<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: February 11, 2000
LanVision Systems, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-28132 31-1455414
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4700 Duke Drive, Suite 170, Mason , OH, 45040-9374
(Address of principal executive offices)
Registrant's telephone number, including area code (513) 459-5000
----------------------------
Item 1. Changes in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
In accordance with an Asset Purchase Agreement dated January 20, 2000,
The Registrant sold, on February 11, 2000, its Mason, Ohio data
center, to Smart Professional Photocopy Corporation for $2.9 million.
The purchase price was paid $2.0 million in cash and $900 thousand in
a promissory note due in installments over the next year.
Additionally, under a fee for service arrangement, LanVision will
provide Smart with certain outsourcing services to manage and maintain
portions of the data center, while Smart will provide LanVision
continued use of the e-health data center facilities. See the full
text of the News Release attached as Exhibit 99
Item 3. Bankruptcy or Receivership.
Item 4. Changes in Registrant's Certifying Accountant.
Item 5. Other Events.
Item 6. Resignations of Registrant's Directors.
Item 7. Financial Statements and Exhibits.
<PAGE> 2
Item 7(b)(1) Not applicable
Item 7(c) Exhibits
Exhibit No. Description of Exhibit
10 Asset Purchase Agreement Between LanVision, Inc. and
Smart Professional Photocopy Corporation
99 News Release of LanVision Systems, Inc.
Dated February 15, 2000
Item 8. Change in Fiscal Year
Signatures
Pursuant to the requirements of the Securities Act of 1934, Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
LanVision Systems, Inc.
Date: February 11, 2000 By: /s/ J. Brian Patsy
J. Brian Patsy
Chief Executive Officer
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
10 Asset Purchase Agreement Between LanVision, Inc. and Smart
Professional Photocopy Corporation
99 News Release of LanVision Systems, Inc.
Dated February 15, 2000
<PAGE> 1
Exhibit 10
LANVISION SYSTEMS, INC.
Asset Purchase Agreement Between LanVision, Inc. and Smart Professional
Photocopy Corporation
ASSET PURCHASE AGREEMENT
BETWEEN
LANVISION, INC.
AND
SMART PROFESSIONAL PHOTOCOPY CORPORATION
<PAGE> 2
TABLE OF CONTENTS
1. INTRODUCTION...........................................................1
2. DEFINITIONS............................................................1
3. PURCHASE AND SALE OF ASSETS............................................5
4. ASSUMPTION OF LIABILITIES..............................................5
5. PRICE AND PAYMENT......................................................5
6. REPRESENTATIONS AND WARRANTIES OF SELLER...............................6
7. REPRESENTATIONS AND WARRANTIES OF BUYER...............................12
8. PRE-CLOSING COVENANTS.................................................13
9. CONDITIONS TO OBLIGATIONS TO CLOSE....................................15
10. CLOSING...............................................................19
11. INDEMNITY.............................................................20
12. CONFIDENTIALITY.......................................................22
13. TERMINATION PRIOR TO CLOSING..........................................23
14. MISCELLANEOUS.........................................................23
<PAGE> 3
ASSET PURCHASE AGREEMENT
1. INTRODUCTION
1.1. This Asset Purchase Agreement is made as of January 20, 2000,
between LanVision, Inc. ("Seller"), an Ohio corporation, with
its principal place of business at 4700 Duke Drive, Suite 170,
Mason, Ohio 45040, and Smart Professional Photocopy
Corporation ("Buyer"), a California corporation, with its
principal place of business at 120 Bluegrass Valley Parkway,
Alpharetta, Georgia 30005.
1.2. Seller has built, operates, and maintains a data center.
Seller desires to sell to Buyer, and Buyer desires to buy from
Seller, certain of the assets of Seller relating to the data
center, and Seller desires to transfer, and Buyer desires to
assume, certain liabilities of Seller arising in connection
with the data center, all upon the terms and conditions and
subject to the exceptions set forth in this Agreement. In
addition, Seller expects to terminate its employment of
certain employees who operate the data center, and Buyer
desires to hire certain of such employees, upon the terms and
conditions set forth in this Agreement.
1.3. In consideration of the mutual representations, warranties,
covenants, and agreements set forth in this Agreement, Seller
and Buyer, intending to be legally bound, do hereby agree to
the terms and conditions set forth in this Agreement.
2. DEFINITIONS
2.1. "Agreement": this Asset Purchase Agreement and all
incorporated exhibits, schedules, appendices, and all written
addenda and/or written amendments, if any, executed after the
execution of this Agreement.
2.2. "Assets": all of the right, title, and interest of Seller, to
the full extent transferable or assignable to Buyer, in the
Authorizations, the Equipment, the Leases, the Office
Furniture, the Software, and the Software Licenses, excluding
the Excluded Assets.
2.3. "Assumed Liabilities": the liabilities and obligations of
Seller identified in Schedule 2.3 of the Seller Disclosure
Schedule, but only to the extent that such identified
liabilities and obligations relate to time periods beginning
on or after the Closing Date.
2.4. "Authorizations": all governmental approvals, authorizations,
certifications, consents, licenses, and permits from, and
filings, notices, and recordings to or with, federal, state,
and local governmental authorities necessary to operate the
Data Center. All Authorizations are identified in Schedule 2.4
of the Seller Disclosure Schedule.
2.5. "Buyer": has the meaning set forth in Paragraph 1.1.
2.6. [Intentionally left blank.]
2.7. "Buyer Group": Buyer, its successors and assigns, and its
directors, officers, employees, agents, shareholders, and
subsidiaries.
1
<PAGE> 4
2.8. "Claim": has the meaning set forth in Paragraph 11.3.
2.9. "Claimant": has the meaning set forth in Paragraph 11.3.
2.10. "Closing": the closing of the transaction contemplated by this
Agreement, that shall take place at the offices of Graydon,
Head & Ritchey, 1900 Fifth Third Center, Cincinnati, Ohio
45202, commencing at 9:30 a.m. local time, on January 31,
2000, or such later date no more than five business days
following the satisfaction or waiver of all conditions to the
obligations of Seller and Buyer under this Agreement (other
than conditions with respect to actions Seller and Buyer will
take at such closing).
2.11. "Closing Date": the date for the Closing as determined in
accordance with Paragraph 2.10.
2.12. "Confidential Information": any competitively sensitive or
secret business or technical information owned and disclosed
by either party to the other party. Notwithstanding the
foregoing, Confidential Information does not include
information (a) in the rightful possession of the recipient at
the time of its initial disclosure, or (b) disclosed as a
matter of right and without obligation of confidentiality by a
third party, or (c) in the public domain or that enters the
public domain other than by the unauthorized acts of any
person, or (d) required by law, rule, or regulation to be
disclosed, as determined in good faith after consideration of
the advice of counsel to the party seeking to make a
disclosure, provided the owner of the information is given a
reasonable opportunity to contest the disclosure and/or obtain
a protective order.
2.13. "Data Center": that data center operated and maintained by
Seller consisting of the Premises and all of the Assets.
2.14. "Data Center Personnel": Seller's employees used in any
material capacity as operators and supervisors in the
operations of the Data Center and identified in Schedule 2.14
of the Seller Disclosure Schedule.
2.15. "Effective Date": the date stated in Paragraph 1.1 of this
Agreement.
2.16. "Environmental Requirements": all federal, state, local, and
foreign statutes, regulations, ordinances, and similar
provisions having the force or effect of law, all judicial and
administrative orders and determinations, and all common law
concerning public health and safety, worker health and safety,
and pollution or protection of the environment, including,
without limitation, all those relating to the presence, use,
production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control,
or cleanup of any Hazardous Substance.
2.17. "Equipment": the computer equipment, devices, and other
equipment, including data processing hardware,
telecommunications equipment, media, and tools, identified in
Schedule 2.17 of the Seller Disclosure Schedule, including
Seller's rights under all related warranties.
2
<PAGE> 5
2.18. "ERISA": the Employee Retirement Income Security Act of 1974,
as amended, and any rules and regulations promulgated
thereunder.
2.19. "Excluded Assets": the right, title, and interest of Seller in
the assets identified in Schedule 2.19 of the Seller
Disclosure Schedule.
2.20. "Excluded Liabilities": the liabilities and obligations of
Seller, other than any Assumed Liability, described as
follows:
2.20.1. Nonenumerated Liabilities. Any liability or
obligation of Seller of any kind, known or unknown,
contingent or otherwise, neither enumerated as an
Assumed Liability nor resulting from any other
covenant, agreement, or indemnity of Buyer in this
Agreement or the other agreements and instruments to
be executed and delivered by Buyer in connection with
this Agreement. Specifically excluded are the
liabilities and obligations identified in Schedule
2.3 of the Seller Disclosure Schedule to the extent
such liabilities and obligations relate to time
periods prior to the Closing Date.
