Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
QUADRAMED CORPORATION
AND
MEDICUS SYSTEMS CORPORATION
November 9, 1997
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of November 9, 1997, by and among QuadraMed Corporation, a
Delaware corporation ("QuadraMed"), and Medicus Systems Corporation, a Delaware
corporation ("Medicus").
RECITALS
A. The Boards of Directors of Medicus and QuadraMed believe it is in the
best interests of their respective companies and the stockholders of their
respective companies that Medicus and a wholly owned subsidiary of QuadraMed to
be formed for the purposes hereof ("Merger Sub") combine into a single company
through the statutory merger of Merger Sub with and into Medicus (the "Merger")
and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares of
Medicus Common Stock, $.01 par value ("Medicus Common Stock"), shall be
converted into shares of QuadraMed Common Stock, $.01 par value ("QuadraMed
Common Stock"), or cash, or a combination thereof, on the terms set forth
herein.
C. Medicus and QuadraMed desire to make certain representations and
warranties and other agreements in connection with the Merger.
D. Concurrent with the execution of this Agreement and as an inducement to
QuadraMed to enter into this Agreement, certain of the stockholders of Medicus
who in the aggregate beneficially own in excess of 50% of the outstanding Common
Stock of Medicus have on the date hereof entered into stock purchase agreements
(the "Stock Purchase Agreements") to sell the shares of Medicus' Common Stock
owned by such person in exchange for a cash payment and a warrant to purchase
QuadraMed Common Stock (the "Warrants").
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement, a Certificate of
Merger to be filed in respect of the Merger (the "Certificate of Merger") and
the applicable provisions of the Delaware General Corporation Law ("DGCL"),
Merger Sub shall be merged with and into Medicus, the separate corporate
existence of Merger Sub shall cease and Medicus shall continue as the surviving
corporation. Medicus as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Closing; Effective Time. The closing of the transactions contemplated
hereby (the "Closing") shall take place as soon as practicable after the
satisfaction or waiver of each of the conditions set forth in Article VI hereof
or at such other time as the parties hereto agree (the "Closing Date"). The
Closing shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Xxx
Xxxxxx, Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other
location as the parties hereto agree. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger with the Secretary of State of the State of Delaware and
with the Recorder of the County in which the registered office of each of
Medicus and Merger Sub is located, in accordance with the relevant provisions of
the DGCL (the time of such filing being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Medicus and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Medicus and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by the DGCL and such Certificate of Incorporation.
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. At the Effective Time, the directors and
officers of Merger Sub shall become the directors and officers of the Surviving
Corporation, until their respective successors are duly elected or appointed and
qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and without any action
on the part of Merger Sub, Medicus or the holders of any of the following
securities, subject to the provisions of this Section 1.6:
(a) Conversion of Medicus Common Stock. At the Effective Time, each share
of Medicus Common Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of Medicus Common Stock to be canceled
pursuant to Section 1.6(b)) will be canceled and extinguished and be converted
automatically into (i) the right to receive $7.50 in cash, without interest (the
"Per Share Cash Amount"); or (ii) the right to receive 0.3125 shares of
QuadraMed Common Stock (the "Exchange Ratio"); provided, however, that (1) if
the QuadraMed Stock Value (as defined below) exceeds $27.60, then the Exchange
Ratio shall be the quotient obtained by dividing (A) $8.625 by (B) the QuadraMed
Stock Value, and (2) if the QuadraMed Stock Value is less than $24.00, then the
Exchange Ratio shall be the quotient obtained by dividing (A) $7.50 by (B) the
QuadraMed Stock Value; provided further, however, that if the QuadraMed Stock
Value is less than $20.40, then QuadraMed may, at its sole discretion, elect to
have all or any portion of the shares of Medicus Common Stock converted into the
Per Share Cash Amount (the "QuadraMed Cash Election"); or (iii) the right to
receive a combination of shares of QuadraMed Common Stock and cash, all in
accordance with the provisions of this Section 1.6. In the event of the
QuadraMed Cash Election in which less than all of the outstanding shares of
Medicus Common Stock will be converted into cash, the shares of Medicus Common
Stock to be converted into cash as a result of the QuadraMed Cash Election will
be selected pro rata according to the number of shares with respect to which a
Stock Election (as defined below) has been made. The amounts paid in the Merger
in exchange for shares of Medicus Common Stock shall be referred to herein as
the "Merger Consideration". For purposes hereof, the "QuadraMed Stock Value"
shall be equal to the average of the closing prices of QuadraMed Common Stock
during the fifteen (15) days prior to the second day prior to the date of the
Medicus Stockholders Meeting (as defined in Section 2.23).
(b) Cancellation of Medicus Common Stock Owned by QuadraMed or Medicus. At
the Effective Time, all shares of Medicus Common Stock that are owned by Medicus
as treasury stock and each share of Medicus Common Stock owned by QuadraMed or
any direct or indirect wholly owned subsidiary of QuadraMed or of Medicus
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
(c) Medicus Stock Option Plans. At the Effective Time, the Medicus 1989
Stock Option Plan, the Medicus 1991 Stock Option Plan, the Medicus 1993 Stock
Option Plan, the Medicus 1993 Performance Stock Option Plan, the Medicus 1994
Stock Option Plan, the Medicus 1994 Directors' Stock Option Plan, the Medicus
1995 RCM Stock Option Plan, the Medicus 1996 C.E.O. Stock Option Plan, the
Medicus 1996 C.E.O. Replacement Stock Option Plan, the Medicus 1996 C.E.O.
Special Stock Option Plan, the Medicus 1997 Employee Stock Option and Restricted
Stock Plan, the Medicus 1997 Directors' Stock Option Plan (collectively, the
"Medicus Stock Option Plans"), the Stock Exchange and Subscription warrants
dated March 19, 1997 issued by Medicus to Xxxxxxx X. Xxxxxxx and a trust for his
benefit (the "Xxxxxxx Warrants") and the Stock Subscription Warrant dated March
1, 1996 issued by Medicus to TriHealth, Inc. (the "TriHealth Warrant") and all
options or rights to purchase Medicus Common Stock then outstanding under the
Medicus Stock Option Plans, the Xxxxxxx Warrants and the TriHealth Warrant shall
be assumed by QuadraMed in accordance with Section 5.11.
(d) Capital Stock of Merger Sub. At the Effective Time, each share of
Common Stock, $.01 par value, of Merger Sub ("Merger Sub Common Stock") issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
Common Stock, $.01 par value, of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio and Per Share Cash Amount. The Exchange
Ratio and the Per Share Cash Amount shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into QuadraMed Common Stock or Medicus
Common Stock), reorganization, recapitalization or other like change with
respect to QuadraMed Common Stock or Medicus Common Stock occurring after the
date hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of QuadraMed Common Stock
will be issued in the Merger. In lieu of any fractional shares that would
otherwise be issuable in the Merger in exchange for shares of Medicus Common
Stock, QuadraMed shall pay the proportionate amount of the Per Share Cash Amount
that would be payable in respect of such fractional share.
(g) Limitation on Shares Issuable. In no event shall the aggregate number
of shares of QuadraMed Common Stock which QuadraMed is obligated to issue (1)
upon the exercise of Warrants and (2) in exchange for outstanding shares of
Medicus Common Stock pursuant to this Agreement exceed a total of 1,800,000
shares. In the event that the aggregate number of shares of Common Stock that
holders of Warrants and holders of Medicus Common Stock have elected to receive
as described in clauses (1) and (2) in the immediately preceding sentence
exceeds 1,800,000 shares, QuadraMed shall only be required to issue 1,800,000
shares of QuadraMed Common Stock and such holders shall be entitled to receive
shares of QuadraMed Common Stock equal to each holder's pro rata portion of the
total amount of shares issued by QuadraMed as described in clauses (1) and (2),
based on the total number of shares each holder and each elected to receive.
(h) Election for Shares or Cash. Each record holder immediately prior to
the Effective Time of shares of Medicus Common Stock will be entitled (i) to
elect to receive cash for none, some or all of such shares (a "Cash Election"),
(ii) to elect to receive QuadraMed Common Stock for none, some or all of such
shares (a "Stock Election"), or (iii) to indicate that such record holder has no
preference as to the receipt of cash or QuadraMed Common Stock for such shares
(a "Non-Election"). All such elections shall be made on a form designed for that
purpose (a "Form of Election"). Holders of record of shares of Medicus Common
Stock who hold such shares as nominees, trustees or in other representative
capacities (a "Representative") may submit multiple Forms of Election, provided
that such Representative certifies that each such Form of Election covers all
the shares of Medicus Common Stock held by each Representative for a particular
beneficial owner. All shares of Medicus Common Stock covered by Stock Elections
(the "Stock Election Shares") and all shares of Medicus Common Stock covered by
Non-Elections (the "Non-Election Shares") shall be converted into the right to
receive QuadraMed Common Stock, and the Cash Election Shares shall be converted
into the right to receive cash, without interest.
(i) Election Procedures. Elections shall be made by holders of Medicus
Common Stock by mailing or otherwise delivering to the Exchange Agent (as
defined in Section 1.7) a Form of Election. To be effective, a Form of Election
must be properly completed, signed and submitted to the Exchange Agent and
accompanied by the certificates representing the shares of Medicus Common Stock
as to which the election is being made (or by an appropriate trust company in
the United States or a member of a registered national securities exchange or
the National Association of Securities Dealers, Inc. (the "NASD")). QuadraMed
will have the discretion which it may delegate in whole or in part to the
Exchange Agent, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in Forms of Election. The decision of QuadraMed (or the Exchange Agent) in such
matters shall be conclusive and binding. Neither QuadraMed nor the Exchange
Agent will be under any obligation to notify any person of any defect in a Form
of Election submitted to the Exchange Agent. The Exchange Agent shall also make
all computations contemplated by this Section 1.6 and all such computations
shall be conclusive and binding on the holders of Medicus Common Stock. For the
purposes hereof, a holder of Medicus Common Stock who does not submit a Form of
Election which is received by the Exchange Agent prior to the Election Deadline
(as hereinafter defined) shall be deemed to have made a Non-Election. If
QuadraMed or the Exchange Agent shall determine that any purported Cash Election
or Stock Election was not properly made, such purported Cash Election or Stock
Election shall be deemed to be of no force and effect and the stockholder making
such purported Cash Election or Stock Election shall for purposes hereof, be
deemed to have made a Non-Election. QuadraMed and Medicus shall each use its
reasonable best efforts to mail the Form of Election to all persons who become
holders of Medicus Common Stock during the period between the record date for
the Medicus Stockholders Meeting (as defined in Section 2.23) and 10:00 a.m.
