<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D*
Under the Securities Exchange Act of 1934
HBO & COMPANY
________________________________________________________________________________
(Name of Issuer)
COMMON STOCK, $.05 PAR VALUE
________________________________________________________________________________
(Title of Class of Securities)
(CUSIP Number 404100109)
________________________________________________________________________________
David P. Bailis
Senior Vice President,
Secretary and
General Counsel
First Data Corporation
2121 North 117th Avenue
Omaha, Nebraska 68164
(402) 498-2170
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
June 17, 1995
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in the prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page __ of __ Pages
Exhibit Index is on Page __
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 404100109 PAGE 2 OF 11 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Data Corporation IRS No. 47-0731996
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
4,000,000
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY -0-
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
4,000,000
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,000,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
11.1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 3 OF 11 PAGES
--------------- --- ---
Item 1. Security and Issuer.
-------------------
The title and class of equity securities to which this statement
relates is the Common Stock, par value $.05 per share (the "Company Common
Stock"), of HBO & Company, a Delaware corporation (the "Company"). The
Company's principal executive offices are located at 301 Perimeter Center
North, Atlanta, Georgia 30346.
Item 2. Identity and Background.
-----------------------
(a)-(e) This statement is being filed by First Data Corporation, a
Delaware corporation ("First Data"). First Data provides high quality,
high volume information processing and related services to specific client
groups: the transaction card, payment instruments, teleservices, mutual
fund, receivables and information management industries. The principal
business and office address of First Data is 11718 Nicholas Street, Omaha,
Nebraska 68154.
The following individuals are the executive officers and directors
of First Data (with asterisks indicating the directors):
<TABLE>
<CAPTION>
Present
Principal Occupation
Name or Employment Name and Business Address /(1)/
---- ------------------------ -------------------------------
<S> <C> <C>
Henry C. Duques* Chairman of the Board, First Data Corporation
Chief Executive 401 Hackensack Avenue
Officer and President 7th Floor
of First Data Hackensack, NJ 07601
Charles T. Fote Executive Vice President First Data Corporation
of First Data 6200 South Quebec
Suite 335
Englewood, CO 80111
Walter M. Hoff Executive Vice President First Data Corporation
of First Data 10825 Farnam Drive
Omaha, NE 68154
Robert J. Levenson* Executive Vice President First Data Corporation
of First Data 401 Hackensack Avenue
7th Floor
Hackensack, NJ 07601
Edward C. Nafus Executive Vice President FDR Limited
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 4 OF 11 PAGES
--------------- --- ---
<S> <C> <C>
of First Data Fourth Floor, North Wing
Christopher Martin Road
Basildon, Essex, UK 55149AA
Lee Adrean Executive Vice President First Data Corporation
and Chief Financial Officer 401 Hackensack Avenue
of First Data 7th Floor
Hackensack, NJ 07601
David P. Bailis Senior Vice President, First Data Corporation
Secretary and General 2121 North 117th Avenue
Counsel of First Data Omaha, NE 68164
Cheryl L. King Vice President and First Data Corporation
Controller of First Data 11718 Nicholas Street
Omaha, NE 68154
Ben Burdetsky* Professor, George 4619 N. Dittmar Road/(2)/
Washington University Arlington, VA 22207
Courtney F. Jones* Retired 500 E. 77th Street/(2)/
Apt. 2224
New York, NY 10162
James D. Robinson III* President of J. D. Robinson Inc.
J. D. Robinson Inc. 126 E. 56th Street
(financial consulting) 26th Floor
New York, NY 10022
Charles T. Russell* Retired c/o Visa International
900 Metro Center Blvd.
Foster City, CA 94404
Bernard L. Schwartz* Chairman of the Board and Loral Corporation
Chief Executive Officer 600 Third Avenue
of Loral Corporation 36th Floor
(diversified electronic New York, NY 10016
systems)
Garen K. Staglin* Chairman of the Board and Safelite Glass Corporation
Chief Executive Officer of 1105 Schrock Road
Safelite Glass Corporation 7th Floor
(glass manufacturer) Columbus, OH 43229
</TABLE>
____________________
(1) Description of the principal business of First Data has been
omitted from the table. Unless otherwise noted, all addresses
are business addresses.
(2) Residence address.
Neither First Data nor, to the knowledge of First Data, any of
the executive officers and directors identified above, during the last five
years, (i) has been convicted in a criminal proceeding (excluding traffic
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 5 OF 11 PAGES
--------------- --- ---
violations or similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any
violation with respect to such laws.
(f) First Data is a Delaware corporation. Each of the executive
officers and directors identified under Item 2(a)-(e) is a citizen of the
United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
In connection with the closing (the "Closing") on June 17, 1995
of the transactions contemplated by the Stock Purchase Agreement dated as
of May 16, 1995 and amended as of June 17, 1995 (the "Stock Purchase
Agreement"), among First Data, FDC Health Inc., a Nebraska corporation
("FDC Health"), First Data Health Systems Corporation, a Delaware
corporation ("FDHSC"), the Company and HBO & Company of Georgia, a Delaware
corporation ("HBO of Georgia"), the Company issued 4,000,000 shares of
Company Common Stock, and paid $500,000 in cash and $100,000 in the form of
a promissory note, to First Data in exchange for the transfer to HBO of
Georgia of all of the issued and outstanding shares of capital stock of
FDHSC. Copies of the Stock Purchase Agreement and the amendment thereto
are included as Exhibit 1 and Exhibit 2, respectively, and incorporated
herein by this reference.
Item 4. Purpose of Transaction.
----------------------
The information contained in Item 3 is incorporated herein by
reference.
At the Closing, First Data and the Company entered into a
Shareholder Agreement (the "Shareholder Agreement") which limits First
Data's ability to acquire additional securities of the Company such that
First Data, its subsidiaries and any member of a group (a "Group"), within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of which First Data or a subsidiary of First
Data is a member shall not acquire additional securities of the Company if,
after such purchase, the securities of the Company owned by First
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 6 OF 11 PAGES
--------------- --- ---
Data, its subsidiaries and any Group of which First Data or any of its
subsidiaries is a member would represent more than 12% of the total
combined voting power of the outstanding voting securities of the Company
(assuming conversion of any outstanding convertible securities and the
exercise of any outstanding options or rights to purchase voting securities
or convertible securities of the Company).
Pursuant to the Shareholder Agreement, First Data may not
transfer securities of the Company except (a) pursuant to Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), as in effect
from time to time or any successor to such rule, (b) through a bona fide
underwritten public offering registered under the Securities Act, (c) by a
disposition covered by any other registration statement relating to equity
securities of the Company filed by the Company under the Securities Act,
(d) in one or more transactions exempt from registration under the
Securities Act (other than by reason of Rule 144), (e) in a merger or
consolidation in which the Company is acquired, or in connection with a
plan of liquidation of the Company, or (f) in response to an offer to
purchase or exchange for cash or other consideration any securities of the
Company (i) which is made by or on behalf of the Company or (ii) which is
made by or on behalf of any other person or Group. Furthermore, the
Shareholder Agreement provides that First Data may not transfer any
securities of the Company pursuant to clause (d) above (i) to certain
competitors of the Company identified in the Shareholder Agreement or to
any Group of which any such competitor is a member, (ii) to any person or
Group who, prior to such transfer, does not agree in writing to be bound by
all of the terms of the Shareholder Agreement or (iii) to any Person who
has filed a statement on Schedule 13D under the Exchange Act in respect of
the Company Common Stock, unless, in the case of clause (iii), First Data
has delivered a written notice to the Company of its intent to transfer
such securities as aforesaid to such person and, within 5 business days
after receipt thereof, the Company has not delivered to First Data a
certificate of the Company signed by its President and Chief Executive
Officer stating that the Board of Directors of the Company has made a
reasonable good faith determination that such person presently intends to
make an unsolicited attempt to acquire control of the Company.
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 7 OF 11 PAGES
--------------- --- ---
The Shareholder Agreement also provides that First Data, its
subsidiaries and any Group of which First Data or any of its subsidiaries
is a member will not, without the prior approval of a majority of the Board
of Directors of the Company, solicit proxies with respect to any voting
securities of the Company or become a "participant" in any "solicitation"
(as such terms are used in Rule 14a-11 under the Exchange Act) relating to
the election of directors of the Company, or join a partnership, limited
partnership, syndicate or other Group, or otherwise act in concert with any
other person or Group for the purpose of acquiring, holding, voting or
disposing of voting securities of the Company.
In addition, the Shareholder Agreement provides that the Company
shall, upon written notice of First Data, take all necessary steps to
increase the size of the Board of Directors of the Company from 9 to 10
members and to appoint the Chief Executive Officer of First Data (the "FDC
Representative") as a member of the Board of Directors of the Company.
Following such appointment, and for so long thereafter as the Shareholder
Agreement shall be in effect, the Board of Directors of the Company shall
take all steps necessary to secure the election by the stockholders of the
Company of the FDC Representative to the Board of Directors of the Company,
including, without limitation, the designation of the FDC Representative as
a nominee for director in the annual proxy materials distributed by the
Company in connection with its annual meetings of stockholders.
The Shareholder Agreement shall terminate the earlier of (a)
June 17, 2000 and (b) the date on which First Data, its subsidiaries and
any Group of which First Data and any of its subsidiaries is a member no
longer own securities representing 5% or more of the voting power of the
Company.
At the Closing, First Data and the Company also entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
pursuant to which First Data has certain rights to cause the Company to
register the shares of the Company Common Stock issued to First Data at the
Closing under the Securities Act for the purpose of allowing First Data to
dispose of such shares by means of a registered offering thereof. The
Registration Rights Agreement also grants First Data certain rights to
require that the Company include all or a portion of the shares of Company
Common Stock issued to First Data at the Closing in certain registration
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 8 OF 11 PAGES
--------------- --- ---
statements filed by the Company under the Securities Act on its own behalf
or on behalf of any of its stockholders other than First Data.
The Shareholder Agreement and the Registration Rights Agreement
are included as Exhibits 3 and 4, respectively, and incorporated herein by
this reference, and the foregoing description of such agreements is
qualified in its entirety by reference to such Exhibits.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a) At the Closing, First Data received from the Company
4,000,000 shares of Company Common Stock, representing 11.1% of the
outstanding shares of Company Common Stock (such percentage being
calculated based on the representation of the Company to First Data,
contained in the Stock Purchase Agreement, that on May 16, 1995 there were
32,077,055 shares of Company Common Stock issued and outstanding). Except
as set forth in this Item 5(a), neither First Data, nor, to the knowledge
of First Data, any executive officer or director of First Data identified
in Item 2 above beneficially owns any shares of Company Common Stock.
(b) First Data has the sole voting power and sole dispositive
power over the 4,000,000 shares of Company Common Stock delivered to it at
the Closing. The information contained in Item 5(a) is incorporated herein
by reference.
(c) The information contained in Item 5(a) is incorporated
herein by reference. Except as set forth in this Item 5(c), neither First
Data nor, to the knowledge of First Data, any of the executive officers or
directors of First Data identified in Item 2 above have effected
transactions in the Company Common Stock in the last 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangement, Understandings or Relationships
with Respect to Securities of the Issuer.
----------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 9 OF 11 PAGES
--------------- --- ---
The information set forth under Items 3, 4 and 5 of this
statement is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit Number Description
-------------- -----------
1. Stock Purchase Agreement dated as of May 16, 1995,
among First Data Corporation, FDC Health Inc., First
Data Health Systems Corporation, HBO & Company and HBO
& Company of Georgia.
2. Letter Agreement dated as of June 17, 1995 among First
Data Corporation, FDC Health Inc., First Data Health
Systems Corporation, HBO & Company and HBO & Company of
Georgia amending the Stock Purchase Agreement.
3. Shareholder Agreement dated as of June 17, 1995 between
First Data Corporation and HBO & Company.
4. Registration Rights Agreement dated as of June 17, 1995
between First Data Corporation and HBO & Company.
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 10 OF 11 PAGES
--------------- --- ---
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: June 22, 1995
FIRST DATA CORPORATION
By: /s/ David P. Bailis
-----------------------
Name: David P. Bailis
Title: Senior Vice President,
Secretary and General Counsel
<PAGE>
SCHEDULE 13D
CUSIP NO. 404100109 PAGE 11 OF 11 PAGES
--------------- --- ---
Exhibit Index
-------------
Exhibit No. Description
- ----------- --------------------------------------------
[S] [C]
1. Stock Purchase Agreement dated as of
May 16, 1995, among First Data
Corporation, FDC Health Inc., First
Data Health Systems Corporation, HBO
& Company and HBO & Company of
Georgia.
2. Letter Agreement dated as of June 17,
1995 among First Data Corporation,
FDC Health Inc., First Data Health
Systems Corporation, HBO & Company
and HBO & Company of Georgia amending
the Stock Purchase Agreement.
3. Shareholder Agreement dated as of
June 17, 1995 between First Data
Corporation and HBO & Company.
4. Registration Rights Agreement dated
as of June 17, 1995 between First
Data Corporation and HBO & Company.
<PAGE>
Exhibit 1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 16,
1995, among FIRST DATA CORPORATION, a Delaware corporation ("FDC"); FDC HEALTH
INC., a Nebraska corporation and a wholly owned subsidiary of FDC ("FDC
Health"); FIRST DATA HEALTH SYSTEMS CORPORATION, a Delaware corporation and
wholly owned subsidiary of FDC Health (the "Company"); HBO & COMPANY, a Delaware
corporation ("Parent"); and HBO & COMPANY OF GEORGIA, a Delaware corporation and
wholly owned subsidiary of Parent (the "Buyer").
W I T N E S S E T H:
-------------------
WHEREAS, FDC is the owner of all the outstanding shares of capital
stock of FDC Health, and FDC Health is the owner of all the outstanding shares
of capital stock of the Company;
WHEREAS, the Company and the Subsidiaries (as such term is defined in
Section 1.1) are collectively engaged in the business of providing health care,
patient and financial information systems and services to hospitals, integrated
health care delivery systems, medical group practices and medical facilities
(the "Business");
WHEREAS, FDC desires to sell to Buyer, and Buyer desires to purchase
from FDC, through FDC Health, all the capital stock of the Company, all on the
terms and subject to the conditions set forth herein;
WHEREAS, simultaneously with the Closing (as such term is defined in
Section 1.1), the Company intends to distribute to FDC Health all of the capital
stock of ACB Business Services, Inc., a Delaware corporation ("ACB"), and The
Shareholder Services Group, Inc., a Massachusetts corporation ("TSSG"), both
wholly owned subsidiaries of the Company; and
WHEREAS, at the Closing, FDC and/or the Company and Parent and/or
Buyer shall enter into the FDC Ancillary Agreements and the Buyer Ancillary
Agreements, respectively, including (i) the Registration Rights Agreement (the
"Registration Rights Agreement") in the form attached hereto as Exhibit 1, (ii)
the Human Resources Agreement (the "Human Resources Agreement") in the form
attached hereto as Exhibit 2, (iii) the Transition Services Agreement (the
"Transition Services Agreement") in the form attached hereto as Exhibit 3, (iv)
the Shareholder Agreement (the "Shareholder Agreement") in the
<PAGE>
form attached hereto as Exhibit 4; (v) the Trademark License Agreement (the
"Trademark License Agreement") in the form attached hereto as Exhibit 5; and
(vi) the sublease agreement described in Section 9.7.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between FDC, FDC Health
and the Company, on the one hand, and Parent and Buyer, on the other hand, as
follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1. DEFINITIONS. In this Agreement, the following terms have
the meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement, statute or
regulation referred to in this Agreement shall mean such agreement, statute or
regulation as amended, supplemented and modified from time to time, but only, in
the case of any such agreement, to the extent permitted by the applicable
provisions thereof and by this Agreement.
"ACB" has the meaning specified in the fourth recital of this
Agreement.
"ACQUISITION PROPOSAL" has the meaning specified in Section 7.5.
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"APPRAISAL" has the meaning specified in Section 8.3(g)(iii).
"APPRAISER" has the meaning specified in Section 8.3(g)(iii).
"AVERAGE STOCK PRICE" has the meaning specified in Section 3.1.
"BENEFIT PLANS" has the meaning specified in Section 5.9.
"BUSINESS" has the meaning specified in the second recital to this
Agreement.
"BUSINESS COMBINATION" has the meaning specified in Section 3.2.
"BUYER" has the meaning specified in the first paragraph of this
Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Buyer or Parent under this
Agreement or in connection herewith, including, without limitation, the
Registration Rights Agreement,
-2-
<PAGE>
the Human Resources Agreement, the Transition Services Agreement, the
Shareholder Agreement and the Trademark License Agreement.
"BUYER GROUP MEMBER" means Buyer and its Affiliates (including Parent
and, after the Closing, the Company and the Subsidiaries), directors, officers,
employees, agents, attorneys and consultants and their respective successors and
assigns.
"BUYER STOCK CONSIDERATION" has the meaning specified in Section
3.1(b).
"CASH CONSIDERATION" has the meaning specified in Section 3.1(a).
"CLAIM NOTICE" has the meaning specified in Section 11.3(a).
"CLOSING" means the closing of the transfer of the Shares from FDC to
Buyer in exchange for the Buyer Stock Consideration and the Cash Consideration.
"CLOSING DATE" has the meaning specified in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning specified in the first paragraph of this
Agreement.
"COMPANY SOFTWARE" has the meaning specified in Section 5.11(g).
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement dated August 5, 1994, as amended by Amendment No. 1 to the
Confidentiality Agreement dated September 22, 1994, between Buyer and FDC, by a
letter dated October 4, 1994, to John S. Zieser, Esq. from Robert W. Smith,
Esq., counsel to Parent (which letter constitutes Amendment No. 2 to the
Confidentiality Agreement) and by Amendment No. 3 to the Confidentiality
Agreement dated as of the date hereof between Parent and FDC.
"COPYRIGHTS" mean United States and foreign registered copyrights and
pending applications to register the same of the Company and the Subsidiaries.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"CUSTOMER CONTRACT" has the meaning specified in Section 5.14(A).
"DOL" means the United States Department of Labor.
"ERISA" means the Employee Retirement Income Security Act of 1974.
-3-
<PAGE>
"ERISA AFFILIATE" means, with respect to a Person, any other Person
that is required to be aggregated with such Person under Section 414(b), (c),
(m) and/or (o) of ERISA at any time prior to the Closing Date.
"ERISA PLAN" has the meaning specified in Section 5.9.
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title or other restrictions of a similar kind.
"EXCLUDED TAXES" have the meaning specified in Section 8.3(b).
"EXPENSES" means any and all reasonable expenses incurred in
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals); provided,
however, that in respect of the indemnification obligations of FDC to the Buyer
Group Members under Section 11.1(a)(iv), "EXPENSES" means 50% of any and all of
the foregoing items incurred by any Buyer Group Member and indemnifiable under
Section 11.1(a)(iv).
"FDC" has the meaning specified in the first paragraph of this
Agreement.
"FDC ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by FDC, an Affiliate of FDC, FDC
Health or the Company under this Agreement or in connection herewith, including,
without limitation, the Registration Rights Agreement, the Human Resources
Agreement, the Transition Services Agreement, the Shareholder Agreement, the
Trademark License Agreement and the sublease agreement described in Section 9.7.
"FDC GROUP MEMBER" means FDC and its Affiliates, directors, officers,
employees, agents, attorneys and consultants and their respective successors and
assigns.
"FDC HEALTH" has the meaning specified in the first paragraph of this
Agreement.
"FDC NOTICED BREACH" has the meaning specified in the first paragraph
of Article IX.
"FDC TAX GROUP" means the "affiliated group" (as defined in Section
1504(a) of the Code without regard to the limitations contained in Section
1504(b) of the Code) that includes FDC.
-4-
<PAGE>
"FINANCIAL STATEMENT" means the unaudited consolidated balance sheet
of the Business as of the Financial Statement Date, and the related statements
of income, shareholder's equity and cash flows for the 3 months then ended,
included in Schedule 5.5.
"FINANCIAL STATEMENT DATE" means March 31, 1995.
"FOREIGN PLANS" has the meaning specified in Section 5.9 (o).
"GAAP" means United States generally accepted accounting principles,
consistently applied, in effect at the applicable date, or at the date of the
financial statement to which it refers.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" have the meaning specified in Section 5.12.
"HAZARDOUS SUBSTANCE" has the meaning specified in Section 5.17.
"HBO NOTICED BREACH" has the meaning specified in the first paragraph
of Article X.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"HUMAN RESOURCES AGREEMENT" has the meaning specified in the fifth
recital to this Agreement.
"IMMIGRATION LAWS" has the meaning specified in Section 5.19.
"INDEMNIFIED PARTY" has the meaning specified in Section 11.3(a).
"INDEMNITOR" has the meaning specified in Section 11.3(a).
"INTELLECTUAL PROPERTY" means Copyrights, Patent Rights, Trademarks
and Trade Secrets of the Company and the Subsidiaries.
"KNOWLEDGE OF COMPANY" means, as to a particular matter, the actual
knowledge of the following persons: Larry Ferguson, Edward Bowman, Henry
Abelman, Linda Quaranto, Barbara Piatt, Jim Bodenbender, Ivan Boyd, Chuck
Miller, Norm Kessling, Eddie Quibell, Robert Levenson and David Bailis.
"KNOWLEDGE OF FDC" means, as to a particular matter, the actual
knowledge of the following persons: Henry Duques, Robert Levenson, Walter Hoff,
Larry Hain, David Treinen, David Bailis and John Zieser.
-5-
<PAGE>
"KNOWLEDGE OF PARENT" means, as to a particular matter, the actual
knowledge of the following persons: Charles W. McCall, James A. Gilbert, Jay P.
Gilbertson and Timothy S. Heyerdahl.
"LICENSED SOFTWARE" has the meaning specified in Section 5.11(f).
"LOSSES" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges; provided, however, that in respect of the
indemnification obligations of FDC to the Buyer Group Members under Section
11.1(a)(iv), "LOSSES" means 50% of any and all of the foregoing items incurred
by any Buyer Group Member and indemnifiable under Section 11.1(a)(iv).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on or change
in any of the business, financial condition, results of operations, assets or
liabilities of the Company and the Subsidiaries, in each case taken as a whole.
"MATERIAL ADVERSE EFFECT ON PARENT AND BUYER" means a material adverse
effect on or change in any of the business, financial condition, results of
operations, assets or liabilities of Parent and Buyer, in each case taken as a
whole.
"NASDAQ" has the meaning specified in Section 3.1.
"NOTICE OF CONTEST" has the meaning specified in Section 11.4(c).
"NOTICE OF SETTLEMENT" has the meaning specified in Section 11.4(c).
"OWNED SOFTWARE" has the meaning specified in Section 5.11(e).
"PARENT COMMON STOCK" means the Common Stock, par value $.05 per
share, of Parent.
"PARENT PREFERRED STOCK" has the meaning specified in Section 6.3.
"PARENT SEC DOCUMENTS" have the meaning specified in Section 6.4.
"PARENT STOCK OPTIONS" have the meaning specified in Section 6.3.
"PATENT RIGHTS" mean United States and foreign patents, patent
applications, continuations, continuations-in-part, divisions or reissues.
"PENSION PLAN" means an employee pension benefit plan within the
meaning of Section 3(2) of ERISA.
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"PBGC" means the Pension Benefit Guaranty Corporation established
under Title IV of ERISA.
"PERMITTED ENCUMBRANCES" means (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable and (c) other liens or imperfections on property
that would not have a Material Adverse Effect.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"PHARMACY, SCHEDULING, MEDICAL RECORDS AND RADIOLOGY SOFTWARE
PRODUCTS" means (i) the new pharmacy and radiology clinical software promised to
the PCS software customers described on Schedule 8.5 at a user group meeting in
San Antonio, Texas during the Fall of 1992 by John Gaven, then Chief Operating
Officer of the Company, in the formal presentation setting forth the terms and
conditions of the offer; (ii) the new pharmacy and radiology clinical software
promised to the "The Precision Alternative" software customers described on
Schedule 8.5 at a user group meeting in Baltimore, Maryland during the Spring of
1994 by Chuck Miller, Senior Vice President of the Company, in the formal
presentation setting forth the terms and conditions of the offer; (iii) the
pharmacy and radiology clinical software required in the written contracts with
the following customers: Ball Memorial Hospital located in Muncie, IN; City and
County of Denver, Colorado (for its Department of Health and Hospitals) a/k/a
Denver General located in Denver, CO; Medical Society Health Systems, Inc.
a/k/a/ Roper Hospital located in Charleston, SC; Saint Anthony's, Peninsula
Regional Medical Center located in Salisbury, MD; and St. Lukes Hospital located
in Chesterfield, MO; and (iv) the medical records and scheduling software
required in the written contracts with the following customers: Ball Memorial
Hospital, Blodgett Memorial Medical Center, Blue Cross Blue Shield of Ohio,
Charleston Area Medical Center, Peninsula Regional Medical Center, Children's
Hospital & Medical Center (a/k/a Seattle Children's), Delnor Community Hospital,
Denver General Health & Hospitals, Eastern New Mexico Medical Center, Lake
Hospital, Liberty Healthcare Systems, Inc., Newcomb Medical Center, Medical
Society Health Systems, Inc. (a/k/a Roper Hospital), Providence General Medical
Center, St. Anthony's Medical Center, St. Luke's Hospital, Stormont-Vail
Regional Medical Center and Western Pennsylvania Hospital.
"PHARMACY, SCHEDULING, MEDICAL RECORDS AND RADIOLOGY SOFTWARE
CONTRACTS" has the meaning specified in Section 8.5.
"PURCHASE PRICE" has the meaning specified in Section 3.1.
"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in the fifth
recital to this Agreement.
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"REAL PROPERTY" has the meaning specified in Section 5.10.
