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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 20, 1999
COMPLETE BUSINESS SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-22141 38-2606945
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
32605 WEST TWELVE MILE ROAD, SUITE 250, FARMINGTON HILLS, MI
48334
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(248) 488-2088
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITIONS AND DISPOSITIONS OF ASSETS
On April 20, 1999, Complete Business Solutions, Inc. (the "Company")
executed a definitive Stock Purchase Agreement with Medaphis
Corporation ("Medaphis"), Impact Innovations Holdings, Inc.
("Holdings") and E-Business Solutions.com, Inc. ("Solutions") for all
of the outstanding capital stock of Solutions owned by Medaphis and
Holdings. The transactions contemplated by the Stock Purchase
Agreement were also consummated on April 20, 1999.
Pursuant to the Stock Purchase Agreement, the Company acquired all of
the issued and outstanding capital stock of Solutions. The purchase
price for the capital stock was approximately $15 million, subject to
adjustment based on the final balance sheet of Solutions. The
purchase price was determined through arm's length negotiations by
the parties and based upon evaluation by the Company of the value of
Solutions and the complementary nature of the business of Solutions
with that of the Company. The Company used working capital to fund
the purchase price. Additional information about this transaction is
contained in the press release included as Exhibit 20 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
It is impracticable for the Company to file the financial statements
as of the date hereof which are required to be filed pursuant to Item
7(a) of Form 8-K. The required financial statements will be filed by
amendment to this Report no later than 60 days following the date on
which this Report on Form 8-K was required to be filed.
(b) Pro Forma Information.
It is impracticable for the Company to file the pro forma financial
information as of the date hereof which is required to be filed
pursuant to Item 7(b) of Form 8-K. The required pro forma financial
information will be filed by amendment to this Report no later than
60 days following the date on which this Report on Form 8-K was
required to be filed.
Exhibit No. Description
----------- -----------
10.1 Stock Purchase Agreement dated as of April 20, 1999
by and among Complete Business Solutions, Inc.,
E-Business Solutions, Inc., Impact Innovations
Holdings, Inc. and Medaphis Corporation.
20 Press Release dated August 20, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Complete Business Solutions, Inc.
Dated: April 28, 1999 By: /s/ Timothy S. Manney
______________________________________
Timothy S. Manney
Executive Vice President of Finance
and Administration
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EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
10.1 Stock Purchase Agreement dated as of April 20, 1999
by and among Complete Business Solutions, Inc.,
E-Business Solutions, Inc., Impact Innovations
Holdings, Inc. and Medaphis Corporation.
20 Press Release dated August 20, 1999
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EXHIBIT 10.1
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into this
20th day of April, 1999, and effective as of the close of business April 15,
1999 by and among COMPLETE BUSINESS SOLUTIONS, INC., a Michigan corporation (the
"Purchaser"), E-BUSINESS SOLUTIONS.COM, INC., a Delaware corporation (the
"Company"), IMPACT INNOVATIONS HOLDINGS, INC., a Delaware corporation
("Holdings"), and MEDAPHIS CORPORATION, a Delaware corporation ("Medaphis")
(Holdings and Medaphis are sometimes referred to herein individually as a
"Shareholder" and collectively as the "Shareholders"). Certain terms used in
this Agreement are defined in Section 8.1 hereof.
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the issued and outstanding shares
of common stock, $.001 par value, of the Company, and all of the issued and
outstanding shares of non-voting common stock, $.001 par value, of the Company
(collectively, the "Shares"); and
WHEREAS, the parties desire to enter into this Agreement pursuant to
which Purchaser will purchase from the Shareholders, and the Shareholders will
sell to the Purchaser, all of the Shares upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF STOCK; RELATED MATTERS tc "ARTICLE I SALE AND PURCHASE OF
STOCK" \l 1
1.1 Agreement to Sell and Purchase Stock tc "1.1 Agreement to Sell and Purchase
Stock" \l 2. For the consideration hereinafter provided, the Shareholders hereby
sell, assign, transfer, convey and deliver to the Purchaser, free and clear of
all Liens, and the Purchaser hereby purchases and acquires from the
Shareholders, the Shares.
1.2 Purchase Price. tc "1.2 Purchase Price" \l 2 Upon execution of this
Agreement, the Purchaser has transferred Fifteen Million U.S. Dollars (U.S.
$15,000,000) (the "Purchase Price") to the Shareholders by wire transfer of
immediately available funds to an account designated by Medaphis.
1.3 Closing Date Balance Sheet tc "1.3 Closing Date Balance Sheet" \l 2
(a) The Company will prepare, consistent with the practices and
procedures (except for April 15, 1999 Liabilities that may be quantified using
cut off processes or other techniques) used to create the March 31, 1999 balance
sheet included in the Financial Statements attached as Schedule 2.6 hereof, a
balance sheet of the Company as of April 15, 1999 ("Closing Date Balance
Sheet"), and an estimated "Adjustment Amount" (as defined below) that also
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identifies which party is to pay such Adjustment Amount. The Company will
deliver the Closing Date Balance Sheet and estimated Adjustment Amount to the
Shareholders within thirty (30) days after the date hereof. If within thirty
(30) days following delivery of the Closing Date Balance Sheet and estimated
Adjustment Amount to the Shareholders, the Shareholders have not given Purchaser
written notice of their objection to the Closing Date Balance Sheet and the
estimated Adjustment Amount (which notice must contain a statement of the basis
of the Shareholders' objection), then the estimated Adjustment Amount submitted
by the Company shall be deemed to be the final calculation of the Adjustment
Amount, not subject to appeal or any proceeding of any type brought by any
party. If the Shareholders give such notice of objection, and the parties are
unable to resolve any such dispute within 15 days of the Shareholders' notice of
objection, then the issues in dispute will be submitted to the Atlanta, Georgia
office of Ernst & Young LLP, certified public accountants (the "Accountants"),
for resolution. If the issues in dispute are submitted to the Accountants for
resolution, (i) each party will furnish to the Accountants such workpapers and
other documents and information relating to the disputed issues as the
Accountants may request which are available to that party or its Affiliates (or
its independent public accountants), and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties, not subject to
appeal or any proceeding of any type brought by any party; and (iii) Purchaser
will bear 50% of the fees of the Accountants for such determination, and
Medaphis will bear the remaining 50% of the fees of the Accountants for such
determination.
(b) As used herein, "Adjustment Amount" shall mean the difference
between the "Adjusted Net Working Capital" (as defined below) of the Company at
March 31, 1999 (as calculated by using the March 31, 1999 balance sheet included
as part of the Financial Statements attached as Schedule 2.6 hereof), and the
Adjusted Net Working Capital of the Company as of April 15, 1999 (as calculated
by using the Closing Date Balance Sheet). If the March 31, 1999 Adjusted Net
Working Capital of the Company exceeds its Adjusted Net Working Capital as of
April 15, 1999, Medaphis shall be obligated to pay the Adjustment Amount to the
Purchaser. Conversely, if the Adjusted Net Working Capital of the Company as of
April 15, 1999 exceeds its Adjusted Net Working Capital as of March 31, 1999,
the Purchaser shall be obligated to pay the Adjustment Amount to Medaphis.
(c) As used herein, "Adjusted Net Working Capital" shall mean (as
calculated by reference to the relevant balance sheet of the Company) (x) all of
the current assets of the Company, minus (y) all of the current liabilities of
the Company excluding (i) the current portion of any long term debt, and (ii)
any portion of any Liability owed to the Shareholders; provided that, solely
with respect to the calculation of Adjusted Net Working Capital of the Company
as of April 15, 1999, (A) to the extent that any of the cash or checks received
by the Company after April 15, 1999 in payment of its accounts receivable were
transferred to a Medaphis account, and such funds are retained by Medaphis and
it Affiliates and not returned to the Company, then the Adjusted Net Working
Capital shall be reduced by such amounts or, if not so reduced, such amounts
shall be returned to the Company, and (B) to the extent that (directly or
indirectly) Medaphis and its Affiliates (other than the Company) paid any
Liabilities of the Company after April 15, 1999 (excluding for this purpose any
payments on
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checks of the Company dated on or prior to April 15, 1999), then the Adjusted
Net Working Capital shall be increased by such payments.
(d) On or before the tenth business day following the final
determination of the Adjustment Amount, the party required to pay the Adjustment
Amount as set forth in subsection (b) above will pay such amount to the party
specified above. Payments must be made in immediately available funds by wire
transfer to such bank account as the recipient will specify.
(e) To the extent not inconsistent with any other provision of this
Agreement, all of the parties hereto agree that for tax, accounting and all
other purposes the transactions described herein shall be deemed to have
occurred as of April 15, 1999, 11:59 p.m. E.D.T.
