AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ACTAMED CORPORATION,
EDI ACQUISITION, INC.,
UHC GREEN ACQUISITION, INC.
AND
UNITED HEALTHCARE CORPORATION
TABLE OF CONTENTS
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ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER. . . . . . . . . . . . . . 1
1.1 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . 2
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Items to Be Delivered at Closing. . . . . . . . . . . . . . 2
ARTICLE 2 THE SURVIVING CORPORATION . . . . . . . . . . . . . . . . . 4
2.1 Articles of Incorporation . . . . . . . . . . . . . . . . . 4
2.2 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Directors and Officers. . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . 5
3.1 Conversion of Shares. . . . . . . . . . . . . . . . . . . . 5
3.2 Exchange Procedures . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF UHC AND THE COMPANY . . . 5
4.1 Ownership of Shares; Operations . . . . . . . . . . . . . . 5
4.2 Capacity and Validity . . . . . . . . . . . . . . . . . . . 6
4.3 Organization, Standing and Foreign Qualification. . . . . . 6
4.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Subsidiaries and Investments. . . . . . . . . . . . . . . . 7
4.6 EDI Financial Statements. . . . . . . . . . . . . . . . . . 7
4.7 Absence of Undisclosed Liabilities. . . . . . . . . . . . . 7
4.8 No Liabilities as Guarantor . . . . . . . . . . . . . . . . 8
4.9 Absence of Changes. . . . . . . . . . . . . . . . . . . . . 8
4.10 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 10
4.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Personal Property . . . . . . . . . . . . . . . . . . . . . 10
4.14 Intellectual Property . . . . . . . . . . . . . . . . . . . 11
4.15 Accounts and Notes Receivable . . . . . . . . . . . . . . . 11
4.16 The Proprietary Software. . . . . . . . . . . . . . . . . . 11
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.18 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 12
4.19 Environmental Conditions. . . . . . . . . . . . . . . . . . 13
4.20 Litigation and Claims . . . . . . . . . . . . . . . . . . . 13
4.21 Contracts and Commitments; Warranties . . . . . . . . . . . 13
4.22 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . 14
4.23 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 14
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4.24 Remuneration. . . . . . . . . . . . . . . . . . . . . . . . 14
4.25 Union and Employment Agreements . . . . . . . . . . . . . . 14
4.26 Officers, Directors, and Bank Accounts. . . . . . . . . . . 15
4.27 Interested Party Transactions . . . . . . . . . . . . . . . 15
4.28 Brokers and Finders . . . . . . . . . . . . . . . . . . . . 15
4.29 Investment Representations; Legend on Shares. . . . . . . . 15
4.30 Compliance with Regulation D Information Requirements . . . 16
4.31 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACTAMED AND SUBCORP . . . 17
5.1 Organization and Good Standing. . . . . . . . . . . . . . . 17
5.2 Authorization of Agreement, No Breach . . . . . . . . . . . 18
5.3 Corporate Power . . . . . . . . . . . . . . . . . . . . . . 18
5.4 ActaMed Financial Statements. . . . . . . . . . . . . . . . 18
5.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Validity and Rights of the Preferred Shares . . . . . . . . 19
5.8 Registration Rights . . . . . . . . . . . . . . . . . . . . 20
5.9 Offering. . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.10 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.11 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 20
5.12 Pending Litigation, etc.. . . . . . . . . . . . . . . . . . 20
5.13 Title to Properties . . . . . . . . . . . . . . . . . . . . 20
5.14 Intellectual Property, etc. . . . . . . . . . . . . . . . . 21
5.15 Compliance with Other Instruments . . . . . . . . . . . . . 21
5.16 Compliance with Law . . . . . . . . . . . . . . . . . . . . 22
5.17 Employees . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.18 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 22
5.19 Compliance with Environmental Laws. . . . . . . . . . . . . 22
5.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.21 Material Contracts and Agreements . . . . . . . . . . . . . 23
5.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.23 Investment Company. . . . . . . . . . . . . . . . . . . . . 24
5.24 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 24
5.25 No Conflict of Interest . . . . . . . . . . . . . . . . . . 25
5.26 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . 25
5.27 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6 RELATED AGREEMENTS OF THE PARTIES . . . . . . . . . . . . . 25
6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . 25
6.2 Access to Properties. . . . . . . . . . . . . . . . . . . . 26
6.3 Relationship with Employees and Customers . . . . . . . . . 26
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6.4 Hired Employees . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Employee Benefits . . . . . . . . . . . . . . . . . . . . . 27
6.6 Other Offers and Exclusive Dealing. . . . . . . . . . . . . 28
6.7 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . 29
6.8 Consents and Approvals. . . . . . . . . . . . . . . . . . . 29
