Exhibit 10.1
Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
by and among
BLUE CROSS AND BLUE SHIELD OF MASSACHUSETTS, INC.
and
CAREINSITE, INC.
February 14, 2000
TABLE OF CONTENTS
Page
Sale and Delivery of the Acquired Assets.......................................1
Sale of the Acquired Assets.................................................1
Consent Contracts...........................................................3
Purchase Price..............................................................3
Assumption of Liabilities; Etc..............................................4
Allocation of Purchase Price and Assumed Liabilities........................5
The Closing.................................................................5
Proration...................................................................5
Registration Right..........................................................6
The Seller's Contingent Rights to Put Shares to the Buyer..................12
Additional Registration Right..............................................13
Reserved Rights in Names...................................................14
Closing Expenses and Related Taxes.........................................14
Bulk Transfer Laws.........................................................14
Further Assurances.........................................................14
Restrictive Legend.........................................................15
Representations of the Seller.................................................16
Organization...............................................................16
Authorization..............................................................16
Ownership of the Acquired Assets...........................................17
Litigation.................................................................17
Fixed Assets...............................................................17
Assigned Contracts.........................................................17
Compliance with Agreements and Laws........................................18
Taxes......................................................................18
Trade Names and Other Intangible Property..................................19
Regulatory Approvals.......................................................19
Business...................................................................19
Financial Statements.......................................................20
Representations of the Buyer..................................................20
Organization and Authority.................................................20
Authorization..............................................................20
Regulatory Approvals.......................................................21
Litigation.................................................................21
Compliance with Agreement and Laws.........................................21
Capitalization.............................................................21
The Buyer's Public Information.............................................22
Access; Confidentiality.......................................................22
Access to Management, Properties and Records...............................22
Confidentiality............................................................22
Pre-Closing Covenants of the Seller...........................................23
Conduct of Business........................................................23
Absence of Material Changes................................................23
Compliance with Laws.......................................................23
Continuing Obligation to Inform............................................24
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings..................................................24
Financial Statements.......................................................24
Consultation...............................................................24
Covenants of the Buyer........................................................24
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings..................................................24
Public Announcements.......................................................24
Employee Matters..............................................................25
Reasonable Efforts to Obtain Satisfaction of Conditions.......................25
Conditions to Obligations of the Buyer........................................25
Continued Truth of Representations and Warranties of the Seller;
Compliance with Covenants and Obligations..................................25
Corporate Proceedings......................................................26
Governmental Approvals.....................................................26
Adverse Proceedings........................................................26
Absence of Material Changes................................................26
The Acquired Assets........................................................26
Services Agreement.........................................................26
Portal Agreement...........................................................27
Financial Statements from the Seller.......................................27
Closing Deliveries.........................................................27
Conditions to Obligations of the Seller.......................................28
Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations..................................28
Corporate Proceedings......................................................28
Governmental Approvals.....................................................29
Adverse Proceedings........................................................29
Absence of Material Adverse Changes........................................29
Services Agreement.........................................................29
The Buyer Common Stock.....................................................29
Financial Statements.......................................................29
Closing Deliveries.........................................................29
Indemnification...............................................................30
By the Seller..............................................................30
By the Buyer...............................................................31
Claims for Indemnification.................................................31
Defense by Indemnifying Party..............................................31
Payment of Indemnification Obligation......................................32
Survival of Representations; Claims for Indemnification....................32
Additional Agreements.........................................................33
Proprietary Information....................................................33
Sharing of Data............................................................33
Cooperation in Litigation..................................................33
Non-Competition and Non-Solicitation.......................................34
Covenant Not to Discontinue to Use Services................................34
Enforcement of Confidentiality Agreements..................................35
Breach of Representation in Section 2.11...................................35
Termination of Agreement......................................................35
Termination by Lapse of Time...............................................35
ii
Termination by Failure to Agree Upon the Services Agreement
and the Portal Agreement...................................................35
Termination by Agreement of the Parties....................................35
Termination by Reason of Breach............................................35
Termination by Change of Control...........................................36
No Recourse................................................................36
Brokers.......................................................................36
For the Seller.............................................................36
For the Buyer..............................................................37
Notices.......................................................................37
Successors and Assigns........................................................37
Entire Agreement; Amendments; Attachments.....................................38
Expenses......................................................................38
Legal Fees....................................................................38
Governing Law; Waiver of Jury Trial...........................................38
Interpretation................................................................38
Section Headings...........................................................38
Gender.....................................................................39
Knowledge..................................................................39
Severability..................................................................39
Blue Cross and Blue Shield Association........................................39
Counterparts..................................................................39
iii
Exhibits
--------
A - Proposal Letter
B - Services Agreement
C - Portal Agreement
D - Confidentiality and Non-Disclosure Agreement
iv
Index to Defined Terms
Term Section
---- -------
Acquired Assets.................................................1.1(a)
Affiliate.......................................................1.8(a)
Agreement.....................................................Preamble
Antitrust Division................................................2.10
Assigned Contracts..............................................2.6(a)
Association.........................................................23
Assumed Liability (Liabilities).................................1.4(a)
Attorney General...................................................1.6
▇▇▇▇ of Sale...................................................9.11(a)
Business Day....................................................1.8(a)
Buyer.........................................................Preamble
Buyer Approvals....................................................3.3
Buyer Common Stock..............................................1.3(a)
Buyer Indemnified Parties.........................................11.1
Buyer's Disclosure Schedule........................................3.2
Buyer SEC Documents................................................3.7
Cash Payment....................................................1.3(a)
Change of Control.................................................13.5
Closing.........................................................1.1(a)
Closing Date.......................................................1.6
Code...............................................................1.5
Common Stock....................................................1.8(a)
Consent Contracts..................................................1.2
Division......................................................Recitals
Employment Obligations............................................7(b)
Encumbrances.......................................................2.3
Exchange Act....................................................1.8(a)
Excluded Assets.................................................1.1(c)
Excluded Liabilities............................................1.4(b)
Financial Statements..............................................2.12
First Put Shares................................................1.9(a)
Fixed Assets................................................1.1(a)(ii)
FTC...............................................................2.10
HSR Act...........................................................2.10
Indemnified Party.................................................11.3
Indemnifying Party................................................11.3
Instrument of Assumption........................................1.4(a)
Intellectual Property........................................1.1(a)(v)
Massachusetts Notice...............................................1.6
MMC................................................................4.2
Non-Short Sale Hedging Transaction..............................1.8(a)
Offered Share Put...............................................1.9(a)
Offered Shares..................................................1.8(c)
Operations....................................................Recitals
Per Share Sales Price...........................................1.3(c)
Person..........................................................1.8(a)
Portal Agreement...................................................9.8
Proposal Letter....................................................9.7
PTG Employees.....................................................7(a)
Register........................................................1.8(a)
Registration Statement..........................................1.8(c)
Remaining Share Put.............................................1.9(b)
Required Contracts...........................................1.1(a)(i)
Restriction Period..............................................1.8(a)
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Satisfaction of the Massachusetts Requirements.....................1.6
SEC.............................................................1.8(a)
Second Anniversary..............................................9.7(a)
Second Put Amount...............................................1.9(b)
Second Put Price................................................1.9(b)
Second Put Shares...............................................1.9(b)
Second Registration Shares.....................................1.10(a)
Second Registration Statement..................................1.10(a)
Securities Act..................................................1.8(a)
Seller........................................................Preamble
Seller Approvals..................................................2.10
Seller's Closing Statement......................................1.7(b)
Seller's Disclosure Schedule.......................................2.1
Seller Indemnified Parties........................................11.2
Selling Stockholder.............................................1.8(a)
Services Agreement.................................................9.7
Shares..........................................................1.3(a)
Stock Payment...................................................1.3(a)
Tax .........................................................2.8(b)(A)
Tax Return ..................................................2.8(b)(B)
Total Purchase Price............................................1.3(a)
Transaction Documents..............................................2.2
Transfer........................................................1.8(a)
Transition Service(s)...........................................9.7(a)
Unassigned Agreement............................................1.1(b)
vi
ASSET PURCHASE AGREEMENT
Agreement ("Agreement") made as of the 14th day of February, 2000 by
CareInsite, Inc., a Delaware corporation with its principal office at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ Drive Center Two, Elmwood Park, New Jersey 07407-1361 (the "Buyer")
and Blue Cross and Blue Shield of Massachusetts, Inc., a Massachusetts
non-profit corporation with its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Seller").
Recitals
The Buyer desires to purchase, and the Seller desires to sell, certain
assets, including without limitation, certain contracts and related license and
other rights and obligations, used by the Seller's Provider Technology Group
Division (the "Division") and required for the conduct of the Division's
operations related to the coordination and delivery of an electronic network
linking health care providers with insurance companies, government insurers,
HMO's and PPO's (the "Operations"). The Buyer is in the business of health care
connectivity and electronic commerce services; and, upon consummation of the
transactions provided for under this Agreement, the Buyer will conduct the
Operations previously conducted by the Division in order to provide, among other
things, the services set out in the Services Agreement (defined below).
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Sale and Delivery of the Acquired Assets.
1.1 Sale of the Acquired Assets.
(a) Acquired Assets. Subject to and upon the terms and conditions
of this Agreement, at the closing of the transactions contemplated by this
Agreement (the "Closing"), the Seller shall sell, transfer, convey, assign and
deliver to the Buyer, and the Buyer shall purchase from the Seller, the
following properties, assets and other claims, rights and interests owned by the
Seller (collectively, the "Acquired Assets"):
(i) all rights of the Seller in, to and under the contracts,
leases, licenses and agreements identified on Schedule
1.1(a)(i) (collectively, the "Required Contracts");
(ii) the machinery and equipment owned by the Seller on the Closing
Date, used by the Seller in the Division and identified in
Schedule 1.1(a)(ii) (the "Fixed Assets");
(iii) all books, records, technical and procedural manuals related
to the Acquired Assets;
(iv) all prepaid expenses (but not including any deferred income
taxes) of the Seller relating primarily to the Operations for
periods on or after the Closing Date;
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(v) all of the Seller's right, title and interest in and to the
service names, trade names or any derivation thereof, service
marks, service ▇▇▇▇ registrations, trademarks, trademark
registrations, and applications for service ▇▇▇▇ or trademark
registrations, and other intellectual property, as set forth
on Schedule 1.1(a)(v) and all of the Seller's trade secrets
and know-how primarily related to the Acquired Assets or the
Operations (collectively, the "Intellectual Property");
(vi) all confidential and proprietary information relating
primarily to the Operations, including, without limitation,
customer lists, supplier lists, sales, billing and collection
records, data collections, business plans, marketing plans and
correspondence;
(vii) all municipal, state and federal franchises, permits,
licenses, agreements, waivers and authorizations held or used
by the Seller primarily in connection with, or required for,
the Operations, to the extent transferable; and
(viii) the goodwill of the Seller relating to the Operations.
(b) Transition Contracts. The Seller and the Buyer agree that, if
any Consent Contract (as defined in Section 1.2) or related trademark or service
▇▇▇▇ is not, or cannot be, fully assigned and transferred to the Buyer in form
and substance reasonably acceptable to the Buyer (including, among other things,
without any restriction on the Buyer's ability to provide any goods or services
to any Person (as defined in Section 1.8) in any territory), the Seller shall
retain such contract, trademark or service ▇▇▇▇ and use its reasonable best
efforts (in cooperation and consultation with the Buyer) to use or make
available the same to the Buyer as Transition Services (as defined in Section
9.7(a)) to the extent reasonably necessary for the Buyer's use in fulfilling its
obligations under the Services Agreement. If, after using its reasonable best
efforts (in cooperation and consultation with the Buyer), the Seller is unable
to to use or make available any Consent Contract or related trademark or service
▇▇▇▇ to the Buyer (an "Unassigned Agreement"), the Buyer shall use its
reasonable best efforts to find a substitute or replacement asset or service for
the Unassigned Agreement. Notwithstanding anything to the contrary herein, the
Seller's obligations pursuant to this Section 1.1(b) shall be subject to those
limitations applicable to other Transition Services as provided in Sections
9.7(a), (b) and (c).