"REPORTABLE EVENT" has the meaning specified in Section 4043 of ERISA.
"REQUIREMENTS OF LAW" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Body.
"SEC" has the meaning specified in Section 6.2.
"SECTION 338(H)(10) ELECTION" has the meaning specified in Section
8.3(g)(i).
"SECURITIES ACT" has the meaning specified in Section 6.2.
"SHARES" has the meaning specified in Section 2.1.
"SOFTWARE" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, higher level "proprietary" languages, related documentation and
materials, whether in source code, object code or human-readable form.
"SHAREHOLDER AGREEMENT" has the meaning specified in the fifth recital
to this Agreement.
"STRADDLE PERIOD" means any taxable year or period beginning before
and ending after the Closing Date.
"SUBSIDIARIES" means First Data Health Services Corporation, a Georgia
corporation; FDC Physician Services Corporation, a California corporation; First
Data Health Systems International, a Delaware corporation; First Data Health
Systems (Australia), Pty. Ltd., an Australia corporation; First Data Health
Systems (U.K.), Ltd., a United Kingdom corporation; First Data Health Systems
(Ireland), Ltd., an Ireland corporation; and First Data Health Systems Training
Services Ltd., an Ireland corporation.
"TANDEM" has the meaning specified in Section 8.6.
"TANDEM MATTER" means the matter between the Company and Tandem
described in Schedule 5.13.
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like
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assessment or charge of any kind whatsoever, together with any interest or
penalty, imposed by any Governmental Body.
"TAX PACKAGE" has the meaning specified in Section 8.3(c)(ii).
"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
"THIRD-PERSON CLAIM" has the meaning specified in Section 11.4(a).
"TRADEMARKS" means the trademarks, service marks and trade names
listed on Schedule 5.11(a).
"TRADEMARK LICENSE AGREEMENT" has the meaning specified in the fifth
recital to this Agreement.
"TRADE SECRETS" means all ideas, trade secrets, know-how, concepts,
methods, processes, formulae, reports, data, customer lists, mailing lists,
business plans, or other proprietary information of the Company or any of the
Subsidiaries that (i) derive independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other Persons who can obtain economic value from their disclosure or
use, and (ii) are the subject of efforts that are reasonable under the
circumstances to maintain their secrecy.
"TRANSITION SERVICES AGREEMENT" has the meaning specified in the fifth
recital to this Agreement.
ARTICLE II
PURCHASE AND SALE
-----------------
SECTION 2.1. PURCHASE AND SALE OF THE SHARES. Upon the terms and
subject to the conditions of this Agreement, on the Closing Date FDC shall cause
FDC Health to, and FDC Health shall, sell, transfer, assign, convey and deliver
to Buyer, free and clear of all Encumbrances, and Buyer shall purchase and
accept from FDC Health, all of the issued and outstanding shares of capital
stock of the Company (the "Shares").
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ARTICLE III
PURCHASE PRICE
--------------
SECTION 3.1. PURCHASE PRICE. The purchase price for the Shares (the
"Purchase Price") shall be equal to:
(a) $500,000 in cash and a promissory note in the aggregate principal
amount of $100,000, in the form of Exhibit 6 (collectively, the "Cash
Consideration"), plus,
(b) the number of validly issued, fully paid and nonassessable shares
of Parent Common Stock equal to the Buyer Stock Consideration.
"Buyer Stock Consideration" means the following:
(i) if the Average Stock Price is not less than $44, 4,000,000 shares
of Parent Common Stock; or
(ii) if the Average Stock Price is less than $44, the number of shares
of Parent Common Stock equal to the quotient of (x) $176,000,000 divided by
(y) the Average Stock Price; provided, however, that if such quotient is
greater than 4,200,000, then the Buyer Stock Consideration shall be equal
to 4,200,000 shares of Parent Common Stock;
provided, however, that, in the event the Buyer Stock Consideration is
determined pursuant to the proviso to clause (ii) above then FDC shall have the
right, by written notice delivered to Parent, to terminate this Agreement
pursuant to Section 12.1(e); and provided, further, that any calculation
pursuant to such clause (ii) of the number of shares constituting the Buyer
Stock Consideration shall be rounded to the nearest whole number or, if there is
no nearest whole number, to the next higher number.
"Average Stock Price" means the average of the per share closing
prices on the Nasdaq Stock Market's National Market ("Nasdaq") as reported in
The Wall Street Journal of the Parent Common Stock during the 10 consecutive
trading days ending on the second trading day prior to the Closing Date.
SECTION 3.2. ADJUSTMENT OF AVERAGE STOCK PRICE AND/OR BUYER STOCK
CONSIDERATION. In the event of any reclassification, stock split or stock
dividend with respect to the Parent Common Stock, any change of the Parent
Common Stock into other securities or any other dividend or distribution with
respect to the Parent Common Stock, other than normal quarterly dividends as the
same may be adjusted from time to time in the ordinary course, or if a record
date with respect to any of the foregoing should occur, prior to the Closing
Date, appropriate and proportionate adjustments, if any, shall be made to the
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Average Stock Price and/or the number of shares of Parent Common Stock to be
received by FDC Health as the Buyer Stock Consideration. In addition, if
between the date of this Agreement and the Closing Date, Parent consolidates
with or is merged with or into any other corporation (a "Business Combination")
and the terms thereof provide that the Parent Common Stock will be converted
into or exchanged for the securities or assets of any other corporation not
controlled by Parent, then provision shall be made as part of the terms of such
Business Combination so that FDC Health will be entitled to receive, in lieu of
each share of Parent Common Stock issuable to FDC Health as provided herein, the
same kind and amount of securities or assets as will be distributable to holders
of shares of Parent Common Stock upon consummation of such Business Combination
with respect to each such share of Parent Common Stock.
ARTICLE IV
CLOSING
-------
SECTION 4.1. CLOSING DATE. The Closing shall be consummated at 10:00
A.M., local time, on May 31, 1995, and effective as of 11:59 P.M. on such date,
or such later date and such other time as may be agreed upon by Buyer and FDC
after the conditions set forth in Articles IX and X have been satisfied, at the
offices of Jones, Day, Reavis & Pogue, Atlanta, Georgia, or at such other place
as shall be agreed upon by Buyer and FDC. The time and date on which the
Closing is actually held is referred to herein as the "Closing Date."
SECTION 4.2. PAYMENT ON THE CLOSING DATE. Subject to fulfillment or
waiver (where permissible) of the conditions set forth in Article IX, at the
Closing (i) Buyer shall pay FDC Health $500,000 by wire transfer of immediately
available funds to the bank account or accounts specified by FDC and deliver a
duly executed promissory note in the form of Exhibit 6 and (ii) Parent shall, on
behalf of Buyer, deliver to FDC Health a certificate or certificates for the
shares of Parent Common Stock constituting the Buyer Stock Consideration
registered in the name of FDC or, at the request of FDC, in the name of one or
more of its Affiliates.
SECTION 4.3. BUYER'S AND PARENT'S ADDITIONAL CLOSING DATE DELIVERIES.
Subject to fulfillment or waiver (where permissible) of the conditions set forth
in Article IX, in addition to the deliveries to be made pursuant to Section 4.2,
at the Closing Buyer or Parent shall deliver to FDC all of the following:
(a) copies of Buyer's and Parent's respective Certificates of
Incorporation certified as of a recent date by the Secretary of State of
the State of Delaware;
(b) certificates of good standing of each of Buyer and Parent issued
as of a recent date by the Secretary of State of the State of Delaware;
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(c) certificates of the secretary or an assistant secretary of each
of Buyer and Parent, dated the Closing Date, in form and substance
reasonably satisfactory to FDC, as to (i) the lack of amendments to the
Certificate of Incorporation of each respective corporation since the date
of the respective certificates specified in clause (a) above; (ii) the By-
laws of each respective corporation; (iii) the resolutions of the Board of
Directors of each respective corporation authorizing the execution and
performance of this Agreement, any Buyer Ancillary Agreement to which it is
a party and the transactions contemplated hereby and thereby; and (iv)
incumbency and signatures of the officers of each respective corporation
executing this Agreement and any Buyer Ancillary Agreement to which it is a
party;
(d) opinion of James A. Gilbert, Esq., Vice President and General
Counsel of Parent, in customary form to be agreed upon by the parties;
(e) the certificates contemplated by Sections 10.1 and 10.2, duly
executed by duly authorized officers of Buyer and Parent, respectively; and
(f) the Registration Rights Agreement, the Shareholder Agreement, the
Transition Services Agreement, the Human Resources Agreement and the
Trademark License Agreement, each duly executed by Parent and/or Buyer.
SECTION 4.4. FDC'S, FDC HEALTH'S AND THE COMPANY'S CLOSING DATE
DELIVERIES. Subject to fulfillment or waiver (where permissible) of the
conditions set forth in Article X, at the Closing FDC, FDC Health or the Company
shall deliver to Buyer all of the following:
(a) copies of FDC's, FDC Health's and the Company's respective
Certificates or Articles of Incorporation, as appropriate, certified as of
a recent date by the Secretary of State of the State of each corporation's
state of incorporation;
(b) certificates of good standing of each of FDC, FDC Health and the
Company issued as of a recent date by the Secretary of State of each
corporation's state of incorporation;
(c) certificates of the secretary or an assistant secretary of each
of FDC, FDC Health and the Company, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, as to (i) the lack of
amendments to the Certificate or Articles of Incorporation of each
respective corporation since the date of the respective certificate
specified in clause (a) above; (ii) the By-laws of each respective
corporation; (iii) the resolutions of the Board of Directors of each
respective corporation authorizing the execution and performance of this
Agreement, any FDC Ancillary Agreement to which it is a
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party and the transactions contemplated hereby and thereby; and (iv)
incumbency and signatures of the officers of each respective corporation
executing this Agreement and any FDC Ancillary Agreement to which it is a
party;
(d) opinion of David P. Bailis, Esq., General Counsel of FDC, in
customary form to be agreed upon by the parties;
(e) the certificate or certificates representing all the Shares, duly
endorsed to Buyer or accompanied by duly executed and witnessed stock
powers;
(f) the certificates contemplated by Sections 9.1 and 9.2, duly
executed by duly authorized officers of FDC, FDC Health and the Company,
respectively;
(g) the certificates representing any shares of the Subsidiaries
held by officers or directors of such Subsidiaries pursuant to the laws of
their respective jurisdictions of incorporation, as indicated in the
definition of Subsidiaries set forth in Section 1.1 hereof, duly endorsed
to individuals designated by Buyer (a list of each such individual to be
delivered by Buyer to FDC at least five days prior to the Closing Date) or
accompanied by duly executed and witnessed stock powers; and
(h) the Registration Rights Agreement, the Shareholder Agreement, the
Transition Services Agreement, the Human Resources Agreement, the Trademark
License Agreement and the sublease agreement described in Section 9.7, each
duly executed by FDC or an Affiliate of FDC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FDC AND THE COMPANY
-----------------------------------------------------
As an inducement to Buyer and Parent to enter into this Agreement and
to consummate the transactions contemplated hereby, FDC, FDC Health and the
Company, jointly and severally, represent and warrant to Buyer and Parent and
agree as follows:
SECTION 5.1. ORGANIZATION OF FDC. FDC and FDC Health are corporations
duly organized, validly existing and in good standing under the laws of the
State of Delaware and Nebraska, respectively.
SECTION 5.2. ORGANIZATION OF THE COMPANY AND THE SUBSIDIARIES; CAPITAL
STRUCTURE OF THE COMPANY; POWER AND AUTHORITY. (a) Each of the Company and the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation
(such jurisdictions for the purposes of the Subsidiaries being those listed in
Section 1.1 in the definition of
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"Subsidiaries"). Each of the Company and the Subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect. Each of
the Company and the Subsidiaries has the corporate power and corporate authority
to own or lease and operate its assets and to carry on the Business in the
manner in which it was conducted immediately prior to the date of this
Agreement.
(b) The authorized capital stock of the Company consists of 1,000
shares of Common Stock, par value $1.00 per share, of which 10 shares are issued
and outstanding. Except for this Agreement, there are no agreements,
arrangements, options, warrants, calls, rights or commitments of any character
relating to the issuance, sale, purchase or redemption of any shares of capital
stock of the Company. All the outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid, nonassessable, free of
preemptive rights and are owned by FDC Health free from all Encumbrances.
SECTION 5.3. SUBSIDIARIES AND INVESTMENTS. Except as identified on
Schedule 5.3, the Company does not, directly or indirectly, own, of record or
beneficially, any outstanding equity interests in any corporation, partnership,
joint venture or other entity which is involved in or relates to the Business.
SECTION 5.4. AUTHORITY; CONFLICTS. (a) Each of FDC, FDC Health and
the Company has the corporate power and corporate authority to execute, deliver
and perform this Agreement and each of the FDC Ancillary Agreements to which it
is a party. The execution, delivery and performance of this Agreement and the
FDC Ancillary Agreements by FDC, FDC Health and the Company, to the extent
either corporation is a party to any such agreement, have been duly authorized
and approved by FDC's, FDC Health's and the Company's respective boards of
directors and, except for the approval of the sole shareholder of FDC Health, do
not require any further authorization or consent of FDC, its stockholders, FDC
Health or the Company. This Agreement has been duly authorized, executed and
delivered by FDC, FDC Health and the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Buyer and Parent) is
the legal, valid and binding obligation of FDC, FDC Health and the Company
enforceable in accordance with its terms, and each of the FDC Ancillary
Agreements has been duly authorized by FDC, FDC Health and the Company to the
extent such corporation is a party thereto, and upon execution and delivery by
FDC, FDC Health and the Company, to the extent such corporation is a party
thereto, will be (assuming the valid authorization, execution and delivery by
Buyer and Parent, where Buyer or Parent is a party, and any other party or
parties thereto) a legal, valid and binding obligation of FDC, FDC Health and
the Company enforceable in accordance with its terms, in each case subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights and to general equitable
principles.
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(b) Except as set forth in Schedule 5.4, none of the execution and
delivery of this Agreement or any of the FDC Ancillary Agreements, the
consummation of any of the transactions contemplated hereby or thereby, and
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
upon any of the Shares or any of the assets of the Company or any
Subsidiary, under (1) the Restated Certificate of Incorporation or By-laws
of FDC; (2) the Articles of Incorporation or By-laws of FDC Health; (3) the
Certificate of Incorporation or By-laws of the Company; (4) any note,
instrument, mortgage, contract, agreement, commitment, lease, license,
franchise or financial obligation to which FDC, FDC Health, the Company or
any of the Subsidiaries is a party or by which FDC, FDC Health, the Company
or any of the Subsidiaries is bound, the breach or default of which would
have a Material Adverse Effect; (5) the Certificate of Incorporation,
charter or equivalent organizational document or By-laws or equivalent
document of any of the Subsidiaries; or (6) any Court Order to which FDC,
FDC Health, the Company or any of the Subsidiaries is a party or by which
FDC, FDC Health, the Company or any of the Subsidiaries is bound; or
(ii) require the approval, consent, authorization or act of, or the
making by FDC, FDC Health, the Company or any of the Subsidiaries of any
declaration, filing or registration with, any Person, except (A) in
connection, or in compliance, with the provisions of the HSR Act and (B)
for such approvals, consents, authorizations, declarations, filings or
registrations the failure of which to be obtained or made would not have a
Material Adverse Effect or otherwise prevent the consummation of any of the
transactions contemplated hereby.
SECTION 5.5. FINANCIAL STATEMENTS. Schedule 5.5 contains (i) the
audited consolidated balance sheets of the Business as of December 31, 1994,
1993 and 1992, respectively, and the audited consolidated statements of income,
shareholder's equity and cash flows of the Business for the years ended December
31, 1994, 1993 and 1992, respectively, and (ii) the unaudited consolidated
balance sheet of the Business as of the Financial Statement Date and the related
statements of income, shareholder's equity and cash flows for the 3 months then
ended. Except as set forth therein, such balance sheets and related statements
of income, shareholder's equity and cash flows have been prepared in conformity
with GAAP consistently applied (except that the Financial Statement does not
contain footnotes; provided that if such Financial Statement included footnotes
in accordance with GAAP such footnotes would not disclose any liabilities
required to be reflected therein by GAAP not otherwise reflected therein,
reflected in the footnotes to the financial statements described in clause (i)
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above or as disclosed on Schedule 5.7). Such balance sheets and related
statements of income, shareholder's equity and cash flows present fairly in
accordance with GAAP the financial position and results of operations of the
Business, as of their respective dates and for the respective periods covered
thereby.
SECTION 5.6. OPERATIONS SINCE FINANCIAL STATEMENT DATE. Except as set
forth in Schedule 5.6, and except for any change resulting from general
economic, financial, industry-wide or market conditions or circumstances
generally affecting the Business, since the Financial Statement Date, the
Business has been conducted only in the ordinary course and there have been no
changes in the assets, results of operating or financial condition of the
Business that have had or are reasonably expected to have a Material Adverse
Effect. Solely for purposes of illustrating the contents of the foregoing
sentence, since the Financial Statement Date, except as would not have a
Material Adverse Effect, neither the Company nor any of the Subsidiaries has,
except as disclosed on Schedule 5.6 attached hereto:
(a) transferred, assigned, conveyed or liquidated into current assets
any of its assets with a current book value in excess of $100,000;
(b) suffered, permitted or incurred the imposition of any
Encumbrance, other than Permitted Encumbrances;
(c) committed, suffered, permitted or incurred any default in
connection with borrowed money;
(d) to the Knowledge of the Company, made or agreed to any adverse
change in the terms of any contract or instrument to which it is a party;
(e) except in the ordinary course of the Business, waived, cancelled,
sold or otherwise disposed of, for less than the face amount thereof, any
claim or right that it has against others;
(f) except in the ordinary course of the Business, paid, agreed to
pay or incurred any obligation for any payment for, any contribution or
other amount to, or with respect to, any employee benefit plan, or paid any
bonus to, or granted any increase in the compensation of, its directors,
officers, agents or employees, or made any increase in the pension,
retirement or other benefits of its directors, officers, agents or other
employees;
(g) collected accounts receivable other than in the ordinary course
of the Business consistent with past practice;
(h) received any notices, or had reason to believe, that any supplier
has taken or contemplates any steps that could disrupt the business
relationship of the Company
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or such Subsidiary with said supplier or could result in the diminution in
the value of the Company and the Subsidiaries as a going concern;
(i) paid, agreed to pay or incurred any obligation for any payment of
any indebtedness except current liabilities incurred in the ordinary course
of the Business and except for payments as they become due pursuant to
governing agreements as such agreements on the date hereof; or
(j) delayed or postponed the payment of any liabilities, whether
current or long-term, or failed to pay in the ordinary course of the
Business any liability on a timely basis consistent with prior practice.
SECTION 5.7. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 5.7 or reflected on the Financial Statement, as of the Financial
Statement Date, the Company and the Subsidiaries were not subject to any
liability, whether absolute, contingent, accrued or otherwise that would be
required to be included on a balance sheet prepared in accordance with GAAP and
that would have a Material Adverse Effect. Since the Financial Statement Date,
except as set forth in Schedule 5.7, the Company and the Subsidiaries have not
incurred any liability, whether absolute, contingent, accrued or otherwise,
except for liabilities incurred in the ordinary course of the Business that have
not and would not have a Material Adverse Effect.
SECTION 5.8. TAXES. (A) COMPANY AND SUBSIDIARIES. Except as set
forth on Schedule 5.8(a), (i) the Company and the Subsidiaries have, as of the
date hereof, and will prior to the Closing Date have, timely filed all Tax
Returns required to have been filed on or before such dates, except such Tax
Returns which the failure to file would not have a Material Adverse Effect; (ii)
all Taxes shown to be due on the Tax Returns referred to in clause (i),
including without limitation all withholding or other payroll-related taxes
shown on such returns, have been or will be timely paid or deposited and all
required estimated taxes have been or will be timely paid or deposited; (iii)
none of the Company or the Subsidiaries has waived in writing any statute of
limitations in respect of Taxes of the Company or the Subsidiaries or agreed in
writing to an extension of time with respect to an assessment of taxes or
deficiency; (iv) the Tax Returns referred to in clause (i) relating to federal
and state income Taxes that have been filed as of the date hereof have been
examined by the appropriate Governmental Body or the period for assessment of
the Taxes in respect of which such Tax Returns were required to be filed has
expired; (v) no issues that have been raised or threatened in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; and (vi) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
referred to in clause (i) by a taxing authority have been paid in full.
(b) FDC Tax Group. The Company and each of the U.S. Subsidiaries are
members of the FDC Tax Group that join in the filing of a consolidated federal
income tax return with FDC as the common parent. Except as set forth on
Schedule 5.8(b), neither the
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Company nor any of the Subsidiaries has been a member of an affiliated group
filing a consolidated federal income tax return other than the FDC Tax Group.
Except as set forth in Schedule 5.8(b), (i) the FDC Tax Group has, as of the
date hereof, and will prior to the Closing Date have, timely filed, for any
period during which the Company or any of the Subsidiaries was a member of such
group, all federal income Tax Returns required to have been filed on or before
such dates, except such Tax Returns which the failure to file would not have a
Material Adverse Effect; (ii) all Taxes shown to be due on the Tax Returns
referred to in clause (i) have been or will be timely paid or deposited and all
required Taxes have been or will be timely paid or deposited; and (iii) the FDC
Tax Group has not waived in writing any statute of limitations in respect of any
material federal income Taxes or agreed in writing to an extension of time with
respect to any material assessment of federal income Taxes or deficiency for any
period during which the Company or any of the Subsidiaries was a member of the
group.
(c) Notwithstanding anything to the contrary in this Agreement,
nothing in this Section 5.8 shall cause FDC and FDC Health to be liable for any
Taxes for which FDC is not expressly liable pursuant to Section 8.3 (relating to
Tax matters).
SECTION 5.9. EMPLOYEE BENEFITS. (a) Schedule 5.9 lists any pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other incentive plan; any medical,
vision, dental or other health plan; any life insurance plan or any other
employee benefit plan or fringe benefit plan; any other material commitment,
payroll practice or method of contribution or compensation (whether arrived at
through collective bargaining or otherwise), whether formal or informal, whether
funded or unfunded, and whether legally binding or not; including, without
limitation, any "employee benefit plan" as that term is defined in Section 3(3)
of ERISA; that is currently or previously adopted, maintained, sponsored in
whole or in part, or contributed to by the Company, any of the Subsidiaries or
any ERISA Affiliate of the Company or any of the Subsidiaries, for the benefit
of, providing any remuneration or benefits to, or covering any current or former
employee or retiree, any dependent, spouse or other family member or beneficiary
of such employee or retiree, or any director, independent contractor,
stockholder, officer or consultant of the Company or any of the Subsidiaries, or
under (or in connection with) which the Company or any of the Subsidiaries has
any contingent or noncontingent liability of any kind, whether or not probable
of assertion (collectively, the "Benefit Plans"). Any of the Benefit Plans that
is an "employee pension benefit plan" as defined in Section 3(2) of ERISA or an
"employee welfare benefit plan" as defined in Section 3(1) of ERISA is referred
to herein as an "ERISA Plan."
(b) Schedule 5.9 also lists, with respect to all Benefit Plans: (i)
all trust agreements or other funding arrangements, including insurance
contracts, all annuity contracts, financial contributions, actuarial statements
or valuations, fidelity bonds, fiduciary liability policies, investment manager
or advisory contracts, and all amendments (if any) thereto; (ii) where
applicable, with respect to any such plans or plan amendments, the most recent
determination letters issued by the IRS; and (iii) the most recent summary plan
descriptions,
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any material modifications thereto, and all material employee communications
with respect to such Benefit Plans. Contemporaneous with the delivery of the
Schedules to this Agreement, the Company has delivered a true and complete copy
of each Benefit Plan and each agreement, IRS letter or ruling, opinion,
financial statement and summary plan description described in this Section 5.9,
together with the annual report (Form 5500 Series) for the two most recent plan
years for any Benefit Plan subject to such reporting requirements.
(c) All the ERISA Plans and any related trusts comply with and have
been maintained, operated and administered in accordance with their written
terms and in substantial compliance with the provisions of ERISA, all applicable
provisions of the Code relating to qualification and tax exemption under Code
Sections 401(a) and 501(a) or otherwise necessary to secure intended tax
consequences, all applicable state or federal securities laws, all applicable
reporting and disclosure requirements, and all other applicable laws, rules and
regulations and collective bargaining agreements, and none of the Company, any
of the Subsidiaries or any ERISA Affiliate of the Company or any of the
Subsidiaries has received any notice from any governmental agency or
instrumentality questioning or challenging such compliance. Any noncompliance
or failure properly to maintain, operate or administer an ERISA Plan or related
trust has not rendered and will not render (i) such ERISA Plan or related trust
or the Company or any of the Subsidiaries subject to or liable for any material
taxes, penalties, or liabilities to any Person; (ii) such ERISA Plan subject to
disqualification; or (iii) the trust subject to loss of tax-exempt status.
(d) No Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(e) None of the Company, any of the Subsidiaries or any ERISA
Affiliate of the Company or any of the Subsidiaries or any administrator or
fiduciary of any such Benefit Plan (or agent or delegate of any of the
foregoing) has engaged in any transaction or acted or failed to act in any
manner that could subject the Company or any of the Subsidiaries to any direct
or indirect liability (by indemnity or otherwise) for a breach of any fiduciary,
co-fiduciary or other duty under ERISA. No material oral or written
representation or communication with respect to any aspect of the Benefit Plans
has been or will be made to employees of the Company or any of the Subsidiaries
prior to the Closing Date that is not in accordance with the written or
otherwise preexisting terms and provisions of such Benefit Plans in effect
immediately prior to the Closing Date, except for any amendments or terminations
required by the terms of this Agreement or otherwise required by law or a
governmental agency. Except as set forth in Schedule 5.9, there are no
unresolved claims or disputes under the terms of, or in connection with, the
Benefit Plans (other than routine undisputed claims for benefits under the
health care plans), and no action, legal or otherwise, has been commenced with
respect to any claim (including claims for benefits under health care plans).
