EXHIBIT 2.2
ASSET CONTRIBUTION AGREEMENT
dated as of May 3, 2000
by and among
QUADRAMED CORPORATION,
QUADRAMED OPERATING CORPORATION
and
CHARTONE, INC.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................3
Section 1.1 Certain Defined Terms......................................3
Section 1.2 Other Definitional Provisions..............................7
Section 1.3 Parent.....................................................7
ARTICLE II CONTRIBUTION OF ASSETS...........................................7
Section 2.1 Transfer of Assets to Company..............................7
Section 2.2 Excluded Assets............................................9
Section 2.3 Liabilities and Contracts Assumed by Company...............9
Section 2.4 Retained Liabilities and Obligations......................10
Section 2.5 Consideration for ROI Assets..............................11
Section 2.6 Closing...................................................11
Section 2.7 Subsequent Documentation..................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT.......................12
Section 3.1 Purchase Entirely for Own Account.........................12
Section 3.2 Reliance Upon Parent's Representations....................12
Section 3.3 Accredited Investor.......................................12
Section 3.4 Disclaimer of Warranties..................................12
ARTICLE IV ADDITIONAL AGREEMENTS...........................................13
Section 4.1 Taxes.....................................................13
Section 4.2 Employees and Employee Benefits...........................13
Section 4.3 Access to Properties and Records..........................14
Section 4.4 Further Action............................................14
Section 4.5 Bulk Sales Compliance.....................................14
Section 4.6 Assignment of Contracts and Warranties....................14
Section 4.7 Section 351 Qualification.................................15
Section 4.8 Consent to Assignment of Leases...........................15
Section 4.9 Intellectual Property.....................................15
Section 4.10 Covenants Not To Compete.................................15
ARTICLE V SURVIVAL; INDEMNIFICATION.......................................17
Section 5.1 Survival..................................................17
Section 5.2 Indemnification by Parent.................................17
Section 5.3 Indemnification by Company................................18
Section 5.4 Procedures for Indemnification............................18
Section 5.5 Arbitration...............................................19
Section 5.6 No Consequential Damages; Exclusive Remedy................21
Section 5.7 Tax Benefit...............................................21
Section 5.8 Mitigation................................................21
ARTICLE VI GENERAL PROVISIONS..............................................22
Section 6.1 Expenses..................................................22
Section 6.2 Notices...................................................22
Section 6.3 Public Announcements......................................23
Section 6.4 Headings..................................................23
Section 6.5 Severability..............................................23
Section 6.6 Entire Agreement..........................................23
Section 6.7 Assignment................................................24
Section 6.8 No Third-Party Beneficiaries..............................24
Section 6.9 Waivers and Amendments....................................24
Section 6.10 Specific Performance.....................................24
Section 6.11 Governing Law............................................24
Section 6.12 Counterparts.............................................24
EXHIBITS
A Administrative Services Agreement
B Amended and Restated Charter
C Assignment and Assumption Agreement
D ▇▇▇▇ of Sale
E-1 ChartOne Demand Note A
E-2 ChartOne Demand Note B
F-1 ROI Business
F-2 Company Business
G-1 EDM License Agreement
G-2 Secure Sign-On License Agreement
G-3 ChartEngine License Agreement
DISCLOSURE SCHEDULES
1.1 Permitted Encumbrances
2.1(a) Included Assets
2.1(b) Assumed Contracts
2.1(c) Technology & Licenses from Health + Cast LLC
2.1(d) Assumed Permits
2.1(k) Intellectual Property
2.2 Excluded Assets
2.3(e) Assumed Actions
2.4 Excluded Liabilities
4.2(a) Excepted Employees
ASSET CONTRIBUTION AGREEMENT
ASSET CONTRIBUTION AGREEMENT, dated as of May 3, 2000, by and among
QUADRAMED CORPORATION, a Delaware corporation ("QM"), QUADRAMED OPERATING
CORPORATION, a Delaware corporation and wholly-owned subsidiary of QM
("QMOC," and collectively with QM, "Parent"), and CHARTONE, INC., a
Delaware corporation ("Company").
RECITALS:
WHEREAS, Parent owns and operates release of information, file
management, on-site staffing, and off-site storage businesses based in San
Jose, California;
WHEREAS, Parent desires to transfer such businesses to
Company, a wholly-owned subsidiary of QMOC; and
WHEREAS, to effect such transfer, the parties desire that Parent will
transfer and assign certain assets and liabilities comprising such
businesses to Company in exchange for consideration to be paid to QMOC
consisting of demand notes of Company in the aggregate principal amount of
$11,950,000, 2,130,000 shares of Series B Preferred Stock of Company and
1,200,000 shares of Series C Preferred Stock of Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, Parent and Company hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms
As used in this Agreement, the following terms have the following
meanings:
"Action" means any claim, action, suit, arbitration or proceeding by
or before any Governmental Authority or arbitrator.
"Administrative Services Agreement" means an interim administrative
service agreement substantially in the form of Exhibit A.
"Affiliate" means, when used with respect to a specified Person,
another Person that, either directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with the Person specified; provided that for purposes of this Agreement, an
Affiliate of Parent shall not include Company or any subsidiary of Company,
and an Affiliate of Company shall only include the direct subsidiaries of
Company.
"Agreement" means this Asset Contribution Agreement dated as of May
3, 2000 by and between Parent and Company (including the Exhibits and
Disclosure Schedules hereto) and all amendments hereto.
"Amended and Restated Charter" means the amended and restated
certificate of incorporation of Company, substantially in the form of
Exhibit B.
"Assignment and Assumption Agreement" means an assignment and
assumption agreement substantially in the form of Exhibit C.
"Assumed Contracts" has the meaning specified in Section 2.1.
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Assumed Permits" has the meaning specified in Section 2.1.
"▇▇▇▇ of Sale" means a ▇▇▇▇ of sale substantially in the form of
Exhibit D.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in the
State of California or the State of New York.
"Business Employee" has the meaning specified in Section 4.2(a).
"ChartOne Demand Note A" means that certain Demand Promissory Note,
to be made by Company for the benefit of QMOC on the Closing Date, in the
principal amount of $9,950,000, substantially in the form of Exhibit E-1.
"ChartOne Demand Note B" means that certain Demand Promissory Note,
to be made by Company for the benefit of QMOC on the Closing Date, in the
principal amount of $2,000,000, substantially in the form of Exhibit E-2.
"ChartOne Demand Notes" means ChartOne Demand Note A and ChartOne
Demand Note B.
"Closing" has the meaning specified in Section 2.7.
"Closing Date" has the meaning specified in Section 2.7.
"Common Stock" means the Common Stock, par value $0.001 per share, of
Company.
"Company's Arbitrator" has the meaning specified in Section 5.5(c).
