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EXHIBIT 10.11
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (the "Agreement"), made this
11th day of February, 1998, is entered into by and among Xxxxx HealthPlan
Services, Inc., a Florida corporation (hereinafter referred to as the
"Purchaser"), Xxxxx HealthPlan Services Acquisition Corporation, a Florida
corporation (the "Merger Subsidiary"), and Health International Inc., a Delaware
corporation (the "Company").
WITNESSETH:
WHEREAS, the respective Boards of Directors of the Purchaser,
Merger Subsidiary and the Company have approved the merger (the "Merger") of the
Merger Subsidiary with and into the Company upon the terms and subject to the
conditions set forth in this Agreement, in accordance with the Florida General
Corporation Law and the General Corporation Law of the State of Delaware (the
"Acts"), with the effect that the Company will become a wholly-owned subsidiary
of the Purchaser;
WHEREAS, concurrently with the execution of this Agreement,
also in order to induce the Purchaser to enter into this Agreement, the
Purchaser is entering into a Support/Voting Agreement (the "Support/Voting
Agreement") with the Supporting Shareholders providing for certain voting and
other restrictions with respect to the shares of the Company Common Stock as
defined herein which are owned by such shareholders.
NOW, THEREFORE, in consideration of the premises and the
mutual promises, representations, warranties and covenants hereinafter set
forth, the parties hereto agree as follows:
I. DEFINITIONS. The capitalized terms used herein will have the
meanings ascribed to them in Exhibit 1.1 hereto. Unless the context otherwise
requires, such capitalized terms will include the singular and plural and the
term "including" shall mean "including but not limited to." Wherever in this
Agreement reference is made to the knowledge of the Company it means the
individual actual knowledge of Xxxxxx X. Xxxxx, M.D., Xxxxxxx X. Xxxxx, and Xxxx
Xxxxxxxx.
II. COVENANTS AND UNDERTAKINGS.
II.1 The Merger. At the Effective Time and in accordance with the
provisions of this Agreement and the Acts, the Merger Subsidiary will be merged
with and into the Company in the Merger, the separate corporate existence of the
Merger Subsidiary shall thereupon cease, and the Company shall be the surviving
corporation (the "Surviving Corporation").
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II.2 Effective Time of Merger. The Merger shall become effective at the
time on the Closing Date (the "Effective Time") of filing of Articles of Merger
with the Department of State of the State of Florida and Articles of Merger with
the Secretary of State of the State of Delaware in accordance with the
provisions of the Acts.
II.3 Effects of Merger. Subject to the Acts, at the Effective Time, the
Merger shall have the following effects:
II.3.1 Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any
shares of capital stock of the Purchaser or the Company:
II.3.1.1 each share of Merger Subsidiary Common Stock
that is issued and outstanding immediately prior to the
Effective Time shall remain outstanding;
II.3.1.2 each share of Company Common Stock that is
issued and outstanding immediately prior to the Effective
Time, except for Dissenting Shares, shall be converted into
the right to receive the Per Share Closing Cash Consideration;
II.3.1.3 each outstanding certificate representing
shares of Company Common Stock, except for Dissenting Shares,
shall be deemed, for all purposes, to evidence only the right
to receive upon surrender of such certificate the
consideration into which such shares of Company Common Stock
are convertible; and
II.3.1.4 each share of Company Common Stock that is
owned by the Company immediately prior to the Effective Time
as treasury stock will be canceled and retired and will cease
to exist, without any conversion thereof.
II.3.1.5 Notwithstanding anything in this Section 2.3
to the contrary, shares of Company Common Stock which are
issued and outstanding immediately prior to the Effective Time
and which are held by Shareholders who have not voted such
shares in favor of the Merger and who shall have properly
exercised their rights of appraisal for such shares in the
manner provided by the Delaware General Corporation Law (the
"Dissenting Shares") shall evidence only the right to receive
the amount, if any, determined to be payable thereon pursuant
to the applicable appraisal rights statute and shall not be
converted or exchangeable for the right to receive the Per
Share Closing Cash Consideration set
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forth herein, unless and until such holder shall have failed
to perfect or shall have effectively withdrawn or lost such
holder's right to appraisal and payment, as the case may be.
If such Shareholder shall have failed to so perfect or shall
have effectively withdrawn or lost such right, such
Shareholder's shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Per Share Closing
Cash Consideration set forth herein without any interest
thereupon. The Company shall give the Purchaser prompt notice
of any Dissenting Shares (and shall also give the Purchaser
prompt notice of any withdrawals of such demands for appraisal
rights) and the Purchaser shall have the right to direct all
negotiations and proceedings with respect to any such demands.
The Company shall not, except with the prior written consent
of the Purchaser, voluntarily make any payment with respect
to, or settle or offer to settle, any such demand for
appraisal rights.
II.4 Exchange of Certificates.
II.4.1 Exchange Agent. Not later than the Effective Time,
the Purchaser shall deposit with the Exchange Agent for the benefit of Company
Shareholders, for exchange in accordance with this Section 2.4, cash in the
amount of the Closing Cash Consideration (hereinafter referred to as the
"Exchange Fund").
II.4.2 Exchange Procedures for Certificates Representing
Shares. No later than five (5) days following the Effective Time, the Exchange
Agent shall mail to each holder of record of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive the Per Share Closing Cash Consideration pursuant to Section
2.3 (i) a letter of transmittal (which shall specify that delivery shall be
effected, and that risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates (or affidavits of loss in lieu thereof) to the
Exchange Agent and shall be in such form and have such other provisions as the
Purchaser may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for the Per Share Closing Cash
Consideration as set forth herein. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with a duly executed and complete
letter of transmittal, the holder of such Certificate shall be entitled to
receive in exchange therefor as soon thereafter as possible either a wire
transfer of same day funds (if the Shareholder pays all wire transfer fees) or a
check, at the Shareholder's option, representing the amount of the Per Share
Closing Cash
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Consideration multiplied by the number of shares represented by such
certificate(s), after giving effect to any required withholding tax, if any, and
the shares represented by the Certificate so surrendered shall be canceled
forthwith. No interest will be paid or accrued on the Per Share Closing Cash
Consideration. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered on the transfer records of the Company, the
transferee shall only be entitled to the Per Share Closing Cash Consideration
for each share so transferred if the Certificate representing such shares of
Company Common Stock held by such transferee is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.4, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon surrender the Per Share Closing Cash Consideration as provided in
this Article II.
II.4.3 Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no part of the Per Share
Closing Cash Consideration shall be paid to any holder, until the holder shall
surrender the Certificate as to which such Per Share Closing Cash Consideration
relates as provided in this Section 2.4.
II.4.4 No Further Ownership Rights in Company Common Stock.
The Per Share Closing Cash Consideration paid pursuant to this Article II shall
be deemed to have been issued in full satisfaction of all rights pertaining to
the shares of Company Common Stock and from and after the Effective Time there
shall be no further registration of transfers on the stock transfer books of the
Company of shares of Company Common Stock. If, after the Effective Time,
Certificates are presented to the Purchaser or the Company for any reason, they
shall be canceled and exchanged as provided in this Section 2.4.
II.4.5 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to Company Shareholders for six months
after the Effective Time shall be delivered to the Purchaser, upon demand
thereby, and holders of shares of Company Common Stock who have not theretofore
complied with this Section 2.4 shall thereafter look only to the Purchaser for
payment of any claim to the Per Share Closing Cash Consideration.
II.4.6 No Liability. None of the Purchaser, the Company or
the Exchange Agent shall be liable to any person in respect of any part of the
Per Share Closing Cash Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificates
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shall not have been surrendered prior to seven years after the Effective Time of
the Merger (or immediately prior to such earlier date on which any part of the
Per Share Closing Cash Consideration would otherwise escheat to or become the
property of any governmental authority), any such cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
the Acts, become the property of the Purchaser, free and clear of all claims or
interest of any person previously entitled thereto.
II.4.7 Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by the Purchaser, on
a daily basis. Any interest and other income resulting from such investments
shall be paid to the Purchaser upon termination of the Exchange Fund pursuant to
Section 2.4.5.
II.4.8 Lost, Stolen or Destroyed Certificates. In the event
any Certificate of Company Common Stock shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by Purchaser,
the posting by such Person of a bond in the amount of the Per Share Closing Cash
Consideration multiplied by the number of shares represented thereby as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Per Share Closing Cash Consideration upon receipt of
such affidavit in respect of the Company Common Stock represented by such
Certificate pursuant to this Agreement.
II.5 Treatment of Stock Options. Each holder of an option to
purchase shares of Company Common Stock that is outstanding at the Effective
Time (a "Company Option") shall prior to the Closing cancel and terminate such
options in exchange for a cash payment from the Company equal to (i) the total
number of shares of Company Common Stock subject to the unexercised portion of
such Company Option, determined by assuming that such Company Option is
immediately vested and exercisable in full, multiplied by (ii) the excess of (x)
the Per Share Option Consideration over (y) the per share exercise price
specified in such Company Option. The total amount paid by the Company in
cancellation of all the Company Options shall not exceed $2,606,000. The Company
shall take all action necessary to ensure that between the date of this
Agreement and the Effective Time, no outstanding options or other rights to
purchase Company securities are exercised except for the conversion of the
Company's Preferred Stock as contemplated by Section 3.3 hereof. Prior to the
Effective Time, the Company shall take all action necessary and shall cause all
Current Option Holders to take all action necessary to amend the Company's Stock
Option Plans and all outstanding option agreements thereunder so as to
accommodate the foregoing termination of all outstanding
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options in exchange for the right to receive cash immediately prior to the
Effective Time. The actions to be taken by the Company with respect to the
Company Options pending the Closing, as described in this Section 2.5, shall
specifically be deemed to be contemplated and permitted by this Agreement,
notwithstanding any other provisions of this Agreement to the contrary. At the
Closing, the Purchaser will contribute $2,606,000 to the Company as a capital
contribution to replenish capital used by the Company in terminating the options
as specified in Section 2.5 above.
II.6 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Company shall become the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended as provided
by law.
II.7 Bylaws. The Bylaws in the form of Exhibit 2.7 hereto shall
become the Bylaws of the Surviving Corporation, until thereafter amended as
provided by law.
II.8 Directors. The directors of the Merger Subsidiary immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
and shall hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
II.9 Officers. The officers of the Surviving Corporation shall be
the officers of the Company at the Effective Time and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation and
Bylaws of the Surviving Corporation, or as otherwise provided by law.
II.10 HSR Act Filings. As promptly as practicable after the
execution of this Agreement, and in any event not later than the fourteenth (14)
business day following the date of this Agreement, the Purchaser and the Company
shall, if required, in cooperation with each other, make the required filings in
connection with the transactions contemplated by this Agreement under the HSR
Act with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice, and, as promptly as practicable from time to time
thereafter, each party shall make all such further filings and submissions, and
take such further action, as may be required in connection therewith. The
Purchaser shall be solely responsible for payment of the fee required for making
applications under the HSR Act. The Purchaser and the Company shall each request
early termination of the waiting period with respect to such filings. Each party
shall furnish the other all information in its possession necessary for
compliance by the other with the provisions of this Section 2.10. The Purchaser
and
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the Company shall each notify the other immediately upon receiving any request
for additional information with respect to such filings from either the
Antitrust Division of the Department of Justice or the Federal Trade Commission
and the party receiving the request shall use its best efforts to comply with
such request as soon as possible. Neither party shall withdraw any such filing
or submission without the written consent of the other party.
II.11 Conduct of the Business of the Company Prior to Closing.