(f) As of the Financial Statement Date, neither the Company nor any
of the Subsidiaries had any current or future liability with respect to any
services performed or any
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events or matters occurring, arising or accruing on or prior to such date under
any Benefit Plan that was not reflected in the Financial Statement.
(g) None of the Company or any of the Subsidiaries maintains any
Benefit Plan providing deferred or stock-based compensation that is not
reflected in the Financial Statement.
(h) None of the Company, any of the Subsidiaries or any ERISA
Affiliate of the Company or any of Subsidiaries has maintained, and none now
maintains, a Benefit Plan providing welfare benefits (as defined in ERISA
Section 3(1)) to employees after retirement or other separation of service
except to the extent required under Part 6 of Title 6 of ERISA and Code Section
4980B.
(i) Except as set forth on Schedule 5.9, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee (or spouse, dependent or other family member of such employee)
of the Company or any of the Subsidiaries to severance pay, unemployment
compensation or any payment contingent upon a change in control or ownership of
the Company or any of the Subsidiaries, or (ii) accelerate the time of payment
or vesting, or increase the amount, of any compensation due to any such employee
or former employee (or any spouse, dependent or other family member of such
employee).
(j) Except as set forth on Schedule 5.9, the Internal Revenue Service
has issued a favorable determination letter with respect to each Pension Plan.
The Company is not aware of any facts that would adversely affect the qualified
status of any Pension Plan that is intended to so qualify.
(k) No non-exempt "prohibited transaction" (within the meaning of
Code Section 4975(c)) involving any Benefit Plan has occurred that would have a
Material Adverse Effect. None of the assets of any ERISA Plan is an "employer
security" (within the meaning of ERISA Section 407(d)(1)) or "employer real
property" (within the meaning of ERISA Section 407(d)(2)).
(l) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been paid to each
Pension Plan, and all contributions for any period ending on or before the
Closing Date that are not yet due have been paid to each such Pension Plan or
accrued, in each case in accordance with the past custom and practice of the
Company, any of the Subsidiaries and ERISA Affiliates of the Company.
(m) No Pension Plan has been completely or partially terminated or
been the subject of a Reportable Event as to which notices would be required to
be filed with the PBGC. No proceeding by the PBGC to terminate any Pension Plan
has been instituted or threatened.
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(n) None of the Company, any of the Subsidiaries or any ERISA
Affiliate of the Company or any of the Subsidiaries has incurred, or will incur,
any liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal liability) or under the Code with
respect to any Pension Plan on or prior to the Closing Date.
(o) The Benefit Plans which are maintained outside the jurisdiction
of the United States, including any such plans required to be maintained or
contributed to by the law of the relevant jurisdiction (the "Foreign Plans"),
will be listed on Schedule 5.9 and delivered to Parent within 10 days following
the date hereof, a true and complete copy of each of which will be furnished to
Buyer within 10 days following the date hereof.
(1) Each of the Foreign Plans is in compliance in all material
respects with the provisions of the laws of each jurisdiction in which any
of the Foreign Plans are maintained, to the extent those laws are
applicable to the Foreign Plans.
(2) All contributions to, and payments from, the Foreign Plans which
may have been required to be made in accordance with the terms of any such
Foreign Plan, and, when applicable, the law of the jurisdiction in which
such Foreign Plan is maintained, have been timely made. All such
contributions to the Foreign Plans, and all payments under the Foreign
Plans, for any period ending before the Closing that are not yet, but will
be, required to be made, are reflected as an accrued liability on the
Financial Statement, or as may be disclosed to Parent within 10 days
following the date hereof in Schedule 5.9.
(3) All material reports, returns and similar documents with respect
to any Foreign Plan required to be filed with any Governmental Body or
distributed to any Foreign Plan participant have been duly and timely filed
or distributed and all of the Foreign Plans have obtained from the
Governmental Body having jurisdiction with respect to such plans any
required determinations that such Foreign Plans are in compliance with the
laws of the relevant jurisdiction.
(4) Each of the Foreign Plans has been administered at all times, and
in all material respects, in accordance with its terms. There are no
pending investigations by any Governmental Body involving the Foreign
Plans, and no pending claims (except for claims for benefits payable in the
normal operation of the Foreign Plans), suits or proceedings against any
Foreign Plan or asserting any rights or claims to benefits under any
Foreign Plan which could have a Material Adverse Effect.
(5) The fair market value of the assets of each of the Foreign Plans
which are funded are at least equal to the liabilities of such Foreign
Plans, and
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the consummation of the transactions contemplated by this Agreement will
not by itself create or otherwise result in any material liability with
respect to any Foreign Plan.
(6) Schedule 5.9 shall be delivered to Parent within 10 days
following the date hereof separately identifying each Foreign Plan which is
a defined benefit pension plan and which is maintained by one of the
Subsidiaries as the sponsor of such plan and which is not reflected as a
liability on the Financial Statement.
(p) The participant and beneficiary records maintained for
transferred employees with respect to the Benefit Plans are in the custody of
the Person(s) identified on Schedule 5.9, which will be delivered to Parent
within 10 days following the date hereof. All such records accurately state the
employment, salary and benefits history of each participant and beneficiary
under such Benefit Plan.
(q) Any insurance premium with respect to any Benefit Plan and any
premium imposed on the Company or any of the Subsidiaries that is required or
payable through the Closing Date will have been paid on or before the Closing
Date, and there will be no liability of the Buyer, the Company or any of the
Subsidiaries in the nature of a retroactive rate adjustment, loss sharing
arrangement or other liability arising out of events occurring prior to the
Closing Date.
SECTION 5.10. OWNERSHIP OF ASSETS AND LEASES. Neither the Company
nor any Subsidiary owns any real property ("Real Property"). Schedule 5.10(a)
lists all agreements pursuant to which the Company or any of the Subsidiaries
leases Real Property. Schedule 5.10(b) attached hereto is a list of items of
personal property owned by the Company or any of the Subsidiaries, such list
being maintained by the Company in the ordinary course of the Business as of the
date indicated thereon and excluding items included in any of the Schedules to
Section 5.11. Schedule 5.10(c) attached hereto is a complete and correct list
of all material items of personal property leased by the Company or any of the
Subsidiaries pursuant to agreements that provide for annual rental payments of
$50,000 or more, other than items identified in any of the Schedules to Section
5.11. The Company and the Subsidiaries have title to all of the property and
assets listed and described in Schedules 5.10(a) and 5.10(b) in each case free
and clear of any Encumbrances, except for Permitted Encumbrances. All buildings
and material items of machinery and equipment owned or leased by the Company or
any Subsidiary, as applicable, are in good operating condition and reasonable
state of repair, subject only to ordinary wear and tear, except for such
conditions and states of repair that would not have a Material Adverse Effect.
Except as provided on Schedule 5.10(d) and except as would not have a Material
Adverse Effect, the inventories of the Company and the Subsidiaries consist only
of items of supplies and computer-related equipment of a quality and quantity
usable in the normal course of the Business. Except as set forth in Schedule
5.15(1)(d), all of the accounts receivable of the Company and the Subsidiaries
as of the Closing Date will be bona fide, will reflect actual transactions and
will have arisen in the
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ordinary course of the Business. Except as listed on Schedule 5.10(e) and any of
the Schedules to Section 5.11, and except pursuant to this Agreement, neither
the Company nor any of the Subsidiaries is a party to any contract or obligation
(other than contracts or obligations entered in the ordinary course of the
Business) whereby there has been granted to anyone an absolute or contingent
right to purchase, obtain or acquire any rights in any material items of the
assets, properties or operations that are owned by the Company or any of the
Subsidiaries or that are used in connection with the Business, other than any
such rights that, if exercised, would not have a Material Adverse Effect.
SECTION 5.11. INTELLECTUAL PROPERTY; COMPUTER SOFTWARE. (a) Schedule
5.11(a) contains a list of (i) all Copyrights and Patent Rights owned by the
Company or the Subsidiaries together with all registrations and applications for
registration of the foregoing, if any, and trademarks, both registered or with
respect to which applications for registration have been filed, applicable to or
used in the Business and owned by the Company and the Subsidiaries, and
trademarks that are unregistered and are material to the Business ("Trademarks")
owned by the Company or the Subsidiaries; (ii) the owner of such Intellectual
Property and any registration thereof; and (iii) a complete list of all licenses
granted by or to the Company with respect to any of the above, except for
licenses granted pursuant to Customer Contracts, licenses granted to Software
developers and marketing rights granted to third parties by the Company or the
Subsidiaries or granted by third parties to the Company or the Subsidiaries.
(b) Except as disclosed in Schedule 5.11(b) and Schedule 8.2, the
Company and the Subsidiaries own the entire right, title and interest in and to
the Intellectual Property owned by the Company or the Subsidiaries, free and
clear of any Encumbrance, except for Permitted Encumbrances, except for licenses
granted pursuant to Customer Contracts, licenses granted to Software developers
and marketing rights granted to third parties by the Company or the Subsidiaries
or granted by third parties to the Company or the Subsidiaries.
(c) Except as disclosed in Schedule 5.11(c), (i) all registrations
for Copyrights and Trademarks identified in Schedule 5.11(a) are valid and in
force; (ii) all applications to register any unregistered Copyrights, Patent
Rights and Trademarks so identified are pending and in good standing, all
without challenge of any kind; (iii) the Company and the Subsidiaries have the
right to bring actions for infringement or unauthorized use of the Copyrights,
Trademarks and Trade Secrets owned by the Company or the Subsidiaries; and (iv)
no action has been brought in which the validity of the Patent Rights was
successfully challenged.
(d) Except as disclosed in Schedule 5.11(d), neither the Company nor
any Subsidiary is currently in receipt of any written notice of any violation
of, and neither the Company nor any Subsidiary is violating, the rights of
others in any copyrights, patents, trademarks, service marks, trade names, trade
secrets, know-how or other intellectual property, except such violations that
would not have a Material Adverse Effect. Except as set forth on Schedule
5.11(d), the Company and the Subsidiaries have obtained a valid license or have
otherwise obtained the right to utilize all Intellectual Property used in the
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Business and not owned by the Company or the Subsidiaries, except for those that
would not have a Material Adverse Effect.
(e) Schedule 5.11(e) contains a complete and accurate list of
substantially all (but all material) currently marketed computer Software owned
by the Company or any of the Subsidiaries. Software used by the Company or any
Subsidiary or subject to an agreement or license whereby the right to use has
been granted by the Company or a Subsidiary to a third party, inclusive of the
Software described on Schedule 5.11(e), but excluding Licensed Software,
commercially available over-the-counter "shrink-wrap" Software, and Software of
third parties marketed by the Company or any Subsidiary pursuant to marketing
agreements, is herein referred to as the "Owned Software." Except as set forth
on Schedule 5.11(e) and except for such claims that would not have a Material
Adverse Effect, the Company or one of the Subsidiaries has title to the Owned
Software, free and clear of all claims with respect to title or ownership,
including such claims of employees, agents, consultants, customers, licensees or
other parties involved in the development, creation, marketing, maintenance,
enhancement or licensing of such computer Software. No source code in respect
of the Owned Software has been published or disclosed by the Company or any of
the Subsidiaries or, to the Knowledge of the Company, by any other party, to any
other parties, except as set forth in Schedule 5.11(e), and except pursuant to
contracts requiring such other parties to keep the source code in respect of the
Owned Software confidential. To the Knowledge of the Company, no such other
party has breached any such obligation of confidentiality, except such breaches
that would not have a Material Adverse Effect.
(f) Schedule 5.11(f)(1) contains a complete and accurate summary
description of substantially all (but all material) currently marketed Software
(other than commercially available over-the-counter "shrink-wrap" Software)
under which the Company or one or more of the Subsidiaries is a licensee, lessee
or otherwise has obtained the right of use. Software used by the Company or any
Subsidiary or subject to an agreement or license whereby the right to use has
been granted by the Company or a Subsidiary to a third party, inclusive of the
Software described on Schedule 5.11(f)(1), but excluding Owned Software,
commercially available over-the-counter "shrink-wrap" Software, Software used by
First Data Technologies, Inc. in providing services of the nature provided
pursuant to the Transition Services Agreement and Software of third parties
marketed by the Company or any Subsidiary pursuant to marketing agreements, is
herein referred to as the "Licensed Software." Schedule 5.11(f)(2) contains a
complete and accurate list of substantially all (but all material) licenses and
similar agreements pursuant to which the Company or any Subsidiary has obtained
or been granted the right to sublicense Licensed Software, except for such
licenses or such similar agreements that have expired or terminated, which
expirations or terminations would not have a Material Adverse Effect. Each of
the agreements described on Schedule 5.11(f)(2) sets forth the rights of the
Company or any Subsidiary, to the extent it is a party thereto, to sublicense
the Licensed Software referenced thereby, and the Company or a Subsidiary, as
the case may be, is in compliance with the terms of such agreement, except where
the failure to comply would not have a Material Adverse Effect. No source code
in respect of the Licensed Software has been published or disclosed by the
Company or any of the Subsidiaries or, to the
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Knowledge of the Company, by any other party, to any other parties, except, in
the case of Licensed Software that the Company or a Subsidiary leases or markets
to others, in accordance with and as permitted by a license, lease or similar
agreement relating to the source code in respect of the Licensed Software,
except pursuant to contracts requiring such other parties to keep the source
code in respect of the Licensed Software confidential or except that would not
have a Material Adverse Effect. To the Knowledge of the Company, no party to
whom the Company or any Subsidiary has disclosed Licensed Software has breached
such obligation of confidentiality, except such breaches that would not have a
Material Adverse Effect.
(g) The Owned Software and Licensed Software and commercially
available over-the-counter "shrink-wrap" Software constitute all Software used
in the business of the Company and the Subsidiaries (except the Software used by
First Data Technologies, Inc. in providing services of the nature provided
pursuant to the Transition Services Agreement) (collectively, the "Company
Software"). Except as specified in Schedule 5.11(g), and except for licenses
granted pursuant to Customer Contracts, licenses granted to Software developers
and marketing rights granted to third parties by the Company or the Subsidiaries
or granted by third parties to the Company or the Subsidiaries, neither the
Company nor any of the Subsidiaries has granted any licenses, leases or other
rights or has any obligation to do so with respect to the Company Software. All
contract programmers, independent contractors, nonemployee agents and persons or
other entities (other than employees) who have performed, within the last three
years, computer programming services for the Company or any of the Subsidiaries
has executed a confidentiality agreement in favor of the Company or such
Subsidiary, except for such failures to execute that would not cause a Material
Adverse Effect. Except as disclosed on Schedule 5.11(g), neither the Company
nor any Subsidiary is infringing any intellectual property rights of any person
or entity with respect to the Company Software, except for such infringements
that would not have a Material Adverse Effect. To the Knowledge of the Company,
no Person is infringing any intellectual property rights of the Company or any
Subsidiary with respect to the Company Software, which infringement by such
other Person would have a Material Adverse Effect.
(h) Except for commercially available "shrink-wrap" Software and
Software listed on Schedule 5.11(f)(1) and Schedule 5.11(f)(2), Schedule
5.11(h)(i) contains a complete and accurate summary description of substantially
all (but all material) agreements pursuant to which the Company and the
Subsidiaries have been granted rights to market Software owned by third parties.
To the Knowledge of the Company, Schedule 5.11(h)(ii) contains a complete and
accurate summary description of substantially all (but all material) agreements
pursuant to which the Company and the Subsidiaries have granted marketing rights
in the Company Software to third parties.
(i) Except as disclosed on Schedule 5.11(i), and except for Patents
and Trademarks, to the Knowledge of the Company, neither the Company nor any of
the Subsidiaries has taken or failed to take any action under the law of any
applicable foreign jurisdiction in which the Company or such Subsidiary has
marketed or licensed Company Software that would restrict or limit the ability
of the Company or such Subsidiary to protect,
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or prevent it from protecting, its ownership interests in, confidentiality
rights of, and rights to market, license, modify or enhance the Company Software
in such jurisdiction, except where such action can be cured without a Material
Adverse Effect.
SECTION 5.12. LICENSES AND PERMITS; COMPLIANCE WITH LAW. Except as
listed on Schedule 5.12, the Company and the Subsidiaries hold all licenses,
certificates, permits, franchises and rights from all appropriate federal, state
or other public authorities necessary for the conduct of the Business and the
use of their respective assets ("Governmental Permits"), except where the
failure to obtain the same would not have a Material Adverse Effect. Except as
noted in Schedule 5.12, the Company and the Subsidiaries are currently
conducting the Business so as to comply with all applicable Requirements of Law
the violation of which would have a Material Adverse Effect. Further, neither
the Company nor any of the Subsidiaries is currently charged with, and has not
received written notice that it is under governmental investigation with respect
to, any actual or alleged violation of any statute, ordinance, rule or
regulation, or is currently the subject of any pending or threatened adverse
proceeding by any regulatory authority having jurisdiction over the Business or
its properties or operations. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in the termination of any license, certificate, permit, franchise or
right held by the Company or any of the Subsidiaries that would have a Material
Adverse Effect.
SECTION 5.13. LITIGATION; DECREES. Except as set forth in Schedule
5.13:
(a) there are no orders, decrees, judgments, investigations,
inquiries or proceedings by any Governmental Body and no lawsuits, claims
or actions, either pending or, to the Knowledge of the Company, threatened
against, or affecting, the Business, the Company or any of the
Subsidiaries, and none of the same listed on Schedule 5.13, if pursued
and/or resulting in a judgment, would have a Material Adverse Effect or
impair the rights of any party hereto to consummate the transactions
contemplated hereby; and
(b) there are no orders, decrees, judgments, investigations,
inquiries or proceedings by any Governmental Body and no lawsuits, claims
or actions, either pending or, to the Knowledge of the Company, threatened,
that question the legality or propriety of the transactions contemplated by
this Agreement or any of the FDC Ancillary Agreements.
SECTION 5.14. CONTRACTS, AGREEMENTS AND INSTRUMENTS GENERALLY.
Schedule 5.14 hereto consists of a true and complete list of all oral or written
contracts, agreements, commitments and other instruments to which the Company or
any of the Subsidiaries is a party that: (a) involve a receipt or an
expenditure by the Company or such Subsidiary or require the performance of
services or delivery of goods to, by, through, on behalf of or for the benefit
of the Company or such Subsidiary, which in each case relates to such contract,
agreement, commitment or instrument that either (i) requires payments in
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excess of $175,000 per year in the current, or any future year, or (ii) in
excess of $500,000 after the date hereof (in each case during the current term,
assuming no renewal thereof, other than renewals by the other parties thereto
that do not require the concurrence of the Company or such Subsidiary); or (b)
involves an obligation for the performance of services or delivery of goods by
the Company or such Subsidiary that cannot, or in reasonable probability will
not, be performed within 60 days of the date hereof. Schedule 5.14 also
identifies (by title, date and parties) with respect to the Company or any
Subsidiary:
(A) any contracts, agreements, commitments or other instruments in
effect with any customer of the Company or any of the Subsidiaries, including
without limitation any consulting services agreements, Software license
agreements or other licenses, purchase commitments or installation agreements
with payments in excess of $100,000 remaining after the date hereof (each
hereinafter referred to as a "Customer Contract" and identified as such on
Schedule 5.14);
(B) any note receivable in excess of $10,000;
(C) any contract or commitment (except marketing agreements in
respect of Company Software) providing for payments based in any manner upon the
sales, purchases, receipts, income or profits of the Company or any Subsidiary;
(D) any franchise agreement, marketing agreement or royalty agreement
(except marketing agreements in respect of Company Software);
(E) any contract, agreement, understanding or arrangement restricting
the Company or any Subsidiary from carrying on the Business anywhere in the
world; and
(F) any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed directly, or indirectly, by
way of purchase-money obligation, guaranty, subordination, conditional sale,
lease-purchase or otherwise by the Company or any Subsidiary, providing for
payments in excess of $20,000 per month.
All contracts, licenses, leases and agreements referenced in the
Schedules to Sections 5.10, 5.11 and 5.14 are valid and binding upon the Company
or a Subsidiary and, to the Knowledge of the Company, the other parties thereto
and are in full force and effect and enforceable in accordance with their terms,
except as enforceability may be affected by public policy principles under
applicable law and by bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity relating
to the availability of equitable remedies, except where the failure to be
binding and enforceable would not have a Material Adverse Effect. Except as set
forth on Schedule 5.14, none of the Company, the Subsidiaries and, to the
Knowledge of the Company, any other party to any such contract, commitment or
arrangement has breached any provision of, or is in default under, the terms
thereof, which breach or default would have a Material Adverse Effect; and, to
the Knowledge of the Company, there are no existing facts or circumstances that
would
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prevent the work in process of the Company or any Subsidiary or its contracts
and agreements from maturing upon performance by such corporation into
collectible accounts receivable consistent with historical experience. Except as
set forth in Schedule 5.14 and except for such contracts and agreements as would
not have a Material Adverse Effect, there are no contracts or agreements that
require the performance of services or provision of goods by the Company or any
Subsidiary at a direct cost or with a value for each such contract or agreement
in excess of the revenue to be derived pursuant to the terms of such contract or
agreement. Except for terms specifically described in Schedule 5.14, none of the
officers, directors or employees of the Company and the Subsidiaries has
received any payment from any contracting party in connection with or as an
inducement for entering into any contract, agreement, policy or instrument,
except for payment for actual services rendered or to be rendered by such
corporation consistent with amounts historically charged for such services.
SECTION 5.15. CUSTOMER CONTRACTS. With respect to each Customer
Contract, and except as set forth in Schedule 5.15, (i) with respect to Owned
Software licensed pursuant to such Customer Contract and tendered or certified
as operational by the Company or a Subsidiary, there is no dispute pending with
a customer, except such disputes that would not have a Material Adverse Effect;
and (ii) to the Knowledge of the Company, no basis exists in respect of
performance warranties with respect to Owned Software made by the Company or a
Subsidiary in any Customer Contract, including warranties with respect to
capacity, availability, downtime and response time, that would result in a
customer dispute having a Material Adverse Effect. In addition, except as set
forth on Schedule 5.15, all of the Customer Contracts have provisions which
attempt to (i) limit the Company's or the applicable Subsidiary's liability to a
maximum dollar amount, (ii) disclaim or exclude consequential damages, and (iii)
maintain the confidentiality of all information (technical and otherwise) that
the Company or the applicable Subsidiary considers confidential and proprietary
(or the customer who is a party thereto is otherwise bound by a confidentiality
agreement in favor of the Company or the applicable Subsidiary serving such
purpose).
Complete copies of all Customer Contracts set forth on Schedule 5.15
have been made available to Buyer or Parent for its review.
SECTION 5.16. CUSTOMERS. Except as provided in Schedule 5.16, to the
Knowledge of the Company, no customer or group of customers of the Company or
any Subsidiary has taken or is expected to take any steps that could disrupt the
business relationship of the Company or such Subsidiary with such customer or
customers and that would result in a Material Adverse Effect and neither the
Company nor any of the Subsidiaries has received any notice from any customer or
group of customers relating to such actions, provided, however, that no
representation or warranty is made as to the response of any customer or group
of customers in connection with the discontinuation, termination or
modification, after the Closing by the Buyer, Parent or the Company as owned by
Buyer of any agreement or product of, or product under development by, the
Company or any of the Subsidiaries.
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SECTION 5.17. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
5.17, no Real Property or other real property now or previously owned or leased
by the Company or any of the Subsidiaries has been used by the Company or any
Subsidiary for the handling, treatment, storage or disposal of any Hazardous
Substance. Except as set forth in Schedule 5.17, no release, discharge,
spillage or disposal into the environment of any Hazardous Substance and no
soil, water or air contamination by any Hazardous Substance has occurred or is
occurring in, from or on the Real Property by virtue of the actions or failure
to act of the Company or any of the Subsidiaries, except for such releases,
discharges, spillages, or disposals that would not have a Material Adverse
Effect. Except as set forth in Schedule 5.17, the Company has complied with all
reporting requirements under any applicable federal, state or local
environmental laws and any permits with respect to the Real Property, and there
are no existing violations by the Company of any such environmental laws or
permits with respect to the Real Property, except for such noncompliances or
violations that would not have a Material Adverse Effect. Except as set forth
in Schedule 5.17, the Company has received no notice of any claims, actions,
suits, proceedings or investigations, pending or threatened, related to the
presence, release, production, handling, discharge, spillage, transportation or
disposal of any Hazardous Substance or ambient air conditions or contamination
of soil, water or air by any Hazardous Substance (a) with respect to the Real
Property by virtue of the actions or failure to act of the Company or any of the
Subsidiaries or (b) otherwise against the Company or any of the Subsidiaries, in
any court or before any state, federal or other governmental agency or private
arbitration tribunal and, to the Knowledge of the Company, there is no basis for
any such claim, action, suit, proceeding or investigation. Except as disclosed
on Schedule 5.17, no operations of the Company or any of the Subsidiaries have
involved the use of underground storage tanks on the Real Property. To the
Knowledge of the Company, no exposed or friable asbestos or any asbestos-
containing materials have been installed or placed by or on behalf of the
Company or any of the Subsidiaries in any building or other improvement included
in the Real Property. For the purposes of this Agreement, "Hazardous Substance"
shall mean any hazardous or toxic substance or waste as those terms are defined
by any applicable federal, state or local law, ordinance, regulation, policy,
judgment, decision, order or decree, including, without limitation, the
Comprehensive Environmental Recovery Compensation and Liability Act, 42 U.S.C.
