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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 20, 1999
MEDAPHIS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 000-19480 58-1651222
(State of other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification Number)
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2840 MT. WILKINSON PARKWAY
SUITE 300
ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 444-5300
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Located on Page: ___4___
Total Number of Pages: ___36___
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Item 2. Acquisition or Disposition of Assets.
On April 20, 1999, the Registrant completed the sale (the "Sale") to
Complete Business Solutions, Inc. ("CBSI") of all the issued and outstanding
shares of capital stock of E-Business Solutions.com, Inc. (formerly known as
Impact Innovations Group, Inc.). The Sale was consummated in accordance with
the terms of a Stock Purchase Agreement dated April 20, 1999. The Sale
represents the disposition by the Registrant of its commercial division of
Impact Innovations.
The consideration paid to Registrant in connection with the Sale was $15
million in cash, subject to final closing adjustments. The total consideration
paid in the Sale was determined through arm's length negotiations between
representatives of the Registrant and CBSI. Neither Registrant, CBSI, nor any of
their affiliates had, nor to the knowledge of Registrant or CBSI did any
director or officer or any associate of any such director or officer of
Registrant or CBSI have, any material relationship with CBSI prior to the Sale.
E-Business Solutions.com, Inc. provides delivery chain management services
including electronic resource management and e-commerce services primarily to
the communications, energy, financial and technology sectors.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2.1 Stock Purchase Agreement dated as of April 20, 1999, among
Registrant, E-Business Solutions.com, Inc., Impact Innovations
Holdings, Inc. and CBSI
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 5, 1999
MEDAPHIS CORPORATION
By: /s/ ALLEN W. RITCHIE
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Allen W. Ritchie
President and Chief Executive Officer
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INDEX TO EXHIBIT
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EXHIBIT
NO. DESCRIPTION OF EXHIBIT
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2.1 Stock Purchase Agreement dated as of April 20, 1999, among Registrant,
E-Business Solutions.com, Inc., Impact Innovations Holdings, Inc. and CBSI
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STOCK PURCHASE AGREEMENT
by and among
COMPLETE BUSINESS SOLUTIONS, INC.,
E-BUSINESS SOLUTIONS.COM, INC.
IMPACT INNOVATIONS HOLDINGS, INC.
and
MEDAPHIS CORPORATION
Dated as of April 20th, 1999
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CONTENTS
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ARTICLE I SALE AND PURCHASE OF STOCK........................................................ 1
1.1 Agreement to Sell and Purchase Stock............................................. 1
1.2 Purchase Price................................................................... 1
1.3 Closing Date Balance Sheet....................................................... 1
1.4 Use of Name and Logo............................................................. 3
1.5 Transition Issues................................................................ 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS................................ 5
2.1 Ownership of Shares.............................................................. 5
2.2 Capacity and Validity............................................................ 5
2.3 Organization and Standing of the Company; Capacity and Validity.................. 5
2.4 Capital Stock.................................................................... 6
2.5 Absence of Conflicting Agreements or Required Consents Relating to Obligations... 6
2.6 Financial Statements............................................................. 6
2.7 Absence of Changes............................................................... 7
2.8 Litigation and Claims............................................................ 8
2.9 No Undisclosed Liabilities....................................................... 8
2.10 Real Property................................................................... 8
2.11 Personal Property............................................................... 8
2.12 Intellectual Property........................................................... 9
2.13 Intangible Property; Subsidiaries............................................... 9
2.14 Compliance with Laws............................................................ 9
2.15 Environmental Matters............................................................ 9
2.16 Benefit Plans................................................................... 10
2.17 Union and Employment Agreements; Employee Litigation............................ 11
2.18 Officers, Directors............................................................. 11
2.19 Contracts and Commitments....................................................... 11
2.20 Insurance Policies.............................................................. 12
2.21 Accounts Receivable............................................................. 12
2.22 Accounts Payable................................................................ 13
2.23 Taxes........................................................................... 13
2.24 Bank Accounts and Powers of Attorney............................................ 14
2.25 Statements True and Correct; Schedules.......................................... 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................... 15
3.1 Organization, Standing and Authority of Purchaser................................ 15
3.2 Absence of Conflicting Agreements or Required Consents
Relating to Purchaser's Obligations 15
3.3 Investment Intent................................................................ 15
ARTICLE IV ADDITIONAL COVENANTS.............................................................. 15
4.1 Cooperation...................................................................... 15
4.2 Related Party Transactions....................................................... 15
4.3 Transfer Taxes................................................................... 16
4.4 Public Announcements............................................................. 16
4.5 Tax Matters...................................................................... 16
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4.6 Leases........................................................................... 19
ARTICLE V ACTIONS TAKEN ON EXECUTION BY SHAREHOLDERS........................................ 19
5.1 The Shares....................................................................... 19
5.2 Releases......................................................................... 19
ARTICLE VI ACTIONS TAKEN ON EXECUTION BY THE PURCHASER....................................... 19
6.1 Purchase Price................................................................... 19
6.2 Trademark Assignments............................................................ 20
ARTICLE VII INDEMNIFICATION................................................................... 20
7.1 Indemnification of Purchaser..................................................... 20
7.2 Indemnification of Shareholder................................................... 20
7.3 Notice and Opportunity to Defend................................................. 20
7.4 Limitations...................................................................... 21
7.5 Survival of Representations and Warranties....................................... 22
7.6 Subrogation...................................................................... 22
7.7 Exclusive Remedy................................................................. 22
7.8 Dispute Resolution............................................................... 22
ARTICLE VIII MISCELLANEOUS PROVISIONS.......................................................... 23
8.1 Definitions...................................................................... 23
8.2 Notices.......................................................................... 25
8.3 Expenses......................................................................... 26
8.4 Waiver........................................................................... 26
8.5 Assignment....................................................................... 26
8.6 Binding Effect................................................................... 26
8.7 Governing Law; Severability...................................................... 26
8.8 Counterparts..................................................................... 26
8.9 Brokers.......................................................................... 26
8.10 Schedules and Exhibits.......................................................... 27
8.11 Headings........................................................................ 27
8.12 Entire Agreement................................................................ 27
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into this
20th day of April, 1999, and effective as of the close of business April 15,
1999 by and among COMPLETE BUSINESS SOLUTIONS, INC., a Michigan corporation (the
"Purchaser"), E-BUSINESS SOLUTIONS.COM, INC., a Delaware corporation (the
"Company"), IMPACT INNOVATIONS HOLDINGS, INC., a Delaware corporation
("Holdings"), and MEDAPHIS CORPORATION, a Delaware corporation ("Medaphis")
(Holdings and Medaphis are sometimes referred to herein individually as a
"Shareholder" and collectively as the "Shareholders"). Certain terms used in
this Agreement are defined in Section 8.1 hereof.
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the issued and outstanding shares
of common stock, $.001 par value, of the Company, and all of the issued and
outstanding shares of non-voting common stock, $.001 par value, of the Company
(collectively, the "Shares"); and
WHEREAS, the parties desire to enter into this Agreement pursuant to
which Purchaser will purchase from the Shareholders, and the Shareholders will
sell to the Purchaser, all of the Shares upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF STOCK; RELATED MATTERS
1.1 Agreement to Sell and Purchase Stock. For the consideration
hereinafter provided, the Shareholders hereby sell, assign, transfer, convey and
deliver to the Purchaser, free and clear of all Liens, and the Purchaser hereby
purchases and acquires from the Shareholders, the Shares.
1.2 Purchase Price. Upon execution of this Agreement, the
Purchaser has transferred Fifteen Million U.S. Dollars (U.S. $15,000,000) (the
"Purchase Price") to the Shareholders by wire transfer of immediately available
funds to an account designated by Medaphis.
1.3 Closing Date Balance Sheet
(a) The Company will prepare, consistent with the
practices and procedures (except for April 15, 1999 Liabilities that may be
quantified using cut off processes or other techniques) used to create the March
31, 1999 balance sheet included in the Financial Statements attached as Schedule
2.6 hereof, a balance sheet of the Company as of April 15, 1999 ("Closing Date
Balance Sheet"), and an estimated "Adjustment Amount" (as defined below) that
also identifies which party is to pay such Adjustment Amount. The Company will
deliver the Closing Date Balance Sheet and estimated Adjustment Amount to the
Shareholders within thirty (30) days after the date hereof. If within thirty
(30) days following delivery of the Closing Date Balance Sheet and estimated
Adjustment Amount to the Shareholders, the Shareholders have not
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given Purchaser written notice of their objection to the Closing Date Balance
Sheet and the estimated Adjustment Amount (which notice must contain a statement
of the basis of the Shareholders' objection), then the estimated Adjustment
Amount submitted by the Company shall be deemed to be the final calculation of
the Adjustment Amount, not subject to appeal or any proceeding of any type
brought by any party. If the Shareholders give such notice of objection, and the
parties are unable to resolve any such dispute within 15 days of the
Shareholders' notice of objection, then the issues in dispute will be submitted
to the Atlanta, Georgia office of Ernst & Young LLP, certified public
accountants (the "Accountants"), for resolution. If the issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish to the
Accountants such workpapers and other documents and information relating to the
disputed issues as the Accountants may request which are available to that party
or its Affiliates (or its independent public accountants), and will be afforded
the opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties, not
subject to appeal or any proceeding of any type brought by any party; and (iii)
Purchaser will bear 50% of the fees of the Accountants for such determination,
and Medaphis will bear the remaining 50% of the fees of the Accountants for such
determination.
