EXHIBIT 2.1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
PROXYMED, INC.,
a Florida corporation;
DAVIE ACQUISITION CORP.
a Delaware corporation;
and
MEDUNITE INC.,
a Delaware corporation.
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Dated as of December 31, 2002
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EXHIBITS
EXHIBIT A - Certain definitions
EXHIBIT B - Form of Escrow Agreement
EXHIBIT C-1 - List of Notes
EXHIBIT C-2 - List of Promissory Notes
EXHIBIT ▇-▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇-▇ - ▇▇▇▇▇▇▇ Agreements
EXHIBIT E - Form of Services Agreement Amendment
EXHIBIT F - Form of Registration Rights Agreement
EXHIBIT G - Form of NDC Consent
EXHIBIT H - Form of Stockholder Undertaking Agreement
EXHIBIT I - Form of Indenture
EXHIBIT J - Form of Parent Legal Opinion
EXHIBIT K - Form of Company Legal Opinion
EXHIBIT L - Landlord Consent
SECTION 1................................................................................DESCRIPTION OF TRANSACTION 1
1.1........................................................................MERGER OF MERGER SUB INTO THE COMPANY 1
1.2.........................................................................................EFFECT OF THE MERGER 2
1.3......................................................................................CLOSING; EFFECTIVE TIME 2
1.4..............................................CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS 2
1.5.....................................................................................CONVERSION OF SECURITIES 3
1.6......................................................................CLOSING OF THE COMPANY'S TRANSFER BOOKS 2
1.7........................................................................................CERTIFICATES; PAYMENT 3
1.8..............................................................................................COMPANY OPTIONS 3
1.9...............................................................................................FURTHER ACTION 3
1.10..................................................................................NOTES AND PROMISSORY NOTES 3
SECTION 2.............................................................REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
2.1.......................................................................DUE ORGANIZATION; NO SUBSIDIARIES; ETC 4
2.2.............................................................CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS 4
2.3..........................................................................................CAPITALIZATION, ETC 4
2.4.........................................................................................FINANCIAL STATEMENTS 5
2.5.........................................................................ABSENCE OF CERTAIN CHANGES OR EVENTS 6
2.6............................................................................................TITLE TO PROPERTY 7
2.7....................................................................................................CONTRACTS 9
2.8........................................................................................INTELLECTUAL PROPERTY 11
2.9.....................................................................................ENVIRONMENTAL COMPLIANCE 12
2.10..........................................................................COMPLIANCE WITH LEGAL REQUIREMENTS 12
2.11.................................................................................GOVERNMENTAL AUTHORIZATIONS 12
2.12.................................................................................................TAX MATTERS 12
2.13...................................................................EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS 13
2.14...................................................................................LEGAL PROCEEDINGS; ORDERS 15
2.15......................................................................AUTHORITY; BINDING NATURE OF AGREEMENT 15
2.16.................................................................................................NO-CONFLICT 15
2.17...................................................................................................INSURANCE 16
2.18.................................................................................................RECEIVABLES 16
2.19...................................................................................................CUSTOMERS 16
2.20...................................................................................................SUPPLIERS 16
2
2.21..............................................................................................COMPANY ACTION 17
2.22................................................................................................FINDER'S FEE 17
2.23.............................................................................................FULL DISCLOSURE 17
SECTION 3...................................................REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 17
3.1................................................................................CORPORATE EXISTENCE AND POWER 17
3.2.............................................................CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS 17
3.3..........................................................................................CAPITALIZATION, ETC 18
3.4............................................................................SEC FILINGS; FINANCIAL STATEMENTS 19
3.5.................................................................................ABSENCE OF CHANGES OR EVENTS 19
3.6...........................................................................COMPLIANCE WITH LEGAL REQUIREMENTS 20
3.7..................................................................................GOVERNMENTAL AUTHORIZATIONS 20
3.8....................................................................................LEGAL PROCEEDINGS; ORDERS 20
3.9..........................................................................................TITLE TO PROPERTIES 20
3.10......................................................................AUTHORITY; BINDING NATURE OF AGREEMENT 21
3.11.......................................................................................NO CONFLICT; CONSENTS 21
3.12...............................................................................................PARENT ACTION 22
3.13................................................................................................FINDER'S FEE 22
3.14..........................................................................................REGULATORY MATTERS 22
3.15.............................................................................PROMISSORY NOTES AND INDENTURE 22
3.16............................................PARENT'S AND MERGER SUB'S DUE DILIGENCE, KNOWLEDGE AND EXPERTISE 23
3.17.............................................................................................FULL DISCLOSURE 23
SECTION 4..................................................................................COVENANTS OF THE PARTIES 23
4.1........................................................................................ADDITIONAL AGREEMENTS 23
4.2.....................................................................................EMPLOYEE BENEFIT MATTERS 23
4.3........................................................................DIRECTORS AND OFFICERS OF THE COMPANY 24
4.4........................................................................................QUOVADX RELATIONSHIPS 25
SECTION 5........................................................................................CLOSING CONDITIONS 25
5.1..................................................................................AMENDED SERVICES AGREEMENTS 25
5.2.................................................................................................CERTAIN FEES 25
5.3................................................................................REGISTRATION RIGHTS AGREEMENT 25
5.4..............................................................................................NDC ARRANGEMENT 25
5.5........................................................................................................NOTES 25
5.6........................................................................................STOCKHOLDER AGREEMENT 25
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5.7..................................................................................WAIVER OF DISSENTERS RIGHTS 25
5.8...............................................................................................NOTE INDENTURE 25
5.9................................................................................................LEGAL OPINION 26
5.10............................................................................................LANDLORD CONSENT 26
SECTION 6............................................................INDEMNIFICATION; DEFENSE OF THIRD PARTY CLAIMS 26
6.1...............................................................................REPRESENTATIONS AND WARRANTIES 26
6.2..............................................................................................INDEMNIFICATION 26
6.3................................................................................DEFENSE OF THIRD PARTY CLAIMS 26
SECTION 7..................................................................................MISCELLANEOUS PROVISIONS 27
7.1...........................................................................................FURTHER ASSURANCES 27
7.2..............................................................................................ATTORNEYS' FEES 27
7.3......................................................................................................NOTICES 27
7.4..........................................................................................TIME OF THE ESSENCE 28
7.5.....................................................................................................HEADINGS 28
7.6.................................................................................................COUNTERPARTS 28
7.7................................................................................................GOVERNING LAW 29
7.8.......................................................................................SUCCESSORS AND ASSIGNS 29
7.9....................................................................REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE 29
7.10......................................................................................................WAIVER 29
7.11..................................................................................................AMENDMENTS 29
7.12................................................................................................SEVERABILITY 29
7.13.........................................................................................PARTIES IN INTEREST 29
7.14............................................................................................ENTIRE AGREEMENT 30
7.15................................................................................................CONSTRUCTION 30
5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERICKS DENOTE SUCH OMISISONS.
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("AGREEMENT") is
made and entered into as of December 31, 2002, by and among: PROXYMED, INC., a
Florida corporation ("PARENT"); DAVIE ACQUISITION CORP., a Delaware corporation
and a wholly owned subsidiary of Parent ("MERGER SUB"); and MEDUNITE INC., a
Delaware corporation (the "COMPANY"). Certain other capitalized terms used in
this Agreement are defined in EXHIBIT A.
RECITALS
WHEREAS, Parent, Merger Sub and the Company intend to effect a merger
of Merger Sub with and into the Company (the "MERGER") in accordance with this
Agreement and the Delaware General Corporation Law (the "DGCL"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
WHEREAS, WellPoint Health Networks, Inc., Aetna Inc., CIGNA Health
Corporation, Health Net, Inc. (formerly Foundation Health Systems, Inc.), Oxford
Health Plans, Inc., Anthem Insurance Companies, Inc., PacifiCare Health Systems,
Inc. and NDC (each, a "STOCKHOLDER" and together, the "STOCKHOLDERS") own all of
the capital stock of the Company.
WHEREAS, this Agreement and the Merger have been adopted and approved
by the respective boards of directors of Parent, Merger Sub and the Company and
have been adopted and approved by Parent, as the sole stockholder of Merger Sub,
and adopted and approved by the Stockholders.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the "EFFECTIVE TIME" (as
defined in Section 1.3), Merger Sub shall be merged with and into the Company,
and the separate existence of Merger Sub shall cease. The Company will continue
as the surviving corporation in the Merger (the "SURVIVING CORPORATION").
1
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the DGCL.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of the Company at ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
place as mutually agreed by the parties, on the date of this Agreement (the
"CLOSING DATE"). Contemporaneously with or as promptly as practicable after the
Closing, a properly executed Certificate of Merger (the "CERTIFICATE OF MERGER")
shall be filed with the Secretary of State of the State of Delaware. The Merger
shall become effective at the time specified in the Certificate of Merger or, if
no time is specified, at the time the Certificate of Merger is filed with the
Secretary of State of the State of Delaware (the "EFFECTIVE Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
(A) The Certificate of Incorporation of the Company immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Time;
(B) the Bylaws of Merger Sub immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation after the Effective Time; and
(C) the directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
immediately after the Effective Time.
1.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any further approval of the holders of any shares of capital
stock of the Company or Merger Sub:
(A) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of
the capital stock of Merger Sub shall be converted into and become one fully
paid and nonassessable share of Common Stock, no par value, of the Surviving
Corporation.
(B) MERGER CONSIDERATION. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Merger Sub, Parent or
any Stockholder, each share of capital stock of the Company issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and shall be converted into the right to receive upon surrender of such
certificate in accordance with Section 1.7, the following (the "MERGER
CONSIDERATION"):
(I) CASH PAYMENT. That portion of the Aggregate Cash Merger
Consideration, without interest, set forth opposite the name of such Stockholder
in ANNEX I.
(II) CONVERTIBLE NOTES OF PARENT. The Parent 4% Convertible
Note set forth opposite the name of such Stockholder in ANNEX I.
2
(III) ESCROWED CONVERTIBLE NOTE OF PARENT. Subject to the
disbursement provisions of the Escrow Agreement, that portion of the Escrowed
Parent 4% Convertible Note set forth opposite the name of such Stockholder in
ANNEX I.
Also as part of the Merger Consideration, Parent shall make the payments
required by Section 5.2
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing Company Shares that were outstanding
immediately prior to the Effective Time shall cease to have any rights as
stockholders of the Company, except the right to receive the Merger
Consideration as set forth in this Agreement. The stock transfer books of the
Company shall be closed with respect to Company Shares outstanding immediately
prior to the Effective Time. No further transfer of any such Company Shares
shall be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a valid certificate previously representing any Company
Shares (a "COMPANY STOCK CERTIFICATE") is presented to the Surviving Corporation
or Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.7.
