Exhibit 2.2
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (the "Agreement") is entered into as of
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December 9, 1998 (the "Effective Time"), by and between Pointshare Corporation,
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a Delaware corporation ("Buyer"), and Peregrin Medical Review, Inc., an Oregon
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corporation ("Seller") and Xxxxxx X. Xxxxx, an individual residing in the State
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of Oregon and the principal stockholder of Seller ("Bosch").
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RECITALS
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Buyer is in the business of providing on-line solutions to health care
organizations. Seller conducts a business which operates an electronic network
among health care organizations. Buyer desires to acquire from Seller, and
Seller and Bosch desires to sell to Buyer, substantially all of the assets of
the Business (as defined below) on the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT
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In consideration of the mutual agreements, representations, warranties and
covenants set forth below, Buyer, Seller and Bosch agree as follows:
1. Definitions.
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1.1 Definitions. As used in this Agreement, the following terms shall
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have the following meanings:
"Affiliate" means with respect to any Person, a Person directly or
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indirectly controlling or controlled by or under common control with such
Person.
"Business" means the operation of the OMEN Network and all services
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and activities of Seller related thereto.
"Closing" means the consummation of the transactions contemplated
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hereby.
"Closing Date" means the date of the Closing.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Employees" means employees of Seller who have been principally
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involved in the operation of the Business.
"GAAP" means generally accepted accounting principles of the United
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States as set forth by the Financial Accounting Standards Board.
"Governmental Authorizations" means the permits, authorizations,
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consents or approvals of any Governmental Entity which are a condition to the
lawful consummation of the transactions contemplated hereby listed on Schedule
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1.1(i) to this Agreement.
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"Governmental Entity" means any court, or any federal, state,
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municipal or other governmental authority, department, commission, board, agency
or other instrumentality (domestic or foreign).
"Lien" means any mortgage, pledge, lien, security interest, option,
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covenant, condition, restriction, encumbrance, charge or other third-party claim
of any kind.
"Material Adverse Effect" with respect to a Person means any event,
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change or effect that is materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, business, operations, results of
operations, or prospects of such Person and its Affiliates, taken as a whole.
"OMA Network Operation Agreement" means that certain agreement dated
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November 1, 1997 by and between Seller and the Oregon Medical Association.
"OMEN Network" means the electronic network operated by Seller in
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connection with the Oregon Medical Association pursuant to the OMA Network
Operation Agreement.
"Person" means an individual, corporation, partnership, association,
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trust, government or political subdivision or agent or instrumentality thereof,
or other entity or organization.
"Taxes" means all taxes, however denominated, including any interest,
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penalties or other additions to tax that may become payable in respect thereof,
(i) imposed by any federal, territorial, state, local or foreign government or
any agency or political subdivision of any such government, for which Buyer
could become liable as successor to or transferee of the Business or the
Purchased Assets or which could become a charge against or lien on any of the
Purchased Assets, which taxes shall include, without limiting the generality of
the foregoing, all sales and use taxes, ad valorem taxes, excise taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, real property gains taxes, transfer taxes, payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, and other governmental charges, and other obligations of the
same or of a similar nature to any of the foregoing, which are required to be
paid, withheld or collected, or (ii) any liability for amounts referred to in
(i) as a result of any obligations to indemnify another person.
2. Sale and Purchase
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2.1 Transfer of Assets. Subject to the terms and conditions of
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this Agreement, Seller shall sell, assign, grant, transfer, and deliver (or
cause to be sold, assigned, granted, transferred and delivered) to Buyer, or to
any Affiliate of Buyer designated by Buyer, and Buyer shall purchase and accept
from Seller as of the Closing Date, free and clear of all
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Liens, all of the Seller's rights, title and interest in and to the following
assets, properties and business, other than the Excluded Assets (as defined
below), owned, held or used in the conduct of the Business by Seller as the same
shall exist on the Closing Date (the "Purchased Assets"):
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(a) tangible personal property and leases of and other interests in
tangible personal property used in connection with the Business listed on
Schedule 2.1(a);
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(b) all rights under contracts, agreements, licenses, commitments,
sales and purchase orders and other instruments relating to the Business,
including, without limitation, the items listed on Schedule 2.1(b) (collectively
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the "Contracts");
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(c) all accounts receivable, notes receivable and other receivables
relating to the Business;
(d) all prepaid expenses relating to the Business including, but not
limited to Taxes, leases and rentals;
(e) all of Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased Assets and/or
the Business, including, without limitation, unliquidated rights under
warranties;
(f) all copyrights, copyright registrations, proprietary processes,
trade secrets, license rights, specifications, technical manuals and data,
drawings, inventions, designs, patents, patent applications, trade names,
trademarks, service marks, product information and data, know-how and
development work-in-progress, customer lists, domain names, software, business
and marketing plans and other intellectual or intangible property embodied in or
pertaining to the Business, whether pending, applied for or issued, whether
filed in the United States or in other countries, including without limitation
the items listed in Schedule 2.1(f), together with all associated goodwill;
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(g) all things authored, discovered, developed, made, perfected,
improved, designed, engineered, acquired, produced, conceived or first reduced
to practice by Seller or any of its employees or agents that are embodied in,
derived from or relate to the Business, in any stage of development, including,
without limitation, modifications, enhancements, designs, concepts, techniques,
methods, ideas, flow charts, coding sheets, notes and all other information
relating to the Business;
(h) any and all design and code documentation, methodologies,
processes, trade secrets, copyrights, design information, product information,
technology, formulae, routines, engineering specifications, technical manuals
and data, drawings, inventions, know-how, techniques, engineering work papers,
and notes, development work-in-process, and other proprietary information and
materials of any kind relating to, used in, or derived from the Purchased Assets
and/or the Business (collectively with subsections (f) and (g), the
"Intellectual Property");
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(i) all permits, authorizations, consents and approvals of any
Governmental Entity affecting or relating in any way to the Business, including
without limitation, the items listed on Schedule 2.1(i) (the "Permits");
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(j) all books, records files and papers, whether in hard copy or
electronic format, used in the Business, including without limitation,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present, former and prospective
suppliers or customers, personnel and employment records, and any information
relating to Taxes imposed on the Business or Purchased Assets;
(k) all computer software programs, data and associated licenses used
in connection with the Business; and
(l) all goodwill associated with the Business or the Purchased
Assets, together with the right to represent to third parties that Buyer is the
successor to the Business.
2.2 Excluded Assets. Buyer agrees that the assets of Seller listed on
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Schedule 2.2 hereto (the "Excluded Assets") shall be excluded from the Purchased
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Assets.
2.3 Transfer of Liabilities. Subject to the terms and conditions of this
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Agreement, Buyer or an Affiliate of Buyer designated by Buyer agrees, effective
as of the Closing Date, to assume the following liabilities (the "Assumed
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Liabilities").
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(a) the liabilities set forth on Schedule 2.3(a) to the extent set
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forth thereon; and
(b) the liabilities and obligations of Seller accruing under the
Contracts after the Closing Date, other than the liabilities attributable to any
failure by Seller to comply with the terms thereof.
