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Exhibit 2.1
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT
(this “ Agreement ”) is entered into as of
December 19, 2007, by and among Elsevier Inc., a New York
corporation (the “ Purchaser ”), Eclipsys
Corporation, a Delaware corporation (“ Eclipsys
”), Eclipsys Solutions Corporation, a Delaware corporation
and wholly-owned subsidiary of Eclipsys (“ Solutions
”), and CPM Resource Center, Inc., a Delaware corporation
(the “ Company ”). Eclipsys, the Company and
Solutions are sometimes referred to herein as a “
Seller ,” and collectively as the “
Sellers .” Certain capitalized terms used in this
Agreement are defined in the attached Exhibit A
.
The Sellers own and operate
the CPMRC Business and the Sellers have agreed to sell to Purchaser
and Purchaser has agreed to buy from Sellers, the Transferred
Assets, on the terms and conditions set forth in this Agreement
(such sale and purchase, the “ Transaction
”).
In consideration of the
foregoing recitals, the mutual representations, warranties and
covenants set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which the parties
acknowledge, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE
TRANSFERRED ASSETS
1.1 Sale of Transferred
Assets . Subject to the terms, provisions and conditions
contained in this Agreement, at the Closing, Sellers agree to sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser
agrees to purchase and acquire from Sellers, all right, title and
interest in the Transferred Assets, free and clear of all Claims.
The “ Transferred Assets ” shall mean the
following items owned or leased by the Sellers or any of
them:
(a) all CPMRC
Content;
(b) subject to
Section 4.2(b) , all of Sellers’ rights under
license to the Licensed Intellectual Property, including the
Licensed Intellectual Property set forth in
Section 1.1(b) of the Seller Disclosure
Schedule;
(c) all Proprietary
Intellectual Property, including the Proprietary Intellectual
Property set forth in Section 1.1(c) of the Seller
Disclosure Schedule;
(d) all Customer
Deliverables, including the Customer Deliverables set forth in
Section 1.1(d) of the Seller Disclosure
Schedule;
(e) the Internal
Systems;
(f) all Business Marks,
including the Business Marks set forth in
Section 2.13(h) of the Seller Disclosure
Schedule;
(g) all items listed in
Section 2.13(a) of Seller Disclosure
Schedule;
(h) all Domain
Names;
(i) copies of portions of the
books and records of each Seller relating primarily to the
operation of the CPMRC Business and the Transferred Assets,
including copies of the Transferring Contracts and all
correspondence and memoranda relating thereto applicable to the
CPMRC Business;
(j) the agreements listed in
Section 1.1(j) of the Seller Disclosure
Schedule;
(k) the rights as assignee or
subcontractor under the Transferring Contracts pursuant to this
Agreement or the Consulting and Subcontracting
Agreement;
(l) the Tangible Transferred
Assets; and
(m) all other Seller CPMRC
Assets.
1.2 Excluded Assets .
Notwithstanding anything set forth in this Agreement to the
contrary, the Sellers are not selling to the Purchaser and the
Purchaser is not purchasing from the Sellers any Excluded Assets.
For this purpose, “ Excluded Assets ” means all
assets not expressly provided in Section 1.1 . For the
avoidance of doubt, Excluded Assets include, but are not limited
to, the following assets:
(a) cash or cash
equivalents;
(b) bank accounts;
(c) insurance
policies;
(d) Tax credits and Tax
refunds with respect to the Transferred Assets and the CPMRC
Business for Pre-Closing Periods;
(e) Accounts
Receivable;
(f) any assets of any
Employee Benefit Plan or interest in any Employee Benefit
Plan;
(g) all rights under any
agreement of any Seller that are not being assigned or
subcontracted pursuant to this Agreement or the Consulting and
Subcontracting Agreement;
(h) any personnel records or
business records of any Seller, including such records that any
Seller is required by law to retain in its possession;
(i) all assets used in
connection with any of the matters referred to in
Section 1.2(i) of the Seller Disclosure Schedule, even
if used, but not primarily used, in the CPMRC Business;
(j) Eclipsys
Software;
(k) Eclipsys Services
Methodologies; and
(l) all other assets,
properties, privileges, rights, interests and claims, real and
personal, tangible and intangible, of every type and description,
of Eclipsys not used primarily in connection with the CPMRC
Business.
1.3 Purchase Price and
Earnout .
(a) Purchase Price .
Subject to the terms and conditions of this Agreement, the
aggregate purchase price payable for the Transferred Assets will be
Twenty-Seven Million Dollars ($27,000,000), plus any amounts
payable by Purchaser pursuant to Section 1.3(b) and
Section 1.3(c) hereof, less the Deferred Revenue Amount
(the “ Purchase Price ”). At the Closing, the
Purchaser will pay to the Sellers Twenty-Five Million Dollars
($25,000,000) less the Estimated Deferred Revenue Amount
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by wire transfer of
immediately available funds to an account designated by Eclipsys no
later than two (2) business days prior to the Closing Date,
and at the times specified in and subject to
Section 4.2(d) , the Purchaser will pay to the Sellers
Two Million Dollars ($2,000,000) (the “ CICC Update
Payment ”).
(b) Earnout
.
(i) As additional
consideration for the Transferred Assets, subject to the provisions
of Section 1.3(b)(ii) , the Purchaser shall pay to the
Sellers an amount, if any, determined in accordance with this
Section 1.3(b) (the “ Earnout Amount
”).
(A) Earnout Year 1 .
In the event that CPMRC Content Orders for the period from the
Closing Date to the end of the Purchaser’s fiscal year ending
December 31, 2008 (“ Earnout Year 1 ”) is
at least $2,700,000 (the “ Earnout Year 1 Target
”), the Purchaser shall pay to the Sellers an aggregate
amount of $1,500,000 (“ Year 1 Earnout Amount ”)
in accordance with the terms of this Agreement. In the event that
the CPMRC Content Orders during Earnout Year 1 is less than
$2,700,000, the Purchaser shall pay to the Sellers a proportional
amount of the Year 1 Earnout Amount that is equal to the product of
(1) the Year 1 Earnout Amount multiplied by (2) a
fraction, the numerator of which is the amount of CPMRC Content
Orders during Earnout Year 1 and the denominator of which is the
Earnout Year 1 Target. For example, if CPMRC Content Orders during
Earnout Year 1 is $1,800,000, the Purchaser would pay to the
Sellers 66.667% of the Year 1 Earnout Amount, or
$1,000,000.
(B) Earnout Year 2 .
In the event that CPMRC Content Orders during the Purchaser’s
fiscal year ending December 31, 2009 (“ Earnout Year
2 ”, and together with Earnout Year 1, each, an “
Earnout Year ”) of at least $3,600,000 (the “
Earnout Year 2 Target ”), the Purchaser shall pay to
the Sellers an aggregate amount of $1,500,000 (“ Year 2
Earnout Amount ”) in accordance with the terms of this
Agreement. In the event that the CPMRC Content Orders during
Earnout Year 2 is less than $3,600,000, the Purchaser shall pay to
the Sellers a proportional amount of the Year 2 Earnout Amount that
is equal to the product of (1) the Year 2 Earnout Amount
multiplied by (2) a fraction, the numerator of which is
the amount of CPMRC Content Orders during Earnout Year 2 and the
denominator of which is the Earnout Year 2 Target.
