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EXHIBIT 2.5
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ACQUISITION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
QUADRAMED CORPORATION, HEALTHCARE RECOVERY ACQUISITION CORPORATION,
HEALTHCARE RECOVERY, INCORPORATED AND ITS SHAREHOLDERS
DATED AS OF
MARCH 1, 1997
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ACQUISITION AGREEMENT AND PLAN OF MERGER
This Acquisition Agreement and Plan of Merger is entered into effective
as of March 1, 1997 by and among QuadraMed Corporation, a Delaware corporation
("QuadraMed"), Healthcare Recovery Acquisition Corporation, a Delaware
corporation ("Acquisition Co.") (QuadraMed and Acquisition Co. are collectively
referred to herein as the "QuadraMed Entities"), on the one hand, and
Healthcare Recovery, Incorporated, a New Jersey corporation doing business as
"Synergy HMC" (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇
("▇▇▇▇") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), who constitute all of the shareholders of
the Company (individually, a "Shareholder" and collectively, the
"Shareholders").
WHEREAS, QuadraMed is a duly incorporated Delaware corporation engaged
in the healthcare electronic data interchange and the business office
outsourcing businesses.
WHEREAS, Acquisition Co. is a duly incorporated Delaware corporation
formed by QuadraMed for the purpose of the Merger contemplated by this
Agreement, with authorized capital stock consisting of 1,000 shares of Common
Stock, $0.001 par value, of which all 1,000 shares are duly and validly issued
and outstanding and owned by QuadraMed.
WHEREAS, the Company is a duly incorporated New Jersey corporation
engaged in the healthcare accounts receivable management and collection
business (the "Business"), with authorized capital stock consisting of 2,500
shares of Common Stock, no par value, of which 1,319.54 shares are duly and
validly issued, outstanding and entitled to vote as of March 1, 1997.
WHEREAS, QuadraMed, the Company and its Shareholders have been in
continuous negotiations regarding the acquisition of the Company since early
March, 1997.
WHEREAS, the Shareholders have orally agreed with senior management of
QuadraMed to operate the Business in a manner which is consistent with the
acquisition of the Company by the QuadraMed Entities.
WHEREAS, QuadraMed desires to acquire the Company via merger of the
Company with and into Acquisition Co. pursuant to the terms of this Agreement
and on a tax-deferred basis pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code (the "Merger").
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each signatory hereto, it is agreed as
follows:
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ARTICLE I.
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 "Acquisition Co." shall have the meaning specified in the
preamble hereto.
1.2 "Acquisition Co. Common Stock" shall mean the Common Stock of
Acquisition Co., $0.001 par value.
1.3 "Agreement" shall mean this Acquisition Agreement and Plan of
Merger, including the exhibits and schedules referred to herein.
1.4 "Certificate of Merger" shall mean the document to be filed
with the Delaware Secretary of State, substantially in the form attached hereto
as Exhibit "A" and incorporated herein by this reference.
1.5 "Closing" shall mean the closing of the transactions
contemplated in this Agreement.
1.6 "Closing Consideration" shall mean an aggregate of $3,354,005
in value, $1,353,605 of which shall be paid in cash at the Closing, plus
181,855 shares of QuadraMed Common Stock to be delivered to the Shareholders as
of the Closing with an aggregate Fair Market Value of $2,000,405.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.8 "Company" shall have the meaning specified in the preamble
hereto.
1.9 "Company Common Stock" shall mean all of the issued and
outstanding Common Stock of the Company, no par value, all of which shares are
held by the Shareholders as of the date hereof.
1.10 "Company Financial Statements" shall mean the reviewed balance
sheets of the Company as of December 31, 1996 for the twelve (12) month period
then ended and the related statements of operations, shareholders' equity and
cash flows for the periods then ended, as prepared by ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
independent certified public accountants to the Company, including notes
thereto, and the unaudited balance sheets of the Company as of February 28,
1997, for the two (2) month period then ended and the related statement of
operations, shareholders' equity and cash flows for the period then ended, as
prepared internally by the Company's accounting staff, including notes thereto.
1.11 "DGCL" shall mean the Delaware General Corporation Law.
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1.12 "Effective Date" shall mean the date and time the Certificate
of Merger is filed with the Delaware Secretary of State.
1.13 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.14 "Fair Market Value" with respect to each of the QuadraMed
Shares shall mean Eleven Dollars ($11.00) per share (ratably adjusted for stock
splits, stock dividends or other subdivisions or combinations of QuadraMed
Common Stock), regardless of what price shares of QuadraMed Common Stock are
then quoted on the NASDAQ-NMS.
1.15 "Interim Balance Sheet" shall mean the Company's unaudited
balance sheet as of February 28, 1997, and the "Interim Balance Sheet Date"
shall mean February 28, 1997.
1.16 "Merger" shall have the meaning specified in the preamble
hereto.
1.17 "New Jersey Act" shall mean the New Jersey Corporations Code.
1.18 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.19 "QuadraMed Common Stock" shall mean the shares of Common Stock
of QuadraMed, $0.01 par value.
1.20 "QuadraMed SEC Filings" shall mean any and all documents,
reports and other filings made by QuadraMed with the SEC, including, without
limitation, the Form 10K-SB filed with the SEC on March 28, 1997.
1.21 "QuadraMed Shares" shall mean the shares of QuadraMed Common
Stock issuable as a portion of the Closing Consideration.
1.22 "SEC" shall mean the Securities and Exchange Commission.
1.23 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.24 "Surviving Corporation" shall mean Acquisition Co. (or its
successor-in-interest) as the surviving corporation following the Merger.
ARTICLE II.
THE MERGER
2.1 The Merger. Subject to the terms and conditions hereof, the
Merger shall be consummated in accordance with the DGCL and the New Jersey Act
as promptly as practicable following the satisfaction or waiver of the
conditions set forth in Articles V and VI. On the Effective Date, subject to
the terms and conditions of this Agreement and in
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accordance with the laws of the State of Delaware, the Company shall be merged
with and into Acquisition Co., which shall be the Surviving Corporation.
2.2 Execution of Certificate of Merger. Prior to the Closing,
Acquisition Co. shall complete and execute the Certificate of Merger and cause
the Certificate of Merger to be delivered to the Delaware Secretary of State
for filing as part of the Closing as provided in Section 251 of the DGCL. The
parties hereto will also execute and deliver such other documents or
certificates as may be required to effect the Merger.
2.3 Effect of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
2.4 Certificate of Incorporation; Bylaws. As of the Effective
Date, the Certificate of Incorporation of Acquisition Co. shall be the
Certificate of Incorporation of the Surviving Corporation, and the Bylaws of
Acquisition Co. shall be the Bylaws of the Surviving Corporation.
2.5 Directors. The directors of Acquisition Co. on the Effective
Date shall be the directors of the Surviving Corporation and shall hold office
from the Effective Date until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
2.6 Officers. The officers of the Surviving Corporation shall be
as set forth below, and such officers shall hold office from the Effective Date
until their respective successors are duly elected or appointed and qualify in
the manner provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law:
Name Office
---- ------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Chairman of the Board, Chief Executive Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President, Chief Operating Officer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Treasurer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Secretary
2.7 Closing. Unless this Agreement shall have been terminated
pursuant to the provisions of Section 8.1, the Closing of the transactions
contemplated by this Agreement shall take place at the principal executive
offices of QuadraMed, ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as soon as practicable following the satisfaction or waiver of
the conditions set forth in Articles V and VI (the "Closing Date").
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2.8 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code,
and that this Agreement shall constitute a "plan of reorganization" for
purposes of Section 368 of the Code.
ARTICLE III.
STATUS AND CONVERSION OF COMPANY COMMON STOCK;
STATUS OF ACQUISITION CO. COMMON STOCK;
REPAYMENT OF COMPANY DEBT
3.1 Consideration Paid for Company Common Stock.
3.1.1 On the Effective Date, each share of Company Common
Stock issued and outstanding immediately prior to the Effective Date shall, by
virtue of the Merger and without any action on the part of the Shareholders, be
converted into the right to receive a ratable portion of the Closing
Consideration upon surrender at the Closing of the certificates representing
such shares. In addition, on the Effective Date, all rights in respect of such
Company Common Stock shall cease to exist, other than the right to receive the
Closing Consideration and all such shares shall be cancelled and retired.
Until surrendered, each outstanding certificate which prior to the Effective
Date represented issued and outstanding Company Common Stock shall be deemed
for all corporate purposes to evidence the right to receive such amounts.
3.1.2 Each share of Company Common Stock held in the
Company's treasury immediately prior to the Effective Date shall, by virtue of
the Merger, be cancelled and retired and cease to exist, without any conversion
thereof.
3.1.3 As of the Effective Date, any Stock Rights (as
defined in Section 4.1.1 below) shall be cancelled and extinguished and cease
to exist, and shall not be entitled to receive any of the Closing Consideration
or contingent consideration hereunder.
3.2 Acquisition Co. Common Stock. Each share of Acquisition Co.
Common Stock issued and outstanding immediately prior to the Effective Date
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into such number of newly issued shares of the Common
Stock of the Surviving Corporation equal to the number of shares of Acquisition
Co. Common Stock then outstanding.
3.3 Private Placement. The QuadraMed Shares to be issued in the
Merger are intended to be exempt from registration requirements of the
Securities Act pursuant to the private placement exemption provided by Rule 505
and/or 506 of Regulation D promulgated under the Securities Act and applicable
state securities laws. Each Shareholder hereby agrees to take all reasonable
actions and execute all documents to qualify issuance of the QuadraMed Shares
for such exemptions.
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3.4 Repayment of Company Debt. Concurrently with the Closing,
QuadraMed shall repay the following indebtedness of the Company via wire
transfer pursuant to written instructions provided to QuadraMed by the Company:
(i) $1,287,000 owed to Core States/New Jersey National Bank ("Core States");
and (ii) $379,000 owed to ▇▇▇▇▇▇. At the Closing, the Company shall cause both
Core States and ▇▇▇▇▇▇ each to deliver the following: (i) the original
promissory note(s) evidencing such indebtedness marked "cancelled;" (ii) the
release and termination of any and all security interests and liens on the
Company's assets issued in connection with such indebtedness; and (iii) such
other documentation reasonably requested by counsel for the QuadraMed Entities
as necessary to evidence full repayment of such indebtedness and release of all
legal rights and remedies in connection therewith by each lender.
3.5 Contingent Consideration. Within sixty (60) days of
completion of the audit of the Surviving Corporation's financial statements for
each of the fiscal years ended December 31, 1997 and December 31, 1998,
QuadraMed shall issue to each of the Shareholders, pro rata based upon their
stock ownership in the Company as of the Closing, QuadraMed Common Stock with a
Fair Market Value calculated as set forth below. With respect to the Surviving
Corporation's fiscal year ended December 31, 1997, QuadraMed shall issue
QuadraMed Common Stock with an aggregate Fair Market Value equal to 21.74% of
the amount by which audited gross revenues of the Surviving Corporation ("Gross
Revenues") exceed $9,200,000 solely to the extent of the first $2,300,000 of
any such excess, such that the Fair Market Value of the contingent
consideration issuable with respect to the 1997 fiscal year shall be to a
maximum of $500,000. By way of illustration, and not of limitation, the Fair
Market Value of contingent consideration issuable would be $282,620 if 1997
Gross Revenues were $10,500,000, would be $500,000 if 1997 Gross Revenues were
equal to $11,500,000 (the "1997 Maximum Target") and would not increase in
excess of $500,000 to the extent the 1997 Gross Revenues exceeded $11,500,000.