2.20.2. Taxes. Any liability or obligation of Seller for
federal, state, or local income, franchise, property,
sales or use or recapture taxes, assessments, and
penalties, except for those taxes arising out of the
transactions contemplated by this Agreement, which
shall be paid as provided in Paragraph 10.3, it being
understood that any taxes relating to the Assets with
respect to time periods prior to the Closing Date
shall be the obligation of Seller and with respect to
time periods after the Closing Date the obligation of
Buyer.
2.20.3. Violations of Law. Any liability or obligation
resulting from violations of any applicable laws or
regulations by Seller or infringement by Seller of
third-party rights or interests.
2.20.4. Employee Liabilities. Any employee liabilities
relating to Seller's present and past employees
arising under Seller's plans, programs, policies,
commitments, and other benefit entitlements whether
or not such liabilities are contingent in nature,
including: any liability or obligation under any
employment, consulting, or collective bargaining
contracts, workers' compensation, deferred
compensation, retirement, pension (as defined in
Section 3(2) of ERISA), profit-sharing, bonus, stock
option, stock appreciation, stock purchase,
severance, disability, or other nonqualified benefit
or compensation commitments, benefit plans,
arrangements, or plans, including any welfare plans
(as defined in Section 3(1) of ERISA), fringe benefit
arrangements, or multi-employer plans (as defined in
Section 3(37)(A) of ERISA).
2.20.5. Product Liability. Any liability or obligation for
product liability or warranty claims or damage claims
arising out of defects in or failures of any Asset or
services performed by the Seller through the Data
Center prior to the Closing Date.
2.20.6. Incidents to Excluded Assets. Any liability or
obligation associated with any of the Excluded
Assets.
3
<PAGE> 6
2.20.7. Litigation. Any Litigation pending or threatened
against Seller or the Assets relating to events or
actions occurring prior to the Closing Date.
2.21. "Hazardous Substance": any substance presently or hereafter
listed, defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or to which exposure is otherwise
regulated, under any Environmental Requirements. Hazardous
Substance includes, without limitation, any toxic waste,
pollutant, contaminate, hazard substance, toxic substance,
hazardous waste, special waste, industrial substance, or
petroleum, or any derivative or by-product thereof, flammable
materials, explosives, radon, radioactive material, asbestos
or asbestos containing material, urea formaldehyde, foam
insulation, lead, or polychlorinated biphenyl.
2.22. "Holdback": has the meaning set forth in Paragraph 5.2.1.
2.23. "Initial Payment": has the meaning set forth in Paragraph
5.2.1.
2.24. "Leases": the entire leasehold and rental interests of Seller
arising under every material lease for the Equipment, the
Office Furniture, and the Premises. All Leases are identified
in Schedule 2.24 of Seller Disclosure Schedule.
2.25. "Litigation": any claim, action, suit, proceeding, inquiry,
hearing, arbitration, administrative proceeding, or
investigation.
2.26. "Loss" or "Losses": demands, claims, actions, or causes of
action, assessments, losses, damages, liabilities, costs, and
expenses, including reasonable fees and expenses of counsel,
other expenses of investigation, handling, and litigation, and
settlement amounts, together with interest and penalties and
any net income tax amount associated with any indemnification
recoveries for such losses.
2.27. "Material Adverse Effect": any adverse effect that results
from a change in the business, financial condition, or results
of operations of the Seller or Parent or from some other
event, act or omission of Seller or Parent, other than the
announcement of the transactions completed hereby, (a) that is
material to the Seller's operation of the Data Center and/or
use or ownership of the Assets, or (b) that would reasonably
be expected to be material to the rights and benefits to be
obtained by Buyer from the transactions contemplated by this
Agreement.
2.28. "Note": has the meaning set forth in Paragraph 5.2.2.
2.29. "Obligor": has the meaning set forth in Paragraph 11.3.
2.30. "Office Furniture": the furniture, furnishings, and fixtures
identified in Schedule 2.30 of the Seller Disclosure Schedule,
including Seller's rights under all related warranties.
2.31. "Parent": LanVision Systems, Inc., a Delaware corporation and
the parent company of Seller.
4
<PAGE> 7
2.32. "Permitted Lien": the mortgages, pledges, liens, or
encumbrances identified in Schedule 2.32 of the Seller
Disclosure Schedule.
2.33. "Premises": that portion of the building, structures, and
other improvements known as 4700 Governor's Pointe, located at
4700 Duke Drive, Suite 170, Mason, Ohio 45040, that is leased
by Seller pursuant to the Lease Agreement between Seller and
Duke Realty Limited Partnership dated September 23, 1997.
2.34. "Purchase Price": the aggregate purchase price for the Assets
as more particularly described in Paragraph 5.1.
2.35. "Required Contract Consents": has the meaning set forth in
Paragraph 6.1.5.
2.36. "Required Government Consents": has the meaning set forth in
Paragraph 6.1.4.
2.37. "Required Notice": has the meaning set forth in Paragraph
11.3.
2.38. "Seller": has the meaning set forth in Paragraph 1.1.
2.39. "Seller Disclosure Schedule": the disclosure schedule signed
and delivered by Seller to Buyer at or prior to the Effective
Date.
2.40. "Seller Group": Seller, its successors and assigns, and its
directors, officers, employees, agents, shareholders,
subsidiaries, and Parent.
2.41. "Software": the computer software programs identified in
Schedule 2.41 of the Seller Disclosure Schedule.
2.42. "Software Licenses": all material contracts, agreements,
licenses, and other arrangements, oral or written, providing
for and governing the use of the Software, including Seller's
rights under all related warranties and under all related
maintenance, support, or service agreements.
3. PURCHASE AND SALE OF ASSETS
Subject to the terms and conditions of this Agreement, Buyer agrees to
purchase, accept, and acquire from Seller, and Seller agrees to sell,
transfer, assign, convey, and deliver to Buyer, at the Closing, all of
the Assets.
4. ASSUMPTION OF LIABILITIES
At and after the Closing, Buyer shall assume and agree to pay or
perform only the liabilities and obligations that are the Assumed
Liabilities or are represented by any other covenant, agreement, or
indemnity of Buyer in this Agreement or the other agreements and
instruments to be executed and delivered by Buyer in connection with
this Agreement. Buyer shall not assume or be responsible for any of the
Excluded Liabilities.
5
<PAGE> 8
5. PRICE AND PAYMENT
5.1. Subject to adjustment for any Loss, the Purchase Price shall
be $2,900,000, plus the amount of Assumed Liabilities as of
the Closing Date, plus Buyer's proportionate share of all
prepaid items and expenses relating to the Assets and Data
Center based on the time periods that Buyer will benefit from
such items and/or own and operate the Assets and the Data
Center (all such items and Buyer's proportionate share of such
items are set forth on Schedule 5.1 of the Seller Disclosure
Schedule, which Schedule shall be updated as of the Closing
Date).
5.2. Payment.
5.2.1. At the Closing, Buyer shall pay the Purchase Price to
Seller as follows: (a) the amount of $2,000,000 (the
"Initial Payment"), (b) Buyer's proportionate share
of certain items as described in Paragraph 5.1, and
(c) the amount of $900,000 (the "Holdback") in the
form of a promissory note as required by Paragraph
5.2.2.
5.2.2. At the Closing, Buyer shall deliver to Seller a
promissory note in the principal amount equal to the
Holdback (the "Note"), which Note shall be secured by
the Assets. The Note shall provide that Buyer pay the
principal amount to Seller on or before the end of
the 12 month period beginning on the first day of the
month following the month in which the Closing
occurs, with interest at the rate of 10% per year, in
12 equal installments of principal and interest, with
the first of such installments being due on or before
the first day of the month following the month in
which the Closing occurs.
5.3. Subject to the limitations set forth in Paragraph 11.5,
payments on the Note shall be subject to offset, at any time
on or prior to the date on which each installment is due, for
any Loss incurred by Buyer, as provided for in Section 11, but
only if Buyer has delivered or simultaneously delivers to
Seller the Required Notice, as provided for in Paragraph 11.3.
In the event the Buyer claims the benefit of such an offset,
but such Loss is subsequently found not to be substantiated
under Section 11, the offset amount to which Buyer is not
entitled shall be paid to Seller (with interest calculated as
set forth in Paragraph 5.2.2) promptly upon such
determination.
5.4. All payments from one party to another under this Agreement
shall be made by wire transfer of immediately available
federal funds in United States dollars to an account
designated in writing by the party to receive such payment.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
6.1. Seller hereby represents and warrants to Buyer as follows:
6.1.1. Organization. Seller is a corporation validly
existing and in good standing under the laws of the
State of Ohio with the corporate power and authority
to conduct its business (including the Data Center)
and to own and lease its properties and assets
(including the Assets).
6
<PAGE> 9
6.1.2. Power and Authority. Seller has the power and
authority to execute, deliver, and perform this
Agreement and the other agreements and instruments to
be executed and delivered by it in connection with
the transactions contemplated hereby and thereby, has
taken all necessary corporate action to authorize the
execution and delivery of this Agreement and such
other agreements and instruments and the consummation
of the transactions contemplated hereby and thereby.