9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et
seq. and the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., and
petroleum, petroleum products and oil.
SECTION 5.18. INSURANCE. Set forth in Schedule 5.18(i) is a complete
list of all insurance policies that FDC, the Company and the Subsidiaries have
currently in effect and that are applicable to the Business. The policies
listed in Schedule 5.18(ii), being the policies owned by the Company and the
Subsidiaries, are in full force and effect and no event has occurred that would
give any insurance carrier a right to terminate any such policy.
SECTION 5.19. LABOR MATTERS. Schedule 5.19(a) sets forth all current
employees of the Company and the Subsidiaries. Except as set forth on Schedule
5.19(b), within the last three years neither the Company nor any Subsidiary has
been the subject of any union activity or labor dispute, nor has there been any
strike of any kind called or, to the
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Knowledge of FDC and the Company, threatened to be called against it. Except as
set forth on Schedule 5.19(c) and except for such violations that would not have
a Material Adverse Effect, neither the Company nor any Subsidiary has violated
any applicable federal or state law or regulation relating to labor or labor
practices, with regard to the Business, including, without limitation, the
provision of Title VII of the Civil Rights Act of 1964 (race, color, religion,
sex, and national origin discrimination), 42 U.S.C. (S) 1981 (discrimination),
42 U.S.C. (S)(S) 621-634 (the Age Discrimination in Employment Act), 29 U.S.C.
(S) 206 (equal pay), Executive Order 11246 (race, color, religion, sex, and
national origin discrimination), Executive Order 11141 (age discrimination), (S)
503 of the Rehabilitation Act of 1973 (handicap discrimination), 42 U.S.C.
(S)(S) 12101-12213 (Americans with Disabilities Act), 29 U.S.C. (S)(S) 2001-2654
(Family and Medical Leave Act), and 29 U.S.C. (S)(S) 651-678 (occupational
safety and health). Schedule 5.19(d) sets forth a true, correct and complete
list of employer loans or advances from the Company and each of the
Subsidiaries, if any, to its employees. Each of the Company and the Subsidiaries
is, and as of the Closing Date will be, in substantial compliance with all
applicable requirements of the Immigration and Nationality Act of 1952, as
amended by the Immigration Reform and Control Act of 1986 and the regulations
promulgated thereunder (hereinafter collectively referred to as the "Immigration
Laws").
SECTION 5.20. RELATED PARTY RELATIONSHIPS. Except as set forth in
Schedule 5.20, neither FDC nor any Affiliate of FDC, nor to the Knowledge of FDC
or the Company, any of the persons identified in Section 1.1 in the definitions
of Knowledge of FDC and Knowledge of Company, possesses, directly or indirectly,
any equity interest in any corporation, partnership, firm, association or
business organization that is a client, supplier, customer, lessor, lessee, or
contracting party with or of the Company or any of the Subsidiaries (except as a
stockholder holding less than a three-percent interest in a corporation whose
shares are traded on a national or regional securities exchange or in the over-
the-counter market).
SECTION 5.21. NO BROKERS. Except as set forth in Schedule 5.21, none
of FDC, FDC Health, the Company and any Person acting on behalf of FDC, FDC
Health or the Company has paid or become obligated to pay any fee or commission
to any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
SECTION 5.22. SECURITIES ACT COMPLIANCE. FDC is acquiring the Buyer
Stock Consideration through FDC Health for its own account and without a present
intention of reselling or distributing any such shares of Parent Common Stock
except in compliance with the registration requirements of the Securities Act
and applicable state securities laws and as contemplated by the Registration
Rights Agreement and the Shareholder Agreement.
SECTION 5.23. INVESTMENT MATTERS. FDC and FDC Health acknowledge,
represent and warrant that:
(a) The shares of Parent Common Stock to be issued to FDC as Buyer
Stock Consideration have not been registered under the Securities Act or the
securities laws of
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any state and are being offered pursuant to an exemption from the registration
requirements in the Securities Act;
(b) FDC is acquiring the Parent Common Stock for its own account as
principal, and, except for sales of such Parent Common Stock pursuant to the
Registration Rights Agreement and for sales made pursuant to exemptions under
the Securities Act, not with a view to, or for, resale, distribution or
fractionalization thereof, in whole or in part, and, as of the Closing Date, no
other person will have a direct or indirect beneficial interest in such Parent
Common Stock;
(c) FDC has the financial ability to bear the economic risk of owning
the Parent Common Stock, and has such experience in financial matters that it is
capable of evaluating the risks and merits of owning such shares;
(d) FDC represents, warrants and agrees that it will not sell or
otherwise transfer its Parent Common Stock or any portion thereof except
pursuant to registration under the Securities Act or an exemption therefrom; and
(e) FDC agrees that the following legend shall be placed on the
certificate or certificates representing the Parent Common Stock issued to it:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or any state
securities law, are restricted securities as that term is defined in Rule
144 of Securities and Exchange Commission, and may be resold only pursuant
to a registration statement effective under the Act or in a transaction
which in the opinion of the issuer's counsel is exempt from the
registration requirement of the Act and any applicable state securities
laws."
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
--------------------------------------------------
As an inducement to FDC, FDC Health and the Company to enter into this
Agreement and to consummate the transactions contemplated hereby, Buyer and
Parent jointly and severally hereby represent and warrant to FDC, FDC Health and
the Company and agree as follows:
SECTION 6.1. ORGANIZATION OF BUYER. Each of Buyer and Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Buyer and Parent is duly qualified to
transact business and is in good standing in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualifications necessary, except where the failure to be
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so qualified or in good standing would not have a Material Adverse Effect on
Parent and Buyer. Each of Buyer and Parent has the corporate power and
corporate authority to own or lease and operate its assets and to carry on its
businesses in the manner that they were conducted immediately prior to the date
of this Agreement.
SECTION 6.2. AUTHORITY OF BUYER AND PARENT; CONFLICTS. (a) Each of
Buyer and Parent has the corporate power and corporate authority to execute,
deliver and perform this Agreement and each of the Buyer Ancillary Agreements to
which such corporation is a party. The execution, delivery and performance of
this Agreement and the Buyer Ancillary Agreements by Buyer and Parent, as
applicable, have been duly authorized and approved by Buyer's and/or Parent's
board of directors, as applicable, and do not require any further authorization
or consent of Buyer, Parent or their respective stockholders. This Agreement
has been duly authorized, executed and delivered by Buyer and Parent and
(assuming the valid authorization, execution and delivery of this Agreement by
FDC and the Company) is the legal, valid and binding agreement of Buyer
enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer or Parent, as applicable, and upon
execution and delivery by Buyer and/or Parent will be (assuming the valid
authorization, execution and delivery by FDC and the Company, where FDC and/or
the Company is a party, and the other party or parties thereto) a legal, valid
and binding obligation of Buyer and Parent, as applicable, enforceable in
accordance with its terms, in each case subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general principles of equity. The
issuance of shares of Parent Common Stock pursuant to this Agreement and the
filing of any registration statements with the Securities and Exchange
Commission (the "SEC") by Parent under the Securities Act of 1933 (together with
the rules and regulations promulgated thereunder, the "Securities Act") for the
purpose of registering the shares of Parent Common Stock issuable pursuant to
this Agreement and in accordance with the Registration Rights Agreement have
been duly authorized by Parent's board of directors.
(b) Neither the execution and delivery of this Agreement or any of
the Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
upon any shares of Parent Common Stock or any assets of Parent or Buyer
under (A) the Certificate of Incorporation or By-laws of either Buyer or
Parent; (B) any material note, instrument, mortgage, contract, agreement
commitment, lease, license, franchise or financial obligation to which
either Buyer or Parent is a party or any of its properties is subject or by
which Buyer or Parent is bound;
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(C) any Court Order to which Buyer or Parent is a party or by which it is
bound; or (D) any Requirements of Law affecting Buyer or Parent; or
(ii) require the approval, consent, authorization or act of, or the
making by Buyer or Parent of any declaration, filing or registration with,
any Person, except for (A) in connection, or in compliance, with the
provisions of the HSR Act; (B) the registration of shares of Parent Common
Stock issuable pursuant to this Agreement under the Securities Act and
applicable state securities laws; (C) the listing of the shares of Parent
Common Stock issuable pursuant to this Agreement with Nasdaq; and (D) such
approvals, consents, authorizations, declarations, filings or registrations
the failure of which to be obtained or made would not materially impair the
ability of Buyer or Parent to perform its obligations hereunder or prevent
the consummation of any of the transactions contemplated hereby.
SECTION 6.3. CAPITALIZATION. As of the date hereof, the authorized
capital stock of Parent consists of 60,000,000 shares of Parent Common Stock and
1,000,000 shares of preferred stock, no par value (the "Parent Preferred
Stock"). At the close of business on March 31, 1995 (a) 32,077,055 shares of
Parent Common Stock were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights, (b) 2,464,612 shares of Parent Common Stock were reserved for issuance
upon the exercise of outstanding options under the Parent Stock Options and (c)
no shares of Parent Preferred Stock were issued or outstanding. At the Closing
Date, there shall not have been any changes to the information set forth in the
immediately preceding sentence, other than pursuant to a corporate action
described in Section 3.2 as to which the adjustments required by such section
have been or will be made, and other than shares of Parent Common Stock issued
upon the exercise of outstanding options under the Parent Stock Options and the
grant of additional options under the Parent Stock Options. All of the shares
of Parent Common Stock issuable pursuant to this Agreement will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. Except for this Agreement and except for not in excess of
614,237 stock options available for issuance pursuant to the Parent's plans or
agreements in respect thereof (collectively, the "Parent Stock Options"), there
are no options, warrants, calls, rights or agreements to which Parent or any of
its subsidiaries is a party or by which they are bound (a) obligating Parent or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or any of its
subsidiaries; (b) obligating Parent or any of its subsidiaries to grant, extend
or enter into any such option, warrant, call, right or agreement; or (c)
obligating Parent to register under the Securities Act any shares of Parent
Common Stock on behalf of any stockholder of Parent. Each outstanding share of
capital stock of each subsidiary of Parent is duly authorized, validly issued,
fully paid and nonassessable and, except as disclosed in the Parent SEC
Documents, each such share is owned by Parent or another subsidiary of Parent
free and clear of all Encumbrances.
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SECTION 6.4. SEC DOCUMENTS AND OTHER REPORTS. Parent has filed with
the SEC since January 1, 1992 copies of all documents which are required to be
filed under the Securities Act and the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act") (the "Parent SEC Documents"), except for such filings which the
failure to file would not have a Material Adverse Effect on Parent and Buyer. As
of their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Buyer included in the Parent SEC Documents comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto),
and fairly present the consolidated financial position of Parent and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and statements of cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustment described therein).
SECTION 6.5. OPERATIONS SINCE MARCH 31, 1995. To the Knowledge of
Parent, except as set forth in Schedule 6.5 and except for any change resulting
from general economic, financial, industry-wide or market conditions or
circumstances generally affecting Buyer's businesses, since March 31, 1995 there
have been no changes in the assets, the businesses or the results of operations
or financial condition of Buyer and its subsidiaries, taken as a whole, which
have had or would have a Material Adverse Effect on Parent and Buyer.
SECTION 6.6. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 6.6 or reflected in the Parent SEC Documents, to the Knowledge of
Parent, as of March 31, 1995, neither Parent nor any of its subsidiaries was
subject to any liability, whether absolute, contingent, accrued or otherwise,
that would be required to be included on a balance sheet prepared in accordance
with GAAP and which in the aggregate would have a Material Adverse Effect on
Parent and Buyer. Since March 31, 1995, except as set forth in Schedule 6.6, to
the Knowledge of Parent, neither Parent nor any of its subsidiaries has incurred
any liability, whether absolute, contingent, accrued or otherwise, except for
liabilities incurred in the ordinary course of business that have not and would
have a Material Adverse Effect on Buyer and Parent.
SECTION 6.7. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as
set forth in Schedule 6.7:
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(i) to the Knowledge of Parent, Parent and its subsidiaries have
complied in all material respects with all applicable Requirements of Law
and Court Orders, except such failures to comply that would not have a
Material Adverse Effect on Parent and Buyer;
(ii) as of the date hereof, there are no lawsuits, claims, suits,
proceedings or investigations pending or, to the Knowledge of Parent,
threatened against Parent or its subsidiaries which would have a Material
Adverse Effect on Parent and Buyer; and
(iii) as of the date hereof, there is no action, suit or proceeding
pending or, to the Knowledge of Parent, threatened that questions the
legality or propriety of the transactions contemplated by this Agreement or
any of the Buyer Ancillary Agreements.
SECTION 6.8. NO BROKERS. Except as set forth in Schedule 6.8, neither
Buyer or Parent nor any Person acting on behalf of either Buyer or Parent has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
SECTION 6.9. INVESTMENT INTENT. Buyer is acquiring the Shares as an
investment for its own account and not with a view to the distribution thereof.
Buyer shall not sell, transfer, assign, pledge or hypothecate any of the Shares
in the absence of registration under, or pursuant to an applicable exemption
from, federal and applicable state securities laws.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
--------------------------------
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
SECTION 7.1. ACCESS TO INFORMATION. Each of FDC and the Company with
respect to the Company, on the one hand, and each of Buyer and Parent with
respect to Buyer and Parent, on the other hand, shall afford to the officers,
employees and authorized representatives of each of the other such parties
(including, without limitation, independent public accountants and attorneys)
reasonable access during normal business hours upon reasonable advance notice to
the offices, properties, employees and business and financial records (including
computer files, retrieval programs and similar documentation) of the Company,
the Subsidiaries, the Buyer and the Parent, as the case may be, as to the extent
such other party shall reasonably deem necessary or desirable and shall furnish
to the other party or its authorized representatives such additional information
concerning the Business, Buyer or Parent, as the case may be, as shall be
reasonably requested; provided, however, that none of
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the parties shall be required to violate any obligation of confidentiality to
which it is subject in discharging its obligations pursuant to this Section 7.1.
Each party hereto agrees that such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operations of the other party.
If in the course of any investigation pursuant to this Section 7.1, any of the
officers or employees of a party referenced in the definition of "Knowledge of
FDC," "Knowledge of the Company" or "Knowledge of Parent" set forth in Section
1.1 acquires, at or prior to the Closing Date, written information sufficient in
detail both (i) to indicate that any representation or warranty herein given by
the other party has been breached and (ii) reasonably to enable such individual
to appreciate the nature of such breach and the extent to which such breach
would cause a Loss or Expense for which the party such individual represents
would otherwise be entitled to indemnification pursuant to Article XI, then the
party such individual represents covenants that it will promptly so inform the
other party.
SECTION 7.2. PRESERVATION OF ACCURACY OF REPRESENTATIONS AND
WARRANTIES. Each of the parties hereto shall refrain from taking any action
that would render any representation or warranty contained in this Agreement
inaccurate as of the Closing Date. Each party shall promptly notify the other
of any action, suit or proceeding that shall be instituted or threatened against
such party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement. Each party hereto shall promptly
notify the other of any lawsuit, claim, proceeding or investigation that may be
threatened, brought, asserted or commenced against the Company, FDC the
Subsidiaries, Buyer or Parent, as the case may be, that would have been listed
in Schedule 5.13 or Schedule 6.7, respectively, if such lawsuit, claim,
proceeding or investigation had arisen prior to the date hereof.
SECTION 7.3. CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS. (a)
Each of the parties agrees to use its commercially reasonable efforts to obtain
the waiver, consent and approval of all persons whose waiver, consent or
approval (i) is required in order to consummate the transactions contemplated by
this Agreement or (ii) is required by any agreement, lease, instrument,
arrangement, judgment, decree, order or license to which the Buyer, the Parent,
the Company or any of the Subsidiaries is a party or is subject on the Closing
Date and (x) that would prohibit or require the waiver, consent or approval of
any person to such transactions or (y) under which, without such waiver,
consent, or approval, such transaction would constitute an occurrence of default
under the provisions thereof, result in the acceleration of any obligation
thereunder or give rise to a right of any party thereto to terminate its
obligation thereunder. All obtained written waivers, consents and approvals
shall be produced at Closing in form and content reasonably satisfactory to the
other party.
(b) During the period prior to the Closing Date, the parties shall
act diligently and reasonably, and shall cooperate with each other, to secure
any consents and approvals of any Governmental Body required to be obtained by
them in order to permit the consummation of the transactions contemplated by
this Agreement, or to otherwise satisfy the conditions set forth in Section 9.4
and Section 10.4.
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SECTION 7.4. OPERATIONS PRIOR TO THE CLOSING DATE. (a) FDC shall use
reasonable efforts to cause the Company and the Subsidiaries to and the Company
shall, and shall use reasonable efforts to cause the Subsidiaries to, operate
and carry on the Business in the ordinary course and substantially as operated
immediately prior to the date of this Agreement. Consistent with the foregoing,
FDC shall use reasonable efforts to cause the Company and the Subsidiaries, and
the Company shall and shall use reasonable efforts to cause the Subsidiaries to,
use their respective reasonable efforts consistent with good business practice
to preserve the goodwill of the suppliers, contractors, licensors, employees,
customers, distributors and others having business relations with the Company or
any of the Subsidiaries.
(b) Notwithstanding Section 7.4(a), except as expressly contemplated
by this Agreement (including Section 8.1) or except with the express written
approval of Buyer, FDC shall cause the Company and the Subsidiaries not to, and
the Company shall not and shall cause the Subsidiaries not to:
(i) make any material change in the Business or their respective
operations;
(ii) make any capital expenditure or enter into any contract or
commitment for any capital expenditure in excess of $150,000, except in the
ordinary course of the Business;
(iii) enter into any material contract, agreement, undertaking or
commitment, except in the ordinary course of the Business;
(iv) enter into any contract for the purchase of real property or
for the sale of any Real Property or exercise any option to purchase real
property listed in any Schedule to Section 5.10 or any option to extend a
lease listed in any Schedule to Section 5.10;
(v) create, incur or assume, or agree to create, incur or assume,
any indebtedness for borrowed money (other than money borrowed or advances
from any of its Affiliates in the ordinary course of the Business), except
in the ordinary course of the Business;
(vi) collect accounts receivable other than in the ordinary course
of the Business consistent with past practice;
(vii) institute any material increase in any profit-sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement, medical,
hospital, disability, welfare or other employee benefit plan with respect
to its employees, other than in the ordinary course or as required by any
such plan or Requirements of Law;
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(viii) make any material change in the compensation of its employees,
other than changes made in accordance with normal compensation practices
and consistent with past compensation practices;
(ix) make any material change in the accounting policies applied in
the preparation of the Financial Statement contained in Schedule 5.5; or
(x) make any change in its Certificate of Incorporation or By-laws.
SECTION 7.5. ACQUISITION PROPOSALS. Commencing on the date of this
Agreement and until either the Closing Date or the earlier termination of this
Agreement, unless Buyer shall otherwise agree in writing, FDC shall not, and
shall not permit the Company or any of the Subsidiaries to, and shall not
authorize or permit any officer or director or employee of either FDC, the
Company or any of the Subsidiaries, or any financial advisor, attorney,
accountant, or other advisor or representative retained by any of FDC, the
Company or any of the Subsidiaries, to initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to any Acquisition Proposal (as hereinafter defined) or
engage in any negotiations concerning or provide any confidential information or
data to or have any discussions with any person or entity relating to an
Acquisition Proposal. FDC or the Company shall immediately notify the Buyer if
any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with FDC, the Company or any of the Subsidiaries.
"Acquisition Proposal" means any tender or exchange offer proposal other than a
proposal by Buyer or any of its Affiliates for a merger, share exchange or other
business combination involving the Company or any of the Subsidiaries, or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets of, the Company or any of the Subsidiaries.
SECTION 7.6. ANTITRUST LAW COMPLIANCE. As promptly as practicable
after the date hereof, Parent and FDC shall file with the Federal Trade
Commission and the Antitrust Division of the Department of Justice the
notifications and other information required to be filed under the HSR Act, or
any rules and regulations promulgated thereunder, with respect to the
transactions contemplated hereby. Each party warrants that all such filings by
it will be, as of the date filed, true and accurate in all material respects and
in material compliance with the requirements of the HSR Act and any such rules
and regulations. Each of Parent and FDC agrees to make available to the other
such information as each of them may reasonably request relative to its
business, assets and property as may be required of each of them to file any
additional information requested by such agencies under the HSR Act and any such
rules and regulations.
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SECTION 7.7. APPROVAL OF SOLE SHAREHOLDER OF FDC HEALTH. FDC, as the
sole shareholder of FDC Health, shall take such actions as may be necessary to
approve this Agreement and the transactions contemplated hereby, including,
without limitation, the sale of the Shares under the Nebraska Business
Corporation Act.
SECTION 7.8. TRANSFER OF SHARES. The parties acknowledge and agree
that, upon notice to Parent and Buyer, FDC Health may transfer the Shares to FDC
prior to the Closing, by dividend or otherwise, in which event (a) FDC hereby
agrees to sell, transfer, assign, convey and deliver to Buyer the Shares
pursuant to the terms of Section 2.1 and (b) the references to FDC Health in
Sections 4.2 and 8.1 and in the last sentence of Section 5.2(b) shall be deemed
to be FDC.
ARTICLE VIII
ADDITIONAL AGREEMENTS
---------------------
SECTION 8.1. TRANSFER OF CAPITAL STOCK OF ACB AND TSSG AND TRADEMARK.
Simultaneously with the Closing, FDC Health shall cause the Company to
distribute to FDC Health all of the outstanding capital stock of ACB and TSSG
and the trademark FIRST DECISION.
SECTION 8.2. USE OF NAMES. Effective immediately following the
Closing, FDC grants the Company, each of the Subsidiaries and Buyer a royalty-
free license to use the service marks, trademarks and trade names listed on
Schedule 8.2, subject to the provisions of the Trademark License Agreement. On
behalf of the Company, FDC shall prosecute the following trademark applications
that are now pending in the United States Patent and Trademark Office: FIRST
DIMENSION, Ser. No. 74/480,755; FIRST INFORM, Ser. No. 74/481,409; FIRST
EMPOWER, Ser. No. 74/492,551; FIRST PERSPECTIVE, Ser. No. 74/492,610; and FIRST
CONNECT, Ser. No. 74/492,611 (collectively referred to hereinafter as the
"Intent-to-use Marks"). The Company agrees to execute all papers reasonably
requested by FDC to prosecute these applications. The Company hereby covenants
that at such time as the Patent and Trademark Office issues a notice of
allowance and accepts a statement of use for any Intent-to-use Mark(s), the
Company shall assign to FDC Health all right, title and interest in such Intent-
to-use Mark(s), together with the goodwill of the business symbolized thereby.
FDC Health hereby covenants that upon the occurrence such assignments(s) from
the Company, FDC Health shall immediately assign to FDC all right, title and
interest in such Intent-to-use Marks, together with the goodwill of the business
symbolized thereby. FDC hereby warrants that upon the occurrence of such
assignment(s) from FDC Health, FDC shall amend Schedule B to the Trademark
License Agreement to include the assigned Intent-to-use Mark(s) among the Marks
licensed under that Agreement.
SECTION 8.3. TAX MATTERS. (a) Termination of Prior Tax Sharing
Agreements. Any agreement or arrangement regarding the sharing of Taxes that
may exist
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between FDC or any Affiliate of FDC, on the one hand, and the Company or any of
the Subsidiaries, on the other, other than this Agreement, shall terminate, and
any obligations to make payments under any such agreement or arrangement shall
be cancelled, as of the Closing Date.
(b) Liability for Taxes. (i) FDC shall be liable for all Taxes
(including as set forth in paragraph (g)(ii) Taxes attributable to the Section
338(h)(10) Election made in accordance with paragraph (g) of this Section) (A)
imposed on the FDC Tax Group or any member of the FDC Tax Group (other than the
Company or the Subsidiaries) for any taxable year, or (B) imposed on the Company
or the Subsidiaries or for which the Company or the Subsidiaries may otherwise
be liable (including any liability for the Taxes of any Person other than the
Company and the Subsidiaries (A) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law) or (B) as a transferee or successor),
for any taxable year or period that ends on or before the Closing Date and, with
respect to any Straddle Period, the portion of such Straddle Period ending on
and including the Closing Date; provided, however, that FDC shall not be liable
and shall not indemnify Buyer for any Taxes imposed on the Company or the
Subsidiaries as a result of transactions occurring on the Closing Date (other
than transactions in the ordinary course of the Business) that occur at the
direction of Buyer (Taxes described in this proviso are "Excluded Taxes"). FDC
shall be entitled to any refund of Taxes for which it is liable pursuant to this
paragraph (b)(i).
(ii) Buyer and Parent shall be liable for (A) all Taxes imposed on
the Company or any of the Subsidiaries, or for which the Company or the
Subsidiaries may otherwise be liable, for any taxable year or period that begins
after the Closing Date and, with respect to any Straddle Period, the portion of
such Straddle Period beginning after the Closing Date and (B) any Excluded
Taxes. Buyer shall be entitled to any refund of such Taxes for which it is
liable pursuant to this paragraph (b)(ii).
(iii) For purposes of paragraphs (b)(i) and (b)(ii), whenever it is
necessary to determine the liability for Taxes of the Company or the
Subsidiaries for a portion of any Straddle Period, the determination of the
Taxes of the Company or the Subsidiaries for the portion of the Straddle Period
ending on and including, and the portion of the Straddle Period beginning after,
the Closing Date shall be determined by assuming that the Straddle Period
consisted of two taxable years or periods, one which ended at the close of the
Closing Date and the other which began at the beginning of the day following the
Closing Date, and items of income, gain, deduction, loss or credit of the
Company or the Subsidiaries for the Straddle Period shall be allocated between
such two taxable years or periods on a "closing of the books basis" by assuming
that the books of the Company or the Subsidiaries were closed at the close of
the Closing Date; provided, however, that (I) Taxes imposed on the Company or
the Subsidiaries as a result of transactions occurring on the Closing Date
(other than transactions in the ordinary course of the Business) that occur at
the direction of Buyer shall be allocated to the taxable year or period that is
deemed to begin at the beginning of the day following the Closing Date and (II)
exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation or real estate or personal property
taxes, shall be
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apportioned between such two taxable years or periods on a daily basis (it being
understood that this proviso shall not apply with respect to the incremental
deductions arising by reason of the 338(h)(10) Election).