California time, on the date seven calendar days prior to the anticipated
Effective Time and to make the Form of Election available to all persons who
become holders of Medicus Common Stock subsequent to such day and no later than
the close of business on the business day prior to the Effective Time. A Form of
Election must be received by the Exchange Agent by the close of business on the
last business day prior to the Effective Time (the "Election Deadline") in order
to be effective. All elections may be revoked until the Election Deadline.
1.7 Surrender of Certificates.
(a) Exchange Agent. The First National Bank of Boston shall act as exchange
agent (the "Exchange Agent") in the Merger.
(b) QuadraMed to Provide Common Stock and Cash. Promptly after the
Effective Time, QuadraMed shall make available to the Exchange Agent for
exchange in accordance with this Article I, through such reasonable procedures
as QuadraMed may adopt, (i) the shares of QuadraMed Common Stock issuable in
exchange for Stock Election Shares and Non-Election Shares and (ii) cash in an
amount sufficient to purchase Cash Election Shares and permit payment of cash in
lieu of fractional shares pursuant to Section 1.6(f).
(c) Exchange Procedures. Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of record of a certificate
or certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Medicus Common Stock, whose shares were
converted into the right to receive shares of QuadraMed Common Stock (and cash
in lieu of fractional shares) pursuant to Section 1.6, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by the Exchange Agent, and shall be in such form and have such
other provisions as QuadraMed may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing shares of QuadraMed Common Stock (and cash in lieu of fractional
shares) or cash. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
QuadraMed, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor (i) a certificate
representing the number of whole shares of QuadraMed Common Stock and payment in
lieu of fractional shares which such holder has the right to receive pursuant to
Section 1.6 or (ii) cash, as the case may be, and the Certificate so surrendered
shall forthwith be canceled. Until so surrendered, each outstanding Certificate
that, prior to the Effective Time, represented shares of Medicus Common Stock
will be deemed for all corporate purposes, other than the payment of dividends,
to evidence the ownership of the number of full shares of QuadraMed Common Stock
or cash, as the case may be, into which such shares of Medicus Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.6.
(d) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions with respect to QuadraMed Common Stock with a record date after
the Effective Time will be paid to the holder of any unsurrendered Certificate
with respect to the shares of QuadraMed Common Stock represented thereby until
the holder of record of such Certificate shall surrender such Certificate.
Subject to applicable law, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of QuadraMed Common Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of any such dividends or other distributions
with a record date after the Effective Time theretofore payable (but for the
provisions of this Section 1.7(d)) with respect to such shares of QuadraMed
Common Stock.
(e) Transfers of Ownership. If any certificate for shares of QuadraMed
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to QuadraMed or any agent designated by it any transfer
or other taxes required by reason of the issuance of a certificate for shares of
QuadraMed Common Stock in any name other than that of the registered holder of
the Certificate surrendered, or established to the satisfaction of QuadraMed or
any age. Notwithstanding anything to the contrary in this Section 1.7, none of
the Exchange Agent, the Surviving Corporation or any party hereto shall be
liable to any person for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Medicus Common Stock. All shares of
QuadraMed Common Stock issued upon the surrender for exchange of shares of
Medicus Common Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Medicus Common Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Medicus Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of QuadraMed Common
Stock (and cash in lieu of fractional shares) as may be required pursuant to
Section 1.6; provided, however, that QuadraMed may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
QuadraMed, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Medicus and Merger Sub, the officers and directors of Medicus
and Merger Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action, so
long as such action is not inconsistent with this Agreement.
1.11 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Medicus QuadraMed Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have demanded properly in writing appraisal for such
shares in accordance with Section 262 of the DGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders shall be entitled to receive payment of
the appraised value of such shares of Medicus Common Stock held by them in
accordance with the provisions of Section 262, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such shares of Medicus
Common Stock under such Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, shares of QuadraMed Common
Stock based on the Exchange Ratio determined in accordance with Section 1.1
hereof, as if such shares were covered by Non-Elections, upon surrender, in the
manner provided in this Article I, of the certificate or certificates that
formerly evidenced such shares of Medicus Common Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MEDICUS
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any entity or group of entities means any
material event, change, condition or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that is materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, business, operations or results of operations
of such entity and its subsidiaries, taken as a whole.
Except as disclosed in a document of even date herewith and delivered by
Medicus to QuadraMed prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the "Medicus
Disclosure Schedule"), Medicus represents and warrants to QuadraMed and Merger
Sub as follows:
2.1 Organization, Standing and Power Each of Medicus and its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each of Medicus and its subsidiaries
has the corporate power to own its properties and to carry on its business as
now being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect on
Medicus. Medicus has delivered a true and correct copy of the Amended and
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and Bylaws, as amended, or other charter documents, as
applicable, of Medicus and each of its subsidiaries, each as amended to date, to
QuadraMed. Neither Medicus nor any of its subsidiaries is in violation of any of
the provisions of its Certificate of Incorporation or Bylaws or equivalent
organizational documents. Medicus is the owner of all outstanding shares of
capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock of each such subsidiary are owned by Medicus free and
clear of all liens, charges, claims or encumbrances or rights of others. There
are no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements of any
character relating to the issued or unissued capital stock or other securities
of any such subsidiary, or otherwise obligating Medicus or any such subsidiary
to issue, transfer, sell, purchase, redeem or otherwise acquire any such
securities. Except as disclosed in the Medicus SEC Documents (as defined in
Section 2.4), Medicus does not directly or indirectly own any equity or similar
interest in, or any interest convertible or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
2.2 Capital Structure. The authorized capital stock of Medicus consists of
10,000,000 shares of Common Stock, $.01 par value, 1,000,000 shares of Preferred
Stock, $.01 par value, and 500 shares of Voting Preferred Stock, $1,000 par
value, of which there were issued and outstanding as of the close of business on
November 7, 1997, 5,487,971 shares of Common Stock and no shares of Preferred
Stock or Voting Preferred Stock. There are no other outstanding shares of
capital stock or voting securities and no outstanding commitments to issue any
shares of capital stock or voting securities other than pursuant to the exercise
of options outstanding as of such date under the Medicus Stock Option Plans and
the obligation to issue 34,800 restricted shares previously granted under the
Medicus Stock Option Plans. All outstanding shares of Medicus Common Stock are
duly authorized, validly issued, fully paid and non-assessable and are free of
any liens or encumbrances created by, or resulting from the actions of, Medicus,
and are not subject to preemptive rights or rights of first refusal created by
statute, the Certificate of Incorporation or Bylaws of Medicus or any agreement
to which Medicus is a party or by which it is bound. As of the close of business
on November 7, 1997, Medicus has 1,501,350 shares subject to outstanding,
unexercised options. Since November 7, 1997, Medicus has not issued or granted
additional options under the Medicus Stock Option Plans. Except for (i) the
rights created pursuant to this Agreement or the Medicus Stock Option Plans and
(ii) Medicus right to repurchase any unvested shares under the Medicus Stock
Option Plans, there are no other options, warrants, calls, rights, commitments
or agreements of any character to which Medicus is a party or by which it is
bound obligating Medicus to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any shares of capital
stock of Medicus or obligating Medicus to grant, extend, accelerate the vesting
of, change the price of, or otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement. There are no contracts,
commitments or agreements relating to voting, purchase or sale of Medicus
capital stock (i) between or among Medicus and any of its stockholders and (ii)
to the best of Medicus knowledge, between or among any of Medicus
stockholders. The terms of the Medicus Stock Option Plans permit the assumption
or substitution of options to purchase QuadraMed Common Stock as provided in
this Agreement, without the consent or approval of the holders of such
securities, the Medicus stockholders, or otherwise and without any acceleration
of the exercise schedule or vesting provisions in effect for those options. True
and complete copies of all forms of agreements and instruments relating to or
issued under the Medicus Stock Option Plans have been made available to
QuadraMed and such agreements and instruments have not been amended, modified or
supplemented, and there are no agreements to amend, modify or supplement such
agreements or instruments in any case from the form made available to QuadraMed.
2.3 Authority. Medicus has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Medicus, subject only to the approval of the
Merger by Medicus stockholders as contemplated by Section 6.1(a). This
Agreement has been duly executed and delivered by Medicus and constitutes the
valid and binding obligation of Medicus enforceable against Medicus in
accordance with its terms. The execution and delivery of this Agreement by
Medicus does not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation or Bylaws of
Medicus or any of its subsidiaries, as amended, or (ii) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Medicus or any of its subsidiaries or any of their
properties or assets, except where such conflict, violation, default,
termination, cancellation or acceleration with respect to the foregoing
provisions of (ii) would not have had and would not reasonably be expected to
have a Material Adverse Effect on Medicus. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity") is required by or with respect to
Medicus or any of its subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby
and thereby, except for (i) the filing of the Certificate of Merger as provided
in Section 1.2, (ii) the filing with the Securities and Exchange Commission (the
"SEC") and the NASD of the Proxy Statement (as defined in Section 2.23) relating
to the Medicus Stockholders Meeting (as defined in Section 2.23), (iii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the
securities laws of any foreign country; and (iv) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Medicus and would not prevent,
or materially alter or delay any of the transactions contemplated by this
Agreement.
2.4 SEC Documents; Financial Statements. Medicus has furnished to QuadraMed
a true and complete copy of each statement, report, registration statement (with
the prospectus in the form filed pursuant to Rule 424(b) of the Securities Act
of 1933, as amended (the "Securities Act")), definitive proxy statement and
other filing filed with the SEC by Medicus since March 1, 1996, and, prior to
the Effective Time, Medicus will have furnished QuadraMed with true and complete
copies of any additional documents filed with the SEC by Medicus prior to the
Effective Time (collectively, the "Medicus SEC Documents"). In addition, Medicus
has made available to QuadraMed all exhibits to the Medicus SEC Documents filed
prior to the date hereof, and will promptly make available to QuadraMed all
exhibits to any additional Medicus SEC Documents filed prior to the Effective
Time. All documents required to be filed as exhibits to the Medicus SEC
Documents have been so filed, and all material contracts so filed as exhibits
are in full force and effect, except those which have expired in accordance with
their terms, and neither Medicus nor any of its subsidiaries is in default
thereunder. As of their respective filing dates, the Medicus SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Securities Act,
and none of the Medicus SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading, except to the extent corrected by a
subsequently filed Medicus SEC Document. The financial statements of Medicus,
including the notes thereto, included in the Medicus SEC Documents (the "Medicus
Financial Statements") were complete and correct in all material respects as of
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent throughout the periods indicated and consistent with each
other (except as may be indicated in the notes thereto or, in the case of
unaudited statements included in Quarterly Reports on Form 10-Q, as permitted by
Form 10-Q of the SEC). The Medicus Financial Statements fairly present the
consolidated financial condition and operating results of Medicus and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end adjustments).