(c) Excluded Assets. There shall be excluded from the purchase
and sale contemplated under this Agreement, and excluded from the term "Acquired
Assets", all of the Seller's assets, other than those included in Section 1.1(a)
above, including, without limitation, the following property and assets
(collectively, the "Excluded Assets"):
(i) assets and property disposed of prior to the Closing in the
ordinary course of business;
(ii) the Seller's corporate, accounting and financial records
except as set forth in Section 1.1(a)(vi), including corporate
record books
2
containing minutes of meetings of directors and
such other records as have to do with the Seller's
organization;
(iii) all cash, cash equivalents, deposit accounts, certificates of
deposit and marketable securities and similar investments of
the Seller and the Division;
(iv) all accounts and notes receivable and other amounts due to the
Seller in respect of the Division;
(v) all service names, trade names or any derivation thereof,
service marks, service ▇▇▇▇ registrations, trademarks,
trademark registrations and applications for trademark and
service ▇▇▇▇ registration, except those names listed on
Schedule 1.1(a)(v);
(vi) claims processed by the Division or submitted to the Division
for processing prior to the Closing Date;
(vii) all demands, claims, actions or causes of action which the
Seller may have against any person;
(viii) assets listed on Schedule 1.1(b)(viii) that are used both in
the Division and in other lines of the Seller's business; and
(ix) all of the assets listed as Excluded Assets on Schedule
1.1(b).
(d) Condition of Acquired Assets. Except as set forth in this
Agreement, the Buyer agrees to purchase the Acquired Assets in an "as is" and
"where is" condition, without reliance upon any expressed or implied
representations or warranties of any nature made by or on behalf of or imputed
to the Seller.
1.2 Consent Contracts. The Seller shall use its reasonable efforts
(without being required, in connection therewith, to incur any material cost or
expense) to assign to the Buyer all of the rights of the Seller in, to and under
the contracts, leases and agreements identified on Schedule 1.2 (the "Consent
Contracts") on the Closing Date. The rights and obligations of the Seller in, to
and under a Consent Contract shall be deemed to be an Acquired Asset or Assumed
Liability if such Consent Contract is assigned to the Buyer.
1.3 Purchase Price.
(a) The total consideration for the Acquired Assets shall be $70
million (the "Total Purchase Price") to be paid by the Buyer at the Closing
subject only to the adjustments provided in Section 1.7 hereof. The Total
Purchase Price shall be satisfied by delivery by, or on behalf of, the Buyer of:
(a) $25 million (the "Cash Payment") and (b) 651,968 shares of common stock,
$.01 par value per share, of the Buyer ("Buyer Common Stock") (the "Stock
Payment"). The shares of Buyer Common Stock comprising the Stock Payment are
referred to in this Agreement as the "Shares".
3
(b) The Cash Payment must be paid by the Buyer to the Seller at
the Closing and must be paid by wire transfer of immediately available funds.
The Buyer shall deliver, or cause to be delivered, to the Seller at the Closing,
a duly executed stock certificate representing the Stock Payment.
(c) If the price per Share, net of any underwriting commissions
and discounts, payable to the Seller (the "Per Share Sales Price") in connection
with the underwritten public offering pursuant to the Registration Statement (as
defined below) is less than $69.0219 then, not later than five (5) Business Days
after the closing pursuant to the underwriting agreement executed in connection
with such offering, the Buyer will pay to the Seller an amount equal to (x) the
difference between $69.0219 and the Per Share Sales Price multiplied by (y)
one-half of the total number of Shares issued to the Seller as the Stock
Payment, in immediately available funds by wire transfer to an account
designated by the Seller.
1.4 Assumption of Liabilities; Etc.
(a) At the Closing, the Buyer shall execute and deliver an
Instrument of Assumption of Liabilities (the "Instrument of Assumption")
pursuant to which it shall assume and agree to perform, pay and discharge the
liabilities, obligations and commitments of the Seller under (i) the Required
Contracts and (ii) all Consent Contracts assigned to the Buyer pursuant to
Section 1.2, which involve payments or receipts by the Seller, in the ordinary
course and consistent with the past practice of the Seller and in compliance
with law as applicable to the Buyer, to the extent that such liabilities relate
to or arise out of the use of the Acquired Assets by or for the Buyer (each such
liability being hereinafter referred to singly as an "Assumed Liability" and all
such liabilities being hereinafter referred to collectively as the "Assumed
Liabilities").
(b) At the Closing, the Buyer shall not assume or agree to
perform, pay or discharge, and the Seller shall remain unconditionally liable
for, all claims, obligations, liabilities and commitments, fixed or contingent,
of the Seller other than the Assumed Liabilities, including all claims,
obligations, liabilities and commitments, fixed or contingent other than the
Assumed Liabilities, incurred in connection with owning, operating or otherwise
relating to the Division prior to the Closing (the "Excluded Liabilities").
Without limiting the foregoing, the Excluded Liabilities shall be deemed to
include, and the Buyer is not assuming, and shall have no obligation to
discharge or otherwise defend, any claims, obligation, liability or commitment
(i) with respect to the conduct of the Operations or any business of the
Division prior to the Closing Date, (ii) under any employee plans of the Seller,
(iii) relating to any environmental law relating to the Operations or the
Division prior to the Closing Date, (iv) based upon or arising out of any
illegal, tortious or wrongful actions of the Seller, (v) relating to Taxes now
or hereafter owed by the Seller or any affiliate of the Seller, or attributable
to the Acquired Assets or the Division, relating to any period, or any portion
of any period, ending at or prior to the Closing, (vi) relating to the Seller's
obligations under the Transaction Documents, (vii) relating to the Seller's
agreements with Electronic Data Systems, (viii) relating to or arising out of
any obligation to provide any compensation or benefits to any employee or
consultant of the Seller with respect to any work performed other than as an
employee or consultant of the Buyer or (ix) relating to or arising out of any
indebtedness for borrowed money of the Seller; provided, however, the Buyer
shall be responsible for the obligations referenced in Section 1.7 with respect
to which, and to the extent that, the Buyer has received a pro-rated benefit
therefrom pursuant to such Section 1.7.
4
1.5 Allocation of Purchase Price and Assumed Liabilities. The Purchase
Price will be allocated prior to the Closing as agreed upon by the parties
acting reasonably and in good faith. Such allocations provided for therein will
be made in accordance with the provisions of Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall be binding upon the
Buyer and the Seller for tax purposes. The Buyer and the Seller also each agree
to prepare IRS form 8594 in accordance with the foregoing and to file such form
in accordance with Section 1060 of the Code.
1.6 The Closing. The Closing shall take place at the offices of
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, Exchange Place, Boston, Massachusetts at 9:00 a.m.
Boston time on the last to occur of (i) February 29, 2000, (ii) the date on
which the early termination or expiration of the waiting period under the HSR
Act occurs or at such other place, time or date as may be mutually agreed upon
in writing by the parties hereto, (iii) the date next following the expiration
of thirty days after the Seller's delivery to the Office of the Massachusetts
Attorney General (the "Attorney General") of written notice given pursuant to
Section 8A of Chapter 180 of the Massachusetts General Laws (the "Massachusetts
Notice") concerning the transaction contemplated by this Agreement without any
objection to that transaction having been expressed by the Attorney General to
the Seller or, if any such objection shall have been expressed by the Attorney
General within that thirty-day period, the date next following the date upon
which all objections to the transaction expressed by the Attorney General in
response to the Massachusetts Notice shall have been withdrawn (the expiration
of the above thirty-day period without any such objection by the Attorney
General or the withdrawal of all such objections by the Attorney General being
hereinafter referred to as "Satisfaction of the Massachusetts Requirements")
(the "Closing Date").
1.7 Proration.
(a) The following items will be prorated between the Buyer and
the Seller as of the Closing Date:
(i) prepaid lease and service contracts, including amounts
deposited as security in connection with any lease or other
contract, and other items assumed by the Buyer;
(ii) prepaid charges for licenses assigned by the Seller to the
Buyer; and
(iii) all other items customarily prorated and adjusted in
connection with the sale of property of the type contemplated
by this Agreement.
All prorations required under this Section 1.7 shall be allocated so
that items relating to time periods prior to the Closing Date will be allocated
to the Seller and items relating to time periods beginning on or after the
Closing Date will be allocated to the Buyer.
(b) The Seller shall provide the Buyer in writing with its
good faith estimate of the amount payable to the Buyer or the Seller, as the
case may be, under Sections 1.7(a) not later than fifteen (15) days prior to the
Closing Date. The Buyer and the Seller shall agree upon an
5
estimate of the adjustments to be made to the Purchase Price for purposes of
determining the amount payable on the Closing Date. Within thirty (30) days
after the Closing Date, the Seller shall provide the Buyer a closing statement
(the "Seller's Closing Statement") which shall contain an explanatory letter
with back-up information, in each case setting forth the Seller's good faith
calculation of the adjustments to the Purchase Price or other amounts due
pursuant to Section 1.7 hereof. Within thirty (30) days after the Buyer's
receipt of the Seller's Closing Statement, the Buyer shall remit such amount to
the Seller or provide the Seller with written grounds for dispute thereof. The
Buyer and the Seller shall thereafter negotiate in good faith to resolve any
disagreements concerning the adjustments contemplated hereunder.
1.8 Registration Right.
(a) For the purposes of this Section 1.8, the following terms
have the following respective meanings:
"Affiliate" of the Seller means a person who controls, is
controlled by or is under common control with the Seller.
"Business Day" means any day, other than a Saturday, Sunday or
a day on which banks located in New York City shall be authorized or
required by law to close.
"Common Stock" means the Common Stock, $0.01 par value, of the
Buyer, as constituted as of the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the SEC hereunder, all as the same shall be in effect at
the time.
"Non-Short Sale Hedging Transaction" shall mean a Transfer
effected through a "collar," "put," or "put/call" arrangement or any
other derivative or hedging transaction (but not including a Transfer
effected through a "short sale" or "forward sale") relating to the
Common Stock which Transfer is not likely, in the reasonable judgment
of the Buyer, to have a detrimental effect on the trading market for
the Common Stock.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed to be a Person
under Section 13(d)(3) of the Exchange Act.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement
or document by the SEC.
"Restriction Period" shall be the period from the date hereof
until the earlier of (A) November 15, 2000 and (B) 45 days after the
timely filing of the Registration Statement (as defined below).
"SEC" means the U.S. Securities and Exchange Commission and
any successor agency.
6
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the SEC thereunder, all as the same shall be in effect at the time.
"Selling Stockholder" shall mean any person holding Common
Stock and entitled to register such Common Stock under the Securities
Act pursuant to a registration agreement with the Buyer, other than the
Seller.
"Transfer" shall mean to sell, transfer, hypothecate, assign
or otherwise dispose of any interest in any Common Stock. For purposes
of this Agreement, the term "Transfer" shall include any direct or
indirect (i) offer to sell, agreement to sell, sale of any option or
contract to purchase, grant of any option, right or warrant for the
sale of, loan, pledge or other disposition of or establishment of a
"put equivalent position" (within the meaning of Rule 16a-1(h) under
the Exchange Act), with respect to any shares of Common Stock, or any
security convertible into, exercisable for or exchangeable for Common
Stock, or (ii) swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of or
investment risk relating to Common Stock or any such other security,
whether any such transaction is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.
(b) Except as set forth in this Section 1.8, during the
Restriction Period, the Seller shall not Transfer any of the Shares without the
prior written consent of the Buyer (which may be withheld in the Buyer's sole
discretion, except that such consent shall not be unreasonably withheld or
delayed in the case of a Non-Short Sale Hedging Transaction); provided, however,
that this Section 1.8(b) shall not prohibit the Seller's purchase or sale of
shares of a publicly traded index security.
(c) The Buyer shall use its reasonable best efforts to file by
May 15, 2000, and in no event later than September 30, 2000, with the SEC a
registration statement on a form selected by the Buyer under the Securities Act
registering such portion, but in no event less than 325,984, of the Shares as
the Seller may request (such Shares as the Seller may request to be so
registered being hereinafter referred to as the "Offered Shares") for resale in
an underwritten public offering (the "Registration Statement").