(iv) For purposes of paragraphs (a)(i) and (a)(ii), whenever it is
otherwise necessary to allocate an item of income, gain, deduction, loss or
credit to either a taxable year or period that ends on or before the Closing
Date or a taxable year or period that begins after the Closing Date, rules
consistent with those in Treas. Reg (S) 1.1502-76(b) shall be applied.
(v) If, as a result of any action, suit, investigation, audit, claim,
assessment or amended Tax Return, there is any change after the Closing Date in
an item of income, gain, loss, deduction or credit that results in an increase
in a Tax liability for which FDC would otherwise be liable pursuant to paragraph
(b)(i), and such change results in a decrease in the Tax liability of the
Company, the Subsidiaries, Buyer, or any Affiliate or successor thereof (after
considering all tax attributes of such party) for any taxable year or period
beginning after the Closing Date or for the portion of any Straddle Period
beginning after the Closing Date, FDC shall not be liable pursuant to paragraph
(b)(i) with respect to such increase to the extent of such decrease.
(vi) Buyer shall pay, and shall indemnify FDC against, and FDC shall
pay and shall indemnify Buyer against, one-half of any real property transfer or
gains tax, stamp tax, stock transfer tax, or other similar tax imposed on the
sale of the Shares pursuant to this Agreement, together with any penalties or
interest with respect to such taxes.
(c) Tax Returns. (i) FDC shall file or cause to be filed when due
all Tax Returns that are required to be filed by or with respect to the Company
or any of the Subsidiaries for taxable years or periods ending on or before the
Closing Date and shall remit any Taxes due in respect of such Tax Returns, and
Buyer shall file or cause to be filed when due all Tax Returns that are required
to be filed by or with respect to the Company or any of the Subsidiaries for
taxable years or periods ending after the Closing Date and shall timely remit
any Taxes due in respect of such Tax Returns. FDC or Buyer shall reimburse the
other party for the Taxes for which FDC or Buyer, respectively, is liable
pursuant to paragraph (b) of this Section 8.3 but which are payable with Tax
Returns to be filed by the other party pursuant to the previous sentence upon
the written request of the party entitled to reimbursement, setting forth in
detail the computation of the amount owed by FDC or Buyer, as the case may be,
but in no event shall such reimbursement be due earlier than 10 days prior to
the due date for the filing of such Tax Returns, including extensions.
(ii) With respect to the taxable period which includes the Closing
Date, Buyer shall promptly cause the Company and the Subsidiaries to prepare and
provide to FDC a package of tax information materials, including, without
limitation, schedules and work papers (the "Tax Package"), required by FDC to
enable FDC to prepare and file all Tax Returns required to be prepared and filed
by it pursuant to paragraph (c)(i). The Tax Package shall be completed in
accordance with past practice including past practice as to providing such
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information, and as to the method of computation of separate taxable income or
other relevant measure of income of the Company and the Subsidiaries. Buyer
shall cause the Tax Package to be delivered to FDC within 150 days after the
Closing Date.
(d) Contest Provisions. (i) Buyer or FDC, as the case may be, shall
promptly notify the other party in writing upon receipt by Buyer or FDC, or any
of their respective Affiliates, of notice of any pending or threatened federal,
state, local or foreign Tax audits, examinations or assessments which may affect
any Tax liability for which FDC or Buyer, respectively, is liable pursuant to
paragraph (b) of this Section 8.3, provided that failure to comply with this
provision shall not affect Buyer's or FDC's right to indemnification hereunder
except to the extent such failure impairs Buyer's or FDC's ability to contest
any such Tax liabilities.
(ii) FDC shall have the sole right to represent the Company's or the
Subsidiaries' interests in any Tax audit or administrative or court proceeding
relating to taxable periods ending on or before the Closing Date (including, for
these purposes, such proceedings as relate to the Section 338(h)(10) Election),
and to employ counsel of its choice at its expense. In the case of any Straddle
Period, FDC shall be entitled to participate at its expense in any Tax audit or
administrative or court proceeding relating (in whole or in part) to Taxes
attributable to the portion of such Straddle Period ending on and including the
Closing Date and, with the written consent of Buyer, and at FDC's sole expense,
may assume the entire control of such audit or proceeding.
(iii) Neither Buyer nor FDC, nor any of their respective Affiliates,
may agree to settle any Tax claim which may be the subject of indemnification by
Buyer or FDC under paragraph (b) of this Section 8.3 without the prior written
consent of the other party, which consent will not be unreasonably withheld. In
the event that one party desires to settle a Tax claim and the other does not,
the procedures set forth in Section 11.4 shall control.
(e) Assistance and Cooperation. After the Closing Date, each of FDC
and Parent shall (and shall cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with
paragraph (c) of this Section 8.3;
(ii) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns of the Company or the
Subsidiaries;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to
Taxes of the Company or the Subsidiaries;
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(iv) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessments of the Company or the Subsidiaries for
taxable periods for which the other may have a liability under this Section
8.3; and
(v) furnish the other with copies of all correspondence received from
any taxing authority in connection with any Tax audit or information
request with respect to any such taxable period.
(f) Adjustment to Purchase Price. Any payment by Buyer or FDC under
this Section 8.3 will be deemed to be an adjustment to the Purchase Price for
tax purposes.
(g) Election Under Section 338(h)(10). (i) FDC and Buyer shall make
and timely file a joint election for the Company (and for any or all of the
domestic Subsidiaries as specified by Buyer for which such an election can be
made) under Section 338(h)(10) of the Code and under any applicable similar
provisions of state or foreign law with respect to the purchase of the Shares or
the deemed purchase of the shares of the Subsidiaries (collectively, such
elections shall be referred to as the "Section 338(h)(10) Election"). Buyer
represents to FDC that it is qualified to make an election under Section
338(h)(10) of the Code and FDC represents to Buyer that it is qualified to make
an election under Section 338(h)(10) of the Code. FDC and Buyer shall within
180 days after the Closing Date exchange completed and executed copies of
Internal Revenue Service Forms 8023A, required schedules thereto, and any
similar state and foreign forms. If any changes are required in these forms as a
result of information which is first available after the Closing Date, the
parties will promptly agree on such changes and take all action necessary to
reflect them in any necessary governmental filings.
(ii) FDC will pay any Tax attributable to the making of the Section
338(h)(10) Election and will indemnify Buyer against any adverse consequences
arising out of any failure to pay such Tax. FDC will also pay any state, local,
or foreign Tax (and indemnify Buyer against any adverse consequences arising out
of any failure to pay such Tax) attributable to an election under state, local
or foreign law similar to the election available under Section 338(g) of the
Code (or which results from the making of an election under Section 338(g) of
the Code) with respect to the purchase of the Shares of the Company (or deemed
purchases of the shares of the Subsidiaries) hereunder where the state, local or
foreign Tax jurisdiction (i) does not provide or recognize a Section 338(h)(10)
election or (ii) does not apply its provisions corresponding to Section
338(h)(10) of the Code to the purchase of the Shares of the Company (or deemed
purchases of the shares of the Subsidiaries), provided that Buyer shall only
make a straight 338(g) or similar election only for state, local and foreign tax
purposes and only under the circumstances described in clauses (i) or (ii)
hereof. In the event there is uncertainty as to whether a jurisdiction provides
for or recognizes a Section 338(h)(10) or comparable election, FDC shall
determine what position FDC and Buyer shall take in their respective tax returns
as to whether such an election is available and the consequences thereof and
shall have sole control over any disputes with that jurisdiction with respect to
such position; provided, however, that if as a result of such action on the part
of FDC, Buyer is precluded from making
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an election it otherwise would have been entitled to make, FDC shall pay Buyer
such amounts as are necessary to put Buyer in the same after-tax position as
Buyer would have been in had such election been made.
(iii) Buyer and FDC shall jointly appoint an independent appraiser
(the "Appraiser") to conduct and to deliver to Buyer and FDC, within 90 days, an
appraisal (the "Appraisal") of the fair market value as of the Closing Date of
the assets of the Company and the Subsidiaries for which the Section 338(h)(10)
Election will be made. The cost of the Appraisal shall be paid one-half by FDC
and one-half by Buyer.
Buyer and FDC hereby agree to allocate the Modified Adjusted Deemed
Sales Price, as defined in Treasury Regulation (S) 1.338(h)(10-1(f), for the
Company and the Subsidiaries, among the assets of the Company and the
Subsidiaries for which the Section 338(h)(10) Election will be made in
accordance with Section 338(h)(10) of the Code, the regulations thereunder and
the Appraisal and agree to file all federal, state, local and foreign Tax
Returns in accordance therewith (it being understood that the parties may take
differing positions on the Modified Adjusted Deemed Sales Price).
SECTION 8.4. ASSUMPTION OF CERTAIN LIABILITIES BY FDC. FDC hereby
agrees that it shall either discharge, and provide evidence at the Closing of
such discharge, or, shall pay on behalf of the Company or the applicable
Subsidiary or reimburse the Company or such Subsidiary for the payment of, those
liabilities described or set forth on Schedule 8.4.
SECTION 8.5. RADIOLOGY, SCHEDULING, MEDICAL RECORDS AND PHARMACY
SOFTWARE PRODUCTS. With respect to customers of the Business described on
Schedule 8.5 who are parties to contracts, agreements, offers or options with
the Company as of the Closing Date that provide for delivery of Pharmacy,
Scheduling, Medical Records and Radiology Software Products upon the
satisfaction of certain terms (the "Pharmacy, Scheduling, Medical Records and
Radiology Software Contracts"), from the Closing Date to the expiration of FDC's
indemnification obligations to the Buyer Group Members under Section
11.1(a)(iv), Buyer will, and will cause the Company to, offer, on terms
substantially similar to those contained in the Pharmacy, Scheduling, Medical
Records and Radiology Software Contracts, the then-current comparable software
products of Buyer for pharmacy and radiology. No Buyer Group Member shall be
indemnified under this Agreement for Buyer's, the Company's or any of their
Affiliates' costs of providing, installing or otherwise implementing,
substituting, replacing or providing alternative software, goods or services of
Buyer, the Company or any of their Affiliates to customers of the Business in
fulfillment of Buyer's obligations pursuant to this Section 8.5.
SECTION 8.6. TANDEM. After the Closing, FDC shall maintain control of
the negotiations with Tandem Computer Incorporated ("Tandem") relating to
settlement of the Tandem Matter, and Buyer and the Company shall cooperate with
FDC to the extent reasonably necessary to consummate all applicable agreements
to settle the Tandem Matter. Each of FDC and Buyer will, and Buyer will cause
the Company to, use its reasonable efforts
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to cooperate to obtain certain credits relative to the sale of product to
current customers of the Business who own or operate Tandem equipment to
minimize the Losses and Expenses incurred by the Buyer Group Members in
connection with or arising from the Tandem Matter; provided, however, that Buyer
shall not be required to incur out-of-pocket expenses outside the ordinary
course of business and shall not be required to commence any adversarial
proceeding, in each case, unless fully indemnified by FDC.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT
-------------------------------------------------------
All of the obligations of Buyer and Parent to consummate the
transactions contemplated by this Agreement shall be contingent upon and subject
to the satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all and any of which may be waived, in whole or in part,
by Parent and Buyer for purposes of consummating such transactions, but without
prejudice (except as provided in the immediately succeeding sentence) to any
other right or remedy that Parent or Buyer may have hereunder as a result of any
misrepresentation by, or breach of any covenant or warranty of, FDC, FDC Health
or the Company contained in this Agreement or in any other certificate or
instrument furnished by FDC, FDC Health or the Company hereunder.
Notwithstanding the foregoing, if the Losses and Expenses suffered or incurred
from any misrepresentation or breach as to which misrepresentation or breach
Parent or Buyer has received notice from FDC in writing (specifically stating
that an event is a misrepresentation or breach) at least ten (10) days prior to
Closing (a "FDC Noticed Breach") exceed, in the aggregate, $1,000,000, closing
of the transactions contemplated by this Agreement shall be deemed a waiver by
Parent and Buyer of all rights and remedies for indemnification in respect of
such FDC Noticed Breach to the extent the Losses and Expenses from such FDC
Noticed Breach exceed $1,000,000. In respect of each such FDC Noticed Breach,
Parent and Buyer shall be deemed to have agreed to limit, and not deemed to have
waived, their rights and remedies up to (and not in excess of) $1,000,000.
SECTION 9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no material breach by FDC or the Company in
the performance of any of its covenants and agreements herein which shall not
have been remedied or cured; each of the representations and warranties of FDC
and the Company contained in this Agreement shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date (except
to the extent that they expressly relate to an earlier date certain specified)
except for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by Buyer or any
transaction permitted by Section 7.4; and there shall have been delivered to
Buyer a certificate to such effect, dated the Closing Date, signed on behalf of
each of FDC and the Company by a duly authorized officer of FDC and the Company.
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SECTION 9.2. NO MATERIAL ADVERSE EFFECT. Between the date hereof and
the Closing Date, there shall have been no Material Adverse Effect; and there
shall have been delivered to Buyer a certificate to such effect, dated the
Closing Date, signed on behalf of each of FDC and the Company by a duly
authorized officer of FDC and the Company.
SECTION 9.3. NO RESTRAINT. The waiting period under the HSR Act shall
have expired or been terminated, and no action, proceeding, investigation,
injunction or restraining order shall have been issued, instituted, threatened
or proposed against or in respect of FDC, any of its Affiliates, Parent or Buyer
by or before any court or Governmental Body of competent jurisdiction to enjoin,
restrain, prohibit or obtain substantial damages in respect of, or which is
related to, or arises out of, this Agreement or the consummation of the
transactions contemplated hereby, and be in effect which restrains or prohibits
any material transaction contemplated hereby.
SECTION 9.4. NECESSARY GOVERNMENTAL APPROVALS. All approvals and
actions of or by all Governmental Bodies which are necessary to consummate the
transactions contemplated hereby shall have been obtained or taken place, other
than those as to which the failure to have been obtained or taken place would
not have a Material Adverse Effect.
SECTION 9.5. NECESSARY CONSENTS. Each of FDC and the Company shall
have received consents to the transactions contemplated hereby from the other
parties to contracts, leases, agreements and permits identified in Schedule 9.5
and Buyer shall have received a true and correct copy of each such consent.
SECTION 9.6. OTHER AGREEMENTS. Each of the Registration Rights
Agreement, the Human Resources Agreement, the Transition Services Agreement, the
Shareholder Agreement and the Trademark License Agreement shall have been
executed by FDC and/or the Company and shall remain in full force and effect.
SECTION 9.7. SUBLEASE. FDC and the Company shall have entered into a
sublease agreement, in customary form, effective as of the Closing Date,
pursuant to which the Company shall sublease to FDC one-quarter of the
facilities of the Company located in Charlotte, North Carolina, upon the same
terms and subject to the same conditions contained in the Company's current
lease of such facilities, it being understood that FDC shall be responsible for
one-quarter of the charges which are not solely attributable to the facilities
occupied by FDC or the Company and 100% of the charges solely attributable to
the facilities occupied by FDC.
SECTION 9.8. COMPANY CASH ACCOUNT. The Company's cash reserves shall
be at least $2,000,000 plus an amount equal to the accrued payroll obligations
of the Company and the Subsidiaries on the Closing Date. For purposes of this
Section 9.8, "accrued payroll obligations" shall also include unpaid bonus
compensation for pre-Closing periods as described in Section 3.2 of the Human
Resources Agreement; unpaid commissions earned before the Closing Date as
described in Section 3.4 of the Human Resources
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Agreement; and unpaid amounts payable in respect of vacation accrued for 1994
and prior years as described in Section 5.1 of the Human Resources Agreement,
along with applicable unpaid employer payroll taxes attendant to such accrued
obligations.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF
--------------------------------------
FDC, FDC HEALTH AND THE COMPANY
-------------------------------
All of the obligations of FDC, FDC Health and the Company to
consummate the transactions contemplated by this Agreement shall be contingent
upon and subject to the satisfaction, on or before the Closing Date, of each and
every one of the following conditions, all and any of which may be waived, in
whole or in part, by FDC for purposes of consummating such transactions, but
without prejudice (except as provided in the immediately succeeding sentence) to
any other right or remedy that FDC may have hereunder as a result of any
misrepresentation by, or breach of any covenant or warranty of, Parent or Buyer
contained in this Agreement or in any other certificate or instrument furnished
by Parent or Buyer hereunder. Notwithstanding the foregoing, if the Losses and
Expenses suffered or incurred from any misrepresentation or breach as to which
misrepresentation or breach FDC has received notice from Parent in writing
(specifically stating that an event is a misrepresentation or breach) at least
ten (10) days prior to Closing (a "HBO Noticed Breach") exceed, in the
aggregate, $1,000,000, closing of the transactions contemplated by this
Agreement shall be deemed a waiver by FDC of all rights and remedies for
indemnification in respect of such HBO Noticed Breach to the extent the Losses
and Expenses from such HBO Noticed Breach exceed $1,000,000. In respect of each
such HBO Noticed Breach, FDC shall be deemed to have agreed to limit, and not
deemed to have waived, its rights and remedies up to (and not in excess of)
$1,000,000.
SECTION 10.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no material breach by Buyer or Parent in the
performance of any of its covenants and agreements herein which shall not have
been remedied or cured; each of the representations and warranties of Buyer and
Parent contained in this Agreement shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date (except to the
extent that they expressly relate to an earlier date certain specified) except
for changes therein specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by FDC or any transaction
contemplated by this Agreement; and there shall have been delivered to FDC a
certificate to such effect, dated the Closing Date, signed on behalf of each of
Buyer and Parent by a duly authorized officer of Buyer and Parent.
SECTION 10.2. NO MATERIAL ADVERSE EFFECT ON PARENT OR BUYER. Between
the date hereof and the Closing Date, there shall have been no Material Adverse
Effect on Parent and Buyer; and there shall have been delivered to FDC a
certificate to such effect,
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dated the Closing Date, signed on behalf of each of Parent and Buyer by a duly
authorized officer of Parent and Buyer.
SECTION 10.3. NO RESTRAINT. The waiting period under the HSR Act
shall have expired or been terminated, and no action, proceeding,
investigation,injunction or restraining order shall have been issued,
instituted, threatened or proposed against or in respect of FDC, any of its
Affiliates, Parent or Buyer by or before any court or Governmental Body of
competent jurisdiction to enjoin, restrain, prohibit or obtain substantial
damages in respect of, or which is related to, or arises out of, this Agreement
or the consummation of the transactions contemplated hereby, and be in effect
which restrains or prohibits any material transaction contemplated hereby.
SECTION 10.4. NECESSARY GOVERNMENTAL APPROVALS. All approvals and
actions of or by all Governmental Bodies which are necessary to consummate the
transactions contemplated hereby shall have been obtained or taken place, other
than those as to which the failure to have been obtained or taken place would
not materially impair the ability of FDC or the Company to consummate the
transactions contemplated hereby.
SECTION 10.5. NECESSARY CONSENTS. Buyer shall have received consents
to the transactions contemplated hereby from the other parties to the contracts,
leases, agreements and permits identified in Schedule 10.5.
SECTION 10.6. OTHER AGREEMENTS. Each of the Registration Rights
Agreement, the Human Resources Agreement, the Transition Services Agreement, the
Shareholder Agreement and the Trademark License Agreement shall have been
executed by Parent and shall remain in full force and effect.
SECTION 10.7. NASDAQ APPROVAL. The shares of Parent Common Stock
issuable pursuant to this Agreement shall have been authorized for listing on
Nasdaq, subject to official notice of issuance.
ARTICLE XI
INDEMNIFICATION
---------------
SECTION 11.1. INDEMNIFICATION BY FDC. (a) FDC agrees to indemnify
and hold harmless each Buyer Group Member from and against any and all Losses
and Expenses incurred by such Buyer Group Member in connection with or arising
from:
(i) any breach of any warranty or the inaccuracy of any representation
of FDC or the Company contained or referred to in this Agreement or any
certificate, schedule, exhibit or other instrument delivered or to be
delivered by or on behalf of FDC or the Company pursuant hereto, or any
claim of a third party (regardless of whether the
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claimant is ultimately successful) which relates to any such warranty or
representation and that, if true, would be such a breach or inaccuracy (it
being understood and agreed, however, by Parent and Buyer, on the one hand,
and FDC, on the other hand, that, notwithstanding the foregoing, all
Expenses incurred by them that relate to any such claim of a third party
who is ultimately unsuccessful and the majority of which does not relate to
any such warranty or representation will be paid by Buyer);
(ii) any breach of any agreement or covenant on the part of FDC or the
Company under this Agreement or any other instrument delivered or to be
delivered by or on behalf of FDC or the Company pursuant hereto (except the
FDC Ancillary Agreements);
(iii) all Tax liabilities for which FDC is liable pursuant to Section
8.3;
(iv) satisfaction of the obligations of the Company to provide the
Pharmacy, Scheduling, Medical Records and Radiology Software Products under
the Pharmacy, Scheduling, Medical Records and Radiology Software Products
Contracts; provided, however, that no indemnity shall be provided to any
Buyer Group Member in respect of Buyer's obligations pursuant to Section
8.5; or
(v) the Tandem Matter and any breach of any covenant of FDC under
Section 8.6;
provided, however, that FDC shall only be required to indemnify and hold
harmless under this Section 11.1(a) with respect to (a) all Losses and Expenses
from any single condition, event or act that is indemnified against under this
Agreement so long as the aggregate amount of such Losses and Expenses is in
excess of $1,000,000 and (b) all such other Losses and Expenses to the extent
that the aggregate amount of such Losses and Expenses exceeds $1,000,000;
provided, further, that the aggregate amount required to be paid by FDC pursuant
to this Section 11.1 shall not exceed $30,000,000; provided, further, that,
without limiting the foregoing, FDC shall not be required to indemnify and hold
harmless under this Section 11.1(a) with respect to Losses and Expenses to the
extent such Losses and Expenses are in connection with or arise from the
discontinuation, termination or modification, after the Closing, of any
agreement or product of, or product under development by, the Company or any of
the Subsidiaries, except as permitted by Section 8.5, although nothing provided
for in this sentence shall limit or diminish any indemnification hereunder for
any breach of any warranty or the inaccuracy of any representation of FDC, FDC
Health or the Company referred to in Section 11.1(a)(i), or breach of any
agreement or covenant on the part of FDC, FDC Health or the Company referred to
in Section 11.1(a)(ii); provided, further, that FDC shall be required to
indemnify and hold harmless under this Section 11.1 for all Losses and Expenses,
up to the $30,000,000 limit set forth in the second proviso to this Section,
from a breach of or inaccuracy contained in the provisions of Sections 5.4(a),
5.6(g), 5.21, 7.4(b)(vi), or 13.9; and provided, further, that FDC shall be
required to indemnify and hold harmless under this Section 11.1 for all Losses
and Expenses, regardless of amount, from a breach of or
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inaccuracy contained in the provisions of Sections 5.2, 5.8, 8.3 and 8.4 and
pursuant to Section 11.1(a)(iv) or (v). Expenses of the Buyer Group Members that
are indemnifiable pursuant to Section 11.1(a)(ii), (iii), (iv) or (v) shall
include, without limitation, Expenses incurred as to any Third-Person Claim in
respect thereof even if such claim is ultimately unsuccessful.
(b) For purposes of this Article only, the definition of the term
"Material Adverse Effect" shall include the following sentence when it is used
in a warranty, representation, agreement or covenant that is the subject of a
claim for indemnification hereunder: For purposes of this definition, (i) an
effect or change with respect to any warranty, representation, agreement or
covenant that is the subject of a claim for indemnification under this Agreement
is deemed to be material if the Losses and Expenses resulting from such effect
or change are equal to $100,000 or more and (ii) all effects and changes with
respect to each sentence qualified by Material Adverse Effect shall be added
together to determine if the $100,000 threshold is met.
(c) The indemnification provided for in Section 11.1(a) shall
terminate on the earlier of (i) the last day of the 27th calendar month
beginning and ending after the Closing Date or (ii) the day on which Parent
releases to the public its report of earnings for its last fiscal period ending
on or before March 31, 1997 (and no claims shall be made by any Buyer Group
Member under Section 11.1(a) thereafter), except that the indemnification by FDC
shall continue as to any Losses or Expenses of which any Buyer Group Member has
notified FDC in accordance with the applicable requirements of Sections 11.3 and
11.4 on or prior to the date such indemnification would otherwise terminate in
accordance with this Section 11.1(c), as to which the obligation of FDC shall
continue until the liability of FDC shall have been determined pursuant to this
Article XI, and FDC shall have reimbursed all Buyer Group Members for the full
amount of such Losses and Expenses in accordance with this Article XI.
Notwithstanding the foregoing, the indemnification provided for in Section
11.1(a) shall continue (and claims may be made by any Buyer Group Member at any
time) for Losses and Expenses from a breach of or inaccuracy contained in the
provisions of Sections 5.8, 8.3 and 8.4 and pursuant to Section 11.1(a)(iv) and
(v). After the Closing FDC shall not have any right of contribution from the
Company or any of the Subsidiaries with respect to any payments due from FDC
pursuant to this Section 11.1(a).