There has been no change in Medicus accounting policies except as described in
the notes to the Medicus Financial Statements.
2.5 Absence of Certain Changes. Since August 31, 1997 (the "Medicus Balance
Sheet Date"), Medicus has conducted its business in the ordinary course
consistent with past practice and, except as disclosed in the Medicus SEC
Documents, there has not occurred: (i) any change, event or condition (whether
or not covered by insurance) that has resulted in, or might reasonably be
expected to result in, a Material Adverse Effect to Medicus; (ii) any
acquisition, sale or transfer of any material asset of Medicus or any of its
subsidiaries other than in the ordinary course of business and consistent with
past practice; (iii) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by Medicus or any
revaluation by Medicus of any of its or any of its subsidiaries' assets; (iv)
any declaration, setting aside, or payment of a dividend or other distribution
with respect to the shares of Medicus, or any direct or indirect redemption,
purchase or other acquisition by Medicus of any of its shares of capital stock;
(v) any material contract entered into by Medicus or any of its subsidiaries,
other than in the ordinary course of business and as provided to QuadraMed, or
any material amendment or termination of, or default under, any material
contract to which Medicus or any of its subsidiaries is a party or by which it
is bound; or (vi) any negotiation or agreement by Medicus or any of its
subsidiaries to do any of the things described in the preceding clauses (i)
through (v) (other than negotiations with QuadraMed and its representatives
regarding the transactions contemplated by this Agreement).
2.6 Absence of Undisclosed Liabilities. Medicus has no material obligations
or liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth or adequately provided for in the Balance Sheet
included in Medicus' Quarterly Report on Form 10-Q for the period ended August
31, 1997 (the "Medicus Balance Sheet"), (ii) those incurred in the ordinary
course of business and not required to be set forth in the Medicus Balance Sheet
under generally accepted accounting principles, (iii) those incurred in the
ordinary course of business since the Medicus Balance Sheet Date and consistent
with past practice; and (iv) those incurred in connection with the execution of
this Agreement.
2.7 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Medicus or any of its
subsidiaries, threatened against Medicus or any of its subsidiaries or any of
their respective properties or any of their respective officers or directors (in
their capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Medicus. There is no
judgment, decree or order against Medicus or any of its subsidiaries, or, to the
knowledge of Medicus and its subsidiaries, any of their respective directors or
officers (in their capacities as such), that could prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or that
could reasonably be expected to have a Material Adverse Effect on Medicus.
2.8 Restrictions on Business Activities. There is no material agreement,
judgment, injunction, order or decree binding upon Medicus or any of its
subsidiaries which has or reasonably could be expected to have the effect of
prohibiting or materially impairing any current or future business practice of
Medicus or any of its subsidiaries, any acquisition of property by Medicus or
any of its subsidiaries or the conduct of business by Medicus or any of its
subsidiaries as currently conducted or as proposed to be conducted by Medicus or
any of its subsidiaries.
2.9 Governmental Authorization. Medicus and each of its subsidiaries have
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (i)
pursuant to which Medicus or any of its subsidiaries currently operates or holds
any interest in any of its properties or (ii) that is required for the operation
of Medicus or any of its subsidiaries' business or the holding of any such
interest ((i) and (ii) herein collectively called "Medicus Authorizations"), and
all of such Medicus Authorizations are in full force and effect, except where
the failure to obtain or have any of such Medicus Authorizations could not
reasonably be expected to have a Material Adverse Effect on Medicus.
2.10 Title to Property. Medicus and its subsidiaries have good and valid
title to all of their respective properties, interests in properties and assets,
real and personal, reflected in the Medicus Balance Sheet or acquired after the
Medicus Balance Sheet Date (except properties, interests in properties and
assets sold or otherwise disposed of since the Medicus Balance Sheet Date in the
ordinary course of business), or in the case of leased properties and assets,
valid leasehold interests therein, free and clear of all mortgages, liens,
pledges, charges or encumbrances of any kind or character, except (i) the lien
of current taxes not yet due and payable, (ii) such imperfections of title,
liens and easements as do not and will not materially detract from or interfere
with the use of the properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties and (iii) liens
securing debt which is reflected on the Medicus Balance Sheet. The plants,
property and equipment of Medicus and its subsidiaries that are used in the
operations of their businesses are in good operating condition and repair. All
properties used in the operations of Medicus and its subsidiaries are reflected
in the Medicus Balance Sheet to the extent generally accepted accounting
principles require the same to be reflected. Schedule 2.10 identifies each
parcel of real property owned or leased by Medicus or any of its subsidiaries.
2.11 Intellectual Property.
(a) Medicus and its subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, maskworks, net lists,
schematics, technology, know- how, trade secrets, inventory, ideas, algorithms,
processes, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used in the business of Medicus and
its subsidiaries as currently conducted or as proposed to be conducted by
Medicus and its subsidiaries, except to the extent that the failure to have such
rights have not had and would not reasonably be expected to have a Material
Adverse Effect on Medicus.
(b) Medicus has provided to QuadraMed (i) all patents and patent
applications and all registered and unregistered trademarks, trade names and
service marks, registered and unregistered copyrights, and maskworks, which
Medicus considers to be material to its business and included in the
Intellectual Property, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which Medicus is a party and
pursuant to which any person is authorized to use any Intellectual Property, and
(iii) all licenses, sublicenses and other agreements as to which Medicus is a
party and pursuant to which Medicus is authorized to use any third party
patents, trademarks or copyrights, including software ("Third Party Intellectual
Property Rights") which are incorporated in, are, or form a part of any Medicus
product that is material to its business.
(c) To Medicus' knowledge, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property rights of Medicus
or any of its subsidiaries, any trade secret material to Medicus or any of its
subsidiaries, or any Intellectual Property right of any third party to the
extent licensed by or through Medicus or any of its subsidiaries, by any third
party, including any employee of its subsidiaries has entered into any agreement
to indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
purchase orders arising in the ordinary course of business.
(d) Medicus is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property or Third Party Intellectual Property Rights, the
breach of which would have a Material Adverse Effect on Medicus.
(e) All patents, registered trademarks, service marks and copyrights held
by Medicus are valid and subsisting. Medicus (i) has not been sued in any suit,
action or proceeding which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party and (ii) has not brought any action, suit
or proceeding for infringement of Intellectual Property or breach of any license
or agreement involving Intellectual Property against any third party. The
manufacture, marketing, licensing or sale of Medicus products does not infringe
any patent, trademark, service xxxx, copyright, trade secret or other
proprietary right of any third party, except where such infringement would not
have a Material Adverse Effect on Medicus.
(f) Medicus has secured valid written assignments from all consultants and
employees who contributed to the creation or development of Intellectual
Property of the rights to such contributions that Medicus does not already own
by operation of law.
(g) Medicus has taken all reasonable and appropriate steps to protect and
preserve the confidentiality of all Intellectual Property not otherwise
protected by patents, or patent applications or copyright ("Confidential
Information"). All use, disclosure or appropriation of Confidential Information
owned by Medicus by or to a third party has been pursuant to the terms of a
written agreement between Medicus and such third party. All use, disclosure or
appropriation of Confidential Information not owned by Medicus has been pursuant
to the terms of a written agreement between Medicus and the owner of such
Confidential Information, or is otherwise lawful.
2.12 Environmental Matters
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any federal, state or local
laws, ordinances, codes, regulations, rules, policies and orders that are
intended to assure the protection of the environment, or that classify,
regulate, call for the remediation of, require reporting with respect to, or
list or define air, water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or which are intended
to assure the safety of employees, workers or other persons, including the
public.
(ii) "Hazardous Materials" shall mean any toxic or hazardous substance,
material or waste or any pollutant or contaminant, or infectious or radioactive
substance or material, including without limitation, those substances, materials
and wastes defined in or regulated under any Environmental and Safety Laws.
(iii) "Property" shall mean all real property leased or owned by Medicus or
its subsidiaries either currently or in the past.
(iv) "Facilities" shall mean all buildings and improvements on the Property
of Medicus or its subsidiaries.
(a) Medicus represents and warrants as follows: (i) to Medicus' knowledge,
no methylene chloride or asbestos is contained in or has been used at or
released from the Facilities; (ii) all Hazardous Materials and wastes disposed
of by Medicus have been disposed of in accordance with all Environmental and
Safety Laws; (iii) Medicus and its subsidiaries have received no notice (verbal
or written) of any noncompliance of the Facilities or its past or present
operations with Environmental and Safety Laws; (iv) no notices, administrative
actions or suits are pending or, to Medicus' knowledge, threatened relating to a
violation of any Environmental and Safety Laws; (v) neither Medicus nor its
subsidiaries have been notified that they are a potentially responsible party
under the federal Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), or state analog statute, arising out of events occurring
prior to the Closing Date; (vi) to Medicus' knowledge, there have not been in
the past, and are not now, any Hazardous Materials on, under or migrating to or
from the Facilities or Property; (vii) to Medicus' knowledge, there have not
been in the past, and are not now, any underground tanks or underground
improvements at, on or under the Property including without limitation,
treatment or storage tanks, pumps, or water, gas or oil xxxxx; (viii) to
Medicus' knowledge, there are no polychlorinated biphenyls (PCBs) deposited,
stored, disposed of or located on the Property or Facilities or any equipment on
the Property containing PCBs at levels in excess of 50 parts per million; (ix)
to Medicus' knowledge, there is no formaldehyde on the Property or in the
Facilities, nor any insulating material containing urea formaldehyde in the
Facilities; (x) Medicus' and its subsidiaries' uses of and activities within the
Facilities have at all times complied with all Environmental and Safety Laws;
and (xi) Medicus and its subsidiaries have all the permits and licenses required
to be issued and are in full compliance with the terms and conditions of those
permits, except where the failure to have or comply with such permits would not,
individually or in the aggregate, have a Material Adverse Effect of Medicus.
