EXHIBIT 2.8
AMENDED AND RESTATED
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, is made this 15th day of May, 1998 and
amends, supplants and replaces the Acquisition Agreement previously executed the
18th day of April, 1998. This Amended and Restated Acquisition Agreement is by
and among HEALTHPLAN SERVICES CORPORATION, a Delaware corporation (hereinafter
referred to as "Buyer"), NATIONAL PREFERRED PROVIDER NETWORK, INC., a New York
corporation ("NPPN"), QUALITY MEDICAL ADMINISTRATORS, INC., a New York
corporation ("Quality") and NATIONAL NETWORK SERVICES, INC., a New York
corporation ("NNS") (NPPN, Quality and NNS are hereinafter each individually
referred to as a "Company" and collectively as the "Companies"), and Xxxxxx X.
Xxxx, Xxxxxx X. Xxxx, as trustee under The Xxxxxx X. Xxxx Irrevocable Qualified
Annuity Trust Agreement I, Xxxxxx X. Xxxx, as trustee under The Xxxxxx X. Xxxx
Irrevocable Qualified Annuity Trust Agreement II, and Xxxxxx X. Xxxx, as trustee
under The Xxxxxx X. Xxxx Irrevocable Qualified Annuity Trust Agreement III (the
"Trusts") (collectively, "Seller").
W I T N E S S E T H :
WHEREAS, the parties hereto wish to enter into this Acquisition
Agreement pursuant to which Buyer will purchase from Seller all of the issued
and outstanding shares of capital stock of the Companies, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties and covenants hereinafter set forth, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 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
conjunctive and disjunctive forms of the terms defined.
ARTICLE 2
COVENANTS AND UNDERTAKINGS.
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2.1 PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
hereinafter set forth, at Closing, Seller shall sell, assign, transfer, convey
and deliver to Buyer, free and clear of all liens, claims, charges, security
interests and other encumbrances of any nature whatsoever, and Buyer shall
purchase, 10 shares of the common capital stock of NPPN, 10 shares of the common
capital stock of Quality, and 10 shares of the common capital stock of NNS (the
"Shares") which represent all of the issued and outstanding shares of capital
stock of the Companies. Such sale, transfer, conveyance and delivery shall be
evidenced by the delivery to Buyer of share certificates duly endorsed in blank
or certificates accompanied by duly executed stock powers (with signatures
guaranteed and with all necessary transfer taxes, if any, paid or other revenue
stamps affixed thereto) together with such other documents of transfer as Buyer
shall reasonably request.
2.2 PURCHASE PRICE.
(a) CONSIDERATION. Buyer, in full payment for the Shares shall
pay the Purchase Price as follows:
(i) The Cash Purchase Price Amount less the Escrow
Amount shall be paid in cash or by other immediately available
funds to Seller (such amount to be allocated among the Seller
parties as set forth on EXHIBIT 2.2) at Closing;
(ii) The Escrow Amount shall be paid in cash or other
immediately available funds at Closing to the Escrow Agent to
be held in escrow pursuant to the terms of the Escrow
Agreement;
(iii) The Additional Payment Amount shall be paid in
cash or other immediately available funds, to Seller (such
amount to be allocated among the Seller parties as set forth
on EXHIBIT 2.2) as set forth in Section 2.2(c) below, within
90 days after the Determination Date.
(b) POST-CLOSING ADJUSTMENT TO PURCHASE PRICE; PROCEDURES AND
DETERMINATION OF THE DEFICIENCY AMOUNT DUE FROM SELLER OR EXCESS NET
WORTH AMOUNT DUE FROM BUYER. The Cash Purchase Price Amount has been
determined based upon the assumption that a post Closing audit of the
Companies will verify that as of the close of business on the Closing
Date, the Companies' Combined Net Worth as determined from the Audited
Closing Balance Sheet prepared in connection with such audit adjusted
by adding back the amount of the Seller's 1998 Sub S Tax Payment
Distributions will not be less than the amount thereof shown on the
Companies' combining
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unaudited balance sheet as of 12/31/97 (the "Unaudited 12/31/97 Balance
Sheet") provided to Buyer by Seller and attached as SECTION 3.8 of the
Disclosure Letter. In order to verify the foregoing, Buyer will at its
expense prepare a consolidated final closing balance sheet
consolidating all of the Companies as of the close of business on the
Closing Date in accordance with the procedures set forth below, which
will be audited by Price Waterhouse LLP (the "Audited Closing Balance
Sheet"). To the extent that the Net Worth as determined from the
Audited Closing Balance Sheet of the Companies adjusted by adding back
the amount of the Seller's 1998 Sub S Tax Payment Distributions is less
than the Net Worth determined from the Unaudited 12/31/97 Balance Sheet
(a "Deficiency Amount"), the Seller shall pay back to the Buyer, as an
adjustment to the Purchase Price, the aggregate of such Deficiency
Amount as shown on the Final Statement of Deficiency Amount. (It is
also understood that the Companies will not have less than a $0 (zero)
balance in Working Capital as of the Closing.) Likewise, if the
Companies Combined Net Worth as determined from the Audited Closing
Balance Sheet after adding back the Seller's 1998 Sub S Tax Payment
Distributions exceeds the Companies Combined Net Worth as shown on the
Unaudited 12/31/97 Balance Sheet (an "Excess Net Worth Amount"), the
Buyer will pay to the Seller the Excess Net Worth Amount provided that
the Seller's Working Capital was at least 0 . The payment of the
Deficiency Amount or the Excess Net Worth Amount shall be made within
10 days of the date of determination of the Final Closing Balance
Sheet. The Deficiency Amount or the Excess Net Worth Amount shall be
determined in accordance with the following procedures:
(i) In order to determine the Deficiency Amount or
the Excess Net Worth Amount, if any, within 135 days of the
Closing Date, Buyer will deliver to Seller the Audited Closing
Balance Sheet together with a statement setting forth the
Deficiency Amount, if any, derived therefrom (a "Statement of
Deficiency Amount" or the Excess Net Worth Amount, if any,
"Statement of Excess Net Worth Amount," as the case may be).
Thereafter, Seller shall have 45 days during which its
independent auditors and authorized representatives shall have
full access at all reasonable times to the properties, books,
records and personnel of the Companies relating to periods
prior to the Closing Date for purposes of reviewing and
resolving any disputes concerning the Audited Closing Balance
Sheet and the Statement of Deficiency Amount or the Statement
of Excess Net Worth Amount as the case may be. Seller shall
have 45 days following delivery to Seller of the Audited
Closing Balance Sheet and the Statement of Deficiency Amount
or Statement of Excess Net Worth Amount, as the case may be,
during which to notify Buyer of any dispute. Prior
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to the expiration of such 45-day period, if Seller has any
objection to the Audited Closing Balance Sheet or the
Statement of Deficiency Amount or Statement of Excess Net
Worth Amount, as the case may be, Seller shall give written
notice to Buyer of such objection to the Audited Closing
Balance Sheet (a "Seller's Objection Notice") which notice
shall set forth in reasonable detail the basis for such
dispute. If Seller fails to notify Buyer that it is disputing
any item contained in the Audited Closing Balance Sheet or the
Statement of Deficiency Amount or Statement of Excess Net
Worth Amount as the case may be prior to the close of business
on the 45th day after delivery thereof, the Audited Closing
Balance Sheet and Statement of Deficiency Amount or the
Statement of Excess Networth as the case may be provided by
the Buyer shall be final, conclusive and binding and shall be
deemed to be the "Final Closing Balance Sheet" and the "Final
Statement of Deficiency Amount" or the Final Statement of
Excess Net Worth Amount, as the case may be. In the event that
Seller shall so notify Buyer of any dispute, the undisputed
portion of the Deficiency Amount shall be paid to the Buyer by
the Seller (or the undisputed portion of the Excess Net Worth
Amount shall be paid by the Buyer to the Sellers, as the case
may be) and Buyer and Seller shall cooperate in good faith to
resolve such dispute as promptly as practicable. If Buyer and
Seller are unable to resolve any such dispute within 15 days
of Seller's delivery of the Seller's Objection Notice, such
dispute shall be resolved by a Settlement Auditor. In
resolving such dispute, the Settlement Auditor shall make such
revisions to the Audited Closing Balance Sheet and Statement
of Deficiency Amount or Statement of Excess Net Worth Amount,
as the case may be, as it deems appropriate in accordance with
GAAP in order to make a determination of the Deficiency Amount
or Excess Net Worth Amount, as the case may be, if any, in
accordance with GAAP as promptly as practicable provided that
the Deficiency Amount or Excess Net Worth Amount as so
determined must be between (or equal to one of) the amounts
proposed by Seller and Buyer in the dispute. Such
determination shall be final, conclusive and binding on the
parties and shall be deemed a final arbitration award that is
enforceable pursuant to all terms of the Federal Arbitration
Act, 9 U.S.C. "" ET SEQ. (the "Federal Arbitration Act").
The expenses relating to the engagement of the Settlement
Auditor shall be shared equally by Buyer and Seller. In the
event of a dispute, the Closing Balance Sheet and Statement of
Deficiency Amount or Statement of Excess Net Worth
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Amount, as the case may be, as modified by the Settlement
Auditor shall be the "Final Closing Balance Sheet" and the
"Final Statement of Deficiency Amount" or "Final Statement of
Excess Net Worth Amount," as the case may be.
(ii) Upon determination of the Final Closing Balance
Sheet and the Final Statement of Deficiency Amount or Final
Statement of Excess Net Worth Amount, as the case may be, the
Seller shall pay to the Buyer the Final Deficiency Amount or
the Buyer shall pay to the Seller the Final Excess Net Worth
Amount, as the case may be, so determined less any undisputed
portion previously paid pursuant to subparagraph (i) above.
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(c) ADDITIONAL PAYMENT.
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(i) As an additional part of the Purchase Price,
within 90 days of the Determination Date, Buyer shall pay to
Seller an amount equal to the Cumulative Core Business EBIT
multiplied by 3, less the Cash Purchase Price Amount (the
"Additional Payment"); provided that in no event shall the
Additional Payment exceed the sum of Twenty Five Million
Dollars ($25,000,000) (U.S.) and no payment shall be due or
made unless the Cumulative Core Business EBIT of the Company
during the Determination Period is equal to or greater than
twelve percent (12%) of Cumulative Core Business Revenues
during the Determination Period. For purposes of determining
the Core Business Revenues and the Cumulative Core Business
EBIT, the Buyer shall deliver to Seller within 60 days of the
Determination Date, the Companies' consolidated statements of
income, prepared in accordance with GAAP by the Buyer, for the
Determination Period (the "Determination Date Income
Statements"). Seller shall have 45 days following delivery to
Seller of the Determination Date Income Statements during
which to notify Buyer of any dispute of any item contained
therein, which notice shall set forth the basis for such
dispute. During such time period, Seller and its independent
auditors and authorized representatives shall have full access
at all reasonable times to the properties, books, records and
personnel of the Companies relating to periods during the
Determination Period for purposes of reviewing and resolving
any disputes concerning the Determination Date Income
Statements. If Seller fails to notify Buyer of any such
dispute within such 45-day period, the Determination Date
Income Statements shall be final, conclusive and binding. In
the event the Seller notifies the Buyer of any dispute, the
undisputed portion of the Additional Payment shall be paid to
Seller and Buyer and Seller shall cooperate in good faith to
resolve such dispute as promptly as practicable. If Buyer and
Seller are unable to resolve any such dispute within 15 days
of Seller's delivery of such notice, such dispute shall be
resolved by a Settlement Auditor. The Settlement Auditor shall
make such revisions to the Determination Date Income
Statements as it deems appropriate in order to make a
determination of the Additional Payment as promptly as
practicable, provided that the Additional Payment as so
determined must be between (or equal to one of) the amounts
proposed by Seller and Buyer in the dispute. Such
determination shall be final, conclusive and binding on the
parties and shall be deemed a final arbitration award that is
enforceable pursuant to all terms of the Federal Arbitration
Act. The expenses
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relating to the engagement of the Settlement Auditor shall be
shared equally by Buyer and Seller.