1.7 CERTIFICATES; PAYMENT. At the Closing, each Stockholder and each
registered holder of an Original Promissory Note will deliver to Parent for
cancellation the Company Stock Certificates and the Original Promissory Note as
further set forth in Section 1.10. At the Closing, Parent (i) shall deposit with
a bank or trust company selected by Parent as escrow agent (the "ESCROW AGENT")
in accordance with the terms of an escrow agreement substantially in the form of
EXHIBIT B (the "ESCROW AGREEMENT") a Parent 4% Convertible Note with an
aggregate principal amount of $4,000,000 (the "ESCROWED PARENT 4% CONVERTIBLE
NOTE"), (ii) shall pay in immediately available funds to each Stockholder the
portion of the Aggregate Cash Merger Consideration set forth opposite such
Stockholder's name in ANNEX I with respect to all Company Stock Certificates
surrendered by such Stockholder, (iii) shall issue to each Stockholder a Parent
4% Convertible Note pursuant to Section 1.5(b)(ii) and (iv) shall deposit with
the Escrow Agent ***** in accordance with the terms of the Escrow Agreement.
1.8 COMPANY OPTIONS. Immediately prior to the Effective Time, each
outstanding option to purchase shares of Company Common Stock, whether vested or
unvested, shall terminate if not exercised in accordance with the terms of the
stock option plan of the Company.
1.9 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights and property of
Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
1.10 NOTES AND PROMISSORY NOTES. At Closing, Parent shall cause the
Company to pay in immediately available funds the amounts on the Notes set forth
in EXHIBIT C-1.
3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the corresponding Part or subpart of
the Company Disclosure Schedule or as expressly cross-referenced to disclosure
elsewhere on the Company Disclosure Schedule, the Company hereby makes the
following representations and warranties which are limited in scope and time as
provided herein:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(A) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all necessary
power and authority: (i) to conduct its business in the manner in which its
business is currently being conducted; (ii) to own and use its assets in the
manner in which its assets are currently owned and used; and (iii) to perform
its obligations under all Company Contracts.
(B) The Company has not conducted any business under or otherwise used,
for any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name.
(C) The Company is duly licensed or qualified as a foreign corporation
to do business and is in good standing, in each jurisdiction in which it owns or
leases any real property or in which the character and location of its
properties and assets owned or leased or the nature of its activities makes such
licensing or qualification necessary.
(D) Part 2.1(d) of the Company Disclosure Schedule accurately sets
forth (i) the names of the members of the Company's board of directors, (ii) the
names of the members of each committee of the Company's board of directors, and
(iii) the names and titles of the Company's officers.
(E) The Company has no Subsidiaries. The Company does not own any
controlling interest in any Entity, and the Company does not own, beneficially
or otherwise, any shares or other securities of, or any direct or indirect
equity or other financial interest in, any Entity.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the certificate of
incorporation and bylaws, including all amendments thereto, of the Company; and
(2) the minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the stockholders of the Company and the board of directors of the Company
(the items described in (1) and (2) above, collectively, the "COMPANY
CONSTITUENT DOCUMENTS").
2.3 CAPITALIZATION, ETC.
(A) Attached hereto as Part 2.3 of the Company Disclosure Schedule is
the list of all the holders of shares of capital stock of the Company setting
forth, opposite the name of such holders, the number of shares of capital stock
of the Company held by such holders. The authorized capital stock of the
Company, as of the date hereof, consists of 434,000,000 shares, of which (i)
210,000,000 are shares of Class A Common Stock, $0.001 par value per share (the
"CLASS A COMMON STOCK"), none of which are issued and outstanding, (ii)
87,000,000 are shares of Class B Common Stock, $0.001 par value per share (the
4
"CLASS B COMMON STOCK"), none of which shares are issued and outstanding, (the
Class A Common Stock and Class B Common Stock being collectively referred to as
the "COMPANY COMMON STOCK"), and (iii) 137,000,000 are shares of Preferred
Stock, $0.001 par value per share (the "COMPANY PREFERRED STOCK"), of which
87,000,000 are designated shares of Series A Preferred Stock, $0.001 par value
per share, 85,270,402 of which are issued and outstanding. The Company has also
issued the Promissory Notes, each of which is convertible into equity securities
of the Company in accordance with its terms.
(B) The rights, preferences, privileges and restrictions of the Company
Shares are as stated in the certificate of incorporation of the Company, as
amended. The Company Preferred Stock is convertible into Class B Common Stock on
a one-for-one basis as of the date hereof. All of the outstanding Company Shares
(i) have been duly authorized and validly issued, are fully paid and
non-assessable and free of any Encumbrances, PROVIDED, HOWEVER, that the Company
Shares may be subject to restrictions on transfer as set forth in the Bylaws,
the Stockholders' Agreement dated August 3, 2001 or under state and/or federal
securities laws and (ii) were issued and sold in accordance with federal and
applicable state securities laws and were not issued in violation of any
statutory preemptive or other similar rights granted by the Company. There are
no outstanding subscriptions, warrants, options, calls, rights of first offer,
rights of first refusal, tag along rights, drag along rights, or commitments or
rights of any character relating to or entitling any person to purchase or
otherwise acquire any shares of capital stock of the Company directly from the
Company and there are no obligations or securities having the right to vote on
any matters on which the stockholders may vote or convertible into or
exchangeable for shares of capital stock of the Company or any commitments of
any character relating to or entitling any person to purchase or otherwise
acquire any such obligations or securities from the Company. There are no
stockholder agreements, voting trusts, proxies or other agreements, instruments
or understandings with respect to the purchase, sale or voting of the
outstanding shares of Company Shares to which the Company is a party and to
which any other Person is a party. There are no Contracts under which the
Company is obligated to repurchase, redeem or otherwise acquire any Company
Shares. The Company has not declared or paid any dividends on any shares of its
capital stock.
2.4 FINANCIAL STATEMENTS.
(A) Attached hereto as Part 2.4 of the Company Disclosure Schedule is a
true and correct copy of (i) the Company's unaudited balance sheets (the
"BALANCE SHEET") as of November 30, 2002 (the "BALANCE SHEET DATE") and the
related statements of income, changes in stockholders' equity (deficit) and cash
flows for the eleven months then ended (the "INTERIM FINANCIAL STATEMENTS"); and
(ii) the Company's audited balance sheet as of December 31, 2001 and the related
statements of income, changes in stockholders' equity (deficit) and cash flows
for the year then ended together with accompanying notes and together with the
report thereon of Pricewaterhouse Coopers, the Company's independent certified
public accountants, for the year then ended (the financial statements described
in clauses (i) and (ii), are collectively referred to herein collectively as the
"COMPANY FINANCIAL STATEMENTS").
5
(B) The Company Financial Statements are in accordance with the
Company's books and records and are accurate and complete in all material
respects and present fairly in all material respects the financial position of
the Company as of the respective dates thereof and the results of operations and
cash flows of the Company for the periods covered thereby. The Company Financial
Statements have been prepared in accordance with GAAP (subject, in the case of
the interim financial statements, to (i) normal, recurring year-end adjustments
that are not, in the aggregate, material and (ii) the absence of footnotes).
(C) The books of account and other financial records of the Company:
(i) reflect in all material respects all items of income and expense and all
assets and Liabilities required to be reflected therein in accordance with GAAP;
and (ii) do not contain or reflect any material inaccuracies or discrepancies.
(D) There exist no Liabilities of the Company, except Liabilities: (i)
that are reflected on the Balance Sheet as of the Balance Sheet Date, (ii) that
were incurred after the Balance Sheet Date in the ordinary course of business,
consistent with past practice, or (iii) that are set forth on Part 2.4(d) of the
Company Disclosure Schedule or that are expressly disclosed in this Agreement or
in another Part of the Company Disclosure Schedule, or (iv) that could
reasonably be expected to be incurred under the written terms of any Company
Contract.
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet Date,
the Company has conducted its business in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing and except for
the transactions contemplated by this Agreement and the Ancillary Agreements,
since the Balance Sheet Date, there has not been:
(A) any material adverse change to the business, financial condition or
results of operation of the Company;
(B) any acquisition by merger, consolidation or purchase of any
business or Person by the Company, including by purchase of all or substantially
all of the assets or any material assets or business of any Person;
(C) any material change in any method of accounting or accounting
practice by the Company except for any such change required by reason of a
concurrent change in GAAP;
(D) any amendment to the Company Constituent Documents;
(E) any declaration, setting aside or payment of any dividends or other
distribution (whether in cash, stock or property) on any shares of capital stock
of the Company, or any repurchase for value by the Company of any capital stock;
(F) any: (i) increase in the compensation payable or to become payable
by the Company to any employee whose total compensation is currently at an
annual rate of more than $75,000, except for normal periodic increases in the
ordinary course of business consistent with past practice; (ii) payment of any
bonus, incentive compensation, service award or other like benefit granted, made
or accrued, contingently or otherwise, for or to the credit of any employee; or
(iii) entry into or amendment of any employment, severance, termination,
retention, change in
6
control, non-competition, non-solicitation or confidentiality or similar
agreement with any employee;
(G) adoption of any new employee benefit plan, except as may be
required by applicable law, or amendment of any existing employee benefit plan
in any material respect, except for changes as may be required by applicable
law;
(H) any sale, lease, assignment, transfer or other disposition of any
material assets or material properties of the Company other than in the ordinary
course of business;
(I) any cancellation of any material indebtedness or waiver of any
claims or rights of substantial value to the Company, or mortgage, pledge or
imposition of any Encumbrances, other than a Permitted Encumbrance;
(J) any written cancellation or written termination of any Contract,
that, if in effect on the date hereof, would constitute a Material Contract
(other than any termination of any such Contract upon expiration of its stated
term);
(K) any capital expenditure or the execution of any lease or any
incurring of liability therefor by the Company, involving payments in excess of
$75,000 individually or $150,000 in the aggregate;
(L) any revaluation by the Company of any of its assets, including
without limitation, writing off notes or accounts receivable or inventory in any
case in excess of reserves;
(M) any damage, destruction or loss (whether or not covered by
insurance) of any material asset or property of the Company adversely affecting
the properties or prospects of the Company;
(N) any new, or changes in existing, Tax elections for the Company or
settlement or compromise of any Tax liability;
(O) any creation, assumption, incurrence or guarantee of any
indebtedness by the Company for borrowed money;
(P) any delay in paying any material obligations of the Company of more
than 90 days beyond the corresponding due dates for such payments (except with
respect to items being disputed in good faith); or
(Q) any agreement, whether oral or written, by the Company to do any of
the foregoing.
2.6 TITLE TO PROPERTY.
(A) ASSETS. The Company owns (and has good, valid and marketable title
to), leases or has the legal right to use all material assets used in the
conduct of the business as of the Closing. The Company is not (i) using any
assets of, (ii) receiving any services from, or (iii) borrowing any employees
of, any Stockholder or any of their respective Affiliates, in each case
7
in the conduct of the Company's business, except for any guidance provided to
the management of the Company through the Chairman of the Board or other
directors of the Company and through the "Leadership Team" of the Stockholder
payers. All properties and assets owned by the Company are owned free and clear
of any Encumbrances, except for (i) any lien for current Taxes not yet due and
payable, and (ii) liens that have arisen in the ordinary course of business and
that (A) were not incurred in connection with any indebtedness, (B) do not
render property encumbered thereby unmarketable, and (C) do not (individually or
in the aggregate) materially detract from the value of the assets subject
thereto or materially impair the operations of the Company (the liens described
in clauses (i) and (ii) being referred to as "PERMITTED ENCUMBRANCES").