2.13 Taxes. Medicus and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Medicus or any of
its subsidiaries is or has been a member have timely filed all Tax Returns
required to be filed by it, have paid all Taxes shown thereon to be due and has
provided adequate accruals in accordance with generally accepted accounting
principles in its financial statements for any Taxes that have not been paid,
whether or not shown as being due on any Tax returns. Except as disclosed in the
SEC Documents, (i) no material claim for Taxes has become a lien against the
property of Medicus or any of its subsidiaries or is being asserted against
Medicus or any of its subsidiaries other than liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Medicus or any of its subsidiaries
is being conducted by a Tax authority, (iii) no extension of the statute of
limitations on the assessment of any Taxes has been granted by Medicus or any of
its subsidiaries and is currently in effect, and (iv) there is no agreement,
contract or arrangement to which Medicus or any of its subsidiaries is a party
that may result in the payment of any amount that would not be deductible by
reason of Sections 280G, 162 or 404 of the Code. Medicus has not been and will
not be required to include any material adjustment in Taxable income for any Tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger. Neither
Medicus nor any of its subsidiaries is a party to any tax sharing or tax
allocation agreement nor does Medicus or any of its subsidiaries owe any amount
under any such agreement. For purposes of this Agreement, the following terms
have the following meanings: "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity (a "Tax Authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation to
indemnify any other person. As used herein, "Tax Return" shall mean any return,
statement, report or form (including, without limitation,) estimated Tax returns
and reports, withholding Tax returns and reports and information reports and
returns required to be filed with respect to Taxes. Medicus and each of its
subsidiaries are in full compliance with all terms and conditions of any Tax
exemptions or other Tax-sharing agreement or order of a foreign government and
the consummation of the Merger shall not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions or other
Tax-sharing agreement or order.
2.14 Employee Benefit Plans.
(a) Schedule 2.14 lists, with respect to Medicus, any subsidiary of Medicus
and any trade or business (whether or not incorporated) which is treated as a
single employer with Medicus (an "ERISA Affiliate") within the meaning of
Section 414(b), (c), (m) or (o) of the Code, (i) all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), (ii) each loan to a non-officer employee in
excess of $50,000, loans to officers and directors and any stock option, stock
purchase, phantom stock, stock appreciation right, supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability, employee
relocation, cafeteria benefit (Code section 125) or dependent care (Code Section
129), life insurance or accident insurance plans, programs or arrangements,
(iii) all bonus, pension, profit sharing, savings, deferred compensation or
incentive plans, programs or arrangements, (iv) other fringe or employee benefit
plans, programs or arrangements that apply to senior management of Medicus and
that do not generally apply to all employees, and (v) any current or former
employment or executive compensation or severance agreements, written or
otherwise, as to which unsatisfied obligations of Medicus of greater than
$50,000 remain for the benefit of, or relating to, any present or former
employee, consultant or director of Medicus (together, the "Medicus Employee
Plans").
(b) Medicus has furnished to QuadraMed a copy of each of the Medicus
Employee Plans and related plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and, to the extent still in its possession, any material
employee communications relating thereto) and has, with respect to each Medicus
Employee Plan which is subject to ERISA reporting requirements, provided copies
of the Form 5500 reports filed for the last three plan years. Any Medicus
Employee Plan intended to be qualified under Section 401(a) of the Code has
either obtained from the Internal Revenue Service a favorable determination
letter as to its qualified status under the Code, including all amendments to
the Code effected by the Tax Reform Act of 1986 and subsequent legislation, or
has applied to the Internal Revenue Service for such a determination letter
prior to the expiration of the requisite period under applicable Treasury
Regulations or Internal Revenue Service pronouncements in which to apply for
such determination letter and to make any amendments necessary to obtain a
favorable determination. Medicus has also furnished QuadraMed with the most
recent Internal Revenue Service determination letter issued with respect to each
such Medicus Employee Plan, and nothing has occurred since the issuance of each
such letter which could reasonably be expected to cause the loss of the
tax-qualified status of any Medicus Employee Plan subject to Code Section
401(a).
(c) (i) Except as disclosed on Schedule 2.14, none of the Medicus Employee
Plans promises or provides retiree medical or other retiree welfare benefits to
any person; (ii) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Medicus Employee Plan, which could reasonably be expected to have, in the
aggregate, a Material Adverse Effect; (iii) each Medicus Employee Plan has been
administered substantially in accordance with its terms and in compliance with
the requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), except as would not have, in the aggregate, a
Material Adverse Effect, and Medicus and each subsidiary or ERISA Affiliate have
performed all obligations required to be performed by them under, are not in any
respect in default under or violation of, and have no knowledge of any default
or violation by any other party to, any of the Medicus Employee Plans, which
default or violation could reasonably be expected to have a Material Adverse
Effect on Medicus; (iv) neither Medicus nor any subsidiary or ERISA Affiliate is
subject to any liability or penalty under Sections 4976 through 4980 of the Code
or Title I of ERISA with respect to any of the Medicus Employee Plans, other
than obligations for the payment of benefits in the normal operation of the
Plan, and obligations which would not in the aggregate have a Material Adverse
Effect on Medicus; (v) all material contributions required to be made by Medicus
or any subsidiary or ERISA Affiliate to any Medicus Employee Plan have been made
on or before their due dates and any accruals required by general accepted
accounting principles ("GAAP") for contributions to each Medicus Employee Plan
for the current plan years are reflected on the financial statements of Medicus;
(vi) with respect to each Medicus Employee Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which the
thirty (30) day notice requirement has been waived under the regulations to
Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 or
ERISA has occurred; and (vii) neither Medicus nor any subsidiary or ERISA
Affiliate has incurred or expects to incur any liability under Title IV of ERISA
or Section 412 of the Code. With respect to each Medicus Employee Plan subject
to ERISA as either an employee pension plan within the meaning of Section 3(2)
of ERISA or an employee welfare benefit plan within the meaning of Section 3(1)
of ERISA, Medicus has prepared in good faith and timely filed all requisite
governmental reports (which were true and correct as of the date filed) and has
properly and timely filed and distributed or posted all notices and reports to
employees required to be filed, distributed or posted with respect to each such
Medicus Employee Plan, except for failures which would not have a Material
Adverse Effect on Medicus. No suit, administrative proceeding, action or other
litigation has been brought, or to the best knowledge of Medicus is threatened,
against or with respect to any such Medicus Employee Plan, including any audit
or inquiry by the IRS or United States Department of Labor. Neither Medicus nor
any Medicus subsidiary or other ERISA Affiliate is a party to, or has made any
contribution to or otherwise incurred any obligation under, any "multiemployer
plan" as defined in Section 3(37) of ERISA.
(d) With respect to each Medicus Employee Plan, Medicus and each of its
United States subsidiaries have complied with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the proposed regulations thereunder and
(ii) the applicable requirements of the Family Leave Act of 1993 and the
regulations thereunder, except to the extent that such failure to comply would
not, in the aggregate, have a Material Adverse Effect.
(e) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
Medicus, any Medicus subsidiary or any other ERISA Affiliate to severance
benefits or any other payment, except as vesting, or increase the amount of
compensation due any such employee or service provider.
(f) Except as disclosed on Schedule 2.14, there has been no amendment to,
written interpretation or announcement (whether or not written) by Medicus, any
Medicus subsidiary or other ERISA Affiliate relating to, or change in
participation or coverage under, any Medicus Employee Plan which would
materially increase the expense of maintaining such Plan above the level of
expense incurred with respect to that Plan for the most recent fiscal year
included in Medicus financial statements.
2.15 Certain Agreements Affected by the Merger. Neither the execution and
delivery of this Agreement nor the consummation of the transaction contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any director or employee of Medicus or any of its subsidiaries, (ii) materially
increase any benefits otherwise payable by Medicus or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
2.16 Employee Matters. Medicus and each of its subsidiaries are in
compliance in all respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice, except where the
failure to be in compliance or the engagement in such unfair labor practices
would not have a Material Adverse Effect on Medicus. There are no pending claims
against Medicus or any of its subsidiaries under any workers compensation plan
or policy or for long term disability. Neither Medicus nor any of its
subsidiaries has any obligations under COBRA with respect to any former
employees or qualifying beneficiaries thereunder, except for obligations that
would not have a Material Adverse Effect on Medicus. There are no controversies
pending or, to the knowledge of Medicus or any of its subsidiaries, threatened,
between Medicus or any of its subsidiaries and any of their respective
employees, which controversies have or could reasonably be expected to have a
Material Adverse Effect on Medicus. Neither Medicus nor any of its subsidiaries
is a party to any collective bargaining agreement or other labor union contract
nor does Medicus nor any of its subsidiaries know of any activities or
proceedings of any labor union to organize any such employees.
2.17 Interested Party Transactions. Except as disclosed in the Medicus SEC
Documents, neither Medicus nor any of its subsidiaries is indebted to any
director, officer, employee or agent of Medicus or any of its subsidiaries
(except for amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses), and no such person is indebted to Medicus or any of its
subsidiaries, and there have been no other transactions of the type required to
be disclosed pursuant to Items 402 and 404 of Regulation S-K under the
Securities Act and the Exchange Act since March 1, 1996.
2.18 Insurance Medicus and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of Medicus and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Medicus and its subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds. Medicus has no knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
2.19 Compliance With Laws. Each of Medicus and its subsidiaries has
complied with, are not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on Medicus.
2.20 Minute Books. The minute books of Medicus and its subsidiaries made
available to QuadraMed contain a complete and accurate summary of all meetings
of directors and stockholders or actions by written consent since the time of
incorporation of Medicus and the respective subsidiaries through the date of
this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 [Intentionally Omitted].
2.22 Brokers' and Finders' Fees. Medicus has not incurred, nor will it
incur without QuadraMed's prior written consent, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
2.23 Registration Statement; Proxy Statement/Prospectus. The information
supplied by Medicus for inclusion in the registration statement on Form S-4 (or
such other or successor form as shall be appropriate) pursuant to which the
shares of QuadraMed Common Stock to be issued in the Merger will be registered
with the SEC (the "Registration Statement") shall not at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by Medicus for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
Medicus in connection with the meeting of Medicus stockholders to consider the
Merger (the "Medicus Stockholders Meeting") (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy Statement") shall
not, on the date the Proxy Statement is first mailed to Medicus stockholders,
at the time of the Medicus Stockholders Meeting and at the Effective Time,
contain any statement which, at such time, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Medicus Stockholders Meeting which has become
false or misleading. If at any time prior to the Effective Time any event or
information should be discovered by Medicus which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Medicus shall promptly inform QuadraMed and Merger Sub. Notwithstanding the
foregoing, Medicus makes no representation, warranty or covenant with respect to
any information supplied by QuadraMed or Merger Sub which is contained in any
documents.