(ii) Upon determination of the Additional Payment,
Buyer shall pay to Seller (such amount to be allocated among
the Seller parties as set forth on EXHIBIT 2.2) the Additional
Payment less the undisputed portion previously paid pursuant
to Section 2.2(c)(i).
(iii) Notwithstanding the above, if there is a Change
in control in Buyer, and provided that as of the date of
Change in Control, the Cumulative Core Business EBIT of the
Company through the date of the Change in Control is equal to
or greater than twelve percent (12%) of Cumulative Core
Business Revenues during such time period, the Seller shall
have the option, exercisable within 90 days after the
occurrence of the Change in Control, to accelerate the
Additional Payment, recomputed for purposes of this Section at
the greater of the following amounts (provided that in no
event shall the sum of recomputed Additional Payment exceed
$25,000,000):
(a) Cumulative Core Business EBIT for 12
month period ending on the calendar month preceding
the Change in Control (or such lesser period between
Closing and the Change in Control, if applicable)
multiplied by 9, less the Cash Purchase Price amount;
or
(b) (A) $8,333,333.00 if the Change of
Control occurs within the first anniversary following
Closing, provided that the option described above
cannot be exercised any sooner than the first
anniversary of the Closing Date, (B) $16,666,666 if
the Change of Control occurs between the first and
second anniversaries following Closing, or (C)
$25,000,000 if the Change of Control occurs between
the second anniversary following Closing and the
Determination Date.
(iv) Interest on the Additional Payment shall be
determined using the Determination Date Income Statements and
shall accrue as follows. From July 1, 1999 through June 30,
2000, interest shall accrue at a rate equal to the June 30,
1999 interest rate on newly issued U.S. Treasury Notes having
a maturity of 2 years, on the amount of the Additional Payment
that would have been due had the Determination Date been June
30, 1999. From July 1, 2000 through June 30,
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2001, interest shall accrue at a rate equal to the June 30,
2000 interest rate on newly issued U.S. Treasury Notes having
a maturity of 2 years, on the amount of the Additional Payment
that would have been due had the Determination Date been June
30, 2000. From July 1, 2001 through the date of payment of the
Additional Payment, Interest shall accrue at a rate equal to
the June 30, 2001 interest rate on newly issued U.S. Treasury
Notes having a maturity of 2 years, on the amount of the
Additional Payment.
D. APPROVAL OF ACQUISITIONS BY THE COMPANIES POST CLOSING:
During the Determination Period the Companies will be allowed
to make acquisitions of other PPO businesses which are
complimentary to the core business of the Companies ("Post
Closing PPO Acquisitions") subject to the following
procedures:
(i) In any acquisition involving payment of an
aggregate purchase price, including the potential
amount of any earn outs or other forms of deferred
payments related to such acquisition, of $2 million
or less that is approved by Seller, Buyer will
provide to Companies the necessary capital or
financing to complete the acquisition until the
aggregate purchase price of Post-Closing PPO
Acquisitions equals $10 million (the "PPO Acquisition
Cap");
(ii) In any acquisition involving payment of an
aggregate purchase price, including the potential
amount of any earn outs or other forms of deferred
payments related to such acquisition, in excess of $2
million and less than or equal to $5 million, and
provided such acquisition has been approved by the
CEO of Buyer, Buyer will provide the necessary
capital or financing to complete the acquisition
until the PPO Acquisition Cap is attained;
(iii) With respect to any other Post-Closing PPO
Acquisition, or after the PPO Acquisition Cap has
been reached,
(a) any such acquisition must be approved by
Seller and documented in accordance with
Buyer's acquisition documentation policies,
must add strategic value, must be based upon
a business plan with reasonable assumptions
that indicates an expected return on
investment commensurate with the Buyer's
expectations for acquisitions generally,
must
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pass Buyers due diligence investigation
without finding any significant exposure to
potential material adverse events, whether
of not contingent or fixed, and must not
involve any entity or person who would be
objectional to Buyer on the basis of
reputation or character. For purposes of
this requirement if the business being
proposed for purchase has earnings before
interest and taxes for the preceding 12
months and after the acquisition can be
reasonably expected to have EBIT projected
for the next 24 months after closing which
are equal to or greater than 12% of its
gross revenues, the request will be deemed
to meet this requirement unless Buyer
reasonably believes that it is not
reasonable to assume this performance will
continue after the end of 24 months after
the acquisition;
(b) The proposed acquisition must be
approved by the Buyer's Executive Committee
or Board of Directors; and
(c) The consideration proposed to be paid in
any proposed acquisition including any debt
to be assumed must not exceed
$10,000,000.00; and
(iv) The results from any Post Closing PPO
Acquisition made by Buyer without the prior written
consent of Seller shall not be considered in the
determination of the Determination Date Income
Statements if they shall cause a reduction in the
amount of the Adjustment Payment.
2.3 INTERCOMPANY ACCOUNTS AND SERVICES.
(a) At the Closing, the Seller shall take all actions
necessary to cause each Company to pay or cancel as of the Closing all cash
overdrafts, intercompany payables or receivables, indebtedness and other
accounts between a Company on the one hand, and the Seller or any Affiliate of
the Seller, on the other hand.
(b) At the Closing, except as contemplated by the LLC
Operating Agreement, all data processing, internal accounting, insurance,
personnel, legal, telephone and other services or products provided by the
Seller or its Affiliates to a Company or by a Company to the Seller or its
Affiliates shall terminate without liability or obligation thereafter accruing.
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2.4 EMPLOYEE MATTERS.
(a) TERMINATION OF COMPANY BENEFIT PLANS. Seller shall cause
each Company to take whatever action is reasonably necessary or appropriate to
terminate as of the Closing the participation, sponsorship and/or maintenance of
each Company in all of the Plans except those listed on EXHIBIT 2.4(A).
(b) OBLIGATION TO ASSIST IN TRANSITION. Seller shall, both
before and after the Closing Date, provide Buyer with any information in
Seller's possession or under its control which Buyer shall reasonably request
concerning the employees of each Company, and shall cooperate with, and assist,
Buyer with respect to the commencement of participation of any Employee of a
Company in any of Buyer's Plans or arrangements. In addition, the Seller will
provide the Buyer with the information necessary to comply with any continuation
coverage requirements of Code Section 4980B.
2.5 AFFILIATED CONTRACTS. At or prior to Closing, the Seller shall and
shall have caused its Affiliates to transfer to the Companies any assets or
contracts used primarily in the businesses of a Company which the Seller or its
Affiliates own or with respect to which the Seller or its Affiliates are the
contracting party, as opposed to a Company, including, but not limited to, those
assets and contracts listed on EXHIBIT 2.5.
2.6 GOOD FAITH DEALING. Each of the parties hereto agrees that it will
at all times act in good faith and with fair dealing with respect to its
obligations under this Agreement.
2.7 CLOSING. The Closing will take place at the offices of Fowler,
White, Gillen, Boggs, Xxxxxxxxx and Banker, P.A., 000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxx, Xxxxxxx at 10:00 a.m., local time, on the Closing Date.
2.8 BUYER STOCK OPTIONS FOR EMPLOYEES OF THE COMPANY OTHER THAN SELLER.
The Buyer shall make available to employees of Companies under its Employee
Stock Option Plan options to purchase its common stock covering up to 50,000
shares of such stock subject to the terms and conditions of the Buyer's Stock
Option Plans provided that grants of such options shall be subject to
consultation and approval of the Buyer's Chief Executive Officer and the
Compensation Committee of the Buyer's Board of Directors.
2.9 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 Buyer and the Companies shall, 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
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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 Buyer and the Companies
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 2.9.
The Buyer and the Companies 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.
2.10 DELIVERY OF EXHIBITS AND DISCLOSURE LETTER. As promptly as
possible after the execution of this Agreement, Seller and the Companies shall
deliver the Exhibits and the Disclosure Letter to Buyer in form and content
satisfactory to Buyer in its sole discretion. If Seller and the Companies fail
to so deliver the Exhibits and Disclosure Letter by 5:00 P.M., April 22, 1998,
Buyer may terminate this Agreement and abandon the transactions contemplated
hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE COMPANIES
The Seller (for purposes of this Article, only Xxxxxx Xxxx) and each
Company represent and warrant to Buyer as follows:
3.1 ORGANIZATION. Each of the Companies is a corporation duly
organized, validly existing, and in good standing under the Laws of their
respective states of incorporation listed on SECTION 3.1 of the Disclosure
Letter and each is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the ownership or use of its
assets or properties, or the conduct or nature of its business, makes such
qualification necessary except where the failure to be so qualified is not
reasonably likely to have a Material Adverse Effect upon such Company. No
Company has any Subsidiaries. SECTION 3.1 of the Disclosure Letter sets forth a
true and complete list of each jurisdiction in which each Company is qualified
to do business as a foreign corporation. Attached to SECTION 3.1 of the
Disclosure Letter are true and complete copies of each Company's Articles of
Incorporation and Bylaws, as in effect on the date of this Agreement.
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3.2 AUTHORITY. Xxxxxx X. Xxxx individually, and as trustee under each
of the Trusts, has full power and authority and each Company has full corporate
power and authority to enter into this Agreement and to perform their
obligations hereunder. The execution, delivery and compliance with the terms of
this Agreement by each Company and the performance by each Company of their
respective obligations hereunder has been duly and validly authorized by all
necessary action on the part of their respective Boards of Directors and
shareholders. This Agreement has been duly and validly executed and delivered by
the Seller and each Company and constitutes a legal, valid, and binding
obligation of the Seller and each Company, enforceable against the Seller and
each Company in accordance with its terms, except to the extent that (a)
enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or conveyance, or similar laws
now or hereafter in effect relating to or limiting creditors' rights generally,
and (b) the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
3.3 NO CONFLICTS. Except as disclosed in SECTION 3.3 of the Disclosure
Letter, neither the execution and delivery by any Company or the Seller of this
Agreement nor the performance of the obligations of any Company (prior to the
Closing Date) or the Seller hereunder will:
(a) conflict with or violate any material Law or Order
applicable to either Seller or any Company or any of their assets or properties;
(b) conflict with or violate any term of the Articles of
Incorporation or Bylaws of any Company;
(c) result in the creation or imposition of any material Lien
upon any Company or any of its assets or properties or conflict with or result
in or constitute a material default under, or give to any Person any right of
termination, cancellation, acceleration, or modification in or with respect to,
any Material Contract to which any Company is a party or by which any of its
assets or properties may be bound; or
(d) require either the Seller or any Company to obtain any
consent, approval, or action of, or make any filing with or give any notice to,
any Governmental Authority or Person who is a party to any Material Contract.
3.4 CAPITAL STOCK. The aggregate number of shares of capital stock that
each Company has the authority to issue,
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including the par value thereof and the number of shares which are issued and
outstanding, is listed in SECTION 3.4 of the Disclosure Letter. All of the
issued and outstanding shares of capital stock of each Company are duly
authorized, validly issued, fully paid, nonassessable, and are owned
beneficially and of record by the Seller, free and clear of all Liens. There are
no outstanding securities, obligations, rights, subscriptions, warrants, options
or (except for this Agreement) other Contracts of any kind that give any Person
the right to (a) purchase or otherwise receive or be issued any shares of
capital stock of any Company (or any interest therein) or any security of any
kind convertible into or exchangeable for any shares of capital stock of any
Company (or any interest therein) or (b) participate in the equity, income, or
(except as a holder of common stock) election of directors or officers of any
Company.
3.5 LITIGATION. Except as disclosed in SECTION 3.5 of the Disclosure
Letter:
(a) there are no actions, suits, investigations, arbitrations,
or similar proceedings pending or, to the knowledge of either the Seller or any
Company, threatened against or involving a Company or any of its assets or
properties, at law or in equity, in, before, or by any Person; and
(b) there is no Order outstanding against or involving any
Company or any of its assets or properties.
3.6 COMPLIANCE WITH LAWS. No Company is or has been in violation (or
with or without notice or lapse of time or both, would be in violation) of any
Law or Order applicable to its business, operations, or affairs, except for
violations that, individually or in the aggregate, do not or may not reasonably
be expected to have a Material Adverse Effect.