(B) OWNED REAL PROPERTY. The Company does not own any real property.
(C) LEASED REAL PROPERTY. Part 2.6(c) of the Company Disclosure
Schedule lists all real property (including all land and buildings) which is
leased by the Company as lessee or sublessee (the "LEASED PROPERTY"). The
Company has delivered or made available to Parent complete and accurate copies
of the written leases and subleases for all Leased Property, including all
amendments and modifications pursuant to which the Company leases the Leased
Property (the "LEASES"). The Leased Property is all of the real property used in
the business of the Company as currently conducted. The Company has not received
notice of, nor has Knowledge of, condemnation or eminent domain proceedings
pending or threatened against any Leased Property.
(I) The Company has good marketable leasehold title to the
Leased Property, the Leases are in full force and effect and are valid, binding
and enforceable against the Company, as the case may be, in accordance with
their respective terms;
(II) No amount payable under any Lease is past due, except
amounts contested as due and owing under a Lease;
(III) The Company is in compliance in all material respects
with all covenants, commitments and obligations on their part to be performed or
observed under the Leases and, to the Knowledge of the Company, there is no
failure by any other party to such Leases to comply in all material respects
with all of its commitments and obligations;
(IV) The Company has not received any written notice of a
material default (which has not been cured), offset or counterclaim under any
Lease;
(V) The Company has not subleased, assigned, mortgaged,
pledged or otherwise encumbered its interest under any Lease or entered into any
license, sublease or occupancy agreement with respect to any Leased Property,
nor has the Company entered into any agreement or commitment to take any such
action;
(VI) To the Knowledge of the Company, all Improvements owned,
leased, or used by the Company on the Leased Property are in reasonably good
condition and repair in all material respects (normal wear and tear excepted),
and such Improvements (including their rooftops and building systems) are, to
the Knowledge of the Company, free from material structural defects;
8
(VII) The Company is not a party to or otherwise bound by any
leasing commission or brokerage agreements with respect to any Leases for which
the Company, its Subsidiaries or any Affiliate will have any liability; and
(VIII) To the Knowledge of the Company, the Company with
respect to the Leased Property is in compliance with all material zoning,
building, fire, health and other similar codes or ordinances.
2.7 CONTRACTS.
(A) Part 2.7 of the Company Disclosure Schedule identifies the
following Company Contracts, which shall be collectively hereinafter referred to
as "MATERIAL CONTRACTS":
(I) each Company Contract with a Payor Customer or a Vendor
Customer involving (i) payments by any party in excess of $35,000 per month as
calculated on average over the last six months, or (ii) more than 100,000
transactions per month as calculated on average over the last six months;
(II) each Company Contract concerning a partnership or joint
venture with, or any other investment in (whether through the acquisition of an
equity interest, the making of a loan or advance or otherwise), any Person;
(III) each Company Contract (A) under which the Company has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness for borrowed money, (B) constituting capitalized lease
obligations, (C) under which the Company has granted a material Encumbrance on
any asset of the Company other than a Permitted Encumbrance, or (D) under which
the Company has incurred any material obligations for any performance bonds,
payment bonds, bid bonds, surety bonds, letters of credit, guarantees or similar
instruments;
(IV) each Company Contract with any present or former
director, officer, employee, agent or consultant of the Company, or the spouses
or relatives of such Persons, other than the Company's form of proprietary
information and inventions agreement;
(V) each Company Contract containing a provision of the type
commonly referred to as a "most favored nation" provision;
(VI) each Company Contract regarding the provision of
telecommunications services or other outsourcing services, in each case
involving payments in excess of $250,000 during the term of such Company
Contract;
(VII) each Company Contract providing for sharing of payments
based on, or measured by, some or all of revenues, profit or similar items of
the Company, other than Company Contracts with Vendor Customers providing for
the payment of transaction rebates;
(VIII) each Company Contract or group of related Company
Contracts providing for payments by the Company in excess of $250,000 over the
life of such Company Contract (or group of related Company Contracts for a
single supplier), except for such
9
Company Contracts that are cancelable on not more than sixty (60) days' notice
by the Company without penalty or increased cost;
(IX) each Company Contract, other than the Ancillary
Agreements and other than the limitations on the scope of business set forth in
the Constituent Documents or the Stockholders' Agreement dated August 3, 2001,
containing covenants restraining or limiting the freedom of the Company to
engage in any line of business or compete with any Person including, without
limitation, by restraining or limiting the right to solicit customers or that
could reasonably be expected, following the closing, to restrain or limit the
freedom of Parent or Affiliate thereof to engage in any line of business or
compete with any Person;
(X) each Company Contract that provides for the Company to be
the exclusive or a preferred provider of any product or service to any Person or
the exclusive or a preferred recipient of any product or service of any Person
during any period of time or that otherwise involves the granting by any Person
to the Company of exclusive or preferred rights of any kind; and
(XI) each Company Contract that provides for any Person to be
the exclusive or a preferred provider of any product or service to the Company
or the exclusive or a preferred recipient of any product or service of the
Company during any period of time or that otherwise involves the granting by the
Company to any Person of exclusive or preferred rights of any kind or that
could, giving effect to the Closing, so provide with respect to Parent or its
Affiliates;
(XII) each Company Contract pursuant to which aggregate
commissions in excess of $20,000 were paid by the Company to any Person during
the last six months, other than Company Contracts with employees of the Company
and Company Contracts with Vendor Customers providing for the payment of
transaction rebates;
(XIII) each Company Contract with any of the Stockholders or
any of their Affiliates;
(XIV) each Company IP Contract pursuant to which the Company
is obligated to make a royalty payment after the Closing Date; and
(XV) any other Company Contract which is material to the
business of the Company.
(B) To the Knowledge of the Company, the Company has not violated or
breached, or committed any default under, any Material Contract, and, to the
Knowledge of the Company, no other Person has violated or breached, or committed
any default under, any Material Contract. To the Knowledge of the Company, no
event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected to,
result in a violation or breach of any of the provisions of any Material
Contract. The Company has not received from any party thereto any written notice
of any intent by such other party to terminate or otherwise fail to fully
perform any Material Contract or any written notice that the Company is in
breach of any Material Contract. The Company has made available to Parent a true
and correct copy of each written Material Contract.
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2.8 INTELLECTUAL PROPERTY.
(A) REGISTERED IP. Part 2.8(a) of the Disclosure Schedule accurately
identifies all Registered IP owned by the Company as of the date of this
Agreement. As of the date of this Agreement, there are no pending or, to the
Knowledge of the Company, threatened Legal Proceedings involving the Company in
which the validity or enforceability of any Registered IP owned by the Company
is being opposed, cancelled, challenged or contested. The Company has taken all
necessary actions and has paid all necessary fees to prosecute its Registered IP
and to keep its Registered IP valid and enforceable.
(B) OWNERSHIP FREE AND CLEAR. The Company owns all right, title, and
interest to and in, and has a valid right to use, all material Company IP free
and clear of any Encumbrances (other than Permitted Encumbrances and
non-exclusive licenses granted in the ordinary course of business). The Company
has a valid right and license to use all Material Company Licensed IP assuming
that the licensing party has the right to grant the rights and licenses to such
Material Company Licensed IP. No Company IP is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge against the Company; and
the Company is not currently bound by any agreement to indemnify any Person for
or against any interference, infringement, misappropriation, violation or other
conflict with respect to any material item of Company IP or Material Company
Licensed IP except for indemnity provisions included in the Material Company
Contracts.
(C) TRADE SECRETS. The Company has taken reasonable steps to maintain
the confidentiality of the Company's material trade secrets and other
confidential information.
(D) EMPLOYEES. All employees of the Company (i) who have made
contributions to the invention, creation or development of the Company IP or
(ii) who otherwise have had access to the Company's trade secrets or
confidential information (including, without limitation, sales employees) have
signed the Company's standard form of proprietary information and inventions
agreement.
(E) INFRINGEMENT OF COMPANY IP BY THIRD PARTIES. To the Knowledge of
the Company, as of the date of this Agreement, no Person, is interfering with,
violating, infringing upon or misappropriating any material Company IP.
(F) INFRINGEMENT OF THIRD PARTY IP RIGHTS BY COMPANY. To the Knowledge
of the Company, as of the date of this Agreement, the Company is not interfering
with, violating, infringing upon or misappropriating the Intellectual Property
Rights of any other Person. The Company has never received any charge,
complaint, claim, demand, or written notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company must license or refrain from using any Intellectual Property Rights of
any third party) except for charges, complaints, claims, demands and written
notices that have been fully and finally resolved and impose no continuing or
future obligation on the Company. There is no pending or, to the Knowledge of
the Company, threatened Legal Proceeding against the Company in which the
Company is alleged to have infringed, interfering with, misappropriated or
violated the Intellectual Property Rights of another Person.
11
(G) MATERIAL COMPANY IP CONTRACTS. Part 2.8(g) of the Company
Disclosure Schedule accurately and completely identifies all Material Company IP
Contracts. With respect to each Material Company IP Contract identified in Part
2.8(g) of the Company Disclosure Schedule: (i) such Material Company IP Contract
is legal, valid, binding, enforceable against the other party, and is in full
force and effect; (ii) neither the Company nor, to the Knowledge of the Company,
any other party to such Material Company IP Contract is in breach or default,
and, to the Knowledge of the Company, no event has occurred that with notice or
lapse of time would constitute a breach or default, that would in either case
permit termination or modification thereunder; (iv) to the Knowledge of the
Company, neither such underlying item of Intellectual Property nor such
Intellectual Property Rights are subject to any outstanding injunction,
judgment, order, decree, ruling, or charge that names the Company; and (v) no
Legal Proceeding that names the Company is pending or, to the Knowledge of the
Company, has been threatened that challenges the legality, validity, or
enforceability of such underlying item of Intellectual Property, Intellectual
Property Rights, or Material Company IP Contract described in Part 2.8(g) of the
Company Disclosure Schedule. The Company has paid when due all necessary fees,
royalties or other payment under the Material Company IP Contracts.
2.9 ENVIRONMENTAL COMPLIANCE. The Company, including any business to
which it is a successor, is in and has at all times been in compliance in all
material respects with all applicable Environmental Laws. To the Knowledge of
the Company, there are no present facts or circumstances, unique to the Company,
which would materially adversely affect or render significantly more costly in
the future compliance of the Company with existing Environmental Laws.
2.10 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is in compliance
with all Legal Requirements that are applicable to it or to the conduct of its
business or the ownership or use of any of its assets, except where the failure
to comply could not have a Material Adverse Effect.
2.11 GOVERNMENTAL AUTHORIZATIONS. The Governmental Authorizations held
by the Company are valid and in full force and effect, and collectively
constitute all Governmental Authorizations necessary (i) to enable the Company
to conduct its business in the manner in which its business is currently being
conducted, and (ii) to permit the Company to own and use its assets in the
manner in which they are currently owned and used. The Company is in compliance
with the terms and requirements of the respective Governmental Authorizations
held by the Company. All such Governmental Authorizations are listed on Part
2.11 of the Company Disclosure Schedule.