(d) In furtherance of its obligations under this Section 1.8,
the Buyer shall:
(i) prepare and file with the SEC the Registration Statement with
respect to the Offered Shares and use its reasonable best
efforts to cause such Registration Statement to become
effective (provided that before filing a registration
statement or prospectus or any amendments or supplements
thereto, the Buyer will furnish to counsel of the Seller
copies of all such documents proposed to be filed);
(ii) prepare and file with the SEC, if applicable, such amendments
and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective until all Offered
Shares shall have
7
been sold, prepare any other similar offering documents that
may be required by law, and comply with the provisions of the
Securities Act with respect to the disposition of all
securities covered by such registration statement or offering
documents during such period in accordance with the intended
methods of disposition;
(iii) furnish to the Seller such number of copies of such
Registration Statement, each amendment and supplement thereto,
the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other
documents as the Seller may reasonably request in order to
facilitate the disposition of the Offered Shares;
(iv) use its best efforts to register or qualify the Offered Shares
under such other securities or blue sky laws of such
jurisdictions of the United States as the Seller reasonably
requests and do any other related acts that may be reasonably
necessary to enable the Seller to consummate the disposition
in such jurisdictions (provided that the Buyer will not be
required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this Section 1.8(d)(iv), or (B) consent to
general service of process in any such jurisdiction);
(v) notify the Seller, at any time when a prospectus relating
thereto is or would be required to be delivered under the
Securities Act, of the happening of any event as a result of
which the prospectus included in such Registration Statement
or any other similar offering document contains an untrue
statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and the Buyer will
prepare a supplement or amendment to such prospectus or other
document so that, as thereafter delivered to the purchasers of
the Offered Shares, such prospectus or other document will not
contain any untrue statement of a material fact or omit any
fact necessary to make the statements therein not misleading;
(vi) cause all the Offered Shares to be listed on each securities
exchange or quotation system on which the Buyer Common Stock
is then listed;
(vii) provide a transfer agent and registrar for all the Offered
Shares not later than the effective date of such Registration
Statement;
(viii) enter into such customary agreements (including underwriting
agreements on customary terms) and take all such other actions
as the Seller or the underwriters reasonably request in order
to expedite or facilitate the disposition of the Offered
Shares
8
(including, without limitation, effecting a stock split or a
combination of shares);
(ix) make available for inspection by the Seller, any underwriter
participating in the disposition pursuant to such Registration
Statement, and any attorney, accountant or any other agent
retained by the Seller or any underwriter, all financial and
other records, pertinent corporate documents and properties of
the Buyer, and cause the Buyer's officers, directors and
employees to supply all information reasonably requested by
the Seller, any underwriter, attorney, accountant or agent in
connection with such Registration Statement;
(x) obtain a comfort letter from the Buyer's independent
accountants in customary form and covering such matters of the
type customarily covered by comfort letters and an opinion
from the Buyer's counsel in customary form covering such
matters normally covered in a public issuance of securities,
in each case addressed to the Seller and underwriters.
(e) The Offered Shares will be sold pursuant to an underwritten
public offering in connection with which the Buyer shall have the right to
select the managing underwriter or underwriters; provided, however, the Seller
shall have the right to approve (i) such underwriter or underwriters and (ii)
the pricing term of such offering, including underwriting discounts and
commissions, such approval not to be reasonably withheld or delayed.
(f) The Buyer shall pay all expenses incident to the sale of the
Offered Shares pursuant to the Registration Statement, including without
limitation, all registration and filing fees (including filing fees with respect
to the National Association of Securities Dealers, Inc.), all fees and expenses
of complying with state securities or "blue sky" laws, all printing expenses,
all listing fees, all registrars' and transfer agents' fees, the fees and
disbursements of counsel for the Buyer and of its independent certified public
accountants, including the expenses of any special audits and/or "comfort"
letters required by or incident to such performance and compliance, the fees and
disbursements of one counsel to the Seller and all underwriting discounts and
commissions.
(g) It is a condition precedent to the obligations of the Buyer
to file the Registration Statement that the Seller (i) furnish to the Buyer such
information regarding the Seller and the Shares as the Buyer may reasonably
request and as may be required in connection with the action to be taken by the
Buyer and (ii) accept the reasonable terms of the underwriting of such offering
that have been agreed upon between the Buyer and the managing underwriter.
(h) In connection with the registration of the Offered Shares
under the Securities Act pursuant to the terms of this Agreement, the Buyer will
indemnify and hold harmless and pay and reimburse the Seller, each underwriter
of such Shares thereunder and each other person, if any, who controls the Seller
or each such underwriter within the meaning of the Securities Act, and their
respective officers, directors, members, shareholders, employees, agents and
affiliates against any losses, claims, damages or liabilities, joint or several,
including without limitation,
9
costs of defense and fees and expenses of legal counsel, as and when incurred,
to which the Seller, underwriter or controlling person and their respective
officers, directors, members, shareholders, employees, agents and affiliates,
may become subject under the Securities Act or otherwise insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstance in which they were made not
misleading, or any violation of the Securities Act, the Exchange Act or any
state securities or blue sky laws, or any rule or regulation thereunder, and
will reimburse the Seller, each such underwriter and each such controlling
person and their respective officers, directors, members, shareholders,
employees, agents and affiliates, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided that the Buyer will not be liable
to the Seller, any such underwriter and any such controlling or other person
referred to above in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon the Buyer's reliance
on an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished in writing by the
Seller, such underwriter or such controlling or other person referred to above
in writing specifically stating that it is for use in such Registration
Statement or prospectus. Notwithstanding the foregoing, the indemnity provided
in this Section 1.8 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected without
the consent of such indemnifying party (which consent shall not be unreasonably
withheld or delayed).
(i) In connection with the registration of the Shares under the
Securities Act pursuant hereto, the Seller will indemnify and hold harmless the
Buyer, each person, if any, who controls the Buyer within the meaning of the
Securities Act, each officer of the Buyer who signs the Registration Statement,
each director of the Buyer, each underwriter and each person who controls any
such underwriter within the meaning of the Securities Act against all losses,
claims, damages or liabilities, joint or several, as and when incurred, to which
the Buyer or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon reliance on any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement or any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Buyer and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided that the
Seller will be liable hereunder in any such case if and only to the extent that
any such loss, claim, damage or liability (or any action in respect thereof)
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with the
Financial Statements, or information furnished in writing by the Seller, such
underwriter or such controlling or other person referred to above in writing
specifically stating that it is for use in such Registration Statement or
prospectus, and provided that the liability of the Seller hereunder
10
shall be limited to the net proceeds received by the Seller from the sale of
Shares covered by such Registration Statement. Notwithstanding the foregoing,
the indemnity provided in this Section 1.8 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of such indemnifying party (which
consent shall not be unreasonably withheld or delayed).
(j) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 1.8 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 1.8 if and to the extent the indemnifying party is materially
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 1.8 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded based upon written advice of its own counsel that
there may be reasonable defenses available to it which are different from or
additional to those available to the indemnifying party or if the interests of
the indemnified party reasonably may be deemed to conflict with the interests of
the indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(k) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) the
Seller or any controlling person of the Seller makes a claim for indemnification
pursuant to this Section 1.8 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 1.8 provides for the indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the Seller
or any such controlling person in circumstances for which indemnification is
provided under this Section 1.8, then, in each such case, the Buyer and the
Seller will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) (i) in such
proportion as is appropriate to reflect the relative fault of the Buyer and the
Seller in connection with the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations (the relative fault of the Buyer and the
Seller to be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Buyer
or the Seller and the parties' relative intent, knowledge, access to information
and opportunity to
11
correct or prevent such statement or omission) or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as shall be appropriate to reflect the relative benefits
received by the Buyer and the Seller from the offering of the securities covered
by such Registration Statement; provided that, in any such case, (A) the Seller
will not be required to contribute any amount in excess of the public offering
price of all of the Shares offered by it pursuant to such Registration Statement
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
(l) With a view to making available the benefits of certain rules
and regulations of the SEC which may permit the sale of the Shares to the public
without registration, the Buyer agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act,
at all times;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Buyer under the Securities Act and
the Exchange Act at any time after the Closing Date; and
(iii) so long as the Seller owns any Shares, furnish to the Seller
forthwith upon request (at any time after the Closing Date) a
written statement by the Buyer as to its compliance with the
reporting requirements of Rule 144, and of the Securities Act
and the Exchange Act, a copy of the most recent annual or
quarterly report of the Buyer, and such other reports and
documents so filed as the Seller may reasonably request in
availing itself of any rule or regulation of the SEC allowing
the Seller to sell any such Shares without registration.
1.9 The Seller's Contingent Rights to Put Shares to the Buyer.
(a) Subject to Sections 1.8(e) and 18(g), if, for any reason, the
Registration Statement has not been declared effective on or before November 15,
2000 then the Seller shall have the right to demand (the "Offered Share Put")
that the Buyer purchase, at a price of $69.0219 per Share, up to 325,984 Shares
(the Shares tendered pursuant to the Offered Share Put shall be herein referred
to as the "First Put Shares"). The Seller shall notify the Buyer in writing of
its intention to exercise the Offered Share Put not later than prior to the
close of business on November 22, 2000, after which time the Offered Share Put
shall expire and be of no further force or effect. Within five Business Days
after the Seller notifies the Buyer of its exercise of the Offered Share Put,
the Seller shall deliver to the Buyer the certificates representing the First
Put Shares, free and clear of all liens, together with stock powers duly
endorsed to the Buyer on behalf of the Seller and, within two Business Days of
such delivery, the Buyer shall pay to the Seller an amount equal to (x) the
number of First Put Shares multiplied by (y) $69.0219, in immediately available
funds by wire transfer to an account designated by Seller.
12
(b) Subject to Sections 1.8 (e) and 1.8(g), if, for any reason,
the Registration Statement has not been declared effective on or before December
29, 2000 then the Seller shall have the right to demand (the "Remaining Share
Put") that the Buyer purchase, for a price equal to the average closing price
per Share on the NASDAQ National Market for the ten successive trading days
ending on December 29, 2000 (the "Second Put Price") up to all of the Shares
then still held by the Seller (the Shares tendered pursuant to the Remaining
Share Put shall be herein referred to as the "Second Put Shares"). The Seller
shall notify the Buyer of its intention to exercise the Remaining Share Put not
later than prior to the close of business on January 5, 2001, after which time
the Remaining Share Put shall expire and be of no further force or effect.
Within five Business Days after the Seller notifies the Buyer of its exercise of
the Remaining Share Put the Seller shall deliver to the Buyer the certificates
representing the Second Put Shares, free and clear of all liens, together with
stock powers duly endorsed to the order of the Buyer on behalf of the Seller
and, within two Business Days of such delivery, the Buyer shall pay to the
Seller an amount (the "Second Put Amount") equal to (x) the number of Second Put
Shares multiplied by (y) the Second Put Price, in immediately available funds by
wire transfer to an account designated by the Seller. Notwithstanding the
foregoing, at the option of the Buyer, in lieu of purchasing the Second Put
Shares the Buyer may arrange for the Seller to sell the Second Put Shares to a
third party if (x) such third party agrees to purchase the Second Put Shares on
terms no less favorable, including with respect to timing, than the Remaining
Share Put and (y) in the reasonable opinion of counsel to the Seller, such sale
would not violate the Securities Act.
1.10 Additional Registration Right.
(a) To the extent that (x) the Offered Shares represent less than
all of the Shares, (y) all of the Offered Shares shall have been sold pursuant
to the Registration Statement, (z) the number of Shares not sold pursuant to the
Registration Statement shall equal not less than 162,992 Shares, and subject to
the provisions of this Section 1.10, the Seller shall have the right,
exercisable on or after June 4, 2001, to request that the Buyer file a second
registration statement (the "Second Registration Statement") with respect to not
less than 162,992 Shares (the Shares with respect to which such Second
Registration Statement is requested being referred to herein as the "Second
Registration Shares") for resale pursuant to an underwritten public offering and
the Buyer shall use its reasonable best efforts to file such Second Registration
Statement within 90 days after such request by the Seller.
