SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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ACCESS WORLDWIDE COMMUNICATIONS, INC.
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[LOGO]
Boca Raton, Florida
January 11, 2002
To the Stockholders of
ACCESS WORLDWIDE COMMUNICATIONS, INC.:
We are pleased to invite you to a Special Meeting of the stockholders of
Access Worldwide Communications, Inc. (the "Company") to be held on February 14,
2002.
The Board of Directors (the "Board") of the Company has negotiated a
proposed sale of the Company's Phoenix Marketing Group, our pharmaceutical
sampling, direct mail and database management business, to Express Scripts, Inc.
(Nasdaq: ESRX), a pharmacy benefit management company. A Special Meeting of the
stockholders of the Company has been called at which time you will be asked to
consider and vote upon approval of this transaction. This transaction represents
the sale of a significant portion of our business and it is consistent with the
Company's previously stated goal of considering strategic alternatives.
The Board has fixed the close of business on December 17, 2001, as the
record date for us to determine those stockholders entitled to notice of, and to
vote at the Special Meeting. We request that all stockholders sign the enclosed
proxy card and return it as promptly as possible in the accompanying stamped
envelope. You are respectfully urged to read the Proxy Statement contained in
this booklet for further information concerning the proposed transaction.
Sincerely,
/s/ Michael Dinkins
Michael Dinkins
Chairman of the Board, President
and Chief Executive Officer
[This page intentionally left blank.]
[LOGO]
4950 Communication Avenue, Suite 300
Boca Raton, FL 33431
(561) 226-5000
7
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
ACCESS WORLDWIDE COMMUNICATIONS, INC.
TO BE HELD FEBRUARY 14, 2002
Boca Raton, Florida
January 11, 2002
To the Stockholders of
ACCESS WORLDWIDE COMMUNICATIONS, INC.:
Notice is hereby given that a Special Meeting of the stockholders of
Access Worldwide Communications, Inc. ("Access" or the "Company") will be held
at the executive offices of the Company at 4950 Communication Avenue, Suite 300,
Boca Raton, Florida 33431, at 10:00 a.m., Eastern Standard Time, on Thursday,
February 14, 2002 to consider and act upon the following matters:
(1) To consider and vote upon a proposal to sell our Phoenix Marketing
Group division which operates our pharmaceutical sampling, direct
mail and database management business, to Express Scripts, Inc.
("Express") pursuant to an Asset Purchase Agreement dated December
19, 2001 among Phoenix Marketing Group (Holdings), Inc., Access and
Express.
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on December 17, 2001 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Special Meeting.
The Board of Directors has determined that the sale of the Phoenix
Marketing Group division is in the best interests of Access and its
stockholders, and has approved and adopted the Asset Purchase Agreement, subject
to approval by Access's stockholders.
It is important that your shares be represented at the meeting regardless
of the number of shares you hold. You are encouraged to specify your voting
preferences by following the directions on the enclosed proxy card and returning
it in the enclosed envelope. If you attend the meeting, you may, if you prefer,
revoke your proxy and vote your shares in person.
By order of the Board of Directors,
Richard Lyew
Secretary
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
From time to time, including herein, we may issue forward-looking
statements within the meanings of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
These statements represent management's current expectations, beliefs, future
plans and strategies, and anticipated events or trends concerning matters that
are not historical facts. Such forward-looking statements include, among others,
those relating to:
o Possible future strategic transactions, including the proposed sale
of our Phoenix Marketing Group division ("Phoenix"), one or all of
our other four divisions or a transaction involving the Company as a
whole;
o Statements regarding our ability to fund our current operations,
planned expenditures and anticipated growth;
o Statements regarding proposed activities pursuant to agreements with
clients;
o The effects of personnel or facilities additions;
o Our banking arrangements;
o Statements regarding our ability to make principal payments due
under our credit facility;
o Future plans relating to our growth strategy and business strategy;
o Effects of our cost reduction efforts; and
o Trends or proposals of clients or relating to the industries which
we serve.
Such statements involve known or unknown risks, uncertainties and other
factors that may cause the actual results to differ materially from those
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements, include, among others, the following:
o The need for stockholder approval and lender approval for, and the
fulfillment of other conditions, prior to the closing of the sale of
Phoenix, that may not be satisfied;
o The ability of the hired financial advisors to assist us in our
efforts to enter into strategic transactions that could benefit our
stockholders;
o Uncertainties applicable to our ability to satisfactorily effectuate
strategic alternatives that could benefit our stockholders;
o Contingent liabilities to which we would be subject after any
consummation of the sale of Phoenix;
o Risks resulting from the more narrow focus of our business after any
disposition of a portion of our business, such as Phoenix;
o Reliance to a significant extent on a single industry - the
pharmaceutical industry, if the Phoenix transaction is not
consummated;
o The risk that the pharmaceutical industry will not experience
growth;
o Reliance on a limited number of major customers;
o Our ability to comply with current banking arrangements, including
significant penalties for failure to make certain payments by March
31, 2002;
o The need for management of any growth that we may achieve;
o Competition from other third-party providers and those of our
clients and prospective clients who may decide to perform in-house
the work that we do;
o Industry consolidation which reduces the number of clients that we
are able to serve;
o Potential consumer saturation reducing the need for our services;
ii
o Our ability to launch new products or enter into strategic alliance
agreements on a timely basis or at all;
o Effects of the loss of our Nasdaq listing privileges;
o The possible limited nature of any beneficial effects of cost
reduction actions undertaken by us;
o The possible effect on us of the recent terrorist attacks of
September 11, 2001; and
o The possible limited duration of significant agreements with our
clients.
We assume no duty to update any forward-looking statements. For a more
detailed discussion of these risks and others that could affect our results, see
the Risk Factors section of this Proxy Statement and our filings with the
Securities and Exchange Commission, including the Risk Factors section of
Access's Annual Report on Form 10-K for the year ended December 31, 2000.
iii
TABLE OF CONTENTS
Summary ................................................................... 2
Questions and Answers About the Proposed Transaction ...................... 6
Security Ownership of Certain Beneficial Owners and Management ............ 10
Risk Factors .............................................................. 11
Proposal: Approval of Proposed Sale of Phoenix ............................ 12
Opinion of Our Financial Advisor .......................................... 22
Where You Can Find More Information About Access .......................... 25
Selected Financial Data. .................................................. 26
Unaudited Financial Statements of Phoenix. ................................ 27
Pro Forma Condensed Consolidated Financial Information .................... 42
Additional Information .................................................... 46
Appendix A: Asset Purchase Agreement ...................................... A-1
Appendix B: Opinion Letter of Alterity Partners LLC ....................... B-1
ACCESS WORLDWIDE COMMUNICATIONS, INC.
4950 Communication Avenue, Suite 300
Boca Raton, FL 33431
(561) 226-5000
---------------
PROXY STATEMENT
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Special Meeting of Stockholders
This Proxy Statement is being furnished to you as a holder of shares of
common stock, par value $0.01 per share, of Access Worldwide Communications,
Inc. ("Access," or the "Company," references to "we," "us" or "our" refer to
Access and its subsidiaries) in connection with the solicitation of proxies by
the Board of Directors (the "Board") of Access for use at a Special Meeting of
stockholders (the "Special Meeting") to be held at 4950 Communication Avenue,
Suite 300, Boca Raton, Florida on February 14, 2002 at 10:00 a.m., Eastern
Standard Time. Accompanying this Proxy Statement is a proxy card for the Special
Meeting, which you may use to indicate your vote as to the proposal described in
this Proxy Statement.
All proxies which are properly completed, signed and returned to us prior
to the Special Meeting, and which have not been revoked, will be voted in favor
of the proposal described in this Proxy Statement unless otherwise directed. You
may revoke a proxy given to us at any time before it is voted either by filing
with the Secretary of Access, at our executive offices, a written notice of
revocation or a duly executed proxy bearing a later date, or by attending the
Special Meeting and expressing a desire to vote your shares in person.
The close of business on December 17, 2001 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Special Meeting or any adjournments of the Special Meeting. As of the
record date, we had 9,740,001 shares of common stock outstanding, the only
voting securities of Access. As of the record date, we had approximately 1,774
stockholders of record. A stockholder is entitled to cast one vote for each
share held on the record date on all matters to be addressed at the Special
Meeting.
Our principal executive offices are located at 4950 Communication Avenue,
Suite 300, Boca Raton, Florida. This Proxy Statement and the accompanying proxy
are being mailed to our stockholders on or about January 14, 2002.
At the Special Meeting, the stockholders will consider and vote upon (i)
the proposal to approve the sale of essentially all of the assets and business
of our Phoenix Marketing Group division ("Phoenix") pursuant to an asset
purchase agreement entered into on December 19, 2001 among the Company, Phoenix
Marketing Group (Holdings), Inc., a wholly-owned subsidiary of the Company that
operates Phoenix ("Holdings;" references herein to "Phoenix" include references
to Holdings), and Express Scripts, Inc. ("Express") (this transaction is
sometimes referred to herein as the "Asset Sale" and the asset purchase
agreement is referred to herein as the "Asset Purchase Agreement"), and (ii)
such other proposals as may properly come before the Special Meeting or any
adjournment thereof.
Additional information about the Asset Sale is contained in this Proxy
Statement, which should be reviewed carefully.
THE ACCESS BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ASSET SALE AND
RECOMMENDS A VOTE "FOR" APPROVAL OF THE ASSET SALE PURSUANT TO THE ASSET
PURCHASE AGREEMENT.
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT.
ACCESS HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROXY STATEMENT. NEITHER THE DELIVERY OF THE PROXY STATEMENT
NOR THE CONSUMMATION OF THE ASSET SALE BY ACCESS TO EXPRESS MEANS THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS CORRECT AFTER THE DATE OF THIS
PROXY STATEMENT.
SUMMARY
This summary highlights selected information in this Proxy Statement and
may not contain all of the information that is important to you. You should
carefully read this entire Proxy Statement and the other documents we refer you
to for a more complete understanding of the Asset Sale.
THE SPECIAL MEETING
Purpose of this Proxy
We are seeking your proxy in order to vote your shares for approval of the
sale of the assets and business of Phoenix pursuant to the Asset Purchase
Agreement.
Record Date and Stockholders Entitled to Vote
You are entitled to vote if you owned shares of our common stock at the
close of business on December 17, 2001, the record date for the Special Meeting.
You will have one vote for each share of our common stock that you owned on the
record date. As of December 17, 2001, there were 9,740,001 shares of Access
common stock entitled to be voted.
Vote Required
We will need the affirmative vote of the holders of a majority of the
shares of our outstanding common stock in order to approve the Asset Sale
pursuant to the Asset Purchase Agreement.
THE COMPANIES
Access
Founded in 1983, Access provides a variety of sales, marketing, Internet
and education services to more than 100 clients. Among other things, we reach
physicians, pharmacists and patients on behalf of pharmaceutical clients,
educating them on new drugs, prescribing indications, medical procedures and
disease management programs. Our services include medical education, product
stocking, database management, teleservices and sample and literature
fulfillment. For clients in the telecommunications, insurance, financial
services and consumer products industries, we reach the growing multicultural
markets with multilingual telemarketing, strategic planning and market research
services. Our corporate headquarters are located at 4950 Communication Avenue,
Suite 300, Boca Raton, Florida 33431. Our telephone number at that location is
(561) 226-5000.
Phoenix
Phoenix is a pharmaceutical sampling, direct mail and database management
business that employs approximately 300 people at four pharmaceutical sampling,
warehouse and management sites in New Jersey. For the first nine months of 2001,
Phoenix accounted for approximately 32% of our gross revenues and approximately
95% of our earnings before interest, taxes, depreciation, and amortization
("EBITDA"). For 2000, Phoenix accounted for approximately 25% of our revenues
and approximately 59% of our EBITDA (excluding Access's loss on the sale of a
business unit in 2000). For 1999, Phoenix accounted for 19% of our revenues and
56% of our EBITDA. Phoenix's principal executive offices are in Access's
corporate headquarters located at 4950 Communication Avenue, Suite 300, Boca
Raton, Florida 33431. Phoenix's telephone number also is (561) 226-5000.
Express
The common stock of Express trades on the Nasdaq Stock Market. According
to Express's management, Express is the third largest pharmacy benefit
management ("PBM") company in North America. Express provides a range of PBM
services, including retail drug card programs, mail pharmacy services, drug
formulary management programs and other clinical management programs for
approximately 19,000 client groups that
2
include HMOs, health insurers, third-party administrators, employers,
union-sponsored benefit plans and government health programs. Headquartered in
Missouri, Express has facilities in seven states and Canada.
THE ASSET SALE
The Reasons for the Asset Sale
The Board has approved the sale of Phoenix pursuant to the Asset Purchase
Agreement in connection with its consideration of strategic transactions for
Access, including, the possible sale of one or all of our divisions or a
transaction involving the Company as a whole. During the past several years, the
Company has considered various strategic alternatives, none of which was deemed
suitable for the Company or its stockholders. The consideration of various
strategic alternatives was accelerated after the renewal of Access's credit
facility (the "Credit Facility") with its lenders (the "Bank Group") in April
2001, as a result of the need to make certain cash payments under that renewal
by March 31, 2002. Absent such payments, Access would be subject to significant
penalties under the terms of the Credit Facility. If the Asset Sale is
consummated, Access intends to use all of the net proceeds, after paying
transaction expenses, to repay amounts outstanding under the Credit Facility.
Fairness of the Asset Sale to the Stockholders of Access
In arriving at the determination that the transaction is fair to, and in
the best interests of, our stockholders, our Board considered a number of
factors, including, the following:
o The fact that the $33.0 million cash purchase price would extinguish
a significant percentage of Access's outstanding debt and reduce
risks we face in connection with the Credit Facility;
o The absence of other offers that are superior to Express's offer in
light of all the terms and conditions offered by Express;
o The fact that the Asset Purchase Agreement requires that the sale be
approved by a majority of Access's stockholders, which ensures that
the Board will not be taking action of which the majority of our
stockholders disapprove;
o The risk that, after the Asset Sale, Access will have a less
diversified business which would leave Access dependent on the
performance of its other divisions, including an increase in the
relative importance of its revenues from, and relationships with,
telemarketing and educational related customers; and
o The risk that Access could be exposed to future indemnification
payments for a breach of its representations and warranties
contained in the Asset Purchase Agreement.
THE ASSET PURCHASE AGREEMENT
General
We propose to sell essentially all of the tangible and intangible assets
of Phoenix pursuant to the Asset Purchase Agreement among the Company, Phoenix
and Express, dated December 19, 2001. The sale of Phoenix is expected to close
within 14 days of any approval of that sale by the stockholders of Access. The
Asset Purchase Agreement is described in more detail under "The Asset Purchase
Agreement" and a copy of the Asset Purchase Agreement is attached to this Proxy
Statement as Appendix A. The Asset Purchase Agreement contains various customary
representations and warranties made by each of the parties to the Asset Purchase
Agreement. Such representations and warranties relate to, among other things,
the enforceability of the Asset Purchase Agreement, our authority and the
authority of Express to enter into the Asset Purchase Agreement, our
organization and the organization of Express and the assets of Phoenix being
transferred. We encourage you to read the Asset Purchase Agreement, as it is the
legal document that governs the transaction.
Purchase Price
As consideration for the Asset Sale, Express will pay to Access $33.0
million in cash at the closing and will assume certain liabilities of Phoenix in
the approximate amount of $2.0 million. The cash purchase price may be
3
adjusted as necessary to reflect prorations for rent and lease payments and
other items that are customarily proratable. That amount will be determined
subsequent to the closing date.
Conditions that Must be Satisfied Prior to the Closing of the Asset Sale
Completion of the Asset Sale is subject to various conditions (any of
which may be waived by the party benefited by the condition), including, among
others:
o The truth and correctness of the representations and warranties of
Access, Phoenix and Express;
o Performance of, and compliance with, all covenants by Access,
Phoenix and Express;
o Delivery of a customary opinion of counsel, by counsel to Access and
Phoenix;
o The absence of certain material adverse changes in the assets or the
business of Phoenix;
o The execution of employment agreements and non-competition
agreements with certain Phoenix employees;
o Approval of the Asset Sale by Bank of America, as agent for the Bank
Group; and
o Approval of the Asset Sale by the stockholders of Access.
Termination of the Asset Purchase Agreement
The Asset Purchase Agreement may be terminated, and the Asset Sale
abandoned for various reasons, including:
o Subject to certain exceptions, by mutual consent of us and Express;
o If the closing does not occur on or before February 28, 2002,
subject to exceptions;
o If any of the representations or warranties of Access, Phoenix or
Express are not true and correct when made or at any time prior to
the closing;
o If we or Express fail to fulfill obligations under the Asset
Purchase Agreement; and
o If there is any statute, rule or regulation making consummation of
the transaction illegal.
Expenses of the Asset Sale
Whether or not the Asset Sale is consummated, each party is required to
bear its own cost and expenses relating to the Asset Sale, including fees and
expenses of attorneys, accountants and financial advisors, except that if the
Asset Purchase Agreement is terminated as a result of the willful breach by a
party of any of its representations, warranties, covenants or agreements set
forth in the Asset Purchase Agreement, such breaching party will pay the costs
and expenses of the other parties.
OPINION OF OUR FINANCIAL ADVISOR
In connection with its approval of the Asset Purchase Agreement, our Board
received an opinion of our financial advisor, Alterity Partners LLC
("Alterity"), as to the fairness, from a financial point of view, to us of the
consideration to be received in the transaction. The full text of the opinion is
attached to this Proxy Statement as Appendix B. We encourage you to read this
opinion carefully in its entirety for a description of the assumptions made,
matters considered and limitations on the review undertaken by Alterity. The
opinion is addressed to our Board and does not constitute a recommendation to
any stockholder as to how to vote with respect to matters relating to the Asset
Sale.
EFFECT OF THE TRANSACTION
Upon completion of the Asset Sale, we intend to apply the proceeds to pay
our expenses of this transaction, including taxes and professional fees,
anticipated to be approximately $5.0 million, and use the balance, anticipated
to be approximately $28.0 million, to the Bank Group. That would reduce our
indebtedness under the
4
Credit Facility, thus lessening the burden of the high interest rate thereunder
and terminating the potential obligation to issue shares of our common stock to
the Bank Group under warrants that we issued in connection with the Credit
Facility. Consistent with previously announced plans, the Company is continuing
to pursue other strategic transactions, including the possible sale of one or
all of our remaining four divisions or a transaction involving the Company as a
whole. We cannot assure you that we will be able to consummate any such
transactions on terms acceptable to us, if at all. While the Company currently
has no agreements for transactions other than the one described in this Proxy
Statement, our efforts in this regard are ongoing and it is possible that a
transaction or transactions involving the sale of one or more of our divisions
or the Company as a whole could be agreed to or closed prior to the Special
Meeting.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
The members of our Board and our officers do not have any interests in the
transaction that are different from or in addition to your interests. Our
financial advisor, Alterity, will receive a $300,000 cash payment upon delivery
of its fairness opinion and, for its services as our financial advisor, 4.0% of
the total consideration received by Access upon consummation of the transaction.
MANAGEMENT OWNERSHIP
As of December 24, 2001, our directors and executive officers own, in
aggregate, 1,140,411 shares of our outstanding common stock, representing
approximately 11.6% of our outstanding shares.
FEDERAL INCOME TAX CONSEQUENCES
We will recognize a gain for federal income tax purposes on the sale of
Phoenix to Express. The transaction may also subject us to state or local
income, franchise, sales, use or other tax liabilities in state or local tax
jurisdictions in which we file returns or have certain assets.
ACCOUNTING TREATMENT OF THE TRANSACTION
The transaction will be accounted as a sale of a business under accounting
principles generally accepted in the United States of America. The sale of the
business of Phoenix will be evaluated by the Company pursuant to the
requirements of FAS No. 144, "Accounting for the Impairment or Disposal of
Long-lived Assets," which became effective January 1, 2002.
APPRAISAL RIGHTS
We are organized under the corporate laws of the State of Delaware.
Delaware law does not provide for appraisal or other similar rights for
dissenting stockholders in connection with the Asset Sale. Accordingly, our
stockholders will have no right to dissent and obtain payment for their shares
in connection with the Asset Sale.
BOARD RECOMMENDATION
Based on its determination that the terms of the Asset Purchase Agreement
are fair to, and are in the best interests of Access and the best interests of
our stockholders, our Board has approved, and recommends that our stockholders
approve the Asset Sale pursuant to the Asset Purchase Agreement.
5
QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTION
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The Special Meeting of stockholders of Access will be held at the
executive offices of the Company at 4950 Communication Avenue, Suite 300,
Boca Raton, Florida 33431, at 10:00 a.m., local time, on Thursday,
February 14, 2002.
Q: WHAT AM I ASKED TO VOTE UPON?
A: Our Board is asking you to vote to approve an Asset Purchase Agreement
providing for the sale of essentially all of the assets of Phoenix to
Express.
Q: WHO IS ENTITLED TO VOTE?
A: The record date for the Special Meeting is December 17, 2001. Stockholders
of record as of the close of business on the record date are entitled to
notice of, and to vote at, the Special Meeting. You are entitled to one
vote for each share of common stock that you held on this date, including
shares:
o held directly in your name as the "stockholder of record" and
o held for you in an account with a broker, bank or other nominee.
Q: HOW DO I VOTE BY PROXY?
A: Sign and date each proxy form that you receive and return it in the
prepaid envelope. If you return your signed proxy, but do not indicate
your voting preference, it will be voted FOR the approval of the sale of
the assets of Phoenix to Express and in the discretion of the proxies
named in your proxy card as to other matters that may properly come before
the meeting. Sign your name exactly as it appears on the proxy form. If
you are signing in a representative capacity (for example, as an attorney,
executor, administrator, guardian, trustee or officer or agent of a
company or partnership), indicate your name and your title or capacity. If
your shares are held in custody for a minor (for example, under the
Uniform Gift to Minors Act), the custodian should sign, not the minor. If
your shares are held jointly, both owners should sign.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares.
Q: MAY I CHANGE MY VOTE AFTER I MAIL MY SIGNED PROXY CARD?
A: Yes. Just send in a written revocation or a later dated, signed proxy card
before the Special Meeting or simply attend the Special Meeting and vote
in person.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY FORM?
A: It means that your shares are registered in more than one account. To
ensure that all your shares are voted, sign and return each proxy card
that you receive from us or from your broker.
Q: WHAT CONSTITUTES A QUORUM?
A: A majority of all outstanding shares of common stock, which may be present
or represented by proxy, constitutes a quorum for the Special Meeting.
Absent a quorum, no action may be taken with respect to the Asset Sale at
the Special Meeting.
6
Q: HOW MANY VOTES ARE NEEDED FOR APPROVAL OF THE SALE OF PHOENIX?
A: Under applicable Delaware law, the affirmative vote of a majority of the
outstanding shares of our common stock is required for the approval of the
Asset Sale.
Q: HOW WILL VOTES BE COUNTED?
A: All proxies which are properly completed, signed and returned to us prior
to the Special Meeting, and which have not been revoked, will be voted in
favor of the Proposal. If you return your signed proxy, but do not
indicate your voting preferences, it will be voted in favor of the
Proposal. Any shares that are not voted (whether by abstention, broker
non-vote or otherwise) will have the same effect as votes against the
Proposal. A "broker non-vote" refers to shares of common stock represented
at the Special Meeting in person or by proxy by a broker or nominee where
such broker or nominee (i) has not received voting instructions on a
particular matter from the beneficial owners or persons entitled to vote,
and (ii) the broker or nominee does not have discretionary voting power on
such matter.
Q: WILL ANY OTHER MATTERS BE PRESENTED TO STOCKHOLDERS AT THE SPECIAL
MEETING?
A: As of the date of this Proxy Statement, we do not know of any matters to
be presented for consideration at the Special Meeting other than that
described in this Proxy Statement. If any other matters properly come
before the Special Meeting, a signed proxy would confer discretionary
authority with respect to those matters, and the person named in the
accompanying form of proxy intend to vote that proxy, to the extent
entitled, in accordance with his best judgment.
Q: WHO WILL BE SOLICITING PROXIES AND WHO WILL BEAR THE COST?
A: The Board is soliciting your proxy. Access will bear the cost of the
Special Meeting and the cost of soliciting proxies in the accompanying
form, including the cost of mailing this Proxy Statement. In addition to
solicitation by mail, our directors, executive officers and employees
(none of whom will be additionally compensated for such services) and
other solicitors retained by us may solicit proxies by telephone or
otherwise. Arrangements will be made with brokerage firms and other
custodians, nominees and fiduciaries to forward forms of proxies and proxy
materials to their principals and we will reimburse them for their
reasonable expenses in connection therewith.
Q: WHAT PERCENTAGE OF THE COMMON STOCK IS OWNED BY THE DIRECTORS AND
OFFICERS?
A: Our directors and executive officers, in the aggregate, beneficially own
approximately 11.6% of our outstanding common stock as of the record date.
Q: IF THE TRANSACTION IS COMPLETED, WHAT WILL ACCESS RECEIVE FOR THE PHOENIX
ASSETS?
A: If the transaction with Express is consummated, we will receive $33.0
million in cash. In addition, Express will assume approximately $2.0
million in liabilities associated with the assets being sold. The amount
of cash we receive may be adjusted as necessary to reflect prorations for
rent and lease payments and other similar items that are customarily
proratable.
Q: WILL ANY OF THE MONEY RECEIVED FROM THE TRANSACTION BE DISTRIBUTED TO ME
AS A STOCKHOLDER?
A: No. If the transaction with Express is consummated, after paying certain
transaction expenses, Access will use the net proceeds, estimated to be
approximately $28.0 million, to pay down a portion of the Credit Facility,
which had an outstanding balance of approximately $33.4 million as of
November 30, 2001.
7
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE PROPOSED MATTER?
A: Our Board unanimously recommends that stockholders vote "FOR" the sale of
Phoenix.
Q: WHY IS OUR BOARD RECOMMENDING THE TRANSACTION?
A: Our Board believes the sale of Phoenix to Express will benefit Access and
its stockholders by enabling us to reduce our debt with the Bank Group and
lessen the burden of our interest payments at their current high rate. Our
Board believes that the terms of the Asset Purchase Agreement, which are
the product of arm's length negotiations between our representatives and
those of Express, are fair and in the best interests of Access and our
stockholders.
Q: ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE TO APPROVE
THE TRANSACTION?
A: Yes. For a discussion of the risk factors you should carefully read the
section of this Proxy Statement titled "Risk Factors."
Q: WILL THE BOARD RECEIVE AN OPINION AS TO THE FAIRNESS OF THE TRANSACTION
FROM A THIRD PARTY?
A: Yes. In arriving at its determination that the transaction is fair to, and
in the best interests of Access, the Board has considered a number of
factors, including the opinion of our financial advisor, Alterity, as to
the fairness, from a financial point of view, to Access of the
consideration to be received in the transaction. The opinion is addressed
to our Board and does not constitute a recommendation to any stockholder
as to how to vote with respect to matters relating to the transaction. For
a full description of the opinion, see the section of this Proxy Statement
titled "Opinion of Our Financial Advisor." To review the text of the
opinion, see Appendix B to this Proxy Statement.