1.4. Use of Name and Logo. tc "1.4 Use of Name and Logo" \l 2
(a) It is expressly agreed that Purchaser is not (directly or
indirectly through the Company or otherwise) purchasing, acquiring or otherwise
obtaining any right, title or interest in the names "Impact," "Impact
Innovations," "Impact Innovations Group, Inc." or any trade names, trademarks,
identifying logos or service marks related thereto or employing the words
"Impact" or "Impact Innovations" or any part or variation of any of the
foregoing or any confusingly similar trade name, trademark or logo (collectively
the "Impact Trademarks and Logos"). Purchaser acknowledges and agrees that prior
to the execution of this Agreement, the Company filed an amendment to its
Certificate of Incorporation amending the Company's name so as to remove the
names "Impact" and "Impact Innovations" therefrom, and the Company assigned all
of its right, title and interest in the Impact Trademarks and Logos to one of
the Shareholders and/or its Affiliates. The Purchaser and the Company further
acknowledge and agree that after the date hereof, neither the Purchaser, the
Company nor any of their Affiliates shall make any use of the Impact Trademarks
and Logos; provided that the Company shall have the right to use the Impact
Trademarks and Logos consistent with its past practices for a period commencing
as of the date hereof and ending 45 days after the date hereof (the "Interim
Period") and provided further that the Company shall have the right to continue
to utilize bank deposits in the name of "Impact Innovations Group" to receive
and negotiate (but not issue) checks for a period of six months, in each case so
long as the Company uses (and the Purchaser causes the Company to use) its
commercially reasonable efforts to cease using the Impact Trademarks and Logos
prior to the end of the Interim Period. Upon the expiration of the Interim
Period (or such earlier date that the Company ceases using the Impact Trademarks
and Logos), the Purchaser and the Company will remove and destroy as quickly as
practicable all items, including without limitation, all signage, stationary,
invoices or other letterhead, bearing Impact Trademarks and Logos.
(b) It is expressly agreed that Purchaser is not (directly or
indirectly through the Company or otherwise) purchasing, acquiring or otherwise
obtaining any right, title or interest in any claims, counterclaims or other
rights associated with any of the Litigation listed on Schedule 2.8 hereof, and
that prior to the execution of this Agreement the Shareholders have caused the
Company to assign all such claims, counterclaims and other rights to a
Shareholder or an Affiliate of a Shareholder. It is also agreed that Medaphis
shall be solely responsible for all cost and expense associated with such
Litigation listed on Schedule 2.8 hereto.
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1.5. Transition Issues.tc "1.5 Transition Issues" \l 2
(a) Except as otherwise set forth in this Section 1.5, as of the date
hereof, all data processing, accounting, insurance, banking, personnel, legal,
communications and other products or services provided to the Company by
Shareholders or any Affiliate of the Shareholders, including any agreements or
understandings (written or oral) with respect thereto, are hereby terminated;
provided that all of the parties agree that the Company shall continue until
January 31, 2000 to obtain its long distance service under the terms of that
certain agreement between MCI/Worldcom and Medaphis dated February 2, 1998 (the
"MCI Agreement"); provided, however, that Medaphis shall reimburse the Company
for an amount equal to the excess (if any) of the cost per minute under the MCI
Agreement over the cost per minute for comparable telephone service under
Purchaser's long distance telephone service provider agreement as in effect from
time to time. In the event that the Company closes or opens any locations prior
to January 31, 2000, it shall use its commercially reasonable efforts to
continue (at relocated or new locations) to obtain its long distance service
under the MCI Agreement (whether by maintenance of then existing phone numbers,
adding lines and numbers at new locations to the MCI Agreement or otherwise).
(b) From and after the date hereof through the payroll payments made
on May 31, 1999, the Shareholders agree to continue to provide payroll services
to the Company, provided that the parties agree and acknowledge that:
(i) Purchaser and the Company shall reimburse the Shareholders
for the costs and expenses of the Shareholders in connection with the provision
of such services within five days of the Shareholders providing an invoice for
such services;
(ii) Purchaser and the Company shall provide to Medaphis all
funds to be paid to employees of the Company or withheld (for tax or other
purposes) in respect of such amounts for a payroll period prior to the
Shareholders paying the Company's employees for such payroll period; and
(iii) All of the parties agree that for the payroll period
ended April 30, 1999 the Shareholders shall withhold for their own account
amounts under the Medical, Prescription Drug, Dental and Vision Benefits
provided through Great-Western Life & Annuity Insurance Company but that for all
payroll periods ending after April 30, 1999 the Shareholders shall not be
required to withhold any amounts for health benefits of employees of the Company
since the health benefits provided by Purchaser do not require any employee
contributions.
(c) The Shareholders represent and warrant to Purchaser that prior to
the execution of this Agreement the sponsorship of the BSG Alliance/IT, Inc.
Retirement Savings Plan, as amended (the "Company 401(k) Plan"), and all
accounts related thereto, were assigned to and assumed by Holdings. In addition,
the Shareholders agree that they shall take all commercially reasonable steps to
cure any operational defects in the Company 401(k) Plan in existence as of the
date hereof as soon as reasonably practicable (if possible) and shall indemnify,
defend and hold harmless the Company and Purchaser from and against any Losses
(as defined in Article VII hereof) incurred by such parties as a result of such
defects. Purchaser and the Company agree to cooperate with
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the Shareholders to correct such defects (at the expense of the Shareholders),
including without limitation providing access to, and copies of, records
reasonably necessary for such corrections. Employees participating in the
Company 401(k) Plan will be deemed terminated and shall be provided with such
options as are required by applicable Law, including, but not limited to, cash
distributions, roll over to an individual retirement account or another employer
sponsored plan, or letting the account remain with the Company 401(k) Plan.
(d) The parties agree that as part of the transactions contemplated
by this Agreement, all of the Assets and Liabilities associated with the BSG
Alliance/IT, Inc. Flexible Employee Benefit Plan, Health Care Reimbursement Plan
and Dependent Care Assistance Plan shall be held by the Company, and that the
parties shall execute such additional agreements of assignment and assumption to
effect such intent as may be reasonably requested by any party hereto.
(e) Purchaser and the Company acknowledge and agree that each of the
insurance policies listed on Schedule 2.20 are umbrella policies of Medaphis and
that the Company shall not be insured under, or be entitled to receive any
payments or any other benefits under, such policies after the date hereof.
(f) Purchaser and the Company hereby acknowledge and agree that the
Shareholders shall be entitled to occupy without paying any rent expenses
associated with the space in the Company's current Houston, Texas location to
operate their travel services to the extent currently occupied by the
Shareholders (the "Transition Space") for a period of up to 45 days after the
date hereof, provided that the Shareholders agree (i) to pay any direct expenses
related to occupancy of such space, and (ii) to cause their employees located in
the Transition Space to comply with the non-payment terms of the lease agreement
of the Company for such location. In addition, the Shareholders hereby agree to
indemnify, defend and hold harmless Purchaser and the Company from and against
any claims whatsoever asserted by the Shareholders' employees while such
employees occupy the Transition Space, except to the extent such claims relate
to the negligence or intentional misconduct of Purchaser or the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS tc "ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS" \l 1
As an inducement to Purchaser to enter into this Agreement and to
purchase the Shares, the Shareholders, jointly and severally, represent and
warrant to Purchaser as set forth below:
2.1 Ownership of Shares tc "2.1 Ownership of Shares" \l 2. Each
Shareholder is the owner of all right, title and interest (legal, record and
beneficial) in and to the number of Shares set forth as owned by such
Shareholder in Section 2.4 hereof, free and clear of any and all Liens, and the
Shares constitute all of the issued and outstanding capital stock of the
Company. The delivery to the Purchaser of the Shares pursuant to the provisions
of this Agreement will transfer to the Purchaser good and marketable title to
all of the Shares, free and clear of all Liens. Except as specifically
contemplated by this Agreement, no Person has any Contract, right or privilege
(whether pre-emptive or contractual) capable of becoming a Contract or option
for the purchase of any
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of the Shares from the Shareholder.
2.2 Capacity and Validity. tc "2.2 Capacity and Validity" \l 2 Each
Shareholder is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Each Shareholder has the
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and all other documents contemplated hereby according to
their respective terms, and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each Shareholder, and
constitutes the legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms.
2.3 Organization and Standing of the Company; Capacity and Validity tc
"2.3 Organization and Standing of the Company; Capacity and Validity" \l 2. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and has the corporate power and
authority to carry on its business as it has been and is now being conducted and
to own and lease the Assets which it now owns or leases. The Company is duly
qualified and/or licensed to transact business in the jurisdictions listed on
Schedule 2.3, and the character of the Assets owned or leased by the Company and
the nature of the business conducted by it do not require such qualification
and/or licensing in any other jurisdiction except as otherwise noted on Schedule
2.3. The Company has the requisite power and authority to execute, deliver and
perform its obligations under this Agreement and all other documents
contemplated hereby according to their respective terms, and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company, and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Copies of the articles of incorporation and all amendments thereto of
the Company and the bylaws of the Company, which are contained in the corporate
minute book, and copies of the corporate minutes of the Company, which have been
made available to Purchaser for review, are, to the Shareholders' knowledge, (i)
true and complete on the date of this Agreement and (ii) accurately reflect in
all material respects all proceedings of the shareholders and directors of the
Company (and all committees thereof). The stock record book of the Company,
which has been made available to Purchaser for review, contains true, complete
and accurate records of the stock ownership of the Company and the transfer of
the shares of its capital stock.