(b) Notwithstanding anything herein to the contrary, the Buyer
shall have the option to postpone and delay the filing or the effectiveness of
the Second Registration Statement, if the board of directors of the Buyer
reasonably determines in good faith that such registration would (i) interfere
with any material third party transaction then being pursued by the Buyer or any
of its affiliates or (ii) require the disclosure of material information
concerning the Buyer that is not yet publicly available; provided, however,
that, the Buyer shall, if required pursuant to Section 1.10(a), file the Second
Registration Statement not later than 180 days after a request by the Seller.
(c) The provisions of Section 1.8(a), (b), (c), (d), (e), (g),
(h), (i), (j), (k), and (l) shall be applicable to the Second Registration
Statement and the Second Registration Shares.
(d) The Seller shall pay all expenses incident to the Second
Registration Statement except those expenses, including underwriting discounts
and commissions and filing
13
fees, that the Buyer would have incurred pursuant to Section 1.8(f) but
did not incur because the Second Registration Shares were not Offered Shares,
which shall be paid for by the Buyer.
(e) The Seller's rights under Sections 1.9 and 1.10 shall not be
assignable.
1.11 Reserved Rights in Names. The Buyer understands that the
Seller has been doing and will continue to do business under the name "Blue
Cross and Blue Shield" and has used, and will continue to use, and to protect
and defend its rights to use, corporate names, trade names, trademarks and
service marks employing the words "Blue Cross and Blue Shield" and the like,
both singly and in combination with other words and symbols, in connection with
its current and future businesses. It is understood and agreed that the Seller
does not, in or pursuant to this Agreement, sell, convey, assign, transfer or
grant to the Buyer, either expressly or by implication or otherwise, any right,
license or authorization to use "Blue Cross and Blue Shield" or any other
corporate name, trade name, trademark or service ▇▇▇▇ other than those that are
included in Section 1.1(a)(v) to the Seller's Disclosure Schedule.
Notwithstanding anything to the contrary herein, after the Closing the Buyer
may, in its promotional literature and correspondence, (i) disclose that, under
the terms of this Agreement, the Buyer has succeeded the Seller in the operation
of the Division and (ii) describe the Buyer's rights under the terms of the
Services Agreement and refer to the Seller in connection therewith.
1.12 Closing Expenses and Related Taxes. Subject to Section 1.4(b)(vi),
each party shall pay at the Closing all transfer and conveyance taxes and costs
as are legally or customarily paid by such party in the Commonwealth of
Massachusetts. By way of example, the Buyer shall pay all fees for tax and
judgment lien searches and Uniform Commercial Code lien searches.
1.13 Bulk Transfer Laws. The parties hereto acknowledge that the
Seller, in its sole discretion, may not comply with the provisions of any bulk
sales laws of any state, if any or if applicable, to the transaction
contemplated hereby.
1.14 Further Assurances. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration, the Seller
promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment, notice and confirmation, and take such other action as
the Buyer may reasonably request to more effectively transfer, convey and assign
to the Buyer, and to confirm the Buyer's title to, all of the Acquired Assets,
to put the Buyer in actual possession and operating control thereof, to assist
the Buyer in exercising all rights with respect thereto, and to carry out the
purpose and intent of this Agreement. The Seller agrees that it will promptly
transfer or deliver to the Buyer from time to time, any cash or other property
that the Seller may receive after the Closing Date with respect to any claims,
contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items that may arise after the Closing
and that are included in the Acquired Assets. The Buyer agrees that it will
promptly transfer or deliver to the Seller from time to time, any cash or other
property that the Buyer may receive after the Closing with respect to any
claims, contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items that are included in the
Excluded Assets.
14
1.15 Restrictive Legend.
(a) Each certificate representing the Shares shall, and in each
case, subject to the provisions of and in compliance with this Agreement, be
stamped or otherwise imprinted with legends substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
"IN ADDITION, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN
ASSET PURCHASE AGREEMENT DATED AS OF FEBRUARY 14, 2000 AS IT
MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO
REGISTRATION OF TRANSFER OF THESE SHARES WILL BE MADE ON THE
BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL
HAVE ELAPSED OR BEEN SATISFIED OR COMPLIED WITH."
Upon request of the Seller, and subject to the restrictions in Section
1.8(b), the Buyer will remove the foregoing legend from the certificate or issue
to the Seller a new certificate therefor free of any transfer legend, if, in
conjunction with such request, the Buyer receives either the opinion referred to
in Section 1.13(b) or the "no action" letter referred to in Section 1.13(b) to
the effect that any transfer by the Seller of the Shares represented by the
certificate will not violate the Securities Act and applicable state securities
laws.
(b) Prior to any proposed transfer of the Shares (other than
pursuant to a Registration Statement), the Seller will give written notice to
the Buyer of its intention to effect such transfer. Each such notice must
describe the manner and circumstances of the proposed transfer in sufficient
detail, and must be accompanied (except in transaction in compliance with Rule
144) by either (i) a written opinion of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP or legal
counsel who is reasonable satisfactory to the Buyer, addressed to the Buyer and
reasonably satisfactory in form and substance to the Buyer's counsel, to the
effect that the proposed transfer of the Shares may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the SEC
to the effect that the proposed transfer of such securities without registration
will not result in a recommendation by the staff of the SEC that action be taken
with respect thereto, whereupon the Seller shall be entitled to transfer such
Shares in accordance with the terms of the notice delivered to the Buyer. Other
than Shares transferred pursuant to a Registration Statement, each certificate
evidencing the Shares transferred as above will bear the appropriate legend set
forth in Section 1.13(a), except that such certificate shall not bear such
legend to the extent applicable under the Securities Act if the opinion of
counsel or "no action" letter referred to above is to the further effect that
such legend is not required in order to establish compliance with any provisions
of the Securities Act.
15
2. Representations of the Seller.
As a material inducement to the Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, the Seller hereby makes to the
Buyer the representations and warranties contained in this Section 2. For
purposes of this Agreement, references to a "Person" shall mean an individual, a
corporation, an association, an estate, a trust, a partnership or any other
entity or organization.
2.1 Organization. The Seller is a non-profit hospital service
corporation and medical services corporation duly organized and validly existing
under the laws of the Commonwealth of Massachusetts with full corporate power
and authority to own, lease and operate the Acquired Assets, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby and thereby. Except as set forth in Section
2.1 to the Seller's Disclosure Schedule (the "Seller's Disclosure Schedule"),
the Seller does not own any subsidiary or interests in any corporation,
partnership, joint venture or other entity that participate in, or are
competitive with, the business of the Division.
2.2 Authorization. The Seller has full right, authority and power to
enter into this Agreement, the Services Agreement, the ▇▇▇▇ of Sale and the
Instrument of Assumption of Liabilities (collectively, the "Transaction
Documents") and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Seller of this Agreement and the
Transaction Documents has been duly authorized by all necessary corporate action
of the Seller, and no other corporate action on the part of the Seller is
required in connection therewith.
This Agreement and each Transaction Document constitutes, or when
executed and delivered will constitute, the valid and binding obligation of the
Seller enforceable in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity. The execution, delivery and
performance by the Seller of each Transaction Document:
(a) does not and will not violate any provision of the Seller's
organization documents;
(b) does not and will not violate any material laws, rules or
regulations of the United States, or any state or other jurisdiction (including
but not limited to any agency, bureau, division or commission thereof) relating
to the Acquired Assets, the Operations or the Assumed Liabilities;
(c) does not and will not, in any material respect, conflict with
or result in a breach of, constitute a default under, accelerate any obligation
under, or give rise to a right of termination, cancellation or acceleration or
to a loss of benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the Acquired Assets under any material (with respect to the Seller and
the Acquired Assets, individually or collectively) indenture, instrument,
mortgage, lien or other agreement to which the Seller is a party and by which
any of the Acquired Assets is bound or to which any of the Operations are
subject; or
16
(d) does not violate any judgment, decree, order or award of any
court, government body or arbitration.
2.3 Ownership of the Acquired Assets. Section 2.3 to the Seller's
Disclosure Schedule sets forth a true, correct and complete list of all material
claims, liabilities, liens, pledges, charges, collateral assignments, preemptive
or refusal rights, security interests, encumbrances and equities of any kind
affecting the Operations or the Acquired Assets (collectively, the
"Encumbrances"). The Seller is, and at the Closing will be, the true and lawful
owner of such Acquired Assets, and will have the right to sell and transfer to
the Buyer good, clear, record and marketable title to such Acquired Assets, free
and clear of all Encumbrances other than those agreed to by the parties and set
forth on Section 2.3 to the Seller's Disclosure Schedule. The delivery to the
Buyer of the instruments of transfer of ownership contemplated by this Agreement
will vest good and marketable or merchantable title to such Acquired Assets
which are tangible assets in the Buyer, free and clear of all Encumbrances other
than those agreed to by the parties and set forth in Section 2.3 to the Seller's
Disclosure Schedule.
2.4 Litigation. Except as set forth in Section 2.4 to the Seller's
Disclosure Schedule, the Seller is not a party to, or to the best of the
Seller's knowledge threatened with, and none of the Acquired Assets or
Operations are subject to, any litigation, suit, action, investigation,
arbitration, proceeding, controversy or material claim before any court,
regulatory body, administrative agency or other governmental authority relating
to or affecting the Acquired Assets or Operations or which, if adversely
determined, would have a material adverse effect on the Acquired Assets or
Operations. The Seller is not in violation of or in default with respect to any
judgment, order, writ, injunction, decree or rule of any court, regulatory body,
administrative agency or governmental authority or any regulation of any
administrative agency or governmental authority relating to or affecting the
Acquired Assets or Operations. The parties acknowledge that the list delivered
pursuant to this Section 2.4 is for informational purposes only and the Buyer is
not assuming any claim, obligation or other liability related to the matters
described thereby. Within the 3-year period immediately preceding the date of
this Agreement, no PTG Employee has ever brought any employee-related charges or
complaints against the Seller before any governmental department or agency and,
to the knowledge of the Seller, there are no facts upon which any such charges
or complaints could be based.
2.5 Fixed Assets. The Fixed Assets, in the aggregate, are in
substantially good operating condition and repair in all material respects,
normal wear and tear excepted.
2.6 Assigned Contracts. Except as set forth in Section 2.6 to the
Seller's Disclosure Schedule:
(a) each Required Contract and Consent Contract that is assigned to the
Buyer (such Required Contracts and Consent Contracts being collectively referred
to herein of the Seller's as the "Assigned Contracts") is a valid and binding
agreement of the Seller and, to the best knowledge, of each of the other parties
thereto;
(b) the Seller has not failed to fulfill any of its material
obligations required to be performed pursuant to the Assigned Contracts to the
extent that any such failure, alone or together with any other such failure, may
have a material adverse effect on the Operations or the Buyer's ability to
perform its obligations under the Services Agreement;
17
(c) the Seller is not in breach of or default under any Assigned
Contract in any material respect, and no event has occurred which with the
passage of time or giving of notice or both would constitute, in any material
respect, a default, result in a loss of rights or result in the creation of any
lien, charge or encumbrance, thereunder or pursuant thereto;
(d) to the best of the Seller's knowledge, there is no existing
material breach or default by any other party to any Assigned Contract, and no
event has occurred which with the passage of time or giving of notice or both
would constitute a material default by such other party, result in a material
loss of rights or result in the creation of any material lien, charge or
encumbrance thereunder or pursuant thereto; and
(e) the continuation, validity and effectiveness of each Assigned
Contract will not be affected by the transfer from the Seller to the Buyer under
this Agreement.
The representations contained in this Section 2.6 regarding the Consent
Contracts that are assigned to the Buyer are not made by the Seller at the time
of execution and delivery of this Agreement but will be made as of the Closing
Date.