(b) As used herein, "Adjustment Amount" shall mean the
difference between the "Adjusted Net Working Capital" (as defined below) of the
Company at March 31, 1999 (as calculated by using the March 31, 1999 balance
sheet included as part of the Financial Statements attached as Schedule 2.6
hereof), and the Adjusted Net Working Capital of the Company as of April 15,
1999 (as calculated by using the Closing Date Balance Sheet). If the March 31,
1999 Adjusted Net Working Capital of the Company exceeds its Adjusted Net
Working Capital as of April 15, 1999, Medaphis shall be obligated to pay the
Adjustment Amount to the Purchaser. Conversely, if the Adjusted Net Working
Capital of the Company as of April 15, 1999 exceeds its Adjusted Net Working
Capital as of March 31, 1999, the Purchaser shall be obligated to pay the
Adjustment Amount to Medaphis.
(c) As used herein, "Adjusted Net Working Capital" shall
mean (as calculated by reference to the relevant balance sheet of the Company)
(x) all of the current assets of the Company, minus (y) all of the current
liabilities of the Company excluding (i) the current portion of any long term
debt, and (ii) any portion of any Liability owed to the Shareholders; provided
that, solely with respect to the calculation of Adjusted Net Working Capital of
the Company as of April 15, 1999, (A) to the extent that any of the cash or
checks received by the Company after April 15, 1999 in payment of its accounts
receivable were transferred to a Medaphis account, and such funds are retained
by Medaphis and it Affiliates and not returned to the Company, then the Adjusted
Net Working Capital shall be reduced by such amounts or, if not so reduced, such
amounts shall be returned to the Company, and (B) to the extent that (directly
or indirectly) Medaphis and its Affiliates (other than the Company) paid any
Liabilities of the Company after April 15, 1999 (excluding for this purpose any
payments on checks of the Company dated on or prior to April 15, 1999), then the
Adjusted Net Working Capital shall be increased by such payments.
(d) On or before the tenth business day following the
final determination of the Adjustment Amount, the party required to pay the
Adjustment Amount as set forth in subsection (b) above will pay such amount to
the party specified above. Payments must be made
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in immediately available funds by wire transfer to such bank account as the
recipient will specify.
(e) To the extent not inconsistent with any other
provision of this Agreement, all of the parties hereto agree that for tax,
accounting and all other purposes the transactions described herein shall be
deemed to have occurred as of April 15, 1999, 11:59 p.m. E.D.T.
1.4. Use of Name and Logo.
(a) It is expressly agreed that Purchaser is not
(directly or indirectly through the Company or otherwise) purchasing, acquiring
or otherwise obtaining any right, title or interest in the names "Impact,"
"Impact Innovations," "Impact Innovations Group, Inc." or any trade names,
trademarks, identifying logos or service marks related thereto or employing the
words "Impact" or "Impact Innovations" or any part or variation of any of the
foregoing or any confusingly similar trade name, trademark or logo (collectively
the "Impact Trademarks and Logos"). Purchaser acknowledges and agrees that prior
to the execution of this Agreement, the Company filed an amendment to its
Certificate of Incorporation amending the Company's name so as to remove the
names "Impact" and "Impact Innovations" therefrom, and the Company assigned all
of its right, title and interest in the Impact Trademarks and Logos to one of
the Shareholders and/or its Affiliates. The Purchaser and the Company further
acknowledge and agree that after the date hereof, neither the Purchaser, the
Company nor any of their Affiliates shall make any use of the Impact Trademarks
and Logos; provided that the Company shall have the right to use the Impact
Trademarks and Logos consistent with its past practices for a period commencing
as of the date hereof and ending 45 days after the date hereof (the "Interim
Period") and provided further that the Company shall have the right to continue
to utilize bank deposits in the name of "Impact Innovations Group" to receive
and negotiate (but not issue) checks for a period of six months, in each case so
long as the Company uses (and the Purchaser causes the Company to use) its
commercially reasonable efforts to cease using the Impact Trademarks and Logos
prior to the end of the Interim Period. Upon the expiration of the Interim
Period (or such earlier date that the Company ceases using the Impact Trademarks
and Logos), the Purchaser and the Company will remove and destroy as quickly as
practicable all items, including without limitation, all signage, stationary,
invoices or other letterhead, bearing Impact Trademarks and Logos.
(b) It is expressly agreed that Purchaser is not
(directly or indirectly through the Company or otherwise) purchasing, acquiring
or otherwise obtaining any right, title or interest in any claims, counterclaims
or other rights associated with any of the Litigation listed on Schedule 2.8
hereof, and that prior to the execution of this Agreement the Shareholders have
caused the Company to assign all such claims, counterclaims and other rights to
a Shareholder or an Affiliate of a Shareholder. It is also agreed that Medaphis
shall be solely responsible for all cost and expense associated with such
Litigation listed on Schedule 2.8 hereto.
1.5. Transition Issues.
(a) Except as otherwise set forth in this Section 1.5, as
of the date hereof, all data processing, accounting, insurance, banking,
personnel, legal, communications and other products or services provided to the
Company by Shareholders or any Affiliate of the
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Shareholders, including any agreements or understandings (written or oral) with
respect thereto, are hereby terminated; provided that all of the parties agree
that the Company shall continue until January 31, 2000 to obtain its long
distance service under the terms of that certain agreement between MCI/Worldcom
and Medaphis dated February 2, 1998 (the "MCI Agreement"); provided, however,
that Medaphis shall reimburse the Company for an amount equal to the excess (if
any) of the cost per minute under the MCI Agreement over the cost per minute for
comparable telephone service under Purchaser's long distance telephone service
provider agreement as in effect from time to time. In the event that the Company
closes or opens any locations prior to January 31, 2000, it shall use its
commercially reasonable efforts to continue (at relocated or new locations) to
obtain its long distance service under the MCI Agreement (whether by maintenance
of then existing phone numbers, adding lines and numbers at new locations to the
MCI Agreement or otherwise).
(b) From and after the date hereof through the payroll
payments made on May 31, 1999, the Shareholders agree to continue to provide
payroll services to the Company, provided that the parties agree and acknowledge
that:
(i) Purchaser and the Company shall reimburse
the Shareholders for the costs and expenses of the Shareholders in connection
with the provision of such services within five days of the Shareholders
providing an invoice for such services;
(ii) Purchaser and the Company shall provide to
Medaphis all funds to be paid to employees of the Company or withheld (for tax
or other purposes) in respect of such amounts for a payroll period prior to the
Shareholders paying the Company's employees for such payroll period; and
(iii) All of the parties agree that for the
payroll period ended April 30, 1999 the Shareholders shall withhold for their
own account amounts under the Medical, Prescription Drug, Dental and Vision
Benefits provided through Great-Western Life & Annuity Insurance Company but
that for all payroll periods ending after April 30, 1999 the Shareholders shall
not be required to withhold any amounts for health benefits of employees of the
Company since the health benefits provided by Purchaser do not require any
employee contributions.
(c) The Shareholders represent and warrant to Purchaser
that prior to the execution of this Agreement the sponsorship of the BSG
Alliance/IT, Inc. Retirement Savings Plan, as amended (the "Company 401(k)
Plan"), and all accounts related thereto, were assigned to and assumed by
Holdings. In addition, the Shareholders agree that they shall take all
commercially reasonable steps to cure any operational defects in the Company
401(k) Plan in existence as of the date hereof as soon as reasonably practicable
(if possible) and shall indemnify, defend and hold harmless the Company and
Purchaser from and against any Losses (as defined in Article VII hereof)
incurred by such parties as a result of such defects. Purchaser and the Company
agree to cooperate with the Shareholders to correct such defects (at the expense
of the Shareholders), including without limitation providing access to, and
copies of, records reasonably necessary for such corrections. Employees
participating in the Company 401(k) Plan will be deemed terminated and shall be
provided with such options as are required by applicable Law, including, but not
limited to, cash distributions, roll over to an individual retirement account or
another employer sponsored plan, or letting the account remain with the Company
401(k) Plan.
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(d) The parties agree that as part of the transactions
contemplated by this Agreement, all of the Assets and Liabilities associated
with the BSG Alliance/IT, Inc. Flexible Employee Benefit Plan, Health Care
Reimbursement Plan and Dependent Care Assistance Plan shall be held by the
Company, and that the parties shall execute such additional agreements of
assignment and assumption to effect such intent as may be reasonably requested
by any party hereto.