For purposes of fiscal year 1997, the audited gross revenues of the Surviving
Corporation shall be deemed to be the gross revenues of the Company from the
period January 1, 1997 through the Closing plus the audited gross revenues of
the Surviving Corporation from the Closing through December 31, 1997. With
respect to the Surviving Corporation's fiscal year ended December 31, 1998,
QuadraMed shall issue QuadraMed Common Stock with a Fair Market Value equal to
18.90% of the amount by which 1998 Gross Revenues exceed $10,580,000 solely to
the extent of the first $2,645,000 of any such excess, such that the Fair
Market Value of the contingent consideration issuable with respect to the 1998
fiscal year shall be subject to a maximum of $500,000. By way of illustration,
and not of limitation, the Fair Market Value of contingent consideration
issuable would be $268,380 if 1998 Gross Revenues were $12,000,000, would be
$500,000 if 1998 Gross Revenues were equal to $13,225,000 (the "1998 Maximum
Target") and would not increase in excess of $500,000 to the extent the 1998
Gross Revenues exceeded $13,225,000. Concurrently with the issuance of any
such contingent consideration, each of the Shareholders shall reaffirm its
investment representations contained in Section 4.1.37 below.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company and the
Shareholders. The Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, jointly and severally, and
▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇, severally, hereby represent and warrant to the
QuadraMed Entities as follows:
4.1.1 Capitalization of the Company. As of the date of
this Agreement, the only authorized capital stock of the Company consists of
2,500 shares of Company Common Stock, no par value, of which 1,319.54 shares
are issued and outstanding. All issued and outstanding shares of Company
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable and are not subject to, nor were any issued in violation of, any
preemptive rights, rights of first refusal, co-sale rights and similar rights.
Except as set forth on Schedule 4.1.1, there are not and, as of the Closing,
there will not be, any outstanding securities of the Company or options,
warrants, subscriptions, convertible debentures or other rights, commitments or
any other similar agreements for the purchase of any securities of the Company
(collectively "Stock Rights"). The Company is not a party to, nor has
knowledge that any of the Shareholders are parties to, any voting trust
agreements or other contracts, agreements or arrangements restricting voting
rights or transferability with respect to the issued and outstanding Company
Common Stock.
4.1.2 Ownership of Shares; No Change. Except as set forth
on Schedule 4.1.2, as of the date of this Agreement and as of the Closing, the
Shareholders do and will own all of the issued and outstanding Company Common
Stock. Each of the shares of Company Common Stock to be tendered by the
Shareholders at the Closing is free and clear of any mortgage, lien, pledge,
security interest, conditional sales contract or other encumbrance of any
nature whatsoever (collectively, an "Encumbrance") and at the Closing, each of
such shares of Company Common Stock will be free of any Encumbrance. The
Shareholders have full power and authority to convey good marketable title to
the shares of Company Common Stock owned by each of them free and clear of any
Encumbrances.
4.1.3 Corporate Existence. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey. The Company is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the failure
to be in good standing, or so qualified would have a material adverse effect on
its business or operations, all of which jurisdictions are listed on Schedule
4.1.3.
4.1.4 Corporate Power; Authorization; Enforceable
Obligations. The Company has the corporate power, authority and legal right to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement (including the documents and transactions
contemplated hereby) by the Company has been duly authorized by all necessary
shareholder and corporate action. This Agreement has been, and the other
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agreements, documents and instruments required to be delivered by the Company
or the Shareholders in accordance with the provisions hereof (the "Company's
Documents") will be, duly executed and delivered on behalf of each Shareholder
and duly executed and delivered by the Company by duly authorized officers of
the Company, and this Agreement constitutes, and the Company's Documents when
executed and delivered will constitute, the legal, valid and binding
obligations of each Shareholder and the Company as each is a party thereto,
enforceable against each such party in accordance with their respective terms
(except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally or by general principles of equity).
4.1.5 No Interest in Other Entities. Except for interests
in the entities described on Schedule 4.1.5 (such entities are hereinafter
referred to as the "Subsidiaries"), the Company owns no shares of any
corporation or any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint venture or
other legal entity.
4.1.6 Validity of Contemplated Transactions, Etc. The
execution, delivery and performance of this Agreement by the Company does not
and will not violate, conflict with or result in the breach of any term,
condition or provision of, or require the consent of any other person under,
(i) any existing law, ordinance or governmental rule or regulation to which the
Company is subject, (ii) to the Company's best knowledge after due inquiry, any
judgment, order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
the Company, (iii) the charter documents of the Company or any securities
issued by the Company or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan, Authorization (hereinafter defined in Section 4.1.17),
or other instrument, document or understanding, oral or written, to which the
Company is a party, by which the Company may have rights or by which any of its
assets may be bound or affected, or give any party with rights thereunder the
right to terminate, modify, accelerate or otherwise change the existing rights
or obligations of the Company thereunder. Except as aforesaid, no
Authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this Agreement by the
Company.
4.1.7 No Third Party Options. There are no existing
agreements, options, commitments or rights with, of or to any person (including
the Shareholders) to acquire any of the Company's assets, properties or rights
or any interest therein.
4.1.8 Financial Statements. The Company has delivered to
the QuadraMed Entities true and complete copies of the Company Financial
Statements. All such Company Financial Statements (including any related
notes), (i) have been prepared from the books and records of the Company in
accordance with generally accepted accounting principles, consistently applied
and maintained throughout the periods indicated, and (ii) fairly present the
financial position, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of
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the Company at the dates indicated and each such statement of income, cash flow
and changes in shareholders' equity fairly present the results of operations,
cash flow and changes in shareholders' equity of the Company for the periods
indicated. The unaudited financial statements for all such periods contain all
adjustments, which are solely of a normal recurring nature, necessary to
present fairly the financial position for the periods then ended.
4.1.9 Accounts Receivable. The accounts receivable of the
Company as set forth on the Interim Balance Sheet and/or arising since the date
thereof are valid and genuine; have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the ordinary course of business consistent with past practice; are not subject
to valid defenses, set-offs or counterclaims; and are collectible within one
hundred twenty (120) days after billing at the full recorded amount thereof
less, in the case of accounts receivable appearing on the Interim Balance
Sheet, the recorded allowance for collection losses on the Interim Balance
Sheet and in each case discounts for early payment noted thereon. The
allowance for collection losses on the Interim Balance Sheet has been
determined in accordance with generally accepted accounting principles
consistent with past practice. To the best of the Company's and each
Shareholder's knowledge after due inquiry, no customer, client or vendee of the
Company has repeatedly or persistently failed to pay amounts due to the Company
within one hundred twenty (120) days after billing. Neither the Company nor
any representative of the Company has any oral or written agreements or side
deals with respect to the payment, billing or collection of accounts receivable
with any customers, clients or vendees of the Company, or any individuals
associated therewith, and there are no existing, or, to the Company's best
knowledge after inquiry, threatened or suspected disputes regarding any
services rendered or ▇▇▇▇▇▇▇▇ to such customers, clients or vendees. After the
Closing Date, the Company will not be obligated to return any amounts
previously collected from its customers, clients or vendees as a result of any
written or oral agreement, understanding or guaranty existing as of the Closing
Date. For purposes of this Section 4.1.9, the QuadraMed Entities acknowledge
and agree that, unless otherwise specified by a customer or client, all amounts
collected with respect to the Company's accounts receivable arising prior to
the Closing shall be applied to the oldest account with respect to such
customer or client.
4.1.10 Complaints. The Company has received no customer
complaints concerning its services.
4.1.11 Absence of Undisclosed Liabilities. The Company has
no liabilities or obligations, either direct or indirect, matured or unmatured
or absolute, contingent or otherwise, except:
(a) Those liabilities or obligations set forth on
the Interim Balance Sheet and not heretofore paid or discharged;
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(b) Liabilities arising in the ordinary course of
business under any agreement, contract, commitment, lease or plan specifically
set forth on Schedule 4.1.11 or not required to be disclosed because of the
term or amount involved; or
(c) Those liabilities or obligations incurred,
consistently with past business practice, in or as a result of the normal and
ordinary course of business since the Interim Balance Sheet Date.
For purposes of this Agreement, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured.
4.1.12 Tax and Other Returns and Reports.
(a) All federal, state, local and foreign tax
returns, reports, statements and other similar filings required to be filed by
the Company and each Shareholder (the "Tax Returns") with respect to any
federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions, (including,
without limitation, all income tax, unemployment compensation, social security,
payroll, excise, privilege, property, ad valorem, franchise, license, school
and any other tax or similar governmental charge or imposition under laws of
the United States or any state or municipal or political subdivision thereof or
any foreign country or political subdivision thereof) (collectively, the
"Taxes") have been filed with the appropriate governmental agencies in all
jurisdictions in which such Tax Returns are required to be filed, and all such
Tax Returns properly reflect the liabilities of the Company and each
Shareholder for Taxes for the periods, property or events covered thereby. All
Taxes, including, without limitation, those which are called for by the Tax
Returns, or heretofore or hereafter claimed to be due by any taxing authority
from the Company have been properly accrued or paid. The accruals for Taxes
contained in the Interim Balance Sheet are adequate to cover the tax
liabilities of the Company as of that date and include adequate provision for
all deferred taxes, and nothing has occurred subsequent to that date to make
any of such accruals inadequate. The Company has not received any notice of
assessment or proposed assessment in connection with any Tax Returns and there
are no pending tax examinations of or tax claims asserted against the Company
or any of its assets or properties. The Company has not extended, or waived
the application of, any statute of limitations of any jurisdiction regarding
the assessment or collection of any Taxes. There are no tax liens (other than
any lien for current taxes not yet due and payable) on any of the assets or
properties of the Company. The Company has no knowledge of any basis for any
additional assessment of any Taxes. The Company has made all deposits required
by law to be made with respect to employees' withholding and other employment
taxes, including, without limitation, the portion of such deposits relating to
taxes imposed upon the Company.
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(b) All state, local and other tax returns,
reports, statements and other similar filings required to be filed by the
Company with respect to any state, local or other sales or use tax have been
filed with the appropriate governmental agencies in all jurisdictions where
sales or use tax returns are required to be filed, and all such sales or use
tax returns properly reflect the liabilities of the Company for all applicable
sale or use taxes for the periods, property or events covered thereby. All
sales or use taxes, including, without limitation, those which are called for
by sales or use tax returns filed by or on behalf of the Company, or heretofore
or hereafter claimed to be due by any taxing authority from the Company, have
been properly accrued or paid. The accruals for sales or use taxes contained
in the Interim Balance Sheet are adequate to cover sales or use tax liabilities
of the Company as of that date and include adequate provision for all deferred
taxes, and nothing has occurred subsequent to that date to make any of such
accruals inadequate. The Company has not received any notice of assessment or
proposed assessment in connection with any sales or use tax and there are not
pending sales or use tax examinations or sales or use tax claims asserted
against the Company. The Company has not extended, or waived the application
of, any statute of limitations of any jurisdiction regarding the assessment or
collection of sales or use taxes. There are no sales or use tax liens (other
than any lien for current taxes not yet due and payable) on any of the assets
or properties of the Company.
4.1.13 Books of Account. The books, records and accounts
of the Company maintained accurately and fairly reflect, in reasonable detail,
the transactions and the assets and liabilities of the Company. The Company
has not engaged in any transaction, maintained any bank account or used any of
the funds of the Company except for transactions, bank accounts and funds which
have been and are reflected in the normally maintained books and records of the
business made available to the QuadraMed Entities and their representatives.
