EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN HEALTHWAYS, INC.,
AH MERGERSUB, INC.,
STATUSONE HEALTH SYSTEMS, INC.
AND
CERTAIN STOCKHOLDERS OF
STATUSONE HEALTH SYSTEMS, INC.
DATED AS OF SEPTEMBER 5, 2003
TABLE OF CONTENTS
PAGE
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ARTICLE 1. THE MERGER.....................................................................................1
1.1 The Merger.....................................................................................1
1.2 The Closing....................................................................................1
1.3 Effect of Merger...............................................................................2
ARTICLE 2. EXCHANGE OF STOCK OF STATUSONE.................................................................2
2.1 Exchange of StatusOne Shares in the Merger and Payment of Merger Consideration.................2
2.2 Working Capital Estimate.......................................................................3
2.3 Working Capital Adjustment.....................................................................3
2.4 Payment of Class A/B Merger Consideration and Adjustment Amount................................5
2.5 Escrow Amount..................................................................................6
2.6 Revenue Shortfall..............................................................................6
2.7 Earn-Out Consideration.........................................................................7
2.8 Procedures.....................................................................................8
2.9 StatusOne Options, Warrants, and Convertible Securities........................................8
ARTICLE 3. OBLIGATIONS OF THE PARTIES AT THE CLOSING......................................................9
3.1 American Healthways' Deliverables..............................................................9
3.2 StatusOne's Deliverables.......................................................................9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY STATUSONE AND THE PRINCIPAL STOCKHOLDERS....................11
4.1 Authorization; Corporate Authority............................................................11
4.2 Existence; Good Standing......................................................................11
4.3 Execution and Enforceability..................................................................11
4.4 Capitalization................................................................................12
4.5 Subsidiaries..................................................................................12
4.6 Prior Sales of Securities.....................................................................12
4.7 No Violation..................................................................................12
4.8 Regulatory Consents...........................................................................13
4.9 Financial Statements; Controls................................................................13
4.10 No Material Adverse Changes; No Undisclosed Liabilities.......................................13
4.11 Tax Matters...................................................................................14
4.12 Employees and Fringe Benefit Plans............................................................15
4.13 Compliance with Applicable Laws and other Regulations.........................................16
4.14 Litigation....................................................................................17
4.15 Corporate Records; Other Information..........................................................17
4.16 Properties....................................................................................18
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4.17 Material Contracts............................................................................18
4.18 StatusOne Proprietary Assets..................................................................19
4.19 Certain Business Practices and Regulations....................................................21
4.20 Insurance.....................................................................................21
4.21 Accounts Receivable...........................................................................21
4.22 Customers and Suppliers.......................................................................21
4.23 No Brokers....................................................................................22
4.24 Compliance with Applicable Privacy Laws.......................................................22
4.25 Government Investigation......................................................................22
4.26 Full Disclosure...............................................................................23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF AMERICAN HEALTHWAYS AND AH MERGER SUB.......................23
5.1 Authorization; Corporate Authority............................................................23
5.2 Existence; Good Standing......................................................................23
5.3 Execution and Enforceability..................................................................23
5.4 No Violation..................................................................................24
5.5 Professional Fees.............................................................................24
5.6 Consents and Approvals........................................................................24
5.7 Commission Filings............................................................................24
5.8 AMHC Common Stock.............................................................................24
ARTICLE 6. POST CLOSING COVENANTS AND AGREEMENTS.........................................................24
6.1 Further Assurances............................................................................24
6.2 Taxes.........................................................................................25
6.3 Employment Offers.............................................................................25
6.4 Outstanding Options...........................................................................25
6.5 Employee Benefit Plans........................................................................25
6.6 Confidential Information Memorandum and Termination, Consent and Release......................26
6.7 Consents......................................................................................26
ARTICLE 7. INDEMNIFICATION AND SURVIVAL OF REPRESENTATIONS...............................................26
7.1 Indemnification by the StatusOne Stockholders.................................................26
7.2 Time Limitation; StatusOne Stockholders.......................................................27
7.3 Limitations on Amount; StatusOne Stockholders.................................................28
7.4 Indemnification by American Healthways........................................................28
7.5 Time Limitation; American Healthways..........................................................29
7.6 Limitations on Amount; American Healthways....................................................29
7.7 Procedure.....................................................................................29
7.8 Statements as Representations.................................................................30
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7.9 American Healthways' Right of Set-Off Against Earn-Out Consideration..........................30
7.10 Indemnification Exclusive Remedy..............................................................30
ARTICLE 8. NON-COMPETE...................................................................................30
8.1 Restrictive Covenants.........................................................................30
ARTICLE 9. CERTAIN TAX MATTERS...........................................................................32
9.1 Tax Periods Ending on or Before the Closing Date..............................................32
9.2 Tax Periods Beginning Before and Ending After the Closing Date................................32
9.3 Cooperation on Tax Matters....................................................................33
9.4 Tax Sharing Agreements........................................................................33
9.5 Taxes.........................................................................................33
ARTICLE 10. STATUSONE STOCKHOLDERS' REPRESENTATIVE........................................................33
ARTICLE 11. MISCELLANEOUS.................................................................................34
11.1 Expenses......................................................................................34
11.2 Assignability; Parties in Interest............................................................35
11.3 Entire Agreement; Amendments..................................................................35
11.4 Headings......................................................................................35
11.5 Severability..................................................................................35
11.6 Notices.......................................................................................35
11.7 Governing Law.................................................................................36
11.8 No Third-Party Beneficiaries..................................................................37
11.9 Pronouns......................................................................................37
11.10 Construction..................................................................................37
11.11 Counterparts..................................................................................37
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Earn Out Agreement
Exhibits C-1
through C-10 Employment Agreements
Exhibit D Form of XxXxxxxxx, Will & Xxxxx Opinion
Exhibit E Form of Bass, Xxxxx & Xxxx PLC Opinion
Exhibit F Form of Release and Consent
Exhibit G Customer List
Exhibit H Certificate of Merger
Exhibit I Consent to Form of Earn-Out Consideration
SCHEDULES
Schedule 2.4 Schedule of Beneficial Interests
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), is dated as of the
5th day of September, 2003, by and among American Healthways, Inc., a Delaware
corporation ("American Healthways"), AH Mergersub, Inc., a Delaware corporation
and wholly owned subsidiary of American Healthways ("AH Merger Sub"), StatusOne
Health Systems, Inc., a Delaware corporation ("StatusOne"), the holders of
capital stock of StatusOne named on the signatures pages hereto (individually a
"Principal Stockholder" and collectively, the "Principal Stockholders") and
Xxxxxxx Xxxxxxxx as "Stockholder Representative" pursuant to Article 10 hereof.
RECITALS
A. The Boards of Directors of American Healthways, AH Merger Sub, and
StatusOne each have determined that a business combination between American
Healthways and StatusOne is in the best interests of their respective companies
and stockholders and accordingly have agreed to effect the merger provided for
herein upon the terms set forth herein.
B. The Boards of Directors of American Healthways, AH Merger Sub and
StatusOne have approved the merger of AH Merger Sub with and into StatusOne (the
"Merger") on the terms set forth in this Agreement and the DGCL (as defined
below), whereby upon the Closing of the Merger, each issued share of StatusOne
Capital Stock (as defined below) and each Option (as defined below) shall be
converted into the right to receive the Merger Consideration (as defined below)
in accordance with Section 2.1(a) herein.
C. American Healthways, AH Merger Sub, StatusOne and the Principal
Stockholders desire to make certain representations and warranties and to enter
into covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1.
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3), AH Merger Sub shall be merged
with and into StatusOne in accordance with this Agreement and the separate
corporate existence of AH Merger Sub shall thereupon cease. StatusOne shall be
the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and will be a wholly owned subsidiary of American
Healthways. The Merger shall have the effects specified in Section 251 of the
Delaware General Corporation Law (the "DGCL").
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place either (a) at the
offices of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx,
Xxxxxxxxx, at 3:00 p.m., local time, on September 5, 2003, or (b) at such other
time, date or place as American Healthways and StatusOne may agree. The date on
which the Closing occurs is hereinafter referred to as the "Closing Date".
1.3 EFFECT OF MERGER.
(a) General. At the Closing, the parties hereto shall cause a
certificate of merger meeting the requirements of the relevant provisions
of the DGCL to be properly executed and filed in accordance with such
provisions, which certificate shall be in substantially the form attached
hereto as Exhibit H (the "Certificate of Merger"). The Merger shall become
effective at the time of filing of the Certificate of Merger or at such
later time which the parties hereto shall have agreed upon and designated
in such Certificate of Merger as the effective time of the Merger (the
"Effective Time"). Notwithstanding any language contained herein to the
contrary, each of the parties hereby agrees that for tax, financial
accounting and reporting purposes, the effective date of the Closing shall
be September 1, 2003, but all representations and warranties are being
made as of the Closing Date.
(b) Certificate of Incorporation. The certificate of incorporation
of the Surviving Corporation shall be amended and restated at and as of
the Effective Time to read as did the certificate of incorporation of AH
Merger Sub (which certificate of incorporation will include restrictions
on transferability of shares of capital stock of the Surviving
Corporation) immediately prior to the Effective Time (except that the name
of the Surviving Corporation shall remain unchanged as of the Effective
Time).
(c) Bylaws. The bylaws of the Surviving Corporation shall be amended
and restated at and as of the Effective Time to read as did the bylaws of
AH Merger Sub immediately prior to the Effective Time (except that the
name of the Surviving Corporation shall remain unchanged as of the
Effective Time).
(d) Directors and Officers. The directors and officers of AH Merger
Sub shall become the directors and officers of the Surviving Corporation
at and as of the Effective Time (retaining their respective positions and
terms of office).
(e) Conversion of StatusOne Capital Stock. At and as of the
Effective Time, each share of StatusOne Capital Stock and each Option
shall be converted into the right to receive the Merger Consideration
pursuant to the terms of Article 2 below.
(f) Conversion of Capital Stock of AH Merger Sub. At and as of the
Effective Time, each share of Common Stock, par value $.001 per share, of
AH Merger Sub shall be converted into one share of Common Stock, par value
$.001 per share, of the Surviving Corporation.
ARTICLE 2.
EXCHANGE OF STOCK OF STATUSONE
2.1 EXCHANGE OF STATUSONE SHARES IN THE MERGER AND PAYMENT OF MERGER
CONSIDERATION.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of StatusOne Capital Stock (as defined
below), (i) all of the issued and outstanding shares of the Class A Common
Stock (as defined below) and Class B Common Stock (as defined below) of
StatusOne (collectively, the "Class A/B Stock"), together with any options
or warrants to acquire any shares of Class A/B Stock (the "Options")
shall, subject to subsection (b) hereof, be canceled and converted into,
and become exchangeable for, the right to receive cash in an
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aggregate amount equal to Sixty-Five Million Dollars ($65,000,000), less
the amount of the Working Capital Shortfall (as defined below), if any, or
plus the amount of the Working Capital Excess (as defined below), if any
(the "Class A/B Merger Consideration"), plus any Contingent Earn-Out
Amount (as defined below), if any, payable pursuant to Section 2.7 hereof
and (ii) all of the issued and outstanding shares of Class C Common Stock
(as defined below) shall, subject to subsection (b) hereof, be converted
into, and become exchangeable for, the right to receive one hundred
percent (100%) of the Base Earn-Out Amount (as defined below), if any,
payable pursuant to Section 2.7 hereof (the "Class C Merger
Consideration", together with the Class A/B Merger Consideration, the
"Merger Consideration"). At the Closing, Five Million Dollars ($5,000,000)
(the "Escrow Amount") of the Class A/B Merger Consideration shall be
deposited in an escrow account (the "Escrow Account") and shall be treated
as set forth in Section 2.5.
(b) Notwithstanding the foregoing, in the event that there are any
Appraising Stockholders (as defined below), (i) the amount of cash that
would otherwise be payable to each Appraising Stockholder as Class A/B
Merger Consideration or Class C Merger Consideration, as the case may be,
shall not be paid, (ii) the aggregate amount of cash to be paid as Class
A/B Merger Consideration or Class C Merger Consideration, as the case may
be, shall be reduced by such amount of cash set forth in (i) above without
affecting the amount of cash apportioned to any other holder of StatusOne
Capital Stock or holder of Options, and (iii) each Appraising Stockholder
shall be entitled only to the consideration described in subsection
2.1(c).
(c) Each share of StatusOne Capital Stock held by any person (such
persons, collectively, the "Appraising Stockholders", and each
individually an "Appraising Stockholder") who duly exercises the rights
afforded to appraising stockholders (the "Appraisal Rights") pursuant to
Section 262 of the DGCL (such shares, collectively, the "Appraising
Shares") shall not be converted into the right to receive the Class A/B
Merger Consideration or Class C Merger Consideration, as the case may be,
attributable to such Appraising Shares, but shall be converted into the
right to receive only the fair value of such shares as determined in
accordance with the provisions of Section 262 of the DGCL.
2.2 WORKING CAPITAL ESTIMATE. At least two (2) business days prior to the
Closing Date, StatusOne shall deliver a document (the "Estimated Working Capital
Statement") to American Healthways setting forth StatusOne's good faith estimate
of the Working Capital (as determined in accordance with Section 2.3) (the
"Estimated Working Capital") as of August 31, 2003 and a reasonable description
of the amounts used to determine such calculation. If the Estimated Working
Capital is less than One Million Nine Hundred Thousand Dollars ($1,900,000) (the
"Working Capital Target"), then the Class A/B Merger Consideration shall be
reduced by the amount of such shortfall (the amount of such shortfall, the
"Estimated Shortfall"). If the Estimated Working Capital is greater than One
Million Nine Hundred Thousand Dollars ($1,900,000), then the Class A/B Merger
Consideration shall be increased by the amount of such excess (the amount of
such excess shall be referred to herein as the "Estimated Excess"). Prior to
Closing, StatusOne shall deliver to American Healthways copies of the accounts
receivable and accounts payable ledgers as of August 31, 2003 and all check
registers dated as of the last business day immediately prior to the Effective
Time.
2.3 WORKING CAPITAL ADJUSTMENT.
(a) For purposes of this section, "Working Capital" shall mean the
amount by which the current assets of StatusOne exceed the current
liabilities of StatusOne, determined in accordance with accounting
principles generally accepted in the United States ("GAAP"), applied on a
basis consistent with the preparation of the audited financial statements,
including all year end adjustments, except as set forth on Schedule 2.3
hereto, as of and at August 31, 2003.
