; (d) any Claim brought by or on behalf
of any broker or finder retained, employed or used by Buyer or any of its
directors, officers, employees, stockholders or agents in connection with the
transactions provided for herein or the negotiation thereof, whether or not
disclosed herein; or (e) any Claim arising out of
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Buyer's operation of the Matkon Business subsequent to the date hereof, except
any such claim for which Company indemnifies Buyer pursuant to 8.1 above.
8.3. Indemnification of Third-Party Claims. The following provisions
shall apply to any Claim subject to indemnification which is (i) a suit, action
or arbitration proceeding filed or instituted by any third party, or (ii) any
other form of proceeding or assessment instituted by any Government Entity:
8.3.(a) Notice and Defense. The party or parties to be indemnified
(whether one or more, the "Indemnified Party") will give the party from whom
indemnification is sought (the "Indemnifying Party") prompt written notice of
any such Claim, and the Indemnifying Party will undertake the defense thereof by
representatives chosen by it (subject to the Indemnified Party's reasonable
approval). The assumption of defense shall constitute an admission by the
Indemnifying Party of its indemnification obligation hereunder with respect to
such Claim, and its undertaking to pay directly all costs, expenses, damages,
judgments, awards, penalties and assessments incurred in connection therewith.
Failure to give such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 8, except to the extent the Indemnifying Party is
prejudiced thereby. So long as the Indemnifying Party is defending any such
Claim actively and in good faith, shall not settle such Claim. The Indemnified
Party shall make available to the Indemnifying Party or its representatives
all records and other materials required by them and in the possession or under
the control of the Indemnified Party, for the use of the Indemnifying Party and
its representatives in defending any such Claim, and shall in other respects
give reasonable cooperation in such defense.
8.3.(b) Failure to Defend. If the Indemnifying Party, within 30 days
after notice of any such Claim, fails to defend such Claim actively and in good
faith, the Indemnified Party will have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a judgment
with respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no right to
challenge the Indemnified Party's defense, compromise, settlement or consent to
judgment.
8.3.(c) Indemnified Party's Rights. The Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or compromise any
Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all Liability in respect of such Claim.
8.4. Payment. The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this Article 8. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
pay promptly on behalf of the Indemnified Party, and/or to the Indemnified Party
in reimbursement of any
29
amounts theretofore paid by it, the amount so determined by judgment,
determination, settlement or compromise and all other Claims of the Indemnified
Party with respect thereto, unless in the case of a judgment an appeal is made
from the judgment. If the Indemnifying Party desires to appeal from an adverse
judgment, then the Indemnifying Party shall post and pay the cost of the
security or bond to stay execution of the judgment pending appeal.
8.5. Limitations on Indemnification.
8.5.(a) Time Limitation. No claim or action shall be brought under
this Article 8 for breach of a representation or warranty after the lapse of two
(2) years following the date hereof. Regardless of the foregoing, however, or
any other provision of this Agreement:
(i) There shall be no time limitation on claims on
actions brought for breach of any representation or warranty made
in or pursuant to Sections 4.11(c), 4.12(a), 4.18(b), (e), and
(j).
(ii) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 4.5 may
be brought at any time until the underlying tax obligation is
barred by the applicable period of limitation under federal and
state laws relating thereto (as such period may be extended by
waiver).
(iii) Any claim made by a party hereunder by sending
written demand to the other party specifying the nature of the
breach prior to the termination of the survival period for such
claim shall be preserved despite the subsequent termination of
such survival period.
(iv) If any act, omission, disclosure or failure to
disclose shall form the basis for a claim for breach of more than
one representation or warranty, and such claims have different
periods of survival hereunder, the termination of the survival
period of one claim shall not affect a party's right to make a
claim based on the breach of representation or warranty still
surviving.
8.5.(b) Amount Limitation. Except with respect to claims for breaches
of representations or warranties contained in Sections 4.12(a), 4.18(b), (e) and
(j), 4.23, or 5.4 an Indemnified Party shall not be entitled to indemnification
under this Article 8 for breach of a representation or warranty unless the
aggregate of the Indemnifying Party's indemnification obligations to the
Indemnified Party pursuant to this Article 8 (but for this Section 8.5(b))
exceeds $100,000 but in such event, the Indemnified Party shall be entitled to
indemnification in full for all breaches of representations and/or warranties.