4.1.14 Existing Condition. Since the Interim Balance Sheet
Date, the Company has not:
(a) Incurred any liabilities, other than
liabilities incurred in the ordinary course of business consistent with past
practice, or discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or will cause any damage or risk of loss
to it or any of its assets or properties;
(b) Sold, assigned or transferred any of its
assets or properties except in the ordinary course of business consistent with
past practice;
(c) Created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or subjected any of its
assets to any Encumbrance except for Permitted Liens (hereinbelow defined in
Section 4.1.15);
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(d) Made or suffered any amendment or termination
of any material agreement, contract, commitment, lease or plan to which it is a
party or by which it is bound, or cancelled, modified or waived any substantial
debts or claims held by it or waived any rights of substantial value, whether
or not in the ordinary course of business;
(e) Declared, set aside or paid any dividend or
made or agreed to make any other distribution or payment in respect of its
capital shares or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or acquire any of its capital shares;
(f) Suffered any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting its
business, operations, assets, properties or prospects;
(g) Suffered any material adverse change in its
business, operations, assets, properties, prospects or condition (financial or
otherwise);
(h) Received notice or had knowledge of any
actual or threatened labor trouble, strike or other occurrence, event or
condition of any similar character which has had or might have an adverse
effect on its business, operations, assets, properties or prospects;
(i) Made commitments or agreements for capital
expenditures or capital additions or betterments except such as may be involved
in ordinary repair, maintenance or replacement of its assets or which in the
aggregate do not exceed $25,000;
(j) Increased the salaries or other compensation
of, or made any advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its employees or made any increase in, or any
addition to, other benefits or perquisites to which any of its employees may be
entitled (except in connection with periodic performance review of
non-Shareholder employees in accordance with the Company's usual practices);
(k) Changed any of the accounting principles
followed by it or the methods of applying such principles;
(l) Entered into any transaction with an
Affiliate (as defined in Section 4.1.18 below) which exceed in any one instance
$5,000; or
(m) Entered into any transaction other than in
the ordinary course of business consistent with past practice.
4.1.15 Title to Properties. The Company has good, valid
and marketable title to all of its properties and assets, real, personal and
mixed, which it purports to own, including, without limitation, all properties
and assets reflected in the Interim Balance Sheet (except for inventory sold
since the date thereof in the ordinary course of business consistent
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with past practice) free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and defects of
title of any nature whatsoever, except for (i) liens for current real or
personal property taxes not yet due and payable, (ii) liens disclosed on
Schedule 4.1.15 and (iii) liens that are immaterial in character, amount and
extent, and which do not detract from the value or interfere with the present
or proposed use of the properties they affect ("Permitted Liens").
4.1.16 Condition of Tangible Assets. All buildings,
structures, facilities, equipment and other material items of tangible property
and assets of the Company are in good operating condition and repair, subject
to normal wear and maintenance, are usable in the regular and ordinary course
of business, and conform to all applicable laws, ordinances, codes, rules and
regulations and Authorizations relating to their construction, use and
operation by the Company. No person other than the Company owns any equipment
or other tangible assets or properties situated on the premises of the Company
or necessary to the operation of the business of the Company, except for leased
items disclosed on Schedule 4.1.16 and for items of immaterial value.
4.1.17 Compliance with Law; Authorizations. The Company
has complied with each, and is not in violation of any law, ordinance or
governmental or regulatory rule or regulation, whether federal, state, local or
foreign, to which the Company's business, operations, assets or properties is
subject ("Regulations"). The Company owns, holds, possesses or lawfully uses
in the operation of its business all franchises, licenses, permits, easements,
rights, applications, filings, registrations and other authorizations
("Authorizations") which are necessary in any material fashion for it to
conduct the Business as now or previously conducted or for the ownership and
use of its assets owned or used by the Company, free and clear of all liens,
charges, restrictions and encumbrances (other than Permitted Liens) and in
compliance with all Regulations. All such Authorizations are listed and
described on Schedule 4.1.17. The Company is not in default, nor has it
received any notice of any claim of default, with respect to any such
Authorization. All such Authorizations are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
None of such Authorizations will be adversely affected by consummation of the
transactions contemplated hereby. No shareholder, director, officer, employee
or former employee of the Company or any affiliates of the Company or any other
person, firm or corporation owns or has any proprietary, financial or other
interest (direct or indirect) in any Authorization which the Company owns,
possesses or uses in the operation of the Business as now or previously
conducted.
4.1.18 Transactions with Affiliates. No shareholder,
director, officer or employee of the Company, or any member of his or her
immediate family or any other of his or her affiliates (collectively, an
"Affiliate") owns or has a five percent (5%) or more ownership interest in any
corporation or other entity that is or was during the last three (3) years a
party to, or in any property which is or was during the last three (3) years
the subject
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of, any material contract, agreement or understanding, business arrangement or
relationship with the Company.
4.1.19 Litigation. No litigation, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority is pending
or, to the best knowledge of the Company and the Shareholders after due
inquiry, threatened against the Company or which relates to the assets of the
Company or the transactions contemplated by this Agreement, nor do the Company
or any Shareholder know of any reasonably likely basis for any such litigation,
arbitration, investigation or proceeding, the result of which could either
individually or in the aggregate materially and adversely affect the Company,
its assets or the transactions contemplated hereby. The Company is not a party
to or subject to the provisions of any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory
official, body or authority which may materially and adversely affect the
Company, its assets or the transactions contemplated hereby.
4.1.20 Insurance. The assets of the Company are insured
under various policies of general liability, property, worker's compensation,
professional negligence or malpractice and other forms of insurance, all of
which are described on Schedule 4.1.20, which discloses for each policy the
risks insured against coverage limits, deductible amounts, all outstanding
claims thereunder and whether the terms of such policy provide for
retrospective premium adjustments. All such policies are in full force and
effect in accordance with their terms, no notice of cancellation has been
received, and there is no existing default or event which, with the giving of
notice or lapse of time or both, would constitute a default thereunder. Such
policies are in amounts which are adequate in relation to the Company's
operations and all premiums to date have been paid in full. The Company has
not been refused any insurance, nor has its coverage been limited by any
insurance carrier to which it has applied for insurance or with which it has
carried insurance during the past five years. Schedule 4.1.20 also contains a
true and complete description of all outstanding bonds and other surety
arrangements issued or entered into by the Company.
4.1.21 Contracts and Commitments. Except as set forth on
Schedule 4.1.21, the Company is not a party to any written or oral:
(a) Agreement, contract or commitment with any
present or former employee or consultant or for the employment of any person,
including any consultant;
(b) Agreement, contract or commitment for the
future purchase of, or payment for, supplies or products, or for the
performance of services by a third party which supplies, products or services
are used in the conduct of the Business involving in any one case $7,500 or
more;
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(c) Agreement, contract or commitment to sell or
supply products ("Goods Contracts") or to perform services ("Services
Contracts") in connection with the Business involving in any one case $7,500 or
more;
(d) Agreement, contract or commitment not
otherwise listed on Schedule 4.1.21 and continuing over a period of more than
six (6) months from the date hereof or exceeding $7,500 in value;
(e) Distribution, dealer, representative or sales
agency agreement, contract or commitment;
(f) Lease under which the Company is either
lessor or lessee relating to its assets or any property at which its assets are
located;
(g) Note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement or other contract or
commitment for the borrowing or lending of money or agreement or arrangement
for a line of credit or guarantee, pledge or undertaking of the indebtedness of
any other person;
(h) Agreement, contract or commitment for any
charitable or political contribution relating to the Business involving in any
one case $500 or more;
(i) Commitment or agreement for any capital
expenditure or leasehold improvement in excess of $25,000;
(j) Other than the Non-Competition and
Non-Circumvention Agreement and the Employment Agreement to be entered into
with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as of Closing, agreement, contract or commitment limiting
or restraining the Company, or any successor thereto from engaging or competing
in any manner in any business, nor, to the Company's knowledge, is any employee
of the Company engaged in the conduct of the business subject to any such
agreement, contract or commitment;
(k) License, franchise, distributorship or other
agreement which relates in whole or in part to any software, patent, trademark,
trade name, service ▇▇▇▇ or copyright or to any ideas, technical assistance or
other know-how of or used by the Company; or
(l) Any other material agreement, contract or
commitment not made in the ordinary course of business.
Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed on Schedule 4.1.21, or not
required to be listed therein because of the term or amount thereof, under
which the QuadraMed Entities are to acquire
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rights or obligations hereunder is valid and enforceable in accordance with its
terms; the Company is, and to the Company's and each Shareholder's knowledge
after due inquiry, all other parties thereto are in material compliance with
the provisions thereof; the Company is not, and to the Company's and each
Shareholder's knowledge after due inquiry, no other party thereto is in default
in the performance, observance or fulfillment of any material obligation,
covenant or condition contained therein; and to the Company's and each
Shareholder's best knowledge after due inquiry, no event has occurred which
with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder. No written or oral agreement, contract or
commitment described on Schedule 4.1.21 requires the consent of any party to
its assignment in connection with the transactions contemplated hereby.
Schedule 4.1.21 accurately discloses with respect to each Service Contract
disclosed therein, the customer name; the form from which such contract has
been derived; whether or not the contract amount is fixed or may be varied
based on services performed; if the contract amount is fixed, the contract
amount, or, if the contract amount is not fixed, a good faith, reasonable
estimate of the contract amount and the estimated contract amount most recently
communicated to the customer; a good faith, reasonable estimate of the work
completed and total costs incurred to the date hereof thereunder; the total
▇▇▇▇▇▇▇▇ as of the date hereof under such contract; the estimated completion
dates therefor; whether or not the Company has any reason to believe that its
profit margin with respect to such contract might be less than it has
customarily achieved in the past for similar contracts; and whether such
contract requires the furnishing of goods or services by persons other than the
employees of the Company.
4.1.22 Additional Information. Schedule 4.1.22 contains
accurate lists and summary descriptions of the following:
(a) All inventory, equipment and furniture and
fixtures of the Company as of the Interim Balance Sheet Date, specifying such
items as are owned and such as are leased and, with respect to the owned
property, specifying its aggregate cost or original value and the net book
value as of the Interim Balance Sheet Date and, with respect to the leased
property as to which the Company is lessee, specifying the identity of the
lessor, the rental rate and the unexpired term of the lease;
(b) All real property and interests in real
property leased by the Company as of the Interim Balance Sheet Date, specifying
the identity of the lessor, the rental rate and the unexpired term of the
lease;
(c) The name and address of every bank and other
financial institution in which the Company or its affiliates maintains an
account (whether checking, savings or otherwise), lock box or safe deposit box
and the account numbers and names of persons having signing authority or other
access thereto;
(d) The names and titles of and current annual
base salary or hourly rates for all employees of the Company, together with a
statement of the full amount and
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nature of any other remuneration, whether in cash or kind, paid to each such
person during the past or current fiscal year or payable to each such person in
the future and the bonuses accrued for, the vacation and severance benefits to
which, each such person is entitled; and
(e) All names under which the Company has
conducted business during the last five (5) years.
4.1.23 Labor Matters. The Company has not suffered any
strike, slowdown, picketing or work stoppage by any union or other group of
employees. The Company is not a party to any collective bargaining agreement,
no such agreement determines the terms and conditions of employment of any
employee of the Company, no collective bargaining agent has been certified as a
representative of any of the employees of the Company and no representation
campaign or election is now in progress with respect to any of the employees of
the Company.