SECTION 11.2. INDEMNIFICATION BY BUYER AND PARENT. (a) Each of
Buyer and Parent, jointly and severally, agrees to indemnify and hold harmless
each FDC Group Member from and against any and all Losses and Expenses incurred
by such FDC Group Member in connection with or arising from:
(i) any breach of any warranty or the inaccuracy of any representation
of Buyer or Parent contained or referred to in this Agreement or any
certificate, schedule, exhibit or other instrument delivered or to be
delivered by or on behalf of Parent or Buyer pursuant hereto, or any claim
of a third party (regardless of whether the claimant is ultimately
successful) which relates to any such warranty or representation and that,
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if true, would be such a breach or inaccuracy (it being understood and
agreed, however, by Parent and Buyer, on the one hand, and FDC, on the
other hand, that, notwithstanding the foregoing, all Expenses incurred by
them that relate to any such claim of a third party who is ultimately
unsuccessful and the majority of which does not relate to any such warranty
or representation will be paid by FDC);
(ii) any breach of any agreement or covenant on the part of Parent or
Buyer under this Agreement or any other instrument delivered or to be
delivered by or on behalf of Parent or Buyer pursuant hereto;
(iii) all Tax liabilities for which Parent or Buyer is liable pursuant
to Section 8.3; or
(iv) the discontinuation, termination or modification, after the
Closing, of any agreement or product of, or product under development by,
the Company or any of the Subsidiaries;
provided, however, that Buyer and Parent shall only be required to indemnify and
hold harmless under this Section 11.2(a) with respect to (a) all Losses and
Expenses from any single condition, event or act that is indemnified against
under this Agreement so long as the aggregate amount of such Losses and Expenses
is in excess of $1,000,000 and (b) all such other Losses and Expenses to the
extent that, the aggregate amount of such Losses and Expenses exceeds
$1,000,000; provided, further, that the aggregate amount required to be paid by
Buyer and Parent pursuant to this Section 11.2(a) shall not exceed $30,000,000;
provided further, that Buyer and Parent, jointly and severally, shall be
required to indemnify and hold harmless under this Section 11.2(a) for all
Losses and Expenses, up to the $30,000,000 limit set forth in the second proviso
to this Section, from a breach of or inaccuracy contained in the provisions of
Sections 6.2(a), 13.9; and provided, further, that Buyer and Parent, jointly and
severally, shall be required to indemnify and hold harmless under this Section
11.2(a) for all Losses and Expenses, regardless of amount, from a breach of or
inaccuracy contained in the provisions of Sections 6.1 and 8.3.
(b) For purposes of this Article only, the definition of the term
"Material Adverse Effect on Parent and Buyer" shall include the following
sentence when it is used in a warranty, representation, agreement or covenant
that is the subject of a claim for indemnification hereunder: For purposes of
this definition, (i) an effect or change with respect to any warranty,
representation, agreement or covenant that is the subject of a claim for
indemnification under this Agreement, is deemed to be material if the Losses and
Expenses resulting from such effect or change are equal to $100,000 or more and
(ii) all effects and changes with respect to each sentence qualified by Material
Adverse Effect shall be added together to determine if the $100,000 threshold is
met.
(c) The indemnification provided for in Section 11.2(a) shall
terminate on the earlier of (i) the last day of the 27th calendar month
beginning and ending after the Closing
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Date or (ii) the day on which Parent releases to the public its report of
earnings for its last fiscal period ending on or before March 31, 1997 (and no
claims shall be made by any FDC Group Member under Section 11.2(a) thereafter),
except that the indemnification by Buyer and Parent shall continue as to any
Losses or Expenses of which any FDC Group Member has notified Buyer or Parent in
accordance with the applicable requirements of Sections 11.3 and 11.4 on or
prior to the date such indemnification would otherwise terminate in accordance
with this Section 11.2(c), as to which the obligations of Buyer and Parent shall
continue until the liability of Buyer and Parent shall have been determined
pursuant to this Article XI, and Buyer and Parent shall have reimbursed all FDC
Group Members for the full amount of such Losses and Expenses in accordance with
this Article XI. Notwithstanding the foregoing, the indemnification provided for
in Section 11.2(a) shall continue (and claims may be made by any FDC Group
Member at any time) for Losses and Expenses from a breach of or inaccuracy
contained in the provisions of Section 8.3. Expenses of the FDC Group Members
that are indemnifiable pursuant to Section 11.2(a)(ii), (iii) or (iv) shall
include, without limitation, Expenses incurred as to any Third-Person Claim in
respect thereof even if such claim is ultimately unsuccessful.
SECTION 11.3. NOTICE OF CLAIMS. (a) Any Buyer Group Member or FDC
Group Member (the "Indemnified Party") seeking indemnification hereunder shall
give promptly to a party obligated to provide indemnification to such
Indemnified Party (the "Indemnitor") a written notice (a "Claim Notice")
describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim and a
reference (made in good faith) to the provision of this Agreement or any other
agreement, document or instrument executed hereunder or in connection herewith
upon which such claim is based; provided, however, that failure to give such
notice or failure to make such reference shall not relieve the Indemnitor of its
obligations hereunder except to the extent the Indemnitor shall have been
prejudiced by such failure (it being understood that this proviso does not
modify or otherwise affect the time periods specified in Sections 11.1(a) and
11.2(a)); provided, further, that the provisions of Section 11.4 shall also
apply to such a Claim Notice relating to a Third-Person Claim.
(b) In calculating any Loss or Expense there shall be deducted any
insurance recovery in respect thereof (and no right of subrogation shall accrue
hereunder to any insurer); provided that no party shall be obligated hereby to
procure or pay for insurance coverage in anticipation of such claims or pursue
any action against an insurer if a claim for insurance is denied.
(c) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
Article XI shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
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and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Losses and Expenses suffered by it.
SECTION 11.4. THIRD-PERSON CLAIMS. (a) In order for an Indemnified
Party to be entitled to any indemnification provided for under this Agreement in
respect of, arising out of or involving a claim or demand made by any third
Person against the Indemnified Party (a "Third-Person Claim"), such Indemnified
Party shall give to an Indemnitor a Claim Notice relating to the Third-Person
Claim within 15 days after receipt by such Indemnified Party of written notice
of the Third-Person Claim; provided, however, that failure to give such notice
shall not relieve an Indemnitor of its obligations hereunder except to the
extent the Indemnitor shall have been prejudiced by such failure (except that
the Indemnitor shall not be liable for any Expenses incurred during the period
in excess of the initial 15 days in which the Indemnified Party failed to give
such notice) (it being understood that the Indemnified Party shall use good
faith efforts to notify the Indemnitor promptly upon receipt of any oral or
written notice of a Third-Person Claim). Thereafter, the Indemnified Party
shall deliver to the Indemnitor, within five business days after the Indemnified
Party's receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnified Party relating to the Third-Person Claim.
Notwithstanding the foregoing, should an Indemnified Party be physically served
with a complaint with regard to a Third-Person Claim, the Indemnified Party must
notify an Indemnitor with a copy of the complaint within five business days
after receipt thereof and shall deliver to the Indemnitor within seven business
days after the receipt of such complaint copies of notices and documents
(including court papers) received by the Indemnified Party relating to the
Third-Person Claim; provided, however, that failure to give such notice shall
not relieve the Indemnitor of its obligations hereunder except to the extent the
Indemnitor shall have been prejudiced by such failure.
(b) (i) In the event of a Third-Person Claim, subject to subsection
11.4(b)(ii) an Indemnitor shall have the absolute right after the receipt of
notice, at its option and at its own expense, to be represented by counsel of
its choice (which shall be satisfactory to the Indemnified Party) and to defend
any proceeding, claim, or demand which relates to any Loss or Expense
indemnified against hereunder if the Indemnitor gives written notice to the
Indemnified Party of its intention to defend (a "Notice to Defend") within seven
business days following receipt of the Claim Notice. The Notice to Defend must
also state that the Indemnitor agrees to fully indemnify the Indemnified Party
for the Third-Person Claim to the extent provided for in this Article XI;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such legal proceeding, claim or demand. To the
extent an Indemnitor elects not to defend such proceeding, claim or demand or
fails to give a Notice to Defend within such seven business-day period, and the
Indemnified Party defends against or otherwise deals with any such proceeding,
claim or demand, the Indemnified Party may retain counsel, at the expense of the
Indemnitor to the extent provided for in this Article XI, and control the
defense of such proceeding. Except as provided in Section 11.4(c), neither the
Indemnitor nor the
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Indemnified Party may settle any such proceeding which settlement obligates the
other party, pursuant to such settlement or this Article XI, to pay money, to
perform obligations, to refrain from performing acts or to admit liability
without the consent of the other party.
(ii) In the event of a Third-Person Claim in which the primary remedy
sought is an injunction, or other similar equitable relief against the
Indemnified Party, that would have a Material Adverse Effect or Material Adverse
Effect on Parent and Buyer, or which principally consists of a criminal law
claim against the Indemnified Party, the Indemnified Party shall have the rights
and obligations of the Indemnitor under Section 11.4(b)(i) and the Indemnitor
shall have the rights and obligations of the Indemnified Party under Section
11.4(b)(i).
(iii) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the time in which to appeal therefrom has expired, or a settlement shall have
been consummated, or the Indemnified Party and the Indemnitor shall arrive at a
mutually binding agreement with respect to each separate matter alleged to be
indemnified by an Indemnitor hereunder, the Indemnified Party shall forward to
the Indemnitor notice of any sums due and owing by it with respect to such
matter and the Indemnitor shall pay all of the sums so owing to the Indemnified
Party by wire transfer, certified or bank cashier's check within 30 days after
the date of such notice.
(iv) The Indemnified Party shall neither be required to refrain from
paying or satisfying any claim which the Indemnitor has not acknowledged in
writing its obligations to indemnify the Indemnified Party, provided that the
Indemnified Party shall have given notice of such claim to the Indemnitor in
accordance with Sections 11.3 and 11.4, or which has matured by court judgment
or decree, unless appeal is taken thereafter and proper appeal bond posted by
the Indemnitor, nor shall the Indemnified Party be required to refrain from
paying or satisfying any Third-Person Claim after and to the extent that such
Third-Person Claim has resulted in an unstayed permanent injunction or other
similar equitable relief against the Indemnified Party (unless such claim shall
have been discharged or enforcement thereof stayed by the filing of a legally
permitted bond by the Indemnitor or otherwise, at its sole expense).
(c) (i) Except as provided in Section 11.4(b)(iv), in the event that
an Indemnitor, on the one hand, or the Indemnified Party, on the other hand, has
reached a good faith, bona fide settlement agreement or compromise that involves
only monetary payment, subject only to approval hereunder, with any claimant
regarding a matter which may be the subject of indemnification hereunder and
desires to settle on the basis of such agreement or compromise that involves
only monetary payment, such party who desires to so settle or compromise shall
notify the other party in writing of its desire setting forth the terms of such
settlement or compromise (the "Notice of Settlement").
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(ii) The Third-Person Claim may be settled or compromised on the
basis set forth in the Notice of Settlement unless within 20 days of the receipt
of the Notice of Settlement the party who issued the Notice of Settlement
receives a notice from the other party of its desire to continue to contest the
matter (the "Notice to Contest") and, in such case:
(A) Should the Indemnified Party deliver a Notice to Contest, the
claim shall be so contested and the monetary liability of the Indemnitor shall
be limited as provided in subsection (C) below.
(B) If the settlement or compromise could result in a claim for
indemnification being made against the Indemnitor and if the Indemnitor delivers
the Notice to Contest, the claim shall be so contested and the monetary
liability of the Indemnified Party shall be limited as provided in subsection
(C) below.
(C) If a matter is contested as provided in subsections (A) or (B)
above and is later adjudicated, settled, compromised or otherwise disposed of
and such adjudication, compromise, settlement or disposition results in a
liability, loss, damage or injury in excess of the amount for which one party
desired previously to settle the matter as set forth in the Notice of
Settlement, then the liability of such party shall be limited to such lesser
proposed settlement amount and the party contesting the matter shall be solely
responsible for the amount in excess of such lesser proposed settlement amount
and without regard to any minimum or maximum restriction on liability described
in this Agreement.
(iii) For an Indemnitor's Notice to Contest to be effective, it must
also state that the Indemnitor acknowledges and agrees that it shall be
obligated to indemnify the Indemnified Party for any amount in excess of the
lesser proposed settlement amount as described in subsection (ii)(C) above.
Except for such obligation for the excess of the lesser proposed settlement
amount acknowledged in a Notice to Contest, the giving of or failure to give a
Notice to Contest by any party shall not be construed or implied as an
acknowledgment by such party of an obligation for indemnification under this
Article XI.
(d) To the extent of any inconsistency between this Section 11.4 and
Section 8.3(d), the provisions of Section 8.3(d) shall control.
SECTION 11.5. LIMITATIONS. (a) In any case where an Indemnified
Party recovers from third Persons any amount in respect of a matter with respect
to which an Indemnitor has indemnified it pursuant to this Article XI, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such matter and (ii) any amount expended by the Indemnitor in
pursuing or defending any claim arising out of such matter.
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(b) Except for remedies that cannot be waived as a matter of law and
injunctive and provisional relief, if the Closing occurs, this Article XI shall
be the exclusive remedy for breach of this Agreement (including any covenant,
obligation, representation or warranty continued in this Agreement or any
certificate delivered pursuant to this Agreement) or otherwise in respect of the
sale of the Shares.
ARTICLE XII
TERMINATION
-----------
SECTION 12.1. TERMINATION. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement may be terminated at any time prior
to the Closing Date:
(a) by the mutual consent of Buyer and FDC;
(b) by Buyer or FDC if the Closing shall not have occurred on or
before July 1, 1995 (or such later date as may be agreed in writing to by
Buyer and FDC);
(c) by Buyer in the event of (i) any material inaccuracy of any of
FDC's or the Company's representations contained herein or (ii) any
material breach by FDC or the Company of any of their respective agreements
or warranties contained herein and the failure of FDC or the Company to
cure such breach on or before the earlier of the outside date for Closing
pursuant to Section 12.1(b) or the 30th day after receipt of notice from
Buyer requesting such breach to be cured;
(d) by FDC in the event of (i) any material inaccuracy of any of
Buyer's or Parent's representations contained herein or (ii) any material
breach by Buyer or Parent of any of their respective agreements or
warranties contained herein and the failure of Buyer or Parent to cure such
breach on or before the earlier of the outside date for Closing pursuant to
Section 12.1(b) or the 30th day after receipt of notice from FDC requesting
such breach to be cured;
(e) by Buyer pursuant to the penultimate proviso to Section 3.1; or
(f) by Buyer or FDC if any court of competent jurisdiction in the
United States or other United States Governmental Body shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby.
SECTION 12.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 12.1 shall give written notice of such
termination to the other party to this Agreement.
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SECTION 12.3. EFFECT OF TERMINATION. In the event that FDC exercises
its right to terminate this Agreement in accordance with and pursuant solely to
paragraph (d) of Section 12.1 (provided that Buyer is not then eligible to
exercise its right to terminate this Agreement pursuant solely to paragraph (c)
or (f) of Section 12.1), FDC shall be entitled to receive from Parent, and
Parent shall pay, a fee in cash equal to $5,000,000 as liquidated damages, and
not as a penalty, the parties agreeing that the damages to FDC resulting from
such a breach of Buyer or Parent are not capable of being estimated with
accuracy and that such amount is a reasonable estimate of the probable loss to
FDC. In the event of such a termination by FDC, neither Buyer or Parent shall
have any other legal or equitable obligation to FDC, FDC Health or the Company,
in the nature of damages or otherwise; provided, however, that the foregoing
shall not limit any remedies that FDC may have under the Confidentiality
Agreement. In the event that this Agreement shall be terminated pursuant to any
other paragraph of Section 12.1, nothing herein shall relieve any party from any
liability for its breach other than as provided in this Section 12.3.
ARTICLE XIII
GENERAL PROVISIONS
------------------
SECTION 13.1. CONFIDENTIAL NATURE OF INFORMATION. Each party hereto
agrees that all documents, materials and other information which it shall have
obtained regarding the other party during the course of the negotiations leading
to the consummation of the transactions contemplated hereby (whether obtained
before or after the date of this Agreement), the investigation provided for
herein and the preparation of this Agreement and other related documents shall
be held in confidence pursuant to the Confidentially Agreement.
SECTION 13.2. NO PUBLIC ANNOUNCEMENT. Neither Buyer nor FDC shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law, in which
case the other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued;
provided, however, that the foregoing shall not preclude communications or
disclosures necessary to implement the provisions of this Agreement or to comply
with the accounting and SEC disclosure obligations or the rules of any stock
exchange.
SECTION 13.3. NOTICES. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or when sent by registered or certified mail
or by private courier addressed as follows:
If to Buyer or Parent, to:
301 Perimeter Center North
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Atlanta, Georgia 30346
Attention: James A. Gilbert, Vice President
and General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
Attention: Robert W. Smith, Esq.
If to FDC or the Company, to or in care of:
First Data Corporation
401 Hackensack Avenue
Hackensack, New Jersey 07601
Attention: Robert J. Levenson, Executive Vice President
with copies to:
First Data Corporation
2121 North 117th Avenue
Omaha, Nebraska 68164
Attention: David P. Bailis, General Counsel
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
SECTION 13.4. SUCCESSORS AND ASSIGNS. (a) The rights of either party
under this Agreement shall not be assignable by such party hereto prior to the
Closing without the written consent of the other party, except that Buyer may
assign its rights, but not its obligations hereunder, to one or more wholly-
owned direct or indirect subsidiaries of Parent.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this
Agreement,
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expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties and successors and assigns permitted by this
Section 13.4 any right, remedy or claim under or by reason of this Agreement.
SECTION 13.5. ACCESS TO RECORDS AFTER CLOSING. (a) For a period of
six years after the Closing Date, FDC and its representatives shall have
reasonable access to all of the books and records of the Company and the
Subsidiaries to the extent that such access may reasonably be required by FDC in
connection with matters relating to or affected by the operations of the Company
and the Subsidiaries prior to the Closing Date. Such access shall be afforded
by Buyer upon receipt of reasonable advance notice and during normal business
hours. FDC shall be solely responsible for any costs or expenses incurred by it
pursuant to this Section 13.5(a). If Buyer, the Company or the Subsidiaries
shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, Buyer shall, prior to such disposition, give FDC a
reasonable opportunity, at FDC's expense, to segregate and remove such books and
records as FDC may select.
(b) For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Business which FDC or any of its Affiliates may retain after the
Closing Date. Such access shall be afforded by FDC and its Affiliates upon
receipt of reasonable advance notice and during normal business hours. Buyer
shall be solely responsible for any costs and expenses incurred by it pursuant
to this Section 13.5(b). If FDC or any of its Affiliates shall desire to
dispose of any of such books and records prior to the expiration of such six-
year period, FDC shall, prior to such disposition, give Buyer a reasonable
opportunity, at Buyer's expense, to segregate and remove such books and records
as Buyer may select.
SECTION 13.6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto and the Confidentiality Agreement contain the entire understanding of the
parties hereto with regard to the subject matter contained herein or therein,
and supersede all other prior agreements, understandings or letters of intent
between or among any of the parties hereto. This Agreement shall not be
amended, modified or supplemented except by a written instrument signed by an
authorized representative of each of the parties hereto.
SECTION 13.7. INTERPRETATION. Articles, titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed
with and as an integral part of this Agreement to the same extent as if they
were set forth verbatim herein. Neither the specification of any dollar amount
in any representation or warranty contained in this Agreement nor the inclusion
of any specific item in any Schedule hereto is intended to imply that such
amount, or higher or lower amounts, or the item so included or other items, are
or are not material, and no party shall use the fact of the setting forth of any
such amount or the inclusion of any such item in any dispute or controversy
between the parties as to whether any obligation, item or matter not described
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herein or included in any Schedule is or is not material for purposes of this
Agreement. Unless this Agreement specifically provides otherwise, neither the
specification of any item or matter in any representation or warranty contained
in this Agreement nor the inclusion of any specific item in any Schedule hereto
is intended to imply that such item or matter, or other items or matters, are or
are not in the ordinary course of business, and no party shall use the fact of
the setting forth or the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in any Schedule is or is not in the ordinary course
of business for purposes of this Agreement. FDC may, from time to time prior to
or at the Closing, by notice in accordance with the terms of this Agreement,
supplement, amend or create any Schedule, in order to add information or correct
previously supplied information. No such amendment shall be evidence, in and of
itself, that the representations and warranties in the corresponding section are
no longer true and correct in all material respects. It is specifically agreed
that such Schedules may be amended to add immaterial, as well as material, items
thereto. No such supplemental, amended or additional Schedule shall be deemed to
cure any breach for purposes of Section 9.1. If, however, the Closing occurs,
then, except as provided in the first paragraph of Article IX and the first
paragraph of Article X, any such supplement, amendment or addition will be
effective to cure and correct for all other purposes any breach of any
representation, warranty or covenant which would have existed if FDC had not
made such supplement, amendment or addition, and all references to any Schedule
hereto which is supplemented or amended as provided in this Section 13.7 shall
for all purposes after the Closing be deemed to be a reference to such Schedule
as so supplemented or amended.
SECTION 13.8. WAIVERS. Any term or provision of this Agreement may
be waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
SECTION 13.9. EXPENSES. Except as provided in the Registration
Rights Agreement, each party hereto will pay all costs and expenses incident to
its negotiation and preparation of this Agreement and to its performance and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with, including the fees, expenses and disbursements of
its counsel and independent public accountants.
SECTION 13.10. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without
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invalidating the remainder of such invalid, illegal or unenforceable provision
or provisions or any other provisions hereof, unless such a construction would
be unreasonable.
SECTION 13.11. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each of FDC, the Company,
Buyer and Parent.
SECTION 13.12. FURTHER ASSURANCES. On and after the Closing Date
each party hereto shall take such other actions and execute such other documents
and instruments of conveyance and transfer as may be reasonably requested by the
other party hereto from time to time to effectuate or confirm the transfer of
the Shares to Buyer in accordance with the terms of this Agreement.
SECTION 13.13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of New York.
SECTION 13.14. DISCLAIMER OF WARRANTIES. FDC makes no
representations or warranties with respect to any projections, forecasts or
forward-looking information provided to Parent or Buyer. There is no assurance
that any projected or forecasted results will be achieved. EXCEPT AS TO THOSE
MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS
AGREEMENT AND THE CERTIFICATE DELIVERED BY FDC PURSUANT TO SECTION 4.4, FDC IS
SELLING THE SHARES (AND THE BUSINESS AND ASSETS OF THE COMPANY REPRESENTED
THEREBY) ON AN "AS IS, WHERE IS" BASIS AND DISCLAIMS ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED. FDC MAKES NO
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Parent and Buyer acknowledge that
neither FDC nor any of its representatives nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts, summaries or schedules heretofore made
available by FDC or its representatives to Parent or Buyer or any other
information which is not included in this Agreement or the Schedules hereto, and
neither FDC nor any of its representatives nor any other Person will have or be
subject to any liability to Parent, any Affiliate of Parent or any other Person
resulting from the distribution of any such information to, or use of any such
information by, Parent, any Affiliate of Parent or any of their agents,
consultants, accountants, counsel or other representatives.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
"BUYER":
HBO & COMPANY OF GEORGIA
By: /s/ Charles W. McCall
---------------------------
Name: Charles W. McCall
Title: President and CEO
"PARENT":
HBO & COMPANY
By: /s/ Charles W. McCall
---------------------------
Name: Charles W. McCall
Title: President and CEO
"FDC":
FIRST DATA CORPORATION
By: /s/ Henry C. Duques
---------------------------
Name: Henry C. Duques
Title: Chief Executive Officer
"FDC HEALTH":
FDC HEALTH INC.
By: /s/ David P. Bailis
---------------------------
Name: David P. Bailis
Title: Secretary
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<PAGE>
"COMPANY":
FIRST DATA HEALTH SYSTEMS
CORPORATION
By: /s/ David P. Bailis
--------------------------
Name: David P. Bailis
Title: Secretary
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<PAGE>
June 17, 1995
HBO & Company
HBO & Company of Georgia
301 Perimeter Center North
Atlanta, Georgia 30346
Ladies and Gentlemen:
Reference is made to the Stock Purchase Agreement (the "Agreement"), dated
as of May 16, 1995, among First Data Corporation, a Delaware corporation
("FDC"); FDC Health Inc., a Nebraska corporation and a wholly owned subsidiary
of FDC ("FDC Health"); First Data Health Systems Corporation, a Delaware
corporation and wholly owned subsidiary of FDC Health (the "Company"); HBO &
Company, a Delaware corporation ("Parent"); and HBO & Company of Georgia, a
Delaware corporation and wholly owned subsidiary of Parent (the "Buyer")
FDC, FDC Health, the Company, Parent and Buyer desire to amend the
Agreement as follows:
Section 8.5 of the Agreement is hereby amended by deleting such Section in
its entirety and substituting therefor the following:
SECTION 8.5. RADIOLOGY, SCHEDULING, MEDICAL RECORDS AND PHARMACY
SOFTWARE PRODUCTS. With respect to customers of the Business described on
Schedule 8.5 who are parties to contracts, agreements, offers or options
with the Company as of the Closing Date that provide for delivery of
Pharmacy, Scheduling, Medical Records and Radiology Software Products upon
the satisfaction of certain terms (the "Pharmacy, Scheduling, Medical
Records and Radiology Software Contracts"), from the Closing Date to the
expiration of FDC's indemnification obligations to the Buyer Group Members
under Section 11.1(a)(iv), Buyer will, and will cause the Company to,
offer, on terms substantially similar to those contained in the Pharmacy,
Scheduling, Medical Records and Radiology Software Contracts, the then-
current comparable software products of Buyer for pharmacy, scheduling,
medical
<PAGE>
HBO & Company
HBO & Company of Georgia
June 17, 1995
Page 2
records and radiology. No Buyer Group Member shall be indemnified under
this Agreement for Buyer's, the Company's or any of their Affiliates' costs
of providing, installing or otherwise implementing, substituting, replacing
or providing alternative software, goods or services of Buyer, the Company
or any of their Affiliates to customers of the Business in fulfillment of
Buyer's obligations pursuant to this Section 8.5.
