EXHIBIT 2.13
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of August 28, 2000, is by and
between Trewit Inc., a Delaware corporation ("Purchaser"), HealthPlan Services,
Inc., a Florida corporation ("HPSI"), ▇▇▇▇▇▇▇▇▇▇ Management Corporation, a
Pennsylvania corporation ("▇▇▇▇▇▇▇▇▇▇" and, together with HPSI, herein called
collectively called "Seller") and HealthPlan Services Corporation, a Delaware
corporation ("Parent").
A. Seller is engaged, among other things, in the business of providing
third party self-funded health and welfare plan administration services through
its "Commercial Large Group Division" (the "Business"), which consists primarily
of Seller's historical business units that were, or are currently, referred to
as CENTRA HealthPlan LLC, ▇▇▇▇▇▇▇▇▇▇ Management Corporation and ▇▇▇▇▇▇▇▇▇▇
Benefits Services, certain care management services currently provided by
ProHealth, Inc and certain data reporting services currently provided by
Analytics Information Management (such business units, or parts thereof, which
carry on the Business are collectively referred to as the "Division").
B. The parties hereto wish to provide for the terms and conditions upon
which Purchaser will acquire substantially all of the assets and operations of
the Division.
C. The parties hereto wish to make certain representations, warranties,
covenants and agreements in connection with the purchase of the Business and
assets of the Division and also to prescribe various conditions to such
transaction.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
ARTICLE 1
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PURCHASE OF ASSETS
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1.1. Assets to be Purchased. Upon satisfaction of all conditions to the
obligations of the parties contained herein (other than such conditions as shall
have been waived in accordance with the terms hereof), Seller shall sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase
from Seller, at the Closing, as hereinafter defined, all of the business,
assets, properties and rights applicable to, arising out of and used exclusively
in the operation of the Division (the "Exclusive Assets") (and certain other
specifically identified assets which are used primarily or partially in the
Division which consist of the Shared Contracts and Shared Intellectual property
other than the Retained Shared Contracts and the Retained Shared Intellectual
Property) (the "Non-Exclusive Assets"), as a going concern, and which assets
constitute all of the assets of the Division whether tangible or intangible and
wherever located whether or not reflected on the books of Seller which are used,
or held for use, in connection with the operation of the Division (hereinafter
referred to collectively as the "Assets"), excluding the Excluded Assets (as
hereinafter defined). In the event an asset which is not an Excluded Asset has
been used, or held for use, exclusively or primarily by the Division, but is not
actually transferred at the Closing to Purchaser, then Seller agrees to promptly
transfer such assets upon the reasonable request of Purchaser after the Closing.
The Assets shall include, without limitation, the following:
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(a) Prepaid Expenses, etc. All prepaid charges, fees and
expenses, credit balances and deposits listed on Exhibit 1.1(a) to the
extent that the foregoing are included in the Final Closing Balance
Sheet (as hereinafter defined) and have continued and measurable value
to Purchaser;
(b) Receivables. All accounts and notes receivable, book
debts, trade notes and trade accounts of the Division which are
included on the Final Closing Balance Sheet, and all security therefor
(the "Receivables");
(c) Contracts. All of the rights of Seller under all
contracts, leases, capital leases, agreements, unfilled customer
purchase or sales orders and non-governmental licenses (including
software) used exclusively in the Business and including without
limitation:
(i) the Administration Contracts (as hereinafter
defined), each of which are listed on Exhibit 1.1(c)(i)
hereto;
(ii) all provider network access agreements which are
listed on Exhibit 1.1(c)(ii) hereto;
(iii) all pharmacy benefit management agreements
which are listed on Exhibit 1.1(c)(iii) hereto;
(iv) all agreements providing for utilization review
and case management services which are listed on Exhibit
1.1(c)(iv) hereto;
(v) all agreements pertaining to the administration
of subrogation claims which are listed on Exhibit 1.1(c)(v)
hereto;
(vi) all agreements providing for data entry,
electronic data interchange (EDI), and imaging services; which
are listed on Exhibit 1.1(c)(vi) hereto;
(vii) all agreements providing for check and
explanation of benefits printing listed on Exhibit 1.1(c)(vii)
hereto; and
(viii) all other contracts, leases, capital leases,
agreements, unfilled customer purchase or sales orders,
licenses, permits and other governmental authorizations or
approvals, including, without limitation, the contracts,
leases, agreements, licenses and permits listed on Exhibit
1.1(c)(viii) hereto.
In addition to the foregoing contracts which are used exclusively in the
Business of the Division, there are certain contracts which the Division shares
with other divisions of Seller (the "Shared Contracts"). These Shared Contracts
are listed on Exhibit 1.1(c)(ix). Except for the Shared Contracts identified as
being retained by Seller on Exhibit 1.1(c)(ix) (the "Retained Shared
Contracts"), Seller will either assign to Purchaser all of its rights under
these Shared Contracts or, with the prior consent of Purchaser, the services
under a Shared Contract including under a Retained Shared Contract may be
provided to Purchaser by Seller under the Service Support Agreement, on terms
mutually agreeable to Purchaser and Seller. Seller shall also transfer to
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Purchaser any NEIC payor identification numbers used by the Division.
Additionally, Seller shall transfer to Purchaser the contracts and documentation
evidencing carrier and reinsurance relationships of ▇▇▇▇▇▇▇▇▇▇ as listed on
Exhibit 1.1(c)(x). The agreements referenced in this subsection 1.1(c) (other
than the Retained Shared Contract) are collectively referred to as the
"Contracts");
(d) Intellectual Property. All rights to any of the following
which (unless specifically designated as Shared) are used exclusively
in the operations of the Division in any jurisdiction, any and all
documentation relating to any of the following and all of the goodwill
associated with any of the following (collectively referred to herein
as "Intellectual Property")
(i) all business and trade names, service names,
corporate names, brand names, logos and slogans listed on
Exhibit 1.1(d)(i);
(ii) all copyrights and trademarks (whether used with
wares or services and including the goodwill attaching to such
trademarks), registrations and applications for trademarks and
copyrights, and all future income from all such trademarks and
copyrights listed on Exhibit 1.1(d)(ii);
(iii) all rights and interests in and to software
(including all modifications, enhancements and custom
programming) listed on Exhibit 1.1(d)(iii) (and the shared
software listed on Exhibit 1.1(c)(ix) which is not designated
as being retained by Seller), which exhibit indicates whether
the software is owned or licensed, and the processes,
notebooks, data, trade secrets, designs, know-how, manuals,
technology, research and development reports, agency
agreements, technical information, technical assistance,
claims processing procedures and other rights relating to the
administration of Contracts (as hereinafter defined), and
similar materials recording or evidencing expertise or
information;
(iv) all rights and interests in and to the Shared
Intellectual Property listed on Exhibit 1.1(d)(iv) which was
developed by Seller ("Acquired Seller-Developed Intellectual
Property") (other than the intellectual property listed on
Exhibit 1.1(d)(iv) which is indicated to be retained by Seller
and with respect to which retained intellectual property
Seller shall grant to Purchaser at Closing a nonexclusive,
perpetual, fully paid-up license to use such retained
intellectual property). With respect to the Acquired
Seller-Developed Intellectual Property, Purchaser shall grant
to Seller at Closing a nonexclusive, perpetual, fully paid-up
license to use all Acquired Seller-Developed Intellectual
Property;
(v) all future income and proceeds from any of the
intellectual property listed in items (i) to (iv) above which
is indicated as being transferred to Purchaser and the
licenses listed or referred to in item (iv) above; and
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(vi) all rights to damages and profits by reason of
the infringement of any of the owned intellectual property
listed in items (i) to (iv) above which is indicated as being
transferred to Purchaser;
in each case, as the same relate to the operations of the Division as
presently conducted by Seller;
(e) Personal Property and Equipment. All personal property,
including without limitation all machinery, equipment, furniture,
fixtures, data processing equipment, computer and peripheral equipment,
vehicles and other similar personal property and spare parts used
exclusively in the operations of the Division including all such
personal property located in the offices listed on Exhibit 1.1(e)(1)
(except in the case of Seller's Columbus, Ohio office, the assets which
have been sold or are to be sold to ▇▇▇▇▇▇▇▇ Uniservice, Inc. which
consist only of the assets historically exclusively used by Seller in
its unemployment compensation, workers compensation and Ohio managed
care organization business), and the items listed on Exhibit 1.1(e)(2)
hereto which are located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ (the
"Equipment");
(f) Real Property. All Seller's rights as tenant under leases
(each being referred to as an "Assumed Lease" and collectively as the
"Assumed Leases") (including all prepaid rents, security deposits,
options, rights to purchase, rights of first refusal and any leasehold
improvements) in the land and buildings described on Exhibit 1.1(f)
hereto (the "Real Estate") (which such exhibit identifies the purposes
for which each property listed on such exhibit is used); and
(g) General. All telephone listings and rights to use the
telephone numbers used by the Division and all communications numbers
and addresses used by the Division, all of the goodwill and going
concern value of the Division, all choses in action and other similar
rights relating to the Division, and all of the supplies, books, sales
records, sales data and sales information relating exclusively or
primarily to the Division and its operations, including without
limitation all office supplies, general, financial and accounting
records, purchase orders and invoices, sales orders and sales order log
books, lists and records of customers, advertising brochures and sales
literature, personnel records, correspondence and miscellaneous records
with respect to customers and supply sources, and all other general
correspondence, records, books and files now owned or hereafter
acquired by Seller with respect to the operations of the Division.
The foregoing assets include all of the assets located at the offices listed on
Exhibit 1.1(e)(1) (except in the case of Seller's Columbus, Ohio office, the
assets which have been previously sold or are to be sold to ▇▇▇▇▇▇▇▇ Uniservice,
Inc. and which assets consisted only of the assets historically exclusively used
by Seller in its unemployment compensation, workers compensation and Ohio
managed care organization business, shall be excluded) and certain additional
assets located at Seller's office in Tampa, Florida as listed on Exhibit
1.1(e)(2).
On the Closing Date, Seller shall transfer to Purchaser valid legal
title to all of the Assets, other than the Excluded Assets, as defined in
subsection 1.2, free and clear of any Lien, as hereinafter defined, other than
any Permitted Liens, as hereinafter defined.
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1.2. Excluded Assets. The Assets to be purchased hereunder shall not
include any of:
(a) the assets of Seller's Southern Nevada Administrators,
Inc. and American Benefit Plan Administrators, Inc., which assets are
not located in Columbus or the other offices listed on Exhibit
1.1(e)(1);
(b) the stock and assets of ProHealth, Inc. except for certain
care management service contracts for Division customers identified on
Exhibit 1.1(c)(viii) which are being assigned to Purchaser as part of
the Assets;
(c) the assets listed on Exhibit 1.2(c);
(d) all insurance policies relating to or covering the
Business or the Assets and any rights to make claims thereunder;
(e) all rights to indemnity from third parties provided under
the Contracts which relate to occurrences prior to the Closing Date;
(f) any deferred tax asset or right to any tax refund which
relates to the operation of the Division prior to the Closing Date;
(g) all financial records of the Division for any period prior
to the Closing Date provided that copies of such records for the period
from and after November 30, 1996 shall be provided to Purchaser or made
available in the same form (i.e. paper or electronic) as currently
available;
(h) the Retained Shared Intellectual Property;
(i) the Retained Shared Contracts;
(j) the assets of Seller located in Tampa, Florida which are
not listed on Exhibit 1.1(e)(2);
(k) the office lease covering Seller's office in Richardson,
Texas;
(l) two leased Xerox Docutext machines used, or held for use,
primarily by the Division (which are not the leased Xerox Docutext
machines identified by Purchaser pursuant to the terms of Section
1.3(b); and
(m) any Letters of Credit or Bonds posted in connection with
any Administrative Contracts being assumed by Purchaser.
The assets described in subsections 1.2(a) through (m) inclusive are
collectively referred to as "Excluded Assets"), which shall remain for all
purposes the properties and assets of Seller.
1.3. Liabilities to Be Assumed. Upon satisfaction of all conditions to the
obligations of the parties contained herein (other than such conditions as shall
have been waived in accordance with the terms hereof), and subject to the
consummation of the Closing, Purchaser
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shall assume, and agree to pay, perform and discharge when due, in the manner
hereinafter provided, only the following obligations of Seller (the "Assumed
Liabilities"):
(a) all of the liabilities related to the operations of the
Division which are included in the Final Closing Balance Sheet,
including the Notes Payable shown thereon; provided however, it is
understood that such liabilities shall not include any expenses
incurred by Seller in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, all of which
Seller agrees to satisfy and pay, and provided further, such
liabilities shall be of the same type set forth on the June Balance
Sheet (as hereinafter defined); and
(b) all of the obligations of Seller which relate to
operations of the Division from and after the Closing under the
Contracts (including, without limitation, equipment and real estate
leases), to the extent the Contracts are listed on Exhibit 1.1(c), and
are not Retained Shared Contracts and specifically excluding any
obligation arising from any default or failure of performance of Seller
arising at any time prior to the Closing; provided, however, that
Purchaser shall only be required to assume the equipment leases for
only two Xerox Docutext machines as selected by Purchaser (with notice
given to Seller) at least 5 days prior to the Closing.
Except with respect to the Assumed Liabilities, it is expressly
understood and agreed by the parties hereto that Purchaser has not and shall not
assume, and nothing contained in this Agreement shall be construed as an
assumption by Purchaser of, any liabilities, obligations, debts, payables or
other claims of any nature against Seller of any kind whatsoever, whether fixed
or contingent, whether accrued or unaccrued and whether known or unknown (all
such liabilities other than the Assumed Liabilities, including without
limitation any debt of the Division owing to Seller, are referred to herein as
the "Excluded Liabilities"). Seller shall be responsible for all of the
liabilities, obligations, debts, payables or other claims against Seller not
expressly assumed by Purchaser as Assumed Liabilities.
1.4. Estimated Balance Sheet. Seller shall deliver to Purchaser an
estimated pro forma balance sheet of the Division in the form attached hereto as
Exhibit 1.4 as of the Closing Date (the "Estimated Closing Balance Sheet") no
later than five (5) business days prior to the Closing Date. The Estimated
Closing Balance Sheet shall be prepared in accordance with GAAP, utilizing the
same methodologies and adjustments as were used in preparing the Historical
Financial Statements (as hereinafter defined); provided, however, the Estimated
Closing Balance Sheet shall include as assets of the Division only the Assets
and as liabilities of the Division only the Assumed Liabilities.
1.5. Estimated Purchase Price.
(a) Subject to the terms and conditions of this Agreement and
in reliance on the representations and warranties and covenants of
Seller herein contained, and in consideration of the sale, conveyance,
transfer and delivery of the Assets provided for in this Agreement,
Purchaser agrees to pay to Seller at the Closing an aggregate purchase
price of Nineteen Million Five Hundred Thousand Dollars ($19,500,000)
(A) minus the greater of (i) the amount, if any, by which Fourteen
Million Three Hundred One
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Thousand Eight Hundred Forty-Five Dollars ($14,301,845) is greater than
the book value of total assets (net of depreciation, amortization and
reserves) that are included on the Estimated Closing Balance Sheet (the
"Estimated Closing Total Assets") and (ii) the amount, if any, by which
Four Million Nine Hundred Thirty Thousand Three Hundred Ninety-One
Dollars ($4,930,391) exceeds the Closing Working Capital Amount (as
hereinafter defined) calculated using the Estimated Closing Balance
Sheet (the "Estimated Closing Working Capital Amount") and (B) plus the
greater of (i) the amount, if any, by which Fifteen Million Eight
Hundred Seven Thousand Three Hundred One Dollars ($15,807,301) is less
than the Estimated Closing Total Assets and (ii) the amount, if any, by
which Five Million Four Hundred Forty-Nine Thousand Three Hundred
Seventy Nine Dollars ($5,449,379) is less than the Estimated Closing
Working Capital Amount.
(b) "Closing Working Capital Amount" shall mean the book
value, as reflected in the relevant balance sheet, of the assets
described in Sections 1.1(a) and 1.1(b) less the book value, as
reflected in the relevant balance sheet, of the liabilities described
in Sections 1.3(a).
(c) The amount determined in accordance with the provisions of
this Section 1.5 is hereinafter referred to as the "Estimated Purchase
Price."
1.6. Payment of Estimated Purchase Price. The Estimated Purchase Price
shall be paid by Purchaser as follows:
(a) At the Closing, Purchaser shall deliver to Seller such
documents and instruments as are reasonably required to evidence
Purchaser's assumption of the Assumed Liabilities.
(b) At the Closing, Purchaser shall deliver the amount of One
Million Two Hundred Thousand Dollars ($1,200,000) (the "Escrow Amount")
to an escrow agent pursuant to an escrow in the form attached hereto as
Exhibit 1.6(b), which is to serve as a non-exclusive source for
adjustment of purchase price due from Seller and Seller's
indemnification obligations hereunder for a period of 18 months after
the Closing.
(c) At the Closing, the Purchase shall deliver via wire
transfer to Seller an amount equal to the Estimated Purchase Price less
the Escrow Amount.
