<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Healthplan Services Corp.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
421959107
(CUSIP Number)
Alan Patricof Lawrence G. Goodman
Patricof & Co. Ventures, Inc. Shereff, Friedman, Hoffman & Goodman, LLP
445 Park Avenue 919 Third Avenue
New York, New York 10022 New York, New York 10022
(212) 753-6300 (212) 758-9500
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 1, 1996
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following: [X].
Check the following box if a fee is being paid with this statement: [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
|CUSIP No. 421959107 | |Page 2 of __ Pages |
- ------------------------- --------------------------
- -----------------------------------------------------------------------------
|1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Patricof & Co. Ventures, Inc. |
- -----------------------------------------------------------------------------
|2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
- -----------------------------------------------------------------------------
|3 | SEC USE ONLY |
| | |
- -----------------------------------------------------------------------------
|4 | SOURCE OF FUNDS* |
| | AF |
----------------------------------------------------------------------------
|5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_| |
| | PURSUANT TO ITEMS 2(d) or 2(e) |
| | |
- -----------------------------------------------------------------------------
|6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | New York |
- -----------------------------------------------------------------------------
| |7 | SOLE VOTING POWER |
| NUMBER OF | | 601,422 |
| SHARES -------------------------------------------------------------
|BENEFICIALLY |8 | SHARED VOTING POWER |
|OWNED BY EACH | | 0 |
| REPORTING -------------------------------------------------------------
| PERSON WITH |9 | SOLE DISPOSITIVE POWER |
| | | 601,422 |
| -------------------------------------------------------------
| |10| SHARED DISPOSITIVE POWER |
| | | 0 |
- -----------------------------------------------------------------------------
|11| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 601,422 |
- -----------------------------------------------------------------------------
|12| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
| | |
- -----------------------------------------------------------------------------
|13| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 4.0% |
- -----------------------------------------------------------------------------
|14| TYPE OF REPORTING PERSON* |
| | CO |
- -----------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
|CUSIP No. 421959107 | |Page 3 of __ Pages |
- ------------------------- --------------------------
- -----------------------------------------------------------------------------
|1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Apax Venture Capital Managers (Jersey) Limited |
- -----------------------------------------------------------------------------
|2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
- -----------------------------------------------------------------------------
|3 | SEC USE ONLY |
| | |
- -----------------------------------------------------------------------------
|4 | SOURCE OF FUNDS* |
| | AF |
----------------------------------------------------------------------------
|5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_| |
| | PURSUANT TO ITEMS 2(d) or 2(e) |
| | |
- -----------------------------------------------------------------------------
|6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | Jersey, Channel Islands |
- -----------------------------------------------------------------------------
| |7 | SOLE VOTING POWER |
| NUMBER OF | | 94,190 |
| SHARES -------------------------------------------------------------
|BENEFICIALLY |8 | SHARED VOTING POWER |
|OWNED BY EACH | | 0 |
| REPORTING -------------------------------------------------------------
| PERSON WITH |9 | SOLE DISPOSITIVE POWER |
| | | 94,190 |
| -------------------------------------------------------------
| |10| SHARED DISPOSITIVE POWER |
| | | 0 |
- -----------------------------------------------------------------------------
|11| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 94,190 |
- -----------------------------------------------------------------------------
|12| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
| | |
- -----------------------------------------------------------------------------
|13| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 0.6% |
- -----------------------------------------------------------------------------
|14| TYPE OF REPORTING PERSON* |
| | CO |
- -----------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
|CUSIP No. 421959107 | |Page 4 of __ Pages |
- ------------------------- --------------------------
- -----------------------------------------------------------------------------
|1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Apax Partners & Cie Gestion |
- -----------------------------------------------------------------------------
|2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
- -----------------------------------------------------------------------------
|3 | SEC USE ONLY |
| | |
- -----------------------------------------------------------------------------
|4 | SOURCE OF FUNDS* |
| | AF |
----------------------------------------------------------------------------
|5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_| |
| | PURSUANT TO ITEMS 2(d) or 2(e) |
| | |
- -----------------------------------------------------------------------------
|6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | France |
- -----------------------------------------------------------------------------
| |7 | SOLE VOTING POWER |
| NUMBER OF | | 93,872 |
| SHARES -------------------------------------------------------------
|BENEFICIALLY |8 | SHARED VOTING POWER |
|OWNED BY EACH | | 0 |
| REPORTING -------------------------------------------------------------
| PERSON WITH |9 | SOLE DISPOSITIVE POWER |
| | | 93,872 |
| -------------------------------------------------------------
| |10| SHARED DISPOSITIVE POWER |
| | | 0 |
- -----------------------------------------------------------------------------
|11| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 93,872 |
- -----------------------------------------------------------------------------
|12| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
| | |
- -----------------------------------------------------------------------------
|13| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 0.6% |
- -----------------------------------------------------------------------------
|14| TYPE OF REPORTING PERSON* |
| | CO |
- -----------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
|CUSIP No. 421959107 | |Page 5 of __ Pages |
- ------------------------- --------------------------
- -----------------------------------------------------------------------------
|1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Maurice Tchenio |
- -----------------------------------------------------------------------------
|2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
- -----------------------------------------------------------------------------
|3 | SEC USE ONLY |
| | |
- -----------------------------------------------------------------------------
|4 | SOURCE OF FUNDS* |
| | AF |
----------------------------------------------------------------------------
|5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_| |
| | PURSUANT TO ITEMS 2(d) or 2(e) |
| | |
- -----------------------------------------------------------------------------
|6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | France |
- -----------------------------------------------------------------------------
| |7 | SOLE VOTING POWER |
| NUMBER OF | | 0 |
| SHARES -------------------------------------------------------------
|BENEFICIALLY |8 | SHARED VOTING POWER |
|OWNED BY EACH | | 93,872 |
| REPORTING -------------------------------------------------------------
| PERSON WITH |9 | SOLE DISPOSITIVE POWER |
| | | 0 |
| -------------------------------------------------------------
| |10| SHARED DISPOSITIVE POWER |
| | | 93,872 |
- -----------------------------------------------------------------------------
|11| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 93,872 |
- -----------------------------------------------------------------------------
|12| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
| | |
- -----------------------------------------------------------------------------
|13| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 0.6% |
- -----------------------------------------------------------------------------
|14| TYPE OF REPORTING PERSON* |
| | IN |
- -----------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
|CUSIP No. 421959107 | |Page 6 of __ Pages |
- ------------------------- --------------------------
- -----------------------------------------------------------------------------
|1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | Alan Patricof |
- -----------------------------------------------------------------------------
|2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
- -----------------------------------------------------------------------------
|3 | SEC USE ONLY |
| | |
- -----------------------------------------------------------------------------
|4 | SOURCE OF FUNDS* |
| | AF |
----------------------------------------------------------------------------
|5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_| |
| | PURSUANT TO ITEMS 2(d) or 2(e) |
| | |
- -----------------------------------------------------------------------------
|6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | United States |
- -----------------------------------------------------------------------------
| |7 | SOLE VOTING POWER |
| NUMBER OF | | 0 |
| SHARES -------------------------------------------------------------
|BENEFICIALLY |8 | SHARED VOTING POWER |
|OWNED BY EACH | | 789,484 |
| REPORTING -------------------------------------------------------------
| PERSON WITH |9 | SOLE DISPOSITIVE POWER |
| | | 0 |
| -------------------------------------------------------------
| |10| SHARED DISPOSITIVE POWER |
| | | 789,484 |
- -----------------------------------------------------------------------------
|11| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 789,484 |
- -----------------------------------------------------------------------------
|12| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
| | |
- -----------------------------------------------------------------------------
|13| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 5.3% |
- -----------------------------------------------------------------------------
|14| TYPE OF REPORTING PERSON* |
| | IN |
- -----------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
|CUSIP No. 421959107 | |Page 7 of __ Pages |
- ------------------------- --------------------------
- -----------------------------------------------------------------------------
|1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | APA Partners |
- -----------------------------------------------------------------------------
|2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
- -----------------------------------------------------------------------------
|3 | SEC USE ONLY |
| | |
- -----------------------------------------------------------------------------
|4 | SOURCE OF FUNDS* |
| | AF |
----------------------------------------------------------------------------
|5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_| |
| | PURSUANT TO ITEMS 2(d) or 2(e) |
| | |
- -----------------------------------------------------------------------------
|6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | New York |
- -----------------------------------------------------------------------------
| |7 | SOLE VOTING POWER |
| NUMBER OF | | 0 |
| SHARES -------------------------------------------------------------
|BENEFICIALLY |8 | SHARED VOTING POWER |
|OWNED BY EACH | | 480,820 |
| REPORTING -------------------------------------------------------------
| PERSON WITH |9 | SOLE DISPOSITIVE POWER |
| | | 0 |
| -------------------------------------------------------------
| |10| SHARED DISPOSITIVE POWER |
| | | 480,820 |
- -----------------------------------------------------------------------------
|11| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 480,820 |
- -----------------------------------------------------------------------------
|12| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
| | |
- -----------------------------------------------------------------------------
|13| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 3.2% |
- -----------------------------------------------------------------------------
|14| TYPE OF REPORTING PERSON* |
| | PN |
- -----------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7
<PAGE>
Schedule 13D
Healthplan Services Corp.
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock (the "Common Stock")
of Healthplan Services Corp., a Delaware corporation (the "Company"), whose
principal executive offices are located at 3501 Fortage Road, Tampa, FL 33627.
Item 2. Identity and Background.
(a), (b), (c) and (f). This statement is being filed by Patricof &
Co. Ventures, Inc. ("Patricof"), APA Partners ("APA"), Apax Venture Capital
Managers (Jersey) Limited ("Apax Jersey"), Apax Partners & Cie Gestion ("Apax
Gestion"), Maurice Tchenio and Alan Patricof. Patricof, APA, Apax Jersey, Apax
Gestion, Maurice Tchenio and Alan Patricof are sometimes referred to
collectively herein as the "Reporting Persons."
Set forth below is certain information concerning the Reporting
Persons:
Name Business Address Citizenship
- ---- ---------------- -----------
Patricof & Co. Ventures, 445 Park Avenue New York
Inc. 11th Floor
New York, New York
10022
Apax Venture Capital 23/25 Broad Street Jersey, Channel Islands
Managers (Jersey) Limited St. Helier, Jersey
Channel Islands
Apax Partners & Cie 45 Avenue Kleber France
Gestion Paris, France 75116
APA Partners 445 Park Avenue New York
11th Floor
New York, New York
10022
Patricof is a corporation organized in New York and is the manager
of APA Excelsior II ("Excelsior II"), a New York limited partnership organized
to make venture capital investments. In addition, Patricof is the investment
advisor to APA Excelsior Venture
<PAGE>
Capital Holdings (Jersey), Ltd. ("Excelsior Jersey"), which was organized in
Jersey, Channel Islands to make venture capital investments.
The executive officers and directors of Patricof are listed below.
All of such persons are citizens of the United States unless otherwise
indicated.
Name Business Address Position
- ---- ---------------- --------
Alan Patricof 445 Park Avenue Chairman of the Board,
11th Floor Chief Executive Officer
New York, New York 10022 and Director
Maurice Tchenio 45 Avenue Kleber Vice Chairman of the Board
(citizen of France) Paris, France 75116 and Director
Ronald Cohen 15 Portland Place Vice Chairman of the Board
(citizen of Great Britain) London W1N 3AA England and Director
Patricia Cloherty 445 Park Avenue President
11th Floor
New York, New York 10022
Wilmer Bottoms 445 Park Avenue Senior Vice-President
11th Floor
New York, New York 10022
Arthur Burach 445 Park Avenue Vice President - Finance
11th Floor
New York, New York 10022
George Jenkins 445 Park Avenue Vice President
11th Floor
New York, New York 10022
Janet Effland 445 Park Avenue Vice President
11th Floor
New York, New York 10022
Robert Chefitz 445 Park Avenue Vice President
11th Floor
New York, New York 10022
Alan Patricof's principal occupation is Chairman of the Board and Chief
Executive Officer of Patricof and his business address is 445 Park Avenue, New
York, New York 10022.
- 2 -
<PAGE>
Apax Jersey is a corporation organized in Jersey, Channel Islands,
and is the manager of Apax Venture Capital Fund Ltd. ("Apax Capital") and Apax
Ventures II, Ltd. ("Ventures II"), each of which was organized in Jersey,
Channel Islands to make venture capital investments.
The executive officers and directors of Apax Jersey are listed
below.
Name Business Address Position
---- ---------------- --------
Alan Patricof 445 Park Avenue Director
(citizen of United States) 11th Floor
New York, New York 10022
Maurice Tchenio 45 Avenue Kleber Director
(citizen of France) Paris, France 75116
Ian Strang St. James' House Director
(citizen of Great Britain) New St. James' Place
St. Helier, Jersey, Channel
Islands
Michael Voisin St. James' House Director
(citizen of Great Britain) New St. James' Place
St. Helier, Jersey, Channel
Islands
Apax Gestion is a corporation organized in France and is the manager
of Apax Capital Risque II(A)("CRIIA"), Apax Capital Risque II(C)("CRIIC") and
Apax Capital Risque ("CR"), each of which is a commingled investment fund formed
under French law to make venture capital investments.
Maurice Tchenio's principal occupation is Chairman of the Board of
Apax Gestion and his business address is 45 Avenue Kleber, Paris, France 75116.
The executive officers and directors of Apax Gestion are listed
below. All of such persons are citizens of France unless otherwise indicated.
Name Business Address Position
---- ---------------- --------
Maurice Tchenio 45 Avenue Kleber Chairman of the
Paris, France 75116 Board and Director
- 3 -
<PAGE>
Name Business Address Position
---- ---------------- --------
Ronald Cohen 15 Portland Place Director
(citizen of Great Britain) London W1N 3AA England
Alan Patricof 445 Park Avenue Director
(citizen of United States) 11th Floor
New York, New York 10022
APA is a New York limited partnership and the general partner of Excelsior
II.
The general partners of APA are listed below. All of such persons are
citizens of the United States.
Name Business Address
---- ----------------
Alan Patricof 445 Park Avenue, 11th Floor
New York, New York 10022
Patricia Cloherty 445 Park Avenue, 11th Floor
New York, New York 10022
Wilmer Bottoms 445 Park Avenue, 11th Floor
New York, New York 10022
George Jenkins 445 Park Avenue, 11th Floor
New York, New York 10022
Janet Effland 445 Park Avenue, 11th Floor
New York, New York 10022
Robert Chefitz 445 Park Avenue, 11th Floor
New York, New York 10022
See Item 5 for information regarding ownership of Common Stock.
(d) and (e). During the past five years, none of the Reporting
Persons or the other persons listed above has been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
- 4 -
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
On July 1, 1996, Excelsior II, Excelsior Jersey, APAX Capital,
Ventures II, CRIIA, CRIIC and CR, received 480,820, 120,602, 23,547, 70,643,
43,277, 18,774, and 31,821, shares of Common Stock, respectively, as a result of
a merger (the "Merger") of Harrington Services Corporation, a privately-held
corporation of which Excelsior II, Excelsior Jersey, APAX Capital, Ventures II,
CRIIA, CRIIC and CR, were stockholders, with and into a wholly-owned subsidiary
of the Company.
Item 4. Purpose of Transaction.
Each of the entities managed or advised by the Reporting Persons
acquired its respective shares of Common Stock as a result of the Merger. Each
of such persons may acquire or dispose of securities of the Company, including
shares of Common Stock, directly or indirectly, in open-market or privately
negotiated transactions, depending upon the evaluation of the performance and
prospects of the Company by the Reporting Persons, and upon other developments
and circumstances, including, but not limited to, general economic and business
conditions and stock market conditions.
Except for the foregoing and as disclosed below, no Reporting Person
has any present plans or proposals which relate to or would result in any of the
actions or events described in paragraphs (a) through (j) of Item 4 of Schedule
13D.
Item 5. Interest in Securities of Issuer.
Except as specifically provided for herein, each of the Reporting
Persons disclaims beneficial ownership of the shares of Common Stock
beneficially owned by any of the other Reporting Persons.
Patricof may be deemed to be the beneficial owner of 480,820 shares
of Common Stock owned by Excelsior II and 120,602 shares of Common Stock owned
by Excelsior Jersey, which shares represent approximately 3.2%, and 0.8%
respectively, of the issued and outstanding Common Stock. Patricof is the
manager of Excelsior II and, as such, may be deemed to have shared voting and
dispositive power with the general partners of such entity with respect to
480,820 shares of Common Stock. Patricof is the investment advisor of Excelsior
Jersey and, as such, may be deemed to have sole voting and dispositive power
with respect to 120,602 shares of Common Stock.
Apax Jersey may be deemed to be the beneficial owner of 23,547
shares of Common Stock owned by Apax Capital, which shares represent
approximately 0.2% of the issued and outstanding Common Stock and 70,643 shares
of Common Stock owned by Ventures II, which shares represent approximately 0.5%
of the issued and outstanding Common Stock. Apax Jersey is the manager of Apax
Capital and Ventures II and, as such,
- 5 -
<PAGE>
may be deemed to have sole voting and dispositive power with respect to 94,190
shares of Common Stock.
Maurice Tchenio may be deemed to be the beneficial owner of 43,277
shares of Common Stock owned by CRIIA, 18,774 shares of Common Stock owned by
CRIIC and 31,821 shares of Common Stock owned by CR, which shares represent
approximately 0.3%, 0.1% and 0.2% of the issued and outstanding Common Stock,
respectively. Mr. Tchenio is the Chairman of the Board of Apax Gestion and, as
such, may be deemed to have shared voting and dispositive power with respect to
93,872 shares of Common Stock owned by CRIIA, CRIIC and CR.
APAX Gestion may be deemed to be the beneficial owner of 43,277
shares of Common Stock owned by CRIIA, 18,774 shares of Common Stock owned by
CRIIC and 38,821 shares of Common Stock owned by CR, which shares represent
approximately 0.3%, 0.1% and 0.2% of the issued and outstanding Common Stock,
respectively. APAX Gestion is the manager of CRIIA, CRIIC and CR and, as such,
may be deemed to have sole voting and dispositive power with respect to 93,872
shares of Common Stock owned by CRIIA, CRIIC and CR.
Alan Patricof may be deemed to be the beneficial owner of 43,277
shares of Common Stock owned by CRIIA, 18,774 shares of Common Stock owned by
CRIIC, 31,821 shares of Common Stock owned by CR, 23,547 shares of Common Stock
owned by Apax Capital, 70,643 shares of Common Stock owned by Ventures II,
120,602 shares of Common Stock owned by Excelsior Jersey and 480,820 shares of
Common Stock owned by Excelsior II, which shares represent approximately
0.3%,0.1%, 0.2%, 0.2%, 0.5%, 3.2% and 0.8%, of the issued and outstanding Common
Stock, respectively. Mr. Patricof as a director of Patricof, APA, Apax Jersey
and Apax Gestion, may be deemed to have shared voting and dispositive power with
respect to 789,484 shares of Common Stock owned by CRIIA, CRIIC, CR, Apax
Capital, Ventures II, Excelsior Jersey and Excelsior II.
APA may be deemed to be the beneficial owner of 480,820 shares of
Common Stock owned by Excelsior II, which shares represent approximately 3.2% of
the issued and outstanding Common Stock. APA is the general partner of Excelsior
II and, as such, may be deemed to have shared voting and dispositive power with
respect to 480,820 shares of Common Stock owned by Excelsior II.
The percentage of beneficial ownership of the Reporting Persons is
based on 14,904,847 outstanding shares of Common Stock of the Company on July 1,
1996 as reported to the Reporting Persons by a representative of the Company.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of Issuer.