(e) Purchaser and the Company acknowledge and agree that
each of the insurance policies listed on Schedule 2.20 are umbrella policies of
Medaphis and that the Company shall not be insured under, or be entitled to
receive any payments or any other benefits under, such policies after the date
hereof.
(f) Purchaser and the Company hereby acknowledge and
agree that the Shareholders shall be entitled to occupy without paying any rent
expenses associated with the space in the Company's current Houston, Texas
location to operate their travel services to the extent currently occupied by
the Shareholders (the "Transition Space") for a period of up to 45 days after
the date hereof, provided that the Shareholders agree (i) to pay any direct
expenses related to occupancy of such space, and (ii) to cause their employees
located in the Transition Space to comply with the non-payment terms of the
lease agreement of the Company for such location. In addition, the Shareholders
hereby agree to indemnify, defend and hold harmless Purchaser and the Company
from and against any claims whatsoever asserted by the Shareholders' employees
while such employees occupy the Transition Space, except to the extent such
claims relate to the negligence or intentional misconduct of Purchaser or the
Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As an inducement to Purchaser to enter into this Agreement and to
purchase the Shares, the Shareholders, jointly and severally, represent and
warrant to Purchaser as set forth below:
2.1 Ownership of Shares. Each Shareholder is the owner of all
right, title and interest (legal, record and beneficial) in and to the number of
Shares set forth as owned by such Shareholder in Section 2.4 hereof, free and
clear of any and all Liens, and the Shares constitute all of the issued and
outstanding capital stock of the Company. The delivery to the Purchaser of the
Shares pursuant to the provisions of this Agreement will transfer to the
Purchaser good and marketable title to all of the Shares, free and clear of all
Liens. Except as specifically contemplated by this Agreement, no Person has any
Contract, right or privilege (whether pre-emptive or contractual) capable of
becoming a Contract or option for the purchase of any of the Shares from the
Shareholder.
2.2 Capacity and Validity. Each Shareholder is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Each Shareholder has the requisite power and authority to execute,
deliver and perform its obligations under this Agreement and all other documents
contemplated hereby according to their respective terms, and to consummate the
transactions contemplated hereby. This Agreement has been duly executed
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and delivered by each Shareholder, and constitutes the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms.
2.3 Organization and Standing of the Company; Capacity and
Validity. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and has the corporate
power and authority to carry on its business as it has been and is now being
conducted and to own and lease the Assets which it now owns or leases. The
Company is duly qualified and/or licensed to transact business in the
jurisdictions listed on Schedule 2.3, and the character of the Assets owned or
leased by the Company and the nature of the business conducted by it do not
require such qualification and/or licensing in any other jurisdiction except as
otherwise noted on Schedule 2.3. The Company has the requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and all other documents contemplated hereby according to their respective terms,
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms. Copies of the articles of incorporation and all amendments
thereto of the Company and the bylaws of the Company, which are contained in the
corporate minute book, and copies of the corporate minutes of the Company, which
have been made available to Purchaser for review, are, to the Shareholders'
knowledge, (i) true and complete on the date of this Agreement and (ii)
accurately reflect in all material respects all proceedings of the shareholders
and directors of the Company (and all committees thereof). The stock record book
of the Company, which has been made available to Purchaser for review, contains
true, complete and accurate records of the stock ownership of the Company and
the transfer of the shares of its capital stock.
2.4 Capital Stock. The authorized capital stock of the Company
consists of (i) 3,000 shares of common stock, $.001 par value per share, all of
which are issued and outstanding as of the date hereof, and held of record by
Holdings, and (ii) 500 shares of non-voting common stock, $.001 par value per
share, 459 of which are issued and outstanding as of the date hereof, and held
of record by Medaphis. No shares are held in the treasury of the Company. All of
the Shares have been duly and validly issued, and are fully paid and
nonassessable. There are no outstanding Equity Rights in the Company, no
outstanding rights to demand registration, or to sell in connection with a
registration, by the Company under the Securities Act of 1933, as amended, and
no other Contracts of the Company of any nature relating to the Shares or any
other Equity Rights in the Company. The Company is not obligated to issue any
Equity Rights in the Company for any purpose.
2.5 Absence of Conflicting Agreements or Required Consents
Relating to Obligations. Except as set forth on Schedule 2.5, the execution,
delivery and performance by the Shareholders and/or the Company of this
Agreement and any other documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both) (i) other than filing under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("H-S-R Act"),
does not require the consent or approval of, prior filing with or notice to, or
other action by, any Regulatory Authority or any other third party; (ii) will
not conflict with any provision of the Company's certificate of incorporation or
bylaws; (iii) will not constitute a Default under any material Law or Order to
which the Shareholders or the Company is a party or by which the Shareholders,
the Company or the Company's Assets are bound; (iv) will not constitute a
Default under any material Contract or Permit to which the Shareholder or the
Company is a party or by which the
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Shareholder, the Company or the Company's Assets are bound; and (v) will not
create any Lien upon the Shares or any of the Assets of the Company.
2.6 Financial Statements. Attached hereto as Schedule 2.6 are the
Company's unaudited balance sheet as of, and statement of operations for the
twelve months ended, December 31, 1998, and balance sheet as of, and statement
of operations for the three months ended, March 31, 1999 (collectively, the
"Financial Statements"). The Financial Statements present fairly in all material
respects the financial condition, Assets and Liabilities of the Company as of
December 31, 1998 and March 31, 1999 and present fairly in all material respects
the results of the Company's operations for the twelve months ended December 31,
1998 and the three months ended March 31, 1999, and were prepared in accordance
with GAAP, subject to the absence of notes and income Taxes and, with respect to
the Financial Statements dated as of and for the three month period ended March
31, 1999, to normal recurring year-end adjustments which are not material.
2.7 Absence of Changes. Except as set forth on Schedule 2.7 and
except as permitted or contemplated by this Agreement, since March 31, 1999, the
Company has conducted its business only in the ordinary course and has not:
(a) suffered any material adverse change in its financial
condition, Assets or business;
(b) paid, discharged or satisfied any material Liability
other than the payments, discharge or satisfaction of Liabilities in the
ordinary course of business;
(c) canceled or compromised any debts in excess of
$25,000 or sold, transferred or otherwise disposed of any of its material Assets
with a fair market value in excess of $25,000;
(d) entered into any commitment or transaction (including
any lease commitment), or made any capital expenditure or commitment, in excess
of U.S.$25,000;
(e) made any material change in any method of accounting
or accounting practice;
(f) incurred any Liabilities in excess of U.S.$25,000;
(g) subjected any of its Assets to any Lien except for
Liens for current personal property Taxes not yet due and payable;
(h) changed or otherwise reclassified (whether by
recapitalization, forward or reverse stock split or otherwise) any of its
capital stock or other Equity Rights, issued any capital stock or other Equity
Rights, granted any registration rights in connection with any capital stock or
other Equity Rights, redeemed or otherwise purchased or acquired any of its
capital stock or other Equity Rights or declared or paid any dividend or other
distribution in respect of any of its capital stock or other Equity Rights;
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(i) increased any salaries, wages or any employee
benefits (whether bonuses or otherwise) for any employee;
(j) hired, committed to hire or terminated any employee
except in the ordinary course of business;
(k) terminated or amended any material Contract to which
it is a party;
(l) directly or indirectly paid or entered into a
Contract to pay any severance or termination pay to any officer, director,
employee or agent;
(m) made any change to its Certificate of Incorporation
or bylaws except as contemplated by Section 1.4;
(n) agreed, whether in writing, orally or otherwise, to
take any action described above in this Section 2.7.
2.8 Litigation and Claims. Except as listed and described on
Schedule 2.8, there is no Litigation pending, or (to each Shareholder's
knowledge) threatened against or affecting the Company or its Assets or business
in any court or before any arbitrator or Regulatory Authority, and there is no
event that has occurred or circumstances that exist that serve(s) as a
reasonable basis for the commencement of any Litigation that would have a
material adverse effect on the financial condition, Assets or business of the
Company. There are no unsatisfied Orders against the Company or any Orders to
which the Company is subject.
2.9 No Undisclosed Liabilities. Except as and to the extent
reflected in the Financial Statements or disclosed on Schedule 2.7 or Schedule
2.9 hereto, the Company has no Liabilities, except for Liabilities incurred in
the ordinary course of its business since March 31, 1999, and which do not have
a material adverse effect on the business, Assets or financial condition of the
Company.
2.10 Real Property.
(a) The Company does not own any real property. Schedule
2.10. contains a true and correct list of all real property leased to the
Company and the lease agreements in connection therewith. The continuation,
validity and effectiveness of the leases set forth in Schedule 2.10 will not be
affected in any material way by the transactions contemplated by this Agreement.