2.4 Excluded Liabilities. Except for those liabilities expressly assumed
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by Buyer or any Affiliate designated by Buyer pursuant to Section 2.3, Buyer
shall not assume and shall not be liable for, and Seller and its direct or
indirect subsidiaries shall retain and remain solely liable for and obligated to
discharge, all of the debts, contracts, agreements, commitments, obligations and
other liabilities of any nature whatsoever of Seller and its direct and indirect
subsidiaries, whether known or unknown, accrued or not accrued, fixed or
contingent, including without limitation, the following:
(a) Any liability for breaches by Seller or any of its direct or
indirect subsidiaries on or prior to the Closing Date of any contract or any
other instrument, contract or purchase order or any liability for payments or
amounts due under any Contract or any other instrument, contract or purchase
order on or prior to the Closing Date;
(b) Any liability or obligation for Taxes attributable to or imposed
upon Seller or any of its direct or indirect subsidiaries, or attributable to or
imposed upon the Purchased Assets for any period (or portion thereof) through
the Closing Date, including, without limitation, any Taxes attributable to or
arising from the transactions contemplated by this Agreement;
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(c) Any liability or obligation for or in respect of any loan, other
indebtedness for money borrowed, or account payable of Seller, its shareholders
or any of Seller's direct or indirect subsidiaries, including any such
liabilities owed to Affiliates of Seller;
(d) Any liability or obligation arising as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any time,
to the extent relating to any action or omission on or prior to the Closing Date
by or on behalf of Seller, its shareholders or any of Seller's direct or
indirect subsidiaries, including, without limitation, any liability for
infringement of intellectual property rights, claims of ownership regarding the
Purchased Assets, breach of product warranty, injury or death caused by
products, or violations of federal or state securities or other laws;
(e) Any liability or obligation arising on or prior to the Closing
Date out of any "employee benefit plan," as such term is defined by the Employee
Retirement Income Security Act of 1974 ("ERISA") or other employee benefit
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plans;
(f) Any liability or obligation for making payments of any kind
(including as a result of the sale of Purchased Assets or as a result of the
termination of employment or consultancy by Seller of Employees, or other claims
arising out of the terms and conditions of employment or consultancy with
Seller, or for vacation or severance pay or otherwise) to Employees of Seller or
in respect of payroll taxes for Employees of Seller;
(g) Any liability of Seller incurred in connection with the making or
performance of this Agreement and the transactions contemplated hereby;
(h) Any liability of Seller arising out of the violation of or
failure to comply with any federal, state, local or foreign laws and regulations
related to the environment or hazardous materials applicable to any aspect of
the Business; and
(i) Any costs or expenses of Seller incurred in connection with
shutting down, deinstalling and removing equipment not purchased by Buyer, and
the costs associated with all contracts and agreements not assumed by Buyer.
2.5 Purchase Price. Subject to the performance by Seller of all of its
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obligations under this Agreement (including delivering all documents required to
be delivered) at the Closing, in consideration of the acquisition of the
Purchased Assets under Section 2.1, Buyer agrees (a) to deliver to Seller or an
account or accounts designated by Seller $146,104.94, in immediately available
funds (the "Immediate Consideration"); (b) to pay those certain liabilities in
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the aggregate amount of $13,572.73, identified on Schedule 2.5(a) (the "Closing
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Liabilities"); (c) to deliver to Imperial Trust Company (the "Escrow Agent") or
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an account or accounts designated by Escrow Agent (the "Escrow") $36,526.23
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payable in immediately available funds (the "Escrow Consideration") which Escrow
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Consideration shall be subject to the provisions of the Escrow Agreement
attached as Exhibit A to this Agreement (the "Escrow Agreement"); and (d) to
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assume all the Assumed Liabilities. On January 4, 1999, in further
consideration of the acquisition of the Purchased Assets under Section 2.1,
Buyer agrees to deliver to Seller or an account or accounts designated by Seller
$182,631.17, in immediately available funds (the
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"Additional Consideration") (the Immediate Consideration, Additional
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Consideration, Escrow Consideration, and the Closing Liabilities being referred
to collectively as the "Purchase Price").
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2.6 Allocation of Purchase Price. The Purchase Price shall be allocated
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among the Purchased Assets as provided in an exhibit to be prepared by Buyer for
purposes of complying with the requirements of Section 1060 of the Code and the
regulations thereunder. As soon as practicable after the delivery of the
Effective Balance Sheet, Buyer shall deliver to Seller a revised allocation,
which revised allocation shall be reasonably consistent with the principles of
the allocation set forth in the exhibit to be attached hereto as determined by
Buyer in its good faith discretion. Buyer and Seller agree to each prepare and
file on a timely basis with the Internal Revenue Service (and applicable state
tax authorities) substantially identical and supplemental Internal Revenue
Service Forms 8594 (and corresponding state tax forms) consistent with Buyer's
allocation of the Purchase Price. If any Tax authority challenges such
allocation, the party receiving notice of such challenge shall give the other
prompt written notice thereof and the parties shall cooperate in order to
preserve the effectiveness of such allocation.
3. Closing
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3.1 Closing. Subject to the terms and conditions of this Agreement, the
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Closing shall take place on such date, as soon as practicable after all
conditions precedent in Sections 8 and 9 have been satisfied or waived, as the
parties may agree, but in any case, no later than December 9, 1998 (the "Closing
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Date").
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3.2 Actions at the Closing. At the Closing, Seller shall deliver the
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Purchased Assets to Buyer, Buyer shall deliver the Immediate Consideration to
Seller and deliver the Escrow Consideration to the Escrow Agent and Buyer and
Seller shall take such actions and execute and deliver such agreements, bills of
sale, and other instruments and documents as necessary or appropriate to effect
the transactions contemplated by this Agreement in accordance with its terms,
including without limitation the following:
(a) Xxxx of Sale; Assignment and Assumption Agreement. Seller shall
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deliver to Buyer a general Xxxx of Sale, substantially in the form attached
hereto, and with respect to each Contract, or item of Intellectual Property, an
Assignment and Assumption, substantially in the form attached hereto, (the
"Transfer Documents") in each case duly executed by Seller, and in the aggregate
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assigning to Buyer all of Seller's right, title and interest in and to the
Purchased Assets. Buyer may designate one or more of its Affiliates as the
recipient of certain of the Purchased Assets, and as the party to assume certain
of the Assumed Liabilities, in which case Seller shall transfer such Purchased
Assets and Assumed Liabilities to Buyer or the Affiliate(s) designated by Buyer
pursuant to such Transfer Documents.
(b) Purchase Price. Buyer shall deliver the Immediate Consideration
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to Seller and the Escrow Consideration to the Escrow Agent.
(c) Title. Seller shall provide reasonable evidence of valid title to
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such of the Purchased Assets as Buyer may reasonably request in writing prior to
the Closing, in form and substance reasonably satisfactory to Buyer.
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(d) Third Party Consents and Assignments. Seller shall deliver to
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Buyer any assignments, and any required consents to assignment, that it has
obtained in respect of the Contracts, duly executed by parties having the
authority to so assign or consent to assign, in form and substance as Buyer
shall reasonably request, as well as a written confirmation from such third
parties that the Contracts are in good standing.
(e) Seller Documents. At the Closing, Seller shall deliver to Buyer
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any and all documents required to satisfy the conditions set forth in Section 9
of this Agreement and any other closing documents reasonably requested by Buyer.
(f) Buyer Documents. At the Closing, Buyer shall deliver to Seller
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any and all documents required to satisfy the conditions set forth in Section 8
of this Agreement and any other closing documents reasonably requested by
Seller.
(g) Post-Closing Actions. Subsequent to the Closing Date, Seller
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shall, and shall cause any Affiliate of Seller to, from time to time execute and
deliver, upon the request of Buyer, all such other and further materials and
documents and instruments of conveyance, transfer or assignment as may
reasonably be requested by Buyer to effect, record or verify the transfer to and
vesting in Buyer of Seller's and any of Seller's Affiliates' right, title and
interest in and to the Purchased Assets, free and clear of all Liens in
accordance with the terms of this Agreement.
4. Representations and Warranties of Seller and Bosch
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Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
In all other respects, each representation and warranty set out in this Section
4 is not qualified in any way whatsoever, will not merge on Closing or by reason
of the execution and delivery of any agreement, document or instrument at the
Closing, will remain in force on and after the Closing Date, is given with the
intention that liability is not confined to breaches discovered before Closing,
is separate and independent and is not limited by reference to any other
representation or warranty or any other provision of this Agreement, and is made
and given with the intention of inducing the Buyer to enter into this Agreement.