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9. CLOSING
9.1. Documents to be Delivered by Company and Stockholder. At the
closing, which shall take place simultaneously with the execution of this
Agreement. Company and Stockholder shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
9.1.(a) Bills of Sale. Bills of sale and such other instruments of
assignment, transfer, conveyance and endorsement as will be sufficient in the
opinion of Buyer and its counsel to transfer, assign, convey and deliver to
Buyer the Purchased Assets as contemplated hereby.
9.1.(b) Compliance Certificate. A certificate signed by the chief
executive officer of Company that each of the representations and warranties
made by Company and Stockholder in this Agreement is true and correct on the
date hereof, and that Company and Stockholder have performed and complied with
all of Company's and Stockholder's obligations under this Agreement which are to
be performed or complied with on or prior to the date hereof.
9.1(c) Opinion of Counsel. A written opinion of Xxxxx Xxxxx, counsel
to Company and Stockholder, dated as of the Closing Date, addressed to Buyer,
substantially in the form of Exhibit B hereto.
9.1.(d) Certified Resolutions. A certified copy of the resolutions of
the Board of Directors and Stockholder of Company authorizing and approving this
Agreement and the consummation of the transactions contemplated by this
Agreement.
9.1.(e) Real Property Sublease. The real property sublease for the
Overland Park, Kansas (the "REAL PROPERTY SUBLEASE".) property, duly executed by
Company and any necessary lessors.
9.1.(f) Real Property Lease. The real property lease for 0000 Xxxxx
Xxxxxxxx Xxx, Xxxxxxxx, Xxxxxxxx (the "REAL PROPERTY LEASE".) duly executed by
Company and any necessary lessors.
9.1.(g) Articles; By-Laws. A copy of the By-Laws of Company certified
by the secretary of Company, and a copy of the Certificate of Incorporation of
Company certified by the secretary of the Company.
9.1.(h) Other Documents. All other documents, instruments or writings
required to be delivered to Buyer at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as Buyer may
reasonably request.
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9.2. Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver to Company the following documents, in each case duly executed or
otherwise in proper form:
9.2.(a) Cash Purchase Price. The Purchase Price to Company (by wire
transfer).
9.2.(b) Assumption of Liabilities. Such undertakings and instruments
of assumption as will be reasonably sufficient in the opinion of Company and its
counsel to evidence the assumption of the Assumed Liabilities.
9.2.(c) Compliance Certificate. A certificate signed by the chief
executive officer of Buyer that the representations and warranties made by Buyer
in this Agreement are true and correct on the date hereof, and that Buyer has
performed and complied with all of Buyer's obligations under this Agreement
which are to be performed or complied with on or prior to the date hereof.
9.2.(d) Opinion of Counsel. A written opinion of Xxxxxxxx & Xxxxxx,
Ltd., counsel to Buyer, dated as of the Closing Date, addressed to Company, in
substantially the form of Exhibit C hereto.
9.2.(e) Certified Resolutions. A certified copy of the resolutions of
the Board of Directors of Buyer authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement.
9.2.(f) Real Property. The Real Property Lease duly executed by Buyer
and the Real Property Sublease duly executed by Buyer.
9.2.(g) Other Documents. All other documents, instruments or writings
required to be delivered to Company at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as Company may
reasonably request.
10. RESOLUTION OF DISPUTES
10.1. Arbitration. After the Closing, any dispute, controversy or claim
arising out of or relating to this Agreement or the negotiation hereof or entry
hereunto or any contract or agreement entered into pursuant hereto or the
performance by the parties of its or their terms shall be settled by binding
arbitration held in Kansas City, Missouri in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, except
as specifically otherwise provided in this Article 10. This Article 10 shall be
construed and enforced in accordance with the Federal Arbitration Act,
notwithstanding any other choice of law provision in this Agreement.
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Notwithstanding the foregoing:
10.1.(a) Either party may, in its discretion, apply to a court of
competent jurisdiction for equitable relief as provided in Section 11.4. Such an
application shall not be deemed a waiver of the right to compel arbitration
pursuant to this Article.
10.1.(b) No party shall be required to submit to arbitration hereunder
unless all persons who are not parties to this Agreement, but who are necessary
parties to a complete resolution of the controversy, submit to the arbitration
process on the same terms as the parties hereto. Without limiting the generality
of the foregoing, no claim under Article 8 for the indemnification of a third-
party claim shall be subject to arbitration under this Article 10 unless the
third party bringing such claim against the indemnitee shall agree in writing to
the application of this Article 10 of the resolution of such claim.