The corporate resolutions authorizing the
transactions shall contain a recital that the terms
of such transactions are fair, reasonable, and in the
best interests of Seller and Parent. This Agreement
is, and the other agreements and instruments to be
executed and delivered by Seller in connection with
the transactions contemplated hereby shall be, the
legal, valid, and binding obligations of Seller,
enforceable in accordance with their terms.
6.1.3. No Conflict. Neither the execution and delivery of
this Agreement and the other agreements and
instruments to be executed and delivered in
connection with the transactions contemplated hereby
or thereby, nor the consummation of the transactions
contemplated hereby or thereby, will violate or
conflict with (a) except insofar as Required
Government Consents are to be procured prior to
Closing, any federal, state, or local law,
regulation, ordinance, zoning requirement,
governmental restriction, order, judgment, or decree
applicable to Seller, the Data Center, or the Assets,
(b) any provision of any charter, regulation, bylaw,
or other governing or organizational instrument of
Seller, or (c) except insofar as Required Contract
Consents are to be procured prior to Closing, any
mortgage, indenture, license, instrument, trust,
contract, agreement, or other commitment or
arrangement to which Seller is a party or by which
Seller or any of the Assets is bound, except with
respect to clauses (a) and (c) for such conflicts,
breaches, defaults, accelerations, or events that
have not had and would not reasonably be expected to
have a Material Adverse Effect.
6.1.4. Required Government Consents. Except as set forth in
Schedule 6.1.4 of the Seller Disclosure Schedule
(such scheduled items being referred to herein as the
"Required Government Consents") and except as may
result from any changes that Buyer may make in the
use of the Assets and the operation of the Data
Center, no approval, authorization, certification,
consent, variance, permission, license, or permit to
or from, or notice, filing, or recording to or with,
federal, state, or local governmental authorities is
necessary for (a) the execution and delivery of this
Agreement and the other agreements and instruments to
be executed and delivered by Seller in connection
with the transactions contemplated hereby or thereby,
(b) the consummation by Seller of the transactions
contemplated hereby or thereby, or (c) the ownership
and use of the Assets and the operation of the Data
Center as currently conducted.
6.1.5. Required Contract Consents. Except as set forth in
Schedule 6.1.5 of the Seller Disclosure Schedule
(such scheduled items being referred to herein as the
"Required Contract Consents"), and except as may
result from any changes that Buyer may make in the
use of the Assets and the operation of the Data
Center, no approval, authorization, consent,
permission, or waiver to or from, or notice, filing,
or
7
<PAGE> 10
recording to or with, any person (other than the
governmental authorities addressed in Paragraph
6.1.4) is necessary for (a) the execution and
delivery of this Agreement and the other agreements
and instruments to be executed and delivered in
connection with the transactions contemplated hereby
or thereby by Seller or the consummation by Seller of
the transactions contemplated hereby; (b) the
transfer and assignment to Buyer at Closing of the
Assets, or (c) the ownership and use of the Assets
and the operation of the Data Center as currently
conducted.
6.1.6. Title. Buyer at Closing shall obtain good and
marketable title to all of the Assets, free and clear
of all title defects, liens, restrictions, claims,
charges, security interests, or other encumbrances of
any nature whatsoever, including any mortgages,
leases, chattel mortgages, conditional sales
contracts, collateral security arrangements, or other
title or interest retention arrangements, except as
set forth in Schedule 6.1.6 of the Seller Disclosure
Schedule.
6.1.7. Condition of Property. All of the tangible Assets are
in good operating order, condition, and repair,
ordinary wear and tear excepted, have been maintained
in accordance with normal industry practice, and are
suitable for use in the Data Center in the ordinary
course of its operation, except to the extent any
unsuitability may result from any changes that Buyer
may make in the use of the Assets and the operation
of the Data Center.
6.1.8. Leases. The Leases listed in Schedule 2.24 of the
Seller Disclosure Schedule constitute all material
leasing or rental contracts, agreements, and other
commitments and arrangements in effect. All Leases
are valid, binding, and enforceable in accordance
with their terms and are in full force and effect.
There are no existing defaults by Seller or, to
Seller's best knowledge, the other parties
thereunder, and no act, event, or omission has
occurred that, whether with or without notice, lapse
of time, or both, would constitute default
thereunder. Seller has provided Buyer with complete
and accurate copies of all Leases.
6.1.9. Software. The Software listed in Schedule 2.41 of the
Seller Disclosure Schedule constitutes all of the
material computer software programs required to
operate the Data Center in the manner that Seller has
operated and presently does operate the Data Center.
The Software Licenses are valid, binding, and
enforceable in accordance with their terms and are in
full force and effect. There are no existing defaults
by Seller or, to Seller's best knowledge, the other
parties thereunder, and, to Seller's best knowledge,
no act, event, or omission has occurred that, whether
with or without notice, lapse of time, or both, would
constitute a default thereunder. Seller has provided
Buyer with evidence of all Software Licenses.
6.1.10. Litigation. Except as set forth in Schedule 6.1.10 of
the Seller Disclosure Schedule, no Litigation is
pending, or, to Seller's best knowledge, threatened
against Seller, its present or former directors,
officers, or employees, or any party to the Leases or
the Software Licenses, affecting, involving, or
relating to the Data Center or any of the Assets.
Except as set forth in Schedule 6.1.10, no Litigation
has been brought within the last three years against
Seller affecting, involving, or relating to
8
<PAGE> 11
the Data Center or any of the Assets that has or
would reasonably be expected to have a Material
Adverse Effect. Seller knows of no facts that could
reasonably be expected to serve as the basis for
Litigation against itself (or the Buyer by virtue of
its acquisition of the Assets), its present or former
directors, officers, or employees, or any party to
the Leases or Software Licenses, affecting,
involving, or relating to the Data Center or any of
the Assets that would reasonably be expected to have
a Material Adverse Effect.
6.1.11. Compliance with Laws. There is no outstanding or, to
Seller's best knowledge, threatened order, writ,
injunction, or decree of any court, governmental
agency, or arbitration tribunal against Seller
affecting, involving, or relating to the Data Center
or any of the Assets that has or would reasonably be
expected to have a Material Adverse Effect. Seller is
not in violation of any applicable federal, state, or
local law, regulation, ordinance, zoning requirement,
governmental restriction, order, judgment, or decree
affecting, involving, or relating to the Data Center
or any of the Assets except where noncompliance has
no material adverse effect upon the operation of the
Data Center or the rights in any of the Assets
(including ownership by Buyer), and Seller has
received no notices of any allegation of any such
violation. The foregoing shall be deemed to include
laws and regulations relating to the federal patent,
copyright, and trademark laws, state trade secret and
unfair competition laws, and to all other applicable
laws, including equal opportunity, wage and hour, and
other employment matters, and antitrust and trade
regulation laws.
6.1.12. Adequacy of Authorizations. The Authorizations
constitute all material approvals, authorizations,
certifications, consents, variances, permissions,
licenses, or permits to or from, or filings, notices,
or recordings to or with, federal, state, or local
governmental authorities that are required for the
ownership and use of the Assets and the operation of
the Data Center under federal, state, and local law,
regulation, ordinance, zoning requirement,
governmental restriction, order, judgment, or decree.
Seller is in compliance with all material terms and
conditions of such required Authorizations. All of
the Authorizations are in full force and effect, and,
to the best of Seller's knowledge, no suspension or
cancellation of any of them is being threatened, nor
will any of the Authorizations be affected by the
consummation of the transactions described in this
Agreement, except to the extent any such
Authorizations are transferable only upon receipt of
the Required Government Consents. Seller is in
compliance with all other applicable limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables
contained in those laws or contained in any law,
regulation, code, plan, order, decree, judgment,
notice, or demand letter issued, entered,
promulgated, or approved thereunder relating to or
affecting the Data Center and the Assets, except for
any instances of noncompliance that would not
reasonably be expected to have a Material Adverse
Effect.
6.1.13. Environmental Compliance. Except as set forth in
Schedule 6.1.13 of the Seller Disclosure Schedule,
neither Seller, nor, to the best of Seller's
knowledge, any prior owner, user, controller, or
occupant, nor any tenant, subtenant, prior tenant, or
prior
9
<PAGE> 12
subtenant has, to the extent relating to the Assets
or the Premises, (a) ever used Hazardous Materials,
(b) in any manner violated any Environmental
Requirements, or (c) received any notice, report, or
other information regarding any actual or alleged
violation of any Environmental Requirement.
6.1.14. Data Center Operations. Seller has not materially
changed the design and functionality of the Data
Center within the 12 months immediately preceding the
Effective Date.
