AGREEMENT AND PLAN OF MERGER by and among QUOVADX, INC. QUARTZITE HOLDINGS, INC. and QUARTZITE ACQUISITION SUB, INC. Dated as of April 1, 2007
Exhibit 2.1
by and among
QUOVADX, INC.
QUARTZITE HOLDINGS, INC.
and
QUARTZITE ACQUISITION SUB, INC.
Dated as of April 1, 2007
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of April 1, 2007, is
entered into by and among Quovadx, Inc., a Delaware corporation (the “Company”), Quartzite
Holdings, Inc., a Delaware corporation (the “Acquiror”), and Quartzite Acquisition Sub,
Inc., a Delaware corporation (the “Acquiror Sub”) (the Company, Acquiror and Acquiror Sub
are individually hereinafter referred to as “Party” and collectively as the
“Parties”).
W I T N
E S S E T H:
WHEREAS, Acquiror Sub, upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (“Delaware Law”), will merge with and
into Company (the “Merger”);
WHEREAS, the Boards of Directors of the Company, Acquiror and Acquiror Sub have determined
that the Merger is advisable and fair to their respective companies and shareholders and approved
and adopted this Agreement and the transactions contemplated hereby;
WHEREAS, the Parties desire to make certain representations, warranties and agreements in
connection with the Merger and also to prescribe certain conditions to the Merger;
WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement
to Acquiror’s and Acquiror Sub’s willingness to enter into this Agreement, certain directors and
officers of the Company, who hold outstanding capital
stock of the Company shall enter into a Voting Agreement in the form attached hereto as Exhibit
A (the “Voting Agreement”);
WHEREAS, certain terms used in this Agreement are defined in Article XI;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
hereinafter contained, the Parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
On the terms and subject to the conditions set forth in this Agreement, and in accordance with
Delaware Law, at the Effective Time, Acquiror Sub shall be merged with and into the Company, with
the Company being the surviving corporation (the “Surviving Corporation”) in the Merger.
Upon consummation of the Merger, the separate corporate existence of Acquiror Sub shall cease, and
the Surviving Corporation shall continue to exist as a Delaware corporation.
1
1.2 Closing.
Subject to the terms and conditions of this Agreement, the closing of the Merger (the
“Closing”) shall take place at the offices of Xxxxx & Xxxxxxx L.L.P., located at One Xxxxx
Center, 0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000 (or at such other place as the
Parties may designate in writing) at 10:00 a.m. (Mountain time) on a date to be specified by the
Parties (the “Closing Date”), which date shall be no later than the third Business Day
after satisfaction or waiver of the conditions set forth in Article IX (other than
conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of those conditions at such time), unless another time, date or place is agreed to in
writing by the Parties hereto.
1.3 Effective Time; Closing Date.
Subject to the provisions of Section 1.2, as promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article IX, the
Surviving Corporation shall cause the Merger to be consummated by filing the Certificate of Merger,
attached hereto as Exhibit B (the “Certificate of Merger”), and any other
appropriate documents with the Secretary of State of the State of Delaware, in such form as
required by, and executed in accordance with the relevant provisions of, Delaware Law (the date and
time of such filing being the “Effective Time”).
1.4 Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as set forth under Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of the Company and Acquiror Sub shall vest
in the Surviving Corporation, and all debts, liabilities and duties of the Company and Acquiror Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.5 Certificate of Incorporation; Bylaws.
(a) The certificate of incorporation of Acquiror Sub as in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving Corporation,
except that the corporate name of the Company shall become the corporate name of the Surviving
Corporation, until thereafter changed or amended as provided therein or by applicable Law.
(b) The bylaws of Acquiror Sub as in effect immediately prior to the Effective Time shall be
the bylaws of the Surviving Corporation, until thereafter changed or amended as provided therein or
by applicable Law.
1.6 Directors and Officers.
At the Effective Time, the officers and directors of Acquiror Sub immediately prior to the
Effective Time shall be the officers and directors of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified or until the earlier of
their death, resignation or removal.
2
1.7 Taking of Necessary Action; Further Action.
If, at any time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation with full right,
title and possession to all assets, property, rights, privileges, powers and franchises of the
Company and Acquiror Sub, the officers and directors of the Company, Acquiror and Acquiror Sub are
fully authorized in the name of their respective corporations or otherwise to take, and will take,
all such lawful and necessary action.
ARTICLE II
MERGER CONSIDERATION; CONVERSION OF SECURITIES
2.1 Total Merger Consideration.
The
aggregate consideration shall be an amount equal to One Hundred
Thirty-Six Million Seven Hundred Thousand and No/100 Dollars
($136,700,000) consisting solely of cash (the “Total Merger Consideration”), as adjusted pursuant to
Section 2.2.
2.2 Adjustment to the Total Merger Consideration. The Total Merger Consideration
shall be subject to adjustment as follows:
(a) Not later than five (5) Business Days prior to the Closing, the Company shall prepare and
deliver to Acquiror a statement signed by the Chief Executive Officer of the Company (the
“Closing Statement”) calculating the Company’s good faith estimate of the Closing Working
Capital (the “Estimated Closing Working Capital”) and the amount, if any, by which the
Estimated Closing Working Capital is less than the Low Threshold or
greater than the High Threshold (together
with supporting documentation used by the Company in calculating and preparing the Closing
Statement and such other documentation as Acquiror shall reasonably request), which statement shall
be prepared in accordance with GAAP consistently applied.
(b) During the five (5) Business Days prior to the Closing (the “Confirmation
Period”), in addition to the access rights provided by Section 7.1 hereof, the Company
shall (i) afford Acquiror through its officers, employees and representatives (including its legal
advisors and accountants) full and free access to the Company’s books and records including, but
not limited to, the Company’s accounts payable and accounts receivable, (ii) make available to
Acquiror all employees involved in the preparation of the Closing Statement, and (iii) provide
Acquiror with any other documentation or information reasonably requested to confirm the Closing
Statement.
(c) During the Confirmation Period, the Company and Acquiror shall use commercially reasonable
efforts to agree on a Closing Statement, which shall be deemed the “Final Closing
Statement” and shall be conclusive and binding upon all parties and shall not be subject to
dispute or review. The Closing Working Capital set forth on the Final Closing Statement shall
hereinafter be referred to as the “Final Working Capital.”
3
(d) If
the Final Working Capital is in the range of negative Nine Million Two
Hundred Forty Thousand and No/100 Dollars (− $9,240,000) (the
“Low Threshold”) and negative Seven Million Two Hundred
Forty Thousand and No/100 Dollars (− $7,240,000) (the
“High Threshold”) then there shall be no adjustment to the
Total Merger Consideration. In the event that the Final Working
Capital exceeds the High Threshold, the Total Merger Consideration
shall be increased, at the Closing, by the amount of such excess, and in
the event that Final Working Capital is less than the Low Threshold,
the Total Merger Consideration shall be decreased, at the Closing, by
the amount of such shortfall (in either case, the “Closing
Merger Consideration”).
2.3 Effect on Capital Stock.
(a) As of the Effective Time, by virtue of the Merger and without any action on the part of
the Company, Acquiror or Acquiror Sub or the shareholders thereof, all shares of common stock, par
value $0.01 per share, of the Company (the “Common Stock”) issued and outstanding prior to
the Effective Time (excluding shares held by shareholders who perfect their dissenters’ rights as
provided in Section 2.3(e) and shares to be cancelled pursuant to Section 2.3(d)
hereof) shall be converted into the right to receive an amount of cash equal to the Per Share
Merger Consideration, without interest.
(b) At the Effective Time, each option granted by the Company under the Company’s 2006 Equity
Incentive Plan, 1999 Director Option Plan or any other stock option plan or similar employee
benefit plan or arrangement maintained or sponsored by the Company providing for equity
compensation to any Person (collectively, the “Company Equity Incentive Plans”), other than
the Company ESPP, or otherwise pursuant to certain inducement grants to purchase Common Stock (each
a “Company Option” and collectively, the “Company Options”) that is outstanding and
unexercised, as accelerated in accordance with Section 5.5(b), immediately prior the
Effective Time, by virtue of the Merger and without any action on the part of the Company,
Acquiror, Acquiror Sub or any of the holders thereof, shall be cancelled and, if the Per Share
Merger Consideration exceeds the per share exercise price of such
Company Option (an "In-the-Money Option") such Company
Option shall be converted into the right to receive, as soon as practicable thereafter but in any
event within three (3) Business Days after the Effective Time, an amount of cash equal to the
excess, if any, of the Per Share Merger Consideration over the
exercise price of such In-the-Money
Option (the “Option Merger Consideration”) minus any applicable withholding taxes. Prior
to the Effective Time, the Company and its Board shall take any and all actions necessary to
effectuate this Section 2.3(b), including the approval of any amendments to the Company
Equity Incentive Plans and, including, but not limited to, satisfaction of the requirements of Rule
16b-3(e) under the Exchange Act. Further, the Company shall ensure that following the Effective
Time no participant in the Company Equity Incentive Plans or other plans, programs or arrangements
shall have any right thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any Subsidiary. Prior to the Effective Time, the Company shall take all actions
necessary pursuant to the terms of the Company’s Employee Stock Purchase Plan (the “Company
ESPP”) to (i) shorten each currently ongoing purchase and/or offering period under the Company
ESPP that extends beyond the Effective Time (the “Current Offering(s)”) such that a new
purchase date for each such Current Offering shall occur prior to the Effective Time and shares of
Common Stock shall be purchased by the Company ESPP participants prior to the Effective Time, and
(ii) preclude the commencement of any new purchase or offering period. The Company shall take all
actions necessary so that the Company ESPP shall terminate immediately prior to the earlier of (A)
the day preceding the Effective Time and (B) the date upon which the Company ESPP terminates by its
terms.
4
(c) Upon the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Acquiror, Acquiror Sub or the holders thereof, all Common Stock and the Company Options
shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (a “Certificate”) previously representing any such Common Stock and each
agreement (an “Option Agreement”) previously representing any such Company Options shall
thereafter represent only the right to receive the Per Share Merger Consideration or the Option
Merger Consideration, as applicable. Payments made in respect of the Company Options shall be in
full satisfaction of all obligations under the Company Equity Incentive Plans and the Option
Agreements. If prior to the Effective Time, the Company should split or combine its common shares,
or pay a dividend in common shares or other distribution in such common shares, then the Per Share
Merger Consideration and Option Merger Consideration shall be appropriately adjusted to reflect
such split, combination, dividend or distribution.
(d) At the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Acquiror, Acquiror Sub or any holder thereof, and notwithstanding any other provision
hereof that may be to the contrary, all Common Stock that is owned directly by Acquiror, Acquiror
Sub or the Company (or held in the Company’s treasury) shall be canceled and shall cease to exist
and no cash or other consideration shall be delivered in exchange therefor.
(e) Notwithstanding any other provision hereof that may be to the contrary, any Shareholder
who has not voted such shares in favor of the Merger and who has demanded or may properly demand
appraisal rights in the manner provided by Section 262 of Delaware Law (“Dissenting
Shares”) shall not be converted into a right to receive a portion of the Merger Consideration
unless and until the Effective Time has occurred and the holder of such Dissenting Shares becomes
ineligible for such appraisal rights. The holders of Dissenting Shares shall be entitled only to
such rights as are granted by Section 262 of Delaware Law. Each holder of Dissenting Shares who
becomes entitled to payment for such shares pursuant to Section 262 of Delaware Law shall receive
payment therefor from Acquiror in accordance with Delaware Law; provided, however,
that (i) if any such holder of Dissenting Shares shall have failed to establish entitlement to
appraisal rights as provided in Section 262 of Delaware Law, (ii) if any such holder of Dissenting
Shares shall have effectively withdrawn demand for appraisal of such shares or lost the right to
appraisal and payment for shares under Section 262 of Delaware Law or (iii) if neither any holder
of Dissenting Shares nor Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the time provided in Section 262 of
Delaware Law, such holder of Dissenting Shares shall forfeit the right to appraisal of such shares
and each such Dissenting Share shall be treated as if it had been, as of the Effective Time,
converted into a right to receive the Per Share Merger Consideration, without interest thereon, as
provided in this Section 2.3 of this Agreement. The Company shall give Acquiror prompt
notice of any demands received by the Company for appraisal of any shares of Common Stock, and
Acquiror shall have the right to participate in all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of Acquiror, make any
payment with respect to, or settle or offer to settle, any such demands, with respect to any holder
of Dissenting Shares before the Effective Time.
(f) At the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Acquiror, Acquiror Sub or any holder thereof, each common share, par
5
value $0.001 per share, of Acquiror Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one fully paid and nonassessable common share, par value
$0.001 per share, of the Surviving Corporation.
(g) All cash paid in respect of the surrender for exchange of shares of Common Stock in
accordance with the terms hereof shall be deemed to be in full satisfaction of all rights
pertaining to such shares of Common Stock. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article.
ARTICLE III
EXCHANGE PROCEDURES
3.1 Acquiror to Make Funds Available.
At or prior to the Effective Time, Acquiror shall deposit, or shall cause to be deposited,
with a bank or trust company reasonably acceptable to the Company (the “Exchange Agent”),
on a timely basis, if and when needed for the benefit of the holders of Certificates, the aggregate
Closing Merger Consideration in cash sufficient for the Exchange Agent to make full payment of the
Per Share Merger Consideration pursuant to Section 2.3 (the “Exchange Fund”).
There shall be a written agreement between Acquiror and the Exchange Agent in which the Exchange
Agent expressly undertakes, on reasonably customary terms, the obligation to pay the aggregate Per
Share Merger Consideration as provided herein. The Company shall have a reasonable opportunity,
but in any event at least five (5) Business Days, to review and comment on the agreement with the
Exchange Agent prior to it being finalized.
3.2 Exchange.
(a) As soon as practicable, but no more than three (3) Business Days, after the Effective
Time, provided that Company has cooperated to make the necessary information available
thereto a sufficient time in advance, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates a form letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Per Share Merger Consideration pursuant to this
Agreement. Additionally, the Exchange Agent shall provide a form of the letter of transmittal to
the Company prior to the Closing Date. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal, duly executed, the
holder (or any agent thereof) of such Certificate shall be entitled to receive promptly in exchange
therefor a check or wire transfer (provided such holder shall be responsible for any wire transfer
fees) payable to such holder (or any agent thereof) representing the amount of cash to which such
holder shall have become entitled pursuant to the provisions of Article II hereof, and the
Certificate so surrendered shall forthwith be canceled.
(b) As of the Effective Time, there shall be no transfers on the stock transfer books of the
Company of the Common Stock that were issued and outstanding immediately prior
6
to the Effective Time. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be canceled and exchanged for the Per
Share Merger Consideration as provided in this Article III.
(c) Any portion of the Exchange Fund that remains unclaimed by the former Shareholders of the
Company twelve (12) months after the Effective Time shall be returned to Acquiror. After such
funds have been returned to Acquiror, any former Shareholders of the Company who have not
theretofore complied with this Article III shall thereafter look only to Acquiror for
payment of the Per Share Merger Consideration deliverable in respect of each share of Common Stock
such Shareholders hold as determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Acquiror, the Company, the Exchange Agent or any
other Person shall be liable to any former holder of Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or similar laws. Acquiror,
any Affiliate of Acquiror, any Affiliated Person or the Exchange Agent will be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement or the
transactions contemplated hereby to any holder of Common Stock or the Company Options such amounts
as Acquiror (or any Affiliate of Acquiror or Affiliated Person) or the Exchange Agent are required
to deduct and withhold with respect to the making of such payment under Delaware Law, or any
applicable provision of U.S. federal, state, local or non-U.S. tax law. To the extent that such
amounts are properly withheld by Acquiror (or any Affiliate of Acquiror or Affiliated Person) or
the Exchange Agent and paid over to the appropriate taxing authority, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to the holder of the Common Stock or
the Company Options in respect of whom such deduction and withholding were made by such Person.
(d) In the event any Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Certificate (whether the record holder or any
agent thereof) to be lost, stolen or destroyed, and, if required by Acquiror, the posting by such
Person of a bond in such amount as Acquiror or may determine is reasonably necessary as indemnity
against any claim that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate a check representing the Per
Share Merger Consideration deliverable to such holder (or any agent thereof) in respect thereof
pursuant to this Agreement. If payment of the Per Share Merger Consideration is to be made to any
Person other than the registered holder of the Certificate surrendered in exchange therefor, it
shall be a condition of the payment or issuance thereof that the Certificate so surrendered shall
be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the Person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other similar taxes required by reason of the payment of the Per
Share Merger Consideration to any Person other than the registered holder of the Certificate
surrendered, or required for any other reason relating to such holder or requesting Person, or
shall establish to the reasonable satisfaction of Acquiror and the Exchange Agent that such tax has
been paid or is not payable.