6.9 Qualification and Corporate Existence . . . . . . . . . . . 29
6.10 Public Announcements. . . . . . . . . . . . . . . . . . . . 29
6.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Covenant Not to Compete . . . . . . . . . . . . . . . . . . 30
6.13 Closing Conditions. . . . . . . . . . . . . . . . . . . . . 30
6.14 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.15 Repayment of Debts to Company . . . . . . . . . . . . . . . 31
6.16 Compliance with Regulation D. . . . . . . . . . . . . . . . 31
6.17 Voting for Merger . . . . . . . . . . . . . . . . . . . . . 31
6.18 Antitrust Notification. . . . . . . . . . . . . . . . . . . 31
6.19 Review of Registration Statement. . . . . . . . . . . . . . 31
6.20 Escrow of Software. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACTAMED AND SUBCORP 32
7.1 Representations True and Covenants Performed at Closing . . 32
7.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 No Injunction, etc. . . . . . . . . . . . . . . . . . . . . 32
7.4 Approval of Legal Matters . . . . . . . . . . . . . . . . . 32
7.5 Governmental Approvals. . . . . . . . . . . . . . . . . . . 32
7.6 No Material Adverse Change. . . . . . . . . . . . . . . . . 32
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UHC AND THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Representations True and Covenants Performed at Closing . . 33
8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 No Injunction, etc. . . . . . . . . . . . . . . . . . . . . 33
8.4 Approval of Legal Matters . . . . . . . . . . . . . . . . . 33
8.5 Governmental Approvals. . . . . . . . . . . . . . . . . . . 33
8.6 No Material Adverse Change. . . . . . . . . . . . . . . . . 34
ARTICLE 9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Survival of Representations and Warranties of UHC and the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Survival of Representations and Warranties of ActaMed and
SubCorp . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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9.3 Obligation of UHC to Indemnify. . . . . . . . . . . . . . . 35
9.4 Obligation of ActaMed and SubCorp to Indemnify. . . . . . . 35
9.5 Claims Notice . . . . . . . . . . . . . . . . . . . . . . . 36
9.6 Procedures Involving Non-Third Party Claims . . . . . . . . 36
9.7 Procedures Involving Third Party Claims . . . . . . . . . . 36
9.8 Limitations on Indemnification. . . . . . . . . . . . . . . 37
9.9 No Release for Fraud. . . . . . . . . . . . . . . . . . . . 38
9.10 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . 38
9.12 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 10 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Tax Indemnities . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Returns and Payments. . . . . . . . . . . . . . . . . . . . 40
10.3 Tax Audit . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.4 Cooperation and Exchange of Information . . . . . . . . . . 41
10.5 Tax Sharing Agreements. . . . . . . . . . . . . . . . . . . 42
10.6 Article 9 . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 11 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 42
11.1 Method of Termination . . . . . . . . . . . . . . . . . . . 42
11.2 Notice of Termination . . . . . . . . . . . . . . . . . . . 43
11.3 Effect of Termination . . . . . . . . . . . . . . . . . . . 43
11.4 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 12 ADDITIONAL COVENANTS OF ACTAMED . . . . . . . . . . . . . . 44
12.1 Securities Law Filings. . . . . . . . . . . . . . . . . . . 44
12.2 Transactions with Substantial Holders . . . . . . . . . . . 44
12.3 Business and Financial Covenants. . . . . . . . . . . . . . 44
12.4 Corporate Existence, Business, Maintenance, Insurance . . . 46
12.5 Payment of Taxes, etc.; ERISA . . . . . . . . . . . . . . . 47
12.6 Books and Records, Compliance . . . . . . . . . . . . . . . 47
12.7 Repurchase of Preferred Shares. . . . . . . . . . . . . . . 48
12.8 Compensation. . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 13 INFORMATIONAL COVENANTS OF ACTAMED. . . . . . . . . . . . . 48
13.1 Audited Annual Financial Statements . . . . . . . . . . . . 48
13.2 Quarterly Unaudited Financial Statements. . . . . . . . . . 48
13.3 Monthly Unaudited Financial Statements. . . . . . . . . . . 49
13.4 Management's Analysis . . . . . . . . . . . . . . . . . . . 49
13.5 Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.6 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . 49
13.7 Other Information . . . . . . . . . . . . . . . . . . . . . 50
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ARTICLE 14 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . 51
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.2 Further Assurances. . . . . . . . . . . . . . . . . . . . . 52
14.3 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.4 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . 52
14.5 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . 53
14.6 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.8 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 53
14.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 53
14.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 53
