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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
JUNE 23, 1995
(JUNE 17, 1995)
Date of Report
(Date of earliest event reported)
HBO & COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-9900 37-0986839
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(Commission File Number) (IRS Employer Identification No.)
301 PERIMETER CENTER NORTH
ATLANTA, GA 30346
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(Address of principal executive offices) (Zip Code)
(404) 393-6000
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Registrant's telephone number, including area code
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ITEM 2. ACQUISITION OF ASSETS
On June 17, 1995, HBO & Company of Georgia, a wholly owned subsidiary of HBO &
Company (HBOC), acquired First Data Health Systems Corporation (HSG), a wholly
owned subsidiary of First Data Corporation, in exchange for 4 million shares of
common stock of HBOC, $500,000 in cash and a promissory note for $100,000. HSG
provides information systems and services to hospitals, medical group practices
and medical facilities throughout the United States, United Kingdom, Australia,
Puerto Rico and other countries.
The transaction will be accounted for as a purchase. The cost of the
acquisition will be allocated on the basis of the estimated fair market value of
the assets acquired and the liabilities assumed. During the second quarter,
HBOC will take a one-time pretax charge of approximately $125 million related to
the acquisition. The Company is in the process of finalizing the purchase price
allocation. As of December 31, 1994, HSG had approximately $150 million of
assets and $119 million of liabilities.
Additional information regarding the transaction is set forth in the press
release dated June 19, 1995, which is attached as Exhibit 99 and is incorporated
by reference into this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
The financial statements of HSG will be filed by amendment as soon as
practicable and in any event not later than sixty days after the date upon which
this Form 8-K is required to be filed.
(b) Pro forma financial information.
The pro forma financial information will be filed by amendment as soon as
practicable and in any event not later than sixty days after the date upon which
this Form 8-K is required to be filed.
(c) Exhibits
2 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, as amended by letter agreement dated June
17, 1995.
99 Press release dated June 19, 1995, announcing the acquisition of HSG.
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HBO & COMPANY
(Registrant)
Date: June 23, 1995
/s/ Jay P. Gilbertson
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Jay P. Gilbertson
Vice President - Finance,
Chief Financial Officer
Treasurer and Assistant Secretary
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EXHIBIT 2
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
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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 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.
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"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, 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.
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"ERISA" means the Employee Retirement Income Security Act of 1974.
"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.
"FINANCIAL STATEMENT" means the unaudited consolidated balance sheet
of the
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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.
"KNOWLEDGE OF PARENT" means, as to a particular matter, the actual
knowledge of
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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.
"PBGC" means the Pension Benefit Guaranty Corporation established
under Title IV of ERISA.
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"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.
"REAL PROPERTY" has the meaning specified in SECTION 5.10.
"REPORTABLE EVENT" has the meaning specified in Section 4043 of ERISA.
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"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 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
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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").
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,
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(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
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.
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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;
(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;
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(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 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,
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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 "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
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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.
(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
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(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)
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;
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(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 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
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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 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
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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, 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
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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 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
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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.
(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 the consummation of the transactions contemplated
by this Agreement will not by
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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 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
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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
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
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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 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.
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(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, 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
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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 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
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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 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.
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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.
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,
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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. Section 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 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. Section 1981 (discrimination), 42 U.S.C. SECTION
Section 621-634 (the Age Discrimination in Employment Act), 29 U.S.C. Section
206 (equal pay), Executive Order 11246 (race, color, religion, sex, and national
origin discrimination), Executive Order 11141 (age discrimination), Section 503
of the Rehabilitation Act of 1973 (handicap discrimination), 42 U.S.C. SECTION
Section 12101-12213 (Americans with Disabilities Act), 29 U.S.C. SECTION Section
2001-2654 (Family and Medical Leave Act), and 29 U.S.C. SECTION Section 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").
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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 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:
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"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
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
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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; (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
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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.
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
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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:
(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
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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 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
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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.
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:
(c) 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
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the ordinary course or as required by any such plan or Requirements of
Law;
(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 between FDC or any Affiliate of FDC, on the one hand, and the Company
or any of the
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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. Section 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 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).
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(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 Section 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
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
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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;
(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.
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(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 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 Section 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
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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 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
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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.
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.
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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 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
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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, 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
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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 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,
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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 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
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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,
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:
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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 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.
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(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
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
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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 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").
(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
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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.
(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
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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.