2.4 Capital Stock tc "2.4 Capital Stock" \l 2. The authorized capital
stock of the Company consists of (i) 3,000 shares of common stock, $.001 par
value per share, all of which are issued and outstanding as of the date hereof,
and held of record by Holdings, and (ii) 500 shares of non-voting common stock,
$.001 par value per share, 459 of which are issued and outstanding as of the
date hereof, and held of record by Medaphis. No shares are held in the treasury
of the Company. All of the Shares have been duly and validly issued, and are
fully paid and nonassessable. There are no outstanding Equity Rights in the
Company, no outstanding rights to demand registration, or to sell in connection
with a registration, by the Company under the Securities Act of 1933, as
amended, and no other Contracts of the Company of any nature relating to the
Shares or any other Equity Rights in the Company. The Company is not obligated
to issue any Equity Rights in the Company for any purpose.
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2.5 Absence of Conflicting Agreements or Required Consents Relating to
Obligations tc "2.5 Absence of Conflicting Agreements or Required Consents
Relating to Obligations" \l 2. Except as set forth on Schedule 2.5, the
execution, delivery and performance by the Shareholders and/or the Company of
this Agreement and any other documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both) (i) other than filing under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("H-S-R Act"),
does not require the consent or approval of, prior filing with or notice to, or
other action by, any Regulatory Authority or any other third party; (ii) will
not conflict with any provision of the Company's certificate of incorporation or
bylaws; (iii) will not constitute a Default under any material Law or Order to
which the Shareholders or the Company is a party or by which the Shareholders,
the Company or the Company's Assets are bound; (iv) will not constitute a
Default under any material Contract or Permit to which the Shareholder or the
Company is a party or by which the Shareholder, the Company or the Company's
Assets are bound; and (v) will not create any Lien upon the Shares or any of the
Assets of the Company.
2.6 Financial Statements tc "2.6 Financial Statements" \l 2. Attached
hereto as Schedule 2.6 are the Company's unaudited balance sheet as of, and
statement of operations for the twelve months ended, December 31, 1998, and
balance sheet as of, and statement of operations for the three months ended,
March 31, 1999 (collectively, the "Financial Statements"). The Financial
Statements present fairly in all material respects the financial condition,
Assets and Liabilities of the Company as of December 31, 1998 and March 31, 1999
and present fairly in all material respects the results of the Company's
operations for the twelve months ended December 31, 1998 and the three months
ended March 31, 1999, and were prepared in accordance with GAAP, subject to the
absence of notes and income Taxes and, with respect to the Financial Statements
dated as of and for the three month period ended March 31, 1999, to normal
recurring year-end adjustments which are not material.
2.7 Absence of Changes tc "2.7 Absence of Changes" \l 2. Except as set
forth on Schedule 2.7 and except as permitted or contemplated by this Agreement,
since March 31, 1999, the Company has conducted its business only in the
ordinary course and has not:
(a) suffered any material adverse change in its financial
condition, Assets or business;
(b) paid, discharged or satisfied any material Liability
other than the payments, discharge or satisfaction of Liabilities in the
ordinary course of business;
(c) canceled or compromised any debts in excess of $25,000 or
sold, transferred or otherwise disposed of any of its material Assets with a
fair market value in excess of $25,000;
(d) entered into any commitment or transaction (including any
lease commitment), or made any capital expenditure or commitment, in excess of
U.S.$25,000;
(e) made any material change in any method of accounting or
accounting practice;
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(f) incurred any Liabilities in excess of U.S.$25,000;
(g) subjected any of its Assets to any Lien except for Liens
for current personal property Taxes not yet due and payable;
(h) changed or otherwise reclassified (whether by
recapitalization, forward or reverse stock split or otherwise) any of its
capital stock or other Equity Rights, issued any capital stock or other Equity
Rights, granted any registration rights in connection with any capital stock or
other Equity Rights, redeemed or otherwise purchased or acquired any of its
capital stock or other Equity Rights or declared or paid any dividend or other
distribution in respect of any of its capital stock or other Equity Rights;
(i) increased any salaries, wages or any employee benefit
(whether bonuses or otherwise) for any employee;
(j) hired, committed to hire or terminated any employee
except in the ordinary course of business;
(k) terminated or amended any material Contract to which it
is a party;
(l) directly or indirectly paid or entered into a Contract to
pay any severance or termination pay to any officer, director, employee or
agent;
(m) made any change to its Certificate of Incorporation or
bylaws except as contemplated by Section 1.4;
(n) agreed, whether in writing, orally or otherwise, to take
any action described above in this Section 2.7.
2.8 Litigation and Claims tc "2.8 Litigation and Claims" \l 2. Except
as listed and described on Schedule 2.8, there is no Litigation pending, or (to
each Shareholder's knowledge) threatened against or affecting the Company or its
Assets or business in any court or before any arbitrator or Regulatory
Authority, and there is no event that has occurred or circumstances that exist
that serve(s) as a reasonable basis for the commencement of any Litigation that
would have a material adverse effect on the financial condition, Assets or
business of the Company. There are no unsatisfied Orders against the Company or
any Orders to which the Company is subject.
2.9 No Undisclosed Liabilities tc "2.9 No Undisclosed Liabilities"
\l 2. Except as and to the extent reflected in the Financial Statements or
disclosed on Schedule 2.7 or Schedule 2.9 hereto, the Company has no
Liabilities, except for Liabilities incurred in the ordinary course of its
business since March 31, 1999, and which do not have a material adverse effect
on the business, Assets or financial condition of the Company.
2.10 Real Property tc "2.10 Real Property" \l 2.
(a) The Company does not own any real property. Schedule 2.10.
contains a true and correct list of all real property leased to the Company and
the lease agreements in connection therewith. The continuation, validity
<PAGE> 9
and effectiveness of the leases set forth in Schedule 2.10 will not be affected
in any material way by the transactions contemplated by this Agreement. The
Company does not lease any real property as lessor except for any subleases
noted on Schedule 2.10.
(b) No Litigation for the taking of any of the real property
leased to or used by the Company by eminent domain by any Regulatory Authority
is pending or, to each Shareholder's knowledge, threatened.
2.11 Personal Property tc "2.11 Personal Property" \l 2.
Schedule 2.11 contains a list of all leases for machinery,
vehicles, equipment and other tangible personal property used or employed by the
Company, except those that are terminable by the Company without penalty on 60
or fewer days notice or that provide for annual rental payments of less than
$10,000. The continuation, validity and effectiveness of the leases set forth in
Schedule 2.11 will not be materially adversely affected in any way by the
transactions contemplated by this Agreement except as otherwise noted on
Schedule 2.11. The Company does not lease any personal property as lessor.
2.12 Intellectual Property tc "2.12 Intellectual Property" \l 2.
Schedule 2.12 contains a true and complete list of all material Intellectual
Property owned by, registered in the name of, or used by the Company and all
license agreements or other Contracts in connection therewith (other than any
"shrink wrap" or similar licenses to software acquired by the Company "off the
shelf" or in non-negotiated transactions). The Company owns or uses all of such
Intellectual Property free of any Liens or infringement of the rights of others,
except as set forth on Schedule 2.12. The Company is not obligated to make any
payments to any Person with respect to any such Intellectual Property, except as
set forth on Schedule 2.12.
2.13 Intangible Property; Subsidiaries tc "2.13 Intangible Property;
Subsidiaries" \l 2. The Company does not own any intangible property, except as
otherwise reflected in the Financial Statements, or set forth in Schedule 2.12
or in Schedule 2.13. Except as set forth on Schedule 2.13, the Company does not
own, directly or indirectly, any capital stock or other Equity Rights or other
ownership or investment interest in any other Person.
2.14 Compliance with Laws tc "2.14 Compliance with Laws" \l 2. The
Company has complied in all material respects, and is in material compliance
with, all Laws applicable to it, its business and the ownership and present uses
of its Assets. The Company has obtained all material Permits that are required
for the ownership, maintenance and operation of the Company's Assets and
business. The Company is not presently in Default under any such material
Permit. Except as listed on Schedule 2.14, none of the material Permits held by
the Company will be materially adversely affected in any way by reason of this
Agreement or the consummation of the transactions contemplated herein. No notice
or warning from any Regulatory Authority with respect to any failure or alleged
failure of the Company to comply with any Law has been received by the Company
or either Shareholder.
2.15 Environmental Matters tc "2.15 Environmental Matters" \l 2. The
Company is in material compliance with all federal, state and municipal
environmental Laws and has not spilled, discharged or released any hazardous
<PAGE> 10
material at or from any of the Company's premises. The Company has no material
Liabilities relating to or arising from environmental matters. The Company has
not received any written communication from any Regulatory Authority in respect
of any environmental issues.
2.16 Benefit Plans tc "2.16 Benefit Plans" \l 2.
(a) Schedule 2.16.1 lists (i) every pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, (ii) any medical, vision,
dental or other health plan, any life insurance plan, and (iii) any other
employee benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA,
adopted, maintained by, sponsored in whole or in part by, or contributed to by
the Company or an Affiliate of the Company at any time during the six years
prior to the date hereof for the benefit of the Company's employees, retirees,
directors, independent contractors, or other beneficiaries or their dependents
or spouses and under which such employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are or were eligible
to participate (collectively, the "Benefit Plans"). Any Benefit Plan that is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, or an "employee welfare benefit plan" as that term is defined in Section
3(1) of ERISA, is referred to herein as an "ERISA Plan." Except as noted in
Schedule 2.16(a), no Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(b) True, correct and complete copies of the following have
been made available to the Purchaser by the Shareholders: all written Benefit
Plans and all trust agreements or other funding arrangements, including
insurance contracts, all amendments thereto and, where applicable, with respect
to any such plans or plan amendments, all determination letters or advisory
opinions issued by the IRS, the United States Department of Labor or Pension
Benefit Guaranty Corporation, annual reports or returns, audited or unaudited
financial statements, actuarial valuations, and summary annual reports for the
most recent three plan years, the most recent summary plan descriptions and any
material modifications thereto.