7
ARTICLE IV
TERMINATION
4.1 Termination.
This Agreement may be terminated at any time (except where otherwise indicated) prior to the
Closing, whether before or after approval of this Agreement (unless otherwise set forth below), as
follows:
(a) by mutual written consent of Acquiror and the Company;
(b) by Acquiror, (i) if there has been a breach of any covenant or agreement on the part of
the Company that causes the condition provided in Section 9.2(b) not to be met and such
breach has not been cured (if curable) within ten (10) Business Days following receipt by the
Company of written notice of such breach describing the extent and nature thereof in reasonable
detail or (ii) if there has been any event, change, occurrence or circumstance that renders the
conditions set forth in Section 9.2(a) incapable of being satisfied by October 31, 2007
(the “Outside Date”);
(c) by the Company, (i) if there has been a breach of any covenant or agreement on the part of
Acquiror or Acquiror Sub that causes the condition provided in Section 9.3(b) not to be met
and such breach has not been cured (if curable) within ten (10) Business Days following receipt by
Acquiror of written notice of such breach describing the extent and nature thereof in reasonable
detail or (ii) or there has been any event, change, occurrence or circumstance that renders the
conditions set forth in Section 9.3(a) incapable of being satisfied by the Outside Date;
(d) by either Acquiror or the Company if there shall be in effect a final, unappealable Order
restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated
hereby; provided, however, that the party seeking to terminate this Agreement
pursuant to this clause (d) shall not have initiated such proceeding or taken any action in support
of such proceeding (it being agreed that the Parties shall use their commercially reasonable
efforts to promptly appeal any such Order that is not unappealable and diligently pursue such
appeal);
(e) by either Acquiror or the Company if the approval of the shareholders of the Company
hereto required for the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the Requisite Shareholder Vote at a duly held Special Meeting of Shareholders or
at any adjournment or postponement thereof (provided that the right to terminate this Agreement
under this Section 4.1(e) shall not be available to any Party seeking termination who at
the time is in breach or has failed to fulfill its obligations under Section 7.4 of this
Agreement);
(f) by either Acquiror or the Company on or after the Outside Date if the Closing shall not
have occurred by the close of business on such date (unless the failure to consummate the Closing
is attributable to a breach of this Agreement on the part of the Party
8
seeking to terminate this Agreement); provided, however, that the terminating
party is not in material default of any of its obligations hereunder;
(g) by Acquiror if, the Board shall have (i) endorsed, approved or recommended any Acquisition
Proposal in accordance with Section 7.8, other than that contemplated by this Agreement;
(ii) effected a Change in Recommendation, (iii) resolved to do any of the foregoing or (iv) failed
to reconfirm the Company Board Recommendation within ten (10) Business Days after Acquiror requests
in writing that the Board do so;
(h) by Acquiror if (i) the Company shall have entered into a definitive agreement with respect
to an Acquisition Proposal; or (ii) a tender offer or exchange offer for outstanding shares of the
Common Stock is commenced (other than by Acquiror or an Affiliate of Acquiror) and the Board
recommends that the Shareholders tender their shares in such tender or exchange offer or, within
ten (10) Business Days after such tender or exchange offer, fails to recommend against acceptance
of such offer or takes no position with respect to the acceptance thereof or (iii) for any reason
the Company fails to hold the Special Meeting by the Outside Date; or
(i) by the Company if, at any time prior to receiving the Requisite Shareholder Approval, the
Board authorizes the Company, subject to complying with the terms of this Agreement in all material
respects, to terminate this Agreement in order to enter into a binding, definitive agreement with
respect to a Superior Proposal; provided that the Company shall have first paid to Acquiror
the Company Termination Fee; and provided, further, that (A) the Company shall have
provided Acquiror with written notice of its intent to terminate this Agreement pursuant to this
Section 4.1(i) at least three (3) Business Days in advance of such termination, which
written notice shall include the most current version of the definitive agreement and a reasonably
detailed summary of any other material terms and conditions relating thereto, and (B) Acquiror does
not make, within three (3) Business Days of receipt of such written notice, an offer that the Board
determines, in good faith after consultation with the Company’s legal and financial advisors and
taking into account all the terms and conditions of such offer (including any break-up fees,
expense reimbursement provisions and conditions to consummation), would, if consummated, result in
a transaction at least as favorable to the Shareholders as the transaction set forth in the
Company’s written notice delivered pursuant to clause (A) above, it being understood that the
Company shall not enter into any such binding, definitive agreement during such three (3) Business
Day period (the Company agrees to notify Acquiror promptly if its intention to enter into any such
agreement referred to in Section 4.1(i)(A) shall change at any time after giving such
notification).
4.2 Procedure Upon Termination.
In the event of termination and abandonment by Acquiror or the Company, or both, pursuant to
Section 4.1 hereof, written notice thereof shall forthwith be given to the other Party or
Parties and this Agreement shall terminate, and the Merger shall be abandoned, without further
action by Acquiror or the Company.
9
4.3 Effect of Termination.
Upon the termination of this Agreement in accordance with Sections 4.1 and 4.2
hereof, Acquiror and the Company shall be relieved of any further duties and obligations under this
Agreement after the date of such termination; provided, that no such termination shall
relieve any Party hereto from Liability for any willful breach or fraud by a Party of this
Agreement; provided, further, that the obligations of the Parties set forth in
Section 4.5, Articles X and XII hereof shall survive any such termination
and shall be enforceable after such termination.
4.4 Frustration of Conditions.
Neither Acquiror or Acquiror Sub, on the one hand, nor the Company, on the other, may rely on
the failure of any condition set forth in Section 9.1, 9.2, or 9.3 to be
satisfied if such failure was caused by such Party’s failure to comply with or perform any of its
covenants or obligations set forth in this Agreement.
4.5 Fees and Expenses.
(a) Except as otherwise set forth in this Section 4.5 or in Section 12.7, all
expenses incurred in connection with this Agreement shall be paid by the Party incurring such
expenses, whether or not the transactions contemplated hereunder are consummated.
(b) The Company agrees that, in order to compensate Acquiror for the direct and substantial
damages suffered by Acquiror in the event of termination of this Agreement under certain
circumstances, which damages cannot be determined with reasonable certainty, the Company shall pay
to Acquiror the Company Termination Fee upon the earliest to occur of the following events:
(i) The termination of this Agreement by Acquiror pursuant to Sections
4.1(b)(i), (g) or (h);
(ii) The termination of this Agreement by Acquiror or the Company pursuant to
Sections 4.1(e) and (f) if within twelve (12) months of the termination of this
Agreement, the Company has consummated a transaction with respect to
an Acquisition Proposal that was publicly announced or communicated to the Board or senior management and not
withdrawn prior to the date of the termination; or
(iii) The termination of this Agreement by the Company pursuant to Section
4.1(i).
For purposes of this Agreement, “Company Termination Fee” means an amount equal to
three and one half percent (3.5%) of the Total Merger Consideration less any Expenses actually
reimbursed and paid by the Company to Acquiror under Section 4.5(c).
(c) Upon any termination of this Agreement for which a Company Termination Fee is due and
payable under Section 4.5(b) (provided that neither Acquiror’s nor Acquiror Sub’s
noncompliance with its obligations under this Agreement has materially contributed to the breach,
failure to perform or other event or condition giving rise to such
10
termination), the Company shall reimburse Acquiror and its Affiliates for one hundred percent
(100%) of their Expenses (as defined below) in an amount not to exceed three and one half percent
(3.5%) of the Total Merger Consideration. In the event this Agreement
is terminated pursuant to Section 4.1(e), but a Company
Termination Fee is not payable under Section 4.5(b), the
Company shall reimburse Acquiror and its Affiliates for one hundred
percent (100%) of their Expenses (as defined below) in an amount not
to exceed Six Hundred Fifty Thousand and No/100 Dollars ($650,000). The term “Expenses” means all actual and
documented out-of-pocket expenses of Acquiror and its Affiliates in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, fees and expenses of
accountants, attorneys and financial advisors, and all costs of Acquiror and its Affiliates
relating to the financing of the Merger (including, without limitation, advisory and commitment
fees and reasonable fees and expenses of counsel to potential lenders).
(d) The Company Termination Fee, and/or Expenses, shall be paid by the Company as directed by
Acquiror in writing in immediately available funds on the date(s) specified above, or, if no such
date is specified, not later than three (3) Business Days after the date of the event giving rise
to the obligation to make such payment.
(e) The Company acknowledges that the agreements contained in this Section 4.4 are an
integral part of the transactions contemplated by this Agreement. In the event that the Company
shall fail to pay the Company Termination Fee when due, the Company shall reimburse Acquiror for
all reasonable costs and expenses actually incurred or accrued by Acquiror (including reasonable
fees and expenses of counsel) in connection with the collection under and enforcement of this
Section 4.4, together with interest on such amounts (or any unpaid portion thereof) from
the date such payment was required to be made until the date such payment is received by Acquiror
and its Affiliates at the prime rate of Citibank, N.A. as in effect from time to time during such
period.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the Schedules (with specific references to the Section or
subsection of this Article V to which the information stated in such disclosure relates,
notwithstanding the fact that any such Section or subsection does not specifically permit or
require disclosure of information on a schedule), the Company hereby represents, warrants to and
agrees with Acquiror as follows, in each case as of the date of this Agreement and as of the
Closing Date:
5.1 Organization and Qualification.
The Company is a corporation duly incorporated, validly existing and in good standing under
Delaware Law, and has all requisite corporate power and authority to own, operate and lease its
assets, to carry on the Business, to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. The Company is duly qualified or authorized to conduct business
as a foreign corporation and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification or authorization
necessary other than where the failure to be so qualified, authorized or in good standing would not
have a Material Adverse Effect.
11
5.2 Authority; Binding Obligation.
The Company has all requisite power, authority and legal capacity to execute and deliver this
Agreement and each of the other agreements, documents, certificates or other instruments
contemplated hereby and thereby (the “Company Documents”), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by the Company of this Agreement, the execution, delivery and
performance by the Company of the Company Documents, and the consummation by the Company of the
transactions contemplated hereby and thereby, have been duly authorized and approved by all
necessary corporate action, and no other corporate proceeding on the part of the Company is
necessary to authorize this Agreement and the Company Documents, or to consummate the transactions
contemplated hereby and thereby, other than the approval and adoption of this Agreement by the
Requisite Shareholder Vote. The Requisite Shareholder Vote is the only vote of the holders of any
of the Company’s capital stock necessary in connection with the consummation of the Merger under
Delaware Law, the Company’s certificate of incorporation and bylaws or otherwise. This Agreement
has been, and the Company Documents will be at or prior to the Closing, duly executed and delivered
by the Company. This Agreement constitutes, and the Company Documents when so executed and
delivered, will constitute a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws, affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity); provided, however, that the Merger will not become effective until the
Certificate of Merger is filed with the office of the Secretary of State of the State of Delaware.
At a meeting duly called and held, the Board has determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of the Shareholders,
approved and adopted this Agreement and the transactions contemplated hereby and resolved (subject
to Section 7.4) to recommend approval and adoption of this Agreement by the Shareholders
(the “Company Board Recommendation”).
5.3 Corporate Records.
(a) The Company has furnished to Acquiror a true and complete copy of the certificate of
incorporation of the Company and a true and complete copy of the Company’s bylaws, as in effect on
the date of this Agreement.
(b) The books of account, stock records, minute book and other corporate and financial records
of the Company are complete and correct in all material respects and have been maintained in
accordance with reasonable business practices for companies similar to the Company, and the Company
will have prior to Closing prepared and made available to Acquiror the minutes for all meetings of
the Board and/or shareholders of the Company held as of the date hereof (or written consents in
lieu of such meetings).
12
5.4 No Conflict; Required Filings and Consents.
(a) None of the execution, delivery and performance by the Company of this Agreement or the
Company Documents, the fulfillment of and compliance with the respective terms and provisions
hereof or thereof, or the consummation by the Company of the transactions contemplated hereby and
thereby, will conflict with, or violate any provision of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination or cancellation under, any
provision of (i) the certificate of incorporation or bylaws of the Company, (ii) any material
Contract or material Permit to which the Company is a party or bound, (iii) any material Order of
any Governmental Body applicable to the Company or by which the Company is bound or (iv) any
applicable Law in any material respect.
(b) No consent, waiver, approval, Order, Permit or authorization of, or filing with, or
notification to, any Person or Governmental Body is required on the part of the Company in
connection with the execution and delivery of this Agreement, the compliance by the Company with
any of the provisions hereto, or the consummation of the transactions contemplated hereby and
thereby, except for (i) compliance with the applicable requirements of the HSR Act and (ii) the
filing with the SEC of a proxy statement in definitive form relating to the meeting of Shareholders
to be held in connection with this Agreement and the transactions contemplated by this Agreement
(as amended or supplemented, the “Proxy Statement”).
5.5 Capitalization; Owners of Shares.
(a) The authorized capital stock of the Company consists of one hundred million (100,000,000)
shares of Common Stock of which forty-two million two hundred thirteen thousand six hundred
ninety-one (42,213,691) shares of Common Stock are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable, and five million (5,000,000) shares of
Preferred Stock of which two hundred thousand (200,000) shares have been designated as Series A
Participating Preferred Stock and the remaining four million eight hundred thousand (4,800,000)
shares are undesignated. Zero (0) shares of Series A Participating Preferred Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable. Except as set forth in Section
5.5(b), no other shares of Common Stock have been reserved for any purpose.
(b) Except for the Company Equity Incentive Plans neither the Company nor any of its
Subsidiaries has ever adopted, sponsored or maintained any stock option plan or any other plan or
agreement providing for equity compensation to any Person. Each Company Equity Incentive Plan has
been duly authorized, approved and adopted by the Company’s Board of Directors and the Shareholders
and is in full force and effect. The Company has reserved a total of
11,639,674 shares of the
Company Common Stock for issuance under all of the Company Equity Incentive Plans, of which as of
the date hereof (i) 5,358,959 shares are issuable upon the exercise of outstanding, unexercised
Company Options, (ii) 4,429,237 shares are available for grant but have not yet been granted
pursuant to the Company Equity Incentive Plans, and
(iii) 5,358,959 shares have been issued and are
outstanding pursuant to the prior exercise of stock options or other stock rights granted pursuant
to the Company Equity Incentive Plans. No
13
outstanding Company Option permits payment of the exercise price therefor by any means other
than cash, check, cashless exercise or with certain shares of the Common Stock that have been owned
by the optionee for at least six (6) months. All outstanding Company Options have been offered,
issued and delivered by the Company in compliance in all material respects with all applicable Laws
and with the terms and conditions of the Company Equity Incentive Plans. Schedule 5.5(b)
sets forth for each outstanding Company Option (whether vested or unvested), the name of the record
holder of such Company Option (and, to the Company’s Knowledge, the name of the beneficial holder,
if different), the domicile address of such holder as set forth on the books of the Company, an
indication of whether such holder is an employee, the date of grant or issuance of such option, the
number of shares of Common Stock subject to such option, the exercise price of such option and
whether such option is a nonstatutory option or an incentive stock option as defined in Section 422
of the Code. All outstanding unexercised Company Options and unvested restricted stock awards will
be accelerated and become exercisable and/or vested pursuant to the terms of the Company Equity
Incentive Plans and/or Option Agreements, other than the Company ESPP, as a result of the
transactions contemplated by this Agreement.
(c) Except for the Company Options, there are no outstanding securities convertible into or
exchangeable for Common Stock, any other securities of the Company or any of its Subsidiaries and
no outstanding options, rights (preemptive or otherwise), or warrants to purchase or to subscribe
for any shares of such stock or other securities of the Company or any of its Subsidiaries. There
are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other
similar rights with respect to the Company or any of its Subsidiaries. There are no outstanding
Contracts affecting or relating to the voting, issuance, purchase, redemption, registration,
repurchase or transfer of Common Stock or any other securities of the Company or any of its
Subsidiaries, except for the Voting Agreement, the Company Equity Incentive Plans and any other
items described in Schedule 5.5(c), (collectively, the “Rights Agreements”). On or
prior to the Effective Time, all Rights Agreements shall have been terminated and of no further
force or effect. Each of the outstanding shares of Common Stock was issued in compliance with all
applicable federal and state Laws concerning the issuance of securities.
5.6 Company Reports and Company Financial Statements.
(a) The Company has timely filed all Company Reports required to be filed with the SEC after
December 31, 2004. No Subsidiary of the Company is subject to the reporting requirements of
Section 13(a) or 15(d) of the Exchange Act. Each Company Report has complied, or will comply as
the case may be, in all material respects with the applicable requirements of the Securities Act,
and the rules and regulations promulgated thereunder, or the Exchange Act, and the rules and
regulations promulgated thereunder, as applicable, each as in effect on the date so filed. None of
the Company Reports (including any financial statements or schedules included or incorporated by
reference therein) contained or will contain, as the case may be, when filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and the dates of
mailing, respectively) any untrue statement of a material fact or omitted or omits or will omit, as
the case may be, to state a material fact required to be stated or incorporated by reference
therein or necessary to make the statements therein, in the light of the circumstances under which
they were or are made, not misleading.
14
(b) Each of the Chief Executive Officer and Chief Financial Officer of the Company has made
all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and
906 of the Xxxxxxxx-Xxxxx Act with respect to the applicable Company Reports filed prior to the
date hereof (collectively, the “Certifications”), and the statements contained in such
Certifications are accurate in all material respects as of the filing thereof.
(c) The Company has made available to Acquiror all of the Company Financial Statements. All
of the Company Financial Statements comply with applicable requirements of the Exchange Act and
have been prepared in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present the consolidated
financial position of the Company at the respective dates thereof and the consolidated results of
its operations and changes in cash flows for the periods indicated (subject, in the case of
unaudited statements, to normal year-end audit adjustments consistent with GAAP).
(d) The Company has implemented and maintains a system of internal accounting controls
sufficient to provide reasonable assurances regarding the reliability of financial reporting and
the preparation of financial statements in accordance with GAAP. The Company has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act)
designed to ensure that information relating to the Company, including its consolidated
Subsidiaries, required to be disclosed in the reports the Company files or submits under the
Exchange Act is made known to the Chief Executive Officer and the Chief Financial Officer of the
Company by others within those entities.