1.7. Adjustment of Estimated Purchase Price.
(a) Not earlier than ninety (90) but in any event within one
hundred (100) days after the Closing Date, Purchaser will at its
expense cause a balance sheet of the Division to be prepared as of the
Closing Date (the "Closing Balance Sheet"), in accordance with
generally accepted accounting principles but using the same
methodologies and adjustments used in the Estimated Closing Balance
Sheet. In order to facilitate Purchaser's preparation of this Closing
Balance Sheet, Seller shall provide to Purchaser access to Seller's
accounting records, accounting personnel and work papers to the extent
necessary to prepare such Closing Balance Sheet. Upon preparation of
such Closing Balance Sheet, Purchaser shall deliver a copy thereof
together with Purchaser's
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work papers related thereto to Seller and Purchaser and Seller shall
meet within 10 business days of Seller's receipt thereof to resolve any
concerns Seller may have. If at the end of this ten business day
period, Purchaser and Seller are unable to agree upon a Final Closing
Balance Sheet, the Closing Balance Sheet as prepared by Purchaser shall
be audited (the "Audited Closing Balance Sheet") at Purchaser's expense
in accordance with generally accepted auditing standards, by the
Minneapolis, Minnesota office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.. LLP,
independent certified public accountants ("Auditor"). The scope of the
audit of the Audited Closing Balance Sheet will be subject to the
review and approval of Seller prior to commencement of such audit.
(b) Valuation of Assets. For purposes of this subsection 1.7,
when preparing the Closing Balance Sheet and the Audited Closing
Balance Sheet:
(i) the value of the tangible Assets (also called
"Property & Equipment, Net" on such balance sheet) set forth
on the Estimated Closing Balance Sheet shall be used without
adjustment on the Closing Balance Sheet and the Audited
Closing Balance Sheet and all such assets shall be deemed to
exist whether or not verified; provided however such amount
shall not be greater than $5,990,777;
(ii) the assets to be included shall only be the
Assets and the liabilities to be included shall only be the
Assumed Liabilities.
(iii) the reserve for accounts receivable will be
adjusted 90 days after Closing (the "Reserve Determination
Date") by an amount if any equal to the amount by which the
Closing Date accounts receivable which are over 90 days old as
of the Reserve Determination Date exceed the reserve for
accounts receivable established on the Estimated Closing
Balance Sheet. After the foregoing adjustment, all receivables
over ninety (90) days old shall be assigned to Seller and
Seller may pursue collection thereof.
(c) Delivery of Audited Closing Balance Sheet and Audit Work
Papers. Within ninety (90) days after the Closing Date, the Auditor
will deliver copies of the Audited Closing Balance Sheet to Purchaser
and Seller, together with Auditor's report based upon its audit of the
Audited Closing Balance Sheet stating that such balance sheet presents
fairly, in all material respects, the financial position of the
Division as of the Closing Date in conformity with generally accepted
accounting principles subject to the restrictions set forth in
subsections (a) and (b) above. Seller will also receive a complete copy
of Auditor's audit work papers related to such audit at the time of
delivery of the Audited Closing Balance Sheet.
(d) Final Closing Balance Sheet. Seller will have a period of
Fifteen (15) business days following receipt of the Audited Closing
Balance Sheet and all of the Auditor's audit work papers to review the
Audited Closing Balance Sheet and Auditor's audit work papers related
to such audit. Seller and its authorized representatives shall have
full access to all relevant books and records and employees of the
Division, Purchaser and Auditor to the extent required to complete its
review of the Audited Closing Balance Sheet. If Seller does not give
written notice of any objections to the
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Audited Closing Balance Sheet to Purchaser within such 15-business day
period, then the Audited Closing Balance Sheet shall be deemed to be
the Final Closing Balance Sheet. The Term "Final Closing Balance Sheet"
shall mean the balance sheet of the Division as of the Closing Date as
finally determined in accordance with this Section 1.7, whether by
acquiescence of Seller in the figures supplied by Purchaser in
accordance with subsection 1.7(c) or 1.7(a), by negotiation and
agreement of the parties, or by the Neutral Auditor in accordance with
subsection 1.7(f), and total assets reflected on the Final Closing
Balance Sheet shall be the "Final Closing Total Assets" and Working
Capital Amount calculated using the Final Closing Balance Sheet shall
be the "Final Closing Working Capital Amount."
(e) Payment of Purchase Price Adjustment. Within five (5)
business days after the determination of the Final Closing Total Assets
and the Final Closing Working Capital, a new purchase price shall be
determined using the provisions of Section 1.7 including the
limitations of Section 1.7(b), except that Final Closing Total Assets
and the Final Closing Working Capital shall be used instead of the
Estimated Closing Total Assets and the Estimated Closing Working
Capital, respectively. The purchase price so calculated shall be the
"Final Purchase Price." Any difference between the Estimated Purchase
Price and the Final Purchase Price shall be paid by Seller to Purchaser
(if the Final Purchase Price is lower than the Estimated Purchase
Price) or by Purchaser to Seller (if the Final Purchase Price is higher
than the Estimated Purchase Price) by wire transfer. The amount so
determined is referred to as the "Purchase Price Adjustment".
(f) Resolution of Disputes. If Seller objects to the Audited
Closing Balance Sheet by written notice to Purchaser within such
15-business day period, which notice shall contain Seller's calculation
of what it believes to be the Final Closing Total Assets and the Final
Closing Working Capital Amount then Purchaser and Seller will promptly
meet to resolve any differences regarding the Audited Closing Balance
Sheet. If any such differences are not resolved within fifteen (15)
days after delivery to Purchaser of Seller's written objections, then
all amounts remaining in dispute shall, at the election of either
party, be submitted to the Tampa, Florida office of KPMG, LLC (the
"Neutral Auditor"). Each party agrees to execute, if requested by the
Neutral Auditor, a reasonable engagement letter. Except for the fees
and expenses of the Neutral Auditor as contemplated by Subsection (g),
all costs and expenses incurred by the respective parties hereto in
connection with resolving any dispute hereunder before the Neutral
Auditor shall be borne by the party incurring such costs and expenses.
The Neutral Auditor shall act as an arbitrator to determine, based
solely on the presentations by Purchaser and Seller, and not by
independent review, only those issues still in dispute. The Neutral
Auditor's determination shall be made within thirty (30) days of its
engagement (which engagement shall be made no later than three (3)
business days after an election by either party to submit the
objections to the Neutral Auditor) or as soon thereafter as possible,
shall be set forth in a written statement delivered to Purchaser and
Seller and shall be final, binding, conclusive and nonappealable. Any
liability determined by the Neutral Auditor or agreed to by Purchaser
and Seller in the Final Closing Balance Sheet which is determined to be
greater than the amount represented by Seller herein shall not give
rise to a claim for indemnification under Section 8 hereof or otherwise
since the amount will be taken into consideration in making the
Purchase Price Adjustment.
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(g) Fees of Neutral Auditor. Seller shall pay a percentage of
such fees and expenses of the Neutral Arbitrator equal to A/(A+B) and
Buyer shall pay a percentage of such fees and expenses equal to
B/(A+B), where A is equal to the absolute value of the difference (in
dollars) between the Purchase Price Adjustment that results after
arbitration and the Purchase Price Adjustment that would have resulted
had the Final Closing Total Assets and Final Closing Working Capital
Amount been calculated using the Audited Closing Balance Sheet and B is
equal to the absolute value of the difference (in dollars) between the
Purchase Price Adjustment that results after arbitration and the
Purchase Price Adjustment that would have resulted using Purchaser's
calculation of the Final Closing Total Assets and Final Closing Working
Capital Amount set forth in Purchaser's objection provided for in
subsection 1.7(f).
1.8. Allocation of Purchase Price. The parties hereto agree that
Purchaser may at its expense retain one or more independent appraiser or
appraisers to prepare appraisals of the fair market value of the Assets (other
than cash equivalents, accounts receivable, prepaid items and Inventory).
Purchaser shall prepare an allocation of the Final Purchase Price among the
Assets based on the fair market values thereof, whether or not Purchaser obtains
any independent appraiser or appraisers to appraise the fair market value of any
of the Assets, in accordance with the requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). The parties to this
Agreement agree that such allocation shall be a fair and reasonable allocation
of the Final Purchase Price, and the parties to this Agreement shall file all
applicable tax returns and reports (including IRS Form 8594) in accordance with
and based upon such allocation, and shall not take any position in any tax
return or report, or any tax proceeding or audit, that is inconsistent with such
allocation.
1.9. Closing. Unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned pursuant to Article 7
hereof, a closing (the "Closing") will be held on September 30, 2000 at the
Minneapolis offices of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or such other place as
the parties may agree, at 9:00 a.m., local time or such other time or date as
the parties may agree upon in writing, at which time and place the documents and
instruments necessary or appropriate to effect the transactions contemplated
herein will be exchanged by the parties, provided; however, that if the
conditions from Articles 5 and 6 shall not have been satisfied or waived by such
date, then the party to this Agreement which is unable to satisfy such condition
or conditions, despite the reasonable commercial efforts of such party, shall be
entitled to postpone the Closing by notice to the other parties until such
condition or conditions shall have been satisfied (which such notifying party
will seek to cause to happen at the earliest practicable date) or waived. In no
event shall the Closing be postponed past October 31, 2000 without the consent
of both parties. If the conditions have not been satisfied or waived by that
date unless the parties otherwise agree, this Agreement shall terminate. The
date on which the Closing actually takes place is hereinafter referred to as the
"Closing Date."
1.10. Further Assurances. After the Closing, Seller shall from time to
time, at the request of Purchaser and without further cost or expense to
Purchaser, execute and deliver such other instruments of conveyance and transfer
as Purchaser may reasonably request, in order to more effectively consummate the
transactions contemplated herein and to vest in Purchaser good and marketable
title to the Assets, including, without limitation, assistance in the collection
or
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reduction to possession of any such Assets. To the extent any of the Assets are
not assigned or assignable to Purchaser or if any necessary consent to such
assignment shall not have been obtained by Purchaser or Seller, Seller shall
hold in trust for the benefit of Purchaser all of Seller's right, title and
interest to such Assets and, insofar as permissible, from time to time assign
such interest to Purchaser. Until all such interests have been transferred to
Purchaser, Seller shall maintain its existence, shall comply with the terms and
conditions contained in any of the interests to be transferred hereunder and
shall, at Purchaser's request, enforce at the expense and for the account of
Purchaser any of the rights contained in the interests to be transferred
hereunder. Seller shall cooperate in any reasonable arrangement to the end that
Purchaser shall be provided the use and benefits of such Assets. Seller shall
promptly pay to Purchaser all monies collected by or paid to Seller in respect
of such Assets. Notwithstanding anything in this Agreement to the contrary,
neither this Agreement nor any document or instrument delivered pursuant hereto
shall constitute an assignment of any claim, contract, license, permit, lease,
commitment, sales order or purchase order or any claim or right or any benefit
arising hereunder or resulting therefrom, if any attempted assignment thereof
without the consent or approval of any other party thereto or issuer thereof
would constitute a breach thereof or in any way adversely affect the rights to
be assigned. Nothing in this Section 1.10, however, shall be deemed to release
Seller from its obligation to defend, indemnify and hold Purchaser harmless from
any loss, liability or damage suffered by Purchaser resulting from any breach of
any representation, warranty or covenant contained herein or any failure by
Seller to transfer and assign the Assets as required by this Agreement.
1.11. Software License Fees and Expenses.
The parties acknowledge that while Seller is transferring all of its right,
title and interest in the software licenses listed on Exhibit 1.1(c)(viii),
1.1(c)(ix) and 1.1(d)(iii) which are listed thereon as not being retained by
Seller, such software licenses may not be transferable without the consent of
the Licensor. Anything in this Agreement to the contrary notwithstanding (other
than the condition set forth in Section 5.6 which shall remain applicable),
Purchaser shall be responsible for getting any such required consents and Seller
shall not be liable to Purchaser for any fees or expenses incurred by Purchaser
in connection with getting such consents or in connection with obtaining
replacement licenses if such consents are not forthcoming
ARTICLE 2
---------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller and Parent, jointly and severally, represent and warrant to
Purchaser as of the date hereof as follows:
2.1. Corporate Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
with corporate power and authority to carry on the operations of the Division as
it is now being conducted and to own, operate and lease the properties and
assets used in the conduct of the operations of the Division. Seller is duly
qualified or licensed to do business as a foreign corporation in good standing
in the jurisdictions listed in Section 2.1 of the Disclosure Schedule which are
every jurisdiction in which the conduct of the operations of the Division
requires such qualification or licensing,
11
except for such jurisdictions in which Seller's failure to be so qualified or
licensed and in good standing would not, individually or in the aggregate, have
a material adverse effect on the operations of the Division or the Assets.
2.2. Authorization. Seller and Parent have full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated herein. The Board of Directors of Seller and Parent taken all
action required by law, the articles or certificate of incorporation and bylaws
of Seller and Parent or otherwise to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by Seller and Parent and no other corporate action is necessary for
the consummation by Seller or Parent of the transactions contemplated herein.
This Agreement is the valid and binding legal obligation of Seller and Parent,
enforceable against Seller and Parent in accordance with its terms except to the
extent that (a) enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or conveyance, or
similar Laws now or hereafter in effect relating to or limiting creditor's
rights generally, and (b) the remedy of specific performance and injunctive and
other forms of equitable relief are subject to the discretion of the court
before which any proceeding therefor may be brought (the "Standard
Enforceability Exceptions").
2.3. Non-Contravention. Except as set forth in the Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by Seller and
Parent nor the consummation of the transactions contemplated herein by Seller
and Parent will:
(a) violate or be in conflict with any provision of the
articles or certificate of incorporation or bylaws of Seller or Parent;
or
(b) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right
of termination, cancellation, imposition of fees or penalties under,
any lease, mortgage, indenture, license, obligation, contract,
commitment, franchise, permit, instrument or other agreement or
obligation to which Seller or Parent is a party or by which Seller or
Parent or any of either such party's properties or assets is or may be
bound, which conflict or default could reasonably be expected to
prevent Seller from conveying the Assets hereunder or result in the
creation or imposition of any mortgage, pledge, lien, security
interest, encumbrance, restriction, adverse claim or charge of any kind
(collectively, a "Lien"), upon any of the Assets; or ----
(c) violate any statute, treaty, law, judgment, writ,
injunction, decision, decree, order, regulation, ordinance or other
similar authoritative matters (sometimes hereinafter separately
referred to as a "Law" and sometimes collectively as "Laws") of any
foreign, federal, state or local governmental or quasi-governmental,
administrative, regulatory or judicial court, department, commission,
agency, board, bureau, instrumentality or other authority (hereinafter
sometimes separately referred to as an "Authority" and sometimes
collectively as "Authorities"), which violation would have a material
adverse effect upon the ability of Purchaser to consummate the
transactions
12
contemplated hereby or operate the Business after Closing as heretofore
operated or create an encumbrance or material restriction on the
Assets.
2.4. Consents and Approvals. Except as set forth in the Disclosure
Schedule, or as noted below, no consent, approval, order or authorization of or
from, or registration, notification, declaration or filing with (hereinafter
sometimes separately referred to as a "Consent" and sometimes collectively as
"Consents"), any individual or entity, including without limitation any
Authority, is required in connection with the execution, delivery or performance
of this Agreement by Seller and Parent or the consummation by Seller and Parent
of the transactions contemplated herein except where the failure to obtain the
same would not have a material adverse effect upon the ability of Seller or
Parent to consummate the transactions contemplated hereby or upon the ability of
Purchaser to operate the Business after Closing as heretofore operated or create
an material encumbrance or restriction on the Assets. With respect to
Administrative Agreements, consents are listed on the Disclosure Schedule only
for the Agreements with the customers who employ at least 1000 employees.
2.5. Financial Statements. The Disclosure Schedule contains (i)
unaudited historical balance sheets and statements of income of the Division as
of and for the periods ending December 31, 1999; (the "Historical Financial
Statements"); and (ii) an unaudited balance sheet and statement of income of the
Division as of and for the six-month period ended June 30, 2000 which such
balance sheet reflects as assets of the Division only the Assets, and as
liabilities of the Division, only the Assumed Liabilities (the "June Balance
Sheet"), and which such income statement reflects only income, expenses and
other items associated with the Assets and Assumed Liabilities (collectively,
the "Most Recent Financial Statements"). Seller has prepared these financial
statements using methodologies, assumptions and estimates including allocations
of shared expenses [which Purchaser has reviewed and accepted as reasonable]
(the "Assumed Allocations"). Except as set forth in the Disclosure Schedule or
as noted in Section 1.7(b)(i), the Historical Financial Statements and the Most
Recent Financial Statements (i) are prepared in conformity with the books and
records of the Division utilizing the methodologies, assumptions and estimates
including the Assumed Allocations; and (ii) fairly present in all material
respects the financial position of the Division as of the respective dates
thereof and the results of operations of the Division for the periods then ended
based on the Assumed Allocations.
2.6. Absence of Undisclosed Liabilities. At and after the Closing,
there will be no liabilities or obligations of Seller of a material nature of
any kind whatsoever relating to the Division (whether secured or unsecured,
accrued or unaccrued, fixed or contingent, matured or unmatured, contingent or
otherwise and whether due or to become due), including liabilities or
obligations which may become known or which arise only after the Closing and
which result from acts, omissions or occurrences of Seller prior to the Closing
which will encumber or otherwise attach to the Assets or be assertable against
Purchaser other than the Assumed Liabilities.
2.7. Absence of Certain Changes. Except as set forth in the Disclosure
Schedule, since June 30, 2000, Seller has owned the Assets and operated the
Division in the ordinary course of business and consistent with past practices.