(c) Except as otherwise disclosed to Purchaser by a
Shareholder in writing, all ERISA Plans and the related trusts that are intended
to be qualified under Code Section 401(a) comply in all material respects with,
and have been administered in material compliance with, the provisions of ERISA
(including all reporting and disclosure requirements under ERISA Titles I and
IV), all provisions of the Code relating to qualification and tax exemption
under Code Section 401(a) and 501(a) or otherwise applicable to secure intended
tax consequences, and all other applicable Laws. Each ERISA Plan that is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA that is
intended to be qualified under Code Section 401(a) has received a favorable
determination letter as to its qualified status under the Code. Neither the
Company nor, to the Company's or either Shareholder's knowledge, any
administrator or fiduciary of any such ERISA Plan (or agent of any of the
foregoing) has engaged in any transaction or acted or failed to act in any
manner which could subject the Company to any material liability for a breach of
any
<PAGE> 11
fiduciary duty under ERISA. Each participant in the Company 401(k) Plan shall
vest in all of the amounts in his or her account under such plan as a result of
the transactions contemplated hereby.
(d) Neither the Company nor either Shareholder, nor to the
Company's or either Shareholder's knowledge, any "party in interest" (as defined
in Section 3(14) of ERISA) or "disqualified person" (as defined in Section
4975(e)(2) of the Code) of any Benefit Plan has engaged in any "prohibited
transaction" (within the meaning of Section 4975(c) of the Code or Section 406
of ERISA). Except as described on Schedule 2.16(d), there has been no (i)
"reportable event" (as defined in Section 4043 of ERISA), or event described in
Section 4062(e) or Section 4063(a) of ERISA, or (ii) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which the Company or any Person considered under common control with the
Company (within the meaning of Code Section 414(b), (c), (m) or (o)) maintains
or contributes to or has maintained or contributed to or was required to
maintain or contribute to for the benefit of employees of the Company.
(e) The consummation of the transactions contemplated by this
Agreement will not entitle any current or former employee of the Company or any
of its predecessors to severance pay, unemployment compensation or any similar
payment, and will not accelerate the time of payment or vesting, or increase the
amount, of any compensation due to any such employee or former employee, except
as reflected in the balance sheet as of March 31, 1999 contained in the
Financial Statements or as shown on Schedule 2.16(e).
(f) No ERISA Plan subject to the minimum funding standards of
Code Section 412 has an "accumulated funding deficiency" as defined in Code
Section 412 and Section 302 of ERISA, whether or not waived. The Company has
made all required contributions under each Benefit Plan for all periods through
and including the most recent fiscal year of each such Benefit Plan, except to
the extent accruals therefor have been provided for in the Financial Statements.
2.17 Union and Employment Agreements; Employee Litigation tc "2.17
Union and Employment Agreements; Employee Litigation" \l 2. The Company is not a
party to any union agreement, nor does the Company have any Contract that is not
terminable by it at will with any of its officers, directors, employees,
consultants, agents, or any other person performing services for the Company,
relating to their employment by or performance of services for the Company or
their compensation therefor. No union attempts to organize the employees of the
Company have been made, nor are any such attempts now (to either Shareholder's
knowledge) threatened. Except as otherwise set forth on Schedule 2.8, there is
no Litigation by an employee of the Company pending, or (to each Shareholder's
knowledge) threatened, against the Company.
2.18 Officers and Directors tc "2.18 Officers, Directors" \l 2.
Schedule 2.18 lists the names of all directors and officers of the Company.
2.19 Contracts and Commitments tc "2.19 Contracts and Commitments"
\l 2.
(a) Except as set forth in Schedule 2.19(a), no Contract of
the Company requires payments by the Company after the date of this Agreement,
<PAGE> 12
in the aggregate, in excess of U.S.$50,000.
(b) There are no Contracts between the Company and any
Affiliate of the Company.
(c) The Company is not subject to any Contract containing
covenants limiting the freedom of the Company to compete in any line of business
in any geographic area or requiring the Company to share any income, revenue or
profits.
(d) The Company is not a party to or subject to any Contract
for the management of the Company and it is not obligated to become a party to
any such management agreement.
(e) Except as set forth in Schedule 2.19(e), the Company is
not a party to any contract which the Company is incapable of complete
performance in accordance with its terms within thirty-six months after the date
on which it was entered into or undertaken.
(f) Except as set forth in Schedule 2.19(f), the Company is
not a party to any fixed price contract for services.
(g) Except as set forth in Schedule 2.19(g), the Company is
not a party to or subject to any Contract involving any business other than the
provision of information technology professional services.
(h) Except as set forth in Schedule 2.19(h), the Company is
not a party to or subject to any Contract that involves or is reasonably likely
to involve the supply of services by the Company the aggregate sales value of
which will represent in excess of five percent (5%) of the gross revenues of the
Company for the twelve months ended December 31, 1998 as set forth in the
Financial Statements.
(i) The Company is not a party to or subject to any Contract
for hedging, futures, options or other derivative contracts.
(j) Except as set forth in Schedule 2.19(j), the Company is
not a party to or subject to any Contract for the sale of shares or Assets of
the Company (other than third party application software) which contains
warranties or indemnities.
(k) The Company is not in material Default under any Contract
of the Company except for the failure to obtain any of the consents listed on
Schedule 2.5.
2.20 Insurance Policies tc "2.20 Insurance Policies" \l 2. Schedule
2.20 sets forth a complete list and description of all insurance policies in
force naming the Company as an insured or beneficiary or as a loss payee or for
which the Company has paid or is obligated to pay all or part of the premiums
including, without limitation, all liability, fire, health and life insurance
policies. The Company has not received notice of any pending or threatened
termination or premium increase (retroactive or otherwise) with respect thereto,
and the Company is in material compliance with all conditions contained in said
policies listed in Schedule 2.20. Except as set forth on Schedule 2.20, there
are no
<PAGE> 13
pending claims against such insurance by the Company as to which insurers are
defending under reservation of rights or have denied liability.
2.21 Accounts Receivable.tc "2.21 Accounts Receivable" \l 2 The amount
of all accounts receivable appearing in the Financial Statements or arising
since March 31, 1999, represent amounts due for services provided net of any
reserve established therefor in such Financial Statements or on the books and
records of the Company. Each account receivable of the Company as of the date
hereof has arisen only from bona fide engagements in the ordinary course of the
business, and has not been previously written off as a bad debt. Except as set
forth on Schedule 2.21, the Company has not received any written notice from any
customer asserting any right of setoff against, or any claim with respect to,
any of the current accounts receivable of the Company.
2.22 Accounts Payable tc "2.22 Accounts Payable" \l 2. Attached hereto
as Schedule 2.22 is a true, complete and accurate list of the accounts payable
individually in excess of $2,500 of the Company as of March 31, 1999, setting
forth the payee and the amount of indebtedness and except as noted on Schedule
2.22 there has been no material increase in the aggregate amount due under
accounts payable of the Company since March 31, 1999, except in the ordinary
course of business.
2.23 Taxes tc "2.23 Taxes" \l 2.
(a) Except as set forth in Schedule 2.23, for taxable periods
where the statute of limitations is open (i) the Company has filed all Tax
Returns that it was required to file, and (ii) any affiliated group including
the Company filing a consolidated federal income Tax Return has filed all
federal income Tax Returns that such group was required to file, and the Company
and such group, respectively, have paid all Taxes due thereon (or have
established adequate reserves therefor as reflected on the Financial
Statements). All information provided in such Tax Returns is true, correct and
complete in all material respects as to the Company. The Company is in
compliance in all material respects with and retains in its records all material
information and documents to comply with applicable Tax or information reporting
and any Tax withholding requirements under federal, state and local Tax Laws.
(b) Schedule 2.23 lists all Tax Returns filed with respect to
the Company for any period where the statute of limitations is open for which
there is any written claim or assessment pending, or where to the knowledge of
the Shareholders such a claim or assessment is threatened, or where an audit or
investigation with respect to any liability of the Company is currently pending.
The Shareholders have delivered or made available to Purchaser correct and
complete copies of all Tax Returns of the Company and all examination reports
and statements of deficiencies assessed against or agreed to by the Company
since December 31, 1995 through December 31, 1997.
(c) Except as set forth in Schedule 2.23, the Company has not
waived (or has had waived on its behalf) any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency for which it could be held liable.
(d) Except as set forth in Schedule 2.23, the Company is not a
party to any Tax allocation or sharing agreement.
<PAGE> 14
(e) Except as set forth in Schedule 2.23, the Company has not
been a member of an affiliated group filing a consolidated federal income Tax
Return other than a group the common parent of which is Medaphis.
(f) The Company has not filed or had filed on its behalf a
consent to the application of Section 341(f) of the Code.
