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ASSET PURCHASE AGREEMENT
by and among
GHS, INC.,
GLOBAL HEALTH SYSTEMS, INC., and
GHS MANAGEMENT SERVICES, INC.
and
HEALTH MANAGEMENT SYSTEMS, INC., and
GLOBAL HEALTH ACQUISITION CORP.
Dated as of March 10, 1997
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TABLE OF CONTENTS
Page
I. TRANSFERS.......................................................................................................1
SECTION 1.01 Transfer of Assets........................................................................1
SECTION 1.02 Instruments of Conveyance and Transfer....................................................5
SECTION 1.03 Nonassignable Contracts...................................................................5
SECTION 1.04 Ancillary Agreements......................................................................6
II. CLOSING, PURCHASE PRICE, LIABILITIES, ETC.......................................................................6
SECTION 2.01 Closing ..................................................................................6
SECTION 2.02 Payment to Sellers on the Closing Date....................................................6
SECTION 2.03 Assumption of Liabilities.................................................................6
SECTION 2.04 Non-Assumption of Certain Liabilities.....................................................7
SECTION 2.05 Sellers' Net Funding Requirement..........................................................8
SECTION 2.06 Change of Names .........................................................................10
III. REPRESENTATIONS AND WARRANTIES.................................................................................10
SECTION 3.01 Representations and Warranties
of Sellers................................................................ ..............24
SECTION 3.02 Representations and Warranties
of Buyers................................................................. ..............24
IV. COVENANTS......................................................................................................26
SECTION 4.01 Covenants of Sellers.....................................................................26
SECTION 4.02 Confidentiality .........................................................................28
SECTION 4.03 Allocation of Purchase Price.............................................................28
SECTION 4.04 Preparation of Certain Financial
Information............................................................... ..............29
SECTION 4.05 Certain Tax Matters......................................................................30
SECTION 4.06 Insurance ...............................................................................30
SECTION 4.07 Retention of Employees; Benefits.........................................................30
SECTION 4.08 Further Assurances.......................................................................31
SECTION 4.09 No Solicitation; Acquisition
Proposals................................................................. ..............32
V. GHS STOCKHOLDERS' CONSENT; INFORMATION STATEMENT...............................................................33
SECTION 5.01 GHS Stockholders' Meeting................................................................33
SECTION 5.02 Preparation and Filing of Information
Statement................................................................. ..............33
SECTION 5.03 Recommendations of GHS Board of
Directors................................................................. ..............33
SECTION 5.04 Irrevocable Proxy........................................................................33
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VI. CONDITIONS PRECEDENT...........................................................................................34
SECTION 6.01 Conditions Precedent to the
Obligations of Buyers..................................................... ..............34
SECTION 6.02 Conditions Precedent to the
Obligations of Sellers.................................................... ..............37
VII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...................................................................39
SECTION 7.01 Survival of Representations..............................................................39
SECTION 7.02 Tax Indemnity .......................................................................... 39
SECTION 7.03 General Indemnity........................................................................40
SECTION 7.04 Conditions of Indemnification............................................................41
SECTION 7.05 Direct Claims ...........................................................................42
SECTION 7.06 Certain Information......................................................................42
SECTION 7.07 Limitations on Liability of Sellers......................................................43
VIII.TERMINATION....................................................................................................43
SECTION 8.01 Termination .............................................................................43
SECTION 8.02 Effect of Termination....................................................................44
IX. MISCELLANEOUS..................................................................................................45
SECTION 9.01 Bulk Transfer Laws.......................................................................45
SECTION 9.02 Expenses, Etc. ..........................................................................45
SECTION 9.03 Risk of Loss ............................................................................45
SECTION 9.04 Execution in Counterparts................................................................46
SECTION 9.05 Notices .................................................................................46
SECTION 9.06 Waivers .................................................................................47
SECTION 9.07 Amendments, Supplements, Etc.............................................................47
SECTION 9.08 Entire Agreement.........................................................................48
SECTION 9.09 Applicable Law; Jurisdiction.............................................................48
SECTION 9.10 Binding Effect; Benefits.................................................................48
SECTION 9.11 Assignability ...........................................................................49
SECTION 9.12 Update to Schedules......................................................................49
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INDEX TO EXHIBITS
Exhibit Description
A Form of Bill of Sale, Assignment and Assumption Agreement
B Form of Non-Compete Agreement
C Form of Proxy with respect to GHS
D Form of Proxy with respect to Global and Management
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INDEX TO SCHEDULES
Schedule Description
1.01(a)(i) Tangible Personal Property
1.01(a)(ii) Intangible Personal Property
1.01(a)(viii) Accounts Receivable Relating to Unearned Revenues
1.01(c)(vii) Other Excluded Assets
1.03 Consents To Assignment Not Required to be Sought
2.03 Accrued Vacation
2.05(a) Sellers' Net Funding Requirement
2.05(a)(i) Payments Relating to Unearned Revenues
2.05(a)(ii) Accrued Expenses
2.05(a)(iii) Prepaid Expenses and Security Deposits
2.05(a)(iv) Work in Process
3.01(a) State Qualifications
3.01(c) Effect of Agreements
3.01(d) Governmental Approvals
3.01(e) Financial Statements
3.01(f) Certain Changes or Events
3.01(g) Liens and Encumbrances
3.01(h) List of Properties, Leases, Proprietary
Rights, Contracts and Employment
Arrangements
3.01(h)(i) Real and Personal Property Leases
3.01(h)(ii) Patents, Trademarks, Trade Names,
Servicemarks and Copyrights
3.01(h)(iii) Employment Agreements and Benefit
Plans
3.01(h)(iv) Software Marketing Agreements
granted by or to Seller
3.01(h)(v) Third Party Vendor Contracts and
Commitments
3.01(i) Litigation
3.01(k) Employee Benefit Plans
3.01(m)(i)-1 The Owned Software
3.01(m)(i)-2 The Licensed Software
3.01(p) Compliance with Law; Permits
3.01(q) Customer Contracts Matters
3.01(r) Taxes
4.07(a) Certain Retained Employees
6.01(e) Required Consents
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 10, 1997, by and
among GHS, INC. ("GHS"), a Delaware corporation, GLOBAL HEALTH SYSTEMS, INC.
("Global"), a Delaware corporation, GHS MANAGEMENT SERVICES, INC.
("Management"), a Delaware corporation (GHS, Global and Management are sometimes
hereinafter referred to collectively as the "Sellers"), HEALTH MANAGEMENT
SYSTEMS, INC. ("HMS"), a New York corporation, and GLOBAL HEALTH ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of HMS ("Sub") (HMS
and Sub are sometimes hereinafter referred to collectively as "Buyers").
WHEREAS, GHS, through Global and Management, provides
computerized medical record-based transaction processing systems and services
for ambulatory healthcare providers and managed care organizations in the public
and private sector (the "Business"); and
WHEREAS, Sellers desire to sell to Buyers, and Buyers desire
to purchase from Sellers, substantially all the assets and properties of the
Business, excluding certain specified assets, and to assume certain liabilities,
all on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
I. TRANSFERS
SECTION 1.01 Transfer of Assets. (a) On the terms and subject
to the conditions hereinafter set forth, on the Closing Date (as hereinafter
defined), Sellers shall sell, convey, transfer, assign and deliver to Buyers,
and Buyers shall purchase from Sellers, for the aggregate purchase price set
forth in Article II hereof, (x) the assets and properties of Global and
Management relating to the Business listed in clauses (i)-(viii) below and those
additional assets referred to in Section 1.01(b) hereof, but excluding those
assets referred to in Section 1.01(c) below (all said assets and properties so
to be sold, conveyed, transferred, assigned and delivered being hereinafter
collectively called the "Non-Software Assets") and (y) the assets and properties
of Global and Management listed in clause (ix) below (the "Owned Software" and,
collectively with the Non-Software Assets, the "Assets"):
(i) all tangible personal property, inventory,
equipment, supplies, tools, computer equipment,
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work in process, spare parts, furniture and office furnishings,
wherever situated, whether or not carried on the books of Sellers, to
the extent that such assets are necessary to, or used by Global or
Management primarily in connection with, the Business, including but
not limited to all items listed on Schedule 1.01(a)(i) hereto;
(ii) the intangible personal property listed on
Schedule 1.01(a)(ii) hereto;
(iii) the patents, trademarks and trade names,
trademark and trade name registrations, service marks and servicemark
registrations, copyrights and copyright registrations, the applications
therefor and the licenses and franchises with respect thereto, in each
case listed on Schedule 3.01(h)(ii) hereto, together with the goodwill
and the business appurtenant thereto; all trade secrets and technology
(including technology with respect to which Global is a licensee, in
such case only insofar as permitted under the applicable license
agreement), processes, inventions, specifications, patterns, royalties,
privileges, permits and all other similar intangible personal property,
in each case as listed on Schedule 3.01(h)(ii) hereto;
(iv) all technical materials and guidelines (other
than any such as are included in the Owned Software), and all
brochures, sales literature, promotional material and other selling
material used in the Business, wherever situated;
(v) all papers, documents, instruments, books and
records, files, agreements, books of account and other records by which
any of the Assets might be identified or enforced, or otherwise
pertaining to the Assets or the Business that are located at the
offices or other locations used in connection with the Assets or the
Business (including, without limitation, customer invoices, customer
lists, vendor and supplier lists, drafts and other documents and
materials relating to customer transactions);
(vi) the rights of Global or Management (other than
rights to refunds arising prior to the Closing Date) under all
contracts, agreements, licenses, leases, sales orders, purchase orders
and other commitments relating to the Assets or the Business listed on
Schedules 3.01(h) (other than commitments of the kind described in
Section 3.01(h)(v) hereof) and on Schedule 3.01(q) hereto;
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(vii) all rights of Global or Management to the
computer software programs and the license or other agreements
conferring rights related thereto, in each case listed on Schedule
3.01(m)(i)-2 hereto and in each case, only insofar as permitted under
the applicable license or other agreement (the "Licensed Software");
(viii) all accounts receivable of the Business that
have arisen prior to the Closing Date with respect to ongoing
liabilities and obligations of Global or Management to provide products
or services after the Closing Date (including without limitation
accounts receivable with respect to all customer advance payments and
maintenance fees) under any contract listed on Schedule 3.01(q) hereto,
which accounts receivable are identified and set forth on Schedule
1.01(a)(viii) hereto;
(ix) all right, title and interest of Global or
Management in and to the computer software programs, and the source and
object codes for such software programs, listed on Schedule
3.01(m)(i)-1 hereto together with all versions thereof and all modules
encompassed thereby and, to the extent used in the Business or
otherwise in possession of Sellers as of the Closing Date, all
technical materials, guidelines and other written material pertaining
thereto; and
(b) In the event that Buyers shall reasonably establish to the
Sellers' reasonable satisfaction and notify Sellers at any time or from time to
time during the three-month period following the Closing Date that any of the
Schedules describing the Assets as provided in Section 1.01(a) hereof failed to
include assets or properties of Global or Management used by Global or
Management exclusively or primarily in the Business (other than any such assets
or properties specifically excluded under Section 1.01(c) hereof or made
available to Buyers pursuant to any of the Ancillary Agreements, as such term is
defined in Section 1.04 hereof) then:
(i) with respect to any such assets or properties
used exclusively in the Business, Sellers shall promptly convey,
transfer, assign and deliver to Buyers or other such person as may be
designated by Buyers, and Buyers or such designee shall acquire from
Sellers, without additional consideration, all such assets and
properties, which shall be deemed for all purposes to be included in
the definition of Assets hereunder as provided in Section 1.01(a)
hereof.
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(ii) with respect to any such assets or properties
used primarily, but not exclusively, in the Business, Sellers shall
grant to Buyers an irrevocable, royalty-free license or otherwise
convey to Buyers the unlimited right to use any such asset or property,
without additional consideration.