- 6 -
<PAGE>
The Reporting Persons are associated entities and consult with each
other with respect to portfolio companies owned by their respective managed or
advised entities.
Excelsior II, Excelsior Jersey, APAX Capital, Ventures II, CRIIA,
CRIIC and CR received certain registration rights with respect to the Common
Stock pursuant to that certain Registration Rights Agreement dated as of July 1,
1996. In addition, such entities received the right, under certain
circumstances, to receive a limited number of additional shares of Common Stock
as a post-closing Merger adjustment pursuant to that certain Plan and Agreement
of Merger dated May 28, 1996.
Item 7. Materials to be Filed as Exhibits.
1. Registration Rights Agreement dated as of July 1, 1996.
2. Plan and Agreement of Merger dated May 28, 1996.
- 7 -
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: July 26, 1996
Patricof & Co. Ventures, Inc.
By: /s/ Alan Patricof
----------------------------
Name: Alan Patricof
Title: Chairman
- 8 -
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: July 26, 1996
APA Partners
By: /s/ Alan Patricof
----------------------------
Name: Alan Patricof
Title: General Partner
- 9 -
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: July 26, 1996
For and on behalf of
Coutts & Co (Jersey) Ltd.
Administrators of Apax Venture
Capital Managers (Jersey) Limited
By: /s/ Sean Ryan
-----------------------------
Name: Sean Ryan
Title: Corporate Services Limited
- 10 -
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: July 26, 1996
Apax Partners & Cie Gestion
By: /s/ Maurice Tchenio
-----------------------------
Name: Maurice Tchenio
Title: Chairman
- 11 -
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: July 26, 1996
By: /s/ Maurice Tchenio
-----------------------------
Maurice Tchenio
- 12 -
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: July 26, 1996
By: /s/ Alan Patricof
-----------------------------
Alan Patricof
- 13 -
<PAGE>
REGISTRATION RIGHTS AGREEMENT
================================================================================
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into
effective as of the 1st day of July, 1996, by and among HEALTHPLAN SERVICES
CORPORATION, a Delaware corporation (the "Company"), and the stockholders of the
Company listed on the signature pages hereto (collectively, the "Stockholders,"
and each, a "Stockholder").
W I T N E S S E T H :
WHEREAS, the Company, HealthPlan Services Alpha Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company (the "Merger
Subsidiary"), Harrington Services Corporation, a Delaware corporation ("HSC"),
and the Stockholders are parties to that certain Plan and Agreement of Merger
dated as of the 28th day of May, 1996 (the "Merger Agreement"), pursuant to
which, among other things, the parties thereto agreed to the merger (the
"Merger") of HSC with and into the Merger Subsidiary, with the effect that HSC
would become a wholly owned subsidiary of the Company and the Stockholders would
receive a combination of cash and shares of common stock of the Company for
their shares of HSC common stock;
WHEREAS, in connection with the consummation of the transactions
contemplated by the Merger Agreement, the Stockholders received, in the
aggregate, approximately 1,347,150 shares (the "Registrable Securities") of the
Company's common stock, par value $0.01 per share, as partial consideration for
their shares of HSC common stock; and
WHEREAS, pursuant to Section 2.6.1 of the Merger Agreement, the Company
agreed to grant to the Stockholders certain rights with respect to the inclusion
of the Registrable Securities in a registration statement to be prepared and
filed by the Company, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound thereby, agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the following
terms have the following meanings (all terms defined in this Agreement in the
singular to have the same meanings when used in the plural and vice versa):
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Commission" shall mean the United States Securities and Exchange
Commission.
(c) "Common Stock" shall mean the Company's common stock, par value $0.01
per share, including the Registrable Securities.
<PAGE>
(d) "Company" shall mean HealthPlan Services Corporation, a Delaware
corporation.
(e) "Continuous Offering" shall have the meaning set forth in Section 2(a)
hereto.
(f) "Continuous Offering Registration Statement"" shall have the meaning
set forth in Section 2(a) hereto.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "HSC" shall mean Harrington Services Corporation, a Delaware
corporation.
(i) "Merger Agreement" shall have the meaning set forth in the preamble
hereto.
(j) "Merger Subsidiary" shall have the meaning set forth in the preamble
hereto.
(k) "Registrable Securities" shall have the meaning set forth in the
preamble hereto.
(l) "Securities Act" shall mean the Securities Act of 1933, as amended,
including the rules and regulations promulgated thereunder.
(m) "Stockholders" shall have the meaning set forth in the introductory
paragraph hereto.
(n) "Suspension Termination Date" shall have the meaning set forth in
Section 3(d) hereto.
(o) "Underwritten Offering" shall have the meaning set forth in Section
3(a) hereto.
(p) "Underwritten Offering Registration Statement" shall have the meaning
set forth in Section 3(a) hereto.
(q) "Underwritten Registration Notice" shall have the meaning set forth in
Section 3(a) hereto.
Section 2. Registration Rights.
(a) Within 15 days after the Closing Date (as defined in the Merger
Agreement), the Company shall begin the preparation of, and shall file with the
Commission as promptly as practicable thereafter, a registration statement (the
"Continuous Offering Registration Statement") sufficient to permit the public
offering and sale of the Registrable Securities by the Stockholders through the
facilities of all appropriate securities exchanges and the over-the-counter
market (the "Continuous Offering"), and will use its best efforts through its
officers, directors, auditors, and counsel to cause such registration statement
to become effective on or before August 31, 1996; provided that in all events,
such Continuous Offering Registration Statement shall become effective on or
before October 31, 1996 unless an
-2-
<PAGE>
Underwritten Offering Registration Statement pursuant to the provisions of
Section 3 hereof has become effective prior thereto and the 90 day lockup period
related thereto has not then expired in which case such Continuous Offering
Registration Statement shall become effective within 55 days of the expiration
of such lockup period.
(b) In the event of a registration for a Continuous Offering pursuant to
this Section 2, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Stockholders may
reasonably request; provided, however, that the Company shall not by reason of
this Section 2(b) be required to qualify to do business in any state in which it
is not otherwise required to qualify to do business or to file a general consent
to service of process.
(c) The Company shall keep effective any Continuous Offering Registration
Statement or qualification contemplated by this Section 2 and shall from time to
time amend or supplement each applicable Continuous Offering Registration
Statement, preliminary prospectus, final prospectus, application, document and
communication for such period of time as shall be required to permit the
Stockholders to complete the offer and sale of the Registrable Securities
covered thereby provided, however, the Company shall in no event be required to
keep any such registration or qualification in effect beyond the date on which
the Registrable Securities are first saleable under Rule 144 (or any similar
provisions) of the Securities Act.
(d) In the event of a Continuous Offering registration pursuant to the
provisions of this Section 2, the Company shall furnish to the Stockholders such
number of copies of the Continuous Offering Registration Statement and of each
amendment and supplement thereto (in each case, including all exhibits), such
reasonable number of copies of each prospectus contained in such Continuous
Offering Registration Statement and each supplement or amendment thereto
(including each preliminary prospectus), all of which shall conform to the
requirements of the Act and the rules and regulations thereunder, and such other
documents as the Stockholders may reasonably request to facilitate the
disposition of the Registrable Securities included in such registration.
(e) If, at any time during which the Company has the obligation to keep
effective the Continuous Offering Registration Statement contemplated by Section
2(a) hereof, the Company becomes aware of the happening of any event or
discovers any facts during the period such Continuous Offering Registration
Statement is effective that (i) makes any statement made in such Continuous
Offering Registration Statement or the related prospectus untrue in any material
respect or (ii) causes such Continuous Offering Registration Statement or the
related prospectus to omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, then the Company will use its reasonable efforts to prepare a
supplement or post-effective amendment to such Continuous Offering Registration
Statement or the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the Stockholders, such prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees to notify each
Stockholder to
-3-
<PAGE>
suspend use of the prospectus as promptly as practicable after an appropriate
officer or employee of the Company becomes aware of the occurrence of such an
event, and each Stockholder hereby agrees to suspend use of the prospectus until
the Company has amended or supplemented the prospectus to correct such
misstatement or omission or has advised such Stockholders that use of such
prospectus may be resumed. At such time as public disclosure is otherwise made
or the Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted material
fact, or the Company otherwise determines that use of such prospectus may be
resumed, the Company agrees to promptly notify each Stockholder of such
determination and (if applicable) to furnish each such Stockholder such numbers
of copies of the prospectus, as amended or supplemented, as such Stockholder may
reasonably request. The Company will pay all registration expenses in connection
with the registration of Registrable Securities pursuant to this Section 2, and
each Shareholder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such
Shareholder's Registrable Securities pursuant to a Continuous Offering.
Section 3. Underwritten Offering Registration Rights.
(a) If the Company proposes to register, at any time during which holders
of Registrable Securities hold in the aggregate more than 200,000 shares of
Common Stock and such shares of Common Stock have not become saleable under Rule
144 (or any similar provisions) of the Securities Act, any Common Stock under
the Securities Act (other than a registration on Form S-8 or any successor or
similar forms, relating to Common Stock issuable upon exercise of employee stock
options or in conjunction with an employee benefit plan or similar plan of the
Company or any of its subsidiaries), in a manner which would permit registration
of the Registrable Securities for sale to the public under the Securities Act
pursuant to an underwritten public offering (the "Underwritten Offering"), it
will at such time give prompt written notice (the "Underwritten Registration
Notice") to all holders of record of Registrable Securities of its intention to
do so (including the intended method of disposition), and of such Shareholders'
rights under this Section 3, at least 30 days prior to the anticipated filing
date of the registration statement relating to such registration (the
"Underwritten Offering Registration Statement"). Any such notice shall offer all
of the holders of Registrable Securities the opportunity to include in such
Underwritten Offering Registration Statement such number of Common Stock as each
such Shareholder may request. Upon the written request of any such Shareholder
made within 10 days after the receipt of notice from the Company (which request
shall specify the number of Common Stock intended to be disposed of by such
Shareholder), the Company will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by the Shareholders thereof, to the extent
necessary to permit disposition of the Registrable Securities so to be
registered in accordance with the Company's intended method of disposition;
provided that (i) all Shareholders of Registrable Securities requesting to be
included in the Company's registration must sell their Registrable Securities so
requested to be included, to the underwriters selected by the Company on the
same terms and conditions as apply to the Company, and (ii) if, at any time
after giving written notice of its intention to register any securities pursuant
to this Section 3 and prior to the effective date of the Underwritten Offering
Registration Statement, the Company shall determine for any reason not to
proceed with the Underwritten Offering, the Company shall give written
-4-
<PAGE>
notice to all Shareholders of Registrable Securities and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration. The Company will pay all registration expenses in
connection with the registration of Registrable Securities pursuant to this
Section 3, and each Shareholder shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Shareholder's Registrable Securities pursuant to an Underwritten Offering.
(b) If the managing underwriter of an Underwritten Offering registration
pursuant to this Section 3 advises the Company that, in its view, the number of
securities (including all Registrable Securities) which the Company, the
Shareholders and any other persons intended to include in such registration
exceeds the maximum offering size, the Company will include Registrable
Securities and other securities in such registration, in the following priority,
up to the maximum offering size:
(i) first, One Million (1,000,000) shares shall be Registrable
Securities requested to be included in such registration by the
Shareholders pursuant to Section 3(a) hereof (allocated, if necessary for
the offering not to exceed the offering size, or for the number of shares
of Registrable Securities not to exceed 1,000,000 shares, pro rata among
the Shareholders requesting registration of such Registrable Securities
pursuant to Section 3(a) hereof based upon the relative number of shares of
Common Stock then owned by each such Shareholder that has requested to be
included in such registration); provided, however, that if the Underwritten
Registration Notice is given to the holders of Registrable Securities at a
time when such holders have had the opportunity to sell at least one
million (1,000,000) shares of Registrable Securities in an Underwritten
Offering, then the Company will no longer be obligated to provide the
holders of Registrable Securities with the first priority in such
Underwritten Offering and the Company may instead provide the holders of
Registrable Securities with the inclusion priority set forth in Section
3(b)(iii), below;
(ii) second, the securities proposed to be included by the Company; and
(iii) third, the securities requested to be included by any other persons
pursuant to piggyback registration rights possessed by such persons
together with the Registrable Securities in excess of One Million shares
which have been requested to be included in such registration by the
Shareholders pursuant to Section 3(a) hereof (allocated, if necessary for
the offering not to exceed the offering size, pro rata among the other
people possessing piggyback registration rights and the Shareholders
requesting registration of such Registrable Securities, based upon the
relative number of shares of Common Stock then owned by each such
Shareholder or other person that has requested to be included in such
registration).
(c) Until the earlier of (i) such time as the number of Registrable
Securities is less that two hundred thousand (200,000) shares, or (ii) the date
on which the Registrable Securities are first saleable under Rule 144 (or any
similar provision) of the Securities Act, which is 24 months after the date of
this Agreement, the Company shall not enter into any agreement with any holder
of any securities of the Company providing for the granting to such holder of
registration rights unless such agreement includes a provision that conflicts
with the priority provisions of Section 3(b) hereof.
-5-
<PAGE>
(d) Upon the filing of an Underwritten Offering Registration Statement,
the Company shall have the right to withdraw or suspend use of any Continuous
Offering Registration Statement which has previously been filed and is not yet
effective with the Commission.
(e) Upon the delivery by the Company of the Underwritten Registration
Notice, the Company's obligation to proceed with the Continuous Offering shall
be suspended until the earlier of (i) such time as the Company shall determine
not to proceed with the Underwritten Offering, (ii) the time required to
complete the Underwritten Offering including any applicable lockup period
thereafter, or (iii) 145 days from the date of the Underwritten Registration
Notice (the "Suspension Termination Date"). If the Shareholders own any
Registrable Securities on the Suspension Termination Date and none of such
securities are saleable under Rule 144 (or any similar provisions) of the
Securities Act, then the Company shall file a Continuous Offering Registration
Statement within ten days after the Suspension Termination Date and shall cause
such Continuous Offering Registration Statement to become effective on or before
45 days after the Suspension Termination Date and the provisions of Sections
2(c), 2(d) and 2(e) herein shall apply to such Continuous Offering. The
foregoing notwithstanding, the Company shall cause a Continuous Offering
Registration Statement to become effective by October 31, 1996, in the event
that no Underwritten Offering Registration Statement has become effective before
such date.
Section 4 Indemnification.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Stockholder from and against any and all loss,
liability, charge, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 4, but not be limited to, attorneys' fees and
any and all expense whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, relating to the sale of any of the Registrable Securities,
or (B) in any application or other document or communication (in this Section 4
collectively called an "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify any of the Registrable
Securities under the securities or blue sky laws thereof or filed with the
Commission or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to the Stockholders by or on behalf of such person
expressly for inclusion in any registration statement, preliminary prospectus,
or final prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any
-6-
<PAGE>
liability the Company may otherwise have, including liabilities arising under
this Agreement.
If any action is brought against any of the Stockholders (an "indemnified
party") in respect of which indemnity may be sought against the Company pursuant
to the foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but the failure
so to notify shall not relieve the Company from any liability other than
pursuant to this Section 4(a)), and the Company shall promptly assume the
defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses. Such
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such action or the Company shall not have promptly employed
counsel reasonably satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 4 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent of each indemnified party
that is not released as described in this sentence, settle or compromise any
action, or permit a default or consent to the entry of judgment in, or otherwise
seek to terminate, any pending or threatened action, in respect of which
indemnity may be sought hereunder (whether or not any indemnified party is a
party thereto), unless such settlement, compromise, consent, or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the
Stockholders of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of any
Registrable Securities or any preliminary prospectus, final prospectus,
registration statement, or amendment or supplement thereto, or any application
relating to any sale of any Registrable Securities.
(b) Each Stockholder, severally and not jointly, agrees to indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall have signed any registration statement covering Registrable
Securities held by the Stockholders, each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, and its or their respective counsel, to the same extent as the
foregoing indemnity from the Company to the Stockholders in Section 4(a), but
only with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company with respect to the Stockholders by or on behalf of the
Stockholders expressly for inclusion in any such registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be. If any action shall be
-7-
<PAGE>
brought against the Company or any other person so indemnified based on any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, and in respect of which
indemnity may be sought against a Stockholder pursuant to this Section 4(b),
such Stockholder shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 4(a).
Notwithstanding the foregoing, no stockholder shall be required to indemnify the
Company under this Section 4(b) for any amount in excess of the gross proceeds
received by said Stockholder in a sale or sales of Registrable Securities under
this Agreement.
(c) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 4(a) or 4(b)
(subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act, or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Stockholders, as a second entity,
shall contribute to all losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, on the basis of relevant
equitable considerations such as the relative fault of the Company and the
Stockholders in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission, or alleged omission,
shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by the
Company or by the Stockholders, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission. The Company and each of the
Stockholders agree that it would be unjust and inequitable if the respective
obligations of the Company and the Stockholders for contribution were determined
by pro rata or per capita allocation of the aggregate losses, liabilities,
claims, damages, and expenses (even if the Stockholders and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 4(c). No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 4(c), each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed any
such registration statement, each director of the Company, and its or their
respective counsel shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 4(c). Anything in this
Section 4(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 4(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
-8-
<PAGE>
Section 5. Assignment of Registration Rights. Rights under this Agreement
may be assigned by the Stockholders to transferees or assignees of the
Stockholders' Registrable Securities; provided, however, that the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee and the
Registrable Securities with respect to which such registration rights are being
assigned; provided, further, that such assignment shall be effective only if,
immediately following such transfer or assignment, the further disposition of
such securities by the transferee or assignee is restricted under the Act. The
term "Stockholder" or "Stockholders" as used in this Agreement includes
permitted assignees of rights under this Agreement in accordance with this
Section 5.
Section 6. Lock-Up Agreement. Each of the Stockholders hereby agrees that,
if the Company prepares and files a registration statement with the Commission
relating to the offer and sale of securities for the Company's account on an
underwritten basis during the period in which the Company has the obligation to
keep effective the registration statement contemplated by Section 3(a) hereof,
then upon request of the underwriters managing such offering, such Stockholder
will enter into a lock-up agreement with the managing underwriters providing
that such Stockholder will not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
without the prior written consent of such underwriters until 90 days following
the closing of the offering covered by the registration statement filed for the
Company's account.
Section 7. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to any Stockholder that such Stockholder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of distribution of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
Section 8. Miscellaneous.
(a) A copy of this Agreement shall be filed with the Secretary of the
Company.
(b) The provisions of this Agreement shall be deemed to apply equally to
the Registrable Securities or other securities distributed in respect of the
Registrable Securities.
(c) At any time and from time to time each party agrees, at its or his
expense, to take such actions and to execute and deliver such documents as may
be reasonably necessary to effectuate the purposes of this Agreement.
(d) Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, any party shall be entitled, in
addition to any other right or remedy available to him or it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either
-9-
<PAGE>
case no bond or other security shall be required in connection therewith, and
the parties hereby consent to such injunction and to the ordering of specific
performance.
(e) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail, or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex, or
similar telecommunications equipment) against receipt to the party to whom it is
to be given, (i) if to the Company, at 3501 Frontage Road, Tampa, Florida 33607,
Attention: James K. Murray, Jr., (ii) if to a Stockholder, at his address on the
signature page of this Agreement, (iii) if to a transferee of a Stockholder, at
such transferee's address set forth in the notice of transfer, or (iv) in any
case, to such other address as the party shall have furnished in writing in
accordance with this Section 8(e). Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 8(e) shall be deemed given at the time of receipt thereof.