(g) The Company will not be required, as a result of a change in
method of accounting for any taxable period ending on or prior to the date of
this Agreement, to include any adjustment under Section 481(c) of the Code in
taxable income for any period ending subsequent to the date of this Agreement.
(h) The Company is not a party to any agreement, contract,
arrangement, or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
(i) The Company does not have and has not had a branch in any
foreign country.
(j) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owning to any
employee, creditor, independent contractor or other third party.
(k) The Company has disclosed on its federal income Tax
Returns all positions taken therein to the extent such disclosure would prevent
imposition of penalties under Section 6662 of the Code for substantial
understatement of federal income Tax.
2.24 Bank Accounts and Powers of Attorney tc "2.24 Bank Accounts and
Powers of Attorney" \l 2. A list of the names and addresses of each bank,
together with the name and number of each account, in which the Company has an
account or safe-deposit box, the names of all persons entitled to draw thereon
or to have access thereto, and the names of any persons holding powers of
attorney with respect to the Company, are set forth in Schedule 2.24.
2.25 Statements True and Correct; Schedules tc "2.25 Statements True
and Correct; Schedules" \l 2. No representation or warranty made herein, nor any
statement, certificate or instrument furnished or to be furnished to the
Purchaser pursuant to this Agreement or any other document, agreement or
instrument referred to herein or therein, contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading. Once an item
is disclosed by the Shareholders on any Schedule referenced in this Article II
("Article II Schedules") such item shall be deemed integrated into and disclosed
in all of the Article II Schedules, without the necessity of any
cross-references; provided, however, that such deemed disclosure and integration
shall not apply as set forth below:
(a) No items disclosed on any of the other Article II Schedules
shall be deemed disclosed on any of the following Schedules: Schedule 2.6
(Financial Statements); Schedule 2.8 (Litigation); Schedule 2.19(e) (Long
Term Contracts); Schedule 2.19(f) (Fixed Price Contracts); Schedule 2.19(g)
(Non-Line
<PAGE> 15
of Business Contracts); Schedule 2.19(h) (Large Customer Contracts); and
Schedule 2.19(j) (Company Warranties).
(b) No items disclosed on or reflected in the Financial
Statements shall be deemed to be disclosed on any Schedule other than
Schedule 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER tc "ARTICLE III REPRESENTATIONS
AND WARRANTIES OF PURCHASER" \l 1
As an inducement to the Shareholders to enter into this Agreement and
to sell the Shares, the Purchaser hereby represents and warrants to the
Shareholders the following:
3.1 Organization, Standing and Authority of Purchaser tc "3.1
Organization, Standing and Authority of Purchaser" \l 2. The Purchaser is a
corporation duly organized, and validly existing and in good standing under the
laws of the State of Michigan. Purchaser has the requisite power and authority
to execute, deliver and perform its obligations under this Agreement and all
other documents contemplated hereby according to their respective terms, and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Purchaser, and constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
3.2 Absence of Conflicting Agreements or Required Consents Relating to
Purchaser's Obligations tc "3.2 Absence of Conflicting Agreements or Required
Consents Relating to Purchaser's Obligations" \l 2. Except as set forth in this
Agreement, the execution, delivery and performance by Purchaser of this
Agreement and any other documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) does not require the consent
or approval of, prior filing with or notice to, or other action by, any
Regulatory Authority or any other third party; (ii) will not conflict with any
provision of the Purchaser's articles of incorporation or bylaws; (iii) will not
constitute a Default under any material Law or Order to which the Purchaser is a
party or by which Purchaser or its Assets are bound; and (iv) will not
constitute a Default under any Contract or Permit material to the transactions
described herein, to which Purchaser is a party or by which the Purchaser or its
Assets are bound.
3.3 Investment Intent tc "3.3 Investment Intent" \l 2. The Purchaser is
acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act of 1933,
as amended. The Purchaser confirms that the Shareholders and the Company have
made available to the Purchaser and its representatives and agents the
opportunity to ask questions of the officers and management employees of the
Company and to acquire such additional information about the business and
financial condition of the Company as the Purchaser has requested.
ARTICLE IV
ADDITIONAL COVENANTS tc "ARTICLE IV ADDITIONAL COVENANTS" \l 1
<PAGE> 16
4.1 Cooperation tc "4.1 Cooperation " \l 2. Each party covenants that
it will, from time to time after the date hereof, execute such additional
instruments and take such actions as may be reasonably requested by any other
party to confirm or perfect or otherwise to carry out the intent and purpose of
this Agreement. In addition, the Shareholders agree to cooperate (at Purchaser's
expense) with Purchaser in the preparation of any filings of Purchaser on Form
8-K under the Securities Exchange Act of 1934, as amended, required as a result
of the transactions contemplated herein, including causing (at Purchaser's
expense) Medaphis' accountants to cooperate in the preparation of any such
filing.
4.2 Related Party Transactionstc "4.2 Related Party Transactions"
\l 2. The Shareholders and the Company have caused all indebtedness and other
Liabilities owed to the Company by a Shareholder or any Affiliate of the Company
or Shareholder to be paid in full on or prior to the date hereof, and caused all
indebtedness and other Liabilities owed by the Company to a Shareholder or any
Affiliate of any Shareholder to be discharged and released in full on or prior
to the date hereof.
4.3 Transfer Taxes tc "4.3 Transfer Taxes" \l 2. The Purchaser shall
pay any and all transfer, sales, use and similar Taxes on any transfer of the
Shares.
4.4 Public Announcements tc "4.4 Public Announcements" \l 2. The
Purchaser, the Shareholders and the Company will consult with each other before
issuing, and provide each other the opportunity to review, comment upon and
concur with, and use reasonable efforts to agree on, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as a party may determine is
required by applicable Law, Order or court process.
4.5 Tax Matters tc "4.5 Tax Matters" \l 2.
(a) Tax Sharing Agreements. Any Tax sharing agreement with
respect to which the Company is or has been a party shall be terminated prior to
the date of this Agreement and will have no further effect for any taxable year
or period prior to, including, or following the date of this Agreement.
(b) Allocation of Tax Liability. All Tax items of the Company
(including, for example, income and deductions) will be included on the federal
consolidated income Tax Return of the affiliated group, the common parent of
which is Medaphis (the "Medaphis Group"), for all periods through April 15,
1999. The Purchaser and the Company will furnish Tax information of such Tax
items to Medaphis for inclusion in the Medaphis Group federal consolidated
income Tax Return for the period that includes April 15, 1999 in accordance with
past custom and practice relating to the Company.
(c) Cooperation and Exchange of Information. The Shareholders
and Purchaser will provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any Tax Return,
amended return or claim for refund, determining a Liability for Taxes or a right
to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of relevant Tax Returns or portions thereof, together with
<PAGE> 17
accompanying schedules and related work papers and documents relating to rulings
or other determinations by Tax authorities, but in no event shall the
Shareholders or Purchaser be required to disclose to the other any information
relating to the operations of either, as the case may be, other than information
relating to a Liability for Taxes of the Company. The Shareholders and Purchaser
shall make their respective employees available on a mutually convenient basis
to provide explanations of any documents or information provided hereunder. The
parties shall cooperate fully in connection with the filing of Tax Returns,
including the provision of copies of any return or report for a period which
includes April 15, 1999 to the other parties not less than thirty (30) days
before filing. The Shareholders will allow the Purchaser an opportunity to
review and comment upon any Tax Returns (including any amended returns) to the
extent that they relate to the Company. The Shareholders will take no position
on such Tax Returns that relate to the Company that would adversely affect the
Company after April 15, 1999, unless such position would be reasonable and
consistent with past practice as if the Shareholders had owned the Company both
before and after April 15, 1999. The Shareholders and Purchaser will retain all
Tax Returns, schedules and work papers and all material books and records or
other documents relating to Tax matters of the Company for its taxable period
first ending after the date of this Agreement and for all prior taxable periods
until the expiration of the statute of limitations of the taxable periods to
which such returns and other documents relate, without regard to extensions (but
taking into account any extended statute of limitations applicable to a year in
which a net operating loss is reported) except to the extent notified by the
other party in writing of such extensions for the respective Tax periods. Any
information obtained under this Section 4.5(c) shall be kept confidential,
except as may be otherwise necessary in connection with the filing of returns or
claims for refund or in conducting an audit or other proceeding. Notwithstanding
anything in this Section 4.5(c) to the contrary, no party shall be required to
divulge any information to the other party that would operate as a waiver of the
attorney-client privilege. Purchaser and the Shareholders shall use reasonable
efforts not to destroy or allow the destruction of any such books and records
and workpapers without first providing 60 days written notice of intention to
destroy to the other party(ies), and allowing such other party(ies) to take
possession of such records.