10.2. Arbitrators. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand for
arbitration, to exceed $1,000,000, then the panel to be appointed shall consist
of three neutral arbitrators; otherwise, one neutral arbitrator.
10.3. Procedures; No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the circumstances and
shall resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator(s). The
arbitrator(s) shall give the parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to reconsider and
modify such decision if any party so requests within ten (10) days after the
decision. Thereafter, the decision of the arbitrator(s) shall be final,
binding, and nonappealable with respect to all persons, including (without
limitation) persons who have failed or refused to participate in the arbitration
process.
10.4. Authority. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or preliminary
relief, and to allocate responsibility for the costs of the arbitration and to
award recovery of attorneys fees and expenses in such manner as is determined to
be appropriate by the arbitrator(s).
10.5. Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. Company, Buyer and Stockholder hereby submit to the in personam
jurisdiction of the Federal and State courts in Chicago, Illinois, for the
purpose of confirming any such award and entering judgment thereon.
10.6. Confidentiality. All proceedings under this Article 10, and
all evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties and by the arbitrators.
33
10.7. Continued Performance. The fact that the dispute resolution
procedures specified in this Article 10 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party.
10.8. Tolling. All applicable statutes of limitation shall be tolled
while the procedures specified in this Article 10 are pending. The parties will
take such action, if any, required to effectuate such tolling.
11. MISCELLANEOUS
11.1. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company and Stockholder will execute and deliver
to Buyer such documents, instruments and consents and take such other action as
Buyer may reasonably request in order to consummate more effectively the
transactions contemplated hereby, to discharge the covenants of Company and
Stockholder, and to vest in Buyer good and valid title to the Matkon Business
and Purchased Assets.
11.2. Disclosures and Announcements. Both the timing and the content of
all disclosure to third parties and public announcements concerning the
transactions provided for in this Agreement by either Company or Buyer shall be
subject to the approval of the other in all essential respects, except that the
Company's approval shall not be required as to any statements and other
information which Buyer may submit to the Securities and Exchange Commission,
the Nasdaq Stock Market, Inc. or Buyer's Stockholders or be required to make
pursuant to any rule or regulation of the Securities and Exchange Commission or
the Nasdaq Stock Market, Inc., or otherwise required by law. Company hereby
agrees to provide its consent, which may not be unreasonably withheld, to
Buyer's presentation of pro forma financial information related to Buyer's
acquisition of the Matkon Business, as may be required under the securities
laws, rules and regulations of the Securities and Exchange Commission.
11.3. Assignment; Parties in Interest.
11.3.(a) Assignment. Except as expressly provided herein, the rights
and obligations of a party hereunder may not be assigned, transferred or
encumbered without the prior written consent of the other parties.
Notwithstanding the foregoing, Buyer may, without consent of any other party,
cause one or more subsidiaries of Buyer to carry out all or part of the
transactions contemplated hereby; provided, however, that Buyer shall,
nevertheless, remain liable for all of its obligations, and those of any such
subsidiary, to Company hereunder. In addition, Buyer may assign this agreement
in connection with the transfer or sale of substantially its entire business to
which this Agreement pertains or
34
in the event of its merger or consolidation with another entity, provided Buyer
will remain liable under this Agreement.
11.3.(b) Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successors and
permitted assigns of the parties hereto. Nothing contained herein shall be
deemed to confer upon any other person any right or remedy under or by reason of
this Agreement.
11.4. Equitable Relief. Company and each Stockholder agree that any
breach by Company or any stockholder of its or their obligations imposed by
Sections 7.6 hereof, will result in irreparable injury to Buyer for which a
remedy at law would be inadequate; and that, in addition to any relief at law
which may be available to Buyer for such breach and regardless of any other
provision contained in this Agreement, Buyer shall be entitled to injunctive and
other equitable relief as a court may grant. This Section 11.4 shall not be
construed to limit Buyer's and Company's right to obtain equitable relief for
other breaches of this Agreement under general equitable standards.
11.5. Law Governing Agreement. This Agreement shall be construed and
interpreted according to the internal laws of the State of Illinois, excluding
any choice of law rules that may direct the application of the laws of another
jurisdiction. Process and pleadings mailed to a party at the address provided
in Section 11.7 shall be deemed properly served and accepted for all purposes.
11.6 Amendment and Modification. Buyer, Company and Stockholder may
amend, modify and supplement this Agreement only in writing.