4.1.24 Employee Benefit Plans and Arrangements.
(a) Identification of Employee Benefit Plans.
Schedule 4.1.24 contains a complete list of all Employee Benefit Plans, whether
formal or informal, whether or not set forth in writing and whether covering
one person or more than one person, sponsored or maintained by the Company in
connection with the Business. For the purposes of this Agreement, the term
"Employee Benefit Plan" includes all plans, funds, programs, policies,
arrangements, practices, customs and understandings providing benefits of
economic value to any employee, former employee or present or former
beneficiary, dependent or assignee of any such employee or former employee
other than regular salary, wages or commissions paid substantially concurrently
with the performance of the services for which paid. The term " "Employee
Benefit Plan" includes, without limitation, all employee welfare benefit plans
within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and all employee pension benefits within the
meaning of Section 3(2) of ERISA. Each Employee Benefit Plan providing
benefits which are funded through a policy of insurance is indicated by the
word "insured" placed by the listing of the plan on Schedule 4.1.24.
(b) Employee Benefit Plans. Each Employee
Benefit Plan maintained by the Company (collectively, the "Employee Benefit
Plans") is in substantial compliance with applicable law and has been
administered and operated in all material respects in accordance with its
terms. Each Employee Benefit Plan which is intended to be "qualified" within
the meaning of Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service (the "IRS") and no event
has occurred and no condition exists which could reasonably be expected to
result in the revocation of any such determination. No event which constitutes
a "reportable event" (as defined in Section 4043(b) of ERISA) for which the
thirty (30) day notice requirement has not been waived by the Pension Benefit
Guaranty Corporation (the "PBGC") has occurred with respect to any
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Employee Benefit Plan. No Employee Benefit Plan subject to Title IV of ERISA
has been terminated or is or has been the subject of termination proceedings
pursuant to Title IV of ERISA. Full payment has been made of all amounts which
the Company was required under the terms of the Employee Benefit Plans to have
paid as contributions to such Employee Benefit Plans on or prior to the date
hereof (excluding any amounts not yet due) and no Employee Benefit Plan which
is subject to Part 3 of Subtitle B of Title 1 of ERISA has incurred any
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived. Neither the Company nor any
Shareholder nor, to the knowledge of the Company and each Shareholder after due
inquiry, any other "disqualified person" or "party in interest" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transactions in connection with any Employee Benefit Plan that
could reasonably be expected to result in the imposition of a penalty pursuant
to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA or a tax
pursuant to Section 4975(a) of the Code. No liability, claim, action or
litigation has been made, commenced or threatened with respect to any Employee
Benefit Plan (other than for benefits payable in the ordinary course and PBGC
insurance premiums). No Employee Benefit Plan or related trust owns any
securities in violation of Section 407 of ERISA. With respect to all Employee
Benefit Plans which are subject to Title IV of ERISA, as of the most recent
actuarial valuation prepared for each such Employee Benefit Plan, the aggregate
present value of the accrued liabilities thereof did not exceed the aggregate
fair market value of the assets allocable thereto. Each "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) to which the Company is obligated
to contribute ("Multiemployer Plan") is listed on Schedule 4.1.24. Except as
set forth on Schedule 4.1.24, all contributions required to have been made by
the Company or any Shareholder to a Multiemployer Plan have been made on a
timely basis. The Company has not been advised by any Multiemployer Plan that
it has any withdrawal liability under Sections 4201 or 4204 of ERISA with
respect to any Multiemployer Plan, nor is the Company or any Shareholder aware
of any such withdrawal liability.
4.1.25 Intellectual Property Matters. The Company did not
and does not utilize any patent, trademark, trade name, service ▇▇▇▇,
copyright, software, trade secret or know-how except for those listed on
Schedule 4.1.25 (the "Intellectual Property"), all of which are owned by the
Company free and clear of any liens, claims, charges or encumbrances except as
noted on Schedule 4.1.25. Schedule 4.1.25 contains a complete list of pending
patent applications of the Company relating to the Business. The Company in
the operation of the Business does not infringe upon or unlawfully or
wrongfully use any patent, trademark, trade name, service ▇▇▇▇, copyright or
trade secret owned or claimed by another. The Company is not in default under,
and has not received any notice or communication of any claim of infringement
or any other claim or proceeding relating to any such patent, trademark, trade
name, service ▇▇▇▇, copyright or trade secret relating to the Business. No
present or former employee or shareholder of the Company and no other person
owns or has any proprietary, financial or other interest, direct or indirect,
in whole or in part, in any patent, trademark, trade name, service ▇▇▇▇ or
copyright, or in any application therefor, or in any trade secret, which the
Company owns, possesses or uses in its operation of the Business as
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now or heretofore conducted. Schedule 4.1.25 lists all confidentiality or
non-disclosure agreements to which the Company or any of its employees is a
party.
4.1.26 Software.
(a) The computer software and software in process
of the Company included in the Intellectual Property (the "Software") performs
in accordance with the documentation and other written material used in
connection with the Software and is free of defects in programming and
operation, is in machine-readable form, contains all current revisions of such
software and includes all computer programs, materials, know-how and processes
related to the Software. The Company has delivered to the QuadraMed Entities
complete and correct copies of all user and technical documentation related to
the Software.
(b) Neither the Company nor any employee or agent
thereof has developed or assisted in the enhancement of the Software except for
enhancements included in the Software as delivered to the QuadraMed Entities
pursuant hereto or the development of any program or product based on the
Software or any part thereof.
(c) No employee of the Company is, or is now
expected to be, in default under any term of any employment contract, agreement
or arrangement relating to the Software or non-competition arrangement, or any
other contract or any restrictive covenant relating to the Software or its
development or exploitation. The Software was developed entirely by the
employees of the Company during the time they were employees only of the
Company and such Software does not include any inventions of the employees made
prior to the time such employees became employees of the Company nor any
intellectual property of any previous employer of such employee.
(d) Except as noted on Schedule 4.1.25, all
right, title and interest in and to the Software is owned by the Company, free
and clear of all liens, claims, charges or encumbrances, are fully transferable
to the QuadraMed Entities, and no party other than the Company has any interest
in the Software, including, without limitation, any security interest, license,
contingent interest or otherwise. The Company's development, use, sale or
exploitation of the Software does not violate any rights of any other person or
entity and the Company has not received any communication alleging such a
violation. The Company does not have any obligation to compensate any person
for the development, use, sale or exploitation of the Software nor has the
Company granted to any other person or entity any license, option or other
rights to develop, use, sell or exploit in any manner the Software, whether
requiring the payment of royalties or not.
(e) The Company has kept secret and has not
disclosed the source code for the Software to any person or entity other than
certain employees of the Company who are subject to the terms of a binding
confidentiality agreement with respect thereto or in connection with software
escrows with third parties which are set forth on Schedule 4.1.26.
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The Company has taken all appropriate measures to protect the confidential and
proprietary nature of the Software, including, without limitation, the use of
confidentiality agreements with all of its employees having access to the
Software source and object code. There have been no patents applied for and no
copyrights registered for any part of the Software.
4.1.27 Environmental Matters.
(a) Except as set forth on Schedule 4.1.27, the
Company has obtained all permits, licenses and other authorizations which are
required in connection with the conduct of the Business under regulations
relating to pollution or protection of the environment, including regulations
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
(b) Except as set forth on Schedule 4.1.27, the
Company is in full compliance with all terms and conditions of the required
permits, licenses and authorizations, and is also in full compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in all applicable
environmental laws or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder ("Environmental Laws").
(c) Except as set forth on Schedule 4.1.27, there
is no civil, criminal or administrative action, suit, demand, claim, hearing,
notice or demand letter, notice of violation, investigation or proceeding
pending or threatened against the Company relating in any way to those
Environmental Laws.
4.1.28 Leased Real Property. With respect to the real
property that is leased by the Company:
(a) The Company has delivered to the QuadraMed
Entities a true and complete copy of every lease and sublease to which the
Company is a tenant or subtenant (the "Leases"), and shall describe each Lease
on Schedule 4.1.28 by listing the name of the landlord or sublandlord, a
description of the leased premises, the commencement and expiration dates of
the current term; and
(b) Each Lease is, and at Closing shall be, in
full force and effect and has not been assigned, modified, supplemented or
amended except as listed on Schedule 4.1.28, and neither the Company nor the
landlord or sublandlord under any lease is in material default under any of the
Leases, and to the best of the Company's knowledge after due
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inquiry, no circumstances or state of facts presently exists which, with the
giving of notice or passage of time, or both, would permit the landlord or
sublandlord under any Lease to terminate any Lease.
4.1.29 Availability of Documents. The Company has made
available to the QuadraMed Entities copies of all documents, including, without
limitation, all agreements, contracts, commitments, insurance policies, leases,
plans, instruments, undertakings, authorizations, permits, licenses, patents,
trademarks, trade names, service marks, copyrights and applications therefor
listed on Schedule 4.1.29 or referred to herein. Such copies are true,
complete and unadulterated and include all amendments, supplements and
modifications thereto or waivers currently in effect thereunder.
4.1.30 Assets. The Company's assets include all rights and
property necessary to the conduct of the Business by the Surviving Corporation
in the manner it is presently conducted by the Company.
4.1.31 Restrictions. The Company is not a party to any
indenture, agreement, contract, commitment, lease, plan, license, permit,
authorization or other instrument, document or understanding, oral or written,
or subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree or award which materially adversely affects or
materially restricts or, so far as the Company or any Shareholder can now
reasonably foresee, may in the future materially adversely affect or materially
restrict, the business, operations, assets, properties, prospects or condition
(financial or otherwise) of the Company after consummation of the transactions
contemplated hereby,
4.1.32 Conditions Affecting the Company. There is no fact,
development or threatened development with respect to the markets, products,
services, clients, customers, facilities, computer software, data bases,
personnel, vendors, supplies, operations, assets or prospects of the Company
which are known to the Company or the Shareholders which either individually or
in the aggregate would materially adversely affect the business, operations or
prospects of the Company considered as a whole, other than such conditions as
may affect as a whole the economy generally the Company has used its reasonable
and diligent efforts to keep available for the Surviving Corporation the
services of employees, agents, customers and suppliers of the Company active in
the conduct of the Business. The Company does not have any reason to believe
that any loss of any employee, agent, customer or supplier or other
advantageous arrangement will result because of the consummation of the
transactions contemplated hereby, which losses either individually or in the
aggregate would have a material adverse effect on the Business.
4.1.33 Minute Books. The minute books of the Company
provided to the QuadraMed Entities contain a complete summary of all meetings
of directors and shareholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
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4.1.34 Corporate Documents. The Articles of Incorporation
and Bylaws of the Company are in the form previously provided to counsel for
the QuadraMed Entities.
4.1.35 Completeness of Disclosure. No statement,
representation or warranty by the Company in this Agreement nor any
certificate, schedule, statement, document or instrument furnished or to be
furnished to the QuadraMed Entities pursuant hereto, or in connection with the
negotiation, execution or performance of this Agreement, contains or will
contain an untrue statement of a material fact or omits or will omit to state a
material fact required to be stated herein or therein or necessary to make any
statement herein or therein not misleading.
4.1.36 Broker's Fees. There are no broker's or finder's
fees or obligations due to persons engaged by the Company or any of the
Shareholders or any of the Company's employees, officers or directors in
connection with the transactions contemplated by this Agreement, except for the
fees and expenses of its counsel and accountants.