The Company does not lease any real property as lessor except for any subleases
noted on Schedule 2.10.
(b) No Litigation for the taking of any of the real
property leased to or used by the Company by eminent domain by any Regulatory
Authority is pending or, to each Shareholder's knowledge, threatened.
2.11 Personal Property.
Schedule 2.11 contains a list of all leases for machinery,
vehicles, equipment and other tangible personal property used or employed by the
Company, except those that are
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terminable by the Company without penalty on 60 or fewer days notice or that
provide for annual rental payments of less than $10,000. The continuation,
validity and effectiveness of the leases set forth in Schedule 2.11 will not be
materially adversely affected in any way by the transactions contemplated by
this Agreement except as otherwise noted on Schedule 2.11. The Company does not
lease any personal property as lessor.
2.12 Intellectual Property. Schedule 2.12 contains a true and
complete list of all material Intellectual Property owned by, registered in the
name of, or used by the Company and all license agreements or other Contracts in
connection therewith (other than any "shrink wrap" or similar licenses to
software acquired by the Company "off the shelf" or in non-negotiated
transactions). The Company owns or uses all of such Intellectual Property free
of any Liens or infringement of the rights of others, except as set forth on
Schedule 2.12. The Company is not obligated to make any payments to any Person
with respect to any such Intellectual Property, except as set forth on Schedule
2.12.
2.13 Intangible Property; Subsidiaries. The Company does not own
any intangible property, except as otherwise reflected in the Financial
Statements, or set forth in Schedule 2.12 or in Schedule 2.13. Except as set
forth on Schedule 2.13, the Company does not own, directly or indirectly, any
capital stock or other Equity Rights or other ownership or investment interest
in any other Person.
2.14 Compliance with Laws. The Company has complied in all material
respects, and is in material compliance with, all Laws applicable to it, its
business and the ownership and present uses of its Assets. The Company has
obtained all material Permits that are required for the ownership, maintenance
and operation of the Company's Assets and business. The Company is not presently
in Default under any such material Permit. Except as listed on Schedule 2.14,
none of the material Permits held by the Company will be materially adversely
affected in any way by reason of this Agreement or the consummation of the
transactions contemplated herein. No notice or warning from any Regulatory
Authority with respect to any failure or alleged failure of the Company to
comply with any Law has been received by the Company or either Shareholder.
2.15 Environmental Matters. The Company is in material compliance
with all federal, state and municipal environmental Laws and has not spilled,
discharged or released any hazardous material at or from any of the Company's
premises. The Company has no material Liabilities relating to or arising from
environmental matters. The Company has not received any written communication
from any Regulatory Authority in respect of any environmental issues.
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2.16 Benefit Plans.
(a) Schedule 2.16.1 lists (i) every pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, (ii) any medical, vision,
dental or other health plan, any life insurance plan, and (iii) any other
employee benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA,
adopted, maintained by, sponsored in whole or in part by, or contributed to by
the Company or an Affiliate of the Company at any time during the six years
prior to the date hereof for the benefit of the Company's employees, retirees,
directors, independent contractors, or other beneficiaries or their dependents
or spouses and under which such employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are or were eligible
to participate (collectively, the "Benefit Plans"). Any Benefit Plan that is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, or an "employee welfare benefit plan" as that term is defined in Section
3(1) of ERISA, is referred to herein as an "ERISA Plan." Except as noted in
Schedule 2.16(a), no Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(b) True, correct and complete copies of the following
have been made available to the Purchaser by the Shareholders: all written
Benefit Plans and all trust agreements or other funding arrangements, including
insurance contracts, all amendments thereto and, where applicable, with respect
to any such plans or plan amendments, all determination letters or advisory
opinions issued by the IRS, the United States Department of Labor or Pension
Benefit Guaranty Corporation, annual reports or returns, audited or unaudited
financial statements, actuarial valuations, and summary annual reports for the
most recent three plan years, the most recent summary plan descriptions and any
material modifications thereto.
(c) Except as otherwise disclosed to Purchaser by a
Shareholder in writing, all ERISA Plans and the related trusts that are intended
to be qualified under Code Section 401(a) comply in all material respects with,
and have been administered in material compliance with, the provisions of ERISA
(including all reporting and disclosure requirements under ERISA Titles I and
IV), all provisions of the Code relating to qualification and tax exemption
under Code Section 401(a) and 501(a) or otherwise applicable to secure intended
tax consequences, and all other applicable Laws. Each ERISA Plan that is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA that is
intended to be qualified under Code Section 401(a) has received a favorable
determination letter as to its qualified status under the Code. Neither the
Company nor, to the Company's or either Shareholder's knowledge, any
administrator or fiduciary of any such ERISA Plan (or agent of any of the
foregoing) has engaged in any transaction or acted or failed to act in any
manner which could subject the Company to any material liability for a breach of
any fiduciary duty under ERISA. Each participant in the Company 401(k) Plan
shall vest in all of the amounts in his or her account under such plan as a
result of the transactions contemplated hereby.
(d) Neither the Company nor either Shareholder, nor to
the Company's or either Shareholder's knowledge, any "party in interest" (as
defined in Section 3(14) of ERISA) or "disqualified person" (as defined in
Section 4975(e)(2) of the Code) of any Benefit Plan has
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<PAGE> 14
engaged in any "prohibited transaction" (within the meaning of Section 4975(c)
of the Code or Section 406 of ERISA). Except as described on Schedule 2.16(d),
there has been no (i) "reportable event" (as defined in Section 4043 of ERISA),
or event described in Section 4062(e) or Section 4063(a) of ERISA, or (ii)
termination or partial termination, withdrawal or partial withdrawal with
respect to any of the ERISA Plans which the Company or any Person considered
under common control with the Company (within the meaning of Code Section
414(b), (c), (m) or (o)) maintains or contributes to or has maintained or
contributed to or was required to maintain or contribute to for the benefit of
employees of the Company.
(e) The consummation of the transactions contemplated by
this Agreement will not entitle any current or former employee of the Company or
any of its predecessors to severance pay, unemployment compensation or any
similar payment, and will not accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any such employee or former
employee, except as reflected in the balance sheet as of March 31, 1999
contained in the Financial Statements or as shown on Schedule 2.16(e).
(f) No ERISA Plan subject to the minimum funding
standards of Code Section 412 has an "accumulated funding deficiency" as defined
in Code Section 412 and Section 302 of ERISA, whether or not waived. The Company
has made all required contributions under each Benefit Plan for all periods
through and including the most recent fiscal year of each such Benefit Plan,
except to the extent accruals therefor have been provided for in the Financial
Statements.
2.17 Union and Employment Agreements; Employee Litigation. The
Company is not a party to any union agreement, nor does the Company have any
Contract that is not terminable by it at will with any of its officers,
directors, employees, consultants, agents, or any other person performing
services for the Company, relating to their employment by or performance of
services for the Company or their compensation therefor. No union attempts to
organize the employees of the Company have been made, nor are any such attempts
now (to either Shareholder's knowledge) threatened. Except as otherwise set
forth on Schedule 2.8, there is no Litigation by an employee of the Company
pending, or (to each Shareholder's knowledge) threatened, against the Company.
2.18 Officers and Directors. Schedule 2.18 lists the names of all
directors and officers of the Company.
2.19 Contracts and Commitments.
(a) Except as set forth in Schedule 2.19(a), no Contract
of the Company requires payments by the Company after the date of this
Agreement, in the aggregate, in excess of U.S.$50,000.
(b) There are no Contracts between the Company and any
Affiliate of the Company.
(c) The Company is not subject to any Contract containing
covenants limiting the freedom of the Company to compete in any line of business
in any geographic area or requiring the Company to share any income, revenue or
profits.
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<PAGE> 15
(d) The Company is not a party to or subject to any
Contract for the management of the Company and it is not obligated to become a
party to any such management agreement.
(e) Except as set forth in Schedule 2.19(e), the Company
is not a party to any contract which the Company is incapable of complete
performance in accordance with its terms within thirty-six months after the date
on which it was entered into or undertaken.
(f) Except as set forth in Schedule 2.19(f), the Company
is not a party to any fixed price contract for services.
(g) Except as set forth in Schedule 2.19(g), the Company
is not a party to or subject to any Contract involving any business other than
the provision of information technology professional services.
(h) Except as set forth in Schedule 2.19(h), the Company
is not a party to or subject to any Contract that involves or is reasonably
likely to involve the supply of services by the Company the aggregate sales
value of which will represent in excess of five percent (5%) of the gross
revenues of the Company for the twelve months ended December 31, 1998 as set
forth in the Financial Statements.
(i) The Company is not a party to or subject to any
Contract for hedging, futures, options or other derivative contracts.
(j) Except as set forth in Schedule 2.19(j), the Company
is not a party to or subject to any Contract for the sale of shares or Assets of
the Company (other than third party application software) which contains
warranties or indemnities.