2.24 [Intentionally Omitted].
2.25 Vote Required. The affirmative vote of the holders of a majority of
the shares of Medicus Common Stock outstanding on the record date set for the
Medicus Stockholders Meeting is the only vote of the holders of any of Medicus
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
2.26 Board Approval. The Board of Directors of Medicus has (i) unanimously
approved this Agreement and the Merger and all transactions comtemplated hereby,
including the purchase of shares of Medicus Common Stock pursuant to the Stock
Purchase Agreements, (ii) determined that the Merger is in the best interests of
the stockholders of Medicus and is on terms that are fair to such stockholders
and (iii) recommended that the stockholders of Medicus approve this Agreement
and consummation of the Merger.
2.27 Section 203 of the DGCL Not Applicable. The Board of Directors of
Medicus has taken all actions so that the restrictions contained in Section 203
of the DGCL applicable to a "business combination" (as defined in Section 203)
will not apply to the execution, delivery or performance of this Agreement or
the consummation of the Merger or the other transactions contemplated by this
Agreement.
2.28 Customers and Suppliers. As of the date hereof, no customer which
individually accounted for more than 1% of Medicus gross revenues during the 12
month period preceding the date hereof has indicated to Medicus that it will
stop, or decrease the rate of, buying services or products of Medicus, or has at
any time on or after May 31, 1997 decreased materially its usage of the services
or products of Medicus. As of the date hereof, no material supplier of Medicus
has indicated to Medicus that it will stop, or decrease the rate of, supplying
materials, products or services to Medicus. Medicus has not knowingly breached,
so as to provide a benefit to Medicus that was not intended by the parties, any
agreement with, or engaged in any fraudulent conduct with respect to, any
customer or supplier of Medicus.
2.29 Employee Nondisclosure Agreements. Each employee of Medicus has
executed and delivered to Medicus the Standard Key Employee Nondisclosure
Agreement in the form previously delivered to QuadraMed.
2.30 Representations Complete. None of the representations or warranties
made by Medicus herein or in any Schedule hereto, including Medicus Disclosure
Schedule, or certificate furnished by Medicus pursuant to this Agreement, or the
Medicus SEC Documents, when all such documents are read together in their
entirety, contains or will contain at the Effective Time any untrue statement of
a material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF QUADRAMED AND MERGER SUB
Except as disclosed in a document of even date herewith and delivered by
QuadraMed to Medicus prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the
"QuadraMed Disclosure Schedule"), QuadraMed and Merger Sub represent and warrant
to Medicus as follows. All representations and warranties of Merger Sub set
forth below are made solely as of the Closing Date.
3.1 Organization, Standing and Power. Each of QuadraMed and its
subsidiaries, including Merger Sub, is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of QuadraMed and its subsidiaries has the corporate power to
own its properties and to carry on its business as now being conducted and is
duly qualified to do business and is in good standing in each jurisdiction in
which the failure to be so qualified and in good standing would have a Material
Adverse Effect on QuadraMed. QuadraMed has made available a true and correct
copy of the Certificate of Incorporation and Bylaws or other charter documents,
as applicable, of QuadraMed to Medicus. Neither QuadraMed nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent organizational documents. QuadraMed is the
owner of all outstanding shares of capital stock of each of its subsidiaries and
all such shares are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of each such
subsidiary are owned by QuadraMed free and clear of all liens, charges, claims
or encumbrances or rights of others. There are no outstanding subscriptions,
options, warrants, puts, calls, rights, exchangeable or convertible securities
or other commitments or agreements of any character relating to the issued or
unissued capital stock or other securities of any such subsidiary, or otherwise
obligating QuadraMed or any such subsidiary to issue, transfer, sell, purchase,
redeem or otherwise acquire any such securities. Except as disclosed in the
QuadraMed SEC Documents (as defined in Section 3.4), QuadraMed does not directly
or indirectly own any equity or similar interest in, or any interest convertible
or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
3.2 Capital Structure. Except as described in this Section 3.2, the
authorized and outstanding capital stock of QuadraMed is as set forth in the
section entitled "Description of Capital Stock" in QuadraMed's Prospectus dated
October 21, 1997 as filed with the Securities and Exchange Commission and as
previously delivered to Medicus. There are no other outstanding shares of
capital stock or voting securities of QuadraMed other than shares of QuadraMed
Common Stock issued after October 21, 1997 upon the exercise of options or
warrants. The authorized capital stock of Merger Sub consists of 1,000 shares of
Common Stock, $.01 par value, all of which are issued and outstanding and are
held by QuadraMed. All outstanding shares of QuadraMed and Merger Sub have been
duly authorized, validly issued, fully paid and are nonassessable and free of
any liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof. Other than pursuant to this Agreement, and
options or warrants that were outstanding as of October 21, 1997, there are no
other options, warrants, calls, rights, commitments or agreements of any
character to which QuadraMed or Merger Sub is a party or by which either of them
is bound obligating QuadraMed or Merger Sub to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of QuadraMed or Merger Sub or obligating QuadraMed
or Merger Sub to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement. The shares of QuadraMed Common Stock to be
issued pursuant to the Merger will be duly authorized, validly issued, fully
paid, and non-assessable.
3.3 Authority. QuadraMed and Merger Sub have all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of QuadraMed and Merger Sub. This
Agreement has been duly executed and delivered by QuadraMed and Merger Sub and
constitutes the valid and binding obligations of QuadraMed and Merger Sub. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (i) any provision of the Certificate
of Incorporation or Bylaws of QuadraMed or any of its subsidiaries, as amended,
or (ii) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to QuadraMed or any of
its subsidiaries or their properties or assets, except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions of (ii) would not have had and would not reasonably be
expected to have a Material Adverse Effect on QuadraMed. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity, is required by or with respect to QuadraMed or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
QuadraMed and Merger Sub or the consummation by QuadraMed and Merger Sub of the
transactions contemplated hereby, except for (i) the filing of the Certificate
of Merger as provided in Section 1.2, (ii) the filing with the SEC of the
Registration Statement, (iii) the filing of a Form 8-K with the SEC within 15
days after the Closing Date, (iv) any filings as may be required under
applicable state securities laws and the securities laws of any foreign country,
(v) the filing with the Nasdaq National Market of a Notification Form for
Listing of Additional Shares with respect to the shares of QuadraMed Common
Stock issuable upon conversion of the Medicus Common Stock in the Merger and
upon exercise of the options under the Medicus Stock Option Plans assumed by
QuadraMed, and (vi) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on QuadraMed and would not prevent or materially alter or delay any of
the transactions contemplated by this Agreement.
3.4 SEC Documents; Financial Statements. QuadraMed has made available to
Medicus a true and complete copy of each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act), definitive proxy statement, and other filing filed with the SEC
by QuadraMed since March 31, 1997, and, prior to the Effective Time, QuadraMed
will have furnished Medicus with true and complete copies of any additional
documents filed with the SEC by QuadraMed prior to the Effective Time
(collectively, the "QuadraMed SEC Documents"). All documents required to be
filed as exhibits to the Medicus SEC Documents have been so filed, and all
material contracts so filed as exhibits are in full force and effect, except
those which have expired in accordance with their terms, and neither QuadraMed
nor any of its subsidiaries is in default thereunder. As of their respective
filing dates, the QuadraMed SEC Documents complied in all material respects with
the requirements of the Exchange Act and the Securities Act, and none of the
QuadraMed SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed QuadraMed SEC Document. The financial statements of QuadraMed, including
the notes thereto, included in the QuadraMed SEC Documents (the "QuadraMed
Financial Statements") were complete and correct in all material respects as of
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent throughout the periods indicated and consistent with each
other (except as may be indicated in the notes thereto or, in the case of
unaudited statements included in Quarterly Reports on Form 10-Q, as permitted by
Form 10-Q of the SEC). The QuadraMed Financial Statements fairly present the
consolidated financial condition and operating results of QuadraMed and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end adjustments).
There has been no material change in QuadraMed accounting policies except as
described in the notes to the QuadraMed Financial Statements.
3.5 Absence of Certain Changes. Since June 30, 1997 (the "QuadraMed Balance
Sheet Date"), QuadraMed has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect to
QuadraMed; (ii) any acquisition, sale or transfer of any material asset of
QuadraMed or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any material change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by QuadraMed or any revaluation by QuadraMed of
any of its assets; (iv) any declaration, setting aside, or payment of a dividend
or other distribution with respect to the shares of QuadraMed, or any direct or
indirect redemption, purchase or other acquisition by QuadraMed of any of its
shares of capital stock; or (v) any negotiation or agreement by QuadraMed or any
of its subsidiaries to do any of the things described in the preceding clauses
(i) through (iv) (other than negotiations with Medicus and its representatives
regarding the transactions contemplated by this Agreement).
3.6 Absence of Undisclosed Liabilities. QuadraMed has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in QuadraMed's Quarterly Report on Form 10-Q for the
period ended June 30, 1997 (the "QuadraMed Balance Sheet"), (ii) those incurred
in the ordinary course of business and not required to be set forth in the
QuadraMed Balance Sheet under generally accepted accounting principles, and
(iii) those incurred in the ordinary course of business since the QuadraMed
Balance Sheet Date and consistent with past practice.
3.7 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of QuadraMed or any of
its subsidiaries, threatened against QuadraMed or any of its subsidiaries or any
of their respective properties or any of their respective officers or directors
(in their capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on QuadraMed. There is
no judgment, decree or order against QuadraMed or any of its subsidiaries or, to
the knowledge of QuadraMed or any of its subsidiaries, any of their respective
directors or officers (in their capacities as such) that could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on QuadraMed.
3.8 Restrictions on Business Activities. There is no material agreement,
judgment, injunction, order or decree binding upon QuadraMed or any of its
subsidiaries which has or reasonably could be expected to have the effect of
prohibiting or materially impairing any current or future business practice of
QuadraMed or any of its subsidiaries, any acquisition of property by QuadraMed
or any of its subsidiaries or the conduct of business by QuadraMed or any of its
subsidiaries as currently conducted or as proposed to be conducted by QuadraMed
or any of its subsidiaries.
