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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 8, 1996
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Physician Support Systems, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 33-80731 13-3624081
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Route 230 and Eby-Chiques Road, Mt. Joy, PA 17552
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 653-5340
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not applicable
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On May 8, 1996, PSS PBS Northwest, Inc. ("PSS-PBS"), a wholly owned
subsidiary of Physician Support Systems, Inc., a Delaware corporation (the
"Company"), purchased substantially all of the assets and liabilities of PBS
Northwest, Incorporated, an Oregon corporation ("PBS").
PBS provides accounts receivable management and other services to
hospital-based physicians. The assets purchased include PBS's customer
arrangements, software, leases and other personal property. PBS received cash
from PSS-PBS in the amount of $2,900,000 based on an evaluation of the earnings
of the business. PBS also received $10,000 for its agreement not to compete
with the Company or the Company's affiliates through May 8, 1999.
Each of the shareholders of PBS entered into employment agreements with
PSS-PBS, under which they agreed to be employed by PSS-PBS through May 8, 1999
in substantially the same capacities as they were employed by PBS prior to the
acquisition. These shareholders received payments aggregating $90,000 for their
agreements not to compete with the Company or its affiliates during the
employment period and for three years thereafter.
A portion of the proceeds from the Company's initial public offering
completed in February 1996 was used to finance the purchase price and noncompete
payments.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
(b) Pro Forma Financial Information.
As of the date of this Report, it is impracticable to provide the
required financial statements and pro forma financial information relating to
PBS. Such statements and information will be filed as soon as they become
available, and in any event not later than 60 days after the date this Report is
filed with the Securities and Exchange Commission.
(c) Exhibits.
(2) Asset Purchase Agreement among PBS
Northwest, Incorporated, the Shareholders of PBS Northwest,
Incorporated and PSS PBS Northwest, Inc. dated May 8, 1996
(omitting schedules and exhibits thereto, which will be furnished
supplementally to the Commission upon request).
(99) Press release issued by the Company May 9, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
PHYSICIAN SUPPORT SYSTEMS, INC.
Date May 14, 1996. By /s/ Hamilton F. Potter
Executive Vice President
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EXHIBIT INDEX
Exhibit 2
Asset Purchase Agreement among PBS Northwest, Incorporated, the Shareholders of
PBS Northwest, Incorporated and PSS PBS Northwest, Inc. dated May 8, 1996
(omitting schedules and exhibits thereto, which will be furnished supplementally
to the Commission upon request).
Exhibit 99
Press release issued by the Company May 9, 1996.
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[Execution Copy]
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ASSET PURCHASE AGREEMENT
AMONG
PBS NORTHWEST, INCORPORATED,
THE SHAREHOLDERS OF PBS NORTHWEST, INCORPORATED,
AND
PSS PBS NORTHWEST, INC.
DATED: MAY 8, 1996
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale ................................................ 1
1.2. Purchaser Not Successor to the Seller; Excluded Liabilities ...... 2
1.3. Purchase Price ................................................... 3
1.4. Closing .......................................................... 3
1.5. Instruments of Conveyance and Transfer ........................... 3
1.6. Post-Closing Assurances .......................................... 3
1.7. Assignment of Contracts, Rights .................................. 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties by Seller and Shareholders ........ 4
(a) Organization, Standing and Power ........................ 4
(b) Authority; Binding Agreements ........................... 4
(c) Capitalization; Equity Interests ........................ 4
(d) Conflicts; Consents ..................................... 4
(e) Financial Information ................................... 5
(f) Absence of Changes ...................................... 6
(g) Assets, Property and Related Matters; Real Property ..... 6
(h) Patents, Trademarks and Similar Rights .................. 6
(i) Agreements, Etc ......................................... 7
(j) Litigation, Etc ......................................... 7
(k) Compliance; Governmental Authorizations ................. 7
(l) Labor Relations; Employees .............................. 8
(m) Accounts Receivable ..................................... 9
(n) Customers ............................................... 9
(o) Accounts Payable ........................................ 9
(p) Related Party Transactions .............................. 9
(q) Billing and Collection Practices ........................ 10
(r) Taxes ................................................... 10
(s) Disclosure .............................................. 11
(t) Brokers ................................................. 11
(u) Bulk Sales .............................................. 11
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2.2. Representations and Warranties by Purchaser ...................... 11
(a) Organization, Standing and Power ........................ 11
(b) Authority; Binding Agreements ........................... 11
(c) Conflicts; Consents ..................................... 11
(d) Brokers ................................................. 12
(e) Review by Purchaser ..................................... 12
ARTICLE III
ADDITIONAL AGREEMENTS
3.1. Expenses; Sales Taxes ............................................ 12
3.2. Further Assurances ............................................... 12
3.3. Non-Disclosure ................................................... 12
3.4. Confidentiality; Non-Competition ................................. 13
3.5. Use of Name ...................................................... 14
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Conditions of Obligations of the Purchaser ....................... 14
(a) Authorization ........................................... 14
(b) Representations and Warranties .......................... 14
(c) Consents, Amendments and Terminations ................... 14
(d) Bill of Sale; Assignment ................................ 14
(e) Financial Results ....................................... 14
(f) Customers; Customer Contracts ........................... 15
(g) Opinion of Counsel ...................................... 15
(h) Financial Statements .................................... 15
(i) Due Diligence ........................................... 15
(j) Financing ............................................... 15
(k) Employment Agreements ................................... 15
(l) Other Documents ......................................... 16
4.2. Conditions of Obligations of the Seller and Shareholders ......... 16
(a) Authorization ........................................... 16
(b) Representations and Warranties .......................... 16
(c) Assignment .............................................. 16
(d) Employment Agreements ................................... 16
(e) Opinion of Counsel ...................................... 16
(f) Purchase Price; Noncompete Payment ...................... 16
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(g) Other Documents.......................................... 16
ARTICLE V
INDEMNITY
5.1. Indemnification .................................................... 16
5.2. Limitations ........................................................ 18
5.3. No Election ........................................................ 18
ARTICLE VI
MISCELLANEOUS
6.1. Entire Agreement ................................................... 18
6.2. Acknowledgement by Purchaser ....................................... 19
6.3. Descriptive Headings; Certain Interpretations ...................... 19
6.4. Notices ............................................................ 19
6.5. Counterparts ....................................................... 20
6.6. Survival ........................................................... 20
6.7. Benefits of Agreement .............................................. 21
6.8. Amendments and Waivers ............................................. 21
6.9. Assignment ......................................................... 21
6.10. Enforceability ..................................................... 21
6.11. Attorney Fees and Costs; Remedies for Misrepresentation............. 21
6.12. GOVERNING LAW; JURISDICTION......................................... 22
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Schedules
1.1(a)(i) Intellectual Property
1.1(a)(iv) Computers, Equipment, etc.
1.1(a)(ix) Acquired Agreements
1.2(a) Assumed Liabilities
1.2(b) Unassumed Liabilities
1.3(b) Acquired Assets Allocation
2.1(c) Capitalization
2.1(d)(ii) Waivers and Consents
2.1(e) Financial Statements
2.1(e)(ii) Unlisted Liabilities
2.1(f) Absence of Changes
2.1(g)(ii) Leased Property
2.1(i) Agreements
2.1(j) Litigation
2.1(k) Licenses and Permits
2.1(l)(ii) Employee Plans
2.1(m) Accounts and Notes Receivable
2.1(n) Customers
2.1(o) Accounts Payable
2.1(p) Related Party Transactions
2.1(q) Billing and Collection Practices
Exhibits
A Form of Employment Agreement
B Form of Bill of Sale
C Form of Assignment
D Form of Opinion of Counsel of the Seller and the Shareholders
E Form of Opinion of Counsel of the Purchaser
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ASSET PURCHASE AGREEMENT, dated May 8, 1996, among PBS Northwest,
Incorporated, an Oregon corporation (the "Seller"), Judy M. Heald ("Heald"),
Margaret A. Fay ("Fay"), Rochelle Marie Scrivens ("Scrivens"), Virginia Carol
Meeuwsen ("Meeuwsen" and, together with Heald, Fay and Scrivens, collectively
referred to herein as the "Shareholders") and PSS PBS Northwest, Inc., a
Delaware corporation (the "Purchaser").