(c) Anything herein contained to the contrary notwithstanding,
the following assets and properties of Global and Management are specifically
excluded from the Assets and shall be retained by Global and Management:
(i) all cash in banks, cash on hand and short-term
investments as of the Closing Date;
(ii) except as set forth on Schedule 1.01(a)(viii)
hereto, all accounts receivable of Seller attributable to the Business
through the Closing Date;
(iii) all claims or rights against third parties
relating to liabilities or obligations (including, without limitation,
any such liabilities or obligations referred to in clause (ii) of
Section 2.04) that are not assumed by Buyer hereunder;
(iv) all claims for the refund of Taxes (as
hereinafter defined) and other governmental charges of whatever nature
for all periods prior to the close of business on the day prior to the
Closing Date;
(v) all rights and funds in connection with
retirement and profit sharing plans;
(vi) the minute books, stock records and related
corporate records of Global and Management; and
(vii) those items listed on Schedule 1.01(c)(vii)
hereto.
(d) Each of the Buyers, on the one hand, and Sellers, on the
other hand, agrees to cooperate with the other parties hereto to establish
reasonable procedures to identify and remit payments received but not owned by
them from third parties, being amounts attributable to Global's and Management's
conduct of the Business prior to the Closing Date or Buyers' conduct of the
Business after the Closing Date, as the case may be, which amounts shall, for
the purposes of this Section 1.01(d), include payments under the Subcontracted
Contracts (as defined in Section
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1.03 hereof). Such payments shall be made promptly, but in no event later than
15 days after receipt thereof by Buyers or Sellers, as the case may be. The
parties agree to reasonably cooperate with the other parties hereto and use
their reasonable efforts, at the request and expense of the other parties, and
to assist each other, under the direction of the party entitled to such
payments, in the collection of amounts due to such parties.
SECTION 1.02 Instruments of Conveyance and Transfer. On the
Closing Date, Sellers shall execute and deliver to Buyers (i) a bill of sale in
the form included in the form of the Bill of Sale, Assignment and Assumption
Agreement annexed hereto as Exhibit A (the "Bill of Sale") and (ii) such other
documents of transfer that Buyers may reasonably request, transferring to Buyers
the properties and assets to be acquired by Buyers under the terms of this
Agreement.
SECTION 1.03 Nonassignable Contracts. Nothing in this
Agreement shall be construed as an attempt or agreement to assign (i) any
contract, agreement, license, lease, sales order, purchase order or other
commitment that is nonassignable without the consent of the other party or
parties thereto unless such consent shall have been given, subject, however, to
the covenant of Sellers in Section 4.01(d) hereof, or (ii) any contract or claim
as to which all the remedies for the enforcement thereof enjoyed by Sellers
would not pass to Buyers as an incident of the assignments provided for by this
Agreement. In order, however, that the full value of every contract and claim of
the character described in clauses (i) and (ii) above, and all claims and
demands on such contracts may be realized, Sellers shall use all reasonable
efforts to obtain consent for the assignment thereof, other than any such
consent with respect to contracts and claims listed on Schedule 1.03 hereto.
With respect to those contracts and claims of which Sellers shall have failed to
obtain consent for the assignment thereof pursuant to their obligations under
Section 4.01(d) hereto and this Section 1.03 listed on Schedule 1.03 hereto,
Sellers shall, at the request and expense and under the direction of Buyers, in
the name of Sellers or otherwise as Buyers shall specify and as shall be
permitted by law, take all action and do or cause to be done all things as shall
in the opinion of Buyers be reasonably necessary or proper (x) in order that the
rights and obligations of Sellers under such contracts shall be preserved and
(y) for, and to facilitate, the collection of the moneys due and payable, and to
become due and payable, to Sellers in and under every such contract and claim
and in respect of every such claim and demand, and Sellers shall hold the same
for the benefit of and shall pay the same over promptly to Buyers, subject to
due payment, performance and discharge by
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Buyers on behalf of Sellers of all liabilities and obligations of Sellers with
respect to any such contracts and claims that have not been assigned hereunder
but as to which Sellers shall have obtained the full value thereof for the
benefit of Buyers as required hereunder (the "Subcontracted Contracts").
SECTION 1.04 Ancillary Agreements. In connection with the
purchase and sale of the Assets by Buyers and Buyers' operation of the Business
from and after the Closing Date, Sellers hereby covenant and agree to enter into
on the Closing Date the Non-Compete Agreement in the form annexed hereto as
Exhibit B (the "Non-Compete Agreement" and, collectively with the Bill of Sale,
the "Ancillary Agreements").
II. CLOSING, PURCHASE PRICE, LIABILITIES, ETC.
SECTION 2.01 Closing. The closing of the transactions
contemplated by this Agreement shall take place at the offices of Coleman &
Rhine LLP, 1120 Avenue of the Americas, New York, New York 10036, on such date
as the parties may mutually agree in writing, after satisfaction of all of the
conditions set forth in Sections 6.01 and 6.02 hereof, and for all purposes
shall be deemed effective as of the close of business on the day prior to such
date (such date and time of closing being herein called the "Closing Date"). The
parties shall use their best efforts to cause the Closing Date to occur within
45 days after the date of this Agreement.
SECTION 2.02 Payment to Sellers on the Closing Date. On the
Closing Date, in full consideration for the sale, conveyance, transfer,
assignment and delivery to Buyers of the Assets and the execution and delivery
of the Ancillary Agreements, subject to the assumption of liabilities provided
for herein, Buyers shall pay to Sellers an amount (the "Purchase Price") equal
to $2,100,000 by bank check payable to GHS.
SECTION 2.03 Assumption of Liabilities. On the Closing Date,
Buyers shall execute and deliver to Sellers an Assumption Agreement, in the form
included in the Bill of Sale, pursuant to which Buyers shall assume and agree to
pay, perform and discharge when due all liabilities and obligations of Global
and Management that arise on and after the Closing Date under the terms of any
contract, agreement, license, lease, sales order, purchase order or other
commitment that is disclosed on Schedules 3.01(h) (other than any commitment of
the kind described in Section 3.01(h)(iii) hereof) or 3.01(q) hereto, other than
any of the foregoing that shall not be assigned as contemplated by Section 1.03
hereof; provided, however, that if at any time after
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the Closing Date consent to assignment satisfactory to Buyers and their counsel
is obtained with respect to any such commitment that shall not have been
assigned as contemplated by said Section 1.03, Buyers shall thereafter be deemed
to have assumed all such liabilities and obligations of Global and Management
thereunder. On the Closing Date, Buyers shall also assume and agree to be
responsible for all obligations of Sellers in respect of vacation accrued for
the Retained Employees prior to the Closing Date as set forth on Schedule 2.03;
provided that Buyers may make it a condition to the offers of employment made
pursuant to Section 4.07(a) that any such accrued vacation be utilized within
twelve months of the Closing Date or expire at such time.
SECTION 2.04 Non-Assumption of Certain Liabilities. Subject as
set forth in Section 2.05, Buyers are not assuming, and shall not be deemed to
have assumed, any liabilities or obligations of Sellers of any kind or nature
whatsoever, except as expressly provided herein or in the Bill of Sale. Without
limiting the generality of the foregoing, it is hereby agreed that Buyers are
not assuming any liability and shall not have any obligation for or with respect
to: (i) any liabilities or obligations of Sellers that arise under the terms of
a contract, agreement, license, lease, sales order, purchase order, or other
commitment which shall not be assigned as contemplated by Section 1.01(c) of
this Agreement; (ii) any liabilities or obligations of Sellers (x) attributable
to the operations of the Business prior to the Closing Date or (y) that would
not have arisen but for the consummation of the transactions contemplated by
this Agreement, unless, in either case, such liabilities or obligations are
expressly assumed by Buyers as provided herein or in the Bill of Sale; (iii) any
liabilities or obligations of Sellers under any Plan (as defined in Section
3.01(k)), including any obligation to adopt or to sponsor such Plan except as
Buyers may, in their sole discretion, elect to adopt or to sponsor; (iv) any
liabilities or obligations of Sellers for any commissions, refunds, rebates,
discounts or other such sums, falling due before the Closing Date, in respect of
services rendered prior to the Closing Date; (v) any obligation of Sellers
arising out of any action, suit or proceeding based upon (A) an event occurring
or a claim arising prior to the Closing Date or (B) a claim arising on and after
the Closing Date based on an event occurring prior to the Closing Date in the
case of claims in respect of products or services sold and delivered or required
to be delivered by Sellers or provided by Sellers or the conduct of the Business
prior to the Closing Date and attributable to acts performed or omitted by
Sellers prior to the Closing Date; (vi) any obligation of Sellers to any
employee in respect of personal or sick days accrued prior to the Closing Date;
(vii) any obligation of Sellers to any
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employee of, or consultant to, the Business who does not become a Retained
Employee (as hereinafter defined) or to any other employee of, or consultant to,
the Business whose employment or consultancy is terminated by Sellers prior to
or effective at the Closing Date or, except as provided in Section 4.07 hereof,
to any employee who is on administrative leave as of the Closing Date; and
(viii) any and all Taxes incurred by or imposed upon Sellers relating to periods
prior to the Closing Date, whether such Taxes are assessed before or after the
Closing Date, including without limitation, but subject to the provisions of
Section 4.05(a) hereof, any Taxes incurred by or lawfully imposed upon Sellers,
other than any Taxes to be paid by Buyers in accordance with this Agreement or
any of the Ancillary Agreements.
SECTION 2.05 Sellers' Net Funding Requirement. (a) Buyers and
Sellers agree that Sellers shall pay to Buyers on the Closing Date, in cash, an
amount equal to the net amount ("Sellers' Net Funding Requirement") set forth on
Schedule 2.05(a) calculated by subtracting the amounts described in clauses
(iii) and (iv) below from the amount described in clauses (i) and (ii) below;
provided, however, that if the Sellers' Net Funding Requirement is less than
zero, Buyers shall pay to Sellers on the Closing Date, in cash, an amount equal
to such negative amount:
(i) Unearned Revenues. The aggregate of all payments received prior to
the Closing Date, in each case, with respect to ongoing liabilities and
obligations of Sellers to provide products or services after the day
prior to the Closing Date (including, without limitation, all customer
advance payments, maintenance fees and the estimated value of all
warranty obligations to be discharged or performed with respect to work
performed or services rendered prior to the Closing Date) under any
contract listed on Schedule 3.01(q) hereto, all of which payments and
amounts have been identified and set forth by Sellers on Schedule
2.05(a)(i) hereto;
(ii) Accrued Expenses. The aggregate of all expenses of the Business
that relate to any period prior to 12:00 midnight on the day prior to
the Closing Date in respect of which Sellers have not made payment or,
subject to payment thereof on or before the due date thereof, an
account payable has arisen or an accrual made on Sellers' books of
account prior to the Closing Date for which Sellers will not remain
responsible after the Closing Date, which amounts have been identified
and set forth by Sellers on Schedule 2.05(a)(ii) hereto;
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(iii) Prepaid Expenses and Security Deposits. The aggregate of (A) all
expenses of the Business that relate to any period after 12:01 a.m. on
the Closing Date and for which Buyers will receive the benefit in
respect of which Sellers have made payment or, subject to payment
thereof on or before the due date thereof, an account payable has
arisen or an accrual made on Sellers' books of account prior to the
Closing Date for which Sellers will remain responsible after the
Closing Date and (B) all security deposits deposited by Sellers in
connection with any contract, agreement, license, lease, sales order,
purchase order or other commitment that is assumed by Buyers pursuant
to the terms of the Agreement, which amounts have been identified and
set forth by Sellers on Schedule 2.05(a)(iii) hereto; and
(iv) Work in Process. Amounts represented by the value, as determined
in accordance with the related contract in respect thereof, of products
and services that shall have been supplied by the Sellers prior to the
Closing Date under any contract listed on Schedule 3.01(q) hereto but
have not yet given rise to an account receivable of Sellers, payment
for which will be included in invoices of Buyers and not Sellers after
the Closing Date, which amounts have been identified and set forth by
Sellers on Schedule 2.05(a)(iv) hereto.