Q: DO THE MEMBERS OF OUR BOARD OR OUR MANAGEMENT HAVE ANY SPECIAL INTEREST IN
THE OUTCOME OF THE VOTE?
A: The members of our Board and our officers do not have any interests in the
transaction that are different from, or in addition to your interests.
Q: WILL STOCKHOLDERS HAVE DISSENTING OR APPRAISAL RIGHTS?
A: Under Delaware law you will have no dissenting or appraisal rights as a
result of the transaction.
Q: WHAT IS MANAGEMENT'S PLAN IF THE ASSET SALE PROPOSAL IS NOT APPROVED?
A: If stockholders either vote to reject the Asset Sale or determine, for
whatever reason, not to vote (so that the required minimum vote of holders
of a majority of all outstanding shares of common stock does not occur),
then, we would continue to seek strategic transactions, including finding
a buyer for Phoenix and/or one or all of our other four divisions or a
transaction involving the Company as a whole.
Q: CAN I STILL SELL MY SHARES?
A: Yes. Neither the Asset Purchase Agreement nor the Asset Sale will affect
your right to sell or otherwise transfer your shares of Access common
stock.
Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET SALE TO THE
STOCKHOLDERS?
A: Access does not expect that holders of our common stock will recognize any
gain or loss due to the Asset Sale. However, if a stockholder chooses to
sell his or her shares, that stockholder may owe taxes as a result of that
sale. Stockholders are encouraged to contact their own tax advisor to
discuss tax issues relating to their transactions in our stock.
8
Q: WHAT DO I NEED TO DO NOW?
A: You simply need to vote and sign your proxy by February 14, 2002. Please
mark your vote with care. If you do not include instructions on how to
vote your properly signed proxy card, your shares will be voted "FOR"
approval of the Asset Sale pursuant to the Asset Purchase Agreement.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have questions about the transaction after reading this Proxy
Statement, you should contact one of the following people: Andrea Greenan,
Director of Investor Relations, at (240) 582-0100; Richard Lyew, Senior
Vice President and Corporate Controller, at (561) 226-5000; or John
Hamerski, Executive Vice President and Chief Financial Officer, at (561)
226-5000.
9
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of our common stock as of December 24, 2001, by (i) each person known
by us to be the beneficial owner of more than five percent of the outstanding
shares of our common stock (based on a review of filings with the Securities and
Exchange Commission (the "SEC")); (ii) each director; (iii) the chief executive
officer and each executive officer whose compensation was required to be
included in our most recent proxy statement; and (iv) all of our current
directors and executive officers as a group. Unless otherwise indicated, each
stockholder has sole voting and investment power with respect to the indicated
shares. The address for the officers and directors is that of Access at 4950
Communication Avenue, Suite 300, Boca Raton, Florida 33431.
Amount and Nature of
Name and Title of Beneficial Owner Beneficial Ownership Percentage of Class
- ------------------------------- -------------------- ------------------
Michael Dinkins, Chairman of the Board,
President, and Chief Executive Officer .............. 91,000(l) *
John Hamerski, Executive Vice President
and Chief Financial Officer ......................... 13,530(2) *
Robert Regazzi, Executive Vice President
and Chief Operating Officer - Phoenix Marketing Group 30,800(3) *
Joseph Macaluso, Executive Vice President of Sales(4) .. 178,463(5) 1.83%
Bernard Tronel, Senior Vice President
and Chief Operating Officer - Teleservices Group(6) . 4,000(7) *
Liam S. Donohue, Director .............................. 3,700 *
Lee H. Edelstein, Director ............................. 201,016 2.06%
Randall J. Lewis, Director ............................. 8,333(8) *
Shawkat Raslan, Director ............................... 19,003(9) *
Charles H. Weil, Director .............................. 551,130(10) 5.66%
All directors and executive officers
as a group (14 persons) ............................. 1,140,411(11) 11.55%
- ----------
* Less than one percent.
(1) Includes 84,000 shares of common stock currently issuable, or issuable
within 90 days after January 1, 2002, upon exercise of options.
(2) Includes 6,400 shares of common stock currently issuable, or issuable
within 90 days after January 1, 2002, upon exercise of options.
(3) Includes 800 shares of common stock currently issuable, or issuable within
90 days after January 1, 2002, upon exercise of options.
(4) Resigned as of August 31, 2001.
(5) Includes 2,400 shares of common stock currently issuable, or issuable
within 90 days of January 1, 2002, upon exercise of options and 10,000
shares owned by Mr. Macaluso's spouse.
(6) Resigned as of June 30, 2001.
(7) Includes 2,000 shares of common stock currently issuable, or issuable
within 90 days of January 1, 2002, upon exercise of options.
(8) Includes 3,333 shares of common stock currently issuable, or issuable
within 90 days of January 1, 2002, upon exercise of options.
(9) Includes 4,003 shares of common stock currently issuable, or issuable
within 90 days of January 1, 2002, upon exercise of options.
(10) Mr. Weil controls Compania Financiera Tassarina, S.A. ("Compania").
According to a Schedule 13-D, dated September 17, 1999, filed by Compania,
Compania has sole voting and no dispositive power over all 551,130 shares
and Mr. Weil has no voting power and sole dispositive power over all
551,130 shares.
(11) Includes 131,272 shares of common stock currently issuable, or issuable
within 90 days of January 1, 2002, upon exercise of options. This amount
also includes 38,336 shares beneficially owned by Peter Bewley who
resigned as a director as of December 12, 2001.
10
RISK FACTORS
You should carefully consider the following risk factors relating to the
transaction before you decide whether to vote to approve the Asset Sale and the
Asset Purchase Agreement. You should also consider the other information in this
Proxy Statement and the additional risk factors and information in other reports
we file with the Securities and Exchange Commission, including our Annual Report
on Form 10-K for the year ended December 31, 2000.
After the Asset Sale, We Will Face Additional Risks
After the sale of Phoenix, our business would consist of inbound/outbound
telemarketing, medical education and multicultural marketing research. While we
are continuing to seek strategic transactions, including the sale of one or more
of our remaining four divisions or a transaction involving Access as a whole, we
cannot assure you that we will be able to enter into any transactions on terms
acceptable to us or at all. After the Asset Sale and any subsequent sale of any
of our other subsidiaries, our business would be more narrowly focused than it
is now, creating greater risks to us if a portion of our business fails to
perform satisfactorily. Such failure to perform could adversely affect our
financial condition and results of operations.
There is No Plan to Distribute Any of the Proceeds of the Asset Sale to Our
Stockholders
We do not intend to distribute any portion of the proceeds from the Asset
Sale to our stockholders. Currently, we intend to use all of the net proceeds of
the sale, after the payment of expenses, to reduce the outstanding amounts of
indebtedness under the Credit Facility.
The Asset Purchase Agreement Will Expose Us to Contingent Liabilities
Under the Asset Purchase Agreement, we have agreed to indemnify Express
and individuals and entities related to Express for any breach of our
representations and warranties in that agreement and for certain other matters.
This means that, if statements we made in the Asset Purchase Agreement are
untrue, or if we fail to fulfill our obligations in the Asset Purchase
Agreement, Express can require us to pay amounts to compensate them for any such
misstatements. A copy of the Asset Purchase Agreement is attached hereto as
Appendix A, and that agreement is further described in this Proxy Statement
under "The Asset Purchase Agreement."
The Asset Sale May Not be Consummated
The consummation of the Asset Sale is subject to numerous conditions. Even
if our stockholders approve the proposed Asset Sale, we cannot assure you that
the other conditions to closing will be met and that the Asset Sale will be
consummated. These conditions include the required approval of the Bank Group.
If the Asset Sale is not consummated, the Company will have devoted a
substantial amount of time and financial resources to the transaction without
realizing any gain there from. Also, if the Asset Sale is not consummated, we
may not be able to sell Phoenix on terms as favorable as those provided in the
Asset Purchase Agreement, if at all, in the future.
11
PROPOSAL: APPROVAL OF PROPOSED SALE OF PHOENIX
The following is a summary description of the material aspects of the
Asset Sale. This description does not purport to be complete and is qualified in
its entirety by reference to the appendices attached to this Proxy Statement,
including the Asset Purchase Agreement, which is attached as Appendix A. While
we believe that the description covers the material terms of the Asset Sale, the
summary provided in this Proxy Statement may not contain all of the information
that is important to you. Therefore, we urge you to read the appendices to the
Proxy Statement in their entireties.
General
Our Board of Directors has approved, and recommends that our stockholders
approve, the Asset Sale pursuant to the Asset Purchase Agreement providing for
the sale of the assets and business of Phoenix to Express. The affirmative vote
of the holders of a majority of the outstanding shares of our common stock is
required to approve the Asset Sale. Abstentions and broker non-votes have the
same effect as a vote against the proposal.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE SALE OF PHOENIX
PURSUANT TO THE ASSET PURCHASE AGREEMENT AND RECOMMENDS THAT OUR STOCKHOLDERS
VOTE "FOR" THE PROPOSED SALE OF PHOENIX PURSUANT TO THE ASSET PURCHASE
AGREEMENT.
Under the Asset Purchase Agreement, Access will transfer to Express
essentially all of the tangible and intangible property constituting Phoenix's
business. Subject to certain post-closing adjustments representing prorations of
rent and lease payments and other items customarily proratable, the total
consideration to be paid by Express for Phoenix's business is $33.0 million in
cash, plus the assumption by Express of certain liabilities relating to Phoenix.
The amount of those liabilities is approximately $2.0 million. The closing of
the transaction is expected to take place within 14 days after the approval, if
any, of the transaction by our stockholders at the Special Meeting. The terms of
the Asset Purchase Agreement are discussed in more detail below.
Access
Founded in 1983, Access provides a variety of sales, marketing, Internet
and education services to more than 100 clients. Among other things, we reach
physicians, pharmacists and patients on behalf of pharmaceutical clients,
educating them on new drugs, prescribing indications, medical procedures and
disease management programs. Our services include medical education, product
stocking, database management, teleservices and sample and literature
fulfillment. For clients in the telecommunications, insurance, financial
services and consumer products industries, we reach the growing multicultural
markets with multilingual telemarketing, strategic planning and market research
services. We have facilities in six states and approximately 1,300 employees.
Phoenix
Phoenix is a pharmaceutical sampling, direct mail and database management
business that employs approximately 300 people at four pharmaceutical sampling,
warehouse, and management sites in New Jersey. Phoenix maintains the nation's
largest outsourced Drug Enforcement Administration ("DEA")-approved sample
fulfillment center. Drugs and product literature are sent to medical personnel
on behalf of pharmaceutical companies from the distribution centers. All
requests are validated through a single-loop system that uses state licenses,
DEA and American Medical Association ("AMA") databases. Shipping manifests and
labels are generated as samples are picked, packed and shipped to targeted
medical practitioners. Follow-up letters are produced, driven by a system that
processes and store acknowledgements of delivery, closing the sample fulfillment
loop. Returned products are quarantined and processed for destruction. A
destruction acknowledgement closes the returned goods loop. In 2000, Phoenix
sent 74 million sample units to medical personnel and pharmaceutical sales
representatives. During the first nine months of 2001, Phoenix sent 72.1 million
sample units, benefiting from a new facility opened in 2000.
Additional information about Access may be obtained from periodic reports
and other information we have filed with the SEC. You may read and copy this
information at the SEC's public reference facilities. Please call the
12
SEC at 1-800-SEC-0330 for information about these facilities. This information
is also available at the Internet site maintained by the Commission at
http://www.sec.gov.
Express
According to its management, Express is the third largest pharmacy benefit
management (PBM) company in North America. Express provides a range of PBM
services, including retail drug card programs, mail pharmacy services, drug
formulary management programs and other clinical management programs for
approximately 19,000 client groups that include HMOs, health insurers,
third-party administrators, employers, union-sponsored benefit plans and
government health programs. Headquartered in St. Louis, Missouri, Express has
facilities in seven states and Canada. Express's principal executive offices are
located at 13900 Riverport Drive, Maryland Heights, Missouri 63043. Express's
telephone number at that location is (314) 770-1666.
Background of the Transaction
The proposed sale of Phoenix has resulted, to a significant extent, from
our need to generate cash to repay certain amounts due under the Credit Facility
by March 31, 2002. We entered into the Credit Facility in March 1999. The Credit
Facility is collateralized by substantially all of our assets and has certain
financial covenants which have become increasingly more restrictive. After a
number of defaults had occurred and subsequent forbearance agreements and
amendments to the Credit Facility were entered into by Access and the Bank
Group, we entered into the Fourth Amendment Agreement and Waiver (the "Fourth
Amendment") to the Credit Facility with the Bank Group on April 3, 2001. The
Fourth Amendment increased our revolving commitment line to $18.5 million
through September 30, 2001, with periodic reductions thereafter, and provided
funding for $4.0 million in capital expenditures during 2001.
The payment schedule under our Credit Facility was modified under the
Fourth Amendment, and requires no monthly installments of principal until
January 1, 2002, at which time monthly principal payments in the amount of
$350,000 will commence and continue through December 31, 2002, with the
remaining outstanding balance due on January 2, 2003. An additional payment of
$3.0 million in principal is due on March 31, 2002. The interest rate for our
Credit Facility under the Fourth Amendment is prime plus four percent.
Additionally, the Fourth Amendment required us to hire an investment
banker by May 15, 2001 to explore strategic alternatives, and provided for the
issuance of warrants to the Bank Group in the amount of 12% of the common equity
of Access if we do not pay down $3.0 million by March 31, 2002. The total amount
outstanding under the Credit Facility as of November 30, 2001 was approximately
$33.4 million.
On May 10, 2001, our Board of Directors approved the hiring of HNY
Associates, L.L.C. ("HNY Associates"), as financial advisor to explore strategic
transactions, including the possible sale of one or all of our divisions or a
transaction involving Access as whole.
During the summer of 2001, business plans were prepared for each of our
business segments, with a focus on the Company's non-pharmaceutical businesses.
In addition, management commenced a search for an investment advisor with a
history of working on pharmaceutical transactions. On August 9, 2001, the Board
approved the hiring of a second investment advisor, Alterity, in order to assist
Access in seeking alternatives for Phoenix. This firm was selected primarily
based on its pharmaceutical background and was charged with focusing on a
transaction involving Phoenix. HNY Associates continues to be retained to search
for strategic transactions for our remaining businesses.
During September 2001, members of Alterity visited Phoenix and held a
series of meetings with employees of Access. Alterity prepared an information
memorandum that described Phoenix's business and included historical and
projected financial information. Potential acquirers were identified and
contacted by Alterity, and non-disclosure agreements were collected prior to
distribution of the information memoranda to the interested companies.
Potential acquirers were given until October 9, 2001 to provide
first-round indications of interest in buying Phoenix. Alterity received 12
first-round indications. Management, with the approval of the Board, invited
five companies to submit additional offers and to meet with the management of
Access and Phoenix and perform due
13
diligence. These meetings with potential acquirers took place during the
remainder of October, and included management presentations, facilities visits
and due diligence of relevant documents. Final bids were due the second week of
November 2001.
Management, with the Board's approval, elected to negotiate a definitive
agreement with Express. Express was selected from among the final bids because
of the price offered and the perceived benefits of their all cash offer. In
addition, Express indicated that it was willing to initiate immediate due
diligence and complete the transaction as soon as possible.
Access and Express executed a non-binding term sheet dated November 19,
2001, and commenced negotiations on a purchase and sale agreement. During the
following weeks, negotiations and due diligence progressed, and the Asset
Purchase Agreement with Express was executed on December 19, 2001.
Reasons for the Transaction
Our Board believes that the sale of Phoenix will benefit us and enhance
stockholder value by providing the funds needed to reduce our indebtedness to
the Bank Group. These funds will allow us to reduce existing interest payments,
which are at prime plus four percent, and avoid the issuance of warrants to the
Bank Group that would be dilutive to the holders of our common stock. We will be
required to issue these warrants if we are unable to make a $3.0 million payment
to the Bank Group by March 31, 2002.
The Board believes that the terms of the Asset Purchase Agreement, which
are the product of arm's length negotiations between us and representatives of
Express, are fair and in our best interests and those of our stockholders. In
reaching its decision to recommend and approve the transaction, our Board
consulted with its advisors and considered a number of factors. The Board
reviewed the likelihood of realizing a long-term value equal to or greater than
the value offered by Express if Phoenix were not sold.
The Board determined that the ability to obtain such value would depend on
numerous factors, many of which were speculative, uncertain and/or out of our
control. The key factors considered by the Board included:
o The fact that the cash payment of $33.0 million would extinguish a
significant percentage of our outstanding debt under the Credit
Facility;
o The absence of other offers that were superior to Express's offer in
light of all the terms and conditions offered by Express;
o The fact that the Asset Purchase Agreement requires that the sale be
approved by a majority of Access's stockholders, which ensures that
the Board will not be taking action of which a majority of our
stockholders disapprove;
o The risk, that after the Asset Sale, Access will have a less
diversified business which would leave Access dependent on the
performance of its other divisions and that there would be an
increase in the relative importance of its revenues and
relationships with telemarketing and educational related customers;
o The risk that the sale of individual divisions would leave Access
with excess overhead that would need to be proportionately reduced;
and
o The risk that Access could be exposed to future indemnification
payments for a breach of its representations and warranties
contained in the Asset Purchase Agreement.
The Phoenix transaction was also evaluated within the context of possible
returns, if any, that would be available to investors from possible strategic
transactions involving our remaining four divisions. We offer stockholders no
assurance that we will be successful in effectuating any strategic transactions
that would be beneficial to our stockholders.
The above discussion of the factors considered by the Board is not
intended to be exhaustive. In determining whether to approve and recommend the
Asset Purchase Agreement, the Board did not assign any relative or specific
weights to any of the foregoing factors, and individual directors may have
weighed factors differently. After deliberating with respect to the Asset
Purchase Agreement and considering, among other factors, the reasons discussed
above, our Board unanimously approved the sale as being in our best interests
and the best interests of our stockholders.
14
The Asset Purchase Agreement
Phoenix will be sold by us pursuant to the Asset Purchase Agreement with
Express. The following summarizes the significant provisions of the Asset
Purchase Agreement. This summary description does not purport to be complete and
is qualified in its entirety by the full text of the Asset Purchase Agreement
attached to this Proxy Statement as Appendix A which sets forth the terms of the
Asset Sale.
Purchase Price
The purchase price for Phoenix assets is $33.0 million in cash plus the
assumption of certain liabilities of Phoenix by Express in the approximate
amount of $2.0 million.
The purchase price is subject to adjustment as necessary to reflect the
prorations for rent and lease payments and other items that are usually and
customarily proratable.
Assets to be Sold
Express will purchase from us essentially all of our assets related to
Phoenix, including:
o Vehicles;
o Equipment and machinery;
o Furniture and fixtures;
o Leasehold improvements;
o Computer and computer-related equipment;
o Spare parts, tools, supplies and other tangible property;
o Inventories;
o Right, title and interest under permits used in the business;
o Right, title and interest in, to and under contracts, agreements,
understandings and leases related to the business;
o Trademarks, service marks, trade names, service names, domain names,
brand names, copyrights, know-how, processes, software, trade
secrets, proprietary information, inventions, databases, customer
lists, and other intellectual property used in or related to the
business;
o All physician and other databases, whether in electronic or hardcopy
format, owned, leased, or otherwise held by Access and used in the
operation of the business;
o Accounts receivable;
o Rights, claims, and causes of action under or pursuant to
warranties, representations, indemnifications, hold harmless
provisions and guarantees;
o Books, records, papers, material correspondence and instruments of
whatever nature or format that relate to the assets of Phoenix or
the operation of its business; and
o All other assets used in the business of Phoenix, including
deposits, prepaid expenses, promotional materials, insurance claims
and claims against third parties.
Excluded Assets
o Most of Phoenix's cash;
o Certain inter-Access receivables and payables;
o Certain intangible assets; and
o Access's corporate assets relating to Phoenix including: corporate
bank accounts, insurance, and computers used in the treasury and
corporate functions.
15
Liabilities to be Assumed By Express
At the closing, Express will assume the following liabilities, obligations
and commitments of Access which relate to the business of Phoenix:
o Accounts payable;
o Customer deposits payable;
o Unearned income;
o Deferred revenue;
o Sales tax payable;
o Use tax payable;
o Employee 401(k) payable;
o Profit sharing loans;
o Cafeteria plan payable;
o Insurance benefit not recorded/medical claims;
o Accrued payroll;
o Accrued bonus;
o Accrued 401(k) contribution; and
o Current and long-term portions of certain loans.
Excluded Liabilities
Express will not assume any of our liabilities that are not specifically
assumed in the Asset Purchase Agreement, including:
o Certain related-party liabilities;
o Accrued interest payable to related parties;
o Any severance obligations of Phoenix or Access with the exception of
specified obligations;
o Expenses that did not arise in the ordinary course of Access's
business; and
o Compensated absences.
Closing Under the Asset Purchase Agreement
Subject to approval by Access's stockholders, the closing of the Asset
Purchase Agreement will take place (i) at the offices of Shapiro Sontag Lawyers,
in Fort Lauderdale, Florida, at 10:00 a.m., local time, no later than February
28, 2002, assuming all of the conditions have been met, including approval by
our stockholders at the Special Meeting, or (ii) at such other time or place or
on such other date as Access or Express will agree in writing, but no later than
March 15, 2002.
Our Representations and Warranties
We have made certain representations and warranties relating to Phoenix,
including with respect to, among other things:
o Financial statements for Phoenix;
o Liabilities and obligations;
o Compliance with applicable laws and permits;
16
o The existence of any legal proceeding in connection with the assets
or the business;
o Payment of taxes;
o Title to the assets being transferred;
o Condition of the assets being transferred;
o Accounts receivable;
o Employee benefits;
o Absence of certain changes since November 30, 2001;
o Agreements, leases, arrangements and understandings of any nature
that relate to the assets or the business of Phoenix involving
remaining payments, liabilities or obligations of $15,000 or more;
o Insurance;
o Employees;
o The intellectual property relating to the operations of Phoenix,
including trademarks, service marks, trade names, copyrights, domain
names, databases, software and software licenses;
o The accuracy of the disclosures made by us in the course of the
transaction; and
o Environmental matters.
Representations and Warranties of Express
Express has made certain representations and warranties relating to, among
other things:
o Its corporate organization;
o Its authority to enter into and perform its obligations under the
Asset Purchase Agreement; and
o The existence of any proceedings to restrain, prohibit, or obtain
damages or other relief in connection with the Asset Purchase
Agreement or the transactions contemplated thereby.
Survival of Representations and Warranties
The representations and warranties of Access, Phoenix and Express survive
and remain in full force and effect for 425 days after the closing date of the
Asset Sale, except that certain representations and warranties of Access,
Phoenix and Express will survive indefinitely and certain representations and
warranties of Access and Phoenix will survive for the applicable statue of
limitations period.
Indemnification
Under the Asset Purchase Agreement, we agree to indemnify and hold
harmless Express and certain related individuals and entities harmless from and
against any damage it may suffer after the closing for:
o Any misrepresentation, omission, or inaccuracy in or breach of any
representation or warranty of Phoenix or Access contained in this
Agreement or in any certificate, instrument, or document delivered
pursuant hereto;
o Any breach by Phoenix or Access of any of the covenants or
agreements contained in the Asset Purchase Agreement or in any
certificate, instrument, or document delivered pursuant thereto;
o Any liability (including the excluded liabilities) or obligation of
Phoenix or Access (whether accrued, absolute, contingent,
unliquidated, or otherwise, whether or not known to Phoenix, and
whether due or to become due), unless specifically assumed by
Express;
o Any taxes arising under state tax laws from or in connection with
the sale of the assets to Express, other than those for which
Express has agreed to be responsible;
17
o The ownership, operation, management, or use of the assets and the
operation of the business prior to and including the closing date;
o Any services provided by Phoenix or Access;
o Any action taken or claim asserted by any stockholder of Phoenix or
Access, whether or not in connection with the transaction
contemplated by the Asset Purchase Agreement; and
o Any acts or omissions of Phoenix or Access prior to the closing date
and any events or occurrences involving the assets or the business
or its operation (other than the liabilities assumed by Express), or
the current or former employees or independent contractors of
Phoenix or Access taking place on or prior to the closing date.
Under the Asset Purchase Agreement, Express agrees to indemnify and hold
us and certain related individuals and entities harmless from and against any
damage it may suffer after the closing for:
o Any misrepresentation, omission, or inaccuracy in or breach of any
representation or warranty of Express contained in the Asset
Purchase Agreement or in any certificate, instrument, or document
delivered pursuant thereto;
o Any breach by Express of any of the covenants or agreements
contained in the Asset Purchase Agreement or in any certificate,
instrument, or document delivered pursuant thereto; and
o The operation of the assets and the business following the closing
date.
No indemnification will be required to be made by either party with
respect to any claims unless the aggregate amount of damages incurred by such
party with respect to all such claims (whether asserted, resulting, imposed, or
incurred before, on, or after the closing date) exceeds $25,000, in which case
the indemnifying party will be liable to the full extent of such damages,
subject to the limitation that except for judicial determinations of fraud
against either party (for which no dollar limit will apply), neither party will
be liable to the other party for any sum in excess of $1,750,000, whether
arising by virtue of a direct claim by one of the parties hereto against the
other, or by virtue of a claim asserted by a third party.
Conditions to Completion of the Transaction
Under the Asset Purchase Agreement, the obligations of Phoenix and Access
to consummate the transaction contemplated by the Asset Purchase Agreement are
subject to the fulfillment on or prior to the closing date of each of the
following conditions:
o The representations and warranties of Express contained in the Asset
Purchase Agreement are true and correct as of the closing date;
o Express has performed and complied with all covenants and agreements
required by the Asset Purchase Agreement to be performed or complied
with by it on or prior to the closing date;
o Our receipt of an officer's certificate executed on behalf of
Express by the chief executive officer and chief financial officer
of Express, dated the closing date, representing and certifying that
the above conditions have been fulfilled and our receipt of a
secretary's certificate, dated the closing date, certifying certain
matters customary for a transaction like this;
o No proceeding will, on the closing date, be pending or threatened or
seek to restrain, prohibit, or obtain damages or other relief in
connection with the Asset Purchase Agreement or the consummation of
the transactions contemplated thereby;
o Corporate approval of the transaction by Express;
o Approval of the Asset Purchase Agreement by Bank of America, as
agent for our Bank Group;
o Approval of the transaction by our stockholders;
18
o Phoenix and Access receiving from Express assignment and assumption
agreements, in form and substance reasonably acceptable to Phoenix
and Access, executed by Express assuming the assumed liabilities;
o Receipt by Phoenix and Access from Express of Express corporate
documents customary for a transaction like this; and
o Express has offered employment to certain executives of Phoenix,
except those that fail to satisfy Express's employment criteria.