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(b) Subsequent to the Closing, American Healthways shall prepare, or
cause to be prepared, in accordance with GAAP, except as set forth on
Schedule 2.3, a balance sheet (the "Closing Date Balance Sheet") of
StatusOne as of August 31, 2003. American Healthways shall cause Ernst &
Young LLP ("E&Y") to perform certain procedures with respect to the
Closing Date Balance Sheet as directed by American Healthways and issue a
report to confirm that such balance sheet is complete, accurate and
prepared in accordance with GAAP. American Healthways shall then determine
the actual Working Capital as of August 31, 2003 (the "Closing Working
Capital") based upon the Closing Date Balance Sheet. American Healthways
shall deliver the Closing Date Balance Sheet and its determination of the
Closing Working Capital to the Stockholder Representative (as defined
below) within sixty (60) days following the Closing Date, together with
the report of E&Y described above. American Healthways shall be fully
responsible for costs of the E&Y report.
(c) If within twenty (20) business days following receipt of the
Closing Date Balance Sheet and the Closing Working Capital calculation the
Stockholder Representative has not given American Healthways written
notice of its objection as to the Closing Working Capital calculation
(which notice shall state with reasonable detail the basis of such party's
objection), then the Closing Working Capital calculated in accordance with
Section 2.3(b) shall be binding and conclusive on all of the holders of
StatusOne Capital Stock (the "StatusOne Stockholders") and American
Healthways and shall be used in computing the Adjustment Amount (as
defined below).
(d) If the Stockholder Representative duly and timely gives American
Healthways such notice of objection, and if the parties fail to resolve
the issues outstanding with respect to the Closing Date Balance Sheet and
the calculation of the Closing Working Capital within twenty (20) business
days after receipt of the objection notice, each of American Healthways
and StatusOne shall submit the issues remaining in dispute to an
independent public accounting firm, other than E&Y, that does not then
audit and has not within the previous three (3) years audited the
financial statements of American Healthways or StatusOne or their
respective affiliates (the "Independent Accountants") for resolution
applying the principles, policies and practices referred to in this
Section 2.3. If issues are submitted to the Independent Accountants for
resolution, (i) StatusOne and American Healthways shall furnish or cause
to be furnished to the Independent Accountants such work papers and other
documents and information relating to the disputed issues as the
Independent Accountants may request and are available to that party or its
agents and shall be afforded the opportunity to present to the Independent
Accountants any material relating to the disputed issues and to discuss
the issues with the Independent Accountants and (ii) the determination by
the Independent Accountants, as set forth in a notice to be delivered to
both the Stockholder Representative and American Healthways within sixty
(60) days of the submission to the Independent Accountants of the issues
remaining in dispute, shall be final, binding and conclusive on the
parties and shall be used in the calculation of the Closing Working
Capital and (A) the amount by which the Working Capital Target exceeds the
Closing Working Capital, if any (the "Working Capital Shortfall") or (B)
the amount by which the Closing Working Capital Exceeds the Working
Capital Target, if any (the "Working Capital Excess"). The fees and
expenses of the Independent Accountants shall be allocated between the
StatusOne Stockholders, on the one hand, and American Healthways, on the
other hand, so that the amount of fees and expenses paid by the StatusOne
Stockholders shall be equal to the product of (x) and (y), where (x) is
the aggregate amount of such fees and expenses, and where (y) is a
fraction, the numerator of which is the amount in dispute that is
ultimately unsuccessfully disputed by the Stockholder Representative on
behalf of the StatusOne Stockholders (as determined by the Independent
Accountants), and the denominator of which is the total value in dispute.
The date
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of the final determination of the Closing Working Capital under Section
2.3 shall be hereinafter referred to the "Adjustment Date."
(e) If an Estimated Shortfall exists on the Closing Date Balance
Sheet and the Closing Working Capital exceeds the Estimated Working
Capital, then the "Adjustment Amount" shall equal the difference between
the Closing Working Capital and the Estimated Working Capital and shall be
owed by American Healthways and paid to the Stockholder Representative as
provided in Section 2.4.
(f) If the Working Capital Shortfall is greater than the Estimated
Shortfall, then the "Adjustment Amount" shall equal the difference between
the Working Capital Shortfall and the Estimated Shortfall and shall be
owed by the StatusOne Stockholders and paid to American Healthways as
provided in Section 2.4.
(g) If an Estimated Excess exists on the Closing Date Balance Sheet
and the Closing Working Capital exceeds the Estimated Working Capital,
then the "Adjustment Amount" shall equal the difference between the
Working Capital Excess and the Estimated Excess, and shall be owed by
American Healthways and paid to the StatusOne Stockholders as provided in
Section 2.4.
(h) If the Working Capital Excess is less than the Estimated Excess,
then the "Adjustment Amount" shall equal the difference between the
Estimated Excess and the Working Capital Excess and shall be owed by the
StatusOne Stockholders and paid to American Healthways as provided in
Section 2.4.
2.4 PAYMENT OF CLASS A/B MERGER CONSIDERATION AND ADJUSTMENT AMOUNT.
Subject to the fulfillment of the conditions set forth herein:
(a) On the Closing Date (or if the Closing Date is a legal holiday,
on the first business day following the Closing Date), American Healthways
shall pay the Stockholder Representative the Class A/B Merger
Consideration adjusted by the Estimated Shortfall or the Estimated Excess,
if any, less the Escrow Amount (the "Closing Date Class A/B Merger
Consideration") by wire transfer in immediately available funds to an
account designated in writing by the Stockholder Representative, provided
that the Estimated Excess, if any, shall not be paid to the Stockholder
Representative but shall be deposited into the escrow account established
pursuant to the Escrow Agreement (as defined herein) until such time as
the Adjustment Amount is paid as set forth below. The Parties agree that
the Stockholder Representative has directed that the Class A/B Merger
Consideration be paid to an account administered by Xxxxxxx Xxxxxxxx and
Xxxxx Xxxxxx, as Trustees (the "Trustees") of the StatusOne Distribution
Trust (the "Trust"), for the benefit of the holders of the Class A/B Stock
and the holders of the Options (the "Trust Account"), and such amount
shall be distributed and allocated by the Trustees among the StatusOne
Stockholders and the holders of the Options in accordance with the
schedule of beneficial interests maintained by the Trustees which will be
mutually agreed to by the parties and attached hereto as Schedule 2.4. The
holder of any Options shall receive from the Trust Account that portion of
the Merger Consideration not less than such amount to which any such
holder of Options would have been entitled if such person had exercised
all of their vested Options immediately prior to the Closing. From and
after the Effective Time, upon payment of the Merger Consideration by
American Healthways to the Stockholder Representative, neither the
StatusOne Stockholders nor the holders of any Options shall have any
rights against American Healthways or the Surviving Corporation in respect
of their ownership of the Class A/B Stock or the Options, except as
provided by applicable law. In
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approving the Merger, the StatusOne Stockholders shall authorize the
Stockholder Representative to receive the Merger Consideration on their
behalf and deposit such Merger Consideration to the Trust Account, and
shall agree to look only to the Stockholder Representative and the Trust
for the Merger Consideration.
(b) Within five (5) business days after the Adjustment Date,
American Healthways shall pay the Stockholder Representative or the
Stockholder Representative shall pay or instruct the Escrow Agent (as
defined herein) to pay American Healthways from the Escrow (such amount to
be paid from the Escrow to be limited to the Estimated Excess deposited
into Escrow at Closing; provided, however, that in the event that the
Stockholder Representative fails to pay American Healthways any Adjustment
Amount, American Healthways may make a claim for the Adjustment Amount
from the Escrow), as the case may be and as provided in Section 2.3, the
Adjustment Amount provided for in Section 2.3 hereof. If the adjustment in
Section 2.3 results in American Healthways owing the StatusOne
Stockholders any amount, American Healthways shall pay the Stockholder
Representative the Adjustment Amount via wire transfer of immediately
available funds, to the Trust Account, such amount to be distributed and
allocated by the Trustees among the StatusOne Stockholders and the holders
of the Options in accordance with the schedule of beneficial interests
maintained by the Trustees, which is attached hereto as Schedule 2.4. If
the adjustment in Section 2.3 results in the StatusOne Stockholders owing
American Healthways any amount, the Stockholder Representative shall pay
or instruct the Escrow Agent to pay American Healthways from the Escrow
(such amount to be paid from the Escrow to be limited to the Estimated
Excess deposited into Escrow at Closing; provided, however, that in the
event that the Stockholder Representative fails to pay American Healthways
any Adjustment Amount, American Healthways may make a claim for the
Adjustment Amount from the Escrow) the Adjustment Amount, which shall be
payable via wire transfer of immediately available funds to an account
designated by American Healthways. After full payment of the Adjustment
Amount to American Healthways, if applicable, the remaining portion of the
Estimated Excess, if any, shall be released from the escrow account and
shall be paid to the Stockholder Representative, who shall direct the
transfer of such funds to the Trust Account, such amount to be distributed
and allocated by the Trustees among the StatusOne Stockholders and the
holders of the Options in accordance with the schedule of beneficial
interests maintained by the Trustees and attached hereto as Schedule 2.4.
2.5 ESCROW AMOUNT. American Healthways shall deposit the Escrow Amount at
the Closing in an escrow account to be maintained with National City Bank of
Kentucky in Louisville, Kentucky (the "Escrow Agent"), which shall be held in
connection with any potential indemnification of American Healthways by the
StatusOne Stockholders pursuant to Sections 7.1 and 7.7 of this Agreement or any
Revenue Shortfall (as defined below) (the "Escrow"). The Escrow Amount shall be
held until the expiration of twelve (12) months following the Closing Date or
longer if an indemnification claim is made hereunder or American Healthways
makes a claim with respect to a Revenue Shortfall during such twelve (12) month
period. The parties hereto shall enter into that certain Escrow Agreement, by
and among the Escrow Agent, American Healthways and the Stockholder
Representative substantially in the form attached hereto as Exhibit A (the
"Escrow Agreement") which shall govern the distribution of the Escrow Amount.
2.6 REVENUE SHORTFALL. StatusOne and the Principal Stockholders agree
that, in the event that on or prior to the one (1) year anniversary date of the
Closing Date (the "Measurement Date"), any customer set forth on Exhibit G
hereto terminates or gives written notice (the "Termination Notice") of its
intention to terminate its relationship with StatusOne (each, a "Terminating
Customer") (for any reason whatsoever, including StatusOne's default under its
contract with such customer), American Healthways shall be entitled to reduce
the Class A/B Merger Consideration, and to receive from the Escrow Amount,
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an amount equal to the amount of projected revenues for each such Terminating
Customer, as set forth on Exhibit G hereto (such amount to be referred to as the
"Revenue Shortfall"); provided that, if both StatusOne and the Terminating
Customer continue to fully perform pursuant to the terms of the Terminating
Customer's existing contract and StatusOne receives written notice by the
Terminating Customer of revocation of its Termination Notice within 90 days
following the termination date set forth in the Termination Notice, American
Healthways shall pay to the Stockholder Representative on behalf of the
StatusOne Stockholders and holders of Options the amount paid from the Escrow to
American Healthways with respect to such Terminating Customer. The combined
Revenue Shortfall for all Terminating Customers paid to American Healthways from
the Escrow shall be referred to as the "Escrow Payout".
2.7 EARN-OUT CONSIDERATION. Upon the achievement by StatusOne of the
performance criteria (the "Performance Criteria") set forth in that certain
Earn-Out Agreement by and between American Healthways and the Stockholder
Representative attached hereto as Exhibit B (the "Earn-Out Agreement"), American
Healthways shall deliver to the Stockholder Representative on behalf of the
holders of the Class C Common Stock an amount up to Twelve Million Five Hundred
Thousand Dollars ($12,500,000) (the "Base Earn-Out Amount"). For purposes of the
Earn-Out Agreement, the Escrow Payout shall be referred to as the "Contingent
Earn-Out Amount" and may be earned and shall be payable to the recipients of the
Class A/B Merger Consideration in accordance with the terms of the Earn-Out
Agreement. Together with the Base Earn-Out Amount, the Contingent Earn-Out
Amount shall be referred to as the "Earn-Out Consideration." The Earn-Out
Consideration shall be payable in cash and/or shares of common stock, par value
$.001 per share, of American Healthways (the "AMHC Common Stock"), at the sole
discretion of American Healthways, all in accordance with the terms set forth in
the Earn-Out Agreement. If the shares of AMHC Common Stock are unregistered,
American Healthways agrees to file an S-3 registration statement (provided that
if American Healthways is not then eligible to register for resale such shares
on Form S-3, such registration shall be on another appropriate form determined
by American Healthways) (the "Registration Statement") with the Securities and
Exchange Commission not later than thirty (30) days after the date on which the
Earn-Out Consideration is payable in accordance with the terms of the Earn-Out
Agreement, which Registration Statement shall cover the resale from time to time
of the shares. American Healthways will use its commercially reasonable efforts
to cause the Registration Statement to be declared effective under the
Securities Act of 1933, as amended (the "Securities Act"), as promptly as
possible after the filing thereof and will use its commercially reasonable
efforts to maintain the effectiveness of such Registration Statement until the
earlier of (i) the date on which all of the shares of AMHC Common Stock issued
as Earn-Out Consideration included in the Registration Statement have been sold
or (ii) the date on which the shares of AMHC Common Stock issued as Earn-Out
Consideration may be sold under Rule 144(k) under the Securities Act. Anything
to the contrary herein notwithstanding, American Healthways may postpone for a
reasonable period of time (not to exceed one period of up to ninety (90) days in
any twelve (12) month period) the resale of shares pursuant to the Registration
Statement if American Healthways determines in the good faith judgment of its
board of directors that the resale of shares pursuant to the Registration
Statement (a) could reasonably be expected to have an adverse effect on any plan
or proposal by American Healthways or any of its subsidiaries with respect to
any financing, acquisition, recapitalization or reorganization which is material
to American Healthways or other transaction which is material to American
Healthways or (b) could require the disclosure of material non-public
information, the disclosure of which could reasonably be expected to be adverse
to the best interests of American Healthways and its stockholders.
Notwithstanding anything contained herein to the contrary, in no event shall the
aggregate amount of Earn-Out Consideration exceed Seventeen Million Five Hundred
Thousand Dollars ($17,500,000). If any amounts become due to the holders of the
Class C Common Stock under this Section 2.7 and the Earn-Out Agreement, the
Stockholder Representative shall direct such funds or shares to be deposited in
the Trust Account, for distribution by the Trustees to the StatusOne
Stockholders and the holders of the
7
Options in amounts proportionate to the Class C Merger Consideration to which
they may be entitled under the terms of the Trust.
