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EXHIBIT 2.4
ACQUISITION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
QUADRAMED CORPORATION AND INTERMED ACQUISITION CORPORATION,
AND
INTERMED HEALTHCARE SYSTEMS INC. AND ITS STOCKHOLDERS
DATED
DECEMBER 2, 1996
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TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS.................................... 2
1.1 "Acquisition Co."....................................... 2
1.2 "Acquisition Co. Common Stock".......................... 2
1.3 "Affiliate"............................................. 2
1.4 "Agreement"............................................. 2
1.5 "Certificate of Merger"................................. 2
1.6 "Closing"............................................... 2
1.7 "Closing Consideration"................................. 2
1.8 "Code".................................................. 2
1.9 "Company"............................................... 2
1.10 "Company Common Stock".................................. 2
1.11 "Company Financial Statements".......................... 2
1.12 "Contract".............................................. 3
1.13 "Daily Price"........................................... 3
1.14 "DGCL".................................................. 3
1.15 "Effective Date"........................................ 3
1.16 "Employee Benefit Plan(s)".............................. 3
1.17 "Encumbrances".......................................... 3
1.18 "Environmental Law"..................................... 3
1.19 "ERISA"................................................. 3
1.20 "Exchange Act".......................................... 3
1.21 "Fair Market Value"..................................... 3
1.22 "Government Communications"............................. 4
1.23 "Hazardous Substance(s)"................................ 4
1.24 "Intellectual Property"................................. 4
1.25 "IRS"................................................... 4
1.26 "Knowledge"............................................. 4
1.27 "Licenses".............................................. 4
1.28 "Material Adverse Effect"............................... 4
1.29 "Merger"................................................ 4
1.30 "Person"................................................ 5
1.31 "PBGC".................................................. 5
1.32 "QuadraMed"............................................. 5
1.33 "QuadraMed Common Stock"................................ 5
1.34 "QuadraMed SEC Filings"................................. 5
1.35 "QuadraMed Shares"...................................... 5
1.36 "Real Property"......................................... 5
1.37 "Real Property Leases" ................................. 5
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1.38 "SEC".............................................................. 5
1.39 "Securities Act"................................................... 5
1.40 "Stockholder(s)"................................................... 5
1.41 "Surviving Corporation"............................................ 5
1.42 "Tax(es)".......................................................... 5
1.43 "Tax Return(s)".................................................... 6
ARTICLE II. THE MERGER................................................ 6
2.1 The Merger......................................................... 6
2.2 Execution of Certificate of Merger................................. 6
2.3 Effect of the Merger............................................... 6
2.4 Certificate of Incorporation; Bylaws............................... 6
2.5 Directors.......................................................... 6
2.6 Officers........................................................... 6
2.7 Closing............................................................ 7
2.8 Tax Consequences................................................... 7
2.9 Pooling of Interests............................................... 7
ARTICLE III. STATUS AND CONVERSION OF THE COMPANY SHARES;
STATUS OF ACQUISITION CO. SHARES.......................... 7
3.1 Consideration Paid for Company Common Stock and Company Options.... 7
3.2 Acquisition Co. Common Stock....................................... 8
3.3 Private Placement; Registration Rights............................. 8
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS...................................... 8
4.1 Organization and Good Standing of the Company...................... 8
4.2 Certificate of Incorporation and Bylaws............................ 9
4.3 Corporate Minutes.................................................. 9
4.4 Qualification To Do Business....................................... 9
4.5 Capitalization of the Company...................................... 9
4.6 Ownership of Shares; No Change..................................... 9
4.7 Subsidiaries and Other Affiliates.................................. 10
4.8 Authority.......................................................... 10
4.9 Company Financial Statements....................................... 11
4.10 Undisclosed Liabilities............................................ 11
4.11 Absence of Certain Changes......................................... 11
4.12 Assets............................................................. 13
4.13 Real Property Matters.............................................. 14
4.14 Intellectual Property.............................................. 15
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4.15 Proprietary Information of Third Parties........................... 15
4.16 Software........................................................... 16
4.17 Tax Matters........................................................ 17
4.18 Legal and Regulatory Matters....................................... 19
4.19 Employees.......................................................... 19
4.20 ▇▇▇▇▇▇▇▇........................................................... 20
4.21 Insurance Coverage................................................. 20
4.22 Non-Assignable Rights.............................................. 20
4.23 Personnel.......................................................... 21
4.24 Employee Benefit Plan(s)........................................... 21
4.25 Accounts Receivable; Inventories................................... 21
4.26 Compliance with Environmental Laws................................. 22
4.27 Bank and Brokerage Accounts........................................ 22
4.28 Contracts.......................................................... 22
4.29 Material Misstatements or Omissions................................ 24
4.30 Broker's Fees...................................................... 24
4.31 Investment Representations of the Stockholders..................... 24
ARTICLE V. COVENANTS OF THE COMPANY AND
THE STOCKHOLDERS.......................................... 25
5.1 Conduct of Company's Business...................................... 25
5.2 Access and Information............................................. 26
5.3 Further Efforts.................................................... 26
5.4 Confidentiality.................................................... 26
5.5 Financial Information.............................................. 26
5.6 Subsequent Events.................................................. 26
5.7 Public Announcement................................................ 27
5.8 Exclusive Dealing ................................................. 27
5.9 Restrictions on Transferability of QuadraMed Shares; Compliance
with Securities Act................................................ 27
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF QUADRAMED
AND ACQUISITION CO........................................ 28
6.1 Organization and Good Standing..................................... 28
6.2 Capitalization of QuadraMed and Acquisition Co..................... 28
6.3 Authority.......................................................... 29
6.4 QuadraMed Shares................................................... 30
6.5 Legal and Regulatory Matters....................................... 30
6.6 QuadraMed SEC Filings.............................................. 30
6.7 Broker's Fees...................................................... 31
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ARTICLE VII. COVENANTS OF QUADRAMED AND ACQUISITION CO........ 31
7.1 Further Efforts........................................... 31
7.2 Confidentiality........................................... 31
7.3 Public Announcement....................................... 32
7.4 Benefits for Retained Employees........................... 32
ARTICLE VIII. GENERAL CONDITIONS PRECEDENT..................... 32
8.1 No Injunctions............................................ 32
8.2 No Governmental Proceedings............................... 32
8.3 Governmental Approvals.................................... 32
ARTICLE IX. CONDITIONS PRECEDENT TO QUADRAMED'S AND
ACQUISITION CO.'S OBLIGATION TO CLOSE............ 33
9.1 Due Diligence............................................. 33
9.2 Certificates of the Company and the Stockholders.......... 33
9.3 No Material Adverse Effect................................ 33
9.4 Third Party Consents...................................... 33
9.5 Legal Opinion of the Company's Counsel.................... 33
9.6 Certified Resolutions..................................... 33
9.7 Letters of Resignation.................................... 34
9.8 Employment Agreements and Non-Compete Agreements.......... 34
9.9 Other Employment Agreements............................... 34
9.10 Pooling of Interests...................................... 34
9.11 Registrations Rights Agreement............................ 34
9.12 ISSC Licenses............................................. 34
9.13 Sirrom Capital Releases................................... 34
9.14 Proceedings Satisfactory to Counsel....................... 34
ARTICLE X. CONDITIONS PRECEDENT TO THE COMPANY'S
AND THE STOCKHOLDERS' OBLIGATION TO CLOSE........ 35
10.1 Certificates of QuadraMed and Acquisition Co.............. 35
10.2 Certified Resolutions..................................... 35
10.3 Third Party Consents...................................... 35
10.4 Legal Opinion............................................. 35
10.5 Closing Consideration..................................... 35
10.6 Employment Agreement...................................... 36
10.7 Registration Rights Agreement............................. 36
10.8 Tax Certification......................................... 36
10.9 Sirrom Repayment.......................................... 36
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10.10 Proceedings Satisfactory to Counsel....................... 36
ARTICLE XI. SURVIVAL OF REPRESENTATIONS
AND INDEMNIFICATIONS............................. 36
11.1 Survival of Representations............................... 36
11.2 Indemnification by the Company and the Stockholders....... 37
11.3 Indemnification by QuadraMed and Acquisition Co........... 38
11.4 Notice of Third-Party Claims; Assumption of Defense....... 38
11.5 Settlement or Compromise.................................. 39
11.6 Failure of Indemnifying Party to Act...................... 39
11.7 Procedure for Indemnification............................. 39
11.8 Certificate of Incorporation.............................. 40
11.9 Exclusivity............................................... 40
ARTICLE XII. TERMINATION...................................... 40
12.1 Termination............................................... 40
12.2 Effect of Termination..................................... 41
12.3 Waiver of Conditions...................................... 41
12.4 Payment of Expenses....................................... 41
ARTICLE XIII. GENERAL.......................................... 42
13.1 Amendments................................................ 42
13.2 Assignment................................................ 42
13.3 Notices................................................... 42
13.4 Further Assurances........................................ 43
13.5 Entire Agreement.......................................... 43
13.6 Counterparts; Facsimile................................... 43
13.7 Governing Law............................................. 43
13.8 Resolutions of Indemnification Disputes................... 43
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EXHIBITS
Exhibit "A" Certificate of Merger
Exhibit "B" Registration Rights Agreement
Exhibit "C" Opinion of Company's Counsel
Exhibit "D" Employment Agreement
Exhibit "E" Non-Competition and Non-Interference Agreement
Exhibit "F" Opinion of QuadraMed and Acquisition Co.'s Counsel
Exhibit "G" Escrow Agreement
SCHEDULES
Schedule 3.1(c) InterMed Employee Stock Options
Schedule 4.4 Qualifications To Do Business
Schedule 4.5 Outstanding Options, Warrants, Etc.
Schedule 4.6 Ownership of Shares
Schedule 4.7 Subsidiaries and Other Affiliates
Schedule 4.9 Company Financial Statements
Schedule 4.10 Undisclosed Liabilities
Schedule 4.11 Absence of Certain Changes
Schedule 4.12(a) Assets
Schedule 4.13(a) Real Property
Schedule 4.13(b) Hazardous Substances
Schedule 4.13(c) Tenants
Schedule 4.13(e) Title to Real Property
Schedule 4.14 Intellectual Property
Schedule 4.16 Software
Schedule 4.17(b) Threatened or Pending Tax Claims
Schedule 4.17(c) Tax Returns
Schedule 4.17(e) States for Tax Returns
Schedule 4.17(g) Waivers or Consents
Schedule 4.17(h) Tax Rulings or Agreements
Schedule 4.17(i) Employee Benefit Plans
Schedule 4.17(j) Consolidated Tax Returns
Schedule 4.17(n) Joint Venture/Partnership Agreements
Schedule 4.17(o) Accounting Method Adjustments
Schedule 4.18 Litigation
Schedule 4.21 Insurance
Schedule 4.22 Non-Assignable Rights
Schedule 4.26 Compliance with Environmental Laws
Schedule 4.27 Bank and Brokerage Accounts
Schedule 4.28(a) Contracts
Schedule 4.28(b) Validity of Contracts
Schedule 4.31 Non-Accredited Investors
Schedule 9.12 ISSC Licenses
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ACQUISITION AGREEMENT AND PLAN OF MERGER
This Acquisition Agreement and Plan of Merger (the "Agreement") is entered
into as of December 2, 1996, by and among QuadraMed Corporation, a Delaware
corporation ("QuadraMed"), InterMed Acquisition Corporation, a Delaware
corporation ("Acquisition Co."), on the one hand, and InterMed Healthcare
Systems Inc., a Delaware corporation (the "Company"), and ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, Obi Okehi, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights of survivorship, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights of survivorship, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, G. ▇▇▇▇▇ ▇▇▇▇▇▇ and Sirrom Investments, Inc., a
Tennessee corporation, who are all of the Stockholders of the Company (each, a
"Stockholder" and collectively, the "Stockholders").
WHEREAS, QuadraMed is a duly incorporated Delaware corporation engaged
in the healthcare electronic data interchange business.
WHEREAS, Acquisition Co. is a duly incorporated Delaware corporation
formed by QuadraMed for the purpose of the Merger contemplated by this
Agreement, with authorized capital stock consisting of 1,000 shares of Common
Stock, $0.001 par value, of which all 1,000 shares are duly and validly issued
and outstanding and owned by QuadraMed.
WHEREAS, the Company is a duly incorporated Delaware corporation
engaged in the healthcare electronic data interchange business, with authorized
capital stock consisting of 1,000,000 shares of Common Stock, $0.001 par value,
of which 115,312 shares are duly and validly issued, outstanding and entitled to
vote as of December 2, 1996.
WHEREAS, the respective Boards of Directors of QuadraMed, Acquisition
Co. and the Company, and the Stockholders of the Company, have approved the
acquisition of the Company by Acquisition Co. via merger of the Company with and
into Acquisition Co. pursuant to the terms of this Agreement and on a
tax-deferred basis pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code (the "Merger").
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed as
follows:
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ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Acquisition Co." shall have the meaning specified in the preamble
hereto.
1.2 "Acquisition Co. Common Stock" shall mean the common stock of
Acquisition Co., $0.001 par value.
1.3 "Affiliate" shall mean any person directly or indirectly controlled
by, controlling or under common control of any party to this Agreement.
1.4 "Agreement" shall mean this Acquisition Agreement and Plan of
Merger, including the exhibits and schedules referred to herein.
1.5 "Certificate of Merger" shall refer to Exhibit "A" hereto.
1.6 "Closing" shall mean the closing of the transactions contemplated
in this Agreement.
1.7 "Closing Consideration" shall mean shares of QuadraMed Common Stock
to be delivered to the Stockholders as of the Closing with an aggregate Fair
Market Value of $3,818,900, plus the stock options to be assumed pursuant to
Section 3.1(c), with such Closing Consideration to have an aggregate value of
$4,150,000 at Closing.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.9 "Company" shall have the meaning specified in the preamble hereto.
1.10 "Company Common Stock" shall mean all of the issued and
outstanding Common Stock of the Company, par value $0.001, all of which shares
are held by the Stockholders as of the date hereof.
1.11 "Company Financial Statements" shall mean the audited balance
sheets of the Company as of December 31, 1995 for the twelve (12) month period
then ended and the related statements of operations, stockholders' equity and
cash flows for the periods then ended, as prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent certified public accountants to the Company, including notes
thereto, and the unaudited balance sheets of the Company as of September 30,
1996, for the nine (9) month period then ended and the related statement of
operations, stockholders' equity and cash flows for the period then ended, as
prepared by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, independent certified public accountants to the
Company, including notes thereto.
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1.12 "Contract" shall mean any existing written or oral contract,
lease, policy, commitment, sales order, purchase order, indenture, mortgage,
note, bond, instrument, license or other agreement.
1.13 "Daily Price" of the QuadraMed Shares shall mean the last reported
sales price on such day reported by the National Association of Securities
Dealers, Inc. Automated Quotation System.
1.14 "DGCL" shall mean the Delaware General Corporation Law.
1.15 "Effective Date" shall mean the date and time the Certificate of
Merger is filed with the Delaware Secretary of State.
1.16 "Employee Benefit Plan(s)" shall mean any "employee benefit plan"
as defined in Section 3(3) of ERISA and any other plan, policy, program,
practice or arrangement providing compensation or other benefits to any current
or former officer or employee of the Company or any beneficiary or dependent
thereof that is or was maintained by the Company.
1.17 "Encumbrances" shall mean any mortgage, chattel mortgage,
conditional sales contract, pledge, lien, charge, security interest,
encumbrance, option, lease, license, easement or similar interest.
1.18 "Environmental Law" shall mean all applicable federal, state and
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directives, requests, licenses,
authorizations, permits and agreements issued or signed by any federal, state or
local government authority, relating to environmental, health or safety matters,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Water Act of 1977, the Clean
Air Act, the Resource Conservation and Recovery Act of 1976, the Federal
Insecticide, Fungicide and Rodenticide Act, the Toxic Substances Control Act,
the Emergency Planning and Community Right-to-Know Act of 1986, the Occupational
Safety and Health Act of 1970 and the Safe Drinking Water Act, all as amended,
and any state and local counterparts to such acts as existing at the time of
Closing.
1.19 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.20 "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.
1.21 "Fair Market Value" with respect to each of the QuadraMed Shares
shall mean the average of the Daily Price per share of the QuadraMed Shares
(adjusted for any stock splits or other reclassifications during the applicable
time period) for the thirty (30)
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consecutive trading days immediately preceding the business day prior to the
Closing or any other applicable date pursuant to Article XI.
1.22 "Government Communications" shall mean all written inspection
reports, complaints and other communications received by the Company from
government and regulatory agencies and authorities or oral communications
received by officers of the Company.
1.23 "Hazardous Substance(s)" shall mean: (i) any substance, the
presence of which requires investigation or remediation under any Environmental
Law or under common law; (ii) any toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
substance which is regulated by any Environmental Law; (iii) any substance, the
presence of which causes or threatens to cause a nuisance upon property
presently and/or previously owned, leased or otherwise used by the Company (or
poses or threatens to pose a hazard to the health or safety of persons on or
about the property of the Company or adjacent properties); and (iv) radon,
ureaformaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing
materials, petroleum and petroleum products.
1.24 "Intellectual Property" shall have the meaning specified in
Section 4.14 of this Agreement.
1.25 "IRS" shall mean the United States Internal Revenue Service or any
successor entity.
1.26 "Knowledge" - an individual will be deemed to have "Knowledge" of
a particular fact or other matter if: (a) such individual is actually aware of
such fact or other matter; or (b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter. A Person (other than an individual) will be deemed to
have "Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
1.27 "Licenses" shall mean all material governmental licenses, permits,
approvals and registrations necessary for the ownership of the Company
properties and the conduct of its business as currently conducted.
1.28 "Material Adverse Effect" shall mean any material adverse effect
on the business, assets, properties, operations or financial condition of the
Company.
1.29 "Merger" shall have the meaning specified in the preamble hereto.
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1.30 "Person" shall mean an individual, a Partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture or any other entity of whatever nature.
1.31 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.32 "QuadraMed" shall have the meaning specified in the preamble
hereto.
1.33 "QuadraMed Common Stock" shall mean the shares of common stock of
QuadraMed, $0.01 par value.
1.34 "QuadraMed SEC Filings" shall mean any and all documents, reports
and other filings made by QuadraMed with the SEC, including, without limitation,
the Form SB-2 filed with the SEC on July 26, 1996 (as amended) in connection
with QuadraMed's initial public offering (the "Registration Statement").
1.35 "QuadraMed Shares" shall mean the shares of QuadraMed Common Stock
issuable as a portion of the Closing Consideration.
1.36 "Real Property" shall mean all of the land, buildings, plants,
facilities, installations, fixtures and other structures and improvements leased
to the Company pursuant to the Real Property Leases.
1.37 "Real Property Leases" shall mean, collectively, any written real
property leases to which the Company is a party.
1.38 "SEC" shall mean the Securities and Exchange Commission.
1.39 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.40 "Stockholder(s)" shall have the meaning specified in the preamble
hereto.
1.41 "Surviving Corporation" shall mean Acquisition Co. as the
surviving corporation following the Merger.
1.42 "Tax(es)" shall mean all taxes, charges, fees, levies or other
assessments of any nature whatsoever (including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes, customs,
duties, fees, assessments or charges of any kind whatsoever) together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign) upon the Company to which reference
is being made or any Affiliate thereof or upon any consolidated, combined or
unitary group of which any such entity is or was a member.
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1.43 "Tax Return(s)" shall mean all federal, state, foreign, local and
other tax returns, reports and statements heretofore required to be filed by the
Company to which reference is being made or by any consolidated, combined or
unitary group of which the Company is or was a member.
ARTICLE II.
THE MERGER
2.1 The Merger. Subject to the terms and conditions hereof, the Merger
shall be consummated in accordance with the DGCL as promptly as practicable
following the satisfaction or waiver of the conditions set forth in Articles
VIII, IX and X. At the Effective Date, subject to the terms and conditions of
this Agreement and in accordance with the laws of the State of Delaware, the
Company shall be merged with and into Acquisition Co., which shall be the
Surviving Corporation.