2.7 Compliance with Agreements and Laws. The Seller has all material
licenses, permits and certificates from federal, state and local authorities
necessary to own and operate the Acquired Assets, to conduct the Operations, and
to enter into and perform the Seller's obligations under the Services Agreement.
The Seller is not in violation, in any material respect, of any law, regulation
or ordinance (including, without limitation, laws, regulations or ordinances
relating to building, zoning, environmental, disposal of hazardous substances,
land use or similar matters) relating to the Acquired Assets or the Operations.
2.8 Taxes.
(a) The Seller has filed all Tax Returns relating to the Division
or the Operations that it was required to file. All such Tax Returns were
correct and complete in all material respects. All Taxes owed by the Seller with
respect to the Division or the Operations (whether or not shown on any Tax
Return) have been paid. There are no security interests on any of the Acquired
Assets that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) As used in this Agreement:
(A) "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
(B) "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
18
2.9 Trade Names and Other Intangible Property. Except as otherwise
disclosed in Section 2.10 to the Seller's Disclosure Schedule, the Seller is the
sole and exclusive owner of the Intellectual Property. With respect to the
Division, or the Operations, the Seller has received no notice that it is
illegally or otherwise using the trade secrets, formulae or any property rights
of others.
2.10 Regulatory Approvals. Except as set forth on Section 2.10 to the
Seller's Disclosure Schedule, neither the execution and delivery by the Seller
of any Transaction Documents, nor the consummation by the Seller of the
transactions contemplated hereby or thereby, will require the Seller to file or
register with, to notify, or to obtain any permit, authorization, consent or
approval of, any federal, state or local government body, except for (i)
filings, registrations and notifications, that if not made, and permits,
authorizations, consents and approvals that if not obtained, would not have a
material adverse effect on the Buyer or the Acquired Assets or the Operations,
(ii) filings with the Federal Trade Commission ("FTC") and with the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
(iii) filings with the Commonwealth of Massachusetts Division of Insurance as
may be required by law or agreement and (iv) filings with the office of the
Attorney General of the Commonwealth of Massachusetts (subparagraphs (i) through
(iv) collectively, the "Seller Approvals"). As of the Closing, the Seller will
have obtained all the Seller Approvals and other permits, authorizations,
consents and approvals of any federal, state or local governmental body, or any
agency, bureau, division or commission thereof, required to consummate the
transactions contemplated hereby, other than any permits, authorizations,
consents or approvals that, if not obtained, would not have a material adverse
effect on the Buyer or the Acquired Assets or the Operations. The Buyer
acknowledges that it will be required to obtain permits, authorizations,
consents and approvals as a result of the transactions contemplated herein.
2.11 Business. Except as set forth in Section 2.11 of the Seller's
Disclosure Schedule or as otherwise agreed by the parties in writing:
(a) the Acquired Assets, together with the Transition Services
(as defined in Section 9.7(a)) to be provided by the Seller for the Buyer
pursuant to the Services Agreement (as defined in Section 9.7) constitute all
assets and rights necessary for the Buyer's conduct of the Operations as
required by that Services Agreement;
(b) the Acquired Assets and the Consent Contracts include all
assets, including without limitation proprietary rights and contracts, held or
controlled by or for the Seller as of the Closing Date and used primarily for or
in connection with the Operations; and
(c) the PTG Employees identified in Schedule 7(a) constitute all
of the Seller's current employees whose activities or responsibilities at any
time within six months prior to the Closing Date related primarily to the
conduct of the Operations.
2.12 Financial Statements. The books of account and other financial
records of the Division provided by the Seller to the Seller's accountants,
Ernst & Young LLP, and to the Buyer's accountants, in connection with the
preparation by Ernst & Young LLP of the financial statements reasonably agreed
upon by the Seller's accountants and the Buyer's accountants for
19
use by the Buyer in connection with the Buyer's financial reporting obligations
(collectively with all related notes and Schedules thereto, the "Financial
Statements"), (i) reflect all items of income and expense and all assets and
liabilities required to be reflected therein in accordance with generally
accepted accounting principles applied on a basis consistent with the past
practices of the Seller, (ii) are in all material respects complete and correct,
and do not contain or reflect any inaccuracies or discrepancies and (iii) have
been maintained in accordance with good business and accounting practices.
3. Representations of the Buyer.
As a material inducement to the Seller to enter into this Agreement and
consummate the transactions contemplated hereby, the Buyer hereby makes to the
Seller the representations and warranties contained in this Section 3.
3.1 Organization and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has requisite power and authority (corporate and other) to own its
properties and to carry on its business as now being conducted. The Buyer has
full power to execute and deliver this Agreement, the Services Agreement, the
▇▇▇▇ of Sale and the Instrument of Assumption of Liabilities and to consummate
the transactions contemplated hereby and thereby. Certified copies of the
Certificate of Incorporation and the Bylaws of the Buyer, as amended to date,
have been previously delivered to the Seller, are complete and correct, and no
amendments have been made thereto or have been authorized since the date
thereof.
3.2 Authorization. The execution and delivery of this Agreement and
each Transaction Document by the Buyer and the agreements provided for herein,
and the consummation by the Buyer of all transactions contemplated hereby, have
been duly authorized by all requisite corporate action. This Agreement and each
Transaction Document and all such other agreements and written obligations
entered into and undertaken in connection with the transactions contemplated
hereby and thereby constitute the valid and legally binding obligations of the
Buyer, enforceable against the Buyer in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general principles of equity. The
execution, delivery and performance of this Agreement and each Transaction
Document and the agreements provided for herein and therein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
will not, in any material respect, with or without the giving of notice or the
passage of time or both, (a) violate the provisions of any material law, rule or
regulation applicable to the Buyer; (b) violate the provisions of the Buyer's
Certificate of Incorporation or Bylaws; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator applicable to the Buyer;
or (d) conflict with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any acceleration under, or
cause the creation of any lien, charge or encumbrance upon the properties of the
Buyer pursuant to, any material indenture, mortgage, deed of trust or other
agreement or instrument to which it or its properties is a party or by which the
Buyer is or may be bound. Section 3.2 to the Buyer's Disclosure Schedule dated
the date hereof (the "Buyer's Disclosure Schedule") sets forth a true, correct
and complete list of all consents and approvals of third parties that are
required in connection with the consummation by the Buyer of the transactions
contemplated by this Agreement and each Transaction Document.
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3.3 Regulatory Approvals. Except as set forth on Section 3.3 to the
Buyer's Disclosure Schedule, neither the execution and delivery by the Buyer of
any Transaction Document, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will require the Buyer to file or register with,
to notify, or to obtain any permit, authorization, consent or approval of, any
federal, state or local government body, except for (i) filings, registrations
and notifications, that if not made, and permits, authorizations, consents and
approvals that if not obtained, would not have a material adverse effect on the
Seller or the Acquired Assets, (ii) filings with the FTC and with the Antitrust
Division pursuant to the HSR Act, and (iii) filings with the office of the
Attorney General of the Commonwealth of Massachusetts (subparagraphs (i) through
(iii) collectively, the "Buyer Approvals"). As of the Closing, the Buyer will
have obtained all Buyer Approvals and other permits, authorizations, consents
and approvals of any federal, state or local governmental body, or any agency,
bureau, division or commission thereof, required to consummate the transaction
contemplated hereby, other than any permits, authorization, consents or
approvals that, if not obtained, would not have a material adverse effect on the
Seller.
3.4 Litigation. Except as set forth in Section 3.4 to the Buyer's
Disclosure Schedule, the Buyer is not a party to, or to the best of the Buyer's
knowledge threatened with, any litigation, suit, action, investigation,
arbitration, procedure, controversy or material claim before any court,
regulatory body, administrative agency or other governmental authority relating
to the business of the Buyer. The Buyer is not in violation or in default with
respect to any judgment, order, writ, injunction, decree or rule of any court,
regulatory body, administrative agency or governmental authority or any
regulation of any administrative agency or governmental authority relating to or
effecting the business of the Buyer.
3.5 Compliance with Agreement and Laws. The Buyer has all material
licenses, permits and certificates from federal, state and local authorities
necessary to own and operate its business and to enter into and perform the
Buyer's obligations under the Services Agreement. The Buyer is not in violation
in any material respect, of any law, regulation or ordinance (including, without
limitation, laws, regulations or ordinances relating to building, zoning,
environmental, disposal of hazardous substances, land use or similar matters).
3.6 Capitalization. The Buyer's authorized capital stock consists of
300 million shares of Common Stock, par value $.01 per share, of which
70,410,134 shares were issued and outstanding as of the close of business on
December 31, 1999, and no shares are held in treasury and 30 million shares of
Preferred Stock of which 100 shares are outstanding and designated as Series A
Preferred Stock. All of the issued and outstanding shares of the Common Stock of
the Buyer have been duly and validly issued and are fully paid and
nonassessable. There is no liability for dividends declared or accumulated but
unpaid with respect to any shares of Buyer Common Stock. There are no
obligations, contingent or otherwise, of the Buyer to repurchase, redeem or
otherwise acquire any shares of Buyer Common Stock or the capital stock of or
other equity interest in any subsidiary of the Buyer.
3.7 The Buyer's Public Information. The Buyer has heretofore furnished
the Seller with its registration statement on Form ▇-▇, ▇▇▇ ▇▇. ▇▇▇-▇▇▇▇▇, filed
with the SEC on June 14, 1999, and its Prospectus, dated June 15, 1999, the
documents incorporated by reference therein and its Annual Report on Form 10-K
for the fiscal year ended June 30, 1999, all as filed with the SEC and will
provide to the Seller any Current, Annual or Quarterly Report filed by the Buyer
21
with the SEC at or prior to the Closing Date (as any such documents have been
amended since their original filing, the "Buyer SEC Documents"). As of their
respective filing dates, the Buyer SEC Documents did not or will not contain any
untrue statements of material facts or omit to state material facts required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
filing dates, the Buyer SEC Documents complied or will comply in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act of 1934, as amended, and the rules and regulations promulgated under such
statutes. The financial statements contained in the Buyer SEC Documents,
together with the notes thereto, have been or will be prepared in accordance
with GAAP, consistently followed throughout the periods indicated (except as may
be indicated in the notes thereto, or, in the case of the unaudited financial
statements, subject to normal estimation of accruals and normal year-end audit
adjustments and any other adjustments described therein), reflect all known
liabilities of the Buyer, fixed or contingent, required to be stated therein,
and present fairly the financial condition of the Buyer and its consolidated
subsidiaries at said dates and the consolidated results of operations and cash
flows of the Buyer for the periods then ended. The Buyer has not incurred any
material adverse change since the date of its last public filing.
4. Access; Confidentiality.
4.1 Access to Management, Properties and Records.
(a) From the date of this Agreement until the Closing Date, the
Seller shall afford the officers, attorneys, accountants and other authorized
representatives of the Buyer free and full access upon reasonable notice and
during normal business hours to all management personnel, offices, properties,
books and records of the Seller relating to the Acquired Assets or the
Operations, so that the Buyer may have full opportunity to make such
investigation as it shall desire. The Seller shall furnish to the Buyer such
financial and operating data and other information as to the Acquired Assets and
the Operations as the Buyer may reasonably request. The Seller shall provide the
Buyer with the opportunity to meet and hold confidential discussions with
persons employed in the Division; provided, the Seller shall have the right to
participate in such discussions if it requests.
(b) The Seller shall authorize the release to the Buyer of all files
pertaining to the Acquired Assets or the Operations held by any federal, state,
county or local authorities, divisions, agencies or instrumentalities.
4.2 Confidentiality. Subject to Section 1.8, this Agreement and the
Transaction Documents and all exhibits and schedules thereto and the Seller's
and Buyer's Disclosure Schedules are deemed by the parties as trade secrets and
to contain confidential commercial and financial information. Accordingly, the
parties agree to maintain the same as confidential, except as may be required by
law or as required to be disclosed under Sections 2.10, 3.3 and 9.3 hereof.