Except (i) with the prior consent in writing of Purchaser, (ii) as provided
otherwise in this Agreement or (iii) as set forth on Schedule 2.11.1 of the
Disclosure Letter, the Company covenants that, between the date of this
Agreement and the Closing Date:
II.11.1 The Company will conduct its business only in the
ordinary course, and it will: (a) use its commercially reasonable efforts to
preserve the organization of the Company intact and to preserve the goodwill of
clients, customers and others having business relations with the Company; (b)
maintain the properties of the Company in the same working order and condition
as such properties are in as of the date of this Agreement, reasonable wear and
tear excepted; (c) keep in force at no less than the present limits all existing
bonds, letters of credit and policies of insurance insuring the Company, its
performance and its respective properties (except to the extent such bonds,
letters of credit and policies of insurance expire on their own terms and are
replaced or renewed with bonds, letters of credit and policies of insurance
containing substantially the same coverage as was contained in the expiring
bond, letter of credit and policy of insurance); (d) not enter into any
contract, commitment, arrangement or transaction of the type required to be
listed on Schedules 3.4, 3.7, 3.10,3.14.2(i), 3.14.2(ii) (unless the term of
such contract, commitment, arrangement or transaction does not exceed one year
and the aggregate amount of all payments due thereunder does not exceed
$100,000), 3.17 or 3.20 of the Disclosure Letter or suffer, permit or incur any
of the transactions or events described in Section 3.10 hereof (except for (i)
the payment of any health, disability and life insurance premiums which may
become due, (ii) contributions or distributions required to be made (and not
discretionary) pursuant to the terms of any Benefit Plans, hereinafter referred
to as "Permitted Employee Distributions")) to the extent such events or
transactions are within the control of the Company; (e) not make or permit any
change in the Company's Certificate of Incorporation or Bylaws, or in its
authorized, issued or outstanding securities; (f) not issue any security except
as contemplated by Section 2.5 hereof, or grant any stock option or right to
purchase any security of the Company, issue any security convertible into such
securities, purchase, redeem, retire or otherwise acquire any of such
securities, or agree to do any of the foregoing or declare,
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set aside or pay any dividend or other distribution in respect of such
securities; (g) not make any contribution to or distribution on behalf of or to
any employee of the Company (except Permitted Employee Distributions); (h) not
make any capital expenditure which when aggregated with all other capital
expenditures for the period exceeds the sum of $100,000; and (i) promptly advise
Purchaser in writing of any matters arising or discovered after the date of this
Agreement which, if existing or known at the date hereof, would be required to
be set forth or described in this Agreement or the Disclosure Letter.
II.11.2 The Company will not make any material change in its
respective banking or safe deposit arrangements or grant any powers of attorney.
A list of all bank accounts, safe deposit boxes (and the contents thereof) and
powers of attorney of the Company and of all persons authorized to act with
respect thereto is set forth in Schedule 2.11.2 of the Disclosure Letter.
II.11.3 Except as otherwise required by GAAP, the Company
will not make any changes in its accounting methods or practices.
II.11.4 The Company will not (i) allow its capitalized lease
obligations on the Closing Date to be greater than $800,000 plus any capitalized
leases approved by Purchaser after the date of this Agreement or otherwise
permitted by this Agreement less normal amortization accruals since September
30, 1997, (ii) allow its adjusted working capital defined as current assets but
excluding the effect of any option payments or capital contributions
contemplated by Section 2.5 hereof, less current liabilities as determined in
accordance with GAAP to be less than $2,660,307 exclusive of any Transaction
Expenses on the Closing Date, or (iii) allow any material negative change in the
equipment, other assets or liability accounts as these accounts existed on the
Financial Statements at December 31, 1997, other than for normal depreciation of
equipment and for Transaction Expenses.
II.12 Intercompany Accounts and Services. Prior to or at the
Closing, the Company will take all actions necessary to settle as of the Closing
all cash overdrafts, loans, advances, intercompany payables or receivables,
indebtedness and other accounts between the Company, on the one hand, and any
employee or any Affiliate of any employee.
II.13 Examination of Property and Records. Between the date of this
Agreement and the Closing Date, the Company will allow Purchaser, its counsel
and other representatives full access to all the books, records, files,
documents, assets, properties, contracts and agreements of the Company which may
be reasonably requested, and shall furnish Purchaser, its officers and
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representatives during such period with all information concerning the affairs
of the Company which may be reasonably requested. Purchaser will conduct any
investigation in a manner which will not unreasonably interfere with the
business of the Company.
II.14 Employment Agreements. The Company will use its commercially
reasonable efforts to cause those employees identified on Exhibit 2.14(a) to
enter into, at the Closing, Employment Agreements substantially in the form set
forth in Exhibit 2.14(b).
II.15 Consents and Approvals. The Company will use its commercially
reasonable efforts to obtain the waiver, consent and approval of all Persons
whose waiver, consent or approval (i) is required or advisable in order to
consummate the transactions contemplated by this Agreement or (ii) is required
by any material agreement, lease, instrument, arrangement, judgment, decree,
order or license to which the Company or any Affiliate of the Company is a party
or subject to on the Closing Date and (a) which would prohibit, or require the
waiver, consent or approval of any Person to such transactions or (b) under
which, without such waiver, consent or approval, such transactions would
constitute an occurrence of default under the provisions thereof, result in the
acceleration of any obligation thereunder or give rise to a right of any party
thereto to terminate its obligations thereunder. All required written notices,
waivers, consents and approvals from Persons are listed on Schedule 3.9 of the
Disclosure Letter and except as waived by the Purchaser in writing, at or prior
to Closing, the consents shall be produced at Closing in form and content
reasonably satisfactory to Purchaser.
II.16 Access to Business Records. Prior to Closing, the Company
shall cause any Controlling Shareholder or any Affiliates thereof, who possess
documents required for the performance of the Company's businesses to transfer
such documents to the Company. Such Controlling Shareholders may make copies or
extracts from such books and records prior to transfer at their sole expense.
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II.17 Employee Matters.
II.17.1 After the Closing until such date as the Company's
employees commence participation in Purchaser's employee benefit plans, as
described in the next sentence (the "Plan Transfer Date"), Purchaser shall take
whatever action is necessary or appropriate to cause the Surviving Corporation
to maintain the participation, sponsorship and/or maintenance of all of the
Company's employee benefit plans except those identified on Exhibit 2.17.1. From
and after the Plan Transfer Date, all employees of the Company shall become
participants in the employee benefit plans and programs maintained by the
Purchaser for similarly situated employees of the Purchaser, which plans shall
be substantially comparable to those of the Company, except as otherwise
mutually agreed by the Company and the Purchaser. Such employee benefit plans
that are health benefit plans shall (i) recognize expenses and claims that were
incurred by such employees in the year in which the Closing Date occurs and
recognized for similar purposes under the Company's plans as of the Closing Date
and (ii) provide coverage (without any required waiting period) for pre-existing
health conditions to the extent covered under the applicable plans or benefit
programs of the Company as of the Closing Date. In addition, such employee
benefit plans and programs shall credit such employees with years of service
with the Company for all plan purposes, provided that no such crediting shall be
required to the extent that it would result in a duplication of benefits or
require contributions for years prior to the Closing Date.
II.17.2 The Company shall provide Purchaser with any
information which Purchaser shall reasonably request concerning the employees of
the Company (the "Employees"), and shall cooperate with, and assist, Purchaser
with respect to the commencement of participation of any Employee in the
Purchaser's benefit plans or arrangements.
II.18 Affiliated Contracts. At or prior to Closing, the Company
shall cause the Controlling Shareholders and their Affiliates to transfer to the
Company any contracts the revenues from which are included in the revenues of
the Company but which are in the name of the Controlling Shareholders or their
Affiliates and any assets which have been paid for by the Company but which are
owned by the Controlling Shareholders or their Affiliates, as opposed to the
Company. All such assets and contracts are listed on Schedule 2.18 of the
Disclosure Letter.
II.19 Alternative Proposals. Prior to the Closing Date, the Company
will not, nor shall it permit its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) to, initiate, solicit or encourage, directly or
indirectly,
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any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its shareholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or purchase of (i) all or any significant portion of the assets of
the Company, or (ii) 25% or more of the outstanding shares of Company Preferred
Stock and/or Company Common Stock (any such proposal or offer being hereinafter
referred to as an "Alternative Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Alternative Proposal (excluding the
transactions contemplated by this Agreement), or otherwise facilitate any effort
or attempt to make or implement an Alternative Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or its board of
directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Alternative Proposal; (B) engaging in any negotiations or
discussions with or providing any information to any person in response to an
unsolicited bona fide written Alternative Proposal by any such Person, if and
only to the extent that, in each such case referred to above, the board of
directors of the Company believes in good faith (after consultation with its
financial advisors) that such Alternative Proposal is reasonably likely to be
capable of being completed, taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the proposal and would,
if consummated, result in a transaction materially more favorable to the
Company's stockholders from a financial point of view than the transaction
contemplated by this Agreement and the board of directors of the Company
determines in good faith after consultation with outside legal counsel that such
action is required in order for its directors to comply with their respective
fiduciary duties under applicable law. Nothing in this Section 2.19 shall (x)
permit the Company to terminate this Agreement except as permitted by Section
7.3 hereof, (y) permit the Company to enter into any agreement with respect to
an Alternative Proposal for as long as this Agreement remains in effect (it
being agreed that for as long as this Agreement remains in effect, the Company
shall not enter into any agreement with any person that provides for, or in any
way facilitates, an Alternative Proposal), or (z) affect any other obligation of
the Company under this Agreement.
II.20 Indemnification. (a) For three (3) years after the Effective
Time, Purchaser shall provide each present and former director and officer of
the Company (when acting in such capacity) determined as of the Effective Time
(the "Indemnified Parties") with indemnification rights and the liability
insurance coverage at least as favorable to the Indemnified Parties in terms of
coverage amounts and terms of coverage amounts and terms as the coverage set
forth in the indemnity provisions and policies attached as Schedule 2.20 of the
Disclosure Letter which is the
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coverage existing on this date provided that if such insurance coverage is not
available at rates reasonably correspondent to the rates charged at the
Effective Time (adjusted for inflation), the Purchaser shall be obligated only
to buy such coverage as is available for such rates as can be commercially
obtained.
(b) If the Purchaser or any of its successors or assigns
(i) shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any Person,
then and in each such case, proper provisions shall be made so that the
successors and assigns of the Purchaser shall assume all of the obligations set
forth in this Section.
(c) The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
II.21 Letter of Credit. On or prior to February 20, 1998, the
Purchaser shall obtain a binding commitment in form and substance acceptable to
the Company from NationsBank N.A. in accordance with the application attached
hereto as Exhibit 2.21 to issue a Letter of Credit in favor of Xxxxxx X. Xxxxx,
M.D., Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxxx (the "Company Officers")
guaranteeing in full all payments to be made to the Company Officers under and
for the full term of their respective employment agreements (the "Letter of
Credit"). On or prior to the Closing, the Purchaser shall deliver to the Company
and the Company Officers written evidence of (a) advance payment in full of all
payments under the Letter of Credit for a three-year term and (b) issuance by
the Bank of the Letter of Credit.
II.22 Net Worth Covenant. At the Effective Time, the Shareholders
Equity of the Company determined in accordance with GAAP applied on a basis
consistent with prior periods (after subtracting the Company option payments but
adding back the amount of the capital contribution by Purchaser called for by
Section 2.5) will not be less than $3,768,906 without taking into account the
Company's Transactional Expenses.
II.23 The Company will deliver to the Purchaser within five business
days of the execution of this Agreement an opinion of counsel acceptable to the
Purchaser to the effect that the Support/Voting Agreements are enforceable in
accordance with their terms except as enforceability may be limited by the
General Qualifications contained in Sections 11-14 and Limitations set forth in
Sections 18-20 set forth in the Legal Opinion Accord of the ABA Section of
Business Law (1991).
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III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchaser as follows:
III.1 Residency, Organization, Standing and Foreign
Qualification.
III.1.1 The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation as set forth in Schedule 3.1.1
of the Disclosure Letter and has full corporate power and authority to carry on
its business as it is now being conducted and to own and lease the properties
and assets which it now owns or leases.