2.2 Execution of Certificate of Merger. Prior to the Closing,
Acquisition Co. shall complete and execute the Certificate of Merger, in
substantially the form attached hereto as Exhibit "A" and incorporated herein by
this reference, and cause the Certificate of Merger to be delivered to the
Delaware Secretary of State for filing as part of the Closing as provided in
Section 251 of the DGCL. The parties hereto will also execute and deliver such
other documents or certificates as may be required to effect the Merger.
2.3 Effect of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
2.4 Certificate of Incorporation; Bylaws. As of the Effective Date, the
Certificate of Incorporation of Acquisition Co. shall be the Certificate of
Incorporation of the Surviving Corporation, and the Bylaws of Acquisition Co.
shall be the Bylaws of the Surviving Corporation.
2.5 Directors. The directors of Acquisition Co. at the Effective Date
shall be the directors of the Surviving Corporation and shall hold office from
the Effective Date until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of Incorporation
and Bylaws of the Surviving Corporation, or as otherwise provided by law.
2.6 Officers. The officers of the Surviving Corporation shall be as set
forth below, and such officers shall hold office from the Effective Date until
their respective successors are duly elected or appointed and qualify in the
manner provided in the Certificate of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law:
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Name Office
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Chairman of the Board, Chief Executive Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇ President, Chief Operating Officer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Secretary
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Treasurer
2.7 Closing. Unless this Agreement shall have been terminated pursuant
to the provisions of Article XII, the Closing of the transactions contemplated
by this Agreement shall take place at the principal executive offices of
QuadraMed, ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ as soon as practicable following the satisfaction or waiver of the
conditions set forth in Articles VIII, IX and X.
2.8 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of Section
368 of the Code.
2.9 Pooling of Interests. The parties intend that the Merger be treated
as a "pooling of interests" for accounting purposes. Each party will take all
actions and execute all documents reasonably necessary to effectuate the same.
ARTICLE III.
STATUS AND CONVERSION OF THE COMPANY COMMON STOCK;
STATUS OF ACQUISITION CO. COMMON STOCK
3.1 Consideration Paid for Company Common Stock.
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Date shall, by virtue of the Merger and
without any action on the part of the Stockholders, be converted into the right
to receive a ratable portion of the QuadraMed Shares upon surrender at the
Closing of the certificates representing such shares. At the Effective Date, all
rights in respect of such Company Common Stock shall cease to exist, other than
the right to receive the Closing Consideration and all such shares shall be
canceled and retired. Until surrendered, each outstanding certificate which
prior to the Effective Date represented issued and outstanding Company Common
Stock shall be deemed for all corporate purposes to evidence the right to
receive such amounts.
(b) Each share of Company Common Stock held in the Company's
treasury immediately prior to the Effective Date shall, by virtue of the Merger,
be canceled and retired and cease to exist, without any conversion thereof.
(c) At the Effective Date, each employee stock option issued
pursuant to the InterMed 1995 Stock Incentive Plan set forth on Schedule 3.1(c)
hereto shall be converted into
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and become identical rights with respect to QuadraMed Common Stock and QuadraMed
and Acquisition Co. shall assume each such InterMed option, in accordance with
the terms of the InterMed 1995 Stock Incentive Plan and each such option shall
be fully vested, except from and after the Effective Date (i) the number of
shares issuable upon exercise of each such stock option shall be an amount
calculated as follows: (1) with respect to ▇▇▇▇▇ ▇▇▇▇▇'▇ stock option, $158,928
divided by the Fair Market Value of the QuadraMed Shares (in each case rounding
down to the nearest share); (2) with respect to each of the ▇▇▇▇▇▇ ▇▇▇▇▇ and G.
▇▇▇▇▇ ▇▇▇▇▇▇'▇ stock options, $86,086 divided by the Fair Market Value of the
QuadraMed Shares, and (ii) the exercise price of each such stock option shall be
its exercise price prior to the Effective Date multiplied by a fraction equal to
the Fair Market Value of the QuadraMed Shares, divided by $33.11 (rounding down
to the nearest cent); and (iii) QuadraMed and its Compensation Committee shall
be substituted for InterMed and its Compensation Committee in administering such
Stock Plan. Each assumed option which is an "incentive stock option" shall in
any event be adjusted as required by Section 424 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder, so as
not to constitute a modification, extension or renewal of the option within the
meaning of Section 424(h) of the Code. QuadraMed and Acquisition Co. agree to
take all necessary steps to effectuate the foregoing provision.
3.2 Acquisition Co. Common Stock. Each share of Common Stock of
Acquisition Co. issued and outstanding immediately prior to the Effective Date
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into such number of newly issued shares of the common
stock of the Surviving Corporation equal to the number of shares of Common Stock
of Acquisition Co. then outstanding.
3.3 Private Placement; Registration Rights. The shares of QuadraMed
Common Stock to be issued in the Merger will be exempt from registration
requirements of the Securities Act pursuant to the private placement exemption
provided by Rule 505 and/or 506 of Regulation D promulgated under the Securities
Act and applicable state securities laws. Each Stockholder hereby agrees to take
all reasonable actions and execute all documents to qualify issuance of the
QuadraMed Common Stock for such exemptions. Such shares shall be entitled to
standard "piggyback" registration rights in accordance with the Registration
Rights Agreement substantially in the form attached hereto as Exhibit "B" and
incorporated herein by this reference (the "Registration Rights Agreement").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE STOCKHOLDERS
The Company and each of the Stockholders hereby represent and warrant
to Acquisition Co. and QuadraMed as follows:
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16
4.1 Organization and Good Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all requisite corporate power and authority to
carry on its business as now being conducted and to own, lease and operate its
properties. The Company is duly organized and in good standing as a foreign
corporation authorized to do business in each jurisdiction where the failure to
be so authorized would, individually or in the aggregate, have a Material
Adverse Effect.
4.2 Certificate of Incorporation and Bylaws. The Company has delivered
to Acquisition Co. and QuadraMed true, correct and complete copies of its
Certificate of Incorporation (certified by the Delaware Secretary of State) and
Bylaws (certified by its Secretary) together with all amendments to each through
the date hereof. Each such Certificate of Incorporation and Bylaws are in full
force and effect.
4.3 Corporate Minutes. The Company has delivered to Acquisition Co. and
QuadraMed true, correct and complete copies of its minute books, stock
certificate books and corporate records, and such books and records reflect all
issuances of equity and debt securities of the Company or rights to acquire any
such securities, and contain true and complete records of all formal meetings
and consents in lieu of meetings of the Company's Board of Directors (and any
committees thereof) and stockholders.
4.4 Qualifications To Do Business. The Company is qualified to do
business and is in good standing in each jurisdiction (listed on Schedule 4.4 to
this Agreement) where the character or location of property owned and leased,
the employment of personnel or the nature of the business and activities
conducted by the Company, as the case may be, require such qualification,
licensing or domestication, except in such jurisdictions where the failure to be
so qualified, licensed or domesticated and to be in good standing, individually
or in the aggregate, would not have a Material Adverse Effect. Except as set
forth on Schedule 4.4, the Company does not file franchise, income or other tax
returns in any jurisdiction based upon the ownership or use of property therein
or the derivation of income therefrom.
4.5 Capitalization of the Company. As of the date of this Agreement,
the only authorized capital stock of the Company consists of 1,000,000 shares of
Company Common Stock, $0.001 par value, of which 115,312 shares are issued and
outstanding. All issued and outstanding shares of Company Common Stock have been
duly authorized and are validly issued, fully paid and nonassessable and are not
subject to, nor were any issued in violation of, any preemptive rights. Except
as set forth on Schedule 4.5, there are not and, as of the Closing, there will
not be, any outstanding securities of the Company or options, warrants,
subscriptions, convertible debentures or other rights, commitments or any other
similar agreements for the purchase of any securities of the Company. The
Company is not a party to, nor has Knowledge that any of the Stockholders are
parties to, any voting trust agreements or other contracts, agreements or
arrangements restricting voting rights or transferability with respect to the
issued and outstanding Company Common Stock.
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17
4.6 Ownership of Shares; No Change. As of the date of this Agreement
and as of the Closing, the Stockholders do and will own all of the issued and
outstanding Company Common Stock. Each of the shares of Company Common Stock to
be tendered by the Stockholders at the Closing is free and clear of any
Encumbrance, and at the Closing, each of such shares of Company Common Stock
will be free of any Encumbrance. The Stockholders have full power and authority
to convey good marketable title to the shares of Company Common Stock owned by
him, her or it free and clear of any Encumbrances. Except as set forth on
Schedule 4.6, there has been no change in the capital stock or other equity
interests of the Company within the two (2) year period ending on the Effective
Date of this Agreement.
4.7 Subsidiaries and Other Affiliates. The Company does not have any
subsidiaries and, except as set forth on Schedule 4.7, does not own, either
directly or indirectly, any interest or investment, whether debt or equity
(other than an interest as a creditor holding a trade account receivable), or
any obligation, option or right to acquire any interest, direct or indirect, in
any other corporation or other entity.
4.8 Authority.
(a) The Company has the necessary corporate power and
authority to enter into and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by the Company have been duly authorized by the Board of
Directors and Stockholders of the Company in accordance with applicable law. No
further corporate action will be necessary on the part of the Company to make
this Agreement valid and binding upon the Company in accordance with its terms.
This Agreement has been duly and validly authorized, executed and delivered by
the Company and this Agreement (assuming due authorization, execution and
delivery by the other parties hereto) constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms (except as
such enforcement may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws affecting the rights of creditors generally or by general
principles of equity). Neither the execution, delivery nor performance of this
Agreement by the Company, nor the consummation of the transactions contemplated
hereby, nor compliance by the Company with the terms and provisions of this
Agreement nor the Certificate of Merger will result in a violation or breach of
any term or provision of the Company's Certificate of Incorporation or Bylaws,
or of any statute, rule or regulation applicable to the Company or its
businesses, properties, assets or personnel, or conflict with or constitute a
violation or breach of, or a default under (or an event which, with the passage
of time or the giving of notice, or both, would constitute a default under), nor
give any party a right to accelerate the due date of any indebtedness or
obligation under, any indenture, mortgage, deed of trust, contract or agreement
to which the Company is a party or to which its properties or assets are
subject, or any instrument, judgment, decree, writ or other restriction to which
the Company is a party or by which the Company or its businesses, properties,
assets or personnel are bound.
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18
(b) Except for filing the Certificate of Merger with the
Delaware Secretary of State and obtaining any necessary third-party consents,
the Company is not required to submit any notice, report or other filing with
any federal, state or local governmental authority in connection with the
execution or delivery or performance by the Company of this Agreement or the
consummation of the transactions contemplated herein.
4.9 Company Financial Statements. The Company has delivered to
Acquisition Co. and QuadraMed true, complete and correct copies of the Company
Financial Statements. Except as set forth on Schedule 4.9, the Company Financial
Statements (i) present fairly the financial condition of the Company at said
dates and the results of its operations, changes in stockholders' equity and
cash flows for the periods therein specified, and (ii) have been prepared from
the books and records of the Company in accordance with generally accepted
accounting principles, consistently applied and maintained throughout the
periods indicated. The Company shall also deliver to Acquisition Co. and
QuadraMed unaudited balance sheets and the related statement of operations,
stockholders equity and cash flows for the period ended on the Closing (the
"Closing Financials") within fifteen (15) days of the Closing. After the
Effective Date, Acquisition Co. shall cause ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to prepare and
deliver to Acquisition Co. and QuadraMed audited versions of the Closing
Financials. There shall be no deviation between such unaudited version of the
Closing Financials and the audited version of the Closing Financials which
causes QuadraMed and/or Acquisition Co. to suffer a Material Adverse Effect.
4.10 Undisclosed Liabilities. Except for liabilities disclosed or
provided for on the Company Financial Statements and liabilities incurred in the
ordinary course of business consistent with past practice since September 30,
1996, the Company does not have any direct or indirect indebtedness, liability,
losses or obligation, accrued, absolute or contingent (whether or not of a kind
required by generally accepted accounting principles to be set forth on a
balance sheet) (the "Liabilities"), other than the Liabilities set forth on
Schedule 4.10.
4.11 Absence of Certain Changes. Except as set forth on Schedule 4.11
or as provided for in this Agreement, since September 30, 1996, the Company has
conducted its business only in the ordinary course and consistent with prior
practice, and the Company has not:
(a) Discharged or satisfied any lien, charge or encumbrance or
paid any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on the
Company Financial Statements and current liabilities incurred since September
30, 1996 in the ordinary course of business and consistent with prior practice;
(b) Declared or made any payment of any dividend, or made any
other distribution upon or in respect of any of its shares of capital stock, or
purchased, retired or
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redeemed any of the shares of its capital stock or any other securities,
including any warrants or options to purchase any capital stock, or obligated
itself to do any of the foregoing;
(c) Subjected (or permitted to be subjected) any of its
property, business or assets, tangible or intangible to any Encumbrance other
than Encumbrances for current taxes which are not yet due and payable;
(d) Sold, transferred, leased to others or otherwise disposed
of any of its assets or canceled or compromised any debt or claim, or waived or
released any claim or right of substantial value except in the ordinary course
of business consistent with prior practice;
(e) Terminated or received any notice of termination of any
contract, lease or other agreement or suffered any damage, destruction or loss
(whether or not covered by insurance) which, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect;
(f) Encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or
had any material change in its relations with its employees, agents,
distributors, formulators, customers or suppliers;
(g) Transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, or entered into any
agreement or commitment relating to, any license, patent, copyright, trademark,
trade name, permit, consent, approval, invention, product registration or
similar rights, domestic or foreign, or modified any existing rights with
respect thereto;
(h) Adopted, entered into or amended any Employee Benefit Plan
or made any change in the actuarial methods or assumptions used in funding or
determining benefit equivalences thereunder, made any change in the rate of
compensation, commission, bonus, deferred compensation arrangement or other
direct or indirect remuneration payable, or paid or agreed or orally promised to
pay, conditionally or otherwise, any bonus (cash or non-cash), extra
compensation, deferred compensation arrangement or severance or vacation pay, to
any stockholder, director, officer, employee, salesman or distributor of the
Company or hired or entered into any employment agreement or arrangement with
any person;
(i) Issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or warrants with
respect thereto, or acquired any capital stock or other securities of any
corporation, business or entity, or any interest in any business enterprise or
otherwise made any loan or advance to or investment in any person, entity, firm
or corporation, except for short-term investments in cash and cash equivalents
made in the ordinary course of business and consistent with prior practice;
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20
(j) Made any capital expenditures or capital additions or
betterments or commitments therefor in excess of $10,000 individually or $50,000
in the aggregate (excluding individual items in excess of $5,000);
(k) Instituted, settled or agreed to settle, or suffered any
adverse determination in, any litigation, action or proceeding before any court
or governmental body (domestic or foreign) relating to the Company or its
businesses, assets or properties;
(l) Accepted any contract for performance of services or
orders in a material amount from any hospital, health care provider or other
customer under conditions relating to price, terms of payment, time of delivery
or performance or like matters differing from the conditions regularly and
usually specified on acceptance of contract or orders for similar services or
merchandise from said customer or customers who are similarly situated, or made
any change in its selling, pricing, advertising or personnel practices,
inconsistent with its prior practices and prudent business practices prevailing
in the industry;
(m) Revalued any of its assets or written off as uncollectible
any notes or accounts receivable which, individually or in the aggregate, is
material to the Company or its businesses, except writedowns and write-offs in
the ordinary course of business.
(n) Entered into any agreement or made any commitment to take
any of the actions described in paragraphs (a) through (m) above; or
(o) Experienced any Material Adverse Effect.
4.12 Assets.
(a) Except as set forth on Schedule 4.12(a), the Company has
marketable title to, or a valid leasehold interest in, or other legal right to
use, all of the properties and assets it owns or uses in its business, except
inventory (if any) sold after September 30, 1996 in the ordinary course of
business. None of such assets or properties are subject to any Encumbrances,
except (i) Encumbrances and leases incurred or made in the ordinary course of
business which are not substantial in character, amount or extent and do not
materially impair the usefulness of such properties and assets in the conduct of
the business of the Company, (ii) liens for taxes, assessments or other
governmental charges or levies which are either not yet delinquent or are being
contested in good faith and by appropriate proceedings, can be paid without
material penalty and which do not materially impair the usefulness of such
properties and assets in the conduct of the business of the Company or (iii) as
reflected on the Company Financial Statements. Except as set forth on Schedule
4.12(a), all of such properties and assets owned, leased or used by the Company
have been maintained in accordance with customary industry practices, are in
good operating condition and repair except for normal wear and tear, are
suitable for the purposes used, are directly related to the business of the
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21
Company and are adequate and sufficient for all current operations of the
business of the Company.
(b) The Company has delivered to QuadraMed and Acquisition Co.
a complete list, which is true and correct in all material respects, of all
equipment, machinery, tools, equipment, motor vehicles, rolling stock and other
tangible personal property (other than inventory (if any) and supplies acquired
after September 30, 1996 in the ordinary course of business) owned, leased or
used by the Company, except for items having a cost less than $5,000.
4.13 Real Property Matters.
(a) The Company does not have any ownership interest in real
property. Schedule 4.13(a) includes a complete and accurate description of all
of the Real Property. The Real Property includes all land used for the conduct
of the business and operations of the Company. To the Knowledge of the Company
and each of the Stockholders, except as disclosed on Schedule 4.13(a), the
buildings, facilities, installations, fixtures and other structures or
improvements included as part of the Real Property have been well-maintained and
are in good operating condition and repair (with the exception of normal wear
and tear), free from defects other than such minor defects as do not interfere
with the continued use thereof in the conduct of normal operations. To the
Knowledge of the Company and each of the Stockholders, the activities carried on
in such buildings, plants, facilities, installations, fixtures and other
structures or improvements, and the buildings, plants, facilities,
installations, fixtures and other structures or improvements themselves, are not
in violation of or in conflict with any applicable zoning, environmental or
health regulation or ordinance or any other law, statute, regulation or
ordinance. The Company has delivered to QuadraMed and Acquisition Co. true,
correct and complete copies of the Real Property Leases and copies of all
reports of any engineers, environmental consultants or other consultants in its
possession relating to any of the Real Property. To the Knowledge of the Company
and each of the Stockholders, there is no pending, threatened or proposed
proceeding or governmental action to modify the zoning classification of, or to
condemn or take by the power of eminent domain (or to purchase in lieu thereof),
or to classify as a landmark, or otherwise to take or restrict in any way the
right to use, develop or alter, all or any part of the Real Property.
(b) To the Knowledge of the Company and each of the
Stockholders, each separate parcel of the Real Property has adequate storm and
sanitary sewer facilities, access to telephone, gas and electrical connections,
fire protection, drainage and other public utilities, and has parking facilities
that meet in all material respects all requirements imposed by applicable law.
In addition, each separate parcel of Real Property currently has adequate water
supply and neither the Company nor any Stockholder has reason to believe that
such water supply will be inadequate in the future.
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(c) Except as disclosed on Schedule 4.13(c), there are no
tenants (other than the Company) occupying space on any Real Property.
(d) Each of the Real Property Leases is valid and enforceable
in accordance with its terms, the Company has not received any notice of any,
and there exists no event of default or event which constitutes or would
constitute (with notice or lapse of time or both) a default in any material
respect under any Real Property Lease and all lessors (and, if applicable, all
mortgagees with respect to Real Property Leases covering Real Property which is
encumbered by a mortgage) under the Real Property Leases (or mortgages) have
consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification in
the rights or obligations thereunder.