(e) The Company is, and since December 31, 2004 has been, in compliance in all material
respects with the applicable provisions of the Xxxxxxxx-Xxxxx Act.
(f) The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K
promulgated under the Exchange Act, for senior financial officers, applicable to its principal
financial officer, comptroller or principal accounting officer, or Persons performing similar
functions. The Company has promptly disclosed, by filing a Form 8-K, any change in or waiver of
the Company’s code of ethics, as required by Section 406(b) of Xxxxxxxx-Xxxxx Act. To the Company’s
Knowledge, there have been no violations of provisions of the Company’s code of ethics.
(g) There are no outstanding loans or other extensions of credit made by the Company or any of
its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or
director of the Company. The Company has not, since the enactment of the Xxxxxxxx-Xxxxx Act, taken
any action prohibited by Section 402 of the Xxxxxxxx-Xxxxx Act.
(h) There are no Liabilities of the Company or any of its Subsidiaries of any kind whatsoever,
whether or not accrued and whether or not contingent or absolute, that are material to the Company,
other than (i) Liabilities disclosed and provided for in the Company Balance Sheet or in the notes
thereto; or (ii) Liabilities incurred in the Ordinary Course of Business consistent with past
practice since the date of the Company Balance Sheet, none of which are material to the Company in
amount or significance; or (iii) Liabilities incurred on behalf of the Company under this
Agreement.
15
5.7 Absence of Certain Developments.
Except for the transactions contemplated hereby, since December 31, 2006 the Company has not:
(a) suffered a Material Adverse Effect;
(b) incurred any material Liability or entered into any other transaction except in the
Ordinary Course of Business;
(c) suffered any material adverse change in its relationship with any of the suppliers,
customers, distributors, lessors, licensors, licensees or other third parties that are material to
the Company;
(d) increased the rate or terms of compensation or benefits payable to or to become payable by
it to its key employees or increased the rate or terms of any bonus, pension or other employee
benefit plan covering any of its key employees, except in each case increases consistent with past
business practice occurring in the Ordinary Course of Business (including normal periodic
performance reviews and related compensation and benefits increases);
(e) waived any claim or rights of material value other than in the Ordinary Course of
Business;
(f) sold, leased, licensed or otherwise disposed of any of its material assets, other than in
the Ordinary Course of Business;
(g) entered into any transaction or Material Contract other than in the Ordinary Course of
Business;
(h) made any capital expenditure in excess of One Hundred Thousand and No/100 Dollars
($100,000.00);
(i) adopted or amended any Employee Plan;
(j) made any adjustment or change in the price or other change in the terms of any options,
warrants or convertible securities of the Company (including the Company Options, but excluding any
adjustments required by contractual terms and reflected in Schedule 5.5(b));
(k) made any material payments for purposes of settling any disputes;
(l) split, combined, or reclassified any of its outstanding shares, or repurchased, redeemed
or otherwise acquired any of shares of capital stock, or declared or paid any dividend on its
capital stock;
(m) entered into any Contract pursuant to which any other Person is granted exclusive
marketing or other exclusive rights in, or to, Intellectual Property of the Company;
16
(n) other than related to the implementation of FIN No. 48, changed the accounting or Tax
reporting principles, methods or policies; or
(o) committed pursuant to a legally binding agreement to do any of the things set forth in
clauses (a) through (n) above.
5.8 Litigation.
There are no Legal Proceedings pending or, to the Company’s Knowledge, material Legal
Proceedings threatened against Company, or which question the validity or enforceability of this
Agreement or any action contemplated herein. The Company is not operating under or subject to, or
in default with respect to any Order of any Governmental Body. Schedule 5.8, sets forth
all agreements entered into by the Company since January 1, 2005 settling or otherwise terminating
actions, suits, claims, governmental investigations or arbitration proceedings against the Company,
or which question the validity or enforceability of this Agreement or any action contemplated
herein.
5.9 Compliance with Laws; Permits.
(a) The Company has complied and is in compliance in all material respects with all Laws
applicable to the Company. Since January 1, 2004, the Company has not been cited, fined or
otherwise notified of any asserted past or present failure to comply, in any material respect, with
any Laws and, to the Company’s Knowledge, no investigation or proceeding with respect to any such
violation is pending or threatened.
(b) The Company currently has all governmental approvals, authorizations, consents, licenses,
permits and certificates required for the operation of the Company (the “Permits”) as
presently conducted in the Ordinary Course of Business, other than those the failure of which to
possess is immaterial. All Permits are valid and in full force and effect, the Company is in
compliance with their requirements, and the Company is not in default or violation (and no event
has occurred which, with notice or the lapse of time or both, would constitute a default or
violation), in any material respect of any term, condition or provision of any Permit, and no
proceeding is pending or, to the Company’s Knowledge, threatened to revoke or amend any of the
Permits.
5.10 Real Property Leases.
(a) The Company does not own real property, nor has the Company ever owned any real property.
Schedule 5.10(a) sets forth a list of all real property and interests in real property
currently leased by the Company which referred to herein as the “Real Property Leases.”
The Company has a valid and enforceable leasehold interest under each of the Real Property Leases,
free and clear of all Encumbrances other than the Permitted Encumbrances. Each of the Real
Property Leases is in full force and effect, and the Company has not received or given any written
notice of any default or event that with notice or lapse of time, or both, would constitute a
material default by the Company under any of the Real Property Leases and, to the Company’s
Knowledge, no other party is in material default thereof. The Company has delivered or otherwise
made available to Acquiror true, correct and complete copies of all Real Property Leases, together
with all amendments, modifications or supplements, if any, thereto.
17
(b) All of the leased real property, buildings, fixtures and improvements owned or leased by
the Company which are material to the Company are in reasonable good operating condition and repair
(subject to normal wear and tear) and have been maintained in reasonably good operating condition
in the Ordinary Course of Business in a manner consistent with past maintenance practices of the
Company.
5.11 Personal Property.
(a) Schedule 5.11(a) sets forth all leases of personal property to which the Company
is a party as of the date hereof involving annual payments in excess of $10,000 (the “Leased
Personal Property”). The Company has not received or given any written notice of any default
or event that with notice or lapse of time or both would constitute a material default by the
Company under any lease entered into in connection with the Leased Personal Property and, to the
Company’s Knowledge, no other party is in material default or default thereunder.
(b) All tangible personal property which is material in the operation of the Company has been
maintained in reasonable operating condition in the Ordinary Course of Business in a manner
consistent with past maintenance practices of the Company. The Company has good and valid title to,
or a valid leasehold interest in, all of the tangible properties and assets which it purports to
own or lease. All properties and assets reflected in the Company Balance Sheet are free and clear
of all Encumbrances, other than Permitted Encumbrances.
5.12 Material Contracts.
(a) Schedule 5.12(a) lists each Contract to which the Company is a party or by which
the Company, or any of its assets, is bound, except for non-customer Contracts pursuant to which
the obligations, of either party thereto are, or are contemplated to be, One Hundred Thousand and
No/100 Dollars ($100,000) or less (each, a “Material Contract”), including without
limitation the following Material Contracts:
(i) Contracts with any Affiliate or current or former officer or director of the Company
(other than Contracts made in the Ordinary Course of Business on terms generally available to
similarly situated non-affiliated parties);
(ii) Contracts with any labor union or association representing any Employees;
(iii) Contracts relating to incurrence of Indebtedness, or the making of any loans, in each
case involving amounts in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00);
(iv) Dealer, distributor, reseller, OEM, VAR, joint marketing or joint development Contract
that cannot be canceled without penalty upon notice of ninety (90) days or less;
(v) Contract that limits the freedom of the Company to compete in any line of business or with
any Person in any area;
18
(vi) Contracts (other than Contracts made in the Ordinary Course of Business) which involve
the expenditure of more than One Million and No/100 Dollars ($1,000,000.00) in the aggregate or
require performance by any party more than one (1) year from the date hereof that, in either case,
are not terminable by the Company without penalty on notice of one hundred eighty (180) days or
less;
(vii) Other Contract not made in the Ordinary Course of Business that is material to the
Company’s Business as conducted and as proposed to be conducted on the date hereof;
(viii) Contracts with customers which involve the annual receipt of more than One Hundred
Thousand and No/100 Dollars ($100,000); and
(ix) The CareScience SPA.
(b) Each Material Contract is legal, valid, binding on the Company, enforceable and in full
force and effect (except as such enforceability may be subject to Laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of Law governing specific
performance, injunctive relief or other equitable remedies) and to the Company’s Knowledge, each
Material Contract will continue to be legal, valid, binding on the other parties thereto,
enforceable and in full force and effect on identical terms following the consummation of the
transactions contemplated by this Agreement and following delivery of any consents or approval
contemplated hereby.
(c) The Company has not received any written notice of any default or event that with notice
or lapse of time or both would constitute a material default by the Company under any Material
Contract.
5.13 Labor and Employment.
(a) Collective Bargaining. There are no collective bargaining or other labor union
agreements to which the Company is a party and there are no labor or collective bargaining
agreements which pertain to the Employees. There is no union organization activity involving any
of the Employees pending or, to the Company’s Knowledge, threatened, nor has there ever been union
representation involving any of the Employees. There are no strikes, slowdowns, lockdowns,
arbitrations, work stoppages or material grievances or other labor disputes pending or, to the
Company’s Knowledge, threatened or reasonably anticipated between the Company and (i) any current
or former employees of the Company or (ii) any union or other collective bargaining unit
representing such employees. There has been no “mass layoff” or “plant closing” (as defined by
WARN) with respect to the Company since January 1, 2005.
(b) Employment Terms. Schedule 5.13(b) is a true and complete list containing
the names and positions of all Employees as of the date hereof, together with (i) each Employee’s
current annual salary or wage, (ii) the amount and date of any scheduled salary increase for each
Employee, (iii) commissions due and draws outstanding for each Employee and (iv) other advances or
receivables owing to the Company from each Employee.
19
(c) The Company has the right to terminate the employment of each of its Employees at will and
to terminate the engagement of any of its independent contractors without payment to such Employee
or independent contractor other than for services rendered through termination and without
incurring any penalty or Liability.
(d) The Company is in compliance, in all material respects, with all Laws relating to
employment practices.
(e) Since January 1, 2002, the Company has not experienced any labor problem that was or is
material to it. To the Company’s Knowledge, the Company’s relations with its employees are
currently on a good and normal basis.
(f) No severance or other payment (including any retention bonus) to an Employee will become
due or Employee benefits or compensation increase or accelerate as a result of the transactions
contemplated by this Agreement, solely or together with any other event, including a subsequent
termination of employment and Schedule 5.13(f) sets forth the name of each related
agreement or plan, the Employee or Employees covered thereby and the amounts to be payable
thereunder, with any of the foregoing relating to employees of CareScience or the CareScience SPA
being separately identified as such. Each Employee entitled to any payment under the Executive
Transaction Bonus Plan, effective as of August 31, 2006 in connection with the transactions
contemplated by this Agreement and the CareScience SPA has executed a letter agreement in the form
of Exhibit C, and such letter agreement is the valid, binding and enforceable obligation of
such Employee.
5.14 Pension and Benefit Plans.
The Company hereby represents and warrants to Acquiror that:
(a) Schedule 5.14(a) contains a correct and complete list identifying each material
“employee benefit plan,” as defined in Section 3(3) of ERISA, each employment, severance, change in
control or similar contract, plan, arrangement or policy and each other plan or arrangement
providing for compensation, profit-sharing, stock option or other stock-related rights or other
forms of incentive or deferred compensation, insurance (including any self-insured arrangements),
health or medical benefits, disability or sick leave benefits, post-employment or retirement
benefits and fringe benefits (each, an “Employee Plan”) which is maintained, administered
or contributed to by the Company or any ERISA Affiliate and covers any Employee or Former Employee
of the Company or any ERISA Affiliate. Copies of such plans and arrangements (and, if applicable,
related trust or funding agreements or insurance policies) and all amendments thereto and written
interpretations thereof have been furnished to Acquiror. Such plans are referred to collectively
herein as the “Employee Plans.”
(b) None of the Company, any of its ERISA Affiliates and any predecessor thereof sponsors,
maintains or contributes to, or has in the past sponsored, maintained or contributed to, any
Employee Plan subject to Title IV of ERISA or any defined benefit plan.
(c) None of the Company, any ERISA Affiliate of the Company and any predecessor thereof
contributes to, or has in the past contributed to, any Multiemployer Plan, as defined in Section
3(37) of ERISA (a “Multiemployer Plan”).
20
(d) There is no current or projected Liability in respect of post-employment or
post-retirement health or medical or life insurance benefits for retired, former or current
Employees, except as required to avoid excise tax under Section 4980B of the Code.
(e) As to all Employees Plans:
(i) all such Plans comply and have been administered in all material respects in form
and in operation with all applicable Laws, all required returns (including without
limitation information returns) have been prepared in accordance with all applicable Laws
and have been timely filed in accordance with applicable Laws, and neither the Company nor
any ERISA Affiliate has received any outstanding written notice from any Governmental or
quasi-Governmental Body questioning or challenging such compliance;
(ii) all Employee Plans intended to comply with Section 401 of the Code are maintained
by the Company in form and in operation with all applicable requirements of the Code and
ERISA, a favorable determination letter has been received from the Internal Revenue Service
with respect to each such Plan (or the sponsor of the Plan is entitled to rely on a
favorable opinion letter issued to the Plan’s prototype sponsor by the Internal Revenue
Service) and no event, to the Company’s Knowledge, has occurred that will or could
reasonably be expected to give rise to disqualification of any such Plan or to a tax under
Section 511 of the Code;
(iii) to the Company’s Knowledge, there are no non-exempt “prohibited transactions” (as
described in Section 406 of ERISA or Section 4975 of the Code) with respect to any Employee
Plan and neither the Company nor any of its ERISA Affiliates has otherwise engaged in any
prohibited transaction; and
(iv) there have been no acts or omissions by the Company or any ERISA Affiliate that
have given rise to or could reasonably be expected to give rise to material fines,
penalties, taxes or related charges under Sections 502(c) or 502(i) of ERISA or Chapter 43
of the Code for which the Company or any ERISA Affiliate may be liable and neither the
Company nor any ERISA Affiliate nor, to the Company’s Knowledge, any of their respective
directors, officers, employees or any other fiduciary has committed any breach of fiduciary
responsibility imposed by ERISA that would subject the Company or any ERISA Affiliate or any
of their respective directors, officers or employees to liability under ERISA.
(f) All individuals considered by the Company or any ERISA Affiliate to be independent
contractors are, and could only be reasonably considered to be, in fact “independent contractors”
and are not “employees” or “common law employees” for tax, benefits, wage, labor or any other legal
purpose.
(g) No Employee is entitled to, nor shall any Employee accrue or receive, additional benefits,
services, accelerated rights to payment of benefits or accelerated vesting, whether pursuant to any
Employee Plan or otherwise, including the right to receive any parachute payment as defined in
Section 280G of the Code, or become entitled to severance,
21
termination allowance or other similar payments as a result of this Agreement and the
transactions contemplated hereunder.
(h) All options that have been granted by the Company to Employees that purport to be
“incentive stock options” under the Code comply with all applicable requirements necessary to
qualify for such tax status, and no option is subject to the provisions of Section 409A of the
Code.
5.15 Taxes and Tax Matters.
(a) The Company and each Subsidiary has:
(i) paid or caused to be paid all Taxes required to be paid by it (including but not limited
to any Taxes shown due on any Tax Return); and
(ii) filed or caused to be filed all Tax Returns required to be filed by it with the
appropriate taxing authority in all jurisdictions in which such Tax Returns are required to be
filed (and all Tax Returns filed on behalf of the Company were true, complete and correct).
(b) Neither the Company nor any Subsidiary has been notified by the IRS or any other taxing
authority that any issues have been raised by the IRS or any other taxing authority in connection
with (A) any Taxes owed by the Company or any Subsidiary or (B) any Tax Return filed by or on
behalf of the Company or any Subsidiary.
(c) There are no pending Tax audits and no waivers of statutes of limitations have been given
or requested with respect to the Company or any Subsidiary.
(d) There are no Encumbrances on the assets of the Company or any Subsidiary with respect to
Taxes, except for Encumbrances for current Taxes not yet due and payable for which adequate
reserves have been provided for in the latest balance sheet of the Company.
(e) No unresolved deficiencies or additions to Taxes have been proposed, asserted, or assessed
against the Company or any Subsidiary and no claim has been made during the past five (5) years by
any Governmental Body in a jurisdiction where neither the Company nor any of its Subsidiaries filed
Tax Returns or paid Taxes that it is or may be subject to any taxation by that jurisdiction.
(f) The charges, accruals and reserves for Taxes (rather than any reserve for deferred Taxes
established to reflect timing difference between book and Tax income), reflected in the most recent
balance sheet of the Company (rather than any notes thereto) are adequate in all material respects
to cover all unpaid Taxes of the Company and the Subsidiaries. All reserves for Taxes as adjusted
for operations and transactions and the passage of time through the Effective Time in accordance
with past custom and practice of the Company and the Subsidiaries are adequate to cover all unpaid
Taxes of the Company and the Subsidiaries accruing through the Effective Time.
22
(g) The Company and each Subsidiary has complied in all material respects with all applicable
requirements relating to the collection or withholding of Taxes (such as sales Taxes or withholding
of Taxes from the wages of employees).