Introduction
The Seller is engaged in providing billing, accounts receivable
management, practice management, pension bookkeeping (the latter service limited
to the Tacoma, Washington location) and other related services to physicians and
physician groups (the "Business") and the Seller owns certain assets that relate
to the Business. Subject to the terms and conditions of this Agreement, the
Seller desires to sell to the Purchaser, and the Purchaser desires to purchase
from the Seller, substantially all of the assets, tangible and intangible,
associated with the Business.
As a condition to the Purchaser's acquisition of the assets of
the Seller, each of the Shareholders, who together own all of the issued and
outstanding capital stock of the Seller, will enter into an employment agreement
with the Purchaser.
In consideration of the mutual benefits to be derived from this
Agreement and of the representations, warranties, conditions, agreements and
promises contained herein and other good and valuable consideration, the parties
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale. (a) The Seller shall sell, convey,
transfer and assign to the Purchaser, and the Purchaser shall purchase from the
Seller, on the Closing Date (as defined in Section 1.4), the Acquired Assets.
"Acquired Assets" means all properties, assets (tangible or intangible), and
rights of the Seller used or held in connection with the Business as of the
Closing Date (which for the purposes of this Section 1.1 shall include any other
business undertaken or contemplated by the Seller), including the following:
(i) all tradenames, trademarks, service marks, patents and
copyrights listed on Schedule l.1(a)(i), and all licenses, franchises,
formula, know-how and other intangible assets used in connection with
the Business and all registrations and applications for any of the
foregoing and all goodwill associated with any of the foregoing;
(ii) all technologies, methods, formulations, software (including
documentation and object and source code listings), trade and business
secrets, know-how, inventions, package designs and other processes or
proprietary information used or under development for use in the
Business;
(iii) all information, customer lists, price lists,
identification of suppliers, correspondence, data, drawings, recorded
knowledge, customer files, account histories, sales literature and
commercial materials relating to the Business; all sales data and other
information relating to selling and providing the services relating to
the Business; all accounting information pertaining to the Business;
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(iv) all computers, equipment, tools, machinery, furniture,
furnishings, leasehold improvements, automobiles, trucks, other vehicles
and similar tangible property used or held in connection with the
Business, subject to such additions and subtractions thereto as are
necessary to reflect acquisitions and dispositions, as appropriate, from
the date hereof through the Closing Date in accordance with the terms of
this Agreement, and as listed on Schedule 1.1(a)(iv);
(v) all books, records, production data, publications, computer
files, databases, data, manuals and other materials relating to the
Business;
(vi) all leasehold interests in real property used in connection
with the Business;
(vii) all supplies and inventories used or held in connection
with the Business;
(viii) all accounts and other receivables and indebtedness owed
to the Seller in connection with the Business, cash and cash equivalents
on hand and in banks (in the aggregate amount of $5,000), and investment
and other securities on hand and in accounts, pre-paid expenses,
security deposits and any other current assets, but specifically
excluding any funds representing the Purchase Price;
(ix) all written or oral contracts, agreements or other
arrangements relating to the Business, as listed on Schedule 1.1(a)(ix);
(x) all rights and claims, including refunds, with respect to all
Assumed Liabilities (as defined in Section 1.2(a) below);
(xi) all transferable governmental licenses, permits, approvals,
registrations, certificates of occupancy and license and permit
applications relating to the Business;
(xii) all goodwill relating to the Business;
(xiii) all other assets reflected on the balance sheet included
in the Closing Date Financial Statement (as defined in Section 4.1(i))
for the Seller.
1.2. Purchaser Not Successor to the Seller; Excluded Liabilities.
(a) The Seller shall sell, convey, transfer and assign to the Purchaser, and the
Purchaser shall assume from the Seller, on the Closing Date, the Assumed
Liabilities. "Assumed Liabilities" means those obligations of the Seller
identified as such on Schedule 1.2(a). Except for the Assumed Liabilities, the
Purchaser shall not be the successor to the Seller and the Purchaser does not
assume and shall not become liable to pay, perform or discharge any obligation
or liability whatsoever of the Seller or relating to any of the Acquired Assets
(all such obligations and liabilities being, collectively, the "Unassumed
Liabilities").
(b) The term "Unassumed Liabilities" includes, and the Purchaser
expressly is not assuming any liabilities of the Seller not specifically
identified as an Assumed Liability on Schedule 1.2(a).
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1.3. Purchase Price. (a) The purchase price (the "Purchase
Price") for the Acquired Assets and the agreement not to compete of the Seller
set forth in Section 3.4 shall be cash in the amount of $2,910,000, of which
$2,900,000 is payable as consideration for the Acquired Assets and $10,000 is
payable to the Seller as consideration for its agreement not to compete. The
Shareholders shall be compensated for their agreement not to compete as set
forth in Section 3.4. The Purchaser shall pay the Purchase Price at Closing.
Such payment shall be made by certified or bank check or checks, or, at the
option of the Seller, by wire transfer to an account of the Seller designated to
the Purchaser. The Seller shall provide the Purchaser with notice of the
exercise of such option and the designation of such account, such notice to be
delivered not less than three business days before the Closing.
(b) The Seller and the Purchaser agree that the allocation among
the Acquired Assets of the Purchase Price will be as set forth on Schedule
1.3(b), which is in accordance with the guidelines of the Internal Revenue
Service (the "IRS"). The Seller and the Purchaser agree that such allocation is
fair and equitable. The parties agree to be bound by such allocation for all
purposes, including for purposes of all Federal, state, local and foreign tax
returns filed by them subsequent to the Closing Date, the determination by the
Seller of taxable gain or loss on the sale of the Acquired Assets and the
determination by the Purchaser of its tax basis in the Acquired Assets.
1.4. Closing. The closing (the "Closing") for the consummation of
the transactions contemplated by this Agreement shall take place at the offices
of Howard, Darby & Levin, 1330 Avenue of the Americas, New York, New York 10019,
or such other place as the Seller and the Purchaser shall agree, at 10:00 a.m.
(Eastern time zone) on the later of May 8, 1996 and the date on which all
conditions set forth in Article IV shall have been satisfied or waived, or such
other date and time agreed to by the Seller and the Purchaser (such date of the
Closing being hereinafter called the "Closing Date").
1.5. Instruments of Conveyance and Transfer. At the Closing, the
Seller shall deliver to the Purchaser such bills of sale, endorsements,
assignments and other instruments of transfer, conveyance and assignment (in a
form satisfactory to the Seller and the Purchaser) as shall be necessary in the
reasonable judgment of the Purchaser to transfer, convey and assign the Acquired
Assets to the Purchaser.
1.6. Post-Closing Assurances. The Seller and the Shareholders
shall pay to the Purchaser any amounts which shall be received by the Seller or
any Shareholder after the Closing Date which constitute Acquired Assets. The
Seller and the Shareholders shall, at any time and from time to time after the
Closing Date, upon the reasonable request of the Purchaser, do, execute,
acknowledge, deliver and file, or cause to be done, executed, acknowledged,
delivered or filed, all such further acts, deeds, transfers, conveyances,
assignments or assurances as may be reasonably required for the better
transferring, conveying, assigning and assuring to the Purchaser, or for the
aiding and assisting in the reducing to possession by the Purchaser of, any of
the Acquired Assets. In connection with the foregoing, from and after the
Closing Date, the Purchaser shall have the right and authority to endorse,
without recourse, the name of the Seller on any check or similar negotiable
instrument received by the Purchaser constituting Acquired Assets transferred,
conveyed and assigned to the Purchaser hereunder.