(C) Earnout Cumulative
. Notwithstanding the provisions of Sections 1.3(b)(i)(A)
and (B) :
(1) in the event that the
CPMRC Content Orders during Earnout Year 1 is less than the Earnout
Year 1 Target, but the aggregate amount of CPMRC Content Orders
reported by CPMRC during Earnout Year 1 and Earnout Year 2 (the
“ Aggregate CPMRC Content Orders ”) is equal to
at least $6,300,000, then in addition to the Year 2 Earnout Amount,
the Purchaser shall pay to the Sellers, on the date on which the
Year 2 Earnout Amount is to be paid by the Purchaser to the
Sellers, an additional amount equal to the difference between
(1) the Year 1 Earnout Amount minus (2) the amount
paid by the Purchaser to the Sellers pursuant to
Section 1.3(b)(i)(A) ; and
(2) in the event that the
CPMRC Content Orders during Earnout Year 2 is less than the Earnout
Year 2 Target, but the Aggregate CPMRC Content Orders is equal to
at least $6,300,000, then in lieu of, and without duplication of,
the amount to be paid by the Purchaser to the Sellers pursuant to
Section 1.3(b)(i)(B) , the Purchaser shall pay to the
Sellers the Year 2 Earnout Amount.
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(D) Additional Earnout
. In the event that the Aggregate CPMRC Content Orders is greater
than $6,300,000, the Purchaser shall pay to the Sellers, on the
date on which the Earnout Amount for Earnout Year 2 would be paid
by the Purchaser, in addition to the amounts paid by Purchaser to
Sellers pursuant to Sections 1.3(b)(i)(B) and/or (C)
, an amount equal to the product of (1) the difference between
the Aggregate CPMRC Content Orders minus $6,300,000
multiplied by (2) 0.50; provided , that in no
event shall the aggregate Earnout Amount to be paid to the Sellers
pursuant to this Agreement exceed $4,000,000.
(ii) Within thirty
(30) days following the completion of the applicable Earnout
Year, the Sellers shall deliver to the Purchaser a statement for
the Earnout Amount to which it is entitled under this
Section 1.3(b) , together with the calculation of the
applicable Earnout Amount (the “ Calculation ”).
The Calculation shall be determined in good faith by the Sellers
and shall include sufficient detail to enable the Purchaser to
review the factors included in the Calculation. The Purchaser shall
have the later of (a) sixty (60) days following the
receipt of the invoice from the Sellers and (b) until
March 31, 2007 to review the Calculation (the “
Review Period ”). During the Review Period, the
Purchaser, its independent auditors and other representatives
shall, upon two (2) business days’ prior notice, at the
Purchaser’s sole cost and expense, be permitted full access
during normal working hours to review the books and records of the
Sellers for the sole purpose of reviewing the Calculation
(including the working papers of the Sellers relating thereto) and
shall be permitted to discuss the Calculation with the senior
officers and financial management of the Sellers; provided,
however, that such access and discussions shall be conducted in
a manner that will not unreasonably disrupt the operation of
Sellers’ business. In the event that the Purchaser concurs
with the Calculation, the Purchaser shall provide the Sellers with
written notice of such concurrence (“ Earnout Concurrence
Notice ”), and the Purchaser shall pay to the Sellers the
applicable Earnout Amount not later than three (3) business
days following the expiration of the Review Period. In the event
that the Purchaser disputes all or any portion of the Calculation,
the Purchaser shall provide the Sellers with written notice of such
dispute (“ Earnout Dispute Notice ”) not later
than the expiration of the Review Period, which Earnout Dispute
Notice shall set forth the Purchaser’s proposed calculation
of the applicable Earnout Amount. Subject to the terms of this
Agreement, the Purchaser shall pay the Sellers the non-disputed
amount within three (3) business days of the receipt by the
Sellers of the Earnout Dispute Notice, and the parties shall,
during the thirty (30) days following the delivery by the
Purchaser of such Earnout Dispute Notice (the “ Earnout
Negotiation Period ”), use commercially reasonable
efforts to reach agreement as to the disputed amount. If, during
such period, the parties are unable to reach agreement, they shall
promptly thereafter (but in no event later than thirty
(30) days from the end of the Earnout Negotiation Period)
engage a firm of independent accountants of national recognized
standing, reasonably satisfactory to the Sellers and the Purchaser,
to resolve the disagreement, provided, that if the Sellers
and the Purchaser are unable to agree upon such firm of independent
accountants, such firm shall be any of Ernst & Young, KPMG
or Grant Thornton, in that order of priority, provided that such
firm does not serve at such time, and has not served during each of
the prior two fiscal years, as the independent accountants of
either the Purchaser or Eclipsys, and does not have at such time,
and has not had during each of the prior two fiscal years, any
other significant business relationship with either the Purchaser
or Eclipsys. Such independent accountants shall promptly review
this Agreement and the Calculation and such other documents and
workpapers and shall have access to such personnel as they
reasonably deem necessary. Such independent accountants shall, as
promptly as practicable, deliver to the Sellers and the Purchaser a
report setting forth the amount of the disputed portion of the
applicable Earnout Amount. Such report shall be final, conclusive
and binding upon the parties hereto, absent fraud or manifest
error, and, if applicable, the Purchaser shall pay the Sellers the
portion of the applicable Earnout Amount set forth on such report
within ten (10) business days of the receipt by the Purchaser
of such report. The fees and expenses of the independent
accountants referred to in this Section 1.3(b)(ii)
shall be apportioned between the Sellers, on the one hand, and the
Purchaser, on the other hand, in proportions based upon the
relative success of each party’s claims as reflected in the
determinations made by the independent accountants pursuant to this
Section 1.3(b)(ii) .
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(iii) The parties hereto
agree that all Earnout Amounts payable pursuant to this
Section 1.3(b) are intended to be treated as additional
purchase price consideration for the purchase and sale of the
Transferred Assets and neither the Sellers nor the Purchaser, nor
any of their respective Affiliates, shall take any position in Tax
Return or Tax Contest that is inconsistent with such agreement
without the consent (not to be unreasonably withheld) of the other
party unless required to do so by applicable law.
(c) Additional Purchase
Price . If the conditions set forth in Project Schedule D of
the Consulting and Subcontracting Agreement are satisfied requiring
a payment of additional purchase price by the Purchaser to the
Sellers, then not later than five (5) business days following
the satisfaction of such conditions, the Purchaser shall pay to the
Sellers the amount specified in accordance with the terms of
Project Schedule D to the Consulting and Subcontracting Agreement
by wire transfer of immediately available funds to the account
designated by Eclipsys pursuant to Section 1.3(a)
herein.
1.4 Assumption of
Liabilities . Except as expressly provided in this
Section 1.4 , the Purchaser shall assume none of any
Sellers’ liabilities or obligations relating to the CPMRC
Business, the Transferred Assets or otherwise. In connection with
the purchase and sale of the Transferred Assets pursuant to this
Agreement, at the Closing, the Purchaser shall assume and agrees to
pay, discharge, perform or otherwise satisfy only the following
liabilities and obligations relating to the CPMRC Business and the
Transferred Assets (the “ Assumed Liabilities
”): (i) the liabilities and obligations as assignee or
subcontractor under the Transferring Contracts, as agreed to by the
Purchaser, pursuant to this Agreement or the Consulting and
Subcontracting Agreement, but only to the extent such liabilities
or obligations (a) relate to any period following the Closing
Date and (b) do not otherwise arise out of any breach or
alleged breach by any Seller, and (ii) the liabilities arising
out of or resulting from the operation of the CPMRC Business and
ownership of the Transferred Assets by the Purchaser from and after
the Closing Date.