III.1.2 The Company and each of its Subsidiaries is now, and
will be at Closing, duly qualified and/or licensed to transact business and in
good standing as a foreign corporation in the jurisdictions listed in Schedule
3.1.2 of the Disclosure Letter, and the character of the property owned or
leased by the Company and each of its Subsidiaries and the nature of the
business conducted by them do not require such qualification and/or licensing in
any other jurisdiction.
III.1.3 Except as disclosed in Schedule 3.1.3 of the
Disclosure Letter, the Company has no Subsidiaries.
III.2 Authority and Status/Ownership of Capital Stock.
III.2.1 The Company has the capacity and authority to execute
and deliver this Agreement, and to perform hereunder without the necessity of
any act or consent of any other Person whomsoever (except as listed on Schedule
3.9 of the Disclosure Letter). The execution, delivery and performance by the
Company of this Agreement and each and every agreement, document and instrument
provided for herein have been duly authorized and approved by the Board of
Directors of the Company. This Agreement and each and every agreement, document
and instrument to be executed, delivered and performed by the Company in
connection herewith constitute or will, when executed and delivered, constitute
the valid and legally binding obligations of such party enforceable against such
party in accordance with their respective terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally. Attached as Schedule
3.2.1 of the Disclosure Letter are true, correct and complete copies of the
Certificate of Incorporation and Bylaws of the Company and of each Subsidiary of
the Company.
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III.2.2 Attached as Schedule 3.2.2 to the Disclosure Letter
is a true and complete list of the Shareholders of the Company as of a recent
date.
III.3 Capitalization. The authorized capital stock of the Company
consists of 5,000,000 shares of common stock, par value $0.10 per share, of
which 2,772,867 are issued and outstanding as of the date of this Agreement, and
1,000,000 shares of preferred stock, no par value ("Company Preferred Stock"),
of which 25 shares are issued and outstanding as of the date of this Agreement.
Prior to Closing, the Outstanding Preferred Shares will be converted to 50,000
shares of common stock and one warrant will be exercised for 4,000 shares of
common stock, leaving 2,826,867 shares of common issued and outstanding as of
the Effective Time. All outstanding securities of each Subsidiary of the
Company, the entire authorized capital stock, the amount of shares issued and
outstanding and the amount of shares held in treasury for each such Subsidiary
are as set forth on Schedule 3.3 of the Disclosure Letter. All of the
outstanding shares of the Company and each Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of any preemptive rights.
Except as set forth on Schedule 3.3 of the Disclosure Letter, all of the
outstanding shares of each Subsidiary are owned by the Company, in each case
free and clear of all liens, claims, charges and encumbrances of any nature
whatsoever except those disclosed in Schedule 3.7 of the Disclosure Letter, and
the authorization or consent of no other person or entity is required in order
to consummate the transactions contemplated herein by virtue of any such person
or entity having an equitable or beneficial interest in the Company or the
capital stock of the Company. Except for options covering 511,000 shares of the
Common Stock of the Company as set forth on Schedule 3.3 of the Disclosure
Letter (which identifies all persons holding options with the amount so held,
the exercise price and the termination date thereof as well as whether such
options are considered qualified or nonqualified options under the Code), there
are no outstanding options, warrants, calls, commitments or plans by the Company
or any Subsidiary to issue any additional shares of its capital stock, to pay
any dividends on such shares or to purchase, redeem, or retire any outstanding
shares of its capital stock, nor are there outstanding any securities or
obligations which are convertible into or exchangeable for any shares of capital
stock of the Company or any Subsidiary.
III.4 Absence of Equity Investments. Except as described in Schedule
3.4 of the Disclosure Letter, the Company does not, either directly or
indirectly, own of record or beneficially any shares or other equity interests
in any corporation, partnership, limited partnership, joint venture, trust or
other business entity. No officer or director of the Company or any Subsidiary
or other Affiliate of such person, directly or indirectly, owns of
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record or beneficially any shares or other equity interests in any corporation
(except as a shareholder holding less than one percent (1%) interest in a
corporation whose shares are traded on a national or regional securities
exchange or in the over-the-counter-market), partnership, limited partnership,
joint venture, trust or other business entity, all or any portion of the
business of which is competitive with that of the Company.
III.5 Liabilities and Obligations of the Company.
III.5.1 Attached as Schedule 3.5.1(a) are true, correct and
complete copies of the Company's audited balance sheets as of September 30,
1995, 1996 and 1997 and the related statements of income and cash flows for the
fiscal years ending on September 30, 1995, 1996 and 1997 (the "Financial
Statements"). Also attached as Schedule 3.5.1(a) are true, correct and complete
copies of the Company's unaudited balance sheet as of December 31, 1997, and the
related unaudited statement of income and cash flows for the three-month period
then ended (the "Interim Financial Statements"). Except as specifically
described in Schedule 3.5.1(b), the Financial Statements and the Interim
Financial Statements fairly present the Company and its Subsidiaries' current
operations and financial condition as of the dates thereof.
III.5.2 Except as described in Schedule 3.5.1(a) and
3.5.1(b), the Company has no liability or obligation related to its assets or
business (whether accrued, absolute, contingent or otherwise), except for (i)
the liabilities and obligations of the Company that are disclosed or reserved
against in the Interim Financial Statements, to the extent and in the amounts so
disclosed or reserved against, (ii) liabilities that were incurred or accrued in
the ordinary course of the Company's business since the date of the Interim
Financial Statements, (iii) the liabilities and obligations of the Company under
the Material Agreements, and (iv) those nonmaterial liabilities and obligations
of the Company under all contracts and agreements other than the Material
Agreements.
III.6 Taxes. The Company has duly filed all federal, and material
state, local and foreign income, franchise, excise, real and personal property
and other Tax returns and reports (including, but not limited to, those filed on
a consolidated, combined or unitary basis) required to have been filed by the
Company prior to the date hereof. All of the foregoing returns and reports are
true and correct in all material respects, and the Company has paid or, prior to
the Closing Date, will pay all Taxes, interest and penalties required to be paid
in respect of the periods covered by such returns or reports to any federal,
state, foreign, local or other taxing authority. The Company has paid or made
adequate provision in the Interim Financial
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Statements for all Taxes payable in respect of all periods ending on or prior to
the date of the Interim Financial Statements. Neither the Company nor any of its
Subsidiaries has any material liability for any Taxes in excess of the amounts
so paid or reserves so established and neither the Company nor any of its
Subsidiaries is delinquent in the payment of any material Tax, assessment or
governmental charge and none of them has requested any extension of time within
which to file any returns in respect of any fiscal year which have not since
been filed. No deficiencies for any Tax, assessment or governmental charge have
been proposed in writing, asserted or assessed (tentatively or definitely), in
each case, by any taxing authority, against the Company or any of its
Subsidiaries for which there are not adequate reserves. Neither the Company nor
any of its Subsidiaries is the subject of any Tax audit. As of the date of this
Agreement, there are no pending requests for waivers of the time to assess any
such Tax, other than those made in the ordinary course and for which payment has
been made or there are adequate reserves. For the purposes of this Agreement,
the term "Tax" shall include all federal, state, local and foreign taxes
including interest and penalties thereon. The Company has not filed an election
under Section 341(f) of the Code to be treated as a consenting corporation.
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III.7 Ownership of Assets, Real Estate, Leases and Personal
Property. Schedule 3.7 of the Disclosure Letter is a complete and correct list
and brief description as of the date of this Agreement of all real property and
items of personal property which are owned and have a book value in excess of
$100,000 net of the reserve for depreciation, and all real property and all
material items of personal property which are leased or licensed by the Company
under leases relating to assets which are material to the operation of the
Company or which provide for payments throughout the lease term of more than
$25,000. The Company has good and marketable title to all of its property and
assets, other than leased or licensed property, including those listed and
described in Schedule 3.7 of the Disclosure Letter as owned property and assets,
in each case free and clear of any liens, security interests, claims, charges,
options, rights of tenants or other encumbrances, except as disclosed or
reserved against in Schedule 3.7 of the Disclosure Letter (to the extent and in
the amounts so disclosed or reserved against) and except for liens arising from
current Taxes not yet due and payable. Each of the leases, licenses and
agreements described in Schedule 3.7 of the Disclosure Letter is in full force
and effect and constitutes a legal, valid and binding obligation of the Company
and, to the knowledge of the Company, the other respective parties thereto and
is enforceable in accordance with its terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally, and there is not under
any of such leases, licenses or agreements existing any default of the Company
or any other parties thereto (or event or condition which, with notice or lapse
of time, or both, would constitute a default). Neither the Company nor any
Controlling Shareholder, has received any payment from a lessor or licensee in
connection with or as inducement for entering into a lease or license under
which it is a lessee or a licensee. All buildings, machinery and equipment owned
or leased by the Company are in good operating condition and reasonable state of
repair, subject only to ordinary wear and tear. The Company has not received any
notice of a violation of any applicable zoning regulation, ordinance or other
law, regulation or requirement relating to its operations and properties,
whether owned or leased, and, to the knowledge of the Company, there is no such
violation or grounds therefor which could have a Company Material Adverse
Effect. Except pursuant to this Agreement, neither the Company nor any
Controlling Shareholder is a party to any contract or obligation whereby there
has been granted to anyone an absolute or contingent right to purchase, obtain
or acquire any rights in any of the assets, properties or operations which are
owned by the Company or which are used in connection with the business of the
Company.
III.8 Accounts Receivable. All of the accounts receivable of
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the Company as of the date of the Interim Financial Statements are and as of
the Closing Date will have arisen in the ordinary course of business and
represent valid accounts which are not subject to offset or dispute except as
otherwise disclosed to Purchaser in Section 3.8 the Disclosure Letter. The
accounts receivables reserves reflected on the Interim Financial Statements are
as of such date established in accordance with GAAP consistently applied and
any reserves established after such date and prior to the Closing Date will
likewise be established in accordance with GAAP consistently applied. An aged
list of the Accounts Receivable of the Company as of the end of the last month
preceding the date of this Agreement is set forth on Schedule 3.8 of the
Disclosure Letter. To the best knowledge of the Company, the accounts
receivable of the Company are collectible in full net of any reserves thereon.
Except as set forth on Schedule 3.8, no accounts payable of the Company are, as
of the date of this Agreement, over thirty (30) days old.
III.9 Required Filings and Absence of Conflicts. Except as listed in
Schedule 3.9 of the Disclosure Letter, the execution and delivery of this
Agreement by the Company does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the Certificate of
Incorporation, as amended, or Bylaws, as amended, of the Company or any
Subsidiary or violate or constitute an occurrence of default under any provision
of, or conflict with, or result in acceleration of any obligation under, or give
rise to a right by any party to terminate its obligations under, any material
mortgage, deed of trust, conveyance to secure debt, note, loan, lien, lease,
agreement, instrument, or any order, judgment, decree or other material
arrangement to which the Company or any Subsidiary is a party or is bound or by
which the Company's assets are affected. Except as listed or described on
Schedule 3.9 of the Disclosure Letter, no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity is required to be obtained or made by or with respect to the Company, any
Controlling Shareholder or any assets, properties or operations of the Company
or any Controlling Shareholder, in connection with the execution and delivery by
the Company of this Agreement or the consummation of the transactions
contemplated hereby.