6.1.15. Personnel. Seller's employees listed by name in
Schedule 2.14 of the Seller Disclosure Schedule are
all of the Data Center Personnel currently being used
by Seller in the operation of the Data Center,
excluding (a) employees of Seller engaged in the
system administration of the Data Center, including
the network, NT servers, UNIX servers, interfaces,
and databases, and (b) employees of Seller engaged in
the management of the Data Center, including Joseph
O. Brown II and Mark W. Wulforst. Schedule 2.14 also
includes the job title, current compensation, and
benefits of the listed employees, including salary
increases and bonuses agreed to or earned prior to
the Effective Date. The number of employees
constituting the Data Center Personnel is currently
four, which number of employees is one less than the
number of employees generally devoted to the Data
Center during the 12 months immediately preceding the
Effective Date. Seller shall provide a replacement
for the open position pursuant to its obligation for
replacements under Paragraph 9.2.9.
6.1.16. Compliance with Employment Laws. Seller is in
compliance with all applicable laws respecting
employment and employment practices, terms and
conditions of employment and wages and hours, and
occupational safety and health pertaining to the Data
Center Personnel, and is not engaged in any unfair
labor practice within the meaning of Section 8 of the
National Labor Relations Act, except for any
instances of noncompliance that would not reasonably
be expected to have a Material Adverse Effect. To the
best of Seller's knowledge, there is no unfair labor
practice, charge, or complaint or any other matter
against or involving Seller pending or, to the
knowledge of Seller, threatened before the National
Labor Relations Board or any court of law pertaining
to the Data Center Personnel. There is no labor
strike, dispute, slowdown, or stoppage pending or
threatened against Seller pertaining to the Data
Center Personnel. To the best of Seller's knowledge,
no certification or decertification question or
organizational drive exists or has existed within the
past 12 months respecting the Data Center Personnel.
Seller has not experienced any organized work
stoppage or other labor difficulty involving the Data
Center Personnel. To the best of Seller's knowledge,
there are no charges, investigations, administrative
proceedings, or formal complaints of discrimination
(including discrimination based upon sex, age,
marital status, race, national origin sexual
preference, handicap, or veteran status) pending or,
to the knowledge of Seller, threatened before the
Equal Employment Opportunity Commission or any
federal, state, or local agency or court against
Seller pertaining to the Data Center Personnel, and,
to the knowledge of the Seller, no basis for any such
charge, investigation, administrative proceeding, or
complaint exists. To the best of Seller's knowledge,
10
<PAGE> 13
there have been no audits of the equal employment
opportunity practices of Seller pertaining to the
Data Center Personnel.
6.1.17. Expenses. Schedule 6.1.17 of the Seller Disclosure
Schedule sets forth all of the Data Center expenses
for the 12 months ended November 30, 1999.
6.1.18. Financial Statements. Seller has previously delivered
to Buyer the following financial statements of
Parent: (a) Parent's audited financial statements for
the fiscal years ended January 31, 1997, 1998, and
1999 and (b) Parent's unaudited quarterly financial
statements for the fiscal quarters ended April 30,
1999, July 31, 1999, and October 31, 1999. Such
financial statements fairly present, in all material
respects, the financial position of Parent and Seller
as of the dates thereof and their results of
operations and cash flows for the periods then ended
(subject, for unaudited data, to normal year end
adjustments), in each case in accordance with past
practice and generally accepted U.S. accounting
principals ("GAAP") consistently applied during the
periods involved (except as may be otherwise
disclosed in the notes thereto and except that the
unaudited financial statements therein do not contain
all of the footnote disclosures required by GAAP).
6.1.19. Solvency. Parent is solvent and, based on its current
financial condition and its good faith financial
projections, shall remain solvent for not less than
six months following the Closing Date. For the
purposes of this Agreement, "solvent" shall mean that
Parent's assets shall be greater than its total
liabilities and that Parent and Seller are generally
able to pay their debts as they become due.
6.1.20. Sufficiency of Rights. Except as set forth in
Schedule 6.1.20 of the Seller Disclosure Schedule and
except for any changes that Buyer may make in the use
of the Assets and the operation of the Data Center,
the Assets constitute all of the properties, rights,
and privileges necessary for the indefinite continued
operation of the Data Center by Buyer in
substantially the same manner as it has been operated
by Seller during the 12 months immediately preceding
the Closing. Seller has made no material change in
its operation of the Data Center within the 12 months
immediately preceding the Effective Date.
6.1.21. Broker's or Finder's Fees. Seller has not authorized
any person to act as broker or finder or in any other
similar capacity in connection with the transactions
contemplated by this Agreement in any manner that may
or will impose liability on Buyer.
6.1.22. Disclosure. No representation, warranty, or statement
made by Seller in this Agreement or in any document
or certificate furnished or to be furnished to Buyer
pursuant to this Agreement contains or will contain
any untrue statement or omits or will omit to state
any fact necessary to make the statements contained
herein or therein not misleading. Seller has
disclosed to Buyer all facts known or reasonably
available to Seller and will disclose to Buyer all
facts that become known or reasonably available to
Seller during the period from the Effective Date to
six months following the Closing Date, including
financial information, that are
11
<PAGE> 14
material to the operation of the Data Center, the
acquisition and use of the Assets, and the assumption
of the Assumed Liabilities.
6.1.23. Truth at Closing. All of the representations,
warranties, and agreements of Seller contained in
this Section 6 shall be true and correct and in full
force and effect on and as of the Closing Date.
6.2. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
DOCUMENT, CERTIFICATE, AGREEMENT, OR OTHER INSTRUMENT
FURNISHED OR TO BE FURNISHED BY SELLER TO BUYER PURSUANT TO
THIS AGREEMENT, SELLER MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS OR THE DATA
CENTER, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
7. REPRESENTATIONS AND WARRANTIES OF BUYER
7.1. Buyer hereby represents and warrants to Seller as follows:
7.1.1. Organization. Buyer is a corporation validly existing
and in good standing under the laws of the State of
California with the corporate power and authority to
conduct its business and to own and lease its
properties and assets.
7.1.2. Power and Authority. Buyer has the power and
authority to execute, deliver, and perform this
Agreement and the other agreements and instruments to
be executed and delivered by it in connection with
the transactions contemplated hereby and thereby, and
Buyer has taken all necessary corporate action to
authorize the execution and delivery of this
Agreement and such other agreements and instruments
and the consummation of the transactions contemplated
hereby and thereby. This Agreement is, and, when such
other agreements and instruments are executed and
delivered, the other agreements and instruments to be
executed and delivered by Buyer in connection with
the transactions contemplated hereby and thereby
shall be, the legal, valid, and binding obligation of
Buyer, enforceable in accordance with their terms.
7.1.3. Broker's or Finder's Fees. Buyers has not authorized
any person to act as broker, finder, or in any other
similar capacity in connection with the transactions
contemplated by this Agreement.
7.1.4. No Conflict. Neither the execution and delivery by
Buyer of this Agreement and of the other agreements
and instruments to be executed and delivered by Buyer
in connection with the transactions contemplated
hereby or thereby, nor the consummation by Buyer of
the transactions contemplated hereby or thereby will
violate or conflict with (a) any federal, state, or
local law, regulation, ordinance, governmental
restriction, order, judgement, or decree applicable
to Buyer, or (b) any provision of any charter,
regulation, bylaw, or other governing or
organizational instrument of Buyer.
12
<PAGE> 15
7.1.5. Availability of Funds. Buyer has sufficient cash or
other liquid assets to make the Initial Payment in
full at the Closing. To the extent that such funds
are expected to be borrowed from third parties, Buyer
has delivered to Seller evidence of such third
party's commitment to provide such funding.
7.1.6. Litigation. No litigation is pending, or to Buyer's
best knowledge, threatened against Buyer, its present
or former directors, officers, or employees that
would reasonably be expected to prevent, restrict or
delay Buyer's ability to timely consummate the
transactions contemplated by this Agreement and the
other agreements and instruments to be executed and
delivered in connection with this Agreement.
7.1.7. Truth at Closing. All of the representations,
warranties and agreements of Buyer contained in this
Section 7 shall be true and correct and in full force
and effect on and as of the Closing Date.
7.2. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
DOCUMENT, CERTIFICATE, AGREEMENT, OR OTHER INSTRUMENT
FURNISHED OR TO BE FURNISHED BY BUYER TO SELLER PURSUANT TO
THIS AGREEMENT, BUYER MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED.
8. PRE-CLOSING COVENANTS
8.1. From the Effective Date through the Closing, Seller shall
operate the Data Center diligently and substantially in the
same manner as it has for the 12 months immediately preceding
the Effective Date.
8.2. From the Effective Date through the Closing, Seller shall use
its reasonable best efforts to preserve its relationship with
the parties with whom it has contracted under the Leases and
the Software Licenses.
8.3. In no event from the Effective Date to the Closing, without
the prior written consent of Buyer, shall Seller (a) permit
any of the Assets to be subjected to any mortgage, pledge,
lien, or encumbrance, except for Permitted Liens; (b) waive
any claims or rights of substantial value respecting the
Assets, or sell, transfer, or otherwise dispose of any of the
Assets; or (c) increase the compensation of those Data Center
Personnel whom Buyer has stated an intention to hire or retain
on or after Closing (other than for salary increases or
bonuses agreed to or earned prior to the Effective Date, such
increases and bonuses being listed in Schedule 2.14 of the
Seller Disclosure Schedule).