"Contract" means and includes all contracts, subcontracts,
agreements, leases, options, notes, bonds, mortgages, indentures, deeds of
trust, collateral assignments of lease and rights, guarantees, licenses,
franchises, purchase orders, sales orders and commitments of every kind,
written or oral.
"Disclosure Schedules" means the Disclosure Schedules delivered to
Company by Parent pursuant to this Agreement.
"Disputes" has the meaning specified in Section 5.5(a).
"Disputing Person" has the meaning specified in Section 5.5(b).
"Employee Benefit Plan" has the meaning specified in Section 4.2(b).
"Encumbrance" means any security interest, pledge, mortgage, lien,
charge, adverse claim of ownership or use or other encumbrance of any kind.
"Environmental Law" means any Law relating to pollution, natural
resources or protection of the environment.
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Liabilities" has the meaning specified in Section 2.4.
"Final Determination" has the meaning specified in Section 5.5(e).
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any United States federal, state or
local government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or judicial or arbitral body.
"Hazardous Materials" means any chemical, substance or waste
regulated or identified as toxic or hazardous under any Environmental Law
or petroleum, including crude oil or any fraction, or natural gas,
including liquids and synthetic gas usable for fuel.
"Health+Cast" means Health+Cast, L.L.C., a Delaware
corporation.
"Health+Cast Guaranty" means the Commercial Guaranty, dated September
29, 1998, issued by Parent to Imperial Bank in the principal amount of
Twelve Million Five Hundred Dollars ($12,500,000) securing the obligations
of Health+Cast to Imperial Bank.
"Income Taxes" means all (x) Taxes based upon, measured by, or
calculated with respect to (i) gross or net income or gross or net receipts
or profits (including, but not limited to, any capital gains, minimum taxes
and any Taxes on items of tax preference, but not including sales, use,
goods and services, real or personal property transfer or other similar
Taxes) or (ii) multiple bases (including, but not limited to, corporate
franchise, doing business or occupation Taxes) if one or more of the bases
upon which such Tax may be based upon, measured by, or calculated with
respect to, is described in clause (i) above and (y) withholding taxes
measured by, or calculated with respect to, any payments or distributions.
"Intellectual Property" means: (i) the service ▇▇▇▇ "CHARTONE," (ii)
the domain names listed in Schedule 2.1(o) and (iii) the Software.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Knowledge of Parent" means the actual knowledge after
reasonable inquiry of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇.
"Law" means any United States federal, state, local statute, law,
ordinance, regulation, rule, code, order or rule of common law.
"Leases" means all real property leases, subleases and occupancy
agreements related exclusively to the ROI Business, together with any
amendments thereto, a complete list of which is set forth on Schedule
2.1(b).
"License Agreements" means the license agreements with respect to
each of the "EDM," "Secure Sign-On" and "ChartEngine" software,
substantially in the form of Exhibits G-1, G-2 and G-3, respectively.
"Licenses" means all of the licenses, permits and other governmental
authorizations required for the operation of the ROI Business.
"Material Adverse Effect" means any change, circumstance, or effect
that is materially adverse to the business, assets, condition (financial or
otherwise) or results of operations of the ROI Division, or prospects of
the business of the ROI Division as it is currently being conducted;
provided, however, that any adverse change, circumstance or effect that is
primarily caused by conditions affecting the United States economy as a
whole or that affects Parent but does not directly affect the ROI Division
shall not be taken into account in determining whether there has been or
would be a "Material Adverse Effect".
"Material Contracts" means each of the following contracts to which
Parent or any of its Affiliates is a party as of the date hereof and which
exclusively relates to the ROI Division:
(i) each contract and agreement for the purchase of goods or
for the furnishing of services to Parent or Company under the terms
of which Parent or Company is obligated to pay or otherwise give
consideration of more than $100,000 in any 12 month period;
(ii) each contract and agreement for the sale of goods or
services by Parent or Company which is likely to involve payment to
Parent or Company of more than $100,000 in any twelve (12) month
period;
(iii) all contracts and agreements relating to
indebtedness for borrowed money in excess of $100,000 of
Parent or Company;
(iv) all contracts and agreements that limit or purport to
limit the ability of Parent or Company to compete in any line of
business or with any Person or in any geographic area or during any
period of time;
(v) each lease of real property involving more than
1,000 square feet;
(vi) each lease of personal property involving more than
$100,000 in the aggregate of rent over any 12 month period;
(vii) each contract for engagement as an independent contractor
of any Person on a full-time, part-time, consulting or other basis
requiring Parent to make payments of more than $75,000 in the
aggregate over any 12-month period, other than any contract that is
terminable at will;
(viii) each contract or indenture mortgaging,
pledging or otherwise placing a material Encumbrance on any
of the ROI Assets with value in excess of $25,000;
(ix) any material license agreement, other than any
license agreement for standard office software;
(x) any other contract which is material to the ROI Division
which obligates Parent or Company to make payments in excess of
$100,000 in the aggregate over any twelve (12) month period.
"Notice of Arbitration" has the meaning specified in Section 5.5(b).
"Parent Event of Breach" has the meaning specified in Section 5.2.
"Parent Indemnitee" has the meaning specified in Section 5.3.
"Parent Losses" has the meaning specified in Section 5.3.
"Parent's Arbitrator" has the meaning specified in Section 5.5(c).
"Permitted Encumbrances" means such of the following as to which no
notice has been received or enforcement, collection, execution, levy or
foreclosure proceeding shall have been commenced: (a) liens for taxes,
assessments and governmental charges or levies not yet due and payable or
the validity of which is being contested in good faith; (b) Encumbrances
that arise by operation of law, such as materialmen's, mechanics',
workmen's', repairmen's. warehousemen's and carrier's liens and other
similar liens arising in the ordinary course of business; (c) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations and (d) the
Encumbrances listed on Schedule 1.1.
"Person" means any individual, partnership, firm, corporation,
association, trust, limited liability company, unincorporated organization,
Governmental Authority or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
"Return" means any report, return, declaration or other filing
required to be supplied to any taxing authority or jurisdiction with
respect to Taxes including any amendments thereto.
"ROI Assets" has the meaning specified in Section 2.1.
"ROI Business" means the release of information, file management,
on-site staffing, and off-site storage businesses of Parent, all as more
fully described in Exhibit F-1.
"ROI Division" means the ROI Assets and the ROI Business.
"ROI Division Financial Statements" means the unaudited balance sheet
of the ROI Division as of, and the unaudited statement of income for, (i)
the year ended December 31, 1999 and (ii) the quarter ended March 31, 2000.
"Securities Act" means the Securities Act of 1933, as amended.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock, par value $0.01 per share, of Company.
"Series C Preferred Stock" means the Series C Convertible Preferred
Stock, par value $0.01 per share, of Company.