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1.7. Assignment of Contracts, Rights. Notwithstanding anything to
the contrary contained in this Agreement, this Agreement shall not constitute an
agreement or attempt to transfer, sublease or assign any contract, license,
lease, sales order, purchase order or other agreement or any claim or right of
any benefit arising thereunder or resulting therefrom or any governmental
permit, license, approval, registration or certificate of occupancy if an
attempted transfer, sublease or assignment thereof, without the consent of any
other party thereto, would constitute a breach thereof or in any way adversely
affect the Purchaser's rights to receive the benefits thereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties by Seller and Shareholders.
The Seller and the Shareholders jointly and severally represent and warrant to
the Purchaser as follows:
(a) Organization, Standing and Power. The Seller (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Oregon and (ii) has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. The Seller is duly qualified to do business and is in good
standing in the State of Washington.
(b) Authority; Binding Agreements. (i) Each of the Shareholders
has the legal power and capacity to enter into this Agreement, an employment
agreement with the Purchaser in the form of Exhibit A (the "Employment
Agreements"), and all other agreements to which such Shareholder is a party as
contemplated by this Agreement. This Agreement, the Employment Agreements and
such other agreements are, or upon execution and delivery thereof will be, the
valid and binding obligations of the Shareholders, enforceable against the
Shareholders in accordance with their respective terms.
(ii) The execution and delivery of this Agreement, the Bill of
Sale (the "Bill of Sale") substantially in the form of Exhibit B, the Assignment
and Assumption (the "Assignment") substantially in the form of Exhibit C, and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action of the Seller. The
Seller has all requisite corporate power and authority to enter into this
Agreement, the Bill of Sale and the Assignment and to consummate the
transactions contemplated hereby and thereby and the Seller has duly executed
and delivered this Agreement. This Agreement is, and upon execution and
delivery, the Bill of Sale and the Assignment will be, the valid and binding
obligations of the Seller enforceable in accordance with their respective terms.
(c) Capitalization; Equity Interests. Schedule 2.1(c) sets forth
a true and complete description of the authorized and issued capital stock, and
holder of record of such stock, of the Seller. The Shareholders own of record
and beneficially all of the issued and outstanding capital stock of the Seller
as set forth on Schedule 2.1(c). The Seller does not have any subsidiaries and
does not own or hold any equity or other security interests in any other entity.
(d) Conflicts; Consents. Neither the execution and delivery of
this Agreement, the Employment Agreements, the Bill of Sale, the Assignment, the
consummation of the transactions
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contemplated hereby or thereby nor compliance by the Seller or the Shareholders
with any of the provisions hereof or thereof will (i) conflict with or result in
a breach of the charter, by-laws or other constitutive documents of the Seller,
(ii) conflict with or result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the provisions of any
material note, bond, lease, mortgage, indenture, license, franchise, permit,
agreement or other instrument or obligation to which the Seller or any
Shareholder is a party, or by which the Seller or any Shareholder or the
Seller's or any Shareholder's properties or assets, may be bound or affected,
except for such conflict, breach or default as to which requisite waivers or
consents were obtained before the Closing (which waivers or consents are set
forth in Schedule 2.1(d)(ii)), (iii) violate any law, statute, rule or
regulation or order, writ, injunction or decree applicable to the Acquired
Assets or (iv) result in the creation or imposition of any security interest,
lien or other encumbrance upon any of the Acquired Assets. No consent or
approval by, or any notification of or filing with, any person, firm,
corporation, partnership, joint venture, association or entity (governmental or
private) (each, a "person" and collectively, "persons") is required in
connection with the execution, delivery and performance by the Seller or any
Shareholder, as applicable, of this Agreement, the Employment Agreements, the
Bill of Sale, the Assignment or the consummation of the transactions
contemplated hereby or thereby.
(e) Financial Information. (i) The following financial statements
are attached hereto as Schedule 2.1(e):
(A) the consolidated balance sheets of the Seller at December 31,
1994 and 1995 and the related statements of operations for the years
ended December 31, 1994 and 1995; and
(B) the monthly balance sheets of the Seller as of the end of
each month commencing January 1, 1996 through the month end prior to the
date of this Agreement and the related statement of operations for each
such month, certified by the chief executive officer and the chief
financial officer of the Seller.
Except as indicated on Schedule 2.1(e), all such financial statements have been
prepared in conformity with generally accepted accounting principles (GAAP)
applied on a basis consistent with prior periods and are true, accurate and
complete. The balance sheets of the Seller as at the dates set forth present
fairly the financial position of the Seller as at the dates thereof, and the
related statements of operations of the Seller for each of the respective
specified periods then ended present fairly the results of operations of the
Seller for each of the respective periods then ended. For the purposes of this
Agreement, all financial statements referred to in this paragraph shall include
any notes and schedules to such financial statements.
(ii) There were no liabilities or obligations (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) in respect
of the Business or the Acquired Assets which were required to be, in accordance
with GAAP, and were not shown or provided for on the balance sheets of the
Seller to which such liabilities or obligations related. All reserves
established by the Seller for the Business are reflected on the balance sheets
of the Seller and are adequate and there are no loss contingencies that are
required to be accrued by Statement of Financial Accounting
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Standard No. 5 of the Financial Accounting Standards Board which are not
provided for on such balance sheet.
(f) Absence of Changes. Except as set forth in Schedule 2.1(f),
since April 30, 1996, the Business has been operated in the ordinary course
consistent with past practice.
(g) Assets, Property and Related Matters; Real Property. (i) The
Seller has good title to, or a valid leasehold interest in, as applicable, all
of the Acquired Assets, free and clear of all mortgages, liens, pledges, charges
or encumbrances of any kind. The Acquired Assets constitute all of the
properties, interests, assets and rights held for use or used in connection with
the Business and constitute all those necessary to continue to operate the
Business consistent with current and historical practice.
(ii) The Seller does not own any real property in connection with
the Business. The real property leased in connection with the Business consists
only of the leased property located at 314 South K Street, Tacoma, Washington
(the "Tacoma Property") and the real property located at 5201 S.W. Westgate
Drive, Portland, Oregon (the "Portland Property"). Schedule 2.1(g)(ii) sets
forth a list and brief description of all personal property held for use or used
in connection with the Business. Schedule 2.1(g)(ii) sets forth the name of the
lessor and requirement of consent of the lessor to assignment and the
termination date or notice requirement with respect to termination, annual
rental and renewal or purchase options under the Tacoma Property, the Portland
Property and all personal property leases. With respect to property leased by
the Seller in connection with the Business, (I) the Seller is the owner and
holder of all the leasehold interests and estates purported to be granted by
such leases, (II) to the knowledge of the Seller and the Shareholders, all
leases to which the Seller is a party are in full force and effect and
constitute valid and binding obligations of the Seller and, to the knowledge of
the Seller and the Shareholders, of the other parties thereto, enforceable in
accordance with their terms and (III) the Seller has made available to the
Purchaser true and complete copies of all leases referred to in Schedule
2.1(g)(ii). To the knowledge of the Seller and the Shareholders, there exists no
default, or any event which upon notice or the passage of time, or both, would
give rise to any default, in the performance by the Seller or by any lessor
under any lease. The Seller has not, and to the knowledge of the Seller and the
Shareholders, no other person has, granted any oral or written right to anyone
other than the Seller to lease, sublease or otherwise occupy any of the
properties described in Schedule 2.1(g)(ii) through the end of the applicable
lease periods.
(iii) To the knowledge of the Seller and the Shareholders, the
Seller's use of the Tacoma Property and the Portland Property does not violate
any restrictive covenants and conforms to applicable Federal, state and local
laws and regulations. No condemnation proceeding is pending or, to the knowledge
of the Seller or any Shareholder, threatened which would preclude or impair the
use of the Tacoma Property or the Portland Property by the Seller for the uses
for which they are intended.