8.4. From the Effective Date to the Closing, Seller shall maintain
the insurance that it has maintained on the Assets in effect
and shall at all times continue to insure all property
constituting the Assets against all ordinary and insurable
casualty risks, and shall maintain the Assets in the same
condition and manner as described in Paragraph 6.1.7.
13
<PAGE> 16
8.5. From the Effective Date to the Closing, neither Seller nor
Buyer shall perform any act or omit to perform any act, or
permit any act or omission, that will cause a breach or
default of any covenant, agreement, warranty, or
representation in this Agreement.
8.6. From the Effective Date to the Closing, Seller shall (a)
provide Buyer with such information as Buyer may from time to
time reasonably request with respect to the Data Center and
the transactions contemplated by its Agreement; (b) provide
Buyer and its officers, counsel, and other authorized
representatives access during regular business hours and upon
reasonable notice to the books, records, and offices of Seller
as they may pertain to the Assets or the operation of the Data
Center, as Buyer may from time to time reasonably request; (c)
permit Buyer to make such inspections thereof as Buyer may
reasonably request, and (d) provide Buyer with such financial
statements prepared in Seller's and Parent's normal course of
business, including cash flow analysis, to the extent such
statements are relevant to the Assets and Data Center. Any
investigation or inspection shall be conducted in such a
manner as not to interfere unreasonably with the operation of
the business of Seller.
8.7. Seller shall deliver revised or supplementary schedules to the
Seller Disclosure Schedule, as may be necessary to maintain,
as of the Closing Date, the accuracy of the information set
forth in the Seller Disclosure Schedule, in order to enable
Buyer to confirm the accuracy of Seller's representations and
warranties and otherwise to give full effect to the provisions
of this Agreement. Such revised or supplementary schedules
shall not modify or be deemed part of this Agreement unless
agreed by Buyer in writing with reference to the specific
schedules to be so treated.
8.8. From the Effective Date to the Closing, Seller and Buyer shall
use their reasonable best efforts, and shall cooperate with
one another, to secure all Required Government Consents,
including the preparation and submission of any required
filings that may be applicable, and all Required Contract
Consents, and to obtain the satisfaction of the conditions
specified in Section 9, as shall be required in order to
enable Seller and Buyer to effect the transactions
contemplated hereby in accordance with the terms and
conditions hereof. In lieu of obtaining the Required Contract
Consent for the Lease for the Premises, Seller will negotiate
a termination of such Lease and provide, if necessary,
reasonable assistance to Buyer in Buyer's negotiations with
the owner of the Premises for a lease of the Premises directly
between Buyer and the owner to be effective upon such
termination of the Lease for the Premises. In lieu of
obtaining the Required Contract Consent for the Software
License for the Software licensed by Seller from Oracle
Corporation, Seller shall procure from Oracle Corporation on
behalf of Buyer a license for Buyer to use the Oracle
Corporation Software under terms no less favorable than the
Software License for such Software.
8.9. Seller shall use its reasonable best efforts to procure for
the benefit of Buyer consent, assignment, and/or estoppel
certificates in such form, from such third parties, and with
respect to such Assets to be assigned to Buyer at Closing as
Buyer may specify on or before Closing.
14
<PAGE> 17
8.10. Seller acknowledges that Buyer has incurred expenditures of
time and money in connection with its due diligence,
preparation of this Agreement, and the contemplated Closing.
Accordingly, from the Effective Date through the earlier of
the Closing or the termination of this Agreement, neither
Seller nor Parent shall, directly or indirectly, (a) solicit,
initiate, or encourage the submission of any proposal or offer
from any person or entity relating to the acquisition of the
Assets, in whole or in part, nor (b) participate in any
discussions or negotiations regarding, furnishing any
information with respect to, assist or participate in or
facilitate or in any other manner any effort or attempt by any
person or entity to do or seek any of the foregoing.
8.10.1. Nothing contained in this Paragraph 8.10 shall
prevent the Board of Directors of Seller or of Parent
from responding to and considering, negotiating,
discussing, approving and recommending to the
stockholders of Parent a bona fide acquisition
proposal not obtained in violation of this Agreement,
provided such Board of Directors determines in good
faith (based upon the advice of outside counsel) that
they are required, by their duties as fiduciaries
under applicable corporate law, to respond to and
negotiate such acquisition proposal. In the event the
Board of Directors makes such determination, the
Board of Directors may approve and recommend such
acquisition proposal and terminate Seller's
obligations hereunder; provided, however, that Seller
shall (i) promptly disclose to Buyer the identity of
the person making the acquisition proposal, (ii) give
Buyer a reasonable opportunity to match the offer
contemplated by such acquisition proposal before
making any determination to approve and recommend any
such alternative acquisition proposal, (iii) give
Buyer prompt written notice of the determination of
the Board of Directors to approve and recommend such
alternative acquisition proposal, and. (iv) upon
terminating its obligations under this Agreement,
reimburse Buyer for all out-of-pocket expenditures
incurred by Buyer in connection with its due
diligence, preparation of this Agreement and other
related agreements and documents, and the
contemplated Closing. Nothing contained in this
Paragraph 8.10 shall prohibit the Board of Directors
of Parent from complying with Rule 14d-9 and Rule
14e-2 promulgated under the Securities Exchange Act
of 1934 with regard to a tender or exchange offer.
8.10.2. If the Board of Directors of Parent or Seller
receives a request for material nonpublic information
from a person who makes, or indicates that it is
considering making, a bona fide acquisition proposal,
and the Board of Directors determines in good faith
(based upon the advice of outside counsel) that it is
required to cause Seller to make such disclosure in
order to discharge properly the directors' fiduciary
duties, then, provided such person has executed a
confidentiality agreement, Seller may provide such
person with access to the requested information.
Seller shall promptly notify Buyer of any such
request.
9. CONDITIONS TO OBLIGATIONS TO CLOSE
9.1. Each of the obligations of Seller to be performed hereunder
shall be subject to the satisfaction (unless waived by
Seller), at or prior to the Closing, of each of the following
conditions:
15
<PAGE> 18
9.1.1. Representations and Warranties True at Closing Date.
Buyer's representations and warranties contained in
this Agreement shall be true on and as of the Closing
Date with the same force and effect as though made on
and as of such date; Buyer shall have complied with
the covenants and agreements set forth herein to be
performed by it on or before the Closing Date; and
Buyer shall have delivered to Seller a certificate
dated the Closing Date and signed by a duly
authorized officer of Buyer to all such effects.
9.1.2. Performance. Buyer shall have performed and complied
with all agreements, obligations, and conditions
required by this Agreement to be performed or
complied with by it on or prior to the Closing.
9.1.3. Documents Satisfactory in Form and Substance. All
agreements, certificates, and other documents
delivered by Buyer to Seller hereunder shall be in
form and substance satisfactory to Seller, in the
exercise of its reasonable judgment after
consultation with its outside counsel.
9.1.4. Consents. Seller and Buyer shall have procured those
Required Government Consents and Required Contract
Consents specified in Schedules 6.1.3 and 6.1.4 of
the Seller Disclosure Schedule as consents required
to have been obtained prior to Closing, except as
otherwise provided in Paragraph 8.8.
9.1.5. Litigation. No Litigation shall be threatened or
pending against Buyer or Seller before any court or
governmental agency that, in the reasonable opinion
of counsel for Seller, could result in the restraint
or prohibition of the consummation of the
transactions contemplated hereby or cause Seller or
Buyer to incur material damages or losses by virtue
of completing the transactions contemplated hereby.
9.1.6. Premises. Seller and Buyer shall have entered into a
Lease Agreement pursuant to which Buyer leases back
to Seller a certain portion of the Premises. Buyer
shall have entered a lease agreement with the owner
of the Premises for the lease thereof and the
existing lease for the Premises between the owner and
Seller shall be cancelled as of the Closing.
9.1.7. Data Center. Seller and Buyer shall have entered a
Services Agreement pursuant to which Buyer shall
provide Seller with certain services of the Data
Center.
9.1.8. Opinion of the Buyer's Counsel. Buyer shall have
delivered to Seller an opinion of the counsel to the
Buyer, dated as of the Closing Date, in form and
substance satisfactory to Buyer, to the effect that:
9.1.8.1. Good Standing. Buyer is a corporation duly
organized, validly existing, and in good
standing under the laws of its jurisdiction
of incorporation.
9.1.8.2. Corporate Power and Authority. Buyer has the
corporate power and authority to execute and
deliver this Agreement and the other
agreements and instruments to be executed
and delivered by it in connection with the
16
<PAGE> 19
transactions contemplated hereby and
thereby, and to consummate the transactions
contemplated hereby and thereby.