Without limiting the generality of the foregoing, Seller has not, with respect
to the Assets and the operations of the Division, subject to the aforesaid
exceptions:
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(a) suffered any known adverse change in the business,
customers, or customer relations, operations, properties, prospects,
assets, working capital, liabilities or condition (financial or
otherwise) which resulted in or could reasonably be expected to result
in a material adverse effect with respect to the Division or the
Assets, and there has not been any damage, destruction, loss or other
event which resulted in or could reasonably be expected to result in a
material adverse effect with respect to the Division or the Assets;
(b) incurred any liabilities or obligations, except those
incurred in the ordinary course of business and consistent with past
practices, or increased, or experienced any change in any assumptions
underlying or methods of calculating, any bad debt, contingency or
other reserves;
(c) permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, lien, security interest, encumbrance, restriction or
charge of any kind, except for liens for current taxes not yet due;
(d) cancelled any debts or waived any claims or rights, in
each case, of substantial value;
(e) sold, transferred or otherwise disposed of any of the
Assets (real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practices;
(f) disposed of or permitted to lapse any rights to the use of
any patent, trademark, trade name or copyright, or disposed of or
disclosed (except as necessary in the conduct of its business) to any
person other than representatives of Purchaser any trade secrets,
formula, process or know-how not theretofore a matter of public
knowledge;
(g) granted any extraordinary increase in the compensation of
officers or employees (including any such increase pursuant to any
bonus, pension, profit sharing or other plan or commitment) or any
extraordinary increase in the compensation payable or to become payable
to any officer or employee;
(h) made any capital expenditure or commitment for additions
to property, plant, equipment or intangible capital assets in excess of
$100,000;
(i) made any change in any method of financial or tax
accounting or financial or tax accounting practice;
(j) suffered any known adverse change in its relationship with
any material customer, including the loss of any such material customer
or a contract with any such material customer; or
(k) agreed, whether in writing or otherwise, to take any
action described in subsections 2.7(a) through (i).
14
2.8. Assets.
(a) Except as set forth in the Disclosure Schedule, Seller has
good and marketable title to all of the assets and properties of the
Division reflected in the June Balance Sheet or acquired in the
Division after the date thereof (except for properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business and consistent with past practices and except for the Assumed
Sublease of a portion of the Columbus, Ohio Assumed Lease), free and
clear of any Lien, except for Liens securing specified liabilities or
obligations shown on the June Balance Sheet with respect to which no
breach, violation or default exists, and on the Closing Date Seller
will transfer to Purchaser good and marketable title to all of the
Assets free and clear of any Lien.
(b) Except as set forth on the Disclosure Schedule, all real
properties included in the June Balance Sheet as owned or leased by
Seller are, to the knowledge of Seller and Parent, free from any
structural defect, and in good operating condition and repair. Except
as set forth on the Disclosure Schedule, each such real property and
its present use, to the knowledge of Seller and Parent, conform in all
material respects to all occupational, safety or health, zoning,
planning, subdivision, platting and similar Laws, and there is, to the
knowledge of Seller and Parent, no such Law contemplated that would
affect adversely the right of Seller to own or lease and operate and
use such real properties.
(c) Except as set forth on the Disclosure Schedule, the
machinery, equipment, vehicles and other personal property included in
the June Balance Sheet as owned or leased by Seller and included in the
Assets are, to the knowledge of Seller and Parent, in good operating
condition and repair and fit for the intended purposes thereof.
(d) Other than the Excluded Assets, the Assets include all of
the assets and properties, including all agreements, necessary for the
operations of the Division as presently conducted, provided that the
Assets do not include any Governmental Authorizations (as hereinafter
defined). The Assets will not include any assets or properties that are
not used or useful in the ordinary course of the operations of the
Division. All leasehold interests relating to machinery, equipment,
vehicles and other personal property which are included in the Assets
are valid and in full force and effect and enforceable in accordance
with their terms, and there does not exist any material violation,
breach, or default thereof or thereunder by Seller, other than a
violation, breach or default under the Assumed Leases resulting from
the failure of Seller to obtain a Landlord's Consent with respect to
assignment of an Assumed Lease.
2.9. Trade Accounts Receivable, Notes Receivable and Payables. Except
as set forth on the Disclosure Schedule, Seller has good right, title and
interest in and to all Receivables reflected in the June Balance Sheet and to be
reflected on the Final Closing Balance Sheet; (ii) none of such Receivables is
subject to any Lien; (iii) all of the Receivables to be listed on the Estimated
Closing Balance Sheet and in the Final Closing Balance Sheet will constitute
valid and enforceable claims arising from bona fide transactions in the ordinary
course of operations of the Division, and there will be no known claims,
refusals to pay or other rights of set-off against any thereof; (iv) the aging
schedule of the Receivables attached hereto as Exhibit 2.9(iv) is complete
15
and accurate in all material respects as of the date thereof. All notes payable
by Seller to be included in the Estimated Closing Balance Sheet and in the Final
Closing Balance sheet will arise from bona fide transactions in the ordinary
course of business.
2.10. Intellectual Property Rights. Seller has good and marketable
title to, and the Disclosure Schedule contains a detailed listing of, each
Intellectual Property right used in, or necessary for, the operations of the
Division as currently conducted or proposed to be conducted with an indication
of any such property which is not used exclusively in the operation of the
Division ("Shared Intellectual Property") and a further indication of the Shared
Intellectual property which is being retained by Seller and will not be included
in the Assets and transferred to Purchaser (the "Retained Shared Intellectual
Property"). Except as set forth on the Disclosure Schedule, the use of all
Intellectual Property rights included in the Assets does not infringe or violate
the Intellectual Property rights of any person or entity. Except as described on
the Disclosure Schedule, in connection with the operations of the Division, as
currently conducted: (i) Seller does not own or use any Intellectual Property
rights included in the Assets pursuant to any license agreement; (ii) Seller has
not granted any person or entity any rights, pursuant to any license agreement
or otherwise, to use any Intellectual Property right included in the Assets; and
(iii) all of Seller's Intellectual Property rights are free and clear of all
royalty obligations and Liens. All registrations of the Intellectual Property
included in the Assets and designated as owned by the Seller are valid and
subsisting. All of the registrations and applications for registration of the
Intellectual Property included in the Assets and designated as owned by the
Seller are in good standing and are recorded in the name of Seller. No
application for registration of any of the Intellectual Property owned by the
Seller which is included in the Assets has been rejected. No shareholder,
officer, director or employee of Seller or any third party has any right, title
or interest in any of the Intellectual Property owned by Seller. Seller has
diligently protected its legal rights to the exclusive use of the Intellectual
Property where Seller enjoys exclusive use. No person has challenged the
validity of any registrations for the Intellectual Property or Seller's rights
to any of the Intellectual Property owned by Seller.
2.11. Litigation. Except as set forth in the Disclosure Schedule, there
is no legal, administrative, arbitration or other proceeding, suit, claim or
action of any nature or investigation, review or audit of any kind (including
without limitation a proceeding, suit, claim or action, or an investigation,
review or audit, involving any environmental Law or matter), judgment, decree,
decision, injunction, writ or order pending, noticed, scheduled or, to the
knowledge of Seller or Parent, threatened or contemplated by or against or
involving the Division, the Assets or the officers, agents or employees of any
of the Division (but only in their capacity as such), whether at law or in
equity, before or by any person or entity or Authority, or which questions or
challenges the validity of this Agreement or any action taken or to be taken by
the parties hereto pursuant to this Agreement or in connection with the
transactions contemplated herein.
2.12. Taxes. Seller or Parent has collected and paid over to the taxing
Authorities of each jurisdiction to which it is subject all taxes of any kind
(including without limitation income, capital gains, gross receipts, ad valorem,
franchise, payroll, employment, excise, profits, withholding, unemployment, real
or personal property, sales, use, transfer, estimated or other taxes, customs'
duties, fees, charges, levies, imports and other assessments or similar charges
in the nature of a tax, including all interest, penalties or additions thereto
and any liability for taxes
16
of any other person or entity (collectively "Taxes")) (other than Taxes that are
Assumed Liabilities), that are due and payable for periods ending prior to the
Closing Date, or made adequate provision for the payment thereof, and for which
Purchaser could have transferee liability or in respect of which any of the
Assets could be subjected to a Lien therefor.
2.13. Benefit Plans. Except as set forth in the Disclosure Schedule:
(a) Schedule 2.13(a) lists all employee pension benefit plans
within the meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") ("Pension Plan(s)") and all
employee welfare benefit plans within the meaning of Section 3(1) of
ERISA ("Welfare Plan(s)") maintained by the Seller for employees of the
Division or to which the Seller contributes or is required to
contribute (collectively, "ERISA Plans") for the benefit of any of the
employees of the Division. True, correct and complete copies of all
such ERISA Plans together with related trusts, insurance contacts,
summary plan descriptions, annual reports and Form 5500 filings for the
past three (3) years, have been delivered to the Purchaser.
(b) Except as set forth on Schedule 2.13(b), the Seller does
not sponsor, maintain or contribute to any employee pension benefit
plan, within the meaning of Section 3(2) of ERISA relating to the
Division and has not sponsored, maintained, or contributed to such a
plan within the past five years. With respect to the employees of the
Division, the Seller is not required to contribute to, and for the past
seven years has not been required to contribute to, any multiemployer
plan within the meaning of Section 3(37)(A) of ERISA. Neither Seller
nor any other "person" within the meaning of Section 7701(a)(1) of the
Code that together with the Seller is considered a single employer
pursuant to Sections 414(b), (c), (m) or (o) of the Code or Sections
3(5) or 4001(b)(1) of ERISA (an "Affiliated Organization") has or could
have any liability of any nature, whether known or unknown, direct or
indirect, fixed or contingent, to the Pension Benefit Guarantee
Corporation ("PBGC") arising directly or indirectly under Title IV of
ERISA, other than liability pursuant to Section 4007 of ERISA for
premiums which are not yet due (without regard to any waiver), which
may constitute a lien on any of the assets transferred to the Purchaser
in connection with this transaction or otherwise result in any
liability to the Purchaser.
(c) Each ERISA Plan covering employees of the Division has
been operated and administered in all material respects in accordance
with all applicable laws, including, without limitation, ERISA and the
Code. Each such ERISA Plan that is a group health plan within the
meaning of Section 601(1) of ERISA and Section 4980(B) of the Code is
in material compliance with the continuation of coverage requirements
of Section 601 of ERISA and Section 4980(B) of the Code. There are no
pending claims, or, to the Seller's knowledge, threatened claims with
respect to any such ERISA Plan, by any employee or beneficiary covered
under such ERISA Plan or by any governmental entity or otherwise
involving such ERISA Plan or any of its fiduciaries (other than for
routine claims for benefits). Nothing has occurred or failed to occur
with respect to any Pension Plan or Welfare Plan which could result in
any liability to the Purchaser or any successor of the Purchaser other
than a liability expressly assumed by the Purchaser pursuant to this
Agreement.
17
(d) Except as set forth on Schedule 2.13(d), Seller is not
bound to provide, and does not provide, benefits, including, without
limitation, death, health or medical benefits (whether or not insured),
with respect to employees of the Division who are hired by Purchaser
beyond their retirement or other termination of service with Seller
other than:
(i) coverage mandated by applicable law;
(ii) deferred compensation benefits accrued as
liabilities; or
(iii) benefits, the full cost of which is borne by
the current or former employee or his beneficiary.
(e) Except as provided on Schedule 2.13(e), neither this
Agreement nor any transaction contemplated hereby will:
(i) entitle any employee of the Seller who is hired
by the Purchaser to severance pay, unemployment compensation
or any similar or other payment; or
(ii) accelerate the time of payment or vesting, or
increase the amount of compensation or benefits due any such
employee.
(f) Flexible Spending Accounts. As of the Closing Date ,
Purchaser shall establish a flexible spending arrangement within the
meaning of Sections 106(c)(2) and 125 of the Code (the "Newco Plan")
which shall be substantially equivalent in all material respects to the
HealthPlan Services Flexible Spending Account Plan (the "Flex Plan")
and shall constitute the Purchaser's adoption and continuation of the
Flex Plan as it relates to the employees of the Division who become
employees of Purchaser as a result of this transaction ("Affected
Employees"). As soon as administratively feasible after the Closing
Date, Seller shall take any actions necessary to transfer (or cause to
be transferred) the written election and the account balance , if any,
of each Affected Employee under the Flex Plan to the Newco Plan (the
"FSA Transfer"). The balance of each flexible spending account of each
Affected Employee immediately after the FSA Transfer shall be equal to
the balance of such account immediately before the FSA Transfer. The
parties agree that Seller shall be solely responsible for (A) the
administration of the flexible spending account of each Affected
Employee under the Flex Plan before the occurrence of the FSA Transfer
and (B) any expense, fee, fine, claim, or any other liability related
to the administration or maintenance of
18
the flexible spending accounts of each Affected Employee assessed,
incurred or accrued prior to the FSA Transfer. The parties agree that
Purchaser shall be solely responsible for (x) the administration of the
flexible spending account of each Affected Employee after the
occurrence of the FSA Transfer and (y) any expense, fee, fine, claim or
any other liability related to the administration or maintenance of the
flexible spending accounts of each Affected Employee assessed, incurred
or accrued after the FSA Transfer. Notwithstanding the above, the
Seller shall be solely responsible for any expense, fee, fine, claim,
or any other liability related to the administration or maintenance of
the flexible spending accounts of each Affected Employee assessed,
incurred or accrued as a result of the FSA Transfer. Each Affected
Employee under the Flex Plan as of the Closing Date shall be eligible
to participate in the Newco Plan on the first day following the date of
the FSA Transfer. The parties agree that the Affected Employees shall
not be entitled to make any changes to their elections under the Newco
Plan as a result of the consummation of the transactions contemplated
herein.
The Seller provides the following additional representations with
respect to its Flex Plan:
(i) Neither the Seller nor an Affiliated Organization
has or could have any liability of any nature whether known or
unknown, direct or indirect, fixed or contingent, with respect
to the Flex Plan, other than the payment of benefits under the
Flex Plan.
(ii) The Flex Plan satisfies all applicable
qualification requirements.
(iii) There are no facts and circumstances which
could subject the Seller or any Affiliated Organization to an
excise tax or penalty tax under the Code or civil penalty,
damages, or other liability under ERISA.
(iv) There will be no change in operation of or the
documents related to the Flex Plan on or before the Closing
Date that will result in an increase in benefits.
(v) Seller and each Affiliated Organization has
timely complied in all material respects with all reporting
and disclosure obligations imposed by the Code, ERISA, and
other applicable law.
(vi) No act or omission of a seller, shareholder,
director, employee, or agent restricts, impairs, or prohibits
the Purchaser or Seller or successor from amending, merging,
or terminating the Flex Plan.
(vii) In addition to the documents being provided
pursuant to subsection (a) of Section 2.13, Seller will
provide true and correct copies of any SMMs and any other
modifications communicated to participants currently in effect
with respect to the Flex Plan.
(g) Affected Employee Participation. Purchaser agrees that the
Purchaser's 401(k) Plan shall be amended to provide that each Affected
Employee (as defined in paragraph (f), above,) shall be given credit
for all years of service with Seller for eligibility and vesting
purposes and Purchaser will amend said 401(k) Plan to provide for
immediate entry for the Affected Employees. The Affected Employees
shall also be eligible to participate immediately in Purchaser's health
care plan.
(h) Information. Seller agrees to prepare and provide to
Purchaser, as soon as practicable following the Closing Date, a list of
the Affected Employees, together with a listing of each such Affected
Employee's term of service for eligibility and vesting purposes under
the HPS Plan and a listing of each such Affected Employee's account
19
balance thereunder, and Buyer and Seller agree to provide one another
with such additional information in the possession of one company and
not already in the possession of the other as may be reasonably
requested by either of them and necessary in order for Purchaser to
establish and administer the transferred account balances of the
Affected Employees.
2.14. Bank Accounts; Powers of Attorney. The Disclosure Schedule sets
forth a correct and complete list of all:
(a) bank accounts and accounts at other institutions utilized
by the Division for its funds (the "Division Accounts");
(b) bank accounts utilized by the Division for receiving or
disbursing funds of sponsors of the medical health and welfare plans
administered by Seller or Parent under the Administration Contracts
("Benefit Administration Accounts") and the names of all persons
authorized to deal with such accounts; and
(c) the names of all persons or entities holding general or
special powers of attorney from the Division and a summary of the terms
thereof.
All accounts in the Division maintained by Seller or Parent on behalf
of clients or customers of the Division have been maintained in accordance with
applicable principles of fiduciary law and the agreements or understandings
under which they are established, and no funds which were supposed to be
maintained in any such accounts have been co-mingled with Seller or Parent funds
and all such accounts are reconciled on the closing date and no unaccounted for
material shortage or deficiency exists with respect to such accounts. There are
not now, nor at any time have there been, any "prohibited transactions" (as such
term is defined in Section 4975 of the Code or Section 406 of ERISA), breach of
fiduciary duty or other violations under ERISA involving the Company with
respect to the Benefit Administration Accounts or health and welfare plans
subject to the Administration Contracts.
2.15. Contracts and Commitments; No Default.
(a) Except as set forth in the Disclosure Schedule, the
Division:
(i) has no written or oral contract, commitment,
agreement or arrangement with any person which (1) requires
payments individually in excess of $50,000 annually or in
excess of $250,000 over its term (including without limitation
periods covered by any option to extend or renew by either
party) and (2) is not terminable on thirty (30) days' or less
notice without cost or other liability to Purchaser;
(ii) does not pay any person or entity cash
remuneration at the annual rate (including without limitation
guaranteed bonuses) of more than $75,000 for services
rendered;
20
(iii) is not restricted by agreement from carrying on
its businesses or any part thereof anywhere in the world or
from competing in any line of business with any person or
entity;
(iv) is not subject to any obligation or requirement
to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any person or
entity which in either case will become an obligation of
Purchaser;
(v) is not subject to any agreement, contract,
commitment or loan to which any of its directors, officers or
shareholders or any "affiliate" or "associate" (as defined in
Rule 405 as promulgated under the Securities Act of 1933) (or
former affiliate or associate) thereof is a party;
(vi) is not subject to any purchase or sale contract
or agreement that calls for aggregate purchases or sales in
excess over the course of such contract or agreement of
$100,000 and which continues for a period of more than twelve
(12) months (including without limitation periods covered by
any option to renew or extend by either party) which is not
terminable on sixty (60) days' or less notice without cost or
other liability at or any time after the Closing; or
(vii) is not subject to any contract, commitment,
agreement or arrangement with any "disqualified individual"
(as defined in Section 280G(c) of the Code) which contains any
severance or termination pay liabilities which would result in
a disallowance of the deduction for any "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code) under
Section 280G of the Code.