4.1.37 Investment Representations of the Shareholders. Each
Shareholder represents and warrants to the QuadraMed Entities as follows:
(a) Except as noted on Schedule 4.1.37, each
Shareholder is an "accredited investor" within the meaning of Rule 501(a) of
the Securities Act.
(b) Each Shareholder is aware that the QuadraMed
Shares (which term, for purposes of this Section 4.1.37, shall include the
shares of QuadraMed Common Stock (if any) to be issued pursuant to Section 3.5)
have not been registered under the Securities Act or any applicable state
securities laws, and agrees that the QuadraMed Shares will not be offered or
sold in the absence of registration under the Securities Act and any applicable
state securities laws or an exemption from the registration requirements of the
Securities Act and any applicable state securities laws. Each Shareholder will
not transfer the QuadraMed Shares in violation of the provisions of any
applicable federal or state securities laws. In this connection, each
Shareholder represents that he or she is familiar with SEC Rule 144 promulgated
pursuant to the Securities Act ("Rule 144"), as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Each Shareholder understands that the offering and sale of the QuadraMed Shares
is intended to be exempt from registration under the Securities Act, by virtue
of Section 4(2) and/or Section 4(6) of the Securities Act and the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements contained in this Agreement and the Company may rely
on such representations, warranties and agreements in connection therewith.
Each Shareholder is acquiring the QuadraMed Shares for his or her own account
and for investment, and not with a view to the distribution thereof or with any
present intention of distributing or selling any of the QuadraMed Shares except
in compliance with the Securities Act. Each Shareholder represents that by
reason of his or her business and financial experience, and the business and
financial experience of those persons, if any, retained by him
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or her to advise him or her with respect to his or her investment in the
QuadraMed Shares, such Shareholder together with such advisors have knowledge,
sophistication and experience in business and financial matters as to be
capable of evaluating the merits and risk of the prospective investment. Each
Shareholder's financial condition and investments are such that he or she is in
a financial position to hold the QuadraMed Shares for an indefinite period of
time and to bear the economic risk of, and withstand a complete loss of, his or
her investment in the QuadraMed Shares.
(c) Each Shareholder has carefully examined the
QuadraMed SEC Filings. Each Shareholder acknowledges that QuadraMed has made
available to each Shareholder all documents and information that he or she has
requested relating to QuadraMed and has provided answers to all of his or her
questions concerning QuadraMed and the QuadraMed Shares. In evaluating the
suitability of the acquisition of the QuadraMed Shares hereunder, each
Shareholder has not relied upon any representations or other information
(whether oral or written) other than as set forth in the QuadraMed SEC Filings
or as contained herein.
4.2 Representations and Warranties of the QuadraMed Entities. The
QuadraMed Entities represent and warrant jointly and severally to the Company
as follows:
4.2.1 Corporate Existence. Each of the QuadraMed Entities
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.
4.2.2 Corporate Power and Authorization. Each of the
QuadraMed Entities has the corporate power, authority and legal right to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by each of the QuadraMed Entities have been duly
authorized by all necessary corporate action. This Agreement has been, and the
other agreements, documents and instruments required to be delivered by each of
the QuadraMed Entities in accordance with the provisions hereof (the
"Purchaser's Documents") will be duly executed and delivered by each of the
QuadraMed Entities by duly authorized officers of each of the QuadraMed
Entities and this Agreement constitutes, and the Purchaser's Documents when
executed and delivered will constitute, the legal, valid and binding
obligations of each of the QuadraMed Entities enforceable against them in
accordance with their respective terms (except as such enforcement may be
limited by applicable bankruptcy, insolvency, moritorium or similar laws
affecting the rights of creditors generally or by general principles of
equity).
4.2.3 Validity of Contemplated Transactions, Etc. The
execution, delivery and performance of this Agreement by each of the QuadraMed
Entities does not and will not violate, conflict with or result in the breach
of any term, condition or provision of, or require the consent of any other
party to, (i) any existing law, ordinance or governmental rule or regulation to
which either of the QuadraMed Entities is subject, (ii) any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official,
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body or authority which is applicable to either of the QuadraMed Entities,
(iii) the charter documents or Bylaws of, or any securities issued by, either
of the QuadraMed Entities or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding which is
attached as an exhibit to the QuadraMed SEC Filings and to which either of the
QuadraMed Entities is a party or by which either of the QuadraMed Entities is
otherwise bound. Except as aforesaid, no authorization, approval or consent
of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery and performance of this Agreement by either of the QuadraMed Entities.
4.2.4 QuadraMed SEC Filings. The QuadraMed SEC Filings,
true, correct and complete copies of which have been made available to the
Company, have been duly filed in substantial compliance with the requirements
of their respective report forms, and as of the date of such filings, did not
contain an untrue statement of a material fact nor omit to state a material
fact necessary in order to make the statements made therein not misleading in
light of the circumstances under which such statements were made, and except as
set forth in Schedule 4.2.4, since March 28, 1997, there has not been any
material adverse change in the business, assets, financial condition or results
of operations of QuadraMed and its subsidiaries taken as a whole. The
consolidated financial statements of QuadraMed and the related notes and
schedules included in the QuadraMed SEC Filings comply in all material respects
with the requirements of the Exchange Act and present fairly the consolidated
financial position of QuadraMed as of the dates indicated in accordance with
generally accepted accounting principles, and the results of its operations and
changes in financial position for the periods therein specified (subject, in
the case of unaudited interim financial statements, to normal year-end
adjustments). The QuadraMed SEC Filings constitute all of the documents
required by applicable securities laws to be filed with the SEC.
4.3 Survival of Representations and Warranties. All
representations and warranties made by the parties in this Agreement or in any
certificate, schedule, statement, document or instrument furnished hereunder or
in connection with negotiation, execution and performance of this Agreement,
shall survive the Closing for a period of three (3) years thereafter (or until
the expiration of the applicable statute of limitations, if sooner), with the
exceptions of representations and warranties contained in Sections 4.1.12 and
4.1.27, which shall survive the Closing until the expiration of the applicable
statute of limitations. Notwithstanding any investigation or audit conducted
before or after the Closing Date or the decision of any party to complete the
Closing, each party shall be entitled to rely fully upon the representations
and warranties set forth herein and therein.
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ARTICLE V.
AGREEMENTS PENDING AND AFTER CLOSING
5.1 Agreements of the Company Pending the Closing. The Company
covenants and agrees that, pending the Closing and except as otherwise agreed
to in writing by the QuadraMed Entities:
5.1.1 Business in the Ordinary Course. The Business shall
be conducted solely in the ordinary course consistent with past practice.
5.1.2 Existing Condition. The Company shall not cause and
shall use reasonable and diligent efforts not to permit to occur any of the
events or occurrences described in Section 4.1.14 hereof.
5.1.3 Maintenance of Physical Assets. The Company shall
continue to maintain and service its physical assets in the same manner as has
been its consistent past practice.
5.1.4 Employees and Business Relations. The Company shall
use its best reasonable efforts to keep available the services of the present
employees and agents material to the conduct of the Business and to maintain
the relations and goodwill with the suppliers, customers, distributors and any
others having business relations with the Company.
5.1.5 Maintenance of Insurance. The Company shall notify
the QuadraMed Entities of any material changes in the terms of the insurance
policies and binders referred to in Schedule 4.1.20.
5.1.6 Compliance with Laws, Etc. The Company shall comply
with all laws, ordinances, rules, regulations and orders applicable to its
businesses, or the Company's operations, assets or properties in respect
thereof, the noncompliance with which might either individually or in the
aggregate materially affect its business or assets.
5.1.7 Update Schedules. The Company acknowledges that it
has not delivered draft schedules to the QuadraMed Entities as of the date
hereof, but shall do so as soon as practicable. The Company shall promptly
finalize such schedules and disclose to the QuadraMed Entities any information
contained in its representations and warranties or the schedules which, because
of an event occurring before or after the date hereof, is materially incomplete
or is no longer materially correct as of all times after the date hereof until
the Closing; provided, however, that none of such disclosures shall be deemed
to modify, amend or supplement the representations and warranties of the
Company for the purposes of Article VI hereof, unless the QuadraMed Entities
shall have consented thereto in writing.
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5.1.8 Conduct of Business. The Company shall use its
reasonable best efforts to conduct the Business in such manner that on the
Closing Date the representations and warranties of the Company contained in
this Agreement shall be true, except as specifically contemplated by this
Article V, as though such representations and warranties were made on and as of
such date. To this end, the officers of the Company shall consult with senior
management of QuadraMed on a regular basis regarding any circumstances which
may reasonably be expected to have a material impact on operation of the
Business and, subject to the terms and conditions hereof, shall operate the
Business in a manner which is consistent with its acquisition by the QuadraMed
Entities as of the Closing. Furthermore, the Company shall cooperate with the
QuadraMed Entities and use its reasonable best efforts to cause all of the
conditions to the obligations of the QuadraMed Entities and the Company under
this Agreement to be satisfied on or prior to the Closing.
5.1.9 Sale of Assets; Negotiations. The Company shall not,
directly or indirectly, sell or encumber all or any part of its assets, other
than in the ordinary course of the Business consistent with past practice, or
initiate or participate in any discussions or negotiations or enter into any
agreement to do any of the foregoing. The Company shall not provide any
confidential information concerning the Business or its properties or assets to
any third party other than in the ordinary course of business or unless
required by applicable law, regulation or order.
5.1.10 Access. Upon reasonable request, the Company shall
give to the QuadraMed Entities' officers, employees, counsel, accountants and
other representatives free and full access to and the right to inspect, during
normal business hours, all of the premises, properties, assets, records,
contracts and other documents relating to the Business and shall permit them to
consult with the officers, employees, accountants, counsel and agents of the
Company for the purposes of making such investigation of the Company as the
QuadraMed Entities shall desire to make; provided, however, that such
investigation shall not unreasonably interfere with the Company's business
operations. Furthermore, the Company shall furnish to the QuadraMed Entities
all such documents and copies of documents and records and information with
respect to the affairs of the Business and copies of any working papers
relating thereto as shall permit the QuadraMed Entities and their agents to
make such physical inventories and inspections of the assets of the Company as
the QuadraMed Entities may request from time to time.
5.1.11 Press Releases. Except as required by applicable
law, neither the Company nor the Shareholders shall give notice to third
parties or otherwise make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except for such written
information as shall have been approved in writing as to form and content by
the QuadraMed Entities, in their sole discretion.
5.1.12 Termination of Pension Plan. The Shareholders shall
have, within ninety (90) days of the Closing, terminated any existing Employee
Benefit Plan (as defined in
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Section 4.1.24 above) in a fashion which results in no continuing liability
with respect to the QuadraMed Entities and is otherwise reasonably acceptable
to counsel for the QuadraMed Entities. Such termination activity shall
include, without limitation, funding each Employee Benefit Plan with assets
sufficient to satisfy all benefit liabilities, providing notices of such
termination in compliance with the Code and other applicable law to all covered
employees, making all required actuarial determinations and obtaining all
necessary governmental or regulatory approvals for such termination. In this
regard, all of the Company's funding obligations with respect to each such
Employee Benefit Plan shall be made out of the Company's assets on or prior to
the Closing or out of the Shareholders' personal assets and in no event shall
any such funding liability constitute a liability of the QuadraMed Entities.