1.5 Excluded
Liabilities . Except for assumption at the Closing of the
Assumed Liabilities, the Purchaser does not assume (either
expressly or implicitly) and shall not be responsible or liable for
any of the debts, claims, obligations, expenses, litigation,
violations, penalties, assessments, losses, damages or other
liabilities of any of the Sellers or any of their Affiliates, of
any kind, character or description whatsoever, whether presently in
existence or arising hereafter, direct, indirect, known or unknown,
absolute or contingent and regardless of any disclosure to the
Purchaser, including (i) any accounts payable (including all
invoices for the September Consortium that have not yet been
received as of the Closing Date) and any intercompany payables
arising prior to the Closing, (ii) any indebtedness of the
Sellers, (iii) any Taxes of the Sellers for Pre-Closing
Periods, (iv) any liabilities or obligations other than the
Assumed Liabilities as to which a third party might assert that
Purchaser has transferee liability, (v) any liabilities or
obligations of the Sellers or any Affiliate of the Sellers to any
of their consultants or employees, including liabilities or
obligations for overtime, severance, accrued but unused vacation as
of the Closing Date, bonuses under the Employee Benefit Plans
attributable to the Pre-Closing Periods, (vi) any and all
liabilities under any of the Sellers’ Employee Benefits Plans
or under any employment agreements with any of the Employees, and
(vii) liabilities or expenses relating to, arising out of or
resulting from the operation of the CPMRC Business or ownership of
the Transferred Assets prior to Closing, including those
liabilities set forth in Section 2.8 of the Seller
Disclosure Schedule and any amounts payable by Eclipsys to Bonnie
L. Wesorick pursuant to the Eclipsys/CPMRC Merger Agreement,
including Section 1.5 thereof (collectively, “
Excluded Liabilities ”).
1.6 Closing . The
parties agree to conduct the closing of the Transaction (“
Closing ”) at the offices of Baker & McKenzie
LLP, 130 East Randolph Street, Suite 3900, Chicago, Illinois, on
the date hereof (such date of the Closing, the “ Closing
Date ”).
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1.7 Closing Deliveries
. At the Closing:
(a) the Sellers will deliver,
or will cause to be delivered, to the Purchaser (i) the
License Agreement, (ii) the Consulting and Subcontracting
Agreement, (iii) the Reseller Agreement, (iv) the
Transition Services Agreement, (vi) the Bill of Sale,
(vii) the Transferred Assets to the extent tangible and
deliverable and (viii) a certification from each Seller
stating, under penalty of perjury, such Seller’s U.S.
taxpayer identification number and address and that such Seller is
not a “foreign person” as defined in Section 1445
of the Code; and
(b) the Purchaser will
deliver to the Sellers (i) the License Agreement,
(ii) the Consulting and Subcontracting Agreement,
(iii) the Reseller Agreement, (iv) the Transition
Services Agreement, (v) the Bill of Sale and (vi) that
portion of the Purchase Price set forth in the second sentence of
Section 1.3(a) .
1.8 Deferred Revenue
Purchase Price Adjustment . The Purchase Price shall be subject
to adjustment as follows:
(a) Not later than sixty
(60) days following the Closing, the Sellers will deliver to
the Purchaser an unaudited statement of the Deferred Revenue of the
CPMRC Business as of the Closing Date (the “ Deferred
Revenue Statement ”), which will show the Deferred
Revenue Amount as of the Closing Date. Section 1.8(a)
of the Seller Disclosure Schedule sets forth an example of how the
Deferred Revenue Amount would be calculated. For the avoidance of
doubt, “Deferred Revenue” will be calculated as revenue
billed or received but not yet recognized under GAAP. As examples,
maintenance revenue received but not yet recognized and prepayments
received for consulting services not yet rendered shall be
considered “Deferred Revenue.”
(b) Review by the
Purchaser . Promptly after delivery to the Purchaser of the
Deferred Revenue Statement, the Purchaser shall review the same,
and within thirty (30) days after delivery of the Deferred
Revenue Statement, deliver a notice to the Sellers either:
(i) concurring with the Deferred Revenue Amount as set forth
in the Deferred Revenue Statement (“ Notice of
Concurrence ”); or (ii) disagreeing therewith
(“ Notice of Disagreement ”). If the Purchaser
shall deliver a Notice of Disagreement, it shall concurrently
deliver to the Sellers a statement setting forth its proposed
revisions to the Deferred Revenue Statement. Failure by the
Purchaser to deliver a Notice of Disagreement and proposed
revisions within such 30-day period shall be deemed to constitute a
Notice of Concurrence.
(c) Resolution of
Disagreements . If a Notice of Disagreement is delivered
pursuant to subsection 1.8(b), the parties shall, during the thirty
(30) days following such delivery (“ Negotiation
Period ”), use commercially reasonable efforts to reach
agreement as to the Deferred Revenue Amount. If, during such
period, the parties are unable to reach agreement, they shall
promptly thereafter (but in no event later than thirty
(30) days from the end of the Negotiation Period) engage a
firm of independent accountants of national recognized standing,
reasonably satisfactory to Eclipsys and the Purchaser, to resolve
the disagreement; provided, that if Eclipsys and the
Purchaser are unable to agree upon such firm of independent
accountants, such firm shall be any of Ernst & Young, KPMG
or Grant Thornton, in that order of priority, provided that such
firm does not serve at such time, and has not served during each of
the prior two fiscal years, as the independent accountants of
either the Purchaser or Eclipsys, and does not have at such time,
and has not had during each of the prior two fiscal years, any
other significant business relationship with either the Purchaser
or Eclipsys. Such independent accountants shall promptly review
this Agreement, the Deferred Revenue Statement and the statement
accompanying the Notice of Disagreement and such other documents
and workpapers and shall have access to such personnel as they
reasonably deem necessary. Such independent accountants shall, as
promptly as practicable, deliver to Eclipsys and the Purchaser a
report setting forth the Deferred Revenue Amount prepared in
accordance with the terms of this Agreement. Such report shall be
final, conclusive and binding upon the parties hereto, absent fraud
or manifest error.
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(d) The date on which the
Deferred Revenue Amount is finally determined shall hereinafter be
referred to as the “ Settlement Date .” In the
event the Deferred Revenue Amount is greater than the Estimated
Deferred Revenue Amount, the Sellers shall pay to the Purchaser
within ten (10) business days after the Settlement Date an
amount equal to such excess. In the event the Deferred Revenue
Amount is less than the Estimated Deferred Revenue Amount, the
Purchaser shall pay to the Sellers within ten (10) business
days after the Settlement Date an amount equal to such deficiency.
Any amounts that remain unpaid after the time periods set forth for
payment in this Section 1.8(d) shall accrue interest at
a per annum rate equal to the prime rate as reported in The Wall
Street Journal from time to time. Any payment required pursuant
to this Section 1.8(d) shall be deemed to be an
adjustment to the Purchase Price for all purposes, and shall be
made by the wire transfer of immediately available funds for credit
to the recipient, to the account designated by such recipient in
writing.
(e) Expenses . The
out-of-pocket fees and expenses of the preparation of the Deferred
Revenue Statement shall be split equally between the Purchaser and
the Sellers and the fees and expenses of the independent
accountants referred to in Section 1.8(c) shall be
apportioned between the Sellers, on the one hand, and the
Purchaser, on the other hand, in proportions based upon the
relative success of each party’s claims as reflected in the
determinations made by the independent accountants pursuant to
Section 1.8(c) .
1.9 Allocation of Purchase
Price . The Sellers and the Purchaser agree that the Purchase
Price shall be allocated among the Transferred Assets in accordance
with Section 1060 of the Code, as set forth in
Section 1.9 of the Seller Disclosure Schedule. Sellers
and Purchaser agree (i) to file all Tax Returns and forms
(including IRS Form 8594 or any successor form) in accordance with
such allocation, (ii) to update such Tax Returns and forms in
accordance with Section 1060 of the Code to the extent
necessary to reflect adjustments to the Purchase Price and
(iii) not to take any position before any Tax authority that
is inconsistent with such allocation, unless otherwise required by
law.