"Software" means the software assigned or licensed to the Company
pursuant to the Software Assignment Agreement and the License Agreements,
in source or object code form, including all corresponding documentation.
"Software Assignment Agreement" means the assignment conveying from
Parent to Company the internally-developed software assets set forth on
Schedule 2.1(k).
"Tax" or "Taxes" means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital
stock, severance, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with respect to
such amounts and any interest in respect of such penalties and additions.
"Tax Return" means all federal, state, local and foreign returns and
reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax
authority relating to Taxes, including any amendments thereto.
"Transaction Documents" means this Agreement, the Administrative
Services Agreement, the Assignment and Assumption Agreement, the ▇▇▇▇ of
Sale and the License Agreements.
Section 1.2 Other Definitional Provisions
Unless the context requires otherwise, references to "Articles" and
"Sections" are to the Articles or Sections of this Agreement, and
references to "Exhibits" and "Schedules" are to the Exhibits and Schedules
annexed hereto. Any of the terms defined in this Article 1 may, unless the
context requires otherwise, be used in the singular or the plural depending
on the reference. Wherever used herein, the masculine pronoun shall include
the feminine and the neuter, as appropriate in the context. With respect to
any matter or thing, "including" or "includes" means including but not
limited to such matter or thing.
Section 1.3 Parent
"Parent" shall mean QM and QMOC collectively, and any liability
assumed or obligation undertaken by Parent hereunder shall be the joint and
several liability or obligation of QM and QMOC.
ARTICLE II
CONTRIBUTION OF ASSETS
Section 2.1 Transfer of Assets to Company
Subject to the terms and conditions of this Agreement, at the
Closing, Parent shall transfer, convey, assign and deliver to Company, and
Company shall accept from Parent, free and clear of any Encumbrances, other
than Permitted Encumbrances, all of Parent's right, title and interest in
and to all of the assets of Parent, tangible or intangible, exclusively
related to and used exclusively by the ROI Business, as they exist as of
the Closing Date, together with all accrued benefits and rights pertaining
thereto, including those assets set forth on Schedule 2.1 and all of the
following assets (collectively, the "ROI Assets"):
(a) all furniture, office and computer equipment, machinery, tools,
spare parts, automobiles and other vehicles, and other tangible personal
property in each case used exclusively in the operation of the ROI
Business, including those items described on Schedule 2.1(a) (other than
those items disposed of in the ordinary course of business since March 31,
2000);
(b) all of Parent's interest in and to all of the Contracts
exclusively related to the ROI Business (the "Assumed Contracts"),
including all Material Contracts, a complete list of such Material
Contracts being set forth on Schedule 2.1(b);
(c) all of Parent's interest in and to the technology and prepaid
licenses from Health+Cast, L.L.C., as more fully described on Schedule
2.1(c);
(d) all of Parent's interest in and to all Permits used exclusively
in the operation of the ROI Business (the "Assumed Permits"), including
those described on Schedule 2.1(d);
(e) all accounts receivable, notes receivable, prepaid expenses and
other receivables arising in each case exclusively out of the ROI Business
and outstanding as of the Closing Date;
(f) all raw materials, work-in-process, finished goods, supplies and
other inventories in each case intended for use or sale by the ROI
Business;
(g) all claims, demands, causes of action, judgments and decrees in
favor of Parent arising exclusively out of the ROI Business;
(h) cash in an aggregate amount equal to $2,125,000;
(i) all books of account, financial, business and operational records
exclusively relating to the ROI Business, including customer and supplier
lists, accounts and records, forms and office supplies, advertising and
promotional literature, price lists, records of former employees of Parent
who accept employment with Company, and manuals in each case relating
exclusively to the ROI Business (but expressly excluding Tax Returns);
(j) to the extent not otherwise set forth in this Section 2.1, all
assets set forth on the face of the March 31, 2000 balance sheet included
in the ROI Division Financial Statements, except such assets as shall have
been disposed of in the ordinary course of business since March 31, 2000;
(k) all of Parent's interest in and to all databases, software,
software programs, object codes, source codes, systems documentation and
user manuals used exclusively with the ROI Business, and all proprietary
information, trade secrets, research records, test information, market
surveys, marketing know how, inventions, processes and procedures owned or
licensed to the Parent and used exclusively in connection with the ROI
Business, including those listed on Schedule 2.1(k);
(l) all of the Parent's claims, refunds, causes of action, chooses in
action, rights of recovery and rights of setoff of any kind exclusively
relating to the ROI Business;
(m) the right to receive and retain mail, accounts receivable
payments and other communications exclusively relating to the ROI Business;
(n) the right to ▇▇▇▇ and receive payment for products shipped or
delivered and services performed by the ROI Division but unbilled or unpaid
as of the Closing;
(o) to the extent transferable, all telephone numbers (e.g., toll
free numbers), fax numbers, Internet addresses and similar numbers or
addresses related to the ROI Business;
(p) all other assets, properties, and rights of every kind used
exclusively in the ROI Business, on the Closing Date, known or unknown,
fixed or unfixed, accrued, absolute, contingent or otherwise, whether or
not specifically referred to in this Agreement.
(q) 100% of the issued and outstanding shares of capital stock of
American Chart Guard Corporation, a Texas corporation ("ACGC"), consisting
of 1,000 shares of common stock, $0.01 par value per share, of ACGC (the
"ACGC Shares").
Section 2.2 Excluded Assets
Notwithstanding any other provision of this Agreement, the term "ROI
Assets" shall not include, and Company shall not acquire hereunder: (A) any
cash or cash equivalents except as expressly provided in Section 2.1, (B)
any refunds, credits or other tax benefits with respect to any Taxes or any
claims therefor, (C) policies of insurance, fidelity, surety and similar
bonds, and the coverages afforded thereby, (D) any books of original
financial entry and internal accounting documents and records relating to
the ROI Business that Parent is required to retain pursuant to Law and any
other books and records relating to the ROI Business that Parent is
required to retain pursuant to Law (which Company shall have the right to
copy and inspect), (E) the equity interests, security interests and claims,
demands and causes of action relating to (i) the Health+Cast, LLC
investment agreement and related documents listed in Schedule 2.2, and (ii)
the Non-Exclusive Reseller Agreement by and between Parent and Health+Cast,
dated September 29, 1998, (F) the "Secure Sign-On" and "EDM" software, as
more fully described in Schedule 2.2, except for the rights thereto
conferred pursuant to the License Agreements, (G) the "One Look" service
▇▇▇▇ and the "MPI" software and (H) any assets of Parent not described in
Section 2.1 (collectively, the "Excluded Assets").