(b) True and complete copies (or summaries, in the case of
oral items) of all items disclosed pursuant to subsection 2.15 have
been made available to Purchaser prior to the date hereof. Except for a
violation breach or default under the Assumed Leases resulting from the
failure of Seller to obtain a Landlord's Consent with respect to
assignment of an Assumed Lease and except as set forth in the
Disclosure Schedule, all such items, and all of the Contracts are valid
and enforceable by and against Seller in accordance with their
respective terms; Seller is not in breach, violation or default,
however defined, in the material performance of any of its obligations
thereunder; and, to Seller's knowledge, no other parties thereto are in
a breach, violation or default, however defined, thereunder or thereof.
(c) The Disclosure Schedule sets forth a complete and accurate
listing of all clients or customers to which the Division has provided,
or was contractually obligated to provide, third party administration
of health and welfare plan services as of the date set forth therein.
Except as noted in Section 2.16 of this Agreement or on the Disclosure
Schedule, the Division either has written administration contracts (or
will have written administration contracts as of the Closing Date with
terms consistent with the services and products supplied by the
Division prior to obtaining such written administration agreements)
with each of the clients and customers listed on the Disclosure
Schedule
21
(the "Administration Contracts"). The Division is and at all times has
been in material compliance with the terms and conditions of all
contracts for the third party administration of health and welfare
plans, including, without limitation, the Administration Contracts, to
which it is or has been a party. As of the Closing Date, Seller will
not have recognized as revenue any payments under the Administrative
Contracts for services not performed or anticipated to be performed
within thirty (30) days. The Division has no agreements or arrangements
that will require claims administration run-off services or other
services in the future without normal fees being billable therefor.
Each of the Administration Contracts is valid, in full force and effect
and enforceable against Seller in accordance with its terms subject to
the Standard Enforceability Exceptions. There has not occurred any
default thereunder by Seller of a material nature.
2.16. Commitments. Except as set forth in the Disclosure Schedule, all
agreements providing performance of services entered into by Seller in
connection with the operations of the Division and all outstanding contracts or
commitments for the purchase of supplies, materials and services in connection
with the operations of the Division were made in bona fide transactions in the
ordinary course of the operations of the Division provided that certain
agreements which are identified in Schedule 2.16 hereto are in negotiation and
service is being provided thereunder without the benefit of a written agreement
pending finalization of the agreements.
2.17. Labor Matters. Except as set forth in the Disclosure Schedule, in
connection with the operations of the Division:
(a) Seller is and has been in compliance in all material
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
including without limitation any such Laws respecting employment
discrimination and occupational safety and health requirements, and has
not and is not engaged in any unfair labor practice;
(b) there is no unfair labor practice complaint against Seller
pending or, to Seller's knowledge, threatened before the National Labor
Relations Board or any other comparable Authority;
(c) there is no labor strike, dispute, slowdown or stoppage
actually pending or, to Seller's knowledge, threatened against or
directly affecting Seller;
(d) no labor representation question exists and there is not
pending or, to Seller's knowledge, threatened any activity intended or
likely to result in a labor representation vote;
(e) no grievance or any arbitration proceeding arising out of
or under any collective bargaining agreement is pending and, to
Seller's knowledge, no claims therefor exist or have been threatened;
(f) no collective bargaining agreement is binding and in force
against Seller or currently being negotiated by Seller;
22
(g) Seller has not experienced any significant work stoppage
or other significant labor difficulty within the past five (5) years;
(h) Seller is not delinquent in payments to any persons for
any wages, salaries, commissions, bonuses or other direct or indirect
compensation for any services performed by them or amounts required to
be reimbursed to such persons, including without limitation any amounts
due under any employee benefit plan;
(i) upon the termination of the employment of any person by
Seller, neither Seller nor Purchaser will, by reason of anything done
at or prior to or as of the Closing Date, be liable to any of such
persons for so-called "severance pay" or any other payments;
2.18. Dealers, Distributors and Suppliers. Except as set forth in the
Disclosure Schedule, to the knowledge of Seller or Parent, there has not been in
the twelve (12) month period prior to the date hereof any material adverse
change in the business relationship of Seller with any dealer, distributor or
supplier to the Division.
2.19. Governmental Authorizations. For purposes of this Agreement,
"Governmental Authorization" means any Consent, approval, license, permit,
waiver or other authorization issued, granted, given or otherwise made available
by or under any Authority or pursuant to any Law. The Disclosure Schedule
contains a complete and accurate list of each material Governmental
Authorization that is necessary for the operations of the Division. Each such
Governmental Authorization listed or required to be listed in subsection 2.19 of
the Disclosure Schedule has been duly obtained by Seller and is valid and in
full force and effect except where the failure of Seller to obtain such
authorization would not have a material adverse effect upon the ability of
Purchaser to operate the Division or otherwise encumber the Assets after
Closing. Except as set forth in subsection 2.19 of the Disclosure Schedule or as
would not otherwise have a material adverse effect upon the ability of Purchaser
to operate the Division or otherwise encumber the Assets after Closing,:
(a) Each Governmental Authorization is not subject to any
pending, or to the knowledge of Seller, threatened administrative or
judicial proceeding to revoke, cancel, suspend or declare such
Governmental Authorization invalid in any respect;
(b) no event has occurred or circumstance exists that will
(with or without notice or lapse of time) (i) constitute or result
directly or indirectly in a violation of or a failure to comply with
any term or requirement of any Governmental Authorization listed or
required to be listed in subsection 2.19 of the Disclosure Schedule, or
(ii) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to any
Governmental Authorization listed or required to be listed in
subsection 2.19 of the Disclosure Schedule;
(c) Seller has not received any notice or other communication
which has not been resolved (whether written or oral) from any
Authority or any other person, asserting (i) any actual or alleged
violation of or failure to comply with any term or requirement of any
Governmental Authorization; or (ii) any actual or proposed revocation,
withdrawal,
23
suspension, cancellation, termination of, or modification to any
Governmental Authorization;
(d) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in subsection 2.19 of the Disclosure Schedule have been duly
filed on a timely basis with the appropriate Authorities, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Authorities; and
(e) no license, permit, franchise, authorization or approval
by or from any Governmental Authority is required to permit the
continued operation of the Business by Seller in the manner now
conducted without the violation of any Law.
Except as set forth on the Disclosure Schedule, to the knowledge of Seller, the
Governmental Authorizations listed in subsection 2.19 of the Disclosure Schedule
collectively constitute all of the material Governmental Authorizations required
by any federal, state or local Law or any Law of any foreign jurisdiction for
Seller to lawfully conduct and operate the operations of the Division in the
manner in which it is presently conducted.
2.20. Compliance with Law. Seller has not previously failed and is not
currently failing to comply with any applicable Laws relating to the operations
of the Division or the operation of its assets which failure could materially
and adversely impact the operation of the Division by Purchaser or otherwise
encumber the Assets.
2.21. Assets of Business. The Assets constitute all of the assets
necessary to carry on the Business as presently conducted by Seller.
2.22. Environmental Matters. Except as set forth in the Disclosure
Schedule, in connection with the operations of the Division:
(a) Seller has obtained all permits, licenses and other
authorizations, if any, which are required under any Laws relating to
pollution or protection of the environment or the manufacture,
processing, distribution, use, treatment, storage, release, transport
or handling of hazardous substances, oils, pollutants or contaminants
of any kind or protection of any endangered or threatened species of
fish, wildlife or plants ("Environmental Laws") for the ownership, use
and operation of each property owned, used or operated in connection
with the operations of the Division at any time, all such permits,
licenses and authorizations are in effect, no appeal nor any other
action is pending to revoke any such permit, license or authorization,
and Seller is in full compliance with all terms and conditions of all
such permits, licenses and authorizations.
(b) Seller and the property used in connection with the
operations of the Division which are part of the Assets are in
compliance with all Environmental Laws including, without limitation,
all applicable restrictions, conditions, standards, limitations,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
24
(c) Seller has heretofore delivered to Purchaser true and
complete copies of all environmental studies, if any, made by or
furnished to Seller in the last five (5) years relating to any property
or facility owned, operated or leased in connection with the operations
of the Division at any time.
(d) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter known to Seller to be existing or
pending, or threatened, relating to the operations of the Division, any
property or facility owned, operated or leased, or previously owned,
operated or leased in connection with the operations of the Division
relating in any way to Environmental Laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
(e) Seller has not, and no other person has, released, placed,
stored, buried or dumped any hazardous substances, oils, pollutants or
contaminants or any other wastes produced by, or resulting from, any
business, commercial or industrial activities, operations or processes,
on, beneath or adjacent to any property owned, operated or leased in
connection with the operations of the Division at any time in violation
of any Environmental Law, except for inventories of such substances to
be used, and wastes generated therefrom, in the ordinary course of
operations of the Division (which inventories and wastes, if any, were
and are stored or disposed of in accordance with applicable Laws and
regulations, including without limitation Environmental Laws, and in a
manner such that there has been no unlawful release of any such
substances into the environment).
(f) No release, or cleanup has occurred at any other property
owned, used or operated in connection with the operations of the
Division at any time which could result in the assertion or creation of
a Lien on property by any governmental body or agency with respect
thereto, nor has any such assertion of a Lien been made by any
governmental body or agency with respect thereto.
(g) Seller has not received any notice or order from any
governmental agency or private or public entity advising it that it is
responsible for or potentially responsible for cleanup or paying for
the cost of cleanup of any hazardous substances, oils, pollutants or
contaminants or any other waste or substance and Seller has not entered
into any agreements concerning such cleanup, nor is Seller aware of any
facts which might reasonably give rise to such notice, order or
agreement.
(h) None of the properties owned, leased or operated in
connection with the operations of the Division at any time contains
any: (a) underground storage tanks; (b) asbestos; (c) equipment using
PCBs; (d) underground injection ▇▇▇▇▇; or (e) septic tanks in which
process waste water or any hazardous substances, oils, pollutants or
contaminants have been disposed.
(i) Seller has not entered into any agreement that will
require it to pay to, reimburse, guarantee, pledge, defend, indemnify
or hold harmless any person for or against any environmental
liabilities or costs.
25
(j) With regard to the Division and the properties owned,
leased or operated in connection with the operations of the Division at
any time, there are no past or present (or, future) events, conditions,
circumstances, activities, practices, incidents, actions or plans which
may interfere with or prevent compliance or continued compliance with
the Environmental Laws as in effect on the date hereof or with any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, or
which may give rise to any common law or legal liability under the
Environmental Laws, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, notice of violation, study or
investigation, based on or related to the manufacture, generation,
processing, distribution, use, treatment, storage, place of disposal,
transport or handling, or the release or threatened release into the
indoor or outdoor environment in connection with the operations of the
Division or by a facility used in connection with the operations of the
Division, of any hazardous substances, oils, pollutants or
contaminants.
2.23. Brokers. Except as set forth in the Disclosure Schedule, neither
Seller nor any of its directors, officers or employees has employed any broker,
finder, or financial advisor or incurred any liability for any brokerage fee or
commission, finder's fee or financial advisory fee, in connection with the
transactions contemplated hereby, nor is there any basis for any such fee or
commission to be claimed by any person or entity.
2.24. Transactions with Certain Persons. Except as set forth in the
Disclosure Schedule, during the past three (3) years in connection with the
operations of the Division, Seller has not directly or indirectly, purchased,
leased or otherwise acquired any property or obtained any services from, or
sold, leased or otherwise disposed of any property or furnished any services to,
or otherwise dealt with, in the ordinary course of business or otherwise, (i)
any shareholder, director or officer of Seller or (ii) any affiliate or
associate of Seller or any shareholder, director or officer of Seller (except
with respect to compensation in the ordinary course of business for services
rendered as a director, officer or employee of Seller). As of the date hereof,
Seller owes no amount to, and has no agreement or contract with or commitment
to, any of its shareholders, directors, officers, employees or consultants or
any affiliate or associate thereof (other than compensation for current services
not yet due and payable and reimbursement of expenses arising in the ordinary
course of business), and none of such persons owes any amount to Seller or has
the right to borrow from Seller. No part of the property or assets of any
shareholder or any direct or indirect subsidiary or affiliate or associate of
any shareholder is used by Seller in connection with the operations of the
Division.
2.25. Absence of Certain Business Practices. Neither Seller nor any
director, officer, employee or agent of Seller, nor any other person acting on
their behalf, has, directly or indirectly, within the past five (5) years given
or agreed to give any gift or similar benefit of a material nature to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the operations of the Division (or assist Seller in
connection with any actual or proposed transaction involving the Division) which
(i) might subject the Division, the Assets or Purchaser to any damage or penalty
in any civil, criminal or governmental litigation proceeding; (ii) if not given
in the past, might have had a material adverse effect on the Division as
reflected in the Historical Financial Statements or the Most Recent Financial
Statements described in subsection 2.5; or (iii) if not continued in the future,
26
might adversely affect the Division's assets, business, operations or prospects
or which might subject the Division, the Assets or Purchaser to suit or penalty
in any private or governmental litigation or proceeding.
2.26. Customers, etc. Except as set forth in the Disclosure Schedule,
the Division has not received any written notice that any customer, distributor,
sales representative, supplier or employee of the Division will terminate its
relationship with the Division or, as the case may be, decrease its business
with the Division, as a result of the transactions contemplated by this
Agreement or for any other reason.
2.27. Powers of Attorney. Except as set forth in the Disclosure
Schedule, no person has any power of attorney to act on behalf of the Division
which will be binding on Purchaser.
2.28. Accuracy of Information. No representation or warranty made by
Seller in this Agreement or in any agreement, instrument, document, certificate,
statement or letter furnished to Purchaser, by or on behalf of Seller in
connection with any of the transactions contemplated by this Agreement contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements herein or therein not misleading in
light of the circumstances in which they are made.
ARTICLE 3
---------
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller as of the date hereof as
follows:
3.1. Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with corporate power and authority to carry on its business as presently
conducted.
3.2. Authorization. Purchaser has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated herein.
Prior to the consummation of the transactions contemplated hereby, the Board of
Directors of Purchaser will have taken all action required by law, its
certificate of incorporation and bylaws or otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein. This Agreement has been duly authorized,
executed and delivered by Purchaser and no other corporate action is necessary
for the consummation by Purchaser of the transactions contemplated herein. This
Agreement is the valid and binding legal obligation of Purchaser enforceable
against it in accordance with its terms except for the Standard Enforceability
Exceptions.
3.3. Non-Contravention. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated herein
will:
(a) violate or be in conflict with any provision of the
certificate of incorporation or bylaws of Purchaser; or
(b) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a
27
default), under, or cause or permit the acceleration of the maturity
of, or give rise to any right of termination, cancellation, imposition
of fees or penalties under, any debt, note, bond, lease, mortgage,
indenture, license, obligation, contract, commitment, franchise,
permit, instrument or other agreement or obligation to which Purchaser
is a party, which conflict or default would have a material adverse
affect on the ability of Purchaser to consummate the transactions
contemplated by this Agreement; or
(c) violate any Law of any Authority, which violation would
have a material adverse affect on the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
3.4. Consents and Approvals. Except as set forth in the Purchaser
Disclosure Schedule, no consent, approval, order or authorization of or from, or
registration, notification, declaration or filing with (hereinafter sometimes
separately referred to as a "Consent" and sometimes collectively as "Consents"),
any individual or entity, including without limitation any Authority, is
required in connection with the execution, delivery or performance of this
Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated herein except where the failure to obtain the same would not have a
material adverse effect upon the ability of Purchaser to consummate the
transactions contemplated hereby.
3.5. Litigation. Except as set forth in the Disclosure Schedule, there
is no legal, administrative, arbitration or other proceeding, suit, claim or
action of any nature or investigation, review or audit of any kind (including
without limitation a proceeding, suit, claim or action, or an investigation,
review or audit, involving any Environmental Law or matter), judgment, decree,
decision, injunction, writ or order pending, noticed, scheduled or, to the
knowledge of Purchaser, threatened or contemplated, whether at law or in equity,
before or by any person or entity or Authority, or which questions or challenges
the validity of this Agreement or any action taken or to be taken by the parties
hereto pursuant to this Agreement or in connection with the transactions
contemplated herein.
3.6. Accuracy of Information. No representation or warranty made by
Purchaser in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to Seller, by or on behalf of
Purchaser in connection with any of the transactions contemplated by this
Agreement contains any untrue statement of material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading in light of the circumstances in which they are made.
3.7 Financial Capacity. Purchaser has, and will have at Closing, the
liquid funds necessary to complete this transaction without any financing
contingency.