(h) Patents, Trademarks and Similar Rights. Schedule 1.1(a)(i)
contains a complete list of all patents, trademarks, service marks, trade names
and copyrights, in each case registered or unregistered, inventions, software
(including documentation and object and source code listings), know-how, trade
secrets and other intellectual property rights (collectively, the "Intellectual
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Property") owned, licensed or used in the Business. To the knowledge of the
Seller and the Shareholders, no Intellectual Property infringes any rights owned
or held by any other person. There is no pending or, to the knowledge of the
Seller and the Shareholders, threatened claim or litigation against the Seller
contesting its right to use any Intellectual Property. To the knowledge of the
Seller and the Shareholders, no person is infringing the rights of the Seller in
any Intellectual Property. To the knowledge of the Seller and the Shareholders,
no product or service sold by the Seller violates or infringes any intellectual
property right owned or held by any other person. To the knowledge of the
Seller, in the case of commercially available "shrink-wrap" software programs
(such as Lotus 1-2-3), neither the Seller nor any of its employees has made or
is using any unauthorized copies of any such software programs at any location
of the Business.
(i) Agreements, Etc. To the knowledge of the Seller and the
Shareholders, Schedule 2.1(i) contains a true and complete list and brief
description of all written or oral contracts, agreements and other instruments
to which a Seller is a party in connection with the Business (i) relating to
indebtedness for money borrowed or capital leases, (ii) of duration of six
months or more from the date hereof and not cancelable without penalty on 30
days or less notice, (iii) relating to commitments in excess of $10,000, (iv)
relating to the employment or compensation of any director, officer, employee,
consultant or other agent of the Seller, (v) relating to the sale or other
disposition of any assets, properties or rights, (vi) relating to the lease or
similar arrangement of any machinery, equipment, motor vehicles, furniture,
fixture or similar property, (vii) between the Seller and any Shareholder or
affiliates of any Shareholder, (viii) that restricts the operation of any part
of the Business anywhere in the world or (ix) that is otherwise material to the
Business or entered into other than in the ordinary course of business. To the
knowledge of the Seller and the Shareholders, the Seller is not in default under
any such agreement or instrument where such default could, singly or in the
aggregate with defaults under other agreements or instruments, have a material
adverse effect on the business, operations or condition of the Business, and, to
the knowledge of the Seller and the Shareholders, all such agreements or
instruments are in full force and effect. The Seller has furnished to the
Purchaser true and complete copies of all documents described in Schedule 2.1(i)
other than customer contracts that are being provided pursuant to Section
4.1(f).
(j) Litigation, Etc. To the knowledge of the Seller and the
Shareholders, and except as set forth in Schedule 2.1(j), there have not been
for the past five years, nor are there, any suits, actions, claims,
investigations or legal or administrative or arbitration proceedings in respect
of the Business, the Acquired Assets, the Seller or any Shareholder, pending or
threatened, whether at law or in equity, or before or by any Federal, foreign,
state or municipal or other governmental department, commission, board, bureau,
agency or instrumentality. To the knowledge of the Seller and the Shareholders,
there have not been for the past five years, nor are there, any judgments,
decrees, injunctions or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator or against the Seller or any
Shareholder, or any of their assets, relating to or affecting the Business or
the Acquired Assets.
(k) Compliance; Governmental Authorizations. (i) The Seller has
complied and is in compliance with all Federal, state, local and foreign laws,
ordinances, regulations, interpretations and orders (including those relating to
disposal of materials, environmental protection and occupational safety and
health) applicable to the Business. The Seller has all Federal, state, local and
foreign governmental licenses and permits necessary to conduct the Business as
presently being
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conducted, which licenses and permits are set forth in Schedule 2.1(k). Such
licenses and permits are in full force and effect, no violations are or have
been recorded in respect of any thereof, no proceeding is pending, or, to the
knowledge of the Seller or any Shareholder, threatened, to revoke or limit any
thereof, and neither the Seller nor any Shareholder knows of any basis for any
such proceeding.
(ii) To the knowledge of the Seller and the Shareholders, there
are no conditions relating to the Seller or the Business or relating to the
Seller's ownership, use or maintenance of any real property leased by the
Seller, and neither the Seller nor any Shareholder knows of any such condition
in respect of such real property not related to the ownership, use or
maintenance, that could lead to any liability for violation of any Federal,
state, county or local laws, regulations, orders or judgments relating to
pollution or protection of the environment or any other applicable
environmental, health or safety statutes, ordinances, orders, rules, regulations
or requirements. To the knowledge of the Seller and the Shareholders, the Seller
has received, handled, used, stored, treated, shipped and disposed of all
hazardous or toxic materials, substances and wastes (whether or not on its
properties or properties owned or operated by others) in connection with the
Business in compliance with all applicable environmental, health or safety
statutes, ordinances, orders, rules, regulations or requirements.
(l) Labor Relations; Employees. (i) Within the last five years,
the Seller has not experienced any labor disputes with, or any work stoppages
by, a group of employees due to labor disagreements and, to the knowledge of the
Seller and the Shareholders, there is no such dispute or work stoppage
threatened against the Seller. To the knowledge of the Seller and the
Shareholders, no employee of the Seller in respect of the Business is
represented by any union or collective bargaining agent and, to the knowledge of
the Seller and the Shareholders, there has been no union organizational effort
in respect of any employees of the Seller within the past four years.
(ii) To the knowledge of the Seller and the Shareholders,
Schedule 2.1(l)(ii) contains a list and a brief, general description of each
pension, retirement, savings, deferred compensation, and profit-sharing plan and
each stock option, stock appreciation, stock purchase, performance share, bonus
or other incentive plan, severance plan, health, group insurance or other
welfare plan, or other similar plan and any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), under which the Seller has any current or future obligation or
liability in respect of the Business or under which any employee or former
employee (or beneficiary of any employee or former employee) of the Seller in
respect of the Business has or may have any current or future right to benefits
(the term "plan" shall include any contract, agreement, policy or understanding,
each such plan being hereinafter referred to individually as a "Plan"). The
Seller has delivered to the Purchaser true and complete copies of (A) each Plan
and (B) the summary plan description for each Plan.
(iii) To the knowledge of the Seller and the Shareholders, with
respect to each Plan the Seller has paid all contributions (including employee
salary reduction contributions) and all insurance premiums that have become due
and any such expense accrued but not yet due has been properly reflected in the
financial information in Schedule 2.1(e).
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(iv) To the knowledge of the Seller and the Shareholders, except
as described in the Plans delivered to the Purchaser, no Plan provides or is
required to provide, now or in the future, health, medical, dental, accident,
disability, death or survivor benefits to or in respect of any person beyond
termination of employment, except to the extent required under any state
insurance law or under Part 6 of Subtitle B of Title I of ERISA and under
Section 4980(B) of the Code.
(v) To the knowledge of the Seller and the Shareholders, the
consummation of the transactions contemplated by this Agreement will not (A)
entitle any employee of the Seller to severance pay or termination benefits for
which the Purchaser or any of its affiliates may become liable, (B) accelerate
the time of payment or vesting, or increase the amount of compensation due to
any such employee or former employee for which the Purchaser or any of its
affiliates may become liable or (C) except for the Assumed Liabilities, obligate
the Purchaser or any of its affiliates to pay or otherwise be liable for any
compensation, vacation days, pension contribution or other benefits to any
employee, consultant or agent of the Seller for periods before the Closing Date
or for personnel whom the Purchaser does not actually employ.
(m) Accounts Receivable. To the knowledge of the Seller and the
Shareholders, Schedule 2.1(m) contains a true aged list of unpaid accounts and
notes receivable relating to the Business as of the day immediately prior to the
date of this Agreement, all of which, to the Seller's knowledge, were generated
in the ordinary course of business, except as disclosed on Schedule 2.1(m).
(n) Customers. Schedule 2.1(n) contains (i) a true and complete
list of the customers of the Business for each of the years ended December 31,
1993, 1994 and 1995 and the period beginning January 1, 1996 and ended the month
end prior to the date of this Agreement, (ii) a true and correct description of
the effective date and expiration date and history of renewals for and
commission revenue generated under contracts with each of the customers of the
Business listed on Schedule 2.1(n), (iii) a true and complete list of all
contracts pursuant to which the Seller provides goods or services to its
customers (the "Client Contracts") and (iv) a true and correct description of
(A) the terms and conditions of each verbal Client Contract, (B) all verbal and
written notices received by the Seller of any default or material dispute, or
any intention to terminate, not renew or adversely modify any relationship,
under any existing Client Contract, and (C) all loans or advances made by the
Seller to or on behalf of its customers, which description includes the date of
such loan or advance and the principal balance outstanding as of the date of
this Agreement under each such loan or advance. To the knowledge of the Seller
and the Shareholders, the Client Contracts are valid and enforceable in
accordance with their respective terms. Except as set forth on Schedule 2.1(n),
the Seller has not received any verbal or written notices of a default or
material dispute, or an intention to terminate, not renew or adversely modify
any relationship, under an existing Client Contract.