(b) In the event that Buyers or Sellers shall, at any time or
from time to time during the three-month period following the Closing Date,
notify the other in writing, that any of Schedules 2.05(a)(i) through
2.05(a)(iv) failed to include amounts, which properly should reasonably have
been included in such Schedules in accordance with generally accepted accounting
principles, based on the information available to Sellers, after due inquiry, as
of the Closing Date, but not thereafter, then Buyers or Sellers, as the case may
be, shall promptly pay to the other such amount.
(c) To the extent that any amounts described in Section
2.05(a)(i) and (ii) hereof has been fully provided for and included in the
amount to be paid in respect of Sellers' Net Funding Requirement, Buyers shall
be deemed upon such payment to have assumed the related liability and
obligation, notwithstanding anything to the contrary contained in Section 2.04
hereof. Conversely, to the extent that any amount described in Section
2.05(a)(iii) and (iv) hereof has been fully provided for and deducted from the
amount to be paid in respect of Sellers'
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Net Funding Requirement, Buyers shall be deemed upon such payment to have
acquired the related asset (which shall be deemed for all purposes to be
included in the definition of Assets hereunder), notwithstanding anything to the
contrary contained in Section 1.01(c) hereof.
SECTION 2.06 Change of Names. At the Closing, Sellers shall
cause the corporate names of Global and Management to be changed to names which
are not confusingly similar to the names of Global and Management, and shall
assign all their rights to Global's and Management's names to Buyers. Sellers
shall furnish to Buyers at the Closing all documents reasonably necessary to
enable Buyers to utilize and/or register such names following the Closing,
including any consents required by the states of California, Delaware, Maryland,
New York and all other jurisdictions where Global and Management are qualified
to do business as foreign corporations. In addition, Sellers will use their best
efforts to obtain the consent of any other person whose consent to Buyers' use
of such names is required, provided, that Sellers shall not be required to pay
any money to obtain such consent. Sellers agree that they will not, subsequent
to the Closing, cause Global and Management to amend their Certificates of
Incorporation to any corporate name which is confusingly similar to Global
Health Systems, Inc. or GHS Management Services, Inc., respectively.
III. REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of Sellers.
Sellers represent and warrant to Buyers as follows:
(a) Organization, Corporate Power, Etc. Each of GHS, Global
and Management is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified to do business as a foreign corporation in each jurisdiction in which
it is required to be so qualified with respect to the operations of the
Business, except where the failure to be so qualified would not have a material
adverse effect on the properties, results of operations, financial condition or
prospects of the Business (a "Material Adverse Effect"). Sellers have all
requisite corporate power and authority to own, operate and lease the Assets, to
carry on the Business as it is now being conducted, to execute and deliver this
Agreement and the Ancillary Agreements and to perform their obligations
hereunder and thereunder. Schedule 3.01(a) hereto sets forth a complete list of
the jurisdictions in which Global and Management are qualified to do business
with respect to the operations of the Business.
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(b) Authorization of Agreements. The execution and delivery by
Sellers of this Agreement and the Ancillary Agreements, and the consummation by
Sellers of the transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate action, subject to approval of this
Agreement by the stockholders of GHS. This Agreement has been duly and validly
executed by Sellers and, subject to such approval by the stockholders of GHS,
constitutes the legal, valid and binding obligation of Sellers, enforceable in
accordance with its terms and the Ancillary Agreements, when duly executed and
delivered in accordance with this Agreement, will constitute legal, valid and
binding obligations of Sellers, enforceable 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. All of the issued and outstanding capital stock of Global and
Management is owned by GHS. Except for the requisite affirmative vote of GHS
under the laws of the State of Delaware, the authorization of no other person or
entity is required to consummate the transactions contemplated herein by virtue
of any such person or entity having an equitable or beneficial interest in
Global or Management.
(c) Effect of Agreements. Except as set forth on Schedule
3.01(c) hereto, the execution and delivery by Sellers of this Agreement and the
Ancillary Agreements, and the performance by Sellers of their obligations
hereunder and thereunder, will not violate any provision of law, any order of
any court or other agency of government, the Certificates of Incorporation or
By-laws of Sellers, or any judgment, award or decree or any indenture,
agreement, permit or other instrument to which Sellers are parties, or by which
Sellers or any of the Assets are bound or affected, or conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under, any such indenture, agreement, permit or other instrument, or result in
the creation or imposition of any lien, charge, security interest or encumbrance
of any nature whatsoever upon any of the Assets.
(d) Governmental Approvals. Except as set forth on Schedule
3.01(d) hereto, no approval, authorization, consent or order or action of or
filing with any court, administrative agency or other governmental authority (i)
is required for the execution and delivery by Sellers of this Agreement or any
of the Ancillary Agreements or the consummation by Sellers of the transactions
contemplated hereby or thereby or (ii) is necessary in order that the Business
may be conducted immediately following
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the Closing Date substantially in the same manner as heretofore conducted, other
than those that become applicable solely as a result of the specific regulatory
status of Buyers or its affiliates.
(e) Financial Statements. Attached as Schedule 3.01(e) hereto
are the unaudited balance sheet of each of Global and Management as at December
31, 1996 (collectively, the "December Balance Sheets") and the related statement
of operations of each of Global and Management for the nine months ended
December 31, 1996 (collectively with the December Balance Sheets, the "Financial
Statements"). The Financial Statements are complete and correct in all material
respects and have been prepared in accordance with generally accepted accounting
principles (including, without limitation, Global's and Management's policies of
revenue recognition), consistently applied and consistent with prior periods,
except that the Financial Statements will be subject to normal year-end
adjustments, which adjustments in the aggregate will not have a Material Adverse
Effect. Except as set forth on Schedule 3.01(e) hereto, the Financial Statements
fairly present the operating results of the Business during the period indicated
therein.
(f) Absence of Certain Changes or Events. Since December 31,
1996, except as otherwise set forth on Schedule 3.01(f) hereto and except for
the transactions contemplated hereby, Sellers have not with respect to the
Business:
(i) incurred any material obligation or liability of
any kind or nature whatsoever, except normal trade or business
obligations incurred in the ordinary course of business and consistent
with past practice and except in connection with this Agreement and the
transactions contemplated hereby;
(ii) discharged or satisfied any material lien,
security interest or encumbrance or paid any obligation or liability
(fixed or contingent) of any kind or nature whatsoever, other than in
the ordinary course of business and consistent with past practice;
(iii) mortgaged, pledged or subjected to any lien,
security interest or other encumbrance any of the Assets (other than
mechanic's, materialman's and similar statutory liens arising as a
matter of law and purchase money security interests arising in the
ordinary course of business between the date of delivery and payment);
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(iv) transferred, leased or otherwise disposed of any
of the Assets except in the ordinary course of business and consistent
with past practice or, except in the ordinary course of business and
consistent with past practice, acquired any assets or properties to be
used by or in connection with the activities of the Business;
(v) canceled or compromised any material debt or
claim related to the Business, except in the ordinary course of
business and consistent with past practice;
(vi) waived or released any rights of material value
related to the Business, except in any case in the ordinary course of
business and consistent with past practice;
(vii) transferred or granted any rights under any
concessions, leases, licenses, sublicenses, agreements, patents,
inventions, trademarks, trade names, service marks or copyrights or
with respect to any know-how related to the Business, except in the
ordinary course of business and consistent with past practice;
(viii) made or granted any wage, salary or benefit
increase or paid any bonus applicable to any group or classification of
employees generally, entered into or amended the terms of any
employment contract (other than employment agreements terminable at
will by Sellers without liability) with, or made any loan to, or
granted any severance benefits to or entered into or amended the terms
of any material transaction of any other nature with any person listed
on Schedule 4.07(a) hereto, except in the ordinary course of business
and consistent with past practice;
(ix) suffered any casualty loss or damage (whether or
not such loss or damage shall have been covered by insurance) that
affects in any material respect their ability to conduct the Business
or received any claim or claims in respect of the Business in excess of
insurable limits, or canceled any insurance coverage, in whole or in
part, under any policy the coverage limits of which exceed $25,000;
(x) suffered any adverse change in any of their
operations or in their financial condition or in their assets,
properties or business, which adverse change is
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material or could reasonably be expected to be material to the
Business;
(xi) surrendered or had revoked or otherwise
terminated any material license, permit or other approval,
authorization or consent from any court, administrative agency or other
governmental authority relating to the conduct of the Business; or
(xii) entered into any agreement or commitment to
take any action described in this Section 3.01(f).
(g) Title to Properties, Absence of Liens and Encumbrances.
Except as set forth on Schedule 3.01(g) hereto, Sellers have good and marketable
title to all the Non-Software Assets, free and clear of all liens, charges,
pledges, security interests or other encumbrances of any nature whatsoever,
subject to restrictions on assignment in any agreements relating to any
Non-Software Assets. Except as set forth on Schedule 3.01(g) hereto, all leases
of personal property of Sellers to be assigned to Buyers hereunder are, to the
knowledge of Sellers, valid and binding in accordance with their respective
terms and there is not under any of such leases any existing default, or any
condition, event or act attributable to Sellers or, to the knowledge of Sellers,
attributable to the other party to such leases, which with notice or lapse of
time or both would constitute such a default, nor would consummation of the
transactions contemplated hereby result in a default or any such condition,
event or act, which, in any such case, would have a Material Adverse Effect. As
used in this Agreement, "to the knowledge of Sellers" shall mean the collective
knowledge of Alan Gold and Howard Grunfeld (collectively, the "Sellers'
Officers"), the President and the Chief Executive Officer and the Controller,
respectively, of GHS. "Knowledge" when used in this context shall mean, as to
the facts or circumstances represented: (i) actual knowledge of any one of the
Sellers' Officers; and (ii) knowledge that any one of the Sellers' Officers
should reasonably be expected to possess after due inquiry.
(h) List of Properties, Contracts and Other Data. Annexed
hereto as Schedule 3.01(h) hereto is a list setting forth with respect to the
operations of the Business, as of the dates specified on such Schedule, the
following:
(i) all leases of real or personal property included
in the Assets involving payments in excess of $5,000 per annum to which
Sellers are a party, either as lessee or lessor, with a brief
description of the parties to
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each such lease, the property to which each such lease relates and the
termination dates thereof;
(ii) (A) all patents, trademarks and trade names,
trademark and trade name registrations, servicemarks and servicemark
registrations, copyrights and copyright registrations which are used in
connection with the operations of the Business, all applications
pending for patents or for trademark, trade name, servicemark or
copyright registrations, and all other proprietary rights (in each
case, other than any such rights in the Owned Software) owned or held
by Sellers, and reasonably necessary to, or primarily used in
connection with, the Business, and (B) all licenses and sublicenses
granted by or to Sellers and all other agreements to which Sellers are
a party which relate, in whole or in part, to any items of the
categories mentioned in (A) above with respect to other proprietary
rights reasonably necessary to, or primarily used in connection with,
the Business, whether owned by Sellers or any affiliate thereof (in
each case, other than any such rights of Sellers in the Licensed
Software);
(iii) with respect to the persons listed on Schedule
4.07(a) hereto, all employment and consulting agreements, executive
compensation plans, collective bargaining agreements, bonus plans,
guaranteed bonus arrangements, deferred compensation agreements,
employee pension plans or retirement plans, employee profit sharing
plans, employee stock purchase and stock option plans, group life
insurance, hospitalization insurance or other plans or arrangements
providing for benefits to such employees (other than employment
agreements terminable at will by Sellers without liability);
(iv) all contracts pursuant to which Sellers have (A)
been granted rights to market software owned by third parties relating
to the Business or (B) granted marketing rights in the Owned Software
to third parties; and
(v) all contracts and commitments (including proposed
(i) contracts and commitments and (ii) amendments to contracts and
commitments) relating to the Business, whether oral or written, to
which Sellers are or may become parties or to which Sellers or any of
their assets or properties are or may become subject and which are not
specifically referred to in Schedule 3.01(m)(i) hereto, Schedule
3.01(q) hereto or any of clauses (i) through (iv) above, and which is a
contract or group of related contracts
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which involve payments by or to Sellers exceeding $5,000 per annum in
amount or cannot be canceled within 365 days after the Closing Date
without breach or penalty.
