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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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Page
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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 collective
ly 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, work in process, spare parts, furniture and
office
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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' opera tion 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, includ ing 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 responsi ble 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
11
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);
12
(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
13
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
14
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
15
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
16
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.
17
(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 Business Property
18
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
19
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
20
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.
21
(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,
22
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:
23
"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
24
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
25
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 with customers of, and
26
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 infor mation 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).
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SECTION 4.05 Certain Tax Matters.
(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 transac tions 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
30
Business shall announce his or her intention not to accept such offer by Buyers.
The employees and consultants listed on 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
31
satisfactory to Buyers and their counsel, as Buyers may reasonably request or as
may be otherwise reasonably necessary to 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.
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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 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
33
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 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
34
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 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
commit ments 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,
35
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
(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 certifi cate 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.
36
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 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.
37
(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, 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.
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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 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.
39
(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 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,
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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:
(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
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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 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
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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 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);
43
(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 hereto may agree in writing (unless such event
has been caused by the breach of this Agreement by the party seeking such
termina tion);
(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'
44
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.
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).
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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:
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
46
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, 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
47
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 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
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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 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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