ARTICLE 2
REPRESENTATIONS AND
WARRANTIES OF THE SELLERS
Each Seller, jointly and
severally, hereby makes to the Purchaser the representations and
warranties set forth in this Article 2 , as qualified by the
section of the Seller Disclosure Schedule that relates thereto. All
references to the “Seller Disclosure Schedule” shall
mean the disclosure schedule attached as Exhibit B to this
Agreement. For the avoidance of doubt, the representations and
warranties of the Sellers contained herein are made by the Sellers
with respect to the Sellers and the CPMRC Business, as the case may
be, and include, with respect to the Company, the predecessor
company to the Company, CPM Resource Center, Ltd., a Michigan
corporation, which was merged with and into the Company on
March 5, 2004. The Seller Disclosure Schedule shall be
arranged in sections and subsections corresponding to the numbered
and lettered sections and subsections contained in this Article
2 . For purposes of the representations and warranties of
Sellers contained herein: (i) any information disclosed in a
section of the Seller Disclosure Schedule (including any exhibits
and attachments incorporated therein by reference) shall be deemed
to be disclosed with respect to any other section of the Seller
Disclosure Schedule if there is a cross-reference in such Seller
Disclosure Schedule to another section of such Seller Disclosure
Schedule or otherwise it is readily apparent that such information
also qualifies or applies to another section of the Seller
Disclosure Schedule; and (ii) the inclusion of any information
in any section of the Seller Disclosure Schedule or other document
delivered by the Sellers pursuant to this Agreement shall not be
deemed to be an admission or evidence of the materiality of such
item, nor shall it establish a standard of materiality for any
purpose whatsoever.
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2.1 Organization,
Qualification and Corporate Power . Each of the Sellers is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Sellers is
duly qualified to conduct business and is in good standing under
the laws of each jurisdiction listed in Section 2.1 of
the Seller Disclosure Schedule, which jurisdictions constitute the
only jurisdictions in which the CPMRC Business or the ownership or
leasing of the Transferred Assets requires such qualification,
except for those jurisdictions in which the failure to be so
qualified or in good standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material
Adverse Effect. The Sellers collectively have all requisite
corporate power and authority to carry on the CPMRC Business that
they have conducted and to own and use the Transferred Assets they
have owned and used.
2.2 Authorization of
Transaction . Each Seller has all requisite power and authority
to execute and deliver this Agreement and the Transaction
Agreements to which it is a party and to perform its obligations
hereunder and thereunder. The execution and delivery by each Seller
of this Agreement and the Transaction Agreements to which it is a
party and the consummation by each Seller of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of each
Seller, and no other corporate action on the part of any Seller is
necessary to authorize each Seller’s execution and delivery
of this Agreement and the other Transaction Agreements to which it
is a party. This Agreement and the Transaction Agreements to which
it is a party have been duly and validly executed and delivered by
each Seller and constitute valid and binding obligations of each
Seller, enforceable against each Seller in accordance with their
respective terms, subject to (a) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and
(b) rules of law governing specific performance, injunctive
relief and other equitable remedies.
2.3 Noncontravention .
Neither the execution and delivery by each Seller of this Agreement
and the Transaction Agreements to which it is a party, nor the
consummation by each Seller of the transactions contemplated hereby
or thereby, will (a) conflict with or violate any provision of
the Certificate of Incorporation or By-laws of any Seller,
(b) require on the part of any Seller any notice to or filing
with, or any permit, authorization, consent or approval of, any
Governmental Entity, (c) conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of obligations under,
create in any party the right to terminate, modify or cancel, or
require any notice, consent or waiver under, any contract or
instrument to which any Seller is a party or by which any Seller is
bound or to which any of their respective assets are subject,
except for (i) any conflict, breach, default, acceleration,
termination, modification or cancellation which, individually or in
the aggregate, would not be material to the CPMRC Business or
adversely affect the consummation of the transactions contemplated
hereby, (ii) any notice, consent or waiver the absence of
which, individually or in the aggregate, would not be material to
the CPMRC Business or adversely affect the consummation of the
transactions contemplated hereby or (iii) notices, consents or
waivers required to transfer or subcontract the Transferring
Contracts, (d) result in the imposition of any Security
Interest upon any of the Transferred Assets or (e) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to any Seller or any of the Transferred Assets or the
CPMRC Business.
2.4 Brokers’
Fees . With the exception of the fees and expenses payable to
Robert Miller or MTW Studios, Inc., which fees and expenses will be
paid by Eclipsys, no Seller has any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect
to the Contemplated Transactions.
2.5 Projections . The
projections set forth in Section 2.5 of the Seller
Disclosure Schedule that are part of the Future Business
Information (the “ Projections ”) were prepared
by Eclipsys in good faith using the same type of information used
by the management of Eclipsys in preparing its own
projections.
8
2.6 Financial
Information . Eclipsys has provided to the Purchaser the
Financial Information. Except as set forth in
Section 2.6(b) of the Seller Disclosure Schedule, the
Financial Information fairly presents the financial condition and
results of operations of the CPMRC Business as of the respective
dates thereof and for the periods referred to therein and is true
and correct in all material respects. Except as set forth in
Section 2.6(b) of the Seller Disclosure Schedule, the
Financial Information is consistent with the books and records of
the Sellers, which records are true and correct.
2.7 Absence of Certain
Changes . Since the Most Recent Balance Sheet Date,
(a) there has not been any event or occurrence, or development
which, individually or in the aggregate, has had, or could
reasonably be expected to have in the future, a Material Adverse
Effect on the CPMRC Business, (b) the Sellers have carried on
the CPMRC Business in the Ordinary Course of Business and
(c) except for amounts as reflected in the Most Recent Balance
Sheet, as any of such items listed in clauses (i)-(xii) relate
to the CPMRC Business, no Seller has:
(i) borrowed any money which
borrowings are in excess of $100,000 in the aggregate;
(ii) voluntarily incurred any
Liability outside the Ordinary Course of Business;
(iii) suffered any damage,
destruction or loss of physical property or goods resulting in
costs or expenses to the Company in excess of $50,000 whether or
not covered by insurance;
(iv) incurred or committed to
incur any capital expenditures in excess of $100,000;
(v) leased, licensed, sold,
transferred, encumbered or permitted to be encumbered any asset,
Intellectual Property or other property (including sales or
transfers to Affiliates of the Company but excluding licensing by
the Company or Eclipsys of CPMRC Content in the Ordinary Course of
Business) or canceled or compromised any of its debts, except in
the Ordinary Course of Business;
(vi) entered into or
accelerated, terminated, modified or cancelled any material
agreement, contract, lease or license (or series of related
material agreements, contracts, leases or licenses);
(vii) waived or released any
right or claim in excess of $50,000 relating to the CPMRC
Business;
(viii) granted any general or
specific increase in compensation (including bonuses, profit
sharing or deferred compensation) payable to or to become payable
to any Employees or Consultants, except as required by law or under
existing contractual obligations, or adopted any benefit plan, or
granted, increased, augmented or improved the benefits granted to
or for the benefit of any Employee of Consultant under any Employee
Benefit Plan, except in the Ordinary Course of Business or as
required by law;
(ix) failed to maintain their
accounts, books and records in the usual, regular and ordinary
manner on a basis consistently applied;
(x) changed any of its
subscription policies (including subscriber acquisition and
retention policies) or materially reduced any of the services
provided to subscribers;
9
(xi) settled or compromised
any Tax liability or agreed to any adjustment of any Tax attribute
or made any material election with respect to its Taxes;
or
(xii) entered into any
transaction or taken any action or failed to enter into any
transaction or failed to take any action that would reasonably be
expected to have a Material Adverse Effect on the CPMRC
Business.
2.8 Undisclosed
Liabilities . The Sellers do not have any liabilities with
respect to the CPMRC Business, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated and
whether due or to become due, except for (a) liabilities shown
on the Most Recent Balance Sheet of the CPMRC Business,
(b) liabilities which have arisen since the Most Recent
Balance Sheet Date of the CPMRC Business in the Ordinary Course of
Business, which liabilities primarily relate to deferred revenue
paid annually by clients in advance for maintenance services and
which do not in the aggregate exceed $500,000, and
(c) liabilities incurred since the Most Recent Balance Sheet
Date of the CPMRC Business outside the Ordinary Course of Business
set forth in Section 2.8 of the Seller Disclosure
Schedule.
2.9 Tax Matters
.