True and complete copies of all documents and complete
descriptions of all oral contracts (if any) referred to in Schedule 3.01(h)
hereto have been provided or made available to Buyers and their counsel. Except
as disclosed in said Schedule 3.01(h) hereto, Sellers have not received any
claim that any contract referred to therein is not valid and enforceable in
accordance with its terms (subject, as to enforcement, to the rights of
creditors generally) for the periods stated therein, and there does not exist
under any such contract any existing default or event of default or event which
with notice or lapse of time or both would constitute such a default, in either
case, on the part of Sellers, or to the knowledge of Sellers, on the part of any
other party thereto, except where any such default or event of default or event
would not have a Material Adverse Effect.
(i) Litigation. Except as set forth on Schedule 3.01(i)
hereto, there are no actions, suits or proceedings involving claims pending, or
to the knowledge of Sellers, threatened, against Sellers with respect to the
Business or against any officer or employee of the Business (other than any
matter that is unrelated to such person's employment, or actions taken in the
course of such person's employment, in the Business) or relating to any
operations of the Business, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality. To the knowledge of Sellers, and except as set forth
on Schedule 3.01(i) hereto, there are no orders, judgments or decrees of any
court or governmental agency with respect to which Sellers have been named or is
a party that apply, in whole or in part, to the Business or any of the Assets.
(j) Collective Bargaining Agreements; Labor Controversies;
Etc. Sellers are not a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to any
employees engaged in the operations of the Business. No employees of Sellers are
represented by any labor organization. No labor organization or group of
employees of Sellers has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of Sellers, threatened to be brought or
filed with the National Labor Relations Board or other labor relations tribunal
relating to the Business. There
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is no organizing activity relating to the Business involving Sellers pending or,
to the knowledge of Sellers, threatened by any labor organization or group of
employees of Sellers. There are no (A) strikes, work stoppages, slowdowns,
lockouts or arbitrations or (B) material grievances or other material labor
disputes pending or, to the knowledge of Sellers, threatened against or
involving Sellers relating to the Business. There are no unfair labor practice
charges, grievances or complaints pending or, to the knowledge of Sellers,
threatened against or involving Sellers or any group of employees of Sellers
relating to the Business. There are no complaints, charges or claims against
Sellers pending or, to the knowledge of Sellers, threatened to be brought or
filed with any governmental body based on, arising out of, in connection with,
or otherwise relating to the employment by Sellers of any individual, including
any claim for workers' compensation relating to the Business. Hours worked by
and payments made to employees of Sellers engaged in the operations of the
Business have not been in violation of the federal Fair Labor Standards Act or
any other law dealing with such matters.
(k) Employee Benefit Plans.
(i) Schedule 3.01(k) hereto lists each employee
benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by Sellers or to which Sellers contributes or is required to
contribute or in which any employee of Sellers engaged in the
operations of the Business participates as a result of being employed
by Sellers (a "Plan"). Sellers have complied and currently are in
compliance, in all material respects, both as to form and operation,
with the applicable provisions of ERISA and the Internal Revenue Code
of 1986, as amended (the "Code"), respectively, with respect to each
Plan.
(ii) Each of the Plans that is intended to qualify
under Section 401(a) of the Code does so qualify and is exempt from
taxation pursuant to Section 501(a) of the Code.
(iii) Sellers have not maintained, contributed to or
been required to contribute to, nor do any of their employees
participate in, a "multiemployer plan" (as defined in Section 3(37) of
ERISA). No amount is due or owing from Sellers on account of a
"multiemployer plan" (as defined in section 3(37) of ERISA) or on
account of any withdrawal therefrom.
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(iv) Sellers do not maintain for the benefit of any
of their employees engaged in the operations of the Business a defined
benefit plan, as defined in section 3(35) of ERISA.
(v) Notwithstanding anything else set forth herein,
Sellers have not incurred any liability with respect to any Plan under
ERISA (including, without limitation, Title I or Title IV of ERISA),
the Code or other applicable law, which has not been satisfied in full,
and no event has occurred, and there exists no condition or set of
circumstances which could result in the imposition of any material
liability under ERISA (including, without limitation, Title I or Title
IV of ERISA), the Code or other applicable law with respect to any of
the Plans.
(vi) No Plan, other than a Plan which is an employee
pension benefit plan (within the meaning of Section 3(2)(A) of ERISA),
provides benefits, including without limitation death, health or
medical benefits (whether or not insured), with respect to current or
former employees of Sellers engaged in the operations of the Business
beyond their retirement or other termination of service with Sellers
(other than coverage mandated by applicable law or benefits the full
cost of which is borne by the current or former employee (or his or her
beneficiary)).
(vii) Except as set forth on Schedule 3.01(k) hereto,
the consummation of the transactions contemplated by this Agreement
will not (A) entitle any current or former employee or officer of
Sellers to severance pay, unemployment compensation or any other
payment, or (B) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(viii) Sellers have provided to Buyers true and
complete copies of each of the Plans together with summary plan
descriptions and each determination letter from the Internal Revenue
Service with respect to each Plan that is intended to qualify under
Section 401(a) of the Code.
(1) Patents, Trademarks, Etc. The patents, trademarks and
trade names, trademark and trade name registrations, service mark
registrations and copyrights, the applications therefor and the
licenses and sublicenses with respect thereto (collectively, "Business
Property Rights") listed on Schedule 3.01(h)(ii) hereto, together with
Sellers' rights in the Owned Software, constitute all
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Business Property Rights of Sellers reasonably necessary to, or
primarily used in connection with, the conduct of the Business. To the
knowledge of Sellers, except as set forth on such Schedule, Sellers own
or have valid rights to use all Business Property Rights without
conflict with the rights of others. No person has advised Sellers of
or, to the knowledge of Sellers, threatened to make, any claims that
the operations of the Business are in violation of or infringe upon any
such Business Property Rights or any other proprietary or trade rights
of any third party.
(m) Software.
(i) The Owned Software listed on Schedule
3.01(m)(i)-l hereto comprises all of the operating and applications
computer software programs and databases that have been licensed by
Sellers to any customer of the Business or as to which Sellers have
agreed to provide services to any customer of the Business, in each
case, pursuant to the contracts listed on Schedule 3.01(q) hereto. The
Owned Software and the Licensed Software listed on Schedule
3.01(m)(i)-2 hereto comprise all of the operating and applications
computer software programs and databases used by Sellers in connection
with the operations of the Business, the licensing, servicing,
developing, or maintaining of the Owned Software or otherwise used by
Sellers in the Business.
(ii) Except as set forth on Schedule 3.01(m)(i)-l
hereto and except for the rights of the customers of the Business under
the contracts listed on Schedule 3.01(q) hereto and the rights of the
parties to the marketing agreements listed on Schedule 3.01(h)(iv)
hereto, Sellers have good and marketable title to all Owned Software,
free and clear of all liens, charges, pledges, security interests, or
other encumbrances of any nature whatsoever. Sellers hold valid
licenses to all Licensed Software, subject, in any event, to the terms
of any agreements relating to the Licensed Software. To the knowledge
of Sellers, none of the Owned Software, and no use by Sellers of the
Licensed Software, infringes upon or violates any patent, copyright,
trade secret or other proprietary right of any other person and no
claim with respect to any such infringement or violation is threatened.
(iii) Sellers possess or have access to (i) to the
extent required to conduct the Business, the source and object codes
for all Owned Software and, to the extent
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permitted under the respective license agreements, for all the Licensed
Software used by Sellers in the conduct of the Business and (ii) all
other technical materials, guidelines and other written materials
pertaining to the Owned Software or, to the knowledge of Sellers, the
Licensed Software. Upon consummation of the transactions contemplated
by this Agreement, Buyers will (A) own all the Owned Software, free and
clear of all claims, liens, encumbrances, obligations and liabilities,
except (x) for the rights of customers under the contracts listed on
Schedule 3.01(q) hereto and the rights of the parties to the marketing
agreements listed on Schedule 3.01(h)(iv) hereto, and (y) as set forth
on said Schedule 3.01(m)(i)-l hereto, and (B) have, pursuant to a valid
and binding assignment thereof hereunder, a valid license to use all
Licensed Software in the Business without violation or infringement of
the respective license agreements relating thereto, to the extent
permitted by such license agreements. To the extent that Buyers shall
identify, at any time or from time to time during the three-month
period following the Closing Date, any Licensed Software for which no
such valid license has been assigned, Sellers shall promptly use best
efforts to obtain such licenses and transfer, assign and deliver same
to Buyers, which shall be deemed for all purposes to be included in the
definition of Assets hereunder as provided in Section 1.01 hereof.
(iv) To the knowledge of Sellers, any programs,
modifications, enhancements or other inventions, improvements,
discoveries, methods or works of authorship included in the Owned
Software that were created by employees of Sellers were made in the
regular course of such employees' employment with Sellers using
Sellers' facilities and resources and, as such, constitute "works made
for hire".
(n) Use of Real Property. The real property as set forth on
Schedule 3.01(h) hereto are used and operated in material compliance and
conformity with all applicable leases, contracts, licenses and permits. Sellers
have not received notice of any material violation of any applicable zoning or
building regulation, ordinance or other law, order, regulation or requirement
relating to the conduct of the Business or to the Assets and, to the knowledge
of Sellers, there is no such violation. To the knowledge of Sellers, all
buildings used in the operations of the Business substantially conform with all
applicable ordinances, codes, regulations and requirements, and
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no law presently in effect or condition precludes or materially restricts
continuation of the present use of such properties.
(o) Condition of Assets. All tangible personal property,
furniture, fixtures and equipment comprising the Assets are (i) in a reasonable
state of repair (ordinary wear and tear excepted) and operating condition and
are suitable for the purposes for which they are being used and (ii) to the
knowledge of Sellers, substantially conform with all applicable ordinances,
codes, regulations and requirements, including without limitation all applicable
ordinances, codes, regulations and requirements relating to occupational safety,
and no law presently in effect or condition precludes or materially restricts
continuation of the present use of such properties. No warranty is made
regarding the tangible personal property comprising the Assets. All such
tangible personal property is conveyed hereunder AS IS, WHERE IS, WITH ALL
FAULTS AND DEFECTS.
(p) Compliance With Law; Permits. Except as set forth on
Schedule 3.01(p) hereto, to the knowledge of Sellers, the conduct of the
Business by Sellers does not violate any federal, state or local laws, statutes,
ordinances, rules, regulations, decrees, orders, permits or other similar items
in force on the date hereof that are applicable to the Business, other than any
such violation which would not or would not reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 3.01(p) hereto, Sellers
have all material governmental licenses, franchises and permits required under
applicable law for the conduct of the Business as currently conducted and, to
the knowledge of Sellers, the Business is being conducted in compliance with all
such licenses, franchises and permits. Schedule 3.01(p) hereto lists all
material licenses, franchises and permits held by Sellers.
(q) Customer Contracts.
(i) Schedule 3.01(q) hereto contains a list of (A)
all contracts between Sellers and the customers of the Business
pursuant to which Sellers have agreed to provide goods or services to
such customers, (B) all contracts between Sellers and the customers of
the Business pursuant to which Sellers have licensed any Owned Software
to such customers and (C) all proposed amendments to any such
contracts. All correspondence files with respect to such contracts
shall be made available for review by Buyers upon their reasonable
request.
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(ii) Except as set forth on said Schedule 3.01(q)
hereto and except for contracts under which Sellers are not currently
obligated to supply any product or provide any service, no such
contract contains a prohibition on the assignment thereof without the
consent of the other party thereto.
(iii) Except as set forth on said Schedule 3.01(q)
hereto, since December 31, 1996, Sellers have not with respect to the
Business had any contracts with customers terminated prior to the
expiration date thereof or been notified in writing by any customer of
its intention to terminate any contract listed on Schedule 3.01(q)
hereto prior to the expiration date thereof that, in the aggregate,
accounted for more than 5% of the revenues of the Business during the
nine-month period ended December 31, 1996 (and, to the knowledge of
Sellers, no customer has notified Sellers in writing that it would, in
the event of the sale of the Business, terminate any such contract).