Section 2.3 Liabilities and Contracts Assumed by Company
Subject to the terms and conditions of this Agreement, at the Closing
Company shall assume and become responsible to pay, perform and discharge
as if the ROI Business had been operated by Company from the commencement
thereof and had never been owned by Parent, all of the debts, obligations
and liabilities arising out of or relating to the ROI Division, whether
known or unknown, fixed or unfixed, accrued, absolute, contingent or
otherwise whether existing on the Closing Date or arising at any time or
arising theretofore or thereafter, and (except for pending or, to the
Knowledge of Parent, threatened Actions, all of which are disclosed on
Schedule 2.3(e)) whether or not such debts, obligations and liabilities
shall have been disclosed herein or reflected on the books and records of
the ROI Division, including the following debts, obligations, and
liabilities of Parent (collectively, the "Assumed Liabilities"):
(a) all debts, obligations and liabilities with respect to the
Material Contracts and any other Assumed Contract;
(b) all accounts payable, including all obligations of Parent under
the Leases, arising out of or exclusively related to the ROI Division;
(c) all debts, obligations and liabilities with respect to the
Assumed Permits; and
(d) all debts, obligations and liabilities of Parent with respect to
the Health+Cast Guaranty, in an amount not to exceed $12,500,000;
(e) all debts, obligations and liabilities of Parent with respect to
(i) the Actions described on Schedule 2.3(e) and (ii) any other Actions (A)
arising in the ordinary course of business after the date hereof, (B) not
listed on Schedule 2.4 and (C) not pending or, to the Knowledge of Parent,
not threatened against the ROI Division, Parent or any of its Affiliates as
of the date hereof; and
(f) all liabilities and obligations relating to the employees of the
ROI Business other than as expressly provided in Section 2.4 hereof.
Upon assumption by Company of the Assumed Liabilities, Company shall
be entitled to all of Parent's rights and benefits thereunder, and Company
shall relieve Parent of its obligations to perform the same.
Section 2.4 Retained Liabilities and Obligations
Anything in this Agreement to the contrary notwithstanding, Parent
shall be responsible for all of the liabilities and obligations not hereby
expressly assumed by Company and Company shall not assume, or in any way be
liable or responsible for, any liabilities or obligations of Parent that
are not expressly assumed by Company under Section 2.3 hereof (the
"Excluded Liabilities"). Without limiting the generality of the foregoing,
the Excluded Liabilities shall include: (A) any liability or obligation
under Contracts or other agreements to which Parent is a party or by or to
which it or any of its assets, properties or rights are bound or subject
but which are not Assumed Contracts; (B) any liability or obligation
arising out of the employment by Parent or any of its Affiliates of any
employees, whether before or after the Closing Date, other than any such
employment liability or obligation which relates to the employees of the
ROI Business (excluding any such liability relating to the employee benefit
plans described in clause (F) below, or any severance obligation in respect
of any employee of Parent terminated in connection with the transactions
contemplated by this Agreement); (C) any liability or obligation of Parent
owing to any stockholder, subsidiary or Affiliate thereof; (D) any
liabilities related to (i) Income Taxes of the Parent, (ii) Taxes
attributable to the transfer of the ROI Assets pursuant to this Agreement,
(iii) Taxes attributable to periods ending on or prior to the Closing Date
(except for sales taxes for products sold by the ROI Division), (iv) Taxes
of any person other than the Parent pursuant to an agreement or otherwise
and (v) any Taxes for which Company may be liable under Treas. Reg ss.
1.1502-6 or similar provisions of state or foreign law; (E) any liability
or obligation arising under any Environmental Law attributable to or
incurred as a result of any acts, omissions, or conditions first occurring
or in existence as of or prior to the Closing Date, including, but not
limited to, any liability or obligation with respect to the generation,
release, handling, discharge, treatment, storage, disposal, or presence of
Hazardous Materials; (F) except with respect to any contribution
obligations directly related to any Transferred Employee's period of
coverage under or participation in any 401(k) plan, any liability or
obligation of Parent or any of its Affiliates under any and all employee
benefit arrangements or practices providing retirement benefits, stock
options, stock purchase rights or, in connection with the transactions
contemplated by this Agreement, severance; (G) any obligations or
liabilities in respect of written employment agreements relating to the
employment of any employee of Parent (with the exception of contracts for
the engagement of independent contractors); (H) any liability, obligation
or debt of Parent with respect to any Action (i) listed on Schedule 2.4 or
(ii)(a) pending or, to the Knowledge of Parent, threatened against the ROI
Division, Parent or any of its Affiliates as of the Closing Date and (b)
not listed on Schedule 2.3(e); (I) except for the assumption by Company of
all Parent's debts, obligations and liabilities under the Health+Cast
Guaranty (in an amount not to exceed $12,500,000), any claim or cause of
action by any party in connection with any transaction, agreement or
business relationship between Parent and Health+Cast, or between the ROI
Division and Health+Cast; (J) any intercompany liabilities; and (K)
liabilities exclusively arising out of or related to any of the Excluded
Assets.
Section 2.5 Consideration for ROI Assets
In exchange for the transfer by Parent to Company of the ROI Assets,
Company shall issue to QMOC (i) the ChartOne Demand Notes, (ii) 2,130,000
shares of Series B Preferred Stock and (iii) 1,200,000 shares of Series C
Preferred Stock.
Section 2.6 Closing
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take
place at 10:00 a.m., San Francisco time, on the date hereof at the offices
of Pillsbury Madison & Sutro LLP, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, or at such other time or on such other date or at such other
place as Company and Parent may mutually agree upon in writing (the day on
which the Closing takes place being the "Closing Date"). At the Closing:
(a) The Amended and Restated Charter shall have been filed with the
Delaware Secretary of State;
(b) Parent shall execute and deliver to Company the ▇▇▇▇ of Sale;
(c) Parent shall transfer the ACGC Shares to Company, and Company
shall accept the ACGC Shares from Parent;
(d) Company shall issue to QMOC the ChartOne Demand Notes and shall
issue and deliver to QMOC certificates representing 2,130,000 shares of
Series B Preferred Stock and 1,200,000 shares of Series C Preferred Stock;
and
(e) Parent and Company shall execute and deliver to each other the
Assignment and Assumption Agreement, the Administrative Services Agreement
and the License Agreements.
Section 2.7 Subsequent Documentation
Parent shall, at any time and from time to time after the Closing
Date, upon the request of Company and at the expense of Parent, do,
execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, all such further deeds, assignments, transfers
and conveyances as may be required for the better assigning, transferring,
granting, conveying and confirming to Company or its successors and
assigns, or for aiding and assisting in collecting and reducing to
possession, any or all of the ROI Assets. Company shall, at any time and
from time to time after the Closing Date, upon the request of Parent and at
the expense of Company, do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, all such further
acknowledgments, agreements and other documents as may be required for the
better assignment to and assumption by Company or its successors and
assigns, of any or all of the ROI Liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Company as follows:
Section 3.1 Purchase Entirely for Own Account
This Agreement is made with Parent in reliance upon Parent's
representation to Company, which by Parent's execution of this Agreement
Parent hereby confirms, that the Series B Preferred Stock and the Series C
Preferred Stock to be acquired by QMOC and the Common Stock issuable upon
conversion thereof will be acquired for investment for QMOC's own account,
not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that QMOC has no present intention of
selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, Parent further represents that QMOC does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third
person, with respect to any shares of such Series B Preferred Stock, Series
C Preferred Stock or Common Stock.