(h) Neither the Company nor any Subsidiary has any Liability in respect of any tax sharing
agreement with any Person.
(i) Neither the Company nor any Subsidiary has agreed to (nor has any other Person agreed to
on its behalf), and neither the Company nor any Subsidiary is required to, make any adjustments or
changes, to its accounting methods pursuant to Section 481 of the Code, and the IRS has not
proposed any such adjustments or changes in the accounting methods of such Persons.
(j) Neither the Company nor any Subsidiary will be required to include in income, or exclude
any item of deduction from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any (A) “closing agreement” as described in Code Section 7121 (or
any corresponding or similar provision of state, local or foreign income Tax Law), (B) open
transaction or installment disposition made on or prior to the Closing Date, or (C) prepaid amount
received on or prior to the Closing Date.
(k) Neither the Company nor any of its Subsidiaries has participated or engaged in any
transaction that constitutes a “reportable transaction” as such term is defined in Treasury
Regulation Section 1.6011-4(b)(1) or any transaction that constitutes a “listed transaction” as
such term is defined in Treasury Regulation Section 1.6011-4(b)(2).
(l) Neither the Company nor any of its Subsidiaries have (A) ever been a member of a
consolidated group of corporations (other than a group the common parent of which is the Company)
and (B) any Liability for Taxes of any Person (other than the Company or any of its Subsidiaries)
under Treasury regulation Section 1.1502-6 (or any similar state, local or foreign tax Law) as a
transferee or successor, by contract or otherwise.
(m) Neither the Company nor any Subsidiary is or has been a United States real property
holding corporation (as defined in Section 897(c) (2) of the Code).
(n) Other than as a result of the Merger, neither the Company nor any Subsidiary is subject to
any limitation on the use of its Tax attributes under Section 382, 383, and 384 of the Code or
Treasury Regulation Section 1.1502-15 or-21 (regarding separate return limitation years) or any
comparable provisions of state or foreign law.
(o) Neither the Company nor any Subsidiary has constituted a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution
of stock intended to qualify for tax-free treatment under Sections 355, 356, or 361 of the Code (A)
in the two (2) years prior to the date of this Agreement (or will constitute such a corporation in
the two (2) years prior to the Closing date) or (B) in a distribution that otherwise constitutes
part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the
Code) in conjunction with the Merger.
23
(p) No claim has been made within the last three (3) years by any taxing authority in a
jurisdiction in which the Company or any Subsidiary does not file Tax Returns that such Person is
or may be subject to taxation by that jurisdiction.
(q) The net operating losses as of December 31, 2006 of (i) the Company on a consolidated
basis and (ii) CareScience separately, are as set forth on Schedule 5.15(q).
5.16 Environmental Matters.
With respect to the properties required to be set forth in Schedule 5.10(a), the
Company is in material compliance with all Environmental Laws. Except as would not reasonably be
expected to result in material Liability under Environmental Laws, to the Company’s Knowledge,
there has been no Release of Hazardous Materials at, on, under or from the properties set forth in
Schedule 5.10(a). The Company has delivered to Acquiror copies of any non-privileged
environmental reports, studies, analyses, tests, or monitoring in the Company’s possession
pertaining to the environmental condition of the properties listed in Schedule 5.10(a) or
concerning the Company’s compliance with Environmental Law.
5.17 Intellectual Property.
(a) Schedule 5.17(a) contains a correct and complete list of all the Company
Registered Intellectual Property and all material unregistered copyrights (excluding products and
services), trademarks and service marks of the Company.
(b) To the Company’s Knowledge, no Purchased Intellectual Property owned by the Company is
subject to any proceeding or outstanding Order (i) restricting in any manner the use thereof by the
Company or (ii) that may affect the validity or enforceability thereof. To the Company’s
Knowledge, no Purchased Intellectual Property licensed to the Company which is material to the
Company is subject to any proceeding or outstanding consent, decree, Order or judgment (A)
restricting in any manner the use thereof by the Company or (B) that may affect the validity or
enforceability thereof.
(c) Each item of Company Registered Intellectual Property is subsisting and in full force in
all material respects. All necessary registration, maintenance and renewal fees currently due and
owing in connection with the Company Registered Intellectual Property have been paid and all
necessary documents, recordations and certifications in connection with the Company Registered
Intellectual Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Company Registered Intellectual Property and recording ownership by the Company of
such Company Registered Intellectual Property.
(d) The Company is the sole and exclusive owner of each item of Purchased Intellectual
Property used by the Company, other than Purchased Intellectual Property that is licensed to the
Company, free and clear of any Encumbrance, except Permitted Encumbrances.
(e) Schedule 5.17(e) sets forth a correct and complete list of (i) the Company
Proprietary Software and (ii) the Company Licensed Software (excluding commercially-available
off-the-shelf Software). The Company is not in material violation of any license,
24
sublicense or other agreement to which the Company is a party or otherwise bound granting
rights to the Company to use any of the Company Licensed Software. Neither the Company nor any of
its Affiliates is obligated to provide any consideration (whether financial or otherwise) to any
third party, nor is any third party otherwise entitled to any consideration, with respect to any
exercise of rights by the Company, before or after the Merger, in the Purchased Intellectual
Property.
(f) The operations of the Company as currently conducted, including the Company’s design,
development, manufacture, use, reproduction, display, marketing and sale of the products or
services (including Software) do not infringe or misappropriate the Intellectual Property of any
third party.
(g) The Company has not received written notice from any third party that the operations as
currently conducted, or any current product or service of the Company infringes or misappropriates
the Intellectual Property of any third party.
(h) Except for technical breaches, which individually and in the aggregate are not material,
of license agreements with customers entered into in the Ordinary Course of Business, to the
Company’s Knowledge, no Person is infringing or misappropriating any Purchased Intellectual
Property that is owned by or exclusively licensed to the Company.
(i) The Company has taken commercially reasonable steps to protect the rights of the Company
in the Confidential Information and any trade secret or confidential information of third parties
used by the Company.
(j) The Company maintains in place and has taken commercially reasonable steps to enforce
appropriate policies designed to ensure that all Purchased Intellectual Property owned by the
Company and developed by Employees of the Company is developed by such Employees while working
within the scope of their employment at the time of such development. The Company further has a
policy requiring its Employees agents, consultants, contractors or other Persons with
responsibility for the development of Intellectual Property to execute appropriate instruments of
assignment in favor of the Company as assignee to convey to the Company ownership of the Purchased
Intellectual Property developed by such Employees, agents, consultants, contractors or other
Persons on behalf of the Company, and where such Intellectual Property has been developed the
Company has secured written and binding assignments from such Persons.
(k) Subject to obtaining any required consents of third parties set forth on Schedule
5.17(k), the consummation of the transactions contemplated under this Agreement shall not
alter, impair or otherwise affect any rights or obligations of the Company in any of the Purchased
Intellectual Property, and as of the consummation of the transactions contemplated hereby, the
Company shall have all of its rights thereto without modification or impairment.
(l) Prior to the Closing Date, the Company has not provided, and did not obligate itself to
provide, directly or indirectly, the source code for any of the Company Software to any other
Person. Moreover, the Company has not, by license, transfer, sale, escrow or otherwise, permitted
any other Person to reverse engineer, disassemble or decompile any such
25
Software to create such source code (excluding Persons expressly engaged to perform such
services on behalf of the Company).
(m) The Company’s licensed and marketed commercially available products and services,
including any customized products, operate and function materially and substantially in accordance
with agreed specifications or corresponding end user documentation provided by the Company and in
accordance, in all material respects, with applicable contractual obligations of the Company and
its Subsidiaries.
(n) Except as set forth on Schedule 5.17(n), the Company Software does not include
any Publicly Available Software and the Company has not used Publicly Available Software in whole
or in part in the development of any part of the Company Software in a manner that may subject the
Company Software in whole or in part, to all or part of the license obligations of any Publicly
Available Software. “Publicly Available Software” means each of (i) any Software that
contains, or is derived in any manner (in whole or in part) from, any software that is distributed
as free software, open source software (e.g. Linux), or similar licensing and distribution models;
and (ii) any software that requires as a condition of use, modification, and/or distribution of
such software that such software or other software incorporated into, derived from, or distributed
with such software (A) be disclosed or distributed in source code form; (B) be licensed for the
purpose of making derivative works; or (C) be redistributable at no or minimal charge. Publicly
Available Software includes, without limitation, software licensed or distributed under any of the
following licenses or distribution models similar to any of the following: (1) GNU General Public
License (GPL) or Lesser/Library GPL (LGPL), (2) the Artistic License (e.g. PERL), (3) the Mozilla
Public License, (4) the Netscape Public License, (5) the Sun Community Source License (SCSL), the
Sun Industry Source License (SISL), and (6) the Apache Server License.
5.18 Insurance.
(a) Schedule 5.18(a) sets forth a true and complete list of all material insurance
policies held by the Company and sets forth the name of each insurer, amount of coverage, type of
insurance, policy number and any material pending claims under such policies.
(b) For each policy of insurance required to be identified in Schedule 5.18(a), all
premiums due with respect thereto are currently paid and the Company has not received any written
notice that such policy has been or shall be canceled or terminated or will not be renewed on
substantially the same terms as are now in effect or the premium on such policy shall be materially
increased on the renewal thereof other than general rate increases.
5.19 Subsidiaries.
(a) Schedule 5.19 sets forth the jurisdiction of formation and names of the officers
and directors of each Subsidiary. The Company owns, directly or indirectly, of record and
beneficially all of the outstanding equity interests of each Subsidiary, free and clear of all
Encumbrances.
(b) Each Subsidiary is duly incorporated, validly existing and in good standing under the Laws
of its jurisdiction of formation and is duly qualified and in good
26
standing in each jurisdiction in which the nature of its business or the ownership or leasing
of its properties makes such qualification or authorization necessary other than where the failure
to be qualified, authorized or in good standing would not have a Material Adverse Effect.
(c) None of the Subsidiaries own any capital stock or other securities of, or any proprietary
interest in, any Person.
5.20 Company Information.
The information relating to the Company and its Subsidiaries provided by the Company for
inclusion in the Proxy Statement, or in any application, notification or other document filed with
any other Regulatory Agency or other Governmental Body in connection with the transactions
contemplated by this Agreement (in the case of the Proxy Statement as of the date such Proxy
Statement is first mailed to Shareholders, at the time of any amendments thereto and at the time of
the meeting of Shareholders to which such Proxy Statement relates), will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which they are made, not misleading. The
Company notice of the Special Meeting (except for the portions thereof relating solely to Acquiror
or any of its Subsidiaries, as to which the Company makes no representation or warranty) will
comply in all material respects with the provisions of Delaware Law.
5.21 Customers and Suppliers.
The Company has not received written notice from and to the Company’s Knowledge is not
otherwise aware that (a) any customer (or group of customers under common ownership or control)
that accounted for five percent (5%) of the revenues of the Business during the past eighteen (18)
months has stopped or intends to stop purchasing the products or services of the Business or (b)
any supplier (or group of suppliers under common ownership or control) that accounted for a
material percentage of the aggregate supplies purchased by the Business during the past eighteen
(18) months has stopped or intends to stop supplying products or services to the Business.
5.22 Data Security and Privacy.
The Company has implemented reasonable steps consistent with the type of activities conducted
by the Company which are known in the information systems industry to protect, physically and
electronically, its information assets and data from unauthorized disclosure, use or modification.
To the Company’s Knowledge, there have been no material breaches of security affecting the
Company’s information assets or data. To the Company’s Knowledge, the Company has conducted the
Business and has collected, maintained and used its data at all times materially in accordance with
(a) accepted industry practice; and (b) all applicable Laws, including but not limited to those
relating to privacy
5.23 State Takeover Statutes.
No “fair price,” “moratorium,” “control share acquisition” or other similar antitakeover
statute or regulation enacted under state or federal laws in the United States (with the exception
of Section 203 of Delaware Law) applicable to the Company is applicable to the Merger. The
27
action of the Board in approving this Agreement is sufficient to render inapplicable to this
Agreement the restrictions on “business combinations” (as defined in Section 203 of Delaware Law)
as set forth in Section 203 of Delaware Law.
5.24 Rights Plan.
The Company has taken all necessary action, and prior to the Effective Time will have taken
any additional necessary action, so that the transactions contemplated by this Agreement are exempt
transactions under the Rights Plan.
5.25 Financial Advisors.
Except for First Albany Capital, Inc., financial advisor to the Company (“First
Albany”), no Person has acted, directly or indirectly, as a broker, finder or financial advisor
for the Company in connection with the transactions contemplated by this Agreement and no Person is
entitled to any fee or commission or like payment in respect thereof.
5.26 Opinion of Financial Advisor. The Board has received the opinion of First Albany
to the effect that, as of the date of such opinion, the consideration (as defined in such opinion)
to be received by holders of Common Stock is fair, from a financial point of view, to such holders.
A copy of such opinion will be provided to Acquiror, solely for informational purposes, after
receipt thereof by the Company.
5.27 CareScience SPA
(a) The Company has provided Acquiror with true and accurate execution copies of the
CareScience SPA and all agreements, documents and schedules ancillary thereto, and the transactions
contemplated thereby have been consummated in all respects, other than the failure to obtain the
consents set forth on Schedule 5.27(a), each of which shall be obtained prior to the
Closing Date. The CareScience SPA and such ancillary agreements are valid and binding agreements
of the Company and are in full force and effect, and the Company is not, and to the Company’s
knowledge, neither is any other party thereto, in default in any material respect under the terms
of the CareScience SPA or such ancillary agreements or documents, nor, to the Company’s knowledge,
has any event or circumstance occurred that, with notice or lapse of time or both, would constitute
an event of default thereunder.
(b) All Liabilities retained by the Company pursuant to Section 7.3 of the CareScience SPA are
set forth on Schedule 5.27(b).
(c) The Net Working Capital (as defined in the CareScience SPA) of CareScience as of the
closing of the transactions contemplated by the CareScience SPA is not less than $1,500,000, which
amount may be adjusted no later than 30 days after the closing date of such transaction in
accordance with the terms of the CareScience SPA.
28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUIROR SUB
Except as specifically set forth in the Schedules (with specific references to the Section or
subsection of this Article VI to which the information stated in such disclosure relates,
notwithstanding the fact that any such Section or subsection does not specifically permit or
require disclosure of information on a schedule), Acquiror and Acquiror Sub hereby represent,
warrant to and agree with the Company as follows, in each case as of the date of this Agreement and
as of the Closing Date:
6.1 Organization and Qualification.
Each of Acquiror and Acquiror Sub is a corporation duly organized, validly existing and in
good standing under Delaware Law, and has all requisite corporate power and authority to own,
operate and lease its assets, to carry on its business as currently conducted, to execute and
deliver this Agreement and to carry out the transactions contemplated hereby. Acquiror is duly
qualified or authorized to conduct business as a foreign corporation and is in good standing in
each jurisdiction in which the nature of its business or the ownership or leasing of its
properties makes such qualification or authorization necessary other than where the failure to be
so qualified, authorized or in good standing would not have a material adverse effect on the
ability of Acquiror or Acquiror Sub to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
6.2 Authority; Binding Obligation.
Each of Acquiror and Acquiror Sub has all requisite power, authority and legal capacity to
execute and deliver this Agreement and each of the other agreements, documents, certificates or
other instruments contemplated hereby (the “Acquiror Documents”), to perform its
obligations hereunder and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Acquiror and Acquiror Sub of this Agreement,
the execution, delivery and performance by Acquiror and Acquiror Sub of the Acquiror Documents, and
the consummation by Acquiror and Acquiror Sub of the transactions contemplated hereby and thereby,
have been duly authorized and approved by all necessary corporate action, and no other corporate
proceeding on the part of Acquiror or Acquiror Sub is necessary to authorize this Agreement and the
Acquiror Documents, or to consummate the transactions contemplated hereby and thereby, other than
the approval and adoption of this Agreement by Acquiror and Acquiror Sub in accordance with
Delaware Law and Acquiror’s and Acquiror Sub’s certificate of incorporation and bylaws. This
Agreement has been, and the Acquiror Documents will be at or prior to the Closing, duly executed
and delivered by Acquiror and Acquiror Sub. This Agreement constitutes, and the Acquiror Documents
when so executed and delivered, will constitute a legal, valid and binding obligation of Acquiror
and Acquiror Sub, enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws, affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity).
29
6.3 No Conflict; Required Filings and Consents.
(a) None of the execution, delivery and performance by Acquiror and Acquiror Sub of this
Agreement or the Acquiror Documents, the fulfillment of and compliance with the respective terms
and provisions hereof or thereof, or the consummation by Acquiror and Acquiror Sub of the
transactions contemplated hereby and thereby, will conflict with, or violate any provision of or
default (with or without notice or lapse of time, or both) under, or give rise to a right of
termination or cancellation under, any provision of (i) the certificate of incorporation or bylaws
of Acquiror or Acquiror Sub, (ii) any Contract or Permit to which Acquiror or Acquiror Sub is a
party, (iii) any Order of any Governmental Body applicable to Acquiror or Acquiror Sub are bound or
(iv) any applicable Law other than, in the cases of clauses (ii), (iii) and (iv), such conflicts,
violations, defaults, termination or cancellations that would not have a material adverse effect on
the ability of Acquiror or Acquiror Sub to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
(b) No consent, waiver, approval, Order, Permit or authorization of, or filing with, or
notification to, any Person or Governmental Body is required on the part of Acquiror or Acquiror
Sub in connection with the execution and delivery of this Agreement, the compliance by Acquiror or
Acquiror Sub with any of the provisions hereto, or the consummation of the transactions
contemplated hereby, except for (i) compliance with the applicable requirements of the HSR Act and
(ii) such other consents, waivers, approvals, Orders, Permits or authorizations the failure of
which to obtain would not have a material adverse effect on the ability of Acquiror or Acquiror Sub
to perform its obligations under, and to consummate the transactions contemplated by, this
Agreement.