Notwithstanding anything to the contrary in this Agreement, the Seller
acknowledges and agrees that the Buyer and the Buyer's corporate parent, Medical
Manager Corporation ("MMC") will file with the SEC any Transaction Document
that, in the sole opinion of counsel to the Buyer and counsel to MMC, as the
case may be, the Buyer and MMC are required to file, provided that the Buyer and
MMC shall make a reasonable effort to seek confidential treatment of any part of
such Transaction Document as the Seller reasonably requests.
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5. Pre-Closing Covenants of the Seller.
From and after the date hereof and until the Closing Date:
5.1 Conduct of Business. The Seller shall carry on the Operations
diligently and substantially in the same manner as heretofore conducted by the
Seller and shall not make or institute any unusual or new methods of management,
accounting or operation, except as agreed to in writing by the Buyer. All of the
property of the Seller included in the Acquired Assets shall be used, operated,
repaired and maintained in a normal business manner consistent with past
practice.
5.2 Absence of Material Changes. Without the prior written consent of
the Buyer, in connection with the business and assets of the Division, the
Seller shall not:
(a) mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of the Acquired Assets;
(b) sell, assign, or transfer any of the Acquired Assets, other
than in the ordinary course of business;
(c) make, accrue or become liable for any bonus, profit sharing
or incentive payment, except for accruals under existing plans, or increase the
rate of compensation payable or to become payable by it to the PTG Employees,
other than increases in the ordinary course of business consistent with past
practice;
(d) modify, amend, alter or terminate any of the Assigned
Contracts, other than in the ordinary course of business;
(e) take any action or fail to take any action which would result
in any representation or warranty of the Seller contained in this Agreement
being untrue; or
(f) commit or agree to do any of the foregoing in the future,
other than in the ordinary course of business.
5.3 Compliance with Laws. The Seller will comply in all material
respects with all laws and regulations which are applicable to it, to the
Operations or to the Seller's ownership of the Acquired Assets and will perform
and comply in all material respects with the Assigned Contracts and all
contracts, commitments and obligations by which it is bound, all consistent with
its past practices.
5.4 Continuing Obligation to Inform. From time to time prior to the
Closing, the Seller will deliver or cause to be delivered to the Buyer
supplemental information concerning events subsequent to the date hereof which
would render any statement, representation or warranty in this Agreement or any
information contained in any Schedule inaccurate or incomplete in any material
respect at any time after the date hereof until the Closing Date. The Seller
shall have the right to supplement or amend any Schedule, list or other
disclosure referred to in this Agreement from time to time prior to the Closing
Date; provided that if the Buyer determines in good faith, acting reasonably,
that any such supplement or amendment discloses an event or circumstance which
materially and adversely affects the terms and conditions of the transactions
23
contemplated by this Agreement, the Buyer shall have the right to terminate this
Agreement, subject to Section 13.5 hereof upon written notice given within ten
(10) days after receipt of such supplemental or amended information.
5.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings. The Seller shall (a) make all filings
and (b) cooperate with the Buyer as required under the HSR Act and shall furnish
all follow-up information required of the Seller in connection therewith. The
Buyer shall pay any filing fees required to be paid in connection with such
filings.
5.6 Financial Statements. The Seller acknowledges that, in connection
with certain SEC requirements, the Buyer will require the preparation of the
Financial Statements regarding the Operations and the Division. The Seller
agrees to (i) use its reasonable best efforts to cause its accountants, Ernst &
Young LLP, to prepare the Financial Statements, (ii) cooperate with its
accountants, the Buyer and the Buyer's accountants in the preparation of the
Financial Statements and (iii) in the event that after the Closing the Financial
Statements are determined by the SEC to be deficient, use its reasonable best
efforts to cause its accountants, Ernst & Young LLP, to cure any deficiency.
Notwithstanding the provisions of Section 18, the Buyer shall pay all expenses
and costs associated with the preparation (and amendment thereto, if any) of the
Financial Statements.
5.7 Consultation. Each party shall cooperate with the other party in
planning for the transition of the Operations to the Buyer.
6. Covenants of the Buyer.
6.1 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings. The Buyer shall (a) make all necessary
filings and (b) cooperate with the Seller as required under the HSR Act and
shall furnish all information required of the Buyer in connection therewith. The
Buyer shall pay any filing fees required to be paid in connection with such
filings.
6.2 Public Announcements. The parties agree that prior to the Closing
Date, except as otherwise required by law, any and all public announcements or
other public communications concerning this Agreement and the purchase of the
Acquired Assets by the Buyer shall be subject to the approval of both parties,
which approval shall not be unreasonably withheld.
7. Employee Matters.
(a) The Buyer shall offer employment to each employee of the
Seller listed on Schedule 7(a) who is employed immediately prior to the Closing
Date by the Seller in the Division (the "PTG Employees"), in each case for a
substantially comparable position (as reasonably determined by the Seller) that
is within 25 miles of such PTG Employee's current work location. Prior to the
Closing, the Buyer shall be entitled to offer, discuss and negotiate a new
employment contract with each PTG Employee, which contract shall be effective
only upon the Closing.
(b) From and after the Closing Date, the Buyer shall make payment
to the Seller in an amount equal to all financial obligations of the Seller to
any of the PTG Employees for severance pay and related benefits to the extent
set forth on Schedule 7(c) which result from the failure of the Buyer to comply
with the Buyer's obligations under Section 7(a) or from the
24
Buyer's termination or severance after the Closing Date (and whether or not
resulting from or in connection with the transactions contemplated hereby) of
the employment of any PTG Employee who accepts employment with the Buyer (the
"Employment Obligations"). Notwithstanding anything to the contrary herein, the
Buyer shall have no liability with respect to, and the Seller shall be solely
liable to pay, any severance pay and other benefits or claims that arise in
connection with the Seller's employment of the PTG Employees, or the severance
from the employment by the Seller of any such employees, including without
limitation any who do not accept employment with the Buyer. The Seller
represents and warrants to the Buyer that Schedule 7(c) sets forth the severance
and other related benefits to which each employee of the Seller listed on
Schedule 7(a) will be entitled if such employee is terminated by the Seller on
the Closing Date assuming that such employee is not employed by the Buyer.
(c) Notwithstanding anything to the contrary in this Section 7,
the Buyer shall have no liability with respect to, and the Seller shall be
solely obligated to provide, health care continuation coverage pursuant to the
Consolidated Omnibus Reconciliation Act of 1985 and applicable state law, to
those employees of the Seller listed on Schedule 7(a) who do not accept
employment with the Buyer and their qualified beneficiaries.
8. Reasonable Efforts to Obtain Satisfaction of Conditions.
The Seller and the Buyer covenant and agree to use their reasonable
efforts to obtain the satisfaction of the conditions specified in this
Agreement.
9. Conditions to Obligations of the Buyer.
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
9.1 Continued Truth of Representations and Warranties of the Seller;
Compliance with Covenants and Obligations. The representations and warranties of
the Seller shall be true, in all material respects, on and as of the Closing
Date as though such representations and warranties were made on and as of such
date, except for any changes permitted by the terms hereof or consented to in
writing by the Buyer. The Seller shall have performed and complied with all
material terms, conditions, covenants, obligations, agreements and restrictions
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date, including, without limitation, obtaining the requisite consent
to effectively assign its rights and obligations under the contracts listed on
Schedule 9.1 to the Buyer as of the Closing.
9.2 Corporate Proceedings. All corporate and other proceedings required
to be taken on the part of the Seller to authorize or carry out this Agreement
and to convey, assign, transfer and deliver the Acquired Assets shall have been
taken.
9.3 Governmental Approvals. All governmental agencies, departments,
bureaus, divisions, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation of the transactions contemplated by this
Agreement and the Transaction Documents shall have consented to, authorized,
permitted or approved such transactions, which shall include the early
25
termination or expiration of the waiting period under the HSR Act and
Satisfaction of the Massachusetts Requirements, as both are referred to in
Section 1.6.
9.4 Adverse Proceedings. No action or proceeding by or before any court
or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might
materially and adversely affect the right of the Buyer to own or use the
Acquired Assets, or to conduct the Operations, after the Closing.
9.5 Absence of Material Changes. From and after the date of this
Agreement until the Closing, there shall have been no material adverse change in
the quality or condition of the Acquired Assets and no material adverse change
in the Operations.
9.6 The Acquired Assets. At the Closing the Buyer shall receive good,
clear, record and marketable title to the Acquired Assets, subject only to
liens, liabilities and encumbrances permitted by this Agreement.
9.7 Services Agreement. The Seller shall have executed and delivered a
services agreement (the "Services Agreement") between the Buyer and the Seller
substantially in accordance with the provisions set forth in Exhibit A to the
letter, dated January 26, 2000, from the Buyer to the Seller (the "Proposal
Letter"), which Proposal Letter is attached as Exhibit A to this Agreement; it
being agreed, however, that
(a) the Services Agreement shall also provide that, until the
second anniversary of the Closing (the "Second Anniversary"), the Seller shall
provide to the Buyer every asset of the Seller and every service (excluding all
Unassigned Agreements, if any) that is (i) used by the Seller in connection with
the Operations prior to the Closing and (ii) reasonably necessary, in addition
to the Acquired Assets, for the Buyer's conduct of the Operations as required by
the Services Agreement (any and all such assets, rights and services being
hereinafter referred to singly as a "Transition Service" and collectively as the
"Transition Services"),
(b) in consideration of the Seller's rendering each such
Transition Service, the Buyer shall reimburse the Seller for all of the Seller's
direct marginal costs of providing such Transition Service to the Buyer,
(c) the Seller shall cease to provide each such Transition
Service prior to such Second Anniversary if (and only if) the Buyer shall have
notified the Seller in writing before such Second Anniversary that such
Transition Service is no longer required for the Buyer to fulfill its
obligations to the Seller under the Services Agreement; provided however, that
the Buyer shall use its reasonable best efforts to find a substitute or
replacement for each Transition Service as soon as commercially practicable
after the Closing Date; and
(d) as promptly as possible after their execution of this
Agreement, the parties, acting reasonably and using their reasonable best
efforts in good faith, shall agree in writing upon the complete form and
substance of the Services Agreement, which complete Services Agreement shall
thereupon be added as Exhibit B to this Agreement and thereby incorporated in
this Agreement by reference.
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9.8 Portal Agreement. The Seller shall have executed and delivered a
portal services agreement (the "Portal Agreement") between the Buyer and the
Seller substantially in accordance with the provisions set forth in Exhibit B to
the Proposal Letter; it being agreed that, as promptly as possible after their
execution of this Agreement, the parties, acting reasonably and using their best
efforts in good faith, shall agree in writing upon the complete form and
substance of the Portal Agreement, which complete Portal Agreement shall
thereupon be added as Exhibit C to this Agreement and thereby incorporated in
this Agreement by reference.
9.9 Financial Statements from the Seller. Either (a) the Financial
Statements shall have been delivered to the Buyer in accordance with applicable
provisions of this Agreement or (b) if the Financial Statements shall not have
been so delivered, the Buyer shall have elected, in its sole discretion, to
deliver to the Seller a legally binding written commitment to pay the Total
Purchase Price to the Seller at the Closing in cash in immediately available
funds; it being understood and agreed that, immediately and automatically upon
the Seller's receipt of any such written commitment by the Buyer to pay the
Total Purchase Price in cash delivered by the Buyer as referred to above, all
provisions of this Agreement regarding the Stock Payment and Shares of the Buyer
shall cease to apply.
9.10 Unassigned Agreements. The Buyer shall have obtained a substitute
or replacement asset or service, satisfactory to the Buyer, for each Unassigned
Agreement, if any.