2.8 PROCEDURES.
(a) As of the Effective Time, each stock certificate representing
one or more shares of StatusOne Capital Stock issued and outstanding
immediately before the Effective Time (other than those held in
StatusOne's treasury, which shares shall be canceled and no consideration
shall be payable or deliverable in respect thereof) (a "Certificate"),
shall cease to represent such StatusOne Capital Stock and shall represent
only, subject to the provisions of Section 2.1(b) hereof, the right to
receive the Class A/B Merger Consideration, in the case of Class A/B
Stock, and the Base Earnout Amount, in the case of the Class C Common
Stock, in each case without interest, into which such shares have been
converted pursuant to Section 2.1 hereof.
(b) After the Effective Time, no transfers of shares of StatusOne
Capital Stock shall be recorded in the stock transfer books of American
Healthways. If, after the Effective Time, there is presented to American
Healthways or the Stockholder Representative for transfer:
(i) any Certificate formerly representing shares of StatusOne
Capital Stock or any Option formerly representing the right to
purchase any StatusOne Capital Stock, such Certificate or Option
shall be canceled and exchanged for the Merger Consideration payable
in respect thereof pursuant to Section 2.1 hereof; and
(ii) any Certificate formerly representing shares of StatusOne
Capital Stock held by StatusOne, such Certificate shall be canceled
and no Merger Consideration shall be payable or deliverable in
respect thereof.
(c) Neither American Healthways nor any other person shall be liable
to any holder or former holder of shares of StatusOne Capital Stock or any
Option for any such shares or any dividends, distributions, or other
payments or consideration in respect thereof that were properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(d) In the event that any Certificate has been lost, stolen, or
destroyed, the Trust shall issue the Merger Consideration which such
registered owner would be entitled to receive pursuant to and in
accordance with Section 2.1 hereof, if any, in exchange for such lost,
stolen or destroyed Certificate, promptly following American Healthways'
receipt of an affidavit as to that fact, in form and substance reasonably
acceptable to American Healthways, made by the registered owner of the
shares represented by such Certificate, as shown on StatusOne's stock
records immediately before the Effective Time; provided, however, that
American Healthways may, in its reasonable discretion and as a condition
precedent to the delivery of such Merger Consideration require such
registered owner of such lost, stolen or destroyed Certificate(s) to
execute a customary indemnification agreement against any claim that may
be made against StatusOne or American Healthways with respect to the
Certificate(s) alleged to have been lost, stolen or destroyed.
2.9 STATUSONE OPTIONS, WARRANTS, AND CONVERTIBLE SECURITIES. American
Healthways shall not assume any stock options, warrants or other convertible
securities to acquire StatusOne Capital Stock outstanding and unexercised or not
converted as of the Effective Time, but rather the Options shall represent the
right to receive the Class A/B Merger Consideration and Class C Merger
Consideration, if any, in an amount not less than such amount to which any
holder of such Options would have been entitled if such holder had exercised all
of their vested Options as of the Effective Time.
8
ARTICLE 3.
OBLIGATIONS OF THE PARTIES AT THE CLOSING
3.1 AMERICAN HEALTHWAYS' DELIVERABLES. At the Closing, American Healthways
and AH Merger Sub shall deliver or will cause to be delivered to StatusOne:
(a) the Closing Date Class A/B Merger Consideration as specified in
Section 2.4;
(b) a copy of resolutions or written consents of the Board of
Directors of American Healthways and AH Merger Sub, and of the sole
stockholder of AH Merger Sub, each certified by the Secretary of such
entity, authorizing the execution, delivery and performance of this
Agreement and the other agreements and documents referred to herein to be
executed by such entity, and the consummation of the transactions
contemplated hereby;
(c) the opinion of Bass, Xxxxx & Xxxx PLC, legal counsel for
American Healthways and AH Merger Sub, the substance of which is
substantially as set forth in Exhibit E hereto;
(d) the Escrow Agreement executed by American Healthways;
(e) an employment agreement for each of Xxxxx Xxxx, Xxx Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxx May, Xxx Xxxxxx, M.D., Xxxx Xxxx, Xxxxx
Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxxx,
substantially in the form of Exhibits X-0, X-0 , X-0, X-0, X-0, X-0 X-0,
X-0, C-9 and C-10, respectively, (the "Employment Agreements") executed by
American Healthways;
(f) the Earn-Out Agreement executed by American Healthways;
(g) the Certificate of Merger, executed by American Healthways
and/or AH Merger Sub, as appropriate; and
(h) such other certificates and documents as the StatusOne
Stockholders, the Stockholder Representative or their counsel may
reasonably request.
3.2 STATUSONE'S DELIVERABLES. At the Closing, StatusOne will deliver or
will cause to be delivered to American Healthways:
(a) stock certificates for the StatusOne Capital Stock, free and
clear of all liens, claims, charges, restrictions, security interests,
proxies, pledges, equities or encumbrances of any kind, which certificates
shall be duly endorsed to American Healthways or accompanied by duly
executed stock powers in form reasonably satisfactory to American
Healthways;
(b) a copy of the resolutions or written consents of the Board of
Directors of StatusOne and the StatusOne Stockholders, certified by
StatusOne's Secretary, authorizing the execution, delivery and performance
of this Agreement and the other agreements and documents referred to
herein to be executed by StatusOne and/or the StatusOne Stockholders, and
the consummation of the transactions contemplated hereby;
(c) the opinion of XxXxxxxxx, Will & Xxxxx, legal counsel for
StatusOne and the Principal Stockholders the substance of which is
substantially as set forth in Exhibit D hereto;
9
(d) the Escrow Agreement executed by the Stockholder Representative;
(e) the Employment Agreements executed by Xxxxx Xxxx, Xxx Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxx May, Xxx Xxxxxx, M.D., Xxxx Xxxx, Xxxxx
Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxxx;
(f) the Earn-Out Agreement executed by the Stockholder
Representative;
(g) the Estimated Working Capital Statement, as required by Section
2.2 hereof;
(h) a Release and Consent, in substantially the form attached hereto
as Exhibit F, executed and delivered by all of the holders of Class A/B
Stock, with the exception of Xxxx Xx Xxxxxxxxx, whose Release and Consent
shall be pursued diligently by the Principal Stockholders after the
Closing;
(i) Consent to Form of Earn-Out Consideration, in substantially the
form of Exhibit I, executed and delivered by all the holders of Class A/B
Stock who are entitled to receive Earnout Consideration;
(j) evidence satisfactory to American Healthways, in its sole
discretion, that StatusOne shall have taken all necessary steps to
terminate its (i) 401(k) and Profit Sharing Plan prior to the Closing and
(ii) Incentive Stock Plan 2000 prior to the Closing or as promptly
thereafter as practicable, and that American Healthways shall assume no
liability therefor;
(k) [INTENTIONALLY DELETED]
(l) evidence satisfactory to American Healthways, in its sole
discretion, that the Stock Redemption Agreement by and among StatusOne,
Xxxx Xxxxxxxx, Xxx Xxxxxx, Xxx Xxxxxx, Xxxx Xxxx and Xxxxx Hospital
Clinic, Inc., dated as of April 22, 1998 (the "Stock Redemption
Agreement"), shall have been terminated;
(m) evidence satisfactory to American Healthways, in its sole
discretion, that Xxxxx Clinic Hospital, Inc., shall have agreed to
terminate its right to nominate and/or elect a director to StatusOne's
Board of Directors;
(n) evidence satisfactory to American Healthways, in its sole
discretion, that each of the employment agreements referred to in Section
4.17(f) of the StatusOne Disclosure Letter hereof shall have been
terminated, and that neither American Healthways nor the Surviving
Corporation shall have any obligations thereunder;
(o) the Certificate of Merger, executed by StatusOne; and
(p) such other certificates and documents as American Healthways or
its counsel may reasonably request.
10
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY STATUSONE AND THE PRINCIPAL
STOCKHOLDERS
Except as set forth in the disclosure letter delivered together with this
Agreement to American Healthways and AH Merger Sub (the "StatusOne Disclosure
Letter"), each of StatusOne and the Principal Stockholders, jointly and
severally, represent, warrant, and agree as follows in this Article 4. Nothing
in the StatusOne Disclosure Letter shall be deemed adequate to disclose an
exception to a representation or warranty made herein, unless the StatusOne
Disclosure Letter identifies the exception with particularity and describes the
relevant facts in detail. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty pertains to the existence of the
document or other item itself). The StatusOne Disclosure Letter will be arranged
in sections corresponding to the numbered and lettered paragraphs contained in
this Article 4, it being acknowledged and agreed, however, that to the extent
that any of the representations and warranties of StatusOne or the Principal
Stockholders call for the disclosure of matters on the StatusOne Disclosure
Letter that are required to be disclosed pursuant to other representations and
warranties under this Agreement, disclosure in one section of the StatusOne
Disclosure Letter of such matter with such reasonable particularity or in such
reasonable detail that it can reasonably be concluded that such disclosure is
applicable to another representation and warranty shall, to the extent of such
disclosure, be deemed to constitute disclosure of that particular matter
pursuant to such other representation and warranty under this Agreement;
provided that the representations of StatusOne and the Principal Stockholders in
Sections 4.9 and 4.21 shall not be qualified by any information other than
disclosed in the sections of the StatusOne Disclosure Letter that reference such
Section.
4.1 AUTHORIZATION; CORPORATE AUTHORITY. Each of StatusOne and the
StatusOne Stockholders has all requisite corporate or individual power, as the
case may be, and full legal right and authority (including, in the case of
StatusOne, due approval of its Board of Directors and stockholders) to enter
into this Agreement and all of the other agreements to which it or he or she is
or is to become a party as contemplated hereby, to perform all of its, his or
her agreements and obligations hereunder and thereunder, each in accordance with
its respective terms, and to consummate the transactions contemplated hereby and
thereby. Each of this Agreement and such other agreements to which StatusOne
and/or any of the StatusOne Stockholders is or is to become a party has been, or
upon execution and delivery as contemplated hereby, will be, duly executed and
delivered by StatusOne and/or such StatusOne Stockholder, as the case may be.
StatusOne has all requisite corporate power and authority to own, operate and
lease its properties and carry on its business as now conducted, except where
such failure would not have a material adverse effect on the business, results
of operations, current or future financial condition or prospects of StatusOne
(a "StatusOne Material Adverse Effect"). StatusOne is not and has never been
subject to Section 2115 of the California General Corporation Law. StatusOne has
provided to American Healthways or its counsel complete and correct copies of
the Certificate of Incorporation and bylaws of StatusOne, each of which is in
full force and effect.
4.2 EXISTENCE; GOOD STANDING. StatusOne is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of Delaware. StatusOne is qualified to do business as a foreign corporation and
is in good standing under the laws of any state of the United States in which
the character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified would not result in a StatusOne Material Adverse
Effect.
4.3 EXECUTION AND ENFORCEABILITY. Each of this Agreement and such other
agreements as contemplated hereby to which StatusOne and/or the StatusOne
Stockholders, including without limitation
11
the Release and Consent, are or are to be a party has been, or upon execution
and delivery as contemplated herein, will be, duly executed and delivered by
StatusOne and/or the StatusOne Stockholders, as the case may be, and constitutes
the legal, valid, and binding obligation of such party, enforceable against such
party in accordance with its respective terms, except to the extent that (i)
such enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or hereafter in effect relating
to or limiting creditors' rights generally, and (ii) 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 or other similar
person before which any proceeding therefor may be brought.
4.4 CAPITALIZATION. The authorized capital stock of StatusOne consists of
(a) 5,500,000 shares of Class A Common Stock, par value $.001 per share (the
"Class A Common Stock"), of which 5,152,000 shares are issued and outstanding,
(b) 4,500,000 shares of Class B Common Stock, par value $.001 per share (the
"Class B Common Stock"), of which 284,712 shares are issued and outstanding, and
(c) 1,000,000 shares of Class C Common Stock, par value $.001 per share (the
"Class C Common Stock"), all of which shares are issued and outstanding, the
Class C Common Stock, together with the Class A Common Stock and the Class B
Common Stock, shall be referred to as the "StatusOne Capital Stock", all of
which are owned by the StatusOne Stockholders. Other than the StatusOne Capital
Stock and the options and warrants described on Section 4.4 of the StatusOne
Disclosure Letter, StatusOne has no outstanding capital stock, bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) on any matter. All issued and outstanding shares of StatusOne
Capital Stock are duly authorized, validly issued, fully paid, nonassessable and
free of any rights of first refusal or preemptive rights. Except as set forth in
the StatusOne Disclosure Letter, there are no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate StatusOne to issue, transfer or sell any shares of
capital stock of StatusOne. Upon and after the Effective Time, there will be no
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which will obligate StatusOne to issue,
transfer or sell any shares of capital stock of StatusOne. The StatusOne
Stockholders are the record and beneficial owners of the StatusOne Capital Stock
as set forth on Schedule 2.4, free and clear of all liens, claims, charges,
restrictions, security interests, equities, proxies, pledges or encumbrances of
any kind and have the full right, power, authority and capacity to sell and
transfer the StatusOne Capital Stock.
4.5 SUBSIDIARIES. StatusOne does not own, directly or indirectly, any
equity securities or other legal and/or beneficial interests in any
corporations, partnerships, limited liability companies, business trusts, or
joint ventures, or in any other unincorporated trade or business enterprises.
4.6 PRIOR SALES OF SECURITIES. All offers and sales of StatusOne Capital
Stock and all issuances and/or grants of options, warrants or other securities
to purchase StatusOne Capital Stock prior to the date hereof were at all
relevant times exempt from the registration requirements of the Securities Act,
and were duly registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue Sky laws,
or the relevant statutes of limitations have expired, or civil liability
therefor has been eliminated by an offer to rescind.
4.7 NO VIOLATION. Neither the execution and delivery of this Agreement or
the other agreements contemplated hereby by StatusOne and each StatusOne
Stockholder, nor the consummation of the transactions contemplated hereby or
thereby will (a) violate any provision of, constitute a default under or
otherwise give any person the right to terminate, or result in the creation of
any lien or security interest under, any agreement, indenture, instrument,
lease, security agreement, mortgage or lien to which StatusOne or any StatusOne
Stockholder is a party or by which any of StatusOne or any StatusOne
Stockholder's assets or properties are bound; (b) violate any provision of the
Certificate of Incorporation
12
or Bylaws of StatusOne; (c) violate any order, arbitration award, judgment,
writ, injunction, decree, statute, rule or regulation applicable to StatusOne or
any StatusOne Stockholder; or (d) violate any other contractual or legal
obligation or restriction to which StatusOne or any StatusOne Stockholder is
subject, except for any such violation which would not have a StatusOne Material
Adverse Effect.