6.4 Litigation.
There are no material Legal Proceedings pending or, to Acquiror’s and Acquiror Sub’s
Knowledge, threatened against Acquiror or Acquiror Sub, or which question the validity or
enforceability of this Agreement or any action contemplated herein. Each of Acquiror and Acquiror
Sub is not operating under or subject to, or in default with respect to any Order of any
Governmental Body.
6.5 Financial Capability; Guarantee.
(a) Acquiror and Acquiror Sub (i) will have, at the Closing, sufficient immediately available
funds (after giving effect to any contemplated financing regardless of whether any such financing
is committed) available to pay the Closing Merger Consideration and any expenses incurred by Acquiror
and Acquiror Sub in connection with the transactions contemplated by this Agreement, (ii) will
have, at the Closing, the financial resources and capabilities to perform its obligations
hereunder, and (iii) immediately after giving effect to the consummation of the transactions
contemplated by this Agreement, the Surviving Corporation shall have adequate capital to carry on
its businesses and all businesses in which it is about to engage.
(b) Acquiror has provided to the Company a true, complete and correct copy of (i) an executed
commitment letter from the Parent to provide Acquiror and/or Acquiror Sub
30
with
equity financing in an aggregate amount of up to $25,000,000 (the “Equity Funding
Letter”), and (ii) executed commitment letters (the “Debt Commitment Letters” and
together with the Equity Funding Letter, the “Financing Commitments”) from Xxxxx Fargo
Foothill, Inc. (the “Lender”) pursuant to which, and subject to the terms and conditions
thereof, the Lender have committed to provide Acquiror with financing
in an aggregate amount of $60,000,000 that may be applied towards
Closing Merger Consolidation (the “Debt Financing” and together with the financing referred to in clause
(i) being collectively referred to as the “Financing”). The Financing Commitments are
legal, valid and binding obligations of Acquiror and/or Acquiror Sub and, to Acquiror’s Knowledge
and Acquiror Sub’s Knowledge, each of the other parties thereto. None of the Financing Commitments
has been amended or modified prior to the date of this Agreement, and as of the date hereof the
respective commitments contained in the Financing Commitments have not been withdrawn or rescinded
in any respect. As of the date hereof, the Financing Commitments are in full force and effect.
Except for the payment of customary fees, there are no conditions precedent or other contingencies
related to the funding of the full amount of the Financing, other than as set forth in or
contemplated by the Financing Commitments. As of the date hereof, no event has occurred which,
with or without notice, lapse of time or both, would constitute a default or breach on the part of
Acquiror or Acquiror Sub, and to Acquiror’s Knowledge and Acquiror Sub’s Knowledge, any other
parties thereto, under the Financing Commitments. As of the date hereof, neither Acquiror nor
Acquiror Sub has reason to believe that any of the conditions to the Financing contemplated by the
Financing Commitments will not be satisfied or that the Financing will not be made available to
Acquiror and/or Acquiror Sub on the Closing Date. Acquiror will provide to the Company any
amendments to the Equity Funding Letter and the Debt Commitment Letters, or any notices given in
connection therewith, as promptly as possible (but in any event within twenty-four (24) hours).
(c) Concurrently with the execution of this Agreement, Acquiror has delivered to the Company a
guarantee (the “Guarantee”) executed by Parent.
6.6 Compliance with Laws; Permits.
(a) Each of Acquiror and Acquiror Sub has complied and is in compliance in all respects with
all Laws applicable to Acquiror and Acquiror Sub, except where non-compliance does not have a
material adverse effect on the ability of Acquiror or Acquiror Sub to consummate the transactions
contemplated by this Agreement. Since January 1, 2006, each of Acquiror and Acquiror Sub has not
been cited, fined or otherwise notified of any asserted past or present failure to comply with
respect to its respective business, in any material respect, with any Laws and, to each of
Acquiror’s and Acquiror Sub’s Knowledge, no investigation or proceeding with respect to any such
violation is pending or threatened.
(b) Each of Acquiror and Acquiror Sub currently has all Permits required for the operation of
the business of Acquiror and Acquiror Sub as presently conducted in the Ordinary Course of
Business, other than those the failure of which to possess is immaterial. All Permits are valid
and in full force and effect, each of Acquiror and Acquiror Sub is in compliance with their
requirements, and each of Acquiror and Acquiror Sub is not in default or violation (and no event
has occurred which, with notice or the lapse of time or both, would constitute a default or
violation), in any material respect of any term, condition or provision of
31
any Permit, and no proceeding is pending or, to Acquiror’s or Acquiror Sub’s Knowledge,
threatened to revoke or amend any of the Permits.
6.7 Acquiror Information.
None of the information relating to Acquiror and its Subsidiaries supplied or to be supplied
by Acquiror to the Company expressly for inclusion in the Proxy Statement, as of the date such
Proxy Statement is first mailed to Shareholders, at the time of any amendments thereto and at the
time of the meeting of Shareholders to which such Proxy Statement relates, will contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.
6.8 Financial Advisors.
No Person has acted, directly or indirectly, as a broker, finder or financial advisor for
Acquiror or Acquiror Sub in connection with the transactions contemplated by this Agreement and no
Person is entitled to any fee or commission or like payment in respect thereof.
ARTICLE VII
COVENANTS AND AGREEMENTS
7.1 Access to Information.
Prior to the Closing Date, to the extent permitted by this Section 7.1 and applicable
Law, Acquiror shall be entitled, through its officers, employees and representatives (including its
legal advisors and accountants), to make such investigation of the properties, businesses and
operations of the Company and such examination of the books and records and Tax reporting positions
of the Company as Acquiror reasonably requests and to make extracts and copies of such books and
records at Acquiror’s own expense. Any such investigation and examination shall be conducted
during regular business hours and under reasonable circumstances and shall be subject to
restrictions under applicable Law. The Company shall cause the officers, employees, consultants,
agents, accountants, attorneys and other representatives of the Company to cooperate with Acquiror
and Acquiror’s representatives in connection with such investigation and examination, and Acquiror
and its representatives shall cooperate with the Company and its representatives and shall use
their commercially reasonable efforts to minimize any disruption to the business. Notwithstanding
anything herein to the contrary, no such investigation or examination shall be permitted to the
extent that it would require the Company to disclose information subject to attorney-client
privilege or conflict with any confidentiality obligations to which the Company is bound.
Notwithstanding anything to the contrary contained herein, prior to the Closing, without the prior
written consent of the Company, such consent not to be unreasonably withheld, conditioned or
delayed, Acquiror shall not contact any suppliers to, or customers of, the Company.
Further, prior to the Closing Date, the Company shall furnish or otherwise make available
(including via XXXXX, if applicable) to Acquiror (i) a copy of each report, schedule, form,
statement and other document filed by it or received by it during such period pursuant to the
32
requirements of federal or state securities Laws reasonably promptly following such filing or
receipt, (ii) to the extent available, for the period beginning after the date of this Agreement
and ending at the Effective Time, as soon as practicable after the end of each month, and in any
event within thirty (30) days thereafter, a copy of the monthly consolidated financial statements
of the Company, including statements of financial condition, results of operations, and statements
of cash flow, and (iii) all other information concerning its business, properties and personnel as
Acquiror may reasonably request.
No investigation pursuant to this Section 7.1 shall affect any representation or
warranty in this Agreement of any Party or any condition to the obligations of the Parties.
7.2 Conduct of the Business Pending the Closing.
(a) Prior to the Closing, except (i) as set forth on Schedule 7.2(a), (ii) as
otherwise contemplated by this Agreement or (iii) with the prior written consent of Acquiror , the
Company shall:
(A) conduct the respective businesses only in the Ordinary Course of Business;
(B) use its commercially reasonable efforts to (xx) maintain working capital of the Company
(excluding CareScience) at levels consistent with past practice and (yy) maintain a Cash balance at
the Effective Time in excess of $48,000,000;
(C) pay its debts and Taxes when due, in each case subject to good faith disputes over such
debts or Taxes; and
(D) use its commercially reasonable efforts to preserve the present business operations,
organization and goodwill of the Company.
(b) Except (i) as set forth on Schedule 7.2(b), (ii) as otherwise contemplated by this
Agreement or (iii) with the prior written consent of Acquiror, the Company shall not:
(A) declare, set aside, make or pay any dividend or other distribution in respect of the
capital stock of the Company or repurchase, redeem or otherwise acquire any outstanding shares of
the capital stock or other securities of, or other ownership interests in, the Company;
(B) issue or sell any shares of capital stock or other securities of the Company or grant
options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital
stock or other securities of the Company;
(C) effect any recapitalization, reclassification or like change in the capitalization of the
Company, except to the extent required by Law;
(D) amend the articles of incorporation or by-laws or comparable organizational documents of
the Company;
33
(E) other than in the Ordinary Course of Business or as required by Law or Contract, (1)
increase the annual level of compensation of any Employee, (2) grant any unusual or extraordinary
bonus, benefit or other direct or indirect compensation to any Employee, (3) increase the coverage
or benefits available under any (or create any new) Employee Plan or (4) enter into any employment,
deferred compensation, severance, consulting, non-competition, retention or similar agreement with
any Employee, (or amend any such agreement) to which the Company is a party or involving any
Employee except in the Ordinary Course of Business;
(F) acquire any material properties or assets or sell, assign, license, transfer, convey,
lease or otherwise dispose of any of the material properties or assets of the Company (except
pursuant to an existing Contract for fair consideration in the Ordinary Course of Business or for
the purpose of disposing of obsolete or worthless assets);
(G) other than in the Ordinary Course of Business, cancel or compromise any material debt or
claim or waive or release any material right of the Company;
(H) enter into, modify, extend or terminate any labor or collective bargaining agreement;
(I) enter into or agree to enter into any merger or consolidation with any other Person, or
agreement to acquire the securities of any other Person;
(J) other than in the Ordinary Course of Business, cancel or compromise any material debt or
claim or waive or release any material right of the Company;
(K) except to the extent required by Law or GAAP, make any material change to any of its
methods of accounting or methods of reporting revenue and expenses or accounting practices;
(L) make any new capital expenditures exceeding Twenty-Five Thousand and No/100 Dollars
($25,000.00) in the aggregate;
(M) other than in the Ordinary Course of Business enter into, modify, amend or terminate any
Material Contract;
(N) (1) make, revoke or change any material Tax election or (2) settle or compromise any
material federal, state, local or foreign income Tax liability;
(O) participate or engage in any transaction that constitutes a “reportable transaction” as
such term is defined in Treasury Regulation Section 1.6011-4(b)(1) or any transaction that
constitutes a “listed transaction” as such term is defined in Treasury Regulation Section
1.6011-4(b)(2);
(P) agree to do anything prohibited by this Section 7.2(b); or
(Q) take any action that would make any representation and warranty of the Company hereunder
inaccurate in any respect at, or as of any time prior to, the Effective
34
Time or omit to take any action necessary to prevent any such representation or warranty from
being inaccurate in any respect at any such time.
7.3 Appropriate Action; Consents; Filings.
(a) The Company shall promptly prepare and file with the SEC the Proxy Statement and shall use
its commercially reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing, and the Company shall thereafter mail or deliver the Proxy Statement
to its Shareholders. The Company shall notify Acquiror of the receipt of, and immediately provide
to Acquiror true and complete copies of, any comments of the SEC with respect to the Proxy
Statement or the transactions contemplated hereby and any requests by the SEC for any amendment or
supplement thereto or for additional information.
(b) Acquiror shall, upon request, furnish the Company with all information concerning Acquiror
as may be reasonably necessary for inclusion in the Proxy Statement that may be furnished to the
Shareholders in connection with the Special Meeting (as defined in Section 7.4 hereof).
None of the information relating to Acquiror supplied or to be supplied by Acquiror to the Company
expressly for inclusion in such Proxy Statement, as of the date such Proxy Statement is first
mailed to Shareholders, at the time of any amendments thereto and at the time of the meeting of
Shareholders to which such Proxy Statement relates, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Upon the terms and subject to the conditions set forth in this Agreement, the Parties
shall use their commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things required under applicable Law or otherwise to
consummate and make effective the transactions contemplated by this Agreement as promptly as
practicable, including without limitation (i) executing and delivering any additional instruments
necessary, proper or advisable to consummate the transactions contemplated by, and to carry out
fully the purposes of, this Agreement, (ii) obtaining from any Governmental Bodies any Permits
required to be obtained or made by Acquiror, Acquiror Sub or the Company in connection with the
authorization, execution and delivery of this Agreement and the consummation of the transactions
contemplated herein and (iii) making all necessary filings, and thereafter making any other
required submissions, with respect to this Agreement under any applicable Law, including without
limitation making any filings required to be made pursuant to the HSR Act; provided that
Acquiror, Acquiror Sub and the Company shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to the non-filing
Party and its advisors prior to filing and discussing all reasonable additions, deletions or
changes suggested in connection therewith. The Company, Acquiror and Acquiror Sub shall furnish to
each other all information reasonably required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with the transactions
contemplated by this Agreement. Any and all filing fees in respect of such filings shall be paid
fifty percent (50%) by Acquiror and fifty percent (50%) by the Company.
(d) Except as the Parties may otherwise agree, the Company, on the one hand, and Acquiror and
Acquiror Sub, on the other, shall give any notices required to be given by any
35
of them, as applicable, to third parties, and use (and in the case of Acquiror, shall cause
Acquiror Sub to use) their commercially reasonable efforts to obtain at the earliest practicable
date all third party consents, approvals or waivers required to obtained by them, as applicable, in
order to consummate the transactions contemplated in this Agreement.
(e) Subject to the provisions of Section 7.3(g), in the event that either the Company
or Acquiror shall fail to obtain any third-party consent, approval or waiver described in
Section 7.3(d), such Party shall use its commercially reasonable efforts, and shall take
any such actions reasonably requested by the other Parties, to minimize any adverse effect upon the
Company and Acquiror or Acquiror Sub and their respective businesses resulting, or which could
reasonably be expected to result after the Effective Time, from the failure to obtain such consent,
approval or waiver.
(f) In order to assist Acquiror with any third party financing in connection with Merger and
the consummation of the transactions contemplated hereby, the Company shall, and shall cause each
of its Subsidiaries to, use commercially reasonable efforts to provide such assistance and
cooperation as Acquiror and its Affiliates may reasonably request (provided that such requested
cooperation does not unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries), including (i) assisting in the preparation of customary offering memoranda or
similar documents or marketing material, and cooperating with lenders, (ii) making senior
management of the Company reasonably available for customary meetings, (iii) cooperating with
prospective lenders, and their respective advisors in performing their due diligence, (iv)
providing existing financial statements and financial and other information reasonably required by
lenders, and (v) helping procure other definitive financing documents or other reasonably requested
certificates or documents, including pledge and security documents, customary certificates, legal
opinions and real estate title documentation.
(g) Notwithstanding anything to the contrary herein, nothing in this Agreement shall require
Acquiror or any of its Subsidiaries to (i) agree to or to effect any divestiture, hold separate
(including by establishing a trust or otherwise), settlement, undertaking, consent decree, or enter
into any license or similar agreement with respect to, or agree to restrict its ownership or
operation of, any business or assets of the Company or its Subsidiaries or of Acquiror or its
Subsidiaries, (ii) enter into, amend or agree to enter into or amend, any Contracts of the Company
or its Subsidiaries or of Acquiror or its Subsidiaries, (iii) otherwise waive, abandon or alter any
material rights or obligations of the Company or its Subsidiaries or of Acquiror or its
Subsidiaries or (iv) file or defend any lawsuit, appeal any judgment or contest any injunction
issued in a proceeding initiated by a Governmental Body; or (v) pay any monies or other
consideration in order to obtain any consent, approval or waiver that relates to the Company or its
assets or that is otherwise binding upon the Company or its assets.
(h) The Company shall use commercially reasonable efforts to obtain the consents set forth on
Schedule 5.27(a) on or prior to the Closing Date. The
Company shall no later than five (5) days prior to the Special
Meeting deliver to Acquiror a list of the names and addresses of all
holders of record of Common Stock and the number and class of shares
held by each such holder.
7.4 Shareholder Meeting.
The Company shall take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders as promptly as practicable after the date of this Agreement for the
36
purpose of voting upon the approval of this Agreement and the Merger (the “Special
Meeting”). Management and the Board shall recommend to the Shareholders approval of this
Agreement, including the Merger, and the transactions contemplated hereby, together with any
matters incident thereto, and shall not (a) fail to make, withdraw, modify or qualify in any manner
adverse to Acquiror such recommendation or (b) take any other action or make any other public
statement inconsistent with such recommendation (collectively, a “Change in
Recommendation”), in each case except as and to the extent expressly permitted by Section
7.8. In connection with such Special Meeting, the Company shall (i) use commercially reasonable
efforts to obtain the Requisite Shareholder Vote and (ii) otherwise comply in all material respects
with all legal requirements applicable to the Special Meeting. At the Special Meeting, the Company
shall submit this Agreement and the Merger to the Shareholders for approval and adoption as
provided by Delaware Law and the Company’s certificate of incorporation and bylaws.