2.12 TAX MATTERS.
(A) All Tax Returns required to be filed by or on behalf of the Company
with respect to any taxable period ending on or before the Closing Date (the
"COMPANY RETURNS") (i) have been or will be filed on or before the applicable
due date (including any extensions of such due date), and (ii) have been, or
will be when filed, accurately and completely prepared in all material respects
in compliance with all applicable Legal Requirements. All Taxes of the Company
have been paid when due, whether or not such amounts have been reported as due
on an applicable Company Return, and the Company will have adequate reserves on
the Company
12
Financial Statements for any unpaid Taxes relating to taxable periods or
portions thereof ending on or before the Closing Date that are not required to
be paid on or prior to the Closing Date. The Company has delivered to Parent
accurate and complete copies of all Company Returns filed which have been
requested by Parent. There are no liens for Taxes (other than for current Taxes
not yet due and payable for which adequate reserves have been established on the
Company Financial Statements) upon any assets of the Company.
(B) No examinations or audits of any Company Return by any Governmental
Body have been, or currently are being, conducted, and to the Knowledge of the
Company, no such examination, audit or other pending action relating to the
assessment or collection of Taxes of the Company has been threatened. No
deficiency or adjustment for any Taxes has been proposed, asserted or assessed
against the Company. No extension or waiver of any statute of limitations period
for any Tax assessment or deficiency in respect of Taxes of the Company has been
granted (by the Company or any other Person), and no such extension or waiver
has been requested from the Company. No claim has ever been made in writing by a
Governmental Body in any jurisdiction where the Company does not file Tax
Returns that the Company is or may be subject to taxation by that jurisdiction.
The Company is not a party to any Tax allocation or Tax sharing agreement, and
has no liability for any Taxes of any Person as a transferee or successor, by
contract, or otherwise.
(C) The Company is not and has not been a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
unpaid Taxes of the Company do not exceed the reserve for Tax liability
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and tax income) set forth or included in the Company
Financial Statements.
2.13 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(A) Part 2.13 of the Company Disclosure Schedule lists each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "EMPLOYEE BENEFIT PLAN", as defined in Section 3(3) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained,
contributed to or sponsored by the Company for the benefit of any current or
former employee, officer or director of the Company, or with respect to which
the Company could incur liability under Section 4069, 4201 or 4212(c) of ERISA
(collectively, the "PLANS").
(B) The Company does not maintain, sponsor or contribute to, and, to
the Knowledge of the Company, has not at any time in the past maintained,
sponsored or contributed to, any employee pension benefit plan (as defined in
Section 3(2) of ERISA). None of the Plans is subject to Title IV of ERISA and
the Company has not incurred, and does not reasonably expect to incur, any
direct or indirect liability under or by operation of Title IV of ERISA.
(C) Each of the Plans is now and always has been operated in all
material respects in accordance with its terms and the requirements of all
applicable Legal Requirements, including but not limited to ERISA and the Code.
The Company has performed in all material respects all obligations required to
be performed by it under, is not in any material respect in
13
default under or in violation of, and, to the Knowledge of the Company, there is
no default or violation by any other party to, any Plan.
(D) Each Plan that is intended to be qualified under Section 401(a) of
the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such determination letter or
letters from the IRS to adversely affect the qualified status of any such Plan
or the exempt status of any such trust. All contributions required to be made to
any Plan have been made on a timely basis.
(E) None of the Plans in effect on the date hereof would result,
separately or in the aggregate (including, without limitation, as a result of
this Agreement or the transactions contemplated hereby), in the payment of any
"EXCESS PARACHUTE PAYMENT" within the meaning of Section 280G of the Code.
(F) The Company has made available to Parent (i) copies of each Plan
(and, if applicable, related trust agreements) and all amendments thereto, all
written interpretations thereof and all written descriptions thereof that have
been distributed to the Company employees, all annuity contracts or other
funding instruments, and a complete description of any Plan which is not in
writing; (ii) the most recent determination letter issued by the IRS with
respect to each applicable Plan; (iii) for the three most recent plan years,
annual reports on Form 5500 series with respect to each applicable Plan, (iv)
copies of all employment agreements and severance agreements plans and policies
with or relating to employees, officers and directors; and (v) copies of all
plans, programs, agreements and other arrangements of the Company with or
relating to its current or former employees, officers and directors which
contain change in control provisions. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (vi)
result in any payment (including, without limitation, severance, unemployment
compensation, "golden parachute" or otherwise) becoming due to any employee,
officer or director of the Company under any Plan or otherwise, (vii) increase
any benefits otherwise payable under any Plan, or (viii) result in any
acceleration of the time of payment or vesting of any benefits.
(G) Neither the Company nor any Plan has any present or future
obligation to make any payment to, or with respect to, any present or former
employee, officer or director of the Company pursuant to any retiree medical
benefit plan or other retiree welfare plan.
(H) The Company is not a party to any collective bargaining or other
labor union contract applicable to its employees, officers or directors. As of
the date hereof, there is no labor dispute, strike or work stoppage against the
Company pending or, to the Knowledge of the Company, threatened which may
interfere with the business activities of the Company. As of the date hereof,
neither the Company nor any of its representatives or employees, has committed
any unfair labor practices in connection with the operation of the business of
the Company, and there is no pending, or to the Knowledge of the Company
threatened charge or complaint against the
14
Company by the National Labor Relations Board or any comparable state agency.
The Company's relations with its employees are good.
2.14 LEGAL PROCEEDINGS; ORDERS. There is no pending Legal Proceeding,
and to the Knowledge of the Company, no Person has threatened to commence any
Legal Proceeding: (i) that involves the Company or any of the assets owned, used
or controlled by the Company or any Person whose liability the Company has or
may have retained or assumed, either contractually or by operation of law; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement or the Ancillary Agreements.
2.15 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
requisite corporate power and authority to enter into and to perform its
obligations under this Agreement and the Ancillary Agreements to which it is a
party; and the execution, delivery and performance by the Company of this
Agreement and the Ancillary Agreements to which it is a party have been duly
authorized by all necessary action on the part of the Company. Each of this
Agreement and the Ancillary Agreements to which it is a party constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.16 NO-CONFLICT.
(A) Assuming that all consents, approvals, authorizations and other
actions of any Governmental Body described in Section 2.16(b) have been
obtained, the execution, delivery and performance of this Agreement and the
Ancillary Agreements by the Company do not and will not (i) violate, conflict
with or result in the breach of any provision of the Company Constituent
Documents, (ii) conflict with or violate any Legal Requirement or Governmental
Authorization applicable to the Company or its assets, properties or businesses,
or (iii) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the Company Shares or any
of the assets of the Company pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which the Company is a party or by which any of the
Company Shares or any of such assets or properties is bound or affected, except,
in the case of each of clauses (ii) and (iii), to the extent that such
conflicts, breaches, defaults or other matters would not (A) adversely affect
the ability of the Company to carry out its obligations under, and to consummate
the transactions contemplated by, this Agreement and the Ancillary Agreements,
(B) adversely affect the ability of the Company to conduct its business, or
(iii) otherwise have a Material Adverse Effect.
(B) Except for the Certificate of Merger to be filed with the Secretary
of State of the State of Delaware, and assuming the accuracy of the
representations of Parent set forth in Section 3.4, no consent, waiver,
agreement, approval, or authorization of, or declaration, filing, notice or
registration to or with any Governmental Body (i) is required for the execution,
15
delivery and performance by the Company of this Agreement or any Ancillary
Agreement or for the consummation by the Company of the transactions
contemplated hereby and thereby, or (ii) is necessary in order to ensure the
legality, validity, binding effect or enforceability against the Company of this
Agreement or any Ancillary Agreement to which it is a party.
2.17 INSURANCE. Part 2.17 of the Company Disclosure Schedule contains a
complete and accurate list of all insurance policies or binders maintained by
the Company. There are no unpaid claims payable to the Company under any such
policy or binder. Such insurance provides, and during its term has provided,
coverage to the extent and in the manner as required by applicable Legal
Requirements. The Company is not in any material default under any of such
policies or binders, and the Company has not failed to give any notice or to
present any material claim under any such policy or binder in a due and timely
fashion. No insurer has refused, denied or disputed coverage or any material
claim made thereunder. No insurer has advised the Company that it intends to
reduce coverage, materially increase any premium or fail to renew any existing
policy or binder. All such policies and binders are in full force and effect on
the date hereof.
2.18 RECEIVABLES. Part 2.18 of the Company Disclosure Schedule sets
forth an aged list of the accounts receivable of the Company as of the Balance
Sheet Date showing separately those accounts receivable that as of such date had
been outstanding (i) 30 days or less, (ii) 31 to 60 days, (iii) 61 to 90 days,
and (iv) greater than 90 days. Except to the extent, if any, reserved for on the
Balance Sheet, all accounts receivable reflected on the Balance Sheet arose
from, and the accounts receivable existing on the Closing Date will have arisen
from, the bona fide sale of inventory or services to Persons not affiliated with
the Company and in the ordinary course of business consistent with past
practice. To the Knowledge of the Company, all accounts receivable of the
Company reflected on the Balance Sheet or arising since the Balance Sheet Date
are valid and binding obligations of the respective debtor, and, to the
Knowledge of the Company, there are no valid defenses, set-offs or counterclaims
against such receivables.
2.19 CUSTOMERS.
(A) Listed in Part 2.19 of the Company Disclosure Schedule are the
names of the 20 most significant Payer Customers of the Company by average
monthly revenues for the preceding six-month period, together with the aggregate
amount paid by each such Payer Customer to the Company and the aggregate amount
paid by the Company to each such Payer Customer during such six-month period.
(B) Listed in Part 2.19 of the Company Disclosure Schedule are the
names of the 20 most significant Vendor Customers of the Company by average
monthly revenues for the preceding six-month period, together with the aggregate
amount paid by each such Vendor Customer to the Company and the aggregate amount
paid by the Company to each such Vendor Customer during such six-month period.
2.20 SUPPLIERS. Listed in Part 2.20 of the Company Disclosure Schedule
are the names of the ten most significant suppliers of products and services to
the Company and the aggregate amount for which each such supplier invoiced the
Company during such period.
16
2.21 COMPANY ACTION.
(A) The Board of Directors of the Company has (i) unanimously
determined that the Merger is advisable and in the best interests of the Company
and its stockholders, (ii) unanimously recommended the adoption and approval of
the Merger and this Agreement by the stockholders of the Company, and (iii)
directed that this Agreement be submitted for a vote by the Stockholders.
(B) The Stockholders have unanimously approved the Merger and adopted
this Agreement.
2.22 FINDER'S FEE. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., no broker, finder,
investment banker, valuation firm or any other Person is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
any of the other transactions contemplated thereby based upon arrangements made
by or on behalf of the Company.