(f) This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements among
them concerning such subject matter, and may be amended only by a written
instrument executed by the Company and by the Stockholders.
(g) This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, and shall inure
to the benefit of each indemnified party under Section 4.
(h) Any waiver by any party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.
(i) If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
(j) This Agreement shall terminate on such date as the Stockholders own no
Registrable Securities, provided that nothing herein shall affect any rights or
obligations which arise prior to such termination or under Section 4 hereof.
(k) The headings in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
(l) Any masculine personal pronoun shall be considered to mean the
corresponding feminine or neuter personal pronoun, as the context requires.
-10-
<PAGE>
(m) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to
principals of conflict of law thereunder.
(n) The Company and each of the Stockholders irrevocably consent to the
jurisdiction of the courts of the State of Delaware and of any federal court
located in such state in connection with any action or proceeding arising out of
or relating to this Agreement, any document or instrument delivered pursuant to,
in connection with, or simultaneously with this Agreement, or a breach of this
Agreement or any such other document or instrument. In any such action or
proceeding, the Company and each of the Stockholders waives personal service of
any summons, complaint, or other process and agrees that service thereof may be
made in accordance with Section 8(e). Within 30 days after such service, or such
other time as may be mutually agreed upon in writing by the attorneys for the
parties to such action or proceeding, the party so served shall appear or answer
such summons, complaint, or other process. Should the party so served fail to
appear or answer within such 30-day period or such extended period, as the case
may be, such party shall be deemed in default and judgment may be entered
against such party for the amount or other relief as demanded in any summons,
complaint, or other process so served.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HEALTHPLAN SERVICES CORPORATION
By: J.K. Murray III
---------------------------
Name: J.K. Murray III
Title: Executive Vice President
APA EXCELSIOR II
By: /s/ Robert Chefitz
---------------------------
Robert Chefitz, G.P.
APAX CAPITAL RISQUE
By:____________________________
-11-
<PAGE>
(m) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to
principals of conflict of law thereunder.
(n) The Company and each of the Stockholders irrevocably consent to the
jurisdiction of the courts of the State of Delaware and of any federal court
located in such state in connection with any action or proceeding arising out of
or relating to this Agreement, any document or instrument delivered pursuant to,
in connection with, or simultaneously with this Agreement, or a breach of this
Agreement or any such other document or instrument. In any such action or
proceeding, the Company and each of the Stockholders waives personal service of
any summons, complaint, or other process and agrees that service thereof may be
made in accordance with Section 8(e). Within 30 days after such service, or such
other time as may be mutually agreed upon in writing by the attorneys for the
parties to such action or proceeding, the party so served shall appear or answer
such summons, complaint, or other process. Should the party so served fail to
appear or answer within such 30-day period or such extended period, as the case
may be, such party shall be deemed in default and judgment may be entered
against such party for the amount or other relief as demanded in any summons,
complaint, or other process so served.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HEALTHPLAN SERVICES CORPORATION
By: ___________________________
Name: _________________________
Title: ________________________
APA EXCELSIOR II
By: ___________________________
APAX CAPITAL RISQUE
By: Maurice Tchenio
----------------------------
-11-
<PAGE>
APAX CAPITAL RISQUE IIA
By: Maurice Tchenio
----------------------------
APAX CAPITAL RISQUE IIC
By:___________________________
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By:___________________________
APAX VENTURE CAPITAL FUND LTD.
By:___________________________
APAX VENTURES II LTD.
By:___________________________
______________________________
ROBERT R. PARKER
______________________________
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
APAX CAPITAL RISQUE IIA
By:___________________________
APAX CAPITAL RISQUE IIC
By: Maurice Tchenio
----------------------------
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By:___________________________
APAX VENTURE CAPITAL FUND LTD.
By:___________________________
APAX VENTURES II LTD.
By:___________________________
______________________________
ROBERT R. PARKER
______________________________
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
APAX CAPITAL RISQUE IIA
By:___________________________
APAX CAPITAL RISQUE IIC
By:___________________________
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By: Coutts & Co. (Jersey) Ltd.,
as Custodian
----------------------------
APAX VENTURE CAPITAL FUND LTD.
By:___________________________
APAX VENTURES II LTD.
By:___________________________
______________________________
ROBERT R. PARKER
______________________________
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
APAX CAPITAL RISQUE IIA
By:___________________________
APAX CAPITAL RISQUE IIC
By:___________________________
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By:___________________________
APAX VENTURE CAPITAL FUND LTD.
By: Coutts & Co. (Jersey) Ltd.,
as Custodian
----------------------------
APAX VENTURES II LTD.
By:___________________________
______________________________
ROBERT R. PARKER
______________________________
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
APAX CAPITAL RISQUE IIA
By:___________________________
APAX CAPITAL RISQUE IIC
By:___________________________
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By:___________________________
APAX VENTURE CAPITAL FUND LTD.
By:___________________________
APAX VENTURES II LTD.
By: Coutts & Co. (Jersey) Ltd.,
as Custodian
----------------------------
______________________________
ROBERT R. PARKER
______________________________
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
APAX CAPITAL RISQUE IIA
By:___________________________
APAX CAPITAL RISQUE IIC
By:___________________________
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By:___________________________
APAX VENTURE CAPITAL FUND LTD.
By:___________________________
APAX VENTURES II LTD.
By:___________________________
/s/ Robert R. Parker
------------------------------
ROBERT R. PARKER
______________________________
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
APAX CAPITAL RISQUE IIA
By:___________________________
APAX CAPITAL RISQUE IIC
By:___________________________
APA EXCELSIOR VENTURE CAPITAL
HOLDINGS (JERSEY) LTD.
By:___________________________
APAX VENTURE CAPITAL FUND LTD.
By:___________________________
APAX VENTURES II LTD.
By:___________________________
______________________________
ROBERT R. PARKER
/s/ Warren G. Blue
------------------------------
WARREN G. BLUE
______________________________
MARTIN RAPAPORT
______________________________
MARTIN RAPAPORT, AS TRUSTEE
UNDER TRUST AGREEMENT DATED
11/23/94
-12-
<PAGE>
/s/ Hannah Rapaport Salia
-------------------------------
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
/s/ Hannah Salia, Trustee for
Rachel Fatima Salia
-------------------------------
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
/s/ Hannah Salia, Trustee For
Mariama Sara Salia
-------------------------------
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
/s/ Robert J. Covert
-------------------------------
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
/s/ Robert A. Arthur
/s/ Charlene M. Arthur
-------------------------------
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
/s/ Michael S. Blue
-------------------------------
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
/s/ Steven J. Covert
-------------------------------
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
/s/ Jeffrey W. Covert
-------------------------------
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
/s/ Clay R. Caroland
-------------------------------
CLAY R. CAROLAND, III
_______________________________
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
_______________________________
HANNAH RAPAPORT SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
RACHEL FATIMA SALIA
_______________________________
HANNAH SALIA, TRUSTEE FOR
MARIAMA SARA SALIA
_______________________________
ROBERT J. COVERT
_______________________________
ROBERT A. or CHARLENE M. ARTHUR
_______________________________
MICHAEL S. BLUE
_______________________________
STEVEN J. COVERT
_______________________________
JEFFREY W. COVERT
GREYSTONE FINANCIAL GROUP, INC.
By:____________________________
_______________________________
CLAY R. CAROLAND, III
/s/ Thomas Greene
-------------------------------
THOMAS GREENE, TRUSTEE
-13-
<PAGE>
/s/ Jessie B. Greene
-------------------------------
JESSIE B. GREENE
_______________________________
TOM E. GREENE, III
PITT & CO.
By:____________________________
MELLON BANK, N.A., AS MASTER
TRUSTEE FOR ABBOT CAPITAL
MANAGEMENT L.P.
By:____________________________
HANK & CO.
By:____________________________
BANKERS TRUST, AS TRUSTEE FOR
GENERAL MOTORS CORPORATION
SALARIED RETIREMENT PLAN
By:____________________________
BANKERS TRUST, AS TRUSTEE FOR
GENERAL MOTORS CORPORATION
HOURLY PENSION PLAN
By:____________________________
-14-
<PAGE>
_______________________________
JESSIE B. GREENE
/s/ Tom E. Greene, III
-------------------------------
TOM E. GREENE, III
PITT & CO.
By:____________________________
MELLON BANK, N.A., AS MASTER
TRUSTEE FOR ABBOT CAPITAL
MANAGEMENT L.P.
By:____________________________
HANK & CO.
By:____________________________
BANKERS TRUST, AS TRUSTEE FOR
GENERAL MOTORS CORPORATION
SALARIED RETIREMENT PLAN
By:____________________________
BANKERS TRUST, AS TRUSTEE FOR
GENERAL MOTORS CORPORATION
HOURLY PENSION PLAN
By:____________________________
-14-
<PAGE>
COMMINGLED EMPLOYEE BENEFIT
TRUST SMALL CAP FUND
By:____________________________
COMMINGLED EMPLOYEE BENEFIT
TRUST EMERGING HEALTH FUND
By:____________________________
FAIRFIELD INVESTORS II, L.P.
By: [ILLEGIBLE]
----------------------------
PRIVATE EQUITY INVESTMENT
FUND, L.P.
By: [ILLEGIBLE]
----------------------------
_______________________________
WILLIAM T. BRAKE
_______________________________
STEVEN J. WEBER
_______________________________
WILLIAM R. ASH, JR.
_______________________________
ALAN P. FAZER
_______________________________
THOMAS J. O'NEILL
-15-
<PAGE>
COMMINGLED EMPLOYEE BENEFIT
TRUST SMALL CAP FUND
By:____________________________
COMMINGLED EMPLOYEE BENEFIT
TRUST EMERGING HEALTH FUND
By:____________________________
FAIRFIELD INVESTORS II, L.P.
By:____________________________
PRIVATE EQUITY INVESTMENT
FUND, L.P.
By:____________________________
/s/ William T. Brake
-------------------------------
WILLIAM T. BRAKE
_______________________________
STEVEN J. WEBER
_______________________________
WILLIAM R. ASH, JR.
_______________________________
ALAN P. FAZER
_______________________________
THOMAS J. O'NEILL
-15-
<PAGE>
COMMINGLED EMPLOYEE BENEFIT
TRUST SMALL CAP FUND
By:____________________________
COMMINGLED EMPLOYEE BENEFIT
TRUST EMERGING HEALTH FUND
By:____________________________
FAIRFIELD INVESTORS II, L.P.
By:____________________________
PRIVATE EQUITY INVESTMENT
FUND, L.P.
By:____________________________
_______________________________
WILLIAM T. BRAKE
/s/ Steven J. Weber
-------------------------------
STEVEN J. WEBER
_______________________________
WILLIAM R. ASH, JR.
_______________________________
ALAN P. FAZER
_______________________________
THOMAS J. O'NEILL
-15-
<PAGE>
COMMINGLED EMPLOYEE BENEFIT
TRUST SMALL CAP FUND
By:____________________________
COMMINGLED EMPLOYEE BENEFIT
TRUST EMERGING HEALTH FUND
By:____________________________
FAIRFIELD INVESTORS II, L.P.
By:____________________________
PRIVATE EQUITY INVESTMENT
FUND, L.P.
By:____________________________
_______________________________
WILLIAM T. BRAKE
_______________________________
STEVEN J. WEBER
/s/ William R. Ash, Jr.
-------------------------------
WILLIAM R. ASH, JR.
_______________________________
ALAN P. FAZER
_______________________________
THOMAS J. O'NEILL
-15-
<PAGE>
COMMINGLED EMPLOYEE BENEFIT
TRUST SMALL CAP FUND
By:____________________________
COMMINGLED EMPLOYEE BENEFIT
TRUST EMERGING HEALTH FUND
By:____________________________
FAIRFIELD INVESTORS II, L.P.
By:____________________________
PRIVATE EQUITY INVESTMENT
FUND, L.P.
By:____________________________
_______________________________
WILLIAM T. BRAKE
_______________________________
STEVEN J. WEBER
_______________________________
WILLIAM R. ASH, JR.
/s/ Alan P. Fazer
-------------------------------
ALAN P. FAZER
_______________________________
THOMAS J. O'NEILL
-15-
<PAGE>
COMMINGLED EMPLOYEE BENEFIT
TRUST SMALL CAP FUND
By:____________________________
COMMINGLED EMPLOYEE BENEFIT
TRUST EMERGING HEALTH FUND
By:____________________________
FAIRFIELD INVESTORS II, L.P.
By:____________________________
PRIVATE EQUITY INVESTMENT
FUND, L.P.
By:____________________________
_______________________________
WILLIAM T. BRAKE
_______________________________
STEVEN J. WEBER
_______________________________
WILLIAM R. ASH, JR.
_______________________________
ALAN P. FAZER
/s/ Thomas J. O'Neill
-------------------------------
THOMAS J. O'NEILL
-15-
<PAGE>
/s/ Diana F. Butts
------------------------------
DIANA F. BUTTS
_______________________________
KENNETH L. DI BELLA
_______________________________
PHILIP R. PARKER
_______________________________
CHRISTOPHER E. PARKER
_______________________________
JAMIE PARKER SHEPHERD
_______________________________
GARRY L. KOCH
-16-
<PAGE>
_______________________________
DIANA F. BUTTS
/s/ Kenneth L. Di Bella
-------------------------------
KENNETH L. DI BELLA
_______________________________
PHILIP R. PARKER
_______________________________
CHRISTOPHER E. PARKER
_______________________________
JAMIE PARKER SHEPHERD
_______________________________
GARRY L. KOCH
-16-
<PAGE>
_______________________________
DIANA F. BUTTS
_______________________________
KENNETH L. DI BELLA
/s/ Phillip R. Parker
-------------------------------
PHILIP R. PARKER
_______________________________
CHRISTOPHER E. PARKER
_______________________________
JAMIE PARKER SHEPHERD
_______________________________
GARRY L. KOCH
-16-
<PAGE>
_______________________________
DIANA F. BUTTS
_______________________________
KENNETH L. DI BELLA
_______________________________
PHILIP R. PARKER
/s/ Christopher E. Parker
-------------------------------
CHRISTOPHER E. PARKER
_______________________________
JAMIE PARKER SHEPHERD
_______________________________
GARRY L. KOCH
-16-
<PAGE>
_______________________________
DIANA F. BUTTS
_______________________________
KENNETH L. DI BELLA
_______________________________
PHILIP R. PARKER
_______________________________
CHRISTOPHER E. PARKER
/s/ Jamie Parker Shepherd
-------------------------------
JAMIE PARKER SHEPHERD
_______________________________
GARRY L. KOCH
-16-
<PAGE>
_______________________________
DIANA F. BUTTS
_______________________________
KENNETH L. DI BELLA
_______________________________
PHILIP R. PARKER
_______________________________
CHRISTOPHER E. PARKER
_______________________________
JAMIE PARKER SHEPHERD
/s/ Garry L. Koch
-------------------------------
GARRY L. KOCH
-16-
<PAGE>
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (the "Agreement"), made this day
28 of May, 1996, is entered into by and among HEALTHPLAN SERVICES CORPORATION, a
Delaware corporation (hereinafter referred to as the "Purchaser"), HEALTHPLAN
SERVICES ALPHA CORPORATION, a Delaware corporation (the "Merger Subsidiary"),
and HARRINGTON SERVICES CORPORATION, a Delaware corporation (the "Company") and
ROBERT CHEFITZ as Shareholders' Representative.
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Purchaser and the
Company have approved the merger (the "Merger") of the Company with and into the
Merger Subsidiary in accordance with the Delaware General Corporation Law (the
"Act"), with the effect that the Company will become a wholly-owned subsidiary
of Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties and covenants hereinafter set forth, the
parties hereto agree as follows:
I. DEFINITIONS. The capitalized terms used herein will have the meanings
ascribed to them in Exhibit 1.1 hereto. Unless the context otherwise requires,
such capitalized terms will include the singular and plural and the term
"including" shall mean "including but not limited to." Wherever in this
Agreement reference is made to the knowledge of the Company it means the
individual knowledge of the Company's officers, directors and employees.
II. COVENANTS AND UNDERTAKINGS.
2.1 The Merger. At the Effective Time and in accordance with the
provisions of this Agreement and the Act, the Company will be merged with and
into the Merger Subsidiary in the Merger, the separate corporate existence of
the Company shall thereupon cease, and the Merger Subsidiary shall be the
surviving corporation (the "Surviving Corporation") which, effective with the
Effective Time, shall change its name to Harrington Services Corporation.
2.2 Effective Time of Merger. The Merger shall become effective at the
time on the Closing Date (the "Effective Time") of filing of the Certificate of
Merger with the Department of State of the State of Delaware in accordance with
the provisions of the Act.
2.3 Effects of Merger. Subject to the Act, at the Effective
Time, the Merger shall have the following effects:
2.3.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
capital stock of Purchaser or the Company:
<PAGE>
2.3.1.1 each share of Merger Subsidiary Common Stock that is
issued and outstanding immediately prior to the Effective Time shall
remain outstanding;
2.3.1.2 each share of Company Common Stock that is issued and
outstanding immediately prior to the Effective Time, except for
Dissenting Shares, shall be converted into the right to receive:
(i) the Per Share Stock Consideration, PLUS
(ii) the Per Share Initial Cash Payment, PLUS
(iii) the Per Share Escrow Proceeds, if any;
provided that (x) no fractional shares of Purchaser's Common Stock
shall be issued and any holder who would otherwise have received a
fractional share of Purchaser's Common Stock shall have a right to
receive cash in an amount equal to such fraction multiplied by the
Market Price, and (y) no Shareholder shall be entitled to receive
any part of the foregoing consideration until he has delivered to
the Purchaser (i) certificates representing all of his capital stock
of the Company duly endorsed in blank with signatures guaranteed by
a national or state bank located in the United States or by an NASD
registered brokerage firm, and (ii) either a duly executed
Shareholders Agreement or Private Placement Representation Letter;
2.3.1.3 except for Dissenting Shares, each share of Preferred
Stock, shall be converted into the Per Share Preferred Stock
Consideration, provided that no Shareholder shall be entitled to
receive any part of the foregoing consideration until he has
delivered to the Purchaser certificates representing all of his
capital stock of the Company duly endorsed in blank with signatures
guaranteed by a national or state bank located in the United States
or by an NASD registered brokerage firm;
2.3.1.4 each outstanding certificate representing shares of
Company Common Stock and Preferred Stock, except for Dissenting
Shares, shall be deemed, for all purposes, to evidence only the
right to receive upon surrender of such certificate the
consideration into which such shares of Company Common Stock or
Preferred Stock are convertible; and
2.3.1.5 each share of Company Common Stock that is owned by
the Company immediately prior to the Effective Time as treasury
stock will be canceled and retired and will cease to exist, without
any conversion thereof.
2
<PAGE>
2.3.1.6 Notwithstanding anything in this Section 2.3 to the
contrary, shares of Company Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are
held by stockholders who have not voted such shares in favor of the
merger and who shall have properly exercised their rights of
appraisal for such shares in the manner provided by the Delaware
General Corporation Law (the "DGCL") (the "Dissenting Shares") shall
not be converted or exchangeable for the right to receive the Merger
consideration set forth herein, unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost
his right to appraisal and payment, as the case may be. If such
stockholder shall have failed to so perfect or shall have
effectively withdrawn or lost such right, his shares shall thereupon
be deemed to have been converted into and to have become
exchangeable for, at the Effective Time, the right to receive the
Merger consideration set forth herein without any interest
thereupon. The Company shall give the Purchaser prompt notice of any
Dissenting Shares (and shall also give the Purchaser prompt notice
of any withdrawals of such demands for appraisal rights) and the
Purchaser shall have the right to direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
except with the prior written consent of the Purchaser, voluntarily
make any payment with respect to, or settle or offer to settle, any
such demand for appraisal rights.