7.5 Further Assurances.
Subject
to Section 7.3(g), Acquiror and the Company shall use their commercially
reasonable efforts to (a) take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement and (b) cause the fulfillment at the earliest practicable date of
all of the conditions to their respective obligations to consummate the transactions contemplated
by this Agreement.
7.6 Publicity.
(a) Neither the Company, Acquiror nor Acquiror Sub shall issue any press release or public
announcement concerning this Agreement, the Company Documents, the Acquiror Documents or the
transactions contemplated hereby without obtaining the prior written approval of the other Party
hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole judgment
of Acquiror or the Company, as applicable, disclosure is otherwise required by applicable Law or by
the applicable rules of any stock exchange on which Acquiror or the Company lists securities,
provided that, to the extent required by applicable Law, the Party intending to make such
release shall use its commercially reasonable efforts consistent with such applicable Law to
consult with the other party with respect to the timing and content thereof.
(b) Each of Acquiror and the Company agrees that the terms of this Agreement shall not be
disclosed or otherwise made available to the public and that copies of this Agreement shall not be
publicly filed or otherwise made available to the public, except where such disclosure,
availability or filing is required by applicable Law and only to the extent required by such Law.
7.7 Notice of Developments.
The Company agrees, as promptly as practicable, prior to Closing to notify Acquiror in writing
of any development or other information occurring after the date hereof in the Ordinary Course of
Business which renders any representation, warranty or statement contained in this Agreement or the
Schedules hereto inaccurate or incomplete at any time prior to the Closing, including any such
development or information which first becomes known to the Company
37
after the date hereof. Any written notice delivered pursuant to this Section 7.7
shall not be deemed to have cured any misrepresentation or breach of warranty that otherwise might
have existed hereunder by reason of the development or information, and the Company agrees to use
its commercially reasonable efforts to remedy such misrepresentation or breach. The delivery of
any written notice pursuant to this Section 7.7 shall not limit or otherwise affect the
remedies available hereunder to the Party receiving such notice.
7.8 No Solicitation of Transactions.
(a) Subject to Sections 7.8(b) and 7.8(c), the Company shall not, nor shall it
authorize or permit, directly or indirectly, any officer, trustee, director, employee, investment
banker, financial advisor, attorney, broker, finder or other agent, representative or Affiliate of
the Company to (i) initiate, solicit, knowingly encourage or knowingly facilitate (including by way
of furnishing nonpublic information or assistance) any inquiries or the making of any proposal or
other action that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
or (ii) enter into discussions or negotiate with any Person in furtherance of such inquiries or
otherwise with respect to, or to obtain, an Acquisition Proposal. The Company shall take all
actions reasonably necessary to cause its officers, trustees, directors, employees, investment
bankers, financial advisors, attorneys, brokers, finders and any other agents, representatives or
affiliates to immediately cease any discussions, negotiations or communications with any party or
parties with respect to any Acquisition Proposal that is active or pending as of the date hereof;
provided, however, that nothing in this Section 7.8 shall preclude the
Company or its officers, trustees, directors, employees, investment bankers, financial advisors,
attorneys, brokers, finders and other agents, representatives or affiliates from complying with the
provisions of Section 7.8(d). The Company shall be responsible for any failure on the part
of its officers, trustees, directors, employees, investment bankers, financial advisors, attorneys,
brokers, finders and any other agents, representatives or affiliates to comply with this
Section 7.8.
(b) Further, and except as expressly permitted by this Section 7.8, neither the Board
nor any committee thereof shall (i) make a Change in Recommendation, (ii) approve or recommend, or
propose publicly to approve or recommend, any Acquisition Proposal or (iii) permit the Company to
enter into any letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to an Acquisition Proposal.
(c) The Company shall promptly notify Acquiror (but in no event less than twenty-four hours
following the Company’s initial receipt of any Acquisition Proposal) of the relevant details
relating to an Acquisition Proposal (including the identity of the parties and all material terms
thereof) which the Company may receive after the date hereof, and shall keep Acquiror informed on a
prompt basis as to the status of and any material developments regarding any such proposal.
(d) Notwithstanding Sections 7.8(a) and 7.8(b) or any other provision of this
Agreement to the contrary, following the receipt by the Company of an Acquisition Proposal (that
was not solicited, encouraged or facilitated in violation of Sections 7.8(a) and
7.8(b)), but prior to receiving the Requisite Shareholder Approval, the Board may (directly
or through advisors or representatives):
38
(i) contact such Person and its advisors solely for the purpose of clarifying the proposal and
any material terms thereof and the conditions to and likelihood of consummation, so as to determine
whether the proposal for an Acquisition Proposal is reasonably likely to lead to a Superior
Proposal, and
(ii) if the Board determines in good faith following consultation with the Company’s legal and
financial advisors that such Acquisition Proposal is reasonably likely to lead to a Superior
Proposal, the Board may:
(A) furnish non-public information with respect to the Company to the Person who made such
proposal (provided that the Company (x) has previously or concurrently furnished such information
to Acquiror and (y) shall furnish such information pursuant to a confidentiality agreement which is
at least as favorable to the Company as the Confidentiality Agreement),
(B) disclose to its shareholders any information required to be disclosed under applicable
Law,
(C) participate in negotiations regarding such proposal; and
(D) following receipt of an Acquisition Proposal that constitutes a Superior Proposal (x)
terminate this Agreement pursuant to, and subject to compliance with,
Section 4.1(i) or (y)
take any nonappealable, final action that any court of competent jurisdiction orders the Company to
take; but in each case referred to in clauses (A) through (D) only if, after complying with this
Section 7.8(c), the Board determines in good faith by a majority vote, after consultation
with, and after considering advice from, outside legal counsel to the Company, that such action is
necessary to comply with its fiduciary duties to the Company or its shareholders under applicable
Delaware Law. Nothing in this Section 7.8 or elsewhere in this Agreement shall prevent the
Board from complying with Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act with
respect to an Acquisition Proposal or from making any required disclosure to the Shareholders if,
in the good faith judgment of the Board, after consultation with outside legal counsel, it
determines that it is necessary to do so to comply with its obligations under applicable Law,
including Rule 14d-9 promulgated under the Exchange Act or Item 1012(a) of Regulation M-A;
provided, however, that neither the Company nor the Board shall be permitted to
recommend pursuant to such provision an Acquisition Proposal which is not a Superior Proposal.
(e) The Board shall not take any of the actions referred to in clause (C) or (D) of
Section 7.8(d)(ii) unless (i) the Company has given Acquiror at least three (3) Business
Days notice, measured from the receipt of notice of such proposal or the receipt of any material
change to the terms thereof, of its intent to take such action and (ii) after waiting at least such
three (3) Business Day period and taking into account any amendment to this Agreement entered into
or to which Acquiror irrevocably covenants to enter into and for which all internal approvals of
Acquiror have been obtained since receipt of such notice, such Superior Proposal remains a Superior
Proposal.
39
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 Company’s Employee Benefit Plans.
(a) After the Effective Time, except to the extent that Acquiror or Acquiror Sub continues
Employee Plans in effect, Employees covered under the Employee Plans (a “Covered Employee”)
will be eligible for employee benefits that Acquiror or Acquiror Sub, as the case may be, provide
to similarly situated employees generally and, except as otherwise required by this Agreement, on
substantially the same basis as is applicable to such employees, provided that nothing in
this Agreement shall require any duplication of benefits. With respect to any health, dental or
vision plan of the Company in which any Covered Employee is eligible to participate in the plan
year that includes the year in which the Effective Time occurs, Acquiror will, or will cause
Acquiror Sub to, use its commercially reasonable efforts, subject to the consent and cooperation of
the third party insurers, (i) waive any limitations as to pre-existing condition exclusions and
waiting periods for participation and coverage that are applicable under the health, dental or
vision plans of Acquiror to the same extent such limitation would have been waived or satisfied
under the corresponding plan in which such Covered Employee participated immediately prior to the
Effective Time, and (ii) credit Covered Employees for an amount equal to the credit that any such
Employee had received as of the Effective Time towards the satisfaction of any co-insurance,
co-payment, deductible or out-of-pocket limit under the comparable employee welfare benefit plan of
Acquiror or Acquiror Sub, to the extent the applicable information is provided to Acquiror in a
form that Acquiror reasonably determines is administratively feasible to take into account under
its plans.
(b) After the Merger, Acquiror and Acquiror Sub will honor and perform the obligations of the
Company under the contracts, plans and arrangements listed in Schedule 8.1(b) in accordance
with their terms; provided, however, the restricted
period contained in the non-competition provisions set forth in the
employment agreement for certain officers shall be extended to a
mutually agreed period not to exceed three (3) years.
8.2 Acquiror Benefit Plans.
Acquiror or one of its Affiliates will recognize all service of the Covered Employees with the
Company or any of its Affiliates for purposes of eligibility to participate, vesting and, as to
welfare benefit plans and vacation benefits, benefits accrual, in those employee benefit plans,
within the meaning of Section 3(3) of ERISA, in which the Covered Employees are enrolled by
Acquiror or one of its Affiliates immediately after the Closing Date. Acquiror, or one of its
Affiliates, will also use its commercially reasonable efforts to cause, subject to the consent and
cooperation of the third party insurers, (a) all pre-existing conditions and proof of insurability
provisions, for all conditions that all Covered Employees and their covered dependents have as of
the Closing Date (subject, also, to each Covered Employee providing, in a form reasonably
acceptable to Acquiror, a certificate of creditable coverage from such medical, health or dental
plans of the Company under which such Covered Employee was covered in the twelve (12) months
preceding the Effective Time), and (b) all waiting periods under each plan that would otherwise be
applicable to newly hired employees to be waived in the case of clause (i) or clause (ii) with
respect to Covered Employees to the same extent waived or satisfied under the Company’s Employee
Plans; provided that nothing in this sentence shall limit the ability of
40
Acquiror and its Affiliates from amending or entering into new or different employee benefit
plans or arrangements provided such plans or arrangements treat the Covered Employees in a
substantially similar manner as employees of Acquiror or its Affiliate, as applicable, are treated.
8.3 No Third Party Beneficiaries.
No provision of this Article VIII shall create any third party beneficiary or other
rights in any Employee or Former Employee (including any beneficiary or dependent thereof) of the
Company or of any of its subsidiaries in respect of continued employment (or resumed employment)
with either Acquiror or any of their Affiliates and no provision of this Article VIII
shall create any such rights in any such Persons in respect of any benefits that may be provided,
directly or indirectly, under any Employee Plan or any plan or arrangement which may be established
by Acquiror or any of its Affiliates. No provision of this Agreement shall constitute a limitation
on rights to amend, modify or terminate after the Closing Date any such plans or arrangements of
Acquiror or any of its Affiliates.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Each Party Under this Agreement.
The respective obligations of each Party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any or all of which may
be waived by agreement of Acquiror and the Company, in whole or in part, to the extent permitted by
applicable Law:
(a) No Injunction. No Law or Order enacted, issued, promulgated, enforced or entered
by any Governmental Body shall be in effect (whether temporary, preliminary or permanent)
enjoining, restraining or prohibiting consummation of the Agreement or making the consummation of
the Agreement illegal;
(b) HSR Act. The waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or early termination shall have been granted; and
(c) Shareholder Approvals. This Agreement and the Merger shall have been approved and
adopted by the Requisite Shareholder Vote.
9.2 Conditions to Obligations of Acquiror.
The obligations of Acquiror and Acquiror Sub to effect the Merger and the other transactions
contemplated in this Agreement are subject to the satisfaction at or prior to the Effective Time of
the following conditions, any or all of which may be waived by Acquiror, in whole or in part, to
the extent permitted by applicable Law:
(a) Representations and Warranties. The representations and warranties made by the
Company in Article V, which representations and warranties shall be deemed for purposes
41
of this Section 9.2(a) not to include any qualification or limitation with respect to
materiality (whether by reference to “Material Adverse Effect” or otherwise), shall be true and
correct at and as of the date hereof and at and as of the Closing with the same effect as though
such representations and warranties were made at and as of the Closing except, in either case,
where the failure thereof to be true and correct, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, and Acquiror shall have received a
certificate signed by a duly authorized officer of the Company, dated as of the Closing Date, to
the foregoing effect;
(b) Performance of Agreements and Covenants. The Company shall have performed or
complied in all material respects with its respective agreements and covenants required by this
Agreement to be performed or complied with by the Company on or prior to the Closing Date.
Acquiror shall have received a certificate signed by a duly authorized officer of the Company dated
as of the Closing Date to that effect;
(c) Consents. The Company shall have procured the consents of third-parties and
Governmental Bodies specified in Schedule 9.2(c) which shall be delivered to Acquiror at
Closing;
(d) No Material Adverse Effect. Since the date hereof, there shall not have occurred
and be continuing any event, occurrence, revelation or development of a state of circumstances or
facts which, individually or in the aggregate, has had or would reasonably be expected to have a
Material Adverse Effect;
(e) No Litigation. There shall not have been instituted or pending any action or
proceeding by any Governmental Body, (A) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the consummation of the
Merger, seeking to obtain material damages or otherwise directly or indirectly relating to the
transactions contemplated by the Merger, (B) seeking to restrain or prohibit Acquiror’s, Acquiror
Subsidiary’s or any of Acquiror’s other Affiliates’ (1) ability effectively to exercise full rights
of ownership of the Common Stock, including the right to vote any shares of Common Stock acquired
or owned by Acquiror, Acquiror Subsidiary or any of Acquiror’s other Affiliates following the
Effective Time on all matters properly presented to the Shareholders, or (2) ownership or
operation (or that of its respective Subsidiaries or Affiliates) of all or any material portion of
the Business or assets of the Company, or (3) seeking to compel Acquiror or any of its Subsidiaries
or Affiliates to dispose of or hold separate all or any material portion of the business or assets
of the Company;
(f)
Pending Settlements. The actions and proceedings set forth
under item 1(b) of Schedule 5.8 shall have been
settled, with the settlement finally approved by a court of competent
jurisdiction pursuant to the terms of the settlement agreement
described at such item 1(b) and accepted by the requisite
percentage of the class to enable implementation.
(g)
Rights Plan. The Company shall have amended the Preferred
Stock Rights Agreement, dated as of July 24, 2000, between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent, to exempt the transactions contemplated by this Agreement; and
(h) Other Approvals. All regulatory approvals required to consummate the Merger shall
have been obtained and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired or been terminated.
42
9.3 Conditions to Obligations of the Company.
The obligation of the Company to consummate the transactions contemplated in this Agreement is
subject to the satisfaction at or prior to the Closing Date of the following conditions, any or all
of which may be waived by the Company, in whole or in part, to the extent permitted by applicable
Law:
(a) Representations and Warranties. The representations and warranties made by
Acquiror in Article VI, which representations and warranties shall be deemed for purposes
of this Section 9.3(a) not to include any qualification or limitation with respect to
materiality (whether by reference to “Material Adverse Effect” or otherwise), shall be true and
correct at and as of the date hereof and at and as of the Closing with the same effect as though
such representations and warranties were made at and as of the Closing, except in either case where
the failure thereof to be true and correct, individually or in the aggregate, would not reasonably
be expected to have a material adverse effect on the ability of Acquiror or Acquiror Sub to
consummate the transactions contemplated by this Agreement, and the Company shall have received a
certificate signed by a duly authorized officer of Acquiror, dated as of the Closing Date, to the
foregoing effect; and
(b) Performance of Agreements and Covenants. Acquiror and Acquiror Sub shall have
performed or complied in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing. The Company shall
have received a certificate signed by a duly authorized officer of Acquiror to that effect.
ARTICLE X
INDEMNIFICATION
10.1 Non-Survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement will survive the Effective Time. This Section 10.1 shall not
limit any covenant or agreement of the parties which by its terms contemplates performance after
the Effective Time.