(o) Accounts Payable. To the knowledge of the Seller and the
Shareholders, Schedule 2.1(o) contains a true and complete list of all accounts
payable relating to the Business as of the day immediately prior to the date of
this Agreement.
(p) Related Party Transactions. Except as set forth in Schedule
2.1(p), no current or former partner, director, officer or shareholder of the
Seller or any associate or affiliate (as
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defined in the rules promulgated under the Securities Exchange Act of 1934)
thereof, or any relative with a relationship of not more remote than first
cousin of any of the foregoing, is presently, or during the 12-month period
ending on the date hereof has been, (i) a party to any transaction with the
Business (including, but not limited to, any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such director,
officer or shareholder or such associate) or (ii) to the knowledge of the Seller
or any Shareholder, the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a present (or
potential) competitor, supplier or customer of the Business, nor does any such
person receive income from any source other than the Seller which relates to the
Business or should properly accrue to the Seller in connection with the
Business.
(q) Billing and Collection Practices. (i) To the knowledge of the
Seller and the Shareholders, the current practices and procedures of the Seller
with respect to (A) billing on behalf of customers, (B) receiving and processing
Medicare and Medicaid payments due to customers, (C) holding and transfer of
such payments and (D) the method of determining and collecting the fees received
by the Seller for services provided by providers and physicians participating in
the Medicare or Medicaid programs are not in violation of the restriction on
assignment as set forth in 42 U.S.C. 'ss'. 1395g(c), 42 U.S.C. 'ss'. 1395u(b)(6)
and 42 U.S.C. 'ss'. 1396(a)(32), and the regulations promulgated thereunder or
similar provisions of any state Medicaid program.
(ii) The Seller is not engaged in any activity, whether alone or
in concert with one or more of its clients, which would constitute a violation
of any federal laws or the laws of any state (including (A) federal antifraud
and abuse or similar laws pertaining to Medicare, Medicaid, or any other federal
health or insurance program, (B) state laws pertaining to Medicaid or any other
state health or insurance program, (C) state or federal laws pertaining to
billings to insurance companies, health maintenance organizations, and other
managed care plans or to insurance fraud, and (D) federal and state laws
relating to collection agencies and the performance of collection services)
prohibiting fraudulent, abusive or unlawful practices connected in any way with
the provision of health care services, the billing for such services provided to
a beneficiary of any state, federal or private health or insurance program or
credit collection services. Without limiting the generality of the foregoing,
the Seller has not, directly or indirectly, paid, offered to pay or agreed to
pay, or solicited or received, any fee, commission, sum of money, property or
other remuneration to or from any person which, to the knowledge of the Seller
or any Shareholder, was illegal under 42 U.S.C. 'ss'. 1320a-7b(b) or any similar
state law.
(iii) Except as set forth in Schedule 2.1(q), the Seller does not
currently use, and has not in the past established or used, trust accounts in
connection with the Business.
(r) Taxes. To the knowledge of the Seller and the Shareholders,
the Seller has timely filed with the appropriate governmental bodies all tax
returns which are required to be filed, and has duly paid to the appropriate
governmental bodies all taxes which are required to be paid, including, without
limitation, all taxes withheld from employees' wages and all other taxes due or
claimed to be due by an governmental body. to the knowledge of the Seller and
the Shareholders, such tax returns properly reflect the taxes payable for the
periods covered thereby. To the knowledge of the Seller and the Shareholders,
all such taxes due for all taxable periods ending on or prior to the Closing
Date have been, or will be, timely paid by the Seller. The Seller has not
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waived the statute of limitations on the right of any governmental body to
assess any additional taxes or to contest the items reported on any such tax
returns. The Seller has made available to the Purchaser's tax accountants true
and complete copies of all tax returns filed by or on behalf of the Seller for
each of the past three taxable years.
(s) Disclosure. No representation or warranty of the Seller or
any Shareholder contained in this Agreement, and no statement contained in any
certificate, schedule, annex, list or other writing furnished to the Purchaser,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statement contained herein or therein not misleading.
(t) Brokers. No agent, broker, investment banker, person or firm
acting on behalf of the Seller or any Shareholder or under the authority of the
Seller or any Shareholder is or will be entitled to any broker's or finder's fee
or any other commission or similar fee directly or indirectly from any of the
parties hereto in connection with any of the transactions contemplated hereby.
(u) Bulk Sales. No bulk sales laws are applicable to the
transactions contemplated by this Agreement.
2.2. Representations and Warranties by Purchaser. The Purchaser
represents and warrants to the Seller and the Shareholders as follows:
(a) Organization, Standing and Power. The Purchaser (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Purchaser is duly qualified to do business and is in
good standing in each jurisdiction in which such qualification is necessary
because of the property owned, leased or operated by it or because of the nature
of its business as now being conducted.
(b) Authority; Binding Agreements. (i) The execution and delivery
of this Agreement, the Employment Agreements and the Assignment, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action of the Purchaser. The
Purchaser has all requisite corporate power and authority to enter into this
Agreement, the Employment Agreements and the Assignment and to consummate the
transactions contemplated hereby and thereby and the Purchaser has duly executed
and delivered this Agreement. This Agreement is, and upon execution and
delivery, the Employment Agreements and the Assignment will be, the valid and
binding obligations of the Purchaser enforceable in accordance with their
respective terms.
(c) Conflicts; Consents. Neither the execution and delivery of
this Agreement, the Employment Agreements or the Assignment, the consummation of
the transactions contemplated hereby or thereby nor compliance by the Purchaser
with any of the provisions hereof or thereof will (i) conflict with or result in
a breach of the charter, by-laws or other constitutive documents of the
Purchaser, (ii) conflict with or result in a default (or give rise to any right
of termination, cancellation or acceleration) under any of the provisions of any
note, bond, lease, mortgage, indenture, license, franchise, permit, agreement or
other instrument or obligation to which the
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Purchaser is a party, or by which the Purchaser or the Purchaser's properties or
assets, may be bound or affected, except for such conflict, breach or default as
to which requisite waivers or consents shall be obtained before the Closing, or
(iii) violate any law, statute, rule or regulation or order, writ, injunction or
decree applicable to the Purchaser or the Purchaser's properties or assets. No
consent or approval by, or any notification of or filing with, any person
(governmental or private) is required in connection with the execution, delivery
and performance by the Purchaser of this Agreement, the Employment Agreements or
the Assignment, or the consummation of the transactions contemplated hereby or
thereby.
(d) Brokers. No agent, broker, investment banker, person or firm
acting on behalf of the Purchaser or under the authority of the Purchaser is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from any of the parties hereto in connection
with any of the transactions contemplated hereby except for Williams Financial.
(e) Review by Purchaser. As of the Closing Date, the Purchaser
and its representatives will have reviewed all written materials relating to the
Business delivered by the Seller or the Seller's representatives to the
Purchaser or the Purchaser's representatives on or prior to the Closing Date,
and, based upon the materials reviewed, the Purchaser will have made all inquiry
it deemed necessary in connection with the transactions contemplated hereby.
ARTICLE III
ADDITIONAL AGREEMENTS
3.1. Expenses; Sales Taxes. Except as provided in this Section
each party hereto shall bear its own costs and expenses incurred in connection
with the transactions contemplated hereby. The Seller shall pay the cost of all
income, single business, sales, transfer, use, gross receipts, registration and
similar taxes arising out of or in connection with the transactions contemplated
by this Agreement. The Purchaser shall pay any fee due to Williams Financial.