2.3.2 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Merger Subsidiary in effect
immediately prior to the Effective Time shall remain in effect as the
Certificate of Incorporation of the Surviving Corporation, until
thereafter amended as provided by law.
2.3.3 Bylaws. The Bylaws of the Merger Subsidiary as in effect
immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation, until thereafter amended as provided by law.
2.3.4 Directors. The directors of the Merger Subsidiary immediately
prior to the Effective Time shall be the directors of the Surviving
Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the
manner provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
2.3.5 Officers. The officers of the Merger Subsidiary immediately
prior to the Effective Time shall be the officers of the Surviving
Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the
manner provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
3
<PAGE>
2.4 Purchase Price Adjustment. Within 45 days of the Closing Date, the
Purchaser will deliver to the Shareholders' Representative and the Escrow Agent
the Closing Balance Sheet together with the Statement of Net Worth derived
therefrom, which shall contain a calculation of the Negative or Positive
Purchase Price Adjustment Amount, as the case may be. The Closing Balance Sheet
shall be prepared in accordance with GAAP consistently applied with prior
periods and shall include as accrued payables all bonuses and unpaid
compensation, including but not limited to bonuses due executives under the
Company's executive bonus plan. Additionally, the Closing Balance Sheet shall
include all liabilities of the Company includable thereon under GAAP
consistently applied with prior periods, including but not limited to any such
liabilities discovered after Closing but prior to the delivery of the Closing
Balance Sheet which if known on the Closing Date would have been so included.
The foregoing notwithstanding, the Closing Balance Sheet shall not show under
any circumstances Intangible Assets in an amount in excess of twenty-three
million six hundred thousand dollars ($23,600,000.00) and to the extent that
Intangible Assets of the Company on the Closing Date exceed $23,600,000, they
shall be disallowed and not taken into account on the Final Closing Balance
Sheet. For purposes of the foregoing the term "Intangible Assets" shall mean
those assets historically categorized as intangible assets by the Company in
accordance with GAAP applied on a consistent basis, as shown on the Company's
audited annual financial statements under the headings "Other Intangibles Net"
and "Software Net." Upon delivery of the Closing Balance Sheet and the Statement
of Net Worth, the Purchaser shall give the Shareholders' Representative and any
independent auditors and authorized representatives of the Shareholders'
Representative full access at all reasonable times to the properties, books,
records and personnel of the Company relating to periods prior to the Closing
Date for purposes of reviewing and resolving any disputes concerning the Closing
Balance Sheet and the Statement of Net Worth. The Shareholders' Representative
shall have 30 days following the delivery by Purchaser of the Closing Balance
Sheet and the Statement of Net Worth during which to notify the Purchaser of any
dispute of any item contained therein, which notice shall set forth in
reasonable detail the basis for such dispute. If the Shareholders'
Representative fails to notify the Purchaser of any such dispute within such
30-day period, the Closing Balance Sheet and the Statement of Net Worth provided
by the Purchaser shall be final, conclusive and binding and shall be deemed to
be the "Final Closing Balance Sheet" and the "Final Statement of Net Worth." In
the event that the Shareholders' Representative shall so notify the Purchaser of
any dispute, the Purchaser and the Shareholders' Representative shall cooperate
in good faith to resolve such dispute as promptly as practicable. If the
Purchaser and the Shareholders' Representative are unable to resolve any such
dispute within 15 days of the Shareholders' Representative's delivery of such
notice, such dispute shall be resolved by the Settlement Auditor at the option
of either the Purchaser or the Shareholders' Representative. The Settlement
Auditor shall make such revisions to the Closing Balance Sheet and Statement of
Net Worth as it deems appropriate in order to make a determination of the Net
Worth
4
<PAGE>
Amount in accordance with the foregoing provisions as promptly as practicable.
Such determination shall be final, conclusive and binding on the parties and
shall be deemed a final arbitration award that is enforceable pursuant to all
terms of the Federal Arbitration Act, 9 U.S.C. ss.ss. 1 et seq. (the "Federal
Arbitration Act"). The expenses relating to the engagement of the Settlement
Auditor shall be paid in equal parts by the Purchaser and from the Escrow. In
the event of a dispute, the Closing Balance Sheet and Statement of Net Worth, as
modified by the Settlement Auditor shall be the "Final Closing Balance Sheet"
and the "Final Statement of Net Worth."
2.4.1 Upon determination of the Final Closing Balance Sheet, if the
Net Worth Amount is less than the Target Net Worth Amount, the Purchaser
shall be paid from the Escrow cash in the amount of one dollar for each
dollar that the Net Worth Amount as of the Closing Date shown on the
Statement of Net Worth is less than such Target Net Worth Amount (the
"Negative Purchase Price Adjustment Amount").
2.4.2 Upon determination of the Final Closing Balance Sheet and the
Final Statement of Net Worth, if the Net Worth Amount of the Company as
shown on the Final Statement of Net Worth is more than the Target Net
Worth Amount (a "Positive Purchase Price Adjustment Amount"), the
Purchaser shall issue to each Shareholder an additional number of shares
of the Purchaser's Common Stock determined by first dividing the Positive
Purchase Price Adjustment Amount plus interest earned thereon since the
Closing at the interest rate earned on the Escrow Amount, by the Market
Price, then dividing the result thereof by the Company's Outstanding
Shares, and then multiplying the result thereof by the number of Company
Shares owned by each such Shareholder immediately prior to the Effective
Time; provided that any fractional shares resulting therefrom shall be
paid in cash in the same manner set forth in Section 2.3.1.2 hereof and
the aggregate number of shares issued to all of the Shareholders pursuant
to this Section 2.4.2 shall never be more than 75,000 shares of the
Purchaser's Common Stock.
2.5 HSR Act Filings. As promptly as practicable after the execution of
this Agreement, and in any event not later than the fourteenth (14) business day
following the date of this Agreement, Purchaser and the Company shall, in
cooperation with each other, make the required filings in connection with the
transactions contemplated by this Agreement under the HSR Act with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice, and, as promptly as practicable from time to time thereafter, each
party shall make all such further filings and submissions, and take such further
action, as may be required in connection therewith. Purchaser and the Company
shall each request early termination of the waiting period with respect to such
filings. Each party shall furnish the other all information in its possession
necessary for compliance by the other with the provisions of this Section 2.5.
Purchaser and the Company shall
5
<PAGE>
each notify the other immediately upon receiving any request for additional
information with respect to such filings from either the Antitrust Division of
the Department of Justice or the Federal Trade Commission and the party
receiving the request shall use its best efforts to comply with such request as
soon as possible. Neither party shall withdraw any such filing or submission
without the written consent of the other party.
2.6 Compliance with Securities Laws, Registration Rights and
Cooperation with Post-Closing Audit.
2.6.1 In connection with the transactions contemplated by this
Agreement, the parties hereto agree to cooperate with one another in complying
with the provisions of the 1933 Act and the General Rules and Regulations
thereunder, and all other applicable federal and state securities laws, and each
of them agrees to furnish the other, or its counsel, with such information and
to take such actions, as may be reasonably requested in respect of such
compliance. At the Closing the Purchaser will enter into Registration Rights
Agreements in substantially the form of Exhibit 2.6.1 hereto with any
Shareholder who wishes to avail himself of the registration rights contained
therein subject to the obligations and conditions contained therein and the
condition set forth in Section 5.15 hereof.
2.6.2 Before the Closing, the Company shall obtain the consent of
Richard Eisner & Company to the incorporation of the financial statements
prepared by Richard Eisner & Company in Purchaser's public filings as may be
required after Closing.
2.7 Conduct of the Business of the Company Prior to Closing.
2.7.1 Except (i) with the prior consent in writing of Purchaser,
(ii) as may be required to effect the transactions contemplated by this
Agreement, (iii) as provided otherwise in this Agreement or (iv) as set forth on
Exhibit 2.7.1, the Company covenants that, between the date of this Agreement
and the Effective Time, the Company will conduct its business only in the
ordinary course, and that it will: (a) use its best efforts to preserve the
organization of the Company intact and to preserve the goodwill of clients,
customers and others having business relations with the Company; (b) maintain
the properties of the Company in the same working order and condition as such
properties are in as of the date of this Agreement, reasonable wear and tear
excepted; (c) keep in force at no less than their present limits all existing
bonds, letters of credit and policies of insurance insuring the Company, its
performance and its respective properties; (d) not enter into any contract,
commitment, arrangement or transaction of the type required to be listed on
Exhibits 3.4, 3.12, 3.13.1, 3.13.2, 3.15 or 3.18 hereof or suffer, permit or
incur any of the transactions or events described in Section 3.9 hereof (except
for the payment of any health, disability and life insurance premiums which may
become due and except for contributions or distributions required to be made
(and not discretionary) pursuant to the terms of any Benefit Plans) to the
extent such events or transactions are
6
<PAGE>
within the control of the Company; (e) not enter into any contracts,
commitments, arrangements or transactions of the type required to be listed on
Exhibit 3.7 which individually exceed $100,000 or in the aggregate exceeds
$250,000.00; (f) not make or permit any change in the Company's Certificate of
Incorporation or Bylaws, or in its authorized, issued or outstanding securities;
(g) not issue any security or grant any stock option or right to purchase any
security of the Company, issue any security convertible into such securities,
purchase, redeem, retire or otherwise acquire any of such securities, or agree
to do any of the foregoing or declare, set aside or pay any dividend or other
distribution in respect of such securities; (h) not make any contribution to or
distribution on behalf of or to any employee of the Company (except for the
payment of any health, disability and life insurance premiums which may become
due and except for contributions or distributions required to be made (and not
discretionary) pursuant to the terms of any Benefit Plans); (i) not make any
capital expenditure which when aggregated with all other capital expenditures
for the period exceeds the sum of $100,000.00; and (j) promptly advise Purchaser
in writing of any matters arising or discovered after the date of this Agreement
which, if existing or known at the date hereof, would be required to be set
forth or described in this Agreement or the Exhibits hereto.
2.7.2 Except after prior notification to, and with the prior written
consent of, Purchaser, the Company will not make, between the date of this
Agreement and the Closing Date, any material change in its respective banking or
safe deposit arrangements or grant any powers of attorney. A list of all bank
accounts, safe deposit boxes (and the contents thereof) and powers of attorney
of the Company and of all persons authorized to act with respect thereto is
attached hereto as Exhibit 2.7.2.
2.7.3 Except with the prior consent in writing of Purchaser or as
otherwise required by GAAP, the Company will not make, between the date of this
Agreement and the Closing Date, any changes in its accounting methods or
practices.
2.8 Intercompany Accounts and Services. Prior to or at the Closing, the
Company will cause its Shareholders to take all actions necessary to settle as
of the Closing all cash overdrafts, loans, advances, intercompany payables or
receivables, indebtedness and other accounts between the Company, on the one
hand, and the Shareholders or any Affiliate of any of the Shareholders which is
not the Company on the other hand.
2.9 Examination of Property and Records. Between the date of this
Agreement and the Closing Date, the Company will allow Purchaser, its counsel
and other representatives full access to all the books, records, files,
documents, assets, properties, contracts and agreements of the Company which may
be reasonably requested, and shall furnish Purchaser, its officers and
representatives during such period with all information concerning the affairs
of the Company which may be reasonably requested. Purchaser will
7
<PAGE>
conduct any investigation in a manner which will not unreasonably interfere with
the business of the Company.
2.10 Consents and Approvals. The Company agrees to use its best efforts to
obtain the waiver, consent and approval of all persons whose waiver, consent or
approval (i) is required in order to consummate the transactions contemplated by
this Agreement or (ii) is required by any material agreement, lease, instrument,
arrangement, judgment, decree, order or license to which the Company or any
Shareholder or any Affiliate of any Shareholder is a party or subject to on the
Closing Date and (a) which would prohibit, or require the waiver, consent or
approval of any person to such transactions or (b) under which, without such
waiver, consent or approval, such transactions would constitute an occurrence of
default under the provisions thereof, result in the acceleration of any
obligation thereunder or give rise to a right of any party thereto to terminate
its obligations thereunder. All required written waivers, consents and approvals
shall be listed on Exhibit 3.8 hereto and except as waived by the Purchaser in
writing, at or prior to Closing, shall be produced at Closing in form and
content reasonably satisfactory to Purchaser.
2.11 Employment Agreements and Nondisclosure and
Noninterference Agreements.
2.11.1 The Company covenants to use its best efforts to cause those
employees identified on Exhibit 2.11.1(a) to enter into, at the Closing,
Employment Agreements substantially in the form set forth in Exhibit 2.11.1(b).
2.11.2 The Company shall cause the Shareholders listed on Exhibit
2.11.2(a) to enter into, at the Closing, a Nondisclosure and Noninterference
Agreement substantially in the form attached hereto as Exhibit 2.11.2(b).
2.12 Supplying of Financial Statements. The Company covenants to deliver
to Purchaser all regularly prepared monthly, and other, unaudited financial
statements of the Company prepared after the date of this Agreement, in format
historically utilized internally, as soon as available but not later than the
15th of each month following each statement's date.
2.13 Access to Business Records. Prior to Closing, the Company shall
cause any Shareholder or any Affiliates thereof, who possess documents required
or incident to the performance of the Company's businesses to transfer such
documents to the Company. Such Shareholders may make copies or extracts from
such books and records prior to transfer at their sole expense.
2.14 Employee Matters.
2.14.1 After the Closing until the later of December 31, 1996 and
such date as the Company's employees commence participation in Purchaser's
employee benefit plans, as described in the next sentence (the "Plan Transfer
Date"), Purchaser shall
8
<PAGE>
cause the Surviving Corporation to take whatever action is necessary or
appropriate to cause the Surviving Corporation to maintain the participation,
sponsorship and/or maintenance of all of the Company's employee benefit plans
except those identified on Exhibit 2.14.1. From and after the Plan Transfer
Date, (except with respect to employees of the Company's APBA subsidiary who
receive benefits pursuant to a collective bargaining contract which shall be
assumed by the Surviving Corporation) all employees of the Surviving Corporation
shall become participants in the employee benefit plans and programs maintained
by the Purchaser for similarly situated employees of the Purchaser. Such
employee benefit plans that are health benefit plans shall (i) recognize
expenses and claims that were incurred by such employees in the year in which
the Effective Time occurs and recognized for similar purposes under the
Company's plans as of the Effective Time and (ii) provide coverage (without any
required waiting period) for pre-existing health conditions to the extent
covered under the applicable plans or benefit programs of the Company as of the
Effective Time. In addition, such employee benefit plans and programs shall
credit such employees with years of service with the Company for all plan
purposes, provided that no such crediting shall be required to the extent that
it would result in a duplication of benefits or require contributions for years
prior to the Effective Time.
2.14.2 The Company shall provide Purchaser with any information
which Purchaser shall reasonably request concerning the employees of the Company
(the "Employees"), and shall cooperate with, and assist, Purchaser with respect
to the commencement of participation of any Employee in the Surviving
Corporation's benefit plans or arrangements.
2.14.3 Prior to the Closing, the Company shall cause the Deferred
Compensation Plan of R. E. Harrington, Inc. for Robert J. Covert, the Deferred
Compensation Plan of R. E. Harrington, Inc. for Robert R. Parker and the
Deferred Compensation Plan of R. E. Harrington, Inc. for Warren G. Blue (the
"Deferred Compensation Agreements") to be amended to provide that effective
January 1, 1996, employer contributions may no longer be made under each such
Deferred Compensation Plan. Further, the Company will not make any amendments
prior to Closing respecting employer or employee contributions to the Rabbi
Trust Agreement which is used to receive the funds that will be paid under each
Deferred Compensation Agreement.
2.15 Affiliated Contracts. At or prior to Closing, the Company shall cause
the Shareholders and their Affiliates to transfer to the Company any contracts
the revenues from which are included in the revenues of the Company but which
are in the name of the Shareholders or their Affiliates and any assets which
have been paid for by the Company but which are owned by the Shareholders or
their Affiliates, as opposed to the Company. All such assets and contracts are
listed on Exhibit 2.15.
9
<PAGE>
2.16 Shareholders' Tax Free Reorganization Treatment. The Company
understands that the Purchaser is making no representation as to the tax-free
status of the Merger or the gain or loss, if any, which the Shareholders will
experience upon consummation of the Merger. The Company represents and warrants
that it has consulted with its own tax advisers concerning the tax consequences
of the proposed transactions and is not relying on any representation of the
Purchaser as to such consequences. Notwithstanding the foregoing, Purchaser
covenants and agrees that it will treat the Merger, for federal income tax
purposes, as a tax-free reorganization under Section 368(a)(1)(A) and (a)(2)(D)
of the Code. Following the Merger, neither the Purchaser, the Surviving
Corporation nor any Affiliate of Purchaser or the Surviving Corporation shall
take, or cause to be taken, any action which, after consultation with counsel,
it reasonably believes would jeopardize the status of the merger as a tax-free
reorganization within the meaning of Section 368 (a) of the Code.
2.17 Shareholder Vote. As promptly as practical after the execution of
this Agreement, the Company shall call a shareholders meeting to vote upon the
Merger, which shareholders meeting shall be held as soon as permitted by the
Company's Bylaws and applicable law after mailing of such notice. The Board of
Directors of the Company shall recommend to the Shareholders the approval of the
Merger and the Company shall use its best efforts to obtain the affirmative vote
of all Shareholders for approval of the Merger.
2.18 Conduct of the Business of the Purchaser Prior to the Closing. Except
with the prior written consent of the Shareholders' Representative, the
Purchaser covenants that, between the date of this Agreement and the Effective
Time, (a) the Purchaser will not adopt or propose any change in its Certificate
of Incorporation or Bylaws; (b) the Purchaser will not and will not allow any of
its subsidiaries to merge or consolidate with any other Person or acquire a
material amount of assets of any other Person; (c) the Purchaser will not and
will not allow any of its subsidiaries to lease, license or dispose of any
assets or property, which assets or property are material to the Purchaser and
its subsidiaries taken as a whole; (d) the Purchaser will not declare, set
aside, make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise with respect to any of its capital stock; and (f) the
Purchaser will not agree or commit to do any of the foregoing.
2.19 Execution of Shareholder Agreements. Simultaneous with the execution
of this Agreement, the Company will cause the Shareholders listed on Exhibit
5.14(a) to execute Shareholder Agreements with the Purchaser and the Merger
Subsidiary in substantially the form of Exhibit 5.14(b).
2.20 Continuation of Indemnification. On or prior to Closing, the Company
will purchase tail coverage under its existing directors and officers liability
insurance policy affording coverage for a period of twelve (12) months to the
Company's
10
<PAGE>
directors and officers for periods prior to the Closing. From and after Closing
for a period of one year, the Purchaser will cause the Surviving Corporation to
keep in place officer and director indemnification in substantially the same
form as currently contained in the Company's Articles of Incorporation and
Bylaws which will indemnify the Company's officers and directors immediately
prior to Closing in accordance with the terms thereof for occurrences prior to
the Effective Time; provided, however, that such indemnification will not cover
any claims made or action filed against such directors and officers by the
Company's Shareholders.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Purchaser as follows:
3.1 Organization, Standing and Foreign Qualification.
3.1.1 The Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation as set forth in Exhibit 3.1 and has full
corporate power and authority to carry on its business as it is now being
conducted and to own and lease the properties and assets which it now owns or
leases.