III.10 Absence of Changes. Since September 30, 1997, neither the
Company nor any Subsidiary has, nor has anyone on its or their behalf, except as
disclosed on Schedule 3.10 of the Disclosure Letter or as permitted by Section
2.11 hereof:
III.10.1 Transferred, assigned, conveyed or liquidated into
current assets any of its assets or business or entered into any transaction or
incurred any liability or obligation, other than in the ordinary course of its
business;
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III.10.2 Suffered any Company Material Adverse Effect or
become aware of any event or state of facts which may result in any a Company
Material Adverse Effect;
III.10.3 Suffered any destruction, damage or loss to a
material asset or a group of assets that are in the aggregate material to the
business, whether or not covered by insurance;
III.10.4 Suffered, permitted or incurred the imposition of any
lien, charge, encumbrance (which as used herein includes, without limitation,
any mortgage, deed of trust, conveyance to secure debt or security interest) or
claim upon any of its assets, except for any current year lien with respect to
Taxes not yet due and payable;
III.10.5 Committed, suffered, permitted or incurred any
default in any liability or obligation;
III.10.6 Made or agreed to any adverse change in the terms of
any material contract or instrument to which it is a party;
III.10.7 Waived, canceled, sold or otherwise disposed of, for
less than the face amount thereof, any material claim or right which it has
against others or accelerated its collections or its efforts to collect accounts
receivable or otherwise deviated from its normal collection activities
consistent with historic practice in any material respect;
III.10.8 Declared, promised or made any dividend payment,
distribution or other payment to its Shareholders (other than the payment of
reasonable compensation for services actually rendered) or issued any additional
shares or rights, options or calls with respect to the Company's shares, or
redeemed, purchased or otherwise acquired the Company's shares except in
accordance with Section 2.5 hereof, or made any change whatsoever in the
Company's capital structure;
III.10.9 Paid, agreed to pay or incurred any obligation for
any payment for, any contribution or other amount to, or with respect to, any
employee benefit plan (except for the payment of health, disability and life
insurance premiums which had become due and except for contributions or
distributions required to be made (and not discretionary) pursuant to any
Benefit Plans), or paid or agreed to pay any bonus to, or granted or agreed to
grant any increase in the compensation of, the Company's directors, officers,
agents or employees, or made any increase in the pension, retirement or other
benefits of its directors, officers, agents or other employees.
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III.10.10 Committed, suffered, permitted or incurred any
transaction or event which would materially increase its Tax liability for any
prior taxable year;
III.10.11 Incurred any other material liability or obligation
or entered into any transaction other than in the ordinary course of business
(for purposes of this Section, the incurrence of term debt, debt incurred
pursuant to promissory notes and capital leases shall not be considered as
incurred in the ordinary course of business);
III.10.12 Received any notices, or had reason to believe, that
any material customer has taken or contemplates any steps which could materially
disrupt the business relationship of the Company with said person or could
result in the material diminution in the value of the Company as a going
concern;
III.10.13 Paid, agreed to pay or incurred any material
obligation for any payment of any indebtedness except current liabilities
incurred in the ordinary course of business and except for payments as they
become due pursuant to governing agreements as such agreements existed on
September 30, 1997;
III.10.14 Delayed or postponed the payment of any liabilities,
whether current or long term, or failed to pay in the ordinary course of
business any material liability on a timely basis consistent with prior
practice;
III.10.15 Suffered or experienced any material adverse change
in the equipment, other assets or liability accounts;
III.10.16 Acquired or agreed to acquire any capital items with
an aggregate value of more than $100,000; or
III.10.17 Taken any action which would be contrary to the
provisions of Section 2.11.4.
III.11 Litigation. Except as otherwise set forth in Schedule 3.11 of
the Disclosure Letter, there is no suit, action, proceeding, claim or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company and, to the knowledge the Company, there exists no basis
or grounds for any such suit, action, proceeding, claim or investigation. None
of the items described in Schedule 3.11 of the Disclosure Letter, individually
or in the aggregate, if pursued and/or resulting in a judgment, would have a
Company Material Adverse Effect or adversely affect the right of the Company or
the Supporting Shareholders to consummate the transactions contemplated hereby.
III.12 Licenses and Permits; Compliance With Law. The Company holds
all licenses, certificates, permits, franchises and rights
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from all appropriate federal, state or other public authorities necessary for
the conduct of its business and the use of its assets. All such licenses,
certificates, permits, franchises and rights are listed in Schedule 3.12 of the
Disclosure Letter. Except as noted in Schedule 3.12 of the Disclosure Letter,
the Company is presently conducting its business so as to comply in all material
respects with all applicable statutes, ordinances, rules, regulations and orders
of any governmental authority. Further, the Company is not presently charged
with, or, to the knowledge of the Company, under governmental investigation with
respect to, any actual or alleged violation of any statute, ordinance, rule or
regulation, nor presently the subject of any pending or, to the knowledge of the
Company, threatened material adverse proceeding by any regulatory authority
having jurisdiction over its business, properties or operations. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in the termination of any material
license, certificate, permit, franchise or right held by the Company.
III.13 Contracts, Etc. Schedule 3.13 of the Disclosure Letter sets
forth a true and complete list of all contracts, agreements and other
instruments to which the Company is a party which are not listed on Schedules
3.7, 3.14.2(ii), 3.17 or 3.20 of the Disclosure Letter and which involve the
payment by or to the Company of more than $100,000 over the term of the
agreement, and contemporaneously with the delivery of the Disclosure Letter, the
Company has delivered a true and complete copy of each contract, agreement or
instrument listed in Schedules 3.7, 3.13, 3.14.2(ii), 3.17 and 3.20 of the
Disclosure Letter which is written and a summary of the terms of each such
contract or agreement which is oral, certified as such by a duly authorized
officer of the Company. The foregoing notwithstanding Schedule 3.13 of the
Disclosure Letter includes all of the following:
III.13.1 Any contract or commitment which requires services in
excess of $100,000 to be provided or performed by the Company or which
authorizes others to perform services for a third party for, through or on
behalf of the Company, other than those services performed for customers and
clients set forth on Schedule 3.18 of the Disclosure Letter;
III.13.2 Any contract or commitment involving an obligation in
excess of $100,000 which cannot, or in reasonable probability will not, be
performed or terminated within one year from the dates as of which these
representations are made;
III.13.3 Any note receivable;
III.13.4 Any contract or commitment providing for payments
based in any manner upon the sales, purchases, receipts, income or profits of
the Company;
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III.13.5 Any franchise agreement, marketing agreement or
royalty agreement (and with respect to each such agreement Schedule 3.13 of the
Disclosure Letter sets forth the aggregate royalties or similar payment paid or
payable hereunder by the Company as of the date hereof);
III.13.6 Any contract or agreement with a creditor not made in
the ordinary course of business;
III.13.7 Any employment contract or arrangement regarding an
employee or independent contractors which is not terminable by the Company
within thirty (30) days without payment of any amount for any reason whatsoever,
or without any continuing payment of any type or nature, including, without
limitation, any bonuses and vested commissions;
III.13.8 Any contract, agreement, understanding or arrangement
materially restricting the Company from carrying on its business anywhere in the
world;
III.13.9 Any material instrument or arrangement evidencing or
related to indebtedness for money borrowed or to be borrowed, whether directly
or indirectly, by way of purchase money obligation, guaranty, subordination,
conditional sale, lease-purchase or otherwise;
III.13.10 Any contract with any labor organization; and
III.13.11 Any material bond, suretyship arrangement,
guarantee, letter of credit or other performance guarantee document pursuant to
which any obligation of the Company is guaranteed or secured or pursuant to
which the Company has guaranteed or secured the performance or obligation of
another person.
All of the contracts, agreements, policies of insurance or instruments
described in Schedules 3.4, 3.7, 3.13, 3.14.2(i), 3.14.2(ii), 3.17 or 3.20 of
the Disclosure Letter (collectively, the "Material Agreements") are valid and
binding upon the Company and, to the knowledge of the Company, the other parties
thereto and are in full force and effect and enforceable in accordance with
their terms. Neither the Company nor, to the knowledge of the Company, any other
party to any such contract, commitment or arrangement has breached any material
provision of, or is in default under, the terms thereof.
III.14 Intellectual Property; Computer Software.
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III.14.1 Schedule 3.14.1 of the Disclosure Letter sets forth a
complete and correct list and summary description of all material trademarks,
trade names, service marks, service names, brand names, copyrights and patents,
registrations thereof and applications therefor, applicable to or used in the
business of the Company, together with a complete list of all licenses granted
by or to the Company with respect to any of the above. All such trademarks,
trade names, service marks, service names, brand names, copyrights and patents
are owned by the Company, free and clear of all liens, claims, security
interests and encumbrances of any nature whatsoever. The Company is not
currently in receipt of any notice of any violation of, and, to the knowledge of
the Company, it is not violating, the rights of others in any trademark, trade
name, service xxxx, copyright, patent, trade secret, know-how or other
intangible asset.
III.14.2 (i) Schedule 3.14.2(i) of the Disclosure
Letter contains a complete and accurate list of all material computer software
owned by the Company (the "Owned Software"). Except as set forth on Schedule
3.14.2(i) of the Disclosure Letter, the Company has exclusive title to the Owned
Software, free and clear of all claims, including claims or rights of employees,
agents, consultants, customers, licensees or other parties involved in the
development, creation, marketing, maintenance, enhancement or licensing of such
computer software. Except as set forth on Schedule 3.14.2(i) of the Disclosure
Letter, the Owned Software is not dependent on any Licensed Software (as defined
in subsection (ii) below) in order to fully operate in the manner in which it is
intended. No Owned Software has been published or disclosed to any other
parties, except as set forth on Schedule 3.14.2(i) of the Disclosure Letter, and
except pursuant to contracts requiring such other parties to keep the Owned
Software confidential. To the knowledge of the Company, no such other party has
breached any such obligation of confidentiality.
(ii) Schedule 3.14.2(ii) of the Disclosure
Letter contains a complete and accurate list of all software under which the
Company is a licensee, lessee or otherwise has obtained the right to use
software (the "Licensed Software"). Schedule 3.14.2(ii) of the Disclosure Letter
also sets forth a list of all license fees, rents, royalties or other charges
that the Company is required or obligated to pay with respect to Licensed
Software. The Company has the right and license to use, sublicense, modify and
copy Licensed Software, free and clear of any limitations or encumbrances except
as may be set forth in any license agreements listed in Schedule 3.14.2(ii) of
the Disclosure Letter. The Company is in full compliance with all material
provisions of any license, lease or other similar agreement pursuant to which it
has rights to use the Licensed Software. Except as disclosed on Schedule
3.14.2(ii) of the Disclosure Letter, none of the Licensed Software has been
incorporated into or made a part of any Owned
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Software or any other Licensed Software. The Company has not published or
disclosed any Licensed Software to any other party.
(iii) The Owned Software and Licensed
Software constitute all software currently used in or necessary for the conduct
of the businesses of the Company as currently conducted (the "Company
Software"). Schedule 3.14.2(iii) of the Disclosure Letter sets forth a list of
all contract programmers, independent contractors, nonemployee agents and
persons or other entities (other than employees) who have performed material
computer programming services for the Company and identifies all material
contracts and agreements pursuant to which such services were performed. The
transactions contemplated herein will not cause a material breach or default
under any licenses, leases or similar agreements relating to the Company
Software or materially impair the Purchaser's or the Surviving Corporation's
ability to use the Company Software in the same manner as such computer software
is currently used by the Company. The Company is not infringing any intellectual
property rights of any other person or entity with respect to the Company
Software, and to the knowledge of the Company, no other person or entity is
infringing any intellectual property rights of the Company with respect to the
Company Software or is claiming any right, title or interest in the Company
Software or any infringement by the Company of any intellectual property right
which such other person may possess.
(iv) Schedule 3.14.2(iv)(a) of the
Disclosure Letter lists and separately identifies all agreements pursuant to
which the Company has been granted rights to market software owned by third
parties, and Schedule 3.14.2(iv)(b) of the Disclosure Letter lists and
separately identifies all agreements pursuant to which the Company has granted
marketing rights in the Company Software to third parties.
(v) To the knowledge of the Company, the
Company has not taken or failed to take any actions under the law of any
applicable foreign jurisdictions where the Company has marketed or licensed
Company Software that would restrict or limit the ability of the Company to
protect, or prevent it from protecting, its ownership interests in,
confidentiality rights of, and rights to market, license, modify or enhance, the
Company Software.