Section 3.2 Reliance Upon Parent's Representations
Parent understands that the Series B Preferred Stock and the Series C
Preferred Stock are not, and any Common Stock acquired on conversion
thereof at the time of issuance may not be, registered under the Securities
Act on the ground that the sale provided for in this Agreement and the
issuance of securities hereunder is exempt from registration under the
Securities Act pursuant to section 4(2) thereof, and that Company's
reliance on such exemption is based on Parent's representations set forth
herein.
Section 3.3 Accredited Investor
Parent is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act.
Section 3.4 Disclaimer of Warranties.
Other than as specifically set forth in this Agreement, Parent makes
no representation or warranty. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE HEREBY EXPRESSLY DISCLAIMED.
ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1 Taxes
(a) Any sales, use or transfer taxes payable by reason of the sale
and transfer of any of the ROI Assets hereunder (other than income taxes)
shall be borne by Parent.
(b) Parent agrees to timely file all Returns relating to the Taxes
referred to in subsection (a) above, after the review and consent of
Company, such consent not to be unreasonably withheld, and shall timely
remit on behalf of itself and Company all such Taxes reported on such Tax
Returns or otherwise due.
(c) Within 30 days after the Closing Date, Company shall propose an
allocation of the consideration and any Assumed Liabilities, to the extent
of any gain recognized to Parent under Section 351 of the Internal Revenue
Code attributable to the status of such consideration or Assumed
Liabilities as "other property" within the meaning of Section 351(b) of the
Internal Revenue Code, among the ROI Assets (the "Allocation"). Parent and
Company agree to act in accordance with the Allocation on any Tax Returns
or similar filings to the extent Parent consents to such allocation, which
consent shall not be unreasonably withheld. In the event that any Tax
authority disputes the Allocation, Parent or Company, as the case may be,
shall promptly notify the other party of the nature of such dispute.
Section 4.2 Employees and Employee Benefits
(a) Except as set forth on Schedule 4.2(a), as of the Closing Date
each individual whose service primarily relates to the ROI Business on the
date hereof (a "Business Employee") and who is actively employed in the ROI
Business as of the Closing Date or on approved leave on the Closing Date
because of jury duty, family or medical leave, sick leave, vacation or
military duty shall be employed by Company effective on the Closing Date at
the same rate of salary or base hourly wage rate as paid by Parent or its
Affiliates immediately prior to the Closing Date. Each Business Employee
who continues employment with Company on and after the Closing Date is
referred to herein as a "Transferred Employee." Parent hereby agrees that
neither Parent nor any of its Affiliates shall, at any time prior to the
second anniversary of the Closing Date solicit for employment any
Transferred Employee, other than pursuant to a general public solicitation.
Company hereby agrees that neither Company nor any of its Affiliates shall,
at any time prior to the second anniversary of the Closing Date, solicit
for employment any employee of parent or any of its Affiliates (excluding
any Transferred Employee), other than pursuant to a general public
solicitation. Except as provided otherwise in this Section 4.2 or the terms
of any employment agreement between Company and any Transferred Employee,
the terms of each Transferred Employee's employment with Company shall be
upon such terms and conditions as Company, in its sole discretion, shall
determine. Nothing herein expressed or implied by this Agreement shall
confer upon any Transferred Employee, or legal representative thereof, any
rights or remedies, including, without limitation, any right to employment,
or for any specified period, of any nature or kind whatsoever, under or by
reason of this Agreement.
(b) Effective as of the Closing Date, Parent and Company shall take
all such actions as are necessary to cause Company to adopt, as a
participating employer, the employee benefit plans that are sponsored by
Parent immediately prior to the Closing Date for the benefit of the
Transferred Employees (the "Employee Benefit Plans"). Participation in the
Employee Benefit Plans by the Transferred Employees will continue on and
after the Closing Date without interruption on the same terms as then in
effect for each such Transferred Employee who was participating in such
plans immediately prior to the Closing Date. The Company and its Affiliates
shall be responsible for all obligations and liabilities relating to any
Transferred Employee's period of coverage under or participation in such
Employee Benefit Plans on and after the Closing Date.
Section 4.3 Access to Properties and Records
From and after the Closing, Parent shall afford to Company, and to
the accountants, counsel and representatives of Company, full access during
normal business hours to all books and records of Parent relating to the
ROI Business during the period prior to the Closing, for purposes of
performing periodic audits of the financials of Company and shall furnish
promptly to Company all other information concerning the ROI Business, its
properties and its personnel as Company may reasonably request.
Section 4.4 Further Action
Subject to the terms and conditions herein provided, each of the
parties hereto covenants and agrees to use its reasonable efforts to
deliver or cause to be delivered such documents and other papers and to
take or cause to be taken such further actions as may be necessary, proper
or advisable under applicable Laws to consummate and make effective the
transactions contemplated hereby.
Section 4.5 Bulk Sales Compliance
Company hereby waives compliance by Parent with any applicable laws
relating to bulk transfers in connection with the transactions contemplated
hereby. Parent shall indemnify Company with respect to any failure to
comply with such bulk transfer laws.
Section 4.6 Assignment of Contracts and Warranties
Notwithstanding anything contained herein to the contrary, no Assumed
Contract shall be assigned contrary to law or the terms of such Assumed
Contract and, with respect to Assumed Contracts that cannot be assigned to
Company at the Closing Date, the performance obligations of Parent
thereunder shall, unless not permitted by such Assumed Contract, be deemed
to be subleased or subcontracted to Company until such Assumed Contract has
been assigned. Parent and Company shall (i) use reasonable efforts to
obtain all necessary consents and (ii) cooperate with each other in any
arrangement designed to provide to Company the benefits (including the
exercise of rights) under any such Assumed Contracts, including enforcement
for the benefit of Company (and at Company's expense) of any and all rights
of Parent against a third party thereto arising out of the breach or
cancellation by such third party or otherwise. Parent shall (i) hold all
monies paid thereunder in trust for the account of Company and (ii) remit
all such money without set-off of any kind whatsoever to Company as
promptly as possible. Company shall indemnify Parent with respect to any
obligations or liabilities under or respect to any of such Assumed
Contracts.
Section 4.7 Section 351 Qualification
Parent and Company shall each use its reasonable best efforts to
cause the transactions contemplated by this Agreement, including the
transfer of the ROI Assets to Company, to qualify under Section 351 of the
Internal Revenue Code.