Each of Seller and Bosch separately represent and warrant to Buyer as follows:
4.1 Organization, Standing and Power. Seller is a corporation duly
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organized and validly existing under the laws of the state of Oregon. Seller
has the requisite corporate power and authority and all necessary permits,
authorizations, consents, and approvals of all Governmental Entities to own,
lease and operate its properties and to carry on the Business as now being
conducted and as proposed to be conducted, except where the failure to have such
power, authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Business. Seller is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for failures to be so qualified or licensed and
in good
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standing that would not, individually or in the aggregate, have a Material
Adverse Effect on the Business.
4.2 Authority. The execution and delivery of this Agreement (and all
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other agreements and instruments contemplated under this Agreement) by Seller,
the performance by Seller of its obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors and
shareholders of Seller, and no other act or proceeding on the part of or on
behalf of Seller, its Board of Directors or its shareholders is necessary to
approve the execution and delivery of this Agreement and such other agreements
and instruments, the performance by Seller of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby. The signatory officers of Seller have the power and authority to
execute and deliver this Agreement and all of the other agreements and
instruments to be executed and delivered by Seller pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Seller pursuant to the provisions hereof
and thereof.
4.3 Execution and Binding Effect. This Agreement has been duly and
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validly executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto, upon their execution and delivery by Seller, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Buyer), legal, valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms.
4.4 Consents and Approvals of Governmental Entities. Other than the
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Governmental Authorizations there is no requirement applicable to Seller to make
any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Seller pursuant hereto or the consummation by Seller of the transactions
contemplated herein or therein.
4.5 No Violation. Neither the execution, delivery and performance of this
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Agreement and all of the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Seller,
(b) except as set forth in Schedule 4.6, conflict with or result in a violation
or breach of, or constitute a default or require consent of any Person (or give
rise to any right of termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any contract, notice, bond, mortgage,
indenture, license, franchise, permit, agreement, lease or other instrument or
obligation to which Seller is a party or by which Seller or any of the Purchased
Assets may be bound, (c) violate any statute, ordinance or law or any rule,
regulation, order, writ, injunction or decree of any Governmental Entity
applicable to Seller or by which any properties or assets of Seller may be
bound, or (d) result in any cancellation of, or obligation to repay, any grant,
loan or other
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financial assistance received by Seller from any Governmental Entity. No "bulk
sales" legislation applies to the transactions contemplated by this Agreement.
4.6 Consents. Schedule 4.6 sets forth each agreement, contract or other
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instrument binding upon Seller requiring a consent as a result of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except such consents as would not,
individually or in the aggregate, have a Material Adverse Effect if not received
by the Closing Date (each a "Required Consent").
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4.7 Financial Information. Seller has delivered to Buyer an unaudited
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balance sheet for the Business at the Closing Date (the "Financial Statements"),
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a copy of which is set forth in the Seller Disclosure Schedule. The Financial
Statements accurately and correctly discloses the amounts of the Purchased
Assets as of the Closing Date. The Financial Statements have been prepared
consistently for all periods presented, and revenues presented on the Financial
Statements have been recognized in accordance with GAAP, consistently applied.
The Financial Statements present fairly the financial condition, operating
results and cash flows of the Business as of the dates and during the periods
indicated therein, subject to normal year-end adjustments, which will not be
material in amount or significance.
4.8 No Undisclosed Liabilities. Seller does not have any liability,
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indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, in excess of $1,000 individually or $5,000 in the aggregate, whether
accrued, absolute, contingent, matured, unmatured or other (whether or not
required by GAAP to be reflected in the Financial Statements), which has not
been reflected in the Financial Statements.
4.9 Assets Generally.
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(a) The Purchased Assets include all properties, tangible and
intangible, necessary for Buyer to operate the Business after the Closing Date
in a manner substantially equivalent to the manner in which Seller has operated
the Business prior to and through the Closing Date. Other than the Required
Consents and the Governmental Approvals, no licenses or other consents from, or
payments to, any other Person are or will be necessary for Buyer to operate the
Business and use the Purchased Assets in the manner in which Seller has operated
the same.
(b) Seller holds good and marketable title, license to or leasehold
interest in all of the Purchased Assets and has the complete and unrestricted
power and the unqualified right to sell, assign and deliver the Purchased Assets
to Buyer. Upon consummation of the transactions contemplated by this Agreement,
Buyer will acquire good and marketable title, license or leasehold interest to
the Purchased Assets free and clear of any Liens and there exists no restriction
on the use or transfer of the Purchased Assets, except as may be assumed
hereunder by Buyer as an Assumed Liability. No Person other than Seller has any
right or interest in the Purchased Assets, including the right to grant
interests in the Purchased Assets to third parties, except for Purchased Assets
licensed or leased from third parties which are set forth in the Seller
Disclosure Schedule and identified as such.
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(c) None of the Purchased Assets that constitute tangible personal
property is held under any lease, security agreement, conditional sales
contract, lien, or other title retention or security arrangement.
(d) Except as provided in this Agreement, no restrictions will exist
on Buyer's right to sell, resell, license or sublicense any of the Purchased
Assets or engage in the Business, nor will any such restrictions be imposed on
Buyer as a consequence of the transactions contemplated by this Agreement or by
any agreement referenced in this Agreement.
(e) All of the Purchased Assets are in good operating condition and
repair, as required for their use in the Business as presently conducted, and
conform to all applicable laws, and no notice of any violation of any law
relating to any of the Purchased Assets or Assumed Liabilities has been received
by Seller.
4.10 Intellectual Property.
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(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (including without
limitation the continued conduct by Buyer after the Closing Date of the Business
as presently conducted by Seller and the incorporation of any Intellectual
Property in any product of Buyer or an affiliate of Buyer) will not breach,
violate or conflict with any instrument or agreement governing any intellectual
property necessary or required for, or used in, the conduct of the Business as
presently conducted and will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any such Intellectual Property
or in any material way impair the right of Buyer or any of its affiliates to
use, sell, license or dispose of, or to bring any action for the infringement
of, any such intellectual property or portion thereof;
(b) Neither the development, manufacture, marketing, license, sale or
use of any product or intellectual property currently licensed, used or sold by
Seller or currently under development violates or will violate any license or
agreement to which Seller is a party or infringes or will infringe any
copyright, patent, trademark, service xxxx, trade secret or other intellectual
property or other proprietary right of any other party. All registered
trademarks, service marks, patents and copyrights held by Seller are valid and
subsisting. There is no pending or threatened claim or litigation contesting
the validity, ownership or right to use, sell, license or dispose of any of the
Purchased Assets (including without limitation the Intellectual Property)
necessary or required for, or used in, the conduct of the business of Seller as
presently conducted nor to the knowledge of Seller and Bosch is there any basis
for any such claim, nor has Seller received any notice asserting that any such
Purchased Asset (including without limitation the Intellectual Property) or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party, nor is there any basis for any such
assertion. To the knowledge of Seller and Bosch, there is no material
unauthorized use, infringement or misappropriation on the part of any third
party of the Purchased Assets (including without limitation the Intellectual
Property); and
(c) Seller has taken reasonable steps (including, without limitation,
entering into confidentiality and non-disclosure agreements with all officers
and Employees of Seller with
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access to or knowledge of the Purchased Assets (including without limitation the
Intellectual Property) to maintain the secrecy and confidentiality of, and its
proprietary rights in, the Purchased Assets (including without limitation the
Intellectual Property) necessary or required for, or used in, the conduct of the
business of Seller as presently conducted. The Seller Disclosure Schedule
contains a complete and accurate list of all applications, filings and other
formal actions made or taken pursuant to federal, state, local and foreign laws
by Seller to perfect or protect its interest in the Purchased Assets, including,
without limitation, all patents, patent applications, trademarks, trademark
applications, service marks and copyright or mask work registrations.
(d) All fees to maintain Seller's rights in the Intellectual
Property, including, without limitation, patent and trademark registration and
prosecution fees and all professional fees in connection therewith pertaining to
the Intellectual Property due and payable on or before the Closing Date, have
been paid by Seller on or before the Closing Date.