ARTICLE 4
---------
COVENANTS
---------
4.1. Seller's Agreements as to Specified Matters. Except in the
ordinary course of business and consistent with past practices, and except as
may be otherwise agreed in writing by Purchaser, from the date hereof until the
Closing, Seller shall not:
28
(a) Incur, assume, suffer or become subject to, whether
directly or by way of guarantee or otherwise, any claims, obligations,
liabilities or loss contingencies which, individually or in the
aggregate, are material to the conduct of the operations by Purchaser
of the Division or the Assets, or have or would have a material adverse
effect on the financial condition of the Division or the condition of
the Assets;
(b) Permit or allow any of the Assets to be subjected to any
Lien which is not released at Closing;
(c) Cancel or waive any claims or rights of the Division under
Contracts being assigned to Purchaser, or sell, transfer or otherwise
dispose of any Assets of the Division, other than for such claims,
rights, properties or assets which, individually or in the aggregate,
are not material to the Division;
(d) License, sell, transfer, pledge, modify, disclose, dispose
of or permit to lapse any right to the use of any Intellectual Property
rights of the Division other than such Intellectual Property rights
which, individually or in the aggregate, are not material to the
Division;
(e) (i) Terminate, enter into, adopt, institute or otherwise
become subject to or amend in any material respect any collective
bargaining agreement or employment or similar agreement or arrangement
with any of the directors, officers or employees of the Division who
will become employees of Purchaser; (ii) terminate, enter into, adopt,
institute or otherwise become subject to or amend in any material
respect any compensation or employee benefit plan of the Division if
such action would affect the obligations of Purchaser upon hiring such
employee; (iii) contribute, set aside for contribution or authorize the
contribution of any amounts for any such compensation or employee
benefit plan except as required (and not discretionary) by the terms of
such compensation or employee benefit plan if such action would affect
the obligations of Purchaser upon hiring such employee; or (iv) grant
or become obligated to grant any general increase in the compensation
of any directors, officers or employees of the Division (including
without limitation any such increase pursuant to any compensation or
employee benefit plan) if such action would affect the obligations of
Purchaser upon hiring such employee;
(f) Make or enter into any commitment for capital expenditures
for additions to property, plant or equipment of the Division which
would bind Purchaser upon Closing, except for capital expenditures
disclosed on the Disclosure Schedule;
(g) Terminate, enter into or amend in any material respect any
item identified in subsection 2.15 of the Disclosure Schedule, and or
take any action or omit to take any action which will cause a breach,
violation or default (however defined) under any of such items (it
being understood that entering into new contracts with customers and
vendors and terminations and renewals at the end of the term thereof is
in the normal course of business and not covered by this prohibition);
or
29
(h) Agree, whether in writing or otherwise, to take any action
prohibited by this Section 4.1.
4.2. Conduct of Business. Seller shall maintain the Assets and carry on
the operations of the Division only in the ordinary course in substantially the
same manner as planned and previously operated. Seller shall use its reasonable
commercial efforts to preserve intact the Division's business organization,
existing business relationships (including without limitation its relationships
with officers, employees, dealers, distributors, independent contractors,
customers and suppliers), goodwill and going concern value.
4.3. No Solicitation of Alternate Transaction. Seller shall not, and
shall ensure that its directors, officers, employees, independent contractors,
consultants, counsel, accountants, investment advisors and other representatives
and agents shall not, directly or indirectly, solicit, initiate or encourage
discussions or negotiations with, provide any nonpublic information to, or enter
into any agreement with, any third party concerning any exchange offer, merger,
consolidation, sale of substantial assets or a significant amount of assets,
sale of securities, liquidation, dissolution or similar transactions (an
"Acquisition Agreement") involving the Division, and shall immediately advise
the Purchaser of the receipt of any Acquisition Agreement, provided, however,
that nothing contained in this Section 4.3 shall prohibit the Board of Directors
of the Seller from (i) furnishing information to, or entering into and engaging
in discussions or negotiations with, any person that makes a bona fide
unsolicited written proposal that the Board of Directors of the Seller
determines in good faith can be reasonably expected to result in a Superior
Proposal; provided, that prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Seller, (1) provides
notice to Purchaser to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person and provides in any
such notice to Purchaser in reasonable detail the identity of the person making
such proposal and the material terms and conditions of such proposal, (2)
provides Purchaser with all information regarding Seller provided or to be
provided to such person which Purchaser has not previously been provided, and
provided further that the Seller shall keep Purchaser informed, on a prompt
basis, of the status and material terms of any such proposal and the status of
any such discussions and negotiations, (ii) complying with Rule 14e-2
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") with regard to a tender or exchange offer or making any disclosure
required under applicable law;
(b) For purposes of this Agreement, a "Superior Proposal"
means any proposal made by a third party which would result in such
party (or in the case of a Purchaser-to-Purchaser merger, its
stockholders) acquiring, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, share exchange,
business combination, share purchase, asset purchase, recapitalization,
liquidation, dissolution, joint venture or similar transaction,
substantially all the assets of the Parent and with respect to which
the buyer will not make the acquisition unless this Agreement is
terminated and the Board of Directors of Parent determines, in its good
faith judgment, that financing, to the extent required, is then
committed or is reasonably available. Parent may not enter into any
agreement with respect to such a Superior Proposal unless Parent and
Seller terminate this Agreement pursuant to the termination rights
provided in Section 7.1(c) and agree to pay Purchaser the Termination
Fee as provided therein.
30
4.4. Full Access to Purchaser. Seller shall afford to Purchaser and its
directors, officers, employees, counsel, accountants, investment advisors and
other authorized representatives and agents reasonable access to the facilities,
properties, books and records of the Division in order that Purchaser may have
full opportunity to make such investigations as it shall desire to make of the
affairs of the Division; provided, however, that any such investigation shall be
conducted at reasonable times agreed upon with Seller in advance, and in such a
manner as not to interfere unreasonably with business operations; and Seller
shall furnish such additional financial and operating data and other information
as Purchaser shall, from time to time, reasonably request, including without
limitation access to the working papers of its independent certified public
accountants relating to the operations of the Division or the Assets, and,
provided, further, that any such investigation shall not affect or otherwise
diminish or obviate in any respect any of the representations and warranties of
Seller herein.
4.5. Confidentiality. Each of the parties hereto agrees that it will
not disclose or use, or permit the disclosure or use of, any of the information
relating to any other party hereto furnished to it in connection with the
transactions contemplated herein or relating to the Division ("Information") in
a manner or for a purpose detrimental to such other party, the operations of the
Division or otherwise than in connection with the transaction and the conduct of
the operations of the Division in the ordinary course, and that they will not
disclose, divulge, provide or make accessible (collectively, "Disclose"), or
permit the Disclosure of, any of the Information to any person or entity, other
than their responsible directors, officers, employees, investment advisors,
accountants, counsel and other authorized representatives and agents, except as
may be required by judicial or administrative process or, in the opinion of such
party's regular counsel, by other requirements of Law; provided, however, that
prior to any Disclosure of any Information permitted hereunder, the disclosing
party shall first (except for any legally required public disclosure) obtain the
recipient's undertaking to comply with the provisions of this subsection with
respect to such Information. The term "Information" as used herein shall not
include any information relating to a party which the party disclosing such
information can show:
(a) to have been in its possession prior to its receipt from
another party hereto;
(b) to be now or to later become generally available to the
public through no fault of the disclosing party;
(c) to have been available to the public at the time of its
receipt by the disclosing party;
(d) to have been received separately by the disclosing party
in an unrestricted manner from a person entitled to disclose such
information; or
(e) to have been developed independently by the disclosing
party without regard to any information received in connection with
this transaction.
Each party hereto also agrees to promptly return to the party from whom
originally received all original and duplicate copies of written materials
containing Information should the transactions contemplated herein not occur. A
party hereto shall be deemed to have satisfied its obligations
31
to hold the Information confidential if it exercises the same care as it takes
with respect to its own similar information.
4.6. Filings; Consents; Removal of Objections.
(a) Subject to the terms and conditions herein provided, the
parties hereto shall use their commercially reasonable efforts to take
or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable Laws to consummate and
make effective, as soon as reasonably practicable, the transactions
contemplated hereby, including without limitation obtaining all
Consents of any person or entity, whether private or governmental,
required in connection with the consummation of the transactions
contemplated herein. In furtherance, and not in limitation of the
foregoing, it is the intent of the parties to consummate the
transactions contemplated herein at the earliest practicable time, and
they respectively agree to exert their reasonable commercial efforts to
that end, including without limitation: (i) the filing with the Federal
Trade Commission ("FTC") and the Antitrust Division of the Department
of Justice (the "Antitrust Division") all requisite documents and
notifications in connection with the transactions contemplated hereby
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇
(▇▇▇ "▇▇▇" ▇▇▇"), and to respond as promptly as practicable to all
inquiries from the FTC or the Antitrust Division in connection
therewith; (ii) the removal or satisfaction, if possible, of any
objections to the validity or legality of the transactions contemplated
herein; and (iii) the satisfaction of the conditions to consummation of
the transactions contemplated hereby.
(b) Each of the parties acknowledge that as of the date
schedule by the parties for Closing or October 31, 2000 (whichever
first occurs), Landlord's Consents may not have been obtained from all
of the lessors under the Assumed Leases. The failure to obtain the
Landlord's Consents with respect to any Assumed Lease prior to, as of
the date scheduled by the parties for Closing or after Closing shall
not be a default by either party hereunder (nothing in this
subparagraph shall be deemed to relieve either of the parties from
their obligation to use their commercially reasonable efforts to obtain
the Landlord's Consents prior to and after Closing as required in the
immediately preceding subparagraph).
(c) "Primary Leases" shall mean all office leases of the
Division (excluding (i) the office lease in Richardson, Texas and (ii)
all leases relating exclusively to storage space). "Secondary Leases"
shall mean all of the Assumed Leases other than the Primary Leases. If,
as of the date scheduled by the parties for Closing or October 31, 2000
(whichever first occurs), a Landlord's Consent has not been obtained
with respect to a Primary Lease: (i) this Agreement may be terminated
by either party and the transactions contemplated herein abandoned, but
not later than the Closing; or (ii) by mutual consent of Purchaser and
Seller the transaction may be closed, in which event any Primary Lease
for which a Landlord's Consent has not been obtained shall become and
for all purposes hereunder deemed a Secondary Lease.
(d) With respect to Secondary Leases for which Landlord's
Consents have not been obtained as of the Closing, the parties shall,
for at least 60 days after Closing,
32
continue to use their commercially reasonable efforts to obtain a
Landlord's Consent. If after 60 days a Landlord's Consent has not been
obtained with respect to any Secondary Lease: (i) both parties shall be
relieved of any obligation to continue using commercially reasonable
efforts to obtain the Landlord's Consent; and (ii) if, as of that date,
a default has been or is thereafter declared by the lessor under any
Secondary Lease as a result of the failure to obtain a Landlord's
Consent prior to or after Closing, Purchaser shall thereafter indemnify
and hold harmless Seller from and against any and all damages, costs
and attorney's fees required to be paid to the landlord as a result of
the default, and Seller shall be relieved of and released from any
other liability or obligation to Purchaser with respect to that
Secondary Lease.
(e) Each of the parties acknowledges that approximately 14,500
square feet of the premises covered by the Columbus, Ohio Assumed Lease
has been subleased to ▇▇▇▇▇▇▇▇ Uniservice, Inc. pursuant to a sublease
( as such sublease shall be modified as described herein, the "Modified
Sublease") originally dated July 5, 2000 a copy of which has been
furnished to Purchaser by Seller. Prior to Closing, Seller shall, at
its expense, partition off such sublet space from the space occupied by
the Division, provide such sublet space with a separate entrance and
access to common lavatories. At Closing, Purchaser shall assume all
obligations of Seller under and pursuant to the Modified Sublease.
(f) Seller shall use commercially reasonable efforts to obtain
and provide to Purchaser estoppel certificates from the landlords under
the Assumed Leases in form and substance reasonably satisfactory to
Purchaser, specifying that Seller is not in default under any such
leases and specifying Seller's rental obligations under such leases.
Seller's failure to obtain any estoppel certificate from any such
landlord shall not constitute a breach or default by Seller under this
Agreement, nor shall such failure give Purchaser any right to delay
Closing hereunder nor shall such failure give any right to terminate
this Agreement or abandon the transaction contemplated herein.
4.7. Execution of Ancillary Agreements; Further Assurances;
Notification.
(a) Each party hereto shall, at the Closing, and subject to
the satisfaction or waiver of the respective conditions to such
respective parties' obligations hereunder, execute and deliver to the
other parties hereto, or shall cause their respective affiliates to
execute and deliver to the other parties hereto, the respective
documents referred to in Sections 5 and 6 hereof.
(b) Each party hereto shall, before, at and after Closing,
execute and deliver such further instruments and take such other
actions as the other party or parties, as the case may be, may
reasonably require in order to carry out the intent of this Agreement.
(c) At all times from the date hereof until the Closing, each
party shall promptly notify the other in writing of the occurrence of
any event which it reasonably believes will or may result in a failure
by such party to satisfy the conditions specified in Article 5 and
Article 6 hereof.
33
4.8. Supplements to Disclosure Schedule. Not later than five (5)
business days prior to the Closing, Seller will supplement or amend the
Disclosure Schedule with respect to any event or development which, if existing
or occurring at or prior to the date of this Agreement, would have been required
to be set forth or described in the Disclosure Schedule or which is necessary to
correct any information in the Disclosure Schedule or in any representation or
warranty of Seller which has been rendered inaccurate by reason of such event or
development. For purposes of determining the accuracy as of the date hereof of
the representations and warranties of Seller contained in Article 2 hereof in
order to determine the fulfillment of the conditions set forth in Section 5.1,
the Disclosure Schedule shall be deemed to exclude any information contained in
any supplement or amendment hereto delivered after the delivery of the
Disclosure Schedule as of the date of this Agreement. However, if Seller
supplements or amends the Disclosure Schedule pursuant to this section and
Purchaser does not assert a condition which would otherwise give it a right not
to close as a result of the change in the Disclosure Schedule, then the changed
Disclosure Schedule shall be deemed the final Disclosure Schedule for purposes
of determining Seller's indemnity obligations under Article VIII.
4.9. Public Announcements. None of the parties hereto shall make any
public announcement with respect to the transactions contemplated herein without
the prior written consent of the other parties; provided, however, that any of
the parties hereto may at any time make any announcements which are required by
applicable Law or the rules of the New York Stock Exchange so long as the party
so required to make an announcement promptly upon learning of such requirement
notifies the other parties of such requirement and discusses with the other
parties in good faith the wording of any such announcement.
4.10. Transactional Tax Undertakings.
(a) The parties hereto shall cooperate to make any necessary
filings with federal, state and local taxing authorities and to furnish
any required supplemental information to any foreign, federal, state
and local governmental or taxing authorities resulting from the
consummation of the transactions contemplated herein.
(b) In the event that any sales, transfer or use tax, or any
tax in the nature of a sales, transfer or use tax, or any other
transactional tax is payable or assessed relative to the transactions
contemplated herein, Purchaser shall pay all such taxes and shall not
collect any part thereof from Seller.
4.11. Bulk Transfers. The parties agree not to comply with the bulk
transfer provisions of any jurisdiction in which any of the Assets are located.
Purchaser will have no liability or obligation to Seller's creditors or to
others, growing out of or arising from the consummation of the transactions
contemplated by this Agreement.
4.12. Employee Matters.
(a) Employees. As soon as is practicable after the date
hereof, Seller shall provide Purchaser with Schedule 4.12, which shall
be a complete list of all employees currently employed in the Division
including such employees' job titles, rates of pay and years of
service. Seller hereby authorizes Purchaser to enter into discussions
with any of
34
such employees concerning the future employment of such individual by
Purchaser; provided, however, that (i) such discussions shall not be
commenced prior to the giving of notice by Seller to the employees of
Seller of the transactions contemplated by this Agreement; and (ii) all
such discussions shall be conducted in such a manner as not to
interfere unreasonably with the business operations of the Division. It
is expressly agreed that Purchaser shall offer employment to all of the
employees of Seller, employed in the Division, excluding up to a
maximum of 25 employees of the Division to be identified by Purchaser
no later than 5 business days prior to the Closing Date. Seller shall
be responsible for making any required payment of severance
compensation (required by agreement with Seller or Parent or by law) to
any current employee of Seller (1) who is not offered employment by
Purchaser as permitted above; (2) who refuses to accept any such offer
of employment by Purchaser; (3) who is a Joplin Employee who as of the
Closing was processing claims for small group and is terminated by
Purchaser on or before December 31, 2000 as identified on Schedule
4.12(a); (4) who is employed in the Columbus facility in the area of
"provider plan building and loading for the Small Group business"
(which employees located in the Columbus facility are identified as
plan specialists on Schedule 4.12(a)) and who is terminated by
Purchaser on or before December 31, 2000; or (5) certain employees
located in Columbus, Ohio performing Unemployment Comp data input
services for Sheakley UniService as identified on Schedule 4.12(a).
(b) Retention of Employees. Seller shall not, for a period of
three (3) years after the Closing Date, take any action, other than
with the written consent of Purchaser, to induce or hire any employee
who accepts an offer pursuant to subsection (i) above, while still
employed by Purchaser or any affiliate of Purchaser, to enter into the
employ of Seller or any affiliate of Seller.
(c) No Assumption of Collective Bargaining Agreements or
Employee Benefit Plans. Purchaser shall not be obligated under, and
hereby specifically disclaims any assumption or liability with respect
to, any collective bargaining agreement or employee benefit plan to
which Seller is a party or under which any of Seller's employees is
covered.
4.13. Competitive Activities. Seller and Parent agree that, for a
period equal to the term of three (3) years after the Closing Date they will
not, directly or indirectly, engage in any commercial activity in any state
where the Division is conducting business as of the Closing that is competitive
with the Business nor will Seller or Parent participate in the management or
operation of, or become an investor in (other than with respect to ownership of
less than five (5) percent of any entity required to file reports pursuant to
the Exchange Act ), any venture or enterprise of whatever kind, the principal
business of which is competitive with the Business.