(a) Each Seller has filed (or
has caused to be filed) on a timely basis all material Tax Returns
that it was required to file with respect to the Transferred
Assets. Each Seller has paid (or has caused to be paid) on a timely
basis all Taxes that were due and payable with respect to the
Transferred Assets, whether or not shown on any Tax Return. All
material Taxes that each Seller is or was required by law to
withhold or collect with respect to the Transferred Assets have
been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity.
(b) No examination or audit
of any Tax Return of the Sellers by any Governmental Entity, as
such Tax Return relates to the Transferred Assets, is currently in
progress or, to the knowledge of the Sellers, threatened or
contemplated. No deficiencies for any Taxes with respect to the
Transferred Assets have been proposed, asserted or assessed against
the Sellers which have not been resolved and paid in
full.
(c) There are no liens or
other encumbrances with respect to Taxes upon the Transferred
Assets, other than with respect to Taxes not yet due and
payable.
(d) No Seller is a
“foreign person” within the meaning of
Section 1445 of the Code, and each Seller will furnish
Purchaser with an affidavit that satisfies the requirements of
Section 1445 of the Code.
2.10 Assets
.
(a) Eclipsys, the Company or
Solutions is the true and lawful owner, and has good and marketable
title to, or a valid leasehold interest in, or a valid license to,
all right, title and interest in and to all of the Transferred
Assets, free and clear of all Claims, and upon consummation of the
Contemplated Transactions, the Sellers shall have conveyed,
assigned and transferred to the Purchaser title to all of the
Transferred Assets, free and clear of all Claims. The Transferred
Assets, together with the rights made available to the Purchaser
pursuant to the Transaction Agreements, are sufficient for the
operation of the CPMRC Business by the Purchaser after Closing in
substantially the same manner as conducted prior to the Closing.
Without limiting the foregoing, the Transferred Assets, together
with the rights made available to the Purchaser pursuant to the
Transaction Agreements, include all of the tools and applications
necessary to render, manage and deliver the CPMRC Content in paper
form or in CICC
10
format and the Restricted
Services to the customers of the CPMRC Business as of the date
hereof and immediately following Closing. All of the Transferred
Assets are free from material defects, have been maintained in
accordance with normal industry practice, are in good operating
condition and repair (subject to normal wear and tear), are
operated in conformity in all material respects with all applicable
laws and regulations. For the avoidance of doubt, the Transferred
Assets do not include the assets described in
Section 1.2 .
(b)
Section 2.10(b) of the Seller Disclosure Schedule lists
individually (i) all fixed assets (within the meaning of GAAP)
that are part of the Transferred Assets having a book value greater
than $25,000 and (ii) all other assets of a tangible nature
(other than inventories) that are part of the Transferred Assets
whose book value exceeds $25,000.
(c) Each item of equipment,
motor vehicle and other asset that are part of the Transferred
Assets that is pursuant to a lease agreement or other contractual
arrangement is in such condition that, upon its return to its
lessor or owner under the applicable lease or contract, the
obligations of any Seller, as applicable, to such lessor or owner
will have been discharged in full.
2.11 Real Property .
No Seller owns or has ever owned any real property used or held for
use in the operation of the CPMRC Business.
2.12 Real Property
Leases . Section 2.12 of the Seller Disclosure
Schedule lists all Leases. The Sellers have delivered to the
Purchaser complete and accurate copies of the Leases. With respect
to each Lease:
(a) such Lease is a legal,
valid and binding obligation of Eclipsys, the Company or Solutions,
as applicable, and based on Sellers’ reading of such Lease
and to the actual knowledge of the Seller Knowledge Persons without
further inquiry, the other parties thereto;
(b) no Seller has received
any written notice of a dispute with respect to such
Lease;
(c) no Seller or, to the
Knowledge of the Sellers, any other party, is in material breach or
violation of, or default under, any such Lease, and no event has
occurred, is pending or, to the Knowledge of the Sellers, is
threatened, which, after the giving of notice, with lapse of time,
or otherwise, would constitute a material breach or default by the
Company under such Lease;
(d) the transactions
contemplated by this Agreement do not require the consent of any
party to such Lease, will not result in a material breach or
default under such Lease, and will not otherwise cause such Lease
to cease to be legal, valid and binding obligations of the Seller
that is party thereto, as applicable, following the
Closing;
(e) no security deposit or
portion thereof deposited with respect to such Lease has been
applied in respect of a breach or default under such
Lease;
(f) no Seller owes and, under
such Lease, has any obligation to pay, any brokerage commissions or
finder’s fees with respect to such Lease;
(g) no Seller or any
Affiliate thereof has sublicensed, licensed, assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold of any Lease;
11
(h) to the Knowledge of the
Sellers, all facilities leased or subleased under each Lease is
supplied with utilities and other services adequate for the
operation of said facilities; and
(i) to the Knowledge of the
Sellers, there is no Security Interest, easement, covenant or other
restriction applicable to the real property subject to such Lease
which would (or could reasonably be expected to) materially impair
the current uses or the occupancy by any Seller of the property
subject thereto.
2.13 Intellectual
Property .
(a)
Section 2.13(a) of the Seller Disclosure Schedule lists
each patent, patent application, copyright registration or
application therefor, mask work registration or application
therefor, and trademark, service mark and domain name registration
or application therefor of the Company or related primarily to the
CPMRC Business.
(b)
Section 2.13(b) of the Seller Disclosure Schedule
identifies each license or other agreement pursuant to which any
Seller has licensed, distributed or otherwise granted any rights to
any third party with respect to any Business-Related Intellectual
Property.
(c)
Section 2.13(c) of the Seller Disclosure Schedule
identifies each license or other agreement (other than licenses for
“off-the-shelf” software in an amount representing
license, maintenance and other fees less than $10,000, which in the
aggregate do not exceed $50,000) pursuant to which any Seller in
connection with the CPMRC Business has the right to use Licensed
Intellectual Property (each a “ Business License
Agreement ” and collectively, the “ Business
License Agreements ”). Each Business License Agreement is
a legal, valid and binding agreement of the Seller that is party
thereto, as applicable, and based on Sellers’ reading of such
Business License Agreement and to the actual knowledge of the
Seller Knowledge Persons without further inquiry, the other party
thereto. The Sellers have not received any written notice of any
termination of any Business License Agreement as a result of the
Contemplated Transactions or otherwise.
(d) All current employees,
contractors, consultants and personnel of any Seller who have
performed services related to the CPMRC Business have executed
written contracts with such Seller, as applicable, that assign all
rights to inventions, discoveries, improvements, works of
authorship or information relating to the Proprietary Intellectual
Property to such Seller, as the case may be. No Seller has received
any written notice of a claim by any former employee of any Seller
that such person has ownership rights to the Proprietary
Intellectual Property except for such matters that have been
settled for less than $10,000.
(e) With respect to the
Proprietary Intellectual Property, the Sellers collectively are the
sole and exclusive owner of the entire right, title and interest in
the Proprietary Intellectual Property, free and clear of any
Claims. The Business-Related Intellectual Property and all
components thereof do not and the use of any of the foregoing by
the Purchaser as specified in the Transaction Agreements will not,
upon the Closing, infringe upon the Intellectual Property of any
third parties located anywhere in the world. None of the
Business-Related Intellectual Property is or has been involved in
any interference, reissue, reexamination, opposition, invalidation
or cancellation action, claim or proceeding and, to the Knowledge
of the Sellers, no such action, claim or proceeding has been
threatened against the Sellers. No other claim, action, suit,
proceeding or investigation with respect to the Business-Related
Intellectual Property has ever been instituted, is pending, or to
the Knowledge of the Sellers, threatened.
(f) There exists no actual
or, to the Knowledge of the Sellers, threatened infringement or
misappropriation proceeding by any third party of any
Business-Related Intellectual Property or, to the Knowledge of the
Sellers, any event that would reasonably be expected to constitute
such an infringement or misappropriation.