2.23 FULL DISCLOSURE. None of the representations and warranties made
by the Company in this Agreement, as such representations or warranties are
modified by the Disclosure Schedules and/or the attachments thereto, contain any
untrue statement of a material fact, or omit any material fact the omission of
which would make any statements made herein, in light of the circumstances under
which they were made, not misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth on the corresponding Part or subpart of the Parent
Disclosure Schedule or as expressly cross-referenced to disclosure elsewhere on
the Parent Disclosure Schedule, Parent and Merger Sub hereby make the following
representations and warranties which are limited in scope and time as provided
herein:
3.1 CORPORATE EXISTENCE AND POWER.
(A) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Merger Sub has all corporate power
required to conduct its business as now conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the conduct of
its business or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on Parent's business, financial condition or results of
operations.
(B) Part 3.1(b) of the Parent Disclosure Schedule accurately sets forth
(i) the names of the members of Parent's board of directors, (ii) the names of
the members of each committee of Parent's board of directors, and (iii) the
names and titles of Parent's officers.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS. Parent has
delivered to the Company accurate and complete copies of: (1) the certificate of
incorporation and bylaws, including all amendments thereto, of Parent; and (2)
the minutes and other records of the meetings and other proceedings (including
any actions taken by written consent or otherwise
17
without a meeting) of the stockholders of Parent and the board of directors of
Parent (the items described in (1) and (2) above, collectively, the "PARENT
CONSTITUENT DOCUMENTS").
3.3 CAPITALIZATION, ETC.
(A) The authorized capital stock of Parent, as of the date hereof,
consists of 13,333,333 shares of Common Stock, $0.001 par value per share (the
"PARENT COMMON STOCK"), 6,782,938 of which are issued and outstanding; 2,000,000
shares of preferred stock, par value $0.01 per share (the "PARENT PREFERRED
STOCK"), 268,265 of which are designated as Series C Preferred Stock of which
2,000 are issued and outstanding and convertible into 13,333 shares of Parent
Common Stock and 1,731,735 shares of which are undesignated "blank check"
preferred stock.
(B) The rights, preferences, privileges and restrictions of the Parent
Common Stock and the Parent Preferred Stock are as stated in the articles of
incorporation of Parent. All of the outstanding Parent Common Stock and Parent
Preferred Stock is duly authorized, validly issued, fully paid and
nonassessable, and free of any liens or encumbrances and were issued in
compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws.
(C) 1,786,706 shares of Parent Common Stock are reserved for issuance
under the stock option plans of Parent and options to purchase 1,087,538 shares
are outstanding as of the date of this Agreement (stock options granted by
Parent pursuant to the stock option plans of Parent, as well as any stock
options granted outside of the stock option plans of Parent, are referred to
collectively herein as "PARENT OPTIONS.").
(D) Except for warrants to purchase 631,395 shares of Parent Common
Stock, there are no outstanding subscriptions, warrants, options, calls, rights
of first offer, rights of first refusal, tag along rights, drag along rights, or
commitments or rights of any character relating to or entitling any person to
purchase or otherwise acquire any shares of capital stock of Parent directly
from Parent and there are no obligations or securities having the right to vote
on any matters on which the stockholders may vote or convertible into or
exchangeable for shares of capital stock of Parent or any commitments of any
character relating to or entitling any person to purchase or otherwise acquire
any such obligations or securities from Parent. There are no stockholder
agreements, voting trusts, proxies or other agreements, instruments or
understandings with respect to the purchase, sale or voting of the outstanding
shares of Parent capital stock to which the Parent is a party or to which any
other Person is a party. No shares of outstanding capital stock of Parent is
subject to any antidilution protections. There are no Contracts under which
Parent is obligated to repurchase, redeem or otherwise acquire any shares of its
capital stock or register under the Securities Act of 1933, any shares of its
capital stock. Parent has not declared or paid any dividends on any shares of
its capital stock. No anti-dilution rights of any capital stock or other
securities issued by the Company shall be triggered as a result of the
transactions contemplated hereby. The Board of Directors of Parent has
determined that the issuance of the Parent 4% Convertible Notes is an issuance
of securities in connection with a strategic acquisition for purposes of the
warrant issued to Commonwealth Associates, L.P. and therefore no anti-dilution
adjustment is required thereto.
18
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(A) Parent has made available to the Company accurate and complete
copies of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by Parent with the SEC (the
"PARENT SEC DOCUMENTS"). All statements, reports, schedules, forms and other
documents required to have been filed by Parent with the SEC have been so filed.
As of their respective dates (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such amendment or superseding
filing): (i) each of the Parent SEC Documents complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act (as
the case may be); and (ii) none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(B) The financial statements (including related notes, if any)
contained in the Parent SEC Documents (the "PARENT FINANCIAL STATEMENTS"): (i)
complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, and except that the
unaudited financial statements may not have contained footnotes and were subject
to normal and recurring year-end adjustments which were not, or are not
reasonably expected to be, individually or in the aggregate, material in
amount), and (iii) fairly presented in all material respects the financial
position of Parent and its Subsidiaries as of the respective dates thereof and
the results of operations and cash flows of Parent and its Subsidiaries for the
periods covered thereby. For purposes of this Agreement, "PARENT BALANCE SHEET"
means that balance sheet of Parent and its Subsidiaries as of December 31, 2001
set forth in Parent's Annual Report on Form 10-K filed with the SEC and the
"PARENT BALANCE SHEET DATE" means December 31, 2001. The books of account and
other financial records of Parent: (i) reflect in all material respects all
items of income and expense and all assets and Liabilities required to be
reflected therein in accordance with GAAP; and (ii) do not contain or reflect
any material inaccuracies or discrepancies.
(C) Except for Liabilities incurred in the ordinary course of business
consistent with past practice and except for performance obligations under
Contracts, neither Parent nor any of its Subsidiaries, taken as a whole, has
incurred any material Liability which is not required by GAAP to be reflected in
a balance sheet and the notes thereto prepared in accordance with GAAP.
3.5 ABSENCE OF CHANGES OR EVENTS. Since the Parent Balance Sheet Date,
and except as disclosed in any filing by Parent with the Securities and Exchange
Commission prior to the Closing:
(A) Parent has operated its business in the ordinary course and
consistent with past practices;
19
(B) there has not been any event that has had a material adverse effect
on Parent, and no fact, event, circumstance or condition exists or has occurred
that could reasonably be expected to have a material adverse effect on Parent;
(C) Parent has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock; (ii) repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities; (iii) sold, issued or granted, or authorized the
issuance of, (A) any capital stock or other security (except for Parent Common
Stock issued upon the valid exercise of outstanding Parent Options), (B) any
option, warrant or right to acquire any capital stock or any other security
(except for Parent Options), or (C) any instrument convertible into or
exchangeable for any capital stock or other security; (iv) received any
acquisition proposal from any Person; or (v) changed any of its methods of
accounting or accounting practices, except as required by GAAP;
(D) Parent has not (i) sold or otherwise disposed of, or acquired,
leased, licensed, waived or relinquished any material right or other material
asset to, from or for the benefit of, any other Person except for rights or
other assets sold, disposed of, acquired, leased, licensed, waived or
relinquished in the ordinary course of business and consistent with past
practice; (ii) made any pledge of any of its material assets or otherwise
permitted any of its material assets to become subject to any Encumbrance,
except in the ordinary course of business and consistent with past practice; or
(iii) guaranteed any indebtedness for borrowed money.
3.6 COMPLIANCE WITH LEGAL REQUIREMENTS. To the Knowledge of Parent,
Parent is in compliance with all material Legal Requirements that are applicable
to it or to the conduct of its business or the ownership or use of any of its
assets, except where the failure to comply has not had a material adverse effect
on Parent.
3.7 GOVERNMENTAL AUTHORIZATIONS. The Governmental Authorizations held
by Parent are valid and in full force and effect, and collectively constitute
all Governmental Authorizations necessary (i) to enable Parent to conduct its
business in the manner in which its business is currently being conducted, and
(ii) to permit Parent to own and use its assets in the manner in which they are
currently owned and used. Parent is in compliance with the terms and
requirements of the respective Governmental Authorizations held by Parent.
3.8 LEGAL PROCEEDINGS; ORDERS. There is no pending Legal Proceeding,
and to the Knowledge of Parent, no Person has threatened to commence any Legal
Proceeding: (i) that involves Parent or any of the assets owned, used or
controlled by Parent or any Person whose liability Parent has or may have
retained or assumed, either contractually or by operation of law; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Merger or any of the other transactions
contemplated by this Agreement.
3.9 TITLE TO PROPERTIES. Parent owns (and has good, valid and
marketable title to), leases or has the legal right to use all material assets
used in the conduct of its business as of the Closing. All properties and assets
owned by Parent are owned free and clear of any Encumbrances, except for (i) any
lien for current Taxes not yet due and payable, and (ii) liens that have arisen
in the ordinary course of business and that (A) were not incurred in connection
20
with any indebtedness, (B) do not render property encumbered thereby
unmarketable and (C) do not (individually or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of Parent. To the Knowledge of Parent, as of the date of this
Agreement, no Person, is interfering with, violating, infringing upon or
misappropriating any material Intellectual Property Rights of Parent or any of
its Subsidiaries. To the Knowledge of Parent, as of the date of this Agreement,
Parent is not interfering with, violating, infringing upon or misappropriating
the Intellectual Property Rights of any other Person. There is no pending or, to
the Knowledge of Parent, threatened Legal Proceeding against Parent in which
Parent is alleged to have infringed, interfering with, misappropriated or
violated the Intellectual Property Rights of another Person.
3.10 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the corporate right, power and authority to perform their obligations under this
Agreement and the Ancillary Agreements; and the execution, delivery and
performance by Parent and Merger Sub of this Agreement and the Ancillary
Agreements have been duly authorized by all necessary action, including all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. No vote of Parent's stockholders is needed to adopt this
Agreement and the Ancillary Agreements or approve the Merger. Each of this
Agreement and the Ancillary Agreements has been duly and validly executed and
delivered by Parent and Merger Sub and constitutes the legal, valid and binding
obligation of Parent or Merger Sub, as applicable, enforceable against Parent or
Merger Sub, as applicable, in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.11 NO CONFLICT; CONSENTS.
(A) The execution, delivery and performance by each of Parent and
Merger Sub of this Agreement and the Ancillary Agreements to which it is a party
do not and will not (i) violate, conflict with or result in the breach of any
provision of the Certificate of Incorporation or By-laws of Parent or Merger
Sub, (ii) conflict with or violate any Legal Requirement or Governmental
Authorization applicable to Parent or Merger Sub or (iii) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which Parent or Merger Sub is a
party, except, in the case of clauses (ii) or (iii) above, as would not
adversely affect the ability of Parent or Merger Sub to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement or by the Ancillary Agreements.
(B) Except for the Certificate of Merger to be filed with the Secretary
of State of the State of Delaware, no consent, waiver, agreement, approval, or
authorization of, or declaration, filing, notice or registration to or with any
Governmental Body (i) is required for the execution, delivery and performance by
Parent or Merger Sub of this Agreement or any Ancillary Agreement or for the
consummation by Parent, Merger Sub or any of their Affiliates of the
transactions contemplated hereby and thereby or (ii) is necessary in order to
ensure the
21
legality, validity, binding effect or enforceability against Parent or Merger
Sub of this Agreement or any Ancillary Agreement to which either of them is a
party.