4.14. Additional Post-Closing Obligations of Seller. Effective as of
the Closing, Seller appoints Purchaser, its successor and assigns, the true and
lawful attorney or attorneys of Seller, with full power of substitution, in the
name of Seller but on behalf and for the benefit of and at the expense of
Purchaser: (i) to collect in the name of Seller for the account of Purchaser all
Receivables and other items to be sold and transferred to Purchaser as provided
herein; (ii) to institute and prosecute, in the name of Seller or otherwise, all
proceedings which Purchaser may
35
deem necessary or desirable in order to collect, assert or enforce any claim,
right or title of any kind in or to the Assets; (iii) to defend and compromise
any and all actions, suits or proceedings in respect of the Assets to the extent
liability therefor has been assumed by Purchaser hereunder; and (iv) to do all
such acts and things in relation to the foregoing as is reasonably necessary to
exercise such powers, as Purchaser may deem advisable. The foregoing power is
coupled with an interest and will be irrevocable by Seller or by its dissolution
in any manner or for any reason. Except as contemplated by subsection
1.7(b)(iii), Purchaser will retain for its own account any amounts collected
pursuant to the foregoing power, including any sums payable as interest in
respect thereof, and Seller will pay to Purchaser, when received, any amounts
which will be received by Seller in respect of any receivables or other assets
or properties related to the Assets.
4.15. Litigation Cooperation. After the Closing, upon the reasonable
request of Seller from time to time, Purchaser shall make its employees and
records available to support Seller's management of retained litigation relating
to the Division. Employees will be made available without charge to Seller.
Seller shall reimburse Purchaser for out-of-pocket expenses, such as travel
costs and copying.
4.16. Bonds and Letters of Credit. Prior to Closing, Purchaser will
replace any bonds or letters of credit which relate to Administrative Contracts
included in the Assets and will make arrangements with the customers thereunder
to return Seller's bonds and/or letters of credit.
4.17. Monthly Financial Statements.
Seller shall furnish Purchaser (at the times indicated below) a balance sheet
and income statement for the Division, prepared in a manner and format
substantially similar to the Most Recent Financial Statements for each of the
following monthly periods: (i) for the month ended July 31, 2000, within 10 days
hereafter; and (ii) for each month thereafter, within 15 days after such
month-end.
4.18. COBRA. The Seller is responsible for providing group health plan
continuation coverage under its group medical plans to the extent required by
and otherwise in accordance with Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA and any applicable regulations ("Seller COBRA
Coverage") with respect to each current or former employee of the Seller or any
Affiliated Organization and each other individual who is a "qualified
beneficiary" with respect to such current or former employee, and will
indemnify, defend and hold harmless the Purchaser and its affiliates from and
against any liability, expense, cost, tax or obligation of any nature with
respect to such current or former employee or other individual arising in
connection with such Seller COBRA Coverage. The Purchaser is solely responsible
for, and the Seller has no responsibility for, providing group health plan
continuation coverage under the Purchaser's group medical plans to the extent
required by and otherwise in accordance with Section 4980B of the Code and Part
6 of Subtitle B of Title I of ERISA and any applicable regulations ("Purchaser
COBRA Coverage") with respect to employees of the Division who become employees
of the Purchaser and covered under the Purchaser's group medical plan(s) and
each other individual who is a "qualified beneficiary" with respect to such
employees and who becomes covered under the Purchaser's group medical plan(s).
36
4.19. FICA. The Seller agrees that it will not take or perform any
action which would prevent the Purchaser from qualifying as a successor employer
solely for wage limitation purposes for FICA, FUTA and state unemployment taxes
payable with respect to the Affected Employees. In addition, the Seller shall
provide any and all reasonable information requested by the Purchaser concerning
the year to date wages paid by the Seller to Affected Employees so that the
Purchaser will be able to timely process and remit payroll taxes, as
appropriate, with the first payroll tax filing after the Closing Date.
ARTICLE 5
---------
CONDITIONS TO OBLIGATIONS OF PURCHASER
--------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of Purchaser to effect the transactions contemplated herein shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
5.1. Representations and Warranties True. The representations and
warranties of Seller contained in this Agreement, including without limitation
in the Disclosure Schedule initially delivered to Purchaser pursuant to Article
2 (before any changes or additions delivered to Purchaser pursuant to Section
4.8), shall be in all material respects true, complete and accurate as of the
date when made and at and as of the Closing as though such representations and
warranties were made at and as of such time, except for changes specifically
permitted or contemplated by this Agreement, and except insofar as the
representations and warranties relate expressly and solely to a particular date
or period, in which case they shall be true and correct in all material respects
at the Closing with respect to such date or period.
5.2. Performance. Seller shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Seller on or
prior to the Closing.
5.3. Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by
Seller to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein
by Seller shall have been duly and validly taken.
(b) Except for Landlord's Consents (which are addressed
elsewhere in this Agreement), all Required Consents set forth on the
Disclosure Schedule shall have been delivered, made or obtained in form
and substance satisfactory to Purchaser, and Purchaser shall have
received copies thereof.
(c) Purchaser shall have obtained all Governmental
Authorizations necessary to operate the Business.
5.4. Adverse Changes. No material adverse change, whether or not
covered by insurance, shall have occurred in the operations of the Division or
the Assets since the date hereof.
37
5.5. No Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity shall
have been instituted or threatened which questions the validity or legality of
the transactions contemplated hereby and which, if successfully asserted, could
reasonably be expected to, individually or in the aggregate, otherwise have a
material adverse effect on the conduct of the operations of the Division or the
Assets following the Closing Date.
5.6. Due Diligence. Purchaser shall have received all information
requested by it pursuant to Section 4.4 and Purchaser's due diligence
investigation shall not have revealed any material adverse facts as to the
operations of the Division, the Assets or the transactions contemplated herein;
provided that this condition precedent shall be deemed satisfied unless
Purchaser shall have notified Seller of any such material adverse facts on or
prior to September 8, 2000.
5.7. Environmental Audit. Purchaser shall have received an
environmental audit, in scope reasonably satisfactory to Purchaser, of the
Columbus, Ohio facility, which audit shall not have revealed any contamination
or pollution or other environmental or regulatory problems or violations of any
Laws. For purposes of the foregoing environmental audit, Purchaser and its
representatives may make inquiry of all sources, public and private, they deem
necessary to conduct the audit; and Seller and Parent shall cooperate with
Purchaser and its representatives in the audit. The results or disclosures made
during the course of such audit shall not relieve Seller or Parent from their
obligations under Section 2.22 or Article 8.
5.8. Documentation for Conveyance of the Assets. Purchaser shall have
received, in form and substance reasonably satisfactory to Purchaser, dated the
Closing Date, all of the bills of sale, deeds, assignments and other conveyance
and transfer documentation reasonably required to transfer to Purchaser valid
legal title to the Assets.
5.9. Data Center Agreement. Seller shall have executed and delivered to
Purchaser the Data Center Agreement, containing such terms and conditions as are
mutually agreeable to the parties thereto (the "Data Center Agreement".
5.10. Services Support Agreement. Seller shall have executed and
delivered to Purchaser the Services Support Agreement, containing such terms and
conditions as are mutually agreeable to the parties thereto (the "Services
Support Agreement".
5.11. ▇▇▇▇▇▇▇▇▇▇ Sublease. Seller shall have entered into a sublease
through December 31, 2000 with Purchaser of a portion of the Richardson, Texas
office of the Division, on terms mutually agreeable to Seller and Purchaser.
5.12. HSR Filings. The parties hereto shall have made all required
filings under, and there shall be no remaining impediments to the closing
hereunder, relative to the HSR Act.
5.13. Key Employees. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have either accepted, or indicated
to Purchaser they will accept employment with Purchaser immediately following
the consummation of the transactions contemplated by this Agreement.
38
5.14. Opinion of Seller's Counsel. Purchaser shall have received an
opinion of Fowler, White, Gillen, Boggs, ▇▇▇▇▇▇▇▇▇ and Banker, P.A, counsel to
Seller, dated the Closing Date, in form and substance reasonably satisfactory to
Purchaser.
5.15. Certificates. Seller shall have furnished Purchaser with the
following certificates:
(a) Good Standing Certificates. Certificates, executed by the
proper official of each jurisdiction, as to the good standing and
qualification to do business of Seller in each jurisdiction in which
the Division requires Seller to be qualified to do business;
(b) Secretary's Certificate. A certificate from the Secretary
of Seller confirming the existence, incorporation and good standing of
Seller on the Closing Date, and attaching copies of the certificate or
articles of incorporation and bylaws, and resolutions authorizing the
execution, delivery and performance of this Agreement and all other
documents and the taking of all action required thereunder or in
connection therewith on behalf of Seller;
(c) Incumbency Certificate. A certificate of the Secretary of
Seller certifying the incumbency of officers of Seller and their
genuine signatures, with a cross certification of such Secretary's
incumbency and genuine signature; and
(d) Officer's Certificates. A certificate of the officers of
Seller confirming that the representations and warranties set forth in
Article 2 hereof are true and correct in all respects as of the Closing
Date with the same force and effect as if they had been made thereon
except for changes contemplated or permitted by this Agreement.
ARTICLE 6
---------
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
Notwithstanding anything in this Agreement to the contrary, the
obligation of Seller to effect the transactions contemplated herein shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
6.1. Representations and Warranties True. The representations and
warranties of Purchaser contained in this Agreement shall be in all material
respects true, complete and accurate as of the date when made and at and as of
the Closing, as though such representations and warranties were made at and as
of such time, except for changes permitted or contemplated in this Agreement,
and except insofar as the representations and warranties relate expressly and
solely to a particular date or period, in which case they shall be true and
correct in all material respects at the Closing with respect to such date or
period.
6.2. Performance. Purchaser shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Purchaser at or
prior to the Closing.
6.3. Corporate Approvals. All action required to be taken by Purchaser
to authorize the execution, delivery and performance of this Agreement by
Purchaser and the consummation of the transactions contemplated hereby shall
have been duly and validly taken.
39
6.4. No Proceeding or Litigation. No order in any suit, action,
investigation, inquiry or other proceeding by any Authority or other person or
entity shall have been entered which invalidates or makes illegal the
transactions contemplated hereby, and no Proceeding shall have been instituted
which can reasonably be expected to, individually or in the aggregate, otherwise
have a material adverse effect on the conduct of the operations of the Division
or the Assets following the Closing Date.
6.5. HSR Filings. The parties hereto shall have made all required
filings under, and there shall be no remaining impediments to the closing
hereunder, relative to the HSR Act.
6.6. Documentation for Assumption of Assumed Liabilities. Purchaser
shall have executed and delivered to Seller the Liabilities Undertaking.
6.7. Certificates. Purchaser shall have furnished Seller with the
following certificates:
(a) Secretary's Certificate. A certificate from the Secretary
of Purchaser confirming the existence, incorporation and good standing
of Purchaser on the Closing Date, and attaching copies of its
certificate of incorporation and bylaws, and resolutions authorizing
the execution, delivery and performance of this Agreement and all other
documents and the taking of all action required thereunder or in
connection therewith on behalf of Purchaser;
(b) Incumbency Certificate. A certificate of the Secretary of
Purchaser certifying the incumbency of officers of Purchaser and their
genuine signatures, with a cross certification of such Secretary's
incumbency and genuine signature; and
(c) Officer's Certificate. A certificate of an officer of
Purchaser confirming that the representations and warranties set forth
in Article 3 hereof are true and correct in all respects as of the
Closing Date with the same force and effect as if they had been made
thereon, except for changes contemplated or permitted by this
Agreement.
6.8. Opinion of Purchaser's Counsel. Purchaser shall have received an
opinion of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to Seller, dated the
Closing Date, in form and substance reasonably satisfactory to Seller.
6.9. Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by
Purchaser to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein
by Purchaser shall have been duly and validly taken.
(b) All Required Consents listed on Exhibit 6.9(b) shall have
been delivered, made or obtained in form and substance satisfactory to
Seller, and Seller shall have received copies thereof.
(c) Seller shall have obtained all Governmental Authorizations
necessary to transfer the Business.
40
6.10. Data Center Agreement. Purchaser shall have executed and
delivered to Seller the Data Center Agreement, containing such terms and
conditions as are mutually agreeable to the parties thereto.
6.11. Services Support Agreement. Purchaser shall have executed and
delivered to Seller the Services Support Agreement, containing such terms and
conditions as are mutually agreeable to the parties thereto.
6.12. HSR Filings. The parties hereto shall have made all required
filings under, and there shall be no remaining impediments to the closing
hereunder, relative to the HSR Act.
6.13. Contract with NPPN. Purchaser and National Preferred Provider
Network, Inc., a subsidiary of Parent, shall have entered into a mutually
agreeable network access agreement.
6.14. Bonds and Letters of Credit. Seller shall have received all bonds
and letters of credit or other security posted by it under any Administrative
Agreements being assigned to Purchaser as a part of the Assets.
ARTICLE 7
---------
TERMINATION AND ABANDONMENT
---------------------------
7.1. Methods of Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time, but not later
than the Closing:
(a) By mutual written consent of Purchaser and Seller; or
(b) By any party if the Closing shall not have occurred on or
before 5:00 p.m. (Minneapolis time) on October 31, 2000 or any event
occurs which makes it not reasonably likely that a condition to such
party's closing will not be true at Closing, provided that the party so
terminating did not willfully cause the event giving rise to the
termination right.
(c) By Seller, if Seller's Board elects to enter into a
contract with respect to a Superior Proposal provided that Seller
agrees to pay to Purchaser a termination fee of $1,000,000.00 (US) (the
"Termination Fee") upon Closing of the transaction related to such
Superior Proposal.
7.2. Procedure Upon Termination. In the event of termination and
abandonment pursuant to subsection (a), written notice thereof shall forthwith
be given to the other party or parties, and the provisions of this Agreement
shall terminate, and the transactions contemplated herein shall be abandoned,
without further action by any party hereto. If this Agreement is terminated as
provided herein:
(a) each party will, upon request, redeliver all documents,
work papers and other material of any other party (and all copies
thereof) relating to the transactions contemplated herein, whether so
obtained before or after the execution hereof, to the party furnishing
the same;
41
(b) the confidentiality obligations of Section 4.5 shall
continue to be applicable;
(c) the provisions of Section 9.1 shall continue to be
applicable; and
(d) except as provided in Section 7.1 (c), no party shall have
any liability for a breach of any representation, warranty, agreement,
covenant or other provision of this Agreement, unless such breach was
due to a willful or bad faith action or omission of such party or any
representative, agent, employee or independent contractor thereof.
ARTICLE 8
---------
SURVIVAL AND INDEMNIFICATION
----------------------------
8.1. Survival of Representations, Warranties and Covenants;
Investigation. All representations and warranties of the parties contained in
this Agreement shall survive the Closing Date for a period ending on the second
anniversary date of this Agreement, except that: (i) the representations and
warranties set forth in Sections 2.2, 2.3, 2.8(a), 3.1 and 3.2 shall survive
forever; (ii) the representations and warranties set forth in Sections 2.12 and
2.13, shall survive until the later of the applicable statute of limitations
plus ninety (90) days or the final resolution of all issues arising under
Sections 2.12, and 2.13; and (iii) the representations and warranties set forth
in Section 2.22 shall survive for a period ending on the tenth anniversary of
the Closing Date. The covenants and agreements contained herein shall survive
the Closing without limitation as to time unless the covenant or agreement
specifies a term, in which case such covenant or agreement shall survive for a
period of two (2) years following the expiration of such specified term and
shall thereupon expire. The respective expiration dates for the survival of the
representations and warranties and the covenants shall be referred to herein as
the relevant "Expiration Date." The right to indemnification or any other remedy
based on representations, warranties, covenants and obligations in this
Agreement will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will extinguish the right to
indemnification or any other remedy based on such representations, warranties,
covenants, and obligations unless otherwise agreed at the Closing. No claim,
whether for indemnity or otherwise, may be made based upon representation or
warranty or covenant after the Expiration Date of such representation, warranty
or covenant, provided that any claim pending at the Expiration Date for which a
written notice has been given to Seller]shall not be extinguished but shall be
resolved through such legal proceeding unless otherwise settled.
8.2. Seller's and Parent's Indemnification of Purchaser. After the
Closing Date, Seller and Parent shall, jointly and severally, indemnify and hold
harmless Purchaser, and each of Purchaser's officers, directors and employees
and Purchaser's affiliates from and against any damage, liability, Taxes, loss
or expense (including, but not limited to, interest, penalties,
42
reasonable attorneys' fees and other costs and expenses incident to, and amounts
paid or required to be paid in settlement of, any claim, suit, action or
proceeding) and against all claims in respect thereof (including, without
limitation, costs of investigation) involving a third-party claim (a "Loss")
sustained, incurred, paid or required to be paid by Purchaser or Purchaser's
officers, directors, employees or affiliates which arises directly or indirectly
out of (i) any untrue representation of, or breach of warranty by, Seller or
Parent in any part of this Agreement or in any of the documents or agreements
required to be executed and delivered by or on behalf of any of them pursuant to
this Agreement, notice of which is given to Seller or Parent prior to the
relevant Expiration Date; (ii) any nonfulfillment of any covenant, agreement or
undertaking of Seller or Parent in any part of this Agreement or in any of the
documents or agreements required to be executed and delivered by or on behalf of
any of them pursuant to this Agreement, notice of which is given to Seller or
Parent prior to the relevant Expiration Date; (iii) any failure by Seller or
Parent to comply with the provisions of any applicable bulk sales laws or
similar requirements of any jurisdiction; or (iv) any of the Excluded
Liabilities or any of the Excluded Assets. Seller and Parent acknowledge that if
a representation or warranty or covenant that is qualified by materiality is
breached after giving effect to such materiality qualification then the loss
incurred by Purchaser resulting from such breach shall include all loss
resulting from a breach of such representation or warranty or covenant and not
solely the portion of such loss in excess of such materiality qualifier.