9.11 Closing Deliveries. The Buyer shall have received at or prior to
the Closing each of the following documents:
(a) a ▇▇▇▇ of sale substantially in the form agreed to by the
parties (the "▇▇▇▇ of Sale");
(b) such instruments of conveyance, assignment and transfer, in
form and substance satisfactory to the Buyer, as shall be appropriate to convey,
transfer and assign to, and to vest in, the Buyer or its designee, good, clear,
record and marketable title to the Acquired Assets;
(c) such certificates of the Seller's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 9
and the accuracy of the Seller's representations and warranties as the Buyer
shall reasonably request;
(d) a certificate of the Secretary of State of the Commonwealth
of Massachusetts as to the legal existence of the Seller in the Commonwealth of
Massachusetts;
(e) certificates of the Secretary of the Seller attesting to the
incumbency of the Seller's officers, respectively, the authenticity of the
resolutions authorizing the transactions contemplated by the Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Section 2.1;
(f) cross receipt executed by the Seller;
(g) the Services Agreement, executed by the Seller;
(h) the Portal Agreement, executed by the Seller;
27
(i) a legal opinion of counsel to the Seller, who may be an
employee of the Seller, in form satisfactory to counsel to the Buyer, acting
reasonably; and
(j) such other documents, instruments or certificates as the
Buyer may reasonably request.
10. Conditions to Obligations of the Seller.
The obligations of the Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing at the sole discretion of the Seller:
10.1 Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations. The representations and warranties of
the Buyer in this Agreement shall be true, in all material respects, on and as
of the Closing Date as though such representations and warranties were made on
and as of such date, except for any changes consented to in writing by the
Seller. The Buyer shall have performed and complied with all material terms,
conditions, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
10.2 Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of the Buyer to authorize or carry out this
Agreement shall have been taken.
10.3 Governmental Approvals. All governmental agencies, departments,
bureaus, divisions, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation of the transactions contemplated by this
Agreement and the Transaction Documents shall have consented to, authorized,
permitted or approved such transactions, which shall include the early
termination or expiration of the waiting period under the HSR Act and
Satisfaction of the Massachusetts Requirements, as both are referred to in
Section 1.6.
10.4 Adverse Proceedings. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might
materially and adversely affect the right of the Seller to transfer the Acquired
Assets.
10.5 Absence of Material Adverse Changes. As of the Closing Date, there
shall have been no material adverse change in the overall financial condition of
the Buyer.
10.6 Services Agreement. The Buyer shall have executed and delivered
the Services Agreement as described in Section 9.7.
10.7 The Buyer Common Stock. On the Closing Date, the Buyer will have a
sufficient number of authorized but unissued shares of its Common Stock
available for issuance to the Seller in accordance with the provisions of this
Agreement. The Buyer Common Stock to be issued pursuant to this Agreement will,
when so delivered, be (i) duly and validly issued, fully paid and nonassessable,
and (ii) listed on the Nasdaq Stock Market or other appropriate exchange, upon
official notice of issuance.
28
10.8 Financial Statements. Either (a) the Financial Statements shall
have been delivered to the Seller and the Buyer in accordance with applicable
provisions of this Agreement or (b) if the Financial Statements shall not have
been so delivered, the Buyer may elect, in its sole discretion, to deliver to
the Seller a legally binding written commitment to pay the Total Purchase Price
to the Seller at the Closing in cash in immediately available funds.
10.9 Closing Deliveries. The Seller shall have received, at or prior to
the Closing, each of the following documents:
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 10
and the accuracy of the Buyer's representations and warranties as the Seller
shall reasonably request;
(b) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing (including tax) of the
Buyer in Delaware;
(c) a certificate of the Secretary of State of the qualification
and good standing of the Buyer in Massachusetts;
(d) a certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Section 3.1;
(e) Instrument of Assumption executed by the Buyer;
(f) payment of the Cash Payment in accordance with Section 1.3;
(g) delivery of a stock certificate representing the Stock
Payment;
(h) cross receipt executed by the Buyer;
(i) the Services Agreement, executed by the Buyer;
(j) a legal opinion of counsel to the Buyer, who may be an
employee of the Buyer, in form satisfactory to counsel to the Seller, acting
reasonably; and
(k) such other documents, instruments or certificates as the
Seller may reasonably request.
11. Indemnification.
11.1 By the Seller. The Seller agrees to indemnify and hold harmless
the Buyer, its officers, directors, employees and MMC and its officers,
directors and employees (collectively, the "Buyer Indemnified Parties") from any
and all claims, damages, liabilities, costs and expenses (including, without
limitation, settlement costs and any legal, accounting or other expenses for
investigating or defending any actions or threatened actions) reasonably
incurred by the Buyer Indemnified Parties in connection with each and all of the
following:
29
(a) any breach by the Seller of any representation or warranty of
the Seller in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Seller contained in this Agreement;
(c) fraud or any misrepresentation contained in any statement,
certificate or schedule furnished by the Seller pursuant to this Agreement and
referred to herein;
(d) the Excluded Assets;
(e) the Excluded Liabilities;
(f) failure by the Seller to comply with the provisions of any
applicable bulk sales laws of any state in connection with the transactions
contemplated hereby; and
(g) the Acquired Assets, the Division and the Operations prior to
the Closing.
Notwithstanding the provisions of Section 11.1(a), the Buyer's recourse for any
breach of the Seller's representation and warranty under Section 2.11(a) will be
limited to the Buyer's remedies with respect to any breach by the Seller of its
obligations under the provisions of Section 12.7. The provisions of Section
11.1(e), above, shall not in any way reduce the Buyer's obligations to the
Seller under Section 7, above.
11.2 By the Buyer. The Buyer agrees to indemnify and hold harmless the
Seller, its officers, directors and employees (collectively, the "Seller
Indemnified Parties") from any and all claims, damages, liabilities, costs and
expenses (including, without limitation, settlement costs and any legal,
accounting or other expenses for investigating or defending any actions or
threatened actions) reasonably incurred by the Seller Indemnified Parties in
connection with each and all of the following:
(a) any breach by the Buyer of any representation or warranty in
this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Buyer contained in this Agreement;
(c) fraud or any misrepresentation contained in any statement,
certificate or schedule furnished by the Buyer pursuant to this Agreement and
referred to herein;
(d) any claims against, or liabilities or obligations of, the
Seller or against the Acquired Assets specifically assumed by the Buyer pursuant
to this Agreement, as Assumed Liabilities; and
(e) claims or liabilities with respect to the Acquired Assets and
the Operations that result solely from activities of the Buyer after the
Closing.
It is agreed that the Buyer shall not be required to indemnify the
Seller hereunder if and to the extent the claim with respect to the Acquired
Assets or Assumed Liabilities arises from the Seller's breach of any
representation, warranty, covenant, agreement or obligation contained in this
Agreement.
30
11.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder the party seeking indemnification (the "Indemnified
Party"), shall promptly notify the party from whom indemnification is sought
(the "Indemnifying Party") of the claim and, when known, the facts constituting
the basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third-party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the Indemnifying Party
shall not have taken control of such suit after notification thereof as provided
in Section 11.4 of this Agreement.
11.4 Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense, provided,
however, that the Indemnifying Party may not settle any such action without the
prior consent of the Indemnified Party, which consent shall not be unreasonably
withheld. If the Indemnifying Party does not assume the defense of any such
claim or litigation resulting therefrom within 30 days after the date such claim
is made, (a) the Indemnified Party may defend against such claim or litigation,
in such manner as it may deem appropriate, including, but not limited to,
settling such claim or litigation, after giving notice of the same to the
Indemnifying Party, on such terms as the Indemnified Party may deem appropriate,
and (b) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with its counsel and at its own expense. If
the Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such third-party claim or the amount or nature of any
such settlement (or the legal fees and costs related thereto), the Indemnifying
Party shall have the burden to prove by a preponderance of the evidence that the
Indemnified Party did not defend or settle such third-party claim in a
reasonably prudent manner.
11.5 Payment of Indemnification Obligation.
(a) Subject to Section 11.5(d), the maximum amount the Seller
shall be liable to pay to the Buyer pursuant to this Section 11 shall be limited
to an amount equal to $15 million.
(b) Subject to Section 11.5(d), the Seller shall not be obligated
to pay any amount to the Buyer pursuant to this Section 11 until the aggregate
liability due exceeds $250,000, and in any event only the amount of such excess
liability shall be recoverable thereafter, subject to the terms and limitations
contained herein.
(c) All indemnification by the Buyer or the Seller hereunder
shall be effected by payment of cash, wire transfer or delivery of a cashier's
or certified check in the amount of the indemnification liability.
31
(d) The provisions of Sections 11.5(a) and (b) and 11.6 shall not
apply to recoveries relating to the Excluded Assets or the Excluded Liabilities
or to matters arising out of the operation of the Division prior to the Closing,
all of which shall remain indefinitely the sole and exclusive responsibility of
the Seller.
11.6 Survival of Representations; Claims for Indemnification. All
representations, warranties and covenants made by the parties herein or in any
instrument or document furnished as a Schedule hereto shall survive the Closing.
All rights of an Indemnified Party to assert a claim for indemnification under
this Section 11 on account of a breach of representation or warranty shall
expire on the date which is 18 months after the Closing Date, except for claims,
if any, asserted in writing prior to such date, which shall survive until
finally resolved and satisfied in full, provided that the Indemnified Party uses
reasonable efforts to make a claim for and pursue its rights under this Section
11. Notwithstanding the foregoing, the Excluded Assets and the Excluded
Liabilities shall remain indefinitely the sole and exclusive responsibility of
the Seller; and, after the Closing, the Acquired Assets and Assumed Liabilities
shall remain indefinitely the sole and exclusive responsibility of the Buyer. In
furtherance of the foregoing, and not in limitation thereof, (a) the Buyer
Indemnified Parties shall be entitled to assert a claim for indemnification from
the Seller at any time after the Closing with respect to the full amount of any
claims, damages, liabilities, costs and expenses in connection with the Excluded
Assets and the Excluded Liabilities and (b) the Seller Indemnified Parties shall
be entitled to assert a claim for indemnification from the Buyer at any time
after the Closing with respect to the full amount of any claims, damages,
liabilities, costs and expenses in connection with the Assumed Liabilities.
12. Additional Agreements.
12.1 Proprietary Information.
(a) The Seller shall hold in confidence, and use its reasonable
efforts to have all of its officers, directors and personnel hold in confidence,
all knowledge and information of a secret or confidential nature, including,
without limitation, the know-how, with respect to the Operations or Assumed
Liabilities and shall not disclose, publish or make use of the same without the
written consent of the Buyer, except to the extent that such use is necessary
for the Seller's compliance with its obligations under the Services Agreement
and to the extent that such information shall have become public knowledge other
than by breach of this Agreement by the Seller.
(b) The Seller agrees that the remedy at law for any breach of
this Section 12.1 and of Section 12.6, below, would be inadequate and that the
Buyer shall be entitled to injunctive relief in addition to any other remedy it
may have upon breach of any provision of this Section 12.1 or of Section 12.6.
12.2 Sharing of Data.
(a) The Seller shall have the right following the Closing Date to
have reasonable access to such books, records and accounts as are transferred to
the Buyer pursuant to the terms of this Agreement for the limited purposes of
concluding its involvement in the Acquired Assets
32
prior to the Closing Date and for complying with its obligations under
applicable tax or other laws and regulations.
(b) The Seller and the Buyer agree that from and after the
Closing Date they shall reasonably cooperate fully with each other to facilitate
the transfer of the Acquired Assets from the Seller to the Buyer and the
operation thereof by the Buyer.
12.3 Cooperation in Litigation. Each party hereto will fully cooperate
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the business of the Seller prior to
or after the Closing Date (other than litigation arising out the transactions
contemplated by this Agreement). The party requesting such cooperation shall pay
the out-of-pocket expenses (including legal fees and disbursements) of the party
providing such cooperation and of its officers, directors, employees and agents
reasonably incurred in connection with providing such cooperation, but shall not
be responsible to reimburse the party providing such cooperation for such
party's time spent in such cooperation or the salaries or costs of fringe
benefits or similar expenses paid by the party providing such cooperation to its
officers, directors, employees and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
12.4 Non-Competition and Non-Solicitation.
(a) For a period of five years after the Closing, the Seller
shall not, and will cause its affiliates not to, engage directly or indirectly
in any business that competes with the Operations as conducted on the Closing
Date; provided, however, that nothing in this Agreement shall prohibit the
Seller, from exercising any or all of its rights under the Services Agreement.