11.7. Notice. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents (with a written copy to be sent as otherwise
provided herein); or (c) sent to the parties at their respective addresses
indicated herein by registered or certified U.S. mail, return receipt requested
and postage prepaid, or by private overnight courier service. The respective
addresses to be used for all such notices, demands or requests are as follows:
(a) If to Buyer, to:
Enterprise Systems, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
35
(with a copy to)
Xxxxxxxx & Xxxxxx, Ltd.
00 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall Company in writing.
(b) If to Company or Stockholder, to:
Information Handling Services Group, Inc.
00 Xxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
(with a copy to)
TBG Services, Inc.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
or to such other person or address as Company shall furnish to Buyer in writing.
If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this Section, such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this Section, such communication shall be deemed delivered
upon receipt; and if sent by U.S. mail pursuant to this Section, such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal. Any
party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this Section.
11.8. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
11.8.(a) Expenses to be Paid by Company. Company shall pay, and
indemnify, defend and hold Buyer harmless from and against, each of the
following: all
36
fees and expenses of Company's legal, accounting, investment banking and other
professional counsel in connection with the transactions contemplated hereby.
11.8.(b) Other. Except as otherwise provided herein, each of the parties
shall bear its own expenses and the expenses of its counsel and other agents in
connection with the transactions contemplated hereby.
11.8.(c) Costs of Litigation or Arbitration. The parties agree that
(subject to the discretion, in an arbitration proceeding, of the arbitrator as
set forth in Section 10.4) the prevailing party in any action brought with
respect to or to enforce any right or remedy under this Agreement shall be
entitled to recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party in connection
with such action, including without limitation attorneys' fees and prejudgment
interest.
11.9. Entire Agreement. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein.
11.10. Counterparts. 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.
11.11. Headings. The headings in this Agreement and the Schedules are
inserted for convenience only and shall not constitute a part hereof.
11.12. Glossary of Terms. The following sets forth the location of
definitions of capitalized terms defined in the body of this Agreement:
A
Affected Employees.............................................................9
Affiliate......................................................................7
Agreement......................................................................1
Assignment Substitute.........................................................28
Assumed Contracts..............................................................5
Assumed Liabilities............................................................5
B
Balance Sheets................................................................11
beneficial owner...............................................................7
Billed Receivables............................................................12
Buyer..........................................................................1
Buyer's Affiliates............................................................29
37
C
CERCLA........................................................................15
Claim.........................................................................29
Code...........................................................................9
Communications Software........................................................5
Company........................................................................1
confidential information......................................................26
Contracts......................................................................3
Copyrights.....................................................................2
E
Environmental Laws............................................................15
ERISA Affiliate...............................................................18
Excluded Assets................................................................3
F
First Lutheran Invoice.........................................................4
G
Government Entities............................................................7
H
Health One Agreement..........................................................22
I
Indemnified Party.............................................................30
Indemnifying Party............................................................30
Intellectual Property..........................................................2
Inventory......................................................................2
IRS............................................................................9
L
Laws...........................................................................7
Liability......................................................................5
Licenses-In....................................................................2
Licenses-Out...................................................................2
Liens.........................................................................15
Litigation.....................................................................6
Lutheran.......................................................................4
Lutheran Invoices..............................................................4
M
Matkon Business................................................................1
O
Orders.........................................................................7
Owned Intellectual Property...................................................20
P
Patents........................................................................2
Pension Plan..................................................................18
Permitted Liens...............................................................15
38
person.........................................................................7
Personal Property Leases.......................................................2
Plans.........................................................................18
Proprietary Rights.............................................................2
Purchase Price.................................................................7
Purchased Assets...............................................................1
R
Real Property Lease...........................................................32
Real Property Sublease........................................................32
S
Second Lutheran Invoice........................................................4
Software.......................................................................2
Stockholder....................................................................1
T
Trademarks.....................................................................2
U
Unbilled Receivables..........................................................12
W
Waste.........................................................................14
39
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
COMPANY: BUYER:
Continental Healthcare Systems, Inc. Enterprise Systems, Inc.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------------- --------------------------------
Its: Vice-President Its: Chief Financial Officer
------------------------------- -------------------------------
STOCKHOLDER:
Information Handling Services Group, Inc.
By: /s/ Xxxxx Xxxxx
--------------------------------
Its: Vice-President
-------------------------------
40