Section 9.8 of the Agreement is hereby amended by deleting such
Section in its entirety and substituting therefor the following:
SECTION 9.8. COMPANY CASH ACCOUNT. The cash reserves of the Company
and the Subsidiaries shall, in the aggregate, be at least $2,000,000 plus
an amount equal to the accrued payroll obligations of the foreign
Subsidiaries on the Closing Date. For purposes of this Section 9.8,
"accrued payroll obligations" shall also include unpaid bonus compensation
for pre-Closing periods as described in Section 3.2 of the Human Resources
Agreement; unpaid commissions earned before the Closing Date as described
in Section 3.4 of the Human Resources Agreement; and unpaid amounts payable
in respect of vacation accrued for 1994 and prior years as described in
Section 5.1 of the Human Resources Agreement.
Set forth as Annex A hereto are materials that, pursuant to Section
13.7 of the Agreement, the parties hereby agree constitute amendments and
supplements to the Schedules to the Agreement.
Except as herein expressly amended, the Agreement is ratified and
confirmed in all respects and shall remain in full force and effect in
accordance with its terms. Each reference in the Agreement to "this Agreement"
shall mean the Agreement as amended by this letter agreement, and as hereafter
amended or restated.
This letter agreement may be executed in one or more counterparts,
each of which shall be considered an original instrument, but all of which shall
be considered one and the same
<PAGE>
HBO & Company
HBO & Company of Georgia
June 17, 1995
Page 3
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each of FDC, FDC Health,
the Company, Parent and Buyer.
This letter agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the parties hereto. In the event of any conflict between the provisions of this
letter agreement and the provisions of the Agreement, the provisions of this
letter agreement shall control.
<PAGE>
HBO & Company
HBO & Company of Georgia
June 17, 1995
Page 4
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement among FDC, FDC
Health, the Company, Parent and Buyer.
Very truly yours,
FIRST DATA CORPORATION
By: /s/ Thomas A. Rossi
-------------------------
Name: Thomas A. Rossi
Title: Assistant
Secretary
FDC HEALTH INC.
By: /s/ Thomas A. Rossi
-------------------------
Name: Thomas A. Rossi
Title: Assistant
Secretary
FIRST DATA HEALTH SYSTEMS CORPORATION
By: /s/ Henry M. Abelman
--------------------------
Name: Henry M. Abelman
Title: Assistant
Secretary
<PAGE>
HBO & Company
HBO & Company of Georgia
June 17, 1995
Page 5
The foregoing agreement is hereby confirmed and accepted as of the date of this
letter.
HBO & COMPANY
By: /s/ James A. Gilbert
----------------------
Name: James A. Gilbert
Title: Vice President
HBO & COMPANY OF GEORGIA
By: /s/ James A. Gilbert
---------------------
Name: James A. Gilbert
Title: Vice President
<PAGE>
SHAREHOLDER AGREEMENT
---------------------
SHAREHOLDER AGREEMENT, dated June 17, 1995 (this "Agreement"), by and
between FIRST DATA CORPORATION, a Delaware corporation ("FDC"), and HBO &
COMPANY, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, simultaneously with the closing of the transactions contemplated
by the Stock Purchase Agreement dated as of May 16, 1995 (the "Purchase
Agreement") among FDC, FDC Health Inc., a Nebraska corporation, First Data
Health Systems Corporation, a Delaware corporation ("FDHSC"), the Company and
HBO & Company of Georgia, a Delaware corporation ("HBO-GA"), which provides for
the purchase by HBO-GA of all of the outstanding capital stock of FDHSC in
consideration for the Cash Consideration (as defined in the Purchase Agreement)
and the number of shares of the Company's common stock, par value $.05 per share
(the "Common Stock"), constituting the Buyer Stock
<PAGE>
Consideration (as defined in the Purchase Agreement, the "Shares"); and
WHEREAS, FDC and the Company wish to enter into an agreement with respect
to any future acquisition of the capital stock of the Company by FDC and other
Interested Stockholders (as hereinafter defined) and to provide for certain
requirements with respect to certain transactions by the Interested Stockholders
relating to the Company and the Shares;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
1. DEFINED TERMS
1.1 The term "Subsidiary" means any majority-owned subsidiary of any
Person.
1.2 The term "Interested Stockholder" means (i) FDC and its Subsidiaries
or (ii) any Person who or which is a member of a Group with any of the entities
described in clause (i) above and any of such Person's Subsidiaries.
1.3 The term "Person" means any individual, corporation, partnership,
unincorporated association or other
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<PAGE>
entity and shall include any successor (by merger or otherwise) of such entity.
1.4 The term "Group" means a "group" within the meaning of Section
13(d)(3) of the Exchange Act.
1.5 The term "Voting Stock" means stock of the Company of any class or
series entitled to vote generally in the election of directors; the term
"Convertible Securities" means securities of the Company which are convertible
into or exchangeable for Voting Stock; and the term "Outstanding Voting Stock"
means at any time the then issued and outstanding Voting Stock, Convertible
Securities (which shall be counted as Voting Stock at the highest conversion or
exchange rate at which they can be converted or exchanged), and options or
rights (whether currently exercisable or not) to purchase Voting Stock or
Convertible Securities.
1.6 The term "Voting Power" means, with respect to Outstanding Voting
Stock, the highest number of votes (expressed as a percentage of 100%) that the
holders of all such Outstanding Voting Stock would be entitled to cast for the
election of directors or any other matter (except to the extent such voting
rights are dependent on events of default or bankruptcy), assuming for purposes
of this computation the conversion or
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<PAGE>
exchange into Voting Stock of Convertible Securities and the exercise of options
and rights (whether currently exercisable or not) to purchase Voting Stock or
Convertible Securities to the extent that any such action would increase the
number of votes.
1.7 The term "owner", including the terms "own" and "owned", when used
with respect to any stock means a Person that individually or with or through
any of its Subsidiaries:
(i) beneficially owns such stock, directly or indirectly; or
(ii) has (A) the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the owner of stock tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's
Subsidiaries until such tendered stock is accepted for purchase or exchange; or
(B) the right to vote such stock pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the owner of
any stock because of such Person's right to vote such stock if the agreement,
arrangement or understanding to vote such stock
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<PAGE>
arises solely from a revocable proxy or consent given in response to a proxy or
consent solicitation made to 10 or more Persons; or
(iii) has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent as described in item (B) of clause (ii) of this paragraph), or disposing
or such stock with any other Person that beneficially owns, or whose
Subsidiaries beneficially own, directly or indirectly, such stock.
1.8 The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder.
1.9 The term "SEC" shall mean the Securities and Exchange Commission or
any successor commission or agency having similar powers.
1.10 The term "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
1.11 The term "Closing" shall mean the closing of the transactions
contemplated by the Purchase Agreement.
1.12 The term "Competitor" shall mean any of the following companies:
Shared Medical Systems, Cerner Corporation,
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<PAGE>
Meditech Management Inc., Compucare, Phamis Inc., Clinicom Incorporated and
Altel Corporation.
2. ACQUISITION OF VOTING STOCK
2.1 No Interested Stockholder will, directly or indirectly, acquire or
agree to acquire, by purchase or otherwise, any Voting Stock or Convertible
Securities if after such acquisition the total combined Voting Power of the
Outstanding Voting Stock owned by all Interested Stockholders, taken together,
would be more than 12% of the total combined Voting Power of the Outstanding
Voting Stock on such date; provided that:
(a) an Interested Stockholder may acquire Voting Stock without regard
to the foregoing limitation if such acquisition represents the purchase of
Voting Stock upon the exercise of rights, warrants, options or Convertible
Securities distributed pro rata to all holders of the Company's Voting
Stock entitling them to purchase such Voting Stock; and
(b) no Interested Stockholder shall be obligated to dispose of any
Voting Stock or Convertible Securities in excess of the percentage
limitation set forth above if such
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<PAGE>
excess is caused by a reduction in the Voting Power of the Outstanding
Voting Stock (by decrease in the number of Shares of Outstanding Voting
Stock or otherwise).
2.2 If any Interested Stockholder acquires Voting Stock or Convertible
Securities the result of which acquisition is to cause the Interested
Stockholders in the aggregate to exceed the percentage limitation set forth in
Section 2.1, such Interested Stockholder shall not be deemed to be in breach
hereof if it shall within 10 days after such acquisition dispose of the Voting
Stock or Convertible Securities owned by it that caused such percentage
limitation to be exceeded.
3. AGREEMENT REGARDING TRANSFERS
3.1 No Interested Stockholder shall transfer, assign, sell or otherwise
dispose of any Voting Stock or Convertible Securities owned by it except (i)
pursuant to Rule 144, as in effect from time to time, under the Securities Act,
or any successor to such rule, (ii) through a bona fide underwritten public
offering registered under the Securities Act, (iii) by a disposition covered by
any other registration statement relating to equity securities of the Company
(on appropriate forms) filed by the Company under the Securities Act, (iv) in
one or more
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<PAGE>
transactions exempt from registration under the Securities Act (other than by
reason of Rule 144), (v) in a merger or consolidation in which the Company is
acquired, or in connection with a plan of liquidation of the Company or (vi) in
response to an offer to purchase or exchange for cash or other consideration any
Voting Stock or Convertible Securities (I) which is made by or on behalf of the
Company or (II) which is made by or on behalf of any other Person or Group.
Notwithstanding the foregoing, no Interested Stockholder shall transfer, assign,
sell or dispose Outstanding Voting Securities pursuant to clause (iv) above (A)
to any Competitor or Group of which a Competitor is a member, (B) to any Person
or Group who prior to such transfer, assignment, sale or disposition does not
agree in a writing delivered to the Company to be bound by all the terms of this
Agreement or (C) to any Person who has filed a Statement on Schedule 13D under
the Exchange Act in respect of the Common Stock of the Company, unless, in the
case of clause (C), such Interested Stockholder has delivered a written notice
to the Company of its intent to transfer, assign, sell or dispose of Outstanding
Voting Securities pursuant to clause (iv) above to such Person and, within five
business days after receipt thereof, the Company has not delivered to FDC a
certificate of the Company signed by its President and Chief Executive Officer
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<PAGE>
stating that the Board of Directors of the Company has made a reasonable good
faith determination that such Person presently intends to make an unsolicited
attempt to acquire control of the Company.
4. SOLICITATIONS
4.1 No Interested Stockholder shall, without the prior approval of a
majority of the Board of Directors of the Company, (I) solicit proxies with
respect to any Voting Stock or Convertible Securities, nor shall it become a
"participant" in any "solicitation" (as such terms are used in Rule 14a-11 under
the Exchange Act) relating to the election of directors of the Company; or (II)
join a partnership, limited partnership, syndicate or other Group, or otherwise
act in concert with any other Person or Group for the purpose of acquiring,
holding, voting or disposing of Outstanding Voting Securities.
5. BOARD REPRESENTATION
5.1 Within 30 days following written notice from FDC, the Board of
Directors of the Company shall take all steps necessary to (a) increase the
number of directors constituting the entire board from nine to 10 and (b)
appoint the individual
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<PAGE>
holding the title of Chief Executive Officer of FDC (the "FDC Representative")
to fill such newly created directorship. Following such appointment of the FDC
Representative to the Board of Directors of the Company, and so long thereafter
as FDC shall own 5% or more of the Outstanding Voting Stock, the Board of
Directors of the Company shall take all steps necessary to secure the election
by the stockholders of the Company of the FDC Representative to the Board of
Directors of the Company, including, without limitation, by the nomination of
the FDC Representative as a nominee for director in the annual proxy materials
distributed by the Company in connection with its annual meetings of
stockholders.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to FDC as follows:
6.1 The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
to carry out its obligations under this Agreement.
6.2 The execution and delivery of this Agreement by the Company and the
performance by the Company of its obligations
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<PAGE>
hereunder have been duly and validly authorized by the Board of Directors of the
Company. This Agreement has been duly executed and validly delivered by the
Company and is legally binding on the Company, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting creditors' rights and to general equity principles.
7. REPRESENTATIONS AND WARRANTIES OF FDC
FDC represents and warrants of the Company as follows:
7.1 FDC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power of
carry out its obligations under this Agreement.
7.2 The execution and delivery of this Agreement by FDC and the
performance by FDC of its obligations hereunder have been duly and validly
authorized by the Board of Directors of FDC. This Agreement has been duly
executed and validly delivered by FDC and is legally binding on FDC, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights and to general equity
principles.
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<PAGE>
8. NOTICES
8.1 All notices, requests, demands and other communications required or
permitted to be given hereunder shall be deemed to have been duly given if in
writing and delivered personally or by facsimile transmission or mailed first-
class, postage prepaid, registered or certified mail, addressed as follows:
If to FDC:
First Data Corporation
401 Hackensack Avenue
Hackensack, New Jersey 07601
Attention: Robert J. Levenson
Executive Vice President
with copies to:
First Data Corporation
2121 North 117th Avenue
Omaha, Nebraska 68164
Attention: David P. Bailis, Esq.
General Counsel
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger, Esq.
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<PAGE>
If to the Company:
HBO & Company:
301 Perimeter Center North
Atlanta, Georgia 30346
Attention: James A. Gilbert, Esq.
Vice President and
General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
Attention: Robert W. Smith, Esq.
8.2 Any party may change the address or facsimile number to which such
communications are to be directed to it by giving written notice to the other in
the manner provided in Section 8.1.
9. GENERAL
9.1 This Agreement sets forth the entire agreement and understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof, except for the Purchase Agreement and the Registration Rights Agreement.
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<PAGE>
9.2 The headings contained in this Agreement are for convenient reference
only, and shall not in any way affect the meaning or interpretation of this
Agreement.
9.3 This Agreement may be executed in multiple counterparts, each of which
shall be an original, but all of which shall constitute but one agreement.
9.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but this
Agreement shall not be assignable by an party hereto without the prior written
consent of the others.
9.5 This Agreement may be amended only in a writing which specifically
states that it amends this Agreement and is executed by all parties hereto.
9.6 Failure of any party to insist upon strict observance of or compliance
with all of the terms of this Agreement in one or more instances shall not be
deemed to be a waiver of its rights to insist upon such observance or compliance
with the other terms hereof, or in the future.
9.7 This Agreement will be governed by and construed in accordance with
the internal laws of the State of Delaware, without giving effect to the
conflict of laws principles thereof.
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<PAGE>
9.8 Each Interested Stockholder, on the one hand, and the Company, on the
other hand, acknowledge and agree that irreparable damage would occur if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically its provisions in any court of the United States or
any state having jurisdiction, this being in addition to any other remedy to
which they may be entitled at law or in equity.
9.9 This Agreement shall terminate and be of no further force and effect
from and after the earlier of (i) the fifth anniversary of the date hereof and
(ii) the date on which FDC together with all Interested Stockholders no longer
owns 5% or more of the Voting Power of the Outstanding Voting Securities .
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
FIRST DATA CORPORATION
By: /s/ John S. Zieser
--------------------------
Its: Assistant Secretary
-------------------------
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<PAGE>
HBO & COMPANY
By: /s/ James A. Gilbert
--------------------------
Its: Vice President
-------------------------
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of June 17, 1995
among HBO & Company, a Delaware corporation (the "Company"), and First Data
Corporation, a Delaware corporation ("FDC").
RECITALS
--------
WHEREAS, pursuant to the Stock Purchase Agreement dated as of May 16, 1995
(the "Stock Purchase Agreement"), among the Company, HBO & Company of Georgia
("HBO-GA"), FDC, FDC Health Inc. ("FDC Health") and First Data Health Systems
Corporation ("HSC"), the Company is purchasing, through HBO-GA, all of the
issued and outstanding shares of capital stock of HSC in consideration for the
Cash Consideration (as defined in the Stock Purchase Agreement) and the number
of shares of common stock, $.05 par value per share, of the Company constituting
the Buyer Stock Consideration (as defined in the Stock Purchase Agreement, the
"Shares");
WHEREAS, pursuant to the Stock Purchase Agreement, as a condition to FDC's
agreement to cause FDC Health to sell the shares of HSC to HBO-GA, the Company
agreed to provide FDC with certain rights as set forth in this Agreement to
cause the Shares to be registered pursuant to the Securities Act (as defined
below); and
WHEREAS, the parties hereto hereby desire to set forth FDC's rights and the
Company's obligations to cause the registration of the Registrable Securities
(as defined below) pursuant to the Securities Act;
NOW, THEREFORE, in consideration of the transactions contemplated by the
Stock Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions and Usage.
---------------------
As used in this Agreement:
<PAGE>
1.1. Definitions.
"Affiliate" means with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Board" means the Board of Directors of the Company.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means (i) the common stock, par value $.05 per share,
of the Company, and (ii) shares of capital stock of the Company issued by the
Company in respect of or in exchange for shares of such common stock in
connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such common stock.
"Company" has the meaning set forth in the first paragraph hereof.
"Continuously Effective", with respect to a specified registration
statement under the Securities Act, means that it shall have become effective
and shall not cease to be effective and available for Transfers of Registrable
Securities thereunder for either (i) any 10 consecutive business days, or (ii)
an aggregate of 15 business days during the period specified in the relevant
provision of this Agreement; provided, however, that a postponement or
suspension permitted under Section 2.1(ii) shall not be counted for purposes of
this definition.
"Demand Registration" has the meaning set forth in Section 2.1(i).
"Demanding Holders" has the meaning set forth in Section 2.1(i).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDC" has the meaning specified in the first paragraph of this
Agreement.
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<PAGE>
"FDC Health" has the meaning set forth in the first recital of this
Agreement.
"HBO-GA" has the meaning set forth in the first recital of this
Agreement.
"Holders" means FDC and Transferees of Registrable Securities in
accordance with Section 8, at such times as such Persons shall own Registrable
Securities.
"HSC" has the meaning set forth in the first recital hereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 3.1.
"Register", "registered", and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering by the
Commission of effectiveness of such registration statement or document.
"Registrable Securities" means, subject to Section 8 and Section 10.3:
(i) the Shares owned by FDC or any of its Subsidiaries on the date hereof, and
owned by a Holder on the date of determination; (ii) any shares of Common Stock
or other securities issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange by the Company generally for, or in
replacement by the Company generally of, such Shares; and (iii) any securities
issued in exchange for such Shares in any merger or reorganization of the
Company. For purposes of this Agreement, a Person will be deemed to be a Holder
of Registrable Securities whenever such Person has the then-existing right to
acquire such Registrable Securities (by conversion, purchase or otherwise),
whether or not such acquisition has actually been effected.
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<PAGE>
"Registrable Securities then outstanding" means, with respect to a
specified determination date, the outstanding Registrable Securities held by all
Holders on such date.
"Registration Expenses" has the meaning set forth in Section 6.1.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holders" means, with respect to a specified registration
pursuant to this Agreement, Holders whose Registrable Securities are included in
such registration.
"Shares" has the meaning set forth in the first recital hereof.
"Stock Purchase Agreement" has the meaning set forth in the first
recital hereof.
"Transfer" means and includes the act of selling, giving,
transferring, assigning or otherwise disposing of (other than pledging,
hypothecating or otherwise transferring as security) (and correlative words
shall have correlative meanings).
"Underwriters' Representative" means the managing underwriter, or, in
the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers.
"Violation" has the meaning set forth in Section 7.1.
1.2. Usage.
(i) References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder shall
include Registrable Securities beneficially owned by such Person but which are
held of record in the name of a nominee, trustee, custodian, or other agent, but
shall exclude
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any securities held by a Holder in a fiduciary capacity for customers of such
Person.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable both to
the singular and plural forms and the feminine, masculine and neuter forms of
the terms defined.
(vi) The term "including" and correlative terms shall be deemed to be
followed by "without limitation" whether or not followed by such words or words
of like import.
(vii) The term "hereof" and similar terms refer to this Agreement as
a whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 13.2.
Section 2. Demand Registration.
2.1. Demands for Registration.
------------------------
(i) At any time on or after the date hereof, one or more Holders that
own an aggregate of two-thirds or more of the Registrable Securities then
outstanding shall make a written demand to the Company (the "Demanding
Holders"), the Company shall cause there to be filed with the Commission a
registration statement meeting the requirements of the Securities Act (a "Demand
Registration"), and each Demanding Holder shall be entitled to have included
therein (subject to Section 2.7) all or such number (but not less than two-
thirds of such Demanding Holder's Registrable Securities) which such Demanding
Holder shall elect to include; provided, however, that no request may be
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made pursuant to this Section 2.1 if within four months prior to the date of
such request (a) there has been a closing of a sale of Registrable Securities
under a prior Demand Registration statement or (b) such Demand Registration
statement has been withdrawn at the request of a Demanding Holder, if required
by law or following the good faith determination of the Company, after
consultation with the Demanding Holder or Holders and the Underwriters'
Representative, that there is no present intention to request effectiveness of
such registration statement. Any request made pursuant to this Section 2.1 shall
be addressed to the attention of the Secretary of the Company, and shall specify
the number of Registrable Securities to be registered, the intended methods of
disposition thereof and that the request is for a Demand Registration pursuant
to this Section 2.1(i).
(ii) The Company shall be entitled (a) to postpone for up to 60 days
the filing of any Demand Registration statement otherwise required to be
prepared and filed pursuant to this Section 2.1; provided, however that the
Company will not exercise its right to postpone the filing of a Demand
Registration statement within 30 days of the date hereof, and (b) to suspend
Transfers of Registrable Securities pursuant to an effective Demand Registration
statement for up to 60 days, if the Board determines, in its good faith
reasonable judgment (with the concurrence of the Underwriters' Representative),
that such registration or the Transfer of Registrable Securities contemplated
thereby would materially interfere with, or require premature disclosure of, any
financing, acquisition or reorganization involving the Company or any of its
wholly-owned subsidiaries and the Company promptly gives the Holders notice of
such determination; provided, however, that the Company will not postpone a
Demand Registration statement or suspend Transfers of Registrable Securities
pursuant to an effective Demand Registration statement during the period
beginning 2 days prior to, and ending 10 days after, the date of the pricing of
Registrable Securities and provided, further, that the period of any such
postponements or suspensions will be extended in the time frames established
under Section 2.3(ii).
(iii) Whenever the Company shall have received a demand pursuant to
Section 2.1(i) to effect the registration of any Registrable Securities, the
Company shall promptly give written notice of such proposed registration to all
Holders. Any such Holder may, within 20 days after receipt of such notice,
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request in writing that all of such Holder's Registrable Securities, or any
portion thereof designated by such Holder, be included in the registration. The
method of disposition of all Registrable Securities included in such
registration shall be an underwritten offering.
2.2. Procedures for Demand Registration. Following receipt of a
request for a Demand Registration, the Company shall:
(i) File the registration statement with the Commission as promptly
as practicable, and shall use the Company's best efforts to have the
registration declared effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to prepare current
financial statements, conduct due diligence and complete other actions that are
reasonably necessary to effect a registered public offering.
(ii) Use the Company's best efforts to keep the Demand Registration
statement Continuously Effective until the earlier of such date as of which (a)
all the Registrable Securities under the Demand Registration statement shall
have been disposed of in the manner described in the registration statement or
(b) such Demand Registration statement shall have been withdrawn or abandoned at
the request of a Demanding Holder, if required by law or following the good
faith determination of the Company, after consultation with the Demanding Holder
or Holders and the Underwriters' Representative, that there is no present
intention to request effectiveness of such registration statement.
Notwithstanding the foregoing, if for any reason the effectiveness of a
registration pursuant to this Section 2 is suspended or postponed as permitted
by Section 2.1(ii), the foregoing period shall be extended by the aggregate
number of days of such suspension or postponement.
2.3. Limitations on Number of Demand Registrations. The Company
shall be obligated to effect no more than four Demand Registrations. For
purposes of the preceding sentence, registration shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective, (ii) if after such registration statement has become
effective, such registration or the related offer, sale or distribution of
Registrable Securities thereunder is interfered
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with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not attributable
to the Selling Holders and such interference is not thereafter eliminated, or
(iii) if the conditions to closing specified in the underwriting agreement, if
any, entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Selling Holders. If
the Company shall have complied with its obligations under this Agreement, a
right to demand a registration pursuant to this Section 2 shall be deemed to
have been satisfied upon the date as of which all of the Registrable Securities
included therein shall have been disposed of pursuant to the registration
statement or such registration statement shall have been withdrawn (at the
request of the Demanding Holder or Holders, if required by law or following the
good faith determination of the Company, after consultation with the Demanding
Holder or Holders and the Underwriters' Representative, that there is no present
intention to request effectiveness of such registration statement) other than
for reasons set forth in clause (ii) or (iii) above.
2.4. Form of Demand Registration. A registration pursuant to this
Section 2 shall be on such appropriate registration form of the Commission as
shall (i) be selected by the Company and be reasonably acceptable to the
Demanding Holders.
2.5. Selection of Underwriters. The Demanding Holders shall have the
right to select the underwriter or underwriters and manager or managers to
administer the underwritten offering of a registration pursuant to Section 2;
provided, however, that the Demanding Holders will use reasonable efforts to
consult with the Company as to the selection of the underwriter or underwriters
and manager or managers. The parties hereby acknowledge that their best
interests will be served by selecting the most effective underwriter and the
parties hereby agree to use their best efforts to cooperate in the selection
process set forth above.