(b) Each Party shall not, and shall not permit any of its
affiliates to, directly or indirectly, recruit, solicit, or induce (or in any
way assist another person or enterprise in recruiting, soliciting or inducing)
any employee or agent of the other party or any of its affiliates (including,
with respect to the Buyer, without limitation, any PTG Employees who are
employed by the Buyer in connection herewith) to terminate his or her employment
or other relationship with the other party or any of its affiliates during the
period commencing on the Closing Date and terminating on the fifth anniversary
of the date of the Services Agreement. The Seller may not, during the period
commencing on the Closing Date and ending on the first anniversary of the
Closing Date, hire any PTG Employee who accepts an offer of employment by the
Buyer in accordance with the Buyer's obligations under Section 7(a), above.
Nothing in this Section 12.4 shall limit the Buyer from hiring any PTG Employee
as contemplated under Section 7(a). For a period of one year from the Closing
Date, the Buyer shall not, and shall not permit any of its affiliates to,
directly or indirectly, solicit the employment of any PTG Employee who receives
any severance pay or related benefit from the Seller. For purposes of this
Section 12.4, the sole act of placing an advertisement in a newspaper
advertising for an employment position shall not constitute an act of
recruiting, soliciting or inducing.
(c) Each party acknowledges that the covenants set forth in this
Section 12.4 are an essential element of this Agreement and that, but for the
agreement of the party to comply with these covenants, the other party would not
have entered into this Agreement. The existence of any claim or cause of action
which a party may have against the other party shall not
33
constitute a defense or bar to the enforcement of any of the covenants set forth
in this Section 12.4. Each party has consulted with its counsel and, after such
consultation, agrees that the covenants set forth in this Section 12.4 are
reasonable and proper.
(d) Each party agrees that the remedy at law for any breach of
this Section 12.4 would be inadequate and that the other party shall be entitled
to injunctive relief in addition to any other remedy it may have upon breach of
this Section 12.4.
12.5 Covenant Not to Discontinue to Use Services. Subject to the rights
and remedies, including, without limitation, the termination rights provided for
under the Services Agreement, the Seller agrees that during the term of the
Services Agreement, it shall continue to purchase from the Buyer the services
that are provided to the Seller by the Division or the Operations to the Seller
as of the Closing Date.
12.6 Enforcement of Confidentiality Agreements. If either the Buyer, or
the Seller, in its reasonable opinion, shall believe that a party who considered
the purchase of the Operations or the Acquired Assets (a "Third-Party Bidder")
has committed a breach of a confidentiality agreement between such Third-Party
Bidder and the Seller that party shall promptly inform the other in writing, in
which event, the Buyer may request that the Seller enforce the remedies
available to it under such confidentiality agreement provided that the Buyer
furnishes the Seller with all necessary information that the Buyer may have with
respect to the alleged breach. In the event of such a request referred to in the
previous sentence, the Seller shall review the information supplied by the Buyer
and make such independent investigations as it may determine necessary or
desirable and inform the Buyer, in confidence and within a reasonable amount of
time after the request by the Buyer, whether or not, in the reasonable opinion
of the Seller, there has been a breach by a Third-Party Bidder of a
confidentiality agreement with the Seller. Thereafter, the Seller shall, in
consultation with the Buyer, use its best efforts to enforce its available
remedies against the Third-Party Bidder. The Buyer shall indemnify and hold
harmless the Seller for any and all liabilities or expenses incurred by the
Seller in connection with the actions taken by the Seller pursuant to this
Section 12.6.
12.7 Breach of Representation in Section 2.11. If either party shall
reasonably determine, before the Second Anniversary, that the representation set
forth in Section 2.11(a) is incomplete or inaccurate, the Seller shall use its
reasonable best efforts to use or make available to the Buyer, until the Second
Anniversary, the asset, contract or service comprising such deficiency as a
Transition Service in accordance with the provisions of the Service Agreement
and Sections 9.7 (b) and (c).
13. Termination of Agreement.
13.1 Termination by Lapse of Time. This Agreement shall terminate at
5:00 p.m., Boston time, on March 31, 1999, if the transactions contemplated
hereby have not been consummated, unless such date is extended by the written
consent of all of the parties hereto. No party shall be relieved of any
liability for breach of this Agreement due to such termination.
13.2 Termination by Failure to Agree Upon the Services Agreement and
the Portal Agreement. If, despite their reasonable best efforts, in good faith,
to reach agreement by March
34
17, 2000, upon all terms of the Services Agreement and of the Portal Agreement
as referred to in Section 9.7 and 9.8, either of the parties may terminate this
Agreement.
13.3 Termination by Agreement of the Parties. This Agreement may be
terminated by the mutual written agreement of the parties hereto.
13.4 Termination by Reason of Breach. This Agreement may be terminated
by the Seller, if at any time prior to the Closing there shall occur a material
breach of any of the representations, warranties or covenants of the Buyer or
the failure by the Buyer to perform any material condition or obligation
hereunder, and may be terminated by the Buyer if at any time prior to the
Closing there shall occur a material breach of any of the representations,
warranties or covenants of the Seller or the failure of the Seller to perform
any material condition or obligation hereunder.
13.5 Termination by Change of Control. This Agreement may be terminated
by the Seller, if at any time prior to the Closing there shall occur a Change of
Control of the Buyer. As used in this Agreement "Change of Control" with respect
to the Buyer means any of the following:
(a) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act other than MMC, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person should be deemed to have beneficial ownership of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the capital stock of the Buyer pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least of majority of the board of directors, managers or trustees of
the Buyer;
(b) the Buyer consolidates with, or mergers with or into, another
person or conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with,
or merges with or into, the Buyer, in any such event pursuant to a transaction
in which the outstanding voting stock of the Buyer is converted into or
exchanged for cash, securities or other property;
(c) at any time prior to the Closing Date, individuals who at the
date of this Agreement constituted the Board of Directors of the Buyer cease for
any reason to constitute a majority of the Board of Directors of the Buyer then
in office; or
(d) the Buyer is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
Notwithstanding anything to the contrary herein, consummation of the
transactions contemplated by the Agreement and Plan of Merger dated February 13,
2000, between Healtheon/Web MD Corp. and the Buyer, as it may be amended from
time to time, and the Agreement and Plan of Merger between Healtheon/Web MD
Corp. and Medical Manager Corporation, as it may be amended from time to time,
shall be deemed to not constitute a Change of Control of the Buyer for the
purposes of this Section 13.5 and will not give rise to any right of the Seller
to terminate this Agreement, the Services Agreement or the Portal Agreement.
35
13.6 No Recourse. In the event of a termination pursuant to Sections
13.1, 13.2, 13.3 or 13.5, neither party will have any liability to or recourse
against the other party.
14. Brokers.
14.1 For the Seller. The Seller represents and warrants that it has not
engaged any broker or finder (other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.) or incurred any
liability for brokerage fees, commissions or finder's fees in connection with
the transactions contemplated by this Agreement. The Seller agrees to pay all
fees, expenses and other compensation owed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. The Seller
agrees to indemnify and hold harmless the Buyer against any claims or
liabilities asserted against it by any person acting or claiming to act as a
broker or finder on behalf of the Seller.
14.2 For the Buyer. The Buyer represents and warrants that it has not
has engaged any broker or finder or incurred any liability for brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement. The Buyer agrees to pay all fees, expenses and compensation owed
to any person, firm or corporation who has acted in the capacity of broker or
finder on its behalf in connection with the transactions contemplated by this
Agreement. The Buyer agrees to indemnify and hold harmless the Seller against
any claims or liabilities asserted against it by any person acting or claiming
to act as a broker or finder on behalf of the Buyer.
15. Notices.
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by telex, reputable
overnight courier, registered or certified mail, postage prepaid, addressed as
follows or to such other address of which the parties may have given notice
pursuant hereto:
To the Seller: Blue Cross and Blue Shield of Massachusetts, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
With a copy to: Blue Cross and Blue Shield of Massachusetts, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
To the Buyer: CareInsite, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Center Two
Elmwood Park, New Jersey 07407-1361
Attention: General Counsel
With a copy to: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed delivered (i) on the date actually received, if delivered personally or
by overnight courier; or (ii) three business days after being sent, if sent by
registered or certified mail.
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16. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and assigns, except that the
Buyer and the Seller may not assign their respective obligations hereunder
without the prior written consent of the other party. No assignment shall
release the Buyer or the Seller from any obligation or liability under this
Agreement. Any assignment in contravention of this provision shall be void.
17. Entire Agreement; Amendments; Attachments.
(a) This Agreement, all Schedules and Exhibits hereto, and the
Transaction Documents represent the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and supersede all
prior oral and written and all contemporaneous oral negotiations, commitments
and understandings between such parties, including, without limitation, the
Confidential Descriptive Memorandum dated September 1999, and the parties hereto
make no representations or warranties with respect to the transactions
contemplated by this Agreement and the Transaction Documents other than those
set forth in this Agreement. Notwithstanding the foregoing, the Confidentiality
and Non-Disclosure Agreement dated October 12, 1999 between the Buyer and the
Seller (attached hereto as Exhibit D) shall survive the execution of this
Agreement. The Buyer and the Seller, by the consent of their respective Boards
of Directors, or officers authorized by such Boards, may amend or modify this
Agreement, in such manner as may be agreed upon, only by a written instrument
executed by the Buyer and the Seller.
(b) If the provisions of any Schedule or Exhibit to this
Agreement are inconsistent with the provisions of this Agreement, the provision
of the Agreement shall prevail. The Exhibits and Schedules attached hereto or to
be attached hereafter are hereby incorporated as integral parts of this
Agreement.
18. Expenses.
Except as otherwise expressly provided herein, the Buyer and the Seller
shall each pay their own expenses (including transactional legal fees and
expenses) in connection with this Agreement, the Transaction Documents and the
transactions contemplated hereby and thereby.
19. Legal Fees.
In the event that legal proceedings are commenced by the Buyer against
the Seller, or by the Seller against the Buyer, in connection with this
Agreement, the Transaction Documents or the transactions contemplated hereby or
thereby, the party or parties which do not prevail in such proceedings shall pay
the reasonable attorneys' fees and other costs and expenses, including
investigation costs, incurred by the prevailing party in such proceedings.
20. Governing Law; Waiver of Jury Trial.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to conflicts of
laws principles. The Buyer and the Seller hereby waive their respective rights
to a jury trial of any claim or cause of action based upon or arising out of
this Agreement or any other Transaction Document.
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21. Interpretation.
21.1 Section Headings. The section headings are for the convenience of
the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
21.2 Gender. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
21.3 Knowledge. Whenever in this Agreement the term "to the best of the
Seller's knowledge" or the like is used, the Seller shall be deemed to have the
actual knowledge of ▇▇▇▇ St. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
▇▇ ▇▇▇▇▇▇▇▇, or such knowledge as prudent persons holding the positions of such
individuals reasonably should have known. The Seller has caused such persons to
review the representations and warranties in Section 2 prior to execution of
this Agreement and has incorporated such persons' responses in the related
Schedules.
22. Severability.
In case any of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, any such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been limited or modified (consistent with
its general intent) to the extent necessary to make it valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal or unenforceable provision or part of a provision, this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
23. Blue Cross and Blue Shield Association.
The Buyer expressly acknowledges that the Seller is an independent
corporation operating under a license from the Blue Cross and Blue Shield
Association, an association of independent Blue Cross and Blue Shield Plans (the
"Association") permitting the use of the Blue Cross and Blue Shield service
marks by the Seller in its service area, and that the Seller is not contracting
as an agent of the Association. The Buyer further acknowledges that it has not
entered into this Agreement based upon representation by any person other than
the Seller and that no person, entity, or organization other than the Seller
shall be held accountable or liable to the Buyer for any of the Seller's
obligations to the Buyer under this Agreement. This exception shall not create
any obligations whatsoever on the part of the Seller other than those
obligations created under other provisions in this Agreement.
24. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
[The remainder of this page has
intentionally been left blank.]
38
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
BLUE CROSS AND BLUE SHIELD OF MASSACHUSETTS, INC.
By:
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Title:
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CAREINSITE, INC.
By:
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Title:
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39