3.9 Governmental Authorization. QuadraMed and each of its subsidiaries have
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (i)
pursuant to which QuadraMed or any of its subsidiaries currently operates or
holds any interest in any of its properties or (ii) that is required for the
operation of QuadraMed's or any of its subsidiaries' business or the holding of
any such interest ((i) and (ii) herein collectively called "QuadraMed
Authorizations"), and all of such QuadraMed Authorizations are in full force and
effect, except where the failure to obtain or have any of such QuadraMed
Authorizations could not reasonably be expected to have a Material Adverse
Effect on QuadraMed.
3.10 Compliance With Laws. Each of QuadraMed and its subsidiaries has
complied with, are not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on QuadraMed.
3.11 [Intentionally Omitted].
3.12 Broker's and Finders' Fees. QuadraMed has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby, other
than with respect to its arrangements with Xxxxxxxx & Company, Inc.
3.13 Registration Statement; Proxy Statement/Prospectus. The information
supplied by QuadraMed and Merger Sub for inclusion in the Registration Statement
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by QuadraMed for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to Medicus stockholders, at the time of the Medicus Stockholders
Meeting and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which it is made, not false or misleading; or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Medicus
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event or information should be discovered by QuadraMed
or Merger Sub which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, QuadraMed or Merger Sub will
promptly inform Medicus. Notwithstanding the foregoing, QuadraMed and Merger Sub
make no representation, warranty or covenant with respect to any information
supplied by Medicus which is contained in any of the foregoing documents.
3.14 Board Approval. The Board of Directors of QuadraMed has unanimously
(i) approved this Agreement and the Merger and (ii) determined that the Merger
is in the best interests of its stockholders and is on terms that are fair to
such stockholders.
3.15 Representations Complete. None of the representations or warranties
made by QuadraMed or Merger Sub herein or in any Schedule hereto, including the
QuadraMed Disclosure Schedule, or certificate furnished by QuadraMed or Merger
Sub pursuant to this Agreement, or the QuadraMed SEC Documents, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of Medicus and QuadraMed. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, each of Medicus and QuadraMed agrees
(except to the extent expressly contemplated by this Agreement or as consented
to in writing by the other), to carry on its and its subsidiaries' business in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay and to cause its subsidiaries to pay debts and
Taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other obligations when due, and to use all reasonable efforts
consistent with past practice and policies to preserve intact its and its
subsidiaries' present business organizations, use its best efforts consistent
with past practice to keep available the services of its and its subsidiaries'
present officers and key employees and use its best efforts consistent with past
practice to preserve its and its subsidiaries' relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it or its subsidiaries, to the end that its and its subsidiaries'
goodwill and ongoing businesses shall be unimpaired at the Effective Time. Each
of Medicus and QuadraMed agrees to promptly notify the other of any event or
occurrence not in the ordinary course of its or its subsidiaries' business, and
of any event which could have a Material Adverse Effect. Notwithstanding
anything in this Section 4.1 to the contrary, QuadraMed may negotiate and
consummate acquisitions of businesses or assets without providing notice to or
obtaining the consent of Medicus. Without limiting the foregoing, except as
expressly contemplated by this Agreement, neither Medicus nor QuadraMed shall
do, cause or permit any of the following, or allow, cause or permit any of its
subsidiaries to do, cause or permit any of the following, without the prior
written consent of the other:
(a) Charter Documents. Cause or permit any amendments to its Certificate of
Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. Declare or pay any dividends on or
make any other distributions (whether in cash, stock or property) in respect of
any of its capital stock, or split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, or repurchase or
otherwise acquire, directly or indirectly, any shares of its capital stock
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service to it or its subsidiaries; or
(c) Other. Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) and (b) above, or any action which would
make any of its representations or warranties contained in this Agreement untrue
or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
4.2 Conduct of Business of Medicus. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, except as expressly contemplated by this Agreement,
Medicus shall not do, cause or permit any of the following, or allow, cause or
permit any of its subsidiaries to do, cause or permit any of the following,
without the prior written consent of QuadraMed, which consent shall not be
unreasonably withheld:
(a) Material Contracts. Enter into any contract or commitment, or violate,
amend or otherwise modify or waive any of the terms of any of its contracts,
other than in the ordinary course of business consistent with past practice and
in no event shall such contract, commitment, amendment, modification or waiver
be in excess of $250,000;
(b) Issuance of Securities. Issue, deliver or sell or authorize or propose
the issuance, delivery or sale of, or purchase or propose the purchase of, any
shares of its capital stock or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other agreements or commitments of
any character obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of its Common Stock pursuant to
the exercise of stock options, warrants or other rights therefor outstanding as
of the date of this Agreement, except pursuant to the Medicus 1997 Directors'
Stock Option Plan as currently in effect.
(c) Stock Option Plans, Etc. Accelerate, amend or change the period of
exercisability or vesting of options or other rights granted under its employee
stock plans or director stock plans or authorize cash payments in exchange for
any options or other rights granted under any of such plans.
(d) Intellectual Property. Transfer to any person or entity any rights to
its Intellectual Property other than in the ordinary course of business
consistent with past practice;
(e) Exclusive Rights. Enter into or amend any agreements pursuant to which
any other party is granted exclusive marketing or other exclusive rights of any
type or scope with respect to any of its products or technology;
(e) Dispositions. Sell, lease, license or otherwise dispose of or encumber
any of its properties or assets which are material, individually or in the
aggregate, to its and its subsidiaries' business, taken as a whole, except in
the ordinary course of business consistent with past practice;
(g) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;
(h) Leases. Enter into any operating lease in excess of an aggregate of
$10,000;
(i) Payment of Obligations. Pay, discharge or satisfy in an amount in
excess of $10,000 in any one case or $100,000 in the aggregate, any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Medicus Financial Statements;
(j) Capital Expenditures. Make any capital expenditures, capital additions
or capital improvements except in the ordinary course of business and consistent
with past practice;
(k) Insurance. Materially reduce the amount of any material insurance
coverage provided by existing insurance policies;
(l) Employee Benefit Plans; New Hires; Pay Increases. Adopt or amend any
employee benefit or stock purchase or option plan, or hire any new director
level or officer level employee (except that it may hire a replacement for any
current director level or officer level employee if it first provides QuadraMed
advance notice regarding such hiring decision), pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of its employees;
(m) Severance Arrangements. Grant any severance or termination pay (i) to
any director or officer or (ii) to any other employee except (A) payments made
pursuant to standard written agreements outstanding on the date hereof or (B)
grants which are made in the ordinary course of business in accordance with its
standard past practice;
(n) Lawsuits. Commence a lawsuit other than (i) for the routine collection
of bills, (ii) in such cases where it in good faith determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that it consults with QuadraMed prior to the filing of
such a suit, or (iii) for a breach of this Agreement;
(n) Acquisitions. Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to its
and its subsidiaries' business, taken as a whole, or acquire or agree to acquire
any equity securities of any corporation, partnership, association or business
organization;
(p) Taxes. Other than in the ordinary course of business, make or change
any material election in respect of Taxes, adopt or change any accounting method
in respect of Taxes, file any material Tax Return or any amendment to a material
Tax Return, enter into any closing agreement, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(q) Notices. Fail to give all notices and other information required to be
given to the employees of Medicus, any collective bargaining unit representing
any group of employees of Medicus, and any applicable government authority under
the WARN Act, the National Labor Relations Act, the Internal Revenue Code, the
Consolidated Omnibus Budget Reconciliation Act, and other applicable law in
connection with the transactions provided for in this Agreement;
(r) Revaluation. Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business; or
(s) Other. Take or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through (r) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing 4.3 No Solicitation. Medicus
and its subsidiaries and the officers, directors, employees or other agents of
Medicus and its subsidiaries will not, directly or indirectly, (i) take any
action to solicit, initiate or encourage any Takeover Proposal (defined below)
or (ii) subject to the terms of the immediately following sentence, engage in
negotiations with, or disclose any nonpublic information relating to Medicus or
any of it subsidiaries to, or afford access to the properties, books or records
of Medicus or any of its subsidiaries to, any person that has advised Medicus
that it may be considering making, or that has made, a Takeover Proposal;
provided, however, that nothing herein shall prohibit Medicus Board of
Directors from taking and disclosing to Medicus stockholders a position with
respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act. Notwithstanding the immediately preceding sentence, if an
unsolicited Takeover Proposal, or an unsolicited written expression of interest
that can reasonably be expected to lead to a Takeover Proposal, shall be
received by the Board of Directors of Medicus, then, to the extent the Board of
Directors of Medicus believes in good faith (after consultation with its
financial advisor) that such Takeover Proposal would, if consummated, result in
a transaction more favorable to Medicus stockholders from a financial point of
view than the transaction contemplated by the Agreement (any such more favorable
Takeover Proposal being referred to in this Agreement as a "Superior Proposal")
and the Board of Directors of Medicus determines in good faith after
consultation with outside legal counsel that it is necessary for the Board of
Directors of Medicus to comply with its fiduciary duties to stockholders under
applicable law, Medicus and its officers, directors, employees, investment
bankers, financial advisors, attorneys, accountants and other representatives
retained by it may furnish in connection therewith information and take such
other actions as are consistent with the fiduciary obligations of Medicus Board
of Directors, and such actions shall not be considered a breach of this Section
4.3 or any other provisions of this Agreement, provided that in each such event
Medicus notifies QuadraMed of such determination by the Medicus Board of
Directors and provides QuadraMed with a true and complete copy of the Superior
Proposal received from such third party, if the Superior Proposal is in writing,
or a complete written summary thereof, if it is not in writing, and provides
QuadraMed with all documents containing or referring to non-public information
of Medicus that are supplied to such third party; provided further, that (A) the
Board of Directors of Medicus has determined, with the advice of Medicus
investment bankers, that such third party is capable of making a Superior
Proposal upon satisfactory completion of such third party's review of the
information supplied by Medicus, (B) the third party has stated that it intends
to make a Superior Proposal, (C) Medicus may not provide any non-public
information to any such third party if it has not prior to the date thereof
provided such information to QuadraMed or QuadraMed's representatives, (D)
Medicus notifies QuadraMed in advance of any disclosure of non-public
information to any such third party, with a description of the information
proposed to be disclosed, and (E) Medicus provides such non-public information
pursuant to a non-disclosure agreement at least as restrictive as the
Confidentiality Agreement (as defined in Section 5.4). Medicus will promptly
notify QuadraMed after receipt of any Takeover Proposal or any notice that any
person is considering making a Takeover Proposal or any request for non-public
information relating to Medicus or any of its subsidiaries or for access to the
properties, books or records of Medicus or any of its subsidiaries by any person
that has advised Medicus that it may be considering making, or that has made, a
Takeover Proposal and will keep QuadraMed fully informed of the status and
details of any such Takeover Proposal notice, request or any correspondence or
communications related thereto and shall provide QuadraMed with a true and
complete copy of such Takeover Proposal notice or request or correspondence or
communications related thereto, if it is in writing, or a complete written
summary thereof, if it is not in writing. For purposes of this Agreement,
"Takeover Proposal" means any offer or proposal for, or any indication of
interest in, a merger or other business combination involving Medicus or any of
its subsidiaries or the acquisition of any significant equity interest in, or a
significant portion of the assets of, Medicus or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement. As promptly as
practicable after the execution of this Agreement, Medicus and QuadraMed shall
prepare, and Medicus shall file with the SEC, preliminary proxy materials
relating to the approval of the Merger and the transactions contemplated hereby
by the stockholders of Medicus and, as promptly as practicable following receipt
of SEC comments thereon, QuadraMed shall file with the SEC a Registration
Statement on Form S-4 (or such other or successor form as shall be appropriate),
which complies in form with applicable SEC requirements and shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon thereafter as practicable. Subject to the provisions of Section 4.3, the
Proxy Statement shall include the recommendation of the Board of Directors of
Medicus in favor of the Merger; provided that such recommendation may not be
included or may be withdrawn if previously included if Medicus Board of
Directors believes in good faith that a Superior Proposal has been made and,
upon written advice of its outside legal counsel, shall determine that to
include such recommendation or not withdraw such recommendation if previously
included would constitute a breach of the Board's fiduciary duty under
applicable law.