(vi) Except as set forth in Schedule
3.14.2(i) of the Disclosure Letter, the Owned Software and Licensed Software (a)
includes Year 2000 date conversion and capabilities including, but not limited
to: date data century recognition; calculations which accommodate same century
and multi-century formulas and date values; correct sort ordering; and date data
interface values that reflect the century; (b) automatically compensates for and
manages and manipulates data
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involving dates, including single century formulas and multi-century formulas,
and will not cause an abnormal abend or abort within the application or result
in the generation of incorrect values or invalid outputs involving such date;
(c) provides that all date related user interface functionalities and data
fields include the indication of the correct century; (d) provides that all date
related system to system or application to application data interface
functionalities will include the indication of the correct century; and (e) will
continue to comply with clauses (a) through (d) above. Except as set forth in
Schedule 3.14.2(i), all date processing by Owned Software and Licensed Software
will include four digit year format and recognize and correctly process dates
for leap years.
III.15 Product Warranties and Liabilities. Except as listed on Schedule
3.15 of the Disclosure Letter, the Company has no forms of warranties or
guarantees of its products and services that are in effect or proposed to be
used by it. Schedule 3.15 of the Disclosure Letter sets forth a description of
each pending or, to the knowledge of the Company, threatened material action
under any warranty or guaranty against the Company. The Company has not
incurred, nor does the Company know or have any reason to believe there is any
basis for alleging, any material liability, damage, loss, cost or expense as a
result of any material defect or other deficiency (whether of design, materials,
workmanship, labeling instructions or otherwise) ("Product Liability") with
respect to any product sold or services rendered by or on behalf of the Company
(including any lessee thereof) prior to the Closing Date, whether such Product
Liability is incurred by reason of any express or implied warranty (including,
without limitation, any warranty of merchantability or fitness), any doctrine of
common law (tort, contract or other), any statutory provision or otherwise and
irrespective of whether such Product Liability is covered by insurance.
III.16 Labor Matters. Schedule 3.16 of the Disclosure Letter sets forth
a list of all employees, consultants and independent contractors of the Company
whose compensation for 1997 or expected compensation for 1998 exceeds $75,000
per annum and lists the compensation per annum for such persons. Except as set
forth on Schedule 3.16 of the Disclosure Letter, within the last three (3)
years, the Company has not been the subject of any union activity or labor
dispute, nor has there been any strike of any kind called or threatened to be
called, against the Company. Except as set forth on Schedule 3.16 of the
Disclosure Letter, the Company has not violated any applicable federal or state
law or regulation relating to labor, labor practices or immigration matters. The
Company has no knowledge that there will be any adverse change in relations with
employees and independent contractors of the Company as a result of the
transactions contemplated by this Agreement.
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III.17 Benefit Plans.
III.17.1 Schedule 3.17 of the Disclosure Letter, lists every
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plan, any other written or unwritten employee program, arrangement, agreement or
understanding, (whether arrived at through collective bargaining or otherwise),
any medical, vision, dental or other health plan, any life insurance plan or any
other employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan," as that term is defined in Section 3(3)
of ERISA, or any other plan, program, agreement, arrangement, commitment and/or
method of compensation, whether funded or unfunded, whether legally binding or
not, currently or previously adopted, maintained, sponsored in whole or in part
or contributed to by the Company or any Affiliate of the Company for the benefit
of employees, retirees, dependents, spouses, directors, officers, independent
contractors or other beneficiaries of the Company or an Affiliate of the Company
and under which employees, retirees, dependents, spouses, directors, officers,
independent contractors or other beneficiaries of the Company or an Affiliate of
the Company are eligible to participate or under or in connection with which the
Company may have any contingent or noncontingent liability of any kind whether
or not probable of assertion (collectively, the "Benefit Plans"). Any of the
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, or an "employee welfare benefit plan" as that
term is defined in Section 3(1) of ERISA, is referred to herein as an "ERISA
Plan." No Benefit Plan is or has been a "multiemployer plan" within the meaning
of Section 3(37) of ERISA. Neither the Company nor any Subsidiary has ever
contributed to or had an obligation to contribute to any multiemployer plan.
III.17.2 Schedule 3.17 of the Disclosure Letter also lists:
(a) where applicable, with respect to any such plans or plan amendments, the
most recent determination letters issued by the United States Internal Revenue
Service, (b) all rulings, opinion letters, information letters or advisory
opinions issued by the United States Department of Labor, the United States
Internal Revenue Service or the Pension Benefit Guaranty Corporation after
December 31, 1974, with respect to such Benefit Plan, (c) annual reports or
Returns and audited or unaudited financial statements for the most recent three
plan years and any amendments thereto, and (d) the most recent summary plan
descriptions and any material modifications thereto, and any other material
written communications to employees or to any governmental agency with respect
to such Benefit Plans during the three most recent plan years. Contemporaneous
with the delivery
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of the Disclosure Letter, the Company has delivered a true and complete copy of
each such Benefit Plan or summary description if such Benefit Plan is not in
writing, agreements, letters, rulings, opinions, letters, reports, Returns,
financial statements and summary plan descriptions described in Sections 3.17.1
or 3.17.2 hereof, certified as such by a duly authorized officer of the Company.
III.17.3 All the Benefit Plans and the related trusts subject
to ERISA comply with and have been administered in compliance with the
provisions of ERISA, all provisions of the Code relating to qualification and
tax exemption under Code Sections 401(a) and 501(a) or otherwise applicable to
secure intended Tax consequences, all applicable state or federal securities
laws and all other applicable laws, rules and regulations and collective
bargaining agreements, and neither the Company nor any Affiliate has received
any notice from any governmental agency or instrumentality questioning or
challenging such compliance. All available governmental approvals for the
Benefit Plans have been obtained, including, but not limited to, timely
determination letters on the qualification of the ERISA Plans and tax exemption
of related trusts, as applicable, under the Code and timely registration and
disclosure under applicable securities laws, and all such governmental approvals
continue in full force and effect. No event has occurred which will or could
give rise to disqualification of any such plan under sections 401(a) or 501(a)
of the Code, adversely affect the qualified status of any such plan under
Sections 401(a) or 501(a) of the Code or to a tax under Section 511 of the Code.
All contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each Benefit Plan and
have been paid on a timely basis.
III.17.4 Neither the Company, any Affiliate nor any
administrator or fiduciary of any such Benefit Plan (or agent or delegate of any
of the foregoing) has engaged in any transaction or acted or failed to act in
any manner which could subject the Company to any direct or indirect liability
(by indemnity or otherwise) for a breach of any fiduciary, co-fiduciary or other
duty under ERISA. No oral or written representation or communication with
respect to any aspect of the Benefit Plans has been or will be made to employees
of the Company prior to the Closing Date which is not in accordance with the
written or otherwise preexisting terms and provisions of such Benefit Plans in
effect immediately prior to the Closing Date. There are no unresolved claims or
disputes under the terms of, or in connection with, the Benefit Plans, and no
action, legal or otherwise, has been commenced with respect to any claim.
III.17.5 All annual reports or Returns, audited or unaudited
financial statements, actuarial valuations, summary
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annual reports and summary plan descriptions issued with respect to the Benefit
Plans are correct and accurate in all material respects as of the dates thereof,
and have been timely filed or disseminated, as appropriate or required by
applicable law, and there have been no amendments filed to any of such reports,
Returns, statements, valuations or descriptions or required to make the
information therein true and accurate.
III.17.6 No "party in interest" (as defined in Section 3(14)
of ERISA) or "disqualified person" (as defined in Section 4975(e)(2) of the
Code) of any Benefit Plan has engaged in any "prohibited transaction" (within
the meaning of Section 4975(c) of the Code or Section 406 of ERISA). There has
been no (a) "reportable event" (as defined in Section 4043 of ERISA), or event
described in Section 4062(f) or Section 4063(a) of ERISA or (b) termination or
partial termination, withdrawal or partial withdrawal with respect to any of the
ERISA Plans which the Company or an Affiliate of the Company maintains or
contributes to or has maintained or contributed to or was required to maintain
or contribute to or for the benefit of employees of the Company or any Affiliate
of the Company now or formerly in existence.
III.17.7 The Company does not have any ERISA Plan which is an
employee pension benefit plan as defined in ERISA Section 3(2).
III.17.8 Except as set forth on Schedule 3.17.8 of the
Disclosure Letter, the Company did not have any current or future liability
under any Benefit Plan that was not reflected in such filing, and the liability
of the Company in connection with any Benefit Plan as of Closing will not exceed
the amount recorded therefor on the books of the Company.
III.17.9 Except as set forth on Schedule 3.17.9 of the
Disclosure Letter, the Company does not maintain any Benefit Plan providing
deferred or stock based compensation.
III.17.10 The Company has not maintained a Benefit Plan
providing welfare benefits (as defined in ERISA Section 3(1)) to employees after
retirement or other separation of service except to the extent required under
Part 6 of Title I of ERISA and Code Section 4980B, or except as set forth on
Schedule 3.17.10 of the Disclosure Letter.
III.17.11 The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee of the
Company to severance pay, unemployment compensation or any payment contingent
upon a change in control or ownership of the Company, or (ii) accelerate the
time of payment or vesting, or increase the amount, of any compensation due to
any such employee or former employee.
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III.17.12 All Benefit Plans subject to section 4980B of the
Code as amended from time to time or Part 6 of Title I of ERISA or both have
been maintained in compliance with the requirements of such laws and any
regulations (proposed or otherwise) issued thereunder.
III.18 Customers and Clients. Schedule 3.18 of the Disclosure Letter
consists of a true and correct list of all of the customers and clients of the
Company within the preceding twenty-four months who generated revenues of more
than $100,000 within a twelve-month period, setting forth as to each customer or
client its name and address. Except as set forth on Schedule 3.18 of the
Disclosure Letter, neither the Company nor any Controlling Shareholder has
received any notice, or has reason to believe, that any such customer or client
has taken or contemplates taking any steps which could materially disrupt the
business relationship of the Company with such customer or client, or could
result in the material diminution in the value of the business of the Company as
a going concern.
III.19 Environmental Matters. Except as set forth in Schedule 3.19 of
the Disclosure Letter, no real property now or previously used by the Company or
now or previously owned or leased by the Company (the "Real Property") has been
used by the Company, or to the knowledge of the Company, any other party for the
handling, treatment, storage or disposal of any Hazardous Substance (as
hereinafter defined). Except as set forth in Schedule 3.19 of the Disclosure
Letter, no release, discharge, spillage or disposal into the environment of any
Hazardous Substance and no soil, water or air contamination by any Hazardous
Substance has occurred or is occurring in, from or on the Real Property. Except
as set forth in Schedule 3.19 of the Disclosure Letter, the Company has complied
with all reporting requirements under any applicable federal, state or local
environmental laws and permits, and there are no existing violations by the
Company of any such environmental laws or permits. There are no claims, actions,
suits, proceedings or investigations related to the presence, release,
production, handling, discharge, spillage, transportation or disposal of any
Hazardous Substance or ambient air conditions or contamination of soil, water or
air by any Hazardous Substance pending or, to the knowledge of the Company,
threatened with respect to the Real Property or otherwise against the Company in
any court or before any state, federal or other governmental agency or private
arbitration tribunal and, to the knowledge of the Company, there is no basis for
any such claim, action, suit, proceeding or investigation. To the knowledge of
the Company, there are no underground storage tanks on any Real Property which
is or was owned by the Company or is currently leased by the Company. No
building or other improvement included in any Real Property which is or was
owned by the Company or is
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presently leased by the Company contains any asbestos, and such buildings and
improvements are free from radon contamination. For the purposes of this
Agreement, "Hazardous Substance" shall mean any hazardous or toxic substance or
waste as those terms are defined by any applicable federal, state or local law,
ordinance, regulation, policy, judgment, decision, order or decree, including,
without limitation, the Comprehensive Environmental Recovery Compensation and
Liability Act, 42 U.S.C. 9601 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et. seq. and the Resource Conservation and Recovery Act,
42 U.S.C. 6901 et seq., and petroleum, petroleum products and oil.
III.20 Insurance. Set forth in Schedule 3.20 of the Disclosure Letter
is a complete list of all insurance policies which the Company maintained, or
was an insured party under, with respect to its businesses, properties or
employees which are currently in force and effect together with a list of all
such policies which have been in effect during the last 36 months but have
expired. Schedule 3.20 of the Disclosure Letter lists the annual premium and
renewal date of all such insurance policies. Except as set forth in Schedule
3.20 of the Disclosure Letter, since January 1, 1997, there has not been any
change in the Company's relationship with its insurers or in the premiums
payable pursuant to such policies.