3.2. Further Assurances. Each of the parties hereto agrees to use
all commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as practicable and
to ensure that the conditions set forth in Article IV hereof are satisfied,
insofar as such matters are within the control of any of them. In case at any
time after the Closing Date, any further action is necessary or desirable to
carry out the purposes of this Agreement or to ensure the proper assignment and
delivery of the Acquired Assets to the Purchaser, each of the parties to this
Agreement shall take or cause to be taken all such necessary action, including,
the execution and delivery of such further instruments and documents, as may be
reasonably requested by any party for such purposes or otherwise to complete or
perfect the transactions contemplated hereby. The Seller shall promptly pay or
cause to be paid to the Purchaser any amounts received by the Seller or any
affiliate after the Closing which constitute Acquired Assets.
3.3. Non-Disclosure. The parties hereto agree that they will
advise and confer with each other prior to the issuance of any reports,
statements or releases pertaining to this Agreement
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or the transactions contemplated hereby. Except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange (including the Nasdaq National Market), each of the
parties agrees not to disclose publicly the existence of this Agreement or the
proposed transactions without the written consent of the other party or parties,
which consent will not be unreasonably withheld. Notwithstanding the foregoing,
the Purchaser may disclose the existence and terms of this Agreement and the
proposed transactions to existing or prospective lenders or other parties
providing financing to the Purchaser or any of its affiliates.
3.4. Confidentiality; Non-Competition. (a) The Purchaser, the
Seller and the Shareholders each agree that all financial or other information
about the Purchaser, or the Seller, or other information of a confidential or
proprietary nature, disclosed to the other at any time in connection with the
proposed transaction shall be kept confidential by the party receiving such
information and shall not be disclosed to any person or used by the receiving
party (other than to its agents or employees or in connection with the
transactions contemplated by this Agreement) except: (i) with the prior written
consent of the disclosing party; (ii) as may be required by applicable law,
court process or by obligations pursuant to any listing agreement with any
national securities exchange (including the Nasdaq National Market); (iii) such
information which may have been acquired or obtained by such party (other than
through disclosure by the other party in connection with the transaction
contemplated by this Agreement); or (iv) such information which is or becomes
generally available to the public other than as a result of a violation of this
provision. The Purchaser, the Seller and the Shareholders shall be bound by the
terms of this paragraph (a) for a period of five years after Closing.
(b) The Seller and the Shareholders hereby acknowledge and
recognize such parties' possession of confidential or proprietary information
and the highly competitive nature of the Business and accordingly agree that, in
consideration of the Purchaser entering into this Agreement and the other
transactions contemplated hereby and the premises contained herein, such parties
will not, from and after the date of the Closing for a period of three years
after the date of the Closing, for any reason whatsoever, (i) directly or
indirectly engage in the United States in any competitive business, whether such
engagement shall be as an employer, officer, director, owner, employee, partner
or other agent or participant, (ii) assist others in engaging in any competitive
business in the manner described in the foregoing clause (i), (iii) solicit,
attempt to solicit or do business with any prior or then current customers of
the Business or (iv) induce employees of the Business, the Purchaser or any
affiliate of the Purchaser to terminate their employment with the Purchaser or
such affiliate, as the case may be, or hire any employees of the Purchaser or
any affiliate of the Purchaser to work with the Seller or any Shareholder or any
company or business affiliated with the Seller or any Shareholder. The covenant
of the Shareholders set forth in this paragraph (b) is in further consideration
of the payment by the Purchaser of $55,800 to Heald, $19,800 to Fay, $7,200 to
Scrivens and $7,200 to Meeuwsen, such payments to be made on the Closing Date by
certified or bank check or checks or, at the option of the Shareholders, by wire
transfer to an account or accounts of the Shareholders designated to the
Purchaser. The Shareholders shall provide the Purchaser with notice of the
exercise of such option and the designation of such account, such notice to be
delivered not less than three days before the Closing.
(c) In the event of a breach or threatened breach by any party of
the provisions of this Section, the non-breaching party shall be entitled to an
injunction restraining such party from
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such breach. Nothing contained in this paragraph (c) or elsewhere in this
Agreement shall be construed as prohibiting the non-breaching party from
pursuing any other remedies available at law or equity for such breach or
threatened breach of this Agreement nor limiting the amount of damages
recoverable in the event of a breach or threatened breach by any party of the
provisions of this Section.
3.5. Use of Name. In consideration of the Purchaser's entering
into this Agreement and the consummation of the transactions contemplated
hereby, the Seller hereby consents to the Purchaser's use, from and after the
Closing Date, of the name "PBS Northwest" or any combination or derivation
thereof. The Seller shall, as soon as practicable after the Closing Date, change
its name so that its name does not include any combination or derivation of "PBS
Northwest" and file such name change certificates or notices as and when
required by applicable law.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Conditions of Obligations of the Purchaser. The obligations
of the Purchaser to close the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions unless waived by the
Purchaser:
(a) Authorization. All actions necessary to authorize the
execution, delivery and performance of this Agreement, the Employment
Agreements, the Bill of Sale and the Assignment and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Seller and the Shareholders, as the case may be, and the Seller and
the Shareholders shall have full power and authority to enter into and deliver
such agreements and to consummate the transactions contemplated hereby and
thereby.
(b) Representations and Warranties. The representations and
warranties of the Seller and the Shareholders contained herein shall be true and
correct in all material respects as of the Closing Date, and the Seller and the
Shareholders shall have performed and complied with all covenants and agreements
required to be performed or complied with on or prior to the Closing Date.
(c) Consents, Amendments and Terminations. The Purchaser shall
have received duly executed and delivered copies of all waivers, consents,
terminations and approvals contemplated by Section 2.1(d) and Schedules 2.1(d)
and 2.1(i), all in form and substance reasonably satisfactory to the Purchaser.
(d) Bill of Sale; Assignment. The Seller shall have delivered to
the Purchaser the Bill of Sale conveying the personal property included in the
Acquired Assets, in substantially the form of Exhibit B, and the Assignment, in
substantially the form of Exhibit C.
(e) Financial Results. The Seller shall have earnings before
interest and taxes ("EBIT") for the fiscal year ended December 31, 1995 of not
less than $542,299 and EBIT for the
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12 months ended immediately before the Closing Date, of not less than $542,480.
Since October 1, 1995, the Seller shall have opened new accounts reasonably
expected to produce estimated aggregate annual revenues of not less than
$300,000. EBIT shall be calculated using policies adhering to GAAP, except that
if there is more than one policy allowed under GAAP, the policy allowed under
GAAP which is consistent with the past accounting practices of the Seller with
respect to the Business shall be used.
(f) Customers; Customer Contracts. At Closing, the Purchaser
shall have received a certificate of the chief executive officer of the Seller,
identifying (i) any customers listed on Schedule 2.1(n) as customers of the
Business as of the month end prior to the date of this Agreement (the "Month
End") who are not customers of the Business as of the Closing Date and (ii) any
customers of the Business as of the Closing Date not listed on Schedule 2.1(n)
as customers of the Business as of the Month End. The list of customers as of
the Month End as set forth in Schedule 2.1(n), as modified by the certificate
delivered pursuant to this Section, shall be referred to herein as the "Closing
Date Customer List". The Purchaser shall have received (y) at least 5 days prior
to the Closing Date a true and complete copy of each contract between each
customer of the Business and the Seller, certified as true and complete by the
chief executive officer of such Seller, and (z) at Closing a certificate of the
chief executive officer of the Seller updating the certificate delivered
pursuant to clause (y).
(g) Opinion of Counsel. The Purchaser shall have received the
opinion dated the Closing Date of Ambrose & Associates, PC, counsel to the
Seller and the Shareholders, in substantially the form of Exhibit D.