4.14 Intellectual Property. Schedule 4.14 sets forth all patents,
trademarks, service marks, trade names, copyrights and franchises, all
applications for any of the foregoing and all permits, grants and licenses or
other rights running to or from the Company relating to any of the foregoing
that are material to the business of the Company (collectively, the
"Intellectual Property"). The Company owns, or is licensed to, or otherwise has,
the right to use the Intellectual Property that is required for the conduct of
the business of the Company. Except as set forth on Schedule 4.14, and to each
Stockholder's Knowledge, the Company is not in violation of, or infringing upon,
any patent, trademark, service ▇▇▇▇, trade name, copyright or franchise of any
third party, and no written claims have been asserted, nor is there any
litigation pending or threatened claiming such infringement. Except as set forth
on Schedule 4.14, the Company has not licensed or encumbered any of its
Intellectual Property to any third party, nor have any other distribution rights
been granted by the Company to a third party. Except as set forth on Schedule
4.14, the Company has not entered into any other agreements whereby the Company
has been appointed as a distributor or licensee of any products, patents or
trademarks owned by a third party. Except as set forth on Schedule 4.14, the
Company has not entered into any agreement which restricts or affects the use of
any of the Intellectual Property. To each Stockholder's Knowledge, the Company
is not in breach of any agreement set forth in Schedule 4.14, nor have any
claims with respect to any agreement been asserted nor is there any litigation
pending or threatened claiming any such breach, nor have any claims been
asserted that any of the terms and conditions of such agreements violate the
laws of any jurisdiction or treaty. To each Stockholder's Knowledge, and except
as provided in Schedule 4.14, the Company owns or has licensed from third
parties, and has the right to use, all necessary Intellectual Property in order
to conduct its business in all material respects as currently conducted and has
used reasonable efforts to protect its rights in and to maintain the secrecy of
its trade secrets and other proprietary rights and information.
4.15 Proprietary Information of Third Parties. To the Company's and
each of the Stockholder's Knowledge, no third party has claimed or has reason to
claim that any Person employed by, or serving as an independent contractor of,
the Company has (i) violated or may be violating any terms or conditions of his
or her employment, non-competition or non-disclosure agreement with such third
party, (ii) disclosed or may be disclosing or utilized or
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may be utilizing any trade secret or proprietary information of documentation of
such third party or (iii) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Company or any
Stockholder which suggests that such a claim might be contemplated. To the
Company's and each of the Stockholder's Knowledge, no person employed by or
serving as an independent contractor of the Company has employed or proposed to
employ any trade secret or any information or documentation proprietary to any
former employer, and to the Company's and each of the Stockholder's Knowledge,
no person employed by, or serving as an independent contractor of, the Company
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture or sale of any
product or proposed product for the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe that
there will be any such employment or violation. To the Company and each of the
Stockholder's Knowledge, neither the execution nor delivery of this Agreement or
the carrying on of the business of the Company as officers, employees or agents
by any officer, director or key employee of the Company, or the conduct or
proposed conduct of the business of the Company, will conflict with or result in
the breach of the terms, conditions or provisions of or constitute a default
under any contract, covenant or instrument under which such person is obligated.
4.16 Software. Except as set forth on Schedule 4.16:
(a) The computer software of the Company included in the
Intellectual Property (the "Software") performs in all material respects in
accordance with the documentation and other written material used in connection
with the Software and to the Company's and Stockholders' Knowledge is free of
defects in programming and operation, is in machine-readable form, contains all
current revisions of such software and includes all computer programs,
materials, know-how and processes related to the Software. The Company has
delivered to QuadraMed and Acquisition Co. complete and correct copies of all
user and technical documentation related to the Software.
(b) Neither the Company nor, to the Knowledge of the Company
and the Stockholders, any employee or agent thereof has developed or assisted in
the enhancement of the Software except for enhancements included in the Software
as delivered to QuadraMed and Acquisition Co. pursuant hereto or the development
of any program or product based on the Software or any part thereof.
(c) No employee of the Company is, or is now expected to be,
in default under any term of any employment contract, agreement or arrangement
relating to the Software or noncompetition arrangement, or any other contract or
any restrictive covenant relating to the Software or its development or
exploitation. The Software was developed entirely by the employees of the
Company during the time they were employees only of the Company and such
Software does not include any inventions of the employees made prior to
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the time such employees became employees of the Company nor any intellectual
property of any previous employer of such employee.
(d) All right, title and interest in and to the Software is
owned by the Company, free and clear of all Encumbrances except for those which
would not materially impair the value on use of such Software, are fully
transferable to QuadraMed and Acquisition Co., and no party other than the
Company has any interest in the Software, including, without limitation, any
security interest, license, contingent interest or otherwise. The Company's
development, use, sale or exploitation of the Software does not violate any
rights of any other person or entity and the Company has not received any
communication alleging such a violation. The Company does not have any
obligation to compensate any person for the development, use, sale or
exploitation of the Software nor has the Company granted to any other person or
entity any license, option or other rights to develop, use, sell or exploit in
any manner the Software, whether requiring the payment of royalties or not.
(e) The Company has used commercially reasonable efforts to
prohibit the public disclosure of the source code for the Software to any person
or entity other than certain employees of the Company. The Company used
commercially reasonable efforts to protect the confidential and proprietary
nature of the Software. There have been no patents applied for and no copyrights
registered for any part of the Software.
4.17 Tax Matters.
(a) All Tax Returns and reports of the Company required by law
to be filed as of the Closing have been or will be duly filed, and all Taxes
imposed upon the Company or any of its properties, assets or income which are
due and payable or claimed in writing by any taxing authority to be due and
payable have been paid or reserved for as of the Closing, other than taxes,
assessments, fees and charges being contested in good faith by the Company
concerning an amount which in the aggregate, is not material to the business of
the Company. The Company has paid or made provision for the payment of all
unpaid Taxes of the Company accrued for or applicable to the period ended on the
Closing and all years and periods prior thereto and for which the Company may at
that date have been liable in its own right or as transferee of the assets of,
or successor to, any other corporation or entity or by reason of its being a
member of any group of corporations filing consolidated tax returns (including
any such amounts payable as a result of an audit of any Tax Return for any such
period). The Company utilizes the accrual method of accounting for tax purposes.
(b) Except as set forth on Schedule 4.17(b), there are no
claims for Taxes pending against the Company and the Company does not know of
any threatened claim for Tax deficiencies or any basis for such claims, and
there are not now in force any waivers or agreements by the Company for the
extension of time for the assessment of any tax, nor has any such waiver or
agreement been requested by the IRS or any other taxing authority.
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(c) Except as set forth on Schedule 4.17(c), neither the
federal income Tax Returns of the Company or of its Affiliates have been
examined by the IRS. Except as set forth on Schedule 4.17(c), no material issues
have been raised in any examination by any taxing authority with respect to the
businesses and operations of the Company or any of its Affiliates which, by
application of similar principles, reasonably could be expected to result in a
proposed adjustment to the liability of the Company for Taxes for any other
period not so examined. The Company has no liability for any federal, state or
other Taxes of any other corporation or entity, including, without limitation,
by reason of the application of Treas. Reg. Section 1.1502-6. The Company is not
required to file any tax returns or to pay any Taxes in foreign countries.
(d) The Company has paid or is withholding and will pay when
due to the proper taxing authorities all withholding amounts required to be
withheld with respect to all Taxes on income, unemployment, social security or
other similar programs or benefits with respect to salary and other compensation
of directors, officers and employees of the Company.
(e) Schedule 4.17(e) lists those states where the Company or
any Affiliate has been, or will be with respect to the operations or activities
on or prior to the Closing, required to file a Tax Return.
(f) The Company and each of its Affiliates has filed all Tax
Returns, including IRS Forms 1099, required to be filed and has reported
accurately all information required to be included on such Tax Returns.
(g) Except as set forth on Schedule 4.17(g), neither the
Company nor any Affiliate has executed a waiver or consent extending any statute
of limitation for the assessment or collection of any tax, which waiver or
consent remains in effect.
(h) Except as set forth on Schedule 4.17(h), neither the
Company nor any Affiliate has received a tax ruling or entered into any
agreement with any taxing authority, which ruling or agreement has or could have
a material adverse effect on the Taxes of the Company or any Affiliate payable
on or after the Closing.
(i) Except as set forth on Schedule 4.17(i), neither the
Company nor any Affiliate has any employee pension benefit plan (as defined in
Section 3(2) of ERISA), welfare benefit plan (as described in Section 3(1) of
ERISA), bonus, stock purchase, stock ownership, stock option, deferred
compensation, incentive or other compensation plan or arrangements.
(j) Except as set forth on Schedule 4.17(j), neither the
Company nor any Affiliate has been included in a federal consolidated income tax
return and/or state consolidated, combined or unitary income tax return.
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(k) The Company has not at any time consented to have the
provisions of Section 341(f) of the Code apply to it.
(l) None of the Stockholders is a "foreign person" as that
term is defined in Section 1445(f)(3) of the Code.
(m) The basis of any depreciable or amortizable assets, and
the methods used in determining allowable depreciation or amortization
(including cost recovery), of the Company, have been computed in good faith
compliance with the Code and the regulations thereunder.
(n) Except as set forth on Schedule 4.17(n), the Company is
not subject to any joint venture, partnership or other arrangement or Contract
which is treated as a partnership for federal income tax purposes. The Company
is not a party to any tax sharing agreement.
(o) The Company is not and will not be required to recognize
after the Closing any taxable income in respect of accounting method adjustments
required to be made under any applicable tax law, other than as set forth on
Schedule 4.17(o) (which describes such adjustment, the reason therefor and the
amount or estimated amount (which estimate has been made in good faith, and is
considered reasonable) of such adjustment.
(p) The Company has not made or become obligated to make, and
will not as a result of any event connected with the transactions contemplated
by this Agreement become obligated to make, any "excess parachute payment" as
defined in Section 280G of the Code (without regard to subsection (b)(4)
thereof).
4.18 Legal and Regulatory Matters. Except as set forth on Schedule
4.18: (i) there is no claim, suit, action, arbitration, governmental
investigation or other proceeding, nor any order, decree or judgment pending or
in effect, or, to each of the Stockholder's Knowledge, threatened by, against or
relating to the Company or any of its properties, or the transactions
contemplated hereby; (ii) there are no judgments, decrees or orders enjoining
the Company in respect of, or the effect of which is to prohibit any business
practice or the acquisition of any property or the conduct of any aspect of the
business of the Company; (iii) the Company has complied and is complying with
all laws, ordinances, treaties and governmental rules, orders and regulations
applicable to it or its properties, assets, personnel or business,
non-compliance with which could have a Material Adverse Effect; (iv) the Company
has obtained all material Licenses necessary for the ownership of its properties
and the conduct of its business as currently conducted, and all such Licenses
are currently in full force and effect; and (v) the Company has provided
Acquisition Co. and QuadraMed with access to all Government Communications and
has delivered to Acquisition Co. and QuadraMed a true and complete copy of all
Government Communications received by the Company since September 30, 1996 and
all Government Communications as to which any unresolved issue remains.
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4.19 Employees. The Company has not been nor is it a party to any
collective bargaining agreements with respect to any of its employees or with
respect to any contract or agreement with a labor union or any local or
subdivision thereof, nor has it been charged with any unresolved unfair labor
practices, nor, to each of the Stockholder's Knowledge, is there any present
union organizing activity among any of its employees. There are no material
controversies, claims, suits, actions or proceedings pending or threatened
between the Company and its employees. The Company has complied in all material
respects with all laws and regulations relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
employment practices, terms and conditions of employment, collective bargaining,
equal opportunity or similar laws and the payment of social security and similar
taxes, and is not liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing.
4.20 ▇▇▇▇▇▇▇▇. All ▇▇▇▇▇▇▇▇ to customers which are party to oral or
written Contracts of the Company have been accurate in all material respects.
There are no oral agreements or side deals with such customers or individuals
associated therewith. To the Company's and each of the Stockholder's Knowledge,
there are no existing, threatened or suspected disputes, offsets or
counterclaims regarding any services rendered or ▇▇▇▇▇▇▇▇ to such customers.
4.21 Insurance. The Company maintains valid policies of workers'
compensation insurance, and of other insurance with respect to its properties
and business of the kinds and in the amounts not less than is customarily
obtained by corporations engaged in the same or similar business and similarly
situated, including, without limitation, insurance against loss, damage, fire,
theft, public liability, product liability and other risks. Schedule 4.21 to
this Agreement lists all insurance policies of the Company, indicating the risks
insured against, carrier, policy number, amount of coverage (including
deductible), premiums and expiration dates. Except as set forth on Schedule
4.21, such policies are in full force and effect and all premiums now due and
owing with respect to such policies have been paid in full, and the Company has
not made any borrowings or incurred any indebtedness, the collateral for which
was any of such policies. Schedule 4.21 to this Agreement also lists all
insurance policies of the Company which have been in effect, indicating the
risks insured against, amount of coverage (including deductible), the time
period during which such policy was in effect, and whether such policy was on a
"claims made" or "occurrence" basis. The Company is not in default with respect
to any provision contained in any such policy and the Company has not received
any notice of cancellation or nonrenewal of any such policy. To each of the
Stockholder's Knowledge, there are no inaccuracies in any application for such
policies or any state of facts that might form the basis for termination of any
such insurance. To each of the Stockholder's Knowledge, no event has occurred of
a type normally covered by insurance that is reasonably likely to form the basis
for any material claim against the Company not fully covered by the policies
referred to on Schedule 4.21 (except any applicable deductible).
4.22 Non-Assignable Rights. Except as set forth on Schedule 4.22,
neither the execution, delivery nor performance of this Agreement by the Company
nor the consummation
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of the transactions contemplated hereby will (i) conflict with or result in a
breach or termination of, or prevent the Company from realizing the benefits
otherwise obtainable by the Company under, any permits or property interests of
the Company or any contract, agreement, arrangement or commitment of the Company
or (ii) require the affirmative consent or approval of any third party.
4.23 Personnel.
(a) The Company has delivered to QuadraMed and Acquisition Co.
the names and addresses of all directors, officers and employees of the Company,
indicating (i) the positions within the Company held by each such person and
(ii) the current annual salary rates for each such person and the amounts
payable as bonus or other compensation for each such person.
(b) The Company has delivered to QuadraMed and Acquisition Co.
a description of the Company's policies regarding severance or other benefits
that may be payable to any Company employee if his or her employment were
terminated.
4.24 Employee Benefit Plan(s). The Company has no Affiliates for the
purpose of ERISA. Each Employee Benefit Plan is in substantial compliance with
applicable law and has been administered in all material respects in accordance
with its terms. The Company does not presently maintain, and has not maintained
with the past five (5) years, any Employee Benefit Plan which is an "employee
pension plan" within the meaning of Section 3(2) o ERISA or which is intended to
be "qualified" within the meaning of Section 401(a) of the Code. The Company
does not presently maintain, and has not maintained within the past five (5)
years, a "multi employer plan" (as defined in Section 4001(a)(3) of ERISA). To
the Knowledge of the Stockholders, neither the Company, nor any other
"disqualified person" or "party-in-interest" (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively) has engaged in any
prohibited transactions in connection with any Employee Benefit Plan that could
reasonably be expected to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA,
or a tax pursuant to Section 4975(a) of the Code. No material liability, claim,
action or litigation has been made, commenced or threatened, with respect to any
Employee Benefit Plan (other than for benefits payable in the ordinary course).
To each of the Stockholder's Knowledge, there are no actions, suits or claims
(other than routine claims for benefits) pending or threatened against any
Employee Benefit Plan of the Company or their assets, or arising out of such
Employee Benefits Plan, and, to the Knowledge of the Stockholders, no facts
exist which could give rise to any such actions, suits or claims which might
have a material adverse effect on such Employee Benefit Plan. There has been no
act or omission by the Company that has given rise or may give rise to any
fines, penalties, taxes or late charges under Section 502(c), (i) or (l) of
ERISA or Chapter 43 of the Code.
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4.25 Accounts Receivable.
(a) The Company's accounts receivable represent valid claims,
and no counterclaims or offsetting claims with respect to such receivables are
pending or threatened, except for amounts reserved in the Company Financial
Statements against such receivables for allowances and discounts, and all such
accounts receivable are collectible in the ordinary course of business within
one hundred eighty (180) days of the Closing.
(b) The Company has no inventory on its balance sheet.
4.26 Compliance with Environmental Laws.
(a) Except as set forth in Schedule 4.26: (i) the Company and
all its operations are and have been in compliance with all Environmental Laws
as currently in effect except where such noncompliance would not result in a
Material Adverse Effect; (ii) neither the Company nor any of its predecessors
used, released or disposed of any Hazardous Substance in any manner that could
reasonably be expected to result in material liability; (iii) none of the
property leased or operated by the Company is contaminated by any Hazardous
Substance in a manner which requires investigation or corrective action under
applicable Environmental Laws; and (iv) none of the property leased or operated
by the Company is affected by any condition that could reasonably be expected to
result in liability under any Environmental Law as currently in effect; and (v)
there is and has been no condition, activity or event respecting the Company or
any of the properties leased or operated by it that could reasonably be expected
to subject QuadraMed or the Surviving Corporation to any material liability
under any Environmental Law as currently in effect.
4.27 Bank and Brokerage Accounts. Schedule 4.27 lists (i) the names and
addresses of all banks and brokerage firms in which the Company has accounts or
safe deposit boxes, lock boxes, vaults and the account numbers relating thereto,
(ii) the name of each person authorized to draw on any such account or have
access to any such boxes or vaults and (iii) the names of all persons, if any,
holding tax or other powers of attorney from the Company and a summary of the
terms thereof.
4.28 Contracts.
(a) Except as set forth on Schedule 4.28(a), the Company is
not a party to any:
(i) Contract for the employment or retention of, or
collective bargaining, severance or termination agreement with, any of its
directors, officers, employees, consultants or agents or groups of employees;
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(ii) Profit sharing, thrift, bonus, incentive,
deferred compensation, stock option, stock purchase, severance pay, pension,
retirement, hospitalization, insurance or other Employee Benefit Plan, agreement
or arrangement;
(iii) Contract for the sale of any of its assets,
property or rights outside the ordinary course of business consistent with prior
practice (other than this Agreement);
(iv) Contract that contains any provisions requiring
the Company to indemnify or act as an indemnitor, guarantor, surety, co-signer,
co-maker or endorser for any other person or entity;
(v) Contract restricting the Company from conducting
business anywhere in the world;
(vi) Agreement, note, debenture, loan, mortgage,
indenture or other obligation for or relating to borrowed money or commitments
for obtaining borrowed money;
(vii) Contract, lease or commitment which involves
the future payment by or to it of more than $5,000, except (i) Contracts or
commitments for the sale of goods or purchase or lease of equipment, tooling,
supplies, services or raw materials in each case entered into in the ordinary
course of business consistent with prior practice for periods of less than
ninety (90) days and (ii) Contracts which may be canceled by it upon thirty (30)
or fewer days notice without payment of any penalty or fee in connection
therewith;
(viii) Letter of credit or power of attorney;
(ix) Joint venture contract or similar arrangement or
agreement which is likely to involve future payments by it;
(x) Personal service, licensing, distributor,
supplier, dealer, franchise, advertising, sales or manufacturer's
representative, agency or other similar Contract; or
(xi) Contract to which any stockholder, officer or
director of the Company or any "affiliate" or "associate" of such persons (as
such terms are defined in the rules and regulations promulgated under the
Securities Act), is presently a party, including, without limitation, any
agreement or other arrangement providing for the furnishing of services by,
rental of real or personal property from, or otherwise requiring payments to,
any such person or entity.
(b) Except as specified on Schedule 4.28(b), all Contracts
required to be listed on Schedule 4.28(a) are valid and binding, enforceable in
accordance with their
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respective terms and in full force and effect, and the continuation, validity
and effectiveness of such items will in no way be affected by the consummation
of the transactions contemplated by this Agreement. Neither the Company nor, to
each of the Stockholder's Knowledge, any other party thereto, is in breach of
any provision of or in default under any term of any such agreement, and there
exists no condition or event which after lapse of time or notice (or both) would
constitute any such breach or default or result in any right to accelerate or
loss of rights. True and complete copies of all such Contracts have been
delivered to Acquisition Co. and QuadraMed. To the Company and Stockholder's
Knowledge, the Company is in material compliance with the terms of all contracts
with EDI USA, CSA Provider Services and any other Blue Cross and/or Blue Shield
entities or affiliates and the Company has not received any notice of
termination, or intent to do so, under such agreements.
4.29 Material Misstatements or Omissions. The statements,
representations and warranties of the Company and the Stockholders contained in
this Agreement (including the schedules hereto) and in each document, statement,
certificate or exhibit furnished or to be furnished by or on behalf of the
Company or each of the Stockholders pursuant hereto, or in connection with the
transactions contemplated hereby, taken together, do not contain and will not
contain any untrue statement of a material fact and do not or will not omit to
state a material fact necessary to make the statements or facts contained herein
or therein, in light of the circumstances made, not misleading.