Except as set forth on Schedule 3.01(q) hereto, since December 31,
1996, Sellers have not received written notice from any customer of the
Business claiming that Sellers have materially breached any contract or
other agreement required to be scheduled pursuant to this Agreement.
(iv) Schedule 3.01(q) hereto identifies each
agreement of the Business that (A) requires joint services to be
performed by the Business and GHS's other business units or (B) is with
any administrative agency or other governmental authority. In addition,
Schedule 3.01(q) hereto sets forth all outstanding contract proposals
relating to the Business for which a contract has been requested for
goods or services involving fees in excess of $25,000 per annum.
(r) Taxes.
(i) Except as set forth on Schedule 3.01(r) hereto,
all federal, state, local and foreign income, franchise, sales, use,
property, payroll, employment, transfer and all other tax returns and
information statements ("Tax Returns") required to be filed with
respect to the operations of the Business have been properly prepared
and timely filed for all years and periods for which such Tax Returns
have become due and all such Tax Returns are correct and complete in
all respects. For purposes of this Agreement, "Taxes" shall mean any
and all income, franchise, sales, use, property, payroll,
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employment, transfer and any other taxes, charges, fees, levies,
imports, duties, licenses or other assessments, together with interest,
penalties and any other additions to tax or additional amounts imposed
by any governmental or taxing authority, or liability for such amounts
as a result of Seller being a member of an affiliated, consolidated,
combined or unitary group or being a party to any agreement or
arrangement whereby Sellers may be liable for Taxes of any other person
for any period prior to (or up to and including) the close of business
on the day prior to the Closing Date.
(ii) Sellers have paid to the appropriate taxing
authority, all Taxes owed by Sellers with respect to the operations of
the Business, whether or not shown on any Tax Return, to the extent
such Taxes are due.
(iii) Sellers are not parties to any agreement,
contract or arrangement that would result, by reason of the
consummation of any of the transactions contemplated hereby, separately
or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Section 28OG of the Code.
(iv) None of the Assets is required to be treated as
being owned by any other person pursuant to the "safe harbor" leasing
provisions of Section 168(f)(8) of the Code of 1954, as in effect prior
to the repeal thereof.
(s) Environmental Matters. No Hazardous Substances (as
hereinafter defined) have been, or have been threatened to be, discharged,
released or emitted by Sellers into the air, water, surface water, ground water,
land surface or subsurface strata or transported to or from any property used by
Sellers in the operations of the Business except in accordance with all
applicable Environmental Laws, and except for incidental release of Hazardous
Substances in amounts or concentrations that could not reasonably be expected to
give rise to any material claims or liabilities against Sellers under any
Environmental Law. Sellers have not received any notification from a
governmental agency that there is any violation of any Environmental Law with
respect to the properties of Sellers used in the operations of the Business or
any notification from a governmental agency pursuant to Section 104, 106 or 107
of the Comprehensive Environmental Response Compensation and Liability Act, as
amended.
For purposes of this Agreement, the following terms shall have
the following meanings:
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"Environmental Law" shall mean any federal, state or local
statute, law, ordinance, rule or regulation and any order to which Sellers are
parties or are otherwise bound with respect to the operations of the Business,
relating to pollution or protection of the environment, including natural
resources, or exposure of persons, including employees, to Hazardous Substances;
and
"Hazardous Substances" shall mean any substance, whether
liquid, solid or gas listed, identified or designated as hazardous or toxic
under any Environmental Law, which, applying criteria specified in any
Environmental Law, is hazardous or toxic, or the use or disposal of which is
regulated under any Environmental Law.
(t) Broker's or Finders' Fees. All negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Sellers directly with Buyers, without the intervention of any person on behalf
of Sellers in such a manner to give rise to any claim by any person against
Buyers for a finder's fee, brokerage commission or similar payment.
(u) The Assets. To the knowledge of Sellers, the Assets
referred to in Section 1.01(a) constitute all of the assets or properties of
Sellers used by Sellers exclusively or primarily in the Business.
(v) Other Information. None of the information furnished by
Sellers to Buyers in this Agreement, the exhibits hereto, the schedules
identified herein, or in any certificate or other document to be executed or
delivered pursuant hereto by Sellers at or prior to the Closing Date, is, or on
the Closing Date will be, in any material respects, false or incomplete or
contains, or on the Closing Date will contain, any misstatement of material
fact.
SECTION 3.02 Representations and Warranties of Buyers. Buyers
represents and warrants to Seller as follows:
(a) Organization, Corporate Power, Etc. Each of Buyers is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to do business as
a foreign corporation in each jurisdiction in which it is required to be so
qualified, except where the failure to be so qualified would not have a material
adverse effect on the properties, results of operations or financial condition
of Buyers. Buyers have all
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requisite corporate power and authority to acquire, own, lease and operate the
Assets and the Business, to execute and deliver this Agreement and the Ancillary
Agreements and to perform their respective obligations hereunder and thereunder.
(b) Authorization of Agreements. The execution, delivery and
performance by Buyers of this Agreement and the Ancillary Agreements, and the
consummation by Buyers of the transactions contemplated hereby and thereby, have
been duly authorized by all requisite corporate action. This Agreement has been
duly and validly executed by Buyers and constitutes the legal, valid and binding
obligation of Buyers, enforceable in accordance with its terms, and the
Ancillary Agreements, when duly executed and delivered in accordance with this
Agreement, will constitute legal, valid and binding obligations of Buyers,
enforceable 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. All of the issued and
outstanding capital stock of Sub is owned by HMS. Except for the affirmative
vote of HMS, under the laws of the State of Delaware, the authorization of no
other person or entity is required to consummate the transactions contemplated
herein by virtue of any such person or entity having an equitable or beneficial
interest in Sub.
(c) Effect of Agreements. The execution and delivery by Buyers
of this Agreement and the Ancillary Agreements, and the performance by Buyers of
their respective obligations hereunder and thereunder, will not violate any
provision of law, any order of any court or other agency of government, the
Certificates of Incorporation or By-laws of Buyers or any judgment, award or
decree or any indenture, agreement or other instrument to which Buyers are
parties or by which Buyers or their properties or assets are bound or affected,
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under, any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of
Buyers.
(d) Litigation. There is no action, suit, investigation or
proceeding pending or, to the knowledge of Buyers, threatened against or
affecting Buyers before any court or by or before any governmental body or
arbitration board or tribunal that might enjoin or prevent the consummation of
the transactions contemplated by this Agreement. For purposes of
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this Agreement, "to the knowledge of Buyers" shall mean the collective knowledge
of Paul J. Kerz and Phillip Siegel (collectively, the "Sellers' Officers"), the
President and Chief Executive Officer and the Chief Financial Officer,
respectively, of HMS. "Knowledge" when used in this context shall mean, as to
the facts or circumstances represented: (i) actual knowledge of any one of the
Buyers' Officers; and (ii) knowledge that any one of the Buyers' Officers should
reasonably be expected to possess after due inquiry.
(e) Governmental Approvals. No approval, authorization,
consent or order or action of or filing with any court, administrative agency or
other governmental authority is required for the execution and delivery by
Buyers of this Agreement or the Ancillary Agreements or the consummation by
Buyers of the transactions contemplated hereby or thereby.
(f) Broker's or Finder's Fees. All negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Buyers directly with Sellers, without the intervention of any person on behalf
of Buyers in such a manner to give rise to any claim by any person against
Sellers for a finder's fee, brokerage commission or similar payment.
(g) Other Information. None of the information furnished by
Buyers to Sellers in this Agreement, the exhibits hereto, the schedules
identified herein, or in any certificate or other document to be executed or
delivered pursuant hereto by Buyers at or prior to the Closing Date, is, or on
the Closing Date will be, false or incomplete or contains, or on the Closing
Date will contain, any misstatement of material fact.
IV. COVENANTS
SECTION 4.01 Covenants of Sellers.
(a) Sellers agree that, at all times between the date hereof
and the Closing Date, unless Buyers and Sellers shall otherwise agree in
writing, Sellers shall:
(i) operate the Business only in the usual, regular
and ordinary manner and, to the extent consistent with such operations,
use all reasonable efforts to preserve the current business
organization of the Business intact, keep available the services of
those officers and employees currently engaged in the operations of the
Business and preserve their present relationships
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with customers of, and all other persons having business dealings with,
the Business;
(ii) maintain all the assets and properties deemed
reasonably necessary for the conduct of the Business in good repair,
order and condition, reasonable wear and tear excepted; and
(iii) maintain the books of account and records relating to
the Business in the usual, regular and ordinary manner, on a basis
consistent with past practice, and use their best efforts to comply
with all laws applicable to them and to the conduct of the Business and
perform all their material obligations without default.
(b) Between the date of this Agreement and the Closing Date,
Sellers shall, upon reasonable prior notice, afford the representatives of
Buyers reasonable access during normal business hours to the offices,
facilities, books and records of Sellers pertaining to the Business and the
opportunity to discuss the affairs of the Business with officers and employees
of Sellers familiar therewith.
(c) Between the date of this Agreement and the Closing Date,
Sellers shall not, except as required by generally accepted accounting
principles, with respect to the operations of the Business (i) utilize
accounting principles different from those used in the preparation of the
Financial Statements, (ii) change in any manner their method of maintaining
their books of account and records from such methods as in effect on December
31, 1996, or (iii) accelerate booking of revenues or the deferral of expenses,
other than as shall be consistent with past practice and in the ordinary course
of business.
(d) Between the date hereof and the Closing Date, Sellers
shall, with Buyers' assistance and cooperation, but at the expense of Sellers,
promptly apply for or otherwise seek and use all reasonable efforts to obtain
all authorizations, consents, waivers and approvals as may be required in
connection with the assignment of the contracts, agreements, licenses, leases,
sales orders, purchase orders and other commitments to be assigned to Buyers
pursuant hereto (other than those listed on Schedule 1.03 hereto); provided,
however, that Buyers shall bear the expense of posting any performance bonds and
any reasonable and necessary special travel expenses of Sellers' required to
obtain such consents, waivers and approvals, subject to Buyers' prior approval
and reimbursement for travel expenses consistent with Buyers' existing policies.
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(e) As of the Closing Date, Sellers shall have paid any amount
owed (or that will be owed as of the Closing Date) by such Sellers to any
Retained Employee, in respect of salary, bonus or other compensation. To the
extent that amounts to be paid to any Retained Employee in reimbursement of
expenses incurred by such Retained Employee on behalf of Sellers shall be unpaid
as of the Closing Date, Sellers shall pay such amounts in accordance with
Sellers' customary practice upon receipt of a duly prepared claim therefor
properly submitted by such Retained Employee.
(f) Between the date hereof and the Closing Date, Sellers
shall not enter into any transaction or make any agreement or commitment, or
permit any event to occur, which would result in any of the representations,
warranties or covenants of Sellers contained in this Agreement not being true
and correct at and as of the time immediately after the occurrence of such
transaction or event.
SECTION 4.02 Confidentiality. The contents of this Agreement
shall be kept confidential between the parties, except as otherwise required by
law, including but not limited to the provisions of the federal securities laws,
and except that each party may reveal and discuss the contents with its
professional advisors, including attorneys and accountants. In addition, the
parties may mutually agree in writing as to the disclosure of the subject
transaction to current employees of the Business and to the public. In so doing,
the parties shall agree to the timing and content of the release of such
information.