10.2 Indemnification and Insurance.
(a) For a period of five (5) years from and after the Effective Time (and subject to the
further limitation contained herein), the Surviving Corporation shall indemnify and hold harmless,
as and to the fullest extent permitted by Delaware Law and the Certificate of Incorporation and
Bylaws of the Company, as in effect on the date hereof, any Person who is now, or who becomes prior
to the Effective Time, a director or executive officer of the Company (the “Indemnified
Parties”) against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney’s fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent permitted by Delaware
Law upon receipt of an undertaking to repay such advanced expenses if it is determined by a
judgment of a court of competent jurisdiction that such Indemnified Party was
43
not entitled to indemnification and such other undertakings required by applicable law),
judgments, fines and amounts paid in settlement (“Damages”) in connection with any such
threatened or actual claim, action, suit, proceeding or investigation to which any Indemnified
Party is or may become a party by virtue of his or her service as a present or former director or
executive officer of the Company and arising out of actual or alleged events, actions or omissions
occurring or alleged to have occurred at or prior to the Effective Time (including, without
limitation, the Merger), but only if the applicable Indemnified Party acted in good faith and in a
manner such Indemnified Party reasonably believed to be in or not opposed to the best interests of
the Company, and with respect to any criminal Legal Proceeding, had no reasonable cause to believe
the Indemnified Party’s conduct was unlawful (an “Indemnified Matter”). In connection with
any Indemnified Matter, the Indemnified Parties may retain counsel reasonably satisfactory to
Acquiror; provided, however, that (i) Acquiror shall have the right to assume the
defense thereof and upon such assumption Acquiror shall not be liable to any Indemnified Party for
any legal expenses of counsel or any other expenses subsequently incurred by any Indemnified Party
in connection with the defense thereof, except that if Acquiror elects not to assume such defense
or counsel for the Indemnified Parties reasonably advises the Indemnified Parties that there are
issues which raise conflicts of interest between Acquiror and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Acquiror, and Acquiror shall pay
the reasonable fees and expenses of such counsel for the Indemnified Parties, (ii) Acquiror shall
be obligated pursuant to this paragraph to pay for not more than one counsel for each Indemnified
Party, (iii) Acquiror shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed), and (iv) Acquiror shall not
be obligated pursuant to this paragraph to the extent that a judgment of a court of competent
jurisdiction determines that any Damages are as a result of the gross negligence or willful
misconduct or result from a decision made by the Indemnified Party when the Indemnified Party had
no good faith belief that he or she was acting in the best interests of the Company. Any
Indemnified Party wishing to claim indemnification under this Section 10.2, upon learning
of any such claim, action, suit, proceeding or investigation, shall promptly notify Acquiror
thereof; provided, however, that the failure to so notify shall not affect the
obligations of Acquiror under this Section 10.2 except to the extent such failure to notify
materially prejudices Acquiror. Acquiror’s obligations under this Section 10.2 continue in
full force and effect for a period of five (5) years from the Effective Time; provided,
however, that all rights to indemnification in respect of any claim asserted or made within
such period shall continue until the final disposition of such claim.
(b) Acquiror shall purchase for the benefit of the persons serving as executive officers and
directors of the Company immediately prior to the Effective Time, directors’ and officers’
liability insurance coverage for six (6) years after the Effective Time, under the policy described
on Schedule 10.2(b), with respect to acts or omissions occurring prior to the Effective
Time which were committed by such executive officers and directors in their capacity as such
(“Tail Insurance”); provided that in no event shall Acquiror be required to expend
annually in the aggregate an amount in excess of the annual premium for such Tail Insurance (the
“Insurance Amount”); and provided, further, that if Acquiror is unable to
maintain such policy (or such substitute policy) as a result of the preceding proviso, Acquiror
shall obtain as much comparable insurance as is available for the Insurance Amount.
44
ARTICLE XI
DEFINITIONS
11.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the meanings specified in this
Section 11.1:
“Acquiror” has the meaning set forth in the Preamble.
“Acquiror Documents” has the meaning set forth in Section 6.2.
“Acquiror Sub” has the meaning set forth in the Preamble.
“Acquiror Sub’s Knowledge” means the actual knowledge (i.e. the conscious awareness of
facts or other information), after due and diligent inquiry, of the directors and officers of
Acquiror Sub.
“Acquiror’s Knowledge” means the actual knowledge (i.e. the conscious awareness of
facts or other information), after due and diligent inquiry of the directors and officers of
Acquiror.
“Acquisition Proposal” means any proposal, offer or inquiry relating to (or any third
party indication of interest in), whether in one transaction or a series of related transactions,
(a) any sale or other disposition, directly or indirectly, by merger, consolidation, share exchange
or any similar transaction, of the business or assets of the Company representing ten percent (10%)
or more of the consolidated assets of the Company and its Subsidiaries, (b) any issuance, sale or
other disposition by the Company (including by way of merger, consolidation, share exchange or any
similar transaction) of securities (or options, rights or warrants to purchase, or securities
convertible into, such securities) representing twenty percent (20%) or more of the votes
associated with the outstanding voting equity securities of the Company or any of its Subsidiaries
whose assets, individually or in the aggregate, constitute more than twenty percent (20%) of the
consolidated assets of the Company, (c) any tender offer or exchange offer in which any Person or
“group” (as such term is defined under the Exchange Act) would acquire beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, of twenty percent (20%) or more of the outstanding shares of the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute more than twenty percent
(20%) of the consolidated assets of the Company, (d) any recapitalization, restructuring,
liquidation, dissolution or other similar type of transaction with respect to the Company or any of
its Subsidiaries whose assets, individually or in the aggregate, constitute more than twenty
percent (20%) of the consolidated assets of the Company or (e) transaction which is similar in
form, substance or purpose to any of the foregoing transactions; provided, however,
that the term “Acquisition Proposal” shall not include any of the transactions contemplated by this
Agreement.
“Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control
45
with, such Person, and the term “control” (including the terms “controlled by”
and “under common control with”) means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person, whether through
ownership of voting securities, by Contract or otherwise.
“Affiliated Person” means any director, executive officer or five percent (5%) or
greater shareholder; spouse or other Person living in the same household of such director,
executive officer or shareholder; or any Person in which any of the foregoing persons is an
officer, trustee, five percent (5%) or greater shareholder, general partner or five percent (5%) or
greater trust beneficiary.
“Agreement” has the meaning set forth in the Preamble.
“Aggregate Company Option Exercise Price” means the aggregate exercise price which
would be payable by all holders of In-the-Money Options if all
In-the-Money Options which are otherwise
outstanding immediately prior to the Effective Time were exercised in full immediately prior to the
Effective Time, whether or not vested.
“Board” means the Board of Directors of the Company.
“Business” means the business of the Company as conducted and as proposed to be
conducted on the date hereof, including without limitation the businesses conducted and proposed to
be conducted by the Company’s Integration Solutions division and Rogue Wave Software division.
“Business Day” means any day of the year on which national banking institutions in New
York are open to the public for conducting business and are not required or authorized to close.
“CareScience” means CareScience, Inc., a Pennsylvania corporation.
“CareScience SPA” means that certain Stock Purchase Agreement, dated as of March 30,
2007, by and among the Company, CareScience and Premier, Inc., pursuant to which the Company sold
all of the outstanding capital stock of CareScience.
“Cash” means cash, cash equivalents and short-term investments to the extent held in
the United States.
“Certificate” has the meaning set forth in Section 2.3(c).
“Certificate of Merger” has the meaning set forth in Section 1.3.
“Certifications” has the meaning set forth in Section 5.6(b).
“Change in Recommendation” has the meaning set forth in Section 7.4.
“Closing” has the meaning set forth in Section 1.2.
“Closing Balance Sheet” means the balance sheet of the Company as of the Closing Date.
46
“Closing Date” has the meaning set forth in Section 1.2.
“Closing Merger Consideration” has the meaning set forth in Section 2.2(d).
“Closing Statement” has the meaning set forth in Section 2.2(a).
“Closing Working Capital” means the difference between the value of Current Assets and
Current Liabilities determined as of 12:01 a.m. on the Closing Date. In determining Current Assets
and Current Liabilities hereunder, (i) all normal and recurring monthly accounting entries required
by GAAP shall be taken into account and all errors and omissions shall be corrected, (ii) all
proper adjustments shall be made as if the determination were being made in accordance with GAAP
consistent with the practices and procedures applied in the Closing Balance Sheet, and (iii) all
appropriate reserves for all Current Liabilities for which reserves are appropriate in accordance
with GAAP shall be included in the calculation.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Common Stock” has the meaning set forth in Section 2.3 (a).
“Company” has the meaning set forth in the Preamble.
“Company 10-K” means the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2006.
“Company Balance Sheet” means the consolidated balance sheet of the Company as of
December 31, 2006, including the footnotes thereto, set forth in the Company 10-K.
“Company Board Recommendation” has the meaning set forth in Section 5.2.
“Company Documents” has the meaning set forth in Section 5.2.
“Company Equity Incentive Plans” has the meaning set forth in Section 2.3(b).
“Company ESPP” has the meaning set forth in Section 2.3(b).
“Company Financial Statements” means all of the financial statements of the Company
and its Subsidiaries included in the Company Reports.
“Company Licensed Software” means all third party Software used by the Company.
“Company Option” has the meaning set forth in Section 2.3(b).
“Company Proprietary Software” means all Software owned by the Company.
“Company Registered Intellectual Property” means all of the Registered Intellectual
Property owned by or filed in the name of the Company.
47
“Company Reports” means all forms, reports, statements, information and other
documents (as supplemented and amended since the time of filing) filed or required to be filed by
the Company with the SEC since December 31, 2002, including the Company 10-K.
“Company Software” means the Company Licensed Software and the Company Proprietary
Software.
“Company Termination Fee” has the meaning set forth in Section 4.4(b).
“Company’s Knowledge” means the actual knowledge (i.e. the conscious awareness of
facts or other information), after due and diligent inquiry, of those Persons identified on
Schedule 11.1(a).
“Confidential Information” means any data or information of the Company (including
trade secrets) that is valuable to the operation of the Company and not generally known to the
public or competitors.
“Confirmation Period” has the meaning set forth in Section 2.2(b).
“Contract” means any written contract, agreement, indenture, note, bond, mortgage,
loan, instrument, lease or license.
“Current Assets” means the Company’s and its Subsidiaries’ Cash, accounts receivable
that are current to less than ninety-one (91) days past due (net of a reserve for bad debts
determined in a manner consistent with past practice), deferred costs, inventory, and prepaid items
and other assets classified as current under GAAP, all determined as of 12:01 a.m. on the Closing
Date on a combined basis in accordance with GAAP consistent with the practices and procedures
applied in the Closing Balance Sheet and, in each case, to the extent classified as current under
GAAP; provided, however, that any intercompany accounts shall be excluded.
“Current Liabilities” means the Company’s and its Subsidiaries’ Deferred Revenue,
deferred taxes, accrued but unused employee vacation and sick pay (whether or not to be paid or
vacation time taken after the Closing), salaries, commissions, bonuses, fringe benefits and other
remuneration payable to employees of the Company or its Subsidiaries up to and including the
Closing Date, and accounts payable, accrued expenses and other liabilities classified as current
under GAAP, all determined as of 12:01 a.m. on the Closing Date on a combined basis in accordance
with GAAP consistent with the practices and procedures applied in the Closing Balance Sheet and, in
each case other than with respect to Deferred Revenue, to the extent classified as current under
GAAP; including, specifically, certain amounts related to retention bonus
plans and agreements as set forth in Schedule 11.1(b)
which shall be included.
“Current Offering(s)” has the meaning set forth in Section 2.3(b).
“Debt Commitment Letters” has the meaning set forth in Section 6.5(b).
“Debt Financing” has the meaning set forth in Section 6.5(b).
48
“Deferred Revenue” means any monies received from customers in advance of performance
of revenue activities (irrespective of whether classified as a current or long term liability under
GAAP), including any deposits from customers pursuant to which the Company or any of its
Subsidiaries is obligated to expend funds for the purchase or performance of services for a
specific order; provided, however, that any deferred revenue under Maintenance
Contract shall be excluded.
“Delaware Law” has the meaning set forth in the Preamble.
“Dissenting Shares” has the meaning set forth in Section 2.3(e).
“Documents” means all files, documents, instruments, papers, books, reports, records,
tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title policies,
customer and supplier lists, regulatory filings, operating data and plans, technical documentation
(design specifications, functional requirements, operating instructions, logic manuals, flow
charts, etc.), user documentation (installation guides, user manuals, training materials, release
notes, working papers, etc.) marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials whether or not in electronic form; provided
that “Documents” shall not include duplicate copies of such Documents retained by
the Company or its Affiliates subject to the obligations relating to the use and disclosure thereof
set forth in this Agreement.
“Effective Time” has the meaning set forth in Section 1.3.
“Employee” means all individuals including common law employees, independent
contractors and individual consultants, as of the date hereof, who are employed or engaged by the
Company or any ERISA Affiliate, together with individuals who are hired after the date hereof and
prior to the Closing.
“Employee Plan” has the meaning set forth in Section 5.14(a).
“Encumbrance” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement, servitude or transfer
restriction.
“Environmental Law” means any Law that requires or relates to any Hazardous Material
or protection of natural resources or the environment, including but not limited to the federal
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.
“Equity Funding Letter” has the meaning set forth in Section 6.5(b).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliates” means the Company or any Subsidiary or any other Person or entity
that, together with the Company or any Subsidiary, is or was treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code.
49
“Estimated Closing Working Capital” has the meaning set forth in Section
2.2(a).
“Exchange Act” means the Securities Exchange Act of 1934.
“Exchange Agent” has the meaning set forth in Section 3.1.
“Exchange Fund” has the meaning set forth in Section 3.1.
“Final Closing Statement” has the meaning set forth in Section 2.2(c).
“Final Working Capital” has the meaning set forth in Section 2.2(c).
“Financing” has the meaning set forth in Section 6.5(b).
“Financing Commitments” has the meaning set forth in Section 6.5(b).
“First Albany” has the meaning set forth in Section 5.25.
“Former Employee” means all individuals (including common law employees, independent
contractors and individual consultants) who were employed or engaged by the Company or any ERISA
Affiliate but who are no longer so employed or engaged on the date hereof.
“Fully Diluted Shares” means an amount equal to the sum of (a) the total number of
shares of Common Stock outstanding immediately prior to the Effective Time, plus (b) the
total number of shares of Common Stock that all In-the-Money Options outstanding immediately prior to
the Effective Time are exercisable into at such time and without any withholding of shares to pay
the exercise price or Taxes.
“GAAP” means generally accepted accounting principles in the United States as of the
date hereof, consistently applied in accordance with the Company’s past practices.
“Governmental Body” means any government or governmental or regulatory body thereof,
or political subdivision thereof, whether foreign, federal, state, or local, or any agency,
instrumentality or authority thereof, or any court or arbitrator (public or private).
“Guarantee” has the meaning set forth in Section 6.5(c).
“Hazardous Materials” means any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any Environmental Law, including any mixture or
solution thereof, and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and friable asbestos or friable asbestos-containing materials.
“High
Threshold” has the meaning set forth in
Section 2.2(d).
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
“Indebtedness” of any Person means, without duplication, (a) the principal of and,
accreted value and accrued and unpaid interest in respect of (i) indebtedness of such Person for
50
money borrowed and (ii) indebtedness evidenced by notes, debentures, bonds or other similar
instruments the payment of which such Person is responsible or liable; (b) all obligations of such
Person issued or assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title retention agreement
(but excluding trade accounts payable and other accrued current liabilities); (c) all obligations
of the type referred to in clauses (a) and (b) of any Persons the payment of which such Person is
responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise; and (d)
all obligations of the type referred to in clauses (a) through (c) of other Persons secured by any
Encumbrance on any property or asset of such Person (whether or not such obligation is assumed by
such Person).
“Indemnified Matter” has the meaning set forth in Section 10.2(a).
“Indemnified Parties” has the meaning set forth in Section 10.2(a).
“Intellectual Property” means (a) all United States and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions, provisionals and
continuations thereof, (b) all inventions (whether patentable or not), invention disclosures,
improvements, mask works, trade secrets, manufacturing processes, test and qualification processes,
designs, schematics, proprietary information, know-how, technology, technical data and customer
lists; (c) all works of authorship (whether copyrightable or not), copyrights, copyright
registrations and applications therefor throughout the world, (d) all industrial designs and any
registrations and applications therefor throughout the world, (e) all Software and (f) all internet
uniform resource locators, domain names, trade names, logos, slogans, designs, trade dress, common
law trademarks and service marks, and trademark and service xxxx and trade dress registrations and
applications therefor throughout the world.
“In-the-Money Option” has the meaning set forth in
Section 2.3(b).
“IRS” means the United States Internal Revenue Service and, to the extent relevant,
the United States Department of Treasury.
“Law” means any foreign, federal, state, local law, statute, code, ordinance, rule or
regulation.
“Legal Proceeding” means any judicial, administrative or arbitral actions, suits or
proceedings (public or private) by or before a Governmental Body.
“Lender” has the meaning set forth in Section 6.5(b).
“Liability” means any debt, liability or obligation (whether direct or indirect,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due),
and including all costs and expenses relating thereto.
“Losses” means all losses, liabilities, claims, demands, judgments, damages (excluding
incidental and consequential damages), fines, suits, actions, costs and expenses.
“Low
Threshold” has the meaning set forth in
Section 2.2(d).
“Maintenance Contracts” means all Contracts to which the Company is party, or to which
the Business is subject, relating to the maintenance, support, or enhancement of any product of the
Company.
51
“Material Adverse Effect” means a material adverse effect on (a) the Business, assets,
properties, results of operations or condition (financial or otherwise) of the Company and its
Subsidiaries (taken as a whole) or (b) on the ability of the Company to consummate the transactions
contemplated by this Agreement; other than an effect resulting from any one or more of the
following: (i) the effect of any change in the United States or foreign economies or securities or
financial markets in general (to the extent such effect is not disproportionate with respect to the
Company in any respect); (ii) the effect of any change that generally affects any industry in which
the Company operates (to the extent such effect is not disproportionate with respect to the Company
in any material respect); (iii) the effect of any change arising in connection with earthquakes,
hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material
worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing
or underway as of the date hereof (to the extent such effect is not disproportionate with respect
to the Company in any material respect); (iv) any matter that is disclosed in this Agreement,
including Schedules and Exhibits hereto as of the date of execution; (v) the effect of any changes
in applicable Laws or accounting rules (to the extent such effect is not disproportionate with
respect to the Company in any material respect); or (vi) any effect directly attributable to the
announcement of this Agreement or compliance with and performance of this Agreement and the
transactions contemplated by this Agreement.
“Material Contract” has the meaning set forth in Section 5.12.
“Merger” has the meaning set forth in the Preamble.