4.30 Broker's Fees. There are no broker's or finder's fees or
obligations due to persons engaged by the Company or any of the Stockholders or
any of the Company's employees, officers or directors in connection with the
transactions contemplated by this Agreement, except for the fees and expenses of
its counsel and accountants.
4.31 Investment Representations of the Stockholders. Each Stockholder
represents and warrants to QuadraMed as follows:
(a) Except as set forth on Schedule 4.31, each Stockholder is
an "accredited investor" within the meaning of Rule 501(a) of the Securities
Act.
(b) Each Stockholder is aware that the QuadraMed Shares have
not been registered under the Securities Act or any applicable state securities
laws, and agrees that the QuadraMed Shares will not be offered or sold in the
absence of registration under the Securities Act and any applicable state
securities laws or an exemption from the registration requirements of the
Securities Act and any applicable state securities laws. Each Stockholder will
not transfer the Shares in violation of the provisions of any applicable federal
or state securities laws. In this connection, each Stockholder represents that
it is familiar with SEC Rule 144 promulgated pursuant to the Securities Act
("Rule 144"), as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
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Each Stockholder understands that the offering and sale of the Shares
is intended to be exempt from registration under the Securities Act, by virtue
of Section 4(2) and/or Section 4(6) of the Securities Act and the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements contained in this Agreement and the Company may rely
on such representations, warranties and agreements in connection therewith.
Each Stockholder is acquiring the QuadraMed Shares for its own account
and for investment, and not with a view to the distribution thereof or with any
present intention of distributing or selling any of the Shares except in
compliance with the Securities Act. Each Stockholder represents that by reason
of its business and financial experience, and the business and financial
experience of those persons, if any, retained by it to advise it with respect to
its investment in the Shares, such Stockholder together with such advisors have
knowledge, sophistication and experience in business and financial matters as to
be capable of evaluating the merits and risk of the prospective investment. Each
Stockholder's financial condition and investments are such that it is in a
financial position to hold the Shares for an indefinite period of time and to
bear the economic risk of, and withstand a complete loss of, its investment in
the Shares.
(c) Each Stockholder has carefully examined the QuadraMed SEC
Filings. Each Stockholder acknowledges that the Company has made available to
each Stockholder all documents and information that it has requested relating to
the Company and has provided answers to all of its questions concerning the
Company and the Shares. In evaluating the suitability of the acquisition of the
QuadraMed Shares hereunder, each Stockholder has not relied upon any
representations or other information (whether oral or written) other than as set
forth in the QuadraMed SEC Filings or as contained herein.
ARTICLE V.
COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
The Company and each of the Stockholders hereby jointly and severally
covenant and agree as follows:
5.1 Conduct of Company's Business. From and after the date of this
Agreement to and including the Effective Date, the Company shall and the
Stockholders shall cause the Company to, and the Company will: (i) carry on its
businesses in all material respects in the usual and ordinary course and will
not change the character of such businesses; (ii) use all reasonable efforts to
preserve and maintain each of its respective business organizations intact, to
preserve each of their respective goodwill, to retain its present employees and
to maintain its relationships with suppliers and customers so that all of them
will be preserved for the Surviving Corporation on and after the Effective Date
unless otherwise required by this Agreement; (iii) not enter into any agreement
or make any commitment without QuadraMed's consent to take any of the actions
set forth in Section 4.11(a) through (o), inclusive, of this
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Agreement; (iv) not become a party to or commit to enter into any of the types
of Contracts set forth in Section 4.28 of this Agreement or required to be set
forth on Schedule 4.28(a) without QuadraMed's consent; (v) not amend, terminate
or change in any material respect any Contract set forth on Schedule 4.28(a) to
this Agreement without QuadraMed's consent and will not knowingly do any act or
omit to do any act, or permit an act or omission to act, that will cause it to
breach any such Contract; and (vi) not amend its Certificate of Incorporation or
Bylaws. The prohibitions provided for in this Section 5.1 shall not apply to
actions in connection with obtaining consent to assignment of Contracts to the
Surviving Corporation and/or QuadraMed effective as of the Closing.
5.2 Access and Information. The Company will grant unrestricted access
to QuadraMed and its counsel, accountants and other representatives, during
reasonable working hours throughout the period from the date hereof to the
Closing and upon reasonable prior notice, to all of the Company and the
Company's properties, books, contracts, commitments and records, and will
furnish QuadraMed during such period with reasonable access to key Company
employees and to all such information concerning the affairs of the Company as
QuadraMed reasonably requests, including copies and/or extracts of pertinent
records, documents and contracts. The Company will cause their accountants to
furnish to QuadraMed during such period any and all of their statements, working
papers and other records and data as QuadraMed reasonably may request. No
investigation by QuadraMed or its counsel, accountants and other representatives
as contemplated by this Section 5.2 shall affect any representation or warranty
given by the Company or the Stockholders under this Agreement.
5.3 Further Efforts.
(a) Each of the Company and the Stockholders agree to use
reasonable diligent efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the Merger and
the other transactions contemplated hereby in accordance with the terms of this
Agreement. In case at any time any further action is required to carry out the
purposes of this Agreement, each of the Company and the Stockholders will use
diligent efforts to effectuate all such action.
(b) As soon as reasonably practicable after the date hereof,
and in any event on or prior to the Closing, each of the Company and the
Stockholders will use reasonable diligent efforts to obtain the consents of all
necessary governmental entities and other persons to the Merger and the
continued operation by the Company of its business, properties, assets,
leaseholds, licenses, Contracts and agreements; provided, that the Company will
not, without QuadraMed's prior consent, pay any fees or other amounts to any
parties from whom such consents are required to be obtained.
5.4 Confidentiality. In the event of the termination of this Agreement,
the Company and its representatives shall keep all information with respect to
QuadraMed which
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has been disclosed to the Company pursuant to this Agreement confidential in
accordance with the terms of that certain Mutual Nondisclosure Agreement by and
between the Company and QuadraMed and shall promptly return to QuadraMed all
written information provided to the Company by QuadraMed.
5.5 Financial Information. From and after the date hereof and until the
Closing, the Company will deliver to QuadraMed as soon as practicable and in any
event within fourteen (14) days after the end of each month, an unaudited
balance sheet of the Company as at the end of such month and unaudited
statements of operations and of cash flows of the Company for such month and for
the current fiscal year to the end of such month.
5.6 Subsequent Events. The Company shall promptly, and in any event
prior to the Closing, advise QuadraMed in writing of the occurrence of any event
or the existence of any state of facts which in any material respect would
render any representation or warranty of the Company hereunder inaccurate or
which would preclude satisfaction of any condition contained in Article VIII or
Article IX of this Agreement; provided, that no such notification shall affect
any such representation, warranty or condition.
5.7 Public Announcement. So long as this Agreement is in effect,
neither the Company, the Stockholders nor any of their Affiliates shall issue or
cause the issuance or the publication of any press release or any other public
announcement (including, without limitation, disclosure to employees) with
respect to the Merger or any other transaction contemplated by this Agreement
without the prior review and written consent of QuadraMed.
5.8 Exclusive Dealing. From the execution of this Agreement until the
Closing or the earlier termination of this Agreement, the Company and each of
the Stockholders (i) will not directly or indirectly, through any representative
or otherwise, solicit or entertain offers from, negotiate with or in any manner
encourage, discuss, accept or consider any proposal of any other person relating
to the acquisition of the Company's capital stock, its assets or business, in
whole or in part, whether directly or indirectly, through purchase, merger,
consolidation or otherwise (other than sales of inventory in the ordinary
course), and (ii) will immediately notify QuadraMed regarding any contact
between the Company, the Stockholders and any other person or their respective
representatives regarding any such offer or proposal or any related inquiry.
5.9 Restrictions on Transferability of QuadraMed Shares, Compliance
with Securities Act.
(a) The QuadraMed Shares shall not be transferable in the
absence of an effective registration statement under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement. In the absence of an effective registration statement under the
Securities Act, neither the QuadraMed Shares nor any interest therein shall be
sold, transferred, assigned or otherwise disposed of, unless QuadraMed shall
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have previously received an opinion of counsel knowledgeable in federal
securities law, in form and substance reasonably satisfactory to QuadraMed and
accompanied by such supporting documents as QuadraMed may reasonably request, to
the effect that registration under the Securities Act is not required in
connection with such disposition. QuadraMed shall be entitled to give stop
transfer instructions to its transfer agent with respect to the QuadraMed Shares
in order to enforce the foregoing restrictions. Notwithstanding the foregoing,
QuadraMed agrees that it shall not require an opinion of counsel in connection
with Rule 144 transactions except in unusual circumstances.
(b) The certificate or certificates representing the Shares
shall bear the following legend restricting transfer:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
The certificate shall also include any legend required by any applicable state
securities law.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF QUADRAMED AND ACQUISITION CO.
QuadraMed and Acquisition Co. hereby represent and warrant to the
Company as follows:
6.1 Organization and Good Standing. QuadraMed and Acquisition Co. are
both corporations duly organized, validly existing and in good standing under
the laws of the State of Delaware and have full corporate power and authority to
own, lease and operate their respective properties and carry on their respective
businesses and to enter into, deliver and perform their respective obligations
under and to consummate the transactions contemplated by this Agreement.
6.2 Capitalization of QuadraMed and Acquisition Co.
(a) As of the date of this Agreement, the authorized capital
stock of QuadraMed consists of 20,000,000 shares of Common Stock, par value
$0.01, and 5,000,000
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shares of Preferred Stock, par value $0.01. All issued and outstanding shares of
QuadraMed Common Stock have been duly authorized and are validly issued, fully
paid and nonassessable. The rights, powers, preferences and relative
participating, optional or other special rights, qualifications, limitations or
restrictions applicable to the QuadraMed Common Stock are as set forth in the
QuadraMed Certificate of Incorporation, as amended, a copy of which has been
previously delivered to the Company. All issued and outstanding shares of
QuadraMed Common Stock were issued and sold in accordance with all applicable
state, federal and foreign laws and regulations. Except with respect to employee
stock options, restricted stock and stock purchase plans as set forth in
QuadraMed's SEC Filings, there are no options, warrants, subscriptions,
convertible debentures or other rights, commitments or any other similar
agreements for the purchase of any securities, commitments or rights convertible
into or exchangeable for shares of QuadraMed Common Stock. QuadraMed is not a
party to, and to QuadraMed's knowledge, none of its stockholders are parties to,
any voting trust agreements or other contracts, agreements or arrangements
restricting voting rights with respect to QuadraMed Common Stock.
(b) As of the date of this Agreement, the authorized capital
stock of Acquisition Co. consists of 1,000 shares of Acquisition Co. Common
Stock, par value $0.001, all of which shares are issued and outstanding and
owned beneficially and of record by QuadraMed. All of the Acquisition Co. Common
Stock outstanding on the date hereof has been duly authorized and validly issued
and is fully paid and nonassessable. All of the outstanding Acquisition Co.
Common Stock is, and immediately prior to the Effective Date will be, owned by
QuadraMed.
6.3 Authority.
(a) QuadraMed and Acquisition Co. have the necessary corporate
power and authority to enter into and deliver this Agreement, to perform their
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by QuadraMed and Acquisition Co. have been duly
authorized by the Board of Directors and Stockholders of QuadraMed and
Acquisition Co. in accordance with applicable law. No further corporate action
will be necessary on the part of QuadraMed or Acquisition Co. to make this
Agreement valid and binding upon QuadraMed and Acquisition Co. in accordance
with its terms. This Agreement has been duly and validly authorized, executed
and delivered by QuadraMed and Acquisition Co. and this Agreement (assuming due
authorization, execution and delivery by the other parties hereto) constitutes
the legal, valid and binding obligation of QuadraMed and Acquisition Co.,
enforceable in accordance with its terms (except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or by general principles of equity).
Neither the execution, delivery nor performance of this Agreement by QuadraMed
or Acquisition Co., nor the consummation of the transactions contemplated
hereby, nor compliance by QuadraMed or Acquisition Co. with the terms and
provisions of this Agreement nor the Certificate of Merger will result in a
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violation or breach of any term or provision of QuadraMed's or Acquisition Co.'s
Certificates of Incorporation or Bylaws, or of any statute, rule or regulation
applicable to QuadraMed, Acquisition Co., or their businesses, properties,
assets or personnel, or conflict with or constitute a violation or breach of, or
a default under (or an event which, with the passage of time or the giving of
notice, or both, would constitute a default under), nor give any party a right
to accelerate the due date of any indebtedness or obligation under, any
indenture, mortgage, deed of trust, contract or agreement to which QuadraMed or
Acquisition Co. is a party or to which its properties or assets are subject, or
any instrument, judgment, decree, writ or other restriction to which either
QuadraMed or Acquisition Co. is a party or by which the QuadraMed or Acquisition
Co. or their businesses, properties, assets or personnel are bound.
(b) Except for filing the Certificate of Merger with the
Delaware Secretary of State and obtaining any necessary third-party consents,
neither QuadraMed nor Acquisition Co. is required to submit any notice, report
or other filing with any federal, state or local governmental authority in
connection with the execution or delivery or performance by QuadraMed and
Acquisition Co. of this Agreement or the consummation of the transactions
contemplated herein.
6.4 QuadraMed Shares. As of the Closing, the QuadraMed Shares will have
been duly reserved for delivery pursuant to the terms of this Agreement and
will, when so delivered, be duly authorized, validly issued, fully paid and
nonassessable shares and will be free and clear of all liens, charges,
restrictions, claims and Encumbrances. The Common Stock of QuadraMed may be
purchased by the optionholders set forth in Section 3.1(c), when issued, sold
and delivered in accordance with the terms of this Agreement and the related
option agreements for the consideration expressed therein, will be duly
authorized, validly issued, fully paid and nonassessable and will be free and
clear of all liens, charges, restrictions, claims and Encumbrances.
6.5 Legal and Regulatory Matters. Except as disclosed in QuadraMed's
SEC Filings, (i) there is no claim, suit, action, arbitration, governmental
investigation or other proceeding, nor any order, decree or judgment pending or
in effect, or, to the Knowledge of QuadraMed, threatened by, against or relating
to QuadraMed or any of its properties, assets or business of QuadraMed, or the
transactions contemplated hereby, which if determined adversely could have a
material adverse effect on the business, assets, properties, operations or
condition (financial or otherwise) of QuadraMed and its subsidiaries taken as a
whole; (ii) there are no judgments, decrees or orders enjoining QuadraMed in
respect of, or the effect of which is to prohibit any business practice or the
acquisition of any property or the conduct of business in any area that is
material to the business of QuadraMed; (iii) QuadraMed has complied and is
complying with all laws, ordinances, treaties and governmental rules, orders and
regulations applicable to it or its properties, assets, personnel or business,
non-compliance with which could have a material adverse effect on the business,
assets, properties, operations, results or condition (financial or otherwise) of
QuadraMed and its subsidiaries taken as a whole; and (iv) QuadraMed has obtained
all material Licenses necessary for the ownership of
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its properties and the conduct of its business as currently conducted, and all
such Licenses are currently in full force and effect.
6.6 QuadraMed SEC Filings. The QuadraMed SEC Filings, true, correct and
complete copies of which have been furnished to the Company, have been duly
filed, were in substantial compliance with the requirements of their respective
report forms, were complete and correct in all material respects as of the dates
at which the information under the respective forms were furnished and
contained, as of such date, do not contain an untrue statement of a material
fact nor omit to state a material fact necessary in order to make the statements
made therein not misleading, and since the date of the Registration Statement,
there has not been any material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of QuadraMed and its
subsidiaries taken as a whole. The consolidated financial statements of
QuadraMed and the related notes and schedules included in the QuadraMed SEC
Filings comply fully with the requirements of the Exchange Act and present
fairly the consolidated financial position in accordance with generally accepted
accounting principles of QuadraMed, as of the dates indicated, and the results
of its operations and changes in financial position for the periods therein
specified (subject, in the case of unaudited interim financial statements, to
normal year-end adjustments). The QuadraMed SEC Filings constitute all of the
documents required by applicable securities laws to be filed by it and all such
reports have been true, complete and correct in all material respects.
6.7 Broker's Fees. There are no broker's or finder's fees or
obligations due to persons engaged by QuadraMed or Acquisition Co. or any of
their employees, officers or directors in connection with the transactions
contemplated by this Agreement, except for fees and expenses of its counsel and
accountants.
ARTICLE VII.
COVENANTS OF QUADRAMED AND ACQUISITION CO.
QuadraMed and Acquisition Co. hereby covenant and agree as follows:
7.1 Further Efforts.
(a) QuadraMed agrees to use diligent efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Merger and the other transactions contemplated hereby in
accordance with the terms of this Agreement. In case at any time any further
action is necessary or desirable to carry out the purposes of this Agreement,
QuadraMed will use diligent efforts to effectuate all such action.
(b) As soon as reasonably practicable after the date hereof,
and in any event on or prior to the Closing, QuadraMed will use diligent efforts
to obtain the consents of all necessary governmental entities and other persons
to the Merger and the continued operation
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by the Company of its business, properties, assets, leaseholds, licenses,
contracts and agreements.
7.2 Confidentiality. In the event of the termination of this Agreement,
QuadraMed and its representatives shall keep all information with respect to the
Company which has been disclosed to QuadraMed pursuant to this Agreement
confidential in accordance with the terms that certain Mutual Nondisclosure
Agreement previously entered into by and between the Company and QuadraMed and
shall promptly return to the Company all written information provided to
QuadraMed by the Company.
7.3 Public Announcement. So long as this Agreement is in effect,
QuadraMed shall not, and shall cause its Affiliates not to, issue or cause the
publication of any press release or any other public announcement (including,
without limitation, disclosure to employees) with respect to the Merger or any
other transaction contemplated by this Agreement without the prior review, and
consultation with, the Company with respect to such press release or other
public announcement. Notwithstanding the foregoing, the Company and the
Stockholders acknowledge and agree that QuadraMed may issue a press release
regarding the execution of this Agreement and may make any filings required
pursuant to the Exchange Act, which document shall be presented to the Company
for review and comment prior to issuance or filing.
7.4 Benefits for Retained Employees. QuadraMed agrees to cover (or
cause to be covered) each employee of the Company who accepts or continues
employment with the Surviving Corporation effective as of and from the Closing
under QuadraMed's standard employee benefit plans that are in existence for
comparably situated employees as of such date. Such employees shall be granted
service credit for their last continuous period of employment with the Company
for eligibility to participate and vesting purposes in QuadraMed's applicable
benefit plans or programs maintained by QuadraMed where such vesting is allowed
by law, including, without limitation, disability programs and vacation. Such
employees and their dependents shall become eligible to participate in
QuadraMed's group medical plan as of the Closing and shall be granted service
credit for their last continuous period of employment with the Company and its
affiliates, if they are employed in a position or status that is eligible to
participate in such group medical plan.
ARTICLE VIII.
GENERAL CONDITIONS PRECEDENT
The obligations of each party hereto to consummate the Merger and the
other transactions contemplated by this Agreement shall be subject to
fulfillment and satisfaction on or prior to the Closing of each of the following
conditions:
8.1 No Injunctions. No injunction or restraining or other order issued
by a court of competent jurisdiction which prohibits the consummation of the
transactions contemplated,
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including, without limitation, the issuance of the QuadraMed Shares by this
Agreement shall be in effect (each party agreeing to use reasonably diligent
efforts to have any such injunction or order lifted), and no governmental action
or proceeding shall have been commenced or threatened in writing seeking any
injunction or restraining or other order that seeks to prohibit, restrain,
invalidate or set aside consummation of the transactions contemplated by this
Agreement.
8.2 No Governmental Proceedings. No action will have been taken, and no
statute, rule or regulation will have been enacted, by any state or federal
government agency that would render the consummation of the Merger illegal.
8.3 Governmental Approvals. All governmental filings or approvals
required in connection with the consummation of the transactions contemplated by
this Agreement, including, without limitation, compliance with all applicable
federal and state securities laws, shall have been made or received.
ARTICLE IX.