Section 4.8 Consent to Assignment of Leases
Notwithstanding any provision of Section 4.6 hereto to the contrary,
Parent and Company shall use reasonable efforts to obtain the consent of
each lessor or sublessor under each of the Leases within thirty (30) days
following the date hereof.
Section 4.9 Intellectual Property
Parent will not use, seek to register, register or authorize others
to use, seek to register or register the Intellectual Property or any other
intellectual property substantially or confusingly similar thereto anywhere
in the world and will not challenge Company's right to use, seek to
register or register the Intellectual Property anywhere in the world.
Section 4.10 Covenants Not To Compete
(a) Covenant of Parent.
(i) Parent agrees that for the period commencing on the Closing
Date and ending on the first anniversary of the Closing Date (such
period is hereinafter referred to as the "Restricted Period"), Parent
shall not anywhere in North America participate or engage, directly
or indirectly, for itself or on behalf of or in conjunction with any
Person, whether as an employee, agent, officer, consultant, director,
shareholder, partner, joint venturer, investor or otherwise, in the
Company Business; provided, however, that the foregoing shall not
prohibit the ownership by Parent of an equity interest in Company or
other equity securities of a public company in an amount not to
exceed 2% of the issued and outstanding shares of such company. For
purposes of this Section 4.10(a), the "Company Business" means the
business activities described on Exhibit F-2 hereto.
(ii) Parent acknowledges that the agreements and covenants
contained in this Section 4.10(a) are essential to protect the value
of the ROI Assets being conveyed to Company. Parent agrees that a
monetary remedy for a breach of the agreements set forth in this
Section 4.10(a) will be inadequate and impracticable and further
agree that such a breach would cause Company irreparable harm, and
that Company shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event
of such a breach, Parent agrees that Company shall be entitled to
such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions as a court of
competent jurisdiction shall determine.
(iii) If any provision of this Section 4.10(a) is invalid in
part, it shall be curtailed, as to time, location or scope, to the
minimum extent required for its validity under the laws of the United
States and shall be binding and enforceable with respect to Parent as
so curtailed.
(iv) Parent acknowledges that the Company Business is or may be
conducted throughout the United States and that its clients are or
may be located throughout the United States and that a business
competitive with Company may be carried on anywhere within these
areas as a result of the unique use of Internet, telephonic,
technologic and other advanced communications techniques. Parent
recognizes and acknowledges that the restrictions and limitations set
forth in this Agreement are legitimate and fair in light Parent's
access to confidential information relating to Company, Parent's
substantial contacts with clients of Company and Company's need to
market its services and products.
(b) Covenant of Company.
(i) Company agrees that for the Restricted Period, Company
shall not anywhere in North America participate or engage, directly
or indirectly, for itself or on behalf of or in conjunction with any
Person, whether as an employee, agent, officer, consultant, director,
shareholder, partner, joint venturer, investor or otherwise, in the
Parent Business; provided, however, that the foregoing shall not
prohibit the ownership by Company of the Shares or other equity
securities of a public company in an amount not to exceed 2% of the
issued and outstanding shares of such company. For purposes of this
Section 4.10(b), the "Parent Business" means professional services,
consulting, installation, training and education in the following
areas of the healthcare industry: financial and clinical decision
support; coding and grouping; abstracting; compliance; accounts
receivable and cash management; managed care payment review;
capitation audits, charge data master review; nurse
staffing/acuity/resource management; electronic data interchange
(EDI); business office interim department management and outsourcing.
(ii) Company acknowledges that the agreements and covenants
contained in this Section 4.10(b) are essential to protect the value
of the assets of Parent from and after the Closing. Company agrees
that a monetary remedy for a breach of the agreements set forth in
this Section 4.10(b) will be inadequate and impracticable and further
agree that such a breach would cause Parent irreparable harm, and
that Parent shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event
of such a breach, Company agrees that Parent shall be entitled to
such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions as a court of
competent jurisdiction shall determine.
(iii) If any provision of this Section 4.10(b) is invalid in
part, it shall be curtailed, as to time, location or scope, to the
minimum extent required for its validity under the laws of the United
States and shall be binding and enforceable with respect to Company
as so curtailed.
(iv) Company acknowledges that the Parent Business is or may be
conducted throughout the United States and that its clients are or
may be located throughout the United States and that a business
competitive with Parent may be carried on anywhere within these areas
as a result of the unique use of Internet, telephonic, technologic
and other advanced communications techniques. Company recognizes and
acknowledges that the restrictions and limitations set forth in this
Agreement are legitimate and fair in light Company's access to
confidential information relating to Parent, Company's substantial
contacts with clients of Parent and Parent's need to market its
services and products.
ARTICLE V
SURVIVAL; INDEMNIFICATION
Section 5.1 Survival
All representations and warranties contained in this Agreement or in
any certificate delivered pursuant to this Agreement shall survive until
March 31, 2002.
Section 5.2 Indemnification by Parent
Notwithstanding the Closing or the delivery of the ROI Assets and
regardless of any investigation at any time made by or on behalf of Company
or of any knowledge or information that the Company may have, Parent shall
indemnify and fully defend, save and hold Company and its respective
Affiliates, directors, officers and employees (the "Company Indemnitees"),
harmless if any Company Indemnitee shall at any time or from time to time
suffer any damage, liability, loss, cost, expense (including all reasonable
attorneys' fees incurred by the Company Indemnitees in any action or
proceeding between Parent and the Company Indemnitees or between the
Company Indemnitees and any third party or otherwise), deficiency,
interest, penalty, impositions, assessments or fines (collectively,
"Company Losses") arising out of or resulting from, or shall pay or become
obliged to pay any sum on account of, any and all the Parent Events of
Breach. As used herein, "Parent Event of Breach" shall be and mean any one
or more of the following:
(a) any failure of Parent duly to perform or observe any term,
provision, covenant, agreement contained herein on the part of Parent
to be performed or observed;
(b) any claim or cause of action by any party against
any Company Indemnitee, with respect to the Excluded
Liabilities or the Excluded Assets;
(c) any claims brought by Health+Cast or any other third party
in connection with any failure of Parent to assign to Company, or to
obtain consent from Health+Cast as to the assignment to Company of,
as of the date hereof, (i) the Non-Exclusive Reseller Agreement by
and between Parent and Health+Cast, dated September 29, 1998 or (ii)
the Non-Exclusive License Agreement by and between Parent and
Health+Cast, dated March 31, 1999; or
(d) any withdrawal liability (imposed under Section 4201 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")) in connection with the transactions contemplated by this
Agreement.