5.2 Meeting of Stockholders.
(a) Medicus shall promptly after the date hereof take all action necessary
in accordance with the DGCL and its Certificate of Incorporation and Bylaws to
convene the Medicus Stockholders Meeting within 45 days of the Registration
Statement being declared effective by the SEC. Medicus shall consult with
QuadraMed regarding the date of the Medicus Stockholders Meeting and use all
reasonable efforts and shall not postpone or adjourn (other than for the absence
of a quorum) the Medicus Stockholders Meeting without the consent of QuadraMed.
Subject to Section 5.1, Medicus shall use its best efforts to solicit from
stockholders of Medicus proxies in favor of the Merger and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required to effect the Merger.
(b) QuadraMed shall vote or cause to be voted all shares of Medicus Common
Stock owned by QuadraMed in favor of the Merger.
5.3 Access to Information.
(a) Medicus shall afford QuadraMed and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of Medicus and its subsidiaries'
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of Medicus and its
subsidiaries as QuadraMed may reasonably request. Medicus agrees to provide to
QuadraMed and its accountants, counsel and other representatives copies of
internal financial statements promptly upon request. QuadraMed shall afford
Medicus and its accountants, counsel and other representatives, reasonable
access during normal business hours during the period prior to the Effective
Time to (i) all of QuadraMed's and its subsidiaries' properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel of QuadraMed and its subsidiaries as
Medicus may reasonably request. QuadraMed agrees to provide to Medicus and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request.
(b) Subject to compliance with applicable law, from the date hereof until
the Effective Time, each of QuadraMed and Medicus shall confer on a regular and
frequent basis with one or more representatives of the other party to report
operational matters of materiality and the general status of ongoing operations.
(c) No information or knowledge obtained in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger.
5.4 Confidentiality. The parties acknowledge that each of QuadraMed and
Medicus has previously executed a non-disclosure agreement (the "Confidentiality
Agreement"), which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
QuadraMed and Medicus shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD.
5.6 Consents; Cooperation. Each of QuadraMed and Medicus shall use its best
efforts to obtain all necessary consents, waivers and approvals under any of its
material contracts in connection with the Merger for the assignment thereof or
otherwise.
5.7 Affiliate Agreements. Schedule 5.7 sets forth those persons who may be
deemed "Affiliates" of Medicus within the meaning of Rule 145 promulgated under
the Securities Act ("Rule 145"). Medicus shall provide QuadraMed such
information and documents as QuadraMed shall reasonably request for purposes of
reviewing such list. Medicus shall use its best efforts to deliver or cause to
be delivered to QuadraMed, concurrently with the execution of this Agreement
(and in each case prior to the Effective Time) from each of the Affiliates of
Medicus, an executed Affiliate Agreement in the form attached hereto as Exhibit
A. QuadraMed and Merger Sub shall be entitled to place appropriate legends on
the certificates evidencing any QuadraMed Common Stock to be received by such
Affiliates of Medicus pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for QuadraMed
Common Stock, consistent with the terms of such Affiliates Agreements.
5.8 [Intentionally Omitted].
5.9 Legal Requirements. Each of QuadraMed, Merger Sub and Medicus will, and
will cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or other person, required to be obtained or made
in connection with the taking of any action contemplated by this Agreement.
5.10 Blue Sky Laws. QuadraMed shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the QuadraMed Common Stock in connection with the
Merger. Medicus shall use its best efforts to assist QuadraMed as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of QuadraMed Common Stock
in connection with the Merger.
5.11 Treatment of Employee Benefit Plans and Outstanding Warrants.
(a) At the Effective Time, the Medicus Stock Option Plans and each
outstanding option to purchase shares of Medicus Common Stock under the Medicus
Stock Option Plans, whether vested or unvested, the Xxxxxxx Warrants and the
TriHealth Warrant will be assumed by QuadraMed. Schedule 5.11 hereto sets forth
a true and complete list as of the date hereof of all holders of outstanding
options under the Medicus Stock Option Plans, including the number of shares of
Medicus capital stock subject to each such option, the exercise or vesting
schedule, the exercise price per share and the term of each such option. On the
Closing Date, Medicus shall deliver to QuadraMed an updated Schedule 5.11 hereto
current as of such date.
(b) Each such option so assumed by QuadraMed under this Agreement shall
continue to have, and be subject to, the same terms and conditions set forth in
the Medicus Stock Option Plans, and each of the Xxxxxxx Warrants and the
TriHealth Warrant shall continue to have, and be subject to, the same terms and
conditions set forth therein, immediately prior to the Effective Time, except
that (i) each such option and each such warrant will be exercisable for that
number of whole shares of QuadraMed Common Stock equal to the product of the
number of shares of Medicus Common Stock that were issuable upon exercise of
such option or warrant immediately prior to the Effective Time multiplied by
0.3565 and rounded down to the nearest whole number of shares of QuadraMed
Common Stock, and (ii) the per share exercise price for the shares of QuadraMed
Common Stock issuable upon exercise of such assumed option or warrant will be
equal to the quotient determined by dividing the exercise price per share of
Medicus Common Stock at which such option or warrant was exercisable immediately
prior to the Effective Time by 0.3565, rounded up to the nearest whole cent.
(c) Consistent with the terms of the Medicus Stock Option Plans and the
documents governing the outstanding options under those Plans, the Merger will
not terminate any of the outstanding options under such Plans or accelerate the
exercisability or vesting of such options or the shares of QuadraMed Common
Stock which will be subject to those options upon the QuadraMed's assumption of
the options in the Merger. Within 10 business days after the Effective Time,
QuadraMed will issue to each person who, immediately prior to the Effective Time
was a holder of an outstanding option under the Medicus Stock Option Plans a
document in form and substance satisfactory to Medicus evidencing the foregoing
assumption of such option by QuadraMed.
(d) For purposes of QuadraMed employee benefit plans, Medicus employees
will receive full credit for years of service with Medicus.
5.12 Letter of QuadraMed's and Medicus Accountants.
(a) QuadraMed shall use all reasonable efforts to cause to be delivered to
Medicus a Procedures Letter of QuadraMed's independent auditors, dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to Medicus, in form reasonably satisfactory
to Medicus and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
(b) Medicus shall use all reasonable efforts to cause to be delivered to
QuadraMed a Procedures Letter of Medicus independent auditors, dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to QuadraMed, in form reasonably
satisfactory to QuadraMed and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
5.13 Form S-8. QuadraMed agrees to file, no later than thirty (30) days
after the Closing, a registration statement on Form S-8 covering the shares of
QuadraMed Common Stock issuable pursuant to outstanding options under the
Medicus Stock Option Plans assumed by QuadraMed and the shares of QuadraMed
Common Stock issuable pursuant to the Xxxxxxx Warrants. Medicus shall cooperate
with and assist QuadraMed in the preparation of such registration statement.
5.14 Listing of Additional Shares. Prior to the Effective Time, QuadraMed
shall file with the Nasdaq National Market a Notification Form for Listing of
Additional Shares with respect to the shares referred to in Section 6.1(e).
5.15 Nasdaq Quotation. Medicus and QuadraMed agree to continue the
quotation of Medicus Common Stock and QuadraMed Common Stock, respectively, on
the Nasdaq National Market during the term of the Agreement.
5.16 Indemnification.
(a) After the Effective Time, QuadraMed will, and will cause the Surviving
Corporation to, indemnify and hold harmless the present and former officers,
directors, employees and agents of Medicus (the "Indemnified Parties") in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent permitted by law and to the extent provided under Medicus' Certificate of
Incorporation and Bylaws or any indemnification agreement with Medicus' officers
and directors to which Medicus is a party, in each case in effect on the date
hereof; provided, however, that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. Without limitation of
the foregoing, in the event any such Indemnified Party is or becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter relating to this Agreement or the transactions contemplated hereby
occurring on or prior to the Effective Time, QuadraMed shall, or shall cause the
Surviving Corporation to, pay as incurred such Indemnified Party's reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith to the extent permitted by law and
to the extent provided under Medicus' Certificate of Incorporation and Bylaws or
the indemnification agreement with such Indemnified Party.
(b) For two years after the Effective Time, QuadraMed will, or will cause
the Surviving Corporation to, use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring on or
prior to the Effective Time covering each such person currently covered by
Medicus' officers' and directors' liability insurance policy on terms
substantially similar to those of such policy in effect on the date hereof ;
provided, however, that in satisfying its obligation under this Section 5.16,
QuadraMed shall not be obligated to, or to cause the Surviving Corporation to,
pay premiums in excess of 150% of the amount per annum Medicus paid in its last
full fiscal year, which amount has been disclosed to QuadraMed, and if the
Surviving Corporation is unable to obtain the insurance required by this Section
5.16, it shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount.