4.11 Service Agreements.
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(a) Schedule 4.11 contains a list which is complete in all material
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respects, of all agreements or other arrangements pursuant to which Seller is
obligated to supply products, perform services or otherwise engage in the
conduct of the Business (such agreements, as supplemented below, are referred to
collectively as the "Service Agreements"). Seller has provided a true and
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complete copy of all Service Agreements to Buyer. All such Service Agreements
are in full force and effect and are valid and effective in accordance with
their respective terms against Seller, as the case may be, and against the other
party thereto. Seller is not in default under any such Service Agreements (or
has caused an event which with notice or lapse of time, or both, would
constitute a default), nor to the knowledge of Seller and Bosch is the other
party thereto in default (or has caused an event which with notice or lapse of
time, or both, would constitute a default) under any such Service Agreements.
(b) Seller has not entered into any agreement under which Seller is
restricted from selling, licensing or otherwise distributing any products or
services to any class of customers, in any geographic area, during any period of
time or in any segment of the market.
(c) After the Closing, Buyer will not be prevented by any act of
Seller from changing prices charged to existing or future customers of any
products or services.
(d) Seller has not granted any third party the right to supply any
products or services of the Business to any other third party. No agreement for
supply of the products or services by Seller obligates Seller, and no agreement
would obligate Buyer after the Closing Date, to provide any change in
specification of such products or services or to provide new products or
services. No agreement pursuant to which Seller has licensed the use of any
products to any third party obligates Seller to provide any change in
specification in the performance of such products or to provide new products or
services.
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4.12 Warranties and Indemnities. The Seller Disclosure Schedule sets
--------------------------
forth a summary of all warranties and indemnities, express or implied, relating
to products sold or services rendered by Seller, and no warranty or indemnity
has been given by Seller which is not listed on the Seller Disclosure Schedule
or which differs therefrom in any respect. Seller is in compliance with all
warranties described in the Seller Disclosure Schedule. The Seller Disclosure
Schedule also indicates all warranty and indemnity claims currently pending
against Seller.
4.13 Real Property. Seller does not own any real property which relates
-------------
to the Business. Seller has terminated, or will terminate prior to Closing,
without further liability all real property leases which relate to the Business.
The Purchased Assets do not include (i) any owned or leased real property or
(ii) any material structures on any real property.
4.14 Inventories. Except for the Intellectual Property, the Purchased
-----------
Assets do not include any raw materials, work-in-process, finished goods,
supplies or other inventories (the "Inventories").
-----------
4.15 Accounts Receivable. To the knowledge of Seller and Bosch, all
-------------------
accounts receivable, notes receivable and other receivables included in the
Purchased Assets are valid, genuine and fully collectible in the aggregate
amount thereof, subject to normal and customary trade discounts less any
reserves for doubtful accounts recorded on the Financial Statements. All
accounts, notes receivable, and other receivables arising out of or relating to
the Business as of October 31, 1998 have been included in the Financial
Statements.
4.16 Licenses and Permits. Seller holds all consents, approvals,
--------------------
registrations, certifications, authorizations, permits and licenses of, and has
made all filings with, or notifications to, all Governmental Entities pursuant
to applicable requirements of all federal, state, local and foreign laws,
ordinances, governmental rules or regulations applicable to the business,
including, but not limited to, all such laws, ordinances, governmental rules or
regulations relating to registration of the products of the Business (at their
current level of development and use) and certification of the facilities of the
Business. The Business is in compliance with all federal, state, local and
foreign laws, ordinances, governmental rules and regulations relating to the
products manufactured by the Business or otherwise related to the Business and
Seller has no reason to believe that any consents, approvals, authorizations,
registrations, certifications, permits, filings or notifications that it has
received or made to operate the Business are invalid or have been or are being
suspended, canceled, revoked or questioned. There is no investigation or
inquiry to which Seller is a party or, to Seller's or Bosch's knowledge, as the
case may be, pending or threatened, relating to the Business and its compliance
with applicable foreign, state, local or foreign laws, ordinances, governmental
rules or regulations. Each such consent, approval, registration, certification,
authorization, permit or license is transferable and shall be transferred to
Buyer in accordance with the terms of this Agreement.
4.17 Employees.
---------
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(a) Schedule 4.17 sets forth the names, home addresses, compensation
-------------
levels, stock option positions in Seller, if any, and job titles of all of the
Employees. All Employees, officers, directors and shareholders of Seller or any
Seller subsidiary that have had access to the Purchased Assets are parties to a
written agreement (a "Confidentiality Agreement"), under which each such person
-------------------------
or entity (i) is obligated to disclose and transfer to Seller, without the
receipt by such person of any additional value therefor (other than normal
salary or fees for consulting services), all inventions, developments and
discoveries which, during the period of employment with or performance of
services for Seller, he or she makes or conceives of either solely or jointly
with others, that relate to any subject matter with which his or her work for
Seller may be concerned, or relate to or are connected with the Business,
products or projects of Seller, or involve the use of the time, material or
facilities of Seller, and (ii) is obligated to maintain the confidentiality of
proprietary information of Seller. None of Seller's Employees, officers or
directors is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would conflict with
their obligation to promote the interests of Seller with regard to the Business
or the Purchased Assets or that would conflict with the Business or the
Purchased Assets. Neither the execution nor the delivery of this Agreement, nor
the carrying on of the Business by its Employees will conflict with or result in
a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such persons or
entities are now obligated. It is currently not necessary nor will it be
necessary for Seller to utilize in the Business any inventions of any of such
persons or entities (or people it currently intends to hire) made or owned prior
to their employment by or affiliation with Seller, nor is it or will it be
necessary to utilize any other assets or rights of any such persons or entities
(or people it currently intends to hire) made or owned prior to their employment
with or engagement by Seller, in violation of any registered patents, trade
names, trademarks or copyrights or any other limitations or restrictions to
which any such persons or entity is a party or to which any of such assets or
rights may be subject. To Seller's or Bosch's knowledge, as the case may be,
none of Seller's Employees, officers, directors or shareholders that has had
knowledge or access to information relating to the Purchased Assets has taken,
removed or made use of any proprietary documentation, manuals, products,
materials, or any other tangible item from his or her previous employer relating
to the Purchased Assets by such previous employer which has resulted in Seller's
access to or use of such proprietary items included in the Purchased Assets, and
Seller will not gain access to or make use of any such proprietary items in the
Business, except to the extent that any such activities would not have a
material adverse effect on the Purchased Assets or the Business.
(b) Except for the Confidentiality Agreements, there are no written or
oral contracts of employment or consultancy between Seller and any Employee.
(c) The Seller is not a party to a collective bargaining agreement
with any trade union, the Seller's employees are not members of a trade union
certified as a bargaining agent with the Seller and no proceedings to implement
any such collective bargaining agreement or certifications are pending.
4.18 Employee Benefit and Compensation Plans. Buyer will incur no
---------------------------------------
liability with respect to, or on account of, and Seller will retain any
liability for, and on account of, any
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employee benefit plan of Seller, any of its Affiliates or any predecessor
employer of any Employee, including, but not limited to, liabilities Seller may
have to such Employees under all employee benefit schemes, incentive
compensation plans, bonus plans, pension and retirement plans, vacation, profit-
sharing plans (including any profit-sharing plan with a cash-or-deferred
arrangement) share purchase and option plans, savings and similar plans,
medical, dental, travel, accident, life, disability and other insurance and
other plans or arrangements, whether written or oral and whether "qualified" or
"non-qualified," or to any Employee as a result of termination of employment by
Seller as contemplated by this Agreement. Except as set forth in Schedule 4.18,
Seller has not, with respect to any Employee, maintained or contributed to, or
been obligated or required to contribute to, any retirement or pension plan or
any employee benefit plan. Seller is not a party to any collective bargaining
agreement covering any Employee and Seller knows of no effort to organize any
such Employee as a part of any collective bargaining unit. The Seller has
complied with all of its obligations (including obligations to make
contributions) in respect of the pension funds of which its Employees are
members, there is no outstanding liability of the Seller or any of its
Affiliates to any such funds and all such funds are fully funded to meet all
potential claims for benefits by any and all such employees and any former
employee.