9.1.8.3. Authorization, Execution, Delivery, and
Enforceability. All corporate action by
Buyer required in order to authorize the
transactions contemplated by this Agreement
and the other agreements and instruments to
be executed and delivered by it in
connection with the transactions
contemplated hereby and thereby has been
duly and validly taken; and this Agreement
and such other agreements and instruments
have been duly executed and delivered by
Buyer and constitute the valid and binding
obligations of Buyer enforceable in
accordance with their terms, except as to
(a) such enforcement's being subject to
bankruptcy, insolvency, reorganization,
moratorium, or other laws relating to
creditors' rights, or debtor's moratorium,
and (b) the availability of the remedy of
specific performance and other forms of
equitable relief.
9.2. Each of the obligations of Buyer to be performed hereunder
shall be subject to the satisfaction (unless waived by Buyer),
at or prior to the Closing, of each of the following
conditions:
9.2.1. Representations and Warranties True at Closing Date.
Seller's representations and warranties contained in
this Agreement shall be true on and as of the Closing
Date with the same force and effect as though made on
and as of such date; Seller shall have complied with
the covenants and agreements set forth herein to be
performed by it on or before the Closing Date; and
Seller shall have delivered to Buyer a certificate
dated the Closing Date and signed by a duly
authorized officer of Seller to all such effects.
9.2.2. Performance. Seller shall have performed and complied
with all agreements, obligations, and conditions
required by this Agreement to be performed or
complied with by it on or prior to the Closing.
9.2.3. Documents Satisfactory in Form and Substance. All
agreements, certificates, and other documents
delivered by Seller to Buyer hereunder shall be in
form and substance satisfactory to Buyer, in the
exercise of its reasonable judgment after
consultation with its outside counsel.
9.2.4. Consents. Buyer and Seller shall have procured those
Required Government Consents and Required Contract
Consents specified in Schedules 6.1.4 and 6.1.5 of
the Seller Disclosure Schedule as consents required
to have been obtained prior to Closing, except as
otherwise provided in Paragraph 8.8.
9.2.5. Investigations. Neither any investigation of Seller
by Buyer, nor the Schedules hereto, nor any other
document delivered to Buyer as contemplated by this
Agreement, after the Effective Date, shall have
revealed any facts or circumstances that, in the good
faith judgment of Buyer, would reasonably be expected
to have a Material Adverse Effect.
17
<PAGE> 20
9.2.6. Litigation. No Litigation shall be threatened or
pending against Buyer or Seller before any court or
governmental agency that, in the reasonable opinion
of counsel for Buyer, could result in the restraint
or prohibition of the consummation of the
transactions contemplated hereby or cause Buyer or
Seller to incur material damages or losses by virtue
of completing the transactions contemplated hereby.
9.2.7. Premises. Buyer shall have entered a lease agreement
with the owner of the Premises for the lease thereof
and the existing Lease for the Premises between the
owner and Seller shall be cancelled as of the
Closing.
9.2.8. No Material Adverse Change. From the date of this
Agreement until the Closing Date, Seller shall not
have suffered any material adverse change (whether or
not such change is referred to or described in any
supplement to the Schedules), with respect to the
Data Center, the Assets, or the Assumed Liabilities.
9.2.9. Data Center Personnel. The Data Center Personnel
selected by Buyer for hiring shall, to the extent
feasible, have been hired by Buyer as of the Closing
Date, and, to Seller's and Buyer's best knowledge,
shall have no intention of terminating such
employment. If any one or more of such individuals
have not accepted employment with Buyer, or are
reasonably believed to have no intention to continue
such employment for at least 90 days following the
Closing Date, Seller shall provide replacements for
such individuals for the 90 day period at a cost to
Buyer equal to the compensation listed on Schedule
2.14 of the Seller Disclosure Schedule. Seller and
Buyer shall have entered a Consulting Agreement for
the services of certain of Seller's personnel. Buyer
shall have been free to interview and discuss
employment with the Data Center Personnel as of the
later of the Effective Date or the date that is three
weeks prior to the Closing Date.
9.2.10. Opinion of Seller's Counsel. Seller shall have
delivered to Buyer an opinion of the counsel to
Seller, dated as of the Closing Date, in form and
substance satisfactory to Buyer, to the effect that:
9.2.10.1. Good Standing. Seller is a corporation duly
organized, validly existing, and in good
standing under the laws of its jurisdiction
of incorporation.
9.2.10.2. Corporate Power and Authority. Seller has
the corporate power and authority to
conduct its business as it is now being
conducted and to own the Assets, and Seller
has the full corporate power and authority
to execute and deliver this Agreement and
the other agreements and instruments to be
executed and delivered by it in connection
with the transactions contemplated hereby
and thereby, and to consummate the
transactions contemplated hereby and
thereby.
9.2.10.3. Authorization, Execution, Delivery and
Enforceability. All corporate action by
Seller and Parent required in order to
authorize the transactions contemplated by
this Agreement and the other agreements and
instruments to be executed and delivered by
it in connection with the transactions
18
<PAGE> 21
contemplated hereby and thereby has been
duly and validly taken; this Agreement and
such other agreements and instruments have
been duly executed and delivered by Seller
and constitute the valid and binding
obligations of Seller enforceable in
accordance with their terms, except as to
(a) such enforcement's being subject to
bankruptcy, insolvency, reorganization,
moratorium, or other laws relating to
creditor's rights, or debtor's moratorium
and (b) the availability of the remedy of
specific performance and other forms of
equitable relief.
9.2.10.4. No Litigation. Insofar as is known to such
counsel, Seller is neither engaged in nor
threatened with any Litigation, nor is it
under investigation with respect to alleged
violations of any law or regulation, which,
if adversely determined, might, in such
counsel's opinion, materially adversely
affect or impair the value or condition of
the Assets or the financial condition,
operations, or prospects of the Software
Business.
10. CLOSING
10.1. At Closing, Buyer and Seller shall take the following actions,
in addition to such other actions as may otherwise be required
under this Agreement:
10.1.1. Seller shall deliver to Buyer copies of the Required
Contract Consents and the Required Government
Consents as contemplated by Paragraphs 9.1.4 and
9.2.4.
10.1.2. Seller shall deliver to Buyer such bills of sale,
assignments, and other instruments of conveyance and
transfer as Buyer may reasonably request to effect
the assignment to Buyer of the Assets.
10.1.3. Seller shall give Buyer complete and unrestricted
access to the Premises.
10.1.4. Buyer shall pay the Initial Payment and Buyer's
proportionate share of certain items as described in
Paragraph 5.1 to Seller in full by wire transfer of
immediately available funds to an account designated
by Seller.
10.1.5. Buyer shall deliver to Seller the Note and related
security agreement.
10.1.6. Buyer shall deliver to Seller an assumption agreement
pursuant to which Buyer assumes and agrees to pay and
perform the Assumed Liabilities.
10.1.7. Each party shall deliver the certificates required
under Section Paragraphs 9.1.1 and 9.2.1,
respectively, as to the accuracy of the
representations and warranties contained herein, the
compliance with the covenants and agreements
contained herein, and the satisfaction of the
conditions to Closing contained herein.
10.1.8. Seller shall cause its counsel to deliver to Buyer
the legal opinion required under Paragraph 9.2.10.
19
<PAGE> 22
10.1.9. Buyer shall cause its counsel to deliver to Seller
the Legal Opinion Required under Paragraph 9.1.8.
10.2. At and after the Closing, without further consideration,
Seller shall take all such other action and shall procure or
execute, acknowledge, and deliver all such further
certificates, conveyance instruments, consents, and other
documents as Buyer or its counsel may reasonably request (a)
to vest in Buyer, and perfect and protect Buyer's right,
title, and interest in, and enjoyment of, the Assets, or (b)
to ensure more effectively the compliance of Seller with its
agreements, covenants, warranties, and representatives under
this Agreement.
10.3. All sales, transfer, and similar taxes and related fees
(including all recording fees), if any, incurred in connection
with this Agreement and the transactions contemplated in
Sections 3, 4, and 5 of this Agreement shall be borne equally
by Seller and Buyer. Seller shall file all necessary
documentation with respect to such taxes that are due or
incurred prior to the Closing or as a direct result of the
transactions contemplated by this Agreement. Each of Buyer and
Seller shall otherwise bear their own transaction expenses in
their entirety.
11. INDEMNITY
11.1. Seller shall indemnify, defend, and hold harmless the Buyer
Group, at, and at any time after, the Closing, from and
against any and all Losses asserted against, resulting to,
imposed upon, or incurred by the Buyer Group, directly or
indirectly, by reason of, resulting from, or arising in
connection with any of the following:
11.1.1. Breach of Obligation. Any breach of any
representation, warranty, or agreement of Seller
contained in or made pursuant to this Agreement,
including the agreements and other instruments
contemplated hereby.
11.1.2. Excluded Liabilities. Any liabilities or obligations
of any kind or nature whatsoever, whether accrued,
absolute, contingent, or otherwise, known or unknown,
arising out of or in connection with Seller's conduct
of the Data Center or the ownership or use of the
Assets prior to the Closing, except for the Assumed
Liabilities.