The Shareholders shall jointly and severally indemnify the QuadraMed Entities
and shall defend and hold the QuadraMed Entities (and any affiliates thereof)
completely harmless on an after-tax basis, in the event the IRS or the PBGC for
any reason whatsoever seeks to claim, assess or collect from the QuadraMed
Entities (or any affiliate) any deficiency or assessment in federal income
taxes (and any related penalties, additions to tax and interest), any claims by
the participants of any such Employee Benefit Plan, or any other amounts
attributable to the Employee Benefit Plans of the Company. In the event that
the IRS or the PBGC takes any action with respect to any Employee Benefit Plan,
the Shareholders shall be entitled to conduct, manage or control any audit,
examination or adversarial proceeding by or against the IRS or the PBGC
employing tax counsel selected by them in their reasonable discretion (provided
that the QuadraMed Entities and their counsel may, at their own expense, attend
and participate in any and all meetings and proceedings relating to any such
action). In satisfaction of their indemnification obligation hereunder, the
Shareholders shall, upon written demand by the QuadraMed Entities (or any
affiliate thereof), forthwith pay to the IRS and/or the PBGC the amount of any
assessment or similar item issued to the QuadraMed Entities (or any affiliate
thereof) and/or if the QuadraMed Entities (or any affiliate thereof) has made
any payment to the IRS or the PBGC in respect of any such assessment or similar
item, reimburse the QuadraMed Entities (or any affiliate thereof) therefor.
The Shareholders shall also cause to be removed or abated any lien, levy or
attachment upon the QuadraMed Entities or their respective property and take
any and all other steps necessary to defend and hold the QuadraMed Entities
(and any affiliate thereof) completely harmless on an after-tax basis, from any
action by the IRS or the PBGC. Any reimbursement by the Shareholders to the
QuadraMed Entities (or any affiliate thereof) shall include annual interest at
the prime rate (as then charged by QuadraMed's principal lending bank) plus two
percent (2%) from the date any payment was made to the IRS or the PBGC by the
QuadraMed Entities.
5.2 Agreements of the QuadraMed Entities Pending and After the
Closing.
5.2.1 Compliance with Laws, Etc. The QuadraMed Entities
shall comply with all laws, ordinances, rules, regulations and orders
applicable to their businesses, or their operations, assets or properties in
respect thereof, the noncompliance with which might materially affect the
business or assets of the QuadraMed Entities.
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5.2.2 Access. Upon reasonable request, the QuadraMed
Entities shall give to the Company's officers, employees, counsel, accountants
and other representatives free and full access to and the right to inspect,
during normal business hours, all of the premises, properties, assets, records,
contracts and other documents relating to the business of the QuadraMed
Entities and shall permit them to consult with the officers, employees,
accountants, counsel and agents of the QuadraMed Entities; provided, however,
that such investigation shall not unreasonably interfere with the QuadraMed
Entities' business operations.
5.2.3 Conduct of Business. Each of the QuadraMed Entities
covenants and agrees that, pending the Closing and except as otherwise agreed
to in writing by the Company, neither of the QuadraMed Entities will knowingly
take any action which would result in a breach of any of its representations
and warranties hereunder. Furthermore, each of the QuadraMed Entities shall
cooperate with the Company and use its best efforts to cause all of the
conditions to the obligations of the QuadraMed Entities and the Company under
this Agreement to be satisfied on or prior to the Closing.
5.2.4 Update Schedules. The QuadraMed Entities acknowledge
that they have not delivered draft schedules to the Company as of the date
hereof, but shall do so as soon as practicable. Notwithstanding the foregoing,
each of the Shareholders hereby acknowledges receipt of QuadraMed's Form
10-K-SB which was filed with the SEC on March 28, 1997.
5.2.5 The QuadraMed Entities shall use reasonable best
efforts to maintain at all times during the period from March 1, 1997 through
December 31, 1998 (the "Contingent Consideration Period") Working Capital, as
defined below, of the Surviving Corporation at a minimum of $125,000. Should
the Working Capital of the Surviving Corporation fall below the minimum
established in this Section 5.2.5 at any time during the Contingent
Consideration Period, upon written notice of such shortfall to the QuadraMed
Entities from one or more of the Shareholders, the QuadraMed Entities shall
have thirty (30) days from the date of such notice to cure by restoring the
Working Capital to its required level. The term "Working Capital" shall mean
for the purposes of this Section 5.2.5 the excess of current assets over
current liabilities on the balance sheet of the Surviving Corporation at any
time during the Contingent Consideration Period determined in accordance with
generally accepted accounting principles. If, at the expiration of such thirty
(30) day cure period (i) Working Capital has not been restored to its required
level, regardless of whether the QuadraMed Entities have used reasonable best
efforts to maintain Working Capital (a "Working Capital Shortfall") and, (ii)
audited gross revenues of the Surviving Corporation fail to meet either the
1997 Maximum Target (in the case of a Working Capital Shortfall occurring
between March 1, 1997 and December 31, 1997) or the 1998 Maximum Target (with
respect to a Working Capital Shortfall occurring between January 1, 1998 and
December 31, 1998), then the Shareholders shall be entitled to receive
contingent consideration pursuant to Section 3.5 with a Fair Market Value of
$500,000 solely for the year in which such Working Capital Shortfall occurs,
subject to the limitation set forth in the next sentence. Each of the
Shareholders covenants that the
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business of the Surviving Corporation shall be operated by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
its President and Chief Operating Officer, in good faith and in a fashion as he
reasonably determines necessary to maintain and enhance the profitability of
the Surviving Corporation. Each of the Shareholders acknowledges and agrees
that the sole remedy or recourse of the Shareholders for a failure to cure a
Working Capital Shortfall in any particular year shall be to receive the
$500,000 contingent payment described above and that in no event shall the
QuadraMed Entities be liable for any further damages, costs or expenses
(including, without limitation, special, indirect, compensatory or
consequential damages), whether at law, pursuant to the indemnification
provisions of Article VII hereof or otherwise. Subject only to the exclusive
remedy of the Shareholders to receive the $500,000 contingent payment in 1997
and/or 1998 set forth in the preceding sentence, nothing in this Section 5.2.5
shall prevent the QuadraMed Entities from taking any action in connection with
the Surviving Corporation or its business, including without limitation
reducing costs, hiring or firing personnel or implementing new or different
business, sales or management initiatives or strategies.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to the Obligations of the QuadraMed
Entities. All obligations of the QuadraMed Entities under this Agreement are
subject to the fulfillment or satisfaction, prior to or at the Closing, of each
of the following conditions precedent, any of which may be waived by the
QuadraMed Entities, in whole or in part (as determined in their sole and
absolute discretion):
6.1.1 Due Diligence. The QuadraMed Entities shall have
completed and approved their due diligence review of the business affairs and
operations of the Company as determined in their sole and absolute discretion.
6.1.2 Representations and Warranties True as of the
Closing. Except for changes expressly contemplated hereby or consented to or
waived in writing by the QuadraMed Entities, the representations and warranties
of the Company and the Shareholders contained in this Agreement or in any
schedule, certificate or document delivered by the Company to the QuadraMed
Entities pursuant to the provisions hereof shall have been true on the date
hereof without regard to any schedules or updates furnished by the Company
after the date hereof and shall be true on the Closing with the same effect as
though such representations and warranties were made as of such date.
6.1.3 Compliance with this Agreement. The Company and each
Shareholder shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by such
parties prior to or at the Closing.
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6.1.4 Closing Certificate. The QuadraMed Entities shall
have received a certificate from the Company dated as of the Closing,
certifying that the conditions specified in Sections 6.1.3 and 6.1.4 hereof
have been fulfilled and certifying that the Company has obtained all consents
and approvals required with respect to it or the Business by Section 6.1.10
hereof.
6.1.5 Opinion of Counsel for the Company. ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel for the Company and the Shareholders shall have delivered to
the QuadraMed Entities a written opinion, dated as of the Closing, in form and
substance satisfactory to the QuadraMed Entities and their counsel.
6.1.6 Delivery of Company Shares. The Shareholders shall
have delivered to the QuadraMed Entities certificates representing all shares
of Company Common Stock prior to the Closing, duly endorsed (or accompanied by
duly executed stock powers), with signatures guaranteed by a commercial bank or
by a member firm of the New York Stock Exchange, for transfer to Acquisition
Co.
6.1.7 Assignment of Contracts. All contracts set forth in
Schedule 4.1.21 requiring consent to assignment and existing as of the date of
this Agreement relating to the Company shall have been assigned to the
Surviving Corporation in a fashion such that each such contract is fully
enforceable in accordance with its terms, and the Company shall have obtained
any necessary third-party consents with respect to such assignment.
6.1.8 No Threatened or Pending Litigation. On the Closing,
no suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or be pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding shall be
pending or threatened.
6.1.9 Consents and Approvals. Except for contracts
assigned to the Surviving Corporation pursuant to Section 6.1.8, the holders of
any indebtedness of the Company, the lessors or lessees of any personal
property or assets leased by the Company, the parties (other than the Company)
to any contract, commitment or agreement to which the Company is a party or
subject, and any governmental, judicial or regulatory official, body or
authority having jurisdiction over any Shareholder, the Company or the
QuadraMed Entities to the extent that their consent or approval is required or
necessary under the pertinent debt, lease, contract, commitment or agreement or
other document or instrument or under applicable orders, laws, rules or
regulations, for the consummation of the transactions contemplated hereby in
the manner herein provided, shall have granted such consent or approval.
6.1.10 Leases. The Company shall obtain the consent to
assignment and landlord estoppel certificates (in a form and substance
reasonably satisfactory to the
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QuadraMed Entities and their counsel) with respect to each real property lease
to be assigned to the Surviving Corporation effective as of the Closing.
6.1.11 Material Adverse Changes. The business operations,
assets, properties or prospects of the Business shall not have been and shall
not be threatened to be materially adversely affected in any way as a result of
any event or occurrence.
6.1.12 Non-Competition Agreement. ▇▇▇▇▇▇ shall have
executed and delivered to the QuadraMed Entities a Non-Competition and
Non-Circumvention Agreement, substantially in the form mutually agreed to by
the parties hereto prior to the Closing and attached hereto as Exhibit "B" and
incorporated herein by this reference (the "Non-Competition Agreement").
6.1.13 Key Employee Arrangements. ▇▇▇▇▇▇ shall have
executed and delivered an employment agreement, substantially in the form
attached hereto as Exhibit "C" and incorporated herein by this reference (the
"Employment Agreement"), in form and substance mutually agreed to by the
parties hereto prior to the Closing and reasonably acceptable to the QuadraMed
Entities and their counsel. In addition, any other key employees of the
Company identified by the QuadraMed Entities shall have agreed to continue
their at-will employment with the Surviving Corporation.
6.1.14 Proprietary Information Agreements. Each of the
employees of the Company identified by the QuadraMed Entities and to be
employed by the QuadraMed Entities shall have executed and delivered
QuadraMed's standard form Proprietary Information Agreement.
6.1.15 Employee Benefit Plans. The Company and the
Shareholders shall have delivered to the QuadraMed Entities evidence reasonably
satisfactory to counsel for the QuadraMed Entities that all of the Company's
and the Surviving Corporation's funding obligations with respect to any
Employee Benefit Plan (as defined in Section 4.1.24 above) has been terminated
effective as of the Closing.
6.1.16 Shareholders Agreement. That certain Shareholders
Agreement dated January 1, 1994 by and among certain shareholders of the
Company shall have been terminated in its entirety.
6.1.17 Cancellation Loan Documentation. Each of Core States
Bank and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in their capacities as lenders to the Company shall
have provided to the QuadraMed Entities all documents referred to in Section
3.4 above.