4.19 Taxes. All Taxes have been or will be paid by Seller for all periods
-----
(or portions thereof) prior to and including the Closing Date. Seller and any
other person required to file returns or reports of Taxes have duly and timely
filed (or will file prior to the Closing Date) all returns and reports of Taxes
required to be filed prior to such date, and all such returns and reports are
true, correct, and complete. There are no liens for Taxes on any of the
Purchased Assets. Seller has complied with all record keeping and tax reporting
obligations relating to income and employment taxes due with respect to
compensation paid to employees or independent contractors providing services to
the Business. Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code. There are no pending or, to Seller's or Bosch's
knowledge, as the case may be, threatened proceedings with respect to Taxes, and
there are no outstanding waivers or extensions of statutes of limitations with
respect to assessments of Taxes. No agreement or arrangement regarding
compensation of any employee providing services to the Business provides for any
payments which could result in a nondeductible expense to the Buyer pursuant to
Section 280G of the Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Code.
4.20 Compliance with Law. The operation of the Business has been
-------------------
conducted in all material respects in accordance with all applicable laws,
regulations and other requirements of Governmental Entities having jurisdiction
over the same.
4.21 Health, Safety, Employment and Environmental Matters. To the extent
----------------------------------------------------
that failure to do so or be so would have a Material Adverse Effect upon the
Purchased Assets, Seller is in compliance with all federal, state, local and
foreign laws related to health and occupational safety, environment and
hazardous materials and employment practices that are applicable to the Seller
or its business related to the Purchased Assets, and Seller has conducted its
business relating to the Purchased Assets in compliance with the foregoing laws.
4.22 Material Contracts.
------------------
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(a) Schedule 4.22 contains a list of all Contracts which are material
-------------
to the Business ("Material Contracts"). Material Contracts shall include,
------------------
without limitation, the following and shall be categorized in the Seller
Disclosure Schedule as follows:
(i) each Contract under the terms of which Seller, on behalf of
the Business: (A) paid or otherwise gave consideration of more than $5,000 in
the aggregate during the fiscal year ended December 31, 1997, (B) is likely to
pay or otherwise give consideration of more than $5,000 in the aggregate during
the fiscal year ended December 31, 1998, (C) is likely to pay or otherwise give
consideration of more than $5,000 in the aggregate over the remaining term of
such contract or (D) cannot be canceled without penalty or further payment;
(ii) all contracts and agreements (excluding routine checking
account overdraft agreements involving xxxxx cash amounts) under which the
Business has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness or under which the Business has imposed (or
may impose) a security interest or lien on any of its assets, whether tangible
or intangible, to secure indebtedness;
(iii) all contracts and agreements that limit the ability of any
Person related to the Business, or any of its affiliates, to compete in any line
of business or with any person or in any geographic area or during any period of
time, or to solicit any customer or client;
(iv) all Contracts pursuant to which the Business has agreed to
supply products to a customer at specified prices, whether directly or through a
specific distributor, manufacturer's representative or dealer; and
(v) all other Contracts (A) which are material to the Business,
(B) the absence of which would have a Material Adverse Effect on the Business,
or (C) which are believed by Seller to be of unique value even though not
material to the Business.
(b) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Business, each license, each Material Contract is a legal,
valid and binding agreement, and none of the Material Contracts is in default by
its terms or has been canceled by the other party; Seller is not in receipt of
any claim of default under any such agreement; and Seller does not anticipate
any termination or change to, or receipt of a proposal with respect to, any such
agreement as a result of the transactions contemplated hereby. Seller has
furnished Buyer with true and complete copies of all such agreements together
with all amendments, waivers or other changes thereto.
4.23 Services. Each of the services sold or provided by Seller in
--------
connection with the Business is, and at all times has been, in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations and is, and at all relevant times has been, fit for the ordinary
purposes for which it is intended to be used and conforms in all material
respects to any promises or affirmations of fact made in connection with the
sale of such service.
-15-
4.24 Litigation; Other Claims.
------------------------
(a) There are no claims, actions, suits, inquiries, proceedings, or
investigations against Seller, or any of its officers, directors or
shareholders, relating to the Business, the Purchased Assets or Seller's
Employees which are currently pending or threatened, at law or in equity or
before or by any Governmental Entity, or which challenges or seeks to prevent,
enjoin, alter or materially delay any of the transactions contemplated hereby,
nor is Seller aware of any basis for such claims, actions, suits, inquiries,
proceedings, or investigations; and no Governmental Entity has at any time
challenged or questioned the legal right of Seller to manufacture, offer or sell
any of its products or services in the present manner or style thereof.
(b) There are no grievance or arbitration proceedings pending or
threatened, and there are no actual or threatened strikes or work stoppages with
respect to the Business, the Purchased Assets or Seller's Employees, nor is
Seller aware of any basis for such proceedings or events.
4.25 Defaults. Seller is not in default under or with respect to any
--------
judgment, order, writ, injunction or decree of any court or any Governmental
Entity which could reasonably be expected to have a Material Adverse Effect on
the Business or any of the Purchased Assets. There does not exist any default
by Seller or by any other Person, or event that, with notice or lapse of time,
or both, would constitute a default under any agreement entered into by Seller
as part of the operations of the Business which could reasonably be expected to
have a Material and Adverse Effect on the Business or the Purchased Assets, and
no notices of breach thereof have been received by Seller.
4.26 Schedules. The schedules describing the Purchased Assets are
---------
complete and accurate and describe the assets in the possession of, or used by
Seller in connection with the Business.
4.27 Full Disclosure. Seller is not aware of any facts pertaining to the
---------------
Purchased Assets which affect the Business or the Purchased Assets in a
materially adverse manner or which will in the future affect the Business or the
Purchased Assets in a materially adverse manner. Neither this Agreement nor any
other agreement, exhibit, schedule or officer's certificate being entered into
or delivered pursuant to this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained in such document not misleading.
4.28 Brokers and Finders. Neither Seller nor any of its officers,
-------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder's fee in connection with
the transactions contemplated by this Agreement.
4.29 Fair Consideration; No Fraudulent Conveyance. The sale of the
--------------------------------------------
Purchased Assets pursuant to this Agreement is made in exchange for fair and
equivalent consideration. Seller is not now insolvent and will not be rendered
insolvent by the sale, transfer and assignment of the Purchased Assets pursuant
to the terms of this Agreement. Seller is not entering into this Agreement or
any of the other agreements referenced in this Agreement with the intent to
-16-
defraud, delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. The transactions contemplated in this
Agreement or any agreements referenced in this Agreement will not constitute a
fraudulent conveyance, or otherwise give rise to any right of any creditor of
Seller to any of the Purchased Assets after the Closing.
4.30 Insurance. The Seller Disclosure Schedule lists all insurance
---------
policies and fidelity bonds covering the Purchased Assets. There is no claim by
Seller pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies and bonds.
All premiums due and payable under all such policies and bonds have been paid
and Seller is otherwise in material compliance with the terms of such policies
and bonds (or other policies and bonds providing substantially similar insurance
coverage). There is no threatened termination of, or material premium increase
with respect to, any of such policies.
4.31 Year 2000. To the extent applicable, the Purchased Assets,
---------
including, without limitation, any time-and-date-related codes, data entry
features and internal subroutines thereof, are designed (a) to automatically
accommodate the change in the date from December 31, 1999 to January 1, 2000
without negatively affecting the Purchased Assets' performance; and (b) to
accurately accept, reflect and calculate all dates that are relevant to the
Purchased Assets' performance.
5. Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants to Seller as follows:
5.1 Organization. Buyer is a corporation duly formed and validly existing
------------
under the laws of Delaware, and has full corporate power and authority and the
legal right to execute and deliver this Agreement and all of the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, and to consummate the transactions contemplated hereby and thereby.
5.2 Authority. The execution and delivery of this Agreement (and all
---------
other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of Buyer,
and no other act or proceeding on the part of Buyer or its stockholders is
necessary to approve the execution and delivery of this Agreement and such other
agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Buyer pursuant to the provisions hereof
and thereof.