12
(g)
Section 2.13(g) of the Seller Disclosure Schedule lists
all domain names that are owned by any Seller and used primarily in
connection with the CPMRC Business other than those owned by or
referencing Eclipsys or Eclipsys’ trademarks or service marks
(the “ Domain Names ”) registered anywhere in
the world. The Sellers represent and warrant that the Company or
Eclipsys is the owner of all of the Domain Names (including all
goodwill attached thereto) and that the Sellers have all rights
necessary to transfer the Domain Names hereunder as part of the
Transferred Assets.
(h)
Section 2.13(h) of the Seller Disclosure Schedule sets
forth all of the names, trademarks, designs and logos owned by the
Company and all of the names, trademarks, designs and logos
previously or currently used by any Seller as it relates primarily
to the CPMRC Business (collectively, the “ Business
Marks ”). The Sellers represent and warrant that the
Company or Eclipsys is the owner of all of the Business Marks
(including all goodwill attached thereto) and that the Sellers have
all rights necessary to transfer the Business Marks hereunder as
part of the Transferred Assets.
(i) As of the Closing Date,
the CPRMC Content (i) has been recently updated to reflect
current standards of clinical practice, (ii) conforms with all
published specifications therefor, and (iii) is compliant with
all laws, rules and regulations that impose requirements or
restrictions on the CPMRC Content. As of the Closing Date, the CICC
has not been updated to reflect changes made to the Clinical
Practice Guidelines since June 2007, but when the CICC Updates
described in Section 4.2(d) have been completed, the
CICC expression of the Clinical Practice Guidelines will be as
current and complete as the expression of the Clinical Practice
Guidelines in the current version of KBC released on or about
September 30, 2007, as such version has been updated as of the
Closing Date.
(j) Each Seller has all
rights necessary to use the Business Related Intellectual Property
it uses and has all rights necessary to transfer such rights in and
to the Business Related Intellectual Property to Purchaser as part
of the Transferred Assets. Except for any Business Related
Intellectual Property that is Licensed Intellectual Property, the
Sellers (or any of them) is/are the sole and exclusive owners(s)
of, the entire right, title and interest in the Business Related
Intellectual Property, free and clear of any Claims.
(k) No federal, state, local
or other government funding or university or college facilities
were used in the development of any Proprietary Intellectual
Property (including any CPMRC Content). For the avoidance of doubt,
the information in Section 2.13(k) of the Seller
Disclosure Schedule does not affect the representations and
warranties being made by the Sellers in Section 2.13(e)
of this Agreement.
(l) To the Knowledge of the
Sellers, the Internal Systems are free from significant defects or
programming errors and conform in all material respects to the
written documentation and specifications therefor.
2.14 Contracts
.
(a)
Section 2.14(a) of the Seller Disclosure Schedule lists
the following agreements (written or oral) (i) to which any
Seller is a party and that are material to the CPMRC Business or
(ii) to which the Purchaser will have rights specifically
provided under any of the Transaction Agreements:
(i) all agreements with
customers that include the provision of Customer Deliverables for
which payments are or may become due or payable after the
Closing;
13
(ii) any agreement (or group
of related agreements) for the lease of personal property from or
to third parties providing for lease payments in excess of $25,000
per annum or having a remaining term longer than twelve
months;
(iii) any agreement (or group
of related agreements) for the purchase or sale of products or for
the furnishing or receipt of services (A) which calls for
performance over a period of more than one year or (B) which
involves more than the sum of $25,000 in the aggregate;
(iv) any agreement relating
to the Business-Related Intellectual Property;
(v) any agreement with
distributors, resellers, independent suppliers, contractors,
vendors, manufacturers and outsourcers which involves more than the
sum of $25,000 in the aggregate;
(vi) any agreement concerning
the establishment or operation of a partnership, joint venture or
limited liability company;
(vii) any agreement (or group
of related agreements) under which any Seller has created,
incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations)
involving more than $25,000 or under which any Seller has imposed
(or may impose) a Security Interest on any of the Transferred
Assets;
(viii) any agreement for the
disposition of any assets or business (other than sales licenses to
the CPMRC Content made in the Ordinary Course of Business), any
agreement for the grant to any person of any preferential rights to
purchase any of the Transferred Assets or portion of the CPMRC
Business, or any agreement for the acquisition of the Transferred
Assets or the CPMRC Business (other than purchases of inventory or
components in the Ordinary Course of Business);
(ix) any note, bond,
indenture, credit facility, mortgage, security agreement or other
instrument or document relating to or evidencing indebtedness for
money borrowed (all of which indebtedness is prepayable currently
at the option of the Company without premium or penalty) or a
security interest or mortgage in the Transferred Assets;
(x) any agreement under which
any warranty, indemnity or guaranty is issued (other than customary
product warranties, indemnities and guaranties provided in the
Ordinary Course of Business);
(xi) any agreement concerning
non-disclosure, confidentiality, trade secret, invention assignment
or other assignment of Intellectual Property provisions;
(xii) any agreement involving
any of the Employees;
(xiii) any agreement relating
to money advanced or loaned (i) to any of the Employees, or
(ii) in an amount exceeding $25,000 in the aggregate to any
other person;
(xiv) any agreement under
which the consequences of a default or termination would reasonably
be expected to have a Material Adverse Effect on the CPMRC
Business; and
(xv) any other agreement (or
group of related agreements) either involving more than $25,000 or
not entered into in the Ordinary Course of Business.
14
(b) The Sellers have
delivered or made available to the Purchaser a complete and
accurate copy of each agreement listed in
Section 2.14(a) of the Seller Disclosure Schedule and a
written summary setting forth the terms and conditions of each oral
agreement referred to in Section 2.14(a) of the Seller
Disclosure Schedule. With respect to each such agreement that is
part of the Transferred Assets or to which the Purchaser will have
rights specifically provided under any of the Transaction
Agreements, (i) the agreement is a legal, valid and binding
obligation of the Seller that is party thereto, as the case may be,
and based on Sellers’ reading of such agreement and to the
actual knowledge of the Seller Knowledge Persons without further
inquiry, the other parties thereto; and (ii) no Seller, as the
case may be, or, to the Knowledge of the Sellers, any other party,
is in material breach or violation of, or default under, any such
agreement, and no event has occurred, is pending or, to the
Knowledge of the Sellers, is threatened, which, after the giving of
notice, with lapse of time, or otherwise, would constitute a
material breach or default by any Seller, as the case may be, or,
to the Knowledge of the Sellers, any other party under such
agreement; (iii) there are no material disputes or material
disagreements between any Seller, as the case may be and any other
party with respect to any such agreement; (iv) no Seller, as
the case may be, nor any other party has sent a written notice of
termination or non-renewal or claim with respect to any such
agreement and (v)(i) each agreement set forth in
Section 1.1(j) of the Seller Disclosure Agreement and
(ii) each other Transferring Contract shall remain in full
force and effect immediately following the consummation of the
Contemplated Transactions, subject in the case of clause (v)(ii) to
any consent required to be obtained with respect to such
Transferring Contract under this Agreement or the Consulting and
Subcontracting Agreement.
2.15 Books and Records
. The minute books and stock ledger of the Company are true and
correct in all material respects. The books and records of each
Seller as they relate to the CPMRC Business accurately reflect in
all material respects the portions of the assets, liabilities,
financial condition and results of operations of the CPMRC Business
that they purport to depict.
2.16 Powers of
Attorney . There are no outstanding powers of attorney executed
on behalf of any Seller with respect to the CPMRC
Business.
2.17 Insurance . The
Seller maintains insurance policies (including fire, theft,
casualty, comprehensive general liability, workers compensation,
business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements)
that provide coverage for the CPMRC Business, all of which are in
full force and effect. The insurance policies maintained by the
Seller (taken together) are of such types and in such amounts and
for such risks, casualties and contingencies as is reasonably
adequate to insure the CPMRC Business against insurable losses,
damages and claims to its business, properties, assets and
operations for risks normally insured against by a person carrying
on a similar business to the CPMRC Business. There is no claim
pending under any such policy as to which coverage has been
questioned, denied or disputed by the underwriter of such policy.