8.3. Purchaser's Indemnification of Seller and Parent. After the
Closing Date, Purchaser shall indemnify and hold harmless Seller and Parent from
and against any Loss sustained, incurred, paid or required to be paid by Seller
or Parent or their affiliates which arises out of (i) any untrue representation
of, or breach of warranty by, Purchaser in any part of this Agreement or in any
of the documents or agreements required to be executed and delivered by or on
behalf of Purchaser pursuant to this Agreement, notice of which is given to
Seller or Parent prior to the relevant Expiration Date; (ii) any nonfulfillment
of any covenant, agreement or undertaking of Purchaser in any part of this
Agreement or in any of the documents or agreements required to be executed and
delivered by or on behalf of Purchaser pursuant to this Agreement, notice of
which is given to Seller prior to the relevant Expiration Date; or (iii) any
failure to pay the Assumed Liabilities.
8.4. Minimum Threshold for Indemnification Maximum Amount of
Indemnification. In the event of any claim for indemnity under this Article 8,
the indemnified party under such claim shall not be entitled to indemnification
therefor unless such indemnified party has sustained Losses in excess of Two
Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate, in which event
the indemnified party shall be entitled to indemnification for the full amount
of all Losses suffered or incurred including such Two Hundred Fifty Thousand
Dollars ($250,000.00) of Losses; provided that in no event shall Seller be
required to make indemnity payments hereunder or be liable for damages in
connection with the transactions contemplated hereby in excess of Fifteen
Million Dollars ($15,000,000.00) in the aggregate for all such claims. The
foregoing limitations shall not apply to the payment of the Purchase Price
referred to in Article 1.
8.5. Claims for Indemnification.
43
(a) General. The parties intend that all indemnification
claims be made as promptly as practicable by the party seeking
indemnification (the "Indemnified Party"). Whenever any claim shall
arise for indemnification hereunder the Indemnified Party shall
promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim. The failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any
liability that it may have to the Indemnified Party except to the
extent the Indemnifying Party demonstrates that the defense of such
action is prejudiced thereby.
(b) Claims by Third Parties. With respect to claims made by
third parties, the Indemnifying Party shall be entitled to assume
control of the defense of such action or claim with counsel reasonably
satisfactory to the Indemnified Party, provided, however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim at its own expense
and to employ counsel at its own expense to assist in the
handling of such claim;
(ii) no Indemnifying Party shall consent to the entry
of any judgment or enter into any settlement that (x) does not
include as an unconditional term thereof the giving by each
claimant or plaintiff to each Indemnified Party of a release
from all liability in respect of such claim, or (y) if,
pursuant to or as a result of such consent or settlement,
injunctive or other equitable relief would be imposed against
the Indemnified Party or such judgment or settlement could
materially interfere with the business, operations or assets
of the Indemnified Party; and
(iii) if the Indemnifying Party does not assume
control of the defense of such claim in accordance with the
foregoing provisions within the earlier of five days prior to
the time for response set in any legal proceeding or thirty
(30) days after receipt of notice of the claim, the
Indemnified Party shall have the right to defend such claim in
such manner as it may deem appropriate at the cost and expense
of the Indemnifying Party, and the Indemnifying Party will
promptly reimburse the Indemnified Party therefor in
accordance with this Article 8; provided that the Indemnified
Party shall not be entitled to consent to the entry of any
judgment or enter into any settlement of such claim that does
not include as an unconditional term thereof the giving by
each claimant or plaintiff to each Indemnifying Party of a
release from all liability in respect of such claim without
the prior written consent of the Indemnifying Party if,
pursuant to or as a result of such consent or settlement,
injunctive or other equitable relief would be imposed against
the Indemnifying Party or such judgment or settlement could
materially interfere with the business, operations or assets
of the Indemnifying Party.
8.6. Indemnification Remedy Exclusive. After Closing, the
indemnification remedies provided in this Article 8 shall be the sole remedies
for breach of, or any other matter arising out of, this Agreement or the
transactions contemplated hereby (other than intentional fraud);
44
provided however, that notwithstanding the foregoing, Purchaser may seek
specific performance of the obligations of Seller hereunder.
ARTICLE 9
---------
MISCELLANEOUS PROVISIONS.
-------------------------
9.1. Expenses. Except as otherwise provided in this Agreement,
Purchaser shall bear its, and Seller shall bear its, costs, fees and expenses in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including without limitation fees, commissions and expenses
payable to brokers, finders, investment bankers, consultants, exchange or
transfer agents, attorneys, accountants and other professionals, whether or not
the transactions contemplated herein are consummated. Purchaser shall pay the
fee associated with making a filing under the HSR Act and Seller shall reimburse
Purchaser one half of the amount of such fee upon request of Purchaser.
9.2. Amendment and Modification. Subject to applicable Law, this
Agreement may be amended or modified by the parties hereto at any time prior to
the Closing with respect to any of the terms contained herein; provided,
however, that all such amendments and modifications must be in writing duly
executed by all of the parties hereto.
9.3. Waiver of Compliance; Consents. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the party entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy shall preclude any other or further exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent shall be given in writing
in the same manner as for waivers of compliance.
9.4. No Third Party Beneficiaries. Nothing in this Agreement shall
entitle any person or entity (other than a party hereto and its respective
successors and assigns permitted hereby) to any claim, cause of action, remedy
or right of any kind.
9.5. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be made in writing and shall be deemed to
have been duly given and effective:
(a) on the date of delivery, if delivered personally;
(b) on the date of the return receipt acknowledgement, if
mailed, postage prepaid, by certified or registered mail, return
receipt requested; or
(c) on the date such transmission is made and confirmation of
receipt obtained, if sent by facsimile, telecopy, telegraph, telex or
other similar telegraphic communications equipment:
If to Purchaser:
45
To: Trewit, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller or Parent:
To: HealthPlan Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fowler, White, Gillen, Boggs,
▇▇▇▇▇▇▇▇▇ and Banker, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Purchaser of Seller shall furnish to the
other parties hereto in writing in accordance with this Section 9.5.
9.6. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned (whether
voluntarily, involuntarily, by operation of law or otherwise) by any of the
parties hereto without the prior written consent of the other parties, provided
that Purchaser and Seller may assign its rights hereunder to a wholly owned
subsidiary or other affiliated entity under common control with the assigning
party, so long as the assigning party remains primarily liable for the
performance of such Assignee and the payment of all sums due hereunder.
46
9.7. Governing Law; Jurisdiction. This Agreement and the legal
relations among the parties hereto shall be governed by and construed in
accordance with the internal substantive laws of the State of Florida (without
regard to the laws of conflict that might otherwise apply) as to all matters,
including without limitation matters of validity, construction, effect,
performance and remedies. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Florida or the United States of America located in the State of
Florida for any action, suit or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby or relating to the other
agreements referred to herein, and agrees not to commence any action, suit or
proceeding relating thereto except in such courts, and further agrees that
service of any process, summons, notice or document by United States registered
or certified mail shall be effective service of process for any action, suit or
proceeding brought in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to personal jurisdiction
and the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby or the agreements referred to
herein, in the courts of the State of Florida or the United States of America
located in the State of Florida, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
9.8. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.9. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.10. Headings. The table of contents and the headings of the sections
and subsections of this Agreement are inserted for convenience only and shall
not constitute a part hereof.
9.11. Entire Agreement. The exhibits and other writings incorporated in
this Agreement or any such exhibit or other writing are part of this Agreement,
together they embody the entire agreement and understanding of the parties
hereto in respect of the transactions contemplated by this Agreement and
together they are referred to as "this Agreement" or the "Agreement". However,
if there is a conflict between the terms, conditions, representations,
warranties and covenants contained in this Agreement and the Disclosure Schedule
or any exhibit or other writing referred to in this Agreement, then the
provisions in this Agreement shall control. There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to in this Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
transaction or transactions contemplated by this Agreement, including without
limitation the letter of intent dated July 6, 2000.
47
9.12. Injunctive Relief and Specific Performance. It is expressly
agreed among the parties hereto that monetary damages would be inadequate to
compensate Purchaser for any breach of Sellers covenants and agreements
contained in Sections 4.3 and 4.13. Accordingly, the parties agree and
acknowledge that any such violation or threatened violation will cause
irreparable injury to the other and that, in addition to any other remedies
which may be available, Purchaser shall be entitled to injunctive relief against
the threatened breach of this Agreement or the continuation of any such breach
without the necessity or proving actual damages and may seek to specifically
enforce the terms of this Agreement.
9.13. "To the Knowledge Of". To the extent related to the
representations and warranties made by Seller or Parent herein, the phrases "to
the knowledge of," "to the best knowledge of" and "known to" or any similar
phrase shall mean the actual knowledge of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and all other Vice Presidents, Senior Vice Presidents
or Executive Vice Presidents for Seller or Parent having any responsibility for
the business or operation of the Division.
****Signature page to follow****
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TREWIT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Its: CEO
-----------------------------------------
HEALTHPLAN SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its: President & Chief Operating Officer
-----------------------------------------
▇▇▇▇▇▇▇▇▇▇ MANAGEMENT
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its: Treasurer and Secretary
-----------------------------------------
HEALTHPLAN SERVICES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its: President and Chief Operating Officer
-----------------------------------------
49
EXHIBITS
Prepaid Charges, Fees and Expenses Credit Balances and Deposits Exhibit 1.1(a)
Administration Contracts Exhibit 1.1(c)(i)
Provider Network Access Agreements Exhibit 1.1(c)(ii)
Pharmacy Benefit Management Agreements Exhibit 1.1(c)(iii)
Utilization Review and Case Management Services Agreements Exhibit 1.1(c)(iv)
Administration of Subrogation Claims Agreements Exhibit 1.1(c)(v)
Data Entry and Imaging Services Agreements Exhibit 1.1(c)(vi)
Check and Explanation of Benefits Printing Agreements Exhibit 1.1(c)(vii)
Other Contracts, Leases, Capital Leases, Agreements, Unfilled
Customer Purchase or Sales Orders, Licenses, Permits and Other
Governmental Authorizations or Approvals Exhibit 1.1(c)(viii)
Shared Contracts Exhibit 1.1(c)(ix)
Carrier and Reinsurance Relationships of ▇▇▇▇▇▇▇▇▇▇ Exhibit 1.1(c)(x)
Business and Trade Names, Service Names, Corporate Names,
Brand Names, Logos and Slogans Exhibit 1.1(d)(i)
Copyrights and Trademarks, Registrations and Applications
Used Exclusively in Division Exhibit 1.1(d)(ii)
Rights and Interests in and to Software (including modification
enhancements and custom programming) used exclusively
in Division Exhibit 1.1(d)(iii)
Internally Developed Software Exhibit 1.1(d)(iv)
List of offices where all assets located therein
are exclusively used by the Division Exhibit 1.1(e)(1)
Assets of Seller located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ in
Tampa, Florida which are assets of the Division Exhibit 1.1(e)(2)
Real Property Leased Exhibit 1.1(f)
Excluded Assets Exhibit 1.2(c)
Estimated Closing Balance Sheet of Division Exhibit 1.4
Form of Escrow Agreement Exhibit 1.6(b)
Aging Schedule of the Receivables Exhibit 2.9(a)(iv)
Consents which must be obtained in order to Close Exhibit 5.3(b)
Required Consents Exhibit 6.9(b)
Disclosure Schedules
--------------------
List of jurisdictions in which Seller is qualified or
licensed to do business as a foreign corporation in
good standing Schedule 2.1
Exception to Non-Contravention Items Schedule 2.3
Required Consents and Approvals Schedule 2.4
Historical Financial Statements Schedule 2.5(i)
Unaudited balance sheet and statement of income
of the Division as of and for the six-month period
ended June 30, 2000 Schedule 2.5(ii)
Absence of Certain Changes since June 30, 2000 Schedule 2.7
Exceptions to title to Assets Schedule 2.8(a)
Exceptions to operating condition of real property
and conformance to certain laws Schedule 2.8(b)
Exceptions to operating condition of machinery,
equipment and vehicles Schedule 2.8(c)
Exceptions to title to Trade Accounts Receivable and
Notes Receivable, including designated rights used in
the Division not included in the Assets to be transferred Schedule 2.9
List of all Intellectual Property rights used in the
division with exceptions to title to Intellectual Property
rights included in the Assets Schedule 2.10
Existing litigation and claims Schedule 2.11
List of all employee benefit plans and all employee
welfare benefit plans which cover employees of
the Division Schedule 2.13(a)
Employee pension benefit plans covering employees
of the Division Schedule 2.13(b)
Death, health or medical benefits provided to
employees of the Division Schedule 2.13(d)
Severance pay, unemployment compensation or any
similar or other payment; or acceleration of time of
payment or vesting related to employees of the Division Schedule 2.13(e)
Division bank accounts Schedules 2.14(a)
and 2.14(b)
Persons holding powers of attorney from the Division Schedule 2.14(c)
Contracts. (See Agreement for items which must
be disclosed.) Schedule 2.15(a)(i)
Remuneration in excess of $75,000 Schedule 2.15(a)(ii)
Exceptions to contracts being valid and enforceable
by Seller, and breaches by Seller Schedule 2.15(b)
All third-party administration clients and any non-
compliance or defaults by Seller under such third-
party administration contracts, if any Schedule 2.15(c)
Commitments made outside of ordinary course of business Schedule 2.16
Non-compliance regarding labor matters (see Agreement for
specific items): (i) Severance Policy Schedule 2.17
Known material adverse changes in relationships with
dealers, distributors or suppliers to the Division Schedule 2.18
Governmental authorizations required for operation
of the Division (see Agreement for exceptions which
must be noted) Schedule 2.19
Exceptions to Environmental Representations Schedule 2.22
Brokers, finders or financial advisors Schedule 2.23
Transactions with Affiliates Schedule 2.24
Customers, distributors, sales rep's suppliers or
employees who have given notice that they intend to
terminate relationship with the Division as a result
of the transactions contemplated by the Agreement Schedule 2.26
See Schedule 2.14(c) Schedule 2.27
Capital expenditures, commitments or liabilities
which will bind the Purchaser Schedule 4.1(f)
Complete list of all current employees, including
job titles, rates of pay and years of service Schedule 4.12
Columbus Facility Employees Schedule 4.12(a)
[AS REQUIRED BY APPLICABLE LAW, THE COMPANY WILL FURNISH SUPPLEMENTALLY ANY
OMITTED EXHIBIT OR SCHEDULE UPON REQUEST]
AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment"), is made
effective as of October 25, 2000 by and between HealthPlan Services, Inc., a
Florida corporation ("HPSI"), ▇▇▇▇▇▇▇▇▇▇ Management Corporation, a Pennsylvania
corporation ("▇▇▇▇▇▇▇▇▇▇" and, together with HPSI, herein collectively called
"Seller"), HealthPlan Services Corporation, a Delaware corporation ("Parent"),
Trewit Inc., a Delaware corporation ("Trewit") and ▇▇▇▇▇▇▇▇▇▇ Benefit Services,
Inc., a Delaware corporation and a wholly-owned subsidiary of Trewit ("HBS" and
together with Trewit, collectively called "Purchaser").
RECITALS
--------
A. Purchaser, Seller and Parent have entered into an Asset Purchase
Agreement dated as of August 28, 2000 (the "Agreement"). Capitalized terms used
and not otherwise defined herein will have the meaning given in the Agreement.
B. Purchaser, Seller and Parent desire to amend the Agreement as
specifically set forth in this Amendment.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Removal of ▇▇▇▇▇▇▇▇▇▇ Management Corporation from Agreement. The
parties to the Agreement have agreed that ▇▇▇▇▇▇▇▇▇▇ will not be sold to
Purchaser as is currently contemplated by the Agreement. Accordingly, all
references in the Agreement to "▇▇▇▇▇▇▇▇▇▇," and to the assets or liabilities of
▇▇▇▇▇▇▇▇▇▇ (including references in any Exhibit or Schedule), are hereby
deleted, the intent of the parties being to remove and exclude ▇▇▇▇▇▇▇▇▇▇ and it
assets and liabilities from the Agreement.
2. Estimated Balance Sheet. Section 1.4 of the Agreement is hereby
deleted in its entirety and in its place is substituted the following:
"The parties agree that the estimated pro forma balance sheet of the
Division as of the Closing Date is attached hereto as Exhibit 1.4. This
balance sheet shall be deemed the "Estimated Closing Balance Sheet" and
the "Final Closing Balance Sheet" as those terms are used elsewhere in
this Agreement. Purchaser agrees that the "accrued wages" as set forth
on Exhibit 1.4 will be paid by wire transfer no later than noon
(Eastern time) on October 31, 2000."
3. Estimated Purchase Price. Section 1.5 of the Agreement is hereby
amended in its entirety to read as follows:
"(a) Subject to the terms and conditions of this Agreement and
in reliance on the representations and warranties and covenants of
Seller herein contained, and in consideration of the sale, conveyance,
transfer and delivery of the Assets provided for in this Agreement,
Purchaser agrees to pay to Seller at the
Closing an aggregate purchase price of Twelve Million Forty-Eight
Thousand Four Hundred Eighteen Dollars ($12,048,418).
(b) The amount determined in accordance with the provisions of
this Section 1.5 is hereinafter referred to as the "Estimated Purchase
Price". The Estimated Purchase Price shall be the final purchase price
payable by Purchaser to Seller for the Division, subject only to the
adjustments, if any, to be made on the Receivables Determination Date
contemplated by Section 1.7 as amended by Section 4 below."