3.7 LICENSES.
(a) SECTION 3.7(A) of the Disclosure Letter sets forth a true
and complete list of all jurisdictions in which any Company or Seller is
licensed as an insurance broker, agent, preferred provider organization, third
party administrator or utilization review provider and a true and complete list
of each other License held by each Company or its employees which are required
in connection with the conduct of the business, operations, and affairs of such
Company.
(b) Except as disclosed in SECTION 3.7(B) of the Disclosure
Letter, each Company and its employees hold all Licenses required in connection
with the conduct of the business, operations, or affairs of such Company.
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(c) To the knowledge of each Company and the Seller, such
Company's employees have complied in all material respects with the terms and
conditions of each License disclosed or required to be disclosed in SECTION
3.7(A) of the Disclosure Letter, and all such Licenses are valid and in full
force and effect.
(d) To the knowledge of the Seller and each Company, each
agent, financial advisor, or other Person who has been acting on behalf of
Company in the sale of any customer Contract by or through such Company and who,
at the time of any such involvement, was required to hold any Licenses for such
involvement, has so held all such required Licenses at all required times.
3.8 FINANCIAL STATEMENTS. SECTION 3.8 of the Disclosure Letter contains
true and complete copies of the unaudited combining balance sheet of the
Companies at December 31, 1997 and the related statement of income and cash
flows for the fiscal year then ended (the "Balance Sheet Date"), and the related
statement of income and cash flows for the period then ended, all of which have
been prepared in accordance with GAAP (collectively, the "Financial
Statements"), consistently applied. Such Financial Statements present fairly in
all material respects in accordance with GAAP the financial position, results of
operations and cash flows of the Companies for the periods indicated and reflect
all Liabilities of the Companies as of such date which are required to be
reflected therein in accordance with GAAP.
3.9 NO UNDISCLOSED LIABILITIES. No Company has any Liabilities other
than: (a) Liabilities disclosed on the Balance Sheet, and (b) Liabilities
arising since the Balance Sheet Date in the ordinary course of business and
which, individually or in the aggregate, have not had and may not reasonably be
expected to have a Material Adverse Effect on such Company.
3.10 ASSETS.
(a) ASSETS. Except as disclosed in SECTION 3.10(A) of the
Disclosure Letter, no Company owns (i) any capital stock of any corporation, any
partnership interest in any partnership, or any other equity interest in any
entity, or (ii) any real property. The assets of each Company comprise all of
the assets that are necessary for the present conduct of such Company's
business, operations, and affairs in the ordinary course consistent with past
practice.
(b) LEASED ASSETS. SECTION 3.10(B) of the Disclosure Letter
sets forth all leases and similar Contracts under which each Company leases or
otherwise has the right to use (i) any real
15
property or (ii) tangible personal property involving lease payments of more
than $10,000.00 annually. Each Company has, and after the Closing will have, a
valid leasehold interest in or valid right under each such lease to use each
such asset.
(c) OWNED ASSETS. Each Company has, and immediately after the
Closing will have, good and marketable title to each parcel of real property and
all personal property which, except as disclosed in SECTION 3.10(C) of the
Disclosure Letter, is owned and not leased by such Company free and clear of all
Liens (other than any Liens created by Buyer and Permitted Liens). All material
personal property assets owned by each Company are in good operating condition,
normal wear and tear excepted.
(d) ACCOUNTS RECEIVABLE. All accounts receivable of each
Company represent bona fide claims for sales or distribution of products or
services by or through such Company in the ordinary course of business and
consistent with past practice.
(e) INTELLECTUAL PROPERTY. SECTION 3.10(E) of the Disclosure
Letter sets forth a true and complete list and description of all of the
following assets or properties of each Company that are used by such Company in
its business, operations, or affairs: (i) all registered marks, names,
trademarks, service marks, patents, patent rights, assumed names, logos, trade
secrets, copyrights, trade names and service marks; and (ii) all computer
software, programs, and similar systems owned by or licensed to each Company
other than commercially packaged and available shrinkwrap software generally
available to the public. Except as set forth in SECTION 3.10(E) 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 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 SECTION 3.10(E), all date processing by owned
software and licensed software will include four digit year format and recognize
and correctly process dates for leap years. Except as disclosed in SECTION
3.10(E) of the Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will not (A) require any consent,
16
approval, or action of, filing with, or payment or notice to, any Person in
connection with the ownership or use of such intellectual property and computer
software, programs, and similar systems or (B) invalidate, terminate, or violate
any term applicable to the ownership or use of such intellectual property or
computer software, programs, and similar systems. Except as disclosed in SECTION
3.10(E) of the Disclosure Letter, after the Closing, each Company will have the
right to use, free and clear of any royalty or other payment obligations, such
intellectual property and computer software, programs, and similar systems.
Except as disclosed in SECTION 3.10(E) of the Disclosure Letter, no Company is
in conflict with or in violation or infringement of, and neither the Seller nor
any Company has received any notice of any conflict with or violation or
infringement of or any claimed conflict with, any asserted rights of any other
Person with respect to any intellectual properties or computer software,
programs, or similar systems disclosed or required to be disclosed in SECTION
3.10(E) of the Disclosure Letter.
3.11 TAXES. Except as otherwise disclosed on SECTION 3.11 of the
Disclosure Letter, (a) (i) the Companies are, and have been since their
respective incorporations, "S Corporations" within the meaning of Section
1361(a)(1) of the Code; (ii) the elections by the Companies to be "S
Corporations" were valid at the time such elections were made and such elections
have not been revoked or terminated; (iii) none of the Companies has ever filed,
or has ever been required to file, any Returns in respect of Taxes with any
corporation or other entity on a consolidated, combined or unitary basis; (iv)
all Returns in respect of Taxes required to be filed with respect to each of the
Companies have been timely filed, none of such Returns contains, or is required
to contain, a disclosure statement under section 6662 of the Code or any similar
provision of state, local, or foreign law, and no extension of time within which
to file any such Return has been requested, which Return has not since been
filed; (v) all Taxes required to be shown on such Returns or otherwise due or
payable have been timely paid and all payments of estimated Taxes required to be
made with respect to each Company under section 6655 of the Code or any
comparable provision of state, local or foreign law have been made; (vi) all
such Tax Returns are true, correct and complete in all material respects; (vii)
no adjustment relating to such Returns has been proposed formally or informally
by any Tax authority and, to the knowledge of the Seller, no basis exists for
such an adjustment; (viii) there are no pending or threatened actions or
proceedings for the assessment or collection of Taxes against any of the
Companies; (ix) there are no Tax liens on any assets of any of the Companies
other than AD VALOREM taxes which are not yet due; (x) there are no outstanding
subpoenas or requests for information currently outstanding that could affect
the Taxes of any of the Companies; (xi) there are no proposed reassessments of
any property owned or leased by any of the
17
Companies or other proposals that could increase the amount of any Tax to which
any of the Companies would be subject; (xii) none of the Companies is a party to
any agreement or arrangement that would result, separately or in the aggregate,
in the payment of any "excess parachute payment" within the meaning of section
280G of the Code; (xiii) none of the Companies has been a United States real
property holding corporation within the meaning of section 897(c)(2) of the Code
during the applicable period specified in section 897(c)(1)(A)(ii) of the Code;
(xiv) there are no outstanding waivers or agreements extending the statute of
limitations for any period with respect to any Tax to which any of the Companies
may be subject; (xv) there are no requests for rulings or information currently
outstanding that could affect the Taxes of any of the Companies or any similar
matters pending with respect to any Tax authority; (xvi) no power of attorney
that is currently in force has been granted with respect to any matter relating
to Taxes that could affect any of the Companies; (xvii) no consent under section
341(f) of the Code has been filed with respect to any of the Companies; (xviii)
no acceleration of the vesting schedule for any property that is substantially
nonvested within the meaning of the regulations under section 83 of the Code
will occur in connection with the transactions contemplated by this Agreement;
(xix) none of the Companies has at any time been a member of any partnership or
joint venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax potentially applicable as a
result of such membership or holding has not expired; (xx) none of the Companies
owes any amount pursuant to any Tax sharing agreement or arrangement and does
not have any liability after the date hereof in respect of any Tax sharing
agreement or arrangement executed or agreed to prior to the date hereof, whether
any such agreement or arrangement is written or unwritten; (xxi) all Taxes
required to be withheld, collected or deposited by each of the Companies have
been timely withheld, collected or deposited and, to the extent required, have
been paid to the relevant Tax authority; (xxii) any adjustment of Taxes of any
of the Companies made by the IRS that is required to be reported by any Company
to any state, local or foreign Tax authority has been so reported and any
additional Tax due as a result thereof has been paid in full; (xxiii) none of
the Companies was acquired in a qualified stock purchase under section 338(d)(3)
of the Code and no elections under section 338(g) of the Code, protective
carryover basis elections, offset prohibition elections or other deemed or
actual elections under section 338 of the Code are applicable to any of the
Companies; (xxiv) none of the Companies has issued or assumed any corporate
acquisition indebtedness, as defined in section 279(b) of the Code or any
obligations described in section 279(a) of the Code; (xxv) as of the Closing,
none of the Companies will have any non-recaptured net section 1231 loss as
defined in section 1231(c) of the Code; (xxvi) the books and records of each of
the Companies reflect reserves that are adequate for the
18
payment of all Taxes not yet due and payable that are properly accruable thereon
as of the date thereof (including Taxes being contested), and there is no
difference between the amounts of the book basis and the tax basis of assets
(net of liabilities) that is not accounted for by an accrual on the books for
federal income tax purposes; (xxvii) none of the Companies has had any income
attributable to a transaction (e.g., an installment sale) occurring in or a
change in accounting method made for a period ending at or prior to the Closing
which resulted in a deferred reporting of income from such transaction or from
such change in accounting method; (xxviii) none of the Companies is obligated
under any agreement with respect to industrial development bonds or similar
obligations, with respect to which the excludability from gross income of the
holder for federal income tax purposes could be affected by the transactions
contemplated hereunder; and (xxix) none of the Companies is subject to liability
for any Taxes as a transferee or successor, or by reason of section 1.1502-6 of
the Treasury Regulations (or similar provision of state, local or foreign law).
(b) (i) SECTION 3.11 of the Disclosure Letter (1) lists all
income, franchise and similar Tax Returns (federal, state, local and foreign)
filed with respect to each of the Companies for taxable periods ended on or
after December 31, 1995; (2) indicates for which jurisdictions Returns have been
filed; (3) indicates the most recent income, franchise or similar Return for
each relevant jurisdiction for which an audit has been completed and indicates
all Returns that currently are the subject of audit; (ii) the Seller has
delivered to the Buyer correct and complete copies of all federal, state and
foreign income, franchise, sales and use, real and personal property Tax Returns
and all other Returns, elections relating to Taxes of the Companies, examination
reports, and statements of deficiencies assessed against or agreed to by any of
the Companies since January 1, 1995; (iii) SECTION 3.11 sets forth the following
information with respect to each of the Companies as of the most recent
practicable date (and, in each case, specifying such date): (A) the tax basis of
the Companies in their respective assets and (B) for state Tax purposes, the
amount of any net operating loss, net capital loss, unused credit, unused
foreign tax credit, earnings and profits or excess charitable contribution
allocable to each of the Companies; (iv) the Seller has delivered to the Buyer a
complete and accurate description of all Tax accounting methods for all material
items affecting federal and state income or franchise Taxes; (v) the Seller has
delivered to the Buyer a full description of any and all related party
transactions between any of the Companies and their respective Affiliates; (vi)
the Seller has provided to the Buyer a complete and accurate list of locations
by city and state in which each of the Companies leases any real or personal
property; and (vii) each of the Companies has provided to the Buyer a complete
and accurate description of all changes in
19
corporate control or capital structure.