3.1.2 The Company and each of its Subsidiaries is now, and will be
at Closing, duly qualified and/or licensed to transact business and in good
standing as a foreign corporation in the jurisdictions listed in Exhibit 3.1
hereto, and the character of the property owned or leased by the Company and
each of its Subsidiaries and the nature of the business conducted by them do not
require such qualification and/or licensing in any other jurisdiction, except
where the failure to be so qualified or licensed would not have a material
adverse effect on the business, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Effect").
3.1.3 Except as Listed on Exhibit 3.1.3 attached hereto, the Company
has no Subsidiaries.
3.2 Authority and Status. The Company has the capacity and authority to
execute and deliver this Agreement, to perform hereunder and to consummate the
transactions contemplated hereby without the necessity of any act or consent of
any other person whomsoever. The execution, delivery and performance by the
Company of this Agreement and each and every agreement, document and instrument
provided for herein have been duly authorized and approved by the Board of
Directors of the Company. Subject to Shareholder approval as contemplated by
Section 2.17, this Agreement and each and every agreement, document and
instrument to be executed, delivered and performed by the Company in connection
herewith constitute or will, when executed and delivered,
11
<PAGE>
constitute the valid and legally binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws from time to
time in effect affecting the enforcement of creditors' rights generally.
Attached hereto as Exhibit 3.2 are true, correct and complete copies of the
Certificate or Articles of Incorporation and Bylaws of the Company and each
Subsidiary of the Company.
3.3 Capitalization. All outstanding securities of the Company and each
Subsidiary of the Company, the entire authorized capital stock, the amount of
shares issued and outstanding and the amount of shares held in treasury for the
Company and each such Subsidiary are as set forth on Exhibit 3.3. All of the
issued and outstanding shares of the Company are owned by the Shareholders as
indicated on Exhibit 3.3 and all of the outstanding shares of each Subsidiary
are owned by the Company, in each case free and clear of all liens, claims,
charges and encumbrances of any nature whatsoever, and, subject to shareholder
approval as contemplated by Section 2.17, the authorization or consent of no
other person or entity is required in order to consummate the transactions
contemplated herein by virtue of any such person or entity having an equitable
or beneficial interest in the Company or the capital stock of the Company.
Except as set forth on Exhibit 3.3 or as contemplated herein, there are no
outstanding options, warrants, calls, commitments or plans by the Company or any
Subsidiary to issue any additional shares of its capital stock, to pay any
dividends on such shares or to purchase, redeem, or retire any outstanding
shares of its capital stock, nor are there outstanding any securities or
obligations which are convertible into or exchangeable for any shares of capital
stock of the Company or any such Subsidiary.
3.4 Absence of Equity Investments. Except as described in Exhibit 3.4
hereto or Exhibit 3.1.3 hereto, the Company does not, either directly or
indirectly, own of record or beneficially any shares or other equity interests
in any corporation, partnership, limited partnership, joint venture, trust or
other business entity. Except as described in Exhibit 3.4 hereto, no Shareholder
or any other Affiliate of a Shareholder, directly or indirectly, owns of record
or beneficially any shares or other equity interests in any corporation (except
as a stockholder holding less than one percent (1%) interest in a corporation
whose shares are traded on a national or regional securities exchange or in the
over-the-counter-market), partnership, limited partnership, joint venture, trust
or other business entity, all or any portion of the business of which is
competitive with that of the Company.
3.5 Liabilities and Obligations of the Company.
3.5.1 Attached hereto as Exhibit 3.5.1 are true, correct and
complete copies of the Company's consolidated audited balance sheets as of
December 31, 1993, 1994 and 1995 and the related consolidated statements of
operations and operating cash
12
<PAGE>
flow for the year then ended (the "1993, 1994 and 1995 Financial Statements").
The 1993, 1994 and 1995 Financial Statements are complete, have been prepared in
accordance with GAAP consistently applied, fairly present in all material
respects the financial condition of the Company as of the respective dates
thereof and disclose all liabilities of the Company, whether absolute,
contingent, accrued or otherwise, existing as of the date thereof which are of a
nature required to be reflected in financial statements prepared in accordance
with GAAP consistently applied.
3.5.2 The Company has no liability or obligation (whether accrued,
absolute, contingent or otherwise) which is of a nature required to be reflected
in financial statements prepared in accordance with GAAP, consistently applied,
including, without limitation, any liability which is reasonably likely to
result from an audit of its Tax Returns by any appropriate authority, except for
(a) the liabilities and obligations of the Company which are disclosed or
reserved against in the 1995 Financial Statements or Exhibit 3.5.2 hereto, to
the extent and in the amounts so disclosed or reserved against, and (b)
liabilities incurred or accrued in the ordinary course of business since
December 31, 1995 which do not, either individually or in the aggregate, have a
Material Adverse Effect.
3.5.3 Except as disclosed in the 1995 Financial Statements or
Exhibit 3.5.2, the Company is not in default with respect to any liabilities or
obligations, and all such liabilities or obligations shown or reflected in the
1995 Financial Statements or Exhibit 3.5.2 and such liabilities incurred or
accrued subsequent to December 31, 1995 have been, or are being, paid and
discharged as they become due, and all such liabilities and obligations were
incurred in the ordinary course of business except as indicated in Exhibit
3.5.2.
3.6 Tax Returns and Agreements. (a) Except as otherwise disclosed on
Exhibit 3.6: (i) the Company has never filed, nor has ever been required to
file, any Returns in respect of Taxes with any corporation or other entity on a
consolidated, combined or unitary basis; (ii) all Returns in respect of Taxes
required to be filed with respect to the Company have been timely filed, none of
such Returns contains, or is required to contain, a disclosure statement under
section 6662 of the Code or any similar provision of state, local, or foreign
Law, and no extension of time within which to file any such Return has been
requested, which Return has not since been filed; (iii) all Taxes required to be
shown on such Returns or otherwise due or payable have been timely paid and all
payments of estimated Taxes required to be made with respect to the Company
under section 6655 of the Code or any comparable provision of state, local or
foreign Law have been made; (iv) all such Returns are true, correct and complete
in all material respects; (v) no adjustment relating to such Returns has been
proposed to the Company formally or informally by any tax authority and, to the
knowledge of the Company, no basis exists for such an adjustment; (vi) there are
no pending or threatened actions or proceedings for the assessment or collection
of Taxes against the Company; (vii)
13
<PAGE>
there are no Tax liens on any assets of the Company other than ad valorem or
income taxes which are not yet due; (viii) there are no outstanding subpoenas or
requests for information currently outstanding that could affect the Taxes of
the Company; (ix) there are no proposed reassessments of any property owned or
leased by the Company or other proposals that could increase the amount of any
Tax to which the Company would be subject; (x) the Company is not a party to any
agreement or arrangement that would result, separately or in the aggregate, in
the payment of any "excess parachute payment" within the meaning of section 280G
of the Code; (xi) the Company has not been a United States real property holding
corporation within the meaning of section 897(c)(2) of the Code during the
applicable period specified in section 897(c)(1)(A)(ii) of the Code; (xii) there
are no outstanding waivers or agreements extending the statute of limitations
for any period with respect to any Tax to which the Company may be subject;
(xiii) there are no requests for rulings or information currently outstanding
that could affect the Taxes of the Company or any similar matters pending with
respect to any tax authority; (xiv) no power of attorney that is currently in
force has been granted with respect to any matter relating to Taxes that could
affect the Company; (xv) no consent under section 341(f) of the Code has been
filed with respect to the Company; (xv) no acceleration of the vesting schedule
for any property that is substantially nonvested within the meaning of the
regulations under section 83 of the Code will occur in connection with the
transactions contemplated by this Agreement; (xvi) the Company has not at any
time been a member of any partnership or joint venture or the holder of a
beneficial interest in any trust for any period for which the statute of
limitations for any Tax potentially applicable as a result of such membership or
holding has not expired; (xvii) the Company does not owe any amount pursuant to
any Tax sharing agreement or arrangement and does not have any liability after
the date hereof in respect of any Tax sharing agreement or arrangement executed
or agreed to prior to the date hereof, whether any such agreement or arrangement
is written or unwritten; (xviii) all Taxes required to be withheld, collected or
deposited by the Company have been timely withheld, collected or deposited and,
to the extent required, have been paid to the relevant Tax authority; (xix) any
adjustment of Taxes of the Company made by the Internal Revenue Service ("IRS")
that is required to be reported to any state, local or foreign Tax authority has
been so reported and any additional Tax due as a result thereof has been paid in
full; (xx) the Company was not acquired in a qualified stock purchase under
section 338(d)(3) of the Code and no elections under section 338(g) of the Code,
protective carryover basis elections, offset prohibition elections or other
deemed or actual elections under section 338 of the Code are applicable to the
Company; (xxi) the Company has not issued or assumed any corporate acquisition
indebtedness, as defined in section 279(b) of the Code or any obligations
described in section 279(a) of the Code; (xxii) as of the Closing, the Company
will not have any non-recaptured net section 1231 loss as defined in section
1231(c) of the Code; (xxiii) the books and records of the Company reflect
reserves that are adequate for the payment of all Taxes not yet due and payable
that are properly accruable thereon as of the
14
<PAGE>
date thereof (including Taxes being contested), and there is no difference
between the amounts of the book basis and the tax basis of assets (net of
Liabilities) that is not accounted for by an accrual on the books for federal
income tax purposes; (xxiv) the Company has not had any income attributable to a
transaction (e.g., an installment sale) occurring in or a change in accounting
method made for a period ending at or prior to the Closing which resulted in a
deferred reporting of income from such transaction or from such change in
accounting method; (xxv) the Company is not obligated under any agreement with
respect to industrial development bonds or similar obligations, with respect to
which the excludability from gross income of the holder for federal income tax
purposes could be affected by the transactions contemplated hereunder; and
(xxvi) the Company is not subject to liability for any Taxes as a transferee or
successor, or by reason of Section 1.1502-6 of the Treasury Regulations (or
similar provision of state, local or foreign Law).
(b) (i) Exhibit 3.6 (1) lists all income, franchise and similar
Returns (federal, state, local and foreign) filed with respect to the Company
for taxable periods ended on or after December 31, 1990; (2) indicates for which
jurisdictions Returns have been filed; (3) indicates the most recent income,
franchise or similar Return for each relevant jurisdiction for which an audit
has been completed and indicates all Returns that currently are the subject of
audit; (ii) the Company has delivered to the Purchaser correct and complete
copies of all federal, state and foreign income, franchise, sales and use, real
and personal property Tax Returns and all other Returns, elections relating to
Taxes of the Company, examination reports, and statements of deficiencies
assessed against or agreed to by the Company since January 1, 1990; (iii)
Exhibit 3.6 sets forth the following information with respect to the Company as
of the most recent practicable date (and, in each case, specifying such date):
(A) the tax basis of the Company in its respective Assets and (B) for state Tax
purposes, the amount of any net operating loss, net capital loss, unused credit,
unused foreign tax credit, earnings and profits or excess charitable
contribution allocable to the Company; (iv) the Company has delivered to the
Purchaser a complete and accurate description of all Tax accounting methods for
all significant items affecting federal and state income or franchise Taxes; (v)
the Company has delivered to the Purchaser a full description of any and all
related party transactions between the Company and its respective Affiliates;
(vi) the Company has provided to the Purchaser a complete and accurate list of
locations by city and state in which the Company leases any real or personal
property; and (vii) the Company has provided to the Purchaser a complete and
accurate description of all prior acquisitions, reorganizations and
dispositions, and a description of all changes in corporate control or capital
structure.
15
<PAGE>
3.7 Ownership of Assets and Leases.
3.7.1 Real Estate and Personal Property. Exhibit 3.7 attached hereto
is a complete and correct list and brief description as of the date of this
Agreement of all real property and items of personal property which are owned
and have a book value in excess of $100,000 net of the reserve for depreciation,
and all real property and all material items of personal property which are
leased or licensed by the Company. The Company has good and marketable title to
all of its property and assets, other than leased or licensed property,
including those listed and described in Exhibit 3.7 as owned property and
assets, in each case free and clear of any liens, security interests, claims,
charges, options, rights of tenants or other encumbrances, except as disclosed
or reserved against in Exhibit 3.7 (to the extent and in the amounts so
disclosed or reserved against) and except for liens arising from current taxes
not yet due and payable. Each of the leases, licenses and agreements described
in Exhibit 3.7 is in full force and effect and constitutes a legal, valid and
binding obligation of the Company and the other respective parties thereto and
is enforceable in accordance with its terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally, and there is not under
any of such leases, licenses or agreements existing any default of the Company
or any other parties thereto (or event or condition which, with notice or lapse
of time, or both, would constitute a default). Neither the Company nor any
Shareholder has received any payment from a lessor or licensee in connection
with or as inducement for entering into a lease or license under which it is a
lessee or a licensee. All buildings, machinery and equipment owned or leased by
the Company are in good operating condition and reasonable state of repair,
subject only to ordinary wear and tear. The Company has not received any notice
of a violation of any applicable zoning regulation, ordinance or other law,
regulation or requirement relating to its operations and properties, whether
owned or leased, and there is no such violation or grounds therefor which could
have a Material Adverse Effect. Except pursuant to this Agreement, neither the
Company nor any Shareholder is a party to any contract or obligation whereby
there has been granted to anyone an absolute or contingent right to purchase,
obtain or acquire any rights in any of the assets, properties or operations
which are owned by the Company or which are used in connection with the business
of the Company.
3.7.2 Accounts Receivable. All of the accounts receivable of the
Company as of the Closing Date will reflect actual transactions, will have
arisen in the ordinary course of business and will not be subject to offset or
deduction.
3.8 Agreement Does Not Violate Other Instruments. Except as listed in
Exhibit 3.8, the execution and delivery of this Agreement by the Company does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of the Certificate of Incorporation, as amended, Articles
of
16
<PAGE>
Incorporation, as amended, or Bylaws, as amended, of the Company or violate or
constitute an occurrence of default under any provision of, or conflict with, or
result in acceleration of any obligation under, or give rise to a right by any
party to terminate its obligations under, any material mortgage, deed of trust,
conveyance to secure debt, note, loan, lien, lease, agreement, instrument, or
any order, judgment, decree or other material arrangement to which the Company
is a party or is bound or by which the Company's assets are affected. Except for
Shareholder approval as noted in Section 2.17 hereof, the requisite filing under
the HSR Act and except as listed or described on Exhibit 3.8 attached hereto, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental entity is required to be obtained or made by or
with respect to the Company, any Shareholder or any assets, properties or
operations of the Company or any Shareholder, in connection with the execution
and delivery by the Company of this Agreement or the consummation of the
transactions contemplated hereby.
3.9 Absence of Changes. Since December 31, 1995, the Company has not, nor
has anyone on its behalf, except as disclosed on Exhibit 3.9 attached hereto or
as permitted by Section 5.13 hereof:
3.9.1 Transferred, assigned, conveyed or liquidated into current
assets any of its assets or business or entered into any transaction or incurred
any liability or obligation, other than in the ordinary course of its business;
3.9.2 Suffered any material adverse change in its business,
operations, or financial condition or become aware of any event or state of
facts which may result in any such material adverse change;
3.9.3 Suffered any destruction, damage or loss to a material asset
or a group of assets that are in the aggregate material to the business, whether
or not covered by insurance;
3.9.4 Suffered, permitted or incurred the imposition of any lien,
charge, encumbrance (which as used herein includes, without limitation, any
mortgage, deed of trust, conveyance to secure debt or security interest) or
claim upon any of its assets, except for any current year lien with respect to
Taxes not yet due and payable;
3.9.5 Committed, suffered, permitted or incurred any default in any
liability or obligation;
3.9.6 Made or agreed to any adverse change in the terms of any
material contract or instrument to which it is a party;
3.9.7 Waived, canceled, sold or otherwise disposed of, for less than
the face amount thereof, any material claim or right which it has against others
or accelerated its
17
<PAGE>
collections or its efforts to collect accounts receivable or otherwise deviated
from its normal collection activities consistent with historic practice in any
material respect;
3.9.8 Declared, promised or made any distribution or other payment
to its shareholders (other than reasonable compensation for services actually
rendered) or issued any additional shares or rights, options or calls with
respect to the Company's shares, or redeemed, purchased or otherwise acquired
the Company's shares, or made any change whatsoever in the Company's capital
structure;
3.9.9 Paid, agreed to pay or incurred any obligation for any payment
for, any contribution or other amount to, or with respect to, any employee
benefit plan (except for the payment of health, disability and life insurance
premiums which had become due and except for contributions or distributions
required to be made (and not discretionary) pursuant to any Benefit Plans), or
paid or agreed to pay any bonus to, or granted or agreed to grant any increase
in the compensation of, the Company's directors, officers, agents or employees,
or made any increase in the pension, retirement or other benefits of its
directors, officers, agents or other employees (except for regularly scheduled
periodic increases in employees' compensation at times and in amounts consistent
with historic practice);
3.9.10 Committed, suffered, permitted or incurred any transaction or
event which would materially increase its Tax liability for any prior taxable
year;
3.9.11 Incurred any other material liability or obligation or
entered into any transaction other than in the ordinary course of business;
3.9.12 Received any notices, or had reason to believe, that any
customer has taken or contemplates any steps which could materially disrupt the
business relationship of the Company with said person or could result in the
material diminution in the value of the Company as a going concern;
3.9.13 Paid, agreed to pay or incurred any material obligation for
any payment of any indebtedness except current liabilities incurred in the
ordinary course of business and except for payments as they become due pursuant
to governing agreements as such agreements existed on December 31, 1995; or
3.9.14 Delayed or postponed the payment of any liabilities, whether
current or long term, or failed to pay in the ordinary course of business any
material liability on a timely basis consistent with prior practice.
3.10 Litigation. Except as otherwise set forth in Exhibit 3.10 hereto
(with Exhibit 3.10 separately identifying litigation arising in the ordinary
course in the Company's third party administrator business involving denied
coverage or claims
18
<PAGE>
administration), there is no suit, action, proceeding, claim or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company and, to the knowledge the Company, there exists no basis or grounds for
any such material suit, action, proceeding, claim or investigation. None of the
items described in Exhibit 3.10, individually or in the aggregate, if pursued
and/or resulting in a judgment, would have a Material Adverse Effect or
adversely affect the right of the Company or the Shareholders to consummate the
transactions contemplated hereby.
3.11 Licenses and Permits; Compliance With Law. The Company holds all
licenses, certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary for the conduct of its
business and the use of its assets. All such licenses, certificates, permits,
franchises and rights are listed in Exhibit 3.11. Except as noted in Exhibit
3.11, the Company is presently conducting its business so as to comply with all
applicable statutes, ordinances, rules, regulations and orders of any
governmental authority. All necessary records demonstrating such compliance will
become the property of the Surviving Corporation subsequent to the Closing.
Further, the Company is not presently charged with, or, to the knowledge of the
Company, under governmental investigation with respect to, any actual or alleged
violation of any statute, ordinance, rule or regulation, nor presently the
subject of any pending or, to the knowledge of the Company, threatened material
adverse proceeding by any regulatory authority having jurisdiction over its
business, properties or operations. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in the termination of any material license, certificate, permit,
franchise or right held by the Company.