4.8 REGULATORY CONSENTS. No consent, approval, order or authorization of,
or registration, declaration or filing with, any third party, including without
limitation any governmental entity, is required by or with respect to StatusOne
or any StatusOne Stockholder in connection with the execution and delivery by
StatusOne and the StatusOne Stockholders of this Agreement and the other
agreements contemplated hereby, or the consummation by StatusOne of the
transactions contemplated hereby.
4.9 FINANCIAL STATEMENTS; CONTROLS.
(a) StatusOne has delivered its unaudited financial statements for
the year ended December 31, 2000, its audited financial statements for the
years ended December 31, 2001 and 2002, and its unaudited financial
statements for the six (6) months ended June 30, 2003 (the "Most Recent
Financial Statements" and, together with all of the financial statements
delivered hereunder, the "Historical Financial Statements"). Each of the
Historical Financial Statements provided to American Healthways (including
the related notes and schedules) fairly presents in all materials respects
the financial position, results of operations, retained earnings or cash
flows of StatusOne as of its date and for the periods set forth therein
and was prepared in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein and subject,
in the case of any unaudited financial statements, to the lack of
footnotes which, if included, would not differ materially from those set
forth in the audited financial statements, and in the case of the Most
Recent Financial Statements, for normal, recurring year-end adjustments.
Such Historical Financial Statements have been prepared from the books and
records of StatusOne which accurately and fairly reflect the transactions
and dispositions of the assets of StatusOne. As of the date of the Most
Recent Financial Statements, StatusOne had no material liabilities,
contingent or otherwise, required to be recorded therein in accordance
with GAAP, whether due or to become due, other than as indicated on the
balance sheet in the Most Recent Financial Statements. The liabilities for
all benefits provided under any Plans (as defined in Section 4.12 herein)
have been fully and adequately provided for on the balance sheet in the
Most Recent Financial Statements required to be recorded therein in
accordance with GAAP.
(b) StatusOne maintains accurate books and records reflecting its
assets and liabilities and maintains proper and adequate internal
accounting controls which provide assurance that (i) transactions are
executed with management's authorization; (ii) transactions are recorded
as necessary to permit preparation of the consolidated financial
statements of StatusOne and to maintain accountability for StatusOne's
assets; (iii) access to StatusOne's assets is permitted only in accordance
with management's authorization; (iv) the reporting of StatusOne's assets
is compared with existing assets at regular intervals; and (v) accounts,
notes and other receivables are recorded accurately, and proper and
adequate procedures are implemented to effect the collection thereof on a
current and timely basis.
4.10 NO MATERIAL ADVERSE CHANGES; NO UNDISCLOSED LIABILITIES.
(a) Since the date of the Most Recent Financial Statements, there
has not been (i) any material adverse change in the financial condition,
results of operations, business, prospects, assets or liabilities
(contingent or otherwise, whether due or to become due) of StatusOne,
taken as a whole, including without limitation the loss of any material
customer; (ii) except as set forth in the StatusOne Disclosure Letter, any
dividend declared or paid or
13
distribution made on the StatusOne Capital Stock; (iii) any incurrence of
long term debt by StatusOne; (iv) any salary, bonus or compensation
increases to any officers, employees or agents of StatusOne whose annual
base compensation exceeds Seventy-Five Thousand Dollars ($75,000); (v) any
pending or threatened labor disputes or other labor problems against or
potentially affecting StatusOne; or (vi) any other transaction entered
into by StatusOne, except in the ordinary course of business and
consistent with past practice.
(b) StatusOne has no liability (and to the knowledge of StatusOne
and the Principal Stockholders, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against StatusOne or any Principal Stockholder
giving rise to any liability with respect to StatusOne), except for (i)
liabilities set forth on the balance sheet in the Most Recent Financial
Statements and (ii) liabilities which have arisen after the date of the
Most Recent Financial Statements in the ordinary course of business (none
of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law) and do not exceed Thirty Thousand
Dollars ($30,000) individually or in the aggregate.
4.11 TAX MATTERS. StatusOne has duly paid all Taxes (as defined below) and
other charges (whether or not shown on any Tax Return (as defined below)) due or
claimed to be due from it by federal, foreign, state or local taxing authorities
or has set up an adequate reserve for all Taxes payable by StatusOne accrued
through the date of the Most Recent Financial Statements. True and correct
copies of all filed Tax Returns relating to Federal taxes and state income and
sales taxes and other charges for the years 2000, 2001, 2002 and the six (6)
months ended June 30, 2003 have been delivered to American Healthways. The
accruals and reserves for Taxes contained in the Most Recent Financial
Statements and carried on the books of StatusOne (other than any reserve for
deferred taxes established to reflect timing differences between book and tax
income) are adequate to cover all unpaid Tax liabilities as of the date of the
Most Recent Financial Statements and, as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of StatusOne, will be adequate to cover all unpaid Tax liabilities as
of the Closing Date. There are no Tax liens (other than liens for current Taxes
not yet due or for Taxes which are reflected on the balance sheet of the Most
Recent Financial Statements) upon any properties or assets of StatusOne (whether
real, personal or mixed, tangible or intangible), and, except as reflected on
the balance sheet of the Most Recent Financial Statements, there are no pending
or, to StatusOne's and the Principal Stockholders' knowledge, threatened audits
or examinations relating to, or claims asserted for, Taxes or assessments
against StatusOne, and neither StatusOne nor the Principal Stockholders are
aware of any basis for any material claims. StatusOne has not granted or been
requested to grant any extension of the limitation period applicable to any
claim for Taxes or assessments with respect to Taxes. StatusOne is not a party
to any Tax allocation or sharing agreement. StatusOne has no liability for the
Taxes of any Affiliated Group under Treasury Regulation 1.1502-6 (or any similar
provision of state, local or foreign law other than the Affiliated Group of
which StatusOne is the parent company as of the date hereof). StatusOne has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor or shareholder. StatusOne is not a party to any agreement, contract,
arrangement or plan that has resulted, or would result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning
of 280G of the Internal Revenue Code of 1986, as amended (the "Code"). For
purposes of this Agreement, (i) "Tax" means any federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Code, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not and (ii) "Tax Return" means any return, report, information
return, or other document (including any
14
related or supporting information) filed or required to be filed with any taxing
authority in connection with its determination, assessment, collection,
administration, or imposition of any Tax.
4.12 EMPLOYEES AND FRINGE BENEFIT PLANS.
(a) Section 4.12(a) of the StatusOne Disclosure Letter sets forth
the names, ages and titles of all members of the Board of Directors and
officers of StatusOne and all employees of StatusOne, and the annual rate
of compensation (including base salary and bonus paid) being paid to each
such member of the Board of Directors, officer and employee as of the most
recent practicable date.
(b) Section 4.12(b) of the StatusOne Disclosure Letter lists each
employment, bonus, deferred compensation, pension, stock option, stock
appreciation right, profit-sharing or retirement plan, arrangement or
practice, each medical, vacation, retiree medical, severance pay plan, and
each other agreement or fringe benefit plan, arrangement or practice, of
StatusOne, which affects one or more of its employees, including all
"employee benefit plans" as defined by Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
(collectively, the "Plans"). No Plan is subject to Title IV of ERISA or
the minimum funding standards of Section 412 of the Code.
(c) For each Plan which is an "employee benefit plan" under Section
3(3) of ERISA, StatusOne has delivered to American Healthways correct and
complete copies of the Plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue
Service ("IRS"), the three (3) most recent Form 5500 Annual Reports, and
any related trust agreements, insurance contracts and funding agreements
which implement each such Plan.
(d) Except as may be required by applicable law, StatusOne has no
commitment, whether formal or informal and whether legally binding or not,
(i) to create any additional such Plan; (ii) to modify or change any such
Plan; or (iii) to maintain for any period of time any such Plan. The
StatusOne Disclosure Letter contains an accurate and complete description
of the funding policies (and commitments, if any) of StatusOne with
respect to each such existing Plan.
(e) StatusOne has no unfunded past service liability in respect of
any of its Plans. Neither StatusOne nor any Plan nor, to StatusOne's and
the Principal Stockholders' knowledge, any trustee, administrator,
fiduciary or sponsor of any Plan, has engaged in any prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the
Code for which there is no statutory exemption in Section 408 of ERISA or
Section 4975 of the Code or administrative exemption; all filings, reports
and descriptions as to such Plans (including Form 5500 Annual Reports,
Summary Plan Descriptions, and Summary Annual Reports) required to have
been made or distributed to participants, the IRS, the United States
Department of Labor and other governmental agencies have been made in a
timely manner or, to the extent practicable, will be made on or prior to
the Closing Date; there is no material litigation, disputed claim,
governmental proceeding or investigation pending or, to StatusOne's and
the Principal Stockholders' knowledge, threatened with respect to any of
such Plans, the related trusts, or any fiduciary, trustee, administrator
or sponsor of such Plans; such Plans have been established, maintained and
administered in all material respects in accordance with their governing
documents and applicable provisions of ERISA and the Code and Treasury
Regulations promulgated thereunder. Each Plan which is intended to be a
qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the IRS.
15
(f) Except where failure to do so would not have a StatusOne
Material Adverse Effect, StatusOne has complied in all respects with all
applicable Federal, state and local laws, rules and regulations relating
to employees' employment and/or employment relationships, including,
without limitation, wage related laws, anti-discrimination laws, employee
safety laws and COBRA (defined herein to mean the requirements of Section
4980B of the Code and Part 6 of Subtitle B of Title I of ERISA).
(g) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any employee or former employee of
StatusOne to severance pay, unemployment compensation or any other
payment, or (ii) accelerate the time of payment or vesting of any stock
option, stock appreciation right, deferred compensation or other employee
benefits under any Plan (including vacation and sick pay).
(h) None of the Plans which are "welfare benefit plans," within the
meaning of Section 3(1) of ERISA, provide for continuing benefits or
coverage after termination or retirement from employment, except for COBRA
rights under a "group health plan" as defined in Section 4980B(g) of the
Code and Section 607 of ERISA.
(i) Neither StatusOne nor, to StatusOne's and the Principal
Stockholders' knowledge, any "affiliate" of StatusOne within the meaning
of Section 414 of the Code, has ever participated in or withdrawn from a
multi-employer plan as defined in Section 4001(a)(3) of Title IV of ERISA,
and StatusOne has not incurred and does not owe any liability as a result
of any partial or complete withdrawal by any employer from such a
multi-employer plan as described under Sections 4201, 4203, or 4205 of
ERISA.
4.13 COMPLIANCE WITH APPLICABLE LAWS AND OTHER REGULATIONS.
(a) StatusOne holds all permits, registrations, authorizations,
accreditations, certifications, licenses, variances, exemptions, orders
and approvals of all governmental entities necessary for the operation of
its business or ownership of its properties (the "StatusOne Permits"),
except where the failure to obtain any such StatusOne Permit could not
reasonably be expected to have a StatusOne Material Adverse Effect.
StatusOne is in compliance in all material respects with the terms of the
StatusOne Permits. To the knowledge of StatusOne and the Principal
Stockholders, no investigation or review by any governmental entity with
respect to StatusOne is pending or threatened, and neither StatusOne nor
any Principal Stockholder has any reason to believe that any such
investigation or review will result in a StatusOne Material Adverse
Effect. To the knowledge of StatusOne and the Principal Stockholders, no
condition exists which is reasonably likely to result in any suit, claim,
action, proceeding or investigation by any person or governmental entity
against StatusOne.
(b) As used in this Agreement, "Environmental Laws" shall mean the
Federal Water Pollution Control Act, Resource Conservation and Recovery
Act, Safe Drinking Water Act, Toxic Substances Control Act, Clean Air Act
and Comprehensive Environmental Response, Compensation and Liability Act
and similar federal and state laws. As of the date of this Agreement,
StatusOne (A) is in compliance in all material respects with all
applicable Environmental Laws, (B) has received all material permits,
licenses or other approvals required under applicable Environmental Laws
to conduct their business and (C) is in compliance in all material
respects with all terms and conditions of any such permit, license or
approval. No condition exists that could give rise to any suit, claim,
action, proceeding or investigation by any person or governmental entity
against StatusOne as a result of or in connection with
16
noncompliance with Environmental Laws, except where such noncompliance
could not reasonably be expected to have a StatusOne Material Adverse
Effect.
(c) StatusOne is in compliance in all material respects with all
requirements of applicable laws, rules, regulations, orders, ordinances,
judgments and decrees of all governmental bodies or agencies (federal,
state or local) (collectively, "Laws") and third party payors relating to
or affecting the operations of StatusOne, and StatusOne has not received
any notice of any investigation or threatened investigation of a possible
violation of any applicable Laws, or any other Law or requirement relating
to or affecting the operations of StatusOne.
(d) StatusOne is not licensed by any state and is not required under
any applicable healthcare, care management or utilization management Law
to be so licensed.
(e) All billing practices of StatusOne to all third party payors,
including Medicare, Medicaid, CHAMPUS/TRICARE and other federal or state
healthcare programs and private or commercial insurance companies or
payors and customers, are and have been in compliance in all material
respects with all Laws, and StatusOne has not billed or received any
payment or reimbursement in excess of amounts allowed by Law.
(f) Neither StatusOne, its owners, officers, directors, nor any of
its employees, contractors or agents are, or have been, excluded from
participation in the Medicare, Medicaid, CHAMPUS/TRICARE or other federal
or state healthcare programs, nor is any exclusion threatened to
StatusOne's and the Principal Stockholders' knowledge.
(g) StatusOne has timely, completely and accurately filed all
reports, data and other information required to be filed with any
government entity, agency, program or contractor under any applicable Laws
or any third party payor.
(h) Neither StatusOne nor any of its owners, officers, directors,
nor any of its employees, contractors or agents has committed a violation
of federal, state or local laws regulating health care fraud and abuse,
including, but not limited to, the federal Anti-kickback Statute (42
U.S.C.Section 1320a-7b), the federal Physician Self-Referral Law (42
U.S.C.Section 1395nn) (commonly referred to as the Xxxxx Law), the federal
False Claims Act (31 U.S.C.Section 3729, et seq.) and their associated
regulations.
4.14 LITIGATION. As of the date of this Agreement, there is no suit,
action, proceeding or investigation (whether conducted by any judicial or
regulatory body, arbitrator or other person) pending or, to the knowledge of
StatusOne and the Principal Stockholders (a) threatened against StatusOne or (b)
affecting StatusOne in a manner which could reasonably be expected to result in
a StatusOne Material Adverse Effect (nor is there any basis therefor known to
StatusOne or the Principal Stockholders) or to which StatusOne is a party.