SECTION 4.03 Allocation of Purchase Price. For all federal,
state and local tax purposes, Buyers and Sellers agree to allocate the
consideration described in Section 2.02 hereof (i) as to a portion thereof to
the covenants and agreements of Sellers contained in the Non-Compete Agreement
and (ii) as to the balance, in the manner reasonably determined by Buyers, but
subject to the reasonable approval of Sellers, which approval shall not be
unreasonably withheld. Within 180 days following the Closing, Buyers shall
deliver to Sellers a schedule (the "Allocation Schedule") allocating the
Purchase Price (including, for the purpose of this Section 4.03, any other
consideration paid to Sellers, including any liabilities assumed pursuant
hereto) among the Assets and the covenant not to compete granted pursuant to the
Non-Compete Agreement. The Allocation Schedule shall be reasonable and shall be
prepared in accordance with Section 1060 of the Code and the regulations
thereunder. Buyers and Sellers each agree to file Internal Revenue Service Form
8594, and all federal, state, local and foreign Tax Returns, in
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accordance with the Allocation Schedule. Buyers and Sellers each agree to
provide the other parties promptly with any other information required to
complete Form 8594 and with a copy of such form after it is filed.
SECTION 4.04 Preparation of Certain Financial Information.
(a) After the Closing Date, at the reasonable request of
Buyers, but only in contemplation of and in order to comply with the rules and
regulations (the "SEC Rules") of the Securities and Exchange Commission (the
"SEC"), Sellers shall cause the independent accountants of Sellers to prepare,
at the election of Buyers, audited or compiled financial statements for the
Business for the period commencing on January 1 of the year that is five years
(or such shorter period as is permissible under the SEC Rules) prior to the end
of the year immediately prior to the date such request is made, through the
Closing Date, it being understood and agreed by Sellers and Buyers that such
assistance shall include, without limitation, (i) providing Buyers and their
representatives with all necessary financial information and data relating to
the Business for such periods, (ii) making available to Buyers all employees of
Sellers or any of their affiliates deemed necessary by Buyers to assist in the
preparation of such financial statements, and (iii) delivering a management
representation letter.
(b) The fees and expenses of such independent accountants in
preparing audited and/or compiled financial statements for the Business as
provided in this Section 4.04 shall be borne by Buyers, and Buyers shall
compensate Sellers for their out-of-pocket expenses in assisting in such
preparation.
(c) After the Closing Date, Buyers shall afford the
representatives of Sellers reasonable access during normal business hours to
such books of account and other financial records of Buyers pertaining to the
Business and acquired by Buyers pursuant to this Agreement as Sellers may
reasonably request in order to prepare, file, amend or respond to questions of
any governmental authority relating to its financial statements and Tax Returns
for any period or portion thereof that Sellers owned the Business. Sellers shall
compensate Buyers for their out-of-pocket expenses incurred in assisting Seller
pursuant to this Section 4.04(c).
SECTION 4.05 Certain Tax Matters.
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(a) All sales and use taxes, including interest, penalties and
any other additions to such sales and use taxes, imposed by any governmental or
taxing authority upon or incurred by any of the parties hereto in connection
with this Agreement and the transactions contemplated hereby shall be borne by
Buyers. All transfer taxes, including interest, penalties and any other
additions to such transfer taxes, imposed by any governmental or taxing
authority upon or incurred by any of the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be borne by Sellers.
Sellers and/or Buyers, to the extent required by law and this Section 4.05(a),
shall prepare and file all necessary Tax Returns and other documents with
respect to all such transfer, sales and use taxes. Sellers and Buyers agree to
cooperate in any endeavor to effect a reduction in any such transfer, sales and
use taxes.
(b) For all federal, state, local and foreign income and
franchise Tax purposes, each of the parties hereto agrees to treat the
acquisition of the Assets by Buyers, pursuant to the terms and conditions of
this Agreement, as a taxable sale of the assets of Sellers to Buyers solely in
exchange for cash (and the liabilities assumed by Buyers from Sellers).
(c) Sellers shall be responsible for and shall pay any and all
Taxes with respect to the operations of the Business relating to all periods
prior to the Closing Date and Buyers shall be responsible for and shall pay any
and all Taxes with respect to the operations of the Business relating to periods
commencing the Closing Date.
SECTION 4.06 Insurance. Between the date of this Agreement and
the Closing Date, Buyers shall use reasonable efforts to obtain policies of
fire, liability, workers' compensation and other forms of insurance in such
amounts and against such risks as Buyers deem appropriate, and Sellers shall
reasonably cooperate with Buyers in obtaining such insurance.
SECTION 4.07 Retention of Employees; Benefits.
(a) Offers of Employment. Effective immediately as of the
Closing Date, Buyers shall offer to continue the employment, at will, or
consultancy of all employees or consultants that, at Buyers' request, Sellers
have listed on Schedule 4.07(a) hereto on terms that are initially no less
favorable than the terms of their employment or consultancy by Sellers. Sellers
shall promptly notify Buyers if any employee of, or consultant to, the Business
shall announce his or her intention not to accept such offer by Buyers. The
employees and consultants listed on
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Schedule 4.07(a) hereto who accept Buyers' offer of employment or consultancy
are herein referred to collectively as the "Retained Employees".
(b) Benefits. Following the Closing Date, Retained Employees
(excluding consultants unless otherwise indicated on Schedule 4.07(a)) will be
afforded the opportunity to participate in benefits and equity acquisition
programs that currently are available to employees of HMS and on similar terms
of participation; provided, however, that following the Closing Date, Retained
Employees shall continue their existing medical insurance on the current terms
thereof, subject to such changes as Buyers may implement in the future but which
shall accord the Retained Employees health benefits comparable to their current
arrangement. In the event during the first twelve months after the Closing Date,
Buyers shall make a change in the medical insurance covering the Retained
Employees and in connection therewith require a contribution from the Retained
Employees toward the cost of medical insurance, Buyers shall cause the Retained
Employees to be given an increase in compensation equal to the amount of the
required contribution.
(c) No Offer of Employment. Nothing in this Agreement, express
or implied, shall confer upon any employee of Sellers engaged in the Business,
or any representative of any such employee, any rights or remedies, including
any right to employment or continued employment for any period, of any nature
whatsoever, whether as third-party beneficiary or otherwise, it being understood
and agreed that any such employment shall, to the maximum extent permitted by
applicable law, be employment at will.
(d) Buyers' Own Investigation. Prior to the Closing Date,
Sellers shall, upon reasonable prior notice, afford Buyers reasonable access
during normal business hours to the employees of, and consultants to, Sellers
listed on Schedule 4.07(a) hereto to permit Buyers to evaluate and make their
own investigation with respect to each such employee and consultant, and Sellers
shall not be liable to Buyers for the acts or omissions of any Retained Employee
after the Closing Date.
SECTION 4.08 Further Assurances. From time to time following
the Closing Date, Sellers shall execute and deliver, or cause to be executed and
delivered, to Buyers such bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyers and their counsel, as Buyers may reasonably
request or as may be otherwise reasonably necessary to
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vest in Buyers all the right, title and interest of Sellers in, to or under, and
put Buyers in possession of, any part of the Assets.
SECTION 4.09 No Solicitation; Acquisition Proposals. From the
date of this Agreement until the Closing Date or until this Agreement is
terminated as provided in Article VIII, Sellers will not directly or indirectly
(i) solicit or initiate (including by way of furnishing any information)
discussions with or (ii) enter into negotiations or agreements with, or furnish
any information to, any corporation, partnership, person or other entity or
group (other than Buyers, an affiliate of Buyers or their authorized
representatives pursuant to this Agreement) concerning any proposal for a
merger, sale of substantial assets, sale of shares of stock or securities or
other takeover or business combination transaction (an "Acquisition
Transaction") involving the Business; and Sellers will instruct their officers,
directors, advisors and other financial and legal representatives and
consultants not to take any action contrary to the foregoing provisions of this
sentence; provided, however, that the actions prohibited by the foregoing
clauses (i) and (ii) shall be subject to any action taken by the Boards of
Directors of Sellers in the exercise of their good faith judgment as to their
fiduciary duties to their respective stockholders, which judgment is based upon
the advice of independent counsel that a failure of the Boards of Directors to
take such action would be likely to constitute a breach of their fiduciary
duties to their respective stockholders. Sellers will notify Buyers promptly in
writing if Sellers become aware that any inquiries or proposals are received by,
any information is requested from, or any negotiations or discussions are sought
to be initiated with Sellers with respect to an Acquisition Transaction and will
immediately after receipt provide to Buyers a copy of any letter, proposal or
other document in which any proposal for an Acquisition Transaction is made or
expressed. Sellers will immediately cease any existing activities, discussions
or negotiations with any third parties which may have been conducted on or prior
to the date hereof with respect to an Acquisition Transaction and shall direct
and use reasonable efforts to cause their officers, advisors and representatives
not to engage in any such activities, discussions or negotiations.
V. GHS STOCKHOLDERS' CONSENT;
INFORMATION STATEMENT
SECTION 5.01 GHS Stockholders' Meeting. GHS agrees that this
Agreement shall be submitted to its stockholders for approval at a meeting (the
"GHS Stockholders' Meeting") of the
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stockholders of GHS or such other means as permitted under applicable law. As
soon as practicable after the date of this Agreement, GHS shall take all action,
to the extent necessary in accordance with applicable law and its Certificate of
Incorporation and By-laws, to obtain the approval of the GHS stockholders of
this Agreement and such other matters as may be necessary or desirable to
consummate the transactions contemplated hereby.
SECTION 5.02 Preparation and Filing of Information Statement.
As soon as practicable after the date of this Agreement, GHS shall prepare and
file with the SEC, subject to the prior approval of Buyers, which approval shall
not be unreasonably withheld, an information statement (the "Information
Statement") relating to the GHS Stockholders' Meeting or as otherwise required
under applicable law. Buyers shall reasonably cooperate with GHS in the
preparation of the Information Statement. As soon as is permissible under the
SEC Rules, GHS shall mail the Information Statement to its stockholders.
SECTION 5.03 Recommendations of GHS Board of Directors. GHS
hereby represents that its Board of Directors has (i) determined that the terms
of the transactions contemplated by this Agreement are fair to and in the best
interests of GHS's stockholders, (ii) approved this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby, and (iii)
resolved to and, subject to its fiduciary obligations under Delaware law, will
recommend in the Information Statement adoption of this Agreement and the
Ancillary Agreements and authorization of the transactions contemplated hereby
and thereby by the stockholders of GHS.
SECTION 5.04 Irrevocable Proxy. In consideration of the
execution of this Agreement by Sellers, Sellers have caused to be delivered to
Buyers irrevocable proxies:
(a) in the form of Exhibit C hereto, in favor of designees of
Buyers, authorizing such proxies to vote in favor of this Agreement and the
transactions contemplated hereby at the GHS Stockholders' Meeting. Such
irrevocable proxies represent in excess of 50% of the shares of GHS capital
stock which will be entitled to vote on this Agreement and the transactions
contemplated hereby at the GHS Stockholders' Meeting; and
(b) from GHS in its capacity as the sole stockholder of Global
and Management, in the form of Exhibit D hereto, in favor of designees of
Sellers, authorizing such proxies to vote
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in favor of, or to consent to, this Agreement and the transactions contemplated
hereby.
VI. CONDITIONS PRECEDENT
SECTION 6.01 Conditions Precedent to the Obligations of
Buyers. The obligations of Buyers under this Agreement are subject, at the
option of Buyers, to the satisfaction at or prior to the Closing Date of each of
the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Sellers contained in this Agreement or in any
certificate or document delivered to Buyers pursuant hereto shall be true and
correct in all material respects on and as of the Closing Date as though made at
and as of that date, subject to the updating of schedules as provided in Section
9.12, and Sellers shall have delivered to Buyers a certificate to that effect.
(b) Compliance with Covenants. Sellers shall have performed
and complied in all material respects with all terms, agreements, covenants and
conditions of this Agreement to be performed or complied with by them at or
prior to the Closing Date, and Sellers shall have delivered to Buyers a
certificate to that effect.
(c) Opinion of Counsel for Sellers. Buyers shall have received
the favorable opinion from Werbel & Carnelutti, counsel to Sellers, dated the
Closing Date, in the form reasonably satisfactory to Buyers.
(d) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted or threatened seeking to restrain,
prohibit, invalidate or otherwise affect the consummation of the transactions
contemplated hereby or which would, if adversely decided, have a Material
Adverse Effect on the Business.