3.12 Contracts, Etc. Exhibit 3.12 hereto consists of a true and complete
list of all contracts, agreements and other instruments to which the Company is
a party which are not listed on Exhibits 3.7, 3.13.2(ii), 3.15 or 3.18 and which
involve the payment by or to the Company of more than $100,000.00 over the term
of the agreement, and contemporaneously with the delivery of the Exhibits to
this Agreement, the Company has delivered a true and complete copy of each
contract, agreement or instrument listed in Exhibits 3.7, 3.12, 3.13.2(ii), 3.15
or 3.18 which is written and a summary of the terms of each such contract or
agreement which is oral, certified as such by a duly authorized officer of the
Company, except that, with respect to the contracts listed on Exhibit 3.12, the
Company has provided access to the Purchaser to such contracts but has not made
copies thereof. The foregoing notwithstanding Exhibit 3.12 includes all of the
following:
3.12.1 Any contract or commitment which requires services in excess
of $100,000 to be provided or performed by the Company or which authorizes
others to perform services for a third party for, through or on behalf of the
Company, other than those services performed for customers and clients set forth
on Exhibit 3.16;
19
<PAGE>
3.12.2 Any contract or commitment involving an obligation in excess
of $100,000 which cannot, or in reasonable probability will not, be performed or
terminated within one year from the dates as of which these representations are
made;
3.12.3 Any note receivable;
3.12.4 Any contract or commitment providing for payments based in
any manner upon the sales, purchases, receipts, income or profits of the Company
including, without limitation, any agreements with general agents or with
agents;
3.12.5 Any franchise agreement, marketing agreement or royalty
agreement (and with respect to each such agreement Exhibit 3.12 sets forth the
aggregate royalties or similar payment paid or payable hereunder by the Company
as of the date hereof);
3.12.6 Any contract or agreement with a creditor not made in the
ordinary course of business;
3.12.7 Any employment contract or arrangement regarding an employee
or independent contractors which is not terminable by the Company within thirty
(30) days without payment of any amount for any reason whatsoever, or without
any continuing payment of any type or nature, including, without limitation, any
bonuses and vested commissions;
3.12.8 Any contract, agreement, understanding or arrangement
materially restricting the Company from carrying on its business anywhere in the
world;
3.12.9 Any material instrument or arrangement evidencing or related
to indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of purchase money obligation, guaranty, subordination,
conditional sale, lease-purchase or otherwise;
3.12.10 Any contract with any labor organization; and
3.12.11 Any material bond, suretyship arrangement, guarantee, letter
of credit or other performance guarantee document pursuant to which any
obligation of the Company is guaranteed or secured or pursuant to which the
Company has guaranteed or secured the performance or obligation of another
person.
All of the contracts, agreements, policies of insurance or instruments
described in Exhibits 3.7, 3.12, 3.13.2(i), 3.13.2(ii), 3.15 or 3.18 hereto are
valid and binding upon the Company and, to the knowledge of the Company, the
other parties thereto and are in full force and effect and enforceable in
accordance with their terms. Neither the Company nor, to the knowledge of the
Company, any other party to any such contract, commitment or arrangement has
20
<PAGE>
breached any material provision of, or is in default under, the terms thereof.
3.13 Intellectual Property; Computer Software.
3.13.1 Exhibit 3.13.1 hereto sets forth a complete and correct list
and summary description of all material trademarks, trade names, service marks,
service names, brand names, copyrights and patents, registrations thereof and
applications therefor, applicable to or used in the business of the Company,
together with a complete list of all licenses granted by or to the Company with
respect to any of the above. All such trademarks, trade names, service marks,
service names, brand names, copyrights and patents are owned by the Company,
free and clear of all liens, claims, security interests and encumbrances of any
nature whatsoever. The Company is not currently in receipt of any notice of any
violation of, and, to the knowledge of the Company, it is not violating, the
rights of others in any trademark, trade name, service mark, copyright, patent,
trade secret, know-how or other intangible asset.
3.13.2 (i) Exhibit 3.13.2(i) contains a complete and accurate list
of all material computer software owned by the Company (the "Owned Software").
Except as set forth on Exhibit 3.13.2(i), the Company has exclusive title to the
Owned Software, free and clear of all claims, including claims or rights of
employees, agents, consultants, customers, licensees or other parties involved
in the development, creation, marketing, maintenance, enhancement or licensing
of such computer software. Except as set forth on Exhibit 3.13.2(i), the Owned
Software is not dependent on any Licensed Software (as defined in subsection
(ii) below) in order to fully operate in the manner in which it is intended. No
Owned Software has been published or disclosed to any other parties, except as
set forth on Exhibit 3.13.2(i), and except pursuant to contracts requiring such
other parties to keep the Owned Software confidential. To the knowledge of the
Company, no such other party has breached any such obligation of
confidentiality.
(ii) Exhibit 3.13.2(ii) contains a complete and accurate list
of all software under which the Company is a licensee, lessee or otherwise has
obtained the right to use software (the "Licensed Software"). Exhibit 3.13.2(ii)
also sets forth a list of all license fees, rents, royalties or other charges
that the Company is required or obligated to pay with respect to Licensed
Software. The Company has the right and license to use, sublicense, modify and
copy Licensed Software, free and clear of any limitations or encumbrances except
as may be set forth in any license agreements listed in Exhibit 3.13.2(ii). The
Company is in full compliance with all material provisions of any license, lease
or other similar agreement pursuant to which it has rights to use the Licensed
Software. Except as disclosed on Exhibit 3.13.2(ii), none of the Licensed
Software has been incorporated into or made a part of any Owned Software or any
other Licensed Software. The
21
<PAGE>
Company has not published or disclosed any Licensed Software to any other party.
(iii) The Owned Software and Licensed Software constitute all
software necessary for use in the businesses of the Company (the "Company
Software"). Exhibit 3.13.2(iii) sets forth a list of all contract programmers,
independent contractors, nonemployee agents and persons or other entities (other
than employees) who have performed material computer programming services for
the Company and identifies all material contracts and agreements pursuant to
which such services were performed. The transactions contemplated herein will
not cause a material breach or default under any licenses, leases or similar
agreements relating to the Company Software or materially impair the Purchaser's
or the Surviving Corporation's ability to use the Company Software in the same
manner as such computer software is currently used by the Company. The Company
is not infringing any intellectual property rights of any other person or entity
with respect to the Company Software, and to the knowledge of the Company, no
other person or entity is infringing any intellectual property rights of the
Company with respect to the Company Software.
3.14 Labor Matters. Exhibit 3.14 sets forth a list of all employees,
consultants and independent contractors of the Company whose compensation for
1995 or expected compensation for 1996 exceeds $75,000.00 per annum and lists
the compensation per annum for such persons. Except as set forth on Exhibit
3.14, within the last three (3) years, the Company has not been the subject of
any union activity or labor dispute, nor has there been any strike of any kind
called or threatened to be called, against the Company. Except as set forth on
Exhibit 3.14, the Company has not violated any applicable federal or state law
or regulation relating to labor, labor practices or immigration matters. The
Company has no knowledge that there will be any adverse change in relations with
employees and independent contractors of the Company as a result of the
transactions contemplated by this Agreement.
3.15 Benefit Plans.
3.15.1 Exhibit 3.15 lists 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), any medical, vision, dental or other health
plan, any life insurance plan or 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, or any other plan, program,
agreement, arrangement, commitment and/or method of compensation, whether funded
or unfunded, whether legally binding or not, currently or previously adopted,
maintained, sponsored in whole or in part or contributed to by the Company or
any Affiliate of the Company for the benefit of employees, retirees, dependents,
spouses, directors,
22
<PAGE>
officers, independent contractors or other beneficiaries of the Company or an
Affiliate of the Company and under which employees, retirees, dependents,
spouses, directors, officers, independent contractors or other beneficiaries of
the Company or an Affiliate of the Company are eligible to participate or under
or in connection with which the Company may have any contingent or noncontingent
liability of any kind whether or not probable of assertion (collectively, the
"Benefit Plans"). Any of the Benefit Plans which 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." No Benefit Plan is or has been a "multiemployer plan"
within the meaning of Section 3(37) of ERISA. Except as set forth on Exhibit
3.15, neither the Company nor any Subsidiary has ever contributed to or had an
obligation to contribute to any multiemployer plan.
3.15.2 Exhibit 3.15 also lists: (a) where applicable, with respect
to any such plans or plan amendments, the most recent determination letters
issued by the United States Internal Revenue Service, (b) all rulings, opinion
letters, information letters or advisory opinions issued by the United States
Department of Labor, the United States Internal Revenue Service or the Pension
Benefit Guaranty Corporation after December 31, 1974, with respect to such
Benefit Plan, (c) annual reports or Returns and audited or unaudited financial
statements for the most recent three plan years and any amendments thereto, and
(d) the most recent summary plan descriptions and any material modifications
thereto, and any other material written communications to employees or to any
governmental agency with respect to such Benefit Plans during the three most
recent plan years. Contemporaneous with the delivery of the Exhibits to this
Agreement, the Company has delivered a true and complete copy of each such
Benefit Plan or summary description if such Benefit Plan is not in writing,
agreements, letters, rulings, opinions, letters, reports, Returns, financial
statements and summary plan descriptions described in Sections 3.15.1 or 3.15.2
hereof, certified as such by a duly authorized officer of the Company.
3.15.3 All the Benefit Plans and the related trusts subject to ERISA
comply with and have been administered in compliance with the provisions of
ERISA, all provisions of the Code relating to qualification and tax exemption
under Code Sections 401(a) and 501(a) or otherwise applicable to secure intended
Tax consequences, all applicable state or federal securities laws and all other
applicable laws, rules and regulations and collective bargaining agreements, and
neither the Company nor any Affiliate has received any notice from any
governmental agency or instrumentality questioning or challenging such
compliance. All available governmental approvals for the Benefit Plans have been
obtained, including, but not limited to, timely determination letters on the
qualification of the ERISA Plans and tax exemption of related trusts, as
applicable, under the Code and timely registration and disclosure under
applicable securities laws, and all such governmental approvals continue in full
force and effect.
23
<PAGE>
No event has occurred which will or could give rise to disqualification of any
such plan under sections 401(a) or 501(a) of the Code, adversely affect the
qualified status of the Plan of any such plan under Sections 401(a) or 501(a) of
the Code or to a tax under Section 511 of the Code. All contributions (including
all employer contributions and employee salary reduction contributions) which
are due have been paid to each Benefit Plan and have been paid on a timely
basis.
3.15.4 Neither the Company, any Affiliate nor any administrator or
fiduciary of any such Benefit Plan (or agent or delegate of any of the
foregoing) has engaged in any transaction or acted or failed to act in any
manner which could subject the Company to any direct or indirect liability (by
indemnity or otherwise) for a breach of any fiduciary, co-fiduciary or other
duty under ERISA. No oral or written representation or communication with
respect to any aspect of the Benefit Plans has been or will be made to employees
of the Company prior to the Closing Date which is not in accordance with the
written or otherwise preexisting terms and provisions of such Benefit Plans in
effect immediately prior to the Closing Date. There are no unresolved claims or
disputes under the terms of, or in connection with, the Benefit Plans, and no
action, legal or otherwise, has been commenced with respect to any claim.
3.15.5 All annual reports or Returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Benefit Plans are correct and accurate
in all respects as of the dates thereof, and have been timely filed or
disseminated, as appropriate or required by applicable law, and there have been
no amendments filed to any of such reports, returns, statements, valuations or
descriptions or required to make the information therein true and accurate.
3.15.6 No "party in interest" (as defined in Section 3(14) of ERISA)
or "disqualified person" (as defined in Section 4975(e)(2) of the Code) of any
Benefit Plan has engaged in any "prohibited transaction" (within the meaning of
Section 4975(c) of the Code or Section 406 of ERISA). There has been no (a)
"reportable event" (as defined in Section 4043 of ERISA), or event described in
Section 4062(f) or Section 4063(a) of ERISA or (b) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which the Company or an Affiliate of the Company maintains or contributes
to or has maintained or contributed to or was required to maintain or contribute
to or for the benefit of employees of the Company or any Affiliate of the
Company now or formerly in existence.
3.15.7 For any ERISA Plan which is an employee pension benefit plan
as defined in ERISA Section 3(2), the fair market value of such Benefit Plan's
assets equals or exceeds the present value of all benefits (whether vested or
not) accrued to date of the most recent actuarial report by all present or
former participants in such Benefit Plan. For this purpose the
24
<PAGE>
assumptions prescribed by the PBGC for valuing plan assets or liabilities upon
plan termination shall be applied and the term "benefits" shall include the
value of any early retirement or ancillary benefits (including shutdown
benefits) provided under any Benefit Plan.
3.15.8 Except as set forth on Exhibit 3.15.8, as of December 31,
1995 the Company did not have any current or future liability under any Benefit
Plan that was not reflected in the 1995 Financial Statements, and the liability
of the Company in connection with any Benefit Plan as of Closing will not exceed
the amount recorded therefor on the Final Closing Balance Sheet.
3.15.9 Except as set forth on Exhibit 3.15.9, the Company does not
maintain any Benefit Plan providing deferred or stock based compensation which
is not reflected in the 1995 Financial Statements.
3.15.10 The Company has not maintained a Benefit Plan providing
welfare benefits (as defined in ERISA Section 3(1)) to employees after
retirement or other separation of service except to the extent required under
Part 6 of Title I of ERISA and Code Section 4980B, or except as set forth on
Exhibit 3.15.10.
3.15.11 The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of the Company to
severance pay, unemployment compensation or any payment contingent upon a change
in control or ownership of the Company, or (ii) accelerate the time of payment
or vesting, or increase the amount, of any compensation due to any such employee
or former employee.
3.15.12 All Benefit Plans subject to section 4980B of the Code as
amended from time to time or Part 6 of Title I of ERISA or both have been
maintained in compliance with the requirements of such laws and any regulations
(proposed or otherwise) issued thereunder.
3.16 Customers and Clients. Exhibit 3.16 attached hereto consists of a
true and correct list of all of the customers and clients of the Company within
the preceding twenty-four months who generated revenues of more than $100,000.00
within the preceding twelve months, setting forth as to each customer or client
its name and address. Except as set forth on Exhibit 3.16, neither the Company
nor any Shareholder has received any notice, or has reason to believe, that any
such customer or client has taken or contemplates taking any steps which could
materially disrupt the business relationship of the Company with such customer
or client, or could result in the material diminution in the value of the
business of the Company as a going concern.
3.17 Environmental Matters. Except as set forth in Exhibit 3.17, no real
property now or previously used by the Company or now or previously owned or
leased by the Company (the "Real Property") has been used by the Company or any
other party
25
<PAGE>
for the handling, treatment, storage or disposal of any Hazardous Substance (as
hereinafter defined). Except as set forth in Exhibit 3.17, no release,
discharge, spillage or disposal into the environment of any Hazardous Substance
and no soil, water or air contamination by any Hazardous Substance has occurred
or is occurring in, from or on the Real Property. Except as set forth in Exhibit
3.17, the Company has complied with all reporting requirements under any
applicable federal, state or local environmental laws and permits, and, to the
knowledge of the Company there are no existing violations by the Company of any
such environmental laws or permits. Except as set forth in Exhibit 3.17, there
are no claims, actions, suits, proceedings or investigations related to the
presence, release, production, handling, discharge, spillage, transportation or
disposal of any Hazardous Substance or ambient air conditions or contamination
of soil, water or air by any Hazardous Substance pending or, to the knowledge of
the Company, threatened with respect to the Real Property or otherwise against
the Company in any court or before any state, federal or other governmental
agency or private arbitration tribunal and, to the knowledge of the Company,
there is no basis for any such claim, action, suit, proceeding or investigation.
To the knowledge of the Company, there are no underground storage tanks on any
Real Property which is or was owned by the Company or is currently leased by the
Company. To the knowledge of the Company, no building or other improvement
included in any Real Property which is or was owned by the Company or is
presently leased by the Company contains any asbestos, and such buildings and
improvements are free from radon contamination. For the purposes of this
Agreement, "Hazardous Substance" shall mean any hazardous or toxic substance or
waste as those terms are defined by any applicable federal, state or local law,
ordinance, regulation, policy, judgment, decision, order or decree, including,
without limitation, the Comprehensive Environmental Recovery Compensation and
Liability Act, 42 U.S.C. 9601 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et. seq. and the Resource Conservation and Recovery Act,
42 U.S.C. 6901 et seq., and petroleum, petroleum products and oil.
3.18 Insurance. Set forth in Exhibit 3.18 is a complete list of all
insurance policies which the Company maintained, or was an insured party under,
with respect to its businesses, properties or employees which are currently in
force and effect together with a list of all such policies which have been in
effect during the last 36 months but have expired. Exhibit 3.18 lists the annual
premium and renewal date of all such insurance policies. Except as set forth in
Exhibit 3.18, since January 1, 1996, there has not been any material adverse
change in the Company's relationship with its insurers or in the premiums
payable pursuant to such policies.
3.19 Related Party Relationships. Except as set forth in Exhibit 3.19, to
the Company's knowledge, no Shareholder, or Affiliate of any Shareholder nor any
officer or director of the Company possesses, directly or indirectly, any
beneficial interest in, or is a director, officer or employee of, any
corporation,
26
<PAGE>
partnership, firm, association or business organization which is a client,
supplier, customer, lessor, lessee, lender, creditor, borrower, debtor or
contracting party with or of the Company (except as a stockholder holding less
than a one percent interest in a corporation whose shares are traded on a
national or regional securities exchange or in the over-the-counter market).
3.20 Exhibits. All Exhibits attached hereto are true, correct and complete
in all material respects as of the date of this Agreement and will be true,
correct and complete in all material respects as of the Closing, except to the
extent that such Exhibits may be untrue, incorrect or incomplete due to changes
occurring due to the operation of the Company in the ordinary course. Matters
disclosed on each Exhibit shall be deemed disclosed only for purposes of the
matters to be disclosed on such Exhibit and shall not be deemed to be disclosed
for any other purpose unless expressly provided therein.
3.21 Disclosure and Absence of Undisclosed Liabilities. No statement
contained herein or in any certificate, schedule, list, Exhibit or other
instrument furnished to Purchaser pursuant to the provisions hereof contains or
will contain any untrue statement of any material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND THE
MERGER SUBSIDIARY.
Purchaser and the Merger Subsidiary represent and warrant to the Company
for the benefit of the Shareholders as follows:
4.1 Organization and Standing. The Purchaser and the Merger Subsidiary are
duly organized and validly existing corporations in good standing under the laws
of the State of Delaware.
4.2 Corporate Power and Authority. The Purchaser and the Merger Subsidiary
have the capacity and authority to execute and deliver this Agreement, to
perform hereunder and to consummate the transactions contemplated hereby without
the necessity of any act or consent of any other Person whomsoever. The
execution, delivery and performance by Purchaser and the Merger Subsidiary of
this Agreement and each and every agreement, document and instrument provided
for herein have been duly authorized and approved by the respective Board of
Directors (or Executive Committee thereof) of the Purchaser and Merger
Subsidiary. This Agreement and each and every other agreement, document and
instrument to be executed, delivered and performed by Purchaser or the Merger
Subsidiary in connection herewith, constitute or will, when executed and
delivered, constitute the valid and legally binding obligation of Purchaser or
Merger Subsidiary (whichever is applicable) enforceable against it in accordance
with their
27
<PAGE>
respective terms, except as enforceability may be limited by applicable
equitable principles, or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws from time to time in effect affecting the enforcement of
creditors' rights generally.
4.3 Agreement Does Not Violate Other Instruments. The execution and
delivery of this Agreement by the Purchaser and Merger Subsidiary do not, and
the consummation of the transactions contemplated hereby will not, violate any
provisions of the Certificate of Incorporation, as amended, or Bylaws, as
amended, of Purchaser or Merger Subsidiary, or violate or constitute an
occurrence of default under any provision of, or conflict with, result in
acceleration of any obligation under, or give rise to a right by any party to
terminate its obligations under, any mortgage, deed of trust, conveyance to
secure debt, note, loan, lien, lease, agreement, instrument or any order,
judgment, decree or other arrangement to which Purchaser or the Merger
Subsidiary is a party or is bound or by which it or its assets are affected.