Under the Asset Purchase Agreement, the obligations of Express to
consummate the transactions contemplated by the Asset Purchase Agreement are
subject to the fulfillment on or prior to the closing date of each of the
following conditions:
o The representations and warranties of Phoenix and Access contained
in the Asset Purchase Agreement are true and correct as of the
closing date;
o Phoenix and Access have performed and complied with all covenants
and agreements required by the Asset Purchase Agreement to be
performed or complied with by them on or prior to the Closing Date;
o Express's receipt of officer's certificates executed on behalf of
Access and Phoenix by the chief executive officers and chief
financial officers of Access and Phoenix, dated the closing date,
representing and certifying, that the above conditions have been
fulfilled and Express's receipt of secretary certificates from the
Secretaries of Access and Phoenix, dated the closing date,
certifying matters customary for a transaction like this;
o No proceeding will, on the closing date, be pending or threatened
seeking to restrain, prohibit, or obtain damages or other relief in
connection with the Asset Purchase Agreement or the consummation of
the transactions contemplated thereby;
o Since the date of the Asset Purchase Agreement, there were no
material adverse change in the assets or the business of Phoenix;
o Express will have received from Phoenix and Access certain
certificates, instruments, and documents, including (i) bills of
sale and certificates of title sufficient to transfer title and
interest of Phoenix to Express, subject to permitted encumbrances;
(ii) assignment and assumption agreements regarding the assumed
liabilities; (iii) lien search reports showing no liens affecting
the Phoenix assets; (iv) releases of liens affecting the assets; (v)
executed copies of required approvals; (vi) notarized trademark
assignments; (vii) notarized copyright assignments; and (viii) such
other agreements and instruments as Express may reasonably request;
o Phoenix and Access will have delivered to Express an opinion of
counsel customary for a transaction like this;
o Phoenix and Access will have used their best efforts, in good faith,
to obtain the approval and consent of the AMA with respect to (i)
the assignment to Express of Phoenix's database license agreement
with the AMA, and (ii) the assignment to Express of the various
sub-license agreements under such database license agreement;
o The transaction contemplated by the Asset Purchase Agreement has
been approved by the Boards of Directors of Phoenix and Access and
by the stockholders of Access;
o Express has been issued all licenses and other permits required for
the operation of the business from and after the closing date by the
Drug Enforcement Administration and the Food and Drug
Administration. Express also has received from all other
governmental entities all other permits necessary for it to
consummate the transaction contemplated by the Asset Purchase
Agreement and operate the business from and after the closing date,
except state-issued permits for which applications can be made after
the closing date and the absence of which immediately after the
closing do not prevent Express from operating the business in the
states where such applications must be made;
19
o Express has entered into employment agreements or non-competition
agreements with certain Phoenix employees;
o Express has received from Phoenix and Access copies of Access and
Phoenix corporate documents customary for a transaction like this;
o Express has concluded its (i) review of Phoenix's compliance with
all applicable regulatory requirements, including the Prescription
Drug Marketing Act; and (ii) inventory count with results that
evidence Phoenix's compliance with applicable law and regulations;
o Express has received from Phoenix and Access signed filing copies of
a certificate of amendment to Phoenix's certificate of incorporation
changing Phoenix's name to a name not containing the words "Phoenix
Marketing Group," which Express may file with the Secretary of State
of the State of Delaware; and
o Express has received evidence satisfactory to it of the payment of
the fees of Alterity by Phoenix or Access or the provision,
satisfactory to Express, for such payment without any liability
therefor on the part of Express.
Termination
The Asset Purchase Agreement may be terminated in certain circumstances,
including, among others:
o By mutual written consent of us and Express; or
o By either party, if:
o the closing does not occur on or before February 28, 2002,
unless the failure to close is due to a breach of the Asset
Purchase Agreement by the party seeking to terminate the Asset
Purchase Agreement; or
o there is any statute, rule, or regulation that makes
consummation of the transaction illegal or otherwise
prohibited or a governmental entity has issued an order,
decree, or ruling or taken any other action permanently
restraining, enjoining, or otherwise prohibiting the
consummation of the transaction and such order, decree, ruling
or other action becomes final and non-appealable, or there
comes into effect an applicable law prohibiting the
consummation of the transaction or that could have a material
adverse effect on Express's ability to operate the business of
Phoenix from and after the closing.
o By Phoenix and Access, if:
o any of the representations or warranties of Express contained
in the Asset Purchase Agreement is not true and correct when
made or at any time prior to the closing; or
o Express fails to fulfill any of its obligations under the
Asset Purchase Agreement, and in the case of each of the
foregoing such misrepresentation, breach of warranty, or
failure (provided it can be cured) has not been cured within
30 days of actual knowledge thereof by Express.
o By Express, if
o any of the representations or warranties of Phoenix or Access
contained in the Asset Purchase Agreement are not true and
correct when made or at any time prior to the closing; or
o we fail to fulfill any of our obligations under the Asset
Purchase Agreement, and, in the case of each of the foregoing,
such misrepresentation, breach of warranty, or failure
(provided it can be cured) has not been cured within 30 days
of actual knowledge thereof by us.
Expenses
Access and Express will each pay all of its own costs and expenses
incurred in connection with the Asset Sale, including fees and expenses of
attorneys, accountants and financial advisors; except that if the Asset Purchase
Agreement is terminated as a result of the willful breach by a party of any of
its representations, warranties, covenants, or agreements set forth in the Asset
Purchase Agreement, that breaching party will pay the costs and expenses of the
other parties.
20
Business Activities Following the Proposed Transaction
Pending, and after the closing of the Asset Sale, we plan to continue to
operate our remaining businesses as we have in the past. The Board also will
continue to evaluate strategic transactions, including the possible sale of one
or all of our remaining four divisions or a transaction involving the Company as
a whole. We cannot assure you that we will be able to consummate any such
transactions on terms acceptable to us, if at all.
Use of Proceeds
We plan to use a portion of the net proceeds of the Asset Sale to fund
expenses related to this transaction. We estimate that the expenses incurred in
connection with the transaction (including accounting, legal, financial advisory
services, filing and printing fees and taxes associated with the transaction)
will total approximately $5.0 million. We intend to use the remaining proceeds,
which are estimated to be approximately $28.0 million, to reduce our debt under
the Credit Facility with the Bank Group, which totaled approximately $33.4
million as of November 30, 2001.
Appraisal Rights
We are organized under the corporate laws of the State of Delaware.
Delaware law does not provide for appraisal or other dissenters' rights for
stockholders who vote against approval of the Asset Sale in connection with the
transaction. Accordingly, our stockholders will have no right to dissent and
obtain payment for their shares.
Interests of Certain Persons in the Transaction
The members of our Board and our officers do not have any interests in the
transaction that are different from or in addition to your interests. Our
financial advisor, Alterity, will receive a $300,000 cash payment upon delivery
of its fairness opinion and a payment equal to four percent of the total
consideration received by Access upon consummation of the transaction.
Material United States Federal Income Tax Considerations of the Transaction
The following summary describes the principal United States federal income
tax consequences of the transaction. This summary is based upon the Internal
Revenue Code, existing and proposed United States Treasury Regulations
promulgated under the Internal Revenue Code, published rulings, administrative
pronouncements and judicial decisions, changes to which could affect the tax
consequences described in this Proxy Statement, possibly on a retroactive basis.
We will recognize a gain for federal income tax purposes on the sale of
our assets in the transaction. Our gain will be determined based upon the amount
of the purchase price (increased by our liabilities properly accrued as of the
closing of the transaction, to the extent assumed by Express) allocated to each
asset and our basis for each asset. To the extent that the purchase price (as
increased by accrued liabilities assumed by Express) allocated to an asset
exceeds its tax basis, we will recognize a gain on the disposition of the asset;
and to the extent the basis of an asset exceeds the purchase price (as increased
by accrued liabilities assumed by Express) allocated to such asset we will
recognize a loss. The transaction may also subject us to state or local income,
franchise, sales, use or other tax liabilities in state or local tax
jurisdictions in which we file returns or have assets other than excluded
assets.
Holders of our common stock will not recognize any gain or loss as a
result of the Asset Sale. However, if a stockholder chooses to sell his or her
shares, that stockholder may owe taxes at that time. Stockholders are encouraged
to contact their own tax advisors with respect to the tax effects of
transactions in our stock.
Accounting Treatment of the Transaction
The transaction will be accounted for as a sale of a business under
accounting principles generally accepted in the United States of America. The
sale of the business of Phoenix will be evaluated by the Company pursuant to the
requirements of FAS No. 144, "Accounting for the Impairment or Disposal of
Long-lived Assets," which became effective January 1, 2002.
21
THE ACCESS BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ASSET SALE AND
RECOMMENDS A VOTE "FOR" APPROVAL OF THE ASSET SALE PURSUANT TO THE ASSET
PURCHASE AGREEMENT.
OPINION OF OUR FINANCIAL ADVISOR
In connection with the Asset Sale, we engaged Alterity to act as financial
advisor and to render an opinion as to the fairness of the consideration to be
received in the Asset Sale, from a financial point of view, to us. Alterity was
selected by the Board based on its qualifications and expertise. On December 19,
2001, Alterity delivered its written opinion to our Board that, based upon and
subject to the assumptions made, matters considered and limitations on its
review as set forth in the opinion, from a financial point of view, the
consideration to be received in the Asset Sale is fair to us.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The
following is a brief summary and general description of the valuation
methodologies utilized by Alterity. The summary does not purport to be a
complete statement of the analyses and procedures applied, the judgments made or
the conclusion reached by Alterity or a complete description of its opinion.
Alterity believes, and so advised the Board, that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all factors and analyses, could
create an incomplete view of the process underlying its analyses and opinions.
No limitations were imposed by us on the scope of Alterity's
investigations or the procedures to be followed by Alterity in rendering its
opinion. Alterity did not perform an independent appraisal of the assets of
Phoenix, nor did Alterity ascribe a specific range of values to the assets to be
sold in the Asset Sale; rather, Alterity evaluated the fairness of the
consideration to be received in the Asset Sale. Further, Alterity did not
negotiate the Asset Sale or advise Access with respect to alternatives to it.
THE FULL TEXT OF THE WRITTEN OPINION OF ALTERITY DATED DECEMBER 19, 2001
IS ATTACHED AS APPENDIX B (THE "ALTERITY OPINION"). YOU ARE URGED TO READ THE
ALTERITY OPINION CAREFULLY AND IN ITS ENTIRETY FOR A DESCRIPTION OF THE
ASSUMPTIONS MADE, MATTERS CONSIDERED, PROCEDURES FOLLOWED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY ALTERITY IN RENDERING ITS OPINION. THE ALTERITY OPINION WAS
PREPARED FOR THE BENEFIT OF AND USE BY THE BOARD OF DIRECTORS OF ACCESS IN ITS
CONSIDERATION OF THE ASSET SALE AND DOES NOT CONSTITUTE A RECOMMENDATION TO YOU
AS TO HOW YOU SHOULD VOTE AT THE SPECIAL MEETING IN CONNECTION WITH THE ASSET
SALE PROPOSAL. THE ALTERITY OPINION DOES NOT DRAW ANY CONCLUSIONS ON THE
RELATIVE MERITS OF THE ASSET SALE OR ANY OTHER TRANSACTIONS OR BUSINESS
STRATEGIES DISCUSSED BY THE BOARD OF DIRECTORS AS ALTERNATIVES TO THE ASSET SALE
OR THE UNDERLYING BUSINESS DECISION OF THE BOARD OF DIRECTORS TO PROCEED WITH OR
EFFECT THE ASSET SALE. IT ONLY ADDRESSES THE FAIRNESS OF THE CONSIDERATION TO BE
PROVIDED TO ACCESS IN CONNECTION WITH THE ASSET SALE TO US AND OUR STOCKHOLDERS,
FROM A FINANCIAL POINT OF VIEW. THE SUMMARY OF THE ALTERITY OPINION SET FORTH IN
THIS INFORMATION STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THAT OPINION.
Alterity was not requested to and did not make any recommendation to the
Board as to the form or amount of consideration received in the Asset Sale,
which Alterity assumed, was determined through arms' length negotiations between
the parties. Alterity took into account its assessment of general economic,
market and financial conditions as well as its experience in connection with
similar transactions and securities valuations generally.
In connection with its opinion, Alterity, among other things:
o Solicited third-party indications of interest in acquiring the
assets of Phoenix and bids therefore;
o Reviewed 12 of these initial bids and solicited additional offers to
purchase the assets of Phoenix from five third parties that
submitted initial bids;
22
o Reviewed two of these additional offers and engaged in discussions
thereon with our management, who, following their discussions with
Alterity, recommended that the Board accept an additional bid
submitted by Express based on its terms;
o Reviewed substantially final drafts of the Asset Purchase Agreement;
o Reviewed certain financial and other information relating to Phoenix
that was publicly available or furnished to Alterity by us that
Alterity believed appropriate for purposes of rendering this
opinion, including, but not limited to:
o Access's Annual Reports on Forms 10-K for the three fiscal
years ended December 31, 1998 through December 31, 2000 and
Access's Quarterly Report on Form 10-Q for the nine-month
period ended September 30, 2001;
o Phoenix's unaudited financial statements for the three fiscal
years ended December 31, 1998 through December 31, 2000; and
o Financial projections for, and as developed by Phoenix;
o Met with members of Phoenix's management to discuss the business,
operations, historical financial results and future prospects of
Phoenix;
o Considered certain financial and securities data of Phoenix and
compared that data with similar data for other publicly-and
privately-held companies in businesses similar to those of Phoenix;
o Performed a discounted cash flow analysis, a comparable company
analysis, a comparable transaction analysis and certain other
analyses which Alterity deemed useful in connection therewith; and
o Considered and/or performed such other information, financial
studies, analyses and investigations and financial, economic and
market criteria as Alterity deemed relevant and appropriate for
purposes of its opinion.
In arriving at its opinion, Alterity relied upon and assumed the accuracy
and completeness of all of the financial and other information that was used by
Alterity without assuming any responsibility for any independent verification of
any such information and have further relied upon the assurances of Phoenix's
management that they were not aware of any facts or circumstances that would
make any such information inaccurate or misleading. With respect to the
financial projections of Phoenix, Alterity assumed that such projections had
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of management, and that such projections provide a
reasonable basis upon which Alterity could form an opinion. In arriving at its
opinion, Alterity did not make a physical inspection of the properties and
facilities of Access, and has not made or obtained any evaluations or appraisals
of the assets and liabilities (contingent or otherwise) of Access.
Alterity assumed that the Asset Sale will be consummated in a manner that
complies in all respects with the applicable provisions of the Securities Act of
1933, the Exchange Act and all other applicable federal and state statutes,
rules and regulations. The Alterity Opinion was based upon market, economic and
other conditions as of the date of the opinion. Accordingly, although subsequent
developments may affect the opinion, Alterity did not assume any obligation to
update, review or reaffirm its opinion.
Each of the analyses conducted by Alterity was carried out in order to
provide a different perspective on the Asset Sale, and to enhance the total mix
of information available. Alterity did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support an
opinion as to the fairness, from a financial point of view, of the Asset Sale to
Access. Alterity did not place any particular reliance or weight on any
individual analysis, but instead concluded that its analyses, taken as a whole,
supported its determination. Accordingly, Alterity believes that its analyses
must be considered as a whole and that selecting portions of its analyses or the
factors it considered, without considering all analyses and factors
collectively, could create an incomplete view of the process underlying the
analyses performed by Alterity in connection with the preparation of its
opinion.
Alterity used a variety of financial and comparative analysis for the
purposes of rendering the Alterity opinion, including those described below.
Alterity did not attribute any particular weight to any specific review or
factor considered, but rather made qualitative judgments based on its experience
in rendering such opinions and on the circumstances and information as a whole.
23
In connection with preparing to render its opinion, Alterity:
o compared the consideration offered to the historical market prices
for other businesses;
o compared the consideration offered to the value implied by analyses
of comparable companies and comparable transactions;
o compared the consideration offered to the value implied by
discounted cash flow analyses; and
o considered any factors or analyses that Alterity judged, based on
their experience to be relevant.
While the foregoing summary describes all material analyses and factors
reviewed by Alterity, it does not purport to be a complete description of the
presentations by Alterity to the Board or the analyses performed by Alterity in
arriving at the Alterity Opinion. Alterity believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, could
create a misleading view of the processes underlying the Alterity Opinion. In
addition, Alterity may have given various analyses more or less weight that
other analyses, and may have deemed various assumptions more or less probable
than other assumptions, so that the range of valuations resulting from any
particular analysis described above should not be taken to be Alterity's view of
the actual value of the assets of Phoenix. In performing its analyses, Alterity
made numerous assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond the control
of Access. The analyses performed by Alterity are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. In addition, analyses relating to the
value of businesses or assets do not purport to be appraisals or to necessarily
reflect the prices at which businesses or assets may actually be sold. The
analyses performed were prepared solely as part of Alterity's analysis of the
fairness of the consideration in the Asset Sale, from a financial point of view,
to Access and were provided to the Board in connection with the delivery of the
Alterity Opinion.
In connection with its services in providing the Alterity Opinion,
Alterity will receive $300,000. In addition, in connection with its services as
financial advisor to Access, Alterity will receive an amount equal to four
percent of the total consideration received by Access from the Asset Sale. In
addition, the Company has agreed to indemnify Alterity for certain liabilities
that may arise out of the rendering of this opinion.
Alterity is an investment banking firm that, as part of its investment
banking business, regularly is engaged in the evaluation of businesses and their
securities in connection with mergers, acquisitions and private placements.
24
WHERE YOU CAN FIND MORE INFORMATION ABOUT ACCESS
We file periodic reports, proxy statements, and other information with the
SEC. These SEC filings are available to the public over the Internet at the
SEC's web site (www.sec.gov). You may also read and copy any document that
Access files with the SEC at the SEC's public reference facilities at 450 Fifth
Street, N.W., Washington, D.C. 20549; and Citicorp Center, 500 West Madison
Street, Suite 1400 Chicago, Illinois 60661. You may obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, DC 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its public reference
facilities.
We "incorporate by reference" into this Proxy Statement the information in
documents we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this Proxy Statement, and
information that we file subsequently with the SEC will automatically update
this Proxy Statement. We incorporate by reference the documents listed below and
any filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 after the filing of this Proxy Statement and
before the Special Meeting.
o Annual Report on Form 10-K for the year ended December 31, 2000
(filed April 17, 2001);
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001
(filed May 15, 2001), June 30, 2001 (filed August 14, 2001) and
September 30, 2001 (filed November 7, 2001); and
o Current Reports on Form 8-K filed April 12, 2001 and July 17, 2001.
You may request a copy of these filings, other than an exhibit to a filing
unless the exhibit is specifically incorporated by reference into the filing, at
no cost to you by contacting us at the following address and telephone number:
Access Worldwide Communications, Inc.
Richard Lyew, Secretary
4950 Communication Avenue, Suite 300
Boca Raton, FL 33431
(561) 226-5000
25
SELECTED FINANCIAL DATA
The following selected consolidated financial data set forth as of and for
each of the five years ended December 31, 1996, 1997, 1998, 1999 and 2000 have
been derived from the Company's consolidated financial statements, which have
been audited. The information as of and for the nine-month periods ended
September 30, 2000 and 2001 has been derived from the Company's unaudited
consolidated financial statements which, in the opinion of management, includes
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the information set forth therein. The results of
operations for the nine months ended September 30, 2001 are not necessarily
indicative of the results of operations for the full year. The following
information contained in this table should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included on our Form 10-K for the year ended December 31, 2000.
Nine Months Ended
Years Ended December 31, September 30,
------------------------------------------------------------ ----------------------
1996 1997(1) 1998(2)(3) 1999(3) 2000(3) 2000 2001
-------- -------- ---------- --------- -------- -------- --------
(In Thousands Except for Per Share Data)
Statements of Operations Data:
Revenues ........................ $ 16,286 $ 36,653 $ 71,886 $ 81,187 $ 87,313 $ 65,210 $ 65,533
Cost of revenues ................ 8,639 21,813 39,743 49,350 53,584 39,222 41,319
-------- -------- --------- --------- -------- -------- --------
Gross profit .................... 7,647 14,840 32,143 31,837 33,729 25,988 24,214
Selling, general and
administrative expenses ...... 7,754 8,909 21,432 29,108 29,747 22,137 21,181
Amortization expense ............ -- 901 1,731 3,110 2,960 2,258 2,106
Unusual charge .................. -- -- -- 1,526 -- -- --
Loss on sale of business ........ -- -- -- -- 7,752 7,614 --
-------- -------- --------- --------- -------- -------- --------
(Loss) income from operations ... (107) 5,030 8,980 (1,907) (6,730) (6,021) 927
Interest expense ................ 101 2,327 911 3,724 5,937 4,317 4,343
Other expense (income) .......... 200 297 (4) -- (230) -- 60
-------- -------- --------- --------- -------- -------- --------
(Loss) income before
income taxes ................. (408) 2,406 8,073 (5,631) (12,437) (10,338) (3,476)
Tax (benefit) expense(4) ........ (88) 1,181 3,552 (1,793) (348) 506 (687)
-------- -------- --------- --------- -------- -------- --------
(Loss) income before
extraordinary charge ......... (320) 1,225 4,521 (3,838) (12,089) (10,844) (2,789)
Extraordinary charge on
extinguishments of debt
(net of tax expense of $82) .. -- -- -- (102) -- -- --
-------- -------- --------- --------- -------- -------- --------
Net (loss) income ............... $ (320) $ 1,225 $ 4,521 $ (3,940) $(12,089) $(10,844) $ (2,789)
======== ======== ========= ========= ======== ======== ========
Net (loss) income per common
share - basic ................ $ (0.07) $ 0.26 $ 0.52 $ (0.42) $ (1.25) $ (1.12) $ (0.29)
Net (loss) income per common
share - diluted .............. $ (0.07)(5) $ 0.26 $ 0.51 $ (0.42)(5) $ (1.25)(5) $ (1.12)(5) $ (0.29)(5)
As of December 31, As of September 30,
------------------------------------------------------------ ----------------------
1996 1997 1998 1999 2000 2000 2001
-------- -------- --------- --------- -------- -------- --------
(In Thousands Except for Per Share Data)
Balance Sheet Data:
Current assets .................. $ 16,963 $ 12,384 $ 23,914 $ 25,628 $ 24,752 $ 21,720 $ 29,532
Total assets .................... 29,454 52,680 104,422 109,524 92,980 90,413 96,313
Current liabilities ............. 16,757 17,336 21,944 17,160 17,051 47,188 28,540
Long-term debt, less
current maturities ........... 16,201 34,319 29,847 41,369 36,297 2,726 30,966
Mandatorily redeemable
preferred stock .............. 1,800 3,888 6,500 4,000 4,000 4,000 4,000
Common stockholders'
(deficit) equity ............. (5,304) (2,863) 46,130 46,695 35,253 36,499 32,464
26
- ----------
(1) Effective November 1, 1997, the Company acquired the assets and
liabilities of Phoenix in a transaction accounted for as a purchase.
(2) Effective October 1, 1998, the Company acquired all of the outstanding
capital stock of AM Medica Communications Group in a transaction accounted
for as a purchase.
(3) In the fourth quarter of 2000, the Company implemented SAB No. 101, and,
as a result, reduced its revenues and cost of sales related to the
licensing of AMA databases for the years ended December 31, 2000, 1999,
and 1998 in the amount of $1,883,261, $1,328,180, and $1,347,933,
respectively.
(4) In December 1996, the Company became a "C" Corporation for income tax
purposes. Prior to that, the Company was an "S" Corporation.
(5) Since the effects of the stock options and earnout contingencies are
anti-dilutive for the years ended December 31, 2000, 1999 and 1996 and for
the nine months ended September 30, 2000 and 2001, these effects have not
been included in the calculation of diluted net (loss) income per common
share for the years ended December 31, 2000, 1999 and 1996 and for the
nine months ended September 30, 2000 and 2001.
UNAUDITED FINANCIAL STATEMENTS OF PHOENIX
The following are unaudited financial statements of Phoenix. These
unaudited financial statements have been derived from historical financial data
of Access (also referred to as "Parent" in these unaudited financial statements)
and include balance sheets of Phoenix as of December 31, 1999 and 2000, and
September 30, 2001, and the related statements of operations and cash flows for
each of the years in the three year period ending December 31, 2000, and for the
nine months ended September 30, 2001. These financial statements reflect the
operations, assets and liabilities of Phoenix. These financial statements do not
include assets and liabilities of Access not specifically identifiable to
Phoenix. For financial reporting purposes, Phoenix is consolidated into the
financial statements of Access. The financial statements are not necessarily
indicative of the financial position and results of operations or cash flows
that would have occurred had Phoenix been a stand-alone entity during the
periods presented, nor is it indicative of future results of Phoenix.
The unaudited financial statements of Phoenix are qualified in their
entireties by, and should be read in conjunction with, the historical
consolidated financial statements of Access, including the notes thereto, in our
Annual Report on Form 10-K for the year ended December 31, 2000, which are
incorporated by reference.
27
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
BALANCE SHEETS
(Unaudited)
As of December 31,
------------------------------
2000 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 96,845 $ 1,231,295
Accounts receivable, net of allowance for doubtful accounts of
$56,052, and $62,146, respectively ........................... 4,985,997 3,180,829
Other assets, net ............................................... 428,733 803,537
------------ ------------
Total current assets ......................................... 5,511,575 5,215,661
Property and equipment, net ..................................... 4,907,420 3,982,937
Other assets, net ............................................... 328,283 284,639
Intangible assets, net .......................................... 12,287,169 12,947,641
------------ ------------
Total assets ................................................. $ 23,034,447 $ 22,430,878
============ ============
LIABILITIES AND INVESTMENT BY PARENT
Current liabilities:
Current portion of indebtedness ................................. $ 34,347 $ 28,879
Accounts payable and accrued expenses ........................... 586,598 845,064
Accrued interest and other related party expenses ............... 3,519,197 2,210,557
Accrued salaries, wages and related benefits .................... 805,875 726,006
Deferred revenues ............................................... 223,261 359,536
Due to Parent ................................................... 18,818,920 18,558,914
------------ ------------
Total current liabilities .................................... 23,988,198 22,728,956
Long-term portion of indebtedness ............................... 117,831 28,477
------------ ------------
Total liabilities ............................................ 24,106,029 22,757,433
------------ ------------
Commitments and contingencies
Investment by Parent ............................................ (1,071,582) (326,555)
------------ ------------
Total investment by Parent ................................... (1,071,582) (326,555)
------------ ------------
Total liabilities and investment by Parent ................... $ 23,034,447 $ 22,430,878
============ ============
The accompanying notes are an integral part of these financial statements.