11.2. Buyer shall indemnify, defend, and hold harmless the Seller
Group at, and at any time after, the Closing, from and against
any and all Losses asserted against, resulting to, imposed
upon, or incurred by the Seller Group, to the extent arising
from any of the following:
11.2.1. Breach of Obligation. Any breach of any
representation, warranty, or agreement of Buyer
contained in or made pursuant to this Agreement,
including the agreements and other instruments
contemplated hereby.
11.2.2. Assumed Liabilities. Any of the Assumed Liabilities,
except insofar as such Loss represents an Excluded
Liability.
20
<PAGE> 23
11.2.3. Future Liabilities. Any liabilities or obligations of
any kind or nature whatsoever arising out of or in
connection with Buyer's conduct of the Data Center or
the ownership or use of the Assets after the Closing,
except for the Excluded Liabilities.
11.3. The party entitled to indemnification hereunder (the
"Claimant") shall promptly deliver to the party liable for
such indemnification hereunder (the "Obligor") notice in
writing (the "Required Notice") of any claim for recovery
under Paragraphs 11.1 or 11.2, specifying in reasonable detail
the nature of the Loss, and, if known, the amount, or an
estimate of the amount, of the liability arising therefrom
(the "Claim"). The Claimant shall provide to the Obligor as
promptly as practicable thereafter information and
documentation reasonably requested by the Obligor to support
and verify the claim asserted, provided that, in so doing, it
may restrict or condition any disclosure in the interest of
preserving privileges of importance in any foreseeable
litigation.
11.4. If the facts pertaining to the Loss arise out of the claim of
any third party (other than a member of the Buyer Group or
Seller Group, whichever is entitled to indemnification for
such matter) available by virtue of the circumstances of the
Loss, the Obligor may assume the defense or the prosecution
thereof, including the employment of counsel or accountants,
at its cost and expense. The Claimant shall have the right to
employ counsel separate from counsel employed by the Obligor
in any such action and to participate therein, but the fees
and expenses of such counsel employed by the Claimant shall be
at its expense. The Claimant shall have the right to determine
and adopt (or, in the case of a proposal by Obligor, to
approve) a settlement of such matter in its reasonable
discretion. The Obligor shall not be liable for any settlement
of any such claim effected without its prior written consent,
which shall not be unreasonably withheld. Whether or not the
Obligor chooses to so defend or prosecute such claim, all the
parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information, and
testimony, and attend such conferences, discovery proceedings,
hearings, trials, and appeals, as may be reasonably requested
in connection therewith.
11.5. Notwithstanding anything in this Section 11 to the contrary:
11.5.1. No indemnification or any other claim for damages
under this Agreement or any other instrument or
agreement to be executed and delivered by either
party in connection with the transactions
contemplated hereby shall be payable by Seller to
Buyer until (and then only to the extent that) the
total of all Losses against Seller equals or exceeds
$25,000; provided that such limitation shall not
apply to Losses based on Excluded Liabilities.
11.5.2. No indemnification shall be payable by Seller to
Buyer with respect to matters as to which Seller has
not received notice from Buyer within 12 months after
the Closing Date, except that there shall be no
limitation on the time during which indemnification
may be sought or obtained for Losses based (a) on
Excluded Liabilities, or (b) on any instance of fraud
or any knowing and willful breach by Seller of any
other provision of this Agreement or any other
instrument or
21
<PAGE> 24
agreement to be executed and delivered by either
party in connection with the transactions
contemplated hereby.
11.5.3. Seller's total liability to Buyer for indemnification
pursuant to Paragraph 11.1, exclusive of Losses based
(a) on Excluded Liabilities, or (b) on any instance
of fraud or any knowing and willful breach by Seller
of any other provision of this Agreement or any other
instrument or agreement to be executed and delivered
by either party in connection with the transactions
contemplated hereby, shall not exceed the amount of
$600,000. Seller's liability to Buyer for
indemnification for the matters referenced in clauses
(a) and (b) shall not be limited in amount.
11.5.4. The parties acknowledge and agree that this Section
11 is the exclusive remedy of the parties for damages
for breach or misrepresentation of or under this
Agreement, other than a claim or interpleader based
on Buyer's failure to discharge the Assumed
Liabilities or Seller's failure to discharge the
Excluded Liabilities.
11.6. The amount of any Loss recovered by a Claimant shall be
reduced by the amount, if any, of any insurance recovery or
net tax benefit then or theretofore realized by the Claimant
with respect to such Loss but only to the extent of any amount
actually exceeding the amount necessary to make the Claimant
whole (subject to the limitations contained in Paragraph 11.5)
for the entire Loss (and giving consideration, for such
purpose, to any tax detriment the Claimant may realize from
the insurance, indemnification, or other recoveries the
Claimant may obtain with respect to such Loss). To the extent
such an insurance recovery or net tax benefit is thereafter
realized, the Claimant shall reimburse the Obligor for the
amount of any such insurance recovery or net tax benefit when
and as realized at any time. For purposes of this Section,
"net tax benefit" shall mean the actual tax savings realized
in any period as a result of the Claimant's treatment of a
Loss as an item of deduction or credit for purposes of federal
and/or state income taxes. Net tax benefits shall be
calculated according to the incremental effect on tax
liability that the inclusion of the pertinent deduction or
credit would create in any relevant period, assuming all other
tax deductions to be the same. Unless disputed as having been
prepared in bad faith or without reference to supporting
evidence, a certificate furnished by the tax department or
counsel of the Claimant (or, if such certificate is disputed,
a letter from the regular independent certified public
accounting firm of the Claimant) as to the amount of any such
net tax benefit shall be final and binding for purposes
hereof.
11.7. The Obligor shall be entitled to recover its reasonable
out-of-pocket costs (including court costs and actual attorney
fees) incurred in defending any Claim brought by the Claimant
on frivolous grounds or pursued for the purpose of delay or
harassment. The Claimant shall be entitled to recover its
reasonable out-of-pocket costs (including court costs and
actual attorney fees) incurred in pursuing any Claim defended
by the Obligor on frivolous grounds or opposed for the purpose
of delay or harassment. A frivolous claim shall include any
Claim that is not brought in good faith after consultation
with counsel.
22
<PAGE> 25
12. CONFIDENTIALITY
12.1. Until Closing (and, if this Agreement is terminated for any
reason, forever thereafter), Buyer shall, and shall use its
best efforts to cause its personnel and agents to, hold in
strict confidence, not disclose to any person without the
prior written consent of Seller, and not use in any manner
except in connection with the transactions contemplated
hereby, any Confidential Information obtained from Seller. To
the extent applicable to the Data Center and the Assets, this
obligation shall cease to apply to Buyer upon the occurrence
of Closing. In the event that this Agreement terminates for
any reason prior to Closing, Buyer shall return to Seller or
destroy all materials in its possession containing any such
confidential information, including all copies, extracts,
adaptations, and transcriptions thereof.
12.2. Seller shall, and shall use its best efforts to cause its
personnel and agents to, hold in strict confidence, not
disclose to any person without the prior written consent of
Buyer, and not use in any manner whatsoever, any Confidential
Information obtained from Buyer and, following the signing of
this Agreement and thereafter, unless this Agreement is
terminated prior to Closing, any Confidential Information
remaining in its possession concerning the Data Center or the
Assets. Promptly following Closing, Seller shall surrender to
Buyer or destroy all materials remaining in its possession
containing any such confidential information, including all
copies, extracts, adaptations, and transcriptions thereof.
12.3. Notwithstanding Paragraphs 12.1 and 12.2, either party may
disclose Confidential Information where required by law to any
regulatory authorities or governmental agencies, and the
disclosing party shall take all reasonable steps to limit the
disclosure of the Confidential Information to the maximum
level allowed.
13. TERMINATION PRIOR TO CLOSING
13.1. This Agreement may be terminated at any time prior to the
Closing:
13.1.1. by the mutual consent of Buyer and Seller;
13.1.2. by Buyer or Seller, in writing, without liability, if
the Closing shall not have occurred on or before
February 29, 2000; or
13.1.3. by Buyer or Seller in writing, without liability, if
the other party shall (a) fail to perform in any
material respect its agreements contained herein
required to be performed by in on or prior to the
Closing Date or (b) materially breach any of its
representations, warranties, agreements, or covenants
contained herein, provided that such failure or
breach is not cured within ten business days after
such party has been notified of the other party's
intent to terminate this Agreement pursuant hereto.
13.2. Termination of this Agreement pursuant to this Section 13
shall terminate all obligations of the parties hereunder,
except for the obligations set forth in Sections 12.
23
<PAGE> 26
14. MISCELLANEOUS
14.1. Public Announcements. Seller and Buyer shall consult with each
other before issuing any press releases or otherwise making
any public statements with respect to this Agreement and the
transactions contemplated hereby, provided, however, that
neither Seller nor Buyer shall be required to incorporate any
such comments or advice into its public disclosures. Neither
Seller nor Buyer shall issue any such press release or make
any public statement without the agreement of the other party,
except as such party's counsel advises in good faith may be
required by law, rule, or regulation.