(d) Tax Indemnification. Notwithstanding any provision of this
Agreement to the contrary, the Shareholders shall be jointly and severally
liable, and shall pay, indemnify, and hold harmless (including any Tax owed by
Purchaser as a result of this indemnification payment) Purchaser and the Company
for (i) except to the extent reserved for on the Closing Date Balance Sheet, all
liability for Taxes of the Company (including Taxes owed by Purchaser as a
result of such indemnification payment), for all periods or portions thereof
ending on or prior to April 15, 1999; (ii) except to the extent reserved for on
the Closing Date Balance Sheet, all liability for Taxes of any affiliated,
consolidated, unitary or combined group or any member thereof, which affiliated,
consolidated, unitary or combined group includes or has included the Company for
any period or portion thereof that ends prior to or that includes the date of
this Agreement, which liability is assessed against the Company by reason of the
Company being liable for all or part of the Taxes of any such affiliated,
consolidated, unitary or combined group or any member thereof; and (iii) all
liability for Taxes of the Company for all taxable periods beginning before
April 15, 1999 and ending after such date but only with respect to the portion
of such period ending on April 15, 1999. Any Taxes under (iii) for a period
commencing prior to but ending after
<PAGE> 18
April 15, 1999 will be apportioned, in the case of real and personal property
Taxes, on a per diem basis and, in the case of other Taxes, on the basis of the
actual activities, taxable income or taxable loss of the Company during the
periods before and after April 15, 1999, based upon a closing of the books and
determined as if such period ended with respect to the Shareholders on April 15,
1999 and commenced with respect to the Purchaser on April 16, 1999. The
Purchaser agrees to indemnify the Shareholders for any additional Tax owed by
the Shareholders (including Tax owed by the Shareholders due to this
indemnification payment) resulting from any transaction initiated by Purchaser
and not in the ordinary course of business occurring on the date of this
Agreement. The Purchaser and the Shareholders agree to report all transactions
initiated by the Purchaser and not in the ordinary course of business occurring
on the date of this Agreement on the Purchaser's federal income Tax Return to
the extent permitted by ss. 1.1502-76(b)(1)(ii)(B) of the Treasury Regulations
promulgated pursuant to the Code. Any refund of Taxes received, or reduction of
Taxes realized by Shareholders, or any Affiliate of Shareholders, that is
directly attributable to Taxes paid or losses or credits generated by the
Company with respect to any period or portion thereof ending after April 15,
1999 is to be paid to Purchaser within thirty (30) days after the receipt or
credit thereof. Shareholders shall comply with Purchaser's requests in obtaining
such refunds, including, but not limited to, the filing of amended returns and
claims for refund. Any refund of Taxes received by Purchaser, or any Affiliate
of Purchaser, that is directly attributable to Taxes paid by the Company with
respect to any period or portion thereof ending on or before April 15, 1999 is
to be paid to Shareholders within thirty (30) days after the receipt or credit
thereof. Purchaser shall comply with Shareholders' requests in obtaining such
refunds, including, but not limited to, the filing of amended returns and claims
for refund.
(e) Elections; Other Matters. In connection with the
transactions contemplated herein, Medaphis shall make an election, under ss.
1.1502-20(g)(1) of the Treasury Regulations promulgated pursuant to the Code and
any corresponding elections under state or local Tax law (the "Tax Elections"),
to reattribute to itself certain net operating loss carryovers and/or net
capital loss carryovers provided that Medaphis agrees to not reattribute under
ss. 1.1502-20(g) of the Treasury Regulations any of the net operating losses
that carry forward with the Company when it leaves the Medaphis Group to the
extent Purchaser can utilize such net operating losses pursuant to Code Section
382. For purposes of this Agreement and notwithstanding any provision to the
contrary, the potential utilization of the net operating losses of the Company
by the Purchaser shall include (i) under applicable Law, the maximum possible
utilization of the net operating losses under Section 172 of the Code of the
Company ("NOL") by the Purchaser or any Affiliate of Purchaser, or any successor
or transferor of the Purchaser or any Affiliate of the Purchaser (the "Purchaser
NOL Group"), assuming the maximum possible taxable income of the Purchaser NOL
Group for any period or portion thereof beginning after April 15, 1999, plus
(ii) U.S.$2,000,000. Sixty (60) days prior to the date of filing Tax Elections,
the Shareholders shall submit to Purchaser for Purchaser's review a proposal of
the statement required under ss.1.1502-20(g)(5)[(4)] of the Treasury
Regulations. In the event Purchaser reasonably disagrees with a statement
proposed by the Shareholders, Purchaser shall within twenty (20) days of
receiving such statement provide to the Shareholders a revised statement
indicating the amount of NOL the Purchaser NOL Group can utilize in accordance
with this Agreement and the residual amount of NOL, if any, available for the
Tax Elections (the "NOL Statement"). The Shareholders, within
<PAGE> 19
ten (10) days of receiving the NOL Statement, shall either adopt the NOL
Statement for purposes of the Tax Elections and any other Tax purpose or provide
written notice to Purchaser that the Shareholders dispute the NOL Statement.
Upon any such notice disputing the NOL Statement, the parties shall submit such
dispute to the Accountants for resolution. Such dispute resolution shall be
governed by the last sentence of Section 1.3(a). The Shareholders shall allocate
all of the consolidated Section 382 limitation to the Company, to the extent
Purchaser can utilize such limitation pursuant to Code Section 382 in accordance
with the second sentence of this paragraph, attributable to any net operating
losses ever generated by or otherwise allocable to the Company in accordance
with ss.1.1502-95T of the Treasury Regulations. The Shareholders and the
Purchaser shall: (i) take, and cooperate with each other to take, all actions
necessary and appropriate (including, without limitation, the filing by any
party hereto, or any Affiliate of any party hereto, of a copy of the Tax
Elections in any appropriate forms, returns, elections, schedules and other
documents and instruments filed with any Tax authority) to effect, perfect and
preserve timely Tax Elections; (ii) report the purchase and sale of the Shares
consistent with the Tax Elections; and (iii) take no position contrary thereto
or inconsistent therewith in any Tax Return, or in any discussion with or any
proceeding before any Tax authority or other Regulatory Authority or otherwise.
(f) Purchaser and the Company have not since April 15, 1999 entered
into any transaction or Contract, or otherwise taken any position, any or all of
which, singly or in the aggregate, could result in a materially different Tax
consequence to the Company or the Purchaser than would have been the case had
this Agreement not been entered into and the Shareholders and the Company had
continued to operate the Company in a manner consistent with past practice,
from April 15, 1999 through and including the date of this Agreement.
4.6 Leases tc "4.6 Leases" \l 2. The Purchaser and the Company acknowledge and
agree that the consents of certain landlords are required upon the consummation
of the transactions contemplated by this Agreement under the terms of the leases
identified in Schedule 2.5, and that the Shareholders shall have no Liability
under this Agreement with respect to the failure to obtain such consents. The
Shareholders agree to cooperate (at the cost of the Purchaser and the Company)
with the Company and the Purchaser to obtain any such consents to the extent
reasonably requested by Purchaser. Purchaser and the Company hereby acknowledge
and agree that Medaphis delivered letters of credit in connection with the lease
agreements with Park Avenue Building Company, LLC and WHSUM Real Estate L.P.
(the "Letters of Credit"), and Purchaser and the Company agree to use their
commercially reasonable efforts to obtain such letters of credit from the
foregoing landlords and return them to Medaphis as soon as reasonably
practicable after the date of this Agreement. Further, Purchaser and the Company
acknowledge and agree that Medaphis has guaranteed the obligations of the
Company under the terms of the lease for 395 Oyster Point Boulevard, #330, San
Francisco, California (the "Guaranty"). Purchaser hereby agrees to indemnify,
defend and hold harmless Medaphis from and against any Losses suffered by
Medaphis as a result of the Letters of Credit and the Guaranty remaining
outstanding after the date of this Agreement (for purposes of this sentence,
Losses shall be deemed to include any draws or payments under the Letters of
Credit or payments, or requests for payments, by Medaphis under the Guaranty).
<PAGE> 20
ARTICLE V
ACTIONS TAKEN ON EXECUTION BY SHAREHOLDERS tc "ARTICLE V ACTIONS TAKEN ON
EXECUTION BY SHAREHOLDERS" \l 1
Upon execution of this Agreement, the Shareholders and/or the Company
(as appropriate) have delivered the following documents to Purchaser:
5.1 The Shares tc "5.1 The Shares" \l 2. Stock certificates representing
all of the Shares together with accompanying stock transfer powers or
instruments of assignment, duly endorsed in blank for the transfer thereof.
5.2 Releases tc "5.2 Releases" \l 2. A release from each of the
Shareholders in substantially the form of Exhibit 5.2 attached hereto.
ARTICLE VI
ACTIONS TAKEN ON EXECUTION BY THE PURCHASER tc "ARTICLE VI ACTIONS TAKEN ON
EXECUTION BY THE PURCHASER" \l 1
Upon execution of this Agreement, the Purchaser has delivered the
following to the Shareholders:
6.1 Purchase Price tc "6.1 Purchase Price" \l 2. The Purchase Price as
provided in Section 1.2 hereto.
6.2 Trademark Assignments tc "6.2 Trademark Assignments" \l 2. Any and all
documents reasonably requested by the Shareholders (if any) to effect the
transfer of the Impact Trademarks and Logos described in Section 1.4.
ARTICLE VII
INDEMNIFICATION tc "ARTICLE VII INDEMNIFICATION" \l 1
7.1 Indemnification of Purchaser tc "7.1 Indemnification of Purchaser" \l
2. Subject to the terms and conditions in this Article VII, the Shareholders
shall jointly and severally indemnify, defend and hold harmless Purchaser from
and against any loss, damage (but excluding consequential and incidental damages
of Purchaser and/or the Company), Liability, cost and expense, including
reasonable attorneys' fees (collectively "Losses"), suffered or incurred by
Purchaser, as and when incurred, by reason of, or arising out of, (i) any
misrepresentation, breach of warranty or breach or non-fulfillment of any
agreement of a Shareholder contained in this Agreement or in any document
executed and delivered in connection with this Agreement, (ii) the litigation
listed on Schedule 2.8 hereof (such litigation referred to herein as the
"Identified Litigation"), or (iii) the Impact Innovation Key Employee Incentive
Plan ("Impact Option Liability").