28
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Years Ended December 31,
------------------------------------------------
2000 1999 1998
------------ ------------ ------------
Revenues ........................................................ $ 22,082,645 $ 15,707,371 $ 16,905,546
Cost of revenues ................................................ 10,818,170 7,010,751 7,933,761
------------ ------------ ------------
Gross profit ................................................. 11,264,475 8,696,620 8,971,785
Selling, general and administrative expenses (selling, general
and administrative expenses paid to related parties
are $745,000, $702,860, and $596,810, respectively) .......... 8,399,488 7,458,343 6,003,163
Corporate overhead allocation ................................... 2,331,449 1,053,052 925,829
Amortization expense ............................................ 589,452 589,452 532,410
------------ ------------ ------------
(Loss) income from operations ................................ (55,914) (404,227) 1,510,383
Interest income ................................................. (122,844) (70,107) (57,359)
Interest expense-related parties ................................ 1,308,642 1,421,177 936,791
------------ ------------ ------------
(Loss) income before income tax (benefit) expense ............... (1,241,712) (1,755,297) 630,951
Income tax (benefit) expense .................................... (496,685) (702,119) 252,380
------------ ------------ ------------
Net (loss) income ............................................... $ (745,027) $ (1,053,178) $ 378,571
============ ============ ============
The accompanying notes are an integral part of these financial statements.
29
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Years Ended December 31,
---------------------------------------------
2000 1999 1998
----------- ----------- -----------
Cash flows from operating activities:
Net (loss) income ......................................... $ (745,027) $(1,053,178) $ 378,571
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization ............................. 1,606,106 1,366,586 992,959
Allowance for doubtful accounts ........................... (6,094) (80,237) (30,000)
Changes in operating assets and liabilities:
Accounts receivable ................................... (1,799,074) 867,590 (1,589,290)
Other assets, net ..................................... 331,160 (228,126) (235,826)
Accounts payable and accrued expenses ................. (258,466) 348,505 (541,444)
Accrued interest and related party expenses ........... 1,308,640 270,220 2,103,687
Accrued salaries, wages and related benefits .......... 79,869 (6,396) 241,227
Deferred revenues ..................................... (136,275) 30,944 223,021
----------- ----------- -----------
Net cash provided by operating activities ............. 380,839 1,515,908 1,542,905
----------- ----------- -----------
Cash flows from investing activities:
Additions to property and equipment ....................... (1,805,306) (1,838,396) (1,361,431)
Consideration in connection with business acquisitions .... 71,020 (53,184) (1,327,233)
----------- ----------- -----------
Net cash used in investing activities ................. (1,734,286) (1,891,580) (2,688,664)
----------- ----------- -----------
Cash flows from financing activities:
Advances from Parent ...................................... 260,006 867,569 1,048,856
Payments on capital leases ................................ (41,009) (15,045) (65,122)
----------- ----------- -----------
Net cash provided by financing activities ............. 218,997 852,524 983,734
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents .. (1,134,450) 476,852 (162,025)
Cash and cash equivalents, beginning of year ................. 1,231,295 754,443 916,468
----------- ----------- -----------
Cash and cash equivalents, end of year ....................... $ 96,845 $ 1,231,295 $ 754,443
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
30
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Business Description and Significant Accounting Policies
Business Description and Basis of Presentation
Phoenix Marketing Group (Holdings), Inc. ("Phoenix"), a wholly owned
subsidiary of Access Worldwide Communications, Inc. ("Access" or the "Parent"),
is a pharmaceutical sampling, direct mail and database management business that
employs approximately 300 people at four pharmaceutical sampling sites in New
Jersey.
For financial reporting purposes, Phoenix is consolidated into the
financial statements of Access. The accompanying financial statements include
the operations, assets and liabilities of Phoenix. These financial statements do
not include assets and liabilities of Access not specifically identifiable to
Phoenix. The financial statements include allocations of certain corporate
expenses performed by the Parent on behalf of Phoenix. Corporate expense
allocations have been charges based on the percentage of Phoenix's revenue to
the total revenue of Access. Phoenix's management believes such method is
reasonable. The financial information included herein is not necessarily
indicative of the financial position and results of operations or cash flows
that would have occurred had Phoenix been a stand-alone entity during the
periods presented, nor is it indicative of future results of Phoenix.
The following is a summary of the significant policies used in the
preparation of the accompanying financial statements:
Cash and Cash Equivalents
All highly liquid investments with maturities of three months or less when
purchased are considered cash and cash equivalents.
Phoenix's cash and cash equivalents are managed with Access's total cash
balances.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, ranging from three to seven years. Leasehold
improvements are amortized over the term of the facilities' leases. When assets
are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
recognized in operations in the period. Expenditures for maintenance and repairs
are expensed as incurred, while expenditures for major renewals that extend the
useful lives are capitalized.
Phoenix has developed certain computer software and technically derived
procedures intended to maximize the quality and efficiency of its services.
Costs of purchased internal-use computer and telephone software are capitalized
and costs of internally developed internal-use computer software are capitalized
based on a project-by-project analysis of each of the project's significance to
Phoenix and its estimated useful life. All capitalized software costs are
amortized on a straight-line basis over a period of three years.
Intangible Assets
The acquisition of Phoenix by Access was accounted for as a purchase and,
accordingly, the purchase price was allocated to the assets acquired or
liabilities assumed based on their respective fair values. The excess of the
purchase price over the fair value of net assets acquired consists of noncompete
agreements, customer lists, assembled workforce and goodwill (the "intangible
assets"). The intangible assets are amortized on a straight-line basis over the
estimated useful lives of the assets, which range from four to 35 years.
31
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
1. Business Description and Significant Accounting Policies (Continued)
Long-Lived Assets
Long-lived assets, including intangible assets, are reviewed for
impairment whenever events or changes in circumstances indicate that, based on
estimated future cash flows, the related carrying amounts may not be
recoverable. When required, impairment losses on assets are recognized based on
the excess of the asset's carrying amount over the fair value of the asset, and
the long-lived assets to be disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
Deferred Revenues
Deferred revenues represent customer deposits for services that have been
contracted for, but have not been fully performed.
Revenue Recognition
Revenues received from database analysis, direct mail, sales force support
systems, sales territory management and product sample and literature
fulfillment are recognized when services are rendered.
Income Taxes
Phoenix calculates the income tax (benefit) expense in the accompanying
statements of operations by applying the applicable statutory rate to Phoenix's
net (loss) income before income tax (benefit) expense. All deferred tax assets
and liabilities for Access are recorded on a consolidated basis and the ensuing
charge or benefit is not allocated to the individual subsidiaries.
Had Phoenix calculated the income tax (benefit) expense on a separate
return basis for the year ended December 31, 2000, Phoenix would not have
recognized an income tax benefit of approximately $497,000 since Phoenix would
have recorded a valuation allowance in an amount equal to the benefit generated
for such period. Therefore, Phoenix's pro forma net loss (assuming income taxes
calculated on a separate return basis) for the year ended December 31, 2000
would have been approximately $1.2 million. Such valuation allowance would have
been recorded by Phoenix for the deferred tax asset generated since, based on
the weight of available evidence, management determined that it is more likely
than not that deferred tax asset would not be realized.
Accounting Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting periods. Such estimates consist primarily of
allowances for doubtful accounts, the useful lives of property and equipment and
accrued expenses. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments, which potentially expose Phoenix to concentrations
of credit risk, consist principally of cash and accounts receivable. Phoenix
maintains cash in bank deposit accounts, which, at times, may exceed federally
insured limits. Phoenix has not experienced any losses in such accounts and
management believes the risk related to these deposits is minimal. Phoenix does
not require collateral or other security to support credit sales. In addition,
Phoenix maintains reserves for potential credit losses.
32
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
1. Business Description and Significant Accounting Policies (Continued)
Fair Value of Financial Instruments
The carrying amount of accounts receivable, other assets (net), accounts
payable and accrued expenses, due to Parent, and deferred revenues approximates
fair value.
New Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141 ("FAS 141"), "Business Combination",
and No. 142 ("FAS 142"), "Goodwill and Other Intangible Assets" (collectively,
the "Statements"). FAS 141 (i) requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001, (ii)
establishes specific criteria for the recognition of intangible assets
separately from goodwill and (iii) requires unallocated negative goodwill to be
written off. FAS 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their acquisition. FAS 141 is effective for all
business combinations initiated after June 30, 2001 and FAS 142 is effective for
all fiscal years beginning after December 15, 2001. Phoenix has not yet
determined the impact, if any, that the adoption of the Statements will have on
Phoenix.
In October 2001, the Financial Accounting Standard Board issued Statement
of Financial Accounting Standards No. 144 ("FAS 144"), "Accounting for the
Impairment or Disposal of Long-Lived Assets." FAS 144 supersedes Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," and requires (i) the
recognition and measurement of the impairment of long-lived assets to be held
and used and (ii) the measurement of long-lived assets to be disposed of by
sale. FAS 144 is effective for fiscal years beginning after December 15, 2001.
Phoenix is currently assessing the impact, if any, of the adoption of this
statement.
2. Purchase Business Combinations
As a result of Access's agreement for the purchase of Phoenix in 1997,
additional contingent payments were required if certain financial goals were
achieved. Of the aggregate amounts payable under this agreement, 133,683 shares
of Phoenix's common stock, valued at $1,203,147, were issued in 1999. There were
no contingent payments earned or accrued during the year ended December 31,
2000.
Intangible assets consist of the following:
December 31,
Useful Life ------------------------------
In Years 2000 1999
----------- ------------ ------------
Goodwill ............................... 35 $ 13,085,313 $ 13,156,333
Customer lists ......................... 5 500,000 500,000
Assembled workforce .................... 4 400,000 400,000
Noncompete agreements .................. 7 135,000 135,000
------------ ------------
14,120,313 14,191,333
Less: Accumulated amortization ......... (1,833,144) (1,243,692)
------------ ------------
Intangible assets, net ................. $ 12,287,169 $ 12,947,641
============ ============
33
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
3. Property And Equipment
Property and equipment consists of the following:
December 31,
Useful Life ---------------------------
In Years 2000 1999
------------- ----------- -----------
Furniture and fixtures .......... 7 $ 1,124,346 $ 617,816
Telephone and office equipment .. 7 210,044 37,510
Computer equipment .............. 3-5 4,203,945 3,484,552
Leasehold improvements .......... Life of lease 1,669,423 1,126,743
----------- -----------
7,207,758 5,266,621
Less: Accumulated depreciation .. (2,300,338) (1,283,684)
----------- -----------
Property and equipment, net ..... $ 4,907,420 $ 3,982,937
=========== ===========
Depreciation expense (including property and equipment held under capital
leases) was $1,016,654, $777,134 and $460,549 for the years ended December 31,
2000, 1999 and 1998, respectively.
4. Revenues From Significant Customers
For the years ended December 31, 2000, 1999 and 1998, revenues from one
customer amounted to approximately 53%, 37% and 39% of revenues, respectively.
At December 31, 2000 and 1999, amounts due from this customer and included in
accounts receivable amounted to approximately 50% and 31% of accounts
receivable, respectively.
5. Sales-Type Leases
Phoenix leases equipment to customers under sales-type leases. The current
portion of the net investment in sales-type leases is included in current other
assets and the long-term portion is included in non-current other assets. The
components of the net investment in sales-type leases as of December 31, 2000
and December 31, 1999 are as follows:
2000 1999
--------- ---------
Minimum rental receivables ................. $ 241,319 $ 418,632
Less: unearned interest income ............. (29,308) (16,086)
--------- ---------
Net investment in sales-type leases ........ $ 212,011 $ 402,546
========= =========
Under these leases, Phoenix also leases Phoenix-developed software and is
obligated to provide maintenance services. The leases terminate in October 2001.
6. Defined Contribution Plans
Phoenix has a defined contribution employee benefit plan, which covers
substantially all employees. Phoenix may make discretionary contributions to the
plan. During the years ended December 31, 2000, 1999 and 1998, Phoenix
contributed $92,646, $80,017 and $61,807, respectively, to the plan.
Phoenix also sponsors a defined contribution profit sharing plan covering
full-time employees. Contributions are made at the discretion of Phoenix. Plan
contributions for the year ended December 31, 1998 totaled $322,862. No amounts
were contributed for the years ended December 31, 2000 and 1999.
34
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
7. Transactions With Access
Access provides various general and administrative services to Phoenix
including, among others, corporate management, accounting, human resources and
information systems support. Such amounts are allocated by Access to Phoenix
based on the percentage of Phoenix's revenue to the total revenue of Access.
Management believes the method used to allocate corporate overhead between
Phoenix and the other subsidiaries of Access is reasonable; however, such costs
may not be representative of those which would be incurred if Phoenix operated
as an independent stand-alone entity.
In addition, Access provides working capital on a long-term basis to
Phoenix, which is shown on the accompanying balance sheets as due to Parent.
Access charges Phoenix interest at an annual rate of 8% on such outstanding
balances. Such expense is shown as interest expense-related parties in the
accompanying statements of operations.
8. Commitments And Contingencies
Legal Proceedings
Access and Phoenix are involved in legal actions arising in the ordinary
course of business. Access and Phoenix believe that the ultimate resolution of
these matters will not have a material effect on Access's or Phoenix's financial
position, results of operations or cash flows.
Collateral for Access's Debt
At December 31, 2000 and 1999, Access had an outstanding balance of $32.9
million and $40.5 million, respectively, under the revolving credit and term
loan portions of the Credit Facility. The Credit Facility is collateralized by
substantially all of the assets of Access, including those of Phoenix. In
addition, the Credit Facility has certain financial covenants which become
increasingly more restrictive should Access not be able to meet its growth
projections.
During the second quarter of 1999, Access was not in compliance with
certain financial covenants of its Credit Facility. On September 28, 1999,
Access entered into a forbearance agreement with the Bank Group. On April 14,
2000, Access entered into an Amendment Agreement and Waiver with the Bank Group
which waived the events of default and amended certain provisions of the Credit
Facility.
On January 5, 2001, Access notified the Bank Group that it had defaulted
on all of its financial covenants, as amended, of the Credit Facility. On April
3, 2001, Access entered into the Fourth Amendment to the Credit Facility. The
Fourth Amendment amends certain provisions of the Credit Facility, as previously
amended, and requires Access to meet newly established financial covenants as
well as provided for certain other requirements during the period of the Fourth
Amendment. The Fourth Amendment expires on January 2, 2003.
As a result of the Fourth Amendment, Access is required to commence making
principal payments in 2002, as well as a $3.0 million payment on the Credit
Facility by March 31, 2002. Management believes that only a portion of that
payment may be funded by cash flow from operations of Access. Management
continues to pursue alternative sources of funding for the remaining amount.
Operating Leases
Phoenix leases office space and operating equipment under non-cancelable
operating leases with terms ranging from five to ten years and expiring at
various dates through March 2008. Rent expense under operating leases was
$1,244,477, $869,150 and $630,460 for the years ended December 31, 2000, 1999
and 1998, respectively.
35
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
8. Commitments And Contingencies (Continued)
Phoenix leases office and warehouse facilities in New Jersey under a
long-term operating lease from a partnership comprised of stockholders and
certain former stockholders expiring November 2007. Rent expense under this
agreement totaled $745,000, $702,860 and $630,460 for the years ended December
31, 2000, 1999 and 1998, respectively. Phoenix had a receivable from this
partnership in the amount of $7,043 at December 31, 1999. There was no amount
due from this partnership at December 31, 2000.
Aggregate minimum annual rentals under the operating leases as of December
31, 2000 are as follows:
2001....................................... $1,762,696
2002....................................... 1,773,400
2003....................................... 1,871,356
2004....................................... 1,748,545
2005....................................... 1,643,473
----------
$8,799,470
==========
36
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
CONDENSED BALANCE SHEET
(Unaudited)
September 30,
2001
-------------
ASSETS
Current assets:
Cash and cash equivalents ................................................ $ 221,826
Accounts receivable, net of allowance for doubtful accounts of $147,677 .. 4,486,747
Other assets, net ........................................................ 196,177
------------
Total current assets .................................................. 4,904,750
Property and equipment, net .............................................. 4,931,738
Other assets, net ........................................................ 354,099
Intangible assets, net ................................................... 11,845,080
------------
Total assets .......................................................... $ 22,035,667
============
LIABILITIES AND INVESTMENT BY PARENT
Current liabilities:
Current portion of indebtedness .......................................... $ 47,179
Accounts payable and accrued expenses .................................... 775,186
Accrued interest and other related party expenses ........................ 4,436,064
Accrued salaries, wages and related benefits ............................. 572,563
Deferred revenues ........................................................ 105,936
Due to Parent ............................................................ 16,721,740
------------
Total current liabilities ............................................. 22,658,668
Long-term portion of indebtedness ........................................... 79,537
------------
Total liabilities ..................................................... 22,738,205
------------
Commitments and contingencies
Investment by Parent ........................................................ (702,538)
------------
Total investment by Parent ............................................ (702,538)
------------
Total liabilities and investment by Parent ............................ $ 22,035,667
============
The accompanying notes are an integral part of these financial statements.
37
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
September 30,
------------------------------
2001 2000
------------ ------------
Revenues ................................................ $ 21,335,151 $ 15,304,347
Cost of revenues ........................................ 10,313,099 7,406,444
------------ ------------
Gross profit ......................................... 11,022,052 7,897,903
Selling, general and administrative expenses (selling,
general and administrative expenses paid to related
parties are $566,775 and $557,144, respectively) ..... 7,081,263 5,824,901
Corporate overhead allocation ........................... 1,994,292 1,641,210
Amortization expense .................................... 442,089 442,089
------------ ------------
Income (loss) from operations ........................ 1,504,408 (10,297)
Interest income ......................................... (27,532) (96,153)
Interest expense-related parties ........................ 916,867 988,889
------------ ------------
Income (loss) before income tax expense (benefit) .... 615,073 (903,033)
Income tax expense (benefit) ............................ 246,029 (361,213)
------------ ------------
Net income (loss) .................................... $ 369,044 $ (541,820)
============ ============
The accompanying notes are an integral part of these financial statements.
38
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
----------------------------
2001 2000
----------- -----------
Cash flows from operating activities:
Net income (loss) ........................................ $ 369,044 $ (541,820)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ......................... 1,471,681 1,315,643
Allowance for doubtful accounts ....................... 91,625 (3,363)
Changes in operating assets and liabilities:
Accounts receivable ................................... 407,625 (1,538,896)
Other assets, net ..................................... 206,740 (60,649)
Accounts payable and accrued expenses ................. 188,588 (452,424)
Accrued interest and other related party expenses ..... 916,867 988,887
Accrued salaries, wages and related benefits .......... (233,312) (440,965)
Deferred revenues ..................................... (117,325) 81,619
----------- -----------
Net cash provided by (used in) operating activities ... 3,301,533 (651,968)
----------- -----------
Cash flows from investing activities:
Additions to property and equipment ...................... (1,053,910) (958,413)
----------- -----------
Net cash used in investing activities ................. (1,053,910) (958,413)
----------- -----------
Cash flows from financing activities:
Advances (from) to Parent ................................ (2,097,180) 614,207
Payments on capital leases ............................... (25,462) --
----------- -----------
Net cash (used in) provided by financing activities ... (2,122,642) 614,207
----------- -----------
Net increase (decrease) in cash and cash equivalents .. 124,981 (996,174)
Cash and cash equivalents, beginning of period ........... 96,845 1,231,295
----------- -----------
Cash and cash equivalents, end of period ................. $ 221,826 $ 235,121
=========== ===========
The accompanying notes are an integral part of these financial statements.
39
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis Of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and pursuant to the
rules and regulations of the SEC. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for a complete set of financial statements.
For financial reporting purposes, Phoenix is consolidated into the
financial statements of its parent company, Access (sometimes referred to as the
"Parent"). The accompanying condensed financial statements include the
operations, assets and liabilities of Phoenix. These financial statements do not
include assets and liabilities of Access not specifically identifiable to
Phoenix. The financial statements include allocations of certain corporate
expenses performed by the Parent on behalf of Phoenix. Corporate expense
allocations have been charged based on the percentage of Phoenix's revenue to
the total revenue of Access. Phoenix's management believes such method is
reasonable. The financial information included herein is not necessarily
indicative of the financial position and results of operations or cash flows
that would have occurred had Phoenix been a stand-alone entity during the
periods presented, nor is it indicative of future results of Phoenix.
The preparation of condensed financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect reported
amounts included in the condensed financial statements. In the opinion of
management, all adjustments necessary for a fair presentation of this interim
financial information have been included. Such adjustments consisted only of
normal recurring items. The results of operations for the nine months ended
September 30, 2001 are not necessarily indicative of the results to be expected
for the year ending December 31, 2001.
2. Commitments And Contingencies
Access and Phoenix are involved in legal actions arising in the ordinary
course of business. Access and Phoenix believe that they have adequate legal
defenses or reserves with respect to such litigation and believe that their
ultimate outcome will not have a material adverse effect on Access's or
Phoenix's financial position, results of operations or cash flows.
3. New Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141 ("FAS 141"), "Business Combination"
and No. 142 ("FAS 142"), "Goodwill and Other Intangible Assets" (collectively,
the "Statements"). FAS 141 (i) requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001; (ii)
establishes specific criteria for the recognition of intangible assets
separately from goodwill; and (iii) requires unallocated negative goodwill to be
written off. FAS 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their acquisition. FAS 141 is effective for all
business combinations initiated after June 30, 2001 and FAS 142 is effective for
all fiscal years beginning after December 15, 2001. Phoenix has not yet
determined the impact, if any, that the adoption of these statements will have
on Phoenix.
In October 2001, the Financial Accounting Standard Board issued Statement
of Financial Accounting Standards No. 144 ("FAS 144"), "Accounting for the
Impairment or Disposal of Long-Lived Assets." FAS 144 supersedes Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," and requires (i) the
recognition and measurement of the impairment of long-lived assets to be held
and used and (ii) the measurement of long-lived assets to be disposed of by
sale. FAS 144 is effective for fiscal years beginning after December 15, 2001.
Phoenix is currently assessing the impact, if any, of the adoption of this
statement.
40
PHOENIX MARKETING GROUP (HOLDINGS), INC.
(a subsidiary of Access Worldwide Communications, Inc.)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
4. Income Taxes
Had Phoenix calculated the income tax expense on a separate return basis
for the nine month period ended September 30, 2001, Phoenix would not have
recognized income tax expense of approximately $246,000 since Phoenix would have
recorded a change in the valuation allowance in an amount equal to the income
tax expense recorded for such period. Therefore, Phoenix's pro forma net income
(assuming income taxes calculated on a separate return basis) for the nine month
period ended September 30, 2001 would have been approximately $615,000.
41
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Following this page are pro forma condensed consolidated financial
statements to illustrate the effects of the sale of certain assets to, and the
assumption of certain liabilities by Express. We based this pro forma financial
information on our historical results after removing the assets and liabilities
acquired and assumed by Express and the revenues and expenses directly
associated with the business activities to be transferred to Express.
Our pro forma condensed consolidated balance sheet as of September 30,
2001 gives effect to the sale as if it occurred at that date. The pro forma
condensed consolidated statements of operations for the year ended December 31,
2000 and for the nine months ended September 30, 2001, gives effect to the
transaction as if it occurred on January 1, 2000. The pro forma condensed
consolidated financial statements have been derived from, and should be read in
conjunction with, the historical consolidated financial statements, including
the notes thereto, in our Annual Report on Form 10-K for the year ended December
31, 2000, which are incorporated by reference.
We present these pro forma condensed consolidated financial statements for
informational purposes only. These pro forma condensed consolidated financial
statements are not necessarily indicative of the financial position or results
of our operations that would have occurred had the transaction been consummated
on the dates indicated. In addition, pro forma condensed consolidated financial
statements are not necessarily indicative of our future financial condition or
operating results.
Pro forma adjustments for the transaction include the sale of certain
assets and liabilities and the related revenues and expenses.
42
ACCESS WORLDWIDE COMMUNICATIONS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
As of September 30, 2001
----------------------------------------------------------
Pro Forma
Actual Adjustments Pro Forma
------------ ------------ ------------
ASSETS:
Current assets:
Cash and cash equivalents .......................... $ 849,627 $ 2,967,352 A,B $ 3,816,979
Accounts receivables, net .......................... 19,462,901 $ (4,486,747)B 14,976,154
Billing in excess of costs ......................... 6,791,246 -- 6,791,246
Other assets ....................................... 2,428,418 (134,854)B 2,293,564
------------ ------------ ------------
Total current assets .......................... 29,532,192 (1,654,249) 27,877,943
NON-CURRENT ASSETS:
Property, plant and equipment, net ................. 10,292,937 (4,931,738)B 5,361,199
Other assets ....................................... 1,520,479 (354,099)B 1,166,380
Intangible assets, net ............................. 54,967,432 (11,845,080)B 43,122,352
------------ ------------ ------------
Total assets .................................. $ 96,313,040 $(18,785,166) $ 77,527,874
============ ============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses .............. $ 15,372,303 $ 1,523,711 A,B $ 16,896,014
Accrued interest and other related party expenses .. 34,849 -- 34,849
Accrued salaries, wages and benefits ............... 1,468,827 (572,563)B 896,264
Deferred revenues .................................. 2,095,622 (105,936)B 1,989,686
Warrants Payable ................................... 1,873,527 1,873,527
Current portion of indebtedness .................... 6,197,179 (6,197,179)A,B --
Current portion of indebtedness - related party .... 1,497,820 -- 1,497,820
------------ ------------ ------------
Total current liabilities ..................... 28,540,127 (5,351,967) 23,188,160
Long-term liabilities:
Long-term portion of indebtedness .................. 28,837,997 (21,929,537)A 6,908,460
Long-term portion of indebtedness - related party .. 2,127,598 -- 2,127,598
Other liabilities .................................. 343,098 -- 343,098
Mandatorily redeemable preferred stock ............. 4,000,000 -- 4,000,000
------------ ------------ ------------
Total liabilities ............................. 63,848,820 (27,281,504) 36,567,316
STOCKHOLDERS' EQUITY
Common stock ....................................... 97,400 -- 97,400
Additional paid in capital ......................... 63,577,509 -- 63,577,509
Accumulated deficit ................................ (31,210,689) 8,496,338 A,B (22,714,351)
------------ ------------ ------------
Total stockholders' equity .................... 32,464,220 8,496,338 40,960,558
------------ ------------ ------------
Total liabilities and stockholders' equity .... $ 96,313,040 $(18,785,166) $ 77,527,874
============ ============ ============
- ----------
A. To reflect the use of the proceeds from the Asset Sale as follows:
approximately $28.0 million used to reduce our indebtedness with the Bank
Group, approximately $2.0 million in transaction fees and approximately
$3.0 million to pay taxes on the transaction.
B. To reflect the purchase of certain assets and the assumption of certain
liabilities by Express.
43
ACCESS WORLDWIDE COMMUNICATIONS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Nine Months Ended September 30, 2001
----------------------------------------------------------
Pro Forma
Actual Adjustments Pro Forma
------------ ------------ ------------
Revenues ............................. $ 65,533,379 $(21,335,151)C $ 44,198,228
Cost of revenues ..................... 41,319,209 (10,313,099)C 31,006,110
------------ ------------ ------------
Gross profit ...................... 24,214,170 (11,022,052) 13,192,118
Selling, general and administrative .. 21,180,523 (7,193,317)C 13,987,206
Amortization expense ................. 2,106,003 (442,089)C 1,663,914
------------ ------------ ------------
Income (loss) from operations ..... 927,644 (3,386,646) (2,459,002)
Interest (income) expense ............ (65,239) 27,532 C (37,707)
Interest expense - related parties ... 359,791 -- 359,791
Interest expense ..................... 4,108,728 (2,753,333)D 1,355,395
------------ ------------ ------------
Loss before income tax benefit .... (3,475,636) (660,845) (4,136,481)
Income tax (benefit) expense ......... (686,900) 18,445 E (668,455)
------------ ------------ ------------
Net loss .......................... $ (2,788,736) $ (679,290) $ (3,468,026)
============ ============ ============
Loss per share of common stock:
Basic and diluted .................... $ (0.29) $ (0.36)
============ ============
- ----------
C. To reflect the decrease in revenues resulting from the Asset Sale for the
nine months ending September 30, 2001, as if it had occurred on January 1,
2000. To reflect the decrease in cost of revenues, selling, general and
administrative expenses, amortization expense and interest income
resulting from the Asset Sale for the nine months ending September 30,
2001, as if it had occurred on January 1, 2000.