4.15 CORPORATE RECORDS; OTHER INFORMATION. The minute books of StatusOne,
copies of which have been provided to American Healthways, constitute complete
and accurate records of all meetings and actions taken by its board of
directors, committees of the board of directors and the stockholders thereof. To
the knowledge of StatusOne and the Principal Stockholders, all documents and
other written information as to existing facts relating to StatusOne, and its
assets and liabilities which have been provided to American Healthways by
StatusOne in connection with this Agreement are true, correct and complete in
all material respects except to the extent that any documents or other written
information was later specifically supplemented or corrected prior to the date
of this Agreement with additional documents or written information that was
provided to American Healthways.
17
4.16 PROPERTIES. StatusOne (i) has good, clear and marketable title to all
the properties and assets that are reflected in the Most Recent Financial
Statements as being owned by StatusOne or acquired after the date thereof, free
and clear of all claims, liens, charges, security interests or encumbrances of
any nature whatsoever except (A) statutory liens securing payments not yet due,
(B) such imperfections or irregularities of title, claims, liens, charges,
security interest or encumbrances as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise impair
business operations at such properties, and (C) as expressly set forth in the
Historical Financial Statements, and (ii) is the lessee of all leasehold estates
which are reflected in the Most Recent Financial Statements as being leased by
StatusOne or leased after the date thereof and is in possession of the
properties purported to be leased thereunder, and each such lease is valid
without default thereunder by the lessee, or to StatusOne's and the Principal
Stockholders' knowledge, the lessor.
4.17 MATERIAL CONTRACTS. The StatusOne Disclosure Letter sets forth as of
the date of this Agreement a list of the following agreements (the "StatusOne
Contracts"):
(a) each agreement between StatusOne and any customer or other
source of revenue that is currently in effect or has been in effect at any
time during the two (2) year period prior to Closing;
(b) each agreement of StatusOne concerning a partnership, joint
venture, limited liability company or other business venture with any
other person;
(c) each agreement limiting the right of StatusOne to engage in or
compete with any person in, any business or geographical area;
(d) each agreement or other arrangement of or involving StatusOne
with respect to indebtedness for money borrowed, including letters of
credit, guaranties, swaps and similar agreements;
(e) each agreement for the purchase or other acquisition or the sale
or disposition of any of the assets or properties of StatusOne, in each
case requiring payment by StatusOne or the other party to StatusOne in
excess of Twenty Thousand Dollars ($20,000), or the grant to any person of
any preferential rights to purchase any of such assets or properties;
(f) each management, consulting, bonus, employment, severance or
similar agreement;
(g) each agreement between StatusOne and any physician, clinician,
nurse or other health care professional;
(h) each equipment lease and equipment maintenance agreement;
(i) each agreement under which StatusOne agrees to share tax
liability of any party or to indemnify any party involving aggregate
consideration or potential indemnification liability of more than Twenty
Thousand Dollars ($20,000) or contracts and other agreements under which
StatusOne agrees to indemnify any director, officer or employee; and
(j) each agreement not otherwise listed which is material to
StatusOne.
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Each of the StatusOne Contracts is in full force and effect and is a
legal, valid and binding contract or agreement, and there is not and has not
been any default (or any event known to StatusOne or the Principal Stockholders
which, with the giving of notice or lapse of time or both would be a material
default or breach) by StatusOne or, to the knowledge of StatusOne and the
Principal Stockholders, any other party, in the timely performance of any
obligation to be performed or paid or any other material provision under any
such contracts or agreements. There is not pending, nor to the knowledge of
StatusOne or the Principal Stockholders, threatened, any cancellation or
termination of any of the StatusOne Contracts. Except for such consents or
approvals that are listed in the StatusOne Disclosure Letter, no approval or
consent of any person or entity that has not already been obtained is needed in
order that the StatusOne Contracts continue in full force and effect following
the consummation of the transactions contemplated by this Agreement, and except
as may be set forth in the StatusOne Disclosure Letter, no such contract
includes any provision the effect of which may be to terminate such contract or
enlarge or accelerate any obligations of StatusOne or to give additional rights
to any other party thereunder as a result of consummation of the transactions
contemplated by this Agreement, except where the failure to obtain such consent
could not reasonably be expected to result in a StatusOne Material Adverse
Effect. StatusOne has no agreement currently in effect with any customer or
other source of revenue in which any portion of the fees or revenues payable to
StatusOne at any time in the future that are "at-risk" or subject to repayment,
offset, recoupment, return, adjustment in any manner or any other type of
customer refund, including for failing to meet or exceed any financial or other
performance targets or standards. StatusOne has delivered to American Healthways
or its counsel true, correct and complete copies of all contracts listed on the
StatusOne Disclosure Letter, together with copies of all modifications and
supplements thereto.
4.18 STATUSONE PROPRIETARY ASSETS.
(a) The StatusOne Disclosure Letter sets forth (i) with respect to
each StatusOne Proprietary Asset (as hereinafter defined), registered with
any governmental body or for which any application has been filed with any
governmental body, (1) a statement identifying such StatusOne Proprietary
Asset, and (2) the names of the jurisdictions covered by the applicable
registration or application; (ii) a statement identifying all other
StatusOne Proprietary Assets; and (iii) a statement identifying each
StatusOne Proprietary Asset licensed to StatusOne by any person (except
for any StatusOne Proprietary Asset that is licensed to StatusOne under
any third party software license generally available to the public at a
cost of less than Twenty Thousand Dollars ($20,000) on an enterprise-wide
basis), and identifies the license agreement under which such StatusOne
Proprietary Asset is being licensed to StatusOne. StatusOne has good and
valid title to all of the StatusOne Proprietary Assets, free and clear of
all liens and other encumbrances, and has a valid and unrestricted right
to support, maintain, develop derivative works from and otherwise use
throughout the world all StatusOne Proprietary Assets identified in the
StatusOne Disclosure Letter. None of the StatusOne Stockholders has any
right, title or interest in or to any of the StatusOne Proprietary Assets.
StatusOne is not obligated to make any payment to any person for the use
of any StatusOne Proprietary Asset. StatusOne is in compliance with and
has not breached any term of any intellectual property or proprietary
right license to which it is a party. StatusOne has not developed jointly
with any other person any StatusOne Proprietary Assets with respect to
which such other person has any rights. Without limiting the generality of
the foregoing, to the knowledge of StatusOne and the Principal
Stockholders, except as set forth on the StatusOne Disclosure Letter, all
StatusOne Proprietary Assets (except for StatusOne Proprietary Assets
licensed from a third party) were developed by employees during the time
they were employed by StatusOne. To the extent that any StatusOne
Proprietary Asset has been developed or created by an employee of
StatusOne, StatusOne has a written agreement with each such employee with
respect thereto and thereby has obtained ownership of, and is the
exclusive owner of, all intellectual property rights in such StatusOne
Proprietary Asset by operation of law
19
or by valid assignment. Any StatusOne Proprietary Assets that were
developed or created by independent contractors were developed or created
under a written, executed nondisclosure agreement and a
work-for-hire/assignment agreement. All of the patents, registered
trademarks and registered copyrights owned by StatusOne have been duly
registered in, filed in or issued by the United States Patent and
Trademark Office or Register of Copyrights and have been properly
maintained and renewed, consistent with commercially reasonable business
practices. All filing, amendment, issue and maintenance or other fees due
and owing the United States Patent and Trademark Office and the United
States Copyright Office and any fees or payments due and owing to any
governmental agency, office or department of any other country in
connection with the StatusOne Proprietary Assets, have been paid in full,
and no such fees will become due within ninety (90) days of the date of
execution of this Agreement.
(b) StatusOne has taken commercially reasonable measures and
precautions necessary to protect and maintain the confidentiality and
secrecy of all StatusOne Proprietary Assets (except StatusOne Proprietary
Assets whose value would be unimpaired by public disclosure, or such
public disclosure is required by law) and otherwise maintain and protect
the value of all StatusOne Proprietary Assets. StatusOne has not (other
than pursuant to license agreements identified in the StatusOne Disclosure
Letter) delivered to any third person, or permitted the disclosure or
delivery to any third person of, the source code, or any portion or aspect
of the source code, of any StatusOne Proprietary Asset. StatusOne has not
delivered to any third person any object code of any StatusOne Proprietary
Asset unless such third person entered into a license or other similar
agreement with StatusOne which restricts the use of such object code and
retains all ownership rights of such object code in StatusOne.
(c) None of the StatusOne Proprietary Assets infringes or conflicts
with any Proprietary Asset (as hereinafter defined) owned or used by any
other person. StatusOne is not infringing, misappropriating or making any
unlawful use of, and StatusOne has not at any time infringed,
misappropriated or made any unlawful use of, or received any notice or
other communication (in writing or orally) of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of,
any patent, trademark or other Proprietary Asset owned or used by any
other person. To the knowledge of StatusOne and the Principal
Stockholders, no other person is infringing, misappropriating or making
any unlawful use of, and no Proprietary Asset owned or used by any other
person infringes with, any StatusOne Proprietary Asset.
(d) To the knowledge of StatusOne and the Principal Stockholders,
(i) each StatusOne Proprietary Asset is free from material defects and
conforms in all respects with all written specifications, documentation,
performance standards, representations or statements made or provided with
respect thereto by StatusOne, and (ii) there has not been any claim by any
customer or other person alleging that any StatusOne Proprietary Asset
(including each version thereof that has ever been licensed or otherwise
made available by StatusOne to any person) does not conform in all
material respects with any written specification, documentation,
performance standard, representation or statement made or provided by
StatusOne, and (iii) there is no valid basis for any such claim.
(e) The StatusOne Proprietary Assets constitute all the Proprietary
Assets necessary to enable StatusOne to conduct its business in the manner
in which such business has been and is being conducted. StatusOne has not
licensed any of the StatusOne Proprietary Assets to any person other than
in the ordinary course of business (including licenses of the Carelink
System under customer contracts) and as disclosed on the StatusOne
Disclosure Letter, and StatusOne has not entered into any covenant not to
compete, escrow or other agreement limiting its ability to exploit fully
any of the StatusOne Proprietary Assets or to transact business in any
market or
20
geographic area or with any person. Except as described on the StatusOne
Disclosure Letter, StatusOne has not granted a license to any StatusOne
source code to any third party.
(f) "Proprietary Asset" means any: (i) patent, patent application,
trademark (whether registered or unregistered), trademark application,
trade name, domain name, fictitious business name, service xxxx (whether
registered or unregistered), trade dress, logo, service xxxx application,
copyright (whether registered or unregistered), copyright application,
trade secret, customer list, franchise, system, computer software
(including without limitations all source code, object code and graphical
user interface), computer program, sui generis database rights, invention,
design, specifications, data, architecture, blueprint, engineering
drawing, proprietary product, technology, and any other proprietary right
or other intellectual property right or intangible asset anywhere in the
world in any form or medium known or later devised; or (ii) right to use
or exploit, any of the foregoing.
(g) "StatusOne Proprietary Asset" means any Proprietary Asset owned
by or licensed to StatusOne or otherwise used by StatusOne, including
without limitation, the CareLink software.
4.19 CERTAIN BUSINESS PRACTICES AND REGULATIONS. Neither StatusOne, any
Principal Stockholder on behalf of StatusOne, nor any of StatusOne's officers,
directors, or employees has, to the knowledge of StatusOne or the Principal
Stockholders, (i) made or agreed to make any contribution, payment or gift to
any customer, supplier, landlord, political candidate, governmental official,
employee or agent where either the contribution, payment or gift or the purpose
thereof was illegal under any law or regulation, (ii) established or maintained
any unrecorded fund or asset for any purpose or made any false entries on its
books and records for any reason, (iii) made or agreed to make any contribution,
or reimbursed any political gift or contribution made by any other person, to
any candidate for federal, state or local public office in violation of any law
or regulation, or (iv) engaged in any activity constituting fraud or abuse under
laws relating to health care or insurance.
4.20 INSURANCE. All policies and binders of insurance for professional
liability, directors and officers, fire, liability, worker's compensation and
other customary matters held by or on behalf of StatusOne ("Insurance Policies")
have been delivered to American Healthways. The Insurance Policies (which term
shall include any insurance policy entered into after the date of this Agreement
in replacement of an Insurance Policy provided that such replacement policy
shall insure against risks and liabilities, and in amounts and under terms and
conditions substantially the same as those provided in such replaced policy or
binder) are in full force and effect and StatusOne is not in default with
respect to any material provision contained in any Insurance Policy nor has
StatusOne failed to give any notice of any claim under any Insurance Policy in
due and timely fashion, nor has any coverage for current claims been denied,
except where such default or failure as of the date of this Agreement,
individually or in the aggregate, could not reasonably be expected to result in
a cost to StatusOne in excess of Ten Thousand Dollars ($10,000).
4.21 ACCOUNTS RECEIVABLE. All accounts and notes receivable of StatusOne
at the Closing, whether reflected in the Most Recent Financial Statements or
otherwise (herein called the "Receivables"), represent sales actually made in
the ordinary course of business consistent with past practice; none of the
Receivables is subject to any counterclaim or set-off other than normal sales
adjustments or allowances consistent with past practice; and all the Receivables
are collectible in the ordinary course of business at the aggregate amounts
thereof, net of any reserve reflected in the Most Recent Financial Statements.
4.22 CUSTOMERS AND SUPPLIERS. The StatusOne Disclosure Letter contains an
accurate and complete list of the names and addresses of all the customers or
other sources of revenue of StatusOne during the year ended December 31, 2002
and for the six (6) month period ended June 30, 2003, and the twenty (20)
largest suppliers of StatusOne
21
during the year ended December 31, 2002 and for the six (6) month period ended
June 30, 2003. Neither StatusOne nor the Principal Stockholders have received
any indication from any customer or supplier whose name appears on such list
that such customer or supplier will not continue as a customer or supplier of
StatusOne after the Closing. Except as set forth in the StatusOne Disclosure
Letter, no customer or contract accounted for more than five per cent (5%) of
StatusOne's revenues for the year ended December 31, 2002 or for the six (6)
month period ended June 30, 2003.
4.23 NO BROKERS. Except as set forth in the StatusOne Disclosure Letter,
neither StatusOne nor any Principal Stockholder has entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of StatusOne, any Principal Stockholder or American Healthways to pay
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby. Neither StatusOne nor any Principal
Stockholder is aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
4.24 COMPLIANCE WITH APPLICABLE PRIVACY LAWS. The operations of StatusOne
are compatible with the Standards for Privacy of Individually Identifiable
Health Information (45 CFR 160 and 164, Subpart E) ("Privacy Standards") to the
extent that StatusOne's services on behalf of any of its customers render it a
Business Associate (as defined by the Privacy Standards) of such customer.