7.2 Indemnification of Shareholders tc "7.2 Indemnification of
Shareholder" \l 2. Subject to the terms and conditions in this Article VII, the
Purchaser shall indemnify, defend and hold harmless the Shareholders from and
against any Loss suffered or incurred by either Shareholder, as and when
incurred, by reason of, or arising out of, any misrepresentation, breach of
<PAGE> 21
warranty or breach or non-fulfillment of any agreement of the Purchaser
contained in this Agreement or in any document executed and delivered in
connection with this Agreement.
7.3 Notice and Opportunity to Defend tc "7.3 Notice and Opportunity to
Defend" \l 2.
(a) The party indemnified hereunder (the "Indemnified Party")
shall notify in writing the indemnifying party (the "Indemnifying Party") within
thirty (30) days after a third party claim is presented to the Indemnified Party
and the Indemnifying Party shall defend such claim at its expense and may select
the attorneys for such defense, who shall be reasonably acceptable to the
Indemnified Party. If the Indemnifying Party does not defend such claim, the
Indemnified Party may do so without the Indemnifying Party's participation, in
which case the Indemnifying Party shall pay the expenses of such defense.
Neither the Indemnified Party nor the Indemnifying Party may settle or
compromise such claim without the other party's consent, which shall not be
unreasonably withheld. If the Indemnified Party fails to notify the Indemnifying
Party of a third party claim as provided in this Section 7.3, and if the
Indemnifying Party is thereby prejudiced by such failure of notice in its
defense of the claim, the Indemnifying Party's obligation of indemnity hereunder
shall be extinguished with respect to such claim to the extent that the
Indemnifying Party has been prejudiced by the failure to give such notice. The
Indemnified Party and Indemnifying Party agree to cooperate in good faith in the
defense and/or settlement of any such claim. Notwithstanding the foregoing, the
parties hereto agree that with respect to the Shareholders' obligations to
indemnify, defend and hold harmless Purchaser from and against Identified
Litigation the terms of this Section 7.3(a) shall not apply, and that the
provisions of Section 7.3(b) shall govern.
(b) Medaphis shall defend the Identified Litigation at its
expense using attorneys which shall be selected in the sole discretion of
Medaphis. Purchaser, the Company and their respective Affiliates shall not
settle any of the Identified Litigation without the prior written consent of
Medaphis. Medaphis may settle any of the Identified Litigation without the
consent of Purchaser, the Company or any of their respective Affiliates to the
extent that any such settlement involves solely the payment of monetary
obligations, and (if such payment is the obligation of Medaphis or its
Affiliates) to the extent Medaphis has sufficient resources available to
discharge such monetary obligation as determined by Purchaser in its reasonable,
good faith discretion; provided that to the extent any such settlement involves
any restriction on Purchaser's or the Company's future actions, any such
settlement or compromise may not be made without the Purchaser's prior consent,
which shall not be unreasonably withheld. Purchaser, the Shareholder and the
Company agree to cooperate in good faith in the defense and/or settlement of any
Identified Litigation, and the Shareholders agree to provide copies of all
pleadings filed in connection with the Identified Litigation to Purchaser prior
to their filing (to the extent reasonably practicable).
7.4 Limitations. tc "7.4 Limitations" \l 2
(a) Subject to Sections 7.4(b) and 7.4(c), and notwithstanding anything to the
contrary contained in this Agreement other than Sections 7.4(b) and 7.4(c), a
party (for purposes of this Section 7.4, the Shareholders shall be deemed to be
<PAGE> 22
one and the same party) otherwise entitled to indemnification under this Article
VII is not entitled to indemnification until the aggregate indemnifiable Losses
for which it is otherwise entitled to indemnification hereunder shall equal or
exceed U.S. $100,000 (the "Threshold Amount"). If and when the sum of all
indemnifiable Losses of a party hereunder equals or exceeds the Threshold
Amount, then such party may request indemnification for all indemnifiable Losses
in excess of the Threshold Amount. To the extent covered by insurance, any
indemnifiable Loss will be deemed reduced by the amount of insurance proceeds
actually received by the Indemnified Party and its Affiliates in respect of such
Loss; provided, however, that in no event shall this sentence be deemed to
require any Indemnified Party to maintain any level of insurance. Subject to
Sections 7.4(b) and 7.4(c), in no event shall the Shareholders' collective
Liability under this Article VII exceed the Purchase Price in the aggregate (the
"Maximum Liability"). Except as set forth in Sections 7.4(b) and 7.4(c), all
rights and remedies under this Article VII for Indemnified Parties, including
all rights to indemnification, and all Liabilities and obligations under this
Article VII for Indemnifying Parties, terminate on September 30, 2000 (the "Time
Limit").
(b) Exempt Claims (solely to the extent of such claims) shall not be subject
to the Threshold Amount or (with respect to claims against the Shareholders) the
Maximum Liability limitations set forth in Section 7.4(a) above. In addition, no
Exempt Claim shall not be subject to the Time Limit; provided, however, all
rights and remedies under this Article VII for Indemnified Parties, including
all rights to indemnification, and all Liabilities and obligations under this
Article VII for Indemnifying Parties, for an Exempt Claim shall terminate as of
the expiration of all applicable statute of limitations (including any extension
or waiver with respect thereto) for the underlying Liability to which such
Exempt Claim relates.
(c) The term "Exempt Claims" shall mean (i) claims by the Purchaser or the
Shareholders (as appropriate) under this Article VII for breaches, or failures
of performance, of the terms of Article I, Section 2.1, Section 2.23, Section
3.3, Section 4.3, Section 4.5 and Section 4.6, and (ii) claims by the Purchaser
for indemnification under this Article VII in connection with the Identified
Litigation or Impact Option Liability.
7.5 Survival of Representations and Warranties. tc "7.5 Survival of
Representations and Warranties" \l 2 The representations, warranties, covenants
and agreements of the Shareholders, the Company and Purchaser will survive the
date hereof and terminate on September 30, 2000, except for the representations,
warranties, covenants and agreements referenced in clause (i) of the definition
of Exempt Claims which shall survive the date hereof and terminate on the
respective dates of the expiration of the applicable statute of limitations
(including any extension or waiver with respect thereto) for the liabilities to
which such provisions relate.
7.6 Subrogation. tc "7.6 Subrogation" \l 2 Upon payment in full of any
claim by a third party under this Article VII (irrespective of the method of
payment), the Indemnifying Party shall be subrogated to the extent of such
payment to the rights of the Indemnified Party against any Person with respect
to the subject matter of such claim.
7.7 Exclusive Remedy. tc "7.7 Exclusive Remedy" \l 2 Except for remedies
based upon fraud, the remedies provided for in this Article VII constitute the
sole and exclusive remedies for recovery against either
<PAGE> 23
Shareholder or the Purchaser based upon the inaccuracy, untruth, incompleteness
or breach of any representation or warranty of such party contained in this
Agreement or in any document executed and delivered in connection with this
Agreement, or based upon the failure of either Shareholder or the Purchaser to
perform any covenant, agreement or undertaking required by the terms hereof to
be performed by such party.
7.8 Dispute Resolution. tc "7.8 Dispute Resolution" \l 2
If an Indemnified Party incurs any Loss indemnifiable under this Article
VII ("Indemnifiable Loss"), it shall promptly provide written notice to
Indemnifying Party stating in reasonable detail the nature and amount of such
Indemnifiable Loss or potential Indemnifiable Loss (a "Loss Notice"). In
addition, with respect to third party claims, the Indemnified Party shall comply
with Section 7.3. If the Indemnifying Party disputes the amount sought under any
such Loss Notice or otherwise disputes the right of the Indemnified Party to be
indemnified hereunder, it shall provide the Indemnified Party a written notice
objecting to such claim for indemnification within thirty (30) days of the date
any such Loss Notice is received by the Indemnifying Party (a "Protest Notice").
(b) If (i) the Indemnifying Party and the Indemnified Party
are unable to resolve a Loss Notice with respect to which the Indemnified Party
has received a Protest Notice (a "Disputed Loss Notice") within thirty days of
the date the Indemnified Party receives the Protest Notice, or (ii) there is any
other controversy or claim arising out of or relating to this Agreement or a
breach hereof, then any of the parties hereto may require such Disputed Loss
Notice or other controversy or claim to be submitted to arbitration in the venue
of Washington, D.C., in accordance with the then-current expedited procedures of
the commercial arbitration rules of the American Arbitration Association
("AAA"). In any arbitration hereunder, the Purchaser shall select one
arbitrator, the Shareholders shall select one arbitrator, and the two
arbitrators so chosen shall select a third. All such arbitrators must be
selected from the list of arbitrators maintained by the AAA. Any decision of the
arbitration panel shall require the vote of at least two (2) of such arbitrators
and shall be deemed conclusive and each party shall be deemed to have waived any
rights to appeal therefrom. Each party shall bear its own legal fees and related
expenses incurred in connection with the arbitration proceedings.