3.12 MATERIAL CONTRACTS. SECTION 3.12 of the Disclosure Letter sets
forth a true and complete list of each Material Contract of each Company. Each
Company has previously delivered to Buyer a true and complete copy of each
Material Contract (including all amendments and supplements thereto). Each
Material Contract is in full force and effect and constitutes a legal, valid,
and binding obligation of such Company and, to the knowledge of the Seller or
each Company, each other party thereto, enforceable against the parties thereto
in accordance with its terms, except to the extent that (a) enforcement may be
limited by or subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, or similar Laws now or hereafter in effect relating to or
limiting creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. No Company nor (to the knowledge of the
Seller or each Company) any other party to any Material Contract is in default
under any Material Contract. Except as disclosed in SECTION 3.12 of the
Disclosure Letter, since the Balance Sheet Date, no Material Contract has been
amended or supplemented in any material respect except for renewals of customer
accounts on terms equal to or more favorable to such Company than existing prior
to renewal.
3.13 EMPLOYEE BENEFIT MATTERS.
(a) SECTION 3.13 of the Disclosure Letter sets forth a true
and complete list of all Plans. Except as set forth in SECTION 3.13 of the
Disclosure Letter, no Company is nor has ever been under common control, or
treated as a single employer, under Section 414(b), (c), (m) or (o) of the Code,
with any other trade or business (whether or not incorporated) with an entity
other than the Companies. Except as set forth in SECTION 3.13 of the Disclosure
Statement, no Company has maintained or contributed or ever been obligated to
contribute to any "employee pension benefit plan," as defined in Section 3(2) of
ERISA, whether or not such plan is subject to Title IV of ERISA or Section 412
of the Code, or any multiemployer plan, as defined in Section 3(37), of ERISA,
or is or has been subject to Section 4063 or 4064 of ERISA. No Company has any
liability to the Pension Benefit Guaranty Corporation or any other party as the
result of its participation in a multiemployer plan. No Company maintains any
Plan which provides post-employment benefits or coverage, including life
insurance or health insurance, for any participant or any beneficiary of a
participant, except as may be required under COBRA and at the expense of the
participant or the participant's beneficiary.
20
(b) The Companies have delivered to Buyer a true and complete
copy of (i) each Plan (including all amendments thereto), (ii) each trust
agreement or other funding arrangement with respect to each Plan, (iii) each
summary plan description relating to a Plan, (iv) the most recently filed IRS
Form 5500 relating to each Plan, (v) if applicable, the most recent IRS
determination letter, or application if the letter has not been issued, and (vi)
any other material communications to Plan participants.
(c) Except as set forth in SECTION 3.13 of the Disclosure
Letter, all contributions, premiums or payments required to be made, paid or
accrued with respect to any Plan prior to Closing have been made, paid or
accrued on or before their due dates, including extensions thereof. Each Plan is
now and has been operated in all material respects in accordance with the
requirements of all applicable laws (including, without limitation, the Code and
ERISA) and the Plan documents. Each Plan which is an "employee welfare benefit
plan" under Section 3(1) of ERISA is in good faith compliance with the notice
and continuation requirements of Section 4980B of the Code, COBRA, Part 6 of
Subtitle B of Title I of ERISA and the regulations thereunder. No legal action,
suit, audit, investigation, or claim is pending or, to the knowledge of the
Seller and each Company, threatened with respect to any Plan (other than claims
for benefits in the ordinary course) and, to the knowledge of the Seller and
each Company, no fact, event or condition exists that could give rise to any
such action, suit, or claim.
(d) No "party in interest" as defined in ERISA Section 3(14)
or "disqualified person" as defined in the Internal Revenue Code has engaged in
a "prohibited transaction" within the meaning of ERISA and the Code. All annual
returns for the Plans have been timely filed as required by applicable law. The
consummation of the transactions contemplated hereby will not result in the
entitlement of any current or former Employee to severance pay, unemployment
compensation or any payment contingent upon a change of control.
3.14 MATERIAL CHANGES. Except as disclosed in SECTION 3.14 of the
Disclosure Letter and except as contemplated by this Agreement:
(a) since the Balance Sheet Date, there has not been,
occurred, or arisen any change, event (including without limitation any damage,
destruction, or loss, whether or not covered by insurance), condition,
circumstance, or development of any character that, individually or, in the
aggregate, has or may reasonably be expected to have a Material Adverse Effect
on any Company;
(b) since the Balance Sheet Date, each Company has
21
conducted its business, operations, and affairs solely in the ordinary course of
business and consistent with past practice; and
(c) since the Balance Sheet Date, no Company has declared or
paid any dividends or other distributions in respect of its capital stock, nor
has it made, or committed to make, any redemption or other repurchase of any of
its capital stock, provided that the Companies may make S-corporation
distributions equal to the actual tax payable by Seller for taxable years ending
with the Closing Date to the extent such payments are due and have not been paid
as of the date hereof or distributions have not previously been made to Seller
by such Company in order to make such payments.
3.15 OPERATIONS INSURANCE. SECTION 3.15 of the Disclosure Letter
contains a true and complete list of all liability, property, workers'
compensation, directors' and officers' liability, and other similar insurance
Contracts issued to any Company that insure the business, operations, or affairs
of such Company or that affect or relate to the ownership, use, or operation of
the assets or properties of such Company. SECTION 3.15 of the Disclosure Letter
specifies, with respect to each such insurance Contract, the type of coverage,
the name of the insured, the name of the insurer, the amount of annual premium,
the coverage limitations, the date of expiration, any self-insurance retention,
and any deductibles. All such insurance is in full force and effect.
3.16 CUSTOMERS, AGENTS, ETC. Except as set forth in SECTION 3.16 of the
Disclosure Letter, no customer, employer or other Person to whom or through whom
the Company has sold any service or other product, accounted for more than 10%
of the gross revenue of the Company during 1996 and 1997. Except as shown in
SECTION 3.16 of the Disclosure Letter, to the knowledge of the Seller and each
Company, no Person with whom any Company does business intends to terminate or
materially alter its relationship with any Company after the Closing.
3.17 REGIONAL PROVIDER NETWORKS AND LARGE PROVIDER GROUPS. Except as
set forth in SECTION 3.17 of the Disclosure Letter, since January 1, 1998, no
regional provider networks, or provider groups with more than 1,500 provider
members or which are major medical facilities the termination of which would
have a Material Adverse Effect on the Companies, has terminated or failed to
renew any contract with any Company and to the knowledge of the Seller and each
Company no such Provider Network or large provider group or major medical
facility intends to terminate or materially alter its relationship with any
Company after the Closing.
3.18 LABOR MATTERS. Except as disclosed in SECTION 3.18 of
22
the Disclosure Letter:
(a) no employee of any Company is represented by any labor
organization in connection with his or her employment by such Company;
(b) no Company is a party to any labor or collective
bargaining Contract with respect to its employees;
(c) there is no labor controversy, labor dispute, labor
arbitration, unfair labor practice charge, grievance, or complaint, strike,
lockout, or work slowdown or stoppage pending or, to the knowledge of the Seller
or each Company, threatened against or involving any Company;
(d) there is no complaint, charge, or claim pending or, to the
knowledge of the Seller or each Company, threatened against or involving any
Company by any Person based on, arising out of, or related to the employment by
a Company of any employee;
(e) no labor or collective bargaining Contract with respect to
employees of any Company is currently being negotiated, and to the knowledge of
the Seller or each Company, no union organizing activities are currently taking
place with respect to any employees of any Company; and
(f) to the knowledge of the Seller and each Company, no
employee of any Company has expressed any intention or desire to terminate his
or her relationship with any Company after the Closing.
3.19 ENVIRONMENTAL COMPLIANCE. Except as disclosed in SECTION 3.19 of
the Disclosure Letter, to the knowledge of the Seller and each Company (a) no
real property at any time owned, or while leased, or operated by any Company has
been used for the storage, treatment, generation, transportation, manufacture,
processing, handling, production, distribution, deposit, burial, use, or
disposal of any Hazardous Substance, and (b) there has been no Release of any
Hazardous Substance (other than de minimus amounts of janitorial and similar
substances used in compliance with law) on or from any such real property. Each
Company has complied with all applicable environmental Laws relating to such
real property and the business, activities, and processing conducted thereon,
except for such noncompliance that, individually or in the aggregate, has not
had and may not reasonably be expected to have a Material Adverse Effect. To the
knowledge of each Company and the Seller, there is not on or in any part of such
real property any underground storage tanks or surface tanks, lines, dikes, or
impoundments. Copies of any environmental studies or other environmental surveys
in any Company's possession which relate to any such properties are
23
attached to SECTION 3.19 of the Disclosure Letter
3.20 INTEREST IN COMPETITORS, ETC. Except as disclosed in SECTION 3.20
of the Disclosure Letter, neither the Seller, any Company, any Affiliate of the
Seller, nor, to the knowledge of the Seller or each Company, any employee of any
Company is, directly or indirectly, a principal, officer, director, employee,
shareholder, investor, consultant, advisor, partner, joint venturer, agent,
landlord, tenant, or equity owner in or with any Person who is a competitor,
supplier, manufacturer, vendor, or customer of any Company (other than as a 2%
shareholder of any Company whose stock is publicly traded).
3.21 BOOKS AND RECORDS. The books, records and accounts of each Company
are accurate and complete in all material respects and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of each
Company. No Company has engaged in any transaction, maintained any bank account
or used any of its funds except for transactions, bank accounts and funds which
have been and are reflected in the normally maintained books and records of such
Company.
3.22 BANK ACCOUNTS. SECTION 3.22 of the Disclosure Letter contains (a)
a true and complete list of the names and locations of all banks, trust
companies, securities brokers, and other financial institutions at which any
Company has an account or safe deposit box or maintains a banking, custodial,
trading, or other similar relationship and (b) a true and complete list and
description of each such account, box, and relationship, indicating in each case
the account number and the names of the respective officers, employees, agents,
or other similar representatives of any Company who are signatories thereon or
who are authorized to act in connection therewith.
3.23 DISCLOSURE. No representation or warranty made by any Company or
the Seller in this Agreement or in the Disclosure Letter or any certificate or
other document furnished by any Company or the Seller in connection with the
Closing of the transactions contemplated hereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading in light of the circumstances in which they
were made.
24
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Florida.
4.2 AUTHORITY. Buyer has full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution,
delivery, and compliance with the terms of this Agreement by Buyer and the
performance by Buyer of its obligations hereunder have been duly and validly
authorized by all necessary action on the part of Buyer (including, without
limitation, approval by the Board of Directors of Buyer). This Agreement has
been duly and validly executed and delivered by Buyer and constitutes, a legal,
valid, and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except to the extent that (a) enforcement may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance, or similar Laws now or hereafter in effect relating to
or limiting creditors, rights generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief which are subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
4.3 NO CONFLICTS. Except as disclosed in SECTION 4.3 of the Disclosure
Letter, neither the execution and delivery by Buyer of this Agreement nor the
performance by Buyer of its obligations under this Agreement will:
(a) conflict with or violate any Law or Order applicable to
Buyer or any of its respective assets or properties;
(b) conflict with or violate any term of the Articles of
Incorporation or Bylaws of Buyer;
(c) result in the creation or imposition of any Lien upon
Buyer or any of its assets or properties or conflict with or result in a default
under, or give any Person any right of termination, cancellation, acceleration,
or modification in or with respect to, any Contract to which Buyer is a party or
by which any of Buyer's assets or properties may be bound; or
(d) require Buyer to obtain any consent, approval or
25
action of, or make any filing with or give any notice to, any Person.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
At all times during the period between the date hereof and the Closing,
inclusive, the Seller and each Company will comply with all covenants and
provisions of this Article 5, unless otherwise agreed by Buyer in writing.
5.1 CONDUCT OF BUSINESS. Seller will cause each Company to conduct its
business, operations, and affairs solely in the ordinary course of business and
consistent with past practice. Without limiting the generality of the foregoing
and except as otherwise expressly required by this Agreement:
(a) Seller will use, and cause each Company to use, all
commercially reasonable efforts to (i) preserve intact each Company's present
business organizations, relationships, and reputation; (ii) maintain in full
force and effect all Licenses held by each Company; (iii) maintain in full force
and effect all Contracts (other than Contracts which expire and are not renewed
in the ordinary course of business and consistent with past practice); (iv)
continue all marketing and promotional activities, programs, and efforts
relating to the business, operations, and affairs of each Company; (vi) maintain
in good working order and condition (ordinary wear and tear excepted) all assets
of each Company; and (vii) maintain in full force and effect substantially the
same levels of insurance coverage as afforded under the insurance Contracts
disclosed or required to be disclosed in SECTION 3.15 of the Disclosure Letter.