Section 5.3 Indemnification by Company
Notwithstanding the Closing or the delivery of the ROI Assets,
Company shall indemnify and agree to fully defend, save and hold Parent and
its Affiliates, directors, officers and employees (the "Parent
Indemnitees"), harmless if any Parent Indemnitee shall at any time or from
time to time suffer any damage, liability, loss, cost, expense (including
alm reasonable attorneys' fees incurred by the Parent Indemnitees in any
action or proceeding between Company and the Parent Indemnitees or between
the Parent Indemnitees and any third party or otherwise), deficiency,
interest, penalty, impositions, assessments or fines (collectively, "Parent
Losses") arising out of or resulting from, or shall pay or become obligated
to pay any sum on account of, any and all Company Events of Breach. As used
herein, "Company Events of Breach" shall be construed to be and mean any
one or more of the following:
(a) any failure of Company duly to perform or observe any term,
provision, covenant or agreement contained herein on the part of
Company to be performed or observed after the Closing Date; or
(b) any claim or cause of action by any party against any
Parent Indemnitee with respect to the ROI Assets or Assumed
Liabilities.
Section 5.4 Procedures for Indemnification
If a party entitled to indemnification pursuant to this Article V (an
"Indemnified Party") becomes aware of any liability, loss, damage, claim,
cost or expense with respect to which a claim for indemnification may be
asserted pursuant to this Article V, or if any claim is made by a third
Person or any suit, action, investigation, claim or proceeding (a
"Proceeding") commenced for which the Indemnified Party shall seek
indemnity from the Indemnifying Party, the Indemnified Party shall, with
reasonable promptness, give to such Indemnifying Party written notice of
such Proceeding and request the Indemnifying Party to defend the same,
provided, however, that the failure of an Indemnified Party to deliver such
written notice with reasonable promptness shall not be deemed to bar or
otherwise limit the rights of the Indemnified Party hereunder unless such
failure materially prejudices the rights or defenses of the Indemnifying
Party. The Indemnifying Party agrees to defend such claim, action or
proceeding at its own expense, and shall give written notice to the
Indemnified Party of the commencement of such defense with reasonable
promptness after the giving of the written notice of the claim by the
Indemnified Party. The Indemnified Party shall have the right, but not the
obligation, to participate at its own expense with the Indemnifying Party
in such defense (subject to the right of the Indemnifying Party to control
such defense), but shall not be entitled in any way to release, waive,
settle, modify or pay such claim, action or proceeding without the written
consent of the Indemnifying Party, if the Indemnifying Party has assumed
such defense. The Indemnified Party shall, in any case, fully cooperate
with and assist the Indemnifying Party to the extent reasonably possible.
If the Indemnifying Party fails to timely defend, contest or otherwise
protect against such Proceeding, the Indemnified Party shall have the full
right to defend against such claim, action or proceeding in such manner as
it may deem appropriate, including, without limitation, the right to make
any compromise or settlement thereof (subject to the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld), and
the Indemnified Party shall be entitled to recover the entire cost thereof
from the Indemnifying Party, including, without limitation, reasonable
attorneys' fees, disbursements and amounts paid as the result of such
Proceeding, and the Indemnifying Party shall be bound by any determination
made in such Proceeding or (subject to the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld) any compromise or
settlement effected by the Indemnified Party. In the event the Indemnifying
Party shall assume the defense, no compromise or settlement of such claims
may be effected by the Indemnifying Party without the Indemnified Party's
consent (which consent shall not be unreasonably withheld, provided,
however that the Indemnified Party may withhold such consent at its
discretion if, in its judgment, such compromise or settlement would have an
adverse impact on the future operations of the Indemnified Party).
Section 5.5 Arbitration
(a) Company and Parent agree that the arbitration procedure set forth
below shall be the sole and exclusive method for resolving and remedying
claims for money damages arising out of the provisions of this Agreement
(the "Disputes"). Nothing in this Section 5.5 shall prohibit either Company
or Parent from instituting litigation to enforce any Final Determination
(as defined below). The parties hereby agree and acknowledge that, except
as otherwise provided in this Section 5.5 or in the Commercial Arbitration
Rules of the American Arbitration Association as in effect from time to
time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to applicable Delaware
law.
(b) In the event that either Company or Parent asserts that there
exists a Dispute, such party shall deliver a written notice to each other
party involved therein specifying the nature of the asserted Dispute and
requesting a meeting to attempt to resolve the same. If no such resolution
is reached within ten Business Days after such delivery of such notice, the
party delivering such notice of Dispute (the "Disputing Person") may,
within 45 Business Days after delivery of such notice, commence arbitration
hereunder by delivering to each other party involved therein a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of each party to the arbitration and shall specify the
amount and nature of any damages, if any, sought to be recovered as a
result of any alleged claim, and any other matters required by the
Commercial Arbitration Rules of the American Arbitration Association in
effect from time to time to be included therein, if any.
(c) Company and Parent each shall select one arbitrator expert in the
subject matter of the Dispute (the arbitrators so selected shall be
referred to herein as the "Company's Arbitrator" and the "Parent's
Arbitrator," respectively). In the event that either party fails to select
an arbitrator as set forth herein within 20 calendar days from the delivery
of a Notice of Arbitration, then the matter shall be resolved by the
arbitrator selected by the other party. The Parent's Arbitrator and
Company's Arbitrator shall select a third independent, neutral arbitrator
expert in the subject matter of the dispute, and the three arbitrators so
selected shall resolve the matter according to the procedures set forth in
this Section 5.5. If the Parent's Arbitrator and Company's Arbitrator are
unable to agree on a third arbitrator within 20 calendar days after their
selection, the Parent's Arbitrator and Company's Arbitrator shall each
prepare a list of three independent arbitrators. The Parent's Arbitrator
and Company's Arbitrator shall each have the opportunity to designate as
objectionable and eliminate one arbitrator from the other arbitrator's list
within seven calendar days after submission thereof, and the third
arbitrator shall then be selected by lot from the arbitrators remaining on
the lists submitted by the Parent's Arbitrator and Company's Arbitrator.
(d) The arbitrator(s) selected pursuant to Section 5.5(c) above will
determine the allocation of the costs and expenses of arbitration based
upon the percentage which the portion of the contested amount not awarded
to each party bears to the amount actually contested by such party. For
example, if Company submits a claim for $1,000 and if Parent contests only
$500 of the amount claimed by Company, and if the arbitrator(s) ultimately
resolves the dispute by awarding Company $300 of the $500 contested, then
the costs and expenses of arbitration will be allocated 60% (that is, 300 /
500) to Parent and 40% (that is, 200 / 500) to Company.