ARTICLE VIII
MISCELLANEOUS PROVISIONS tc "ARTICLE VIII MISCELLANEOUS
PROVISIONS" \l 1
8.1 Definitions. tc "8.1 Definitions" \l 2 The capitalized terms set
forth below shall have the following meanings:
"Affiliate" of a Person shall mean any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. Ownership of 20% or more of the voting equity securities of another
Person shall be deemed to constitute "control" for purposes of this definition.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
<PAGE> 24
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its Equity Rights, Assets or business.
"Default" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"Equity Rights" shall mean all equity interests in a Person
(including but not limited to shares of capital stock, partnership units or
interests or limited liability company interests or units) ("Equity Interests"),
and all arrangements, calls, commitments, Contracts, options, rights to
subscribe to, scrip, understandings, warrants, or other binding obligations of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, Equity Interests of a Person or by which a Person is or may
be bound to issue additional Equity Interests or other Equity Rights.
"GAAP" shall mean generally accepted United States accounting
principles applied on a consistent basis.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, technology rights and
licenses, computer software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights, and any application with any
Regulatory Authority for any of the foregoing.
"Knowledge" as used with respect to a party to this Agreement
(including references to such Person being aware of a particular matter) shall
mean those facts that are known after due inquiry by the chairman, president,
chief executive officer, chief financial officer, chief operating officer,
general counsel, or any vice president of such Person.
"Law" shall mean any federal, state, local, foreign or other
code,
<PAGE> 25
law (including common law), ordinance, regulation, reporting or licensing
requirement, rule, or statute, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any Asset (including
without limitation the Shares), other than Liens for current property Taxes not
yet due and payable.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other proceeding.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its Equity Rights,
Assets, or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, all
foreign, federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over any of
the parties hereto, and/or their respect businesses or Assets.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a party or its subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
<PAGE> 26
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposes or required to be withheld by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and additions
imposed thereon or with respect thereto.
8.2 Notices tc "8.2 Notices" \l 2.
(a) All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered by hand or if mailed by United States registered or certified mail,
return receipt requested, first class postage prepaid, or sent by Federal
Express or similar overnight courier service to the parties or their assignees,
addressed as follows:
If to the Shareholders or the Company:
Medaphis Corporation
2840 Mt. Wilkinson Parkway
Suite 300
Atlanta, Georgia 30339
Attn: Randolph L.M. Hutto
Fax: (770) 444-4502 with a copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree St., N.W.
Atlanta, Georgia 30309-3424
Attn: J. Vaughan Curtis
Fax: (404) 881-4777
If to the Purchaser:
Complete Business Solutions, Inc.
32605 W. Twelve Mile Rd.
Suite 250
Farmington Hills, Michigan 48334
Attn: Timothy S. Manney,
Executive Vice President
Fax: (248) 488-0439
with a copy to:
Complete Business Solutions, Inc.
32605 W. Twelve Mile Rd.
Suite 250
Farmington Hills, Michigan 48334
Attn: Thomas E. Sizemore,
General Counsel
Fax: (248) 848-9741
<PAGE> 27
(b) If delivered personally, the date on which a notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and, if delivered by mail, Federal Express or other overnight courier, the
date on which such notice, request, instruction or document is received shall be
the date of delivery.
(c) Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 8.2.
8.3 Expenses tc "8.3 Expenses" \l 2. The Shareholders shall pay all
legal and other costs and expenses incurred by the Shareholders or by the
Company in connection with the preparation, negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby. The
Purchaser shall pay all legal and other costs and expenses incurred by it in
connection herewith.
8.4 Waiver tc "8.4 Waiver" \l 2. Any failure on the part of any party
to comply with any of its obligations, agreements or conditions hereunder may be
waived by any other party to whom such compliance is owed, provided such waiver
is in writing. No waiver of any provision of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver.
8.5 Assignment tc "8.5 Assignment" \l 2. This Agreement shall not be
assignable, in whole or in part, by any party hereto without the express written
consent of each other party.
8.6 Binding Effect tc "8.6 Binding Effect" \l 2. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, executors, administrators, successors
and permitted assigns.
8.7 Governing Law; Severability tc "8.7 Governing Law; Severability"
\l 2. This Agreement shall be governed by and construed in accordance with the
laws of the State of Georgia. The provisions of this Agreement are severable and
the invalidity of one or more of the provisions herein shall not have any effect
upon the validity or enforceability of any other provision.
8.8 Counterparts tc "8.8 Counterparts" \l 2. This Agreement may be
executed in two or more counterparts (including facsimile counterparts), each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.9 Brokers tc "8.9 Brokers" \l 2. Except as set forth on Schedule 8.9
hereto, the Shareholders and Purchaser each represent to the other that no
broker or finder has been employed in connection with the transactions
contemplated hereby and each party ("Incurring Party") shall indemnify the
others against fees incurred by the Incurring Party.
8.10 Schedules and Exhibits tc "8.10 Schedules and Exhibits" \l 2. All
Schedules and Exhibits attached to this Agreement are incorporated herein by
reference and made a part hereof.
8.11 Headings tc "8.11 Headings" \l 2. The headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
8.12 Entire Agreement tc "8.12 Entire Agreement" \l 2. This Agreement
and the Exhibits, Schedules, certificates and other documents delivered pursuant
hereto or incorporated herein by reference, contain and constitute the entire
agreement among the parties and supersede and cancel any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties relating to the transactions contemplated by this Agreement. Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the day and year first written above.
SHAREHOLDERS:
IMPACT INNOVATIONS HOLDINGS, INC.
By:
Name:
Title:
MEDAPHIS CORPORATION
By:
Name:
Title:
COMPANY:
E-BUSINESS SOLUTIONS.COM, INC.
By:
Name:
Title:
PURCHASER:
COMPLETE BUSINESS SOLUTIONS, INC.
<PAGE> 1
EXHIBIT 20
Complete Business Solutions, Inc.
32605 W. Twelve Mile Rd.
Suite 250
Farmington Hills, MI 48334
Nasdaq: CBSI
AT THE COMPANY: AT FRB
CHICAGO: email address:
Tim Manney Gail Lutey Jim Ketelsen -- General Info
[email protected]
EVP Finance and Investor/Public Relations Margaret Huebner --
- -Analysts [email protected]
Administration (248) 848-2217 Darcy Bretz --
Media Contact [email protected]
(248) 488-2088 email: [email protected] (312) 266-7800
FOR IMMEDIATE RELEASE
TUESDAY, APRIL 20, 1999
COMPLETE BUSINESS SOLUTIONS, INC. ACQUIRES IT SERVICES FIRM
Impact Innovations Group Extends Emerging Technology and Delivery Chain
Management Expertise
FARMINGTON HILLS, MI., APRIL 20, 1999 -- Complete Business Solutions, Inc.
(Nasdaq: CBSI), a worldwide information technology (IT) consultant and service
provider to large and medium-size organizations, announced the acquisition of
the commercial division of Impact Innovations Group (Impact), an operating unit
of Medaphis Corporation. The purchase price of $15,000,000, subject to certain
adjustments, includes net assets and tax benefits in excess of several million
dollars. Impact, headquartered in Atlanta, Georgia, is a systems integration and
technology consulting business specializing in delivery chain management and
emerging technologies including e-commerce and ERM. The acquisition will be
accounted for as a purchase and is expected to be accretive to earnings.
"We are excited about leveraging our combined strengths in e-commerce and ERM
within our rapidly expanding emerging technology practice. This acquisition
helps satisfy our objective to expand our operations into new geographies and
adds new offices to our growing branch infrastructure," noted Raj Vattikuti,
president and CEO of CBSI. "As a full-service provider, we will be able to cross
sell our services to Impact's existing customers." CBSI will not acquire the
Impact Innovations Government Group, Inc.
Founded in 1985, CBSI is a worldwide provider of information technology ("IT")
services to large and mid-size organizations. The Company offers a broad range
of IT services, from advising clients on IT business strategy and strategic
technology plans to developing and implementing appropriate IT applications
solutions. CBSI is a single source provider of a broad range of IT services
including: IT consulting; large systems applications development and
maintenance; reengineering legacy applications to client/server technology;
client/server applications development; emerging technology services; packaged
software implementation; year 2000 conversion and testing services and contract
programming services.
MORE...
Safe Harbor Statement
With the exception of statements regarding historical matters and statements
regarding the Company's current status, certain matters discussed herein are
forward-looking statements that involve substantial risks and uncertainties.
Such forward-looking statements may be identified by the use of the words
"anticipate", "believe", "estimate", "expect", "intend" and similar expressions.
Actual results, performance or achievements could differ materially from these
forward-looking statements. Factors that could cause or contribute to such
material differences include the failure to recruit, train and retain skilled IT
professionals, failure to properly manage acquisitions, increasing significance
and risks of non-U.S. operations, exposure to regulatory, political and general
economic conditions in India, competition in the IT services industry, and other
factors as described in the Company's filings with the US Securities and
Exchange Commission.
For more information on Complete Business Solutions, Inc., visit the Company's
website at www.cbsinc.com or dial 1-800-PRO-INFO and enter the ticker "CBSI"