-17-
5.3 Execution and Binding Effect. This Agreement has been duly and
----------------------------
validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
5.4 Consent and Approvals. There is no requirement applicable to Buyer to
---------------------
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except for filings (a) which are referred to in the
Buyer Disclosure Schedule or (b) the failure of making which would not have a
Material Adverse Effect on the transactions contemplated hereby.
5.5 No Violation. Neither the execution, delivery and performance of this
------------
Agreement and of all the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of Buyer,
(b) conflict with or result in a violation or breach of, or constitute a default
or require consent of any Person (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any notice, bond, mortgage, indenture, license, franchise, permit, agreement,
lease or other instrument or obligation to which Buyer is a party or by which
Buyer or any of its properties or assets may be bound, or (c) violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any Governmental Entity applicable to Buyer or by which any of its
properties or assets may be bound.
5.6 Full Disclosure. Buyer has fully provided Seller with all the
---------------
information that Seller has requested for deciding whether to consummate the
transactions contemplated hereby and all information that Buyer believes is
reasonably necessary to enable Seller to make such a decision (collectively, the
"Buyer Information"). To Buyer's knowledge, no representation or warranty of
-----------------
Buyer contained in this Agreement and the exhibits attached hereto, any
certificate furnished or to be furnished to Seller at the Closing, or the Buyer
Information (when read together) contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
6. Covenants of the Parties
------------------------
6.1 Post-Closing Access to Information. If, after the Closing Date, in
----------------------------------
order to properly operate the Business or prepare documents or reports required
to be filed with governmental authorities or Buyer's financial statements, it is
necessary that Buyer obtain additional information within Seller's possession
relating to the Purchased Assets or the
-18-
Business, Seller will furnish or cause its representatives to furnish such
information to Buyer. Such information shall include, without limitation, all
agreements between Seller and any Person relating to the Business. Seller shall
maintain and make available the information and records specified in this
Section 6.1 for a period of four (4) years after the Closing Date.
6.2 Post-Closing Cooperation. Seller agrees that, if reasonably requested
------------------------
by Buyer, it will cooperate with Buyer, at Buyer's expense, in enforcing the
terms of any agreements between Seller and any third party involving the
Business, including without limitation terms relating to confidentiality and the
protection of intellectual property rights. In the event that Buyer is unable
to enforce its intellectual property rights against a third party as a result of
a rule or law barring enforcement of such rights by a transferee of such rights,
Seller agrees to reasonably cooperate with Buyer by assigning to Buyer such
rights as may be required by Buyer to enforce its intellectual property rights
in its own name. If such assignment still does not permit Buyer to enforce its
intellectual property rights against the third party, Seller agrees to initiate
proceedings against such third party in Seller's name, provided that Buyer shall
be entitled to participate in such proceedings and provided further that Buyer
shall be responsible for the expenses of such proceedings.
6.3 Public Announcements. On and after the Closing Date, Buyer and Seller
--------------------
shall advise and confer with each other prior to the issuance of any reports,
statements or releases concerning this Agreement (including the exhibits and
schedules hereto) and the transactions contemplated herein. Neither Buyer nor
Seller will make any public disclosure prior to the Closing or with respect to
the Closing unless both parties agree on the text and timing of such public
disclosure; provided, however, that nothing contained herein shall prevent
-----------------
either party at any time from furnishing any information to any Governmental
Entity.
6.4 Post-Closing Actions. Subsequent to the Closing Date, Seller shall,
--------------------
from time to time, execute and deliver, upon the request of Buyer, all such
other and further materials and documents and instruments of conveyance,
transfer or assignment as may reasonably be requested by Buyer to effect, record
or verify the transfer to, and vesting in Buyer, of Seller's right, title and
interest in and to the Purchased Assets, free and clear of all Liens, in
accordance with the terms of this Agreement.
6.5 Future Agreements. In the event Seller enters into any material
-----------------
agreement between the date of this Agreement and the Closing that relates
primarily to the Business, at the request of Buyer, Seller agrees to include any
such agreement within the Contracts.
6.6 Permits. Seller will assist Buyer in obtaining any licenses, permits
-------
or authorizations required for carrying on the Business but which are not
transferable.
6.7 Taxes. Seller shall be responsible for paying, shall promptly
-----
discharge when due, and shall reimburse, indemnify and hold harmless Buyer from,
any sales or use, transfer, real property gains, excise, stamp, or other similar
Taxes arising from, imposed on or attributable to the transactions contemplated
by this Agreement.
6.8 Non-Competition Agreement.
-------------------------
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(a) In consideration of Buyer entering into this Agreement, Seller
and Bosch each undertake that for two (2) years after the Closing Date and
within the States of Oregon and Washington (the "Territory") neither it nor any
---------
Affiliate of it will:
(i) participate, assist or otherwise be directly or indirectly
involved or concerned, financially or otherwise, as a member, shareholder,
unitholder, director, consultant, adviser, contractor, principal, agent,
manager, beneficiary, partner, associate, trustee, financier or otherwise in any
business or activity which is the same as or substantially similar to the
Business or any material part of it (a "Restricted Business"); provided,
-------------------
however, that Seller may continue to engage in the business of medical xxxx
auditing other than the Business;
(ii) solicit, canvass, induce or encourage directly or
indirectly any employee of Buyer to leave the employment of Buyer;
(iii) solicit, canvass, approach or accept any offer from any
person or entity who was at any time during the 24 months immediately preceding
the Closing Date a customer or supplier of the Business with a view to
establishing a relationship with or obtaining the patronage of that person or
entity in a Restricted Business;
(iv) interfere or seek to interfere, directly or indirectly,
with any relationship between Buyer and any client, customer, employee or
supplier of the Business.
(b) If any of the separate and independent covenants and restraints
referred to in clause (a) of this Section 6.8 are or become invalid or
unenforceable for any reason then that invalidity or unenforceability will not
affect the validity or enforceability of any other separate and independent
covenants and restraints.
(c) If any prohibition or restriction contained in clause (a) of this
Section 6.8 is judged to go beyond what is reasonable in the circumstances, but
would be judged reasonable if that activity was deleted or that period or area
was reduced, then the prohibitions or restrictions apply with that activity
deleted or period or area reduced by the minimum amount necessary.
(d) Each of Seller and Bosch acknowledges that:
(i) the prohibitions and restrictions contained in clause (a) of
this Section 6.8 are reasonable and necessary; and
(ii) Seller has received valuable consideration for agreeing to
the covenants in clause (a) of this Section 6.8.
(e) Each of Seller, Bosch and Buyer acknowledge and agree that it
will be difficult to compute the amount of damage or loss to Buyer if Seller or
Bosch violated any of their agreements under this Section 6.8, that Buyer will
be without an adequate legal remedy if Seller or Bosch violated the provisions
of this Section 6.8, and that any such violation may cause substantial
irreparable injury and damage to Buyer not fully compensable by monetary
damages. Therefore, each of Seller, Bosch and Buyer agree that in the event of
any violation by Seller or Bosch of this Section 6.8, Buyer shall be entitled
(i) to recover from Seller and/or Bosch
-20-
monetary damages, (ii) to obtain specific performance, injunctive or other
equitable relief, of either a preliminary or permanent type, and (iii) to seek
any other available rights or remedies at law or in equity which may be
exercised concurrently with the rights granted hereunder.