(h) Financial Statements. The Purchaser shall have received a
balance sheet of the Seller as of the Closing Date and a related statement of
operations for the 4-month period ending at the most recent month end prior to
the Closing Date (the "Closing Date Financial Statement") certified by the chief
executive officer and chief financial officer of the Seller. At the Closing
Date, the assets of the Business, by account, shall not be materially less than
the assets set forth in the December 31, 1995 balance sheet included in Schedule
2.1(e) and the liabilities of the Business, by account, shall not be materially
greater than the liabilities set forth in such balance sheet.
(i) Due Diligence. The Purchaser and its representatives shall
have completed a due diligence review of the condition (financial or otherwise),
assets, liabilities, operations, customer contracts or other customer
arrangements, billings, revenues, earnings, business and prospects of, and any
other matters relating to, the Seller and the Shareholders, and the results of
such due diligence shall be satisfactory to the Purchaser in its sole
discretion.
(j) Financing. The Purchaser shall have obtained financing
sufficient to satisfy all of the Purchaser's obligations under this Agreement,
satisfactory to the Purchaser in its sole discretion.
(k) Employment Agreements. The Shareholders each shall have
delivered to the Purchaser an Employment Agreement, in substantially the form of
Exhibit A.
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(l) Other Documents. The Purchaser shall have received such other
documents, certificates or instruments as it may reasonably request.
4.2. Conditions of Obligations of the Seller and Shareholders.
The obligations of the Seller and the Shareholders to close the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions unless waived by the Seller and the Shareholders:
(a) Authorization. All actions necessary to authorize the
execution, delivery and performance of this Agreement, the Assignment and the
Employment Agreements and the consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by the Purchaser, and
the Purchaser shall have full power and authority to enter into and deliver such
agreements and to consummate transactions contemplated hereby and thereby, as
applicable.
(b) Representations and Warranties. The representations and
warranties of the Purchaser contained herein shall be true and correct in all
material respects as of the Closing Date, and the Purchaser shall have performed
and complied with all covenants and agreements required to be performed or
complied with on or prior to the Closing Date.
(c) Assignment. The Purchaser shall have delivered to the Seller
the Assignment, duly executed by the Purchaser, in substantially the form of
Exhibit C.
(d) Employment Agreements. The Purchaser shall have entered into
an Employment Agreement with each Shareholder, in substantially the form of
Exhibit A.
(e) Opinion of Counsel. The Seller shall have received the
opinion dated the Closing Date of Howard, Darby & Levin, counsel to the
Purchaser, in substantially the form of Exhibit E.
(f) Purchase Price; Noncompete Payment. The Seller shall have
received, pursuant to Section 1.3, the Purchase Price and each of the
Shareholders shall have received such Shareholder's noncompete payment pursuant
to Section 3.4(b).
(g) Other Documents. The Seller shall have received such other
documents, certificates or instruments as it may reasonably request.
ARTICLE V
INDEMNITY
5.1. Indemnification. (a) The Seller and the Shareholders jointly
and severally indemnify and hold harmless the Purchaser, and their respective
affiliates, directors, officers, employees and other agents and representatives
from and against any and all liabilities, judgments, claims, settlements,
losses, damages, fees, liens, taxes, penalties, obligations and expenses
incurred or suffered by any such person arising from, by reason of or in
connection with:
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(i) any misrepresentation or breach of any representation,
warranty or agreement of the Seller or any Shareholder contained in this
Agreement or any certificate or other document delivered by the Seller
or any Shareholder hereunder;
(ii) the non-fulfillment by the Seller or any Shareholder of any
agreement made by such party in this Agreement;
(iii) any and all Federal, state, local and foreign income,
profits, franchise, sales, use, occupation, property, excise, employment
and other taxes (including interest, penalties and withholdings of tax)
of any kind related to the Business for any and all periods ending on or
prior to the Closing Date;
(iv) the conduct of the business or other operations of the
Business before or on the Closing Date or any condition existing
relating to product or environmental liability prior to the Closing
Date;
(v) except for the Assumed Liabilities, any and all liabilities
or obligations of the Seller, including any and all Unassumed
Liabilities;
(vi) the failure of the Seller or the Purchaser to comply with
any bulk sales laws or any state or local tax laws applicable to the
transactions contemplated by this agreement;
(vii) claims under checks issued by the Seller prior to the
Closing Date that remain uncashed or have expired as of the Closing
Date; and
(viii) any and all actions, suits, proceedings, demands,
judgments, costs and legal and other expenses incident to any of the
matters referred to in clauses (i) through (vii) of this Section 5.1(a).
(b) The Purchaser indemnifies and holds harmless the Seller and
the Shareholders, and their respective partners, directors, officers, employees
and other agents and representatives, from and against any and all liabilities,
judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties,
obligations and expenses incurred or suffered by any such person arising from,
by reason of or in connection with:
(i) any misrepresentation or breach of any representation,
warranty or agreement of the Purchaser contained in this Agreement or
any certificate or other document delivered by the Purchaser hereunder;
(ii) the non-fulfillment by the Purchaser of any agreement made
by it in this Agreement;
(iii) the conduct of the business or other operations of the
Business after the Closing Date and any and all Assumed Liabilities; and
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(iv) any and all actions, suits, proceedings, demands, judgments,
costs and legal and other expenses incident to any of the matters
referred to in clauses (i), (ii) and (iii) of this Section 5.1(b).
(c) In case any claim or litigation which might give rise to any
obligation of a party under the indemnity and reimbursement provisions of this
Agreement (each an "Indemnifying Party") shall come to the attention of the
party seeking indemnification hereunder (the "Indemnified Party"), the
Indemnified Party shall notify in writing promptly the Indemnifying Party of the
existence and amount thereof. Failure to give such notice shall not prejudice
the rights of the Indemnified Party, except to the extent that the Indemnifying
Party shall have been materially prejudiced by such failure. The Indemnifying
Party shall be entitled to participate in and, if (i) in the judgment of the
Indemnified Party such claim can properly be resolved by money damages alone and
the Indemnifying Party has the financial resources to pay such damages and (ii)
the Indemnifying Party admits that this indemnity fully covers the claim or
litigation, the Indemnifying Party shall be entitled to direct the defense of
any claim at its expense, but such defense shall be conducted by legal counsel
reasonably satisfactory to the Indemnified Party.
(d) The Purchaser may set off against any amounts due to the
Seller the amount of any indemnity to which the Purchaser becomes entitled under
this Agreement; provided that the Purchaser may exercise this right of setoff
only following a final, non-appealable adjudication as to the liability of the
Seller. The obligations of the Seller under this Section 5.1 for any claim to
indemnity shall be reduced by the amount (if any) that the Purchaser so sets off
for such claim.
5.2. Limitations. The indemnification and reimbursement
obligations (other than for claims relating to or arising out of Section
5.1(a)(i), (iii), (iv), (v), (vi) and (viii)) hereunder shall expire on the
third anniversary of the Closing Date (the "Expiration Date"), except as to any
claims for, or any claims that may result in, any liability, judgment, claim,
settlement, loss, damage, fee, lien, tax, penalty, obligation or expense for
which indemnity may be sought hereunder of which the Indemnifying Party has
received written notice from the Indemnified Party on or before the Expiration
Date.
5.3. No Election. Nothing contained in this Article V shall be
deemed an election of remedies under this Agreement or limit in any way the
liability of any party under the Employment Agreements or any other agreement to
which such party is a party relating to this Agreement or the transactions
contemplated by this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1. Entire Agreement. This Agreement and the schedules and
exhibits hereto contain the entire agreement among the parties with respect to
the transactions contemplated by this Agreement and supersede all prior
agreements or understandings among the parties. In the event of any conflict
between this Agreement and either of the Bill of Sale or the Assignment, this
Agreement shall govern.
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6.2. Acknowledgement by Purchaser. Purchaser acknowledges that it
has entered into this Agreement on the basis of the representations, warranties,
covenants and agreements contained herein and its own examination, personal
knowledge, and opinion of the value of the Business and the Seller. Purchaser
has not relied on any representation made by Seller and the Shareholders other
than those set forth in this Agreement. Purchaser further acknowledges that
Seller and the Shareholders made no agreement or promise to repair or improve
any of the leasehold improvements, equipment, or other personal property being
sold to Purchaser under this Agreement, and that, subject to the representations
and warranties contained herein, Purchaser takes all such property "as is", in
the condition existing on the Closing Date.