(k) The Company is not in material Default under any
Contract of the Company except for the failure to obtain any of the consents
listed on Schedule 2.5.
2.20 Insurance Policies. Schedule 2.20 sets forth a complete list
and description of all insurance policies in force naming the Company as an
insured or beneficiary or as a loss payee or for which the Company has paid or
is obligated to pay all or part of the premiums including, without limitation,
all liability, fire, health and life insurance policies. The Company has not
received notice of any pending or threatened termination or premium increase
(retroactive or otherwise) with respect thereto, and the Company is in material
compliance with all conditions contained in said policies listed in Schedule
2.20. Except as set forth on Schedule 2.20, there are no pending claims against
such insurance by the Company as to which insurers are defending under
reservation of rights or have denied liability.
2.21 Accounts Receivable. The amount of all accounts receivable
appearing in the Financial Statements or arising since March 31, 1999, represent
amounts due for services provided net of any reserve established therefor in
such Financial Statements or on the books and records of the Company. Each
account receivable of the Company as of the date hereof has arisen only from
bona fide engagements in the ordinary course of the business, and has not been
previously written off as a bad debt. Except as set forth on Schedule 2.21, the
Company has not
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<PAGE> 16
received any written notice from any customer asserting any right of setoff
against, or any claim with respect to, any of the current accounts receivable of
the Company.
2.22 Accounts Payable. Attached hereto as Schedule 2.22 is a true,
complete and accurate list of the accounts payable individually in excess of
$2,500 of the Company as of March 31, 1999, setting forth the payee and the
amount of indebtedness and except as noted on Schedule 2.22 there has been no
material increase in the aggregate amount due under accounts payable of the
Company since March 31, 1999, except in the ordinary course of business.
2.23 Taxes.
(a) Except as set forth in Schedule 2.23, for taxable
periods where the statute of limitations is open (i) the Company has filed all
Tax Returns that it was required to file, and (ii) any affiliated group
including the Company filing a consolidated federal income Tax Return has filed
all federal income Tax Returns that such group was required to file, and the
Company and such group, respectively, have paid all Taxes due thereon (or have
established adequate reserves therefor as reflected on the Financial
Statements). All information provided in such Tax Returns is true, correct and
complete in all material respects as to the Company. The Company is in
compliance in all material respects with and retains in its records all material
information and documents to comply with applicable Tax or information reporting
and any Tax withholding requirements under federal, state and local Tax Laws.
(b) Schedule 2.23 lists all Tax Returns filed with
respect to the Company for any period where the statute of limitations is open
for which there is any written claim or assessment pending, or where to the
knowledge of the Shareholders such a claim or assessment is threatened, or where
an audit or investigation with respect to any liability of the Company is
currently pending. The Shareholders have delivered or made available to
Purchaser correct and complete copies of all Tax Returns of the Company and all
examination reports and statements of deficiencies assessed against or agreed to
by the Company since December 31, 1995 through December 31, 1997.
(c) Except as set forth in Schedule 2.23, the Company has
not waived (or has had waived on its behalf) any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency for which it could be held liable.
(d) Except as set forth in Schedule 2.23, the Company is
not a party to any Tax allocation or sharing agreement.
(e) Except as set forth in Schedule 2.23, the Company has
not been a member of an affiliated group filing a consolidated federal income
Tax Return other than a group the common parent of which is Medaphis.
(f) The Company has not filed or had filed on its behalf
a consent to the application of Section 341(f) of the Code.
(g) The Company will not be required, as a result of a
change in method of accounting for any taxable period ending on or prior to the
date of this Agreement, to include any
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<PAGE> 17
adjustment under Section 481(c) of the Code in taxable income for any period
ending subsequent to the date of this Agreement.
(h) The Company is not a party to any agreement,
contract, arrangement, or plan that has resulted or would result, separately or
in the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(i) The Company does not have and has not had a branch in
any foreign country.
(j) The Company has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owning to any
employee, creditor, independent contractor or other third party.
(k) The Company has disclosed on its federal income Tax
Returns all positions taken therein to the extent such disclosure would prevent
imposition of penalties under Section 6662 of the Code for substantial
understatement of federal income Tax.
2.24 Bank Accounts and Powers of Attorney. A list of the names and
addresses of each bank, together with the name and number of each account, in
which the Company has an account or safe-deposit box, the names of all persons
entitled to draw thereon or to have access thereto, and the names of any persons
holding powers of attorney with respect to the Company, are set forth in
Schedule 2.24.
2.25 Statements True and Correct; Schedules. No representation or
warranty made herein, nor any statement, certificate or instrument furnished or
to be furnished to the Purchaser pursuant to this Agreement or any other
document, agreement or instrument referred to herein or therein, contains or
will contain any untrue statement of material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading. Once an item is disclosed by the Shareholders on any Schedule
referenced in this Article II ("Article II Schedules") such item shall be deemed
integrated into and disclosed in all of the Article II Schedules, without the
necessity of any cross-references; provided, however, that such deemed
disclosure and integration shall not apply as set forth below:
(a) No items disclosed on any of the other Article II
Schedules shall be deemed disclosed on any of the following Schedules: Schedule
2.6 (Financial Statements); Schedule 2.8 (Litigation); Schedule 2.19(e) (Long
Term Contracts); Schedule 2.19(f) (Fixed Price Contracts); Schedule 2.19(g)
(Non-Line of Business Contracts); Schedule 2.19(h) (Large Customer Contracts);
and Schedule 2.19(j) (Company Warranties).
(b) No items disclosed on or reflected in the Financial
Statements shall be deemed to be disclosed on any Schedule other than Schedule
2.6.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to the Shareholders to enter into this Agreement and
to sell the Shares, the Purchaser hereby represents and warrants to the
Shareholders the following:
3.1 Organization, Standing and Authority of Purchaser. The
Purchaser is a corporation duly organized, and validly existing and in good
standing under the laws of the State of Michigan. Purchaser has the requisite
power and authority to execute, deliver and perform its obligations under this
Agreement and all other documents contemplated hereby according to their
respective terms, and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser, and constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
3.2 Absence of Conflicting Agreements or Required Consents
Relating to Purchaser's Obligations. Except as set forth in this Agreement, the
execution, delivery and performance by Purchaser of this Agreement and any other
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent or approval of, prior filing
with or notice to, or other action by, any Regulatory Authority or any other
third party; (ii) will not conflict with any provision of the Purchaser's
articles of incorporation or bylaws; (iii) will not constitute a Default under
any material Law or Order to which the Purchaser is a party or by which
Purchaser or its Assets are bound; and (iv) will not constitute a Default under
any Contract or Permit material to the transactions described herein, to which
Purchaser is a party or by which the Purchaser or its Assets are bound.
3.3 Investment Intent. The Purchaser is acquiring the Shares for
its own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act of 1933, as amended. The Purchaser confirms
that the Shareholders and the Company have made available to the Purchaser and
its representatives and agents the opportunity to ask questions of the officers
and management employees of the Company and to acquire such additional
information about the business and financial condition of the Company as the
Purchaser has requested.
ARTICLE IV
ADDITIONAL COVENANTS
4.1 Cooperation . Each party covenants that it will, from time to
time after the date hereof, execute such additional instruments and take such
actions as may be reasonably requested by any other party to confirm or perfect
or otherwise to carry out the intent and purpose of this Agreement. In addition,
the Shareholders agree to cooperate (at Purchaser's expense) with Purchaser in
the preparation of any filings of Purchaser on Form 8-K under the Securities
Exchange Act of 1934, as amended, required as a result of the transactions
contemplated herein, including causing (at Purchaser's expense) Medaphis'
accountants to cooperate in the preparation of any such filing.
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<PAGE> 19
4.2 Related Party Transactions. The Shareholders and the Company
have caused all indebtedness and other Liabilities owed to the Company by a
Shareholder or any Affiliate of the Company or Shareholder to be paid in full on
or prior to the date hereof, and caused all indebtedness and other Liabilities
owed by the Company to a Shareholder or any Affiliate of any Shareholder to be
discharged and released in full on or prior to the date hereof.
4.3 Transfer Taxes. The Purchaser shall pay any and all transfer,
sales, use and similar Taxes on any transfer of the Shares.
4.4 Public Announcements. The Purchaser, the Shareholders and the
Company will consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, and use reasonable efforts
to agree on, any press release or other public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
a party may determine is required by applicable Law, Order or court process.
4.5 Tax Matters.
(a) Tax Sharing Agreements. Any Tax sharing agreement
with respect to which the Company is or has been a party shall be terminated
prior to the date of this Agreement and will have no further effect for any
taxable year or period prior to, including, or following the date of this
Agreement.