4.4 Capitalization. As of the Effective Time, the authorized capital stock
of Purchaser will consist of 100,000,000 shares of common stock, par value $0.01
per share, 13,396,757 shares of which are issued and outstanding and 25,000,000
shares of preferred stock, par value $0.01 per share, none of which is issued
and outstanding as of the date hereof. All of the issued and outstanding shares
of common stock of the Purchaser have been duly authorized and validly issued,
and all such shares are fully paid and nonassessable.
4.5 HPS Shares. The HPS Shares when issued in connection with the Merger
will be duly and validly issued, fully paid and nonassessable and will be issued
to the Shareholders in accordance with the terms of this Agreement free and
clear of any preemptive rights or any lien charge or encumbrance arising through
the Purchaser or the Merger Subsidiary.
4.6 Disclosure. The Purchaser has filed all forms, reports and documents
required to be filed by it with the SEC since May 19, 1995, and has heretofore
made available to the Company and its Shareholders, in the form filed with the
SEC (excluding any exhibits thereto, unless otherwise specifically requested by
the Company), the Purchaser Disclosure Documents.
V. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
All of the obligations of Purchaser to consummate the transactions
contemplated by this Agreement are contingent upon and subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
Purchaser for purposes of consummating such transactions, but without prejudice
to any other right or remedy which Purchaser may have hereunder:
28
<PAGE>
5.1 Representations True at Closing. The representations and warranties
made by the Company to Purchaser in this Agreement, the Exhibits hereto or any
document or instrument delivered to Purchaser hereunder shall be true and
correct in all material respects on the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
such time, except for changes contemplated by this Agreement.
5.2 Covenants of the Company . The Company shall have duly performed in
all material respects all of the covenants, acts and undertakings to be
performed by it on or prior to the Closing Date, and the President of the
Company shall deliver to Purchaser a certificate dated as of the Closing Date
certifying to the fulfillment of this condition and the condition set forth in
Section 5.1 hereof in substantially the form attached hereto as Exhibit 5.2.
5.3 No Injunction, Etc. No action, proceeding, investigation, regulation
or legislation shall have been instituted or threatened before any court,
governmental agency or legislative body to enjoin, restrain, prohibit or obtain
damages in respect of this Agreement or the consummation of the transactions
contemplated hereby.
5.4 Opinion of Counsel. An opinion of Vorys, Sater, Seymour and Pease,
counsel for the Company, shall have been delivered to Purchaser dated as of the
Closing Date, substantially in form and substance of the opinion attached hereto
as Exhibit 5.4.
5.5 Consents, Approvals, and Waivers. Purchaser shall have received a true
and correct copy of each and every consent, approval and waiver (a) referred to
in Section 2.10 hereof, or (b) otherwise required for the execution of this
Agreement and the consummation of the transactions contemplated hereby.
5.6 Legal Approvals. The execution and the delivery of this Agreement and
the consummation of the transactions contemplated hereby shall have been
approved by all regulatory authorities whose approvals are required by law, and
the waiting period under the HSR Act shall have expired or been terminated.
5.7 Absence of Adverse Changes. Since December 31, 1995, (a) the Company
shall not have suffered any material and adverse change in its financial
condition, results of operations, business, prospects, property or assets, and
(b) the Company shall not have permitted to occur or suffered any transaction or
event described in Section 3.9 hereof which is not described in Exhibit 3.9
hereto.
5.8 Employment Agreements. Each individual listed in Exhibit 2.11.1(a)
shall have executed or agreed to execute an Employment Agreement, substantially
in forms set forth in Exhibit 2.11.1(b).
29
<PAGE>
5.9 Escrow Agreement. The Shareholders' Representative and the Escrow
Agent shall have executed and delivered the Escrow Agreement to the Purchaser.
5.10 Nondisclosure and Noninterference Agreements. The Shareholders listed
on Exhibit 2.11.2(a) shall have executed and delivered to Purchaser
Nondisclosure and Noninterference Agreements substantially in the form of
Exhibit 2.11.2(b).
5.11 Shareholder Approval/Dissenter's or Statutory Rights. Such
shareholders of the Company as are required by applicable law to have approved
the Merger shall have in fact approved the Merger and Shareholders holding not
more than 5% of the outstanding stock of the Company shall not have notified the
Company that such Shareholders intend to elect nor shall have taken any other
action to perfect any dissenter's or similar statutory rights under the
provisions of any state statute affording such Shareholder such rights as a
result of the Merger.
5.12 Certificate of Merger. The Certificate of Merger shall have been duly
executed and accepted for filing by the Secretary of State of the State of
Delaware and the Merger shall have become effective.
5.13 Warrants. The Warrants shown on the Company's balance sheet at
February 28, 1996 will be repurchased and canceled prior to or on the Closing
Date.
5.14 Shareholders Agreement. The Shareholders listed on Exhibit 5.14(a)
shall each have executed a Shareholders Agreement in substantially the form of
Exhibit 5.14(b) and shall have performed all covenants and agreements to be
performed by them under such agreements as of the Effective Time.
5.15 Registration Rights Agreement. Shareholders holding at least 80% of
the Company's Outstanding Shares shall have executed and delivered Registration
Rights Agreements to the Purchaser.
5.16 Private Placement Representation Letters. The Purchaser shall have
received Private Placement Representation Letters in substantially the form of
Exhibit 5.16 from each Shareholder other than Dissenting Shareholders who did
not execute a Shareholders Agreement.
VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO
CLOSE.
All of the obligations of the Company to consummate the transactions
contemplated by this Agreement shall be contingent upon and subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
the Company for
30
<PAGE>
purposes of consummating such transactions, but without prejudice to any other
right or remedy which they may have hereunder:
6.1 Representations True at Closing. The representations and warranties
made by Purchaser and the Merger Subsidiary to the Company in this Agreement or
any document or instrument delivered to the Company hereunder shall be true and
correct in all material respects on the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
such date, except for changes contemplated by this Agreement.
6.2 Covenants of Purchaser. Purchaser and the Merger Subsidiary shall have
duly performed in all material respects all of the covenants, acts and
undertakings to be performed by it on or prior to the Closing Date, and a duly
authorized officer of Purchaser shall deliver, in substantially the form
attached hereto as Exhibit 6.2, a certificate dated as of the Closing Date
certifying to the fulfillment of this condition and the condition set forth
under Section 6.1 above.
6.3 No Injunction, Etc. No action, proceeding, investigation, regulation
or legislation shall have been instituted or threatened before any court,
governmental agency or legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of this Agreement or the consummation of the
transactions contemplated hereby.
6.4 Opinion of Counsel. An opinion of Fowler, White, Gillen, Boggs,
Villareal & Banker, P.A. counsel for the Purchaser and Merger Subsidiary, shall
have been delivered to the Shareholders' Representative for the benefit of the
Shareholders dated as of the Closing Date, substantially in form and substance
of the opinion attached hereto as Exhibit 6.4.
6.5 Legal Approvals. The execution and the delivery of this Agreement and
the consummation of the transactions contemplated hereby shall have been
approved by all regulatory authorities whose approvals are required by law, and
the waiting period under the HSR Act shall have expired or been terminated.
6.6 Registration Rights Agreement. The Purchaser shall have executed and
delivered the Registration Rights Agreement to the Shareholders' Representative
for the benefit of those Shareholders executing it.
6.7 Certificate of Merger. The Certificate of Merger shall have been duly
executed and accepted for filing by the Secretary of State of the State of
Delaware and the Merger shall have become effective.
6.8 Receipt by Shareholders of Tax Opinion. (a) The Shareholders'
Representative shall have received for the benefit of the Shareholders the
opinion of Vorys, Sater, Seymour and Pease, in form and substance acceptable to
the Shareholders' Representative,
31
<PAGE>
to the effect that the Merger should be treated as a tax free reorganization
pursuant to the provisions of Section 368(a)(1)(A) and (a)(2)(D), and the
Shareholders should recognize no gain on the exchange of their shares, except to
the extent that they receive Consideration other than the Per Share Stock
Consideration.
(b) The Purchaser and the Merger Subsidiary shall have delivered an
executed officers certificate substantially in the form attached as Exhibit
6.8(b), and the representations and warranties of the Purchaser and the Merger
Subsidiary set forth in such officer's certificate shall be true and correct in
all material respects as of the date hereof and as of immediately prior to the
Effective Time.
VII. CLOSING.
7.1 Time and Place of Closing. The Closing shall be held at the offices of
Fowler, White, Gillen, Boggs, Villareal & Banker P.A., 501 East Kennedy Blvd,
Tampa, Florida, commencing at 10:00 a.m. Eastern Daylight Time, on the tenth
business day after the waiting period under the HSR Act has expired or has been
terminated, and all the consents listed on Exhibit 3.8 have been obtained but in
no event earlier than May 31, 1996, and in no event later than August 31, 1996.
7.2 Transactions at Closing. At the Closing, each of the following
transactions shall occur:
7.2.1 The Company's Performance. At the Closing, the Company shall
deliver to Purchaser, the following, except to the extent waived:
(a) all certificates representing shares of the outstanding
capital stock of the Company (other than Dissenting Shares), each
certificate duly endorsed for transfer or accompanied by instruments
of transfer reasonably satisfactory in form and substance to
Purchaser and its counsel, with signatures guaranteed;
(b) the certificate of the President of the Company described
in Section 5.2;
(c) copies of the consents and waivers described in Section
2.10 and Section 5.5;
(d) the assignment of assets and contracts described in
Section 2.15.
(e) satisfactory evidences of the approvals described in
Section 5.6;
(f) certificates of compliance or certificates of good
standing of the Company, as of
32
<PAGE>
the most recent practicable date, from the appropriate governmental
authority of the jurisdiction of its incorporation and any other
jurisdiction which is set forth in Exhibit 3.1 hereto;
(g) certified copies of resolutions of the Board of Directors
of the Company approving the transactions set forth in this
Agreement;
(h) certificates of incumbency for the officers of the Company
who are executing the Agreement and the other documents contemplated
hereunder;
(i) Employment Agreements executed by those individuals listed
in Exhibit 2.11.1(a) substantially in the forms set forth in Exhibit
2.11.1(b);
(j) Nondisclosure and Noninterference Agreements executed by
the Shareholders listed on Exhibit 2.11.2(a), substantially in the
form of Exhibit 2.11.2(b);
(k) opinion of counsel described in Section 5.4;
(l) the Escrow Agreement executed by the Shareholders'
Representative;
(m) executed Registration Rights Agreement substantially in
the form of Exhibit 2.6.1 executed by the holders of at least 80% of
the Company's Outstanding Shares;
(n) the Certificate of Merger duly executed for delivery to
the Secretary of State of the State of Delaware in form acceptable
for filing; and
(o) Private Placement Representation Letters executed by all
Shareholders other than the Dissenting Shareholders who did not
execute Shareholder Agreements.
(p) such other evidence of the performance of all covenants
and satisfaction of all conditions required of the Company and the
Shareholders by this Agreement, at or prior to the Closing, as
Purchaser or its counsel may reasonably require.
7.2.2 Performance by Purchaser. At the Closing, Purchaser and Merger
Subsidiary shall deliver to the Shareholders' Representative for the benefit of
the Shareholders the following:
33
<PAGE>
(a) the Per Share Initial Cash Payment for each Shareholder
who is not a Dissenting Shareholder;
(b) the Per Share Stock Consideration for each Shareholder who
is not a Dissenting Shareholder;
(c) executed Registration Rights Agreements, substantially in
the form of Exhibit 2.6.1 with all Shareholders who are willing to
execute and deliver the same to Purchaser at Closing.
(d) the certificate of the authorized officer described in
Section 6.2;
(e) satisfactory evidence of the HSR waiting period
termination;
(f) certificate of incumbency of the officers of Purchaser who
are executing this Agreement and the other documents contemplated
hereunder;
(g) executed Employment Agreements, substantially in the form
of Exhibit 2.11.1(b) with each of the persons listed on Exhibit
2.11.1(a);
(h) executed Nondisclosure and Noninterference Agreements
substantially in the form of Exhibit 2.11.2(b) with each Shareholder
listed on Exhibit 2.11.2(a);
(i) certified copy of resolutions of the Board of Directors
(or Executive Committee thereof) of Purchaser approving the
transactions set forth in this Agreement;
(j) the Escrow Agreement executed by the Purchaser;
(k) the Certificate of Merger duly executed for delivery to
the Secretary of State of the State of Delaware in form acceptable
for filing; and
(l) such other evidence of the performance of all the
covenants and satisfaction of all of the conditions required of
Purchaser by this Agreement at or before the Closing as the Company,
or its counsel may reasonably require.
7.2.3. Payment of Escrow Amount. At the Closing, the Purchaser shall
pay the Escrow Amount to the Escrow Agent pursuant to the Escrow Agreement.
34
<PAGE>
7.3 Closing of Transfer Books. After the execution of this
Agreement, there shall be no transfers on the stock transfer books
of the Company of any of the shares of the Company Common or
Preferred Stock
VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AGREEMENTS AND COVENANTS
AFTER CLOSING.
8.1 Survival of Representations and Warranties . All representations and
warranties of the parties in this Agreement or in any document or instrument
executed and delivered pursuant hereto, are only conditions to the Closing of
the transactions contemplated hereby and shall not survive the Closing hereunder
except that Purchaser's representations and warranties in Sections 4.2 and 4.5
shall survive the Closing without limitation and Purchaser's representation in
Section 4.4 shall survive the Closing for a period of two years.
8.2 Survival of Agreements and Covenants. All agreements, covenants and
obligations made or undertaken by the parties in this Agreement shall be deemed
to have been performed or waived upon Closing, if Closing occurs, and shall not
survive the Closing except that the agreements and covenants contained in
Sections 2.1, 2.2, 2.3, 2.4, 2.14.1, 2.16, 8.1, 8.2, 10.5, 10.6, 10.12, 10.13
and the Definitions contained therein shall survive the Closing. The foregoing
notwithstanding, the provisions of the Certificate of Merger, the Shareholders
Agreement, the Escrow Agreement, the Non-Disclosure and Noninterference
Agreements, the Employment Agreements, the Registration Rights Agreements, the
Private Placement Representation Letters and the Legal Opinions delivered at
Closing shall survive the Closing for the term set forth therein.
IX. TERMINATION.
9.1 Method of Termination. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, the consideration for which is (a) the covenants set forth in Article II
hereof, and (b) expenditures and obligations incurred and to be incurred by
Purchaser, on the one hand, and by the Company, on the other hand, in respect of
this Agreement, and this Agreement may be terminated or abandoned only as
follows:
9.1.1 By the mutual consent of the Company and Purchaser;
9.1.2 By Company after July 31, 1996, if any of the conditions set
forth in Article VI hereof, to which the Company's obligations are subject, have
not been fulfilled or waived, unless such fulfillment has been frustrated or
made impossible by any act or failure to act of any of them; and
35
<PAGE>
9.1.3 By Purchaser after July 31, 1996, if any of the conditions set
forth in Article V hereof, to which the obligations of Purchaser are subject,
have not been fulfilled or waived, unless such fulfillment has been frustrated
or made impossible by any act or failure to act of Purchaser.
9.2 Effect of Termination. In the event of a termination of this Agreement
pursuant to Section 9.1 hereof, each party shall pay the costs and expenses
incurred by it in connection with this Agreement, and no party (or any of its
officers, directors, employees, agents, representatives or shareholders) shall
be liable to any other party for any costs, expenses, damage or loss of
anticipated profits hereunder. In the event of any other termination, the
parties shall retain any and all rights attendant to a breach of any covenant,
representation or warranty made hereunder.
9.3 Risk of Loss. The Company assumes all risk of condemnation,
destruction, loss or damage due to fire or other casualty from the date of this
Agreement up to the Closing. If the condemnation, destruction, loss, or damage
is such that the business of the Company is materially interrupted or curtailed
or the assets of the Company are materially affected, then Purchaser shall have
the right to terminate this Agreement. If the condemnation, destruction, loss,
or damage is such that the business of the Company is neither materially
interrupted nor curtailed nor its assets materially affected, or if the business
is materially interrupted or curtailed or the assets are materially affected and
Purchaser nevertheless forgoes the right to terminate this Agreement, the
purchase price shall be adjusted at the Closing to reflect such condemnation,
destruction, loss, or damage to the extent that insurance proceeds are not
sufficient to cover such destruction, loss or damage. If Purchaser, on the one
hand, and the Company, on the other hand, are unable to agree upon the amount of
such adjustment, the dispute shall be resolved by arbitration in Tampa, Florida,
in accordance with the rules and regulations of the American Arbitration
Association. The decision of such arbitration shall be final and binding.
X. GENERAL PROVISIONS.
10.1 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand or mailed by
certified mail, return receipt requested, first class postage prepaid, or sent
by Federal Express or similarly recognized national overnight delivery service
with receipt acknowledged, addressed as follows:
36
<PAGE>
10.1.1 If to the Company:
Harrington Services Corporation
3401 Loop Road
Columbus, Ohio 43219
Attn: Robert R. Parker
and to:
Vorys, Sater, Seymour and Pease
52 E. Gay Street
Columbus, Ohio 43215
Attn: Russell M. Gertmenian, Esq.
10.1.2 If to the Shareholders' Representative:
Robert Chefitz
c/o Patricof & Co. Ventures
445 Park Avenue
New York, New York 10022
Attn: Robert Chefitz
and to:
Shareff, Friedman,
Hoffman & Goodman LLP
919 Third Avenue
New York, New York 10022
Attn: Morris Orens, Esq.
and to:
Vorys, Sater, Seymour and Pease
52 E. Gay Street
Columbus, Ohio 43215
Attn: Russell M. Gertmenian
10.1.3 If to Purchaser or Merger Subsidiary:
HealthPlan Services Corporation
3501 Frontage Road
Tampa, Florida, 33607
Attn: James K. Murray III, Executive Vice
President and Chief Financial Officer
and to:
Fowler, White, Gillen, Boggs, Villareal &
Banker, P.A.
501 East Kennedy Blvd., Suite 1700
Tampa, Florida 33602
Attn: David C. Shobe, Esq.
10.1.4 If delivered personally, the date on which a notice, request,
instruction or document is delivered shall be
37
<PAGE>
the date on which such delivery is made and, if delivered by mail or by
overnight delivery service, the date on which such notice, request, instruction
or document is received shall be the date of delivery. In the event any such
notice, request, instruction or document is mailed or shipped by overnight
delivery service to a party in accordance with this Section 10.1 and is returned
to the sender as nondeliverable, then such notice, request, instruction or
document shall be deemed to have been delivered or received on the fifth day
following the deposit of such notice, request, instruction or document in the
United States mail or the delivery to the overnight delivery service.
10.1.5 Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this Section
10.1.
10.2 Brokers. Purchaser represents and warrants to the Company, and the
Company represents and warrants to Purchaser that no broker or finder has acted
for it or them or any entity controlling, controlled by or under common control
with it or them in connection with this Agreement other than Smith Barney Inc.
who has acted as Purchaser's broker. Purchaser agrees to indemnify and hold
harmless the Company against any fee, loss or expense arising out of any claim
by any broker or finder employed or alleged to have been employed by it,
including the fees of Smith Barney Inc. and the Company agrees to indemnify and
hold harmless Purchaser against any fee, loss, or expense arising out of any
claim by any broker or finder employed or alleged to have been employed by it.