3.12 PARENT ACTION. The board of directors of Parent (at a meeting duly
called and held in accordance with the Parent Constituent Documents) has
unanimously determined that the issuance of the Parent 4% Convertible Notes in
the Merger is advisable and in the best interests of Parent. The Merger, the
issuance of the Parent 4% Convertible Notes in the Merger and the transactions
contemplated hereby do not require consent, approval or any other action by the
holders of any securities of Parent.
3.13 FINDER'S FEE. Except for fees, expenses, or commissions for ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners, LLC, no broker, finder, investment banker, valuation firm or
any other Person is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated thereby based upon arrangements made by or on behalf of Parent.
3.14 REGULATORY MATTERS. Parent represents that it is its own ultimate
parent entity as determined pursuant to 16 ▇.▇.▇.▇▇. 801.1(a)(3); and that the
acquisition price to be paid for the voting securities of the Company does not
equal or exceed $50 million.
3.15 PROMISSORY NOTES AND INDENTURE.
(A) The Parent 4% Convertible Notes have been duly authorized and
executed by Parent and, when authenticated in accordance with the provisions of
the Indenture and delivered to the Stockholders in accordance with the terms of
the Merger Agreement, will be valid and binding obligations of Parent,
enforceable against Parent in accordance with their terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer
or conveyance, reorganization, arrangement, moratorium or other similar laws
affecting creditors' rights generally, and by general equitable principles.
(B) The Indenture has been duly authorized, executed and delivered by
Parent, and is a valid and binding agreement of Parent, enforceable against
Parent in accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, fraudulent transfer or conveyance,
reorganization, arrangement, moratorium or other similar laws affecting
creditors' rights generally, and by general equitable principles. The execution,
delivery and performance by Parent of the Indenture do not and will not (i)
violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-laws of Parent or any of its Subsidiaries,
(ii) conflict with or violate any Legal Requirement or Governmental
Authorization applicable to Parent or any of its Subsidiaries or (iii) conflict
with, or result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, any Parent
Contract.
(C) The shares of Parent Common Stock issuable upon conversion of the
Parent 4% Convertible Notes have been duly authorized and reserved for issuance
and, when issued upon conversion of the Parent 4% Convertible Notes in
accordance with the terms of the
22
Parent 4% Convertible Notes, will be validly issued, fully paid and
non-assessable. The issuance of the shares of Parent Common Stock will not be
subject to any preemptive or similar rights under the Parent Constituent
Documents or under any Parent Contract.
3.16 PARENT'S AND MERGER SUB'S DUE DILIGENCE, KNOWLEDGE AND EXPERTISE.
Parent and Merger Sub have conducted all of the investigation and due diligence
which they deem necessary for purposes of evaluating the Merger and entering
into this Agreement. Parent and Merger Sub acknowledge and agree that they have
substantial business experience, and financial, legal, accounting and other
expertise to conduct a comprehensive investigation as to all matters they deem
relevant regarding the Company, its business, financial condition, legal and
regulatory matters, and all other matters. Parent and Merger Sub acknowledge and
agree that except as set forth in this Agreement and the Ancillary Agreements,
(i) neither the Company nor any of its Representatives is making any
representation, warranty, covenant or agreement with respect to the matters
contained herein, and (ii) Parent and Merger Sub have not relied upon any
representations from the Stockholders or any Affiliates, employees, agents, or
other representatives of the Stockholders in considering and concluding the
Merger.
3.17 FULL DISCLOSURE. None of the representations and warranties made
by Parent or Merger Sub in this Agreement, as such representations or warranties
are modified by the Disclosure Schedules and/or the attachments thereto, contain
any untrue statement of a material fact, or omit any material fact the omission
of which would make any statements made herein, in light of the circumstances
under which they were made, not misleading.
SECTION 4. COVENANTS OF THE PARTIES
4.1 ADDITIONAL AGREEMENTS. Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions reasonably
necessary to consummate the Merger and make effective the other transactions
contemplated by this Agreement as soon as practicable.
4.2 EMPLOYEE BENEFIT MATTERS.
(A) From and after the Effective Time, Parent shall maintain employee
benefit plans, programs, policies and arrangements for Employees which provide
benefits that are no less favorable in the aggregate to those provided under the
applicable employee benefit plans (as defined in Section 3(3) of ERISA
(excluding plans exempt under Section 201(2) of ERISA)) of Parent generally
available to the employees of Parent. Parent shall, or shall cause the Surviving
Corporation to, recognize for each Employee prior service recognized under the
Welfare Plans of the Company of each Employee as service under the employee
benefit plans of Parent or its Subsidiaries for purposes of eligibility and
vesting (but not for purposes of benefit accruals) in which such Employee is
eligible to participate following the Effective Time. From and after the
Effective Time, Parent shall use commercially reasonable efforts, or shall cause
the Surviving Corporation to use commercially reasonable best efforts, (i) to
cause any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Parent or its Subsidiaries to be waived with
respect to the Employees, and their eligible dependents to the extent that such
Employees and their eligible dependents were covered or would have been covered
under the group health plans of the Company immediately prior to the Effective
Time, and (ii) give each Employee credit, for the plan year in which such
Employee commences
23
participation in the plans of Parent or its Subsidiaries, towards applicable
deductibles and annual out-of-pocket limits for expenses incurred prior to the
commencement of participation; provided, however, that no Employee had a lapse
or gap in coverage under any group health plan of the Company for more than
sixty (60) days within the last year.
(B) From and after the Effective Time, Parent shall ensure (i) that
each Employee (other than Employees with written severance agreements) is
entitled to the benefits of the severance policies of Parent applicable to the
current employees of Parent and its subsidiaries as in effect immediately prior
to the Effective Time, and (ii) that for all purposes of the severance policies
of Parent each Employee receives full credit for his or her prior service with
the Company. Without limiting the generality of the foregoing, Parent covenants
that it will cause the Surviving Corporation to comply with all severance
agreements with employees of the Company that are listed in Part 4.2(b) of the
Parent Disclosure Schedule, except as such severance agreements may be mutually
modified by the Surviving Corporation and the respective Employee.
4.3 DIRECTORS AND OFFICERS OF THE COMPANY.
(A) Parent shall cause all rights to indemnification existing in favor
of those Persons who are or were directors and officers of the Company prior to
or as of the date of this Agreement (the "INDEMNIFIED PERSONS") for acts and
omissions occurring prior to the Effective Time, as provided in the Company's
certificate of incorporation and bylaws (as in effect as of the date of this
Agreement), to continue in effect after the consummation of the Merger and to
survive the Merger and to be observed by the Surviving Corporation to the
fullest extent permitted by Delaware law for a period of six years from the
Effective Time.
(B) From the Effective Time until the sixth (6th) anniversary of the
Effective Time, the Surviving Corporation shall maintain in effect, for the
benefit of the Indemnified Persons and the other insured parties named therein
with respect to their acts or omissions occurring prior to the Effective Time, a
"tail policy" based on the current policy of directors' and officers' liability
insurance and employee practices liability insurance maintained by the Company
as of the date of this Agreement; PROVIDED, HOWEVER, that Parent shall not be
obligated to make premium payments for such insurance to the extent such
premiums exceed in the aggregate $383,000.00, which amount reflects a credit
that is due the Company from the applicable insurer.
(C) The obligations of Parent and the Surviving Corporation under this
Section 4.3 shall not be terminated or modified in such a manner as to adversely
affect any Indemnified Person to whom this Section 4.3 applies without the
consent of such affected Indemnified Person (it being expressly agreed that the
Indemnified Person to whom this Section 4.3 applies shall be third party
beneficiaries of this Section 4.3).
(D) In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger; or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Parent or the Surviving
24
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 4.3.
4.4 QUOVADX RELATIONSHIPS. For a period of 30 days after the Closing
Date, the Stockholders will exercise their good faith effort to make the
individuals set forth on EXHIBIT D-1 reasonably available to assist Parent and
the Company in the negotiation to the satisfaction of Parent of (i) a Quovadx'
consent, if necessary, to the assignment or transfer by operation of law of the
existing Quovadx agreements in effect between Quovadx and the Company set forth
on EXHIBIT D-2 (the "QUOVADX AGREEMENTS"); and (ii) new payment terms of any
monies owed to Quovadx pursuant to any of the Quovadx Agreements. It is
expressly understood and acknowledged that notwithstanding anything in this
Section 4.4, the Stockholders do not guarantee a particular outcome with respect
to their assistance related to the Quovadx Agreements.
SECTION 5. CLOSING CONDITIONS.
Immediately prior to the Closing, each of the following shall have occurred:
5.1 AMENDED SERVICES AGREEMENTS. The separate Services Agreements
between the Company and each of Aetna Inc., CIGNA Health Corporation, Health
Net, Inc., Oxford Health Plans, Inc., Anthem Insurance Companies, Inc.,
PacifiCare Health Systems, Inc. and WellPoint Health Networks, Inc., shall have
been amended in the form of the Services Agreement Amendment attached hereto as
EXHIBIT E.
5.2 CERTAIN FEES. Parent shall pay simultaneously with the Closing in
full the ▇▇▇▇▇▇ Godward Amount, the ▇▇▇▇▇▇▇ Sachs Amount and shall deposit with
the Escrow Agent *****.
5.3 REGISTRATION RIGHTS AGREEMENT. Each of the Founders and Parent
shall have executed and delivered a registration rights agreement in the form
attached hereto as EXHIBIT F.
5.4 NDC ARRANGEMENT. A consent from NDC, substantially in the form
attached as EXHIBIT G hereto shall have been executed and delivered by the
parties thereto.
5.5 NOTES. At or prior to the Closing, and in any case immediately
prior to the Effective Time, each of the Original Promissory Notes listed on
EXHIBIT C-2 shall be cancelled and stamped "Paid in Full."
5.6 STOCKHOLDER AGREEMENT. On or before Closing, each of the
Stockholders shall have delivered to Parent and the Company the Stockholder
Undertaking Agreement in the form of EXHIBIT H.
5.7 WAIVER OF DISSENTERS RIGHTS. Each of the holders of common stock of
the Company shall have taken all appropriate action to waive in full any
applicable appraisal or dissenters rights arising under the DGCL.
5.8 NOTE INDENTURE. In connection with the issuance of the Parent 4%
Convertible Note, Parent and LaSalle Bank, N.A. shall have executed and
delivered pursuant to the Trust Indenture Act of 1039, as amended, an Indenture
in the form of EXHIBIT I (the "INDENTURE")
25
5.9 LEGAL OPINION. In connection with the issuance of the Parent 4%
Convertible Notes, counsel to Parent shall have delivered to the Stockholders a
legal opinion in the form of EXHIBIT J. In connection with the delivery of the
Company Stock Certificates, counsel to the Company shall have delivered to the
Parent a legal opinion in the form of EXHIBIT K.