(b) Seller will cause each Company to (i) prepare and timely
file (or cause to be prepared and timely filed) all Tax Returns required to be
filed with any Governmental Authority by each Company; (ii) duly and timely pay
all estimated Taxes necessary to avoid the imposition of penalties for failure
to pay timely estimated Taxes; (iii) duly and timely pay (or cause to be duly
and timely paid) all Taxes indicated by such Tax Returns or otherwise levied or
assessed upon any Company of any of its assets or properties; and (iv) withhold
or collect and pay to the proper Governmental Authority all Taxes that each
Company is required to so withhold or collect and pay, unless such Taxes are
being contested in good faith and, if appropriate, reasonable reserves therefor
have been established and are reflected, in accordance with GAAP, on the books
and records of each Company.
(c) The Seller will cause each Company to continue to
26
comply in all material respects with all Laws applicable to its business,
operations, and affairs or to the assets of each Company.
(d) The Seller will cause each Company to refrain from:
(i)selling or otherwise disposing of any of its
assets, permitting any of its assets to be subjected to any
Liens, or otherwise conveying any right, title, or interest in
or to any of its assets, except for the sale, in the ordinary
course of business and consistent with past practice, of
assets having an aggregate fair market value of less than
$50,000 and (ii) the disposal of worn-out or obsolete assets;
(ii) creating, incurring, assuming, guaranteeing, or
otherwise becoming liable for any Liability (except for trade
payables in the ordinary course of business and consistent
with past practice);
(iii) declaring, setting aside, or paying any
dividend or other distribution in respect of its capital stock
or directly or indirectly redeeming, purchasing, or otherwise
acquiring any of its capital stock or any interest in or right
to acquire any such stock, provided that each Company may make
S-corporation distributions equal to the actual tax payable by
Seller for taxable years ending with the Closing Date to the
extent such payments are due and have not been paid as of the
date hereof or distributions have not been made to Seller by
such Company in order to make such payment;
(iv) entering into any Contract or transaction with
any Affiliate; or
(v) incurring any Liability for borrowed money.
5.2 INVESTIGATION BY BUYER. The Seller and each Company will provide
Buyer and Buyer's legal counsel, accountants, financial advisers, and other
representatives with full access during regular business hours to all
facilities, officers, employees, agents, accountants, and books and records of
each Company, and will furnish Buyer and such Persons with copies of such
documents, information, and data concerning each Company, as Buyer or such
Persons may reasonably request. Buyer will not contact or communicate with
employees or customers of Seller without first obtaining the consent of Seller.
5.3 FINANCIAL STATEMENTS AND REPORTS. The Seller and each
27
Company will deliver to Buyer (as promptly as practicable after becoming
available) true and complete copies of such financial statements, reports, or
analyses as may be prepared or received by either Seller or any Company that
relate to the business, operations, or affairs of each Company including without
limitation periodic financial statements, normal internal reports (such as those
reflecting monthly cash flow), and special reports (such as those of
consultants).
5.4 EMPLOYEE MATTERS. Seller will refrain, and will cause each Company
to refrain, from directly or indirectly:
(a) making any change to, or amending in any way, the
Contracts, salaries, wages, or other compensation of any officer, director,
employee, agent, consultant, or other similar representative of any Company
whose annual compensation exceeds $50,000, other than changes or amendments that
(A) are made in the ordinary course of business and consistent with past
practice, and (B) do not and will not result in increases of more than 5% in the
salary, wages, or other compensation of any such Person;
(b) adopting or entering into any Plan;
(c) approving any general or company-wide pay increases for
officers, directors, employees, agents, consultants, or other similar
representatives of any Company;
(d) entering into any Contract with any officer, director,
employee, agent, consultant, or other similar representative of any Company; or
(e) hiring any officer, director, employee, agent, consultant,
or other similar representative of any Company whose annual compensation exceeds
$75,000.
5.5 NO CHARTER AMENDMENTS. The Seller will cause each Company to
refrain from amending its Articles or Certificate of Incorporation or Bylaws and
from taking any action with respect to any such amendment.
5.7 NO ISSUANCE OF SECURITIES. The Seller will cause each Company to
refrain from authorizing or issuing any shares of its capital stock or other
equity securities or entering into any Contract or granting any option, warrant,
or right calling for the authorization or issuance of any such shares or other
equity securities, or creating or issuing any securities directly or indirectly
convertible into or exchangeable for any such shares or other equity securities,
or issuing any options, warrants, or rights to purchase any such convertible
securities.
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5.6 RESIGNATIONS OF DIRECTORS. Seller will cause such members (other
than Xxxxxx Xxxx) of the Board of Directors of each Company and such officers of
each Company as are designated by Buyer to tender, effective on the Closing
Date, their resignations from the Board of Directors or from such offices.
ARTICLE 6
CERTAIN OTHER COVENANTS
6.1 REGULATORY AND THIRD PARTY APPROVALS.
(a) The Seller, each Company, and Buyer, respectively, will
(i) take all commercially reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts to
obtain, as promptly as practicable, all approvals, authorizations, clearances,
and Orders of Governmental Authorities required of such party to consummate the
transactions contemplated by this Agreement, and (ii) cooperate with the other
parties hereto in obtaining, as promptly as practicable, all approvals,
authorizations, clearances, and Orders of Governmental Authorities required of
the other parties to consummate the transactions contemplated by this Agreement.
(b) The Seller and each Company will use all commercially
reasonable efforts, as promptly as practicable, to obtain all consents,
approvals, and actions disclosed or required to be disclosed in SECTION 3.3 of
the Disclosure Letter.
(c) Buyer will use all commercially reasonable efforts, as
promptly as practicable, to obtain all consents, approvals, and actions
disclosed or required to be disclosed in SECTION 4.3 of the Disclosure Letter.
6.2 SATISFACTION OF CLOSING CONDITIONS. The Seller, each Company, and
Buyer shall take all commercially reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all commercially reasonable efforts
to cause to be fulfilled at or prior to the Closing all of the conditions
precedent to such party's obligation to consummate the transactions contemplated
by this Agreement.
6.3 RELEASE OF SELLER GUARANTY. Buyer shall, at or prior to Closing,
use its best efforts to cause the Bank of New York to release Seller from all
liability on personal guarantees on loans to the Companies.
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ARTICLE 7
CONDITIONS PRECEDENT
7.1 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or before the Closing of each of the following conditions (all or
any of which may be waived in whole or in part by Buyer):
(a) NO INJUNCTION. There shall not be in effect on the Closing
Date any valid Order of any Governmental Authority restraining, enjoining, or
otherwise preventing consummation of any of the transactions contemplated by
this Agreement.
(b) CONSENTS, AUTHORIZATIONS, ETC. All approvals,
authorizations, clearances, or Orders of all Governmental Authorities and other
Persons contemplated by Section 6.1 hereof and necessary to permit any party to
perform its obligations under this Agreement shall have been obtained and shall
be in full force and effect.
(c) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Seller and each Company contained in this Agreement (including
the statements of the Seller and each Company contained in the Disclosure
Letter) shall be true in all material respects as of the date of this Agreement
and shall be true in all material respects on and as of the Closing Date as if
made on and as of the Closing Date except to the extent that any failure of any
of the Representations and Warranties (other than those in Section 3.4) to be
true does not cause (either individually or when taken together with all such
other failures to be true) a Material Adverse Effect to any Company.
(d) PERFORMANCE OF AGREEMENT. The Seller and each Company
shall have performed or complied in all material respects with all obligations
that are required to be performed or complied with by the Seller or any Company
pursuant to the terms of this Agreement on or before the Closing Date.
(e) CERTIFICATES. The Seller shall have delivered to Buyer a
certificate, dated the Closing Date, in a form reasonably satisfactory to Buyer,
certifying as to the fulfillment of the conditions set forth in Sections 7.1(a),
7.1(b), 7.1(c), 7.1(d) and 7.1(e) hereof. In addition, the Seller shall and
shall cause each Company to deliver to Buyer one or more certificates of the
Secretary or any Assistant Secretary of each Company and the Seller respectively
certifying as to corporate matters reasonably requested by Buyer and shall
deliver good standing certificates from the jurisdiction of each Company's
incorporation attesting to
30
each Company's good standing in such jurisdiction.
(f) OPINIONS OF COUNSEL. The Seller and each Company shall
have delivered to Buyer an opinion, dated as of the Closing Date, of Drinker
Xxxxxx & Xxxxx LLP, as counsel to the Seller and each Company, to the effect set
forth in EXHIBIT 7.1(F) hereto.
(g) LICENSES. Each Company shall own or hold all Licenses that
are necessary in connection with the conduct of the business of such Company as
currently conducted except to the extent that the failure to hold such licenses
does not cause or can not reasonable be expected to cause a Material Adverse
Event to any Company.
(h) DELIVERY OF SHARES. The Seller shall have delivered to
Buyer certificates for the Shares duly endorsed in blank or with stock powers
endorsed in blank duly attached, and such Shares shall be free and clear of any
lien, charge or encumbrance of any nature whatsoever.
(i) LLC OPERATING AGREEMENT. The Seller shall have executed
and delivered to the Buyer the LLC Operating Agreement in substantially the form
of EXHIBIT 7.1(I) hereto.
(j) ESCROW AGREEMENT. The Escrow Agent and the Seller shall
have executed and delivered the Escrow Agreement in substantially the form of
EXHIBIT 7.1(J) hereto.
(k) DUE DILIGENCE REVIEW. The Buyer shall have completed its
due diligence review of the business, assets and liabilities of the Companies,
which review shall have been completed on or before May 15, 1998, and shall not
have notified the Seller on or before May 15, 1998, that as a result of such due
diligence investigation, Buyer does not desire to close the transactions
contemplated hereby.
(l) HSR FILINGS. The waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
(m) EMPLOYMENT AGREEMENTS. Xxxxxx X. Xxxx and such other key
employees of the Companies as mutually agreed to by Buyer and Xxxxxx X. Xxxx
shall have executed and delivered to Buyer Employment Agreements in
substantially the form of EXHIBIT 7.1(M) hereto.
(n) DELIVERY OF EXHIBITS AND DISCLOSURE LETTER. Seller and the
Companies shall have delivered the Exhibits and Disclosure Letter to Buyer in
form and content satisfactory to Buyer in its sole discretion by 5:00 P.M.,
April 22, 1998.
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7.2 CONDITIONS TO THE OBLIGATIONS OF THE SELLER AND THE COMPANY. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or before the Closing of each of the
following conditions (all or any of which may be waived in whole or in part by
the Seller and each Company):
(a) NO INJUNCTION. There shall not be in effect on the Closing
Date any valid Order of any Governmental Authority restraining, enjoining, or
otherwise preventing consummation of any of the transactions contemplated by
this Agreement.
(b) CONSENTS, AUTHORIZATIONS, ETC. All approvals,
authorizations, clearances, Orders, consents, and actions of all Governmental
Authorities necessary to permit any party to perform their obligations under
this Agreement shall have been obtained and shall be in full force and effect.
(c) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Buyer contained in this Agreement shall be true in all material
respects as of the date of this Agreement and shall be true in all material
respects on and as of the Closing Date as if made on and as of the Closing Date
except to the extent that any failure of any of the representations and
warranties to be true does not cause (either individually or when taken together
with all such other failures to be true) a Material Adverse Effect to the Buyer.
(d) PERFORMANCE OF AGREEMENT. Buyer shall have performed or
complied in all material respects with all obligations that are required to be
performed or complied with by Buyer pursuant to the terms of this Agreement on
or before the Closing Date.