III.21 Related Party Relationships. Except as set forth in Schedule
3.21 of the Disclosure Letter, to the Company's knowledge, no Controlling
Shareholder, or Affiliate of any Controlling Shareholder nor any officer or
director of the Company possesses, directly or indirectly, any beneficial
interest in, or is a director, officer or employee of, any corporation,
partnership, firm, association or business organization which is a client,
supplier, customer, lessor, lessee, lender, creditor, borrower, debtor or
contracting party with or of the Company (except as a shareholder holding less
than a one percent interest in a corporation whose shares are traded on a
national or regional securities exchange or in the over-the-counter market).
III.22 Schedules. All Schedules set forth in the Disclosure Letter are
true, correct and complete in all material respects as of the date of this
Agreement and will be true, correct and complete in all material respects as of
the Closing, except to the extent that such Schedules may be untrue, incorrect
or incomplete due to changes occurring due to the operation of the Company in
the ordinary course. Matters disclosed on each Schedule in the Disclosure Letter
shall be deemed disclosed only for purposes of the matters to be disclosed on
such Schedule and shall not be deemed to be disclosed for any other purpose
unless expressly provided therein.
III.23 Disclosure. No statement contained herein or in
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any certificate, Schedule of the Disclosure Letter, list, Exhibit or other
instrument furnished to the Purchaser pursuant to the provisions hereof contains
or will contain any untrue statement of any material fact or omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
III.24 Support/Voting Agreements. The Support/Voting Agreements with
the Supporting Shareholders have been duly executed and delivered to the
Purchaser prior to or simultaneous with the execution of this Agreement and
represent the valid and binding obligations of the Supporting Shareholders which
are enforceable in accordance with their terms except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and do not violate the
terms of any control share or affiliated transaction law applicable thereto.
IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE
MERGER SUBSIDIARY
The Purchaser and the Merger Subsidiary represent and warrant to the
Company for the benefit of the Shareholders as follows:
IV.1 Organization and Standing. The Purchaser and the Merger Subsidiary
are duly organized and validly existing corporations in good standing under the
laws of the State of Florida.
IV.2 Corporate Power and Authority. The Purchaser and the Merger
Subsidiary have the capacity and authority to execute and deliver this
Agreement, to perform hereunder and to consummate the transactions contemplated
hereby without the necessity of any act or consent of any other Person
whomsoever. The execution, delivery and performance by the Purchaser and the
Merger Subsidiary of this Agreement and each and every agreement, document and
instrument provided for herein have been duly authorized and approved by the
respective Board of Directors of the Purchaser and Merger Subsidiary. This
Agreement and each and every other agreement, document and instrument to be
executed, delivered and performed by Purchaser or the Merger Subsidiary in
connection herewith, constitute or will, when executed and delivered, constitute
the valid and legally binding obligation of Purchaser or Merger Subsidiary
(whichever is applicable) enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
equitable principles, or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws from time to time in effect affecting
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the enforcement of creditors' rights generally.
IV.3 Agreement Does Not Violate Other Instruments. The execution and
delivery of this Agreement by the Purchaser and Merger Subsidiary do not, and
the consummation of the transactions contemplated hereby will not, violate any
provisions of the Articles of Incorporation, or Bylaws, of Purchaser or Merger
Subsidiary.
IV.4 Required Filings and Absence of Conflicts. The execution and
delivery of this Agreement by the Purchaser and the Merger Subsidiary does not,
and the consummation of the transactions contemplated hereby will not, violate
any provision of the Articles of Incorporation, as amended, or Bylaws, as
amended, of the Purchaser and the Merger Subsidiary or any other Subsidiary or
violate or constitute an occurrence of default under any provision of, or
conflict with, or result in acceleration of any obligation under, or give rise
to a right by any party to terminate its obligations under, any material
mortgage, deed of trust, conveyance to secure debt, note, loan, lien, lease,
agreement, instrument, or any order, judgment, decree or other material
arrangement to which the Purchaser and the Merger Subsidiary or any Subsidiary
is a party or is bound or by which the Purchaser and the Merger Subsidiary's
assets are affected and which would cause Purchaser or Merger Subsidiary not to
be able to consummate the transactions contemplated hereby. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental entity is required to be obtained or made by or with
respect to the Purchaser and the Merger Subsidiary, or any assets, properties or
operations of the Purchaser and the Merger Subsidiary in connection with the
execution and delivery by the Purchaser and the Merger Subsidiary of this
Agreement or the consummation of the transactions contemplated hereby which will
not be completed prior to the Effective Time.
IV.5 Disclosure. No statement contained herein or in any certificate,
list, Exhibit or other instrument furnished to the Company pursuant to the
provisions hereof contains or will contain any untrue statement of any material
fact or omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
IV.6 Litigation. There is no suit, action, proceeding, claim or
investigation pending or, to the knowledge of Purchaser or Merger Subsidiary,
threatened against or affecting the Purchaser or the Merger Subsidiary which, if
pursued and/or resulting in a judgment, would prevent the Purchaser or the
Merger Subsidiary from consummating the transactions contemplated hereby, and,
to the knowledge of the Purchaser and the Merger Subsidiary,
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there exists no basis or grounds for any such suit, action, proceeding, claim or
investigation.
IV.7 Financing. The Purchaser has, prior to the date hereof,
received all consents and financing commitments from its lender(s) necessary to
consummate the transactions contemplated hereby and such consents and financing
commitments are on terms and conditions acceptable to the Purchaser. Purchaser
has, or will have prior to the Closing, sufficient cash to enable it to make
payment of the Closing Cash Consideration.
V. CONDITIONS .
V.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
V.1.1 This Agreement and the transactions contemplated
hereby shall have been approved in the manner required by applicable law or by
the applicable regulations of any stock exchange or other regulatory body, as
the case may be, by the holders of the issued and outstanding shares of capital
stock of the Company; provided that such approval shall not be deemed to have
been obtained unless at least a majority of the shares of Company Common Stock
held by Shareholders other than Xxxxxx X. Xxxxx, M.D. and Xxxxxxx X. Xxxxx are
voted in favor of this Agreement and the Merger.
V.1.2 The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
V.1.3 Neither of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement. In the event
any such order or injunction shall have been issued, each party agrees to use
its reasonable efforts to have any such injunction lifted.
V.1.4 All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Closing Date and except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or registration
would not have a Company Material Adverse Effect or provide a reasonable basis
to conclude that the parties hereto or
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any of their affiliates or respective directors, officers, agents, advisors or
other representatives would be subject to the risk of criminal liability.
V.2 Conditions to Obligations of Purchaser and Merger Subsidiary
to Effect the Merger. All of the obligations of Purchaser and the Merger
Subsidiary to consummate the transactions contemplated by this Agreement are
contingent upon and subject to the satisfaction, on or before the Closing Date,
of each and every one of the following conditions, all or any of which may be
waived, in whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Purchaser
may have hereunder:
V.2.1 Representations True at Closing. The representations
and warranties made by the Company to Purchaser in this Agreement, the Schedules
contained in the Disclosure Letter or any document or instrument delivered to
Purchaser hereunder shall be true and correct in all material respects on the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of such time, except for changes contemplated
by this Agreement.
V.2.2 Covenants of the Company . The Company shall have
duly performed in all material respects all of the covenants, acts and
undertakings to be performed by it on or prior to the Closing Date, and the
Chief Executive Officer of the Company shall deliver to Purchaser a certificate
dated as of the Closing Date certifying to the fulfillment of this condition and
the condition set forth in Section 5.2.1 hereof in substantially the form
attached hereto as Exhibit 5.2.2.
V.2.3 Opinion of Counsel. An opinion of Xxxxxx, Xxxxxx &
Xxxxx LLP, counsel for the Company, shall have been delivered to Purchaser dated
as of the Closing Date, substantially in form and substance of the opinion
attached hereto as Exhibit 5.2.3.
V.2.4 Consents, Approvals, and Waivers. Purchaser shall
have received from the Company a true and correct copy of each and every
consent, approval and waiver (a) referred to in Section 3.9 hereof, or (b)
otherwise required for the execution of this Agreement and the consummation of
the transactions contemplated hereby except for those for which the failure to
obtain such consent, approval or waiver would not have a Company Material
Adverse Effect or would not materially adversely affect the ability of the
Company to consummate the Merger.
V.2.5 Absence of Adverse Changes. Since the date of this
Agreement, the Company shall not have suffered a Company Material Adverse Event
or any series of events which when taken in
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the aggregate have a Company Material Adverse Effect.
V.2.6 Employment Agreements. Each individual listed in
Exhibit 2.14(a) shall have executed or agreed to execute an Employment
Agreement, substantially in forms set forth in Exhibit 2.14(b).
V.2.7 Shareholder Approval/Dissenter's or Statutory Rights.
Such shareholders of the Company as are required by applicable law and Section
5.1.1 to have approved the Merger shall have in fact approved the Merger and
Shareholders holding not more than 5% of the outstanding stock of the Company
shall not have notified the Company that such Shareholders intend to elect nor
shall have taken any other action to perfect any dissenter's or similar
statutory rights under the provisions of any state statute affording such
Shareholder such rights as a result of the Merger.
V.2.8 Company Options and Preferred Stock. None of the
Current Option Holders shall have exercised any Company Options held by them as
of the date of this Agreement, the Company and the Current Option Holders shall
have taken all actions required of them under Section 2.5 hereof and after the
Closing Date, no person shall have any right under any stock option plan (or any
option granted thereunder) or other plan, program or arrangement to acquire any
equity securities of the Company. All holders of the Preferred Stock and all
outstanding stock purchase warrants shall have all converted their Preferred
Stock into, and exercised their warrants for, shares of Company Common Stock as
required by Section 3.3 hereof.
V.2.9 Support/Voting Agreement to Remain In Effect. The
Support/Voting Agreements shall have remained in full force and effect through
the Effective Time.
V.2.10 Due Diligence. The Purchaser and the Merger
Subsidiary shall have been provided with all information reasonably requested by
them or their representatives in connection with the conduct of their due
diligence investigation and shall not have discovered any fact or circumstance
not disclosed in this Agreement which constitutes or which the Purchaser
reasonably believes with the passage of time will constitute a Material Adverse
Event as to the Company or its prospects.
V.2.11 The Purchaser shall have received from the Company's
transfer agent a true and complete list of the Company's Shareholders as shown
on the transfer agent's books as of the Closing Date.
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V.3 Conditions Precedent To The Obligations Of The Company To
Close. All of the obligations of the Company to consummate the transactions
contemplated by this Agreement shall be contingent upon and subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
the Company for purposes of consummating such transactions, but without
prejudice to any other right or remedy which they may have hereunder:
V.3.1 Representations True at Closing. The representations
and warranties made by Purchaser and the Merger Subsidiary to the Company in
this Agreement or any document or instrument delivered to the Company hereunder
shall be true and correct in all material respects on the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of such date, except for changes contemplated by this Agreement.
V.3.2 Covenants of Purchaser and Merger Subsidiary.