5.10 LANDLORD CONSENT. At or before Closing, the Company shall have
caused the form of Landlord Consent in the form attached hereto as EXHIBIT L to
be delivered to the landlord of the lease office space located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ in accordance with the procedures for
providing notice under that certain lease Agreement entered into by and between
Tenant and Landlord, commencing on April 29, 2002 and shall have exercised
commercially reasonable efforts to have obtain such Landlord Consent; PROVIDED,
HOWEVER, that the Company shall not have any obligation to obtain such consent
prior to the Effective Time.
SECTION 6. INDEMNIFICATION; DEFENSE OF THIRD PARTY CLAIMS.
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall survive the Merger and the
Effective Time until 5 p.m. (New York City time) on the first anniversary of the
Closing Date. The representations and warranties of Parent and Merger Sub
contained in this Agreement shall survive the Merger and the Effective Time
until 5 p.m. (New York City time) on the due date of the Parent 4% Convertible
Notes. The sole and exclusive remedy and recourse of Parent, the Surviving
Corporation and their respective Affiliates for any and all Damages related to
this Agreement and the Escrow Agreement, including any breach of any
representations, warranties and covenants made by the Company in this Agreement
shall be limited to the right of offset against the Escrowed Convertible
Promissory Note in accordance with the terms of the Escrow Agreement.
6.2 INDEMNIFICATION. From and after the Effective Time, Parent and its
subsidiaries (collectively, the "INDEMNIFYING PARTY") shall hold harmless and
shall indemnify each Indemnitee from and against, and shall compensate,
reimburse and pay for, any Damages (i) which are directly or indirectly suffered
or incurred by any Indemnitee or to which any Indemnitee may otherwise become
subject; and (ii) which are a result of, any claims by any Person (other than
the Founders) with relationships to the Company, including, without limitation,
any present, former or future customer, creditor or vendor of the Company, (such
claims "COVERED CLAIMS") to the extent such Covered Claims relate solely to the
conduct of the business of the Company after the Effective Time; IT BEING
EXPRESSLY UNDERSTOOD, that the Indemnitees shall not be entitled to be
indemnified pursuant to this Section 6.2 for any Damages payable to Parent
pursuant to the terms of the Escrow Agreement or that would have been payable
under the Escrow Agreement but for the fact that the representations and
warranties have expired pursuant to Section 6.1.
6.3 DEFENSE OF THIRD PARTY CLAIMS.
(A) In the event of the assertion or commencement by any Person of any
claim or Legal Proceeding with respect to which any of the Indemnitees may be
entitled to indemnification pursuant to this Section 6, the respective
Indemnitee shall promptly give the
26
Indemnifying Party written notice of such claim or Legal Proceeding (a "CLAIM");
PROVIDED, HOWEVER, that any failure on the part of any of the Indemnitees to so
notify the Indemnifying Party shall not limit any of the Indemnitees' rights to
indemnification under this Section 6 (except to the extent such failure
materially prejudices the defense of such Legal Proceeding).
(B) Within ten days of delivery of such written notice, the
Indemnifying Party may elect (by written notice delivered to the Indemnitee) to
take all necessary steps properly to contest any Claim involving third parties
or to prosecute such Claim to conclusion or settlement. If the Indemnifying
Party makes the foregoing election, an Indemnitee will have the right to
participate at its own expense in all proceedings. If the Indemnifying Party
does not make such election within such period or fails to diligently contest
such Claim after such election, then the Indemnitee shall be free to handle the
prosecution or defense of any such Claim, and will take all necessary steps to
contest the Claim involving third parties or to prosecute such Claim to
conclusion or settlement. Neither the Indemnifying Party nor any Indemnitee will
compromise or settle any such Claim without the written consent of the other
party, such consent not to be unreasonably withheld; PROVIDED, HOWEVER, that,
upon five-day written notice to the Indemnified Parties, the Indemnifying Party
may settle any such Claim if (i) such settlement is without monetary cost to the
Indemnified Parties, (ii) such settlement fully and finally resolves all claims
arising in such Claim as against the Indemnified Parties with prejudice, and
(iii) such settlement does not result and does not give rise to any future
obligation or other Liability (whether to perform any covenant or refrain from
engaging in any activity or otherwise) on the part of any of the Indemnified
Parties or their respective Affiliates.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
7.2 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
7.3 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
27
IF TO PARENT:
PROXYMED, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President and
General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPY TO (WHICH COPY SHALL NOT CONSTITUTE NOTICE):
HOLLAND & KNIGHT
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE COMPANY:
MEDUNITE, INC.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the Board
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO (WHICH COPY SHALL NOT CONSTITUTE NOTICE):
COOLEY GODWARD LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
7.4 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
7.5 HEADINGS. The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
28
7.7 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of Delaware (without
giving effect to principles of conflicts of laws).
7.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns (if
any). This Agreement may not be assigned, by operation of law of otherwise, by
any party hereto without the express written consent of the Founders, and any
such purported assignment shall be null and void.
7.9 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
7.10 WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
7.11 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered by Parent and each of the Stockholders.
7.12 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
7.13 PARTIES IN INTEREST. Except for (i) the provisions of Section 6
which shall be for the express benefit of the Indemnitees, (ii) the provisions
of Section 4.4 which shall be for the express benefit of the Persons specified
therein, and (iii) the provisions of Section 3 which shall be for the express
benefit of the Stockholders, none of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns (if any).
29
7.14 ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements set
forth the entire understanding of the parties hereto relating to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject matter hereof and
thereof.
7.15 CONSTRUCTION.
(A) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(B) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(C) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(D) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
30
The parties hereto have caused this Agreement to be executed and
delivered as of the date first set forth above.
PROXYMED, INC.
a Florida corporation
By:
---------------------------------------
MEDUNITE INC.
a Delaware corporation
By:
---------------------------------------
DAVIE ACQUISITION CORP.
a Delaware corporation
By:
---------------------------------------
[SIGNATURE PAGE TO AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION]
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this EXHIBIT A):
AFFILIATE. "AFFILIATE" shall mean, with respect to any Person, any
other Person, directly or indirectly, controlling, controlled by or under common
control with such Person.
AGGREGATE CASH MERGER CONSIDERATION. "AGGREGATE CASH MERGER
CONSIDERATION" shall equal (A) $10,000,000 MINUS (B) the aggregate amount paid
in cash at the Closing with respect to the Notes set forth in EXHIBIT C-1 MINUS
(C) the sum of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Amount, the Cooley Godward Amount and *****.
ANCILLARY AGREEMENT. "ANCILLARY AGREEMENTS" shall mean, the
Registration Rights Agreements, each party's respective Disclosure Schedules to
this Agreement, any Exhibits to this Agreement, the Stockholders' Undertaking
Agreement, the Indenture and the Escrow Agreement.
BALANCE SHEET. "BALANCE SHEET" shall have the meaning set forth in
Section 2.4.
BALANCE SHEET DATE. "BALANCE SHEET DATE" shall have the meaning set
forth in Section 2.4.
CERTIFICATE OF MERGER. "CERTIFICATE OF MERGER" shall have the meaning
set forth in Section 1.3.
CLAIM. "CLAIM" shall have the meaning set forth in Section 6.3(a).
CLASS A COMMON STOCK. "CLASS A COMMON STOCK" shall have the meaning set
forth in Section 2.3.
CLASS B COMMON STOCK. "CLASS B COMMON STOCK" shall have the meaning set
forth in Section 2.3.
CLOSING. "CLOSING" shall have the meaning set forth in Section 1.3.
CLOSING DATE. "CLOSING DATE" shall have the meaning set forth in
Section 1.3.
CODE. "CODE" shall mean the Internal Revenue Code of 1986, as amended
and any applicable regulations promulgated thereunder.
COMPANY COMMON STOCK. "COMPANY COMMON STOCK" shall have the meaning set
forth in Section 2.3(a).
COMPANY CONSTITUENT DOCUMENTS. "COMPANY CONSTITUENT DOCUMENTS" shall
have the meaning set forth in Section 2.2.
COMPANY CONTRACT. "COMPANY CONTRACT" shall mean any Contract, including
any amendment or supplement thereto: (a) to which the Company is a party; (b) by
which the Company or any of its assets are or may become bound or under which
the Company has, or may become subject to, any obligation; or (c) under which
the Company has or may acquire any right or interest.
COMPANY DISCLOSURE SCHEDULE. "COMPANY DISCLOSURE SCHEDULE" shall mean
the schedule (dated as of the date of the Agreement and modifying the
representations and warranties of the Company in Section 2) delivered to Parent
on behalf of the Company on the date of this Agreement and signed by the
President of the Company.
COMPANY FINANCIAL STATEMENTS. "COMPANY FINANCIAL STATEMENTS" shall have
the meaning set forth in Section 2.4.
COMPANY IP. "COMPANY IP" means all Intellectual Property Rights and
Intellectual Property owned by the Company.
COMPANY PREFERRED STOCK. "COMPANY PREFERRED STOCK" shall have the
meaning set forth in Section 2.3(a).
COMPANY RETURNS. "COMPANY RETURNS" shall have the meaning set forth in
Section 2.12(a).
COMPANY SHARES. "COMPANY SHARES" means the Company Preferred Stock.
COMPANY STOCK CERTIFICATE. "COMPANY STOCK CERTIFICATE" shall have the
meaning set forth in Section 1.6.
CONTRACT. "CONTRACT" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, and any amendments or modifications
thereto, whether express or implied.
▇▇▇▇▇▇ GODWARD AMOUNT. "▇▇▇▇▇▇ GODWARD AMOUNT" shall mean the legal
fees and expenses incurred or reasonably expected to be incurred by the Company
for services provided by Cooley Godward LLP in connection with the preparation
for or operation of the auction of the Company resulting in the sale of the
Company pursuant to this Agreement or in connection with the negotiation,
execution and closing of this Agreement and the Ancillary Agreements as set
forth on a final invoice delivered to Parent and the Stockholders at the
Closing.
COVERED CLAIM. "COVERED CLAIM" shall have the meaning set forth in
Section 6.2.
*****.
CUSTOMER. "CUSTOMER" shall mean any vendor, payor, provider or other
customer of the Company.
DAMAGES. "DAMAGES" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
EFFECTIVE TIME. "EFFECTIVE TIME" shall have the meaning set forth in
Section 1.3.
EMPLOYEE. "EMPLOYEE" shall mean any employee of the Company as of the
Effective Time.
EMPLOYEE BENEFIT PLAN. "EMPLOYEE BENEFIT PLAN" shall have the meaning
set forth in Section 2.13(a).
ENCUMBRANCE. "ENCUMBRANCE" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature affecting property, real or
personal, tangible or intangible, including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset, any restriction on the possession, exercise or transfer
of any other attribute of ownership of any asset, any lease in the nature
thereof and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statute of any jurisdiction).
ENTITY. "ENTITY" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ESCROW AGENT. "ESCROW AGENT" shall have the meaning set forth in
Section 1.7.
ESCROWED PARENT 4% CONVERTIBLE NOTE. "ESCROWED PARENT 4% CONVERTIBLE
NOTE" shall have the meaning set forth in Section 1.7.