(e) CERTIFICATES. Buyer shall have delivered to the Seller an
officer's certificate, dated the Closing Date, in a form reasonably satisfactory
to the Seller, certifying as to the fulfillment of the conditions set forth in
Sections 7.2(a), 7.2(b), 7.2(c), 7.2(d) and 7.2(e) hereof. In addition, Buyer
shall deliver to the Seller one or more certificates of the Secretary or any
Assistant Secretary of Buyer certifying as to corporate matters reasonably
requested by the Seller.
(f) OPINION OF COUNSEL. Buyer shall have delivered to the
Seller an opinion, dated as of the Closing Date, of Fowler, White, Gillen,
Boggs, Xxxxxxxxx and Banker P.A., as counsel to Buyer, to the effect set forth
in EXHIBIT 7.2(F) hereto.
(g) DELIVERY OF CONSIDERATION. Buyer shall have delivered to
Seller the Cash Purchase Price Amount less the Escrow Amount and shall have
delivered to the Escrow Agent the Escrow
32
Amount.
(h) ESCROW AGREEMENT. The Escrow Agent and the Buyer shall
have executed and delivered the Escrow Agreement substantially in the form of
EXHIBIT 7.1(J) hereto.
(i) LLC OPERATING AGREEMENT. The Buyer shall have executed and
delivered to the Seller the LLC Operating Agreement.
(j) HSR FILINGS. The waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
(k) EMPLOYMENT AGREEMENTS. Xxxxxx X. Xxxx and such other key
employees of the Companies as mutually agreed to by Buyer and Xxxxxx X. Xxxx
shall have executed and delivered to Buyer Employment Agreements substantially
in the form of EXHIBIT 7.1(M) hereto.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE SELLER. Subject to the provisions of this
Article 8 and Section 9.2 hereof, the Seller will indemnify and hold harmless
the Buyer in respect of the following (i) any amount to be paid to Buyer
pursuant to the post closing adjustment provisions of Section 2.2(b), and (ii)
any and all Damages resulting from or relating to any breach by the Seller or
any Company of any representation, warranty, covenant, or agreement made by the
Seller or any Company in this Agreement, the Disclosure Letter or in any
certificate delivered by the Seller or any Company in connection with this
Agreement, and (iii) any Liability of any Company relating to an event or
occurrence on or prior to the Closing Date which is not reserved for on the
Final Closing Balance Sheet, including but not limited to any lawsuits listed in
SECTION 3.6 of the Disclosure Letter and any matter listed as an exception or
notation in the Seller's certificate delivered at Closing, it being understood
that to the extent that a claim for damages hereunder relates to the termination
of any contract which is terminable at will by the party contracting with any
Company, no claim for damages for lost revenues or profits which might have been
derived by the Companies after the termination shall be included in such
indemnifiable Damages.
8.2 INDEMNIFICATION BY THE BUYER. Subject to the provisions of this
Article 8 and Section 9.2 hereof, the Buyer will indemnify and hold harmless the
Seller from any and all Damages resulting from or relating to any breach by the
Buyer of any representation, warranty, covenant, or agreement made by the Buyer
in this Agreement or in any certificate delivered by the
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Buyer in connection with this Agreement.
8.3 INDEMNIFICATION PROCEDURES.
(a) If an Indemnitee becomes aware of any matter that it
believes is indemnifiable pursuant to this Article 8 (other than pursuant to
SECTION 8.4) and such matter involves (i) any claim made against the Indemnitee
by any Person other than Buyer or Seller or (ii) the commencement of any action,
suit, investigation, arbitration, or similar proceeding against the Indemnitee
by any Person other than Buyer or Seller, the Indemnitee will give the
Indemnifying Party prompt written notice of such claim or the commencement of
such action, suit, investigation, arbitration, or similar proceeding. Such
notice will (A) provide (with reasonable specificity) the basis on which
indemnification is being asserted, (B) set forth the actual or estimated amount
of Damages for which indemnification is being asserted, if known, and (C) be
accompanied by copies of all relevant pleadings, demands, and other papers
served on the Indemnitee.
(b) The Indemnifying Party will have a period of 60 days after
the delivery of each notice required by Section 8.3(a) hereof during which to
respond to such notice. If the Indemnifying Party responds within such 60-day
period that it accepts its indemnification obligation and elects to defend the
claim described in such notice, the Indemnifying Party will be obligated to
compromise or defend (and will control the defense of) such claim, at its own
expense and by counsel chosen by the Indemnifying Party and reasonably
satisfactory to the Indemnitee. The Indemnitee will cooperate fully with the
Indemnifying Party and counsel for the Indemnifying Party in the defense against
any such claim, and the Indemnitee will have the right to participate at its own
expense in the defense of any such claim. If the Indemnifying Party (i) responds
within such 60-day period that it elects not to defend such claim or that it
does not accept responsibility for indemnification, (ii) does not respond within
such 60-day period, or (iii) responds within such 60-day period that it elects
to defend such claim but does not, in fact, take actions reasonably necessary to
defend such claim, the Indemnitee will be free, without prejudice to any of the
Indemnitee's rights hereunder, to compromise or defend (and control the defense
of) such claim, by counsel chosen by the Indemnitee, and to pursue such remedies
as may be available to the Indemnitee under applicable Law. The foregoing
notwithstanding, during the period prior to an allocation of the responsibility
for controlling the defense of a claim hereunder, each party shall take such
action as shall be required to prevent the entry of any default in such action.
(c) Any compromise or settlement of any claim (whether
34
defended by the Indemnitee or by the Indemnifying Party) will require the prior
written consent of the Indemnitee and the Indemnifying Party, which consent will
not be unreasonably withheld. If, however, the Indemnitee refuses to consent to
a bona fide offer of compromise or settlement that the Indemnifying Party
desires to accept, the Indemnitee may continue to pursue such claim, free of any
participation by the Indemnifying Party, at the sole expense of the Indemnitee.
In such event, the obligation of the Indemnifying Party to the Indemnitee will
equal the lesser of (i) the amount of the offer of compromise of settlement that
the Indemnifying Party desired to accept, plus the reasonable out-of-pocket
expenses (except for expenses resulting from the Indemnitee's participation in
any defense controlled by the Indemnifying Party) incurred by the Indemnitee
before the date the Indemnifying Party notified the Indemnitee of the offer of
compromise or settlement, or (ii) the actual out-of-pocket amount that the
Indemnitee is obligated to pay as a result of the Indemnitee's continued pursuit
of such claim, plus the reasonable out-of-pocket expenses incurred by the
Indemnitee in connection with such claim.
(d) If an Indemnitee becomes aware of any matter that it
believes is indemnifiable pursuant to this Article 8 (other than Section 8.4)
and such matter involves a claim made by Buyer or Seller, the Indemnitee will
give the Indemnifying Party prompt written notice of such claim. Such notice
will (i) provide (with reasonable specificity) the bases for which
indemnification is being asserted and (ii) set forth the actual or estimated
amount of Damages for which Indemnification is being asserted. The Indemnifying
Party will have a period of 60 days after the delivery of each notice required
by this Section 8.4(d) during which to respond to such notice. If the
Indemnifying Party accepts (in writing) full responsibility for the claim
described in such notice, the actual or estimated amount of Damages reflected in
such notice will be conclusively deemed a Liability that the Indemnifying Party
owes, and will pay (in cash) upon demand, to the Indemnitee. If the Indemnifying
Party responds within such 60-day period that it disputes such claim, the
Indemnifying Party and the Indemnitee agree to proceed in good faith to
negotiate a resolution of such dispute. If all such disputes are not resolved
through negotiations within 60 days after such negotiations begin, either the
Indemnifying Party or the Indemnitee may initiate litigation to resolve such
disputes. If the Indemnifying Party does not respond within 60 days after
delivery of any claim notice required by this Section 8.4(d), the Indemnitee may
initiate litigation to resolve such claim.
8.4 Tax Indemnification.
(a) The Seller will be responsible for, will pay or cause to
be paid, and will indemnify and hold harmless the Buyer
35
from and against, any and all Damages for or in respect of each of the
following:
(i) any and all Taxes finally determined to be due
with respect to any taxable period of any Company (or any
predecessor) ending on or before the Closing Date, except to
the extent of current accruals for Taxes in the Balance Sheet;
(ii) any and all Taxes finally determined to be due
from any member of an affiliated, consolidated, combined, or
unitary group (other than any Company) of which any Company
(or any predecessor) is or was a member on or prior to the
Closing Date for which any Company is liable pursuant to
Treasury Regulation Section 1.1502-6(a) or any analogous or
similar state, local or foreign Law;
(iii) any breach by any Company or the Seller of any
representation, warranty, or covenant contained in Section
3.11 or Section 5.1(b) hereof;
(iv) any breach by the Seller of any representation,
warranty or covenant contained in this Section 8.4; and
(v) any Election Taxes specified in Section 9.3(b)
hereof.
(b) The Buyer will promptly notify the Seller of the
commencement of any claim, audit, examination, or other proposed change or
adjustment by any taxing authority concerning any Tax or other Damages covered
by Section 8.4(a) hereof ("Tax Claim"). The Seller and the Buyer shall jointly
control the defense and settlement of any Tax audit or administrative or court
proceeding relating to a claim made with respect to taxable periods of any
Company ending on or prior to the Closing Date, and each party (including Buyer)
shall cooperate with the other parties at its own expense and keep all other
parties fully informed with respect thereto, including furnishing copies of all
communications with any taxing authority relating to such proceeding, and there
shall be no settlement or closing or other agreement with respect thereto
without the consent of the other parties, which consent will not be unreasonably
withheld. If Buyer or Company fails to consent to a settlement which is
acceptable to Seller, Buyer shall take over the defense of such proceeding at
its sole expense and the liability of Seller hereunder shall be limited to the
lesser of the Settlement amount which was acceptable to Seller but to which
Buyer and/or Company did not consent and the final liability. The Seller shall
promptly notify the Buyer if it decides not to participate in the defense or
settlement of any
36
such Tax audit or administrative or court proceeding and the Buyer thereupon
shall be permitted to defend and settle such Tax audit or proceeding.
(c) The Seller will promptly notify the Buyer of the
commencement of any claim, audit, examination, or other proposed change or
adjustment by any taxing authority which may affect the Liability of any Company
for Taxes and the Seller shall keep the Buyer duly informed of the progress
thereof.
(d) Tax Returns shall be prepared in a manner consistent with
past practices. The Seller shall be responsible for filing all Tax Returns
required to be filed by or on behalf of any Company, or with respect to its
assets and operations, for the Pre-Closing Period, and each Company shall, and
the Buyer shall cause each Company to, cooperate in all respects with Seller
with respect to preparation and filing such Tax Returns including, without
limitation, providing Seller with executed copies thereof for filing if such Tax
Returns are due subsequent to the Closing Date. The Buyer shall be responsible
for filing all Tax Returns required to be filed by or on behalf of each Company,
or with respect to its assets and operations, for taxable periods which commence
after the Closing Date.