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
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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
Atlanta, Georgia 30346
Attention: James A. Gilbert, Vice President
and General Counsel
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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, 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
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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
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
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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 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
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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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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
<PAGE>
"COMPANY":
FIRST DATA HEALTH SYSTEMS CORPORATION
By: /S/ DAVID P. BAILIS
---------------------------
Name: David P. Bailis
Title: Secretary
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
TO THE STOCK PURCHASE AGREEMENT
DATED AS OF MAY 16, 1995 AMONG FDC,
FDC HEALTH, THE COMPANY, PARENT AND BUYER
EXHIBITS
1 Form of Registration Rights Agreement
2 Form of Human Resources Agreement
3 Form of Transition Services Agreement
4 Form of Shareholder Agreement
5 Form of Trademark License Agreement
6 Form of Promissory Note
SCHEDULES
5.3 Subsidiaries and Investments
5.4 Authority; Conflicts
5.5 Financial Statements
5.6 Operations of the Company Since Financial Statement Date
5.7 Undisclosed Liabilities of the Company and the Subsidiaries
5.8(a) Tax Returns of the Company and the Subsidiaries
5.8(b) Matters Relating to the FDC Tax Group
5.9 Employee Benefits
5.10(a) Leased Real Property
5.10(b) Owned Personal Property
5.10(c) Leased Personal Property
5.10(d) Inventories Not Usable and Accounts Receivables Not Arising in
the Ordinary Course of the Business
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5.10(e) Other Agreements Relating to Assets or Property
5.11(a) List of Owned Intellectual Property
5.11(b) Exceptions to Entire Ownership of Right, Title and Interest in
Intellectual Property
5.11(c) Exceptions to Enforceability of Intellectual Property Rights
5.11(d) Infringement of Intellectual Property
5.11(e) List of Software Owned by the Company or Subsidiaries
5.11(f)(1) Summary of Software Licensed by the Company or Subsidiaries
5.11(f)(2) List of Sublicensed Software
5.11(g) Software Licenses or Leases Granted by the Company or any
Subsidiaries
5.11(h)(i) Summary Description of Third Party Software Marketing Agreements
Granted to the Company or Subsidiaries
5.11(h)(ii) Third Party Marketing Rights Granted by the Company or
Subsidiaries
5.11(i) Absence of Certain Action Regarding Company Software
5.12 Compliance with Laws and Licensing
5.13 Litigation or Claims Against the Company
5.14 List of Contracts, Agreements and Instruments Generally
5.15 Customer Contract Exceptions
5.16 Disruption of Customer Relationships
5.17 Environmental Matters
5.18(i) Insurance Policies Held by FDC, the Company and Subsidiaries
5.18(ii) Insurance Policies Owned by Company and Subsidiaries
5.19(a) List of Employees and Independent Contractors
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5.19(b) Labor Disputes
5.19(c) Compliance with Employment Laws
5.19(d) Loans and Advances to Employees
5.20 Related Party Transactions
5.21 Brokers Acting on Behalf of FDC, FDC Health or the Company
6.5 Operations of Buyer Since March 31, 1995
6.6 Undisclosed Liabilities of Parent
6.7 Compliance with Laws and Litigation and Regulatory Action
Involving Parent
6.8 Brokers Acting on Behalf of Parent or Buyer
8.2 List of Trademarks, Tradenames and Service Marks of the Company
and Subsidiaries
8.4 Assumption of Certain Liabilities by FDC
8.5 Radiology and Pharmacy Software Customers
9.5 Necessary Consents (FDC and the Company)
10.5 Necessary Consents (Parent and Buyer)
Pursuant to Item 601 of Regulation S-K, the Registrant has excluded from Exhibit
2 to its Form 8-K dated June 22, 1995, the Exhibits and Schedules listed above
and the Registrant agrees to furnish copies of such Exhibits and Schedules to
the Commission upon request.
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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 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:
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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 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.
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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:
----------------------
Name:
Title:
FDC HEALTH INC.
By:
----------------------
Name:
Title:
FIRST DATA HEALTH SYSTEMS CORPORATION
By: ______________________
Name:
Title:
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The foregoing agreement is hereby confirmed and accepted as of the date of this
letter.
HBO & COMPANY
By:
----------------------
Name:
Title:
HBO & COMPANY OF GEORGIA
By:
----------------------
Name:
Title:
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EXHIBIT 99
NEWS RELEASE
CONTACT: MONIKA BROWN 301 PERIMETER CENTER NORTH
INVESTOR RELATIONS ATLANTA, GA 30346
(404) 668-5926
HBOC COMPLETES ACQUISITION OF FDC HEALTH SYSTEMS GROUP
ATLANTA, June 19, 1995 -- HBO & Company (Nasdaq:HBOC) today announced it
has completed the acquisition of the Charlotte-based Health Systems Group of
First Data Corporation (HSG). HBOC purchased HSG for 4 million shares of HBOC
stock. The transaction will be accounted for as a purchase of assets. During
the second quarter, HBOC will take a one-time pretax charge of approximately
$125 million for the acquisition, primarily related to purchased research and
development for HSG.
With 1994 revenue of approximately $121 million, HSG has more than 500
customers.
"The acquisition of HSG is a continuation of HBOC's strategy to deliver new
enterprisewide solutions while continuing to support and enhance our customers
existing products ," said Charles W. McCall, HBOC president and chief executive
officer. "We believe the combination of our product strength, customer base and
financial position gives us a strategic advantage in the healthcare informatics
industry."
HBOC announced its plans to acquire HSG on May 16, 1995. Since then, the
company has been working to ensure a smooth transition of the HSG business to
HBOC, says vice president James A. Gilbert. "Our overriding goal is to provide
uninterrupted, high-quality service to every HSG customer," he said. "At the
same time, we've taken steps to eliminate redundancies and streamline processes
to ensure future profitability."
Gilbert said that HBOC will operate HSG as a business unit under the
leadership of Chuck Miller, a former HSG vice president, who will report to
Gilbert.
HBO & Company delivers underpriced patient care, clinical, financial and
strategic management software solutions, as well as networking technologies,
outsourcing and other services to healthcare organizations in the United States,
United Kingdom, Canada, Australia and New Zealand.
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