14.2. Nonsolicitation. Other than those certain individuals
specifically identified in Schedule 2.14 of the Seller
Disclosure Schedule that Buyer desires to hire or as may
otherwise be agreed between Seller and Buyer, each party shall
refrain from soliciting for employment or employing, directly
or indirectly, any employee of the other until 12 months have
elapsed following Closing (unless this Agreement is terminated
prior to Closing, then 12 months from termination of this
Agreement), or until 12 months have elapsed following
termination of the employment of the employee, whichever
occurs first.
14.3. Assignment. Neither party may assign or otherwise transfer
this Agreement or any rights or obligations under this
Agreement to any third party without the prior written consent
of the other party. Consent shall not be unreasonably
withheld. Subject to the restriction on transfer set forth in
this Paragraph 14.3, this Agreement shall be binding upon and
shall inure to the benefit of the parties' successors and
assigns.
14.4. Waiver. The failure of either party to act upon any right,
remedy, or breach of this Agreement shall not constitute a
waiver of that or any other right, remedy, or breach. No
waiver shall be effective unless made in writing and signed by
an authorized representative of the waiving party.
14.5. Notices. Unless provided otherwise in this Agreement, any
notice required or permitted under this Agreement shall be
personally delivered, or sent by telefax, courier, express or
overnight delivery service, or by certified mail, postage
prepaid, return receipt requested, to the following address:
If to Seller: LanVision, Inc.
4700 Duke Drive, Suite 170
Mason, Ohio 45040
Attention: J. Brian Patsy
Telefax: (513) 459-8773
If to Buyer: Smart Professional Photocopy Corporation
120 Bluegrass Valley Parkway
Alpharetta, Georgia 30005
Attention: John A. Smart, II
Telefax: (770) 360-1705
or to such other address as shall be advised by any party to
the other in writing. Notices shall be effective as of the
date of receipt.
24
<PAGE> 27
14.6. Governing Law. This Agreement and any claim arising out of
this Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, excluding its
conflict of laws principles.
14.7. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be
settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The
arbitration shall be conducted with three arbitrators, one of
whom shall be selected by Seller, one of whom shall be
selected by Buyer, and one of whom shall be jointly selected
by Seller and Buyer; provided that if Seller and Buyer cannot
agree upon a third arbitrator, such arbitrator shall be chosen
according to the Commercial Arbitration Rules of the American
Arbitration Association. Any provisional remedy that would be
available from a court of law shall be available from the
arbitrators to the parties pending arbitration. The
arbitrators shall decide all discovery issues. Neither party
nor the arbitrators may disclose the existence, content, or
results of any arbitration hereunder without the prior written
consent of both parties. All fees and expenses of the
arbitration shall be borne by the parties equally. However,
each party shall bear the expense of its own counsel, experts,
witnesses, and preparation and presentation of proofs; save
and except that the prevailing party shall be entitled to an
award of reasonable attorneys' fees.
14.8. Provisions Severable. The provisions of this Agreement are
severable. If any provision is held to be invalid,
unenforceable, or void, the remaining provisions shall not as
a result be invalidated.
14.9. Third-Party Beneficiaries. With the exception of (a) the
parties to this Agreement and (b) the Buyer Group and the
Seller Group with respect to the matters inuring to their
benefit under Section 11, there shall exist no right of any
person to claim a beneficial interest in this Agreement or any
rights occurring by virtue of this Agreement.
14.10. Survival of Agreements. All Covenants, agreements,
representations, and warranties made herein shall survive the
execution and delivery of this Agreement and the Closing.
14.11. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties relating to
the object and scope of this Agreement. Any representation,
statement, or warranty not expressly contained in this
Agreement, or in any agreements or other documents
25
<PAGE> 28
executed or otherwise consummated pursuant to this Agreement,
shall not be enforceable by the parties. This Agreement may
not be amended except by a writing that specifically
references this Agreement and is signed by authorized
representatives of the parties.
SMART PROFESSIONAL PHOTOCOPY CORPORATION LANVISION, INC
By: /s/ John A Smart By: /s/ J Brian Patsy
------------------------- ----------------------------
(Signature) (Signature)
John A. Smart, II J. Brian Patsy
------------------------ ----------------------------
(Name Typed or Printed) (Name Typed or Printed)
Chief Executive Officer Chief Executive Officer
------------------------- ----------------------------
(Title) (Title)
1/19/00 1/31/00
------------------------- ----------------------------
(Date) (Date)
26
<PAGE> 1
Exhibit 99
LANVISION SYSTEMS, INC.
News Release of LanVision Systems, Inc. Dated February 15, 2000
News Release
Visit our web site at: www.lanvision.com
COMPANY CONTACTS:
J. Brian Patsy
President and Chief Executive Officer
Or
Thomas E. Perazzo
Chief Financial Officer
(513) 459-5000
MORGEN-WALKE CONTACTS:
Investor Relations: Donna Stein/
Jill Meleski
Morgen-Walke Associates
(212) 850-5600
FOR IMMEDIATE RELEASE
LANVISION SYSTEMS, INC. ANNOUNCES SALE OF MASON, OHIO DATA
CENTER FOR $2.9 MILLION TO SMART PROFESSIONAL PHOTOCOPY
CORPORATION
MASON, Ohio, February 15, 2000 --- LanVision Systems, Inc. (Nasdaq: LANVC) today
announced the sale of its Mason, Ohio data center to Alpharetta, Georgia-based
Smart Professional Photocopy Corporation dba Smart Corporation ("Smart") for
$2.9 million. The sale, which will generate a gain of approximately $1.4
million, will allow LanVision to focus on expanding its web-based Application
Service Provider ("ASP") service offerings provided by its Virtual Healthware
Services ("VHS") division, while continuing to utilize the start-of-the art
e-health service bureau facilities located in Mason, Ohio through a service
provider arrangement with Smart. Under a fee for service arrangement, LanVision
will provide Smart with certain outsourcing services to manage and maintain
portions of the data center, while Smart will provide LanVision continued use of
the e-health data center facilities. Also, LanVision intends to continue to
expand access to its e-health Software Applications through additional data
center service providers.
Brian Patsy, President and Chief Executive Officer, commented, "The
LanVision-Smart agreement is a significant win for both companies. The sale of
the Mason data center to Smart allows LanVision to focus on expanding our
e-health ASP software portfolio provided by our VHS division, while
1
<PAGE> 2
lowering our operating costs by selling the service bureau facilities to Smart.
Smart, in turn, acquires a state-of-the art ASP facility that can be leveraged
for its other e-health strategic initiatives."
Eric Lombardo, Executive Vice President - Sales and Services noted, "We believe
a substantial opportunity exists for healthcare ASP's to fundamentally change
the way healthcare information is processed, stored and shared. Smart has a long
history of success in the healthcare marketplace and we are very pleased to have
established this arrangement with them."
Smart Corporation is the leading outsource provider of Release of Information
services to the healthcare industry. Established in 1976, Smart now provides its
services to over 1,000 hospitals and 4,600 clinics located in 46 states.
LanVision is an e-health Application Service Provider and leading supplier of
Healthcare Information Access Systems specializing in connectivity solutions
that utilize the power of the Internet/Intranet to link hospitals, physicians,
patients and payers to a robust Electronic Medical Record. LanVision's solutions
enable the coordination of both "structured" and "unstructured" patient data
through a single health information repository. The Company's products are
complementary to existing clinical and financial systems, and use document
imaging and workflow tools to ensure end users can electronically access all the
various forms of health information including clinician's handwritten notes, lab
reports, photographs, insurance cards, etc. LanVision's e-health solutions offer
value to all of the constituents in the healthcare delivery process by enabling
them to simultaneously access information from virtually any location, including
the physician's desktop using web browser technology. Web access to the entire
medical record improves physician productivity and reduces administrative costs
such as filing, storage, retrieval and upkeep of medical records and clinical
costs, such as redundant diagnostic testing. LanVision provides its e-health ASP
services to The University Hospital, a member of The Health Alliance of Greater
Cincinnati. In addition, LanVision has installed its ChartVision(R) Healthcare
Information Access System at an impressive list of leading healthcare providers
including: UCSF Stanford Healthcare, the University of Pittsburgh Medical
Center, Albert Einstein and Beth Israel Medical Centers, the Medical College of
Georgia and Medical University of South Carolina, and Memorial Sloan-Kettering
Cancer Center.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995:
Statements made by LanVision that are not historical facts are forward looking
statements that are subject to risks and uncertainties. LanVision's future
financial performance could differ materially from expectations of management
and from results reported now or in the past. Factors that could cause
LanVision's financial performance to so differ include, but are not limited to,
the impact of competitive products and pricing, product development, reliance on
strategic alliances, availability of products procured from third party vendors,
the healthcare regulatory environment, fluctuations in operating results, and
other risks detailed from time to time in LanVision's filings with the U.S.
Securities and Exchange commission.
(C)2000 LanVision Systems, Inc., Mason, OH 45040. All rights reserved.
2