All premiums due and payable under all such policies on or prior to
the date of this Agreement have been paid, and to the Knowledge of
the Sellers, no event has occurred that is reasonably likely to
give rise to a claim for retroactive premiums by the insurer. The
Sellers have no Knowledge of any threatened termination of, or
premium increase with respect to, any such policy.
2.18 Litigation . As
of the date of this Agreement, there is no Legal Proceeding pending
or that has been threatened in writing (a) against any Seller
relating to the CPMRC Business that seeks either damages in excess
of $25,000 or equitable relief or (b) against any Seller in
any manner that challenges or seeks to prevent, enjoin, alter or
delay the transactions contemplated by this Agreement. There are no
judgments, orders or decrees outstanding that relate to the CPMRC
Business.
15
2.19 Warranties . No
Customer Deliverables manufactured, sold, leased, licensed or
delivered by any Seller is subject to any guaranty, warranty, right
of return, right of credit or other indemnity other than the
applicable standard terms and conditions of sale or license of the
Customer Deliverables, which are set forth in
Section 2.19 of the Seller Disclosure Schedule. To
Sellers’ Knowledge, there are no claims from a third party
that the Customer Deliverables violate the terms of any agreements
to which they are subject.
2.20 Employees
.
(a)
Section 2.20(a)(i) of the Seller Disclosure Schedule
contains a complete list of all employees of any Seller primarily
or exclusively engaged in the CPMRC Business (the “
Employees ”), including, (1) their
titles/positions; (2) their dates of hire; and (3) their
current salaries or wages and all bonuses, commissions and
incentives paid at any time during the past twelve
(12) months; and (4) their target bonus for 2007.
Section 2.20(a)(ii) of the Seller Disclosure Schedule
contains a list of all consultants and independent contractors of
any Seller primarily or exclusively engaged in the CPMRC Business
(the “ Consultants ”), along with the per-hour
consulting rate paid to each such person.
(b) The Sellers have provided
the Purchaser with copies of all standard forms of employee trade
secret, non-compete, non-disclosure and invention assignment
agreements applicable to the Employees.
(c) Except for any
employment, termination, severance and/or change of control
agreement or severance plan or policy set forth in
Section 2.20(a)(i) of the Seller Disclosure Schedule,
all Employees may be terminated at any time with or without cause
and without any severance or other liability. Except as provided in
Section 2.20(a)(i) of the Seller Disclosure Schedule,
all Consultants may be terminated at any time without
liability.
(d) The Sellers have
delivered to Purchaser accurate and complete copies of all Company
written manuals, handbooks, and policies relating to the employment
of the Employees.
(e) To the Knowledge of the
Sellers, except as set forth in Section 2.20(e) of the
Seller Disclosure Schedule, no Employee or significant group of
Employees has informed any Seller of his, her or their current
intent to terminate employment with Eclipsys. No Seller has
implemented any layoff of Employees that could implicate the Worker
Adjustment and Retraining Notification Act of 1988, as amended, or
any similar foreign, state or local law, regulation or ordinance
(collectively, the “ WARN Act ”). Sellers shall
be solely responsible for complying with the WARN Act, including
issuing any notices required thereunder, to the extent required on
or before the Closing Date.
(f) No Seller as it relates
to the CPMRC Business is a party to or bound by any collective
bargaining agreement and none of the Employees are represented by
any labor union or organization, nor has any Seller experienced any
strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes in connection with the operation of
the CPMRC Business. No Seller has Knowledge of any organizational
effort made or threatened, either currently or within the past two
years, by or on behalf of any labor union with respect to any of
the Employees. There is no unfair labor practice charge or
complaint by any Employee against any Seller pending before the
National Labor Relations Board.
(g) As to the Employees, each
Seller is in compliance in all material respects with all federal
and state laws respecting employment and employment practices,
terms and conditions of employment and employment practices,
immigration, wage and hour, occupational health and
safety.
16
(h) As to the Employees and
the Consultants, there are no claims pending or, to the
Sellers’ Knowledge, threatened against any Seller or any of
their respective officers or directors, including any unlawful
employment practice discrimination charge involving any Employees
pending or threatened before the Equal Employment Opportunity
Commission (“ EEOC ”), EEOC recognized state
“referral agency” or any other governmental agency and
no investigation is pending or, to the Knowledge of the Sellers,
threatened by the EEOC or any governmental agency with respect to
the Employees and the Consultants.
(i) As to the Employees, each
Seller has paid in full all wages, salaries, commissions, bonuses,
benefits, compensation, fees and severance due and payable prior to
the date of termination of employment. As to the Consultants, each
Seller has paid in full all commissions, bonuses and fees due and
payable prior to the date of this Agreement.
(j) To the Sellers’
Knowledge, no Employee is a party to or bound by any
confidentiality agreement, non-competition agreement or other
agreement (with any other person or entity) that restricts the
performance by such person of any of his duties or responsibilities
as an employee of the Purchaser.
2.21 Employee Benefits
.
(a)
Section 2.21(a) of the Seller Disclosure Schedule
contains a complete and accurate list of all Employee Benefit
Plans. Complete and accurate copies of (i) all Employee
Benefit Plans which have been reduced to writing, (ii) written
summaries of all unwritten Employee Benefit Plans, (iii) all
related trust or other funding agreements, insurance contracts and
summary plan descriptions, the most recent determination letters
with respect to each Employee Benefit Plan that is intended to be
tax-qualified under section 401(a) of the Code and (iv) all
annual reports filed on IRS Form 5500, 5500C or 5500R and (for all
funded plans) all plan financial statements for the last five plan
years for each Employee Benefit Plan, have been made available to
the Purchaser.
(b) Each Employee Benefit
Plan has been operated and administered in all material respects in
accordance with its terms and with ERISA, the Code and all other
applicable laws. Each Seller and each ERISA Affiliate has in all
material respects met their obligations with respect to each
Employee Benefit Plan and at or before the time when due have made
all required contributions thereto.
(c) All the Employee Benefit
Plans that are intended to be qualified under Section 401(a)
of the Code have received determination letters from the Internal
Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto are exempt
from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, no such determination letter has been
revoked and revocation has not been threatened, and to the
Knowledge of the Sellers, no act or omission has occurred, that
would adversely affect its qualification.
(d) Notwithstanding anything
to contrary provided in this Agreement, except as required by law,
the Purchaser shall not assume, or have any direct or indirect
responsibility, liability or obligation whatsoever with respect to,
any Employee Benefit Plan. No event has occurred or is reasonably
likely to occur that has resulted or would reasonably be expected
to result in any current, pending, or to Sellers’ Knowledge,
threatened lien or Liability on any of the Transferred Assets
pursuant to Section 412(n) of the Code or Sections 4068 or
4201 of ERISA.
2.22 Environmental
Matters .
(a) In connection with the
operation of the CPMRC Business and the ownership and use of the
Transferred Assets, each Seller has complied with all applicable
Environmental Laws, except for violations of Environmental Laws
that, individually or in the aggregate, have not had and would
not
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reasonably be expected to
have a Material Adverse Effect. There is no pending or, to the
Knowledge of the Sellers, threatened civil or criminal litigation,
written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving the operation
of the CPMRC Business or the ownership or use of the Transferred
Assets.
(b) In connection with the
operation of the CPMRC Business or the ownership or use of the
Transferred Assets, no Seller has any liabilities or obligations
arising from the release of any Materials of Environmental Concern
into the environment.
(c) In connection with the
operation of the CPMRC Business or the ownership or use of the
Transferred Assets, no Seller is a party to or bound by any court
order, administrative order, consent order or other agreement with
any Governmental Entity entered into in connection with any legal
obligation or liability arising under any Environmental
Law.