(e) For purposes of this Agreement, if, for any Taxes, whether
federal, state or local, a taxable period of any Company does not terminate on
the date of the Closing (such non-terminating period, a "Straddle Period"), the
parties shall, to the extent permitted by applicable law, elect with the
relevant taxing authority to treat the Pre-Closing Period portion of such
Straddle Period for all purposes as a short taxable period ending as of the
close of the date of the Closing and such short taxable period shall be treated
as a Pre-Closing Period for purposes of this Agreement. In any case where
applicable law does not permit such an election to be made, then, for purposes
of this Agreement, Taxes for the entire Straddle Period shall be allocated to
the Pre-Closing Period using an "interim closing of the books" method, assuming
that such Straddle Period ended at the close of the date of the Closing and
treating such Straddle Period as a Pre-Closing Period for purposes of this
Agreement, except that exemptions, allowances and deductions calculated on an
annual basis (such as the deduction for depreciation) shall be apportioned on a
per-diem basis. With respect to any Tax Return required to be filed by any
Company for a Straddle Period, the Buyer shall prepare such Tax Return and shall
provide the Seller with (i) a copy of such Straddle Period Return, which shall
have been prepared in accordance with prior practices of such Company and (ii) a
statement setting forth the amount of Tax that is allocable (net of current
accruals for Taxes in the Balance Sheet) to the Seller pursuant to this Section
8.4(e) (the "Statement") at least 30 business days prior to the due date for
filing of such Tax Return
37
(including extensions). The Statement shall provide (with reasonable
specificity) the bases on which such Taxes were allocable to the Seller,
including computation of Taxes reflected in such Straddle Period Return. Within
fifteen business days after the Seller's receipt of the Statement, the Seller
will provide the Buyer with written notice indicating whether the Seller agrees
or disagrees with the Statement, including Seller's computation and bases of
disputed allocations and Taxes. If the Seller notifies the Buyer in writing of
agreement with the Statement or if the Seller fails to deliver such written
notice within such fifteen-day period, then not later than five business days
before the due date for payment of Taxes with respect to such Straddle Period
Return, the Seller shall pay to the relevant Company (unless such Company had
established an adequate reserve prior to Closing) an amount equal to the Taxes
shown on the Statement that are allocable to the Seller pursuant to this Section
8.4(e). In the event the Seller provides written notice to the Buyer of any
disagreement with the Statement, or with the computation of Taxes reflected on
such Straddle Period Return, setting forth (with reasonable specificity) the
bases therefor, the parties will negotiate in good faith to resolve such
disagreement. If the parties are able to resolve such disagreement within five
business days after the Buyer's receipt of notice of disagreement, then the
Taxes allocable to the Seller will be adjusted accordingly and the Seller shall
pay such amount to such Company no later than five business days before the due
date for the payment of Taxes with respect to such Tax Return. In the event the
parties are unable to resolve any disagreement within five business days
following each the Buyer's receipt of notice of disagreement, the parties shall
jointly request the Settlement Auditor to resolve any issue in dispute as
promptly as possible and shall cooperate with the Settlement Auditor to resolve
such disagreement. If the Settlement Auditor is unable to make a determination
with respect to any disputed issue within five business days prior to the due
date (including extensions) for the filing of the Tax Return in question, then
the Buyer shall file such Tax Return on the due date (including extensions)
therefor, and shall pay the amount of tax shown as due on such Tax Return,
without such determination having been made. Notwithstanding the filing of such
Tax Return, the Settlement Auditor shall make a determination with respect to
any disputed issue, and the amount of Taxes that are allocated to the Seller
pursuant to Section 8.4(e) hereof shall be as determined by the Settlement
Auditor. The fees and expenses of the Settlement Auditor shall be paid one-half
by the Buyer and one-half by the Seller. In the case of a dispute, (i) the
Seller shall pay to such Company not later than five business days before the
due date for the payment of Taxes with respect to such Tax Return, the amount of
Taxes as to which there is no disagreement and (ii) the Seller shall pay to the
Buyer not later than five business days after notice to the Seller of resolution
thereof, any remaining
38
amounts allocable to the Seller as shown in such notice. No payment pursuant to
this Section 8.4(e) will affect the Buyer's right to indemnification pursuant to
Section 8.4(a) hereof should the amount of Taxes as ultimately determined (on
audit or otherwise) for the periods covered by such Tax Returns and which are
the responsibility of the Seller as provided herein or as determined pursuant to
this Section 8.4(e), exceed the amount of the Seller's payment under this
Section 8.4(e). Seller may apply for a refund of any amounts paid by it pursuant
to this Section 8.4(e) which it has disputed as set forth in this Section
8.4(e), and the Buyer and Company shall reasonably cooperate in all respects
with Seller with respect to such refund claim including, without limitation,
providing Seller with appropriate, non-exclusive, power of attorney.
(f) The Seller and each Company will provide (and Buyer will
cause each Company so to provide) to each other full access, at any reasonable
time and from time to time, at the business location at which the books and
records are maintained, after the Closing Date, to such Tax data of each Company
as the Seller or the Buyer or any Company, as the case may be, may from time to
time reasonably request and will furnish, and request the independent
accountants and legal counsel of the Seller, the Buyer or any Company to furnish
to the Seller, Buyer or Company, as the case may be, such additional Tax and
other information and documents in the possession of such Persons as the Seller,
Buyer or any Company may from time to time reasonably request.
(g) Any claim for indemnity hereunder may be made at any time
prior to sixty days after the expiration of the applicable Tax statute of
limitations with respect to the relevant taxable period (including all periods
of extension, whether automatic or permissive).
8.5 INDEMNIFICATION PAYMENTS. Without limiting the rights of Buyer
hereunder, any indemnification payment due, as determined by either (i) written
agreement between the Buyer and the Seller or (ii) a final non-appealable order
of a court of competent jurisdiction, to the Buyer under this Article 8 may be
collected from the Escrow Fund pursuant to the terms of the Escrow Agreement so
long as the Escrow is in existence. Notwithstanding anything to the contrary in
this Article 8, (i) no claim for indemnification under Section 8.1 hereof
(except pursuant to Section 8.1(i) or (iii)) shall be made by an indemnitee
unless and until the aggregate liability with respect to which such Indemnitee
is seeking indemnification hereunder shall equal or exceed $200,000.00, (in
which event, only the amount in excess of $200,000.00 shall be subject to such
indemnification) and (ii) the aggregate amount of the indemnification obligation
of Seller shall not exceed the Purchase Price (excluding any amounts payable
under this Article but including the amount of the Additional Payment).
39
Seller and Buyer agree that any payment made pursuant to Section 8.1 hereof will
be treated by the parties on their Tax Returns as a contribution to the capital
of the applicable Company.
ARTICLE 9
MISCELLANEOUS
9.1 TERMINATION. Without limiting the rights or remedies that any party
hereto may otherwise have, this Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by written agreement of
the Seller, each Company, and Buyer.
(b) at any time after May 31, 1998, by the Seller, each
Company, or Buyer if the transactions contemplated by this Agreement have not
been consummated on or before such date; provided, however, that if Buyer
terminates the Agreement hereunder and Sellers and Companies are not then in
breach of a representation, warranty, covenant or other obligations under this
Agreement, then Buyer shall pay Seller, as a break-up fee to reimburse Seller
for costs and other losses, the sum of $50,000 within three days after
termination; or
(c) at any time on or before May 15, 1998, by the Buyer if
Buyer is not satisfied with the results of its due diligence investigation or if
the Seller and the Companies failed to deliver the Exhibits and Disclosure
Letter by April 22, 1998 in form and content satisfactory to Buyer in accordance
with Section 2.10.
If this Agreement is validly terminated pursuant to Section 9.1 hereof, (i) the
obligations of the parties to effect the transactions contemplated hereby will
terminate, (ii) the provisions of Article 9 hereof will continue to apply
following any such termination, and (iii) no party hereto will be relieved of
any Liability for Damages that such party may have to any other party by reason
of such party's breach of this Agreement (or any representation, warranty,
covenant, or agreement included herein).
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9.2 SURVIVAL; LIMITATIONS ON CLAIMS.
(a) All representations and warranties made by any party in
this Agreement will survive the consummation of the transactions contemplated
hereby, and will remain in full force and effect thereafter until the survival
expiration date therefor (the "Survival Expiration Date"), which shall be the
end of the twelfth month after the Closing Date, except that (i) with respect to
the representations and warranties made by any Company and the Seller in
Sections 3.4 hereof the representation and warranty shall survive indefinitely
and there shall be no Survival Expiration Date, and (ii) with respect to the
representation and warranty made in Section 3.11 hereof, the Survival Expiration
Date shall be 60 days after the expiration of all applicable statutes of
limitations (including all periods of extension, whether automatic or
permissive).
(b) No claim for indemnification may be made under Section 8
of this Agreement after the Survival Expiration Date applicable to such claim
has occurred. Notwithstanding anything in the foregoing to the contrary, any
claim as to which a bona fide claim for indemnification has been asserted prior
to the Survival Expiration Date related thereto may be pursued beyond, the
expiration of such Survival Expiration Date until such claim is resolved by
final, nonappealable judgment or by settlement.
(c) All covenants and agreements respectively made by any
party in this Agreement to be performed after the date hereof will survive the
consummation of the transactions contemplated hereby, and will remain in full
force and effect thereafter, until the expiration of the terms or periods
respectively specified therein or indefinitely in the case of the covenants that
have no such specified term or period.
9.3 TAX ELECTION.
(a) CERTAIN DEFINITIONS. As used in this Agreement:
(i) "Election" means the election to be made by Buyer
and Seller pursuant to Section 338(h)(10) of the Code, as
described in Section 9.3(b) hereof.
(ii) "Election Taxes" means Taxes incurred solely by
reason of the Election.
(iii) "Pre-Closing Period" means any taxable period
which ends on or before the Closing Date, including that
portion of any Straddle Period which is treated as ending on
the Closing Date.
(iv) "Seller Group" means Seller's affiliated
41
group, within the meaning of Section 1504(a) of the Code, of
which Seller is the common parent.
(v) "Straddle Period" means any taxable period that
includes (but does not end on) the Closing Date.
(vi) "Straddle Period Return" means a Tax Return
filed for a Straddle Period.
(b) SECTION 338(H)(10) ELECTION.
(i) With respect to the purchase by Buyer of the
Shares pursuant to this Agreement (A) Seller and Buyer shall
jointly make the Election (and any comparable election under
state or local tax law), (B) Seller, Buyer and each Company
shall, on or as promptly as practicable following the Closing
Date, cooperate with each other to take all actions necessary
and appropriate (including filing such forms, returns,
elections, schedules and other documents as may be required)
to effect and preserve a timely Election in accordance with
the provisions of Treasury Regulations Section 1.338(h)(10)-1
(or any comparable provisions of state or local tax law) or
any successor provisions, (C) Seller and Buyer shall report
the purchase by Buyer of the Shares pursuant to this Agreement
consistent with the Election (and any comparable elections
under state or local tax laws) and shall take no position
inconsistent therewith in any Tax Return (unless applicable
state or local tax law does not recognize such election), any
proceeding before any taxing authority or otherwise, and (D)
Seller shall pay all Election Taxes, if any, due as a result
of this Election.
(ii) In connection with the Election, Buyer and
Seller shall agree to the determination of the "Aggregate
Deemed Sales Price" (as defined under applicable Treasury
Regulations) of the Shares and the allocation of such
"Aggregate Deemed Sales Price" among the assets of each
Company. Such determination and allocation shall be prepared
jointly by Seller and Buyer after the Closing Date. In the
event that Seller and Buyer are unable to agree upon such
determination and allocation, such determination and
allocation (to the extent there is disagreement between Seller
and Buyer) shall be made by the Settlement Auditor as promptly
as practicable and shall be final, conclusive and binding on
the parties. The determination of the amount of the "Aggregate
Deemed Sales Price" and the allocations thereof shall be made
in accordance with
42
Section 338(b) of the Code and the applicable Treasury
Regulations thereunder. Each of Seller and Buyer shall (A) be
bound by such determination and such allocation for purposes
of determining any Taxes, (B) prepare and file, and cause its
affiliates to prepare and file, its Tax Returns on a basis
consistent with such determination of the "Aggregate Deemed
Sales Price" and such allocation and (C) take no position, and
cause its affiliates to take no position, inconsistent with
such determination and such allocation on any applicable Tax
Return, in any proceeding before any taxing authority or
otherwise (unless applicable state or local tax law does not
recognize such election). In the event that any such
determination or allocation is disputed by any taxing
authority, the party receiving notice of the dispute shall
promptly notify the other party hereto concerning the
commencement of the dispute and the defense or prosecution of
the dispute shall be pursuant to Section 8.4(b) hereof.
(iii) Notwithstanding any other provisions of this
Agreement to the contrary, all sales, use, transfer, gains,
stamp, duties, recording and similar Taxes incurred in
connection with the transactions contemplated by this
Agreement shall be paid by the Seller, and Seller shall, at
its own expense, accurately file or cause to be filed all
necessary Tax Returns and other documentation with respect to
such Taxes and timely pay all such Taxes. If required by
applicable law, Buyer will, and will cause each Company to,
join in the execution of any such Tax Returns or such other
documentation.