(b) Allocation of Tax Liability. All Tax items of the
Company (including, for example, income and deductions) will be included on the
federal consolidated income Tax Return of the affiliated group, the common
parent of which is Medaphis (the "Medaphis Group"), for all periods through
April 15, 1999. The Purchaser and the Company will furnish Tax information of
such Tax items to Medaphis for inclusion in the Medaphis Group federal
consolidated income Tax Return for the period that includes April 15, 1999 in
accordance with past custom and practice relating to the Company.
(c) Cooperation and Exchange of Information. The
Shareholders and Purchaser will provide each other with such cooperation and
information as either of them reasonably may request of the other in filing any
Tax Return, amended return or claim for refund, determining a Liability for
Taxes or a right to a refund of Taxes or participating in or conducting any
audit or other proceeding in respect of Taxes. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by Tax authorities, but in no event
shall the Shareholders or Purchaser be required to disclose to the other any
information relating to the operations of either, as the case may be, other than
information relating to a Liability for Taxes of the Company. The Shareholders
and Purchaser shall make their respective employees available on a mutually
convenient basis to provide explanations of any documents or information
provided hereunder. The parties shall cooperate fully in connection with the
filing of Tax Returns, including the provision of copies of any return or report
for a period which includes April 15, 1999 to the other parties not less than
thirty (30) days before filing. The Shareholders will allow the Purchaser an
opportunity to review and comment upon any Tax Returns (including any amended
returns) to the extent that they relate to the Company. The Shareholders will
take no position on such Tax Returns that relate to the Company that would
adversely affect the Company after April 15,
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1999, unless such position would be reasonable and consistent with past practice
as if the Shareholders had owned the Company both before and after April 15,
1999. The Shareholders and Purchaser will retain all Tax Returns, schedules and
work papers and all material books and records or other documents relating to
Tax matters of the Company for its taxable period first ending after the date of
this Agreement and for all prior taxable periods until the expiration of the
statute of limitations of the taxable periods to which such returns and other
documents relate, without regard to extensions (but taking into account any
extended statute of limitations applicable to a year in which a net operating
loss is reported) except to the extent notified by the other party in writing of
such extensions for the respective Tax periods. Any information obtained under
this Section 4.5(c) shall be kept confidential, except as may be otherwise
necessary in connection with the filing of returns or claims for refund or in
conducting an audit or other proceeding. Notwithstanding anything in this
Section 4.5(c) to the contrary, no party shall be required to divulge any
information to the other party that would operate as a waiver of the
attorney-client privilege. Purchaser and the Shareholders shall use reasonable
efforts not to destroy or allow the destruction of any such books and records
and workpapers without first providing 60 days written notice of intention to
destroy to the other party(ies), and allowing such other party(ies) to take
possession of such records.
(d) Tax Indemnification. Notwithstanding any provision of
this Agreement to the contrary, the Shareholders shall be jointly and severally
liable, and shall pay, indemnify, and hold harmless (including any Tax owed by
Purchaser as a result of this indemnification payment) Purchaser and the Company
for (i) except to the extent reserved for on the Closing Date Balance Sheet, all
liability for Taxes of the Company (including Taxes owed by Purchaser as a
result of such indemnification payment), for all periods or portions thereof
ending on or prior to April 15, 1999; (ii) except to the extent reserved for on
the Closing Date Balance Sheet, all liability for Taxes of any affiliated,
consolidated, unitary or combined group or any member thereof, which affiliated,
consolidated, unitary or combined group includes or has included the Company for
any period or portion thereof that ends prior to or that includes the date of
this Agreement, which liability is assessed against the Company by reason of the
Company being liable for all or part of the Taxes of any such affiliated,
consolidated, unitary or combined group or any member thereof; and (iii) all
liability for Taxes of the Company for all taxable periods beginning before
April 15, 1999 and ending after such date but only with respect to the portion
of such period ending on April 15, 1999. Any Taxes under (iii) for a period
commencing prior to but ending after April 15, 1999 will be apportioned, in the
case of real and personal property Taxes, on a per diem basis and, in the case
of other Taxes, on the basis of the actual activities, taxable income or taxable
loss of the Company during the periods before and after April 15, 1999, based
upon a closing of the books and determined as if such period ended with respect
to the Shareholders on April 15, 1999 and commenced with respect to the
Purchaser on April 16, 1999. The Purchaser agrees to indemnify the Shareholders
for any additional Tax owed by the Shareholders (including Tax owed by the
Shareholders due to this indemnification payment) resulting from any transaction
initiated by Purchaser and not in the ordinary course of business occurring on
the date of this Agreement. The Purchaser and the Shareholders agree to report
all transactions initiated by the Purchaser and not in the ordinary course of
business occurring on the date of this Agreement on the Purchaser's federal
income Tax Return to the extent permitted by ss. 1.1502-76(b)(1)(ii)(B) of the
Treasury Regulations promulgated pursuant to the Code. Any refund of Taxes
received, or reduction of Taxes realized by Shareholders, or any Affiliate of
Shareholders, that is directly attributable to Taxes paid or losses or credits
generated by the Company with respect to any period or portion thereof ending
after April 15, 1999 is to be paid
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<PAGE> 21
to Purchaser within thirty (30) days after the receipt or credit thereof.
Shareholders shall comply with Purchaser's requests in obtaining such refunds,
including, but not limited to, the filing of amended returns and claims for
refund. Any refund of Taxes received by Purchaser, or any Affiliate of
Purchaser, that is directly attributable to Taxes paid by the Company with
respect to any period or portion thereof ending on or before April 15, 1999 is
to be paid to Shareholders within thirty (30) days after the receipt or credit
thereof. Purchaser shall comply with Shareholders' requests in obtaining such
refunds, including, but not limited to, the filing of amended returns and claims
for refund.
(e) Elections; Other Matters. In connection with the
transactions contemplated herein, Medaphis shall make an election, under ss.
1.1502-20(g)(1) of the Treasury Regulations promulgated pursuant to the Code and
any corresponding elections under state or local Tax law (the "Tax Elections"),
to reattribute to itself certain net operating loss carryovers and/or net
capital loss carryovers provided that Medaphis agrees to not reattribute under
ss. 1.1502-20(g) of the Treasury Regulations any of the net operating losses
that carry forward with the Company when it leaves the Medaphis Group to the
extent Purchaser can utilize such net operating losses pursuant to Code Section
382. For purposes of this Agreement and notwithstanding any provision to the
contrary, the potential utilization of the net operating losses of the Company
by the Purchaser shall include (i) under applicable Law, the maximum possible
utilization of the net operating losses under Section 172 of the Code of the
Company ("NOL") by the Purchaser or any Affiliate of Purchaser, or any successor
or transferor of the Purchaser or any Affiliate of the Purchaser (the "Purchaser
NOL Group"), assuming the maximum possible taxable income of the Purchaser NOL
Group for any period or portion thereof beginning after April 15, 1999, plus
(ii) U.S.$2,000,000. Sixty (60) days prior to the date of filing Tax Elections,
the Shareholders shall submit to Purchaser for Purchaser's review a proposal of
the statement required under ss.1.1502-20(g)(5)[(4)] of the Treasury
Regulations. In the event Purchaser reasonably disagrees with a statement
proposed by the Shareholders, Purchaser shall within twenty (20) days of
receiving such statement provide to the Shareholders a revised statement
indicating the amount of NOL the Purchaser NOL Group can utilize in accordance
with this Agreement and the residual amount of NOL, if any, available for the
Tax Elections (the "NOL Statement"). The Shareholders, within ten (10) days of
receiving the NOL Statement, shall either adopt the NOL Statement for purposes
of the Tax Elections and any other Tax purpose or provide written notice to
Purchaser that the Shareholders dispute the NOL Statement. Upon any such notice
disputing the NOL Statement, the parties shall submit such dispute to the
Accountants for resolution. Such dispute resolution shall be governed by the
last sentence of Section 1.3(a). The Shareholders shall allocate all of the
consolidated Section 382 limitation to the Company, to the extent Purchaser can
utilize such limitation pursuant to Code Section 382 in accordance with the
second sentence of this paragraph, attributable to any net operating losses ever
generated by or otherwise allocable to the Company in accordance with
ss.1.1502-95T of the Treasury Regulations. The Shareholders and the Purchaser
shall: (i) take, and cooperate with each other to take, all actions necessary
and appropriate (including, without limitation, the filing by any party hereto,
or any Affiliate of any party hereto, of a copy of the Tax Elections in any
appropriate forms, returns, elections, schedules and other documents and
instruments filed with any Tax authority) to effect, perfect and preserve timely
Tax Elections; (ii) report the purchase and sale of the Shares consistent with
the Tax Elections; and (iii) take no position contrary thereto or inconsistent
therewith in any Tax Return, or in any discussion with or any proceeding before
any Tax authority or other Regulatory Authority or otherwise.