CONDITIONS PRECEDENT TO QUADRAMED'S
AND ACQUISITION CO.'S OBLIGATIONS TO CLOSE
The obligations of QuadraMed and Acquisition Co. to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing of each of the following conditions (unless waived pursuant
to Section 12.3 hereof):
9.1 Due Diligence. QuadraMed and Acquisition Co. shall have completed
and approved their due diligence review of the business affairs and operations
of the Company, as determined in their sole and absolute discretion.
9.2 Certificates of the Company and the Stockholders. The
representations and warranties of the Company and the Stockholders under Article
IV shall have been true in all material respects when made and shall be true in
all material respects as of the Closing with the same effect as though made at
such time, except for changes occurring or arising after the date of this
Agreement in carrying out the transactions contemplated herein or which have
been approved in writing by QuadraMed. At the Closing, the Company shall have
delivered a certificate, signed by an executive officer of the Company and each
of the Stockholders, dated as of the Closing Date, certifying that the Company
and the Stockholders shall have materially performed all obligations and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing.
9.3 No Material Adverse Effect. Since September 30, 1996 the Company
shall not have experienced any Material Adverse Effect.
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9.4 Third Party Consents. All consents or approvals of the third
parties set forth on Schedule 4.22 shall have been obtained, including, without
limitation, that of Sirrom Investments, Inc.
9.5 Legal Opinion of the Company's Counsel. QuadraMed and Acquisition
Co. shall have received an opinion, dated as of the Closing, of ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇, LLP, counsel for the Company, in form and substance reasonably acceptable
to counsel for QuadraMed.
9.6 Certified Resolutions. The Company shall have delivered to
QuadraMed and Acquisition Co. true and complete copies of the resolutions of its
Board of Directors and the Stockholders pursuant to which the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby were duly and validly authorized, adopted and approved, certified by the
Company's Secretary and to be in full force and effect as of the Closing.
9.7 Letters of Resignation. QuadraMed shall have received letters of
resignation addressed to the Company from all members of the Board of Directors
of the Company and all executive officers of the Company (except ▇▇▇▇▇ ▇. ▇▇▇▇▇,
President of the Company ("▇▇▇▇▇")), which resignations shall be effective as of
the Closing.
9.8 Employment Agreement and Non-Compete Agreements. ▇▇▇▇▇ shall have
executed and delivered to QuadraMed an Employment Agreement with the Surviving
Corporation substantially in the form attached hereto as Exhibit "D" and
incorporated herein by this reference (the "Employment Agreement") to serve as
President and Chief Operating Officer of the Surviving Corporation, and each
officer, director and Stockholder identified by QuadraMed shall execute a
Non-Competition and Non-Interference Agreement with QuadraMed and the Surviving
Corporation and the Company substantially in the form attached hereto as Exhibit
"E" and incorporated herein by this reference.
9.9 Other Employment Agreements. Any existing employment agreements
with other employees of the Company (other than ▇▇▇▇▇) shall have been
terminated and such employees shall be deemed to be "at-will" employees as of
the Closing.
9.10 Pooling of Interests. QuadraMed and the Surviving Corporation
shall have received satisfactory assurance from their accountants that the
Merger shall be accounted for as a pooling of interests.
9.11 Registration Rights Agreements. Each of the Stockholders shall
have executed and delivered to QuadraMed the Registration Rights Agreement.
9.12 ISSC Licenses. ISSC shall have been invoiced for the software
licensed to ISSC pursuant to the two (2) software licenses attached hereto as
Schedule 9.12 in a fashion
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permitting recognition of the revenue relating thereto pursuant to generally
accepted accounting principles.
9.13 Sirrom Capital Releases. Sirrom Capital, L.P. and Sirrom Capital
Corporation (collectively "Sirrom") shall have executed documentation reasonably
satisfactory to QuadraMed's counsel evidencing release of all Encumbrances in
favor of Sirrom with respect to the Company's properties or assets, including,
without limitation, execution of a UCC-3 Termination Statement.
9.14 Proceedings Satisfactory to Counsel. All proceedings taken by the
Company and the Stockholders and all instruments executed and delivered by the
Company and the Stockholders on or prior to the Closing in connection with the
transactions contemplated herein shall be reasonably satisfactory in form and
substance to the counsel for QuadraMed and Acquisition Co.
ARTICLE X.
CONDITIONS PRECEDENT TO THE COMPANY'S
AND THE STOCKHOLDERS' OBLIGATIONS TO CLOSE
The obligations of the Company and the Stockholders to consummate the
Merger and the other transactions contemplated by this Agreement are subject to
the fulfillment and satisfaction at or prior to the Closing of each of the
following conditions (unless waived pursuant to Section 12.3 hereof):
10.1 Certificates of QuadraMed and Acquisition Co. The representations
and warranties of QuadraMed and Acquisition Co. under Article VI shall have been
true in all material respects when made and shall be true in all material
respects as of the Closing with the same effect as though made at such time,
except for changes occurring or arising after the date of this Agreement in
carrying out the transactions contemplated herein. QuadraMed and Acquisition Co.
shall have performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by them
at or prior to the Closing, and QuadraMed and Acquisition Co. shall have
delivered to the Company certificates of QuadraMed and Acquisition Co., dated
the date of the Closing and signed by an executive officer of QuadraMed and
Acquisition Co., certifying to all such effects.
10.2 Certified Resolutions. QuadraMed and Acquisition Co. shall have
delivered to the Company true and complete copies of the resolutions of their
respective Boards of Directors pursuant to which the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby were
duly and validly authorized, adopted and approved, certified by the Secretary of
each and to be in full force and effect as of the Closing.
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10.3 Third Party Consents. All necessary consents or approvals of the
third parties shall have been obtained.
10.4 Legal Opinion. Company and the Stockholders shall have received an
opinion, dated as of the Closing, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.,
counsel for QuadraMed and Acquisition Co. in form and substance reasonably
acceptable to counsel for the Company and its Stockholders.
10.5 Closing Consideration. QuadraMed shall have delivered the Closing
Consideration to the Stockholders and duly executed options agreements with
respect to the options set forth on Section 3.1(c) less amounts to be escrowed
pursuant to Section 11.2(c).
10.6 Employment Agreement. Acquisition Co. shall have executed and
delivered to ▇▇▇▇▇ the Employment Agreement.
10.7 Registration Rights Agreement. QuadraMed shall have executed and
delivered the Registration Rights Agreement to the Stockholders.
10.8 Tax Certification. QuadraMed shall have executed and delivered a
Tax Certificate in form and substance reasonably acceptable to counsel for the
Company making certain representations and warranties consistent with Section
2.8 hereof.
10.9 Sirrom Repayment. The outstanding loan made to the Company by
Sirrom shall have been repaid in full in accordance with instructions provided
by such lenders.
10.10 Proceedings Satisfactory to Counsel. All proceedings taken by
QuadraMed and Acquisition Co. and all instruments executed and delivered by the
QuadraMed and Acquisition Co. on or prior to the Closing in connection with the
transactions contemplated herein shall be reasonably satisfactory in form and
substance to the counsel for Company and the Stockholders.
ARTICLE XI.
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATIONS
11.1 Survival of Representations.
(a) The Company's and the Stockholders' Representations. All
representations and warranties and all covenants of either the Company or the
Stockholders contained in this Agreement will survive the Closing and remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement until the earlier of (i) the date
of the first audit report (after the Effective Time) on the financial statements
of QuadraMed with respect to items expected to be encountered in such audit in
light of the audit scope and (ii) one year from the date of Closing (the
"Survival
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Period") and, thereafter, to the extent a claim is made prior to the expiration
with respect to any breach of such representation, warranty or covenant, until
such claim is finally determined or settled, whereupon such representation,
warranties and covenants will expire.
(b) QuadraMed's and Acquisition Co.'s Representations.
QuadraMed's and Acquisition Co.'s representations, warranties and covenants
contained in this Agreement will terminate as of the expiration of the Survival
Period. Any judgment or settlement of a claim against either QuadraMed or
Acquisition Co. for a breach of its obligations hereunder brought after the
Effective Date will be settled in QuadraMed Common Stock, valued at the average
Daily Price of QuadraMed Common Stock for the thirty (30) trading days
immediately preceding the date on which QuadraMed and Acquisition Co. delivered
shares of QuadraMed Common Stock in connection with such a breach.
11.2 Indemnification by the Company and the Stockholders.
(a) The Company and each of the Stockholders will indemnify
and hold harmless QuadraMed and Acquisition Co. and their respective officers,
directors, agents and employees, and each Person, if any, who controls or may
control QuadraMed or Acquisition Co. within the meaning of the Securities Act
(each, an "Indemnified Person" and collectively, the "Indemnified Persons"),
from and against any and all claims, demands, actions, causes of actions,
losses, costs, damages, liabilities and expenses including, without limitation,
reasonable legal fees and expenses ("Losses"), arising out of or relating to any
misrepresentation or breach of or default or other action or omission in
connection with either (i) any of the representations, warranties and covenants
given or made by the Company or the Stockholders in this Agreement, in any
exhibit or schedule hereto or any certificate, document or instrument delivered
by or on behalf of the Company pursuant hereto, or (ii) any and all actions,
suits, claims or legal, administrative, arbitration, governmental or other
proceedings or investigations against any Indemnified Person that relate to the
Company or any of the Stockholders in which the principal event giving rise
thereto occurred prior to the Closing or which result from or arise out of any
action or inaction prior to the Closing of the Stockholders, the Company or any
director, officer, employee, agent, representative or subcontractor of the
Company, except for those which the Surviving Corporation specifically assumes
in writing. Any claim for indemnification hereunder must be made on or prior to
the expiration of the Survival Period; provided, however, that any claim made
prior to such expiration shall continue until such claim is finally determined
or settled.
(b) Notwithstanding the foregoing, the Stockholders shall have
no liability with respect to the matters described in paragraph (a) above unless
and until the aggregate amount of Losses equal or exceed $25,000 (the "Threshold
Amount"). At such time as the aggregate Losses equal or exceed the Threshold
Amount, QuadraMed and/or Acquisition Co. shall be indemnified to the full extent
of all such Losses (including Losses counted in determining whether the
aggregate Losses equal or exceed the Threshold Amount); provided,
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however, that this paragraph shall not apply to any intentional or fraudulent
breach by either the Company or any Stockholder of any covenant or obligation.
(c) As security for their obligation to indemnify QuadraMed
and/or Acquisition Co. hereunder, concurrently with payment of the Closing
Consideration by QuadraMed, the Stockholders shall place into escrow from the
Closing Consideration that number of QuadraMed Shares equal to $415,000 (the
"Escrow Shares") pursuant to the terms and conditions of that certain Escrow
Agreement substantially in the form attached hereto as Exhibit "G" and
incorporated herein by this reference, to be held in escrow until the expiration
of the Survival Period as security for the indemnification obligations of the
Stockholders hereunder.
(d) As additional security for their obligation to indemnify
QuadraMed and Acquisition Co. hereunder, the Stockholders and the Company hereby
grant each of QuadraMed and Acquisition Co. a right of set-off and agree that at
any time a payment or amount is owing by either the Stockholders or the Company
pursuant to the terms of this Article XI, or either QuadraMed or Acquisition Co.
has made a claim for indemnification pursuant to the terms of this Article XI,
QuadraMed and Acquisition Co. may set-off, or direct the other party to set-off,
amounts owing by either QuadraMed or Acquisition Co. to any of the Stockholders;
provided, however, in no event shall Acquisition Co. set-off any amounts due
▇▇▇▇▇ ▇▇▇▇▇ pursuant to the Employment Agreement. Any dispute regarding
indemnification pursuant to this Article XI (including, without limitation, the
amount of Damages suffered or the interpretation of the terms hereof), shall be
settled pursuant to binding arbitration in accordance with the terms of Section
13.8 below.
(e) Anything herein to the contrary notwithstanding, the
aggregate amount of all claims subject to indemnification hereunder for which
any particular Stockholder shall be liable shall not exceed the sum of (i) the
Fair Market Value at the time of each claim for indemnification of the QuadraMed
Shares held by such Stockholder at the time of each such claim for
indemnification, plus (ii) the aggregate proceeds received by such Stockholder
from the prior sale of his, her or its QuadraMed Shares.
(f) QuadraMed, Acquisition Co. and the Indemnified Persons
shall not be entitled to recover under Section 11.2 to the extent the subject
matter of the claim is reimbursed by insurance proceeds (including title
insurance) held by the Company, the Surviving Corporation or QuadraMed.
(g) The amount of any recovery by QuadraMed, Acquisition Co.
and the Indemnified Persons pursuant to Section 11.2 shall be net of any actual
Tax benefits inuring to QuadraMed or Acquisition Co. solely in the tax year in
which the event giving rise to the indemnification occurred and to the extent
such Tax benefits result from such claim.
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11.3 Indemnification by QuadraMed and Acquisition Co. QuadraMed and
Acquisition Co. will indemnify and hold harmless the Company and each of the
Stockholders and their respective Indemnified Persons from and against any and
all Losses, arising out of or relating to any misrepresentation or breach of or
default or other action or omission in connection with either (i) any of the
representations, warranties and covenants given or made by QuadraMed and
Acquisition Co. in this Agreement, and any exhibit or schedule hereto or any
certificate, document or instrument delivered by or on behalf of QuadraMed or
Acquisition Co. pursuant hereto, or (ii) any and all actions, suits, claims or
legal, administrative, arbitration, governmental or other proceedings or
investigations against any Stockholder or Indemnified Person incident to any of
the foregoing.
11.4 Notice of Third-Party Claims; Assumption of Defense. Each
indemnified party shall give reasonably prompt notice of a claim ("Claims
Notice") to each indemnifying party, in accordance with the terms of Section
13.3, of the assertion of any claim, or the commencement of any suit, action or
proceeding by any third party in respect of which indemnity may be sought
hereunder, and shall give the indemnifying parties such information with respect
thereto as the indemnifying parties may reasonably request. The giving of such
Claims Notice shall not be condition precedent to indemnification hereunder;
however, failure to give reasonably prompt notice shall reduce the indemnified
party's recovery from the indemnifying parties only by an amount equal to the
damages, costs and expenses (including attorneys fees) caused by such delay.
Upon receipt of such notice, each indemnifying party may, at its own expense,
(i) participate in and (ii) upon notice to each indemnified party of such
indemnifying party's written agreement that the indemnified party is entitled to
indemnification pursuant to this Article XI for Losses arising out of such
third-party claim, suit, action or proceeding, at any time during the course of
any such claim, suit, action or proceeding, assume the defense thereof;
provided, that (x) the indemnifying party's counsel is reasonably satisfactory
to the indemnified party; (y) the indemnifying party shall thereafter consult
with the indemnified party upon the indemnified party's reasonable request for
such consultation from time to time with respect to such claim, suit, action or
proceeding and (z) the indemnified party shall not be required to permit the
indemnifying party to assume the defense of any third-party claim which if not
first paid, discharged or otherwise complied with would result in an imminent,
material interruption or cessation of the conduct of the Company's business or
any material part thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. Whether or not the indemnifying
party chooses to defend or prosecute any such claim, suit, action or proceeding,
all of the parties hereto shall cooperate in the defense or prosecution thereof.
11.5 Settlement or Compromise. Any settlement or compromise made or
caused to be made by the indemnified party or, the indemnifying party, as the
case may be, of any third party such claim, suit, action or proceeding of the
kind referred to in Section 11.4 shall also be binding upon the indemnifying
party or the indemnified party, as the case may be, in the
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same manner as if a final judgment or decree had been entered by a court of
competent jurisdiction in the amount of such settlement or compromise. The
indemnified party will give the indemnifying party at least thirty (30) days
notice of any proposed settlement or compromise of any claim, suit, action or
proceeding it is defending, during which time an indemnifying party may assume
the defense of such claim, suit, action or proceeding and if it does so the
proposed settlement or compromise may not be made.
11.6 Failure of Indemnifying Party to Act. In the event that an
indemnifying party does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the indemnified party to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the indemnifying party of its
obligations hereunder.
11.7 Procedure for Indemnification. Upon becoming aware of a claim for
indemnification hereunder (whether as a result of any third-party claim, suit,
action or proceeding of the kind referred to in Section 11.4, or in connection
with any other Losses which the indemnified party deems to be within the ambit
of this Article XI), the indemnified party shall give, in accordance with the
terms of Section 13.3, a Claims Notice to the indemnifying party. If the
indemnifying party does not object to such claim within thirty (30) days of
receiving such Claims Notice, the indemnified party shall be conclusively
entitled to recover the amount of such claim. If the indemnifying party gives
written notice objecting to such claim within a thirty (30) day period, then any
dispute shall be settled by arbitration in accordance with Section 13.8.
11.8 Certificate of Incorporation and Bylaws. Notwithstanding anything
to the contrary contained in the Company's Certificate of Incorporation or
Bylaws, the indemnification provisions of this Article XI shall take precedence
over such Certificate of Incorporation or Bylaws. No Stockholder nor any other
director or officer incumbent at any time prior to the Closing shall be entitled
to indemnification directly or indirectly under the Company's Certificate of
Incorporation or Bylaws or otherwise for any matter upon which the Company or
any Stockholder has or might have an indemnification obligation hereunder and
the Certificate of Incorporation and Bylaws shall be deemed amended accordingly.
However, the provisions of this Section 11.8 are intended only for the
regulation of relations between the Company and the Stockholders and any
indemnified party. This Section 11.8 is not intended for the benefit of
creditors or other third parties and does not grant any rights to creditors or
other third parties.
11.9 Exclusivity. The indemnifications provisions contained in this
Article XI shall be the sole and exclusive remedy of the breach of this
Agreement or any action taken in connection with this Agreement. The only legal
action which may be asserted by any party with respect to any matter which is
the subject of this Article 11 shall be a contract action to enforce or to
recover damages for breach of this Article 11. Notwithstanding anything
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contained in this Section 11.9, the rights of any party shall not be impaired or
otherwise affected in any matter with respect to fraudulent misrepresentations.
ARTICLE XII.
TERMINATION
12.1 Termination. This Agreement and the Merger contemplated hereby may
be terminated at any time prior to the Closing, whether before or after approval
of this Agreement and the Merger by the Stockholders, as follows, and in no
other manner:
(a) By mutual written consent of QuadraMed and the Company;
(b) By QuadraMed or the Company if any of the conditions set
forth in Article VIII shall not have been satisfied as of the date of the
Closing;
(c) By QuadraMed if any of the conditions set forth in Article
IX shall have not been satisfied as of the date of the Closing;
(d) By the Company if any of the conditions set forth in
Article X shall have not been satisfied as of the date of the Closing; or
(e) By either QuadraMed or the Company if the Closing shall
have not been consummated on or before December 15, 1996; provided, however,
with respect to (b)-(d) that the terminating party has complied with or
performed or tendered performance of all covenants and agreements, and satisfied
all conditions contained herein which are to be complied with, performed or
satisfied by such party immediately prior to or at the Closing; provided,
further, that a party shall promptly notify the other parties hereto in writing
if it becomes aware of circumstances which would cause such other party to
breach or be unable to comply with or perform the conditions set forth in
Article VIII, IX or X as is appropriate.
12.2 Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 12.1 hereof, all further obligations of the
parties hereto under this Agreement shall terminate without further liability of
any party to another, and each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance of and compliance with all agreements and conditions contained
herein or therein on its part to be performed or complied with, including the
fees, expenses and disbursements of its counsel; provided, that the obligations
of the Company contained in Section 5.5 hereof and the obligations of QuadraMed
and Acquisition Co. contained in Section 7.2 hereof shall survive any such
termination; and provided, further, that nothing herein shall relieve any party
of any liability with respect to or arising out of any breach of its
obligations, covenants or agreements hereunder and such termination shall not
constitute an election of remedies nor limit the non-breaching parties from
pursuing whatever rights and remedies they may have at law, in equity or
otherwise.
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12.3 Waiver of Conditions. If any of the conditions specified in
Article VIII hereof has not been satisfied, QuadraMed and the Company may
nevertheless mutually agree to proceed with the transactions contemplated
hereby. If any of the conditions specified in Article IX hereof has not been
satisfied, QuadraMed and Acquisition Co. may nevertheless at the election of
QuadraMed proceed with the transactions contemplated hereby. If any of the
conditions specified in Article X hereof has not been satisfied, the Company and
the Stockholders may nevertheless at the election of the Company proceed with
the transactions contemplated hereby.