D. To reflect the decrease in interest expense as a result of $28.0 million
being used to reduce the Company's indebtedness as if the Asset Sale had
occurred and the corresponding bank debt was repaid on January 1, 2000.
Considering the balance of the Company's outstanding indebtedness at
September 30, 2001 of approximately $6.9 million after the reduction of
indebtedness as a result of the Asset Sale, a 1/8% change in the interest
rate would result in an impact to pre-tax earnings of $6,470.
E. To reflect the adjustment to the income tax benefit as a result of the
Asset Sale.
44
ACCESS WORLDWIDE COMMUNICATIONS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For Year Ended December 31, 2000
-----------------------------------------------------------
Pro Forma
Actual Adjustments Pro Forma (H)
------------ ------------ -------------
Revenues ............................. $ 87,312,992 $(22,082,645)F $ 65,230,347
Cost of revenues ..................... 53,583,938 (10,818,170)F 42,765,768
------------ ------------ ------------
Gross profit ...................... 33,729,054 (11,264,475) 22,464,579
Selling, general and administrative .. 29,746,694 (8,533,516)F 21,213,178
Amortization expense ................. 2,960,366 (589,452)F 2,370,914
Loss on sale of business ............. 7,752,354 -- 7,752,354
------------ ------------ ------------
Loss from operations .............. (6,730,360) (2,141,507) (8,871,867)
Interest (income) expense ............ (267,052) 122,844 F (144,208)
Interest expense - related parties ... 626,701 -- 626,701
Interest expense ..................... 5,577,185 (3,450,147)G 2,127,038
Other income ......................... (229,972) -- (229,972)
------------ ------------ ------------
Loss before income tax benefit .... (12,437,222) 1,185,796 (11,251,426)
Income tax benefit ................... (348,060) -- (348,060)
------------ ------------ ------------
Net loss .......................... $(12,089,162) $ 1,185,796 $(10,903,366)
============ ============ ============
Loss per share of common stock:
Basic and diluted .................... $ (1.25) $ (1.13)
============ ============
- ----------
F. To reflect the decrease in revenues resulting from the Asset Sale for the
year ended December 31, 2000, as if it had occurred on January 1, 2000. To
reflect the decrease in cost of revenues, selling, general and
administrative expenses, amortization expense and interest income
resulting from the Asset Sale for the year ended December 31, 2000, as if
it had occurred on January 1, 2000.
G. To reflect the decrease in interest expense as a result of $28.0 million
being used to reduce the Company's indebtedness, as if the transaction had
occurred on January 1, 2000. Considering the balance of the Company's
outstanding indebtedness at December 31, 2000 of approximately $6.9
million after the reduction of indebtedness as a result of the Asset Sale.
A 1/8% change in the interest rate would result in an impact to pre-tax
earnings of approximately $8,625 for the year ended December 31, 2000.
H. The pro forma condensed consolidated statement of operations for the year
ended December 31, 2000 does not include the gain on the sale of certain
assets and the assumption of certain liabilities that will be recorded by
Access in connection with the sale of Phoenix to Express. Such gain will
be approximately $9.5 million, net of taxes of $3.0 million and will be
recorded by Access at the time of the closing of the transaction.
45
ADDITIONAL INFORMATION
Management knows of no matters that are to be presented for action at the
Special Meeting other than approval of the Asset Sale. We will bear the expenses
in connection with the solicitation of proxies. Solicitation will be made by
mail, but may also be made by telephone, personal interview, facsimile or
personal calls by our officers, directors or employees who will not be specially
compensated for such solicitation. We may request brokerage houses and other
nominees or fiduciaries to forward copies of this Proxy Statement to beneficial
owners of common stock held in their names, and we may reimburse them for
reasonable out-of-pocket expenses incurred in doing so.
We have retained Georgeson Shareholder Communications Inc. to assist with
the solicitation of proxies for a fee not to exceed $35,000, plus reimbursement
for reasonable out-of-pocket expenses.
The deadline for submission of stockholder proposals pursuant to Rule
14a-8 of the Securities Exchange Act of 1934 for inclusion in the proxy
statement for the 2002 Annual Meeting of Stockholders is January 5, 2002.
Additionally, Access must receive notice of any stockholder proposal to be
submitted at the 2002 Annual Meeting of Stockholders (but not required to be
included in our proxy statement) by March 21, 2002 or such proposal will be
considered untimely pursuant to Rule 14a-4 and Rule 14a-5(e) under the Exchange
Act and the persons named in the proxies solicited by management may exercise
discretionary voting authority with respect to such proposal.
46
APPENDIX A
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of December 19,
2001, is made by and between Express Scripts, Inc., a Delaware corporation
("Buyer"), Phoenix Marketing Group (Holdings), Inc., a Delaware corporation
("Seller"), and Access Worldwide Communications, Inc., a Delaware corporation
("Access").
WHEREAS, Access owns 100% of the equity interests in Seller; and
WHEREAS, Seller conducts and operates a business consisting of healthcare
related sample fulfillment and database management together with certain
other lines of business more particularly described in the definition
"Business" set forth in Article XIII hereof, all under the name Phoenix
Marketing Group ("PMG"); and
WHEREAS, Access owns certain assets that are used in the Business (the
"Access PMG Assets") and Seller owns, leases, or otherwise holds the other
assets used in the Business (the "PMG Assets," which together with the
Access PMG Assets are collectively referred to as the "Assets"); and
WHEREAS, Access and Seller (collectively, the "Selling Parties") desire to
sell to Buyer, and Buyer desires to purchase from the Selling Parties,
upon the terms and subject to the conditions herein set forth, all of the
Assets other than those specifically excluded hereunder; and
WHEREAS, Buyer also desires to assume certain liabilities of the Selling
Parties that arise from the operation of the Business and that are
specifically identified herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Buyer, Access and Seller hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1A Assets to be Transferred by Seller. At the Closing (defined below),
and on the terms and subject to the conditions set forth in this Agreement,
Seller agrees to sell, assign, transfer, deliver, and convey (collectively,
"transfer"), or cause to be transferred, to Buyer, and Buyer agrees to purchase,
the assets which constitute all of the tangible and intangible PMG Assets that
are owned, leased or used by Seller in the operation of the Business (other than
the Excluded Assets as such term is hereafter defined), including but not
limited to:
(a) Equipment and Machinery. All vehicles, equipment, machinery,
materials, furniture, fixtures, leasehold improvements, computers and
computer-related equipment, spare parts, tools, supplies and other tangible
personal property used in or related to the Business, including but not limited
to those described in Part 1.1A(a) of the Disclosure Letter delivered with this
Agreement (the "Disclosure Letter");
(b) Inventories. All of Seller's inventories (if any) as of Closing
that are used in or related to the Business including but not limited to those
described in Part 1.1A(b) of the Disclosure Letter;
(c) Permits. All right, title, and interest of Seller in, to, and
under all Permits used in the Business and described in Part 1.1A(c) of the
Disclosure Letter to the extent such Permits can be lawfully conveyed;
(d) Contracts and Agreements. All right, title, and interest of
Seller in, to, and under all contracts, agreements, understandings, and leases,
whether written or unwritten, (with customers, suppliers, lessors of personalty
or realty, or otherwise) used in or otherwise related to the Business including
but not limited to those described in Part 1.1A(d) of the Disclosure Letter and
all rights (including rights of refund and offset), privileges, claims, causes
of action, and options in favor of Seller relating or pertaining to such
contracts, leases, agreements, and understandings, subject to receipt of any
Required Approvals;
(e) Intellectual Property. All trademarks, service marks, trade
names, service names (including the name "Phoenix Marketing Group"), domain
names (URL) for Phoenix Marketing Group, brand names, copyrights, know-how,
processes, software (including PDMA compliance process software), trade secrets,
proprietary information, inventions, databases, customer lists, and other
intellectual property used in or related to the Business,
A-1
including but not limited to those described in Parts 1.1A(e) and 2.10 of the
Disclosure Letter, and all registrations, applications, licenses, claims, causes
of action, and rights with respect to any of the foregoing, and all rights to
recover for infringement thereof and all goodwill related to the foregoing
(collectively, the "Intellectual Property");
(f) Accounts Receivable. All of Seller's accounts receivable arising
from the operation of the Business on or before the Closing Date and all other
rights to payment or notes receivable for goods sold or leased or for services
rendered by Seller, including without limitation those that are not evidenced by
instruments or chattel paper:
(g) Warranty Claims. All rights, claims, and causes of action under
or pursuant to all warranties, representations, indemnifications, hold harmless
provisions, and guarantees, whether express or implied, made or given by
suppliers, licensors, manufacturers, contractors, and others in respect of the
PMG Assets; and
(h) Books and Records. All books, records, papers, material
correspondence, and instruments of whatever nature or format and wherever
located that relate to the PMG Assets or the operation of the Business,
including without limitation all books and records (excluding immaterial
correspondence) relating to dealings with customers, vendors, and suppliers, and
all sales and marketing materials related to the operation of the Business,
provided that Seller shall be entitled to retain copies of any such books and
records that are necessary for tax, accounting, or legal purposes; and
(i) Other. All other PMG Assets (other than Excluded Assets) used in
the Business, including deposits, prepaid expenses, promotional materials,
insurance claims, and claims against third parties.
1.1B Assets to be Transferred by Access. At the Closing, and on the terms
and subject to the conditions set forth in this Agreement, Access agrees to
transfer, or cause to be transferred, to Buyer, and Buyer agrees to purchase the
following assets which constitute all of the tangible and intangible Access PMG
Assets owned, leased, or used by Access in the operation of the Business (other
than, the Excluded Assets), including but not limited to:
(a) Contracts and Agreements. All right, title, and interest of
Access in, to, and under all contracts, agreements, understandings, and leases,
whether written or unwritten (with customers, suppliers, lessors of personalty
or realty, or otherwise) used in or otherwise related to the Business including
but not limited to those described in Part 1.1B(a) of the Disclosure Letter and
all rights (including all rights of refund and offset), privileges, claims,
causes of action, and options in favor of Access relating or pertaining to such
contracts, agreements, leases, agreements, and understandings, subject to
receipt of any Required Approvals;
(b) Databases. All physician and other databases, whether in
electronic or hardcopy format, owned, leased, or otherwise held by Access and
used in the operation of the Business, including but not limited to those listed
in Part 1.1B(b) of the Disclosure Letter, subject to the receipt of any Required
Approvals; and
(c) Other Assets. All other assets of any kind owned, leased, or
otherwise held by Access and used in the operation of the Business including but
not limited to those listed in Part 1.1B(c) of the Disclosure Letter.
1.2 Excluded Assets. Notwithstanding anything else to the contrary set
forth herein, the Assets used in the Business to be transferred and conveyed by
Seller and Access to Buyer pursuant to this Agreement shall not include those
assets or properties specifically set forth in Part 1.2 of the Disclosure Letter
(collectively the "Excluded Assets").
1.3 Purchase Price; Payment Terms. The total purchase price to be paid by
Buyer, in addition to the assumption by Buyer of the Assumed Liabilities
(defined below), in consideration of the transfer to Buyer of the Assets is
Thirty Three Million Dollars ($33,000,000.00) (the "Purchase Price"), adjusted
as hereafter provided, payable at Closing by wire transfer to Seller's account
that shall be specified by Seller to Buyer no less than two business days before
the Closing Date.
1.4 Liabilities Assumed by Buyer. As partial consideration for the
transfer of the Assets to Buyer, Buyer agrees, upon the terms and subject to the
conditions set forth herein, to assume, as of the Closing, and thereafter to
pay, perform, and discharge only those obligations of Seller and Access
specifically set forth in Part 1.4 of the Disclosure Letter (collectively, the
"Assumed Liabilities").
A-2
1.5 Certain Adjustments. The Purchase Price shall be adjusted as necessary
to reflect the prorations for rent and lease payments and other similar items
that are usually and customarily proratable, and any other prorations or
adjustments specifically contemplated hereunder.
1.6 Allocation of Purchase Price. As soon as practicable following
Closing, Buyer will determine the appropriate allocation of the Purchase Price
among the Assets pursuant to Section 1060 of the Code, and will notify Seller
and Access of such determination prior to January 31, 2003. Seller, Access, and
Buyer shall report the transactions contemplated hereby on all Tax Returns
(including information returns and supplements thereto required to be filed by
the parties under Section 1060 of the Code) in a manner consistent with such
allocation.
1.7 Liabilities Not Assumed by Buyer. Buyer shall not assume or take title
to the Assets subject to, or in any way be liable or responsible for, any
liabilities or obligations of Seller or Access (whether or not referred to in
any Schedule or Exhibit hereto), except as specifically provided in Section 1.4,
it being expressly acknowledged that it is the intention of the parties hereto
that all liabilities and obligations that Seller or Access has or may have in
the future (whether accrued, absolute, contingent, unliquidated, or otherwise,
whether or not known to Seller, and whether due or to become due), other than
the Assumed Liabilities, shall be and remain the liabilities and obligations of
Seller or Access, as the case may be (the "Excluded Liabilities"). Without
limiting the generality of the foregoing, the Excluded Liabilities shall include
but not be limited to the liabilities set forth in Part 1.7 of the Disclosure
Letter.
1.8 Definitions. All capitalized terms used in this Agreement and not
otherwise defined are defined in Article XIII of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND ACCESS
Seller and Access jointly and severally represent and warrant to Buyer
that:
2.1 Corporate Organization and Qualification.
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, and has all requisite corporate power
and corporate authority to own, lease, and operate its properties and to carry
on its business as now being conducted. No actions or proceedings to dissolve
Seller are pending or threatened. Seller is duly qualified or licensed to do
business as a foreign corporation in all jurisdictions in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, require such qualification.
(b) Access is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, and has all requisite corporate power
and corporate authority to own, lease, and operate its properties and to carry
on its business as now being conducted. No actions or proceedings to dissolve
Access are pending or threatened. Access is duly qualified or licensed to do
business as a foreign corporation in all jurisdictions in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, require such qualification.
2.2 Authority Relative to This Agreement.
(a) Seller has full corporate power and corporate authority to
execute, deliver, and perform this Agreement and the agreements and instruments
to be executed or delivered by it hereunder, and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, and performance by
Seller of this Agreement and the agreements and instruments to be executed or
delivered by it hereunder, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action. This Agreement and the agreements and instruments to be
executed or delivered by it hereunder have been duly executed and delivered by
Seller and constitute valid and legally binding obligations of Seller,
enforceable against Seller in accordance with their respective terms.
(b) Access has full corporate power and corporate authority to
execute, deliver, and perform this Agreement and the agreements and instruments
to be executed or delivered by it hereunder, and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, and performance by
Access of this Agreement and the agreements and instruments to be executed or
delivered by it hereunder, and the consummation
A-3
by it of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action. This Agreement and the agreements
and instruments to be executed or delivered by it hereunder have been duly
executed and delivered by Access and constitute valid and legally binding
obligations of Access, enforceable against Access in accordance with their
respective terms.
2.3 Noncontravention. The execution, delivery, and performance by Seller
and Access of this Agreement and the agreements and instruments to be executed
or delivered by it hereunder, and the consummation by them of the transactions
contemplated hereby do not and will not (i) breach, conflict with, or result in
a violation of any provision of the charter or bylaws of or other governing
instruments of Seller or Access, (ii) breach, conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization, or waiver of, or notice to, any party to, any bond, debenture,
note, mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which Seller or Access is a party or by which Seller or Access, or
any of the Assets, may be bound or any Permit held by Seller or Access, (iii)
result in the creation or imposition of any Encumbrance upon the Assets, (iv)
result in the loss of any benefit to, or privilege or right of, the business
attributable to any of the Assets, or (v) violate any Applicable Law binding
upon Seller, Access, or any of the Assets, except, in the case of clause (ii)
above, for (A) such consents, approvals, authorizations, and waivers that have
been obtained and are unconditional and in full force and effect and such
notices that have been duly given, and (B) such consents, approvals,
authorizations, waivers, and notices disclosed on Part 2.3 of the Disclosure
Letter.
2.4 Governmental and Other Approvals. Except as disclosed on Part 2.4 of
the Disclosure Letter, no consent, approval, order, or authorization of, or
declaration, filing, or registration with, any Governmental Entity is required
to be obtained or made by Seller or Access in connection with the execution,
delivery, or performance by Seller or Access, respectively, of this Agreement or
the agreements and instruments to be executed or delivered by it hereunder, the
consummation by it of the transactions contemplated hereby and thereby, or the
continued operation of the Business by the Buyer after the Closing, other than
(i) filings with Governmental Entities to occur in the ordinary course following
the consummation of the transactions contemplated hereby, and (ii) such
consents, approvals, orders, or authorizations that, if not obtained, and such
declarations, filings, or registrations that, if not made, would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, results of operations, condition (financial or otherwise), or
prospects of Seller or Access or on the ability of Seller and Access to
consummate the transactions contemplated hereby, or on the ability of the Buyer
to operate the Business after the Closing. Except as set forth in Part 2.4 of
the Disclosure Letter, neither Seller nor Access is required to give any notice
or consent, approval, ratification, waiver, or other authorization in connection
with the execution and delivery of this Agreement or the performance of the
transactions contemplated hereby.
2.5 Title to Assets. Seller and Access are the owners of, and have good
and marketable title to, all the Assets, free and clear of all Encumbrances
other than the Permitted Encumbrances and Required Approvals. Upon Selling
Parties' transfer of the Assets to Buyer pursuant to this Agreement, Buyer will
have good and marketable title to all the Assets, free and clear of all
Encumbrances other than the Permitted Encumbrances and Required Approvals not
theretofore obtained. Except as disclosed on Part 2.5 of the Disclosure Letter,
no financing statement (or other instrument sufficient or effective as a
financing statement) under the Uniform Commercial Code with respect to any of
the Assets has been filed and is effective in any jurisdiction, and neither
Seller nor Access has signed any such financing statement (or other instrument)
or any mortgage or security agreement granting any mortgage or security interest
in any of the Assets or authorizing any secured party thereunder to file any
such mortgage or financing statement (or other instrument).
2.6 Financial Statements. Seller has delivered to Buyer accurate and
complete copies of Seller's unaudited balance sheet as at November 30, 2001 (the
"Balance Sheet") and Seller's unaudited income statement for the eleven months
ended November 30, 2001 (the "Income Statement" and together with the Balance
Sheet, the "Financial Statements"). The Financial Statements (i) represent
actual bona fide transactions, (ii) have been prepared from and are in
accordance with, the books and records of Seller in conformity with generally
accepted accounting principles, consistently applied and consistent with
Seller's historical practices, and (iii) accurately, completely, and fairly
present Seller's financial position as of the date thereof and its results of
operations for the period then ended, all in accordance with generally accepted
accounting principles consistently applied. The Income Statement does not
contain any items of special or nonrecurring income, and the Balance Sheet does
not
A-4
reflect any write-up or revaluation increasing the book value of any assets, nor
have there been any transactions since December 31, 2000, giving rise to special
or nonrecurring income or any such write-up or revaluation.
2.7 Liabilities.
(a) Seller has no material liabilities or obligations (whether
accrued, absolute, contingent, unliquidated, or otherwise, whether or not known
to Seller or Access, and whether due or to become due), except (i) liabilities
reflected on the Financial Statements or in any notes thereto, (ii) liabilities
which have arisen in the Ordinary Course of Business since the date of the
Financial Statements (none of which is a liability for breach of contract,
breach of warranty, tort, or infringement), none of which is material, (iii)
liabilities arising under executory contracts entered into in the Ordinary
Course of Business (none of which is a liability for breach of contract), and
(iv) liabilities specifically set forth on Part 2.7(a) of the Disclosure Letter.
(b) Access has no material liabilities or obligations (whether
accrued, absolute, contingent, unliquidated, or otherwise, whether or not known
to Access or Seller, and whether due or to become due) relating to or arising
from or in connection with the Assets or Business except (i) liabilities
reflected on the balance sheets, income statements, and statements contained in
its Form 10-Q and Form 10-K most recently filed with the Securities and Exchange
Commission and described in the notes thereto (the "Filed Financial
Statements"), (ii) liabilities that have arisen in the Ordinary Course of
Business since the date of the Filed Financial Statements contained in its Form
10-Q most recently filed with the Securities and Exchange Commission (none of
which is a liability for breach of contract, breach of warranty, tort, or
infringement), none of which is material, (iii) liabilities arising under
executory contracts entered into in the Ordinary Course of Business (none of
which is a liability for breach of contract, and (iv) liabilities specifically
set forth on Part 2.7(b) of the Disclosure Letter.
2.8 Absence of Certain Changes. Except as disclosed on Part 2.8 of the
Disclosure Letter, since November 30, 2001: (i) there has not been any material
adverse change in, or any event or condition that might reasonably be expected
to result in any material adverse change in, (a) the Assets or the Business or
in the results of operations, condition (financial or otherwise), or prospects
of the Business or the Seller, or (b) the ownership or operation of the Assets
or any material portion thereof; (ii) Seller and Access have conducted the
Business only in the Ordinary Course of Business; (iii) with respect to the
Business, neither Seller nor Access has incurred any material liability, engaged
in any material transaction, or entered into any material agreement outside the
Ordinary Course of Business; (iv) neither Seller nor Access has suffered any
material loss, damage, destruction, or other casualty to any of the Assets
(whether or not covered by insurance), (v) with respect to the Business, neither
Seller nor Access has entered into, terminated, or received a notice of
termination of any contract, agreement, or understanding involving a total
remaining commitment by or on behalf of the Business of $25,000 or more, (vi)
neither Seller nor Access has any indication by any customer or supplier of the
Business of an intention to discontinue or change the terms of its relationship
with the Business, (vii) neither Seller nor Access has made or authorized any
bonus or increases in compensation of any employees, consultants, or agents of
the Business other than in the Ordinary Course of Business, and (viii) neither
Seller nor Access has consented or waived any claims or rights having a value to
the Business of $25,000 or more.
2.9 Condition of Assets. Other than those assets specifically identified
on Part 1.2 of the Disclosure Letter as Excluded Assets used in the Business,
the Assets constitute all the assets and properties used or held for use in
connection with the operation of the Business. All tangible personal property
included within the Assets shall, as of the Closing Date, be in good working
order (which Buyer shall be permitted to verify via a walk-through within 24
hours prior to Closing), failing which Buyer may elect not to close and may
terminate this Agreement. By closing on this transaction, Buyer shall be deemed
to have accepted all tangible personal property included within the Assets in
their "AS IS" condition, "WITH ALL FAULTS."
2.10 Intellectual Property. Except for the trademarks, service marks,
trade names, copyrights, names, domain names, databases, software, software
licenses, and other items set forth on Part 2.10 of the Disclosure Letter,
neither Seller nor Access owns, holds, uses, nor has pending any Intellectual
Property or applications therefor used in connection with the operation of the
Assets or the Business. The Intellectual Property listed on Part 2.10 of the
Disclosure Letter constitutes all of the Intellectual Property assets necessary
for the operation of the Business as it is currently operated. Seller or Access
is the owner or licensee of all right, title, and interest in and to each
Intellectual Property asset listed in Part 2.10 of the Disclosure Letter, free
and clear of all Encumbrances other than the Permitted Encumbrances. All such
Intellectual Property Assets are (i) in compliance with Applicable
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Laws, (ii) not involved in any interference, reissue, reexamination, or
opposition Proceeding before the United States Patent and Trademark Office or
elsewhere, and (iii) not infringed, violated, misused, or misappropriated, and,
to the knowledge of Seller and Access, do not infringe, violate, misuse, or
misappropriate any Intellectual Property of any other person or entity.
2.11 Legal Proceedings. Except as set forth on Part 2.11 of the Disclosure
Letter, there are no Proceedings pending, or to the best knowledge of Seller or
Access, threatened, against or involving or by Seller or Access (or any of their
respective directors, officers, or other affiliates) in connection with the
Assets or the Business. No judgment, order, writ, injunction, or decree of any
Governmental Entity has been issued or entered against Seller or Access or any
of their respective affiliates that continues to be in effect with respect to or
affecting the Assets or the Business or the operation of the Business. There are
no Proceedings pending, or to the best knowledge of Seller or Access threatened,
seeking to restrain, prohibit, or obtain damages or other relief in connection
with this Agreement or the transactions contemplated hereby. Except as set forth
in Part 2.11 of the Disclosure Letter, no event has occurred or circumstance
exists that is reasonably likely to serve as the basis for the commencement of a
Proceeding involving the Assets or the Business or its operation.
2.12 Agreements.
(a) All agreements, leases, arrangements, and understandings of any
nature (written or oral, formal or informal) (collectively, for purposes of this
Section, "agreements") to which Seller or Access is a party or by which Seller
or Access is otherwise bound, that relate to the Assets or the Business
involving remaining payments, liabilities, or obligations of $15,000 or more are
listed on Part 2.12 of the Disclosure Letter.
(b) Seller and Access have delivered to Buyer accurate and complete
copies of the agreements listed on Part 2.12 of the Disclosure Letter. To
Seller's and Access' knowledge, each of such agreements is in full force and
effect and is a valid and binding agreement of the parties thereto, enforceable
against them in accordance with its terms. Except as set forth on Part 2.12 of
the Disclosure Letter, no breach or default exists with respect to any of such
agreements; no event has occurred which, after the giving of notice or the
passage of time or otherwise, will result in any such breach or default or give
a party to any agreement the right to declare a default or exercise any remedy
under, or to accelerate the maturity of, or payment under, or to cancel,
terminate, or modify any such agreement; and neither Seller nor Access has been
in breach of any of such Agreements. Except as disclosed on Part 2.12 of the
Disclosure Letter, each of such agreements is freely and fully assignable to
Buyer without penalty or other adverse consequence. No event has occurred or
circumstance exists under or by virtue of any agreement that (with or without
notice or a lapse of time) would cause the creation of any Encumbrance affecting
any of the Assets. Each agreement has been entered into in the Ordinary Course
of Business.