EXCHANGE ACT. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended and, the rules and regulations promulgated thereunder.
ENVIRONMENTAL LAW. "ENVIRONMENTAL LAW" means any federal, state, local
or foreign Legal Requirement relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
FOUNDERS. "FOUNDERS" shall mean the Stockholders.
GAAP. "GAAP" shall mean generally accepted accounting principles,
applied on a basis consistent with the basis on which the Company Financial
Statements were prepared.
▇▇▇▇▇▇▇ SACHS AMOUNT. "▇▇▇▇▇▇▇ ▇▇▇▇▇ AMOUNT" shall mean any fees and
expenses incurred by the Company for services provided by ▇▇▇▇▇▇▇ Sachs & Co. in
connection with the preparation for or operation of the auction of the Company
resulting in the sale of the Company pursuant to this Agreement or in connection
with the negotiation, execution and closing of this Agreement and the Ancillary
Agreements pursuant to the letter agreement dated April 24, 2002 as set forth on
a final invoice delivered to Parent and the Stockholders at the Closing.
GOVERNMENTAL AUTHORIZATION. "GOVERNMENTAL AUTHORIZATION" shall mean
any: (a) approval, permit, license, certificate, franchise, permission,
clearance, registration, qualification or other authorization issued, granted,
given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement; or (b) right under any Contract with
any Governmental Body.
GOVERNMENTAL BODY. "GOVERNMENTAL BODY" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental, self-regulatory or quasi-governmental
authority of any nature (including any governmental division, department,
agency, commission, instrumentality, official, organization, unit, body or
Entity and any court or other tribunal).
INDEMNIFIED PERSON. "INDEMNIFIED PERSON" shall have the meaning set
forth in Section 4.3(a).
INDEMNIFYING PARTY. "INDEMNIFYING PARTY" shall have the meaning set
forth in Section 6.2.
INDEMNITEE. "INDEMNITEE" shall mean (a) each of the Founders; (b) each
Founder's current and future Affiliates; (c) the respective Representatives of
the Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective
successors and assigns of the Persons referred to in clauses "(a)", "(b)" and
"(c)" above.
INDENTURE. "INDENTURE" shall have the meaning set forth in Section 5.8.
INTELLECTUAL PROPERTY. "INTELLECTUAL PROPERTY" means all algorithms,
databases and data collections, diagrams, formulae, inventions (whether or not
patentable), know-how, logos, marks, methods, processes, proprietary
information, schematics, specifications, software, software source code,
techniques, works of authorship, and other forms of technology.
INTELLECTUAL PROPERTY RIGHTS. "INTELLECTUAL PROPERTY RIGHTS" means any
and all worldwide (a) rights associated with works of authorship, including
exclusive exploitation rights, copyrights, mask work rights, and moral rights;
(b) trademarks, service marks, tradenames, corporate names, trade dress, domain
names and other identifiers of source, together with the goodwill associated
therewith; (c) trade secret rights; (d) patents and industrial property rights;
and (e) registrations, applications, renewals, extensions, combinations,
divisions, or reissues with respect to the foregoing.
INTERIM FINANCIAL STATEMENTS. "INTERIM FINANCIAL STATEMENTS" shall have
the meaning set forth in Section 2.4.
KNOWLEDGE. An individual shall be deemed to have "KNOWLEDGE" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter after his or her reasonably diligent review of records kept
in the ordinary course of business within the area of his or her function and
responsibility. The Company shall be deemed to have "knowledge" of a particular
fact or other matter if any of the following persons has knowledge of such fact
or other matter: ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇. Parent
shall be deemed to have "knowledge" of a particular fact or other matter if any
of the following persons has knowledge of such fact or other matter: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇.
LEASE. "LEASE" shall have the meaning set forth in Section 2.6(c).
LEASED PROPERTY. "LEASED PROPERTY" shall have the meaning set forth in
Section 2.6(c).
LEGAL PROCEEDING. "LEGAL PROCEEDING" shall mean any ongoing or
threatened action, suit, litigation, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding),
hearing, inquiry, audit, examination or investigation commenced, brought,
conducted or heard by or before, or otherwise involving, any court or other
Governmental Body or any arbitrator or arbitration panel.
LEGAL REQUIREMENT. "LEGAL REQUIREMENT" shall mean any federal, state,
local, municipal, foreign or international, multinational or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Body.
LIABILITIES. "LIABILITIES" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, contingent, indirect, conditional, implied, vicarious, derivative,
joint, several or secondary liability), regardless of whether such debt,
obligation, duty or liability would be required to be disclosed on a balance
sheet prepared in accordance with GAAP and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
MATERIAL ADVERSE EFFECT. "MATERIAL ADVERSE EFFECT" or similar phrase
means any change in or effect on the Company or any circumstance that,
individually or in the aggregate with any other changes in or effects on the
Company is or is reasonably likely to be materially adverse to the business,
financial condition or results of operations of the Company; PROVIDED, HOWEVER,
that none of the following shall be deemed (either alone or in combination) to
constitute, and none of the following shall be taken into account in determining
whether there has been, such a material adverse change: any adverse change
(including any litigation, loss of employees, cancellation of or delay in
customer orders, reduction in revenue or net income
or disruption of business relationships) arising from or attributable or
relating to (A) the announcement or pendency of any of the transactions
contemplated by this Agreement, (B) conditions affecting the industry or
industry sector in which the Company or any of its subsidiaries operates or
participates, the United States economy or financial markets or any foreign
economy or financial markets in any location where the Company or any of its
subsidiaries has material operations or sales, (C) compliance with the terms of,
or the taking of any action required or otherwise contemplated by, this
Agreement. The Company is not making any representations and warranties
regarding future financial performance, and the failure of the Company following
the Closing to meet any projections, estimates, forecast or plan developed or
made prior to the Closing shall not constitute PER SE evidence of a Material
Adverse Effect.
MATERIAL COMPANY IP CONTRACTS. "MATERIAL COMPANY IP CONTRACTS" means
all Contracts governing the licenses of Intellectual Property or Intellectual
Property Rights from the Company to a third party or from a third party to the
Company, but excluding shrink-wrap or click-through licenses of commercially
available off-the-shelf computer software and Contracts with Customers entered
into in the ordinary course of business.
MATERIAL COMPANY LICENSED IP. "MATERIAL COMPANY LICENSED IP" means all
Intellectual Property and Intellectual Property Rights licensed to the Company,
but excluding Intellectual Property and Intellectual Property Rights licensed
pursuant to shrink-wrap or click-through licenses of commercially available
off-the-shelf computer software and any other Intellectual Property and
Intellectual Property Rights that are generally available for license without
significant cost.
MATERIAL CONTRACTS. "MATERIAL CONTRACTS" shall have the meaning set
forth in Section 2.7.
MATERIALS OF ENVIRONMENTAL CONCERN. "MATERIALS OF ENVIRONMENTAL
CONCERN" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any applicable Environmental Law or that is otherwise a
danger to health, reproduction or the environment.
MERGER CONSIDERATION. "MERGER CONSIDERATION" shall have the meaning set
forth in Section 1.5(b).
NDC. "NDC" shall mean NDC Health, Inc. (formerly known as National Data
Corporation, a Delaware corporation).
ORDER. "ORDER" shall mean any writ, decree, injunction, order or
similar action.
ORIGINAL PROMISSORY NOTE. "ORIGINAL PROMISSORY NOTE" shall mean the
notes and promissory notes listed on EXHIBIT C-1 and EXHIBIT C-2.
PARENT BALANCE SHEET. "PARENT BALANCE SHEET" shall have the meaning set
forth in Section 3.4(b).
PARENT BALANCE SHEET DATE. "PARENT BALANCE SHEET DATE" shall have the
meaning set forth in Section 3.4(b).
PARENT COMMON STOCK. "PARENT COMMON STOCK" shall have the meaning set
forth in Section 3.3(a).
PARENT CONSTITUENT DOCUMENTS. "PARENT CONSTITUENT DOCUMENTS" shall have
the meaning set forth in Section 3.2.
PARENT CONTRACT. "PARENT CONTRACT" shall mean any Contract, including
any amendment or supplement thereto: (a) to which Parent or any of its
Subsidiaries is a party; (b) by which Parent, its Subsidiaries or any of its
assets are or may become bound or under which Parent or any of its Subsidiaries
has, or may become subject to, any obligation; or (c) under which Parent or any
of its Subsidiaries has or may acquire any right or interest.
PARENT 4% CONVERTIBLE NOTE. "PARENT 4% CONVERTIBLE NOTE" shall mean the
4% Convertible Note due December 31, 2008 issued pursuant to the Indenture.
PARENT DISCLOSURE SCHEDULE. "PARENT DISCLOSURE SCHEDULE" shall mean the
schedule (dated as of the date of the Agreement and modifying the
representations and warranties of Parent in Section 3) delivered to the Company
on behalf of Parent on the date of this Agreement and signed by the President of
Parent.
PARENT FINANCIAL STATEMENTS. "PARENT FINANCIAL STATEMENTS" shall have
the meaning set forth in Section 3.4(b).
PARENT OPTIONS. "PARENT OPTIONS" shall have the meaning set forth in
Section 3.3(c).
PARENT PREFERRED STOCK. "PARENT PREFERRED STOCK" shall have the meaning
set forth in Section 3.3(a).
PARENT SEC DOCUMENTS. "PARENT SEC DOCUMENTS" shall have the meaning set
forth in Section 3.4(a).
PAYER CUSTOMERS. "PAYER CUSTOMERS" shall mean any Customer, including
that, directly or indirectly, provide, deliver, arrange for, insure or
facilitate the provision of health care services to any person(s) through health
care providers, health maintenance organizations, managed care entities,
insurance companies, health care financing entities or other similar means.
PERMITTED ENCUMBRANCE. "PERMITTED ENCUMBRANCE" shall have the meaning
set forth in Section 2.6.
PERSON. "PERSON" shall mean any individual, Entity or Governmental
Body.
PLAN. "PLAN" shall have the meaning set forth in Section 2.13(a).
QUOVADX AGREEMENT. "QUOVADX AGREEMENT" shall have the meaning set forth
in Section 4.4.
REGISTERED IP. "REGISTERED IP" means all Intellectual Property and
Intellectual Property Rights that are registered or filed with or issued by any
Governmental Body, including all patents, registered copyrights, and registered
trademarks and all applications for any of the foregoing.
REPRESENTATIVES. "REPRESENTATIVES" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
SUBSIDIARY. Any Entity shall be deemed to be a "SUBSIDIARY" of another
Person if such Person directly or indirectly (a) has the power to direct the
management or policies of such Entity or (b) owns, beneficially or of record,
(i) an amount of voting securities or other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or (ii) at least 50%
of the outstanding equity or financial interests of such Entity.
SURVIVING CORPORATION. "SURVIVING CORPORATION" shall have the meaning
set forth in Section 1.1.
TAX. "TAX" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "TAX RETURN" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
VENDOR CUSTOMERS. "VENDOR CUSTOMERS" shall mean any Customers that are
practice management system providers, service bureaus, billing services or other
entities providing EDI transaction submission services or related services to
providers.