Purchaser and the Merger Subsidiary shall have duly performed in all material
respects all of the covenants, acts and undertakings to be performed by it on or
prior to the Closing Date, and a duly authorized officer of Purchaser shall
deliver, in substantially the form attached hereto as Exhibit 5.3.2, a
certificate dated as of the Closing Date certifying to the fulfillment of this
condition and the condition set forth under Section 5.3.1 above.
V.3.3 Opinion of Counsel. An opinion of Fowler, White,
Gillen, Boggs, Xxxxxxxxx and Banker, P.A. counsel for the Purchaser and Merger
Subsidiary, shall have been delivered to the Company dated as of the Closing
Date, substantially in form and substance of the opinion attached hereto as
Exhibit 5.3.3.
V.3.4 Consents, Approvals and Waivers. The Company shall
have received from the Purchaser a true and correct copy of each and every
consent, approval and waiver required for the execution of this Agreement and
the consummation of the transactions contemplated hereby, except for those for
which would not materially adversely affect the ability of the Purchaser to
consummate the Merger.
V.3.5 Letter of Credit. The Purchaser shall have timely
complied with each of its obligations under Section 2.21 with respect to the
Letter of Credit.
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VI. CLOSING.
VI.1 Time and Place of Closing. The Closing shall be held at the
offices of Fowler, White, Gillen, Boggs, Xxxxxxxxx and Banker P.A., 000 Xxxx
Xxxxxxx Xxxx, Xxxxx, Xxxxxxx, commencing at 10:00 a.m. Eastern Daylight Time, on
the later of (i) the business day after the last to be fulfilled or waived of
the conditions set forth in Article V shall be fulfilled or waived in accordance
with the provisions hereof but in no event later than May 15, 1998 or such other
date, time and place as the parties shall mutually agree.
VI.2 Transactions at Closing. At the Closing, each of the parties
shall deliver to the others such certificates and other documents as called for
by the terms of this Agreement or as otherwise reasonably requested by such
parties and their respective counsel.
VII. TERMINATION.
VII.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, by the mutual consent of the Purchaser and the Company.
VII.2 Termination by Either Purchaser or Company. This Agreement may
be terminated and the Merger may be abandoned by action of the Board of
Directors of either the Purchaser or the Company if (a) the Merger shall not
have been consummated by May 15, 1998 or (b) the approval of the Company's
Shareholders required by Section 5.1.1 shall not have been obtained at a meeting
duly convened therefor or at any adjournment thereof, or (c) a United States
federal or state court of competent jurisdiction or United States federal or
state governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling, or other action shall have become
final and non-appealable; provided that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used all reasonable efforts to
remove such injunction, order or decree; and provided further, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger by May 15, 1998.
VII.3 Termination by Company. This Agreement may be terminated and
the Merger may be abandoned at any time prior to
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the Effective Time, by action of the Board of Directors of the Company, if (a)
in accordance with Section 2.19 the Board of Directors of the Company determines
that such termination is required by reason of an Alternative Proposal being
made; provided that the Company shall notify the Purchaser promptly of its
intention to terminate this Agreement or enter into a definitive agreement with
respect to any Alternative Proposal; or (b) there has been a material breach by
the Purchaser or Merger Subsidiary of any of the representations, warranties,
covenants or agreements of the Purchaser or the Merger Subsidiary set forth in
this Agreement, which breach is not curable and constitutes a Material Adverse
Event or, if curable, is not cured within 30 days after written notice of such
breach is given by the Company to the Purchaser (without limiting the generality
of the foregoing sentence, any failure by the Purchaser to comply timely with
its obligations under Section 2.21 with respect to the Letter of Credit shall be
deemed to be a Material Adverse Event under this Agreement and shall not entitle
Purchaser to any cure period or require any prior notice of such breach to
Purchaser from the Company). Notwithstanding the foregoing, the Company's
ability to terminate this Agreement pursuant to clause (a) of this Section 7.3
is conditioned upon the payment by the Company of any amounts owed by it
pursuant to Section 7.5(a).
VII.4 Termination by Purchaser. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, by action
of the Board of Directors of the Purchaser, if (a) the Board of Directors of the
Company shall have withdrawn or modified in a manner materially adverse to the
Purchaser its approval or recommendation of this Agreement or the Merger or
shall have recommended an Alternative Proposal to the Company Stockholders, or
(b) there has been a breach by the Company of any representation or warranty
contained in this Agreement which would have or would be reasonably likely to
have a Company Material Adverse Effect, or (c) there has been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the Company, which breach is not curable and constitutes a Company Material
Adverse Event or, if curable, is not cured within 30 days after written notice
of such breach is given by the Purchaser to the Company.
VII.5 Effect of Termination and Abandonment. (a) In the event that
this Agreement is validly terminated (i) by the Company pursuant to Section
7.2(a) or 7.2(b) (but only if an Alternative Proposal has been made prior
thereto) or (ii) by the Purchaser pursuant to 7.2(a) or 7.2(b) (after an
Alternative Proposal has been received) or Section 7.4, then the Company shall
pay the Purchaser the sum of $750,000, which amount shall be paid by wire
transfer of same day funds either prior to such termination becoming effective
if the termination is by the Company and within three days if the termination is
by the Purchaser pursuant to
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Section 7.4 when no Alternative Proposal has been received by the Company and
following execution by the Company of an agreement to consummate an Alternative
Proposal if the termination is by the Purchaser after an Alternative Proposal
has been received. The Company acknowledges that the agreements contained in
this Section 7.5(a) are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, the Purchaser would not
enter into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to this Section 7.5(a), and, in order to obtain such
payment, the Purchaser commences a suit which results in a judgment against the
Company for the fee set forth in this Section 7.5(a), the Company shall pay to
the Purchaser its costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the fee at
the rate of 8% per annum.
(b) In the event that this Agreement is validly terminated by the
Company pursuant to Section 7.3(b), then the Purchaser shall pay the Company the
sum of $750,000, which amount shall be paid by wire transfer of same day funds
within three days of the Purchaser's receipt of notice of the termination. The
Purchaser and Merger Subsidiary acknowledge that the agreements contained in
this Section 7.5(b) are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, the Company would not enter
into this Agreement; accordingly, if the Purchaser fails to pay promptly the
amount due pursuant to this Section 7.5(b), and, in order to obtain such
payment, the Company commences a suit which results in a judgment against the
Purchaser for the fee set forth in this Section 7.5(b), the Purchaser shall pay
to the Company its costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the fee at
the rate of 8% per annum.
(c) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VII, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 7.5 and except for the provisions of Article VIII. Moreover, in
the event of termination of this Agreement pursuant to Section 7.3 or 7.4 by
reason of a breach of this Agreement by the non-terminating party, nothing
herein shall prejudice the ability of the non-breaching party from seeking
damages from any other party for such breach of this Agreement, including
without limitation, attorneys' fees and the right to pursue any remedy at law or
in equity.
VII.6 Extension, Waiver. At any time prior to the Effective Time,
any party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations
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and warranties made to such party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
VIII. GENERAL PROVISIONS.
VIII.1 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by certified mail, return receipt requested, first class postage prepaid,
or sent by Federal Express or similarly recognized national overnight delivery
service with receipt acknowledged, or sent by facsimile if receipt thereof is
confirmed in writing, addressed as follows:
VIII.1.1 If to the Company:
Health International Inc.
00000 Xxxxx 00xx Xxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, M.D.
Facsimile: (000) 000-0000
and to:
Xxxxxx X. Xxxxxx
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
VIII.1.2 If to Purchaser or Merger Subsidiary:
Xxxxx HealthPlan Services, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
Fax: 000-000-0000
Attn: President
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and to:
Xxxxx X. Xxxxx
Fowler, White, Gillen, Boggs,
Xxxxxxxxx and Banker, P.A.
000 X. Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxx, XX 00000
Fax: 000-000-0000
VIII.1.3 If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made and, if delivered by mail, facsimile or by overnight delivery
service, the date on which such notice, request, instruction or document is
received shall be the date of delivery. In the event any such notice, request,
instruction or document is mailed or shipped by overnight delivery service to a
party in accordance with this Section 8.1 and is returned to the sender as
nondeliverable, then such notice, request, instruction or document shall be
deemed to have been delivered or received on the fifth day following the deposit
of such notice, request, instruction or document in the United States mail or
the delivery to the overnight delivery service.
VIII.1.4 Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 8.1.
VIII.2 Brokers. Purchaser represents and warrants to the Company, and
the Company represents and warrants to Purchaser that no broker or finder has
acted for it or them or any entity controlling, controlled by or under common
control with it or them in connection with this Agreement, other than Dain,
Xxxxxxxx Incorporated which has acted as the Company's advisor. Purchaser agrees
to indemnify and hold harmless the Company against any fee, loss or expense
arising out of any claim by any broker or finder employed or alleged to have
been employed by it, and the Company agrees to indemnify and hold harmless
Purchaser against any fee, loss, or expense arising out of any claim by any
broker or finder employed or alleged to have been employed by it, including the
fees of Dain, Xxxxxxxx Incorporated.
VIII.3 Waiver. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be waived by
any other party to whom such compliance is owed. No waiver of any provision of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver.
VIII.4 Expenses. Except as otherwise provided herein,
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all costs incurred by the parties hereto in connection with or related to the
authorization, preparation and execution of this Agreement and the Closing of
the transactions contemplated hereby, including, without limitation of the
generality of the foregoing, all fees and expenses of agents, representatives,
counsel and accountants employed by any such party, shall be borne solely and
entirely by the party which has incurred the same. The expenses incurred by the
Company pursuant to Section 8.2 will be paid by the Company either before or
promptly following Closing.
VIII.5 Public Announcements. At all times at or before the Closing,
the Company, on the one hand, and the Purchaser, on the other hand, will consult
with one another before issuing or making any reports, statements, or releases
to the public with respect to this Agreement or the transactions contemplated
hereby and will use good faith efforts to agree on the text of a joint public
report, statement, or release or will use good faith efforts to obtain the other
parties' approval of the text of any public report, statement, or release to be
made solely on behalf of a party. If such parties are unable to agree on or
approve any such public report, statement, or release and such report,
statement, or release is, based on the advice of legal counsel to a party,
required by law or appropriate to discharge such party's disclosure obligations,
then such party may make or issue the legally required or appropriate report,
statement, or release upon prior notice to the other parties hereto.
VIII.6 Confidentiality. The Company, its respective officers,
directors, employees, agents, and other representatives will refrain from
disclosing to any other Person (i) any documents or information concerning
Purchaser or its Affiliates furnished to it in connection with this Agreement or
the transactions contemplated hereby, and (ii) any documents or information
concerning the Company, unless (A) such disclosure is compelled by judicial or
administrative process or by other requirements of law and notice of such
disclosure is furnished to Purchaser; or (B) such confidential documents or
information can be shown to have been (x) previously known by the Person
receiving such documents or information, or (y) in the public domain through no
fault of such Persons. If for any reason the transactions contemplated by this
Agreement are not consummated, Purchaser and the Company agree that they will
return any and all such confidential information provided by any of them to the
other party so providing such information.
VIII.7 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
VIII.8 Headings. The section and other headings in this
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Agreement are inserted solely as a matter of convenience and for reference, and
are not a part of this Agreement.
VIII.9 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and supersedes and cancels any prior
agreements, representations, warranties, or communications, whether oral or
written, among the parties hereto relating to the transactions contemplated
hereby or the subject matter herein. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by an
agreement in writing signed by the party against whom or which the enforcement
of such change, waiver, discharge or termination is sought.
VIII.10 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida (regardless of the laws that
might be applicable under principles of conflicts of law) as to all matters
including, but not limited to, matters of validity, construction, effect and
performance.
VIII.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
VIII.12 Pronouns. All pronouns used herein shall be deemed to refer to
the masculine, feminine or neuter gender as the context requires.