12.4 Payment of Expenses. The Stockholders (on behalf of themselves and
the Company) and QuadraMed will pay all of their respective costs and expenses
(including fees and expenses of legal counsel, accountants and financial
advisors) incurred by such party in connection with the transactions
contemplated by this Agreement, regardless of whether the Merger is consummated.
The costs and expenses incurred by the Company and the Stockholders in
connection with the transactions contemplated hereby may be paid from the
Company's corporate funds up to a maximum of $10,000. Neither QuadraMed,
Acquisition Co. nor the Company will be obligated to any person for any finders
or broker's fee in connection with the proposed Merger.
ARTICLE XIII.
GENERAL
13.1 Amendments. Subject to applicable law, this Agreement, the
Certificate of Merger and any exhibit attached hereto or thereto may be amended
by the parties hereto at any time prior to the Effective Date; provided,
however, that any such amendment must be in writing and executed by all parties
hereto.
13.2 Assignment. The rights under this Agreement shall not be
assignable nor the duties delegable by any party without the written consent of
the other parties and nothing contained in this Agreement, express or implied,
is intended to confer upon any person or entity, other than the parties hereto
and their successors in interest and permitted assignees, any rights or remedies
under or by reason of this Agreement unless so stated to the contrary.
13.3 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally, by facsimile transmission, or when mailed, by United
States certified or registered mail, prepaid, to the parties or their assignees
at the following addresses or facsimile numbers (or at such other address as
shall be given in writing by QuadraMed and Acquisition Co. to the Company and to
QuadraMed by the Company):
To the Company: InterMed Healthcare Systems Inc.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
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Marquis ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & Cody, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To QuadraMed/Acquisition Co.: QuadraMed Corporation
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13.4 Further Assurances. QuadraMed and Acquisition Co., on the one
hand, and the Company, on the other hand, agree that from time to time after the
Closing, at the other's request and without further consideration or consent,
each will execute and deliver such additional instruments as the other may
reasonably request to confirm more effectively the status of the Company as a
subsidiary of QuadraMed, and, from and after the date hereof if there are any
rights of the Company vis-a-vis third parties which would not continue beyond
the time of the Merger without the consent of any such third party, to try with
the cooperation and assistance of each other to obtain such consent promptly.
13.5 Entire Agreement. This Agreement (including all exhibits and
schedules attached hereto and thereto and all documents delivered as provided
for herein and therein) contain the entire agreement among the parties hereto
with respect to the subject matter hereof and the transactions contemplated
hereby and supersedes all prior negotiations, discussions, agreements and
undertakings, both written and oral, among the parties hereto, with respect to
the subject matter hereof; provided, however, that certain Mutual Nondisclosure
Agreement between the parties hereto shall continue in full force and effect.
13.6 Counterparts; Facsimile. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile (with
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originals to follow by United States mail), and such facsimile shall be
conclusive evidence of the consent and ratification of the signatories hereto.
13.7 Governing Law. This Agreement shall be construed by and enforced
in accordance with the laws of the State of Delaware without giving effect to
the principles of the conflicts of laws.
13.8 Resolutions of Indemnification Disputes. Any controversy arising
out of the indemnification provisions of Article XI of this Agreement or breach
thereof shall be settled by arbitration in Chicago, Illinois, in accordance with
the rules of the American Arbitration Association, and judgment entered upon the
award rendered by arbitrator may be enforced by appropriate judicial action
pursuant to the California Code of Civil Procedure. The arbitration panel shall
consist of one (1) member, which shall be a person agreed to by each party to
dispute within thirty (30) days following notice by one party that desires the
matter to be arbitrated. If the parties are unable within such thirty (30) day
period to agree upon an arbitrator, than the panel shall be one (1) arbitrator
selected by the Chicago office of the American Arbitration Association, which
arbitrator shall be experienced in commercial law and acquisition transactions
and knowledgeable with respect to the subject matter of the dispute. The losing
party shall bear any fees and expenses of the arbitrator, other tribunal fees
and expense and reasonable attorney's fees of both parties, and the cost of such
witness and other reasonable costs or expenses incurred by him or the prevailing
party. The arbitrator shall render a decision within thirty (30) days following
the close of presentation by the parties to their cases and any rebuttal. The
parties shall agree within thirty (30) days following the selection of the
arbitrator to any pre-hearing procedures or further procedures necessary for the
arbitration to proceed, including, interrogatories or other discovery, provided,
in any event, each party shall be entitled to discovery in accordance with
applicable rules.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Acquisition
Agreement and Plan of Merger as of the date first written above.
QUADRAMED QUADRAMED CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
ACQUISITION CO. INTERMED ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
INTERMED INTERMED HEALTHCARE SYSTEMS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President
[SIGNATURE PAGE NO. 1 TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
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STOCKHOLDERS
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇
------------------------------------- -------------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ G. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------- -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ G. ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ SIRROM CAPITAL CORPORATION
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
/s/ OBI OKEHI Title: Chief Financial Officer
------------------------------------- ------------------------------
Obi Okehi
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as joint tenants with rights of survivorship
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as joint tenants with rights of survivorship
/s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[SIGNATURE PAGE NO. 2 TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
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EXHIBIT "A"
CERTIFICATE OF MERGER
OF
INTERMED HEALTHCARE SYSTEMS INC.
INTO
INTERMED ACQUISITION CORPORATION
The undersigned corporation organized and existing under and by virtue
of the Delaware General Corporation Law does hereby certify:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
Name State of Incorporation
InterMed Healthcare Systems Inc. Delaware
InterMed Acquisition Corporation Delaware
SECOND: That an Acquisition Agreement and Plan of Merger between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the Delaware General Corporation Law.
THIRD: That a stockholder vote approving the merger pursuant to the
Acquisition Agreement and Plan of Merger between the parties to the merger need
not be approved by the stockholders of the surviving constituent corporation
pursuant to Section 251(f) of the Delaware General Corporation Law, and, as of
the date hereof, the merger qualifies for Section 251(f) treatment.
FOURTH: That the name of the surviving corporation of the merger is
InterMed Acquisition Corporation.
FIFTH: That the authorized capital stock of the non-surviving
corporation consists of 1,000,000 shares of Common Stock, $0.001 par value, of
which 125,312 shares are duly and validly issued and outstanding.
SIXTH: That the Certificate of Incorporation of InterMed Acquisition
Corporation, a Delaware corporation which will survive the merger, shall be the
Certificate of Incorporation of the surviving corporation.
A-1
55
SEVENTH: That the executed Acquisition Agreement and Plan of Merger is
on file at the principal place of business of the surviving corporation, the
address of which is ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
EIGHTH: That a copy of the Acquisition Agreement and Plan of Merger
will be furnished by the surviving corporation, on request and without cost, to
any stockholder of either constituent corporation.
NINTH: That this Certificate of Merger shall be effective on the
Closing as that term is defined in the Acquisition Agreement and Plan of Merger
(but in no event after the 90th day following the filing of this Certificate of
Merger).
INTERMED ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Secretary
A-2
56
EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT
B-1
57
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as
of December 5, 1996, by and among QuadraMed Corporation, a Delaware corporation
(the "Company"), and certain holders of the Common Stock of the Company listed
on Schedule "A" attached hereto and incorporated herein by this reference (each,
a "Stockholder" and collectively, the "Stockholders").
WHEREAS, pursuant to that certain Acquisition Agreement and Plan of
Merger by and between the Company and InterMed Acquisition Corporation, a
Delaware corporation ("Acquisition Co."), on the one hand, and InterMed
Healthcare Systems Inc., a Delaware corporation ("InterMed"), and the
Stockholders, on the other hand, dated as of December 2, 1996 (the "Merger
Agreement"), (i) InterMed shall be merged with and into Acquisition Co. (the
"Merger") and (ii) by virtue of the Merger, the Stockholders, who are all of the
stockholders of InterMed, shall be entitled to receive shares of the Company's
Common Stock and/or options to purchase shares of the Company's Common Stock
(collectively, the "Shares") as consideration for the Merger and in exchange for
cancellation of each share of issued and outstanding InterMed Common Stock and
each option to purchase InterMed Common Stock held by the Stockholders as of the
date hereof.
WHEREAS, pursuant to the Merger Agreement, the Stockholders have each
made customary representations and warranties in order for the issuance of the
Shares by the Company to be exempt from the registration requirements of the
Securities Act pursuant to the private placement exemption provided by
Regulation D promulgated under the Securities Act, and applicable state
securities laws.
WHEREAS, the Company desires to grant to the Stockholders "piggyback"
registration rights for the Shares, and the Company and the Stockholders desire
that this Agreement shall govern the rights of the Stockholders to cause the
Company to register the Shares, as well as certain other matters as set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed as
follows:
1. Definitions.
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Registrable Securities" means (i) the Shares issued to
the Stockholders pursuant to the Merger Agreement and (ii) any Common Stock
issued or issuable with respect to the securities referred to in clause (i) by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As to
any particular Registrable Securities, such securities will cease to be
Registrable Securities when they have been distributed to the public pursuant to
an offering
B-2
58
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with any exemption under the Securities
Act, including, without limitation, Rule 144 promulgated by the SEC under the
Securities Act (or any similar rule then in force). For purposes of this
Agreement, a person will be deemed to be a holder of Registrable Securities
whenever such person has the right to acquire directly or indirectly such
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
(c) "Securities Act" means the Securities Act of 1933, as
amended.
(d) "SEC" means the Securities and Exchange Commission.
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to
register (but without the obligation to do so or to consummate any such
registration once filed) any of its securities under the Securities Act and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), the Company will give prompt written
notice to all holders of Registrable Securities of its intention to effect such
a registration and will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within twenty (20) days after the receipt of the Company's notice. The
Registration Expenses of the holders of Registrable Securities will be paid by
the Company in all Piggyback Registrations as set forth in Section 5 hereof.
(b) Underwritten Registrations. For any Piggyback Registration
executed by means of an underwriting, the Company shall include such information
in the written notice referred to in Section 2(a) above. The underwriter will be
selected by the Company. No holder of Registrable Securities may participate in
any registration hereunder which is underwritten unless such holder (i) agrees
to sell such holder's securities on the basis provided in customary underwriting
arrangements, and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in such offering
within a price range reasonably acceptable to the Company, the Company will
include in such registration (i) first, the securities the Company proposes to
sell, and (ii) second, the Registrable Securities requested to be included in
such registration and such other securities of the Company with the right to
participate in such registration, pro rata among the
B-3
59
holders of such Registrable Securities and such other securities on the basis of
the number of shares owned by each such holder.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to the holders initially
requesting such registration, the Company will include in such registration (i)
first, the securities requested to be included therein by the holders requesting
such registration, and (ii) second, the Registrable Securities requested to be
included in such registration and any other securities requested to be included
in such registration, pro rata among the holders of all such securities on the
basis of the number of securities owned by each such holder.
3. Registration Procedures. Whenever the Company is required by
the provisions hereof to effect the registration of Registrable Securities under
the Securities Act, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the holders of the Registrable Securities such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
holders of the Registrable Securities, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
B-4
60
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each holder of
the Registrable Securities participating in such underwriting shall also enter
into and perform its obligations under such an agreement provided that such
underwriting agreement shall not provide for indemnification or contribution
obligations on the part of the holders of the Registrable Securities greater
than the obligations set forth in Section 7.
(f) Notify each holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling holder that such holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of such securities
as shall be required to effect the registration of such holder's Registrable
Securities.
5. Registration Expenses.
(a) Except as set forth in Section 5(b) below, all expenses
incident to the Company's performance of or compliance with the Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses and fees and disbursements of counsel for the
Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Company
(collectively, the "Registration Expenses"), will be borne by the Company.
(b) Notwithstanding the foregoing, the holders of the
Registrable Securities shall be obligated to pay, pro rata among the holders of
the Registrable Securities on the basis of the number of securities owned by
each such holder, (i) the underwriting discounts and commissions relating to the
Registrable Securities included in any registration hereunder and (ii) all fees
and expenses for separate counsel (if any) retained by the holders of the
Registrable Securities in connection with such registration.
6. Delay of Registration. No holder of Registrable Securities
shall have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration under this Agreement as a result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.
B-5
61
7. Indemnification. In the event any Registrable Securities are
included in a registration statement pursuant to this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each holder of Registrable Securities and the officers,
directors and partners of such holder, any underwriter (as defined in the
Securities Act) for such holder and each person, if any, who controls such
holder or underwriter within the meaning of the Securities Act or the 1934 Act,
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the 1934 Act or any state securities law or any rule, or of any regulation
promulgated under the Securities Act, the 1934 Act or any state securities law;
and the Company will pay to each such holder, underwriter or controlling person,
as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in any such case for any loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling holder of
Registrable Securities will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other holder selling securities in such registration
statement and any controlling person of any such underwriter or other holder,
against any losses, claims, damages or liabilities to which any of the foregoing
persons may become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs
solely in reasonable reliance upon and in conformity with written information
furnished by such holder of Registrable Securities expressly for use in
connection with such registration; and each such holder of Registrable
Securities will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section 7(b),
in connection with investigating or defending any such loss,
B-6
62
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the holder of Registrable
Securities, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 7, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 7.
(d) If the indemnification provided for in this Section 7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements, omissions or other actions or violations
that resulted in such loss, liability, claim, damage or expense, as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions of the underwriting
agreement shall control.
B-7
63
(f) The obligations of the Company and holders under this
Section 7 shall survive the completion of any offering of Registrable Securities
in a registration statement under this Agreement, and otherwise.
8. Reports Under the 1934 Act. With a view to making available to
the holders of the Registrable Securities the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that may at
any time permit such holders to sell the Registrable Securities to the public
without registration, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after the Merger.
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act.
(c) Furnish to any holder of the Registrable Securities, so
long as such holder owns any Registrable Securities, forthwith upon request (i)
a written statement by the Company that it has complied with the reporting
requirements of SEC Rule 144, the Securities Act and the 1934 Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company with the SEC and (iii) such other
reports and documents of the Company and information in the possession of or
reasonably obtained by the Company as may be reasonably requested in availing
any holder of the Registrable Securities of any rule or regulation of the SEC
which permits the selling of any such securities without registration.
9. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned (but only with all related obligations) by a holder of Registrable
Securities to a transferee or assignee of such securities who, after such
assignment or transfer, holds at least five thousand (5,000) shares of
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations), provided: (i) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; (ii) such
transferee or assignee agrees in writing to be bound by the terms and conditions
of this Agreement; (iii) such assignment complies with the Securities Act; and
(iv) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act.
10. Termination of Registration Rights. The Company shall have no
further obligations pursuant to this Agreement three (3) years after the closing
date of the Merger.
B-8
64
11. Miscellaneous.
(a) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(b) Governing Law. The corporate law of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement (and Schedule "A" hereto) shall be governed by the internal law,
and not the law of conflicts, of Delaware.
(c) Counterparts; Facsimile. This Agreement may be executed
simultaneously in one or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement. This Agreement may be effectively
executed via facsimile transmission, with a hard copy to follow via overnight
courier.
(d) Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a section of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
(e) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be delivered personally to the recipient, sent by
reputable express courier service (charges prepaid) or sent by certified or
registered mail, return receipt requested and postage prepaid and shall be
deemed to have been given when so delivered, sent or deposited in the United
States mail. Such notices, demands and other communications shall be sent to the
Company and each of the Stockholders at the addresses indicated in the records
of the Company for such Stockholder, or to such other address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party.
(f) Amendments and Waivers. Except as otherwise provided
herein, amendment or waiver to the provisions of this Agreement, or grants of
registration rights prior or superior to the rights of the holders Registrable
Securities may be made only upon the prior written consent of the Company and
the holders of at least a majority of the Registrable Securities.
(g) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any
B-9
65
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.
(h) Entire Agreement. This Agreement (including Schedule "A"
hereto) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects contained herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
B-10
66
IN WITNESS WHEREOF, the parties have duly executed this Registration
Rights Agreement as of the date first written above.
COMPANY QUADRAMED CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Title: Chief Executive Officer
-------------------------
[SIGNATURE PAGE NO. 1 TO REGISTRATION RIGHTS AGREEMENT]
B-11
67
STOCKHOLDERS
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇
----------------------------- ------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ G. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------- ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ G. ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- SIRROM INVESTMENTS, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ OBI OKEHI By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------- --------------------------
Obi Okehi Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Chief Financial Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ -------------------------
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as joint tenants with rights of survivorship
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇,
as joint tenants with rights of survivorship
/s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[SIGNATURE PAGE NO. 2 TO REGISTRATION RIGHTS AGREEMENT]
▇-▇▇
▇▇
▇▇▇▇▇▇▇▇ "▇"
▇▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
Obi ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights of
survivorship
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights of
survivorship
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
G. ▇▇▇▇▇ ▇▇▇▇▇▇
Sirrom Investments, Inc.
B-13
69
EXHIBIT "C"
OPINION OF COUNSEL
C-1
70
December 5, 1996
InterMed Healthcare Systems Inc.
and its stockholders
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Marquis ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have represented QuadraMed Corporation, a Delaware corporation, and
InterMed Acquisition Corporation, a Delaware corporation (collectively, the
"Companies") in connection with the transactions which are the subject of that
certain Acquisition Agreement and Plan of Merger (the "Merger Agreement") dated
as of December 2, 1996 by and among the Companies, on the one hand, and InterMed
Healthcare Systems Inc., a Delaware corporation ("InterMed"), and the
stockholders of InterMed (collectively, the "Stockholders"), on the other hand,
pursuant to which (i) InterMed shall be merged with and into InterMed
Acquisition Corporation (the "Merger") and (ii) by virtue of the Merger, the
Stockholders shall be entitled to receive shares and/or options to purchase
shares of the Common Stock of QuadraMed Corporation (the "Shares") as
consideration for the Merger and in exchange for cancellation of each share of
issued and outstanding InterMed Common Stock and each option to purchase
InterMed Common Stock held by the Stockholders as of the date hereof
(collectively, the "Merger Transactions"). We have acted solely as special
counsel to the Companies in connection with the Merger Transactions, and not as
general counsel for the Companies. This opinion is being rendered pursuant to
Section 10.4 of the Merger Agreement. Unless otherwise defined herein, the
definitions of capitalized terms used in this opinion shall be the same as those
set forth in the Merger Agreement.
In our capacity as counsel to the Companies, we have examined
originals, or copies identified to our satisfaction as being true copies of such
corporate records, agreements, instruments and other documents of the Companies
as in our judgment are necessary or
C-2
71
InterMed Healthcare Systems Inc.
December 5, 1996
Page 2
appropriate to enable us to render the opinions expressed below. These records,
agreements, instruments and documents include, without limitation, the
following:
1. The Merger Agreement, the exhibits and schedules attached thereto,
including any such exhibits as executed and delivered as a definitive agreement
in connection with the Merger Transactions, and the various stock option
agreements described in Section 10.5 of the Merger Agreement (collectively, the
"Transaction Documents");
2. The Certificates of Incorporation of the Companies, as amended;
3. The Bylaws of the Companies, as amended;
4. A Certificate in Support of Legal Opinion of the executive officers
of the Companies dated as of the date hereof, attached hereto as Exhibit "A" and
incorporated herein by this reference (the "Certificate in Support of Legal
Opinion").
As to all questions of fact material to this opinion that have not been
independently established or of which the attorneys in this firm who have worked
on the Merger Transactions do not have material knowledge, we have relied
without verification upon the Certificate in Support of Legal Opinion,
certificates or other comparable documents of officers and representatives of
the Companies, the representations and warranties of the Companies contained in
the Merger Agreement and the certificates of good standing of the Delaware
Secretary of State for each of the Companies, attached hereto as Exhibit "B" and
incorporated herein by this reference.
This opinion letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, this opinion letter is subject to a
number of qualifications, exceptions, definitions, limitations on coverage and
other limitations, all as more particularly described on the Accord. This
opinion letter should be read in conjunction with the Accord. Except as
otherwise indicated herein, capitalized terms used in this Opinion Letter are
defined as set forth in the Accord. This opinion letter is also governed by, and
shall be interpreted in accordance with, the "California Provisions" and the
"California Generic Exception" as defined in the Business Law Section of the
California State Bar Report on the Third-Party Legal Opinion Report of the ABA
Section of Business Law (dated May 1992), and is therefore subject to a number
of additional qualifications, exceptions, and understandings all as more
particularly described in the California Provisions and California Generic
Exception, and this opinion letter should also be read in conjunction therewith.