2.13 Labor Relations.
(a) Except as disclosed on Part 2.13(a) of the Disclosure Letter,
(i) there are no collective bargaining agreements or other labor union contracts
applicable to any employees of Seller to or by which Seller is a party or is
bound, no such agreement or contract has been requested by any employee or group
of employees employed in the Business, no discussions have occurred with respect
thereto by management of Seller or Access with any such employees and no
application or petition for an election of or for certification of a collective
bargaining agent is pending; (ii) no employees employed in the Business are
represented by any labor organization, collective bargaining representative, or
group of employees; (iii) no labor organization, collective bargaining
representative, or group of employees claims to represent a majority of the
employees employed in the Business; (iv) neither Seller nor Access is aware of
or involved with any representational campaign or other organizing activities by
any union or other organization or group seeking to become the collective
bargaining representative of any of the employees employed in the Business; (v)
Seller is not obligated to bargain collectively with respect to wages, hours,
and other terms and conditions of employment with any recognized or certified
labor organization, collective bargaining representative, or group of employees
representing employees employed in the Business; (vi) neither Seller nor Access
is aware of any strikes, work stoppages, work slowdowns, or lockouts or any
threats thereof by or with respect to any employees employed in the Business,
and since October, 1997, there have been no labor disputes, strikes, work
stoppages, work slowdowns, lockouts, or similar matters involving any such
employees; (vii) there is not pending or, to Seller's or Access' knowledge,
threatened against or affecting Seller or Access any Proceeding relating to the
alleged violation of any Applicable Laws pertaining to labor relations or
employment matters with respect to the Business, and (viii) to Seller's or
Access' knowledge, there is no
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unresolved charge of discrimination filed against or threatened against Seller
or Access with the Equal Employment Opportunity Commission or similar
Governmental Entity. Part 2.13(a) of the Disclosure Letter contains a complete
list of all charges of discrimination filed against Seller with the Equal
Employment Opportunity Commission or similar Governmental Entity since October
1997.
(b) Seller is in compliance with all Applicable Laws pertaining to
employment and employment practices and wages, hours, and other terms and
conditions of employment in respect of employees employed in the Business and
has no accrued liability for any arrears of wages or any Taxes or penalties for
failure to comply with any thereof. Seller is not engaged in any unfair labor
practices or unlawful employment practices in respect of its employees employed
in the Business. Except as set forth on Part 2.13(b) of the Disclosure Letter,
no employees of Access are or have been employed in the Business. There is no
pending or, to the best knowledge of Seller or Access, threatened Proceeding
against or involving Seller or Access by or before, and neither Seller nor
Access is subject to any judgment, order, writ, injunction, or decree of or
inquiry from, the National Labor Relations Board, the Equal Employment
Opportunity Commission, the Department of Labor, or any other Governmental
Entity in connection with any current, former, or prospective employee of Seller
employed in the Business.
2.14 Compliance With Laws; Permits.
(a) To Seller's and/or Access' knowledge without investigation, each
of Seller and Access has complied and is complying in all material respects with
all Applicable Laws relating to the ownership or operation of the Assets or the
Business (including without limitation Applicable Laws relating to
transportation, securities, properties, business operations, products,
manufacturing processes, advertising and sales practices, employment practices,
terms and conditions of employment, wages and hours, safety, occupational
safety, health, environmental protection, product safety, and civil rights).
Neither Seller nor Access has received any written notice or other communication
from any Governmental Entity with respect to the Assets or the Business, that
has not been dismissed or otherwise disposed of, or with which Seller and Access
have not so complied. Neither Seller nor Access has been charged, or to the best
knowledge of Seller or Access threatened, with or under investigation with
respect to, any alleged violation of any Applicable Law relating to any aspect
of the ownership or operation of the Assets or the Business. To Seller's or
Access' knowledge, no event or circumstance exists with respect to the Assets or
the Business that (with or without the notice or the lapse of time) (i) may
constitute or result in a violation by Seller or Access of, or the failure on
the part of the Seller or Access to comply with any Applicable Law or (ii) may
give rise to any obligation on the part of the Seller or Access to undertake or
bear all or any portion of the cost of any remedial action of any kind.
(b) Part 1.1A(c) of the Disclosure Letter contains a complete and
accurate list of each Permit that is held by Seller or Access relating to the
Business or the Assets. Each Permit listed or required to be listed in such Part
1.1A(c) is valid and in full force and effect. Except as set forth in Part
2.14(b) of the Disclosure Letter:
(i) each of Seller and Access is, and at all times since
January 1, 1999, has been, in full compliance with all of the terms and
requirements of each Permit identified or required to be identified in Part
1.1A(c) of the Disclosure Letter;
(ii) To Seller's or Access' knowledge, no event has occurred
or circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Permit listed or required to be
listed in Part 1.1A(c) of the Disclosure Letter or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Permit listed or required to be
listed in such Part 1.1A(c);
(iii) neither Seller nor Access has received, at any time
since January 1, 1999, any notice or other communication (whether oral or
written) from any Governmental Entity or any other person or entity regarding
(A) any actual, alleged, possible or potential violation of or failure to comply
with any term or requirement of any Permit listed or required to be listed in
Part1.1A(c) of the Disclosure Letter or (B) any actual, proposed, possible or
potential revocation, withdrawal, suspension, cancellation, termination of or
modification to any Permit; and
(iv) all applications required to have been filed for the
renewal of the Permits listed or required to be listed in Part 1.1A(c) of the
Disclosure Letter have been duly filed on a timely basis with the
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appropriate Governmental Entities, and all other filings required to have been
made with respect to such Permits have been duly made on a timely basis with the
appropriate Governmental Entities.
(v) The Permits listed in such Part 1.1A(c) collectively
constitute all of the material Permits necessary to permit Seller and Access to
lawfully conduct and operate the Business in the manner in which they currently
conduct and operate such business and to permit Seller and Access to own and use
the Assets in the manner in which they currently own and use such assets.
2.15 Tax Matters. Except as disclosed on Part 2.15 of the Disclosure
Letter:
(a) Seller and Access have duly filed all Tax Returns required to be
filed by or with respect to them with the IRS or other applicable taxing
authorities, and no extensions with respect to such Tax Returns have been
requested or granted. Every portion of such Tax Returns relating to sales,
income, expenses, credits, and other tax attributes relating to the Business is
correct and complete in all material respects. All Taxes due and payable for the
periods covered by such Tax Returns have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof, or any such fine, penalty, interest, late charge or loss has been paid;
(b) there has been no issue raised or adjustment proposed by the IRS
or any other taxing authority with respect to liabilities for Taxes of Seller or
Access and no audit by the IRS or any other taxing authority is pending;
(c) there are no Encumbrances with respect to Taxes (except for
liens respect to real property Taxes not yet due) upon any of the Assets;
(d) Seller and Access have duly and timely withheld from salaries,
wages, and other compensation and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over under all
Applicable Laws;
(e) with respect to the Business, Seller and Access have not made
any material payments, are not obligated to make any material payments, and are
not parties to any agreement that under certain circumstances could obligate
either of them or their successor to make any material payments that will not be
deductible under Code (S)280G; and
(f) with respect to the Business, neither Seller nor Access are a
party to any tax allocation or sharing agreement and has no liability for Taxes
as a transferee or successor, by contract or otherwise.
2.16 Environmental Matters.
(a) (i) Neither Seller nor Access has received any written notice of
any investigation, liability or threat of liability, or inquiry by any
Governmental Entity or any other person or entity under any Applicable
Environmental Laws (as defined below) relating to the ownership or operation of
the Assets or the operation of the Business, (ii) neither Seller nor Access has
disposed of any hazardous material (as defined below) on any of the Assets and
no condition exists on any of the Assets that would subject Seller, Access, or
the Assets to any remedial obligations or liability under any Applicable
Environmental Laws; (iii) to Seller's and Access' knowledge, the Assets and the
operation of the Business are in material compliance with all Applicable
Environmental Laws; (iv) to Seller's and Access' knowledge, the transactions
contemplated herein will not trigger the applicability of the New Jersey
Industrial Site Recovery Act; (v) Seller and Access have no liability under any
Applicable Environmental Law with respect to the operation of the Business, (vi)
Seller and Access have transmitted to Buyer complete copies of any and all
information it has about the environmental condition of any property where
operations of the Business are located or have been located in the past. The
Assets include no real property.
(b) For purposes of this Agreement, "Applicable Environmental Laws"
means any and all Applicable Laws pertaining to health, safety, or the
environment in effect (currently or hereafter) in any and all jurisdictions in
which the Business or Seller has conducted operations or activities or owned or
leased property, including, without limitation, the Clean Air Act, as amended,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Rivers and Harbors Act of 1899, as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the
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Toxic Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, similar state laws, and other federal, state or local
environmental conservation or protection laws, regulations or ordinances. For
purposes of this Agreement, the term "hazardous material" means (i) any
substance which is listed or defined as a hazardous substance, hazardous
constituent, hazardous chemical, or solid waste pursuant to any Applicable
Environmental Laws and (ii) petroleum (including crude oil and any fraction
thereof), natural gas, and natural gas liquids.
2.17 Books and Records. All the books and records pertaining the Business,
including without limitation all personnel files, employee and independent
contractor data, and other materials relating to PMG's employees and independent
contractors, are complete and correct, have been maintained in accordance with
sound business practice (including an adequate system of internal controls) and
all Applicable Laws. Such books and records accurately and fairly reflect, in
reasonable detail, all transactions (all of which are bona fide), revenues,
expenses, assets, and liabilities of Seller or Access arising from the operation
of the Business. Except when prevented by Applicable Law and except for
personnel files, employee and independent contractor data, and other materials
relating to PMG's employees and independent contractors, Seller and Access have
made all such books and records available to Buyer.
2.18 Audits. Seller and Access have made available to Buyer complete
copies of all audits of the Business' compliance with the requirements of the
Prescription Drug Marketing Act ("PDMA") or compliance with any regulations or
requirements of the Drug Enforcement Agency, the Food and Drug Administration,
or any other Governmental Entity having jurisdiction over the delivery or
distribution of pharmaceuticals, whether made by customers of the Business,
other third parties, Seller, or Access since June 1, 2000. Seller and Access
have also provided Buyer with complete copies of all responses and corrective
actions, and all correspondence and communications related thereto other than
immaterial items of electronic mail, that Seller or Access have made or taken to
such audits. Seller and Access have also made available to Buyer complete copies
of all (i) correspondence and communications either has had with Governmental
Entities since June 1, 2000, and (ii) agreements or undertakings that Seller or
Access have entered into with any Governmental Entities, in each case with
respect to compliance by the Business.
2.19 Insurance.
(a) Seller and Access have delivered to Buyer:
(i) accurate and complete copies of all policies of insurance
(and correspondence relating to coverage thereunder) for the Business to which
either Seller or Access is a party or under which Seller is or has been covered
at any time since April 1, 2000, a list of which is included in Part 2.19(a) of
the Disclosure Letter; and
(ii) accurate and complete copies of all pending applications
by Seller or Access for policies of insurance for the Business.
(b) Part 2.19(b) of the Disclosure Letter describes any
self-insurance arrangement for the Business by or affecting Seller or Access,
including any reserves established thereunder.
(c) Part 2.19(c) of the Disclosure Letter sets forth with respect to
the Business, by year, for the current policy year and each of the immediately
preceding policy year:
(i) a summary of the loss experience under each policy of
insurance;
(ii) a statement describing each claim under a policy of
insurance for an amount in excess of ten thousand dollars ($10,000),which sets
forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance and period of coverage; and
(C) the amount and a brief description of the claim;
and
(iii) (D) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
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(d) Except as set forth in Part 2.19(d) of the Disclosure Letter
since April 1, 2000:
(i) Neither Seller nor Access has received with respect to the
Business (A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights or (B) any notice of cancellation or any
other indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or able to
perform its obligations thereunder;
(ii) Seller and Access have paid all premiums due, and have
otherwise performed all of its obligations, under each policy of insurance to
which it is a party or that provides coverage for the Business; and
(iii) Seller and Access have given notice to the insurer of
all claims that may be insured thereby.
2.20 Real Property. Neither Seller nor Access owns any real property that
is included in the Assets or used in the Business, and all real property used in
the Business is leased by Seller from third parties. Part 2.20 of the Disclosure
Letter contains an accurate description (by location, name of lessor, date of
lease and term expiration date) of all leases of real property (the "Leased Real
Property") used in the Business.
2.21 Accounts Receivable. All accounts receivable of the Business that are
reflected on the Balance Sheet or on the accounting records of Seller or Access
as of the Closing Date represent or will represent valid obligations arising
from sales actually made or services actually performed by Seller or Access in
the Ordinary Course of Business. Except to the extent paid prior to the Closing
Date, such accounts receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or, in the
case of accounts receivable arising after the date of the Balance Sheet, on the
accounting records of the Business (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve on the accounting
records of the Business will not represent a greater percentage of the accounts
receivable reflected on such accounting records than the reserve reflected on
the Balance Sheet represented of the Accounts Receivable reflected thereon and
will not represent a material adverse change in the composition of such accounts
receivable in terms of aging). There is no contest, claim, defense, or right of
setoff, other than returns in the Ordinary Course of Business of Seller and
Access, under any contract with any account debtor of an account receivable
relating to the amount or validity of such account receivable. Part 2.21 of the
Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of the date of the Balance Sheet, which list sets forth the aging
of each such Account Receivable.
2.22 Employees.
(a) Part 2.22(a) of the Disclosure Letter contains a complete and
accurate list of the following information for each employee, independent
contractor, consultant and agent of Seller employed in the Business, including
each employee on leave of absence or layoff status: name; job title; date of
hiring or engagement; date of commencement of employment or engagement; current
compensation paid or payable and any change in compensation since January 1,
2001; sick and vacation leave that is accrued but unused; and service credited
for purposes of vesting and eligibility to participate under any employee
benefit plan.
(b) Seller is not obligated to pay or provide pension benefits;
retiree medical insurance coverage; retiree life insurance coverage; or any
other benefits to retired employees who were employed in the Business.
(c) Part 2.22(c) of the Disclosure Letter states the number of
employees employed in the Business who have been terminated by Seller during the
six months prior to the date of this Agreement and contains a complete and
accurate list of the following information for each such employee of Seller who
has been terminated or laid off, or whose hours of work have been reduced by
more than fifty percent (50%) by Seller, in the six (6) months prior to the date
of this Agreement: (i) the date of such termination, layoff or reduction in
hours; (ii) the reason for such termination, layoff or reduction in hours; and
(iii) the location to which the employee was assigned.
(d) Seller has not violated the Worker Adjustment and Retraining
Notification Act (the "WARN Act") or any similar state or local Legal
Requirement. During the ninety (90) day period prior to the date of this
Agreement, Seller has terminated four (4) employees, and Access terminated one
(1) employee related to the Business.
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(e) Except as set forth on Part 2.13(b) of the Disclosure Letter, no
employee of access is, or since October 1997, has been, employed in the
Business.
2.23 Employee Benefits.
(a) As used in this Section 2.23, the following terms have the
meanings set forth below:
(i) "Employer" means Seller together with any ERISA Affiliate
of Seller.
(ii) "ERISA Affiliate" means any other person that, together
with the Employer, is or was treated as a single employer under Code ss. 414 at
any time within the preceding five years.
(iii) "Multiemployer Plan" means a multiemployer plan as
defined in ERISA ss. 3(37).
(iv) "Other Benefit Obligation" means any agreement, plan,
arrangement, policy, practice or obligation of Employer or any ERISA Affiliate
to provide benefits, other than salary or wages, to present or former directors
or employees of the Employer, other than obligations which are Plans. Other
Benefit Obligations may include but are not limited to any specified fringe
benefit plans as defined in Code ss. 6039D, stock option or incentive plans or
other stock-based compensation arrangements that are not Plans.
(v) "Pension Plan" means an employee pension benefit plan as
defined in ERISA ss. 3(2), including but not limited to each pension, profit
sharing, retirement, deferred compensation (qualified or non-qualified) or other
similar plan.
(vi) "Plan" means each Pension Plan, Welfare Plan, and Other
Benefit Obligation maintained by the Employer or any ERISA Affiliate or to which
the Employer or any ERISA Affiliate contributes or has contributed within the
preceding six year period.
(vii) "Welfare Plan" means an employee welfare benefit plan as
defined in ERISA ss. 3(1).
(b) Part 2.23(b) of the Disclosure Letter contains complete and
accurate lists of each Plan and each Other Benefit Obligation of the Employer
and of each ERISA Affiliate, respectively.
(c) Except as set forth in Part 2.23(c) of the Disclosure Letter,
the Employer has made available to Buyer:
(i) A true and complete copy of each Plan document and Summary
Plan Description for each Plan, and all amendments thereto, and each trust
agreement, insurance policy, annuity contract or other investment contract
relating to each Plan;
(ii) all documents and summaries relating to each Other
Benefit Obligation, and a written description of any Other Benefit Obligation
that is not otherwise described in writing;
(iii) all personnel and employment manuals or policies;
(iv) all contracts with third party administrators, investment
managers and consultants for services relating to any Plan or Other Benefit
Obligation;
(v) all records relating to Internal Revenue Service or
Department of Labor audits of any Plan within the preceding five years;
(vi) a copy of the most recent annual report (Form 5500 or
Form 5500-C/R) for each Plan, including all required schedules, attachments and
reports of an independent auditor, when applicable; and
(vii) for each Plan that is intended to be a qualified plan
within the meaning of Code ss. 401(a), a copy of the most recent IRS
determination letter and a copy of the most recent annual valuation report
including individual participant account information and the results of all
required compliance testing.
(d) Except as set forth in Part 2.23(d) of the Disclosure Letter:
(i) Each Plan that is a Pension Plan that is intended to be a
qualified plan under Code ss. 401(a) complies in all material respects, both in
form and in operation, with the requirements of Code ss. 401(a). No event has
occurred and no circumstance exists that could give rise to disqualification or
loss of the tax-exempt status of any such Plan.
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(ii) Each Plan is being operated and administered in all
material respects in compliance with the applicable requirements of ERISA,
including but not limited to the continuation coverage requirements of ERISA ss.
601 et seq., and with any applicable requirements of the Age Discrimination in
Employment Act, the Americans with Disabilities Act of 1990, the Family Medical
Leave Act of 1993 and the Health Insurance Portability and Accountability Act of
1996.
(iii) All filings required by ERISA or the Code as to each
Plan have been timely filed and all notices and other information required by
ERISA or the Code to be provided to Plan participants have been provided on a
timely basis.
(iv) There have been no non-exempt prohibited transactions
within the meaning of ERISA ss. 406 and Code ss. 4975 involving the assets of
any Plan.
(v) All required employer contributions to each Plan have been
made when due.
(vi) There are no pending or, to the knowledge of Seller and
Access, no threatened investigations or claims by the Internal Revenue Service
or Department or Labor or any other Governmental Entity relating to any of the
Plans.
(vii) There are no pending or, to the knowledge of Seller and
Access, any threatened suits or proceedings against or involving any Plan or
Other Benefit Obligation, or asserting any rights to or claims for benefits
under any Plan or Other Benefit Obligation, other than claims for benefits in
the normal course.
(e) Neither the Employer nor any ERISA Affiliate now maintains or
has at any time maintained a Pension Plan that is subject to the funding
requirements of Code ss. 412 and ERISA ss. 302.
(f) Neither the Employer nor any ERISA Affiliate now contributes to
or has at any time contributed to a Multiemployer Plan.
(g) Except as set forth in Part 2.23(g) of the Disclosure Letter, no
employee of the Employer will be entitled to any additional benefits or any
acceleration of the time of payment or vesting of any benefits under any Plan or
Other Benefit Obligation as a result of the transactions contemplated by this
Agreement.
(h) Except as set forth in Part 2.23(h) of the Disclosure Letter
neither the Employer nor any ERISA Affiliate has any obligation to provide
health or welfare benefits of any kind to retired or former employees other than
continuation of health insurance required by Code ss. 4980B and ERISA ss. 601 et
seq.
2.24 Sufficiency of Assets. Except as set forth in Part 2.24 of the
Disclosure Letter, the Assets (a) constitute all of the assets, tangible and
intangible, of any nature whatsoever, necessary to continue to operate the
Business in the manner presently operated by Seller and Access and (b) include
all of the operating assets of Seller and Access used in the Business.
2.25 Broker or Finders. Except as set forth in Part 2.25 of the Disclosure
Letter, neither Seller, Access, nor any of their representatives have incurred
any obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payments in connection with the
sale of the Assets or the Business.
2.26 Customers. Part 2.26 of the Disclosure Letter contains a complete and
accurate lists of all customers of the Business during the period commencing on
December 1, 2000, and ending on the date of this Agreement and identifies for
each such customer each executory agreement (other than purchase orders received
in the Ordinary Course of Business) between the customer and Seller or Access
with respect to the Business on the date of this Agreement, copies of which
Seller or Access have provided to the Buyer. Seller and Access have also
provided the Buyer with complete and accurate copies of payment histories of all
such customers during the period from December 1, 2000, to the date of this
Agreement, including the aging of all outstanding accounts receivable from such
customers on the date of this Agreement.
2.27 Disclosure. No representation or warranty made by Seller or Access in
this Agreement, and no statement of Seller or Access contained in any document,
certificate, or other writing furnished or to be furnished by them pursuant
hereto or in connection herewith, contains or will contain, at the time of
delivery, any untrue statement of a material fact or omits or will omit, at the
time of delivery, to state any material fact necessary in
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order to make the statements contained therein, in light of the circumstances
under which they are made, not misleading. Neither Seller nor Access knows of
any matter specifically relating to the Assets or the Business that has not been
disclosed to Buyer pursuant to this Agreement that has, is likely to have, or
will have a material adverse effect on the Assets or Business or Buyer's
operation thereof. Seller and Access have delivered or made available to Buyer
accurate and complete copies of all agreements, documents, and other writings
referred to or listed in this Article II or any Part of the Disclosure Letter.
2.28 Representations and Warranties on Closing Date. The representations
and warranties made in this Article II will be true and correct on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date, except that any such
representations and warranties that expressly relate only to an earlier date
shall be true and correct on the Closing Date as of such earlier date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
3.1 Organization and Qualification. Buyer is a Delaware corporation, duly
organized, validly existing, and in good standing under the laws of Delaware,
and Buyer has all requisite power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted. No actions or
proceedings to dissolve Buyer are pending or threatened. Buyer is duly qualified
or licensed to do business as a foreign corporation in all jurisdictions in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, require such qualification.
3.2 Authority Relative to This Agreement. Buyer has full power and
authority to execute, deliver, and perform this Agreement and the agreements and
instruments to be executed or delivered by it hereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance by Buyer of this Agreement and the agreements and instruments to be
executed or delivered by it hereunder, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary action of Buyer. This Agreement and the agreements and instruments to
be executed or delivered by it hereunder has been or at Closing will be duly
executed and delivered by Buyer and constitutes a valid and legally binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms.
3.3 Noncontravention. The execution, delivery, and performance by Buyer of
this Agreement and the agreements and instruments to be executed or delivered by
it hereunder and the consummation by it of the transactions contemplated hereby
do not and will not (i) breach, conflict with, or result in a violation of any
provision of the charter or bylaws or other governing instruments of Buyer, (ii)
breach, conflict with or result in a violation of any provision of, or
constitute (with or without the giving of notice or the passage of time or both)
a default under, or give rise (with or without the giving of notice or the
passage of time or both) to any right of termination, cancellation, or
acceleration under, or require any consent, approval, authorization, or waiver
of any party to, any bond, debenture, note, mortgage, indenture, lease,
contract, agreement, or other instrument or obligation to which Buyer is a party
or by which Buyer or any of its properties may be bound, or (iii) violate any
Applicable Law binding upon Buyer.
3.4 Governmental Approvals. No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Buyer in connection with the execution,
delivery, or performance by Buyer of this Agreement or the agreements and
instruments to be executed or delivered by it hereunder or the consummation by
it of the transactions contemplated hereby, other than (i) filings with
Governmental Entities to occur in the ordinary course following the consummation
of the transactions contemplated hereby, and (ii) such consents, approvals,
orders, or authorizations that, if not obtained, and such declarations, filings,
or registrations that, if not made, would not, individually or in the aggregate,
have a material adverse effect on the business, assets, results of operations,
condition (financial or otherwise), or prospects of Buyer or on the ability of
Buyer to consummate the transactions contemplated hereby.
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3.5 Legal Proceedings. There are no Proceedings pending, or to the best
knowledge of Buyer threatened, seeking to restrain, prohibit, or obtain damages
or other relief in connection with this Agreement or the transactions
contemplated hereby.
3.6 Representations and Warranties on Closing Date. The representations
and warranties made in this Article III will be true and correct on and as of
the Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date, except that any such
representations and warranties that expressly relate only to an earlier date
shall be true and correct on the Closing Date as of such earlier date.
ARTICLE IV
CLOSING
Subject to the satisfaction of the conditions set forth in Articles VII
and VIII hereof, the consummation of the transactions contemplated hereby shall
take place (i) at the offices of Seller's counsel in Fort Lauderdale, Florida,
at 10:00 a.m., local time, on February 15, 2002, or (ii) at such other time or
place or on such other date as Buyer and Seller shall agree in writing (the
"Closing"), but no later than March 15, 2002. The date on which the Closing is
required to take place is herein referred to as the "Closing Date." All Closing
transactions shall be deemed to have occurred simultaneously when all the
conditions set forth in Articles VII and VIII have been satisfied.
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING
Seller hereby covenants and agrees with Buyer as follows:
5.1 Conduct and Preservation of Business. Except as expressly provided in
this Agreement and/or in Part 5.1 of the Disclosure Letter during the period
from the date hereof to the Closing, Seller and Access (i) shall conduct the
Business only in the Ordinary Course of Business; including actions with respect
to the collection of accounts receivable and the payment of accounts payable,
(ii) shall use their best efforts to preserve, maintain, and protect the Assets;
and (iii) shall use their best efforts to preserve intact business organization
of the Business, to keep available the services of their employees, and to
maintain existing relationships with suppliers, contractors, distributors,
customers, and others having business relationships with Seller or Access with
respect to the Business.
5.2 Restrictions on Certain Actions. Without limiting the generality of
Section 5.1, and except as otherwise expressly provided in this Agreement, with
respect to the conduct of the Business prior to the Closing, neither Seller nor
Access shall, without the prior written consent of Buyer:
(a) mortgage or pledge any of the Assets or create or suffer to
exist any Encumbrance thereupon, other than those existing in connection with
the Permitted Encumbrances;
(b) sell, lease, transfer, or otherwise dispose of, directly or
indirectly, any of the Assets, other than in the Ordinary Course of Business;
(c) enter into, or amend, modify, or change, any lease, contract,
agreement, commitment, arrangement, or transaction related to the Business,
except in the Ordinary Course of Business;
(d) delay payment of any account payable or other liability of
Seller or Access arising from the conduct of the Business beyond its due date or
the date when such liability would have been paid in the Ordinary Course of
Business;
(e) allow the levels of raw materials, work-in-process, finished
goods, supplies, and other materials included in the Assets to vary in any
material respect from the levels customarily maintained by Seller or Access in
the Ordinary Course of Business;
(f) permit any current insurance or reinsurance policies to be
canceled or terminated or any of the coverages thereunder to lapse if such
policy covers Assets or insures risks, contingencies, or liabilities of the
Business, unless simultaneously with such cancellation, termination, or lapse,
replacement policies providing coverage equal to or greater than the coverage
canceled, terminated, or lapsed are in full force and effect and written copies
thereof have been provided to Buyer;
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(g) take any action that would or might make any of the
representations or warranties of Seller or Access contained in this Agreement
untrue or inaccurate as of any time from the date of this Agreement to the
Closing or would or might result in any of the conditions set forth in this
Agreement not being satisfied;
(h) enter into or amend any contract, agreement, or other commitment
that would have a material adverse effect on the Assets or the Business;
(i) permit or effectuate any change in accounting methods used in
the Business;
(j) make any material changes in management personnel of the
Business; or
(k) modify or amend any Plan (as defined in Section 2.23) applicable
to employees of the Business.