10.3 Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived by any
other party to whom such compliance is owed. 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.
10.4 Expenses. Except as otherwise provided herein, all Transactions Costs
incurred by the parties hereto in connection with or related to the
authorization, preparation and execution of this Agreement and the Closing of
the transactions contemplated hereby, including, without limitation of the
generality of the foregoing, all fees and expenses of agents, representatives,
counsel and accountants employed by any such party, shall be borne solely and
entirely by the party which has incurred the same. All Transaction Costs and
expenses of the Company shall be borne by the Company if incurred or accrued
prior to the Effective Time and reflected in the Final Closing Balance Sheet or
by the Shareholders if incurred thereafter. To the extent an amount is accrued
and not used within nine (9) months, then the amount of such unused accrual
shall be paid by the Surviving Corporation to the Shareholders' Representative
for the account of the Shareholders. The Surviving Corporation shall not be
liable for or responsible for any expenses of the Company or the Shareholders
which is not accrued on or is in
38
<PAGE>
excess of the accrual therefore on the Final Closing Balance Sheet.
10.5 Shareholders' Representative to Act on Behalf of Shareholders and the
Company. With respect to all matters relating to, and all actions to be taken
pursuant to, this Agreement that are to occur or be performed at or prior to the
Closing, the parties hereto agree that, with respect to the Shareholders, the
Purchaser may seek, and shall be entitled to rely upon, the actions or
performance by the Shareholders' Representative as being on behalf of, and
binding upon the Shareholders of which such action or performance was required.
Payment or delivery of the Consideration to the Shareholders' Representative for
the account of the Shareholders shall be deemed to be payment to or delivery of
such Consideration to the Shareholders.
10.6 Public Announcements. At all times at or before the Closing, the
Company, on the one hand, and the Purchaser, on the other hand, will consult
with one another before issuing or making any reports, statements, or releases
to the public with respect to this Agreement or the transactions contemplated
hereby and will use good faith efforts to agree on the text of a joint public
report, statement, or release or will use good faith efforts to obtain the other
parties' approval of the text of any public report, statement, or release to be
made solely on behalf of a party. If such parties are unable to agree on or
approve any such public report, statement, or release and such report,
statement, or release is, based on the advice of legal counsel to a party,
required by Law or appropriate to discharge such party's disclosure obligations,
then such party may make or issue the legally required or appropriate report,
statement, or release upon prior notice to the other parties hereto.
10.7 Confidentiality. The Company, its respective officers, directors,
employees, agents, and other representatives, will, and will use reasonable
efforts to cause its Shareholders to, refrain, from disclosing to any other
Person (i) any documents or information concerning Purchaser or its Affiliates
furnished to it in connection with this Agreement or the transactions
contemplated hereby, and (ii) any documents or information concerning the
Company, unless (A) such disclosure is compelled by judicial or administrative
process or by other requirements of law and notice of such disclosure is
furnished to Purchaser; or (B) such confidential documents or information can be
shown to have been (x) previously known by the Person receiving such documents
or information, or (y) in the public domain through no fault of such Persons. If
for any reason the contemplated Merger is not consummated, Purchaser and the
Company agree that they will return any and all such confidential information
provided by any of them to the other party so providing such information.
10.8 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 assigns.
39
<PAGE>
10.9 Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference, and are not a part
of this Agreement.
10.10 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties hereto relating to the transactions contemplated hereby or the
subject matter herein. 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.
10.11 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might be applicable under principles of conflicts of law) as to all matters
including, but not limited to, matters of validity, construction, effect and
performance.
10.12 Litigation Venue. This Agreement shall be deemed for all purposes to
have been entered into in Delaware, and any litigation brought by any party
hereto shall be brought on in the Delaware Chancery Court or in the United
States District Court in Delaware (unless the actual location of real estate
that is the subject of any suit requires otherwise). The parties hereto submit
to the personal jurisdiction of such courts and agree that such courts shall be
the sole situs of venue for the resolution of any such dispute through
litigation.
10.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.14 Pronouns. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
10.15 Exhibits Incorporated. All Exhibits attached hereto are incorporated
herein by reference, and all blanks in such Exhibits, if any, will be filled in
as required in order to consummate the transactions contemplated herein and in
accordance with this Agreement.
10.16 Time of Essence. Time is of the essence in this Agreement.
40
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
"PURCHASER"
HealthPlan Services Corporation
By: /s/ James K. Murray, Jr.
----------------------------
James K. Murray, Jr.
Title: President
"COMPANY":
Harrington Services Corporation
By: ____________________________
Robert R. Parker
Title: Chief Executive Officer
"MERGER SUBSIDIARY"
HealthPlan Services
Alpha Corporation
By: /s/ James K. Murray, Jr.
----------------------------
James K. Murray, Jr.
Title: President
SHAREHOLDERS'S REPRESENTATIVE:
________________________________
Robert Chefitz
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
"PURCHASER"
HealthPlan Services Corporation
By: ____________________________
James K. Murray, Jr.
Title: President
"COMPANY":
Harrington Services Corporation
By: /s/ Robert R. Parker
----------------------------
Robert R. Parker
Title: Chief Executive Officer
"MERGER SUBSIDIARY"
HealthPlan Services
Alpha Corporation
By: ____________________________
James K. Murray, Jr.
Title: President
SHAREHOLDERS'S REPRESENTATIVE:
________________________________
Robert Chefitz
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
"PURCHASER"
HealthPlan Services Corporation
By: ____________________________
James K. Murray, Jr.
Title: President
"COMPANY":
Harrington Services Corporation
By: ____________________________
Robert R. Parker
Title: Chief Executive Officer
"MERGER SUBSIDIARY"
HealthPlan Services
Alpha Corporation
By: ____________________________
James K. Murray, Jr.
Title: President
SHAREHOLDERS'S REPRESENTATIVE:
/s/ Robert Chefitz
--------------------------------
Robert Chefitz
<PAGE>
LIST OF EXHIBITS
EXHIBITS
- --------
1.1 Definitions.
2.6.1 Form of Registration Rights Agreement
2.7.1 Exceptions to Conduct of Business Prior to Closing
2.7.2 List of Bank Accounts, Safe Deposit Boxes and Powers of
Attorney.
2.11.1(a) List of Employees to Enter into Employment Agreements.
2.11.1(b) Forms of Employment Agreements for Employees.
2.11.2(a) Shareholders to Enter into Nondisclosure and
Noninterference Agreements.
2.11.2(b) Form of Nondisclosure and Noninterference Agreements.
2.14.1 Benefit Plans Being Terminated.
2.15 List of Assets and Contracts to be Transferred to the
Company.
3.1 List of Jurisdiction of Incorporation and Jurisdictions
where there is Good Standing Status.
3.1.3 List of Subsidiaries
3.2 Certificates (or Articles) of Incorporation, Articles of
Incorporation and Bylaws.
3.3 List of Authorized, Issued and Outstanding and Treasury
Shares of the Company.
3.4 List of Equity Investments.
3.5.1 1993, 1994 and 1995 Financial Statements.
3.5.2 List of Liabilities Not Disclosed in the 1995 Financial
Statements and List of Defaults.
3.6 List of Tax Matters
3.7 List of Assets and Leases; List of Encumbrances.
3.8 List of Required Consents.
3.9 List of Changes.
(i)
<PAGE>
3.10 List of Litigation, Separately Identifying Litigation in
the Ordinary Course of Third Party Administrator
Business.
3.11 List of Licenses and Permits and List of Noncompliance
with Laws.
3.12 List of Contracts.
3.13.1 List of Trademarks, Trade Names, Service Marks, Service
Names, Etc.
3.13.2(i) Lists of Owned Software.
3.13.2(ii) List of Licensed Software, List of Problems with
Software Licenses.
3.13.2(iii) List of Computer Programming Services Providers.
3.14 List of Highly Compensated Employees and their
Compensation, Union Activities and Labor Disputes.
3.15 List of Benefit Plans.
3.15.8 Current or Future Liabilities under Benefit Plans not
reflected in 1995 Financial Statements.
3.15.9 Benefit Plans providing deferred or stock based
compensation not reflected in 1995 financial statement.
3.15.10 List of Benefit Plans Providing Post Separation Benefits
3.16 List of Customers, Addresses and List of Problems with
Customer.
3.17 List of Environmental Matters.
3.18 List of Insurance Matters.
3.19 List of Related Party Relationships.
5.2 Form of Certificate of the President of the Company.
5.4 Form of Opinion of Counsel for the Company.
5.9 Form of Escrow Agreement.
5.14(a) List of Shareholders Executing Shareholders Agreements.
5.14(b) Form of Shareholders Agreement.
5.16 Form of Private Placement Representation Letter.
(ii)
<PAGE>
6.2 Officer's Certificate of Purchaser and Merger
Subsidiary.
6.4 Form of Opinion of Counsel for Purchaser and Merger
Subsidiary.
6.8(b) Form of Certificate of Purchaser and Merger Subsidiary
re tax matters.
(iii)
<PAGE>
EXHIBIT 1.1
DEFINED TERMS
As used herein, the following terms shall have the following meanings unless the
context otherwise requires:
1. "Act" shall mean the Delaware General Corporation Law.
2. "Affiliate" shall mean, with respect to a Person, any other Person which
is required to be aggregated with such Person under Code Section 414(b),
(c), (m) and/or (o) at any time prior to the Closing Date.
3. "Aggregate Cash Consideration" shall mean the number derived by
multiplying the Per Share Initial Cash Payment by the Company's
Outstanding Shares.
4. "Aggregate Stock Consideration" shall mean the number derived by
multiplying the Per Share Stock Consideration by the Company's
Outstanding Shares.
5. "Aggregate Escrow Proceeds" shall mean $1,500,000.
6. "Aggregate Consideration" shall mean the sum of the Aggregate
Cash Consideration, the Aggregate Stock Consideration, and the
Aggregate Escrow Proceeds adjusted by the Purchase Price
Adjustment.
7. "Agreement" shall mean this Plan and Agreement of Merger.
8. "Benefit Plans" shall have the meaning set forth in Section
3.15.
9. "Cash Payment Amount" shall mean cash equal to $32,500,000 less
the Preferred Stock Payment Amount.
10. "Closing" shall mean the consummation of the transactions
provided for in this Agreement.
11. "Closing Balance Sheet" shall mean the balance sheet of the Company as of
the Closing Date prepared in accordance with GAAP pursuant to the
provisions of Section 2.4 hereof.
12. "Closing Date" shall mean the date on which the Closing occurs
pursuant to Section 7.1 hereof.
13. "Code" shall mean the Internal Revenue Code of 1986, as amended.
14. "Company" shall mean Harrington Services Corporation, a Delaware
corporation, and unless otherwise specified, shall be deemed to
include all of its Subsidiaries.
(i)
<PAGE>
15. "Company Common Stock" shall mean the common stock of the
Company.
16. "Company Shares" shall mean shares of Company Common Stock.
17. "Company Software" shall have the meaning set forth in Section
3.13.2.
18. "Company's Outstanding Shares" shall mean the total number of shares of
common stock of the Company which are issued and outstanding or are
issuable on a fully-diluted basis immediately prior to the Effective Time.
19. "Consideration" shall mean the Stock Consideration, the Cash
Consideration, and the Escrow Proceeds, if any.
20. "Deferred Compensation Agreement" shall have the meaning set
forth in Section 2.14.3.
21. "Dissenting Shareholder" is a Shareholder who holds Dissenting
Shares.
22. "Dissenting Shares" shall have the meaning set forth in Section
2.3.1.6.
23. "Effective Time" shall have the meaning set forth in Section 2.2
hereof.
24. "Employees" shall have the meaning set forth in Section 2.14.2.
25. "Employment Agreements" shall mean those Employment Agreements among the
entities and those individuals set forth in Exhibit 2.11.1(a),
substantially in the form attached as Exhibit 2.11.1(b), each of which may
be referred to individually as an "Employment Agreement."
26. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
27. "ERISA Plan" shall have the meaning set forth in Section 3.15.
28. "Escrow" shall mean the escrow fund established pursuant to the Escrow
Agreement to be used solely for the purposes of funding the purchase price
adjustment set forth in Section 2.4 of this Agreement.
29. "Escrow Agent" shall mean First Union National Bank of Florida or such
other financial institution as the Purchaser and the Company may agree
upon to hold the Escrow Amount pursuant to the Escrow Agreement.
30. "Escrow Agreement" means the escrow agreement substantially in the form of
Exhibit 2.3.1.2(iii), attached hereto, pursuant to which the Escrow Amount
will be held by the Escrow Agent.
(ii)
<PAGE>
31. "Escrow Amount" means the amount of One Million Five Hundred and
00/100 Dollars (U.S. $1,500,000).
32. "Escrow Proceeds" shall mean the proceeds, if any, from the Escrow after
termination of the Escrow and the satisfaction of all claims asserted
against the Escrow in connection with the purchase price adjustment in
accordance with the terms of the Escrow Agreement.
33. "Federal Arbitration Act" shall mean 9 U.S.C. Sections 1 et seq.
34. "Final Closing Balance Sheet" shall have the meaning set forth
in Section 2.4 hereof.
35. "Final Statement of Net Worth" shall have the meaning set forth
in Section 2.4 hereof.
36. "GAAP" shall mean Generally Accepted Accounting Principles formulated by
the American Institute of Certified Public Accountants as in effect from
time to time during the term of this Agreement.
37. "Hazardous Substance" shall have the meaning set forth in
Section 3.17.
38. "HPS Shares" shall have the meaning set forth in the
Shareholders Agreement.
39. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust and
Improvements Act of 1978, as amended.
40. "Licensed Software" shall have the meaning set forth in Section
3.13.2(ii).
41. "Market Price" shall mean Twenty four dollars and Twelve and one
half cents ($24.125).
42. "Material Adverse Effect" shall have the meaning set forth in
Section 3.1.2.
43. "Merger" shall mean the merger of the Company with and into the
Merger Subsidiary.
44. "Merger Subsidiary" shall mean HealthPlan Services Alpha
Corporation, a Delaware corporation.
45. "Merger Subsidiary Common Stock" shall mean the common stock of
the Merger Subsidiary.
46. "Merger Subsidiary Shares" shall mean shares of Merger
Subsidiary Common Stock.
47. "Negative Purchase Price Adjustment Amount" shall have the
meaning set forth in Section 2.4.1.
(iii)
<PAGE>
48. "Net Worth Amount" shall mean the net worth determined in accordance with
GAAP applied consistently with prior periods as shown on the Final Closing
Balance Sheet computed in accordance with Section 2.4.
49. "1933 Act" shall mean the Securities Act of 1933, as amended.
50. "1993, 1994, and 1995 Financial Statements" shall have the
meaning set forth in Section 3.5.1.
51. "Nondisclosure and Noninterference Agreements" shall mean
agreements substantially in the form of Exhibit 2.11.2(b).
52. "Owned Software" shall have the meaning set forth in Section
3.13.2(i).
53. "PBGC" shall mean the Pension Benefit Guaranty Corporation.
54. "Per Share Escrow Proceeds" means the Escrow Proceeds divided by
the Company's Outstanding Shares.
55. "Per Share Initial Cash Payment" shall mean the Cash Payment
Amount less the Escrow Amount divided by the Company's
Outstanding Shares.
56. "Per Share Preferred Stock Consideration" shall mean the
Preferred Stock Payment Amount divided by 33,284.
57. "Per Share Stock Consideration" shall mean the Stock
Consideration Share Number divided by the Company's Outstanding
Shares.
58. "Person" shall include, but is not limited to, an individual, a trust, an
estate, a partnership, an association, a company, a corporation, a limited
liability company, a sole proprietorship, a professional corporation or a
professional association.
59. "Plan Transfer Date" shall have the meaning set forth in Section
2.14.1.
60. "Positive Purchase Price Adjustment Amount" shall have the
meaning set forth in Section 2.4.2.
61. "Preferred Stock" shall mean the $100 per share Preferred Stock
of the Company as described on Exhibit 3.3.
62. "Preferred Stock Payment Amount" shall mean the amount of
$3,328,400 plus the amount of the accrued but unpaid dividends
on the Preferred Stock as of the Closing.
63. "Private Placement Representation Letters" shall mean the
letters in substantially the form of Exhibit 5.16 hereto.
64. "Purchaser" shall mean HealthPlan Services Corporation, a
Delaware corporation.
(iv)
<PAGE>
65. "Purchaser Common Stock" shall mean the common stock of the
Purchaser.
66. "Purchaser Disclosure Documents" shall have the meaning ascribed
thereto in Section 1(g) of the Shareholders Agreement.
67. "Purchaser Shares" shall mean shares of Purchaser Common Stock.
68. "Real Property" shall have the meaning set forth in Section
3.17.
69. "Registration Rights Agreement" shall mean that certain agreement, in
substantially the form as Exhibit 2.6.1, attached hereto, which shall be
entered into by the Purchaser and certain of the Shareholders pursuant to
Section 5.15 hereof.
70. "SEC" shall mean the Securities and Exchange Commission.
71. "Settlement Auditor" shall mean a big-six accounting firm to be
mutually agreed upon by the parties. If for any reason such
accounting firm shall not be available to resolve such issues,
the Shareholders' Representative and Purchaser shall promptly
contact the national office of, and shall retain the services
of, another big-six accounting firm. If the Shareholders'
Representative and Purchaser cannot agree on such accounting
firm to be retained, the Shareholders' Representative and
Purchaser shall each submit the name of another big-six
accounting firm which does not at the time provide, and has not
in the prior two years provided, significant services to the
Shareholders or to Purchaser, and the firm shall be selected by
lot from these two firms.
72. "Shareholders" shall mean the shareholders of the Company at the
Effective Time, each of which may be referred to individually as
a "Shareholder."
73. "Shareholders Agreement" shall mean the agreement to be executed
by the persons listed on Exhibit 5.14(a) in substantially the
form of Exhibit 5.14(b) hereto.
74. "Shareholders' Representative" shall mean Robert Chefitz, or such other
Shareholder who has been chosen in writing, with notice thereof to the
Purchaser, by a majority of the Shareholders based on their then
percentage of beneficial ownership (without duplication) of HPS Shares.
75. "Statement of Net Worth" shall mean the statement of the Company's Net
Worth derived from the Closing Balance Sheet in accordance with the
provisions of Section 2.4 hereof.
76. "Stock Consideration Share Number" shall mean the number of
shares determined by dividing 32,500,000 by the Market Price.
77. "Subsidiary" shall mean any entity the controlling interest in
which is owned either directly or indirectly by the Company.
(v)
<PAGE>
78. "Surviving Corporation" shall have the meaning set forth in
Section 2.1 hereof.
79. "Surviving Corporation Common Stock" shall mean common stock of
the Surviving Corporation.
80. "Surviving Corporation Shares" shall mean shares of Surviving
Corporation Common Stock.
81. "Target Net Worth Amount" shall mean $9,881,811.
82. "Tax Return" or "Return" shall mean any report, return,
statement or other written information required to be supplied
to a taxing authority in connection with Taxes.
83. "Taxes" shall mean all taxes, charges, fees, levies, or other
similar assessments or Liabilities including without limitation
income, gross receipts, inventory, ad valorem, excise, real
property, personal property, sales, use, transfer, withholding,
deed, license, employment, payroll, and franchise taxes imposed
by any Governmental Authority (including any interest, fines,
penalties, or additions attributable to any such tax or any
contest or dispute thereof).
84. "Transaction Costs" shall mean the respective investment banking, legal,
accounting or other fees or costs incurred by the parties as a result of
the transactions contemplated by this Agreement.
(vi)