We do not opine on any laws other than the laws of the States of
California and Delaware and the federal laws of the United States.
C-3
72
InterMed Healthcare Systems Inc.
December 5, 1996
Page 3
The Merger Agreement and all Exhibits thereto are referred to herein
collectively as the "Transaction Documents".
Based on the above, and subject to the qualifications set forth herein,
it is our opinion that:
1. The Companies are corporations duly organized, validly existing and
in good standing under the laws of the State of Delaware.
2. The authorized capital stock of QuadraMed Corporation consists of
20,000,000 shares of Common Stock, $0.01 par value, 5,697,308 shares of which
are outstanding as of the date hereof, and 5,000,000 shares of Preferred Stock,
$0.01 par value, no shares of which are outstanding as of the date hereof. The
outstanding shares of capital stock of QuadraMed Corporation are duly
authorized, validly issued, fully paid and non-assessable. As of the Effective
Date of the Merger Agreement, and after giving effect to the sale of the Shares
to the Stockholders contemplated by the Merger Agreement, the Shares will be
duly authorized and validly issued to the Stockholders and will be owned by the
Stockholders free and clear of all claims, liens, security interests, charges
and encumbrances, assuming the Stockholders have no notice of any adverse claim.
3. The Companies have the corporate power to execute and deliver the
Transaction Documents and to perform their obligations thereunder.
4. Each of the Companies has duly authorized the execution and delivery
of each Transaction Document to which it is a party, and all performance
thereunder, and each of the Companies has duly executed and delivered each such
Transaction Document.
5. The Transaction Documents are enforceable against the Companies.
6. The execution and delivery by the Companies of the Transaction
Documents and performance thereunder, would not result in any:
(i) violation of the Companies' Certificates of Incorporation
or Bylaws;
(ii) violation of any existing federal or state constitution,
statute, regulation, rule, order or law to which, to our Actual Knowledge, the
Companies are subject; or
(iii) violation of any judicial or administrative decree,
writ, judgment or order to which, to our Actual Knowledge, the Companies are
subject.
C-4
73
InterMed Healthcare Systems Inc.
December 5, 1996
Page 4
7. Except for the filing of a Certificate of Merger with the State of
Delaware, no consent, approval, authorization or other action by, or filing
with, any governmental authority of the United States, the State of Delaware, or
the State of California is required for the Companies' execution and delivery of
the Merger Agreement and the consummation of the transactions contemplated
therein.
This opinion is solely for the information of the addressees hereof in
connection with the Merger Transactions and is not to be quoted in whole or in
part or otherwise referred to, nor is it to be filed with any government agency
or any other person without our prior written consent and no one other than the
addressees hereof is entitled to rely on this opinion nor are the addressees of
this opinion entitled to rely upon it for any other purpose. This opinion is
given to you as of the date hereof and we assume no obligation to advise you of
changes that may hereafter be brought to our attention.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
C-5
74
EXHIBIT "A"
CERTIFICATE IN SUPPORT OF LEGAL OPINION
75
CERTIFICATE IN SUPPORT OF LEGAL OPINION
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ hereby certify as follows:
1. We are the duly elected and acting Chairman of the Board and
Chief Executive Officer, and Vice President, Secretary and Treasurer,
respectively, of QuadraMed Corporation, a Delaware corporation ("QuadraMed"),
and Chairman of the Board, President and Chief Executive Officer, and Secretary
and Treasurer, respectively, of InterMed Acquisition Corporation, a Delaware
corporation ("Acquisition Co.") (each, a "QuadraMed Entity" and collectively,
the "QuadraMed Entities"). We recognize that ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
L.L.P. will rely on the statements made in this Certificate in delivering their
legal opinion to InterMed Healthcare Systems Inc., a Delaware corporation
("InterMed"), pursuant to Section 10.4 of that certain Acquisition Agreement
and Plan of Merger, dated effective as of December 2, 1996 by and among the
QuadraMed Entities, on the one hand, and InterMed and all the stockholders of
InterMed (collectively, the "Stockholders"), on the other hand, (collectively,
together with all documents appended as exhibits and schedules thereto and
contemplated thereby, the "Merger Agreement"), pursuant to which (i) InterMed
shall be merged with and into Acquisition Co. (the "Merger") and (ii) by virtue
of the Merger, the Stockholders shall be entitled to receive shares of
QuadraMed Common Stock or options to purchase QuadraMed Common Stock (the
"Shares") as consideration for the Merger and in exchange for cancellation of
each share of issued and outstanding InterMed Common Stock and each option to
purchase InterMed Common Stock held by the Stockholders as of the date hereof.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement.
2. With respect to each of the QuadraMed Entities, we have
provided to ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. true, complete and correct
originals, or copies of originals, of the Certificate of Incorporation and all
amendments thereto, the Bylaws and all amendments thereto, the stock books, the
stock records, the stock ledger and the minutes of all meetings and actions
without meetings of directors, board committees and stockholders.
3. We have provided to ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
true, complete and correct copies of the mortgages, deeds of trust, indentures,
notes, agreements, instruments, judgments and decrees which would be directly
or indirectly affected by the transactions contemplated by the Merger
Agreement, together with all amendments and modifications thereto.
4. Each and every document and instrument that we have provided to
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. is what it purports to be, all
signatures on these documents and instruments are genuine and all documents and
instruments submitted to ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. as copies
conformed with the originals, which facts we acknowledge that ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. did not independently verify.
5. (a) The Certificate of Incorporation of QuadraMed was filed
with the Delaware Secretary of State on May 9, 1996. The Second Amended and
Restated Certificate
76
of Incorporation of QuadraMed was filed with the Delaware Secretary of State on
October 11, 1996. No other amendments to the Certificate of Incorporation of
QuadraMed have been filed.
(b) The Certificate of Incorporation of InterMed was filed
with the Delaware Secretary of State on November 7, 1996. No amendments to the
Certificate of Incorporation of InterMed have been filed.
6. Each of the QuadraMed Entities are corporations duly organized,
validly existing and in good standing under the laws of the State of Delaware,
have corporate power and authority to execute, deliver and perform the Merger
Agreement, and to consummate the transactions in accordance with the terms of
the Merger Agreement, and the execution, delivery and performance of the Merger
Agreement by the QuadraMed Entities have been duly and validly authorized by all
requisite corporate action and the Merger Agreement has been executed and
delivered by the QuadraMed Entities.
7. Upon the filing of the Certificate of Merger with the Delaware
Secretary of State, and the completion of all conditions precedent to the
effectiveness of the Merger set forth in the Merger Agreement, the Merger will
be duly, lawfully and validly consummated pursuant to the Merger Agreement,
with the effect that the separate corporate existence of InterMed Healthcare
Systems Inc. will be terminated and InterMed Acquisition Corporation will be
the surviving corporation after the Merger.
8. The authorized capital stock of QuadraMed consists of 20,000,000
shares of Common Stock, $0.01 par value, 5,697,308 shares of which are
outstanding as of the date hereof, and 5,000,000 shares of Preferred Stock,
$0.01 par value. The outstanding shares of capital stock of QuadraMed are duly
authorized, validly issued, fully paid and non-assessable. As of the Effective
Date of the Merger Agreement, and after giving effect to the sale of the Shares
to the Stockholders contemplated by the Merger Agreement, the Shares will be
owned by the Stockholders free and clear of all claims, liens, security
interests, charges and encumbrances, assuming the Stockholders have no notice of
any adverse claim.
9. The Merger Agreement is valid and binding upon the QuadraMed
Entities and is enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights in general. The enforceability of the obligations of the
QuadraMed Entities under the Merger Agreement is, with respect to the
availability of equitable remedies, also subject to the general principles of
equity and the discretion of the court having jurisdiction thereof.
10. Neither the execution nor the delivery of the Merger Agreement
by the QuadraMed Entities nor the consummation of the transactions which are
the subject thereof will constitute a default or an event which would with
notice or lapse of time or both constitute a default or violation or breach of
(i) the Certificates of Incorporation or Bylaws, both as
-2-
77
amended, of either of the QuadraMed Entities or (ii) to the best of our
knowledge after due inquiry, of any indenture, license, lease, franchise or
other instrument or any writ, judgment or decree to which the QuadraMed
Entities or their properties may be bound, nor would such execution, delivery
or consummation constitute, to the best of our knowledge after due inquiry, an
event which would permit any party to any agreement or instrument to terminate
it or to accelerate the maturity of any indebtedness or obligation of the
QuadraMed Entities or an event that would result in the creation or imposition
of any lien or encumbrance on any asset of the QuadraMed Entities.
11. No action of or filing with any governmental or public body or
authority is required to authorize or is otherwise required for the validity of
execution, delivery and performance by the QuadraMed Entities of the Merger
Agreement.
12. There are no proceedings pending or planned for the dissolution or
liquidation of either of the QuadraMed Entities.
13. Neither of the QuadraMed Entities has filed any voluntary
bankruptcy petition, nor has any involuntary bankruptcy petition been filed
against either of the QuadraMed Entities.
14. None of the resolutions adopted by (i) the unanimous written
consent of the QuadraMed Board of Directors, dated effective as of November 20,
1996 or (ii) the unanimous written consent of the InterMed Board of Directors,
dated effective as of December 2, 1996 has been amended, modified, superseded
or revoked in whole or in part.
15. All representations, warranties and covenants of the QuadraMed
Entities in the Merger Agreement are true, complete and correct in every
regard, without modification, clarification or supplement.
16. We have reviewed the form of legal opinion to be delivered by
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. pursuant to Section 10.4 of the Merger
Agreement and, although we are not attorneys, neither the opinion nor any
portion thereof appeared to us to be in any way false, incorrect or misleading.
17. This Certificate may be executed in one or more counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same instrument. This Certificate may be executed by facsimile and ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. may rely on such facsimile in delivering
their legal opinion pursuant to Section 10.4 of the Merger Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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78
IN WITNESS WHEREOF, the undersigned have executed this Certificate in
Support of Legal Opinion as of December 5, 1996.
QUADRAMED CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board
and Chief Executive Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President,
Secretary and Treasurer
INTERMED ACQUISITION CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board,
President and Chief Executive Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Secretary and Treasurer
[SIGNATURE PAGE TO CERTIFICATE IN SUPPORT OF LEGAL OPINION]
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79
EXHIBIT "B"
CERTIFICATES OF GOOD STANDING
80
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY "QUADRAMED CORPORATION" IS DULY INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE
EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY-THIRD DAY
OF DECEMBER, A.D. 1996.
AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "QUADRAMED CORPORATION"
WAS INCORPORATED ON THE NINTH DAY OF MAY, A.D. 1996.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE NOT BEEN
ASSESSED TO DATE.
[SEAL] /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE
2622142 8300 AUTHENTICATION: 8256399
960380203 DATE: 12-23-96
81
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY "INTERMED ACQUISITION CORPORATION" IS DULY INCORPORATED UNDER
THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL
CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE
TWENTY-THIRD DAY OF DECEMBER, A.D. 1996.
AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "INTERMED ACQUISITION
CORPORATION" WAS INCORPORATED ON THE SEVENTH DAY OF NOVEMBER, A.D. 1996.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE NOT BEEN
ASSESSED TO DATE.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
[SEAL] -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of State
2681666 8300 AUTHENTICATION: 8256408
960380207 DATE: 12-23-96
82
EXHIBIT "D"
EMPLOYMENT AGREEMENT
SEE EXHIBIT 10.32
83
EXHIBIT "E"
NON-COMPETITION AND NON-INTERFERENCE AGREEMENT
E-1
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NON-COMPETITION AND NON-INTERFERENCE AGREEMENT
This Non-Competition and Non-Interference Agreement (the "Agreement")
is entered into as of December 5, 1996 by and among QuadraMed Corporation, a
Delaware corporation ("QuadraMed"), InterMed Acquisition Corporation, a Delaware
corporation ("Acquisition Co."), and ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ and G. ▇▇▇▇▇ ▇▇▇▇▇▇ (each, a "Stockholder" and collectively,
the "Stockholders").
WHEREAS, pursuant to that certain Acquisition Agreement and Plan of
Merger by and among QuadraMed and Acquisition Co., on the one hand, and InterMed
Healthcare Systems Inc., a Delaware corporation (the "Company"), and the
stockholders of the Company, on the other hand, dated as of December 2, 1996
(the "Merger Agreement"), (i) the Company shall be merged with and into
Acquisition Co. (the "Merger") and (ii) by virtue of the Merger, the
Stockholders, who are certain of the stockholders of the Company, shall be
entitled to receive shares of QuadraMed's Common Stock and/or options to
purchase shares of QuadraMed's Common Stock as consideration for the Merger and
in exchange for cancellation of each share of issued and outstanding Common
Stock of the Company and each option to purchase Common Stock of the Company
held by the Stockholders as of the date hereof.
WHEREAS, the Company has heretofore engaged in the healthcare
electronic data interchange business and related software operations.
WHEREAS, QuadraMed and Acquisition Co. desire to assure themselves that
the Stockholders will not compete with QuadraMed and Acquisition Co. for a
period of five (5) years from the closing of the Merger in a business which is
the same as, substantially similar to or in competition with QuadraMed's and
Acquisition Co.'s healthcare electronic data interchange business and related
software operations in all of the states and territories of the United States.
WHEREAS, this Agreement is a material inducement to QuadraMed and
Acquisition Co. to enter into the Merger Agreement, and each of the Stockholders
is agreeable to entering into this Agreement with QuadraMed and Acquisition Co.
on the terms herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed as
follows:
1. Subject to the terms and conditions hereof, each Stockholder
covenants and agrees that, for the period commencing on the Effective Date of
the Merger Agreement and ending on the fifth (5th) anniversary of said Effective
Date (the "Restricted Period"), the Stockholders shall not, either directly or
indirectly, through an affiliated or controlled entity or person, on their own
behalf or as a partner, consultant, proprietor, principal, agent, stockholder,
creditor, security holder, trustee or otherwise (except by ownership of five
percent (5%) or less of the outstanding stock of any publicly held corporation)
or in any other capacity, own, manage, operate, finance, control, invest,
participate or engage in, lend their
E-2
85
name to, lend credit to, render services or advice to, or devote any material
endeavor or effort to, an entity engaged in a business which is the same as,
substantially similar to or in competition with QuadraMed's and Acquisition
Co.'s healthcare electronic data interchange business and related software
operations (the "Restricted Business") in all of the states and territories of
the United States (the "Restricted Territory").
2. Each Stockholder acknowledges that he or she has knowledge of
information of substantial value regarding the Restricted Business, which is not
generally known and which gives QuadraMed and Acquisition Co. an advantage over
competitors who do not know it, including, without limitation, computer
programs, names and expertise of employees and consultants, know-how, trade
secrets, formulae, processes, ideas, inventions and other sales, business,
financial, customer and product developments, plans, lists, forecasts,
strategies and information of the Company, QuadraMed and Acquisition Co. (the
"Confidential Information"). The term "Confidential Information" shall not
include information which is (i) generally or readily obtainable by the public
or the trade, (ii) publicly known or becomes known, through no fault or activity
of the Stockholders, (iii) independently developed by any Stockholder without
use, directly or indirectly, of the Confidential Information or (iv) required to
be disclosed by any Stockholder or any relative or affiliate thereof pursuant to
deposition, interrogatory, request for documents, order, subpoena, civil
investigative demand or similar legal compulsion; provided, however, that prompt
written notice of such requirement shall be provided to QuadraMed and/or
Acquisition Co. so that they may seek a protective order or other appropriate
remedy and/or may waive compliance with this Section 2; and provided, further,
that if such protective order or other remedy is not obtained, and whether or
not such waiver is given, only such portion of the Confidential Information
which the person subject to such legal compulsion is advised in writing by its
counsel is legally required to be disclosed shall be disclosed and reasonable
effort shall be made to obtain assurances that confidential treatment will be
accorded such Confidential Information. Each Stockholder hereby expressly
acknowledges and agrees that the Confidential Information constitutes
confidential and valuable trade secret business information of QuadraMed and
Acquisition Co. Each Stockholder agrees, at all times during the Restricted
Period, to regard and preserve as confidential such Confidential Information,
and, subject to the provisions hereof, to refrain from publishing or disclosing
any part of it or from using, copying or duplicating it in any way or by any
means or for any purposes other than those expressly set forth in the Merger
Agreement. Subject to the provisions hereof, each Stockholder further agrees, at
all times during the Restricted Period, that such Confidential Information will
not be disclosed by any Stockholder to any person or entity without the prior
written consent of QuadraMed and/or Acquisition Co., which may be withheld in
their sole discretion. Each Stockholder acknowledges that the disclosure or use
or any Confidential Information in violation of this Agreement could gravely
affect the effective and successful conduct of the Restricted Business of
QuadraMed and Acquisition Co. and the value of the goodwill of the Company
acquired pursuant to the Merger Agreement, and that breach of the terms of this
Section 2 is a material breach of the terms of this Agreement.
▇-▇
▇▇
▇. During the Restricted Period, no Stockholder shall, whether for
their own account or for the account of any other individual, partnership, firm,
corporation or other business organization, divert or attempt to divert,
directly or indirectly, or otherwise interfere in a material fashion with any
orders for the products or services of the Restricted Business, or any customers
or contractors of the Restricted Business or induce or attempt to induce,
directly or indirectly, any person to terminate his or her employment or other
business association with the Restricted Business.
4. Each Stockholder and their respective officers, directors,
employees, representatives and affiliates shall refrain from making disparaging
or derogatory comments or references regarding the business, practices,
competence and/or services of the Restricted Business.
5. The covenants contained herein shall be construed as if each
covenant is divided into separate and distinct covenants in respect of the
Restricted Business, each capacity in which each Stockholder is prohibited from
competing and each part of the Restricted Territory in which QuadraMed and
Acquisition Co. are carrying on the Restricted Business. Each such covenant
shall constitute separate and several covenants distinct from all other such
covenants.
6. Each of the parties hereto recognizes that the territorial
restrictions contained in this Agreement are properly required for the adequate
protection of the Restricted Business and that in the event any covenant or
other provision contained herein shall be deemed to be illegal, unenforceable or
unreasonable by a court or other tribunal of competent jurisdiction with respect
to any part of the Restricted Territory, such covenant or provision shall not be
affected with respect to any other part of the Restricted Territory, and each of
the parties hereto agrees and submits to the reduction of said territorial
restriction to such an area as said court shall deem reasonable.
7. Each of the parties acknowledge that (i) the covenants and the
restrictions contained in this Agreement are necessary, fundamental and required
for the protection of the Restricted Business, (ii) such covenants relate to
matters which are of a special, unique and extraordinary character that gives
each of such covenants a special, unique and extraordinary value and (iii) a
breach of any of such covenants or any other provision of this Agreement will
result in irreparable harm and damage to the Restricted Business which cannot be
adequately compensated by a monetary award. Accordingly, it is expressly agreed
that in addition to all other remedies available at law or in equity (including,
without limitation, money damages from the Stockholders), QuadraMed and/or
Acquisition Co. shall be entitled to seek the remedy of a temporary restraining
order, preliminary injunction or such other form of injunctive or equitable
relief as may be used by any court of competent jurisdiction to restrain or
enjoin any of the parties hereto from breaching any such covenant or provision
or to specifically enforce the provisions hereof.
▇-▇
▇▇
▇. All defined terms utilized in this Agreement shall have the meanings
ascribed to them in the Merger Agreement unless otherwise indicated.
9. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered in the fashion and at the addresses
as specified in Section 13.3 of the Merger Agreement or to such other addresses
as any party hereto may specify by notice in writing to the other.
10. This Agreement and any dispute arising under or related to this
Agreement or the transactions contemplated herein shall be governed by and
construed in accordance with Sections 13.7 and 13.8 of the Merger Agreement.
11. This Agreement is the valid and legally binding obligation of the
parties hereto, enforceable against each party in accordance with its terms, and
shall inure to the benefit of such parties and their respective successors and
assigns.