VIII.13 Exhibits Incorporated. All Exhibits attached hereto are
incorporated herein by reference, and all blanks in such Exhibits, if any, will
be filled in as required in order to consummate the transactions contemplated
herein and in accordance with this Agreement.
VIII.14 Time of Essence. Time is of the essence in this Agreement.
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IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
"Purchaser"
XXXXX HEALTHPLAN SERVICES, INC.
By:
---------------------------------
Title:
"Merger Subsidiary"
XXXXX HEALTHPLAN SERVICES
ACQUISITION CORP.
By:
---------------------------------
Title:
"Company"
HEALTH INTERNATIONAL, INC.
By:
---------------------------------
Title:
45
LIST OF EXHIBITS
EXHIBITS
--------
1.1 Definitions.
2.7 Bylaws of the Surviving Corporation
2.14(a) List of Employees to Enter into Employment Agreements.
2.14(b) Forms of Employment Agreements for Employees.
2.17.1 Benefit Plans not to be maintained by Surviving
Corporation
2.21 Form of binding commitment for letter of credit from
NationsBank N.A.
5.2.2 Form of Certificate of the President of the Company.
5.2.3 Form of Opinion of Counsel for the Company.
5.3.2 Officer's Certificate of Purchaser and Merger
Subsidiary.
5.3.3 Form of Opinion of Counsel for Purchaser and Merger
Subsidiary.
(i)
46
EXHIBIT 1.1
DEFINED TERMS
As used herein, the following terms shall have the following meanings unless the
context otherwise requires:
1. "Acts" shall mean the Florida General Corporation Law and the
Delaware General Corporation Law.
2. "Affiliate" shall mean, with respect to a Person, any other Person
which is required to be aggregated with such Person under Code ss.
414(b), (c), (m) and/or (o) at any time prior to the Closing Date.
3. "Agreement" shall mean this Plan and Agreement of Merger.
4. "Alternative Proposal" shall have the meaning ascribed thereto in
Section 2.19.
5. "Benefit Plans" shall have the meaning set forth in Section 3.17.1.
6. "Certificates" shall have the meaning set forth in Section 2.4.2.
7. "Closing" shall mean the closing of the transactions
contemplated by this Agreement as provided in Section 6.1
hereof.
8. "Closing Cash Consideration" shall mean an amount of cash equal to
$22,614,936 (U.S.).
9. "Closing Date" shall mean the date on which the Closing occurs pursuant
to Section 6.1 hereof.
10. "Code" shall mean the Internal Revenue Code of 1986, as amended.
11. "Company" shall mean Health International, Inc. a Delaware
corporation, and unless otherwise specified, shall be deemed to
include all of its Subsidiaries.
12. "Company Common Stock" shall mean the common stock of the Company.
13. "Company Officers" shall mean Xxxxxx X. Xxxxx, M.D., Xxxxxxx X. Xxxxx
and Xxxxxxx X. Xxxxxxxx.
(i)
47
14. "Company Option" shall mean the options to purchase Company Common
Stock which are outstanding prior to the Effective Time pursuant to
Section 2.5 hereof.
15. "Company Preferred Stock" shall mean the preferred stock of the
Company.
16. "Company Shareholders" or "Shareholders" shall mean the shareholders of
the Company at the Effective Time, each of which may be referred to
individually as a "Shareholder."
17. "Company Software" shall have the meaning set forth in Section
3.14.2(iii).
18. "Company's Transactional Expenses" shall mean the actual reasonable
expenses of the Company for the fees and expenses of its lawyers,
accountants, investment bankers, transfer agent, and partners in
connection with the transactions contemplated hereby which in no event
will exceed $500,000.
19. "Controlling Shareholders" shall mean Xxxxxx X. Xxxxx, M.D., Xxxxxxx X.
Xxxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx, each of whom may be referred
to individually as a "Controlling Shareholder."
20. "Current Option Holder" shall mean any Person who owns or has been
granted a Company Option which is outstanding on the date of this
Agreement.
21. "Disclosure Letter" shall mean the letter delivered to Purchaser by the
Company simultaneously with the execution of this Agreement containing
certain requested disclosures concerning the Company.
22. "Dissenting Shares" shall have the meaning set forth in Section
2.3.1.5.
23. "Effective Time" shall have the meaning set forth in Section 2.2
hereof.
24. "Employees" shall have the meaning set forth in Section 2.17.2.
25. "Employment Agreements" shall mean those Employment Agreements among
the entities and those individuals set forth in Exhibit 2.14(a),
substantially in the form attached as Exhibit 2.14(b), each of which
may be referred to individually as an "Employment Agreement."
26. "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(ii)
48
27. "ERISA Plan" shall have the meaning set forth in Section 3.17.1.
28. "Exchange Act" shall mean the Securities Exchange Act of 1934.
29. "Exchange Agent" shall mean ChaseMellon Shareholder Services, LLC.
30. "Exchange Fund" shall have the meaning specified in Section 2.4.1
hereof.
31. "Financial Statements" shall have the meaning set forth in Section
3.5.1.
32. "GAAP" shall mean Generally Accepted Accounting Principles formulated
by the American Institute of Certified Public Accountants as in effect
from time to time during the term of this Agreement.
33. "Hazardous Substance" shall have the meaning set forth in Section 3.19.
34. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1978, as amended.
35. "Indemnified Parties" shall have the meaning set forth in Section 2.20.
36. "Interim Financial Statements" shall have the meaning set forth in
Section 3.5.1.
37. "Letter of Credit" shall have the meaning set forth in Section 2.21.
38. "Licensed Software" shall have the meaning set forth in Section
3.14.2(ii).
39. "Material Adverse Effect" shall mean any event or group of events which
either individually or when considered together have a material adverse
effect on the business, prospects, results of operation or condition
(financial or otherwise) of the entity to which it is applied and its
Subsidiaries, taken as a whole, or on the ability of the entity to
which it is applied to consummate the transactions contemplated hereby.
For purposes of the foregoing, if the event or events are quantifiable
monetarily, they shall not be considered to be material unless the
aggregate adverse effect of all such events together is equal to or
greater than $500,000.00. This term is sometimes used in conjunction
with the defined term for one of the parties and in such event shall
have the same meaning as
(iii)
49
set forth above as applied to that party.
40. "Material Adverse Event" shall mean an event or events which
individually or when taken together cause a Material Adverse Effect.
41. "Material Agreements" shall have the meaning set forth in Section 3.13.
42. "Merger" shall mean the merger of the Merger Subsidiary with and into
the Company.
43. "Merger Subsidiary" shall mean Xxxxx HealthPlan Services Acquisition
Corporation, a Florida corporation.
44. "Merger Subsidiary Common Stock" shall mean the common stock of the
Merger Subsidiary.
45. "Outstanding Option Consideration" shall mean the amount of
$4,088,000.00.
46. "Outstanding Preferred Shares" shall mean the issued and outstanding
preferred shares of the Company as of the date of this Agreement.
47. "Outstanding Share Consideration" shall mean the amount of $22,614,936.
48. "Owned Software" shall have the meaning set forth in Section 3.14.2(i).
49. "Per Share Closing Cash Consideration" shall mean an amount of cash
equal to the Outstanding Share Consideration divided by the total
number of issued and outstanding shares of Company Common Stock at the
Closing.
50. "Per Share Option Consideration" shall mean an amount of cash equal to
the Outstanding Option Consideration divided by the total number of
shares into which options outstanding as of the Effective Time may be
converted.
51. "Permitted Employee Distributions" shall have the meaning set forth in
Section 2.11.1.
52. "Person" shall include, but is not limited to, an individual, a trust,
an estate, a partnership, an association, a company, a corporation, a
limited liability company, a sole proprietorship, a professional
corporation or a professional association.
53. "Plan Transfer Date" shall have the meaning set forth in Section
2.17.1.
(iv)
50
54. "Product Liability" shall have the meaning ascribed thereto in Section
3.15.
55. "Purchaser" shall mean Xxxxx HealthPlan Services, Inc., a Florida
corporation.
56. "Real Property" shall have the meaning set forth in Section 3.19.
57. "Return" shall mean any report, return, statement or other written
information required to be supplied to a taxing authority in connection
with Taxes.
58. "Schedule" shall mean the schedules contained in the Disclosure Letter.
59. "Stock Option Plans" shall mean the oral or written plans of the
Company pursuant to which Company Options have been granted.
60. "Subsidiary" shall mean any entity, the controlling interest in which
is owned either directly or indirectly by the Company or the Purchaser,
as applicable.
61. "Support/Voting Agreements" shall mean the agreements by and between
the Purchaser and the Supporting Shareholders providing for certain
voting and other restrictions with respect to the shares of the Company
Common Stock which are owned by such shareholders.
62. "Supporting Shareholder" shall mean Xxxxxx X. Xxxxx, M.D., Xxxxxxx X.
Xxxxx, who own 1,153,319 shares of the Company Common Stock, and Xxxxxx
Xxxxxx and Xxxxxxx Xxxxxx, who own 880,000 shares of Company Common
Stock as of the date hereof, each of whom have executed Support/Voting
Agreements with the Purchaser simultaneous with the execution of this
Agreement.
63. "Surviving Corporation" shall have the meaning set forth in Section
2.1.
64. "Tax" or "Taxes" shall mean all taxes, charges, fees, levies, or other
similar assessments or liabilities including without limitation income,
gross receipts, inventory, ad valorem, excise, real property, personal
property, sales, use, transfer, withholding, deed, license, employment,
payroll, and franchise taxes imposed by any governmental authority
(including any interest, fines, penalties, or additions attributable to
any such tax or any contest or dispute thereof).
(v)
51
SCHEDULES TO THE DISCLOSURE LETTER
Schedule
--------
2.11.1 Conduct of Business Prior to Closing
2.11.2 Bank Accounts, Safe Deposit Boxes and Powers of
Attorney
2.18 Affiliated Assets and Contracts
2.20 Indemnity Provisions and Policies
3.1.1 Jurisdictions of Incorporation
3.1.2 Foreign Jurisdictions/Qualifications
3.1.3 Subsidiaries
3.2.1 Certificate of Incorporation and Bylaws of the Company
3.2.2 List of Shareholders of the Company and Subsidiaries
3.3 Capitalization of the Company; Option Information
3.4 Equity Investments
3.5.1(a) 1994, 1995, 1996 and three-month Interim 1998
Financial Statements
3.5.1(b) Liabilities Not Disclosed in the Financial Statements
and the Interim Financial Statements and Undisclosed
Liabilities
3.7 Assets and Leases; Encumbrances
3.8 Aged Accounts Receivable
3.9 Required Consents
3.10 Changes
3.11 Litigation
3.12 Licenses and Permits and Noncompliance with Laws
(vi)
52
3.13 Contracts
3.14.1 Trademarks, Trade Names, Service Marks, Service Names,
Etc.
3.14.2(i) Owned Software; Exceptions to Year 2000 date
conversion and capabilities for Owned Software and
Licensed Software
3.14.2(ii) Licensed Software, Problems with Software Licenses
3.14.2(iii) Computer Programming Services Providers and agreements
3.14.2(iv)(a) Marketing Rights Received
3.14.2(iv)(b) Marketing Rights Granted to Third Parties
3.15 Product Warranties and Liabilities
3.16 Highly Compensated Employees and their Compensation;
Union Activities and Labor Disputes; Violations of
Labor Laws and Regulations
3.17 Benefit Plans
3.17.8 Undisclosed Current or Future Liability Under Benefit
Plans
3.17.9 Benefit Plans Providing Deferred or Stock Based
Compensation
3.17.10 Benefit Plans Providing Post Separation Benefits
3.18 Customers, Addresses, Telephone Numbers and Principal
Person of Contact and Problems with Customer
3.19 Environmental Matters
3.20 Insurance Matters
3.21 Related Party Relationships
(vii)