5.3 Further Covenants. Without limiting the generality of Section 5.1,
prior to the Closing the Seller and Access shall, with respect to the operation
of the Business:
(a) confer with Buyer prior to implementing operational decisions of
a material nature;
(b) otherwise report periodically to Buyer concerning the status of
its business, operations and finances;
(c) keep in full force and effect, without amendment, all material
rights relating to the Business;
(d) comply with all Applicable Laws and contractual obligations
applicable to the operations of the Business;
(e) maintain all books and records of Seller and Access relating to
the Business in the Ordinary Course of Business; and
(f) provide Buyer with complete and accurate copies of any
agreements, contracts, or understandings with respect to the Business into which
Seller or Access enters between the date of this Agreement and the Closing Date,
including all agreements with customers other than purchase orders received in
the Ordinary Course of Business.
5.4 Access. From the date hereof through the Closing, Seller and Access
shall afford Buyer and its employees and representatives with full and free
access to records (including, without limitation, accounting records),
properties and personnel of the Business, subject only to any and all existing
confidentiality agreements between the parties, the terms of which are merged
herein, and shall furnish Buyer copies of the books, records, agreements, and
other documents of the Business.
5.5 Inventory Count. On January 1, 2002, Seller and Access shall conduct a
physical count of inventories of the Business, including all pharmaceutical
samples held by Seller or Access for distribution in the Ordinary Course of
Business of the Business and all post-dated pharmaceutical samples held by
Seller or Access for disposition on behalf of their manufacturers.
Representatives of Buyer and/or its independent certified public accountants may
view such count.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Payment of Liabilities. Before the Closing, Seller and Access shall
pay, perform, and discharge all of the liabilities and obligations of the
Business in the Ordinary Course of Business. Seller and Access shall pay,
perform, and discharge the Excluded Liabilities as and when the same become due
and payable before and after the Closing. After the Closing, Buyer shall pay,
perform, and discharge all of the Assumed Liabilities and those liabilities that
have arisen in the Ordinary Course of Business of the Business in the period
immediately preceding the Closing and that have not been accrued or recorded by
the Seller because Seller has not as of the Closing Date received notice
thereof.
6.2 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors, and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fee or expense, whether or not the Closing shall have occurred; provided,
however, that if this Agreement shall have been
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terminated pursuant to Section 9.1 as a result of the willful breach by a party
of any of its representations, warranties, covenants, or agreements set forth in
this Agreement, such breaching party shall pay the costs and expenses of the
other parties in connection with the transactions contemplated by this
Agreement.
6.3 Taxes; Other Charges. All sales, use and gross receipts Taxes
resulting from the consummation of the transactions contemplated hereby shall be
borne by Seller and the parties shall cooperate in obtaining all exemptions from
such Taxes. All other excise, registration, transfer, recording, and stamp Taxes
and fees incurred in connection with the consummation of the transactions
contemplated hereby shall be borne by Buyer. All ad valorem or similar Taxes
attributable to the Assets for the 2002 calendar year (as well as prepaid
rentals and unearned and paid utility charges) shall be pro-rated between Buyer
and Seller on a daily basis as of the Closing Date.
6.4 Employee and Employee Benefit Plan Matters.
(a) Information on Active Employees. For the purpose of this
Agreement, the term "Active Employees" shall mean all employees employed on the
Closing Date by Seller or Access who are employed exclusively in the Business as
currently conducted, including employees on temporary leave of absence,
including family medical leave, military leave, temporary disability or sick
leave, but excluding employees on long-term disability leave.
(b) Employment of Active Employees by Buyer.
(i) Buyer is not obligated to hire any Active Employee but may
interview all Active Employees. Buyer may condition its employment of any Active
Employees upon such employees' satisfying Buyer's employment criteria, including
drug testing and background checks. No later than fifteen days before the
Closing, Buyer will provide Seller with a list of Active Employees to whom Buyer
has made an offer of employment that has been accepted and who have satisfied
Buyer's employment criteria, including drug testing and background checks (the
"Hired Active Employees") to be effective on the Closing Date. As Active
Employees to whom Buyer wishes to make offers of employment satisfy such
employment criteria during the fifteen (15) days preceding the Closing accept
Buyer's offers of employment, Buyer will give notice thereof to Seller and such
employees shall become Hired Active Employees. Subject to any Applicable Laws,
Buyer will have reasonable access to the facilities of the Business for the
purpose of preparing for and conducting employment interviews with all Active
Employees and will conduct the interviews as expeditiously as possible prior to
the Closing Date. Such access will be provided by Seller and Access upon
reasonable prior notice during normal business hours. Effective at the close of
business on the day immediately preceding the Closing Date, Seller will
terminate the employment of all of its Hired Active Employees with such
termination to be conditioned upon the occurrence of the Closing.
(ii) Neither Seller nor Access nor their affiliates shall
solicit the continued employment of any Active Employee (unless and until Buyer
has informed Seller in writing that the particular Active Employee will not
receive any employment offer from Buyer). No later than fifteen (15) days before
the Closing, Buyer shall inform Seller promptly of the identities of those
Active Employees to whom it will not make employment offers.
(iii) It is understood and agreed that (A) Buyer's expressed
intention to extend offers of employment as set forth in this section shall not
constitute any commitment, contract or understanding (expressed or implied) of
any obligation on the part of Buyer to a post-Closing employment relationship of
any fixed term or duration or upon any terms or conditions other than those that
Buyer may establish pursuant to individual offers of employment, and (B)
employment offered by Buyer is "at will" and may be terminated by Buyer or by an
employee at any time for any reason (subject to any written commitments to the
contrary made by Buyer or an employee and Applicable Laws). Other than as set
forth in Part 6.4(b) of the Disclosure Letter, nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to terminate,
reassign, promote or demote any of the Hired Active Employees after the Closing
or to change adversely or favorably the title, powers, duties, responsibilities,
functions, locations, salaries, other compensation or terms or conditions of
employment of such employees.
(c) Salaries and Benefits.
(i) Buyer shall be responsible for the payment of all accrued
wages and other remuneration due to Active Employees with respect to their
services as employees of Seller through the close of business on the
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day immediately preceding the Closing Date, including pro rata bonus payments
and all vacation pay earned prior to the Closing Date.
(ii) Seller shall be responsible for (A) the payment of any
termination or severance payments, (B) the provision of health plan continuation
coverage in accordance with the requirements of COBRA and Sections 601 through
608 of ERISA and (C) any and all payments to employees required under the WARN
Act. Seller shall be liable for any claims made or incurred by Active Employees
and their beneficiaries through the Closing Date under the Plans (as such term
is defined in Section 2.23). For purposes of the immediately preceding sentence,
a charge will be deemed incurred, in the case of hospital, medical or dental
benefits, when the services that are the subject of the charge are performed
and, in the case of other benefits (such as disability or life insurance), when
an event has occurred or when a condition has been diagnosed that entitles the
employee to the benefit. Notwithstanding clause A of this subsection (ii), Buyer
shall reimburse Seller for all of its severance pay obligations in excess of
$150,000 in the aggregate for all Active Employees to whom Buyer elects not to
extend offers of employment. Buyer shall have no obligation to reimburse Seller
for Seller's severance pay obligations to Active Employees to which Buyer
extends offers of employment who decline such employment by Buyer or whose
employment may be terminated later by Buyer or who whose employment was
terminated by Seller before the employment termination date required by Section
6.4(b)(i) this Agreement.
(d) Seller's Plans.
(i) All Hired Active Employees who are participants in
Seller's or Access' Plans (as such term is defined in Section 2.23) shall retain
their accrued benefits under such Plans as of the Closing Date, and Seller or
Access (or Seller's or Access' Plans) shall retain sole liability for the
payment of such benefits as and when such Hired Active Employees become eligible
therefor under such Plans.
(e) No Transfer of Assets. Neither Seller nor Access nor their
respective ERISA Affiliates (as such term is defined in Section 2.23) will make
any transfer of pension or other employee benefit plan assets to Buyer.
(f) General Employee Provisions.
(i) Seller, Access, and Buyer shall give any notices required
by Applicable Laws and take whatever other actions with respect to the plans,
programs and policies described in this Section 6.4 as may be necessary to carry
out the arrangements described in this Section 6.4.
(ii) Seller, Access, and Buyer shall provide each other with
such Plan documents and Summary Plan Descriptions, employee data or other
information as may be reasonably required to carry out the arrangements
described in this Section 6.4.
(iii) If any of the arrangements described in this Section 6.4
are determined by the Internal Revenue Service or other Governmental Body to be
prohibited by law, Seller, Access, and Buyer shall modify such arrangements to
as closely as possible reflect their expressed intent and retain the allocation
of economic benefits and burdens to the parties contemplated herein in a manner
that is not prohibited by law.
(iv) Seller and Access shall provide Buyer with copies of the
completed I-9 forms and attachments with respect to all Hired Active Employees,
except for such employees as Seller or Access certifies in writing to Buyer are
exempt from such requirement.
(v) Buyer shall not have any responsibility, liability or
obligation, whether to Active Employees, former employees, their beneficiaries
or to any other person or entity, with respect to any Plans (as such term is
defined in Section 2.23), practices, programs or arrangements (including the
establishment, operation or termination thereof and the notification and
provision of COBRA coverage extension) maintained by Seller or Access.
(g) No Third Party Benefits. The parties hereto do not intend to
create any third party beneficiary rights for any employee of Seller, Access, or
their affiliates as a result of the provisions of this Agreement and
specifically hereby negate any such intent.
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6.5 Third Party Consents.
Seller shall be obliged to obtain all Required Approvals. Buyer shall
provide and offer reasonable assistance to and cooperation with Seller in this
process. All costs and expenses of obtaining or effecting the Required Approvals
shall be borne by Seller.
6.6 Removal of Excluded Assets. On or before the Closing Date, Seller and
Access shall remove all Excluded Assets from the Leased Real Property and
facilities to be occupied by Buyer. Such removal shall be done in such manner as
to avoid any damage to such properties and facilities to be occupied by Buyer
and any disruption of the business operations to be conducted by Buyer after the
Closing. Any damage to the Assets or to such properties or facilities resulting
from such removal shall be paid by Seller at the Closing.
6.7 Reports and Returns. Seller and Access shall promptly after the
Closing prepare and file all reports and returns required by Legal Requirements
relating to the Business as conducted using the Assets, to and including the
Closing Date.
6.8 Assistance in Proceedings.
(a) Seller and Access shall offer and provide reasonable cooperation
to Buyer and its counsel in the contest or defense of, and make reasonably
available its personnel and provide testimony and access to their books and
records in connection with, any Proceeding involving or relating to (a) the
transactions contemplated hereunder or (b) their ownership and use of the Assets
and the operation of the Business before the Closing.
(b) Buyer shall offer and provide reasonable cooperation to Seller
and Access and their counsel in the contest or defense of, and make reasonably
available its personnel and provide testimony and access to their books and
records in connection with, any Proceeding involving or relating to (a) the
transactions contemplated hereunder or (b) their ownership and use of the Assets
and the operation of the Business before the Closing.
6.9 Noncompetition, Nonsolicitation and Nondisparagement.
(a) Noncompetition. For a period of three (3) years after the
Closing Date, Seller and Access shall not, anywhere in the United States
directly or indirectly invest in, own, manage, operate, finance, control,
advise, render services to or guarantee the obligations of any person or entity
engaged in or planning to become engaged in the healthcare related sample
fulfillment business or the healthcare related database management business
(collectively, the "Competing Business"), provided, however, that (i) Seller and
Access may purchase or otherwise acquire up to (but not more than) an aggregate
of one percent (1%) of any class of the securities of any entity (but may not
otherwise participate in the activities of such Person) engaged in a Competing
Business if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934, (ii) Access shall be permitted, as an adjunct to services to
customers provided by other Access divisions or subsidiaries to subcontract to
unaffiliated third parties pharmaceutical sample fulfillment and healthcare
database management services that are not a substantial part of the services
provided to such customers, and (iii) Buyer acknowledges and consents to Access'
ownership use of its proprietary pharmacy and grocery database, none of which is
used in the Business or necessary for the operation of the Business as currently
conducted.
(b) Nonsolicitation. For a period of one year after the Closing
Date, Seller and Access shall not, directly or indirectly:
(i) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant or other business
relation of Buyer to cease doing business with Buyer, to deal with any
competitor of Buyer or in any way interfere with its relationship with Buyer;
(ii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant or other business
relation of Seller or Access with respect to the Business on the Closing Date or
within the year preceding the Closing Date to cease doing business with Buyer,
to deal with any competitor of Buyer or in any way interfere with its
relationship with Buyer; or
(iii) hire, retain or attempt to hire or retain any employee
or independent contractor of Buyer or in any way interfere with the relationship
between Buyer and any of its employees or independent contractors.
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(c) Nondisparagement. After the Closing Date, Seller and Access will
not disparage Buyer or any of Buyer's shareholders, directors, officers,
employees or agents, and Buyer will not disparage Seller or Access or any of
Seller's or Access' directors, officers, employees, or agents.
(d) Modification of Covenant. If a final judgment of a court or
tribunal of competent jurisdiction determines that any term or provision
contained in Section 6.9 (a) through (c) is invalid or unenforceable, then the
parties agree that the court or tribunal will have the power to reduce the
scope, duration or geographic area of the term or provision, to delete specific
words or phrases or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision. This
Section 6.9 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 6.9 is reasonable and
necessary to protect and preserve Buyer's legitimate business interests and the
value of the Assets and to prevent any unfair advantage conferred on Seller.
6.10 Retention of and Access to Records. After the Closing Date, Buyer
shall retain for period consistent with Buyer's record-retention policies and
practices those records of the Business delivered to Buyer by or on behalf of
Seller or Access. Buyer also shall provide Seller and Access and their
representatives reasonable access thereto, during normal business hours and on
at least three days' prior written notice, to enable them to prepare financial
statements or tax returns or deal with tax audits. After the Closing Date,
Seller and Access shall provide Buyer and its representatives reasonable access
to records that are Excluded Assets, during normal business hours and on at
least three days' prior written notice, for any reasonable business purpose
specified by Buyer in such notice.
6.11 Pre-Closing Inventory Count. Buyer may elect by notice to Seller to
conduct a physical count of the inventories of the Business, including all
pharmaceutical samples held by Seller or Access for distribution in the Ordinary
Course of Business of the Business and all post-dated pharmaceutical samples
held by Seller or Access for disposition on behalf of their manufacturers.
Representatives of Seller and Access may view such inventory count. Buyer shall
pay the expenses it incurs in such inventory count.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller and Access to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct as of the date made and
(having been deemed to have been made again on and as of the Closing Date in the
same language) shall be true and correct on and as of the Closing Date, except
that any such representations and warranties that expressly relate only to an
earlier date shall be true and correct on the Closing Date as of such earlier
date.
7.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
7.3 Certificates.
(a) Seller and Access shall have received a certificate executed on
behalf of Buyer by the chief executive and chief financial officers of Buyer (or
the functional equivalents of each of the foregoing), dated the Closing Date,
representing and certifying, in such detail as Seller may reasonably request,
that the conditions set forth in Sections 7.1 and 7.2 have been fulfilled.
(b) Seller and Access shall have received certificates executed by
Buyer's Secretary, dated the Closing Date, certifying (i) attached copies of
Buyer's Bylaws as true and complete, and (ii) the signatures of the officers of
Buyer authorized to execute and deliver this Agreement and the other agreements
and instruments to be executed and delivered hereunder.
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7.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.5 Corporate Approval. The transactions contemplated by this Agreement
shall have been approved, in accordance with Applicable Laws and the charter and
Bylaws of Buyer, by the Board of Directors of Buyer; and Buyer shall have
delivered to Seller and Access a copy of the resolutions of its Board of
Directors approving the Buyer's execution, delivery, and performance of this
Agreement, certified by the Buyer's Secretary or Assistant Secretary.
7.6 Lender Approval. Bank of America, as Agent for Access's current
institutional lenders, shall have approved this transaction.
7.7 Shareholder Approval. The transactions contemplated by this Agreement
shall have been approved, in accordance with Applicable Laws and the charter and
Bylaws of Access, by the shareholders of Access.
7.8 Assumptions. Seller and Access shall have received from Buyer
assignment and assumption agreements, in form and substance reasonably
acceptable to Seller and Access, executed by Buyer assuming the Assumed
Liabilities.
7.9 Good Standing; Certified Certificate of Incorporation. Seller and
Access shall have received from Buyer copies of (a) a certificate of good
standing for it in the State of Delaware, and (ii) the certificate of
incorporation of the Buyer certified by the Secretary of State of the State of
Delaware.
7.10 Permits. Seller and Access shall have received from Governmental
Entities all Permits necessary for them to consummate the transactions
contemplated by this Agreement.
7.11 Employees. Buyer shall have offered employment to at least ninety
percent (90%) of salaried Active Employees and to at least ninety percent (90%)
of hourly Active Employees, provided that Buyer shall not be required to employ
any such Active Employees who fail to satisfy Buyer's employment criteria,
including drug testing and background checks.
7.12 Executives. Buyer shall have offered employment to those executives
of Seller under the terms set forth in Part 7.12 of the Disclosure Letter,
provided that Buyer shall not be required to employ any such executives who fail
to satisfy Buyer's employment criteria, including drug testing and background
checks.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
8.1 Representations and Warranties True. All the representations and
warranties of Seller and Access contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct as of the
date made and (having been deemed to have been made again on and as of the
Closing Date in the same language) shall be true and correct on and as of the
Closing Date, except that any such representations and warranties that expressly
relate only to an earlier date shall be true and correct on the Closing Date as
of such earlier date.
8.2 Covenants and Agreements Performed. Seller and Access shall have
performed and complied with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
8.3 Certificates.
(a) Buyer shall have received certificates executed on behalf of
Seller and Access by the chief executive officers and chief financial officers
(or the functional equivalents of each of the foregoing) of Seller and Access,
dated the Closing Date, representing and certifying, in such detail as Buyer may
reasonably request, that the conditions set forth in Sections 8.1 and 8.2 have
been fulfilled.
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(b) Buyer shall have received certificates executed by the
Secretaries of Seller and Access, dated the Closing Date, certifying (i)
attached copies of the Bylaws of Seller and Access as true and complete and (ii)
the signatures of the officers of Seller and Access authorized to execute and
deliver this Agreement and the other agreements and instruments to be executed
and delivered by Seller and Access hereunder.
8.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
8.5 No Material Adverse Change. Since the date hereof, there shall not
have been any material adverse change in the Assets or the business, assets used
in, results of operations, condition (financial or otherwise), or prospects of
the Business or the ownership or operation of the Assets or the Business or any
material portion thereof.
8.6 Documents. Buyer shall have received from Seller and Access the
following certificates, instruments, and documents listed below, all of which
shall be in form and substance reasonably satisfactory to Buyer:
(a) Executed bills of sale, certificates of title and other
instruments of assignment, Transfer, and conveyance (including Required
Approvals) sufficient to transfer to Buyer and effectively vest in Buyer all
right, title, and interest of Seller and Access in and to the Assets, subject
only to the Permitted Encumbrances, provided, however, that receipt by Buyer of
assignments or consents other than the Required Approvals shall not be a
condition of closing.
(b) Assignment and assumption agreements executed by Seller and
Access, as applicable, assigning the Assumed Liabilities to the Buyer.
(c) Lien search reports showing that no financing statements or
other liens (or notices with respect to liens) affecting any of the Assets
naming Seller, Access, or the Business as debtor are on file in the Uniform
Commercial Code or other relevant records of the office of the Secretary of
State or the county clerk's office of any jurisdiction in which any of the
operations of the Business are conducted, other than as permitted or disclosed
by this Agreement.
(d) Releases of all liens affecting any of the Assets, including,
without imitation, of all liens and other Encumbrances held by Bank of America,
as agent for Seller's and Access' bank lenders.
(e) Non-foreign certificates executed by Seller and Access, is
required by Section 1445 of the Code and applicable regulations.
(f) Executed copies of all Required Approvals in a form acceptable
to Buyer.
(g) Notarized trademark assignments executed by Seller (or Access,
if applicable) assigning to the Buyer all registered trademarks and service
marks used in the Business and all applications therefor.
(h) Notarized copyright assignments executed by Seller (or Access,
if applicable) assigning to Buyer all registered copyrights used in the Business
and all applications therefor.
(i) Such other agreements and instruments as Buyer may reasonably
request.
8.7 Legal Opinion. Seller and Access shall have delivered to Buyer a usual
and customary opinion of counsel, substantially in the form attached hereto as
Exhibit A.
8.8 AMA Assignment. Seller and Access shall have used their best efforts,
in good faith, to obtain the approval and consent of the American Medical
Association ("AMA") with respect to (i) the assignment to Buyer of Seller's
database license agreement with the AMA, and (ii) the assignment to Buyer of the
various sub-license agreements under such database license agreement, and it
Seller and Access have obtained such approval and consent, they shall have
assigned such license and sub-license agreements to the Buyer.
8.9 Corporate Approval. The transactions contemplated by this Agreement
shall have been approved, in accordance with Applicable Laws and the charter and
bylaws of Seller and Access, by the Boards of Directors of Seller and Access and
by the shareholders of Access, and Seller and Access shall have delivered to
Buyer a copy
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of the resolutions of their Boards of Directors and the shareholders of Access
approving the execution, delivery, and performance of this Agreement, certified
by the Secretary or Assistant Secretary of each.
8.10 Licenses and Permits. Buyer shall have been issued all licenses and
other Permits required for the operation of the Business from and after the
Closing Date by the Drug Enforcement Administration and the Federal Drug
Administration. Buyer shall also have received from all other Governmental
Entities all other Permits necessary for it to consummate the transactions
contemplated by this Agreement and operate the Business from and after the
Closing Date, excluding, however, State issued Permits for which applications
can be made after the Closing Date and the absence of which immediately after
the Closing do not prevent the Buyer from operating the Business in the States
where such applications must be made.
8.11 Employee Agreements. Buyer shall have entered into employment
agreements or non-competition agreements with the Active Employees set forth in
Part 8.11 of the Disclosure Letter under the terms set forth thereon.
8.12 Good Standing; Certified Certificates of Incorporation. Buyer shall
have received from Seller and Access copies of (i) certificates of good standing
for them from the State of Delaware and all other States in which the Business
is conducted and (ii) the certificates of incorporation of Seller and Access
certified by the Secretary of State of the State of Delaware.
8.13 Regulatory Compliance. Buyer shall have concluded its (i) review of
Seller's compliance with all applicable regulatory requirements, including the
PDMA, and (ii) inventory count pursuant to Section 6.12 of this Agreement, with
results that evidence Seller's compliance with applicable law and regulations.
8.14 Name Change. Buyer shall have received from Seller and Access signed
filing copies of a certificate of amendment to Seller's certificate of
incorporation changing the Seller's name from Phoenix Marketing Group
(Holdings), Inc., to a name not containing the words "Phoenix Marketing Group,"
which Buyer may file with the Secretary of State of the State of Delaware.
8.15 Payment of Fees. Buyer shall have received evidence satisfactory to
it of the payment of the fees of Alerity Partners by Seller or Access or the
provision, satisfactory to Buyer, for such payment without any liability
therefor on the part of the Buyer.
ARTICLE IX
TERMINATION, AMENDMENT, AND REMEDIES
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Seller and Buyer; or
(b) by Seller or by Buyer, if:
(i) the Closing shall not have occurred on or before February
28, 2002, unless such failure to close shall be due to a breach of this
Agreement by the party seeking to terminate this Agreement pursuant to this
clause (i); or
(ii) there shall be any statute, rule, or regulation that
makes consummation of the transactions contemplated hereby illegal or otherwise
prohibited or a Governmental entity shall have issued an order, decree, or
ruling or taken any other action permanently restraining, enjoining, or
otherwise prohibiting the consummation of the transactions contemplated hereby,
and such order, decree, ruling, or other action shall have become final and
nonappealable, or there shall have come into effect an Applicable Law
prohibiting the consummation of the transactions contemplated hereby or that
could have a material adverse effect on Buyer's ability to operate the Business
from and after the Closing; or
(c) by Seller and Access, if (i) any of the representations or
warranties of Buyer contained in this Agreement shall not be true and correct
when made or at any time prior to the Closing as if made at and as of such time,
or (ii) Buyer shall have failed to fulfill any of its obligations under this
Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within thirty (30) days of actual knowledge thereof by Buyer; or
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(d) by Buyer, if (i) any of the representations or warranties of
Seller or Access contained in this Agreement shall not be true and correct when
made or at any time prior to the Closing as if made at and as of such time, or
(ii) Seller shall have failed to fulfill any of its obligations under this
Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within thirty (30) days of actual knowledge thereof by Seller or
Access.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 by Seller and Access or Buyer, written notice
thereof shall be given to the other party or parties by specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
become void and have no effect, except that the agreements contained in this
Section 9.2, Section 6.2, and Articles X, XI and XII shall survive the
termination hereof. Nothing contained in this Section 9.2 shall relieve any
party from liability for any breach of this Agreement, and in such an event the
terminating party may pursue all remedies available to it at law or equity.
9.3 Waiver. Seller and Access, on the one hand, or Buyer, on the other,
may (i) waive any inaccuracies in the representations and warranties of the
other contained herein or in any document, certificate, or writing delivered
pursuant hereto or (ii) waive compliance by the other with the other's
agreements or fulfillment of any conditions to obligations contained herein. Any
agreement on the part of a party hereto to any such waiver shall be valid only
if set forth in an instrument in writing signed by or on behalf of such party or
parties. No failure or delay by a party hereto in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege.
9.4 Remedies Not Exclusive. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law or
equity, including the remedy of specific performance. The rights and remedies of
any party based upon, arising out of, or otherwise in respect of any inaccuracy
in or breach of any representation, warranty, covenant, or agreement contained
in this Agreement shall in no way be limited by the fact that the act, omission,
occurrence, or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant, or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.1 Survival.
(a) The representations and warranties of the parties hereto
contained in this agreement or in any certificate, instrument, or document
delivered pursuant hereto shall survive until the expiration of four hundred
twenty-five (425) days after the Closing Date provided that the representations
and warranties contained in Sections 2.1, 2.2, 2.3, 2.5, 3.1, 3.2, and 3.3 shall
survive indefinitely and the representations and warranties in Sections 2.15 and
2.16 shall survive for the applicable statute of limitations period, including
any extensions thereof (with the four hundred twenty-fifth day after the Closing
Date or the termination date of an applicable statute of limitations date being
the "Survival Date"). From and after the applicable Survival Date, no party
hereto or any shareholder, director, officer, employee, or affiliate of such
party shall be under any liability with respect to any representation or
warranty, except with respect to matters as to which notice has been received in
accordance with Section 10.1(b).
