1
================================================================================
EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
BY AND AMONG
PER-SE TECHNOLOGIES, INC.,
HEALTH DATA SERVICES, INC.,
VIRTUAL INFORMATION SYSTEMS, INC.,
AND
XXXX X. XXXXXXX AND XXXXXXX X. XXXXX
DATED EFFECTIVE AS OF APRIL 27, 2001
================================================================================
2
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS..............................................................................................1
2. ACQUISITION OF ACQUIRED ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES....................................12
2.1. Calculation of Estimated Net Working Capital of the Company....................................12
2.2. Purchase and Sale of Acquired Assets; Assumption of Liabilities................................12
2.3. Asset Purchase Consideration...................................................................12
2.4. Payment of Asset Purchase Consideration........................................................13
2.5. Time and Place of Closing......................................................................13
2.6. Deliveries at the Closing......................................................................13
2.7. Minimum Net Working Capital Adjustment to Asset Purchase Consideration.........................14
2.8. Earn-Out Payment...............................................................................15
2.9. Allocation of Asset Purchase Consideration.....................................................17
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OWNERS............................................17
3.1. Organization and Good Standing.................................................................18
3.2. Authority; No Conflict.........................................................................18
3.3. Financial Statements...........................................................................19
3.4. Books and Records..............................................................................19
3.5. Title to Properties; Security Interests........................................................20
3.6. Condition and Sufficiency of Assets............................................................20
3.7. Accounts Receivable............................................................................20
3.8. No Undisclosed Liabilities.....................................................................20
3.9. Taxes..........................................................................................21
3.10. No Material Adverse Change.....................................................................21
3.11. Employee Benefits..............................................................................22
3.12. Compliance with Legal Requirements; Governmental Authorizations................................23
3.13. Legal Proceedings; Orders......................................................................24
3.14. Absence of Certain Changes and Events..........................................................24
3.15. Contracts; No Defaults.........................................................................25
3.16. Insurance......................................................................................27
3.17. Environmental Matters..........................................................................28
3.18. Real Property..................................................................................29
3.19. Employees......................................................................................30
3.20. Labor Relations; Compliance....................................................................31
3.21. Intellectual Property..........................................................................31
3.22. Software.......................................................................................33
3.23. No Infringement................................................................................35
3.24. Certain Payments...............................................................................35
3.25. Disclosure.....................................................................................36
3.26. Relationships with Related Persons.............................................................36
3.27. Brokers or Finders.............................................................................36
3
3.28. Charter Provisions, Etc........................................................................36
4. REPRESENTATIONS AND WARRANTIES OF PER-SE AND THE PURCHASER..............................................36
4.1. Organization and Good Standing.................................................................37
4.2. Authority; No Conflict.........................................................................37
4.3. Certain Proceedings............................................................................37
4.4. Brokers or Finders.............................................................................38
5. COVENANTS...............................................................................................38
5.1. Access and Investigation.......................................................................38
5.2. Operation of the Business of the Company.......................................................38
5.3. Negative Covenant..............................................................................39
5.4. Required Approvals.............................................................................39
5.5. Indebtedness...................................................................................39
5.6. Company Plans..................................................................................39
5.7. No Negotiation.................................................................................39
5.8. Best Efforts...................................................................................40
5.9. Confidentiality................................................................................40
5.10. Litigation Support.............................................................................40
5.11. Transition.....................................................................................40
5.12. Assignment of Interests in Acquired Assets.....................................................41
5.13. Use of Company Name............................................................................41
5.14. Tax Matters....................................................................................41
6. CONDITIONS PRECEDENT TO PER-SE'S AND THE PURCHASER'S OBLIGATION TO CLOSE................................42
6.1. Accuracy of Representations....................................................................42
6.2. Performance of Company and Owners..............................................................42
6.3. Consents.......................................................................................43
6.4. Release of Security Interests..................................................................43
6.5. Additional Documents...........................................................................43
6.6. No Proceedings.................................................................................44
6.7. Termination of Company Plans...................................................................44
6.8. No Claim Regarding Ownership or Sale Proceeds..................................................44
6.9. No Prohibition.................................................................................44
6.10. Due Diligence..................................................................................44
7. CONDITIONS PRECEDENT TO THE COMPANY'S AND THE OWNERS' OBLIGATION TO CLOSE...............................45
7.1. Accuracy of Representations....................................................................45
7.2. Per-Se's and Purchaser's Performance...........................................................45
7.3. Additional Documents...........................................................................45
7.4. No Injunction..................................................................................46
8. TERMINATION.............................................................................................46
8.1. Termination Events.............................................................................46
8.2. Effect of Termination..........................................................................46
ii
4
9. INDEMNIFICATION; REMEDIES...............................................................................47
9.1. Survival.......................................................................................47
9.2. Indemnification and Payment of Damages by the Company and the Owners...........................47
9.3. Indemnification and Payment of Damages by Per-Se and Purchaser.................................47
9.4. Time Limitations...............................................................................48
9.5. Limitations on Amount - Company and Owners.....................................................48
9.6. Limitations on Amount - Per-Se and Purchaser...................................................48
9.7. Procedure for Indemnification -- Third Party Claims............................................49
9.8. Procedure for Indemnification -- Other Claims..................................................50
10. GENERAL PROVISIONS......................................................................................50
10.1. Expenses.......................................................................................50
10.2. Public Announcements...........................................................................50
10.3. Notices........................................................................................50
10.4. Jurisdiction; Service of Process...............................................................51
10.5. Further Assurances.............................................................................52
10.6. Waiver.........................................................................................52
10.7. Entire Agreement and Modification..............................................................52
10.8. Disclosure Schedule............................................................................52
10.9. Assignments, Successors, and No Third-Party Rights.............................................53
10.10. Severability...................................................................................53
10.11. Section Headings; Construction.................................................................53
10.12. Time of Essence................................................................................53
10.13. Governing Law..................................................................................53
10.14. Counterparts...................................................................................53
10.15. Arbitration....................................................................................53
EXHIBITS
Exhibit A Purchase Price Allocation
Exhibit B Form of Employment Agreement
Exhibit C Form of Noncompetition and Assignment and Inventions Agreement
Exhibit D Form of Release Agreement
Exhibit E Required Consents
Exhibit F Form of Opinion of Xxxxxx, Xxxxxxxxx & XxXxxxx, P.S.C.
Exhibit G Form of Landlord Estoppel Certificate
Exhibit H Form of Opinion of Powell, Goldstein, Xxxxxx & Xxxxxx LLP
Exhibit H Form of Opinion of Xxxxxx X. Xxxxx, Xx.
iii
5
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated effective as
of April 27, 2001, by and among PER-SE TECHNOLOGIES, INC., a Delaware
corporation ("Per-Se"), HEALTH DATA SERVICES, INC., an Ohio corporation
("Purchaser"), VIRTUAL INFORMATION SYSTEMS, INC., an Ohio corporation (the
"Company"), XXXX X. XXXXXXX, an individual resident of the State of Ohio
("Xxxxxxx"), and XXXXXXX X. XXXXX, an individual resident of the State of Ohio
("Xxxxx") (Xxxxxxx and Xxxxx are each a "Owner" and collectively, the "Owners").
Per-Se, the Purchaser, the Company, and the Owners are collectively referred to
herein as the "Parties".
RECITALS
The Company is in the business of providing client/server software for
remittance processing automation and cash reconciliation tracking for hospitals
and physician groups.
The Owners are the holders of all of the issued and outstanding capital
stock of the Company.
This Agreement contemplates a transaction in which the Company shall
sell, transfer, assign and deliver to the Purchaser substantially all of the
assets owned or used by, and certain of the liabilities of, the Company, and the
Purchaser shall purchase and accept such assets, and assume such liabilities,
and in connection therewith, the Company will receive consideration in the form
of cash.
AGREEMENT
In consideration of the premises and the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACCOUNTANTS" - as defined in Section 2.7(c).
"ACCOUNTS RECEIVABLE" - as defined in Section 3.7.
"ACQUIRED ASSETS" -- all right, title, and interest in and to all of
the assets of the Company used or usable in the conduct of the Business of the
Company (except for those assets described below as Excluded Assets), including,
without limitation, all of the Company's right, title and interest in and to:
(a) all leases with respect to the Leased Real Property,
and all improvements, fixtures, and fittings thereon, and easements,
rights-of-way, and other appurtenants with respect thereto (such as appurtenant
rights in and to public streets);
6
(b) all tangible personal property (such as machinery,
equipment, inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, automobiles, trucks,
tractors, trailers, and the like);
(c) all Intellectual Property Assets, goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions;
(d) all Owned Software and all Licensed Software;
(e) all agreements (including but not limited to
employment agreements, confidentiality agreements, and noncompetition
agreements), contracts, leases (other than the real property leases), personal
property leases, subleases, and rights thereunder (the "ASSUMED CONTRACTS");
(f) all insurance policies of the Company;
(g) any current asset of the Company relating to the
operation of the Company prior to the Closing Date, including but not limited to
Cash (but excluding Cash not needed to satisfy the minimum Net Working Capital
requirement set forth in Section 2.7 and Cash in the Company's payroll account
as of the Closing Date necessary to satisfy the Company's payroll obligations to
its employees up to and through the Closing Date), accounts receivables,
inventories, prepaid expenses, and other current assets;
(h) all claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set off, and rights of
recoupment;
(i) all franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies;
(j) all books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies, reports, and
other printed or written materials relating to the Business, except those
excluded below as Excluded Assets; and
(k) all goodwill and similar intangible property of the
Company.
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Acquired Assets shall
not include (the following shall be referred to as the "EXCLUDED ASSETS"):
(i) any rights or interests in and with respect
to any Company Plan;
(ii) any rights or interests in any indentures,
mortgages, lines of credit, instruments, security interests,
guaranties, other similar arrangements constituting
Indebtedness, and rights thereunder, of the Company (the
"EXCLUDED CONTRACTS");
2
7
(iii) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, stock
transfer books, blank stock certificates, original Tax Returns
and other documents relating to the organization, maintenance,
and existence of the Company as a corporation;
(iv) any and all of the rights of the Company
under this Agreement; or
(v) any right, title, or interest in and to the
Company's payroll account.
"ACTUAL EBITDA" - as defined in Section 2.8(c).
"AFFILIATE" - used to indicate a relationship to a specified person,
firm, corporation, partnership, limited liability company, association or
entity, and means any person, firm, corporation, partnership, limited liability
company, association or entity that, directly or indirectly or through one or
more intermediaries, controls, is controlled by or is under common control with
such person, firm, corporation, partnership, limited liability company,
association or entity.
"ARBITRATOR" - as defined in Section 2.7(c).
"ASSET PURCHASE CONSIDERATION" - as defined in Section 2.3.
"ASSUMED LIABILITIES" -- (except to the extent such liabilities are
expressly excluded as Excluded Liabilities described below):
(a) those current Liabilities of the Company which are
reflected as current liabilities on the Closing Date Balance Sheet;
(b) Liabilities of the Company as tenant arising under
the leases for the Leased Real Property set forth on Schedule 1(a) with
respect to performance obligations that arise and become due and owing
following the Closing, which Liabilities relate to the conduct of the
business of the Purchaser with respect to such leases for the Leased
Real Property after the Closing Date, and which do not relate to the
conduct of the Business prior to the Closing Date; and
(c) all Liabilities of the Company with respect to
performance obligations that arise and become due and owing following
the Closing under those Assumed Contracts set forth on Schedule 1(b),
which Liabilities relate to the conduct of the business of the
Purchaser with respect to such Assumed Contracts after the Closing
Date, and which do not relate to the conduct of the Business prior to
the Closing Date.