(e) Assignment of Contracts. Sellers shall have (i) obtained
all authorizations, consents, waivers and approvals required in connection with
the assignment of those contracts, agreements, licenses, leases, sales orders,
purchase orders and other commitments (collectively, the "Material Contracts")
to be assigned to Buyers pursuant to this Agreement as set forth on Schedule
6.01(e) that are material to the conduct of the Business, which in the case of
contracts with Sellers' customers shall include and be limited to all contracts
with the Los Angeles County Department of Health, the City of Chicago
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Department of Health and San Mateo County and (ii) otherwise made arrangements
satisfactory to Buyers and their counsel so that Buyers will receive the benefit
of all such Material Contracts. Notwithstanding the foregoing, subject to
Section 4.01(d), Sellers will use their best efforts, at Sellers' expense, to
obtain all authorizations, consents, waivers and approvals required to assign to
Buyers all other contracts, agreements, licenses, leases, sales orders, purchase
orders and other commitments set forth on Schedule 6.01(e). The obligations of
Sellers set forth in the immediately preceding sentence shall continue from and
after the Closing Date.
(f) Consents and Regulatory Approvals. Subject to subsection
(e) above, Buyers shall have been furnished with the written consents, permits,
licenses, authorizations and approvals in forms acceptable to Buyers of any and
all persons, including without limitation government agencies, authorities and
third parties, required to be obtained prior to the consummation of the
transactions contemplated hereby and required to be obtained in order that
Buyers may conduct the Business immediately following the Closing Date.
(g) Ancillary Agreements. Sellers and Alan Gold (in the case
of the Non-Compete Agreement) shall have executed and delivered the Ancillary
Agreements, and said Agreements shall be in full force and effect as of the
Closing Date.
(h) Retained Employees. Alan Gold shall have agreed to his
employment by Buyers.
(i) Name Change. Sellers shall have executed and delivered to
Buyers all instruments necessary to effectuate the change of Global's and
Management's names to names not confusingly similar to Global Health Systems,
Inc. and Global Management Services, Inc., and to enable Buyers to use such
names subsequent to the Closing Date.
(j) Supporting Documents. Buyers and their counsel shall have
received copies of the following supporting documents:
(i) (1) copies of the Certificate of Incorporation of
each Seller and all amendments thereto, certified as of a recent date
by the Secretary of State of the State of Delaware, and (2) a
certificate of said Secretary dated as of a recent date as to the good
standing of each such Seller and listing all documents of such Seller
on file with said Secretary; and
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(ii) a certificate of the Secretary or an Assistant
Secretary of each of the Sellers dated the Closing Date and certifying:
(1) that attached thereto is a true and complete copy of the By-laws of
such Seller as in effect on the date of such certification; (2) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Seller authorizing the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby and
that all such resolutions are still in full force and effect and are
all the resolutions adopted in connection with the transactions
contemplated by this Agreement; (3) that attached thereto is a true and
complete copy of resolutions duly adopted by the stockholders of such
Seller (if required by applicable law) authorizing and adopting this
Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby; (4) that the Certificate of
Incorporation of such Seller has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to
clause (i)(2) above; and (5) as to the incumbency and specimen
signature of each officer of such Seller executing this Agreement and
any certificate or instrument furnished pursuant hereto, and a
certification by another officer of such Seller as to the incumbency
and signature of the officer signing the certificate referred to in
this paragraph (ii).
(k) Stockholder Approval. This Agreement shall have been
approved and adopted by the required affirmative vote of (i) the stockholders of
GHS and (ii) GHS in its capacity as the sole stockholder of Global and
Management, and the requisite notices under federal and state law shall have
been delivered.
(l) All Proceedings To Be Satisfactory. All corporate and
other proceedings to be taken by Sellers in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Buyers and their counsel, and Buyers and
said counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
SECTION 6.02 Conditions Precedent to the Obligations of
Sellers. The obligations of Sellers under this Agreement are subject, at the
option of Sellers, to the satisfaction at or prior to the Closing Date of each
of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyers contained in this
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Agreement or in any certificate or document delivered to Sellers pursuant hereto
shall be true and correct in all material respects on and as of the Closing Date
as though made at and as of that date, and Buyers shall have delivered to
Sellers a certificate to that effect.
(b) Compliance with Covenants. Buyers shall have performed and
complied in all material respects with all terms, agreements, covenants and
conditions of this Agreement to be performed or complied with by them at or
prior to the Closing Date, and Buyers shall have delivered to Sellers a
certificate to that effect.
(c) Opinion of Counsel for Buyers. Sellers shall have received
the favorable opinion of Coleman & Rhine LLP, counsel for Buyers, dated the
Closing Date, in the form reasonably satisfactory to Sellers.
(d) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted or threatened seeking to restrain,
prohibit, invalidate or otherwise affect the consummation of the transactions
contemplated hereby.
(e) Consents and Regulatory Approvals. Buyers shall have been
furnished with the written consents, permits, licenses, authorizations and
approvals of any and all persons, including without limitation government
agencies, authorities and third parties, required to be obtained prior to the
consummation of the transactions contemplated hereby and required to be obtained
in order that Buyers may conduct the Business immediately following the Closing
Date.
(f) Sellers Released. Sellers shall have been released from
any obligations under any agreements and contracts assigned to Buyers under this
Agreement, provided that (i) such obligations arise on and after the Closing
Date or (ii) Buyers have specifically assumed such obligations.
(g) Ancillary Agreements. Buyers shall have executed and
delivered the Ancillary Agreements, and said Agreements shall be in full force
and effect as of the Closing Date.
(h) Supporting Documents. Sellers and their counsel shall have
received copies of the following supporting documents:
(i) (1) copies of the Certificate of Incorporation of
Sub and all amendments thereto, certified as of a recent date by the
Secretary of State of the State of Delaware, (2) a certificate of said
Secretary of State,
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with respect to Sub, and of the Secretary of State of the State of New
York, with respect to HMS, dated as of a recent date, as to the due
incorporation and good standing of Buyers and listing all documents of
Buyers on file with each of said Secretaries; and
(ii) a certificate of the Secretary or an Assistant
Secretary of each of the Buyers dated the Closing Date and certifying:
(1) that attached thereto is a true and complete copy of resolutions
duly adopted by the Board of Directors of such Buyer authorizing the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby and
that all such resolutions are still in full force and effect and are
all the resolutions adopted in connection with the transactions
contemplated by this Agreement; and (2) as to the incumbency and
specimen signature of each officer of such Buyer executing this
Agreement and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of such Buyer as to the
incumbency and signature of the officer signing the certificate
referred to in this paragraph (ii).
(i) Stockholder Approval. This Agreement shall have been
approved by the required affirmative vote of (i) the stockholders of GHS and
(ii) GHS in its capacity as the sole stockholder of Global and Management, and
the requisite notices under federal and state law shall have been delivered.
(j) All Proceedings To Be Satisfactory. All corporate and
other proceedings to be taken by Buyers in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Sellers and their counsel, and Sellers and
said counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
VII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 7.01 Survival of Representations. Subject as set forth
below, (i) all representations and warranties (other than representations and
warranties as to Tax matters) made by any party hereto in this Agreement or
pursuant hereto shall survive for the period commencing on the date hereof and
ending on the first anniversary of the Closing Date, and (ii) the
representations and warranties as to Tax matters made by any party hereto in
this Agreement or pursuant hereto shall survive
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for the applicable Tax statute of limitation period, including any extensions or
waivers thereof.
SECTION 7.02 Tax Indemnity.
(a) Sellers hereby agree to indemnify, defend and hold Buyers
harmless from and against:
(i) any and all Taxes incurred by, imposed upon or
attributable to Sellers for all periods prior to (and up to and
including) the close of business on the day prior to the Closing Date,
including reasonable legal fees and expenses incurred by any party
hereto and relating to such Taxes; and
(ii) subject to the provisions of Section 4.05(a)
hereof, any and all Taxes incurred by, imposed upon or attributable to
Sellers, arising out of the consummation of any of the transactions
contemplated hereby, including reasonable legal fees and expenses
incurred by any party hereto and relating to such Taxes.
(b) Buyers hereby agree to indemnify, defend and hold Sellers
harmless from and against:
(i) any and all Taxes incurred by, imposed upon or
attributable to Buyers for all periods after the close of business on
the day prior to the Closing Date, including reasonable legal fees and
expenses incurred by any party hereto and relating to such Taxes; and
(ii) subject to the provisions of Section 4.05(a)
hereof, any and all Taxes incurred by, imposed upon or attributable to
Buyers, arising out of the consummation of any of the transactions
contemplated hereby, including reasonable legal fees and expenses
incurred by any party hereto and relating to such Taxes.
(c) For purposes of this Section 7.02, any interest, penalty
or additional charge included in Taxes shall be deemed to be a Tax for the
period in which the items on which the interest, penalty or additional charge is
based occurs.
(d) The indemnity provided for in this Section 7.02 shall be
independent of any other indemnity provision hereof and, anything in this
Agreement to the contrary notwithstanding, shall survive until the expiration of
the applicable statutes of limitation, including any extensions or waivers
thereof, for the
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Taxes referred to herein and any Taxes, legal fees and expenses subject to
indemnification under this Section 7.02 shall not be subject to indemnification
under Section 7.03.
SECTION 7.03 General Indemnity.
(a) Subject to the terms and conditions of this Article VII,
Sellers hereby agree to indemnify, defend and hold Buyers harmless from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or incurred by Buyers
by reason of or resulting from:
(i) a breach of any representation, warranty or
covenant of Sellers contained in or made pursuant to this Agreement;
(ii) any liabilities or obligations of, or claims
against or imposed on, Sellers (whether absolute, accrued, contingent
or otherwise and whether a contractual, or any other type of liability,
obligation or claim) not assumed by Buyers pursuant to this Agreement;
(iii) any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) in respect of (A) any of
the actions, suits or proceedings or threatened actions, suits or
proceedings described on Schedule 3.01(i) hereto, or (B) any action,
suit or proceeding commenced after the Closing Date based upon an event
occurring or a claim arising prior to the Closing Date; and
(iv) any liability in respect of any failure by
Sellers to conduct the Business prior to the Closing Date in compliance
with any federal, state or local laws, statutes, ordinances, rules,
regulations, decrees, orders, permits or other similar items in force
as of the Closing Date.
(b) Subject to the terms and conditions of this Article VII,
Buyers hereby agree to indemnify, defend and hold Sellers harmless from and
against all Damages asserted against, resulting to, imposed upon or incurred by
Sellers, by reason of or resulting from:
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(i) a breach of any representation, warranty or
covenant of Buyers contained in or made pursuant to this Agreement;
(ii) the failure of Buyers to pay, perform and
discharge when due the liabilities and obligations assumed by Buyers
pursuant to this Agreement;
(iii) any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) in respect of any action,
suit or proceeding based on an event occurring or claim arising on and
after the Closing Date; and
(iv) any liability in respect of any failure by
Buyers to conduct the Business on and after the Closing Date in
compliance with any federal, state or local laws, statutes, ordinances,
rules, regulations, decrees, orders, permits or other similar items
from time to time in force.
SECTION 7.04 Conditions of Indemnification. The respective
obligations and liabilities of Sellers, on the one hand, and Buyers, on the
other hand (the "indemnifying party"), to the other (each, collectively, the
"party to be indemnified") under Sections 7.02 and 7.03 hereof with respect to
claims resulting from the assertion of liability by third parties shall be
subject to the following terms and conditions:
(a) within 10 days after receipt of notice of commencement of
any action or the assertion in writing of any claim by a third party, the party
to be indemnified shall give the indemnifying party written notice thereof
together with a copy of such claim, process or other legal pleading, and the
indemnifying party shall have the right to undertake the defense thereof by
representatives of its own choosing;
(b) in the event that the indemnifying party, by the 20th day
after receipt of notice of any such claim (or, if earlier, by the tenth day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying party, subject to the right of the indemnifying
party to assume the defense of such claim at any time prior to settlement,
compromise or final determination thereof, provided that the indemnifying party
shall be given at least 15 days prior
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written notice of the effectiveness of any such proposed settlement or
compromise; and
(c) anything in this Section 7.04 to the contrary
notwithstanding (i) if there is a reasonable probability that a claim may
materially and adversely affect the indemnifying party other than as a result of
money damages or other money payments, the indemnifying party shall have the
right, at its own cost and expense, to compromise or settle such claim, but (ii)
the indemnifying party shall not, without the prior written consent of the party
to be indemnified, settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the party to be indemnified a release from all
liability in respect of such claim.