6.3. Descriptive Headings; Certain Interpretations. (a)
Descriptive headings are for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement.
(b) As used in this Agreement, the phrase "to the knowledge" of a
party shall refer to matters within the actual knowledge of the referenced party
or parties and shall not include constructive or imputed notice or knowledge;
and the use of that phrase shall not imply that the referenced party or parties
have undertaken any special inquiry or investigation with respect to the
representation modified by such phrase, unless circumstances within the actual
knowledge of the referenced party or parties would warrant a reasonable person
to undertake further inquiry when presented with similar circumstances.
(c) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its permitted successors and assigns; (vi) a reference to
generally accepted accounting principles refers to United States generally
accepted accounting principles; and (vii) a reference in this Agreement to an
Article, Section, Exhibit or Schedule is to the Article, Section, Exhibit or
Schedule of this Agreement.
6.4. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and sufficient if delivered personally
or sent by telecopy (with confirmation of receipt) or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to the Purchaser, to:
PSS PBS Northwest, Inc. c/o
Physician Support Systems, Inc.
Route 230 and Eby-Chiques Road
P.O. Box 36
Mt. Joy, Pennsylvania 17552
Telecopy: 717-653-0567
Attention: Peter W. Gilson
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Hamilton F. Potter III
with a copy to:
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Telecopy: 212-841-1010
Attention: Kelly Vance, Esq.
If to the Seller or the Shareholders to:
PBS Northwest, Incorporated
5201 S.W. Westgate Drive
Suite 111
Portland, Oregon 97221
Telecopy: 503-292-0132
Attention: Judy M. Heald
with a copy to:
Ambrose & Associates, PC
22 S.W. Columbia Street
Suite 1670
Portland, Oregon 97201
Telecopy: 503-222-0984
Attention: David R. Ambrose, Esq.
or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Each such notice, request or communication shall be effective when received if
given personally or by telecopy, or, if given by mail, when delivered at the
address specified in this Section or on the fifth business day following the
date on which such communication is posted, whichever occurs first.
6.5. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
6.6. Survival. Except as set forth in Section 5.2, all
representations and warranties, agreements and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith (unless
otherwise expressly provided herein or therein) shall survive the Closing and
shall remain in full force and effect until the Expiration Date; provided that
the representations and warranties in paragraphs (b), (c), (g)(i), (k), (l),
(m), (n), (o), (q) and (s) of Section 2.1 and the agreements in Sections 3.1 and
3.4 shall not expire on the Expiration Date.
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6.7. Benefits of Agreement. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement is for the
sole benefit of the parties hereto and not for the benefit of any third party,
except that any party providing financing for the transactions contemplated by
this Agreement may rely on the representations, warranties and agreements of the
Seller and the Shareholders.
6.8. Amendments and Waivers. No modification, amendment or
waiver, of any provision of, or consent required by, this Agreement, nor any
consent to any departure herefrom, shall be effective unless it is in writing
and signed by the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
6.9. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferrable by any party hereto without
the prior written consent of the other parties hereto; except that the Purchaser
may assign all or part of its rights and obligations hereunder to any other
affiliate of the Purchaser if upon such assignment to its affiliate, the
Purchaser shall guaranty, in form and substance reasonably acceptable to the
Seller and the Shareholders, the performance by such assignee of its obligations
hereunder. Following any such permitted assignment, the term "Purchaser" shall
mean such assignee. Any purported assignment not permitted by this Section shall
be void.
6.10. Enforceability. It is the desire and intent of the parties
hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
6.11. Attorney Fees and Costs; Remedies for Misrepresentation.
(a) In the event Action becomes necessary to enforce or interpret the terms of
this Agreement or any rights arising therefrom or thereunder, or to recover
damages for breach of any terms of this Agreement, or to obtain injunctive or
other equitable relief, the prevailing party in such Action shall be entitled to
recover reasonable attorney fees and costs incurred in such action, as
determined by the trial court. In the event of any appeals from the Action, the
prevailing party shall be entitled to recover their reasonable attorney fees and
costs incurred in such appeals, as determined by the appropriate appellate
courts. The term "costs" shall include, in addition to statutory costs and
disbursements, all costs associated with the initial investigation of and
determination whether to commence an Action, and all costs associated with
discovery depositions, witness fees (expert and otherwise), and out-of-pocket
costs incurred by the prevailing party on the prosecution or defense of the
Action. For the purpose of this section, the term "Action" shall be deemed to
include any proceeding commenced in any court of general or limited
jurisdiction, including any proceeding commenced in the bankruptcy courts of the
United States.
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(b) The sole and exclusive remedy of a prevailing party in any
Action arising out of any misrepresentation (other than one due to actual fraud)
or breach of warranty, in violation of Sections 2.1 or 2.2 herein, shall be the
recovery of the direct economic damages to such party, if any, arising out of
such misrepresentation or breach. None of the parties hereto shall be liable for
any indirect or consequential damages as a result of such a misrepresentation or
breach of warranty.
6.12. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT IN THE CITY OF PORTLAND,
STATE OF OREGON IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
THIS AGREEMENT.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed and delivered as of the day and year first above written.
PBS NORTHWEST, INCORPORATED
By:
------------------------------------
Name:
Title:
---------------------------------------
Judy M. Heald, as Shareholder
---------------------------------------
Margaret A. Fay, as Shareholder
---------------------------------------
Rochelle Marie Scrivens, as Shareholder
-----------------------------------
Virginia Carol Meeuwsen, as Shareholder
PSS PBS NORTHWEST, INC.
By:________________________________
Name:
Title:
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STATEMENT OF DIFFERENCES
The section mark symbol shall be expressed as ...... 'ss'
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[Physician Support Systems, Inc. Letterhead]
FOR IMMEDIATE RELEASE
Contact:
David S. Geller
Senior Vice President & Chief Financial Officer
Physician Support Systems, Inc.
(717) 653-5340
Noonan/Russo Communications, Inc.
(212) 696-4455
Jessica Livingston (investors), ext. 229
Michele M. Helm (media), ext. 225
e-mail: [email protected]
PHYSICIAN SUPPORT SYSTEMS ACQUIRES PBS NORTHWEST, INCORPORATED
-- COMPANY CONTINUES TO PENETRATE WEST COAST -
Mt. Joy, PA - May 9, 1996 - Physician Support Systems, Inc. (Nasdaq: PHSS) today
announced it has acquired PBS Northwest, Incorporated, a provider of accounts
receivable management and other services to hospital-based physicians. PBS
Northwest revenues for 1995 were approximately $2 million. Terms of the
acquisition were not disclosed.
"Acquiring PBS Northwest significantly increases our presence in the West Coast
markets," said Peter Gilson, President and Chief Executive Officer of Physician
Support Systems. "As our first acquisition since the three accomplished at the
time of our initial public offering in February, PBS Northwest serves a broad
variety of physician specialists and brings a strong management team to PSS. We
plan to continue evaluating other potential acquisitions and other opportunities
to grow and strengthen Physician Support Systems."
Based in Portland, Oregon, PBS will continue to be led by its present management
team.
Headquartered in Mt. Joy, Pennsylvania, Physician Support Systems, Inc. is a
leading provider of business management services to hospital-based physicians,
including accounts receivable, financial, administrative, strategic and
information support systems.
This press release contains forward-looking statements that involve a number of
risks and uncertainties. Actual results may differ materially as a result of
risks facing the Company. These risks include the ability of PSS to grow
internally or by acquisitions, political and regulatory pressures or changes,
the ability of the Company to integrate acquired businesses into the PSS group
of companies, competitive action by other companies, changing conditions in the
healthcare industry and other risks referred to in the Company's periodic
reports and registration statement filed with the Securities and Exchange
Commission.
###
Editor's Note: This release is also available on the Internet over the World
Wide Web:
http://www.noonanrusso.com