7. Employee Matters
----------------
7.1 Transferred Employees.
---------------------
(a) Offer of Employment. Subject to and in accordance with the
-------------------
provisions of this Section 7, Buyer may offer employment to any or all of the
employees, consultants or independent contractors who are employed or retained
by Seller in the Business as of the date of this Agreement (collectively, the
"Employees"). Seller agrees that it will cooperate with Buyer to identify those
----------
Employees of Seller who are necessary for the conduct the Business. Upon
Closing, Buyer (or any Affiliates designated by Buyer) shall hire those
Employees to whom it has made an offer in accordance with this Section 7.1 and
who accept such offer in the manner and within the time frame reasonably
established by Buyer. Each such Employee who is employed by Seller on the
Closing Date and who actually transfers to employment with Buyer (or any
Affiliate designated by Buyer) at or after the Closing Date as a result of an
offer of employment made by Buyer is hereafter referred to as a "Transferred
-----------
Employee." Transferred Employees shall not include any person on a disability
--------
leave of more than twenty-six (26) weeks. Buyer shall not be obligated to hire
any employee unless an offer of employment is made to, and accepted by, such
employee; and Buyer shall have no obligation to hire any Employees of Seller
after the Closing Date.
(b) Transition. The employment by Seller of the Transferred
----------
Employees shall end at the close of business on the Closing Date and the
employment of the Transferred Employees by Buyer shall commence at 12:01 a.m. on
the day after the Closing Date. The terms of employment with Buyer (or Buyer's
Affiliates) shall as mutually agreed to between each Transferred Employee and
Buyer (or Buyer's Affiliate, as the case may be), subject to the provisions of
this Section 7.1. Between the date of this Agreement and the Closing Date,
Seller will provide each Transferred Employee with the same level of
compensation as that currently provided by Seller. Buyer shall have no
obligation with respect to payments of salary, compensation, wages, health or
similar benefits, commissions, bonuses (deferred or otherwise), severance, stock
or stock options or any other sums due to any Transferred Employee that accrued
before the Closing Date. Seller will be fully responsible for all amounts
payable to any Employee, including (without limitation) all termination
payments, redundancy compensation, severance pay, accrued vacation pay and other
amounts payable in respect of the termination of employment or consultancy of
any Employee in connection with the sale of the Purchased Assets to the Buyer.
In addition, Seller will be fully responsible for all amounts owing to
Transferred Employees prior to Closing.
7.2 Other Employees of the Business. With respect to each Employee of the
-------------------------------
Business as of the Closing Date who is not a Transferred Employee (each a "Non-
---
Transferred Employee"), Seller agrees to either terminate such Non-Transferred
--------------------
Employee's employment or consultancy with Seller, effective prior to the Closing
or offer such Non-Transferred Employee employment with Seller in other business
in which Seller is engaged. Seller further
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acknowledges that the Non-Transferred Employees shall not be employees or
consultants of Buyer after the Closing.
7.3 No Right to Continued Employment or Benefits. No provision in this
--------------------------------------------
Agreement shall create any third party beneficiary or other right in any Person
(including any beneficiary or dependent thereof) for any reason, including,
without limitation, in respect of continued, resumed or new employment with
Seller or Buyer (or any Affiliate of Seller or Buyer) or in respect of any
benefits that may be provided, directly or indirectly, under any plan or
arrangement maintained by Seller, Buyer or any Affiliate of Seller or Buyer.
Except as otherwise expressly provided in this Agreement, Buyer is under no
obligation to hire any Employee of Seller, provide any Employee with any
particular benefits, or make any payments or provide any benefits to those
Employees of Seller whom Buyer chooses not to employ or retain.
7.4 No Solicitation or Hire by Seller. For a period of one year after the
---------------------------------
Closing, Seller will not solicit any Transferred Employee for employment. For
purposes of this Section 7.4, the term "solicit" shall not include the following
activities by Seller: (i) advertising for employment in any bulletin board
(including electronic bulletin boards), newspaper, trade journal or other
publication available for general distribution to the public without specific
reference to any particular employees; (ii) participation in any hiring fair or
similar event open to the public not targeted at Buyer's employees; and (iii)
use of recruiting or employee search firms that have been instructed by Seller
not to target any Transferred Employee.
8. Conditions to Buyer's Obligations
---------------------------------
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
8.1 Representations and Warranties True; Performance; Certificate.
-------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) The conditions set forth in this Section 8 have been fulfilled or
satisfied, unless otherwise waived in writing by Buyer; and
(d) Buyer shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Seller on behalf of Seller certifying
to the matters set forth in Sections 8.1(a) and 8.1(b) above.
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8.2 Consents. All Governmental Authorizations, Required Consents and
--------
consents required to transfer the Contracts to Buyer on the terms and conditions
provided to Seller, without change as a result of the transfer to Buyer, shall
have been obtained.
8.3 No Proceedings or Litigation.
----------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Business or the
Purchased Assets.
8.4 Documents. This Agreement, the exhibits and schedules attached
---------
hereto, and any other instruments of conveyance and transfer and all other
documents to be delivered by Seller at the Closing and all actions of Seller
required by this Agreement and the exhibit agreements, or incidental thereto,
and all related matters, shall be in form and substance reasonably satisfactory
to Buyer and Buyer's counsel and shall be in full force and effect.
8.5 Governmental Filings. The parties shall have made any required filing
--------------------
with Governmental Entities in connection with this Agreement and the exhibit
agreements, and any approvals related thereto shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Buyer shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Buyer's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being reached or rendered.
8.6 No Material Adverse Change. There shall have been no material adverse
--------------------------
change in the financial condition or results of operations of the Business on
the Closing Date as compared with the date of this Agreement.
8.7 Approval. This Agreement and the transactions it contemplates shall
--------
have been approved and adopted by the shareholders of Seller in accordance with
the provisions of Seller's Articles of Incorporation and Bylaws, and shall have
otherwise been approved by Seller's Board of Directors and otherwise as required
by law and the charter documents of Seller.
8.8 Due Diligence. Buyer shall have received the opportunity to make a
-------------
full investigation of Seller, its business operations, assets, liabilities,
technologies, third party relationships, material contracts and agreements and
any other matter that Buyer deems to be material and such investigation shall be
concluded satisfactory to Buyer, in its sole discretion.
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8.9 Escrow Agreement. Buyer and Seller shall have entered into an Escrow
----------------
Agreement in substantially the form attached hereto as Exhibit A, and such
---------
agreement shall remain in full force and effect.
8.10 Employment Agreement. Xxxx Xxxxxxxxx shall have entered into an
--------------------
Employment Agreement with Buyer in substantially the form attached hereto as
Exhibit B (the "Xxxxxxxxx Employment Agreement").
--------- ------------------------------
8.11 Legal Opinion. Buyer shall have received a legal opinion from Stoel
-------------
Xxxxx LLP, legal counsel to Seller, dated the Closing Date, in a form
satisfactory to Buyer.
8.12 Oregon Medical Association. Buyer and the Oregon Medical Association
--------------------------
("OMA") shall have entered into an agreement in form and substance satisfactory
---
to Buyer, in its sole discretion, amending and restating the OMA Network
Operation Agreement.
9. Conditions to Seller's Obligations
----------------------------------
The obligations of Seller under this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions, all or any
of which may be waived in writing by Seller, except as otherwise provided by
law:
9.1 Representations and Warranties True; Performance.
------------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) Seller shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Buyer on behalf of Buyer certifying
to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 No Proceeding or Litigation.
---------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent the sale of the Purchased Assets or asserting that
the sale of the Assets would be illegal or create liability for damages.
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9.3 Documents. This Agreement, any other instruments of conveyance and
---------
transfer and all other documents to be delivered by Buyer to Seller at the
Closing and all actions of Buyer required by this Agreement or incidental
thereto, and all related matters, shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
9.4 Governmental Filings. The parties shall have made any filing required
--------------------
with Governmental Entities, and any approvals shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Seller shall not be required to consummate the transactions contemplated by
this Agreement until such decision is reached or rendered, notwithstanding
Seller's legal ability to consummate the transactions contemplated by this
Agreement prior to such decision being reached or rendered.
9.5 Approval. This Agreement and the transactions it contemplates shall
--------
have been approved and adopted by the Board of Directors of Buyer in accordance
with the provisions of Buyer's Certificate of Incorporation and Bylaws.