(f) Purchaser and the Company have not since April 15,
1999 entered into any transaction or Contract, or otherwise taken any position,
any or all of which, singly or in the aggregate, could result in a materially
different Tax consequence to the Company or the Purchaser
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<PAGE> 22
than would have been the case had this Agreement not been entered into and the
Shareholders and the Company had continued to operate the Company in a manner
consistent with past practice, from April 15, 1999 through and including the
date of this Agreement.
4.6 Leases. The Purchaser and the Company acknowledge and
agree that the consents of certain landlords are required upon the consummation
of the transactions contemplated by this Agreement under the terms of the leases
identified in Schedule 2.5, and that the Shareholders shall have no Liability
under this Agreement with respect to the failure to obtain such consents. The
Shareholders agree to cooperate (at the cost of the Purchaser and the Company)
with the Company and the Purchaser to obtain any such consents to the extent
reasonably requested by Purchaser. Purchaser and the Company hereby acknowledge
and agree that Medaphis delivered letters of credit in connection with the lease
agreements with Park Avenue Building Company, LLC and WHSUM Real Estate L.P.
(the "Letters of Credit"), and Purchaser and the Company agree to use their
commercially reasonable efforts to obtain such letters of credit from the
foregoing landlords and return them to Medaphis as soon as reasonably
practicable after the date of this Agreement. Further, Purchaser and the Company
acknowledge and agree that Medaphis has guaranteed the obligations of the
Company under the terms of the lease for 395 Oyster Point Boulevard, #330, San
Francisco, California (the "Guaranty"). Purchaser hereby agrees to indemnify,
defend and hold harmless Medaphis from and against any Losses suffered by
Medaphis as a result of the Letters of Credit and the Guaranty remaining
outstanding after the date of this Agreement (for purposes of this sentence,
Losses shall be deemed to include any draws or payments under the Letters of
Credit or payments, or requests for payments, by Medaphis under the Guaranty).
ARTICLE V
ACTIONS TAKEN ON EXECUTION BY SHAREHOLDERS
Upon execution of this Agreement, the Shareholders and/or the Company
(as appropriate) have delivered the following documents to Purchaser:
5.1 The Shares. Stock certificates representing all of the Shares
together with accompanying stock transfer powers or instruments of assignment,
duly endorsed in blank for the transfer thereof.
5.2 Releases. A release from each of the Shareholders in
substantially the form of Exhibit 5.2 attached hereto.
ARTICLE VI
ACTIONS TAKEN ON EXECUTION BY THE PURCHASER
Upon execution of this Agreement, the Purchaser has delivered the
following to the Shareholders:
6.1 Purchase Price. The Purchase Price as provided in Section 1.2
hereto.
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<PAGE> 23
6.2 Trademark Assignments. Any and all documents reasonably
requested by the Shareholders (if any) to effect the transfer of the Impact
Trademarks and Logos described in Section 1.4.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Purchaser. Subject to the terms and
conditions in this Article VII, the Shareholders shall jointly and severally
indemnify, defend and hold harmless Purchaser from and against any loss, damage
(but excluding consequential and incidental damages of Purchaser and/or the
Company), Liability, cost and expense, including reasonable attorneys' fees
(collectively "Losses"), suffered or incurred by Purchaser, as and when
incurred, by reason of, or arising out of, (i) any misrepresentation, breach of
warranty or breach or non-fulfillment of any agreement of a Shareholder
contained in this Agreement or in any document executed and delivered in
connection with this Agreement, (ii) the litigation listed on Schedule 2.8
hereof (such litigation referred to herein as the "Identified Litigation"), or
(iii) the Impact Innovation Key Employee Incentive Plan ("Impact Option
Liability").
7.2 Indemnification of Shareholders. Subject to the terms and
conditions in this Article VII, the Purchaser shall indemnify, defend and hold
harmless the Shareholders from and against any Loss suffered or incurred by
either Shareholder, as and when incurred, by reason of, or arising out of, any
misrepresentation, breach of warranty or breach or non-fulfillment of any
agreement of the Purchaser contained in this Agreement or in any document
executed and delivered in connection with this Agreement.
7.3 Notice and Opportunity to Defend.
(a) The party indemnified hereunder (the "Indemnified
Party") shall notify in writing the indemnifying party (the "Indemnifying
Party") within thirty (30) days after a third party claim is presented to the
Indemnified Party and the Indemnifying Party shall defend such claim at its
expense and may select the attorneys for such defense, who shall be reasonably
acceptable to the Indemnified Party. If the Indemnifying Party does not defend
such claim, the Indemnified Party may do so without the Indemnifying Party's
participation, in which case the Indemnifying Party shall pay the expenses of
such defense. Neither the Indemnified Party nor the Indemnifying Party may
settle or compromise such claim without the other party's consent, which shall
not be unreasonably withheld. If the Indemnified Party fails to notify the
Indemnifying Party of a third party claim as provided in this Section 7.3, and
if the Indemnifying Party is thereby prejudiced by such failure of notice in its
defense of the claim, the Indemnifying Party's obligation of indemnity hereunder
shall be extinguished with respect to such claim to the extent that the
Indemnifying Party has been prejudiced by the failure to give such notice. The
Indemnified Party and Indemnifying Party agree to cooperate in good faith in the
defense and/or settlement of any such claim. Notwithstanding the foregoing, the
parties hereto agree that with respect to the Shareholders' obligations to
indemnify, defend and hold harmless Purchaser from and against Identified
Litigation the terms of this Section 7.3(a) shall not apply, and that the
provisions of Section 7.3(b) shall govern.
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<PAGE> 24
(b) Medaphis shall defend the Identified Litigation at
its expense using attorneys which shall be selected in the sole discretion of
Medaphis. Purchaser, the Company and their respective Affiliates shall not
settle any of the Identified Litigation without the prior written consent of
Medaphis. Medaphis may settle any of the Identified Litigation without the
consent of Purchaser, the Company or any of their respective Affiliates to the
extent that any such settlement involves solely the payment of monetary
obligations, and (if such payment is the obligation of Medaphis or its
Affiliates) to the extent Medaphis has sufficient resources available to
discharge such monetary obligation as determined by Purchaser in its reasonable,
good faith discretion; provided that to the extent any such settlement involves
any restriction on Purchaser's or the Company's future actions, any such
settlement or compromise may not be made without the Purchaser's prior consent,
which shall not be unreasonably withheld. Purchaser, the Shareholder and the
Company agree to cooperate in good faith in the defense and/or settlement of any
Identified Litigation, and the Shareholders agree to provide copies of all
pleadings filed in connection with the Identified Litigation to Purchaser prior
to their filing (to the extent reasonably practicable).
7.4 Limitations.
(a) Subject to Sections 7.4(b) and 7.4(c), and notwithstanding
anything to the contrary contained in this Agreement other than Sections 7.4(b)
and 7.4(c), a party (for purposes of this Section 7.4, the Shareholders shall be
deemed to be one and the same party) otherwise entitled to indemnification under
this Article VII is not entitled to indemnification until the aggregate
indemnifiable Losses for which it is otherwise entitled to indemnification
hereunder shall equal or exceed U.S. $100,000 (the "Threshold Amount"). If and
when the sum of all indemnifiable Losses of a party hereunder equals or exceeds
the Threshold Amount, then such party may request indemnification for all
indemnifiable Losses in excess of the Threshold Amount. To the extent covered by
insurance, any indemnifiable Loss will be deemed reduced by the amount of
insurance proceeds actually received by the Indemnified Party and its Affiliates
in respect of such Loss; provided, however, that in no event shall this sentence
be deemed to require any Indemnified Party to maintain any level of insurance.
Subject to Sections 7.4(b) and 7.4(c), in no event shall the Shareholders'
collective Liability under this Article VII exceed the Purchase Price in the
aggregate (the "Maximum Liability"). Except as set forth in Sections 7.4(b) and
7.4(c), all rights and remedies under this Article VII for Indemnified Parties,
including all rights to indemnification, and all Liabilities and obligations
under this Article VII for Indemnifying Parties, terminate on September 30, 2000
(the "Time Limit").
(b) Exempt Claims (solely to the extent of such claims) shall not
be subject to the Threshold Amount or (with respect to claims against the
Shareholders) the Maximum Liability limitations set forth in Section 7.4(a)
above. In addition, no Exempt Claim shall not be subject to the Time Limit;
provided, however, all rights and remedies under this Article VII for
Indemnified Parties, including all rights to indemnification, and all
Liabilities and obligations under this Article VII for Indemnifying Parties, for
an Exempt Claim shall terminate as of the expiration of all applicable statute
of limitations (including any extension or waiver with respect thereto) for the
underlying Liability to which such Exempt Claim relates.
(c) The term "Exempt Claims" shall mean (i) claims by the
Purchaser or the Shareholders (as appropriate) under this Article VII for
breaches, or failures of performance, of the terms of Article I, Section 2.1,
Section 2.23, Section 3.3, Section 4.3, Section 4.5 and Section
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<PAGE> 25
4.6, and (ii) claims by the Purchaser for indemnification under this Article VII
in connection with the Identified Litigation or Impact Option Liability.