(e) The arbitration shall be conducted in the State of Delaware under
the Commercial Arbitration Rules of the American Arbitration Association as
in effect from time to time, except as modified by the agreement of all of
the parties to this Agreement. The arbitrator(s) shall so conduct the
arbitration that a final result, determination, finding, judgment and/or
award (the "Final Determination") is made or rendered as soon as
practicable, but in no event later than 90 Business Days after the delivery
of the Notice of Arbitration nor later than 10 calendar days following
completion of the arbitration. The Final Determination must be agreed upon
and signed by the sole arbitrator or by at least two of the three
arbitrators (as the case may be). The Final Determination shall be final
and binding on all parties and there shall be no appeal from or
reexamination of the Final Determination, except for fraud, perjury,
evident partiality or misconduct by an arbitrator prejudicing the rights of
any party and to correct manifest clerical errors.
(f) Company and Parent may enforce any Final Determination in any
state or federal court located in the State of Delaware . For the purpose
of any action or proceeding instituted with respect to any Final
Determination, each party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of process
by registered mail or personal service and hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter have as to personal jurisdiction, the laying of the venue of any
such action or proceeding brought in any such court and any claim that any
such action or proceeding brought in any court has been brought in an
inconvenient forum.
(g) Any party required to make a payment pursuant to this Section 55
shall pay the party entitled to receive such payment within ten calendar
days of the delivery of the Final Determination to such responsible party.
If any party shall fail to pay the amount of any damages, if any, assessed
against it within such ten calendar day period, the unpaid amount shall
bear interest from the date of such delivery at the lesser of (i) the prime
rate of interest published by the Board of Governors of the Federal Reserve
System as the "Bank Prime Loan" rate, in effect from time to time (which
rate shall be adjusted on the effective date of each change in such prime
rate) plus 2.00% and (ii) the maximum rate permitted by applicable usury
laws. Interest on any such unpaid amount shall be compounded semi-annually,
computed on the basis of a 360-day year consisting of twelve 30-day months
and shall be payable on demand. In addition, such party shall promptly
reimburse the other party for any and all costs and expenses of any nature
or kind whatsoever (including but not limited to all attorney's fees)
incurred in seeking to collect such damages or to enforce any Final
Determination.
Section 5.6 No Consequential Damages; Exclusive Remedy
No party hereto shall have any liability for loss of profit or
consequential damages with respect to this Agreement or the transactions
contemplated hereby. Absent fraud, the indemnification provided by this
Article V shall be the sole and exclusive remedy available to the parties
hereto with respect to any claim or cause of action based upon, relating to
or arising out of this Agreement or otherwise in respect of the
transactions contemplated hereby, whether such claim or cause of action
arises out of any contract, tort or otherwise.
Section 5.7 Tax Benefit
Notwithstanding the above, if losses, damages, claims, costs or
expenses are incurred by any party which are indemnifiable under this
Article V, and if indemnification of any losses, damages, claims, costs or
expenses would result in a deduction, credit or other tax benefit to the
Indemnified Party under federal or state laws, the amount indemnifiable
under this Article V shall be reduced to reflect such tax benefit.
Section 5.8 Mitigation
Each Indemnified Party shall use reasonable efforts to mitigate any
liabilities and damages for which it may claim indemnification under this
Article V. To the extent that the operations of Company at any time that
Company is not under the control of Parent contribute to or aggravate any
liabilities or damages as to which indemnification is available under
Section 5.2, Parent's indemnification obligation will be reduced by such
contribution or aggravation.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Expenses
Except as otherwise provided herein, all costs and expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
Section 6.2 Notices
All notices, requests, claims, demands and other. communications
hereunder shall be in writing and shall be given or made (and shall be
deemed to have been duly given or made upon receipt) by delivery in person,
by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 6.2):
(a) if to Parent:
QuadraMed Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Pillsbury Madison & Sutro LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company:
ChartOne, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, President
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Pillsbury Madison & Sutro LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Section 6.3 Public Announcements
Parent shall use reasonable efforts to consult with Company before
issuing any press release or otherwise making any public statement with
respect to this Agreement or the transactions contemplated hereby, unless
otherwise required by applicable law or by obligation pursuant to any
listing agreement with or rules of any securities exchange. Except as
otherwise provided in this Section 6.3 or required by Law, no party to this
Agreement shall make any public announcements in respect of this Agreement
or the transactions contemplated hereby, or use the name of any other party
hereto in any public announcement, without the prior written consent of the
other parties hereto, which consent shall not be unreasonably withheld or
delayed.
Section 6.4 Headings
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 6.5 Severability
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
Section 6.6 Entire Agreement
This Agreement (including the Schedules and Exhibits) constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, both written
and oral between Company and Parent with respect to the subject matter
hereof and except as otherwise expressly provided herein.
Section 6.7 Assignment
Neither this Agreement nor any of the rights and obligations of the
parties hereunder may be assigned by any of the parties hereto without the
prior consent of each other parties hereto. Notwithstanding the foregoing,
any party assigning its rights or obligations hereunder shall remain liable
for all of its respective obligations under this Agreement. Subject to the
preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
and no other Person shall have any right, obligation or benefit hereunder.
Section 6.8 No Third-Party Beneficiaries
This Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended
to or shall confer upon any other Person or entity any legal or equitable
right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
Section 6.9 Waivers and Amendments
This Agreement may be amended or modified, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties hereto or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege
hereunder, nor any single or partial exercise of any other right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights
or remedies which any party may otherwise have at law or in equity.
Section 6.10 Specific Performance
The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement required to be performed prior to the
Closing was not performed in accordance with the terms hereof and that,
prior to the Closing, the parties shall be entitled to specific performance
of the terms hereof, in addition to any other remedy at law or in equity.
Section 6.11 Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in
and to be performed in that State.
Section 6.12 Counterparts
This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Asset
Contribution Agreement to be executed as of the date first written above by
their respective officers.
QUADRAMED CORPORATION
By:
------------------------
Name:
Title:
QUADRAMED OPERATING CORPORATION
By:
------------------------
Name:
Title:
CHARTONE, INC.
By:
------------------------
Name:
Title:
EXHIBIT F-2
COMPANY BUSINESS
"Company Business" means providing outsourcing services for the
traditional and electronic release, fulfillment, tracking and delivery of
patient medical records information to acute and ambulatory healthcare
clients, insurance companies, government agencies and other requestors of
information, providing skilled clerical labor for a healthcare providers'
medical records and business office to complete project-based work such as
file room records purges, loose element filing, file room moves, and other
clerical projects; providing traditional offsite storage, electronic
management, electronic tracking and delivery of paper records (including
patient medical records and other healthcare-related records); obtaining
patient medical records (at the request of the patient) and maintaining the
record electronically in a secure data center; photographing clients'
medical records and returning copies to clients in microfilm form; and
imaging paper-based material for customers in the healthcare industry,
storing this material on various computer services located on customer
sites or in company-managed data centers, and providing these customers and
all other authorized users of this material, access to these records
through secure LAN, WAN, and thin client browser-enabled methods.