(c) To the extent there is any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time) against an
Indemnified Party that arises out of or pertains to any action or omission in
his or her capacity as a director, officer, employee, fiduciary or agent of
Medicus occurring prior to the Effective Time, or arises out of or pertains to
the transactions contemplated by this Agreement for a period of two years after
the Effective Time (whether arising before or after the Effective Time), such
Indemnified Party shall be entitled to be represented by counsel and following
the Effective Time (i) any counsel retained by the Indemnified Parties shall be
reasonably satisfactory to the Surviving Corporation and QuadraMed, (ii) the
Surviving Corporation and QuadraMed shall pay the reasonable fees and expenses
of such counsel, promptly after statements therefor are received and (iii) the
Surviving Corporation and QuadraMed will cooperate in the defense of any such
matter; provided, however, that neither the Surviving Corporation nor QuadraMed
shall be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld); and provided, further, however,
that in the event that any claim or claim for indemnification are asserted or
made within such two-year period, all rights to indemnification in respect of
any such claim or claims shall continue until the disposition of any and all
such claims. The Indemnified Parties as a group may retain only one law firm (in
addition to local counsel) to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any tow or more Indemnified
Parties.
(d) The provisions of this Section 5.16 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
5.17 Reasonable Best Efforts and Further Assurances. Each of the parties to
this Agreement shall use its reasonable best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the holders of a majority of the shares of Medicus
Common Stock outstanding as of the record date set for the Medicus Stockholders
Meeting.
(b) Registration Statement Effective. The SEC shall have declared the
Registration Statement effective. No stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement, shall have been initiated or threatened by the SEC; and all requests
for additional information on the part of the SEC shall have been complied with
to the reasonable satisfaction of the parties hereto.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party agrees to use its
reasonable diligent efforts to have such injunction or other order lifted.
(c) Governmental Approval. QuadraMed, Medicus and Merger Sub and their
respective subsidiaries shall have timely obtained from each Governmental Entity
all approvals, waivers and consents, if any, necessary for consummation of or in
connection with the Merger and the several transactions contemplated hereby,
including such approvals, waivers and consents as may be required under the
Securities Act and under state Blue Sky laws.
(d) Listing of Additional Shares. The filing with the Nasdaq National
Market of a Notification Form for Listing of Additional Shares with respect to
the shares of QuadraMed Common Stock issuable upon conversion of the Medicus
Common Stock in the Merger and upon exercise of the options under the Medicus
Stock Option Plans assumed by QuadraMed shall have been made.
6.2 Additional Conditions to Obligations of Medicus. The obligations of
Medicus to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by Medicus:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of QuadraMed and Merger Sub in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality which
representations and warranties as so qualified shall be true in all respects) on
and as of the Effective Time as though such representations and warranties were
made on and as of such time and (ii) QuadraMed and Merger Sub shall have
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by
them as of the Effective Time.
(b) Certificate of QuadraMed. Medicus shall have been provided with a
certificate executed on behalf of QuadraMed by its President and its Chief
Financial Officer to the effect that, as of the Effective Time:
(i) all representations and warranties made by QuadraMed and Merger Sub
under this Agreement are true and complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement to be
performed by QuadraMed and Merger Sub on or before such date have been so
performed in all material respects.
(c) No Material Adverse Changes. There shall not have occurred any material
adverse change in the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations, results of
operations or prospects of QuadraMed and its subsidiaries, taken as a whole.
(d) Third Party Consents. Medicus shall have been furnished with evidence
satisfactory to it of the consent or approval of those persons whose consent or
approval shall be required in connection with the Merger under any material
contract of QuadraMed or any of its subsidiaries or otherwise.
(e) Injunctions or Restraints on Conduct of Business. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint
provision limiting or restricting QuadraMed's business following the Merger
shall be in effect, nor shall any proceeding brought by an administrative agency
or commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.
6.3 Additional Conditions to the Obligations of QuadraMed and Merger Sub.
The obligations of QuadraMed and Merger Sub to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by QuadraMed:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of Medicus in this Agreement shall be true and correct in all
material respects (except for such representations and warranties that are
qualified by their terms by a reference to materiality, which representations
and warranties as so qualified shall be true in all respects) on and as of the
Effective Time as though such representations and warranties were made on and as
of such time and (ii) Medicus shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it as of the Effective Time.
(b) Certificate of Medicus. QuadraMed shall have been provided with a
certificate executed on behalf of Medicus by its President and its Chief
Financial Officer to the effect that, as of the Effective Time:
(i) all representations and warranties made by Medicus under this Agreement
are true and complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement to be
performed by Medicus on or before such date have been so performed in all
material respects.
(c) Third Party Consents. QuadraMed shall have been furnished with evidence
satisfactory to it of the consent or approval of those persons whose consent or
approval shall be required in connection with the Merger under any material
contract of Medicus or any of its subsidiaries or otherwise.
(d) Injunctions or Restraints on Conduct of Business. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint
provision limiting or restricting QuadraMed's conduct or operation of the
business of Medicus and its subsidiaries, following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.
(e) No Material Adverse Changes. There shall not have occurred any material
adverse change in the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations, results of
operations or prospects of Medicus and its subsidiaries, taken as a whole.
(f) Affiliate Agreements. QuadraMed shall have received from each of the
Affiliates of Medicus an executed Affiliate Agreement in substantially the form
attached hereto as Exhibit A.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. At any time prior to the Effective Time, whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Medicus, this Agreement may be terminated:
(a) by mutual consent of QuadraMed and Medicus;
(b) by either QuadraMed or Medicus, if, without fault of the terminating
party, the Closing shall not have occurred on or before May 1, 1998 (or such
later date as may be agreed upon in writing by the parties hereto);
(c) by QuadraMed, if (i) Medicus shall breach any of its representations,
warranties or obligations hereunder and such breach shall not have been cured
within ten business days of receipt by Medicus of written notice of such breach
or (ii) the Board of Directors of Medicus shall have withdrawn or modified its
recommendation of this Agreement or the Merger in a manner adverse to QuadraMed
or shall have resolved to do any of the foregoing;
(d) by Medicus, if QuadraMed shall breach any of its representations,
warranties or obligations hereunder and such breach shall not have been cured
within ten days following receipt by QuadraMed of written notice of such breach;
(e) by either QuadraMed or Medicus if (i) any permanent injunction or other
order of a court or other competent authority preventing the consummation of the
Merger shall have become final and nonappealable or (ii) if any required
approval of the stockholders of Medicus shall not have been obtained by reason
of the failure to obtain the required vote upon a vote held at a duly held
meeting of stockholders or at any adjournment thereof.
7.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of QuadraMed, Merger Sub or
Medicus or their respective officers, directors, stockholders or affiliates,
except to the extent that such termination results from the breach by a party
hereto of any of its representations, warranties or covenants set forth in this
Agreement; provided that, the provisions of Section 5.4 (Confidentiality),
Section 7.3 (Expenses) and this Section 7.2 shall remain in full force and
effect and survive any termination of this Agreement.
7.3 Expenses.
(a) Subject to subsections (b), (c) and (d) of this Section 7.3, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisers, accountants and legal
counsel) shall be paid by the party incurring such expense, except that expenses
incurred in connection with printing the Proxy Materials and the Registration
Statement, registration and filing fees incurred in connection with the
Registration Statement, the Proxy Materials and the listing of additional shares
pursuant to Section 6.1(e) and fees, costs and expenses associated with
compliance with applicable state securities laws in connection with the Merger
shall be paid by QuadraMed.
(b) In the event that (i) QuadraMed shall terminate this Agreement pursuant
to Section 7.1(c) or (ii) QuadraMed shall terminate this Agreement pursuant to
Section 7.1(e)(ii) (but only in the event that all of the shares owned by
QuadraMed are voted in favor of the Merger), Medicus shall promptly reimburse
QuadraMed for all of the out-of-pocket costs and expenses incurred by QuadraMed
in connection with this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of its advisors,
accountants and legal counsel).
7.4 Amendment. The boards of directors of the parties hereto may cause this
Agreement to be amended at any time by execution of an instrument in writing
signed on behalf of each of the parties hereto; provided that an amendment made
subsequent to adoption of the Agreement by the stockholders of Medicus or Merger
Sub shall not (i) alter or change the amount or kind of consideration to be
received on conversion of the Medicus Common Stock, (ii) alter or change any
term of the Certificate of Incorporation of the Surviving Corporation to be
effected by the Merger, or (iii) alter or change any of the terms and conditions
of the Agreement if such alteration or change would adversely affect the holders
of Medicus Common Stock or Merger Sub Common Stock.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival at Effective Time. The representations, warranties and
agreements set forth in this Agreement shall terminate at the Effective Time,
except that the agreements set forth in Article I, Section 5.4
(Confidentiality), 5.7 (Affiliates), 5.11 (Employee Benefit Plans), 5.13 (Form
S-8), 5.19 (Best Efforts and Further Assurances), 7.3 (Expenses), 7.4
(Amendment), and this Article VIII shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
(a) if to QuadraMed or Merger Sub, to:
QuadraMed Corporation
00 X. Xxx Xxxxxxx Xxxxx Xxxx., Xxxxx 0X
Xxxxxxxx, XX 00000
Attention:Xxxxx X. Xxxxxxx, Esq.
Vice President and General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Medicus, to:
Medicus Systems Corporation
Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention:Xxxxxxx Xxxxxxx, President and CEO
Facsimile No: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxx, Xxxx & Xxxxx
Three First National Plaza
00 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3 Interpretation. When a reference is made in this Agreement to Exhibits
or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to November , 1997.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Nonassignability; Parties in Interest. This Agreement
and the documents and instruments and other agreements specifically referred to
herein or delivered pursuant hereto, including the Exhibits, the Schedules,
including the Medicus Disclosure Schedule and the QuadraMed Disclosure Schedule
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth in Sections
1.6(a)-(c) and (f), 1.7-1.9, 5.11 and 5.14; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
8.6 Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 Remedies Cumulative. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any court located within
the State of Delaware in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein, agrees that process may be
served upon them in any manner authorized by the laws of the State of Delaware
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
IN WITNESS WHEREOF, Medicus and QuadraMed have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized,
all as of the date first written above.
MEDICUS SYSTEMS CORPORATION
By _______________________________
Name:
Title:
QUADRAMED CORPORATION
By _______________________________
Name:
Title:
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