7.5 Survival of Representations and Warranties. The
representations, warranties, covenants and agreements of the Shareholders, the
Company and Purchaser will survive the date hereof and terminate on September
30, 2000, except for the representations, warranties, covenants and agreements
referenced in clause (i) of the definition of Exempt Claims which shall survive
the date hereof and terminate on the respective dates of the expiration of the
applicable statute of limitations (including any extension or waiver with
respect thereto) for the liabilities to which such provisions relate.
7.6 Subrogation. Upon payment in full of any claim by a third
party under this Article VII (irrespective of the method of payment), the
Indemnifying Party shall be subrogated to the extent of such payment to the
rights of the Indemnified Party against any Person with respect to the subject
matter of such claim.
7.7 Exclusive Remedy. Except for remedies based upon fraud, the
remedies provided for in this Article VII constitute the sole and exclusive
remedies for recovery against either Shareholder or the Purchaser based upon the
inaccuracy, untruth, incompleteness or breach of any representation or warranty
of such party contained in this Agreement or in any document executed and
delivered in connection with this Agreement, or based upon the failure of either
Shareholder or the Purchaser to perform any covenant, agreement or undertaking
required by the terms hereof to be performed by such party.
7.8 Dispute Resolution.
(a) If an Indemnified Party incurs any Loss indemnifiable
under this Article VII ("Indemnifiable Loss"), it shall promptly provide written
notice to Indemnifying Party stating in reasonable detail the nature and amount
of such Indemnifiable Loss or potential Indemnifiable Loss (a "Loss Notice"). In
addition, with respect to third party claims, the Indemnified Party shall comply
with Section 7.3. If the Indemnifying Party disputes the amount sought under any
such Loss Notice or otherwise disputes the right of the Indemnified Party to be
indemnified hereunder, it shall provide the Indemnified Party a written notice
objecting to such claim for indemnification within thirty (30) days of the date
any such Loss Notice is received by the Indemnifying Party (a "Protest Notice").
(b) If (i) the Indemnifying Party and the Indemnified
Party are unable to resolve a Loss Notice with respect to which the Indemnified
Party has received a Protest Notice (a "Disputed Loss Notice") within thirty
days of the date the Indemnified Party receives the Protest Notice, or (ii)
there is any other controversy or claim arising out of or relating to this
Agreement or a breach hereof, then any of the parties hereto may require such
Disputed Loss Notice or other controversy or claim to be submitted to
arbitration in the venue of Washington, D.C., in accordance with the
then-current expedited procedures of the commercial arbitration rules of the
American Arbitration Association ("AAA"). In any arbitration hereunder, the
Purchaser shall select one arbitrator, the Shareholders shall select one
arbitrator, and the two arbitrators so chosen shall select a third. All such
arbitrators must be selected from the list of arbitrators maintained by the AAA.
Any decision of the arbitration panel shall require the vote of at least two (2)
of such arbitrators and shall be deemed conclusive and each party shall be
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<PAGE> 26
deemed to have waived any rights to appeal therefrom. Each party shall bear its
own legal fees and related expenses incurred in connection with the arbitration
proceedings.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Definitions. The capitalized terms set forth below shall have
the following meanings:
"Affiliate" of a Person shall mean any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. Ownership of 20% or more of the voting equity securities of another
Person shall be deemed to constitute "control" for purposes of this definition.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its Equity Rights, Assets or business.
"Default" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"Equity Rights" shall mean all equity interests in a Person
(including but not limited to shares of capital stock, partnership units or
interests or limited liability company interests or units) ("Equity Interests"),
and all arrangements, calls, commitments, Contracts, options, rights to
subscribe to, scrip, understandings, warrants, or other binding obligations of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, Equity Interests of a Person or by which a Person is or may
be bound to issue additional Equity Interests or other Equity Rights.
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<PAGE> 27
"GAAP" shall mean generally accepted United States accounting
principles applied on a consistent basis.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, technology rights and
licenses, computer software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights, and any application with any
Regulatory Authority for any of the foregoing.
"Knowledge" as used with respect to a party to this Agreement
(including references to such Person being aware of a particular matter) shall
mean those facts that are known after due inquiry by the chairman, president,
chief executive officer, chief financial officer, chief operating officer,
general counsel, or any vice president of such Person.
"Law" shall mean any federal, state, local, foreign or other
code, law (including common law), ordinance, regulation, reporting or licensing
requirement, rule, or statute, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any Asset (including
without limitation the Shares), other than Liens for current property Taxes not
yet due and payable.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other proceeding.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its Equity Rights,
Assets, or business.
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<PAGE> 28
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, all
foreign, federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over any of
the parties hereto, and/or their respect businesses or Assets.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a party or its subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposes or required to be withheld by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and additions
imposed thereon or with respect thereto.
8.2 Notices.
(a) All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given if delivered by hand or if mailed by United States registered or certified
mail, return receipt requested, first class postage prepaid, or sent by Federal
Express or similar overnight courier service to the parties or their assignees,
addressed as follows:
<TABLE>
<CAPTION>
If to the Shareholders or the Company: with a copy to:
<S> <C>
Medaphis Corporation Alston & Bird LLP
2840 Mt. Wilkinson Parkway One Atlantic Center
Suite 300 1201 West Peachtree St., N.W.
Atlanta, Georgia 30339 Atlanta, Georgia 30309-3424
Attn: Randolph L.M. Hutto Attn: J. Vaughan Curtis
Fax: (770) 444-4502 Fax: (404) 881-4777
</TABLE>
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<PAGE> 29
<TABLE>
<S> <C>
If to the Purchaser: with a copy to:
Complete Business Solutions, Inc. Complete Business Solutions, Inc.
32605 W. Twelve Mile Rd. 32605 W. Twelve Mile Rd.
Suite 250 Suite 250
Farmington Hills, Michigan 48334 Farmington Hills, Michigan 48334
Attn: Timothy S. Manney, Attn: Thomas E. Sizemore,
Executive Vice President General Counsel
Fax: (248) 488-0439 Fax: (248) 848-9741
</TABLE>
(b) If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made and, if delivered by mail, Federal Express or other overnight
courier, the date on which such notice, request, instruction or document is
received shall be the date of delivery.
(c) Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 8.2.
8.3 Expenses. The Shareholders shall pay all legal and other costs
and expenses incurred by the Shareholders or by the Company in connection with
the preparation, negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. The Purchaser shall pay
all legal and other costs and expenses incurred by it in connection herewith.
8.4 Waiver. Any failure on the part of any party to comply with
any of its obligations, agreements or conditions hereunder may be waived by any
other party to whom such compliance is owed, provided such waiver is in writing.
No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver.
8.5 Assignment. This Agreement shall not be assignable, in whole
or in part, by any party hereto without the express written consent of each
other party.
8.6 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and permitted assigns.
8.7 Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of Georgia. The
provisions of this Agreement are severable and the invalidity of one or more of
the provisions herein shall not have any effect upon the validity or
enforceability of any other provision.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts (including facsimile counterparts), each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
8.9 Brokers. Except as set forth on Schedule 8.9 hereto, the
Shareholders and Purchaser each represent to the other that no broker or finder
has been employed in connection with the
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<PAGE> 30
transactions contemplated hereby and each party ("Incurring Party") shall
indemnify the others against fees incurred by the Incurring Party.
8.10 Schedules and Exhibits. All Schedules and Exhibits attached to
this Agreement are incorporated herein by reference and made a part hereof.
8.11 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
8.12 Entire Agreement. This Agreement and the Exhibits, Schedules,
certificates and other documents delivered pursuant hereto or incorporated
herein by reference, contain and constitute the entire agreement among the
parties and supersede and cancel any prior agreements, representations,
warranties, or communications, whether oral or written, among the parties
relating to the transactions contemplated by this Agreement. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
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<PAGE> 31
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first written above.
SHAREHOLDERS:
IMPACT INNOVATIONS HOLDINGS, INC.
By:/s/ RANDOLPH L. M. HUTTO
-----------------------------------------
Name: Randolph L. M. Hutto
---------------------------------
Title: Executive Vice President
--------------------------------
MEDAPHIS CORPORATION
By: /s/ RANDOLPH L. M. HUTTO
-----------------------------------------
Name: Randolph L. M. Hutto
---------------------------------
Title: Executive Vice President
--------------------------------
COMPANY:
E-BUSINESS SOLUTIONS.COM, INC.
By: /s/ RANDOLPH L. M. HUTTO
-----------------------------------------
Name: Randolph L. M. Hutto
---------------------------------
Title: Executive Vice President
--------------------------------
PURCHASER:
COMPLETE BUSINESS SOLUTIONS, INC.
By: /s/ TIMOTHY S. MANNEY
-----------------------------------------
Name: Timothy S. Manney
---------------------------------
Title: Executive Vice President
--------------------------------
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