2.6. Cutback. Whenever the Company shall effect a registration
pursuant to this Section 2 if the Underwriters' Representative advises a Selling
Holder in writing that, in its opinion, the amount of securities requested to be
included in such offering exceeds the amount which can be sold in such
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offering, securities shall be included in such offering and the related
registration, to the extent of the amount which the Underwriters' Representative
advises can be sold, first, on a pro rata basis among all Selling Holders and
second, on a pro rata basis among all others requesting securities to be
included in such registration.
2.7. Opinion. The Company shall not be required to effect a Demand
Registration if counsel for the Company shall deliver an opinion reasonably
acceptable to the Selling Holders and their counsel that pursuant to Rule 144
under the Securities Act the Holders can sell the Registrable Securities then
outstanding which are the subject of a Demand Registration without registration
under the Securities Act within the period of time and in the manner
contemplated by the written demand delivered pursuant to Section 2.1 or 2.8.
2.8. Non-Underwritten Registered Offerings.
-------------------------------------
(a) From time to time on and after the date hereof, if a Holder shall
make a written demand to the Company, the Company shall use its best efforts to
cause to be filed with the Commission a registration statement meeting the
requirements of the Securities Act covering a non-underwritten offering of not
less than 250,000 shares of Registrable Securities solely to institutional
purchasers. The Company shall use its best efforts to keep such registration
statement effective until the earlier of (i) the fifteenth day following the
effectiveness of such registration statement, (ii) the completion of the
distribution of the Registrable Securities covered thereby or (iii) the
withdrawal of such registration statement at the request of the demanding
Holder, if required by law or following the good faith determination of the
Company, after consultation with the demanding Holder, that there is no present
intention to request effectiveness of such registration statement.
(b) Any registration statement filed under Section 2.8(a) shall not
be deemed to constitute one of the four Demand Registration statements provided
for in Section 2.1(i) and all expenses relating thereto will be borne by the
Holder or Holders demanding such registration.
(c) Except as to the first request of a Holder under Section 2.8(a),
the Company need only file a registration
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statement pursuant to this Section 2.8 in response to a request by a Holder
under Section 2.8(a) if at least 3 months shall have elapsed since (i) the
closing of the sale of all Registrable Securities under the most-recently filed
registration statement of the Company that was filed in response to a demand of
a Holder pursuant to Section 2.8(a) or (ii) the withdrawal of such registration
statement at the request of the demanding Holder, if required by law or
following the good faith determination of the Company, after consultation with
the demanding Holder, that there is no present intention to request
effectiveness of such registration statement.
(d) The provisions of Section 2.1(ii) shall apply to a registration
statement prepared pursuant to a demand made under Section 2.8(a) as if such
registration statement were a Demand Registration statement.
Section 3. Piggyback Registration.
----------------------
3.1. Right to Include Registrable Securities in Registration. If at
any time the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders of the Company other than
the Holders) securities under the Securities Act that are generally comparable
to the Registrable Securities in connection with the public offering solely for
cash on Form S-1, S-2 or S-3 (or any replacement or successor forms), the
Company shall promptly give each Holder of Registrable Securities written notice
of such registration (a "Piggyback Registration"). Upon the written request of
a Holder given within 20 days following the date of such notice, the Company
shall cause to be included in such registration statement and use its best
efforts to register under the Securities Act all the Registrable Securities that
each such Holder shall have requested to be registered. The Company shall have
the absolute right to withdraw or cease to prepare or file any registration
statement for any offering referred to in this Section 3 without any obligation
or liability to any Holder.
3.2. Priority in Cutback Registration. If the Underwriters'
Representative shall advise the Company in writing (with a copy to each Selling
Holder) that, in its opinion, the amount of Registrable Securities requested to
be included in such registration would materially adversely affect such
offering, or the timing thereof, then the Company will include in such
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registration, to the extent of the amount which the Company is so advised can be
sold without such material adverse effect in such offering: first, all
securities proposed to be sold by the Company for its own account; second, the
Registrable Securities requested to be included in such registration by Holders
pursuant to this Section 3, pro rata based on the estimated gross proceeds from
the sale thereof; and third all other securities requested to be included in
such registration.
3.3. Number of Piggyback Registrations. Holders shall be entitled to
have their Registrable Securities included in an unlimited number of Piggyback
Registrations pursuant to this Section 3 until the expiration of three years
from the date hereof.
3.4. Holdback by the Company. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
Section 2 or pursuant to this Section 3, and if such previous registration has
not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-4 or S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of such securities,
until the earliest of a period of 180 days from the effective date of such a
previous registration that has been Continuously Effective or the date as of
which all securities registered thereby shall have been disposed of pursuant to
the registration statement.
Section 4. Registration Procedures. Whenever required under Section
2 or Section 3 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as practicable:
4.1. Preparation and Filing of Registration Statement. Prepare and
file with the Commission a registration statement with respect to such
Registrable Securities and use the Company's best efforts to cause such
registration statement to become effective; provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial filing
of the registration statement and prior to effectiveness thereof, the Company
shall furnish to one legal counsel for the
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Selling Holders (selected by the Demanding Holders) copies of all such documents
in the form substantially as proposed to be filed with the Commission a
reasonable period of time prior to filing for review and comment by such
counsel.
4.2. Filing of Amendment and Supplements. Prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act and rules
thereunder with respect to the disposition of all securities covered by such
registration statement. If the registration is for an underwritten offering,
the Company shall amend the registration statement or supplement the prospectus
whenever required by the terms of the underwriting agreement entered into
pursuant to Section 5.2. In the event that any Registrable Securities included
in a registration statement subject to, or required by, this Agreement remain
unsold at the end of the period during which the Company is obligated to use its
best efforts to maintain the effectiveness of such registration statement, the
Company may file a post-effective amendment to the registration statement for
the purpose of removing such Registrable Securities from registered status.
4.3. Furnishing Copies. Furnish to the Underwriters' Representative,
without charge, such numbers of copies of the registration statement, any pre-
effective or post-effective amendment thereto, the prospectus, including each
preliminary prospectus and any amendments or supplements thereto, in each case
in conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as the Underwriters' Representative
may reasonably request in order to facilitate the disposition of Registrable
Securities.
4.4. Blue Sky Laws. Use the Company's best efforts (i) to register
and qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such states or jurisdictions as shall be
reasonably requested by the Underwriters' Representative (as applicable, or if
inapplicable, the Demanding Holders), and (ii) to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of the
offer and transfer of any of the Registrable Securities in any
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jurisdiction, as soon as possible; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
4.5. Underwriting Agreement. In the event of any underwritten
offering, enter into and perform the Company's obligations under an underwriting
agreement (including indemnification and contribution obligations of
underwriters), in usual and customary form, with the managing underwriter or
underwriters of such offering. The Company shall also cooperate with the
Demanding Holders and the Underwriters' Representative for such offering in the
marketing of the Registrable Securities, including making available the
Company's officers, accountants, counsel, premises, books and records for such
purpose. In addition, the Company shall use reasonable best efforts to assist
in the marketing of the Registrable Securities that are the subject of the
underwritten offering, including, without limitation, participation on a
reasonable basis in customary "road show" activities, including making the
appropriate officers of the Company available on a reasonable basis, and subject
to the best interests of the Company's operations, for investor meetings and
similar presentations.
4.6. Notice of Stop Order. Promptly notify each Selling Holder of
any stop order issued or threatened to be issued by the Commission in connection
therewith and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
4.7. Periodic Reports. Make generally available to the Company's
security holders copies of all periodic reports, proxy statements, and other
information referred to in Section 10.1 and an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act no later than 90 days
following the end of the 12-month period beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of each
registration statement filed pursuant to this Agreement.
4.8. Inspection of Financial Information. Make available for
inspection by any Selling Holder, any underwriter participating in such offering
and the representatives of such
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Selling Holder and underwriter (but not more than one firm of counsel to such
Selling Holders), all financial and other information as shall be reasonably
requested by them, and provide the Selling Holder, any underwriter participating
in such offering and the representatives of such Selling Holder and underwriter
the reasonable opportunity to discuss the business affairs of the Company with
its principal executives and independent public accountants who have certified
the audited financial statements included in such registration statement, in
each case all as reasonably necessary to enable them to exercise their due
diligence responsibility under the Securities Act; provided, however, that
information that the Company determines, in good faith, to be confidential and
which the Company advises such Person, in writing, is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company or the related Selling Holder of Registrable
Securities agrees to be responsible for such Person's breach of confidentiality
on terms reasonably satisfactory to the Company.
4.9. Comfort Letter; Legal Opinion. Obtain a so-called "comfort
letter" from its independent public accountants, and legal opinion of counsel to
the Company, addressed to the Underwriters' Representative in customary form and
covering such matters of the type customarily covered by such letters and
opinions, and in a form that shall be reasonably satisfactory to the Demanding
Holders. The Company shall furnish to each Selling Holder a signed counterpart
of any such comfort letter or legal opinion.
4.10. Transfer Agent. Provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement.
4.11. Listing of Shares. Use its best efforts to cause the
Registrable Securities covered by such registration statement (i) if the Common
Stock is then listed on a securities exchange or included for quotation in a
recognized trading market, to continue to be so listed or included for a
reasonable period of time after the offering, and (ii) to be registered with or
approved by such other United States or state governmental agencies or
authorities as may be necessary by virtue of the
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business and operations of the Company to enable the Selling Holders of
Registrable Securities to consummate the disposition of such Registrable
Securities.
4.12. CUSIP Numbers. Provide a CUSIP number for the Registrable
Securities prior to the effective date of the first registration statement
including Registrable Securities.
4.13. Actions to Expedite Disposition. Take such other actions as
are reasonably required in order to expedite or facilitate the disposition of
Registrable Securities included in each such registration.
Section 5. Selling Holders' Obligations. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities of any Selling Holder of
Registrable Securities that such Selling Holder shall:
5.1. Information Relating to Selling Holders. Furnish to the Company
such information regarding such Selling Holder, the number of the Registrable
Securities owned by it, and the intended method of disposition of such
securities as shall be required to effect the registration of such Selling
Holder's Registrable Securities and requested by the Company, and to cooperate
with the Company in preparing such registration.
5.2. Agreement with Underwriters. In connection with a Demand
Registration statement only, agree to sell its Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the registration
statement was being filed have agreed to sell their securities, and to execute
the underwriting agreement agreed to by the Demanding Holders (in the case of a
Demand Registration under Section 2), or the Company and the Selling Holders (in
the case of a registration under Section 3).
Section 6. Expenses of Registration. Except as provided in Section
2.8(b), expenses in connection with registrations pursuant to this Agreement
shall be allocated and paid as follows:
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6.1. Expenses of Demand Registration. With respect to each Demand
Registration, the Company shall bear and pay all expenses incurred in connection
with any registration, filing, or qualification of Registrable Securities with
respect to such Demand Registrations for each Selling Holder (the right of each
Holder to have the Company bear and pay such expenses being assignable to any
Person to whom Registrable Securities are Transferred as permitted by Section
8), including all registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with securities or Blue
Sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of counsel for the
Company, and of the Company's independent public accountants, including the
expenses of "comfort letters" required by or incident to such performance and
compliance, and one-half of the reasonable fees and disbursements of one legal
counsel for the Selling Holders of Registrable Securities selected by Demanding
Holders (provided that the amount of the fees and disbursements of such firm to
be borne by the Company shall not exceed $15,000) (the "Registration Expenses"),
but excluding underwriting discounts and commissions relating to Registrable
Securities (which shall be paid on a pro rata basis by the Selling Holders);
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 2 if the
registration is subsequently withdrawn at the request of the Demanding Holders
(in which case all Selling Holders shall bear such expense), unless Holders
whose Registrable Securities constitute a majority of the Registrable Securities
then outstanding agree that such withdrawn registration shall constitute one of
the Demand Registrations under Section 2.
6.2. Piggyback Registration Expenses. The Company shall bear and pay
all Registration Expenses incurred in connection with any Piggyback
Registrations pursuant to Section 3 for each Selling Holder (which right shall
be Transferred to any Person to whom Registrable Securities are Transferred as
permitted by Section 8), but excluding underwriting discounts and commissions
relating to Registrable Securities (which shall be paid on a pro rata basis by
the Selling Holders of Registrable Securities).
6.3. Failure to Pay Expenses. Any failure of the Company to pay any
Registration Expenses as required by this
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Section 6 shall not relieve the Company of its obligations under this Agreement.
Section 7. Indemnification; Contribution. If any Registrable
Securities are included in a registration statement under this Agreement:
7.1. Indemnification by the Company. To the extent permitted by
applicable law, the Company shall indemnify and hold harmless each Selling
Holder, each Person, if any, who controls such Selling Holder within the meaning
of the Securities Act, and each officer, director, partner, and employee of such
Selling Holder and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint or several), including attorneys' fees
and disbursements and expenses of investigation, incurred by such party pursuant
to any actual or threatened action, suit, proceeding or investigation, or to
which any of the foregoing Persons may become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein, or any amendments or
supplements thereto;
(ii) The omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
applicable state securities law;
provided, however, that the indemnification required by this Section 7.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage,
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liability or expense to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished to the Company by the indemnified party expressly for use
in connection with such registration; provided, further, that the indemnity
agreement contained in this Section 7.1 shall not apply to any underwriter to
the extent that any such loss is based on or arises out of an untrue statement
or alleged untrue statement of a material fact, or an omission or alleged
omission to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such underwriter was under an
obligation to deliver such final prospectus and failed to do so. The Company
shall also indemnify underwriters participating in the distribution, their
officers, directors, agents and employees and each person who controls such
persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Selling Holders.
7.2. Indemnification by Selling Holders. To the extent permitted by
applicable law, each Selling Holder shall indemnify and hold harmless the
Company, each of its directors and officers, each Person, if any, who controls
the Company within the meaning of the Securities Act, each other Selling Holder,
any controlling Person of such other Selling Holder and each officer, director,
partner, and employee of such other Selling Holder and such controlling Person,
and any underwriters participating in the distribution, against any and all
losses, claims, damages, liabilities and expenses (joint and several), including
attorneys' fees and disbursements and expenses of investigation, incurred by
such party pursuant to any actual or threatened action, suit, proceeding or
investigation, or to which any of the foregoing Persons may otherwise become
subject under the Securities Act, the Exchange Act or other federal or state
laws, insofar as such losses, claims, damages, liabilities and expenses arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Selling Holder expressly for use in
connection with such registration; provided, however, that (x) the
indemnification required by this Section 7.2 shall not apply to amounts paid in
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settlement of any such loss, claim, damage, liability or expense if settlement
is effected without the consent of the relevant Selling Holder of Registrable
Securities, which consent shall not be unreasonably withheld, and (y) in no
event shall the amount of any indemnity under this Section 7.2 exceed the gross
proceeds from the applicable offering received by such Selling Holder.
7.3. Notice of Claims. Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing for which such
indemnified party may make a claim under this Section 7, such indemnified party
shall deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties. The failure to deliver written notice to
the indemnifying party within a reasonable time following the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 7 but shall not relieve the indemnifying party of any liability
that it may have to any indemnified party otherwise than pursuant to this
Section 7. Any fees and expenses incurred by the indemnified party (including
any fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) shall be paid to the indemnified party, as
incurred, within 30 days of written notice thereof to the indemnifying party
(regardless of whether it is ultimately determined that an indemnified party is
not entitled to indemnification hereunder). Any such indemnified party shall
have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses or (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding or (iii) the named parties to any such action, claim
or proceeding (including any impleaded parties) include both such indemnified
party and the indemnifying party, and such indemnified party shall have been
advised by counsel that there may be one or more legal defenses available to
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it which are different from or in addition to those available to the
indemnifying party and that the assertion of such defenses would create a
conflict of interest such that counsel employed by the indemnifying party could
not faithfully represent the indemnified party (in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
7.4. Contributions. If the indemnification required by this Section
7 from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
in this Section 7:
(i) The indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any Violation has been committed by, or relates to
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information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.1 and Section 7.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7.4 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in Section 7.4(i). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
7.5. Survival of Indemnification. The obligations of the Company and
the Selling Holders of Registrable Securities under this Section 7 shall survive
the completion of any offering of Registrable Securities pursuant to a
registration statement under this Agreement, and otherwise.
Section 8. Transfer of Registration Rights. All rights of a Holder
with respect to Registrable Securities pursuant to this Agreement may be
Transferred by such Holder to any Person in connection with the unregistered
Transfer of Registrable Securities to such Person, in all cases, if (v) the
Company has not delivered to such Holder, within five business days following
written notice from such Holder that it intends to Transfer Registrable
Securities to such Person, a certificate of the Company signed by its President
and Chief Executive Officer stating that the Board of Directors of the Company
has made a reasonable good faith determination that such Person presently
intends to make an unsolicited attempt to acquire control of the Company, (w)
any such Transferee that is not a party to this Agreement shall have executed
and delivered to the Secretary of the Company a properly completed agreement
substantially in the form of Exhibit A, (x) any such Transferee who is not a
party to this Agreement shall have agreed in writing to be bound by the
Shareholder Agreement which is an Exhibit to the Stock Purchase
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Agreement, (y) the Transferor shall have delivered to the Secretary of the
Company, no later than 15 days following the date of the Transfer, written
notification of such Transfer setting forth the name of the Transferor, name and
address of the Transferee, and the number of Registrable Securities which shall
have been so Transferred, and (z) after giving effect to such Transfer, there
shall be no more than 10 Holders. No Transfer shall increase the Company's
obligations to effect registrations or pay expenses thereof as otherwise
provided in this Agreement.
Section 9. Holdback. Each Holder entitled pursuant to this
Agreement to have Registrable Securities included in a registration statement
prepared pursuant to this Agreement, if so requested by the Underwriters'
Representative in connection with an offering of any Registrable Securities,
shall not effect any public sale or distribution of shares of Common Stock or
any securities convertible into or exchangeable or exercisable for shares of
Common Stock, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration), during the five-day period
prior to, and during the 180-day period beginning on, the date such registration
statement is declared effective under the Securities Act by the Commission,
unless some other period is required by an underwriter, provided that such
Holder is timely notified of such effective date in writing by the Company or
such Underwriters' Representative. In order to enforce the foregoing covenant,
the Company shall be entitled to impose stop-transfer instructions with respect
to the Registrable Securities of each Holder until the end of such period.
Section 10. Covenants of the Company. The Company hereby agrees and
covenants as follows:
10.1. Exchange Act Reports. The Company shall use its best efforts
to file as and when applicable, on a timely basis, all reports required to be
filed by it under the Exchange Act. If the Company is not required to file
reports pursuant to the Exchange Act, upon the request of any Holder of
Registrable Securities, the Company shall make publicly available the
information specified in subparagraph (c)(2) of Rule 144 of the Securities Act,
and take such further action as may be reasonably required from time to time and
as may be within the reasonable control of the Company, to enable the Holders to
Transfer Registrable Securities without registration under the Securities
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Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act or any similar rule or regulation hereafter adopted by the
Commission.
10.2. No Public Sale; Future Agreements. (i) In the event of a
Registration Statement which is filed pursuant to this Agreement and which is
underwritten, and if so requested by the Underwriters' Representative, the
Company shall not, and shall not permit its majority-owned subsidiaries to,
effect any public sale or distribution of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for shares of Common
Stock, during the five business days prior to, and during the 180-day period
beginning on, the commencement of such underwritten public distribution of the
Registrable Securities pursuant to any registration statement prepared pursuant
to Section 2 of this Agreement (other than by the Company pursuant to such
registration if the registration is pursuant to Section 3 and except pursuant to
a registration statement on Form S-4 or S-8 or any successor form) unless some
other period is required by the Underwriters' Representative.
(ii) Any agreement entered into after the date of this Agreement
pursuant to which the Company or any of its majority-owned subsidiaries issues
or agrees to issue any privately placed securities similar to any issue of the
Registrable Securities (other than (x) shares of Common Stock pursuant to a
stock incentive, stock option, stock bonus, stock purchase or other employee
benefit plan of the Company approved by its Board, and (y) securities issued to
Persons in exchange for ownership interests in any Person in connection with a
business combination in which the Company or any of its majority-owned
subsidiaries is a party) shall contain a provision whereby holders of such
securities agree not to effect any public sale or distribution of any such
securities during the periods described in the first sentence of Section
10.2(i), in each case including a sale pursuant to Rule 144 under the Securities
Act (unless such Person is prevented by applicable statute or regulation from
entering into such an agreement).
10.3. Merger, Consolidation, Reorganization, Etc. The Company shall
not, directly or indirectly, (x) enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation or
(y) Transfer or agree to Transfer all or substantially all the Company's assets,
unless
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prior to such merger, consolidation, reorganization or asset Transfer, the
surviving corporation or the Transferee, respectively, shall have agreed in
writing to assume the obligations of the Company under this Agreement, and for
that purpose references hereunder to "Registrable Securities" shall be deemed to
include the securities which the Holders of Registrable Securities would be
entitled to receive in exchange for Registrable Securities pursuant to any such
merger, consolidation or reorganization.
10.4. Grant of Registration Rights to Others. The Company shall not
grant any registration rights to any Person (other than a Holder of Registrable
Securities) that are superior to the rights granted under this Agreement or that
would entitle the holder thereof to have securities owned by it included in a
Demand Registration.
Section 11. Amendment, Modification and Waivers; Further Assurances.
(i) This Agreement may be amended with the consent of the Company and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act of Holders
owning Registrable Securities possessing a majority in number of the Registrable
Securities then outstanding.
(ii) No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further
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action as any other party hereto may reasonably require in order to effectuate
the terms and purposes of this Agreement.
Section 12. Assignment; Benefit. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, assigns, executors, administrators or
successors; provided, however, that except as specifically provided herein with
respect to certain matters, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by the Company
without the prior written consent of Holders owning Registrable Securities
possessing a majority in number of the Registrable Securities outstanding on the
date as of which such delegation or assignment is to become effective. A Holder
may Transfer its rights hereunder to a successor in interest to the Registrable
Securities owned by such assignor only as permitted by Section 8.
Section 13. Miscellaneous.
13.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
13.2. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
If to the Company, to:
HBO & Company
301 Perimeter Center North
Atlanta, Georgia 30346
Attention: James A. Gilbert, Esq.
Vice President and General Counsel
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With a copy to:
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
Atlanta, Georgia 30308-3242
Attention: Robert W. Smith, Esq.
If to FDC, to:
First Data Corporation
401 Hackensack Avenue
Hackensack, New Jersey 07601
Attention: Robert J. Levenson
Executive Vice President
With a copy to:
First Data Corporation
2121 North 117th Avenue
Omaha, Nebraska 68164
Attention: David P. Bailis, Esq.
General Counsel
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger, Esq.
or to such other address as such party may indicate by a notice delivered to the
other party hereto. With respect to Transferees, all notices or other
communications shall be delivered to the address specified in the relevant
agreement in the form of Exhibit A whereby the Transferee became bound by the
provisions of this Agreement.
13.3. Entire Agreement; Integration. This Agreement supersedes all
prior agreements between or among any of the parties hereto with respect to the
subject matter contained herein and therein, and such agreements embody the
entire understanding among the parties relating to such subject matter with the
exception of the Stock Purchase Agreement and the Shareholder Agreement attached
thereto as an Exhibit.
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13.4. Injunctive Relief. Each of the parties hereto acknowledges
that in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each
of the parties therefore agrees that in the event of such a breach hereof the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the
aggrieved party shall not be precluded from seeking or obtaining any other
relief to which it may be entitled.
13.5. Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
13.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
13.7. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
13.8. Filing. A copy of this Agreement and of all amendments hereto
shall be filed at the principal executive office of the Company with the
corporate recorder of the Company.
13.9. Termination. This Agreement may be terminated at any time by a
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 7)
shall terminate in its entirety on the earlier of (a) such date as there shall
be no Registrable Securities outstanding and (b) the date that is three years
from the date hereof, provided, however, that on such date all Holders are able
to sell the Common Stock previously subject to this Agreement pursuant to Rule
144(k) under the Securities Act. The parties hereto agree that any shares of
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Common Stock previously subject to this Agreement shall not be Registrable
Securities following the sale of any such shares in an offering registered
pursuant to this Agreement.
13.10. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
13.11. No Third Party Beneficiaries. Except in respect of any Person
entitled to indemnification or contribution pursuant to Section 7, nothing
herein expressed or implied is intended to confer upon any Person, other than
the parties hereto or their respective permitted assigns, successors, heirs and
legal representatives, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
HBO & COMPANY
By: /s/ James A. Gilbert
--------------------------
Its: Vice President
-------------------------
FIRST DATA CORPORATION
By: /s/ John S. Zieser
--------------------------
Its: Assistant Secretary
-------------------------
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EXHIBIT A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
AND THE SHAREHOLDER AGREEMENT
The undersigned, being the transferee of ______ shares of the common
stock, $.05 par value per share [or describe other capital stock received in
exchange for such common stock] (the "Registrable Securities"), of HBO &
Company, a Delaware corporation (the "Company"), as a condition to the receipt
of such Registrable Securities, acknowledges that matters pertaining to the
registration and transfer of such Registrable Securities are governed by the
Registration Rights Agreement dated as of __________, 1995 initially among the
Company and First Data Corporation, a Delaware corporation ("FDC") (the
"Registration Rights Agreement"), and the Shareholder Agreement dated as of
_________, 1995 between FDC and the Company (the "Shareholder Agreement") (the
Registration Rights Agreement and the Shareholder Agreement together
constituting the "Agreements"), and the undersigned hereby (1) acknowledges
receipt of copies of the Agreements, and (2) agrees to be bound as a Holder and
as an Interested Party by the terms of the respective Agreements, as they have
been or may be amended from time to time.
Agreed to this __ day of ______________, ____________.
_________________________________
_________________________________*
_________________________________*
*Include address for notices.
A-1