12. This Agreement may be executed in any number of counterparts and
any party hereto may execute any such counterpart, each of which when executed
and delivered shall be deemed to be an original and all of which counterparts
taken together shall constitute but one and the same instrument. This Agreement
shall become binding when one or more counterparts taken together shall have
been executed and delivered by the parties by facsimile transmission or
otherwise.
13. This Agreement and the Merger Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written and oral agreements and understandings
between QuadraMed and Acquisition Co., on the one hand, and the Company and the
Stockholders, on the other hand, with respect to the subject matter of this
Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
14. Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in this Agreement are held to be unreasonable,
arbitrary or against public policy, such covenants will be considered divisible
with respect to scope, time and geographic area, and in such lesser scope, time
and geographic area, will be effective, binding and enforceable against and the
Stockholders.
15. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or
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88
privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (i) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party,
(ii) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given and (iii) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.
16. Each party hereto acknowledges that it has been represented by
independent legal counsel.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
E-6
89
IN WITNESS WHEREOF, the parties have duly executed this Non-Competition
and Non-Interference Agreement as of the date first written above.
QUADRAMED QUADRAMED CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Chief Executive Officer
---------------------------------
ACQUISITION CO. INTERMED ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Chief Executive Officer
---------------------------------
[SIGNATURE PAGE NO. 1 TO NON-COMPETITION AND NON-INTERFERENCE AGREEMENT]
E-7
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STOCKHOLDERS
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇▇
/s/ G. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
G. ▇▇▇▇▇ ▇▇▇▇▇▇
[SIGNATURE PAGE NO. 2 TO NON-COMPETITION AND NON-INTERFERENCE AGREEMENT]
E-8
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EXHIBIT "F"
OPINION OF COUNSEL
F-1
92
[▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LETTERHEAD]
December 5, 1996
QuadraMed Corporation
InterMed Acquisition Corporation
▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Acquisition Agreement and Plan of Merger of even date herewith
(the "Merger Agreement"), by and among QuadraMed Corporation, a
Delaware corporation ("QuadraMed"), InterMed Acquisition
Corporation, a Delaware corporation ("Acquisition Co."), and
InterMed Healthcare System, Inc., a Delaware corporation
("InterMed") and ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇, Obi Okehi, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇, as joint tenants with rights of survivorship, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights of
survivorship, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, G.
▇▇▇▇▇ ▇▇▇▇▇▇ and Sirrom Investments, Inc., who are all
stockholders of InterMed (each a "Stockholder" and collectively,
the "Stockholders").
Gentlemen:
We have acted as counsel to InterMed and the Stockholders in connection
with the Merger Agreement and the consummation of the transactions contemplated
therein. This opinion is rendered pursuant to Section 9.5 of the Merger
Agreement. In the capacity described above, we have considered such matters of
law and of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of such records and documents of
InterMed, certificates of officers and representatives of InterMed,
certificates of public officials and such other documents as we have deemed
appropriate as a basis for the opinions and confirmations hereinafter set forth.
This opinion letter is limited by and is in accordance with the January
1, 1992 edition of the Interpretive Standards Applicable to Legal Opinions to
Third Parties in
F-2
93
[▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P. LETTERHEAD]
QuadraMed Corporation
December 5, 1996
Page 2
Corporate Transactions adopted by the Legal Opinion Committee of the Corporate
and Banking Law Section of the State Bar of Georgia, which Interpretive
Standards are incorporated into this opinion letter by this reference. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in the Merger Agreement and the Interpretive Standards. (The
Merger Agreement and all agreements attached as Exhibits thereto, including any
such exhibit as executed and delivered as a definite agreement in connection
with the Merger Transactions, are referred to herein collectively as the
"Transaction Documents").
The opinions set forth herein are limited to the laws of the State of
Georgia, the Delaware General Corporation Law and applicable federal laws.
Based upon the foregoing, it is our opinion that:
1. InterMed was duly organized as a corporation and is existing and
in good standing under the laws of the State of Delaware. InterMed has the
corporate power to own its assets and to conduct its business.
2. The authorized capital stock of InterMed consists of 1,000,000
shares of common stock $.001 par value, of which 115,312 shares are issued and
outstanding. All of such issued and outstanding shares have been duly authorized
and validly issued and are fully paid and non-assessable.
3. InterMed has the corporate power to execute and deliver the
Transaction Documents, and to perform its obligations thereunder.
4. InterMed has duly authorized the execution and delivery of the
Transaction Documents, and all performance thereunder, and InterMed and each of
the Stockholders has duly executed and delivered the Transaction Documents.
5. The Merger Agreement is enforceable against InterMed and each of
the Stockholders.
6. The execution and delivery by InterMed of the Merger Agreement,
and performance thereunder, would not result in any:
(i) violation of InterMed's Certificate of Incorporation or
Bylaws;
F-3
94
[▇▇▇▇▇▇▇▇▇▇ & CODY, L.L.P. LETTERHEAD]
QuadraMed Corporation
December 5, 1996
Page 3
(ii) violation of any existing federal or state constitution,
statute, regulation, rule, order or law to which, to our knowledge, InterMed is
subject;
(iii) breach of or default under any material written
agreements to which, to our knowledge, InterMed is a party or by which, to our
knowledge, InterMed is bound;
(iv) creation or imposition of a contractual lien or security
interest in, on or against the assets of InterMed under any material written
agreements to which, to our knowledge, InterMed is a party or by which, to our
knowledge, InterMed is bound; or
(v) violation of any judicial or administrative decree,
writ, judgment or order to which, to our knowledge, InterMed is subject.
With your permission we have assumed that the term "material
written agreements" used in clauses (iii) and (iv) above includes only
agreements listed on EXHIBIT A hereto. We point out to you, however, that the
agreement numbered 17 on Exhibit A between Company and NEC Technologies, Inc.
will require that notice of the consummation of the Merger be furnished to NEC
Technologies, Inc.
6. Except for the filing of a Certificate of Merger with the State
of Delaware, no consent, approval, authorization or other action by, or filing
with, any governmental authority of the United States, the State of Delaware, or
the State of Georgia is required for InterMed's execution and delivery of the
Merger Agreement and the consummation of the transactions contemplated therein.
Based upon the limitations and qualifications set forth above, we
confirm to you that:
1. To our knowledge, except as set forth in the Merger Agreement,
no litigation or other proceeding against InterMed or any of its properties is
pending or overtly threatened by a written communication to InterMed.
2. Company is qualified to transact business as a foreign
corporation in the State of Georgia. The foregoing statement is based solely
upon certificates provided by the Georgia Secretary of State, a copy of which
InterMed has delivered to you at the closing of the Merger, and is limited to
the meaning ascribed to such certificates by each applicable state agency.
F-4
95
[▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P. LETTERHEAD]
QuadraMed Corporation
December 5, 1996
Page 4
The opinion letter is provided to you for your exclusive use solely in
connection with the execution and delivery of the Merger Agreement, and the
transactions contemplated therein, and may not be relied upon by any other
person or for any other purpose without our prior written consent.
Very truly yours,
▇▇▇▇▇▇▇▇▇▇ & Cody, L.L.P.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇, a Partner
F-5
96
[▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P. LETTERHEAD]
EXHIBIT A
LIST OF AGREEMENTS OF
INTERMED HEALTHCARE SYSTEMS INC.
DEEMED TO BE MATERIAL WRITTEN AGREEMENTS
1. Peachtree Center Office Lease Agreement with P.C. Towers, L.P. dated
April 3, 1993.
2. Loan Agreement with Sirrom Capital, L.P. dated June 29, 1994, and
related Security Agreement, Secured Promissory Note, and Stock Purchase
Warrant of the same date.
3. First Amendment to Loan Agreement with Sirrom Capital, L.P. dated
February 10, 1995, and related Secured Promissory Note and Stock
Purchase Warrant of the same date.
4. Letter Agreements amending the Loan Agreement with Sirrom Capital, L.P.
dated June 21, 1995, April 1, 1996, and June 24, 1996.
5. Stock Purchase Warrant with Sirrom Capital, L.P. dated August 1, 1996.
6. Master Agreement with ABACUS Financial Management Services, Ltd. dated
November 15, 1993, and related Task Orders dated November 15, 1993 and
November 30, 1993. (By its terms, the Master Agreement and related Task
Orders expired on November 15, 1995; the parties have continued to
conduct business with each other pursuant to a course of dealings that
reflects the expired agreement.)
7. System Purchase and License Agreement with Actamed Corporation dated
March 31, 1993, and Amendments thereto dated February 1, 1994, May 12,
1994, and December 31, 1995.
8. Master Agreement with CSA Provider Services dated October 29, 1993, and
related Task Orders dated October 29, 1993, and December 30, 1993.
9. Master Agreement with Integrated Systems Solutions Corp. dated June 22,
1994, and related Task Orders dated June 22, 1994.
10. License Agreement with Integrated Systems Solutions Corp. dated
March 22, 1995.
11. Master Agreement with Washington Dental Service dated December 21,
1993.
F-6
97
12. System Purchase and License Agreement with Washington Dental Service
dated December 21, 1993.
13. Master Source Code Escrow Agreement dated January 20, 1994.
14. Master Agreement with Core Management Resources dated October 11, 1995,
and related Task Orders dated January 16, 1996, and April 17, 1996.
15. Master Agreement with EDIUSA dated October 23 1996, and related Task
Order dated October 23, 1996.
16. First Amendment to Stock Purchase Warrant dated December 29, 1995.
17. Site Agreement with NEC Technologies, Inc. dated September 14, 1993.
18. Lease Agreement with Alco Capital Resource, Inc. dated May 24, 1995.
19. Lease Agreement with P.C. Towers, L.P., dated April 3, 1993.
20. License Agreement with Equifax Healthcare EDI Services, Inc. dated
August 15, 1996
21. Master Lease Agreement with Integrated Network Services, Inc. dated
November 7, 1996. (unexecuted).
22. Master Software License and Services Agreement with Software
Technologies Corporation dated October 16, 1996.
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98
EXHIBIT "G"
ESCROW AGREEMENT
G-1
99
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement"), is dated as of December 5,
1996 by and among QuadraMed Corporation, a Delaware corporation ("QuadraMed"),
and InterMed Acquisition Corporation, a Delaware corporation ("Acquisition
Co."), (QuadraMed and Acquisition Co. are collectively referred to herein as the
"Buyers"), ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, Obi Okehi, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights of
survivorship, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with rights
of survivorship, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, G. ▇▇▇▇▇ ▇▇▇▇▇▇ and
Sirrom Investments, Inc., a Tennessee corporation, who are all of the
stockholders of the Company (each, a "Seller" and collectively, the "Sellers")
and State Street Bank & Trust Company (the "Escrow Agent").
WHEREAS, this Agreement is being entered into by the parties pursuant
to Section 11.2(c) of that certain Acquisition Agreement and Plan of Merger
dated as of December 2, 1996 (the "Merger Agreement") by and among the Buyers,
InterMed Healthcare Systems Inc., a Delaware corporation (the "Company"), and
the Sellers. Capitalized terms used in this Agreement without definition shall
have the respective meanings given to them in the Merger Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. Establishment of Escrow.
(a) The Buyers are depositing with the Escrow Agent an amount
of shares of QuadraMed Common Stock, duly endorsed in blank or with appropriate
executed stock powers, with an aggregate Fair Market Value (as defined in the
Merger Agreement) of Four Hundred Fifteen Thousand Dollars ($415,000) (as
increased or decreased by fluctuations in the value of such shares, the "Escrow
Fund"), and the Escrow Agent acknowledges receipt thereof.
(b) The Escrow Agent hereby agrees to act as escrow agent and
to hold, safeguard and disburse the Escrow Fund pursuant to the terms and
conditions hereof.
2. Claims.
(a) From time to time on or before the expiration of the
Survival Period (as defined in the Merger Agreement), the Buyers may give
written notice (a "Notice") to the Sellers and the Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a "Claim") they may
have under Article XI of the Merger Agreement. The Buyers may make more than one
claim with respect to any underlying state of facts. If the Sellers give notice
to the Buyers and the Escrow Agent disputing any Claim (a "Counter Notice")
within fifteen (15) days following receipt by the Escrow Agent of the Notice
regarding such Claim, such Claim shall be resolved as provided in Section 2(b).
If no Counter Notice is received by the Escrow Agent within such fifteen (15)
day period, then the dollar amount of
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Damages claimed by the Buyers as set forth in their Notice shall be deemed
established for purposes of this Agreement and the Merger Agreement and, at the
end of such fifteen (15) day period, the Escrow Agent shall assign, transfer and
convey to the Buyers an amount of shares from the Escrow Fund with an aggregate
Fair Market Value as of the date of such Claim (as defined in the Merger
Agreement) equal to each such Claim. The Escrow Agent shall not inquire into or
consider whether a Claim complies with the requirements of the Merger Agreement.
(b) If a Counter Notice is given with respect to a Claim, the
Escrow Agent shall make payment with respect thereto only (i) to the extent a
Claim is not disputed by a Counter Notice, (ii) in accordance with joint written
instructions of the Buyers and the Sellers or (iii) in accordance with a final
non-appealable order of an arbitration panel as described in Section 13.8 of the
Merger Agreement. Any court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that the order is final and non-appealable. The Escrow Agent shall act on such
court order and legal opinion without further question.
3. Termination of Escrow. On the fifth (5th) business day
following the expiration of the Survival Period, the Escrow Agent shall pay and
distribute the then amount of the Escrow Fund to the Sellers in proportion to
their relative stockholdings in the Company unless any Claims are then pending,
in which case an amount of shares with an aggregate Fair Market Value as of such
date equal to the aggregate dollar amount of such Claims (as shown in the
Notices of such Claims) shall be retained by the Escrow Agent in the Escrow Fund
(and the balance paid to the Sellers in such proportions) until it receives
joint written instructions of the Buyers and the Sellers or a final
non-appealable order of an arbitration panel as contemplated by Section 2(b).
4. Duties of Escrow Agent.
(a) The Escrow Agent shall not be under any duty to give the
Escrow Fund held by it hereunder any greater degree of care than it gives its
own similar property and shall not be required to invest any funds held
hereunder except as directed in this Agreement.
(b) The Escrow Agent shall not be liable, except for its own
gross negligence or willful misconduct and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor the Escrow
Agent) from and against any and all losses, liabilities, claims, actions,
damages and expenses, including reasonable attorneys fees and disbursements,
arising out of and in connection with this Agreement.
(c) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without
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being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity of the service thereof. The Escrow
Agent may act in reliance upon any instrument or signature believed by it to be
genuine and may assume that the person purporting to give receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so. The Escrow Agent may conclusively
presume that the undersigned representative of any party hereto which is an
entity other than a natural person has full power and authority to instruct the
Escrow Agent on behalf of that party unless written notice to the contrary is
delivered to the Escrow Agent.
(d) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Agreement and shall not be liable
for any action taken or omitted by it in good faith in accordance with such
advice.
(e) The Escrow Agent does not have any interest in the Escrow
Fund deposited hereunder but is serving as escrow holder only and having only
possession thereof. Any payments of income from this Escrow Fund shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will provide the Escrow Agent with appropriate
Internal Revenue Service Forms W-9 for tax identification number certification,
or non-resident alien certifications. This Section 4(e) and Section 4(b) shall
survive notwithstanding any termination of this Agreement or the resignation of
the Escrow Agent.
(f) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.
(g) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(h) The Escrow Agent (and any successor the Escrow Agent) may
at any time resign as such by delivering the Escrow Fund to any successor the
Escrow Agent jointly designated by the other parties hereto in writing, or to
the arbitration panel described in Section 13.8 of the Merger Agreement,
whereupon the Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Agreement. The resignation of the
Escrow Agent will take effect on the earlier of (i) the appointment of a
successor or (ii) the day which is thirty (30) days after the date of delivery
of its written notice of resignation to the other parties hereto. If at that
time the Escrow Agent has not received a designation of a successor the Escrow
Agent, the Escrow Agent's sole responsibility after that time shall be to retain
and safeguard the Escrow Fund until receipt of a designation of a successor
Escrow Agent or a joint written disposition instruction by the other parties
hereto or a final non-appealable order of a court of competent jurisdiction.
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(i) In the event of any disagreement between the other parties
hereto resulting in adverse Claims or demands being made in connection with the
Escrow Fund, or in the event that the Escrow Agent is in doubt as to what action
it should take hereunder, the Escrow Agent shall be entitled to retain the
Escrow Fund until the Escrow Agent shall have received (i) a final
non-appealable order of the arbitration panel described in Section 13.8 of the
Merger Agreement directing delivery of the Escrow Fund or (ii) a written
agreement executed by the Buyers and the Sellers directing delivery of the
Escrow Fund, in which event the Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be accompanied by
a legal opinion by counsel for the presenting party satisfactory to the Escrow
Agent to the effect that the order is final and non-appealable. The Escrow Agent
shall act on such court order and legal opinion without further question.
(j) The Buyers shall pay the Escrow Agent compensation (as
payment in full) for the services to be rendered by the Escrow Agent hereunder
in the amount of Two Thousand Five Hundred Dollars ($2,500) at the time of
execution of this Agreement and agree to reimburse the Escrow Agent for all
reasonable expenses, disbursements and advances incurred or made by the Escrow
Agent in performance of its duties hereunder (including reasonable fees,
expenses and disbursements of its counsel). Any such compensation and
reimbursement to which the Escrow Agent is entitled shall be borne by the
Buyers.
(k) No printed or other matter in any language (including,
without limitation, prospectuses, notices, reports and promotional material)
that mention the Escrow Agent's name or the rights, powers or duties of the
Escrow Agent shall be issued by the other parties hereto or on such parties'
behalf unless the Escrow Agent shall first have given its specific written
consent thereto.
5. Limited Responsibility. This Agreement expressly sets forth
all the duties of the Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Agreement
against the Escrow Agent. The Escrow Agent shall not be bound by the provisions
of any agreement among the other parties hereto except this Agreement.
6. Ownership. The Buyers acknowledge and agree that the Sellers
shall be treated as owners and retain all rights of ownership of any and all
portion of the Escrow Fund not distributed to the Buyers hereunder, and,
accordingly, the Sellers shall retain all voting rights and rights to dividends
with respect to such shares. The Sellers agree that, for purposes of federal and
other taxes based on income, the Sellers will be treated as the owners of the
Escrow Fund, and that the Sellers will report all income, if any, that is earned
on, or derived from, the Escrow Fund as their income, in such proportions, in
the taxable year or years in which such income is properly includible and pay
any taxes attributable thereto.
7. Notices. All notices, consents, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (i) delivered
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by hand (with written confirmation of receipt), (ii) sent by facsimile (with
written confirmation of receipt) provided that a copy is mailed by registered
mail, return receipt requested, or (iii) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth below (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other parties):
To the Buyers: QuadraMed Corporation
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Sellers: InterMed Healthcare Systems Inc.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Marquis ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ & Cody, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Escrow Agent: State Street Bank & Trust Company
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
8. Counterparts; Facsimile. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original and all of
which, when taken together, will be deemed to constitute one and the same. This
Agreement may be executed by facsimile, with such facsimile copy to serve as
conclusive evidence of the consent and ratification of the matters contained
herein by the parties hereto.
▇-▇
▇▇▇
▇. Section Headings. The headings of sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.
10. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (i) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (ii) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given and (iii) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11. Exclusive Agreement; Modification. This Agreement and the Merger
Agreement supersede all prior agreements among the parties with respect to its
subject matter and constitute (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the Buyers, the Sellers and
the Escrow Agent.
12. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to conflicts of law principles.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement as of the date first written above.
QUADRAMED QUADRAMED CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
ACQUISITION CO. INTERMED ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
ESCROW AGENT STATE STREET BANK & TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Title: Administration Manager
----------------------------
[SIGNATURE PAGE NO. 1 TO ESCROW AGREEMENT]
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SELLERS
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇
------------------------------ ------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ G. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ G. ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ SIRROM INVESTMENTS, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ OBI OKEHI --------------------------
------------------------------ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Obi Okehi ------------------------
Title: Chief Financial Officer
-----------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as joint tenants with rights of survivorship
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇,
as joint tenants with rights of survivorship
/s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[SIGNATURE PAGE NO. 2 TO ESCROW AGREEMENT]
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