Except as set forth in the StatusOne Disclosure Letter, StatusOne has not
determined whether the performance of its services on behalf of its customers,
in the manner currently performed, satisfy the Security Standards for the
Protection of Electronic Protected Health Information (45 CFR 164, Subpart C)
("Security Standards") for which compliance by Covered Entities (as defined by
the Privacy Standards) is required by April 20, 2005. StatusOne has in effect
with those customers who are Covered Entities and who have made a request
therefore, agreements that satisfy the requirements of 45 CFR Section
164.504(e), and StatusOne has in place policIes and procedures that allow
StatusOne to fulfill its obligations and comply with the requirements of any
such agreement, and StatusOne is not in breach of any such agreements. StatusOne
has not received any complaints from any person regarding StatusOne's or any of
its agents', employees' or contractors' uses or disclosures of, or security
practices regarding, individually identifiable health-related information.
StatusOne is not aware of any misuse, improper disclosure or incident (each as
determined by reference to the Privacy Standards or state law, as applicable),
by StatusOne or any of its agents, employees or contractors, involving
individually identifiable health-related information. StatusOne has provided to
American Healthways a description of steps StatusOne has taken to prepare for
its contractual obligations with its customers based upon said customers' need
to comply with the Administrative Simplification provisions of the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA").
4.25 GOVERNMENT INVESTIGATION. StatusOne (a) is not a party to a Corporate
Integrity Agreement with the Office of Inspector General of the Department of
Health and Human Services, (b) has no reporting obligations pursuant to any
settlement agreement entered into with any governmental entity, (c) has not been
the subject of any government payor program investigation conducted by any
federal or state enforcement agency, (d) has not been a defendant in any qui
tam/False Claims Act litigation, (e) has not been served with or received any
search warrant, subpoena, civil investigative demand, contact letter, or
personal or telephone contact by or from any Federal or state enforcement agency
and (f) has not received any oral or written complaints in the last five (5)
years from employees, independent contractors, vendors, physicians or any other
person that would indicate that StatusOne has materially violated, or is
currently in material violation of, any Law, regulation or rule.
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4.26 FULL DISCLOSURE. All of the information provided by StatusOne and the
Principal Stockholders herein or in the StatusOne Disclosure Letter is true,
correct, and complete in all material respects, and no representation, warranty,
or statement made by StatusOne or the Principal Stockholders in this Agreement
or the StatusOne Disclosure Letter contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary to
make such representation, warranty, or statement not misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF AMERICAN HEALTHWAYS AND AH MERGER SUB
American Healthways and AH Merger Sub, jointly and severally, hereby
represent and warrant to StatusOne as follows:
5.1 AUTHORIZATION; CORPORATE AUTHORITY. Each of American Healthways and AH
Merger Sub has taken all action required by applicable law, its certificate of
incorporation and its bylaws to authorize the execution and delivery by such
entity of this Agreement and in the case of American Healthways, the Earn-Out
Agreement and the Escrow Agreement, and the consummation by American Healthways
and AH Merger Sub of the transactions contemplated hereby and thereby. Each of
American Healthways and AH Merger Sub has all requisite corporate power and
authority to own, operate and lease its properties and carry on its business as
now conducted, except where such failure would not have a material adverse
effect on the business, results of operations, current or future financial
condition or prospects of American Healthways or AH Merger Sub (an "American
Healthways Material Adverse Effect"). Each of American Healthways and AH Merger
Sub has made available to StatusOne or its counsel complete and correct copies
of the certificate of incorporation and bylaws of American Healthways and AH
Merger Sub, each of which is in full force and effect.
5.2 EXISTENCE; GOOD STANDING. Each of American Healthways and AH Merger
Sub is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. Each of American Healthways and AH
Merger Sub is qualified to do business as a foreign corporation and is in good
standing under the laws of any state of the United States in which the character
of the properties owned or leased by it therein or in which the transaction of
its business makes such qualification necessary, except where the failure to be
so qualified would not result in an American Healthways Material Adverse Effect.
Each of American Healthways and AH Merger Sub has all requisite corporate power
and authority to own, operate and lease its properties and carry on its business
as now conducted, except where such failure would not result in an American
Healthways Material Adverse Effect. Each of American Healthways and AH Merger
Sub has made available to StatusOne or its counsel complete and correct copies
of the certificate of incorporation and bylaws of American Healthways and AH
Merger Sub, each of which is in full force and effect.
5.3 EXECUTION AND ENFORCEABILITY. This Agreement has been and such other
agreements as contemplated hereby to which American Healthways or AH Merger Sub
is or, at the Closing will be a party, have been, or are upon execution and
delivery as contemplated herein, will be, duly executed and delivered by
American Healthways and/or AH Merger Sub, as the case may be, and constitute the
legal, valid, and binding obligation of American Healthways and AH Merger Sub,
enforceable against each of American Healthways and AH Merger Sub in accordance
with their respective terms, except to the extent that (i) enforcement may be
limited by or subject to any bankruptcy, insolvency, reorganization, moratorium,
or similar laws now or hereafter in effect relating to or limiting creditors'
rights generally, and (ii) 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 or other similar person before which any proceeding
therefor may be brought.
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5.4 NO VIOLATION. Neither the execution and delivery of this Agreement nor
the other agreements contemplated hereby by American Healthways or AH Merger
Sub, nor the consummation of the transactions contemplated hereby or thereby,
will (a) violate any provision of, constitute a default under or otherwise give
any person the right to terminate, or result in the creation of any lien or
security interest under, any agreement, indenture, instrument, lease, security
agreement, mortgage or lien to which American Healthways or AH Merger Sub is a
party or by which American Healthways' or AH Merger Sub's assets or properties
are bound; (b) violate any provision of the certificate of incorporation or
bylaws of American Healthways or AH Merger Sub; (c) violate any order,
arbitration award, judgment, writ, injunction, decree, statute, rule or
regulation applicable to American Healthways or AH Merger Sub; or (d) violate
any other contractual or legal obligation or restriction to which American
Healthways or AH Merger Sub is subject, except to the extent that any such
violation or default would not have an American Healthways Material Adverse
Effect.
5.5 PROFESSIONAL FEES. Neither American Healthways nor AH Merger Sub has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of American Healthways, AH Merger Sub, any
Principal Stockholder or StatusOne to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby. Neither American Healthways nor AH Merger Sub is aware of any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
5.6 CONSENTS AND APPROVALS. American Healthways and AH Merger Sub have
obtained all consents, approvals, authorizations or orders of third parties,
including governmental authorities, necessary for the authorization, execution
and performance of this Agreement by American Healthways and AH Merger Sub.
5.7 COMMISSION FILINGS. American Healthways has made available to
StatusOne and the Principal Stockholders true, correct and complete copies of
American Healthways Annual Report on Form 10-K for the fiscal year ended August
31, 2002 (the "AH 10-K"), American Healthways Quarterly Reports on Form 10-Q for
the quarters ended November 30, 2002, February 28, 2003, and May 31, 0000 (xxx
"XX 00-Xx") and the Proxy Statements dated December 20, 2002, and January 8,
2003 (collectively with the AH 10-K, and the AH 10-Qs, the "AH Exchange Act
Filings"). American Healthways has timely filed in the preceding twelve (12)
months all reports required to be filed by it pursuant to the applicable
provisions of the Securities Act and pursuant to Section 13, 14 and 15(d) of the
Exchange Act of 1934, as amended (the "Exchange Act"). The AH Exchange Act
Filings (including the documents incorporated therein by reference), as of their
respective filing dates, did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
5.8 AMHC COMMON STOCK. The AMHC Common Stock when issued and delivered to
the StatusOne Stockholders and/or the Class C Stockholders, if at all, in
accordance with the provisions of the Earn-Out Agreement will be duly
authorized, validly issued shares of Common Stock of American Healthways, fully
paid and non-assessable.
ARTICLE 6.
POST CLOSING COVENANTS AND AGREEMENTS
6.1 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at American Healthways' request and without further consideration, the
Principal Stockholders will execute and
24
deliver such other instruments of sale, transfer, conveyance, assignment, and
delivery and confirmation and take such action as American Healthways may
reasonably deem necessary or desirable in order to complete the Merger or more
effectively effect or confirm the transactions hereby contemplated and to carry
out the purposes of the Merger.
6.2 TAXES. The StatusOne Stockholders will be responsible for, and hereby
agree to assume and pay, all sales and similar taxes which may be due to any
jurisdiction or governmental body as a result of their receipt of the Merger
Consideration.
6.3 EMPLOYMENT OFFERS. American Healthways will extend employment offers
to each employee of StatusOne on terms, economic and otherwise, commensurate
with such employment terms as are currently in place with StatusOne.
6.4 OUTSTANDING OPTIONS. The Principal Stockholders will use their best
efforts to obtain a Termination, Consent and Release, in a form acceptable to
American Healthways, from each of the holders of outstanding options or warrants
that are exercisable into shares of StatusOne capital stock as promptly as
practicable following the Closing.
6.5 EMPLOYEE BENEFIT PLANS.
(a) At all times subsequent to the Closing Date, all StatusOne
employees shall be eligible to continue to participate in the StatusOne
Flexible Benefits Plan (the "Flex Plan") until such time as American
Healthways facilitates an orderly transition to a similar employee benefit
plan or program maintained by American Healthways for its and its
affiliates' employees. An "orderly transition" requires that a StatusOne
employee shall be entitled to continue to participate in the Flex Plan
until he or she actually becomes eligible for enrollment in an American
Healthways plan. American Healthways shall take such reasonable actions,
to the extent permitted by its benefits programs, as are necessary to
allow StatusOne employees to participate in its health, welfare and other
employee benefit programs or alternative benefit programs in the aggregate
that are substantially equivalent to those applicable to employees of
American Healthways in similar functions and positions on similar terms.
Pending such action, American Healthways shall maintain the effectiveness
of any StatusOne welfare benefit plan required to comply with this
provision.
(b) American Healthways shall credit any StatusOne employee who
remains employed by StatusOne after the Closing of the Merger with service
that such employee performed for StatusOne for all purposes (including
vesting, eligibility to participate and accrual of benefits, except for
accruals under an American Healthways tax-qualified or non-qualified
deferred compensation plan that would be attributable to service performed
by a StatusOne employee prior to the Effective Date) under any pension
plan, Code Section 401(k) plan, profit-sharing plan, health or welfare
plan (including credit for any co-payments or deductibles paid prior to
Closing to the extent permitted under the particular plan), and any other
employee benefit plan including, but not limited to vacation or holiday
arrangements, that is maintained or sponsored by American Healthways or to
which American Healthways contributes or for which American Healthways
otherwise has or may have any liability, contingent or otherwise, either
directly or as a result of any entity treated as a single employer with
American Healthways under Code Section 414 and the regulations issued
thereunder.
(c) American Healthways shall take any and all necessary action to
cause the trustee of a defined contribution plan of American Healthways or
one of its affiliates, if requested to do so by a StatusOne employee, to
accept a direct rollover of all or a portion of such employee's
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distribution from the StatusOne 401(k) and Profit Sharing Plan that
constitutes an eligible rollover distribution pursuant to Section
402(c)(4) of the Code, unless the acceptance of the rollover could result
in the disqualification of the American Healthways plan.
6.6 CONFIDENTIAL INFORMATION MEMORANDUM AND TERMINATION, CONSENT AND
RELEASE. The Principal Stockholders will provide American Healthways with copies
of the proposed Confidential Information Memorandum to be delivered to the
StatusOne Stockholders and holders of Options and a proposed form of
Termination, Consent and Release to be delivered to the holders of Options (to
contain language consenting to different forms of Earnout Consideration (the
"Earnout Language") and shall give American Healthways' two (2) business days to
review and comment on such documents (which comments may be accepted or rejected
by the Principal Stockholders in their sole discretion, except for comments with
respect to the Earnout Language which shall be mutually agreed upon by American
Healthways and the Principal Stockholders) prior to the delivery thereof to the
StatusOne Stockholders and holders of Options, as applicable.
6.7 CONSENTS. The Principal Stockholders will use commercially reasonable
efforts to obtain the consents referred to in Section 4.7 of the StatusOne
Disclosure Letter and all other consents required for the consummation of the
transactions contemplated hereby, all of which consents shall be in form and
substance reasonably satisfactory to American Healthways.
ARTICLE 7.
INDEMNIFICATION AND SURVIVAL OF REPRESENTATIONS
7.1 INDEMNIFICATION BY THE STATUSONE STOCKHOLDERS. The StatusOne
Stockholders, jointly and severally, hereby agree to defend, indemnify, hold
harmless and shall reimburse American Healthways, its directors, officers,
employees, agents, affiliates and successors and assigns (the "American
Healthways Indemnitees") for, from and against each claim, loss, liability, cost
and expense (including without limitation, interest, penalties, reasonable costs
of preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors)
(collectively, "Losses"), directly or indirectly relating to, resulting from or
arising out of:
(a) Any untrue representation, misrepresentation or breach of
warranty made by StatusOne or the Principal Stockholders contained herein
or in the Earn-Out Agreement and the Escrow Agreement or any schedule
hereto or thereto; including without limitation, the StatusOne Disclosure
Letter.
(b) Any failure by StatusOne or the Principal Stockholders to
perform any covenant or agreement contained herein or in the Earn-Out
Agreement and the Escrow Agreement or any schedule hereto or thereto.
(c) Any Tax liability of StatusOne not previously paid, or for which
adequate reserves have not been established in the Most Recent Financial
Statements which may at any time be asserted or assessed against it for
any event or period ending on or prior to the Closing Date; provided,
however, that neither the StatusOne Stockholders nor the Principal
Stockholders shall have any obligation to pay any Taxes that may be
imposed on American Healthways solely in connection with the transactions
contemplated by this Agreement.
(d) Any liability of American Healthways or StatusOne relating to
any claim by any StatusOne Stockholder or holder of any Options for any
consideration in respect of their Options or StatusOne Capital Stock
(whether money or other property).
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(e) Any liability of American Healthways or StatusOne or any
American Healthways Indemnitee arising out of or based on any untrue
statement of a material fact or alleged untrue statement of a material
fact contained in the Confidential Information Memorandum to be provided
by StatusOne to the holders of the Options, or the omission or alleged
omission therefrom of a material fact necessary in order for the
statements therein, in light of the circumstances under which they were
made, not misleading.