10. Escrow; Indemnification
-----------------------
10.1 Survival of Representations and Warranties. All covenants to be
------------------------------------------
performed prior to the Closing Date, and all representations and warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the consummation of the transactions contemplated hereby and continue
until six (6) months following the Closing (the "Escrow Termination Date");
-----------------------
provided that if any claims for indemnification have been asserted with respect
--------
to any such representations, warranties and covenants prior to the Escrow
Termination Date, the representations, warranties and covenants on which any
such claims are based shall continue in effect until final resolution of any
claims, and provided, further, that representations, warranties and covenants
-------- -------
relating to Taxes shall survive until 30 days after expiration of all applicable
statutes of limitations relating to such Taxes. All covenants to be performed
after the Closing Date shall continue indefinitely or for the period referenced
in such covenant.
10.2 Indemnification. Subject to the limitations set forth in this
---------------
Section 10, from and after the Effective Time, Seller shall protect, defend,
indemnify and hold harmless Buyer and Buyer's Affiliates, officers, directors,
employees, representatives and agents (each of the foregoing Persons is
hereinafter referred to individually as an "Indemnified Person" and collectively
------------------
as "Indemnified Persons") from and against any and all losses, costs, damages,
-------------------
liabilities, fees (including without limitation attorneys' fees) and expenses
(collectively, the "Damages"), that any of the Indemnified Persons incurs or
-------
reasonably anticipates incurring by reason of or in connection with any claim,
demand, action or cause of action (i) relating to any liabilities or obligations
of Seller not specifically assumed by Buyer hereunder, (ii) alleging
misrepresentation, breach of, or default in connection with, any of the
representations, warranties, covenants or agreements of the Seller contained in
this Agreement, including any exhibits or schedules attached hereto, known to
Buyer prior to the Escrow Termination Date and (ii) relating to the termination
prior to Closing of any Employees of Seller. Damages in each
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case shall be net of the amount of any insurance proceeds and indemnity and
contribution actually recovered by Buyer.
10.3 Indemnification Damages Threshold. Notwithstanding the foregoing,
---------------------------------
Buyer may not receive any amount of the Escrow Consideration from the Escrow
based on a claim for indemnification unless and until a certificate signed by an
officer of Buyer (an "Officer's Certificate") identifying Damages in the
---------------------
aggregate amount in excess of $15,000 has been delivered to the Escrow Agent and
such amount is determined pursuant to this Section 10 to be payable, in which
case Buyer shall receive from the Escrow Agent an amount equal in value to the
full amount of such Damages and any subsequent Damages without deduction in the
following manner: first, such amount shall come from the Escrow Consideration;
second, to the extent any Damages remain unpaid, from other assets, if any,
constituting the Escrow Consideration. In determining the amount of any Damages
attributable to a breach, any materiality standard contained in a
representation, warranty or covenant of Seller shall be disregarded.
10.4 Escrow Consideration Period. Subject to the following requirements
---------------------------
and the terms of the Escrow Agreement, the Escrow Consideration shall be
retained by the Escrow Agent until the Escrow Consideration Termination Date.
Upon the Escrow Consideration Termination Date, the Escrow Agent shall deliver
to the Seller all remaining Escrow Consideration provided, however, that the
-------- -------
amount of Escrow Consideration, which, in the reasonable judgment of Buyer,
subject to the objection of the Escrow Agent and the subsequent arbitration of
the claim in the manner provided in the Escrow Agreement, is necessary to
satisfy any unsatisfied claims specified in any Officer's Certificate delivered
to the Escrow Agent prior to the Escrow Consideration Termination Date with
respect to facts and circumstances existing on or prior to the Escrow
Consideration Termination Date shall remain in the possession of the Escrow
Agent until such claims have been resolved. As soon as all such claims have
been resolved, any remaining Escrow Consideration not required to satisfy such
claims shall be distributed to the Seller.
10.5 Method of Asserting Claims. All claims for indemnification by the
--------------------------
Buyer or any other Indemnified Person pursuant to this Section 10 shall be made
in accordance with the provisions of the Escrow Agreement.
11. Termination.
-----------
11.1 Termination of Agreement. This Agreement may be terminated at any
------------------------
time prior to the Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By either party, if the other party goes into liquidation, has an
application or order made for its winding up or dissolution, has a resolution
passed or steps taken to pass a resolution for its winding up or dissolution,
becomes unable to pay its debts as and when they fall due, or has a receiver,
receiver and manager, administrator, liquidator, provisional liquidator,
official manager or administrator appointed to it or any of its assets; or
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(c) By Buyer or Seller if any Governmental Entity shall have issued
an order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
(d) By either party if the Closing does not occur by December 31,
1998.
11.2 Procedure and Effect of Termination. In the event of termination of
-----------------------------------
this Agreement by any or all of the parties pursuant to Section 11.1, written
notice shall be given to each other party specifying the provision of Section
11.1, pursuant to which such termination is made and shall become void and there
shall be no liability on the part of Buyer or Seller (or their respective
officers, directors, partners or Affiliates), except as a result of any breach
of this Agreement by such party or to the extent such a party is entitled to
indemnification under Section 10 of this Agreement.
12. Miscellaneous.
-------------
12.1 Amendments and Waivers. Any term of this Agreement may be amended or
----------------------
waived with the written consent of the parties or their respective successors
and assigns. Any amendment or waiver effected in accordance with this Section
12.1 shall be binding upon the parties and their respective successors and
assigns.
12.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
12.3 Governing Law; Jurisdiction. This Agreement and all acts and
---------------------------
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Washington, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of King
County, Washington.
12.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
12.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
12.6 Notices. Any notice required or permitted by this Agreement shall be
-------
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as
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set forth below, or as subsequently modified by written notice, and if to Buyer,
with a copy to Xxxxx Xxxxxxxx, Venture Law Group, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx,
XX 00000.
12.7 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
12.8 Entire Agreement. This Agreement and the documents referred to
----------------
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other written
or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
12.9 Advice of Legal Counsel. Each party acknowledges and represents
-----------------------
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
[Signature pages follows]
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This Agreement has been duly executed and delivered by the duly authorized
officers of Seller and Buyer as of the date first above written.
POINTSHARE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name:_________________________________
Title:________________________________
Address: 0000 000xx Xxx. XX, Xxxxx 000
Xxxxxxxx, XX 00000
PEREGRIN MEDICAL REVIEW, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: ________________________________
Title:________________________________
Address: 0000 XX Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Address: ____________________
____________________
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
Exhibit A
Escrow Agreement
Exhibit B
Xxxxxxxxx Employment Agreement
Seller Disclosure Schedule
Buyer Disclosure Schedule
Schedule 2.1
Purchased Assets
Schedule 2.2
Excluded Assets
1. The trade name Peregrin; and corporate name Peregrin Medical Review, Inc.
2. The Peregrin website.
Schedule 2.3(a)
Assumed Liabilities
Schedule 2.3(a)
Assumed Liabilities
-------------------
Description Amount
----------- ------
Lightwave (A) $ 5,000
US West (B) 4,000
Workers compensation insurance premium (C) 2,000
Compliance with State of Oregon Contract:
Y2K readiness (D) 25,000
"Development Costs" (E) 13,000
Monthly maintenance fee, annualized (F) 12,000
T1 cost and related hardware (G) ?
Costs related to resolving "technical issues" for currently ?
non-paying customers (H)
---------
Total [$61,000]
=========
Notes:
---
(A) Amounts paid and disputed by Oregon Medical Association.
(B) [Need explanation].
(C) Estimate of annual premium cost for existing three employees to comply with
Contract with Regence Blue Cross Blue Shield.
(D) Estimated cost to comply with State of Oregon Contract regarding Y2k
readiness. Penalty of $100,000 for non-compliance. (Section 3.1).
(E) Payment obligation to State of Oregon relating to reimbursement for
"development costs". [Estimated range of between $13,000 and $66,000]
(Section 3.2.1)
(F) Payment obligation to State of Oregon for monthly "maintenance cost".
(Section 3.2.2)
(G) Estimated cost of a terminal and T-1 line required to be provided for the
exchange of eligibility data. (Sections 3.4a,b)