(d) Set forth in
Section 2.22(d) of the Seller Disclosure Schedule is a
list of all documents (whether in hard copy or electronic form)
that contain any environmental reports, investigations and audits
relating to premises currently or previously owned or operated in
connection with the CPMRC Business by any Seller (whether conducted
by or on behalf of Eclipsys, the Company or Solutions or a third
party, and whether done at the initiative of Eclipsys, the Company
or directed by a Governmental Entity or other third party) which
any Seller has possession of or access to. A complete and accurate
copy of each such document has been provided to the
Purchaser.
(e) No Seller is aware of any
material environmental liability of any solid or hazardous waste
transporter or treatment, storage or disposal facility that has
been used in the operation of the CPMRC Business.
2.23 Legal Compliance
. Each Seller is currently conducting, and has at all times since
November 1, 2004 conducted, the CPMRC Business in compliance
in all material respects with each applicable law (including rules
and regulations thereunder) of any federal, state, local or foreign
government, or any Governmental Entity. No Seller has received any
written notice from any Governmental Entity alleging, as it relates
to the CPMRC Business, noncompliance by any Seller, with any
applicable law, rule or regulation and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced or, to the Knowledge of the Sellers, is
threatened as it relates to the CPMRC Business, against any
Seller.
2.24 Illicit or Illegal
Payments . As it relates to the CPMRC Business, no Seller, nor
any Affiliate of the Sellers, has used any corporate funds for any
unlawful contribution, gift, entertainment or other expense
relating to political activity or made any direct, or indirect,
unlawful payment to any United States, federal, state, local or
foreign government official or employee from corporate funds or
paid or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
2.25 Customers and
Suppliers . Section 2.25 of the Seller Disclosure
Schedule sets forth a list of (a) each customer or licensee of
the CPMRC Business (including the particular customers of Eclipsys
for which services are being subcontracted pursuant to the
Consulting and Subcontracting Agreement) that accounted for more
than $50,000 in revenue reflected in the Financial Information
during the last full fiscal year or the interim period through the
Most Recent Balance Sheet Date and the amount of revenues accounted
for by such customer during each such period; (b) customers of
the CPMRC Business that the Sellers anticipate, based upon revenue
to date, shall account for more than $50,000 in revenue for the
CPMRC Business for the current fiscal year, and for the fiscal
years ending December 31, 2008 and December 31, 2009,
provided , however , that Sellers are not making, and
nothing in this Section 2.25 shall
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be construed to mean that Sellers are
making, any guarantees, or except to the limited extent set forth
in Section 2.5 and this Section 2.25 , any
representations or warranties, with respect to any future business,
revenue or projections for the CPMRC Business or attributable to
any of the customers or licensees of the CPMRC Business for any
period following the Most Recent Balance Sheet Date, and
(c) each supplier that is a material supplier of any
significant product or service to the CPMRC Business. No such
customer or supplier has indicated within the past year that it
will stop, or decrease the rate of, buying products or supplying
products, as applicable, to the CPMRC Business. No purchase order
or commitment of the CPMRC Business is in excess of normal
requirements.
2.26 Permits .
Section 2.26 of the Seller Disclosure Schedule sets
forth a list of all Permits issued to or held by the Company or
used primarily in the CPMRC Business. Such listed Permits are the
only Permits that are required to conduct the CPMRC Business as
presently conducted or as proposed to be conducted, except for
those the absence of which, individually or in the aggregate, is
not and would not reasonably be expected to be material to the
CPMRC Business. Each such Permit is in full force and effect. The
Sellers, as the case may be, are in material compliance with the
terms of each such Permit. To the Knowledge of the Sellers, no
suspension or cancellation of such Permit is threatened and there
is no reasonable basis for believing that such Permit will not be
renewable upon expiration.
2.27 Certain CPMRC
Business Relationships With Affiliates . Except as set forth in
Section 2.27 of the Seller Disclosure Schedule, no
Affiliate of any Seller (a) owns any property or right,
tangible or intangible, which is used primarily in the CPMRC
Business, (b) has any claim or cause of action against any
Seller, as it relates to the CPMRC Business, or (c) owes any
money to, or is owed any money by, any Seller as it relates to the
CPMRC Business. Section 2.27 of the Seller Disclosure
Schedule describes any transactions or relationships involving
amounts in excess of $100,000 per annum related to the CPMRC
Business between (i) any Seller and (ii) any Seller and
any of their Affiliates that occurred or have existed since the
beginning of the time period covered by the Financial
Information.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
The Purchaser represents and
warrants to the Sellers the following:
3.1 Organization,
Qualification and Corporate Power . The Purchaser is a
corporation duly organized and validly existing under the laws of
the State of New York and has all requisite corporate power and
authority to carry on the business in which it is
engaged.
3.2 Authorization of
Transaction . The Purchaser has all requisite power and
authority to execute and deliver this Agreement and the Transaction
Agreements to which it is a party and to perform its obligations
hereunder and thereunder. The execution and delivery by the
Purchaser of this Agreement and the Transaction Agreements to which
it is a party and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of
the Purchaser. This Agreement and the Transaction Agreements to
which it is a party have been duly and validly executed and
delivered by the Purchaser and constitute valid and binding
obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, subject to (a) laws of
general application relating to bankruptcy, insolvency and the
relief of debtors, and (b) rules of law governing specific
performance, injunctive relief and other equitable
remedies.
3.3 Noncontravention .
Neither the execution and delivery by the Purchaser of this
Agreement and the Transaction Agreements to which it is a party,
nor the consummation by the Purchaser of the transactions
contemplated hereby or thereby, will (a) conflict with or
violate any provision of the
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Articles of Incorporation or bylaws of
the Purchaser, (b) require on the part of the Purchaser any
notice to or filing with, or any permit, authorization, consent or
approval of, any Governmental Entity, (c) conflict with,
result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration
of obligations under, create in any party the right to terminate,
modify or cancel, or require any notice, consent or waiver under,
any contract or instrument to which the Purchaser is a party or by
which the Purchaser is bound or to which any of its assets is
subject, except for (i) any conflict, breach, default,
acceleration, termination, modification or cancellation which,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect and would not adversely affect
the consummation of the transactions contemplated hereby or
(ii) any notice, consent or waiver the absence of which,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect and would not adversely affect
the consummation of the transactions contemplated hereby, or
(d) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Purchaser or any of its properties
or assets.
3.4 Litigation . As of
the date of this Agreement, there is no Legal Proceeding which is
pending or has been threatened in writing against the Purchaser
which in any manner challenges or seeks to prevent, enjoin, alter
or delay the transactions contemplated by this
Agreement.
3.5 Brokers’
Fees . The Purchaser does not have any liability or obligation
to pay any fees or commissions to any broker, finder or agent with
respect to the Contemplated Transactions.
3.6 Projections . The
Purchaser acknowledges and agrees that (i) except as
specifically provided in Section 2.5 herein, the
Sellers are not making any guarantees of any kind, or except to the
limited extent set forth in Section 2.5 and
Section 2.25 , any representations or warranties, with
respect to the Projections, the Future Business Information or any
likely operating results of the CPMRC Business, or parts thereof,
following the Closing, and (ii) the Purchaser has conducted
its own due diligence investigation with respect to the Projections
and the Future Business Information.
3.7 Adequacy of Funds
. The Purchaser has and will maintain during the period in which
any amounts may be payable hereunder adequate financial resources
to satisfy its monetary and other obligations under this Agreement,
including the payment of the Purchase Price in accordance
herewith.
ARTICLE 4
ADDITIONAL
COVENANTS
4.1 Covenants of the
Sellers .
(a) Collection of
Proceeds . Following the Closing, (i) to the extent any
Seller receives or otherwise comes into possession of cash receipts
attributable to the operation of the CPMRC Business due for
products and services provided after the Closing (other than
products or services that the Sellers are permitted t
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