6.1.18 Kaden Release. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") shall have
executed and delivered a complete release and termination of any and all
securities interests and liens on the Company's Common Stock or assets and such
other documentation as shall be reasonable
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requested by counsel for the QuadraMed Entities as necessary to evidence full
repayment of ▇▇▇▇▇▇'▇ indebtedness to Kaden and release of all legal rights and
remedies in connection therewith by Kaden.
6.1.19 Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on the Closing by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.,
counsel for the QuadraMed Entities in the exercise of their reasonable
judgment. The Shareholders and the Company also shall have delivered to the
QuadraMed Entities such other documents, instruments, certifications and
further assurances as such counsel may reasonably require.
6.2 Conditions Precedent to the Obligations of the Company. All
obligations of the Company and Shareholders under this Agreement are subject to
the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent, any of which may be waived by the Company and
the Shareholders, in whole or in part (as determined in their sole and absolute
discretion):
6.2.1 Representations and Warranties True as of the
Closing. Except for changes contemplated hereby or consented to or waived in
writing by the Company, the representations and warranties of the QuadraMed
Entities contained in this Agreement or in any schedule, certificate or
document delivered by the QuadraMed Entities to the Company pursuant to the
provisions hereof shall have been true on the date hereof without regard to any
schedule updates furnished by the QuadraMed Entities after the date hereof and
shall be true on the Closing with the same effect as though such
representations and warranties were made as of such date.
6.2.2 Compliance with this Agreement. Each of the
QuadraMed Entities shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
6.2.3 Closing Certificate. The Company shall have received
a certificate from the QuadraMed Entities dated as of the Closing certifying
in such detail as the Company may reasonably request that the conditions
specified in Sections 6.2.1 and 6.2.2 hereof have been fulfilled.
6.2.4 Opinion of Counsel for the QuadraMed Entities.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P., counsel for the QuadraMed Entities,
shall have delivered to the Company a written opinion, dated as of the Closing
in form and substance satisfactory to counsel for the Company and its
Shareholders.
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6.2.5 Key Employee Arrangements. ▇▇▇▇▇▇ shall have
executed and delivered the Employment Agreement in form and substance
reasonably acceptable to the Company and its counsel.
6.2.6 Material Adverse Change. The financial condition of
QuadraMed shall not have been materially adversely effected in any way as a
result of any event or occurrence.
6.2.7 No Threatened or Pending Litigation. On the Closing,
no suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or be pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding shall be
pending or threatened.
6.2.8 Closing Consideration. QuadraMed shall have
delivered the Closing Consideration to the Shareholders.
6.2.9 Repayment of Loans. QuadraMed shall have repaid the
loans to the Company referred to in Section 3.4 above.
6.2.10 Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on the Closing by counsel for the Company and the Shareholders,
in the exercise of his or her reasonable judgment. The QuadraMed Entities also
shall have delivered to the Company such other documents, instruments,
certifications and further assurances as such counsel may reasonably require.
ARTICLE VII.
INDEMNIFICATION
7.1 General Indemnification Obligation of the Shareholders. From
and after the Closing through and until the third (3rd) anniversary of the
Closing (or such longer period as shall be required to resolve any claim made
pursuant to this Article VII on or prior to the third (3rd) anniversary of the
Closing), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as to 100% of any potential liability of the
Shareholders to an Indemnified QuadraMed Party (as defined below) under this
Article VII, and each of the other Shareholders, severally, will reimburse,
protect, defend, indemnify and hold harmless the QuadraMed Entities and their
respective officers, directors, employees, agents, representatives, affiliates,
successors and assigns (each an "Indemnified QuadraMed Party") against and in
respect of:
7.1.1 Any and all damages, losses, deficiencies,
liabilities, costs and expenses incurred or suffered by any Indemnified
QuadraMed Party that result from, relate to or arise out of:
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(a) Any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified QuadraMed Party that relate to the
Company or the Shareholders or the Business in which the principal event giving
rise thereto occurred prior to the Closing or which result from or arise out of
any action or inaction prior to the Closing of the Company, any Shareholder or
any director, officer, employee, agent, representative, subcontractor or
affiliate of the Company or any Shareholder; or
(b) Any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of the Company or any
of the Shareholders under this Agreement (with the exception of the covenant
contained in Section 5.2.5 above, for which no indemnification is available),
or from any misrepresentation in or omission from any certificate, schedule,
statement, document or instrument furnished to the QuadraMed Entities pursuant
hereto or in connection with the negotiation, execution or performance of this
Agreement; or
(c) Any and all liabilities and obligations of
the Company or any Shareholder of any nature whatsoever arising out of or
relating to the indebtedness of the Company to either Core States, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, except for the payment of the amount specified in
Section 3.4; or
(d) Any and all liability for Taxes arising out
of or attributable to the operations or other activities of the Company prior
to the Closing, including all interest, penalties, additions to tax or similar
amounts; or
(e) Any and all legal fees, costs and expenses of
the Company and/or the Shareholders incurred in connection with the
transactions contemplated by this Agreement; or
(f) Any and all liabilities, costs and expenses
incurred in connection with the termination of the Company's existing pension
plan as set forth in Section 5.1.12 above; or
(g) Any and all legal fees, costs and expenses
either the Company or the Shareholders incurred in connection with the
transactions contemplated by this Agreement, regardless of when such fees,
costs and expenses were or are incurred or paid; and
7.1.2 Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 7.1.
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7.2 General Indemnification Obligation of the QuadraMed Entities.
From and after the Closing, through and until the third (3rd) anniversary of
the Closing (or such longer period as shall be required to resolve any claim
made pursuant to this Article VII on or prior to the third (3rd) anniversary of
the Closing), the QuadraMed Entities will reimburse, protect, defend, indemnify
and hold harmless the Shareholders and their agents, representatives,
affiliates, successors and assigns (each an "Indemnified Shareholder Party")
against and in respect of:
7.2.1 Any and all damages, losses, deficiencies,
liabilities, costs and expenses incurred or suffered by any Indemnified
Shareholder Party that result from, relate to or arise out of:
(a) Any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified Shareholder Party that relate to the
QuadraMed Entities or the Business in which the principal event giving rise
thereto occurred after the Closing or which result from or arise out of any
action or inaction after the Closing of the QuadraMed Entities, or any
director, officer, employee, agent, representative, subcontractor or affiliate
of either of the QuadraMed Entities, except (i) any such action or inaction by
the QuadraMed Entities resulting from, relating to or arising out of matters
which the Shareholders are required to indemnify the Indemnified QuadraMed
Parties pursuant to Section 7.1 above, or (ii) to the extent attributable to
the acts or omissions of a Shareholder; or
(b) Any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of either of the
QuadraMed Entities under this Agreement, or from any misrepresentation in or
omission from any certificate, schedule, statement, document or instrument
furnished to the Company pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement; and
7.2.2 Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 7.2.
7.3 Method of Asserting Claims, Etc. In the event that any claim
or demand for which the Shareholders would be liable to an Indemnified
QuadraMed Party hereunder is asserted against or sought to be collected from an
Indemnified QuadraMed Party by a third party, the Indemnified QuadraMed Party
shall notify the Shareholders of such claim or demand, specifying the nature of
such claim or demand and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the final
amount of such claim and demand) (the "Claim Notice"). Each Shareholder shall
have ten (10) days from the personal delivery or mailing of the Claim Notice
(the "Notice Period") to notify the Indemnified QuadraMed Party (i) whether or
not the Shareholder disputes the
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liability of the Shareholder to the Indemnified QuadraMed Party hereunder with
respect to such claim or demand and (ii) notwithstanding any such dispute,
whether or not the Shareholder desires, at his or her sole cost and expense to
assume the defense of the Indemnified QuadraMed Party against such claim or
demand.
7.3.1 If the Shareholders dispute their liability with
respect to such claim or demand or the amount thereof (whether or not the
Shareholders desire to assume the defense of the Indemnified QuadraMed Party
against such claim or demand as provided in Sections 7.3.2 and 7.3.3 below),
such dispute shall be resolved in accordance with Section 7.8 hereof. Pending
the resolution of any dispute by the Shareholders of the liability of the
Shareholders with respect to any claim or demand, such claim or demand shall
not be settled without the prior written consent of the Indemnified QuadraMed
Party.
7.3.2 In the event that the Shareholders notify the
Indemnified QuadraMed Parties within the Notice Period that it desires to
assume the defense of the Indemnified QuadraMed Parties against such claim or
demand then, except as hereinafter provided, the Shareholders shall have the
right to defend the Indemnified QuadraMed Party by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted by it to a final
conclusion in such a manner as to avoid any risk of any Indemnified QuadraMed
Party becoming subject to liability for any other matter; provided, however,
that the Shareholders shall not, without the prior written consent of all
Indemnified QuadraMed Parties, consent to the entry of any judgment against any
Indemnified QuadraMed Party or enter into any settlement or compromise which
does not include, as an unconditional term thereof, the giving by the claimant
or plaintiff to the Indemnified QuadraMed Party of a release, in form and
substance satisfactory to the Indemnified QuadraMed Party, as the case may be,
from all liability in respect of such claim or litigation. If the Indemnified
QuadraMed Parties desire to participate in, but not control, any such defense
or settlement, they may do so at their sole cost and expense. If, in the
reasonable opinion of the Indemnified QuadraMed Parties, any such claim or
demand or the litigation or resolution of any such claim or demand involves an
issue or matter which could have a materially adverse effect on the business,
operations, assets, properties or prospects of any Indemnified QuadraMed Party,
including, without limitation, the administration of the tax returns and
responsibilities under the tax laws of any Indemnified QuadraMed Party, then
the Indemnified QuadraMed Parties shall have the right to control the defense
or settlement of any such claim or demand and its reasonable costs and expenses
shall be included as part of the indemnification obligation of the Shareholders
hereunder; provided, however, that the Indemnified QuadraMed Parties shall not
settle any such claim or demand without the prior written consent of the
Shareholders, which consent shall not be unreasonably withheld. If the
Indemnified QuadraMed Parties should elect to exercise such right, the
Shareholders shall have the right to participate in, but not control, the
defense or settlement of such claim or demand at its sole cost and expense.
7.3.3 If the Shareholders elect not to defend any
Indemnified QuadraMed Party against such claim or demand, whether by not giving
the Indemnified QuadraMed Party
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timely notice as provided above or otherwise, then the amount of any such claim
or demand, or if the same be defended by the Shareholders or by the Indemnified
QuadraMed Parties (but none of the Indemnified QuadraMed Parties shall have any
obligation to defend any such claim or demand), then that portion thereof as to
which such defense is unsuccessful, in each case shall be conclusively deemed
to be a liability of the Shareholders hereunder, unless the Shareholders shall
have disputed their liability to the Indemnified QuadraMed Party hereunder, as
provided in Section 7.3.1 above, in which event such dispute shall be resolved
as provided in Section 7.8 hereof.
7.3.4 In the event an Indemnified QuadraMed Party should
have a claim against the Shareholders hereunder that does not involve a claim
or demand being asserted against or sought to be collected from it by a third
party, the Indemnified QuadraMed Party shall promptly send a Claim Notice with
respect to such claim to the Shareholders. If the Shareholders dispute their
liability with respect to such claim or demand, such dispute shall be resolved
in accordance with Section 7.8 hereof.
7.3.5 All claims for indemnification by an Indemnified
Party under this Agreement shall be asserted and resolved under the procedures
set forth above substituting in the appropriate place "Indemnified Shareholder
Party" for "Indemnified QuadraMed Party" and variations thereof and "QuadraMed"
for "Shareholders."