SECTION 7.05 Direct Claims. Any claim by the party to be
indemnified for indemnification other than with respect to claims resulting from
the assertion of liability by third parties (a "Direct Claim") will be asserted
by giving the indemnifying party reasonably prompt written notice thereof, and
the indemnifying party will have a period of twenty (20) calendar days within
which to respond in writing to such Direct Claim. If the indemnifying party does
not so respond within such twenty (20) calendar day period, the indemnifying
party will be deemed to have rejected such claim, in which event the party to be
indemnified will be free to pursue another remedy to which it may be entitled.
SECTION 7.06 Certain Information. In connection with any
indemnification provided in this Article VII, the indemnified party shall
cooperate in all reasonable requests of the indemnifying party and each party
shall furnish or cause to be furnished to the other (at reasonable times and at
the expense of the party requesting such information) upon request as promptly
as practicable such information (including access to books and records of the
Business and to employees familiar with the affairs thereof) and assistance
relating to the Business as is reasonably necessary for the defense of any
claim, suit or proceeding.
SECTION 7.07 Limitations on Liability of Sellers.
(a) The indemnities set forth in Section 7.03 and all
representations, warranties and covenants hereunder shall survive for a period
of one year following the Closing Date, unless such indemnities,
representations, warranties and covenants of the Sellers hereunder pertain to
Tax claims, in which event they
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shall survive until expiration of the applicable statute of limitation period.
Upon the expiration of such respective periods, the Sellers shall have no
liability for Damages under such indemnification provisions unless the Buyers
have been given notice of a claim asserting liability by a third party prior to
the expiration of such respective periods and thereafter provides notice to the
Sellers in the manner provided in Section 7.04 above prior to the expiration of
such periods.
(b) If the Sellers become liable for Damages to Buyers
hereunder, the Sellers shall be entitled to a credit or offset against such
liability of an amount equal to $20,000 (the "Threshold"). At such time as the
aggregate of all Damages exceeds the Threshold, the Buyers shall be entitled to
recover from the Sellers any and all amounts for which a claim for indemnity has
been made, without regard to the Threshold.
(c) If the Sellers become liable for Damages to Buyers
hereunder, in no event shall the liability of the Sellers exceed in the
aggregate 15% of the Purchase Price; provided, however, that nothing in this
section 7.07(c) shall limit, in any manner, any remedy at law or in equity to
which Buyers may be entitled as a result of intentional fraud by any party to
this Agreement.
VIII. TERMINATION
SECTION 8.01 Termination. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by Buyers, if the conditions set forth in Section 6.01
shall not have been complied with or performed in any material respect by
Sellers on or before 120 days following the date hereof (except 180 days
following the date hereof in the case of the condition set forth in Section
6.01(e)) and such noncompliance or nonperformance shall not have been waived,
cured or eliminated (or by its nature cannot be cured or eliminated);
(b) by Sellers, if the conditions set forth in Section 6.02
shall not have been complied with or performed in any material respect by Buyers
on or before 120 days following the date hereof (except 180 days following the
date hereof in the case of the condition set forth in Section 6.02(i)) and such
noncompliance or nonperformance shall not have been waived, cured or eliminated
(or by its nature cannot be cured or eliminated);
(c) by Buyers or Sellers, in the event the Closing Date has
not occurred on or prior to the close of business 180 days following the date
hereof or such later date as the parties
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hereto may agree in writing (unless such event has been caused by the breach of
this Agreement by the party seeking such termination);
(d) by either Sellers or Buyers if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated by this Agreement or (ii) there
shall be any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated by
this Agreement by any governmental entity which would make consummation of the
transactions contemplated by this Agreement illegal; or
(e) by either Sellers or Buyers if there shall be any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the transactions contemplated by this Agreement by any
governmental entity, which would (i) prohibit the Sellers' ownership or
operation of all or a material portion of the Assets or the Business, or compel
Buyers to dispose of or hold separate all or a material portion of the Assets or
the Business or of HMS and its subsidiaries taken as a whole, as a result of the
transactions contemplated by this Agreement or (ii) render Sellers or Buyers
unable to consummate the transactions contemplated by this Agreement, except for
any waiting period provisions.
SECTION 8.02 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.01 hereof, this Agreement
shall thereafter become void and have no effect, and no party hereto shall have
any liability to the other party hereto or its stockholders, directors or
officers in respect thereof, except as provided in Section 9.02 hereof and
except that nothing herein shall relieve any party from liability for any
willful breach hereof. Notwithstanding the foregoing, in the event of the
termination of this Agreement pursuant to Section 8.01 hereof, Buyers shall not
solicit any of Sellers' customers as of the date of termination within the scope
of Sellers' then current contracted services to such customers for a period of
one year from the date of such termination or until the expiration of Sellers'
then current contract with such customers, whichever is the shorter period;
provided, however, the foregoing restriction shall not apply to any of Sellers'
customers (the "Overlap Customers") for whom Buyers are providing similar
services; provided further, however, that for such Overlap Customers, Buyers
shall not expand the scope of services which they are providing to such Overlap
Customers until the restriction herein expires as provided above.
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IX. MISCELLANEOUS
SECTION 9.01 Bulk Transfer Laws. Buyers hereby waive
compliance by Sellers with any applicable bulk transfer laws including, without
limitation, the bulk transfer provisions of the Uniform Commercial Code of any
state, or any similar statute that may be applicable to the sale or transfer of
the Assets hereunder with respect to the transactions contemplated hereby.
SECTION 9.02 Expenses, Etc. Whether or not the transactions
contemplated by this Agreement are consummated, Sellers, on the one hand, and
Buyers on the other hand, shall not have any obligation to pay any of the fees
and expenses of the other party incident to the negotiation, preparation and
execution of this Agreement, including the fees and expenses of counsel,
accountants, investment bankers and other experts. Sellers, on the one hand, and
Buyers on the other hand, will indemnify the other and hold the other harmless
from and against any claims for finder's fees or brokerage commissions in
relation to or in connection with such transactions as a result of any agreement
or understanding between such indemnifying party and any third party.
SECTION 9.03 Risk of Loss. Sellers assume all risk of
condemnation, destruction, loss or damage due to fire or other casualty from the
date of this Agreement through the Closing Date. If the condemnation,
destruction, loss or damage is such that the Business is interrupted or
curtailed or the Assets are materially affected, then Buyers shall have the
right either to terminate this Agreement or to continue with the Closing
provided that Buyers shall have received from Sellers an assignment of all
insurance benefits paid or to be paid to Sellers as a result of such casualty
(which benefits Sellers shall agree so to assign following a request from Buyers
therefor).
SECTION 9.04 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
SECTION 9.05 Notices. All notices that are required or may be
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if delivered by hand or via a national overnight
courier service or mailed by registered or certified mail postage prepaid, as
follows:
(a) If to Buyers:
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c/o Health Management Systems, Inc.
401 Park Avenue South
New York, New York 10016
Attention: Paul J. Kerz, President
and to:
Coleman & Rhine LLP
1120 Avenue of the Americas
New York, New York 10036
Attention: Bruce S. Coleman, Esq.
(b) If to Sellers:
Global Health Systems, Inc.
1350 Piccard Drive
Suite 360
Rockville, Maryland 20850
Attention: Alan Gold, President
GHS Management Services, Inc.
1350 Piccard Drive
Suite 360
Rockville, Maryland 20850
Attention: Alan Gold, President
GHS, Inc.
1350 Piccard Drive
Suite 360
Rockville, Maryland 20850
Attention: Alan Gold, President
and to:
Werbel & Carnelutti
711 Fifth Avenue, 5th Floor
New York, New York 10022
Attention: Peter DiIorio, Esq.
or such other address or addresses as Sellers, on the one hand, or Buyers, on
the other hand, shall have designated by notice to the other in writing. Any
such notice, claim or other communication shall be deemed conclusively to have
been given and received (i) on the first business day following the day timely
received by a national overnight courier, with the cost of delivery prepaid;
(ii) on the fifth business day following the day duly sent by certified or
registered United States mail,
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postage prepaid and return receipt requested; or (iii) when otherwise personally
delivered to the addressee.
SECTION 9.06 Waivers. Sellers, on the one hand, and Buyers, on
the other hand, may, by written notice to the other, (i) extend the time for the
performance of any of the obligations or other actions of the other under this
Agreement; (ii) waive any inaccuracies in the representations or warranties of
the other contained in this Agreement or in any document delivered pursuant to
this Agreement; (iii) waive compliance with any of the conditions or covenants
of the other contained in this Agreement; or (iv) waive performance of any of
the obligations of the other under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of Sellers, on the one
hand, and Buyers, on the other hand, shall be deemed to constitute a waiver by
the party taking such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver by Sellers, on
the one hand, and Buyers, on the other hand, of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
SECTION 9.07 Amendments, Supplements, Etc. At any time this
Agreement may be amended or supplemented by such additional agreements, articles
or certificates as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the consummation of any
of the transactions contemplated hereby. Any such instrument must be in writing
and signed by the parties.
SECTION 9.08 Entire Agreement. This Agreement, its Exhibits
and Schedules including, without limitation, the Ancillary Agreements and the
documents executed on the Closing Date in connection herewith, constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof. No
representation, warranty, promise, inducement or statement of intention has been
made by any party which is not embodied in this Agreement or such other
documents, and neither Sellers, on the one hand, nor Buyers, on the other hand,
shall be bound by, or be liable for, any alleged
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representation, warranty, promise, inducement or statement of intention not
embodied herein or therein.
SECTION 9.09 Applicable Law; Jurisdiction.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York.
(b) Each Seller hereby irrevocably and unconditionally (i)
submits for itself and its property in any legal action or proceeding relating
to this Agreement and the Ancillary Agreements to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof; (ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same; and (iii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
Seller at its address set forth in Section 9.05 hereof or at such other address
of which the Agent shall have been notified pursuant thereto.
SECTION 9.10 Binding Effect; Benefits. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 9.11 Assignability. Neither this Agreement nor any of
the parties' rights hereunder shall be assignable by any party hereto without
the prior written consent of the other parties hereto.
SECTION 9.12 Update to Schedules. The parties acknowledge that
the disclosure schedules of Sellers attached to this Agreement have been
prepared either as of the date of this Agreement or, at the request of the
Buyers, as of December 31, 1996. At least three days prior to the Closing Date,
the Sellers shall provide the Buyers with updated schedules as of the Closing
Date in order that such schedules shall be true and correct as of such Closing
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Date. The changes in the updated schedules shall be limited solely to changes
resulting from Sellers conduct of the business in the usual, regular and
ordinary manner and shall not have a Material Adverse Effect.
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IN WITNESS WHEREOF, this Asset Purchase Agreement has been
duly executed and delivered by the parties hereto as of the date first above
written.
GHS, INC.
By:/s/ Alan Gold
------------------------------------
Alan Gold, President
GLOBAL HEALTH SYSTEMS, INC.
By:/s/ Alan Gold
------------------------------------
Alan Gold, President
GHS MANAGEMENT SERVICES, INC.
By:/s/ Alan Gold
------------------------------------
Alan Gold, President
HEALTH MANAGEMENT SYSTEMS, INC.
By:/s/ Paul J. Kerz
------------------------------------
Paul J. Kerz, President
GLOBAL HEALTH ACQUISITION CORP.
By:/s/ Phillip Siegel
------------------------------------
Phillip Siegel, Vice President
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