“Multiemployer Plan” has the meaning set forth in Section 5.14(c).
“Option Agreement” has the meaning set forth in Section 2.3(c).
“Option Merger Consideration” has the meaning set forth in Section 2.3(b).
“Order” means any consent, order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.
“Ordinary Course of Business” means the ordinary and usual course of normal day-to-day
operations of the Company and the Business.
“Outside Date” has the meaning set forth in Section 4.1(b).
“Parent” means Battery Ventures VII, L.P., a Delaware limited partnership.
“Party” including “Parties” has the meaning set forth in the Preamble.
“Per Share Merger Consideration” means an amount equal to (a) the sum of (i) the
Closing Merger Consideration plus (ii) the Aggregate Company Option Exercise Price
divided by (b) the number of Fully Diluted Shares.
“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.
52
“Permitted Encumbrances” means (a) all defects, exceptions, restrictions,
easements, rights of way and encumbrances affecting real property that are disclosed in policies of
title insurance, (b) statutory liens for current Taxes, assessments or other governmental charges
not yet delinquent or the amount or validity of which is being contested in good faith by
appropriate proceedings, for which adequate reserves have been established in accordance with GAAP
(c) mechanics’, carriers’, workers’, repairers’ and similar Encumbrances arising or incurred in the
Ordinary Course of Business, (d) zoning, entitlement and other land use and environmental
regulations by any Governmental Body, (e) title of a lessor under a capital or operating lease; (f)
such other imperfections in title, charges, easements, restrictions and encumbrances that are
immaterial, individually and in the aggregate, and (g) in the case of Software, non-exclusive
licenses granted in the Ordinary Course of Business.
“Person” means any individual, corporation, partnership, limited liability company,
firm, joint venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
“Proxy Statement” has the meaning set forth in Section 5.4(b).
“Publicly Available Software” has the meaning set forth in Section 5.17(n).
“Purchased Intellectual Property” means all Intellectual Property that is owned by or
licensed to the Company, including the Company Software and the Company Registered Intellectual
Property.
“Real Property Leases” has the meaning set forth in Section 5.10(a).
“Registered Intellectual Property” means all United States and foreign: (a) patents
and patent applications (including provisional applications), (b) registered trademarks, service
marks and trade dress, and applications to register trademarks, service marks and trade dress, (c)
registered copyrights and applications to register copyrights and (d) domain name registrations.
“Release” shall have the meaning as set forth in the Comprehensive, Environmental
Response Compensation Act, 42 U.S.C. § 9601 et seq.
“Requisite Shareholder Vote” means the affirmative vote of the holders of a majority
of the outstanding shares of the Common Stock of the Company.
“Rights Agreements” has the meaning set forth in Section 5.5(c).
“Rights Plan” means that certain Preferred Stock Rights Agreement, dated as of July
24, 2000, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933.
“Shareholder” means a shareholder of the Company.
53
“Software” means all computer software programs, together with any error corrections,
updates, modifications, or enhancements thereto, in both machine-readable form and human-readable
form.
“Special Meeting” has the meaning set forth in Section 7.4.
“Subsidiary” means any Person of which a majority of the outstanding share capital,
voting securities or other voting equity interests are owned, directly or indirectly, by the
Company.
“Superior Proposal” means a bona fide written Acquisition Proposal (on its most
recently amended and modified terms, if amended and modified) for not less than seventy-five
percent (75%) of the outstanding shares of Common Stock or all or substantially all of the assets
of the Company and its Subsidiaries made by any Person that the Board determines in its good faith
judgment by a majority vote (after consultation with the Company’s legal advisor and a financial
advisor of nationally recognized reputation and after taking into account all of the terms and
conditions of the Acquisition Proposal, including break-up fees, the conditions to the consummation
of the Acquisition Proposal and the financing terms of such Acquisition Proposal) to be more
favorable to the Company’s shareholders than the transactions contemplated by this Agreement from a
financial point of view and is reasonably likely to be consummated.
“Surviving Corporation” has the meaning set forth in Section 1.1.
“Tax Return” means all returns, declarations, reports, forms, estimates, information
returns, claims for refund statements or other documents (including any related or supporting
information or amendments) filed or required to be filed with or supplied to any Governmental Body
in connection with any Taxes.
“Taxes” (including the term “Tax”) means all taxes, charges, fees, duties,
levies, penalties or other assessments, including, without limitation, income, gross receipts,
excise, real and personal property, sales, transfer, license, payroll, withholding, social
security, franchise, unemployment insurance, workers’ compensation, employer health tax or other
taxes, imposed by any Governmental Body and shall include any interest, penalties or additions to
tax attributable to any of the foregoing.
“Total Merger Consideration” has the meaning set forth in Section 2.1.
“WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as
amended, and the rules and regulations promulgated thereunder.
11.2 Other Definitional and Interpretive Matters.
Unless otherwise expressly provided, for purposes of this Agreement, the following rules of
interpretation shall apply:
54
(a) Calculation of Time Period. When calculating the period of time before which,
within which or following which, any act is to be done or step taken pursuant to this Agreement,
the date that is the reference date in calculating such period shall be excluded. If the last day
of such period is a non-Business Day, the period in question shall end on the next succeeding
Business Day.
(b) Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
(c) Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Disclosure of any item on any Schedule shall not
constitute an admission or indication that such item or matter is material or would have a Material
Adverse Effect. No disclosure on a Schedule relating to a possible breach or violation of any
Contract, Law or Order shall be construed as an admission or indication that breach or violation
exists or has actually occurred. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein shall be defined as set forth in this Agreement.
(d) Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural and vice versa.
(e) Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in construing or interpreting this Agreement.
All references in this Agreement to any “Section” are to the corresponding Section of this
Agreement unless otherwise specified.
(f) Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires.
(g) Including. The word “including” or any variation thereof means (unless the
context of its usage otherwise requires) “including, without limitation” and shall not be construed
to limit any general statement that it follows to the specific or similar items or matters
immediately following it.
(h) Reflected On or Set Forth In. An item arising with respect to a specific
representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet
or Company Financial Statements, to the extent any such phrase appears in such representation or
warranty, if (a) there is a reserve, accrual or other similar item underlying a number on such
balance sheet or Company Financial Statements that related to the subject matter of such
representation, (b) such item is otherwise specifically set forth on the balance sheet or Company
Financial Statements or (c) such item is reflected on the balance sheet or Company Financial
Statements and is specifically set forth in the notes thereto.
55
11.3 Interpretation.
The Parties hereto have participated jointly in the negotiation and drafting of this Agreement
and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as jointly drafted by the Parties hereto and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality.
Each of the Company and Acquiror agrees that, unless and until the transactions contemplated
hereby shall have been consummated, the letter agreement regarding confidentiality dated as of
November 16, 2006, by and among Acquiror and the Company, shall remain in full force and effect.
12.2 Notices.
All notices, requests and other communications hereunder to a Party shall be in writing and
shall be deemed to have been given (a) on the Business Day sent, when delivered by hand, electronic
mail or facsimile transmission (with confirmation) during normal business hours or (b) on the
Business Day following the Business Day of sending, if delivered by an overnight courier recognized
as providing services nationally in the United States, in each case to such Party at its address
(or number) set forth below or such other address (or number) as the Party may specify by notice to
the other Parties hereto:
If to Acquiror:
Quartzite Holdings, Inc.
x/x Xxxxxxx Xxxxxxxx XXX, X.X.
Xxxxxxxxx Xxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
x/x Xxxxxxx Xxxxxxxx XXX, X.X.
Xxxxxxxxx Xxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx III, Esq.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx III, Esq.
56
If to the Company:
Quovadx, Inc.
0000 X. Xxxxxxx Xxxx, Xxxxx 000-X
Xxxxxxxxx Xxxxxxx, XX 00000
Facscimile: (000) 000-0000
Attention: President and Chief Executive Officer
0000 X. Xxxxxxx Xxxx, Xxxxx 000-X
Xxxxxxxxx Xxxxxxx, XX 00000
Facscimile: (000) 000-0000
Attention: President and Chief Executive Officer
With a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
One Xxxxx Center
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
One Xxxxx Center
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
12.3 Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof. Upon such determination that any term or other provision is invalid, illegal,
or incapable of being enforced, (a) the Parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible and (b) the remainder of this Agreement and the
application of such provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any other
jurisdiction.
12.4 Entire Agreement; No Third-Person Beneficiaries.
This Agreement (including the Schedules and Exhibits hereto), the Company Documents, and the
Acquiror Documents constitute the entire agreement between the Parties with respect to the
transactions contemplated hereby and supersede all prior agreements, written or oral, among the
Parties with respect to the subject matter of this Agreement. No representation, warranty,
inducement, promise, understanding or condition not set forth in this Agreement has been made or
relied on by any Party in entering into this Agreement. Nothing in this Agreement, expressed or
implied, is intended to confer on any Person, other than the Parties hereto or their respective
successors, any rights, remedies, obligations or liabilities.
12.5 Waiver; Amendment.
Any provision of this Agreement may be amended or waived, but only if the amendment or waiver
is in writing and signed by the Party or Parties that would have benefited by the provision waived
or amended. No action taken pursuant to this Agreement, including any investigation by or on
behalf of any Party, shall be deemed to constitute a waiver by the Party
57
taking such action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any Party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such breach or as a waiver
of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such Party preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
12.6 Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any of the Parties (whether by operation of law or otherwise) without the prior written
consent of the other Parties, and any purported assignment in violation of this Section
12.6 will be void; provided, however, that Acquiror and Acquiror Sub may assign
this Agreement (and its rights and obligations hereunder), in whole or in part, to any direct or
indirect wholly owned Subsidiary of Acquiror; provided, further, so long as
Acquiror remains primarily liable hereunder, the Company will cooperate in good faith with Acquiror
to structure, simultaneously with the Closing, any disposition of the stock or assets of Rogue Wave
Software, Inc. that Acquiror may reasonably request in connection with the transactions
contemplated by the Debt Commitment Letters. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
12.7 Expenses.
Except as otherwise provided in this Agreement, each Party will bear all expenses incurred by
it in connection with this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby and thereby.
Notwithstanding the foregoing, whether or not the Merger is consummated, Acquiror and the Company
shall share equally all fees and expenses, other than attorneys’ and accountants’ fees and
expenses, incurred in connection with filings required under the HSR Act (including the HSR filing
fee).
12.8 Specific Performance.
Without limiting or waiving in any respect any rights or remedies of Acquiror under this
Agreement now or hereafter existing at law in equity or by statute, Acquiror shall be entitled to
such specific performance of the obligations to be performed by the other Parties in accordance
with the provisions of this Agreement. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any Party may have under this
Agreement or otherwise.
12.9 Governing Law; Disputes.
This Agreement, and all claims or causes of action (whether in contract or tort) that may be
based upon, arise out of or relate to this Agreement or the negotiation, execution or performance
of this Agreement (including any claim or cause of action based upon, arising out of or related to
any representation or warranty made in or in connection with this Agreement), shall
58
be governed by and construed in accordance with the internal laws of the State of Delaware.
Any action against any Party relating to the foregoing shall be brought exclusively in a federal or
state court of competent jurisdiction located within the State of Delaware and the Parties hereto
hereby irrevocably submit to the exclusive jurisdiction of any federal or state court located
within the State of Delaware over any such action. The Parties hereby irrevocably waive, to the
fullest extent permitted by applicable Law, any objection which they may now or hereafter have to
the laying of venue of any such action brought in such court or any defense of inconvenient forum
for the maintenance of such action.
12.10 Counterparts.
This Agreement may be executed in any number of counterparts, each of which will constitute an
original and all of which, when taken together, will constitute one agreement. Any signature pages
of this Agreement transmitted by telecopier will have the same legal effect as an original executed
signature page.
[Signature Page to Follow]
59
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their
respective authorized officers as of the date first written above.
COMPANY: QUOVADX, INC., a Delaware corporation |
||||
By: | /s/ Xxxxxx X. Xxxxxx | |||
Name: | Xxxxxx X. Xxxxxx | |||
Title: | President and Chief Executive Officer | |||
ACQUIROR: QUARTZITE HOLDINGS, INC., a Delaware corporation |
||||
By: | /s/ R. Xxxxx Xxxxxx | |||
Name: | R. Xxxxx Xxxxxx | |||
Title: | President | |||
ACQUIROR SUB: QUARTZITE ACQUISITION SUB, INC., a Delaware corporation |
||||
By: | /s/ R. Xxxxx Xxxxxx | |||
Name: | R. Xxxxx Xxxxxx | |||
Title: | President |
60
TABLE OF CONTENTS
ARTICLE I THE MERGER |
1 | |||
1.1 The Merger |
1 | |||
1.2 Closing |
2 | |||
1.3 Effective Time; Closing Date |
2 | |||
1.4 Effect of the Merger |
2 | |||
1.5 Certificate of Incorporation; Bylaws |
2 | |||
1.6 Directors and Officers |
2 | |||
1.7 Taking of Necessary Action; Further Action |
3 | |||
ARTICLE II MERGER CONSIDERATION; CONVERSION OF SECURITIES |
3 | |||
2.1 Total Merger Consideration |
3 | |||
2.2 Adjustment to the Total Merger Consideration |
3 | |||
2.3 Effect on Capital Stock |
4 | |||
ARTICLE III EXCHANGE PROCEDURES |
6 | |||
3.1 Acquiror to Make Funds Available |
6 | |||
3.2 Exchange |
6 | |||
ARTICLE IV TERMINATION |
8 | |||
4.1 Termination |
8 | |||
4.2 Procedure Upon Termination |
9 | |||
4.3 Effect of Termination |
10 | |||
4.4 Frustration of Conditions |
10 | |||
4.5 Fees and Expenses |
10 | |||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
11 | |||
5.1 Organization and Qualification |
11 | |||
5.2 Authority; Binding Obligation |
12 | |||
5.3 Corporate Records |
12 | |||
5.4 No Conflict; Required Filings and Consents |
13 | |||
5.5 Capitalization; Owners of Shares |
13 | |||
5.6 Company Reports and Company Financial Statements |
14 | |||
5.7 Absence of Certain Developments |
16 | |||
5.8 Litigation |
17 | |||
5.9 Compliance with Laws; Permits |
17 | |||
5.10 Real Property Leases |
17 |
5.11 Personal Property |
18 | |||
5.12 Material Contracts |
18 | |||
5.13 Labor and Employment |
19 | |||
5.14 Pension and Benefit Plans |
20 | |||
5.15 Taxes and Tax Matters |
22 | |||
5.16 Environmental Matters |
24 | |||
5.17 Intellectual Property |
24 | |||
5.18 Insurance |
26 | |||
5.19 Subsidiaries |
26 | |||
5.20 Company Information |
27 | |||
5.21 Customers and Suppliers |
27 | |||
5.22 Data Security and Privacy |
27 | |||
5.23 State Takeover Statutes |
27 | |||
5.24 Rights Plan |
28 | |||
5.25 Financial Advisors |
28 | |||
5.26 Opinion of Financial Advisor |
28 | |||
5.27 CareScience SPA |
28 | |||
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUIROR SUB |
29 | |||
6.1 Organization and Qualification |
29 | |||
6.2 Authority; Binding Obligation |
29 | |||
6.3 No Conflict; Required Filings and Consents |
30 | |||
6.4 Litigation |
30 | |||
6.5 Financial Capability; Guarantee |
30 | |||
6.6 Compliance with Laws; Permits |
31 | |||
6.7 Acquiror Information |
32 | |||
6.8 Financial Advisors |
32 | |||
ARTICLE VII COVENANTS AND AGREEMENTS |
32 | |||
7.1 Access to Information |
32 | |||
7.2 Conduct of the Business Pending the Closing |
33 | |||
7.3 Appropriate Action; Consents; Filings |
35 | |||
7.4 Shareholder Meeting |
37 | |||
7.5 Further Assurances |
37 |
ii
7.6 Publicity |
37 | |||
7.7 Notice of Developments |
37 | |||
7.8 No Solicitation of Transactions |
38 | |||
ARTICLE VIII EMPLOYEES AND EMPLOYEE BENEFITS |
40 | |||
8.1 Company’s Employee Benefit Plans |
40 | |||
8.2 Acquiror Benefit Plans |
40 | |||
8.3 No Third Party Beneficiaries |
41 | |||
ARTICLE IX CONDITIONS TO CLOSING |
41 | |||
9.1 Conditions to Obligations of Each Party Under this Agreement |
41 | |||
9.2 Conditions to Obligations of Acquiror |
42 | |||
9.3 Conditions to Obligations of the Company |
43 | |||
ARTICLE X INDEMNIFICATION |
43 | |||
10.1 Non-Survival of Representations and Warranties |
43 | |||
10.2 Indemnification and Insurance |
44 | |||
ARTICLE XI DEFINITIONS |
45 | |||
11.1 Certain Definitions |
45 | |||
11.2 Other Definitional and Interpretive Matters |
55 | |||
11.3 Interpretation |
56 | |||
ARTICLE XII MISCELLANEOUS |
56 | |||
12.1 Confidentiality |
56 | |||
12.2 Notices |
56 | |||
12.3 Severability |
57 | |||
12.4 Entire Agreement; No Third-Person Beneficiaries |
58 | |||
12.5 Waiver; Amendment |
58 | |||
12.6 Assignment |
58 | |||
12.7 Expenses |
58 | |||
12.8 Specific Performance |
59 | |||
12.9 Governing Law; Disputes |
59 | |||
12.10 Counterparts |
59 |
iii