7.4 Maximum Exposure. The aggregate amount of all claims subject
to indemnification hereunder by the Shareholders, on one hand, and the
QuadraMed Entities, on the other hand, shall not exceed $5,000,000 plus the
Fair Market Value of the amount of shares of QuadraMed Common Stock, if any,
issued pursuant to Section 3.5 above.
7.5 Threshold. Notwithstanding the foregoing Sections 7.1 and
7.2, neither party shall have the right to indemnification hereunder unless and
until the aggregate damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by such party as a result of the acts, events or
omissions described in Sections 7.1 and 7.2 (collectively, "Losses") equal or
exceed $30,000 (the "Threshold Amount"). At such time as the aggregate losses
equal or exceed the Threshold Amount, the party to be indemnified shall be
indemnified to the full extent of all such Losses (including Losses counted in
determining whether the aggregate Losses equaled or exceed the Threshold
Amount).
7.6 Set-Off. Each of the Shareholders hereby grants the QuadraMed
Entities the right to set-off against any and all amounts due and owing from
the Shareholders to the QuadraMed Indemnified Party pursuant to this Article
VII any and all amounts of contingent consideration then due and payable to the
Shareholders pursuant to the provisions of Section 3.5 above. The QuadraMed
Common Stock so set-off shall be valued at its Fair Market Value. Should the
Shareholders pay the amount of any such indemnity claim to the applicable
QuadraMed Indemnified Party in cash within ninety (90) days after any such
set-off, the
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QuadraMed Entities shall cause any QuadraMed Common Stock otherwise set-off to
be issued to the Shareholders in accordance with the terms of Section 3.5.
7.7 Payment. Upon the determination of any indemnification
liability under this Article VII, the appropriate party shall pay to the other,
as the case may be, within ten (10) days after such determination, the amount
of any claim for indemnification made hereunder in cash or other certifiable
funds.
7.8 Arbitration.
7.8.1 All disputes under this Article VII shall be settled
by arbitration in San Francisco, California, before a single arbitrator
pursuant to the rules of the American Arbitration Association. Arbitration may
be commenced at any time by any party hereto giving written notice to each
other party to a dispute that such dispute has been referred to arbitration
under this Section 7.8. The arbitrator shall be selected by the joint
agreement of the Shareholders and the QuadraMed Entities, but if they do not so
agree within twenty (20) days after the date of the notice referred to above,
the selection shall be made pursuant to the rules from the panels of
arbitrators maintained by such Association. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto; provided,
however, that any such award shall be accompanied by a written opinion of the
arbitrator giving the reasons for the award. This provision for arbitration
shall be specifically enforceable by the parties and the decision of the
arbitrator in accordance herewith shall be final and binding and there shall be
no right of appeal therefrom. Each party shall pay its own expenses of
arbitration and the expenses of the arbitrator shall be equally shared;
provided, however, that if in the opinion of the arbitrator any claim for
indemnification or any defense or objection thereto was unreasonable, the
arbitrator may assess, as part of his award, all or any part of the arbitration
expenses of the other party (including reasonable attorneys fees) and of the
arbitrator against the party raising such unreasonable claim, defense or
objection.
7.8.2 To the extent that arbitration may not be legally
permitted hereunder and the parties to any dispute hereunder may not at the
time of such dispute mutually agree to submit such dispute to arbitration any
party may commence a civil action in a court of appropriate jurisdiction to
solve disputes hereunder. Nothing contained in this Section 7.8 shall prevent
the parties from settling any dispute by mutual agreement at any time.
7.9 Other Rights and Remedies Not Affected. The indemnification
rights of the parties under this Article VII are independent of and in addition
to such rights and remedies as the parties may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or failure to fulfill
any agreement or covenant hereunder on the part of any party hereto, including,
without limitation, the right to seek specific performance, rescission or
restitution, none of which rights or remedies shall be affected or diminished
hereby.
ARTICLE VIII.
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MISCELLANEOUS
8.1 Termination.
8.1.1 Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing only as follows:
(a) By mutual consent of the Company and the
QuadraMed Entities;
(b) By the QuadraMed Entities (i) at any time if
the representations and warranties of the Company or the Shareholders contained
in Section 4.1 hereof were incorrect in any material respect when made or at
any time thereafter, or (ii) upon written notice to the Company given at any
time after June 15, 1997 (or such later date as shall have been specified in a
writing authorized on behalf of the Company and the QuadraMed Entities) if all
of the conditions precedent set forth in Section 6.1 hereof have not been met;
or
(c) By the Company (i) at any time if the
representations and warranties of the QuadraMed Entities contained in Section
4.2 hereof were incorrect in any material respect when made or at any time
thereafter, or (ii) upon written notice to the QuadraMed Entities given at any
time after June 15, 1997 (or such later date as shall have been specified in a
writing authorized on behalf of the Company and the QuadraMed Entities) if all
of the conditions precedent set forth in Section 6.2 hereof have not been met.
8.1.2 In the event of the termination and abandonment
hereof pursuant to the provisions of this Section 8.1, this Agreement shall
become void and have no effect, without any liability on the part of any of the
parties or their directors or officers or shareholders in respect of this
Agreement, unless the termination was the result of the representations and
warranties of a party being materially incorrect when made or the material
breach by such party of a covenant hereunder in which event the party whose
representations and warranties were incorrect or who breached such covenant
shall be liable to the other party for all costs and expenses of the other
parties in connection with the preparation, negotiation, execution and
performance of this Agreement.
8.2 Brokers' and Finders' Fees.
8.2.1 The Company and the Shareholders represent and
warrant to the QuadraMed Entities that all negotiations relative to this
Agreement have been carried on by it directly without the intervention of any
person who may be entitled to any brokerage or finder's fee or other commission
in respect of this Agreement or the consummation of the transactions
contemplated hereby, and the Company and the Shareholders agree to jointly and
severally indemnify and hold harmless the QuadraMed Entities against any and
all claims, losses, liabilities and expenses which may be asserted against or
incurred by it as a result of
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the Company's or any Shareholder's or any of their respective agents' dealings,
arrangements or agreements with any such person.
8.2.2 Each of the QuadraMed Entities represents and
warrants that all negotiations relative to this Agreement have been carried on
by it directly without the intervention of any person who may be entitled to
any brokerage or finder's fee or other commission in respect of this Agreement
or the consummation of the transactions contemplated hereby, and each of the
QuadraMed Entities agrees to indemnify and hold harmless the Company and the
Shareholders against any and all claims, losses, liabilities and expenses which
may be asserted against or incurred by it as a result of either of the
QuadraMed Entities' or any of their respective agents' dealings, arrangements
or agreements with any such person.
8.3 Expenses. QuadraMed shall bear all legal fees, costs and
expenses incurred by the QuadraMed Entities incidental to the preparation of
this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby. The Shareholders shall
pay, out of their personal funds and not out of any assets of the Company, all
legal fees, costs and expenses incurred by either the Company or the
Shareholders incidental to the preparation of this Agreement, the carrying out
of this Agreement and the consummation of the transactions contemplated hereby.
8.4 Contents of Agreement; Parties in Interest; Etc. This
Agreement sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby. It shall not be amended or
modified except by written instrument duly executed by each of the parties
hereto. Any and all previous agreements and understandings between or among
the parties regarding the subject matter hereof, whether written or oral, are
superseded by this Agreement.
8.5 Assignment and Binding Effect. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other parties. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of the Shareholders, the
Company and the QuadraMed Entities.
8.6 Waiver. Any terms or provisions of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
8.7 Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or by
overnight courier or sent by telegram or facsimile transmission or by
registered or certified mail, postage prepaid, as follows:
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If to the QuadraMed Entities: QuadraMed Corporation
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company or Healthcare Recovery, Incorporated
the Shareholders: ▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication delivered personally or by facsimile
shall be deemed delivered on the date of delivery and such items sent by
certified or registered mail shall be deemed delivered three (3) days after
mailing.
8.8 Delaware Law to Govern. This Agreement and any dispute
arising under or related to this Agreement shall be governed by and interpreted
and enforced in accordance with the internal laws of the State of Delaware
without regard to the conflicts of laws rules thereof.
8.9 Headings, Gender and "Person". All section headings contained
in this Agreement are for convenience of reference only, do not form a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as
the context requires. Any reference to a "person" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity.
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8.10 Exhibits and Schedules. All exhibits and schedules referred
to herein are intended to be and hereby are specifically made a part of this
Agreement.
8.11 Severability. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.12 Counterparts; Facsimile. This Agreement may be executed in
one or more counterparts, all of which when fully-executed and delivered by all
parties hereto and taken together shall constitute a single agreement, binding
against each of the parties. To the maximum extent permitted by law or by any
applicable governmental authority, any document may be signed and transmitted
by facsimile with the same validity as if it were an ink-signed document. Each
signatory below represents and warrants by his or her signature that he or she
is duly authorized (on behalf of the respective entity for which such signatory
has acted) to execute and deliver this instrument and any other document
related to this transaction, thereby fully binding each such respective entity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Acquisition
Agreement and Plan of Merger as of the date first written above.
QUADRAMED QUADRAMED CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
ACQUISITION CO. HEALTHCARE RECOVERY ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
COMPANY HEALTHCARE RECOVERY, INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
SHAREHOLDERS
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO ACQUISITION AGREEMENT AND PLAN OF MERGER]
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EXHIBIT "A"
CERTIFICATE OF MERGER
OF
HEALTHCARE RECOVERY, INCORPORATED
INTO
HEALTHCARE RECOVERY ACQUISITION CORPORATION
The undersigned corporation organized and existing under and by virtue
of the Delaware General Corporation Law does hereby certify:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
Name State of Incorporation
---- ----------------------
Healthcare Recovery, Incorporated New Jersey
Healthcare Recovery Acquisition Corporation Delaware
SECOND: That an Acquisition Agreement and Plan of Merger between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the Delaware General Corporation Law.
THIRD: That a stockholder vote approving the merger pursuant to the
Acquisition Agreement and Plan of Merger between the parties to the merger need
not be approved by the stockholders of the surviving constituent corporation
pursuant to Section 251(f) of the Delaware General Corporation Law, and, as of
the date hereof, the merger qualifies for Section 251(f) treatment.
FOURTH: That the name of the surviving corporation of the merger is
Healthcare Recovery Acquisition Corporation.
FIFTH: That the authorized capital stock of the non-surviving
corporation consists of 2,500 shares of Common Stock, no par value, of which
1,319.54 shares are duly and validly issued and outstanding.
SIXTH: That the Certificate of Incorporation of Healthcare Recovery
Acquisition Corporation, a Delaware corporation which will survive the merger,
shall be the Certificate of Incorporation of the surviving corporation.
SEVENTH: That the executed Acquisition Agreement and Plan of Merger is
on file at the principal place of business of the surviving corporation, the
address of which is ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
46
EIGHTH: That a copy of the Acquisition Agreement and Plan of Merger
will be furnished by the surviving corporation, on request and without cost, to
any stockholder of either constituent corporation.
NINTH: That this Certificate of Merger shall be effective on the
Closing as that term is defined in the Acquisition Agreement and Plan of Merger
(but in no event after the 90th day following the filing of this Certificate of
Merger).
HEALTHCARE RECOVERY ACQUISITION
CORPORATION
By:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
ATTEST:
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary
47
EXHIBIT "B"
NON-COMPETITION AGREEMENT
48
EXHIBIT "C"
EMPLOYMENT AGREEMENT