(f) Any claims against American Healthways or StatusOne arising or
resulting from StatusOne's failure to obtain and maintain insurance
coverage requirements pursuant to StatusOne's License Agreements with
Anthem East, Inc., Harvard Pilgrim Health Care, Inc., Health Partners,
Inc. and Tufts Associated Health Maintenance Organization, Inc. prior to
the Closing Date.
provided, however, that the StatusOne Stockholders shall not have any obligation
to indemnify the American Healthways Indemnitees from and against any Loss
unless and until the American Healthways Indemnitees shall have suffered Losses
by reason of (a) or (b) above in excess of Two Hundred Thousand Dollars
($200,000) in the aggregate, and not on a per claim basis (the "Basket") in
which event the StatusOne Stockholders shall be obligated to indemnify the
American Healthways Indemnitees from and against Losses in excess of such
Basket; and provided further, that the foregoing limitations shall not apply to
(i) claims made for indemnification for any intentional misrepresentation or
fraud, (ii) claims made for indemnification pursuant to Section 7.1(b), unless
such claim arises from the failure to perform a covenant or agreement which is
not primarily within the control of StatusOne or the StatusOne Stockholders,
(iii) claims made for indemnification pursuant to Section 7.1(a) by reason of a
breach of representation or warranty contained in Sections 4.1, 4.3, 4.4, 4.6,
4.11, 4.12 or 4.23, or (iv) claims made for indemnification pursuant to Sections
7.1(c), 7.1(d) and 7.1(e); and provided further, that all claims made for
indemnification payments under this Section 7.1 shall be paid by the StatusOne
Stockholders net of any Tax benefits that may be received by American
Healthways. For purposes of this Section 7.1, any breach or inaccuracy in any
representation or warranty shall be determined without regard to any materiality
qualification, Material Adverse Effect qualification or any qualification that a
matter be or not be "reasonably expected" to occur, contained in, or otherwise
applicable to, any such representation or warranty. Notwithstanding the
foregoing, except for indemnification for Losses pursuant to Section 7.1(f),
American Healthways shall proceed to seek any indemnification for any Losses due
hereunder first from the Escrow and shall not seek any indemnity from the
Principal Stockholders unless and until the full amount of the Escrow has been
exhausted.
7.2 TIME LIMITATION; STATUSONE STOCKHOLDERS. The representations and
warranties contained herein shall be deemed to survive for eighteen (18) months
following the Closing, provided that the representations and warranties made in
Sections 4.1, 4.2, 4.3, 4.4, 4.6 and 4.23 shall survive in perpetuity and the
representations and warranties made in Sections 4.11, 4.12, 4.13(e) and (g) and
4.24 shall survive for the applicable statute of limitations plus sixty (60)
days. The StatusOne Stockholders will have no liability with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before that date which is
eighteen (18) months from the Closing Date, an American Healthways Indemnitee
notifies the Stockholder Representative of a Loss specifying the factual basis
of that Loss in reasonable detail to the extent then known by the American
Healthways Indemnitee. Notwithstanding the foregoing, with respect to any Losses
by any American Healthways Indemnitee under Section 7.1(c) or any breach of
Sections 4.11, 4.12, 4.13(e) or (g), or 4.24, the StatusOne Stockholders shall
indemnify the American Healthways Indemnitees if an American Healthways
Indemnitee provides the Stockholder Representative with notice of such Loss on
or before the date which is sixty (60) days after the expiration of the
applicable statute of limitations. In addition, notwithstanding anything
contained herein to the contrary, there shall be no time
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limitation for American Healthways to make a claim with respect to Losses by any
American Healthways Indemnitee pursuant to (i) any breach of or
misrepresentation in Sections 4.1, 4.2, 4.3, 4.4, 4.6 or 4.23, (ii) any claim
for intentional misrepresentation or fraud or (iii) any claim made for
indemnification pursuant to Section 7.1(b), (d), (e) or (f).
7.3 LIMITATIONS ON AMOUNT; STATUSONE STOCKHOLDERS. Except as set forth
below, the StatusOne Stockholders shall be liable to the American Healthways
Indemnitees, with respect to the matters described in Section 7.1 in an amount
not exceeding the Escrow Amount; provided, however, that the foregoing
limitation shall not apply to the Principal Stockholders with respect to (i) any
claim for intentional misrepresentation or fraud, (ii) any claim made for
indemnification pursuant to Section 7.1(b), (iii) any claim made for
indemnification pursuant to Section 7.1(c), (iv) any claim for indemnification
pursuant to Section 7.1(a) for any breach of or misrepresentation in Section
4.1, 4.2, 4.3, 4.4, 4.6, 4.11, 4.12, 4.13(d), (e) or (g), 4.23, 4.24 or 4.25,
(v) any claim made for indemnification pursuant to Section 7.1(d); (vi) any
claim made for indemnification pursuant to Section 7.1(e); or (vii) any claim
made for indemnification pursuant to Section 7.1(f). In the event that any
American Healthways Indemnitee proceeds to seek indemnification from the
StatusOne Stockholders, the StatusOne Stockholders agree that they shall be
liable for such amounts on a joint and several basis, but in no event shall any
StatusOne Stockholder be liable to the American Healthways Indemnitees in an
amount exceeding the Merger Consideration received by such StatusOne Stockholder
and the total aggregate amount which the American Healthways Indemnitees may
recover hereunder shall be limited to the aggregate Merger Consideration
actually paid.
7.4 INDEMNIFICATION BY AMERICAN HEALTHWAYS. American Healthways hereby
agrees to defend, indemnify, hold harmless and shall reimburse StatusOne, the
StatusOne Stockholders, and their directors, officers, employees, agents,
affiliates and successors and assigns (the "StatusOne Indemnitees"), from and
against any Loss, directly or indirectly relating to, resulting from or arising
out of:
(a) Any untrue representation, misrepresentation or breach of
warranty made by American Healthways contained herein or in the Earn-Out
Agreement and the Escrow Agreement or any schedule hereto or thereto.
(b) Any failure by American Healthways to perform any covenant or
agreement contained herein or in the Earn-Out Agreement and the Escrow
Agreement or any schedule hereto or thereto.
provided, however, that American Healthways shall not have any obligation to
indemnify the StatusOne Indemnitees from and against any Loss unless and until
the StatusOne Indemnitees shall have suffered Losses in excess of the Basket, in
which event American Healthways will be obligated to indemnify the StatusOne
Indemnitees from and against Losses in excess of such Basket; provided, however,
that the foregoing limitations shall not apply to (i) claims made for
indemnification for any intentional misrepresentation or breach by American
Healthways of any covenant or obligation or fraud, or (ii) claims made for
indemnification pursuant to Section 7.4(b), unless such claim arises from the
failure to perform a covenant or agreement which is not primarily within the
control of American Healthways; and provided further, that all indemnification
payments under this Section 7.4 shall be paid by American Healthways net of any
Tax benefits that may be received by StatusOne or the StatusOne Stockholders.
For purposes of this Section 7.4, any breach or inaccuracy in any representation
or warranty shall be determined without regard to any materiality qualification,
any Material Adverse Effect qualification or any qualification that a matter be
or not be "reasonably expected" to occur, contained in or otherwise applicable
to any such representation or warranty.
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7.5 TIME LIMITATION; AMERICAN HEALTHWAYS. The representations and
warranties made by American Healthways and AH Merger Sub contained herein shall
be deemed to survive for eighteen (18) months following the Closing; provided,
however, that the foregoing limitation shall not apply to (i) any claim for
intentional misrepresentation or fraud, (ii) any claim made for indemnification
pursuant to Section 7.4(b), or (iii) any claim for indemnification pursuant to
Section 7.4(a) for any breach of or misrepresentation in Sections 5.1, 5.2, or
5.3. American Healthways shall have no liability with respect to any
representation or warranty or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before that date which is
eighteen (18) months from the Closing Date, the Stockholder Representative
notifies American Healthways of a Loss specifying the factual basis of that Loss
in reasonable detail to the extent then known by the StatusOne Stockholders or
the Stockholder Representative. Notwithstanding the foregoing, there shall be no
time limitation with respect to claims made by the Stockholder Representative
pursuant to any breach of or misrepresentation in Sections 5.1, 5.2 or 5.3.
7.6 LIMITATIONS ON AMOUNT; AMERICAN HEALTHWAYS. American Healthways shall
be liable to the StatusOne Stockholders with respect to the matters described in
Section 7.4 in an amount not exceeding Five Million Dollars ($5,000,000), for
any Losses sustained by the StatusOne Stockholders but will not be liable for
such Loss if the Stockholder Representative does not give notice within the
applicable time period as set forth above; provided, that, subject to Section
7.9 hereof, this limitation shall not be applicable to American Healthways'
failure to pay the Earn-Out Consideration, which shall instead be governed by
the provisions of the Earn-Out Agreement; provided, however, that the foregoing
limitation shall not apply to (i) any claim for intentional misrepresentation or
fraud, (ii) any claim made for indemnification pursuant to Section 7.1(b), or
(iii) any claim for indemnification pursuant to Section 7.1(a) for any breach of
or misrepresentation in Sections 5.1, 5.2, or 5.3.
7.7 PROCEDURE. The indemnified party shall notify the indemnifying party
of any claim, demand, action or proceeding for which indemnification will be
sought under Sections 7.1 or 7.4 of this Agreement, provided, that failure to
give such notice shall not relieve the indemnifying party of its indemnification
obligations under this Article 7 except to the extent, if at all, that the
indemnifying party shall have been actually prejudiced thereby; and, if such
claim, demand, action or proceeding is a third party claim, demand, action or
proceeding, the indemnifying party will have the right at its expense to assume
the defense thereof using counsel reasonably acceptable to the indemnified
party; provided further, however, that if the indemnifying party fails to assume
the defense of such third party claim within a reasonable time after notice
thereof, the indemnified party shall have the right to assume the defense of
such third party claim using counsel of its choice, and shall be entitled to
full reimbursement from the indemnifying party for any Loss incurred in
connection with the defense of such claim. The indemnified party shall have the
right to participate, at its own expense, with respect to any such third party
claim, demand, action or proceeding. In connection with any such third party
claim, demand, action or proceeding, American Healthways and the StatusOne
Stockholders shall cooperate with each other and provide each other with access
to relevant books and records in their possession. No such third party claim,
demand, action or proceeding shall be settled without the prior written consent
of the indemnified party. If a firm written offer is made to settle any such
third party claim, demand, action or proceeding and the indemnifying party
proposes to accept such settlement and the indemnified party refuses to consent
to such settlement, then: (i) the indemnifying party shall be excused from, and
the indemnified party shall be solely responsible for, all further defense of
such third party claim, demand, action or proceeding; and (ii) the maximum
liability of the indemnifying party relating to such third party claim, demand,
action or proceeding shall be the amount of the proposed settlement if the
amount thereafter recovered from the indemnified party on such third party
claim, demand, action or proceeding is greater than the amount of the proposed
settlement.
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7.8 STATEMENTS AS REPRESENTATIONS. All statements contained in the
StatusOne Disclosure Letter shall be deemed representations and warranties for
all purposes of this Agreement.
7.9 AMERICAN HEALTHWAYS' RIGHT OF SET-OFF AGAINST EARN-OUT CONSIDERATION.
From the Release Date (as defined in the Escrow Agreement), American Healthways
shall, at its election, be entitled to set-off any amount to which it may be
entitled under this Article 7 against payment by it of the Earnout
Consideration, as defined in the Earn-Out Agreement. The exercise of such right
of set-off by American Healthways, whether or not ultimately determined to be
justified, will not constitute an event of default under the Earn-Out Agreement.
Neither the exercise of nor the failure to exercise such right of set-off will
constitute an election of remedies or limit American Healthways in any manner in
the enforcement of any other remedies that may be available to it.
Notwithstanding the foregoing, prior to setting off any amount to which it shall
be entitled against payment of the Earn-Out Consideration, except with respect
to claims for Losses pursuant to Section 7.1(f), American Healthways shall
proceed against and exhaust those funds available (and not subject to any claim
by American Healthways) under the Escrow Agreement. In addition, prior to
exercising its right of set-off under this Section 7.9 against the Earn-Out
Consideration payable to those beneficiaries of the Trust who did not own any
shares of Class A/B Stock prior to the Effective Date, American Healthways shall
first proceed against (i) the aggregate amount of the Earn-Out Consideration
payable to the holders of the Class A/B Stock, and (ii) then, if any amounts
which American Healthways is entitled to under this Article 7 remain unpaid, the
Principal Stockholders. If the Principal Stockholders fail to pay any amounts
for which American Healthways makes a claim pursuant to this Article 7 within
five (5) business days, American Healthways shall not be required to pay the
Earn-Out Consideration pending resolution of the claim and shall be entitled to
fully exercise its right of set-off under this Section 7.9 against the Earn-Out
Consideration otherwise payable to those beneficiaries of the Trust who did not
own any shares of Class A/B Stock prior to the Effective Date.
7.10 INDEMNIFICATION EXCLUSIVE REMEDY. The parties agree that from and
after the Closing, except as provided in the Escrow Agreement, the Earn-out
Agreement, the Employment Agreements, and except for other non-monetary
equitable remedies, indemnification pursuant to the provisions of Article 7
shall be the exclusive remedy of the parties for any misrepresentation or breach
of warranty or covenant contained herein or in any schedule or other closing or
ancillary document executed and delivered pursuant to the provisions hereof or
thereof; provided, however, that the parties acknowledge that in no event shall
the StatusOne Stockholders be liable for any consequential damages, solely to
the extent such damages arise from a decrease in the market price of the AMHC
Common Stock; and provided further, that the parties acknowledge that the
limitations of Article 7 shall not apply to claims under the Escrow Agreement,
the Earn-out Agreement and the Employment Agreements.
ARTICLE 8.