(b) No party hereto shall have any indemnification obligation
pursuant to this Article X in respect of any representation or warranty to which
the Survival Date has occurred unless before the Survival Date it shall have
received from the party seeking indemnification written notice of the existence
of the claim for or in respect of which indemnification in respect of such
representation or warranty is sought.
10.2 Indemnification by Seller and Access. Subject to the terms and
conditions of this Article X, Seller and Access shall jointly and severally
indemnify, defend, and hold harmless Buyer, each director, officer, employee,
representative and agent of Buyer, and their respective heirs, legal
representatives, successors, and assigns (collectively, the "Buyer Group"), from
and against any and all claims, actions, causes of action, demands,
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assessments, losses, damages, liabilities, judgments, settlements, penalties,
costs, and expenses (including reasonable attorneys' fees and expenses), of any
nature whatsoever, whether actual or consequential (collectively, "Damages"),
asserted against, imposed upon, or incurred by any member of the Buyer Group,
directly or indirectly, by reason of or resulting from any of the following:
(a) any misrepresentation, omission, or inaccuracy in or breach of
any representation or warranty of Seller or Access contained in this Agreement
or in any certificate, instrument, or document delivered pursuant hereto;
(b) any breach by Seller or Access of any of the covenants or
agreements contained in this Agreement or in any certificate, instrument, or
document delivered pursuant hereto;
(c) any liability (including the Excluded Liabilities) or obligation
of Seller or Access (whether accrued, absolute, contingent, unliquidated, or
otherwise, whether or not known to Seller, and whether due or to become due),
unless specifically assumed by Buyer hereunder;
(d) any Taxes arising under state Tax laws from or in connection
with the sale of the Assets to Buyer, other than those for which Buyer has
herein agreed to be responsible;
(e) the ownership, operation, management, or use of the Assets and
the operation of the Business prior to and including the Closing Date;
(f) any services provided by Seller or Access;
(g) any action taken or claim asserted by any shareholder of Seller
or Access, whether or not in connection with the transactions contemplated by
this Agreement; and
(h) any acts or omissions of Seller or Access prior to the Closing
Date and any events or occurrences involving the Assets or the Business or its
operation (other than the Assumed Liabilities), or the current or former
employees or independent contractors of Seller or Access taking place on or
prior to the Closing Date.
10.3 Indemnification by Buyer. Subject to the terms and conditions of this
Article X, Buyer shall indemnify, defend, and hold harmless Seller and Access,
each director, officer, employee, representative and agent of Seller and Access,
and their respective heirs, legal representatives, successors, and assigns
(collectively, the "Seller Group") from and against any and all Damages asserted
against, resulting to, imposed upon, or incurred by any member of the Seller
Group, directly or indirectly, by reason of or resulting from any of the
following:
(a) any misrepresentation, omission, or inaccuracy in or breach of
any representation or warranty of Buyer contained in this Agreement or in any
certificate, instrument, or document delivered pursuant hereto;
(b) any breach by Buyer of any of the covenants or agreements
contained in this agreement or in any certificate, instrument, or document
delivered pursuant hereto; and
(c) Buyer's operation of the Assets and the Business following the
Closing Date.
10.4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 10.2 or 10.3 of notice of the commencement of
any action that constitutes a claim by a third party, or after an indemnified
party's otherwise becoming aware of facts or circumstances giving rise to any
third party's right to claim Damages, such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying party under such
Section, give written notice to the indemnifying party of the commencement
thereof, but the failure to so notify the indemnifying party shall not relieve
it of any liability that it may have to any indemnified party except to the
extent the indemnifying party demonstrates that the defense of such action is
prejudiced thereby. In case any such action shall be brought against an
indemnified party and it shall give written notice to the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. If the
indemnifying party elects to assume the defense of such action, the indemnified
party shall have the right to employ separate counsel at its own expense and to
participate in the defense thereof. If the indemnifying party elects not to
assume (or fails to assume) the defense of such action, the indemnified party
shall be entitled to assume the defense of such action with counsel of its own
choice, at the expense of the indemnifying party. If the
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action is asserted against both the indemnifying party and the indemnified party
and there is a conflict of interests that renders it inappropriate for the same
counsel to represent both the indemnifying party and the indemnified party, the
indemnifying party shall be responsible for paying for separate counsel for the
indemnified party; provided, however, that if there is more than one indemnified
party, the indemnifying party shall not be responsible for paying for more than
one separate firm of attorneys to represent the indemnified parties, regardless
of the number of indemnified parties. If the indemnifying party elects to assume
the defense of such action, (a) no compromise or settlement thereof may be
effected by the indemnifying party without the indemnified party's written
consent (which shall not be unreasonably withheld) unless the sole relief
provided is monetary damages that are paid in full by the indemnifying party and
(b) the indemnifying party shall have no liability with respect to any
compromise or settlement thereof effected without its written consent (which
shall not be unreasonably withheld).
10.5 Other Claims. A claim for indemnification for any matter not
involving a third-party claim may be asserted by notice to the party from whom
indemnification is sought and shall be paid promptly after such notice.
10.6 Limitation of Liability. The indemnification obligations of the
parties hereto shall be subject to the following limitations:
(a) No indemnification shall be required to be made by either party
pursuant to this Article X with respect to any claims for which indemnification
is provided hereunder unless the aggregate amount of Damages incurred by such
party with respect to all such claims (whether asserted, resulting, imposed, or
incurred before, on, or after the Closing Date) exceeds $25,000.00, in which
case the indemnifying party shall be liable to the full extent of such Damages,
subject to the limit set forth in Section 10.6(b), below.
(b) Except for judicial determinations of fraud against Buyer or
Seller (for which no dollar limit shall apply), neither party shall be liable to
the other party for any sum in excess of $1,750,000.00, whether arising by
virtue of a direct claim by one of the parties hereto against the other, or by
virtue of a claim asserted by a third party.
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ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, or sent by prepaid overnight delivery
service, or sent by cable, telegram, telefax, or telex, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
If to Buyer:
Express Scripts, Inc.
13900 Riverport Drive
St. Louis, Missouri 63043
Attention: General Counsel
Fax: 314-702-7120
with a copy to:
Martin Akins, Esq. Express Scripts, Inc.
13900 Riverport Drive
St. Louis, Missouri 63043
Fax: 314-702-7120
If to Seller or Access:
Access Worldwide Communications, Inc.
4950 Communication Avenue, Suite 300
Boca Raton, Florida 33431
Attn: Michael Dinkins, CEO
Fax: 1-800-464-8599
with a copy to:
Kenneth W. Shapiro, Esq.
Shapiro Sontag, Lawyers
1776 N. Pine Island Road, Suite 326
Fort Lauderdale, Florida 33322
Fax: 954-382-9008
Such notices, requests, demands, and other communications shall be
effective upon receipt.
11.2 Entire Agreement. This Agreement, together with the Exhibits,
Disclosure Letter, and other writings referred to herein or delivered pursuant
hereto, constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
11.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that Buyer
may assign to any affiliate of Buyer any of Buyer's rights, interests, or
obligations hereunder, upon notice to Seller and Access, provided that no such
assignment shall relieve Buyer of its obligations hereunder. Except as provided
in Article X, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than the parties hereto, and their respective
successors and permitted assigns, any rights, benefits, or remedies of any
nature whatsoever under or by reason of this Agreement.
11.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such
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provision may be made enforceable by limitation thereof, then such provision
shall be deemed to be so limited and shall be enforceable to the maximum extent
permitted by Applicable Law.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
11.6 References. All references in this Agreement to Articles, Sections,
and other subdivisions refer to the Articles, Sections, and other subdivisions
of this Agreement unless expressly provided otherwise. The words "this
Agreement", "herein", "hereof", "hereby", "hereunder", and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. Whenever the words "include", "includes", and
"including" are used in this Agreement, such words shall be deemed to be
followed by the words "without limitation". Each reference herein to a Part or
Exhibit refers to the item identified separately in writing by the parties
hereto as the described Disclosure Letter or Exhibit to this Agreement. All
Exhibits and the Disclosure Letter are hereby incorporated in and made a part of
this Agreement as if set forth in full herein.
11.7 Further Assurances. From time to time, at the request of either party
hereto and without further consideration, the parties hereto agree that each
will execute and deliver to the other any and all documents in addition to those
expressly provided for in this Agreement that may be reasonably necessary or
appropriate to carry out the purposes of this Agreement and the transactions
contemplated hereby, whether at or after the Closing. Seller and Access further
agree that from time to time after the Closing Date they will execute and
deliver to Buyer or its designee such further conveyances, assignments, or other
written assurance, and take such further necessary actions, as Buyer may
reasonably request in writing to perfect and protect Buyer's title to the
Assets.
11.8 Counterparts. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
11.9 Remedies Not Exclusive. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law. The
rights and remedies of any party based upon, arising out of, or otherwise in
respect of any inaccuracy in or breach of any representation, warranty,
covenant, or agreement contained in this Agreement shall in no way be limited by
the fact that the act, omission, occurrence, or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant, or agreement contained
in this Agreement (or in any other agreement between the parties) as to which
there is no inaccuracy or breach.
11.10 Public Announcements. Any public announcement, press release or
similar publicity with respect to this Agreement or the transactions
contemplated by this Agreement will be issued, if at all, at such time and in
such manner, and in such form and substance, as mutually agreed by Buyer and
Access.
11.11 Disclosure Letter.
(a) The information in the Disclosure Letter constitutes (i)
exceptions to particular representations, warranties, covenants and obligations
of Seller and Access as set forth in this Agreement or (ii) descriptions or
lists of assets and liabilities and other items referred to in this Agreement.
If there is any inconsistency between the statements in this Agreement and those
in the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty), the statements in this Agreement will control.
(b) The statements in the Disclosure Letter, and those in any
supplement thereto, relate only to the provisions in the Section of this
Agreement to which they expressly relate and not to any other provision in this
Agreement.
11.12 Post-Closing Collections. Access and Seller shall promptly pay over,
and account to Buyer for, all collections on accounts receivable of the Business
that they receive on or after the Closing Date.
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ARTICLE XII
CONFIDENTIALITY
12.1 Definition of Confidential Information.
(a) As used in this Article 12, the term "Confidential Information"
includes any and all of the following information of Seller, Access, or Buyer
that has been or hereafter may be disclosed in any form, whether in writing,
orally, electronically or otherwise, or otherwise made available by observation,
inspection or otherwise by either party (Buyer on the one hand or Seller and
Access, collectively, on the other hand) or its representatives (collectively, a
"Disclosing Party") to the other party or its representatives (collectively, a
"Receiving Party"):
(i) all information that is a trade secret under applicable
trade secret or other law;
(ii) all information concerning product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current and planned
research and development, current and planned manufacturing or distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer hardware,
software and computer software and database technologies, systems, structures
and architectures;
(iii) all information concerning the business and affairs of
the Disclosing Party (which includes historical and current financial
statements, financial projections and budgets, tax returns and accountants'
materials, historical, current and projected sales, capital spending budgets and
plans, business plans, strategic plans, marketing and advertising plans,
publications, client and customer lists and files, contracts, the names and
backgrounds of key personnel and personnel training techniques and materials,
however documented), and all information obtained from review of the Disclosing
Party's documents or property or discussions with the Disclosing Party
regardless of the form of th communication; and
(iv) all notes, analyses, compilations, studies, summaries and
other material prepared by the Receiving Party to the extent containing or
based, in whole or in part, upon any information included in the foregoing.
(b) Any trade secrets of a Disclosing Party shall also be entitled
to all of the protections and benefits under applicable trade secret law and any
other applicable law. If any information that a Disclosing Party deems to be a
trade secret is found by a court of competent jurisdiction not to be a trade
secret for purposes of this Article 12, such information shall still be
considered Confidential Information of that Disclosing Party for purposes of
this Article 12 to the extent included within the definition. In the case of
trade secrets, each of Buyer, Seller, and Access hereby waives any requirement
that the other party submit proof of the economic value of any trade secret or
post a bond or other security.
12.2 Restricted Use of Confidential Information.
(a) Each Receiving Party acknowledges the confidential and
proprietary nature of the Confidential Information of the Disclosing Party and
agrees that such Confidential Information (i) shall be kept confidential by the
Receiving Party, (ii) shall not be used for any reason or purpose other than to
evaluate and consummate the transactions contemplated by this Agreement and
(iii) without limiting the foregoing, shall not be disclosed by the Receiving
Party to any person or entity, except in each case as otherwise expressly
permitted by the terms of this Agreement or with the prior written consent of an
authorized representative of Seller and Access with respect to Confidential
Information of Seller or Access (each, a "Seller Contact") or an authorized
representative of Buyer with respect to Confidential Information of Buyer (each,
a "Buyer Contact"). Each of Buyer and Seller and Access shall disclose the
Confidential Information of the other party only to its representatives who
require such material for the purpose of evaluating the transactions
contemplated by this Agreement and are informed by Buyer, Seller or Access, as
the case may be, of the obligations of this Article 12 with respect to such
information. Each of Buyer, Seller and Access shall (x) enforce the terms of
this Article 12 as to its respective representatives, (y) take such action to
the extent necessary to cause its representatives to comply with the terms and
conditions of this Article 12 and (z) be responsible and liable for any breach
of the provisions of this Article 12 by it or its representatives.
(b) Unless and until this Agreement is terminated, Seller and Access
shall maintain as confidential any Confidential Information (including for this
purpose any information of Seller or Access of the type referred
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to in Sections 12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) of
the Seller or Access relating to any of the Assets or the Assumed Liabilities.
Notwithstanding the preceding sentence, Seller and Access may, subject to
Sections 5.2 and 5.3, use any of their Confidential Information before the
Closing in the Ordinary Course of Business.
(c) From and after the Closing, the provisions of Section 12.2(a)
above shall not apply to or restrict in any manner Buyer's use of any
Confidential Information of the Seller or Access relating to any of the Assets
or the Assumed Liabilities.
12.3 Exceptions. Sections 12.2(a) and (b) do not apply to that part of the
Confidential Information of a Disclosing Party that a Receiving Party
demonstrates (a) was, is or becomes generally available to the public other than
as a result of a breach of this Article 12 or a confidentiality agreement by the
Receiving Party or its representatives, (b) was or is developed by the Receiving
Party independently of and without reference to any Confidential Information of
the Disclosing Party or (c) was, is or becomes available to the Receiving Party
on a nonconfidential basis from a third party not bound by a confidentiality
agreement or any legal, fiduciary or other obligation restricting disclosure.
Neither Seller nor Access shall disclose any Confidential Information of Seller
or Access relating to any of the Assets or the Assumed Liabilities in reliance
on the exceptions in clauses (b) or (c) above.
12.4 Legal Proceedings. If a Receiving Party becomes compelled in any
Proceeding or is requested by a Governmental Entity having regulatory
jurisdiction over the transactions contemplated by this Agreement to make any
disclosure that is prohibited or otherwise constrained by this Article 12, that
Receiving Party shall provide the Disclosing Party with prompt notice of such
compulsion or request so that it may seek an appropriate protective order or
other appropriate remedy or waive compliance with the provisions of this Article
12. In the absence of a protective order or other remedy, the Receiving Party
may disclose that portion (and only that portion) of the Confidential
Information of the Disclosing Party that, based upon advice of the Receiving
Party's counsel, the Receiving Party is legally compelled to disclose or that
has been requested by such Governmental Entity, provided, however, that the
Receiving Party shall use reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded by any Person to whom any Confidential
Information is so disclosed. The provisions of this Section 12.4 do not apply to
any Proceedings between the parties to this Agreement.
12.5 Return or Destruction of Confidential Information. If this Agreement
is terminated, each Receiving Party shall (a) destroy all Confidential
Information of the Disclosing Party prepared or generated by the Receiving Party
without retaining a copy of any such material, (b) promptly deliver to the
Disclosing Party all other Confidential Information of the Disclosing Party,
together with all copies thereof, in the possession, custody or control of the
Receiving Party with all copies thereof, in the possession, custody or control
of the Receiving Party or, alternatively, with the written consent of a Seller
Contact or a Buyer Contact (whichever represents the Disclosing Party) destroy
all such Confidential Information and (c) certify all such destruction in
writing to the Disclosing Party, provided, however, that the Receiving Party may
retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party's Confidential Information is returned.
12.6 Attorney-Client Privilege. The Disclosing Party is not waiving, and
will not be deemed to have waived or diminished, any of its attorney work
product protections, attorney-client privileges or similar protections and
privileges as a result of disclosing its Confidential Information (including
Confidential Information related to pending or threatened litigation) to the
Receiving Party, regardless of whether the Disclosing Party has asserted, or is
or may be entitled to assert, such privileges and protections. The parties (a)
share a common legal and commercial interest in all of the Disclosing Party's
Confidential Information that is subject to such privileges and protections, (b)
are or may become joint defendants in Proceedings to which the Disclosing
Party's Confidential Information covered by such protections and privileges
relates, (c) intend that such privileges and protections remain intact should
either party become subject to any actual or threatened Proceeding to which the
Disclosing Party's Confidential Information covered by such protections and
privileges relates and (d) intend that after the Closing the Receiving Party
shall have the right to assert such protections and privileges. No Receiving
Party shall admit, claim or contend, in Proceedings involving either party or
otherwise, that any Disclosing Party waived any of its attorney work-product
protections, attorney-client privileges or similar protections and privileges
with respect to any information, documents or other material not disclosed to a
Receiving Party due to the Disclosing
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Party disclosing its Confidential Information (including Confidential
Information related to pending or threatened litigation) to the Receiving Party.
ARTICLE XIII
DEFINITIONS
13.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"Affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person. For the purposes of
this definition, "control", when used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities, by contract, or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Laws" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to which
a specified person or property is subject.
"Business" means the healthcare related sample fulfillment, database
management, literature fulfillment, direct mail, personalized mail, list label,
and Access Sports businesses of the kind offered by Seller and Access under the
PMG name.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions, easements, and other
encumbrances of every type and description, whether imposed by law, agreement,
understanding, or otherwise.
"Governmental Entity" means any court or tribunal in any
jurisdiction or any federal, state, municipal, or other governmental body,
agency, authority, department, commission, board, bureau, or instrumentality.
"Intellectual Property" means trademarks, service marks, trade
names, service names, brand names, copyrights, know-how, processes, software
(including PDMA compliance process software), trade secrets, proprietary
information, inventions, databases, customer lists, and other intellectual
property, and all registrations, applications, licenses, claims, causes of
action, and rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"Knowledge" in the case of an entity means the actual knowledge of
its executive officers or the knowledge that such officers should discover or of
which such officers should otherwise become aware in the course of their
performance of their responsibilities.
"Ordinary Course of Business" means that an action taken by a person
or entity will be deemed to have been taken in the Ordinary Course of Business
only if that action:
(a) is consistent in nature, scope and magnitude with the past
practices of such person or entity and is taken in the ordinary course of the
normal, day-to-day operations of such person or entity;
(b) does not require authorization by the board of directors or
shareholders of such person or entity (or by any person or group of persons
exercising similar authority) and does not require any other separate or special
authorization of any nature; and
(c) is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of
the normal, day-to-day operations of other persons or entities that are in the
same line of business as such person or entity.
"Permits" means licenses, permits, franchises, consents, approvals,
variances, exemptions, and other authorizations of or from Governmental
Entities.
"Permitted Encumbrances" means (i) Encumbrances created by Buyer,
(ii) liens for Taxes for the current year not yet due and payable, (iii)
statutory liens (including materialmen's, mechanic's, repairmen's,
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landlord's, and other similar liens) arising in connection with the ordinary
course of business securing liabilities payments for which are not yet due and
payable, and (iv) such imperfections or irregularities of title, if any, as (A)
are not substantial in character, amount, or extent and do not materially
detract from the value of the property subject thereto, (B) do not interfere
with either the present or intended use of such property, and (C) do not,
individually or in the aggregate, materially interfere with the conduct of
normal operations; provided, however, that "Permitted Encumbrances" shall not
include any liens for Taxes or statutory liens filed of record against the
Assets.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or Governmental
Entity.
"Required Approvals" means those approvals described on Part 13.1 of
the Disclosure Letter.
"Taxes" means any income taxes or similar assessments or any sales,
gross receipts, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise, or other tax imposed
by any United States federal, state, or local (or any foreign or provincial)
taxing authority, including any interest, penalties, or additions attributable
thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
PHOENIX MARKETING GROUP (HOLDINGS), INC.
By: /s/ MICHAEL DINKINS
------------------------------------
Name: Michael Dinkins
Title: Chairman and Chief Executive Officer
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ MICHAEL DINKINS
------------------------------------
Name: Michael Dinkins
Title: Chairman and Chief Executive Officer
EXPRESS SCRIPTS, INC.
By: /s/ BARRETT TOAN
------------------------------------
Name: Barrett Toan
Title: Chairman and Chief Executive Officer
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APPENDIX B
OPINION LETTER OF ALTERITY PARTNERS LLC
December 19, 2001
Board of Directors
Access Worldwide Communications, Inc.
4950 Communication Avenue, Suite 300
Boca Raton, FL 33431
Dear Sirs:
We understand that Express Scripts, Inc., a Delaware corporation
("Buyer"), Phoenix Marketing Group (Holdings), Inc. (the "Seller"), and Access
Worldwide Communications, Inc., a Delaware corporation and owner of 100% of the
equity interests of Seller (the "Parent"), have proposed entering into an Asset
Purchase Agreement, dated as of December 19, 2001 (the "Agreement"), pursuant to
which Buyer will purchase from Parent and Seller all of the Assets (as defined
in the Agreement) used by the Seller in the Business (as defined in the
Agreement), other than those specifically excluded thereunder, for consideration
comprising cash of thirty three million dollars ($33,000,000.00) and the Assumed
Liabilities (as defined in the Agreement) (collectively, the "Consideration"),
subject to adjustment as provided in the Agreement. The purchase of the Assets
and the related transactions pursuant to the Agreement are referred to herein,
collectively, as the "Transactions". You have provided us with a draft copy of
the Agreement in substantially final form.
You have asked us to render our opinion, as investment bankers, as to
whether the Consideration for the Assets is fair, from a financial point of
view, to the Parent.
In connection with our opinion, we have:
(a) solicited third-party indications of interest in acquiring the Assets
and bids therefor (the "Initial Bids");
(b) reviewed 12 Initial Bids and solicited additional offers to purchase
the Assets (the "Second Bids") from five parties that submitted Initial Bids;
(c) reviewed two Second Bids and engaged in discussions thereon with the
management of Parent, who following their discussions with us, recommended that
the Board of Directors of Parent accept the Second Bid submitted by Buyer based
on the terms thereof;
(d) reviewed the Agreement;
(e) reviewed certain financial and other information relating to the
Seller that was publicly available or furnished to us by the Seller that we
believe appropriate for purposes of rendering this opinion, including, but not
limited to: (i) the Parent's Annual Reports on Forms 10-K for the three fiscal
years ended December 31, 1998 through December 31, 2000 and the Parent's
Quarterly Report on Form 10-Q for the nine-month period ended September 30,
2001; (ii) Seller's unaudited financial statements for the three fiscal years
ended December 31, 1998 through December 31, 2000; and (iii) financial
projections for and as developed by the Seller;
(f) met with members of the Seller's management to discuss the business,
operations, historical financial results and future prospects of the Seller;
(g) considered certain financial and securities data of the Seller and
compared that data with similar data for other publicly- and privately-held
companies in businesses similar to those of the Seller;
(h) performed a discounted cash flow analysis, a comparable company
analysis, a comparable transaction analysis and certain other analyses which we
deemed useful in connection therewith; and
(i) considered and/or performed such other information, financial studies,
analyses and investigations and financial, economic and market criteria as we
deemed relevant and appropriate for purposes of this opinion.
The opinion expressed below is subject to the following qualifications and
limitations:
1. In arriving at our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all financial and
other information that was publicly available or furnished to us by the Seller.
With respect to the financial forecasts examined by us, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Seller's management as to
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the future financial performance of the Seller. We have not assumed any
responsibility for the independent verification of any such information or of
the projections provided to us, and we have further relied upon the assurances
of the senior management of the Seller and that they are unaware of any facts
that would make the information and projections provided to us incomplete or
misleading.
2. Our services with respect to the Transactions do not constitute, nor
should they be construed to constitute in any way, a review or audit of, or any
other procedures with respect to any financial information, nor should such
services be relied upon by any person to disclose weaknesses in internal
controls or financial statement errors or irregularities. We have not made an
independent evaluation or appraisal of the Assets or liabilities (contingent or
otherwise) of Seller or Parent, either on a fair market basis or otherwise, nor
have we been provided with any such appraisals.
3. Our opinion does not address, and should not be construed to address,
either the underlying business decision to effect the Transactions, the relative
merits of the Transactions as compared to any alternative business strategies
that might exist for the Seller, the effects of any other transaction in which
the Seller might engage or whether the consideration to be received by the
Parent in the Transactions represents the highest price obtainable. We express
no view as to the federal, state or local tax consequences of the Transactions.
4. In arriving at our opinion we have assumed that the Agreement will be
consummated in a timely manner and in accordance with the terms of the
Agreement, without any regulatory limitations, restrictions, conditions,
amendments or modifications that collectively would have an material effect on
the Parent.
5. Our opinion is subject to the assumptions and conditions contained
herein and is necessarily based on business, economic, market and other
conditions, and the information made available to us, as they exist as of the
date hereof or as of the date of the information provided to us.
6. This opinion is effective as of the date hereof. We have no obligation
to update the opinion unless requested by you in writing to do so and expressly
disclaim any responsibility to do so in the absence of any such request.
7. This opinion expresses no view as to the value of the Assets following
the consummation of the Agreement.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Consideration to be received for the Assets by the Parent is
fair to the Parent from a financial point of view. We will receive customary
compensation for our services in rendering this opinion. We have also acted as
financial advisor to the Board of Directors to the Parent in connection with the
Transaction and we will receive customary compensation for our financial
advisory services.
Provided that it is reproduced in full, this opinion may be included in
any disclosure document filed by the Seller in connection with the consummation
of the Agreement with the Securities and Exchange Commission, or otherwise
required to be made publicly available. Except as provided in the immediately
preceding sentence, any disclosure of this opinion, including that contained in
any document filed with the Securities and Exchange Commission or distributed to
the stockholders of the Seller, and any description of this opinion, may not be
made without the prior written review and approval of Alterity Partners, in all
instances not to be unreasonably withheld or delayed.
Our advisory services and the opinion expressed herein are provided for
the information of the Board of Directors of the Parent and its evaluation of
the proposed Agreement, and our opinion is not intended to be and does not
constitute a recommendation to any stockholder as to how such stockholder should
vote on the proposed Agreement.
Very truly yours,
ALTERITY PARTNERS LLC
By: /s/ DOUGLAS S. DONAHUE
--------------------------------
Name: Douglas S. Donahue
Title: Managing Director
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