9.4 BROKERS. The Seller will indemnify and hold harmless the Buyer in
respect of any and all claims or demands for commission, compensation, or other
Damages by any broker, finder, or other agent (whether or not a present or
former employee or agent of either Seller or any Company) claiming to have been
engaged by the Seller or any Company in connection with the transactions
contemplated by this Agreement, and the Seller will bear the cost of the
reasonable out-of-pocket expenses incurred by the Buyer in investigating,
defending against, or appealing any such claim. Buyer will indemnify and hold
harmless the Seller in respect of any and all claims or demands for commission,
compensation, or other Damages by any broker, finder, or other agent (whether or
not a present or former employee or agent of Buyer) claiming to have been
engaged by Buyer in connection with the transactions contemplated by this
Agreement, and Buyer will bear the cost of the reasonable out-of-pocket expenses
incurred by the Seller in investigating, defending against, or appealing any
such claim.
43
9.5 NONCOMPETITION.
(a) During the Term of Noncompetition, the Seller will refrain
from directly or indirectly, whether as a principal, officer, director, employee
(other than as an employee of the Companies or the Buyer), shareholder,
investor, consultant, advisor, partner, joint venturer, broker, agent, equity
owner, or in any other capacity whatsoever, in every state in the United States
(the "Restricted Territory"):
(i) engaging or participating in any business
enterprise (regardless of whether it is a sole proprietorship
or a corporation, partnership, trust, business association, or
other entity) that engages in (x) any business which any
Company was engaged in as of the date of this Agreement or as
of the Closing date (other than the Retail Card Business), or
(y) any business which performs TPA Services. The foregoing
notwithstanding, it is permissible for the Seller to engage in
the Retail Card Business; or
(ii) other than through the sale of permitted
products or services by the Seller as set forth in (i) above,
causing or attempting to cause (A) any person or entity by or
through or to whom any Company sells or distributes its
services or products to terminate or reduce its relationship
or dealings with any Company, or (B) any company whose
services or products are sold by or through any Company to
terminate or reduce its relationship or dealings with any
Company; or
(iii) causing or attempting to cause any employee,
agent, consultant, or independent contractor of any Company to
cease serving any Company in such capacity; or
(iv) hiring or otherwise retaining or soliciting any
Person who, prior to the Closing or at any time during the
Term of Noncompetition, was an employee, consultant or other
contractor of any Company.
(b) The Seller acknowledges that the geographic boundaries of
the Restricted Territory, the scope of prohibited activities, and Term of
Noncompetition contained in Section 9.5(a) hereof (i) are reasonable and no
broader than necessary to protect the investment by Buyer in each Company and
each Company's ongoing business interests and (ii) do not and will not impose
any unreasonable burden upon the Seller.
(c) Buyer and Seller agree that (i) any breach by the
44
Seller of any of the provisions contained in this Section 9.5 would cause
irreparable Damage to the Buyer Parties for which monetary damages and other
remedies at law may be inadequate, and (ii) the Buyer Parties will be entitled
as a matter of right to obtain, without posting any bond whatsoever and without
proof of any actual Damage, a restraining order, an injunction, specific
performance, or other form of equitable or extraordinary relief from any court
of competent jurisdiction to restrain any threatened or further breach of this
Section 9.5 or to require such Seller to perform its obligations under this
Section 9.5, which right to equitable or extraordinary relief will not be
exclusive but will be in addition to all other remedies to which the Buyer
Parties may be entitled under this Agreement, at law, or in equity (including
without limitation the right to recover monetary damages).
9.6 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing, the
Seller and each Company, on the one hand, and Buyer, 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.
45
9.7 CONFIDENTIALITY.
(a) The Seller will refrain, and will cause each Company and
their respective officers, directors, employees, agents, and other
representatives to refrain, from disclosing to any other Person (i) any
confidential documents or confidential information concerning Buyer or its
Affiliates furnished to it in connection with this Agreement or the transactions
contemplated hereby, and (ii) any documents or information concerning each
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 Buyer (or, following Closing, each Company); (B) Seller deems it
advisable (upon advice of legal counsel) to disclose any such documents or
information in connection with the requirements of any Law; or (C) 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 the Seller.
(b) For a three-year period after this Agreement is terminated
pursuant to Section 9.1 hereof, Buyer will refrain, and will cause its officers,
directors, employees, agents, and other representatives to refrain, from
disclosing to any other Person any documents or information concerning each
Company furnished to it in connection with this Agreement or the transactions
contemplated hereby, unless (i) such disclosure is compelled by judicial or
administrative process or by other requirements of Law and notice of such
disclosure is furnished to the Seller; (ii) Buyer deems it advisable (upon
advice of legal counsel) to disclose any such documents or information in
connection with the requirements of any Law; or (iii) such documents or
information can be shown to have been (A) previously known by the Person
receiving such documents or information, or (B) in the public domain through no
fault of Buyer.
9.8 EXPENSES. Except as otherwise specifically provided in this
Agreement, each of the Seller and the Buyer will pay all expenses incurred or to
be incurred by it in negotiating this Agreement, in performing its obligations
under this Agreement, and in consummating the transactions contemplated by this
Agreement.
9.9 NOTICES. Any notice or communication given pursuant to this
Agreement must be in writing and (a) delivered personally, (b) sent by
telefacsimile or other similar facsimile transmission, (c) delivered by
overnight express, or (d) sent by registered or certified mail, postage prepaid,
as follows:
46
(i) If to Seller or any Company (before Closing):
Xxxxxx X. Xxxx
000 X. Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile number: (000) 000-0000
with copy to:
Drinker Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile number: 609-799-7000
(ii) If to Company (after Closing):
National Preferred Provider Network, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: President
Facsimile number: 000-000-0000
with copy to:
Fowler, White, Gillen, Boggs,
Xxxxxxxxx and Banker, P.A.
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxx, XX 00000
Attn. Xxxxx X. Xxxxx, Esq.
Facsimile number: 000-000-0000
(iii) If to Buyer:
HealthPlan Services Corporation
0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: General Counsel
Facsimile number: (000) 000-0000
with copy to:
Fowler, White, Gillen, Boggs,
Xxxxxxxxx and Banker, P.A.
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxx, XX 00000
Attn. Xxxxx X. Xxxxx, Esq.
Facsimile number: 000-000-0000
All notices and other communications required or permitted under
47
this Agreement that are addressed as provided in this Section 9.9 will (A) if
delivered personally or by overnight express, be deemed given upon delivery; (B)
if delivered by telefacsimile or similar facsimile transmission, be deemed given
when electronically confirmed; and (C) if sent by registered or certified mail,
be deemed given when received. Any party from time to time may change its
address for the purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charged with the
contents thereof.
9.10 ENTIRE AGREEMENT. This Agreement, together with the exhibits
hereto and the Disclosure Letter, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes all
prior communications, agreements, understandings, representations, and
warranties, whether oral or written, between the parties hereto with respect to
the subject matter hereof. There are no oral or written agreements,
understandings, representations, or warranties among the parties hereto with
respect to the subject matter hereof other than those set forth in this
Agreement.
9.11 ASSIGNMENT AND AMENDMENT OF AGREEMENT. This Agreement will be
binding upon the parties hereto and their respective successors and permitted
assignees. Neither this Agreement, any part hereof, nor any right or obligation
hereunder may be assigned by any party hereto without the prior written consent
of the other parties hereto (and any attempt to do so will be void), except that
Buyer may, without the consent of Seller, assign all or any portion of Buyer's
rights or obligations hereunder to any Affiliate of Buyer, provided that Buyer
agrees that such assignment shall not relieve Buyer from any liability it may
have hereunder. This Agreement may be modified or amended only by a writing duly
executed on behalf of each party hereto.
9.12 GOVERNING LAW AND LITIGATION VENUE. This Agreement shall be
governed by the laws of the State of Florida and the laws of United States of
America (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. This Agreement shall be deemed
for all purposes to have been entered into in Hillsborough County, Florida. Any
litigation arising directly or indirectly from a dispute hereunder shall be
litigated solely in the Circuit Court of the State of Florida in Hillsborough
County, Florida or in the United States District Court for the Middle District
of Florida, Tampa Division (unless the actual location of real estate that is
the subject of any suit requires otherwise). The parties hereto submit to the
personal jurisdiction of such courts,
48
exclusively, and agree that such courts shall be the sole situs of venue for the
resolution of any such dispute through litigation. Any appeals from the
decisions of the aforementioned courts shall be taken pursuant to the Federal
and Florida Rules of Appellate Procedure, except as the actual location of real
estate that is the subject of suit otherwise requires.
9.13 NO THIRD PARTY RIGHTS. Except as specifically provided in this
Agreement, this Agreement is not intended and may not be construed to create any
rights (including third party beneficiary rights) in any parties other than the
Seller, each Company, Buyer and their respective successors and permitted
assignees.
9.14 INCORPORATION OF EXHIBITS. The exhibits attached hereto are hereby
incorporated into this Agreement and will be deemed a part hereof as if set
forth herein in full. In the event of any conflict between the provisions of
this Agreement and any such exhibit, the provisions of this Agreement will
control.
9.15 HEADINGS, GENDER, ETC. The headings used in this Agreement have
been inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender will be deemed to include
each other gender, (b) words using the singular or plural number also will
include the plural or singular number, respectively, (c) the terms "hereof,"
"herein," "hereby," "hereunder," "hereto," and derivative or similar words will
refer to this entire Agreement, (d) the terms "Article" or "Section" will refer
to the specified Article or Section of this Agreement, and (e) the conjunction
"nor" will denote any one or more, or any combination or all, of the specified
items or matters involved in the applicable list.
9.16 WAIVER AND REMEDIES. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof. Any
such waiver will be in writing and will be executed by such party. A waiver on
one occasion will not be deemed to be a waiver of the same or any other term or
condition on a future occasion. All remedies, either under this Agreement or by
Law or otherwise afforded, will be cumulative and not alternative.
9.17 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain
49
in full force and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom, and (d) in lieu of such
illegal, invalid, or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid, and enforceable provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be
possible.
9.18 FURTHER ASSURANCES. Each of Buyer (including each Company
following the Closing) and the Seller agree that, from time to time after the
Closing Date, upon the reasonable request of the other party, it will cooperate
with such other party to effect the orderly transfer of the business,
operations, and affairs of each Company. Each such party may, at its own
expense, make such copies of any portions of the relevant books and records as
such party may reasonably require.
9.19 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[Remainder of page intentionally left blank.]
50
Acquisition Agreement
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Agreement this 18th day of April, 1998.
HEALTHPLAN SERVICES CORPORATION
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: SVP and Chief Counsel
"Buyer"
NATIONAL PREFERRED PROVIDER NETWORK,
INC.
By: /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx
Title: President
QUALITY MEDICAL ADMINISTRATORS, INC.
By: /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx
Title: President
NATIONAL NETWORK SERVICES, INC.
By: /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx
Title: President
the "Companies"
XXXXXX X. XXXX, individually
/s/ XXXXXX X. XXXX
---------------------------------
THE XXXXXX X. XXXX IRREVOCABLE
QUALIFIED ANNUITY TRUST
AGREEMENT I
By: /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx, Trustee
THE XXXXXX X. XXXX IRREVOCABLE
QUALIFIED ANNUITY TRUST
AGREEMENT II
By: /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx, Trustee
THE XXXXXX X. XXXX IRREVOCABLE
QUALIFIED ANNUITY TRUST
AGREEMENT III
By: /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx, Trustee
"Seller"
LIST OF EXHIBITS
Exhibit 1.1 Definitions
Exhibit 2.2 Purchase Price Allocation
Exhibit 2.4(a) Exceptions to Company Benefit Plan Terminations
Exhibit 2.5 Affiliated Contracts
Exhibit 7.1(f) Opinions of Counsel
Exhibit 7.1(i) LLC Operating Agreement
Exhibit 7.1(j) Escrow Agreement
Exhibit 7.1(m) Employment Agreements
Exhibit 7.2(f) Opinion of Fowler, White, Gillen, Boggs, Xxxxxxxxx and
Banker, P.A.
As required by applicable law, the Company will furnish supplementally any
omitted Exhibit or Schedule upon request.