NON-COMPETE
8.1 RESTRICTIVE COVENANTS. In order to induce American Healthways to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Principal Stockholders hereby covenant as follows, which covenants shall be in
addition and without prejudice to any other noncompetition, nonsolicitation,
and/or similar covenants to which the Principal Stockholders or any of their
affiliates may be subject from time to time:
(a) NON-COMPETITION. Without limiting or restricting any Principal
Stockholder's non-competition or non-solicitation obligations under any
other agreement between such Principal Stockholder and StatusOne or
American Healthways, or any affiliate of American Healthways, during the
four (4) year period immediately following the Closing, which period shall
automatically be extended by a period of time equal to any period in which
any of the
30
Principal Stockholders and/or any of their Affiliates (as defined below)
is in breach of any obligations under this Section 8.1 (including any such
extension, the "Restricted Period"), each of the Principal Stockholders
and each Principal Stockholder's spouse, parents and any other relative of
such Principal Stockholder who resides at the principal residence of such
Principal Stockholder, or any other person or entity that directly or
indirectly, is controlled by or is under common control with such
Principal Stockholder (each, an "Affiliate") shall not engage, directly or
indirectly (except as a stockholder, director, officer, and/or employee of
American Healthways), as a proprietor, equity holder, investor (except as
a passive investor holding not more than five percent (5%) of the
outstanding capital stock of a publicly traded company), lender, partner,
director, officer, employee, consultant, or representative, or in any
other capacity, in any business which is competitive with American
Healthways' business of providing disease management and care enhancement
services to hospitals, health plans and employers anywhere in the United
States of America and such international countries which American
Healthways is doing business or contemplating doing business (the
"Restricted Area") (each of American Healthways and the Principal
Stockholders hereby acknowledging that American Healthways and its
Affiliates are currently doing business or contemplating doing business
throughout the Restricted Area), provided that the provision of legal or
accounting professional services by any natural person who is an Affiliate
of a Principal Stockholder to any such business shall not by itself
constitute a breach by such Principal Stockholder or the applicable
Affiliate of this Section 8.1; provided, however, that any reference to
the "contemplated" business of American Healthways or its subsidiaries
shall be limited to those countries in which American Healthways or its
subsidiaries are actively considering conducting business and of which
such Principal Stockholder is aware.
(b) NON-SOLICITATION OF EMPLOYEES. During the Restricted Period,
none of the Principal Stockholders nor any of their respective Affiliates
shall directly or indirectly recruit, solicit, induce, or attempt to
induce any of the employees or independent contractors of American
Healthways, StatusOne or their respective Affiliates to terminate their
employment or contractual relationship with American Healthways, StatusOne
or their respective Affiliates, and none of them shall assist or encourage
any other person to do so, or be a proprietor, equity holder, investor
(except as a passive investor holding not more than five percent (5%) of
the capital stock of a publicly traded company), lender, partner,
director, officer, employee, consultant, or representative of any person
who does or attempts to do so. Notwithstanding the foregoing, none of the
Principal Stockholders nor their Affiliates will be precluded from making
non-targeted, general solicitations by advertisement or other means.
(c) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the
Restricted Period, none of the Principal Stockholders nor any of their
respective Affiliates shall directly or indirectly solicit, divert, take
away, or attempt to divert or take away, from American Healthways or its
Affiliates any of the business or patronage of any of its customers,
clients, accounts, vendors, sales agents or suppliers, or induce or
attempt to induce any such person to reduce the amount of business it does
with American Healthways or its Affiliates, and none of the Principal
Stockholders nor any of their respective Affiliates shall assist or
encourage any other person to do so, or be a proprietor, equity holder,
investor (except as a passive investor holding not more than 5% of the
capital stock of a publicly traded company), lender, partner, director,
officer, employee, consultant, or representative of any person who does or
attempts to do so.
(d) NON-DISPARAGEMENT. None of the Principal Stockholders nor any of
their respective Affiliates shall disparage, deprecate or make any
negative comment with respect to American Healthways or any of its
Affiliates or their respective businesses, operations or properties.
Similarly, neither American Healthways nor any of its Affiliates shall
disparage,
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deprecate or make any negative comment with respect to StatusOne, any
Principal Stockholder or any of their Affiliates or their respective
businesses, operations, or properties.
(e) EQUITABLE REMEDIES. Each party hereby acknowledges that any
breach by any party of its obligations under this Section 8.1 would cause
substantial and irreparable damage to the other parties to this Agreement,
and that money damages would be an inadequate remedy therefor, and
accordingly, acknowledges and agrees that each of the other parties shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which such party may be entitled in respect of any
such breach).
(f) MODIFICATION. In the event that a court of competent
jurisdiction determines that any of the provisions of this Section 8.1
would be unenforceable as written because they cover too extensive a
geographic area, too broad a range of activities, or too long a period of
time, or otherwise, then such provisions shall automatically be modified
to cover the maximum geographic area, range of activities, and period of
time as may be enforceable, and in addition, such court is hereby
expressly authorized so to modify this Agreement and to enforce it as so
modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or
enforceability of any other section or of the remainder of such section.
ARTICLE 9.
CERTAIN TAX MATTERS
9.1 TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The Principal
Stockholders shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns for StatusOne for all periods ending on or prior to the Closing
Date which are to be filed before the Closing Date. StatusOne shall permit
American Healthways to review and comment on each such Tax Return described in
the preceding sentence prior to filing. StatusOne shall pay all Taxes of
StatusOne with respect to Tax Returns filed prior to the Closing Date.
9.2 TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.
American Healthways shall prepare or cause to be prepared and file or cause to
be filed any Tax Returns of StatusOne which are to be filed after the Closing
Date. The StatusOne Stockholders shall pay to American Healthways within 15 days
after the date on which Taxes are paid with respect to such periods an amount
equal to the Taxes which relate to the taxable period ending on or prior to the
Closing Date to the extent such Taxes are not reflected in the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) on the balance sheet of the Most
Recent Financial Statements. American Healthways shall permit the Principal
Stockholders to review and comment on each such Tax Return described in this
Section 9.2 prior to filing. For purposes of this Section, in the case of any
Taxes that are imposed on a periodic basis and are payable for a Taxable period
that includes (but does not end on) the Closing Date, the portion of such Tax
which relates to the portion of such taxable period ending on the Closing Date
shall, in the case of any Taxes other than Taxes based upon or related to income
or receipts, be deemed to be the amount of such Tax for the entire taxable
period multiplied by a fraction the numerator of which is the number of days in
the taxable period ending on the Closing Date and the denominator of which is
the number of days in the entire taxable period ended on the Closing Date. Any
credits relating to a taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of StatusOne.
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9.3 COOPERATION ON TAX MATTERS.
(a) American Healthways, StatusOne and the Principal Stockholders
shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to this
Article 9 and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
StatusOne and the Principal Stockholders agree (A) to retain all books and
records with respect to Tax matters pertinent to StatusOne relating to any
taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by American
Healthways, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior
to transferring, destroying or discarding any such books and records and,
if the other party so requests, StatusOne and the Principal Stockholders,
as the case may be, shall allow the other party to take possession of such
books and records.
(b) American Healthways and the Principal Stockholders further
agree, upon request, to use their reasonable commercial efforts to obtain
any certificate or other document from any governmental authority or any
other person as may be necessary to mitigate, reduce or eliminate any Tax
that could be made imposed (including, but not limited to, with respect to
the transactions contemplated hereby).
9.4 TAX SHARING AGREEMENTS. All tax sharing agreements or similar
agreements with respect to or involving StatusOne shall be terminated as of the
Closing Date and, after the Closing Date, StatusOne shall not be bound thereby
or have any liability thereunder.
9.5 TAXES. American Healthways will be responsible for, and hereby agrees
to assume and pay, all Taxes which may be imposed on American Healthways or
StatusOne as a result of the Merger; provided, however, that American Healthways
shall not be obligated to pay any sales, income, capital gains, or other similar
taxes due and owing by the StatusOne Stockholders to any jurisdiction or
governmental body as a result of the receipt of the Merger Consideration which
shall be paid by the StatusOne Stockholders in accordance with Section 6.2
hereof.
ARTICLE 10.
STATUSONE STOCKHOLDERS' REPRESENTATIVE
10.1 Xxxxxxx Xxxxxxxx shall be constituted and appointed as agent (the
"Stockholder Representative") for and on behalf of each holder of StatusOne
Capital Stock to give and receive notices and communications, to agree to,
negotiate, and enter into, on behalf of the StatusOne Stockholders, amendments,
consents and waivers under this Agreement and the other agreements contemplated
by this Agreement, to enter into and administer, on behalf of the StatusOne
Stockholders, the Earn-Out Agreement and Escrow Agreement, to authorize delivery
to American Healthways of the cash by the Escrow Agent in accordance with the
Escrow Agreement, to make and enforce claims for indemnity against American
Healthways under Section 7.4 hereof, and to take all actions necessary or
appropriate in the judgment of the Stockholder Representative for the
accomplishment of the foregoing. Such agency may be changed by holders of a
majority of the StatusOne Capital Stock held by the Principal Stockholders
immediately prior to the Closing from time to time upon not less than ten (10)
days' prior written notice to American Healthways. No StatusOne Stockholder may
make a claim for indemnity against American Healthways under Section 7.4 hereof
except through the Stockholder Representative.
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Once the Stockholder Representative has initiated such a claim for indemnity,
the Stockholder Representative may enforce, prosecute and settle such claim
without further directions from the StatusOne Stockholders, and all acts and
decisions of the Stockholder Representative in connection with such matter shall
be binding on all the StatusOne Stockholders. No bond shall be required of the
Stockholder Representative, and the Stockholder Representative shall receive no
compensation for his services. Notices or communications to or from the
Stockholder Representative shall constitute notice to or from each of the
StatusOne Stockholders.
10.2 The Stockholder Representative shall not be liable for any act done
or omitted hereunder or under the Earn-Out Agreement or Escrow Agreement as
Stockholder Representative while acting in good faith and in the exercise of
reasonable judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith. The StatusOne
Stockholders shall severally indemnify the Stockholder Representative and hold
him harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Stockholder Representative and
arising out of or in connection with the acceptance or administration of his
duties hereunder.
10.3 The Stockholder Representative shall have reasonable access to
information about American Healthways and the reasonable assistance of American
Healthways' officers and employees for purposes of performing his duties and
exercising his rights hereunder, provided that the Stockholder Representative
shall treat confidentially and not disclose any nonpublic information from or
about American Healthways to anyone (except on a need to know basis to
individuals who agree to treat such information confidentially).
10.4 A decision, act, consent or instruction of the Stockholder
Representative in respect of any action under this Agreement, the Earn-Out
Agreement or the Escrow Agreement shall constitute a decision of all the
StatusOne Stockholders, and shall be final, binding and conclusive upon each
such StatusOne Stockholder, and the Escrow Agent and American Healthways may
rely upon any decision, act, consent or instruction of the Stockholder
Representative hereunder or under the Escrow Agreement as being the decision,
act, consent or instruction of each and every such StatusOne Stockholder. The
Escrow Agent and American Healthways are hereby relieved from any liability to
any person (including any StatusOne Stockholder) for any acts done by them in
accordance with such decision, act, consent or instruction of the Stockholder
Representative.
10.5 The Stockholder Representative waives, and acknowledges and agrees
that he shall not, on behalf of the StatusOne Stockholders or otherwise, have
and shall not exercise or assert (or attempt to exercise or assert), any right
of contribution, right of indemnity or other right or remedy against American
Healthways in connection with any indemnification obligations a StatusOne
Stockholder may have under or in connection with this Agreement.
ARTICLE 11.
MISCELLANEOUS
11.1 EXPENSES. All fees and expenses incurred by the StatusOne
Stockholders or StatusOne, including without limitation legal fees and expenses
and fees and expenses of other professional advisors including bankers, brokers,
finders or agents, in connection with this Agreement will be borne by StatusOne
provided that such fees and expenses are reflected on the Estimated Working
Capital Statement or the Closing Date Balance Sheet and all fees and expenses
incurred by American Healthways, including without limitation, legal fees and
expenses, in connection with this Agreement will be borne by American
Healthways.
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11.2 ASSIGNABILITY; PARTIES IN INTEREST.
(a) American Healthways may assign any or all of its rights
hereunder to any affiliate or any direct or indirect subsidiary of
American Healthways, and American Healthways shall advise StatusOne of any
such assignment and shall designate such party as the assignee and
transferee of the securities purchased. Any such assignee shall assume all
of American Healthways' duties, obligations, representations and
warranties and undertakings hereunder, but the assignor shall remain
liable thereunder.
(b) StatusOne may not assign, transfer or otherwise dispose of any
of its rights hereunder without the prior written consent of American
Healthways.
(c) All the terms and provisions of this Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the
respective heirs, successors, permitted assigns and legal or personal
representatives of the parties hereto.
11.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the exhibits,
Schedules, lists and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein or as otherwise may be provided
for in the Confidentiality Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. This Agreement may be amended only by a written instrument duly executed
by all parties or their respective heirs, successors, assigns or legal personal
representatives. Any condition to a party's obligations hereunder may be waived
but only by a written instrument signed by the party entitled to the benefits
thereof. The failure or delay of any party at any time or times to require
performance of any provision or to exercise its rights with respect to any
provision hereof, shall in no manner operate as a waiver of or affect such
party's right at a later time to enforce the same.
11.4 HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretations of this Agreement.
11.5 SEVERABILITY. The invalidity of any term or terms of this Agreement
shall not affect any other term of this Agreement, which shall remain in full
force and effect.
11.6 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered, mailed (registered or certified mail, postage prepaid,
return receipt requested) or sent by recognized overnight delivery service or by
facsimile transmission as follows:
If to StatusOne:
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Fax No. (000) 000-0000
35
with a copy to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
Fax No. (000) 000-0000
If to the Principal Stockholders:
c/o StatusOne Health Systems, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Fax No. (000) 000-0000
If to American Healthways:
American Healthways, Inc.
0000 Xxxxx Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Fax No. (615) 665 - 7767
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Fax No. (000) 000-0000
If to AH Merger Sub:
c/o American Healthways, Inc.
0000 Xxxxx Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Fax No. (615) 665 - 7767
or to such other address or fax number as any party may have furnished to the
others in writing in accordance herewith, except that notices of change of
address shall only be effective upon receipt.
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
facsimile transmission (receipt confirmed) or, if mailed, when actually
received.
11.7 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
its conflict of laws rules.
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11.8 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
11.9 PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.
11.10 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
11.11 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, with the same effect as if the signatories executing
the several counterparts had executed one counterpart, provided, however, that
the several executed counterparts shall together have been signed by the parties
hereto. All such executed counterparts shall together constitute one and the
same instrument.
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Signature Page to
Agreement and Plan of Merger
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of American Healthways, AH Merger Sub, and
StatusOne, the Principal Stockholders and the Stockholder Representative on the
date first above written.
AMERICAN HEALTHWAYS, INC.
By:/s/ Xxx X. Xxxxxx, Xx.
---------------------------------
Title: Chief Executive Officer
------------------------------
AH MERGERSUB, INC.
By:/s/ Xxx X. Xxxxxx, Xx.
---------------------------------
Title: President
------------------------------
STATUSONE HEALTH SYSTEMS, INC.
By:/s/ Xxxxxxx Xxxxxxxx
---------------------------------
Title: Chief Executive Officer
------------------------------
PRINCIPAL STOCKHOLDERS:
/s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxx
------------------------------------
Xxxx Xxxx
/s/ Xxx Xxxxxx, M.D.
------------------------------------
Xxx Xxxxxx, M.D.
/s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx
STOCKHOLDER REPRESENTATIVE:
/s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx