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Assumed Liabilities
shall not include (the following shall be referred to herein as the "EXCLUDED
LIABILITIES"):
3
8
(i) any Liability of the Company relating to the
operation of the Company prior to the Closing Date resulting
from, arising out of, or caused by any (i) breach of contract,
(ii) tort, (iii) infringement, or (iv) violation of law;
(ii) any Liability of the Company for any
accounts payable or accrued expenses which, according to the
Closing Date Balance Sheet and the books and records of the
Company, are overdue by their terms at Closing, or at Closing
are in excess of thirty (30) days of age from either (i) the
date upon which the accrued expense was incurred by the
Company, or (ii) the date of the invoice of the payable, as
applicable;
(iii) any Liability of the Company relating to
employees of the Company for the period prior to the Closing
Date, including but not limited to employee compensation,
bonuses, commissions, incentive compensation, sick pay,
severance pay, workers' compensation, and payroll and other
employer-related withholding obligations, and any entitlements
due to any employees, whether by contractual obligation or
normal business expectation, or pursuant to any stock
appreciation or phantom stock plan or program;
(iv) any Liabilities under those contracts,
agreements, leases, subleases, and instruments included among
the Acquired Assets arising prior to the Closing Date which by
their nature or amount should be reflected on the Closing Date
Balance Sheet but are not so reflected;
(v) any Liabilities arising under the Excluded
Contracts;
(vi) any Liability of the Company for
Indebtedness of any kind;
(vii) Liabilities under the leases with respect to
the Leased Real Property arising prior to the Closing Date;
(viii) any Liability of the Company for Taxes, and
any penalties, interest and other additions to Tax arising out
of the failure to pay prior to Closing any Taxes that were due
prior to Closing;
(ix) any Liability of the Company with respect to
any of the Company Plans or for any post-Closing retirement
benefits for employees of the Company;
(x) any Liability of the Company arising under
or with respect to any Equity Rights of the Company;
(xi) any Liability of the Company for costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby;
(xii) any Liability of the Company under this
Agreement for failure to perform its obligations hereunder;
4
9
(xiii) any Liability arising from any use of or
defect in any Company products sold prior to the Closing Date
(regardless of the date of any loss, bodily injury, or
property damage claimed to have resulted from such uses or
defects);
(xiv) any Environmental Health and Safety
Liabilities of the Company, including but not limited to
liabilities arising from any Environmental Law, which arise or
result, directly or indirectly, from conditions existing or
operations conducted at any facility owned, operated, leased
or used by the Company prior to the Closing Date;
(xv) any liability or obligation arising under
the violation of any law, regulation, or ordinance by the
Company prior to or on the Closing Date, including but not
limited to any violation of any immigration law, regulation,
or ordinance; or
(xvi) other than the Assumed Liabilities, any
other Liability of the Company, whether absolute, contingent
or otherwise, known or unknown, accrued or unaccrued, asserted
or unasserted, or otherwise.
"AUDITED BALANCE SHEET" -- as defined in Section 3.3.
"BASE EBITDA" - as defined in Section 2.8(c).
"BEST EFFORTS" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"BUSINESS" -- (i) with respect to the period prior to and as of the
Closing Date, the business conducted by the Company prior to and as of the
Closing Date, and (ii) with respect to the period after the Closing Date, the
business conducted by the Purchaser (or if applicable, an Affiliate of
Purchaser) with the Acquired Assets and the Assumed Liabilities.
"CLOSING" -- as defined in Section 2.5.
"CLOSING DATE" -- as defined in Section 2.5.
"CLOSING DATE BALANCE SHEET" - as defined in Section 2.7(b).
"COBRA" - as defined in Section 3.11(e).
"COMPANY GROUP" as defined in Section 3.11(a).
"COMPANY PLAN" -- as defined in Section 3.11(b).
"CONFIDENTIAL INFORMATION" -- (a) confidential data and confidential
information relating to the business of any Party (the "PROTECTED PARTY") which
is or has been disclosed to another Party (the "RECIPIENT") or of which the
Recipient became aware as a consequence of or through its relationship with the
Protected Party and which has value to the Protected Party and is not generally
known to its competitors and which is designated by the Protected Party as
confidential
5
10
or otherwise restricted; and (b) information of the Protected Party, without
regard to form, including, but not limited to, Intellectual Property Assets,
Software, technical or nontechnical data, algorithms, formulas, patents,
compilations, programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, product or service plans or lists of customers
or suppliers which is not commonly known or available to the public and which
information (i) derives economic value from not being generally known to, and
not being readily ascertainable by proper means by, other Persons who can obtain
economic value from its disclosure or use, and (ii) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
Notwithstanding anything to the contrary contained herein, Confidential
Information shall not include any data or information that (v) has been
voluntarily disclosed to the public by the Protected Party, (w) has been
independently developed and disclosed to the public by others, (x) otherwise
enters the public domain through lawful means, (y) was already known by
Recipient prior to such disclosure (as evidenced by written documentation) or
was lawfully and rightfully disclosed to Recipient by another Person, or (z)
that is required to be disclosed by law or order without the availability of
applicable protective orders or treatment.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including but not limited to (a) the acquisition of the Acquired
Assets, and the assumption of the Assumed Liabilities, by the Purchaser from the
Company, the Purchaser's exercise of control over the Business of the Company
following the Closing, and the payment of the Asset Purchase Consideration
therefor; (b) the execution, delivery, and performance of each Employment
Agreement, each Noncompetition Agreement, and each Release Agreement; and (c)
the performance by Per-Se, Purchaser, the Company, and the Owners of their
respective covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"COPYRIGHTS" - as defined in Section 3.21(a).
"DAMAGES" -- as defined in Section 9.2.
"DISCLOSURE SCHEDULE" - as defined in Section 3.
"EARN-OUT ARBITRATOR" - as defined in Section 2.8(h).
"EARN-OUT INTERVAL" - as defined in Section 2.8(b).
"EARN-OUT PAYMENT" - as defined in Section 2.8(a).
"EARN-OUT STATEMENT" - as defined in Section 2.8(e).
"EBITDA" - the net income of the Purchaser (or if applicable, an
Affiliate of Purchaser) attributable to the Business, plus to the extent such
charges are deducted in determining net income of Purchaser (or if applicable,
an Affiliate of Purchaser) attributable to the Business, (i)
6
11
any interest on Indebtedness of the Purchaser (or if applicable, an Affiliate of
Purchaser) attributable to the Business, (ii) all income Taxes of the Purchaser
(or if applicable, an Affiliate of Purchaser) attributable to the Business,
(iii) any depreciation expenses of the Purchaser (or if applicable, an Affiliate
of Purchaser) attributable to the Business, (iv) any amortization of goodwill
and other intangibles of the Purchaser (or if applicable, an Affiliate of
Purchaser) attributable to the Business, (v) the acquisition costs,
reorganization costs, implementation costs, and similar costs of the Purchaser
(or, if applicable, an Affiliate of Purchaser) arising from the Contemplated
Transactions to the extent allocated to the Business, and (vi) those costs
allocated to the Business by the Purchaser (or, if applicable, an Affiliate of
Purchaser) that exceed the costs paid by the Company, for the similar products
or services for the 12 months immediately preceding the Closing Date when
prorated for a period of time equal to the period for which the EBITDA is being
determined, all as calculated and determined in accordance with GAAP.
"EBITDA TARGET" - as defined in Section 2.8(c).
"EMPLOYEES" - as defined in Section 3.11(b).
"EMPLOYMENT AGREEMENT" -- as defined in Section 6.2(b)(i).
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law, including fines,
penalties, financial responsibility for cleanup costs, corrective action,
removal, remedial actions and response actions, and any other compliance,
corrective, investigative, or remedial measures required under Environmental Law
or Occupational Safety and Health Law. The terms "removal," "remedial," and
"response action," include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or relates
to releases of pollutants or hazardous substances or materials, violations of
discharge limits, or other prohibitions that could have significant impact on
the Environment; preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment; reducing
the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated; reducing to acceptable levels the
risks inherent in the transportation of hazardous substances, pollutants, oil,
or other potentially harmful substances; cleaning up pollutants that have been
released, preventing the threat of release, or paying the costs of such clean up
or prevention; or making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
7
12
"EQUITY RIGHTS" - any and all plans permitting the issuance of the
capital stock of the Company, options to acquire capital stock of the Company;
and/or other rights to acquire capital stock of the Company, that are valued in
whole or in part by reference to the capital stock of the Company or that may be
settled in capital stock of the Company.
"ERISA" - as defined in Section 3.11(b)(i).
"ESTIMATED ADJUSTMENT SCHEDULE" - as defined in Section 2.1.
"FACILITIES" -- any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles and trucks) currently
or formerly owned or operated by the Company.
"FINAL ADJUSTMENT SCHEDULE" - as defined in Section 2.7(b).
"GAAP" -- United States generally accepted accounting principles,
consistently applied, as in effect on the date hereof.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal).
"HAZARDOUS MATERIALS" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"INDEBTEDNESS" - (i) all indebtedness for borrowed money or for the
deferred purchase price of property or services (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured), including the current
portion of such indebtedness, (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, and (iii) all capital lease obligations.
"INDEMNIFIED PERSON" - as defined in Section 9.2.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.21.
"INTERIM BALANCE SHEET" -- as defined in Section 3.3.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
8
13
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or
other matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonable investigation concerning the existence of such fact or other
matter.
"Knowledge" with respect to the Company shall mean the Knowledge of each Owner
and each officer, director, and management employee responsible for the
applicable functional area.
"LEASED REAL PROPERTY" - as defined in Section 3.18.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"LIABILITY" -- any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LICENSED SOFTWARE" - as defined in Section 3.22(a).
"MARKS" - as defined in Section 3.21(a).
"NET WORKING CAPITAL" - the excess of total current assets, including
without limitation cash, accounts receivable, net inventories (calculated in a
first-in, first-out basis), prepaid expenses, and other current assets, in each
case to the extent such are Acquired Assets, less total current liabilities,
including without limitation accounts payable, accrued benefits, accrued
liabilities, and other current liabilities (but excluding liabilities for
accrued interest, deferred employee compensation, accrued Tax liability,
deferred income, and any Indebtedness) to the extent such are Assumed
Liabilities, in each case determined in accordance with GAAP. All accounting
entries will be made regardless of their amount and all detected errors and
omissions will be corrected regardless of their materiality.
"NONCOMPETITION AGREEMENTS" -- as defined in Section 6.2(b)(ii).
"NOTICE OF DISAGREEMENT WITH EARN-OUT STATEMENT" - as defined in
Section 2.8(f).
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
9
14
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if such
action is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the certificate of formation and operating agreement of a
limited liability company; (e) any trust agreement adopted in connection with
any trust; and (f) any amendment to any of the foregoing.
"OVER-ACHIEVEMENT EBITDA TARGET" - as defined in Section 2.8(c).
"OWNED SOFTWARE" - as defined in Section 3.22(a).
"PATENTS" - as defined in Section 3.21(a).
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE ADJUSTMENT" - as defined in Section 2.7(a).
"PURCHASE PRICE ALLOCATION" - as defined in Section 2.9.
"PURCHASER'S ADVISORS" - as defined in Section 5.1.
"RELATED PERSON" -- with respect to a particular individual: (a) each
other member of such individual's Family; (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity). With respect to a specified Person other
than an individual: (A) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person; (B) any Person that holds a Material
Interest in such specified Person; (C) each Person that serves as a director,
officer, partner, executor, or trustee of such specified Person (or in a similar
capacity); (D) any Person in which such specified Person holds a Material
Interest; (E) any Person with respect to which such
10
15
specified Person serves as a general partner or a trustee (or in a similar
capacity); and (F) any Related Person of any individual described in clause (B)
or (C).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
voting securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"RELEASE AGREEMENT" -- as defined in Section 6.2(b)(iii).
"REPRESENTATIVE" -- with respect to a particular Person, any director,
manager, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECURITY INTEREST" -- means any charge, claim, community property
interest, condition, equitable interest, encumbrance, mortgage, lien, option,
pledge, security interest, right of first refusal, or restriction of any kind,
including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"SOFTWARE" - as defined in Section 3.22(a).
"TAX" -- shall mean all tax (including but not limited to income tax,
capital gains tax, value added tax, sales tax, property tax, gift tax or estate
tax), levy, assessment, tariff, duty (including but not limited to customs
duty), deficiency or other fee and any related charge or amount (including but
not limited to fine, penalty and interest) imposed, assessed or collected by or
under the authority of any Governmental Body.
"TAX RETURN" -- any return (including but not limited to any
information return), report, statement, schedule, notice, form, or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
11
16
"TRADE SECRETS" - as defined in Section 3.21(a).
2. ACQUISITION OF ACQUIRED ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES
2.1. Calculation of Estimated Net Working Capital of the Company.
Not earlier than three (3) days prior to the Closing Date, and prior to
Closing, the Company, Per-Se, and Purchaser shall jointly calculate the
estimated Net Working Capital of the Company as of the Closing Date (such
calculation shall be referred to herein as the "Estimated Adjustment Schedule").
2.2. Purchase and Sale of Acquired Assets; Assumption of
Liabilities.
(a) The Purchaser agrees to purchase from the Company,
and the Company agrees to sell, transfer, convey, assign and deliver to the
Purchaser, all of the Acquired Assets at the Closing for the consideration
specified in Section 2.3 below, free and clear of any Security Interest.
(b) On and subject to the terms and conditions of this
Agreement, the Purchaser agrees to assume and become responsible for the Assumed
Liabilities at the Closing for the consideration specified in Section 2.3 below.
The Purchaser will not assume or have any responsibility, however, with respect
to any Liability or obligation of the Company or the Owners which is not
included among the Assumed Liabilities or which is an Excluded Liability.
(c) In the event of any claim against the Purchaser with
respect to any of the Assumed Liabilities, without limiting Purchaser's remedies
or defenses, the Purchaser shall have, and the Company hereby assigns to the
Purchaser, any defense, counterclaim, or right of setoff which would have been
available to the Company if such claim had been asserted against the Company.
(d) The assumption by the Purchaser of the Assumed
Liabilities, and the transfer thereof by the Company, shall in no way expand the
rights or remedies of any third party against Per-Se, the Purchaser or the
Company or their respective officers, directors, employees, stockholders, and
advisors as compared to the rights and remedies which such third party would
have had against such parties had the Purchaser not assumed such Liabilities.
Without limiting the generality of the preceding sentence, the assumption by the
Purchaser of the Assumed Liabilities shall not create any third-party
beneficiary rights. The Company shall pay and discharge when due, or contest in
good faith, all of those liabilities of the Company which the Purchaser has not
specifically agreed to assume pursuant to the provisions of this Agreement.
2.3. Asset Purchase Consideration.
At Closing, in consideration for the sale, transfer, conveyance,
assignment, and delivery of the Acquired Assets by the Company to the Purchaser,
and the assumption by the Purchaser of the Assumed Liabilities from the Company,
the Company shall be entitled to receive, in the manner described in Section 2.4
below, (i) Seven Million Dollars ($7,000,000.00), plus (ii) the
12
17
post-closing contingent payment described in Section 2.8 below, and subject to
post-Closing adjustment as provided in Section 2.7 below (the "Asset Purchase
Consideration").
2.4. Payment of Asset Purchase Consideration.
At Closing, the Asset Purchase Consideration shall be paid as follows:
(a) that amount, if any, of the Asset Purchase
Consideration necessary to be paid to applicable lenders and other creditors of
the Company to pay off Indebtedness or obtain clear title to the Acquired
Assets, shall be paid to such lenders and other creditors in accordance with the
payoff letters provided by such creditors;
(b) to the extent that the estimated Net Working Capital
of the Company as of the Closing is, according to the Estimated Adjustment
Schedule, less than $140,000, the Purchaser shall deduct from the Asset Purchase
Consideration that amount which equals the difference between $140,000 and the
estimated Net Working Capital of the Company according to the Estimated
Adjustment Schedule; and
(c) The balance of the Asset Purchase Consideration shall
be paid to a bank or other account designated by the Company in writing to the
Purchaser at least two business days prior to the Closing Date by wire transfer
or other immediately available funds.
2.5. Time and Place of Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Powell, Goldstein, Xxxxxx & Xxxxxx
LLP, 000 Xxxxxxxxx Xxxxxx, XX, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000, no later than
9:00 a.m. on April 27, 2001, or such other date and time, or in such other
manner, as the Parties may agree (the "Closing Date"). Subject to the provisions
of Section 8, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.5 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.6. Deliveries at the Closing.
At the Closing, the Company and the Owners will deliver to Per-Se and
the Purchaser the various certificates, instruments, and documents referred to
in Section 6 below; Per-Se and the Purchaser will deliver to the Company the
various certificates, instruments, and documents referred to in Section 7 below;
the Company and the Owners will execute, acknowledge (if appropriate), and
deliver to Per-Se and the Purchaser such documents as Per-Se and the Purchaser
and their counsel may reasonably request; Per-Se and the Purchaser will execute,
acknowledge (if appropriate), and deliver to the Company such documents as the
Company and its counsel reasonably may request; and the Purchaser will deliver
Asset Purchase Consideration in accordance with Section 2.4 above.
13
18
2.7. Minimum Net Working Capital Adjustment to Asset Purchase
Consideration.
(a) The Asset Purchase Consideration shall be reduced on
a dollar-for-dollar basis to the extent that the Net Working Capital of the
Company as of the commencement of business on the Closing Date is less than
$140,000. Any decrease in the Asset Purchase Consideration pursuant to this
Section 2.7 shall be referred to as a "Purchase Price Adjustment".
(b) No later than forty five (45) days after the Closing
Date, Per-Se and the Purchaser shall deliver to the Company (i) a balance sheet
and a statement of operations of the Company for the period ended as the
commencement of business on the Closing Date (the "Closing Date Balance Sheet"),
and (ii) a separate statement calculating Net Working Capital of the Company as
of the commencement of business as of the Closing Date based on the Closing Date
Balance Sheet, showing any calculations with respect to any necessary Purchase
Price Adjustment, including any necessary adjustments to reflect any previous
adjustments based on the Estimated Adjustment Schedule (the "Final Adjustment
Schedule").
(c) The Company shall, within thirty (30) days following
its receipt of the Closing Date Balance Sheet and the Final Adjustment Schedule,
accept or reject the Purchase Price Adjustment submitted by Per-Se and the
Purchaser. If the Company disagrees with such calculation, it shall give written
notice to the Purchaser of such disagreement and any reason therefor within such
thirty (30) day period. Should the Company fail to notify Per-Se and the
Purchaser of a disagreement within such thirty (30) day period, the Company
shall be deemed to agree with Per-Se and the Purchaser's calculation. Any
disagreement with respect to the determination of any Purchase Price Adjustment
shall be referred to the Atlanta, Georgia office of Ernst & Young LLP (the
"Arbitrator"). The Arbitrator shall act as an arbitrator and shall issue its
report as to the Net Working Capital and the determination of the Purchase Price
Adjustment reflected in the Final Adjustment Schedule within sixty (60) days
after such dispute is referred to the Arbitrator. The Company on the one hand,
and Per-Se and the Purchaser on the other hand, shall bear all costs and
expenses incurred by it in connection with such arbitration, except that the
fees and expenses of the Arbitrator hereunder shall be borne by the Company on
the one hand, and Per-Se and the Purchaser on the other hand, in such proportion
as the Arbitrator shall determine based on the relative merit of the position of
the parties. This provision for arbitration shall be specifically enforceable by
the Parties and the decision of the Arbitrator in accordance with the provisions
hereof shall be final and binding with respect to the matters so arbitrated and
there shall be no right of appeal therefrom.
(d) If, based on the Adjustment Schedule as finally
determined, the Net Working Capital of the Company is less than $140,000, the
Company and the Owners shall pay to the Purchaser such deficit, less the amount
deducted by the Purchaser pursuant to Section 2.4(b) above. Final amounts due
hereunder shall be paid no later than five (5) business days following the
Company's agreement with Per-Se's and the Purchaser's calculation of the
Purchase Price Adjustment, or in the event of a disagreement, following the
resolution of such disagreement by written agreement of Per-Se, the Purchaser
and the Company, or the determination of the Arbitrator pursuant to Section
2.7(c) above.
14
19
2.8. Earn-Out Payment.
(a) In the event that the EBITDA attributable to the
Business during the Earn-Out Interval (as defined below) is greater than
$596,000, then the Company will be entitled to receive a contingent payment of
up to One Million Five Hundred Thousand Dollars ($1,500,000) (the "Earn-Out
Payment") in accordance with the provisions of this Section 2.8.
(b) The Earn-Out Payment (if any) shall be made with
respect to the period from April 27, 2001, through April 27, 2002 (the "Earn-Out
Interval"), and will be paid in accordance with Section 2.8(i) upon the final
determination of the Earn-Out Statement for the Earn-Out Interval.
(c) As used in this Section 2.8, (A) the "Base EBITDA"
shall be $596,000, (B) the "EBITDA Target" shall be $970,000, and (B) the
"Over-Achievement EBITDA Target" shall be $1,212,500. The Earn-Out Payment shall
be calculated as follows:
(i) if the Earn-Out Statement (as defined below)
shows that the EBITDA attributable to the Business with
respect to the Earn-Out Interval (the "Actual EBITDA") is less
than Base EBITDA, then no Earn-Out Payment shall be payable to
the Company; or
(ii) if the Earn-Out Statement shows that Actual
EBITDA is greater than the Base EBITDA but less than or equal
to the EBITDA Target, then the Earn-Out Payment payable to the
Company shall be equal to $1,200,000 multiplied by a fraction,
(x) the numerator of which equals Actual EBITDA, and (y) the
denominator of which equals the EBITDA Target; or
(iii) if the Earn-Out Statement shows that Actual
EBITDA is greater than the EBITDA Target but less than or
equal to the Over-Achievement EBITDA Target, then the Earn-Out
Payment payable to the Company shall be equal to (A)
$1,200,000 plus (B) $300,000 multiplied by a fraction, (x) the
numerator of which equals Actual EBITDA, and (y) the
denominator of which equals the Over-Achievement EBITDA
Target; or
(iv) if the Earn-Out Statement shows that Actual
EBITDA is greater than the Over-Achievement EBITDA Target,
then the Earn-Out Payment payable to the Company shall equal
$1,500,000.
Under no circumstance shall the Earn-Out Payment be greater than $1,500,000.
(d) Any amount or calculation to be made in connection
with the Earn-Out Payment shall be determined or made in accordance with GAAP.
All accounting entries will be made regardless of their amount and all detected
errors and omissions will be corrected regardless of their materiality.
(e) Within forty-five (45) days following the end of the
Earn-Out Interval, the Purchaser shall, at its expense, conduct a financial
review of the Purchaser (and if applicable, its Affiliates) attributable to the
Business, and in connection with such review, shall prepare a
15
20
statement of EBITDA attributable to the Business with respect to the Earn-Out
Interval, and a separate statement calculating the Earn-Out Payment, if any,
payable to the Company as contemplated in Section 2.8(c) above (the "Earn-Out
Statement"). Promptly (but in no event later than 45 days) after completion of
the review and the preparation of the Earn-Out Statement for the Earn-Out
Interval, the Purchaser at its expense shall deliver to the Company a copy of
such Earn-Out Statement. During the 45 days immediately following receipt of the
Earn-Out Statement by the Company, the Company and its accountants shall be
entitled to review the Earn-Out Statement and any working papers, trial balances
and similar materials relating to the Earn-Out Statement prepared by the
Purchaser or its accountants, and the Purchaser shall provide the Company and
his accountants with reasonable access, during the Purchaser's normal business
hours, to the Purchaser's personnel, properties, books and records for the sole
purpose of verifying the Earn-Out Statement.
(f) The Earn-Out Statement shall become final and binding
upon the Parties on the 46th day following delivery thereof unless the Company
gives written notice to the Purchaser of its disagreement with the Earn-Out
Statement (a "Notice of Disagreement with Earn-Out Statement") prior to such
date. Any Notice of Disagreement with Earn-Out Statement shall specify in
reasonable detail the nature of any disagreement so asserted.
(g) If a timely Notice of Disagreement with Earn-Out
Statement is received by the Purchaser with respect to the Earn-Out Statement,
then the Earn-Out Statement shall become final and binding upon the Parties on
the earlier of (A) the date the Purchaser and the Company resolve in writing all
differences they have with respect to the matters specified in a Notice of
Disagreement with Earn-Out Statement, or (B) the date the matters in dispute are
finally resolved in writing by the Earn-Out Arbitrator in the manner described
below.
(h) During the 45 days immediately following the delivery
of any Notice of Disagreement with Earn-Out Statement, the Purchaser and the
Company shall seek in good faith to resolve in writing any differences which
they may have with respect to the matters specified in such Notice of
Disagreement with Earn-Out Statement. During such period, the Company and its
accountants shall each have access to the Purchaser's working papers, trial
balances and similar materials (including the working papers, trial balances and
similar materials of the Purchaser's accountants) prepared in connection with
the Purchaser's preparation of the Earn-Out Statement. If such differences have
not been resolved by the end of such 45-day period, the Purchaser and the
Company shall submit to the Atlanta, Georgia office of Ernst & Young LLP (the
"Earn-Out Arbitrator") for review and resolution any and all matters which
remain in dispute and which were included in any Notice of Disagreement with
Earn-Out Statement (it being understood that the Earn-Out Arbitrator shall act
as an arbitrator to determine, based solely on presentations by the Purchaser
and the Company (and not by independent review), only those matters which remain
in dispute), and the Earn-Out Arbitrator shall reach a final, binding resolution
of all matters which remain in dispute, which final resolution shall be (A) in
writing, (B) furnished to the Purchaser and the Company as soon as practicable
after the items in dispute have been referred to the Earn-Out Arbitrator, and
(C) made in accordance with this Agreement. The Earn-Out Statement, with any
adjustments necessary to reflect the Earn-Out Arbitrator's resolution of the
matters in dispute, shall become final and binding on the Parties on the date
the Earn-Out Arbitrator delivers its final resolution to the Parties. The
Company on the one hand, and the Parent and the Purchaser on the other hand,
shall bear all costs and expenses incurred by
16
21
it in connection with such arbitration, except that the fees and expenses of the
Earn-Out Arbitrator hereunder shall be borne by the Company and the Parent and
the Purchaser in such proportion as the Arbitrator shall determine based on the
relative merit of the position of the parties. This provision for arbitration
shall be specifically enforceable by the Parties and the decision of the
Earn-Out Arbitrator in accordance with the provisions hereof shall be final and
binding with respect to the matters so arbitrated and there shall be no right of
appeal therefrom.
(i) If an Earn-Out Payment is payable with respect to the
Earn-Out Interval, such Earn-Out Payment shall be paid by the Purchaser to the
Company or the Owners, within thirty (30) days following final resolution of the
Earn-Out Statement.
(j) In the event that the employment of either Owner is
terminated for any reason other than "cause" (as such term is defined in such
Owner's Employment Agreement) during the Earn-Out Interval, and an Earn-Out
Payment is payable to the Company in accordance with this Section 2.8, such
Earn-Out Payment shall nevertheless be paid to the Company in accordance with
this Section 2.8, but in no event shall the Earn-Out payable in such
circumstance be less than $200,000. In addition, in the event that the
employment of either Owner is terminated for any reason other than "cause" (as
such term is defined in such Owner's Employment Agreement) during the Earn-Out
Interval, and the Earn-Out Statement indicates that the Actual EBITDA is less
than Base EBITDA, then the Earn-Out Payment payable to the Company in such
circumstance nevertheless shall be $200,000. In the event that the employment of
either Owner is terminated by the Purchaser or Per-Se for "cause" (as such term
is defined in such Owner's Employment Agreement) during the Earn-Out Interval,
then the provisions of this Section 2.8 shall cease to apply and no Earn-Out
Payment shall be payable to the Company.
(k) During the Earn-Out Interval, the Purchaser covenants
and agrees that it shall not use the software or other technology used in the
conduct of the Business for any internal Purchaser use without the written
consent of the Company or the Owners.
(l) It is expressly understood between the Parties hereto
that the Earn-Out Payment contemplated herein, if any, is included as part of
the Asset Purchase Consideration paid for the Acquired Assets and the Assumed
Liabilities pursuant to this Section 2.8.
2.9. Allocation of Asset Purchase Consideration.
The Asset Purchase Consideration will be allocated for all purposes
(including Tax and financial accounting purposes) as set forth (or in accordance
with the methodology set forth) in Exhibit A hereto (the "Purchase Price
Allocation"). Each of the Parties hereto will not take a position on any Tax
Return, before any Governmental Body charged with the collection of any Tax, or
in any Proceeding, that is in any way inconsistent with the Purchase Price
Allocation and will cooperate with each other in timely filing consistent with
such allocation on applicable forms with the IRS.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OWNERS
The Company and the Owners, jointly and severally, represent and
warrant to Per-Se and the Purchaser that the statements contained in this
Section 3 are true, correct and complete as of
17
22
the date hereof, and will be true, correct and complete as of the Closing Date,
except as specified to the contrary in the corresponding section of the
disclosure schedule prepared by the Company and the Owners accompanying this
Agreement and initialed by Per-Se, the Purchaser and the Company (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
3.
3.1. Organization and Good Standing.
Schedule 3.1 contains a complete and accurate list of (i) the
jurisdiction of incorporation Company and (ii) the other jurisdictions in which
the Company is authorized to do business. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under the Assumed Contracts. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.
3.2. Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and
binding obligation of the Company and each Owner, enforceable against the
Company and each Owner in accordance with its terms. Upon the execution and
delivery by the Company and each Owner of, the Noncompetition Agreements and the
Release Agreements, (collectively, the "Company Closing Documents"), the Company
Closing Documents to which the Company and the Owners are a party will
constitute the legal, valid, and binding obligations of the Company and each
Owner, enforceable against the Company and each Owner in accordance with their
respective terms. The board of directors of the Company and all of the
shareholders of the Company have approved and authorized this Agreement and the
Contemplated Transactions, in each case without condition, limitation or
restriction. The Company and each Owner has the respective right, power,
authority, and capacity to execute and deliver this Agreement and the Company
Closing Documents to which it is a party and to perform each of their
obligations under this Agreement and the Company Closing Documents to which it
is a party.
(b) Except as set forth in Schedule 3.2(b), neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents
of the Company, or (B) any resolution adopted by the board of
directors or the shareholders of the Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person
the right to challenge any of the Contemplated Transactions;
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke,
18
23
withdraw, suspend, cancel, terminate, or modify, any material
Governmental Authorization that is held by the Company;
(iv) cause the Company to become subject to, or
to become liable for the payment of, any material Tax;
(v) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person
the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Assumed Contract; or
(vi) result in the imposition or creation of any
Security Interest upon or with respect to any of the Acquired
Assets or the Assumed Liabilities.
3.3. Financial Statements.
The Company has delivered to Per-Se and the Purchaser: (a) unaudited
balance sheet of the Company as at December 31, 2000 (the "Audited Balance
Sheet"), and December 31, 1999, and the related unaudited statement of income,
retained earnings, and cash flows for each of the fiscal years then ended, and
(b) an unaudited balance sheet of the Company as at March 31, 2001 (the "Interim
Balance Sheet") and the related unaudited statements of income, retained
earnings and cash flows and supplementary data for the three (3) months then
ended. Such financial statements and notes fairly present the financial
condition and the results of operations and cash flows of the Company as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of the Interim
Balance Sheet, to normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the last audited statement); the financial statements referred to in
this Section 3.3 reflect the consistent application of such accounting
principles throughout the periods involved. The Company has not been advised by
any attorney representing it that there are any "loss contingencies" (as defined
in Statement of Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board of March, 1975), which would be required to be
disclosed or accrued in financial statements of the Company was such statements
prepared as of the date hereof. No financial statements of any Person other than
the Company is required by GAAP to be included in the financial statements of
the Company.
3.4. Books and Records.
The books of account, minute books, stock record books, and other
records of the Company, including but not limited to those which constitute
Acquired Assets, are complete and correct and have been maintained in accordance
with sound business practices, including the maintenance of an adequate system
of internal controls. The minute books of the Company are true and complete in
all material respects and the Company has not taken any action not reflected in
the minutes which would have a material adverse effect on the Company.
19
24
3.5. Title to Properties; Security Interests.
The Company owns all the properties and assets (whether real, personal,
or mixed and whether tangible or intangible) that the Company purports to own or
reflected as owned in the Audited Balance Sheet and the Interim Balance Sheet,
and the other books and records of the Company, including but not limited to all
of the Acquired Assets and the Assumed Liabilities. All properties and assets
which are Acquired Assets are free and clear of all Security Interests, and in
the case of the Leased Real Property, are not subject to any rights of way,
building use restrictions, exceptions, variances, reservations, or limitations
of any nature.
3.6. Condition and Sufficiency of Assets.
The buildings, facilities, structures, and equipment of and used by the
Company which constitute the Acquired Assets are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, facilities, structures, or equipment is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The building, facilities,
structures, and equipment of the Company which constitute the Acquired Assets
are sufficient for the continued conduct of the Business of the Company after
the Closing in substantially the same manner as conducted prior to the Closing.
3.7. Accounts Receivable.
All accounts receivable of the Company that are reflected on the
Audited Balance Sheet or the Interim Balance Sheet or on the Closing Date
Balance Sheet (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Audited
Balance Sheet or the Interim Balance Sheet or on the Closing Date Balance Sheet
(which reserves are adequate and calculated consistent with past practice and,
in the case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the reserve
reflected in the Interim Balance Sheet represented of the Accounts Receivable
reflected therein and will not represent a material adverse change in the
composition of such Accounts Receivable in terms of aging). Subject to such
reserves, each of the Accounts Receivable either has been or will be collected
in full, without any set-off, within ninety days after the day on which it first
becomes due and payable.
3.8. No Undisclosed Liabilities.
The Company does not have any liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Audited Balance Sheet or the Interim Balance Sheet and current
liabilities incurred in the Ordinary Course of Business since the respective
dates thereof.
20
25
3.9. Taxes.
(a) The Company and the Owners have filed or caused to be
filed all Tax Returns that are or were required to be filed by or with respect
to it pursuant to applicable Legal Requirements. The Company has delivered to
Per-Se and Purchaser copies of, and Schedule 3.9(a) contains a complete and
accurate list of, all filings prepared by the Company and the Owners with
respect to income for federal income tax purposes since December 31, 1996. The
Company and the Owners have paid, or made provision for the payment of, all
Taxes that have or may have become due pursuant to Tax Returns or otherwise, or
pursuant to any assessment received by the Company or the Owners, except such
Taxes, if any, as are listed in Schedule 3.9(a) and are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided in the Audited Balance Sheet and the Interim Balance Sheet.
There are no unpaid Taxes that could constitute a Security Interest on the
Acquired Assets, the Assumed Liabilities, the Business, or the other assets or
properties of the Company.
(b) The United States federal and state income Tax
Returns of the Company and the Owners subject to such Taxes have not been
audited by the IRS. Schedule 3.9(b) contains a complete and accurate list of all
audits of all Tax Returns from December 31, 1996, through such period, including
a description of the nature and outcome of each audit. All deficiencies proposed
as a result of such audits have been paid, reserved against, settled, or, as
described in Schedule 3.9(b), are being contested in good faith by appropriate
proceedings. Schedule 3.9(b) describes all adjustments to the United States
federal income Tax Returns filed by the Company, the Owners, or any group of
corporations including the Company for all taxable years since 1996, and the
resulting deficiencies proposed by the IRS. Neither the Company nor the Owners
have been given or been requested to give waivers or extensions (or is or would
be subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of the Company or the Owners or for
which the Company or the Owners may be liable.
(c) The charges, accruals, and reserves with respect to
Taxes on the books of the Company and the Owners is adequate (determined in
accordance with GAAP). There exists no proposed tax assessment against the
Company or the Owners except as disclosed in the Audited Balance Sheet or in
Schedule 3.9(c). No consent to the application of Section 341(f)(2) of the IRC
has been filed with respect to any property or assets held, acquired, or to be
acquired by the Company or the Owners. All Taxes that the Company and the Owners
are or were required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(d) All Tax Returns filed by the Company and the Owners
are true, correct, and complete. There is no tax sharing agreement that will
require any payment by the Company or the Owners after the date of this
Agreement.
3.10. No Material Adverse Change.
Since the date of the Interim Balance Sheet, there has not been any
material adverse change in the Acquired Assets, the Assumed Liabilities, the
Business, or any of the operations,
21
26
properties, prospects, assets, working capital or condition of the Company, and
no event has occurred or circumstance exists that may result in such a material
adverse change.
3.11. Employee Benefits.
(a) No corporation, trade, business, or other entity,
other than the Company, would now or in the past constitute a single employer
within the meaning of Section 414 of the IRC. The Company and any other entities
which now or in the past constitute a single employer within the meaning of IRC
Section 414 are hereinafter collectively referred to as the "Company Group."
(b) Schedule 3.11(b) contains a true and complete list of
all the following agreements or plans which are presently in effect or which
have previously been in effect and which cover employees of any member of the
Company Group ("Employees"), and indicating, with respect to each, the plans for
which the Company currently maintains or contributes to on behalf of each of
their Employees:
(i) Any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and any trust or other funding
agency created thereunder, or under which any member of the
Company Group, with respect to Employees, has any outstanding,
present, or future obligation or liability, or under which any
Employee or former Employee has any present or future right to
benefits which are covered by ERISA; or
(ii) Any other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock
option, incentive, bonus, vacation, severance, disability,
hospitalization, medical, life insurance, split dollar or
other employee benefit plan, program, policy, or arrangement,
whether written or unwritten, formal or informal, which any
member of the Company Group maintains or to which any member
of the Company Group has any outstanding, present or future
obligations to contribute or make payments under, whether
voluntary, contingent or otherwise.
The plans, programs, policies, or arrangements described in
subparagraph (i) or (ii) above are hereinafter collectively referred to as the
"Company Plans." Except as disclosed on Schedule 3.11(b), and except for any
Company Plans which have been terminated, and with respect to which neither the
Company nor any member of the Company Group has any financial, administrative or
other liability, obligation, or responsibility, the Company does not maintain,
nor has it at any time established or maintained, nor has it at any time been
obligated to make, or otherwise made, contributions to or under or otherwise
participated in any Company Plan.
(c) No member of the Company Group maintains or
contributes to or has maintained or contributed to an "employee benefit pension
plan" within the meaning of ERISA Section 3(2) that is or was subject to Title
IV of XXXXX.
00
00
(x) Xx member of the Company Group has any past, present
or future obligation or liability to contribute or has contributed to any
multiemployer plan as defined in ERISA Sections 3(37) and 4001(a)(3).
(e) Except as disclosed on Schedule 3.11(e), each member
of the Company Group has complied with the continuation coverage requirements of
Section 4980B of the IRC, Section K, Chapter 100 of the IRC and ERISA Sections
601 through 608 ("COBRA"), and with the portability, access and renewability
provisions of ERISA Sections 701 through 713.
3.12. Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Schedule 3.12(a):
(i) The Company has complied with each Legal
Requirement that is or was applicable to it or to the conduct
or operation of the Business of the Company or the ownership
or use of any of the Acquired Assets or Assumed Liabilities;
(ii) No event has occurred or circumstance exists
that (with or without notice or lapse of time) may constitute
or result in a violation by the Company of, or a failure on
the part of the Company to comply with, any Legal Requirement;
and
(iii) The Company has not received any notice or
other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual,
alleged, possible, or potential violation of, or failure to
comply with, any material Legal Requirement.
(b) Schedule 3.12(b) contains a complete and accurate
list of each Governmental Authorization that is held by the Company or that
otherwise relates to the Business of, or to any of the Acquired Assets or
Assumed Liabilities owned or used by, the Company or that is necessary for the
conduct of the Business by the Company. Each Governmental Authorization listed
or required to be listed in Schedule 3.12(b) is valid and in full force and
effect. Except as set forth in Schedule 3.12(b):
(i) The Company has complied with all of the
terms and requirements of each Governmental Authorization
identified or required to be identified in Schedule 3.12(b);
(ii) No event has occurred or circumstance exists
that may (with or without notice or lapse of time) constitute
or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Schedule 3.12(b);
(iii) The Company has not received any notice or
other communication (whether oral or written) from any
Governmental Body regarding any actual, alleged, possible, or
potential violation of or failure to comply with any term or
requirement of any Governmental Authorization; and
23
28
(iv) all applications required to have been filed
for the renewal of the Governmental Authorizations listed or
required to be listed in Schedule 3.12 have been duly filed on
a timely basis with the appropriate Governmental Bodies, and
all other filings required to have been made with respect to
such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
3.13. Legal Proceedings; Orders.
(a) Except as set forth on Schedule 3.13, there is no
pending Proceeding:
(i) that has been commenced by or against the
Company or that could impair the Company's use of any of its
assets, including the Acquired Assets and the Assumed
Liabilities; or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.
To the Knowledge of the Company and the Owners, (1) no such Proceeding
has been Threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. The Proceedings listed in Schedule 3.13 will not have a material
adverse effect on the Acquired Assets, Assumed Liabilities, or any of the
operations, condition, or prospects of the Business of the Company.
(b) Except as set forth in Schedule 3.13:
(i) there is no Order to which the Company, or
any of the assets owned or used by the Company, including the
Acquired Assets and the Assumed Liabilities, is subject; and
(ii) to the Knowledge of Company and the Owners,
no officer, director, agent, or employee of the Company is
subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the Business of the Company.
3.14. Absence of Certain Changes and Events.
Except as set forth in Schedule 3.14, since the date of the Audited
Balance Sheet, the Company has conducted its Business only in the Ordinary
Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any option or right to purchase capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any capital stock; or declaration or payment of any dividend or
other distribution or payment in respect of its capital stock;
24
29
(b) amendment to the Organizational Documents of the
Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any shareholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any asset or
property of the Company, including any Acquired Asset or Assumed Liability,
whether or not covered by insurance, adversely affecting the Acquired Assets,
Assumed Liabilities, or other properties, assets, business, financial condition,
or prospects of the Company;
(f) entry into, termination of, or receipt of notice of
termination of any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any Acquired Asset or
Assumed Liability, or any other material asset or property of the Company or
imposition of any Security Interest on any Acquired Asset, Assumed Liability, or
other material asset or property of the Company;
(h) cancellation or waiver of any material claims or
rights;
(i) commitment by the Company to expend funds
individually in an amount in excess of $10,000, or when considered in the
aggregate, in excess of $25,000;
(j) change in the accounting methods used by the Company;
or
(k) agreement, whether oral or written, by the Company to
do any of the foregoing.
3.15. Contracts; No Defaults.
(a) Schedule 3.15(a) contains a complete and accurate
list, and the Company has delivered to Per-Se and Purchaser true and complete
copies, of:
(i) each Contract that involves performance of
services or delivery of goods or materials by the Company of
an amount or value in excess of $10,000;
(ii) each Contract that involves performance of
services or delivery of goods or materials to the Company of
an amount or value in excess of $10,000;
(iii) each Contract pursuant to which the Company
licenses other persons to use any of the Software or has
agreed to support, maintain, upgrade,
25
30
enhance, modify, or consult with respect to any of the
Software, or pursuant to which other persons license Company
to use the Licensed Software;
(iv) each Contract by which the Company has
agreed to design, develop, author or create any new custom, or
customized software for any third party;
(v) each Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures
or receipts of the Company in excess of $10,000;
(vi) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or
personal property (except personal property leases and
installment and conditional sales agreements having a value
per item or aggregate payments of less than $10,000 and with
terms of less than one year);
(vii) each Contract with respect to Intellectual
Property assets, and each form of Contract with former
employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(viii) each collective bargaining agreement and
other Contract to or with any labor union or other employee
representative of a group of employees;
(ix) each joint venture, partnership, and other
Contract (however named) involving a sharing of profits,
losses, costs, or liabilities by the Company with any other
Person;
(x) each Contract containing covenants that in
any way purport to restrict the business activity of the
Company or any Owner or limit the freedom of the Company or
any Owner to engage in any line of business or to compete with
any Person;
(xi) each Contract providing for payments to or
by any Person based on sales, purchases, or profits, other
than direct payments for goods and other than commission
arrangements with sales employees of the Company entered into
in the Ordinary Course of Business;
(xii) each power of attorney that is currently
effective and outstanding;
(xiii) each Contract for capital expenditures;
(xiv) each written warranty, guaranty, and or
other similar undertaking with respect to contractual
performance extended by the Company other than in the Ordinary
Course of Business; and
26
31
(xv) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing
Contracts, identified or required to be identified.
(b) No Owner (and no Related Person of any Owner) has or
may acquire any rights under, or has or may become subject to any obligation or
liability under, any Contract that relates to the Business of, or any of the
assets owned or used by, the Company, including any Acquired Asset or Assumed
Liability.
(c) Each Assumed Contract is in full force and effect and
is valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 3.15(d):
(i) The Company has complied with all applicable
terms and requirements of each Assumed Contract under which
the Company has or had any obligation or liability;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene,
conflict with, or result in a violation or breach of, or give
the Company or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
Assumed Contract; and
(iii) The Company has not given to or received
from any other Person any notice or other communication
(whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default
under, any Assumed Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Assumed Contracts with any
Person and to the Knowledge of the Company and the Owners no such Person has
made written demand for such renegotiation.
3.16. Insurance.
(a) The Company has delivered to Per-Se and Purchaser
true and complete copies of all policies of insurance to which the Company is a
party or under which the Company, or any director, officer or shareholder of the
Company, is or has been covered at any time since December 31, 1998.
(b) Schedule 3.16(b) describes:
(i) any self-insurance arrangement by or
affecting the Company, including any reserves established
thereunder; and
(ii) any contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk
by the Company.
27
32
(c) Schedule 3.16(c) sets forth, by year, for the current
policy year and each of the two preceding policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of $10,000; and
(iii) a statement describing the loss experience
for all claims that were self-insured, including the number
and aggregate cost of such claims.
(d) Except as set forth on Schedule 3.16(d):
(i) All policies to which the Company is a party
or that provide coverage to the Company or any director,
shareholder, or officer of the Company:
(A) are valid, outstanding, and
enforceable;
(B) are issued by an insurer that is
financially sound and reputable; and
(C) do not provide for any
retrospective premium adjustment or other
experienced-based liability on the part of the
Company.
(ii) The Company has not received (A) any refusal
of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or
any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer
of any policy is not willing or able to perform its
obligations thereunder.
(iii) The Company has paid all premiums due, and
has otherwise performed all of its obligations, under each
policy to which the Company is a party or that provides
coverage to the Company or any director, officer or
shareholder thereof.
(iv) The Company has given notice to the insurer
of all claims that may be insured thereby.
3.17. Environmental Matters.
Except as set forth in Schedule 3.17:
(a) The Company is, and at all times has been, in
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. The Company does not have any basis to expect, nor has
the Company or any other Person for whose conduct it is or may be held to be
responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which
28
33
the Company has had an interest, or with respect to any property or Facility at
or to which Hazardous Materials were generated, manufactured, refined,
transferred, imported, used, or processed by the Company or any other Person for
whose conduct it is or may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of the
Company or the Owners, Threatened claims, Security Interests, or other
restrictions of any nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law, with respect
to or affecting any of the Facilities or any other properties and assets in
which the Company has or had an interest.
(c) Neither the Company nor the Owners have any Knowledge
of any basis to expect, nor has any of them or any other Person for whose
conduct they are or may be held responsible, received, any citation, directive,
inquiry, notice, Order, summons, warning, or other communication that relates to
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets in which the Company had an interest, or with respect to any property
or facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by the Company or any other Person for
whose conduct it is or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(d) Neither the Company, nor any other Person for whose
conduct it is or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or with respect to any other
properties and assets in which the Company (or any predecessor) had an interest.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities except in compliance with all applicable
Environmental Laws.
(f) There has been no Release of any Hazardous Materials
at or from the Facilities or at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or from or by any other
properties and assets (including the Acquired Assets and the Assumed
Liabilities) in which the Company had an interest.
(g) The Company has delivered to Per-Se and Purchaser
true and complete copies and results of any reports, studies, analyses, tests,
or monitoring possessed or initiated by the Company pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by the Company or any other Person for whose conduct it is or may be
held responsible, with Environmental Laws.
3.18. Real Property.
The Company does not own any real property. Schedule 3.18 lists and
describes briefly all real property leased to the Company (the "Leased Real
Property"). The Company has
29
34
delivered to Per-Se and the Purchaser true, correct and complete copies of the
leases for the Leased Real Property (as amended to date). With respect to each
lease for Leased Real Property:
(a) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(b) the Company is not, and to the Knowledge of the
Company, no party to the lease or sublease is, in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(c) the Company has not, and to the Knowledge of the
Company, no party to the lease or sublease has, repudiated any provision
thereof;
(d) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease; and
(e) all facilities leased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in all material respects in accordance with applicable laws, rules, and
regulations.
3.19. Employees.
(a) Schedule 3.19(a) contains a list of the following
information for each full-time, part-time or temporary employee or director of
the Company, including each employee on leave of absence or layoff status: name;
job title; current employment status and current compensation. Schedule 3.19(a)
also contains a list of all written contracts of employment to which the Company
is a party, except for contracts which can be terminated without liability upon
not more than thirty (30) days notice.
(b) To the Knowledge of the Company and the Owners, no
employee or director of the Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person that in any way adversely affects or will affect (i) the performance of
his duties as an employee or director, or (ii) the ability to conduct the
Business of the Company. To the Knowledge of the Company and the Owners, no
director, officer, or other key employee of the Company intends to terminate his
employment.
(c) Schedule 3.19(c) also contains a complete and
accurate list of the following information for each retired employee or director
of the Company, or their dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.
30
35
3.20. Labor Relations; Compliance.
(a) The Company is not a party to any collective
bargaining or other labor Contract. There has not been, there is not presently
pending or existing, and to the Knowledge of the Company and the Owners there is
not threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any pending proceeding against or affecting the Company
relating to the alleged violation of any legal requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Company,
or (c) any application for certification of a collective bargaining agent. No
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
the Company, and no such action is contemplated. The Company has complied in all
respects with all legal requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar Taxes, occupational
safety and health, and plant closing. The Company is not liable for the payment
of any compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing legal requirements,
or for any other legal requirement relating to the employer-employee
relationship.
(b) Schedule 3.20 of the Disclosure Schedule contains a
complete list of employment-related lawsuits and/or governmental administrative
proceedings to which the Company is currently a party. This list includes any
employment-related disputes brought under any applicable federal, state or local
laws, as well as all administrative actions including, but not limited to, those
proceedings before the Equal Employment Opportunity Commission, the National
Labor Relations Board, the Occupational Safety and Health Agency and the
Department of Labor, and any state counterparts to such agencies.
3.21. Intellectual Property.
(a) Intellectual Property Assets--The term "Intellectual
Property Assets" includes:
(i) The name, all fictional business names,
trade names, styles, registered and unregistered trademarks,
service marks, and applications owned, used, or licensed by
the Company as licensee or licensor (collectively, "Marks");
(ii) all patents, patent applications, and
inventions and discoveries that may be patentable owned, used,
or licensed by the Company as licensee or licensor
(collectively, "Patents");
(iii) all copyrights in both published works and
unpublished works owned, used, or licensed by the Company as
licensee or licensor (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, technical information, data,
process technology, plans, drawings, and blue
31
36
prints (collectively, "Trade Secrets"); owned, used, or
licensed by the Company as licensee or licensor.
(b) Agreements. Schedule 3.21(b) describes any royalties
paid or received by the Company, of all Contracts relating to the Intellectual
Property Assets, except for licenses for commonly available software programs
under which the Company is the licensee. There are no outstanding and, to the
Knowledge of the Company and the Owners, no Threatened disputes or disagreements
with respect to any such Contract.
(c) Know-How Necessary for the Business. The Intellectual
Property Assets are all those necessary for the operation of the Business as
currently conducted. The Company is the owner of all right, title, and interest
in and to each of their respective Intellectual Property Assets, free and clear
of all Security Interests, and has the right to use without payment to a third
party all of the Intellectual Property Assets.
(d) Patents.
(i) Schedule 3.21(d) contains a complete and
accurate list of all Patents. The Company is the owner of all
right, title and interest in and to each of the Patents, free
and clear of all Security Interests.
(ii) All of the issued Patents are currently in
compliance with formal legal requirements, are valid and
enforceable and are not subject to any maintenance fees or
taxes falling due within ninety (90) days after the Closing
Date.
(iii) No Patent has been or is now involved in any
interference, reissue, re-examination or opposition
proceedings. To the Knowledge of the Company and the Owners,
there is no potentially interfering patent or patent
application of any third party.
(iv) No Patent is infringed or, to the Knowledge
of the Company and the Owners, has been challenged or
threatened in any way. None of the products manufactured or
sold, nor any process or know-how used by the Company,
materially infringes any patent or proprietary right of any
other Person.
(v) All products material to the conduct of the
Business made, used or sold under the Patents have been marked
with the proper patent notice.
(e) Trademarks
(i) Schedule 3.21(e) contains a complete and
accurate list and summary description of all Marks registered
with the U.S. Patent and Trademark Office. The Company is the
owner of all right, title, and interest in and to each of its
Marks, free and clear of all Security Interests.
(ii) To the Knowledge of the Company and the
Owners, there is no potentially interfering trademark or
trademark application of any third party.
32
37
(iii) No Xxxx is infringed or, to the Knowledge of
the Company and the Owners, has been challenged or threatened
in any way. None of the Marks used by the Company infringes or
is alleged to infringe any trade name, trademark, or service
xxxx of any third party.
(f) Copyrights
(i) Schedule 3.21(f) contains a complete and
accurate list and summary description of all Copyrights
material to the conduct of the Business. The Company is the
owner of all right, title, and interest in and to each of its
Copyrights, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) No Copyright is infringed or, to the
Knowledge of the Company and the Owners, has been challenged
or threatened in any way. None of the subject matter of any of
the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on
the work of a third party.
(iii) All works encompassed by the Copyrights have
been marked with the proper copyright notice.
(g) Trade Secrets
(i) The Company has taken all reasonable
precautions to protect the secrecy, confidentiality, and value
of its Trade Secrets material to the conduct of the Business.
(ii) The Company has good title and an absolute
right to use its Trade Secrets. The Trade Secrets are not part
of the public knowledge or literature, and, to the Knowledge
of the Company and the Owners, have not been used, divulged,
or appropriated either for the benefit of any Person (other
than one or both of the Company) or to the detriment of the
Company. No Trade Secret is subject to any adverse claim or
has been challenged or threatened in any way.
3.22. Software.
(a) Schedule 3.22(a) sets forth under the caption "Owned
Software" a true, correct and complete list of all computer programs (source
code or object code) which were developed for or on behalf of, or have been
purchased by, the Company and which are currently used internally by Company or
which have been distributed by Company and all computer programs under
development by Company but not currently distributed (collectively, the "Owned
Software"), and Schedule 3.22(a) sets forth under the caption "Licensed
Software" a true, correct and complete list of all computer programs (source
code or object code) licensed to Company by another person which are currently
used internally by Company or which have been distributed by Company, whether as
integrated or bundled with any of Company's computer programs or as a separate
stand-alone product (specifically excluding any off-the-shelf computer
33
38
program that is validly and properly licensed under a shrink-wrap license)
(collectively, the "Licensed Software" and, together with the Owned Software,
the "Software").
(b) The Company has good and exclusive title to, and the
valid and enforceable power and unqualified right to sell, license, lease,
transfer, use, create derivative works of, or otherwise exploit, all versions
and releases of the Owned Software and all copyrights thereof, free and clear of
all Security Interests. The Company is in actual possession of the source code
and object code for each computer program included in the Owned Software, and
the Company is in possession of all other documentation, including without
limitation all related engineering specifications, program flow charts,
installation and user manuals and know-how necessary for the effective use of
the Software as currently used in Company's business or as offered or
represented to Company's customers or potential customers. The Company is in
actual possession of the object code and user manuals for each computer program
included in the Licensed Software. The Software constitutes all of the computer
programs necessary to conduct the Company's business as now conducted, and
includes all of the computer programs licensed or offered for license to the
Company's customers and potential customers or otherwise used in the
development, marketing, licensing, sale or support of the products and the
services presently offered by the Company. No person other than Company has any
right or interest of any kind or nature in or with respect to the Owned Software
or any portion thereof or any rights to sell, license, lease, transfer, use or
otherwise exploit the Owned Software or any portion thereof.
(c) Schedule 3.22(c) sets forth a true, correct and
complete list, by computer program, of (A) all persons other than the Company
that have been provided with the source code or have a right to be provided with
the source code (including any such right that may arise after the occurrence of
any specified event or circumstance, either with or without the giving of notice
or passage of time or both) for any of the Owned Software, and (B) all source
code escrow agreements relating to any of the Owned Software (setting forth as
to any such escrow agreement the source code subject thereto and the names of
the escrow agent and all other persons who are actual or potential beneficiaries
of such escrow agreement), and identifies with specificity all agreements and
arrangements pursuant to which the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby would
entitle any third party or parties to receive possession of the source code for
any of the Owned Software or any related technical documentation. No Person
(other than the Company) is in possession of, or has or has had access to, any
source code for any computer program included in the Owned Software.
(d) There are no material defects in any computer program
included in the Software that would adversely affect the functioning thereof in
accordance with any published specifications therefor or in accordance with any
warranties given with respect thereto. Each computer program included in the
Software is in machine readable form and contains all current revisions.
Schedule 3.22(d) sets forth a true, correct and complete list of current claims
of defects by customers of Company under warranties or support and maintenance
agreements. Schedule 3.22(d) sets forth a true, correct and complete list of and
brief description of the status of, any current developments or efforts with
respect to the Owned Software, including without limitation, the development of
new computer programs, enhancements or revisions to existing computer programs
included in the Owned Software and software fixes in progress for any
34
39
person to whom or which the Company has sold, licensed, leased, transferred or
otherwise furnished Software or related products or services.
(e) None of the sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation by Company of any
version or release of any computer program included in the Software obligates or
will obligate Company to pay any royalty, fee or other compensation to any other
person.
(f) The Company does not market, nor has the Company
marketed, and the Company has not supported or is obligated to support, any
Licensed Software separate from the Owned Software.
(g) Except as specified in Schedule 3.22(g): (A) no
agreement, license or other arrangement pertaining to any of the Software
(including, without limitation, any development, distribution, marketing, user
or maintenance agreement, license or arrangement) to which Company is a party
will terminate or become terminable by any party thereto as a result of the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby; and (B) all licenses covering Licensed
Software are of perpetual duration (subject to provisions allowing Company to
terminate and provisions allowing the respective licensors to terminate in the
event of a breach by Company).
3.23. No Infringement.
Neither the existence nor the sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation by Company or any
of its successors or assigns of any Owned Software or Intellectual Property
Assets (and, to Company's Knowledge, the Licensed Software), as such Software or
Intellectual Property Assets, as the case may be, is or was, or is currently
contemplated to be sold, licensed, leased, transferred, used or otherwise
exploited by such persons, does, did or will (A) infringe on any patent,
trademark, copyright or other right of any other person, (B) constitute a misuse
or misappropriation of any trade secret, know-how, process, proprietary
information or other right of any other person or a violation of any relevant
agreement governing the license of the Licensed Software to Company, or (C)
entitle any other person to any interest therein, or right to compensation from
Company or any of its successors or assigns, by reason thereof. The Company has
not received any complaint, assertion, threat or allegation or otherwise has
notice of any lawsuit, claim, demand, proceeding or investigation involving
matters of the type contemplated by the immediately preceding sentence or has
Knowledge of any facts or circumstances that could reasonably be expected to
give rise to any such lawsuit, claim, demand, proceeding or investigation. There
are no restrictions on the ability of Company any of its successors or assigns
to sell, license, lease, transfer, use, reproduce, distribute, modify or
otherwise exploit any Software or Intellectual Property Assets.
3.24. Certain Payments.
Neither the Company nor any of its directors, officers, agents, or
employees, or any other Person associated with or acting for or on behalf of the
Company, has (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to improperly obtain
35
40
favorable treatment in securing business, (ii) to improperly pay for favorable
treatment for business secured, (iii) to improperly obtain special concessions
or for special concessions already obtained, for or in respect of the Company,
or (iv) in violation of any Legal Requirement, (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
3.25. Disclosure.
(a) No representation or warranty of the Company or the
Owners in this Agreement and no statement in the Disclosure Schedule omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
(b) There is no fact known to the Company or any Owner
that has specific application to either the Business of the Company (other than
general economic or industry conditions) and that adversely affects the Acquired
Assets, the Assumed Liabilities, the Business, prospects, financial condition,
or results of operations of the Company that has not been set forth in this
Agreement or the Disclosure Schedule.
3.26. Relationships with Related Persons.
Except as set forth in Schedule 3.26, no Related Person of the Company
has or has had, any interest in any property (whether real, personal, or mixed
and whether tangible or intangible), including any Acquired Asset or Assumed
Liability, used in or pertaining to the Business of the Company. No Related
Person of the Company owns or has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
had business dealings or a material financial interest in any transaction with
the Company.
3.27. Brokers or Finders.
The Company has not incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
3.28. Charter Provisions, Etc.
The Company has taken all action so that the entering into of this
Agreement and the consummation of the Contemplated Transactions do not and will
not result in the grant of any rights to any Person (other than the Owners)
under the Organizational Documents of the Company or restrict the ability of
Per-Se or Purchaser to otherwise exercise the rights of the Company and the
Owners with respect to the Acquired Assets and the Assumed Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF PER-SE AND THE PURCHASER
Per-Se and the Purchaser represent and warrant to the Company and the
Owners as follows:
36
41
4.1. Organization and Good Standing.
Per-Se is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Ohio.
4.2. Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and
binding obligation of Per-Se and the Purchaser, enforceable against Per-Se and
the Purchaser in accordance with its terms. Upon the execution and delivery by
Purchaser of the Employment Agreements, the Employment Agreements will
constitute the legal, valid, and binding obligations of the Purchaser,
enforceable against Purchaser in accordance with their respective terms. Per-Se
and the Purchaser have the right, power, and authority to execute and deliver
this Agreement and to perform their respective obligations under this Agreement.
Purchaser has the right, power, and authority to execute and deliver the
Employment Agreements and to perform its obligations under the Employment
Agreements.
(b) Neither the execution and delivery of this Agreement
by Per-Se or Purchaser nor the consummation or performance of any of the
Contemplated Transactions by Per-Se or Purchaser will give any Person the right
to prevent, delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to:
(i) any provision of Per-Se's or Purchaser's
Organizational Documents;
(ii) any resolution adopted by the board of
directors or the stockholders of Per-Se or Purchaser;
(iii) any Legal Requirement or Order to which
Per-Se or Purchaser may be subject; or
(iv) any material Contract to which Per-Se or
Purchaser is a party or by which Per-Se or Purchaser may be
bound.
Neither Per-Se nor Purchaser is required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3. Certain Proceedings.
There is no pending Proceeding that has been commenced against Per-Se
or Purchaser and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Per-Se's and Purchaser's Knowledge, no such Proceeding has been
Threatened.
37
42
4.4. Brokers or Finders.
Neither Per-Se, Purchaser, or their respective officers and agents have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
5. COVENANTS
5.1. Access and Investigation.
Between the date of this Agreement and the Closing Date, the Company
will, and will cause its Representatives to, (a) afford Per-Se, Purchaser, and
their Representatives (collectively, "Purchaser's Advisors") full and free
access to the Acquired Assets, Assumed Liabilities, the personnel, properties
(including for purposes of subsurface and other environmental testing),
contracts, books and records, and other documents and data of the Company, (b)
furnish Per-Se, Purchaser, and Purchaser's Advisors with copies of all such
contracts, books and records, and other existing documents and data as Per-Se or
Purchaser may reasonably request, and (c) furnish Per-Se, Purchaser, and
Purchaser's Advisors with such additional financial, operating, and other data
and information as Per-Se or Purchaser may reasonably request. In case at any
time after the Closing any further action is necessary to carry out the purposes
of this Agreement, the Company, the Owners, Per-Se, and the Purchaser will take
such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor hereunder). The Company and the Owners
acknowledge and agree that from and after the Closing Per-Se and the Purchaser
will have the right to possession of all documents, books, records (including
Tax records), agreements, and financial data of any sort relating to the
Acquired Assets and the Assumed Liabilities; provided, however, that the Owners
shall have the right to obtain access to such documents, books, records
(including Tax records), agreements, and financial data to the extent related to
the period prior to the Closing and make photocopies thereof for a proper
purpose, such as in connection with the preparation of their Tax Returns.
5.2. Operation of the Business of the Company.
Between the date of this Agreement and the Closing Date, the Company
will:
(a) conduct the Business of the Company only in the
Ordinary Course of Business;
(b) use its Best Efforts to preserve intact the current
business organization and net working capital, keep available the services of
the current officers, employees, and agents, and maintain the relations and good
will with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with the Company;
(c) confer with Per-Se and Purchaser concerning
operational matters of a material nature; and
38
43
(d) otherwise report periodically to Per-Se and Purchaser
concerning the status of the Business, the Acquired Assets, the Assumed
Liabilities, and the operations and finances of the Company.
5.3. Negative Covenant.
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, the Company will not, without the
prior consent of Per-Se and Purchaser, take any affirmative action, or fail to
take any reasonable action within their or its control, as a result of which any
of the changes or events listed in Section 3.14 could occur. Except as set forth
in Schedule 3.14, during the period from April 4, 2001, through the Closing
Date, the Company has not committed and shall not commit to or expend funds
individually in an amount in excess of $10,000, or when considered in the
aggregate, in an amount in excess of $25,000, without the express written
consent of Per-Se and the Purchaser.
5.4. Required Approvals.
As promptly as practicable after the date of this Agreement, the
Company and the Owners will make all filings required by Legal Requirements to
be made by it in order to consummate the Contemplated Transactions. Between the
date of this Agreement and the Closing Date, the Company and the Owners will
cooperate with Per-Se and Purchaser with respect to all filings that Per-Se or
Purchaser elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions.
5.5. Indebtedness.
The Company will cause all Indebtedness owed by the Company to be paid
in full prior to or simultaneous with Closing.
5.6. Company Plans.
Prior to the Closing Date, the Company shall take all corporate action
necessary to terminate, effective no later than the day before the Closing Date,
all Company Plans of the Company.
5.7. No Negotiation.
Until such time, if any, as this Agreement is terminated pursuant to
Section 8, neither the Company nor any Owner will directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Per-Se and
Purchaser) relating to any transaction involving the sale of the Business, the
Acquired Assets, the Assumed Liabilities, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
39
44
5.8. Best Efforts.
Between the date of this Agreement and the Closing Date, each of the
Parties will use their respective Best Efforts to cause the conditions in
Sections 6 and 7 to be satisfied.
5.9. Confidentiality.
The Company and each Owner will treat and hold as confidential all of
the Confidential Information, refrain from using any of the Confidential
Information and deliver promptly to the Purchaser or destroy, at the request and
option of Per-Se or the Purchaser, all tangible embodiments (and all copies) of
the Confidential Information which are in his or its possession. In the event
that the Company or any Owner is requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, the Company or such Owner will notify Per-Se and the
Purchaser promptly of the request or requirement so that Per-Se or the Purchaser
may seek an appropriate protective order or waive compliance with the provisions
of this Section 5.9. If, in the absence of a protective order or the receipt of
a waiver hereunder, the Company or such Owner is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, the Company or such Owner may disclose the Confidential
Information to the tribunal; provided, however, that the Company or such Owner
shall use its reasonable efforts to obtain, at the reasonable request of Per-Se
or the Purchaser and at Per-Se's or the Purchaser's sole expense, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as Per-Se or the Purchaser
shall designate.
5.10. Litigation Support.
Following the Closing, in the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Per-Se, the Purchaser, the Company, or the Owners,
each of the other Parties will reasonably cooperate with the contesting or
defending Party and his or its counsel in the contest or defense, make available
his or its personnel, and provide such testimony and access to his or its books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 9 below).
5.11. Transition.
The Company and each of the Owners will use his or its best efforts not
to take any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other business
associate of the Company from maintaining the same business relationships with
Per-Se and the Purchaser after the Closing as it maintained with the Company
prior to the Closing.
40
45
5.12. Assignment of Interests in Acquired Assets.
Nothing in this Agreement shall be deemed to constitute or require an
assignment or an attempt to assign any of the Acquired Assets if the attempted
assignment without the consent of a third party would materially adversely
affect in any way the rights of either Company, Per-Se, or Purchaser. If any
such consent shall not have been obtained at or prior to the Closing, or the
attempted transfer or assignment of any of the Acquired Assets would have an
adverse effect on Per-Se, Purchaser or Company, Company will cooperate with
Per-Se and Purchaser in any reasonable arrangement designed to provide for
Purchaser the rights and benefits of such Acquired Assets, including, enforcing
for the benefit of Purchaser any or all rights of Company under any agreements
against any other party arising out of the breach or cancellation by such other
party, while permitting Purchaser the possession and use of such Acquired Assets
for Purchaser's account as if such Acquired Assets had been so transferred,
assigned and delivered, or otherwise. Pending the obtaining of such consents,
approvals or novations, Purchaser will continue performance of any remaining
unfulfilled obligations of Company under any of the agreements in the same
manner as though the same were subcontracted to Purchaser on the same terms and
conditions as contained in the agreements.
5.13. Use of Company Name.
The Company and the Owners acknowledge and agree that all of their
rights in and to, and ownership of, the name of the Company and any names
related or substantially similar thereto shall be transferred hereunder to the
Purchaser. From and after the Closing, the Company and the Owners shall be
prohibited from using such names, except as necessary to effect the change of
its corporate name or to evidence that such change has occurred. No later than
three (3) days following the Closing Date, the Company and the Owners shall have
filed all documents with the appropriate governmental authorities in the State
of Ohio, and such other states as the Company is so qualified and registered, to
change the name of the Company to a name which does not contain the words
"Virtual Information Systems", "VIS", or any other substantially similar words.
5.14. Tax Matters.
(a) With respect to the transactions contemplated by this
Agreement, Per-Se, the Purchaser, the Company, and the Owners will provide each
other with such cooperation and information as either of them may reasonably
require of the other in connection with the filing of any Tax Return, including
Tax Returns relating to the application of the successor employer rules for
payroll Tax purposes contained in Code Sections 3121(a)(1) and 3306(b)(1), the
determination of a liability for Taxes or a right to a refund for Taxes, or the
preparation for litigation or investigation of any claim for Taxes or a right to
a refund for Taxes, or the preparation for cooperation and information shall
include all relevant Tax Returns, and other documents and records, or portions
thereof relating to or necessary in connection with the preparation of records,
or portions thereof relating to or necessary in connection with the preparation
of such Tax Returns or other determination of Tax Liability. Each Party shall
retain all Tax Returns, schedules, workpapers, and all other materials, records
or documents until the expiration of the statute of limitations for the taxable
years to which such Tax Returns and other documents relate. After expiration of
the statute of limitations, a Party shall notify the each other
41
46
Party in writing that it desires to dispose of or destroy the Tax Returns and
other documents and shall provide such other Parties with the right for thirty
(30) days after the tendering of such notice to copy or take possession of such
Tax Returns and other documents. Any information obtained under this provision
shall be kept confidential by the Parties, except as may be necessary in
connection with the filing of such Tax Returns.
(b) Per-Se, the Purchaser and the Company agree to waive
compliance with applicable bulk sales notification statutes and regulations, in
connection with the sale of the Acquired Assets to the Purchaser.
(c) The Parties agree that the Company shall pay the
sales Tax and the transfer Tax on the transfer of personal property which
constitute the Acquired Assets, and the Company shall indemnify, defend and hold
Per-Se and the Purchaser harmless with respect to such Taxes. Each Party shall
file, or cooperate with the other Parties in filing, all necessary documentation
and Tax Returns with respect to such sales Taxes and transfer Taxes with respect
to the Acquired Assets.
6. CONDITIONS PRECEDENT TO PER-SE'S AND THE PURCHASER'S OBLIGATION TO
CLOSE
Per-Se's and Purchaser's obligation to effect the Closing and to take
the other actions required to be taken by Per-Se and Purchaser at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Per-Se or Purchaser, in
whole or in part):
6.1. Accuracy of Representations.
The representations and warranties of the Company and the Owners in
this Agreement must have been accurate as of the date of this Agreement, and
must be accurate as of the Closing Date as if made on the Closing Date.
6.2. Performance of Company and Owners.
(a) The covenants and obligations that the Company and
the Owners are required to perform or to comply with pursuant to this Agreement
at or prior to the Closing must have been duly performed and complied with.
(b) The Company must have delivered each of the following
executed documents:
(i) an Employment Agreement between Purchaser
and each Owner, in the form of Exhibit B (each, an "Employment
Agreement");
(ii) a Noncompetition and Assignment of
Inventions Agreement with a term of three (3) years, in the
form of Exhibit C, executed by each of the Company, and each
Owner (each, a "Noncompetition Agreement");
42
47
(iii) a Release Agreement, in the form of Exhibit
D, executed by each Owner, and each executive officer and
director of the Company (each, a "Release Agreement");
(iv) such instruments and documents as may be
requested by Per-Se or Purchaser in order to complete the
transfer of the Acquired Assets and the Assumed Liabilities to
the Purchaser, including without limitation, a xxxx of sale
and assignment and assumption agreement, in form and substance
satisfactory to Per-Se and the Purchaser;
(v) a certificate executed by the Company
representing and warranting to Per-Se and the Purchaser that
each of the Company's and the Owners' representations and
warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects
as of the Closing Date as if made on the Closing Date; and
(vi) a certificate of the Secretary of the
Company as to the incumbency of its officers, a copy of a
certificate evidencing the incorporation and good standing of
the Company, a copy of the articles of incorporation and
bylaws of the Company, and a copy of the resolutions adopted
by the board of directors and shareholders of the Company with
respect to the transactions contemplated by this Agreement.
6.3. Consents.
Each of the Consents identified in Exhibit E must have been obtained
and must be in full force and effect.
6.4. Release of Security Interests.
The Company shall have satisfied all obligations owed to its creditors
necessary to permit the Purchaser to obtain clear title to the Acquired Assets,
or, in the alternative, shall have obtained payoff letters from such creditors,
in form and substance satisfactory to Per-Se and the Purchaser, which contain
payoff information with respect to the satisfaction such obligations, and
provided such payoff letters to Per-Se and the Purchaser.
6.5. Additional Documents.
Each of the following documents shall have been delivered to Per-Se and
the Purchaser:
(a) an opinion of Xxxxxx, Xxxxxxxxx & XxXxxxx, P.S.C.,
counsel to the Company and the Owners, dated the Closing Date, in the form of
Exhibit F;
(b) estoppel certificate executed on behalf of the
landlords of the facility located at 00000 Xxxxxx Xxxx, Xxxxx 000, Xxxxx
Xxxxxxxx, Xxxx, dated as of a date not more than twenty (20) days prior to the
Closing Date, each in the form of Exhibit G; and
43
48
(c) such other documents as Per-Se or the Purchaser may
reasonably request for the purpose of (i) enabling its counsel to provide the
opinion referred to in Section 7.3(a), (ii) evidencing the accuracy of the
representations and warranties of the Company and the Owners, (iii) evidencing
the performance by Company and the Owners of, or the compliance by the Company
and the Owners with, any covenant or obligation required to be performed or
complied with by the Company and the Owners, (iv) evidencing the satisfaction of
any condition referred to in this Section 6, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
6.6. No Proceedings.
Since the date of this Agreement, there must not have been commenced or
Threatened any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, (b) that
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions, or (c) that involves any
material claim against the Company.
6.7. Termination of Company Plans.
The Company shall have taken all corporate action necessary to
terminate, effective no later than the day before the Closing Date, all Company
Plans of the Company which are intended to qualify as tax-qualified retirement
plans under Code Section 401(a), and evidence of the same shall have been
delivered to Per-Se and the Purchaser.
6.8. No Claim Regarding Ownership or Sale Proceeds.
There must not have been made or Threatened by any Person any claim
asserting that such Person (other than the Company or an Owner) (a) is the
holder or the beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any capital stock of, or any other voting, equity, or
ownership interest in, the Company, (b) has any interest in or right to acquire
the Acquired Assets or the Assumed Liabilities, or (c) is entitled to all or any
portion of the Asset Purchase Consideration.
6.9. No Prohibition.
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Per-Se, Purchaser or any Person affiliated with Per-Se or
Purchaser to suffer any material adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before any
Governmental Body.
6.10. Due Diligence.
Per-Se's and Purchaser's due diligence investigation and review and
audit of the Disclosure Schedule shall not reveal any fact or circumstance which
in Per-Se's or Purchaser's judgment would make the completion of the
Contemplated Transactions inappropriate or inadvisable.
44
49
7. CONDITIONS PRECEDENT TO THE COMPANY'S AND THE OWNERS' OBLIGATION TO
CLOSE
The Company's and the Owners' obligation to effect the Closing and to
take the other actions required to be taken by the Company and the Owners at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the Company, in whole or
in part):
7.1. Accuracy of Representations.
Per-Se's and Purchaser's representations and warranties in this
Agreement must have been accurate as of the date of this Agreement and must be
accurate as of the Closing Date as if made on the Closing Date.
7.2. Per-Se's and Purchaser's Performance.
(a) The covenants and obligations that Per-Se and
Purchaser are required to perform or to comply with pursuant to this Agreement
at or prior to the Closing must have been performed and complied with.
(b) Purchaser must have executed and delivered each of
the Employment Agreements, and Per-Se and the Purchaser must have executed and
delivered the Noncompetition Agreements.
7.3. Additional Documents.
Per-Se and Purchaser must have caused the following documents to be
delivered to the Company:
(a) an opinion of each of Powell, Goldstein, Xxxxxx &
Xxxxxx LLP, and Xxxxxx X. Xxxxx, Xx., counsel to Per-Se and the Purchaser, dated
the Closing Date, in the form of Exhibit H; and
(b) a certificate executed by Per-Se and the Purchaser
representing and warranting to the Company that each of Per-Se's and the
Purchaser's representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date;
(c) a certificate of the Secretary of each of Per-Se and
the Purchaser as to the incumbency of its respective officers, a copy of a
certificate evidencing the incorporation and good standing of each of Per-Se and
Purchaser, a copy of the articles or certificate of incorporation and bylaws of
each of Per-Se and the Purchaser, and a copy of the resolutions adopted by the
board of directors of each of Per-Se and the Purchaser with respect to the
transactions contemplated by this Agreement; and
(d) such other documents as the Company or the may
reasonably request for the purpose of (i) enabling their counsel to provide the
opinion referred to in Section 6.5(a), (ii) evidencing the accuracy of any
representation or warranty of Per-Se or Purchaser,
45
50
(iii) evidencing the performance by Per-Se or Purchaser of, or the compliance by
Per-Se and Purchaser with, any covenant or obligation required to be performed
or complied with by Per-Se and Purchaser, (iv) evidencing the satisfaction of
any condition referred to in this Section 7, or (v) otherwise facilitating the
consummation of any of the Contemplated Transactions.
7.4. No Injunction.
There must not be in effect any Legal Requirement or any injunction or
other Order that prohibits the Contemplated Transactions.
8. TERMINATION
8.1. Termination Events.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Per-Se or Purchaser on the one hand, or the
Company on the other hand, if a material breach of any provision of this
Agreement has been committed by the other Party and such breach has not been
waived;
(b) (i) by Per-Se or Purchaser if any of the
conditions in Section 6 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Per-Se or Purchaser to comply with its respective obligations
under this Agreement) and neither Per-Se nor Purchaser has waived such condition
on or before the Closing Date; or (ii) by the Company, if any of the conditions
in Section 7 has not been satisfied of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of the
Company or the Owners to comply with their obligations under this Agreement),
and neither the Company nor the Owners has waived such condition on or before
the Closing Date;
(c) by mutual consent of Per-Se, Purchaser, and the
Company; or
(d) by either Per-Se or Purchaser on the one hand, or the
Company on the other hand, if the Closing has not occurred (other than through
the failure of any Party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before April 30, 2001, or such
later date as the parties may agree upon.
8.2. Effect of Termination.
Each Party's right of termination under Section 8.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 8.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
5.9, 10.1, 10.2, 10.4, 10.13 and 10.15 will survive; provided, however, that if
this Agreement is terminated by a party because of the breach of the Agreement
by the other Party or because one or more of the conditions to the terminating
Party's obligations under this Agreement is not satisfied as a result of the
other Party's failure to comply with its obligations
46
51
under this Agreement, the terminating Party's right to pursue all legal remedies
will survive such termination unimpaired.
9. INDEMNIFICATION; REMEDIES
9.1. Survival.
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, the certificate delivered pursuant to
Sections 6.2(b)(v) and 7.3(b), and any other certificate or document delivered
pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
9.2. Indemnification and Payment of Damages by the Company and the
Owners.
The Company and the Owners, jointly and severally, will indemnify and
hold harmless Per-Se, Purchaser, and their respective Representatives,
stockholders, controlling persons, and Affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by
the Company or the Owners in this Agreement, the Disclosure Schedule, or any
other certificate or document delivered by the Company or Owners pursuant to
this Agreement;
(b) any breach by the Company or Owners of any covenant
or obligation of the Company or Owners in this Agreement;
(c) any Liability of the Company which is not included
among the Assumed Liabilities; and
(d) any of the Excluded Assets.
9.3. Indemnification and Payment of Damages by Per-Se and
Purchaser.
Per-Se and Purchaser will indemnify and hold harmless the Company and
the Owners, and will pay to the Company and the Owners the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any breach of
any representation or warranty made by Per-Se or Purchaser in this Agreement or
in any certificate delivered by Per-Se or Purchaser
47
52
pursuant to this Agreement, or (b) any breach by Per-Se or Purchaser of any
covenant or obligation of Per-Se or Purchaser in this Agreement.
9.4. Time Limitations.
If the Closing occurs, neither the Company nor the Owners will have any
liability (for indemnification or otherwise) with respect to any representation
or warranty other than those in Sections 3.1, 3.2, 3.5, 3.6, 3.8, 3.9, 3.10,
3.11, 3.17, 3.25, and 3.27 unless on or before the three (3) year anniversary of
the Closing Date, Per-Se or Purchaser notifies the Company of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Per-Se or Purchaser; a claim with respect to Sections 3.1, 3.2, 3.5, 3.6, 3.8,
3.9, 3.10, 3.11, 3.17, 3.25 and 3.27 or a claim for indemnification or
reimbursement based upon any other representation or warranty not otherwise
specifically referenced above, or any covenant or obligation to be performed and
complied by the Company or the Owners, may be made at any time.
9.5. Limitations on Amount - Company and Owners.
(a) The Company and the Owners will not have any
liability (for indemnification or otherwise) with respect to the matters
described in Section 9.2 (other than a breach of Sections 3.1, 3.2, 3.5, 3.6,
3.8, 3.9, 3.10, 3.11, 3.17, 3.25 and 3.27) until the total of all Damages with
respect to such matters exceeds $70,000. The limitation contained in this
Section 9.5(a) shall not apply with respect to any claim with respect to
Sections 3.1, 3.2, 3.5, 3.6, 3.8, 3.9, 3.10, 3.11, 3.17, 3.25 and 3.27 or a
claim for indemnification or reimbursement based upon any other representation
or warranty not otherwise specifically referenced above, or any covenant or
obligation to be performed and complied by the Company or the Owners.
(b) The Company's and the Owners' maximum liability for
Damages with respect to a claim for indemnification or reimbursement based upon
a breach of the representations and warranties contained in Article 3 of this
Agreement (other than a breach of Sections 3.1, 3.2, 3.5, 3.6, 3.8, 3.9, 3.10,
3.11, 3.17, 3.25 and 3.27) shall be limited to and shall not exceed the Asset
Purchase Consideration in the aggregate. The limitation contained in this
Section 9.5(b) shall not apply with respect to any claim with respect to
Sections 3.1, 3.2, 3.5, 3.6, 3.8, 3.9, 3.10, 3.11, 3.17, 3.25 and 3.27 or a
claim for indemnification or reimbursement based upon any other representation
or warranty not otherwise specifically referenced above, or any covenant or
obligation to be performed and complied by the Company or the Owners.
9.6. Limitations on Amount - Per-Se and Purchaser.
(a) Neither Per-Se nor Purchaser will have any liability
(for indemnification or otherwise) with respect to the matters described in
Section 9.3 until the total of all Damages with respect to such matters exceeds
$70,000.
(b) Per-Se's and Purchaser's maximum liability for
Damages with respect to a claim for indemnification or reimbursement based on a
breach of representations and warranties contained in Article 4 of this
Agreement shall be limited to and shall not exceed the Asset Purchase
Consideration in the aggregate.
48
53
9.7. Procedure for Indemnification -- Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 9.2 or 9.3, of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 9.7(a) is
brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party will,
unless the claim involves Taxes, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is also a
party to such Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its financial
capacity to defend such Proceeding and provide indemnification with respect to
such Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 9 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other claims that may
be made against the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within ten days after the indemnified party's notice is given,
give notice to the indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will be bound by any determination made
in such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
49
54
(d) The Company, the Owners, Per-Se, and the Purchaser
hereby consent to the non-exclusive jurisdiction of any court in which a
Proceeding is brought against any Indemnified Person for purposes of any claim
that an Indemnified Person may have under this Agreement with respect to such
Proceeding or the matters alleged therein, and agree that process may be served
on such Persons with respect to such a claim anywhere in the world.
9.8. Procedure for Indemnification -- Other Claims.
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
10. GENERAL PROVISIONS
10.1. Expenses.
Except as otherwise expressly provided in this Agreement, each Party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each Party to pay its own expenses will be subject to any rights
of such Party arising from a breach of this Agreement by another Party.
10.2. Public Announcements.
Neither the Company nor the Owners shall issue any press release or
make any public announcement relating to the subject matter of this Agreement or
the Contemplated Transactions without the prior written approval of Per-Se or
the Purchaser. Per-Se or Purchaser, upon prior notice to the Company, may make
any public disclosure it believes in good faith is required or permitted by
applicable law or any listing or trading agreement concerning its
publicly-traded securities.
10.3. Notices.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other Parties):
50
55
If to the Company or the Owners:
Virtual Information Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxxxx & XxXxxxx, P.S.C.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Per-Se or Purchaser, to:
Per-Se Technologies, Inc.
0000 Xx. Xxxxxxxxx Xxxx.
Xxxxxxx XX 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. XxXxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
10.4. Jurisdiction; Service of Process.
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Georgia, County of Xxxxxx, or, if it has
or can acquire jurisdiction, in the United States District Court for the
Northern District of Georgia, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
51
56
10.5. Further Assurances.
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
10.6. Waiver.
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
10.7. Entire Agreement and Modification.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
10.8. Disclosure Schedule.
(a) The disclosures in the Disclosure Schedule must
relate only to the representations and warranties in the Section of the
Agreement to which they expressly relate and not to any other representation or
warranty in this Agreement.
(b) In the event of any inconsistency between the
statements in the body of this Agreement and those in the Disclosure Schedule
(other than an exception expressly set forth as such in the Disclosure Schedule
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
(c) No due diligence conducted by Per-Se or Purchaser
shall limit or be used as a defense by the Company or the Owners with respect to
any claim of breach of a representation, warranty or covenant by the Company or
the Owners under this Agreement.
52
57
10.9. Assignments, Successors, and No Third-Party Rights.
No Party may assign any of its rights under this Agreement without the
prior consent of the other Parties, except that Per-Se and Purchaser may assign
any of its rights under this Agreement to any Affiliate of Per-Se or Purchaser.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the Parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the Parties any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the Parties and their successors and
assigns.
10.10. Severability.
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.11. Section Headings; Construction.
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
10.12. Time of Essence.
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
10.13. Governing Law.
This Agreement will be governed by the laws of the State of Georgia
without regard to conflicts of laws principles.
10.14. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
10.15. Arbitration.
Except as otherwise set forth in this Agreement, all disputes arising
out of or under this Agreement shall be settled by arbitration in a location in
the Atlanta, Georgia mutually acceptable to the Parties before a single
arbitrator pursuant to the rules of the American
53
58
Arbitration Association. Arbitration may be commenced at any time by any of the
Parties by giving written notice to each other than such dispute has been
referred to arbitration under this Section 10.15. The arbitrator shall be
selected by the joint agreement of the Parties, but if they do not so agree
within twenty (20) days after the date of receipt of the notice referred to
above, the selection shall be made pursuant to the rules from the panels of
arbitrators maintained by the American Arbitration Association. Any award
rendered by the arbitrator shall be conclusive and binding upon the Parties
hereto; provided, however, that any such award shall be accompanied by a written
opinion of the arbitrator giving the reason for the award. This provision for
arbitration shall be specifically enforceable by the Parties and the decision of
the arbitrator in accordance herewith shall be final and binding and there shall
be no right of appeal therefrom. The arbitrator shall assess, as part of his
award to the prevailing Party, all or such part as the arbitrator deems proper
of the arbitration expenses of the prevailing Party (including reasonable
attorneys' fees) and of the arbitrator against the Party that is unsuccessful in
such claim, defense or objection.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
54
59
IN WITNESS WHEREOF, the parties have executed, sealed and delivered
this Agreement as of the date first written above.
PER-SE:
Per-Se Technologies, Inc.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President and Chief
Financial Officer
PURCHASER:
Health Data Services, Inc.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President and Chief
Financial Officer
COMPANY:
Virtual Information Systems, Inc.
By: /s/ XXXX X. XXXXXXX
--------------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------------
Title: President
-----------------------------------------
OWNERS:
/s/ XXXX X. XXXXXXX
-----------------------------------------------
Xxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXX
-----------------------------------------------
Xxxxxxx X. Xxxxx