4. Adjustment of Estimated Purchase Price. Section 1.7 of the Agreement
(including subparagraphs (a) through (g)) is hereby amended in its entirety to
read as follows:
"Section 1.7 Adjustment of Estimated Purchase Price. The Estimated
Purchase Price shall be adjusted 90 days after Closing (the
"Receivables Determination Date") by an amount equal to the difference
between (i) the actual cash collections received by Purchaser during
the period from the Closing to the Receivables Determination Date in
respect of the accounts receivable included in the Estimated Closing
Balance Sheet and (ii) $7,035,431. If there is a negative difference
("Shortfall Collections") as a result of such collections being less
than $7,035,431, then the Estimated Purchase Price shall be reduced and
Seller shall pay Purchaser an amount equal to the Shortfall Collections
within five days after such amount is determined. After the payment of
the Shortfall Collections, all remaining uncollected receivables
included in the Estimated Closing Balance Sheet shall be assigned to
Seller and Seller may pursue collection thereof. If there is a positive
difference ("Excess Collections") as a result of such collections
exceeding $7,035,431, then the Estimated Purchase Price shall be
increased and Purchaser shall pay an amount equal to the Excess
Collections to Seller within five days after such amount is determined.
5. The Estimated Software License Fees and Expenses. Section 1.11 of
the Agreement is amended by deleting the parenthetical phrase in the last
sentence and substituting the following in lieu thereof:
"(other than as provided in the Data Services Agreement")".
6. Charleston, WV Office. Notwithstanding any other provision in the
Agreement to the contrary, the provisions of the Temporary Services Agreement
attached hereto as Exhibit A shall apply to the Division's office in Charleston,
West Virginia ("Charleston Office").
7. Benefit Plans and Employee Matters.
Notwithstanding any provisions in the Agreement to the contrary, the
following provisions shall apply:
A. Purchaser and Seller recognize that Purchaser will adopt a
health care plan for the period from the Closing Date through
December 31, 2000, which provides for the payment of each
Affected Employee's COBRA continuation coverage cost equal
to that portion of the Seller's group health plan cost of
coverage payable by the Seller (under the Seller's active
employee plan) with the balance of such cost of coverage to be
paid by the Affected Employees under the terms of the Seller's
Flex Plan as continued by Purchaser.
B. Purchaser agrees to pay directly to Seller or its agent the
COBRA continuation payments on behalf of all Affected
Employees. Such payment will be made within five business days
following the beginning of each calendar month between the
Closing and December 31, 2000. For example, the payment for
November COBRA coverage must be made by November 7, 2000. The
COBRA continuation cost payable by Purchaser to Seller shall
not include a 2% COBRA administration fee. The Purchaser shall
also notify each Affected Employee on the Closing Date or as
soon as administratively feasible thereafter of each Affected
Employee's COBRA rights and the fact that for the period from
the Closing Date to midnight on December 31, 2000 coverage
under the Purchaser's health care program shall be provided
through the Seller's health care plan COBRA coverage.
C. The Purchaser shall make November COBRA payments on behalf of
all Affected Employees. The December COBRA payment shall be
made on behalf of all Affected Employees employed by Purchaser
on November 30, 2000. Starting with the Closing Date,
Purchaser shall provide Seller with a bi-weekly report of
those Affected Employees who have separated from service. The
Purchaser shall provide Seller with a certified statement
dated December 1, 2000 stating that the Purchaser has advised
each Affected Employee who has separated from service on or
before November 30, 2000 that such Affected Employee is
responsible for paying the December and subsequent COBRA
payments on a timely basis (i.e., the December payment on or
before December 20, 2000) and no health care claims will be
processed on behalf of such Affected Employee until such
timely COBRA payment is made by the Affected Employee. The
Purchaser will also notify each Affected Employee who has
separated from service on or before November 30, 2000 that
effective January 1, 2001 such Affected Employee shall have
the option of maintaining COBRA coverage under the Seller's
health care plan or electing COBRA continuation coverage under
the Purchaser's health care plan. The Purchaser shall also
provide Seller with a certified statement dated January 3,
2000 stating that the Purchaser has advised each Affected
Employee who has separated from service during the period from
December 1 to December 31, 2000 that such Affected Employee is
responsible for paying the subsequent COBRA payments on a
timely basis and that no health care claims will be processed
on behalf of such Affected Employee until each timely COBRA
payment is made by the Affected Employee. The Purchaser's
January 3, 2000 statement will also state that the Purchaser
has notified each Affected Employee who has separated from
service during the period from the Closing Date through
December 31, 2000 that effective January 1, 2001 each such
Affected Employee shall have the option of maintaining COBRA
coverage under the Seller's health care plan or electing COBRA
continuation coverage under the Purchaser's health care plan.
D. Purchaser agrees that Affected Employees will be eligible for
coverage under a group health plan to be adopted and
maintained by Purchaser for its employees, to be effective as
of January 1, 2001. Purchaser agrees that the benefits
provided under the Purchaser's group health plan will be
substantially similar to or better than the benefits provided
under the Seller's group health plan; provided that the
Purchaser shall not have to provide for vision benefits under
the Purchaser's group health plan.
E. Purchaser agrees to accept responsibility for notifying and
communicating the terms and eligibility for COBRA continuation
coverage to the Affected Employees.
F. Purchaser will not hire those employees located in the Joplin,
Missouri office of the Division ("Joplin Office") who process
claims for the small group business of Seller. The
understanding which the parties have reached regarding the
Joplin Office is set forth in the Transition Services
Agreement dated the date hereof.
G. Regarding payroll for those employees of the Division hired by
the Purchaser, the parties have agreed as follows:
(1) The payroll checks for the payroll period ended
October 21, 2000 will be issued by Seller on November
1, 2000 and Purchaser shall reimburse Seller for such
total payroll amount as provided in Section 2 of this
Amendment.
(2) The payroll checks for the payroll period ended
November 4, 2000 will be issued in two checks for
each employee--one check to come from Seller for the
period October 22 to October 25, 2000, and the other
check to come from Purchaser for the period
thereafter to and including November 4, 2000.
Purchaser shall have no responsibility to reimburse
Seller for any part of Seller's payroll obligation
for this payroll period.
8. Partition of Subleased Space. Notwithstanding the provisions of
Section 4.6(e) of the Agreement to the contrary, in lieu of partitioning off the
sublet space referenced in such subsection, Seller may pay to Purchaser at
Closing (which payment may be effected by a reduction in the Estimated Purchase
Price set forth in Section 1.5(a) of the Agreement) $15,800.00.
9. Monthly Financial Statements. The reference in Section 4.17 of the
Agreement to "15 days" shall be changed to "25 days."
10. Maximum Amount of Indemnification. The reference in Section 8.4 of
the Agreement to "Fifteen Million Dollars ($15,000,000)" shall be changed to
"Eleven Million Seven Hundred Thousand Dollars ($11,700,000)."
11. Amount of Escrow. The Escrow Amount defined in Section 1.6 of the
Agreement shall be One Million Dollars ($1,000,000) not One Million Two Hundred
Thousand Dollars ($1,200,000).
12. Subcontract Agreement. HBS is not currently licensed as a third
party administrator ("TPA") in the states listed on Exhibit B hereto, but its
application is pending in each such state. Notwithstanding any other provision
in the Agreement, the Exhibits and Schedules to the Agreement, or the related
assignment and assumption agreements to the contrary, the administration for all
customers of the Division in these states under the respective Administration
Contract is not being transferred by HPSI to HBS at Closing but will be retained
by HPSI until HBS becomes so licensed (the "HPSI Retained Customers") as
hereinafter provided in this Section 12. With respect to each such state, HPSI
hereby subcontracts with HBS to provide the administrative services under such
Administration Contract as a subcontractor for HPSI for these customers until
the earlier of March 31, 2001 or such time as HBS becomes licensed in such state
(the "Subcontract Period"), at which time HPSI shall assign such customers and
their respective Administration Contract in such state to HBS and this
subcontract arrangement shall terminate with respect to such customers and
contracts. As compensation for its services, HBS shall be entitled to receive
all compensation due to HPSI as a result of the administration work performed by
HBS on HPSI's behalf during the period such services are contracted. Without
limiting the foregoing, HBS shall perform all billing services required under
the respective Administration Contracts with respect to such Retained Customers
on HPSI's behalf and shall distribute and deal with such funds in accordance
with the Administration Contracts and applicable law of each such state. During
such contract period, all customer inquiries will be answered by HBS by
reference to "▇▇▇▇▇▇▇▇▇▇ Benefit Services" only and without reference to Trewit
or Benesight. During the Subcontract Period, while operating under the licenses
of HPSI, HBS shall perform all of its subcontract duties in accordance with the
Third Party Administration statutes of the listed states and shall be subject to
the control and direction of HPSI to the extent required by the applicable
insurance laws of the states in which the administered business is located. HBS
shall indemnify and hold HPSI and Parent harmless from and against any and all
Loss due to any non-governmental third party claims resulting from the
performance of administrative services for HPSI with respect to such Retained
Customers hereunder, and HPSI and Parent shall indemnify and hold HBS and Trewit
harmless for any Loss resulting from actions by the insurance regulatory
agencies or other governmental bodies or authorities in such state based upon
the failure of HBS to have a license in such state to perform the services
contemplated hereby. To the extent this subcontract is inconsistent in any
fashion with the Third Party Administration and other statutes of any particular
state having jurisdiction over the subcontracted work, such laws shall control
but the parties shall take such good faith actions within the permitted context
of such statute as necessary to achieve the same result as otherwise
contemplated hereby.
13. Exclusion of Certain Indemnifications Payments from Minimum
Threshold. The following indemnification obligations shall be exempt from the
$250,000 minimum threshold for indemnification claims as provided in Section 8.4
of the Agreement but shall otherwise be subject to the provisions of Article 8
of the Agreement: (i) an indemnification claim by Seller for the failure of
Purchaser to pay when due the assumed accounts payable or other Assumed
Liabilities as set forth on the Estimated Closing Balance Sheet and (ii) any
indemnification claim by HPSI, Parent, Trewit or HBS arising under Section 12
hereof.
14. Agreements Regarding Customer Bank Accounts. In addition to the
provisions in the Agreement, the parties have reached the following agreements
regarding certain bank accounts relating to customers:
A. The cash in all customer "refund accounts" (including without
limitation those accounts identified as such on Exhibit C
hereto) shall be transferred within 2 business days after the
Closing to new refund accounts established by Purchaser,
together with related account records.
B. Purchaser is establishing as of the Closing new bank accounts
for current customers. All current customer accounts
established as of the Closing by Seller (including without
limitation those accounts identified as such on Exhibit C
hereto) shall be closed by Seller, in an orderly and
commercially reasonable manner, within 120 days following the
Closing. Seller agrees (i) to keep Purchaser reasonably
informed about these closure activities and (ii) to send
written communications to customers regarding such accounts
only after the prior approval of Purchaser, except as required
by law. Purchaser agrees to respond to Seller within 3
business days with its approval or any comments on a proposed
customer communication.
C. Customer accounts with respect to terminated customers
(including without limitation those accounts identified as
such on Exhibit C hereto) are not being transferred to
Purchaser under the Agreement and are not covered by this
Section 14.
15. Assignment and Joinder. Pursuant to the provisions of Section 9.6
of the Agreement, Trewit hereby assigns its rights and obligations under the
Agreement to HBS which corporation agrees to join the Agreement as a party and
be obligated thereunder to the same extent as Trewit. Notwithstanding such
assignment, Trewit shall remain fully obligated under the terms of the
Agreement. HBS accepts such assignment and assumes the obligations of Trewit
under the Agreement. All references to "Purchaser" in the Agreement shall be
deemed to include both Trewit and HBS.
16. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. No Other Changes. Except as expressly amended, restated or modified
as set forth in this Amendment, the Agreement remains unchanged in all other
respect and in full force and affect.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the date first written above.
HEALTHPLAN SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: President, Secretary and Treasurer
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▇▇▇▇▇▇▇▇▇▇ MANAGEMENT
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its: Secretary and Treasurer
-----------------------------------------
HEALTHPLAN SERVICES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its: President, Secretary and Treasurer
-----------------------------------------
TREWIT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Its: President and Chief Executive Officer
-----------------------------------------
▇▇▇▇▇▇▇▇▇▇ BENEFIT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Its: President and Chief Executive Officer
-----------------------------------------
EXHIBIT A TEMPORARY SERVICES AGREEMENT
EXHIBIT B STATES COVERED BY SUBCONTRACT AGREEMENT
EXHIBIT C BANK ACOUNTS
[AS REQUIRED BY APPLICABLE LAW, THE COMPANY WILL FURNISH SUPPLENTALLY ANY
OMITTED EXHIBIT OR SCHEDULE UPON REQUEST]
POST-CLOSING AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT (this "APA Amendment") and
the Escrow Agreement (this "Escrow Agreement Amendment"), is made effective as
of January 12, 2001 by and between HealthPlan Services, Inc., a Florida
corporation ("Seller"), HealthPlan Services Corporation, a Delaware corporation
("Parent"), Trewit Inc., a Delaware corporation ("Trewit") and ▇▇▇▇▇▇▇▇▇▇
Benefit Services, Inc., a Delaware corporation and a wholly-owned subsidiary of
Trewit ("HBS" and together with Trewit, collectively called "Purchaser") and for
purposes of the Escrow Agreement Amendment, ▇▇▇▇▇ Fargo Bank Minnesota as Escrow
Agent ("Escrow Agent").
RECITALS
--------
A. Purchaser, Seller and Parent have entered into and closed an Asset
Purchase Agreement dated as of August 28, 2000 (as amended, the "APA
Agreement"). Capitalized terms used and not otherwise defined herein will have
the meaning giving in the APA Agreement.
B. Purchaser, Seller and Parent desire to amend the APA Agreement as
specifically set forth in this Amendment.
NOW, THEREFORE, the APA Agreement and, to the extent specified, the
Escrow Agreement are hereby amended as follows:
1. Adjustment of Estimated Purchase Price. Section 1.7 of the APA
Agreement is hereby amended in its entirety to read as follows:
"Section 1.7 Adjustment of Estimated Purchase Price. The Estimated
Purchase Price shall be adjusted as provided in this Section 1.7. As
complete consideration and payment for any shortfall in collections of
accounts receivable transferred to Purchaser under the APA Agreement
(the "Transferred Accounts Receivable"), Seller shall pay to Purchaser
on the date of the Post-Closing Amendment an amount equal to the sum of
(i) $1,000,000, which amount is to be paid to Purchaser by wire
transfer of funds , and (ii) $460,000, which amount is to be paid to
Purchaser, less an amount equal to $33,360 for rent payments to Seller
in respect of the Richardson, Texas lease, out of the Escrow Amount by
means of Seller and Purchaser giving the Escrow Agent a form of joint
instructions of payment (in the form attached hereto as Exhibit A-1) to
wire such funds to Purchaser. This payment shall extinguish any and all
rights of Purchaser to make claims against HPS under the APA Agreement
or the Escrow Agreement related to the Transferred Accounts Receivable,
including, but not limited to, any claims for breach of the warranty
specified in Section 2.9 of the APA Agreement; provided however that
HPS agrees to promptly remit to Purchaser any customer payments it
erroneously or inadvertently has received after October 25, 2000 or may
hereafter receive in respect of such Transferred Accounts Receivable
upon receipt of reasonable documentation from Purchaser that any such
payment was erroneously paid to HPS. Notwithstanding the payments made
by Seller as provided for in this Section 1.7, all Transferred Accounts
Receivable shall remain
the sole property and assets of Purchaser and there shall be no
reassignment of any accounts back to Seller due to non-payment or for
any other reason; provided, however, that the Seller's rights to
payment from Sheakley Uniservice under its Transition Services
Agreement for services rendered for periods prior to October 25, 2000
are not being transferred to Purchaser and shall remain the property of
Seller. If the aggregate collections from the Transferred Accounts
Receivable received by Purchaser or its subsidiary HBS prior to
December 31, 2001 total more than $7,235,431 (such excess amount over
$7,235,431 being herein called the "Excess Collections"), then
Purchaser agrees to pay to HBS, no later than 30 days after December
31, 2001, an amount equal to 20% of the Excess Collections.
2. Amount of Escrow. The Escrow Amount defined in Section 1.6 of the
APA Agreement and the Escrow Deposit as defined in Section 1 of the Escrow
Agreement shall be Five Hundred Seventy Three Thousand Three Hundred Sixty
Dollars ($573,360) not One Million Dollars ($1,000,000) Section 5 of the Escrow
Agreement is hereby deleted in its entirety.
3. Charleston, West Virginia Personal Property. Anything in the APA
Agreement or closing documentation to the contrary notwithstanding, the parties
agree that all personal property and fixtures located in the Charleston, West
Virginia office of the Seller remains the property of the Seller and is not
being transferred to the Purchaser.
4. Counterparts. This APA and Escrow Agreement Amendment may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
5. No Other Changes. Except as expressly amended, restated or modified
as set forth in this APA Amendment and this Escrow Agreement Amendment, the APA
Agreement and the Escrow Agreement remain unchanged in all other respect and in
full force and affect.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the date first written above.
HEALTHPLAN SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its:
-----------------------------------------
HEALTHPLAN SERVICES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its:
-----------------------------------------
TREWIT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Its:
-----------------------------------------
▇▇▇▇▇▇▇▇▇▇ BENEFIT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Its:
-----------------------------------------
and only for purposes of acknowledging the
Escrow Agreement Amendments contained herein:
▇▇▇▇▇ FARGO BANK MINNESOTA
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Corporate Trust Officer
-----------------------------------------