14.11 Pronouns. . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.12 Time of Essence . . . . . . . . . . . . . . . . . . . . . . 53
14.13 Schedules and Exhibits. . . . . . . . . . . . . . . . . . . 53
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EXHIBITS AND SCHEDULES
EXHIBITS
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A Defined Terms
1.4(a)(1) Services and License Agreement
1.4(a)(2) Registration Rights Agreement Amendment
1.4(a)(3) Stockholders' Agreement Amendment
1.4(a)(4) Standstill Agreement Amendment
1.4(a)(5) Terms of Transition Services Agreement
1.4(a)(6) UHC Compliance Certificate
1.4(a)(7) UHC Secretary's Certificate
1.4(a)(8) Company Compliance Certificate
1.4(a)(9) Company Secretary's Certificate
1.4(b)(2) Third Amended and Restated Articles of Incorporation
1.4(b)(3) ActaMed Compliance Certificate
1.4((b)(4) ActaMed Secretary's Certificate
1.4(b)(5) SubCorp Compliance Certificate
1.4(b)(6) SubCorp Secretary's Certificate
SCHEDULES
4.6 EDI Financial Statements
4.9 Changes
4.13(a) Company Personal Property
4.14 Company Intellectual Property
4.19 Company Environmental Conditions
4.20 Company Litigation
4.21(a) Company Contracts
4.27 Interested Party Transactions
5.4(a) ActaMed Financial Statements
5.4(b) Undisclosed Liabilities
5.5 Consent Requirements
5.6 ActaMed Derivative Securities
5.12 ActaMed Litigation
5.13 ActaMed Liens
5.14 ActaMed Intellectual Property
5.20 ActaMed Insurance Policies
5.21 ActaMed Contracts
5.22 Description of 1993 IRS Audit
5.24 ActaMed Labor Practices
5.25 ActaMed Conflicts
6.5 Hired Employees
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of March
1, 1996, is made and entered into by and among ACTAMED CORPORATION, a Georgia
corporation ("ACTAMED"), EDI ACQUISITION, INC., a Georgia corporation
("SUBCORP"), UNITED HEALTHCARE CORPORATION, a Minnesota corporation ("UHC")
and UHC GREEN ACQUISITION, INC., a Nevada corporation (the "COMPANY").
PREAMBLE
The Boards of Directors of ActaMed, SubCorp and the Company, and UHC are
of the opinion that the transactions described in this Agreement are in the
best interests of the parties and their respective shareholders. UHC is the
sole shareholder of the Company and ActaMed is the sole shareholder of
SubCorp. The assets dedicated to the EDI Services Group of UHC ("EDI") were
transferred to the Company. This Agreement provides for the acquisition of
the Company by ActaMed pursuant to the merger of SubCorp with and into the
Company. At the effective time of such merger, the outstanding shares of the
capital stock of the Company shall be converted into the right to receive
preferred stock of ActaMed. As a result, UHC shall become a shareholder of
ActaMed and the Company shall continue to conduct its business and operations
as a wholly-owned subsidiary of ActaMed. The transactions described in this
Agreement are subject to the approval of the Federal Trade Commission and the
United States Department of Justice, and the satisfaction of several other
conditions described in this Agreement.
Capitalized terms used in this Agreement are defined in EXHIBIT A to
this Agreement.
AGREEMENT
In consideration of the mutual representations, warranties and covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. At the Effective Time, SubCorp shall be merged with and
into the Company in the Merger. The Company shall be the Surviving
Corporation of the Merger and shall be governed by the laws of the State of
Nevada. The Merger shall be consummated pursuant to the terms and subject to
the conditions of this Agreement, which has been approved and adopted by the
respective Boards of Directors (or authorized committees thereof) of ActaMed,
SubCorp and the Company, and by UHC.
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1.2 TIME AND PLACE OF CLOSING. The Closing of the transactions
contemplated by this Agreement will take place at 9:00 a.m., Atlanta, Georgia
local time, three business days after satisfaction of the conditions set
forth in Articles 7 and 8, or on such other day or at such other time as the
parties hereto may mutually agree. Notwithstanding the foregoing, if the
Closing does not occur on the first day of a month, then solely for financial
accounting and reporting purposes and filing of income tax returns in
connection with the Company, the parties hereto agree that the transactions
contemplated herein shall be deemed to have closed on as of the first day of
the month in which the Closing occurs; provided that the parties hereto agree
that for all other purposes, including, without limitation, risk of loss, the
Closing shall occur, and shall be deemed to have occurred, on the actual date
of the Closing. Executed counterparts of the documents required for the
Closing shall be exchanged by mail prior to the Closing Date, and the parties
shall inspect and approve such executed documents prior to the Closing Date.
Prior to the Closing Date any documents so exchanged shall not be deemed to
have been delivered, but shall be held in escrow for inspection and approval
pending the Closing. On the Closing Date the parties shall confirm to each
other in writing that the documents are satisfactory, the documents shall be
deemed to be delivered, the Closing shall occur and the Merger shall be
effected.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective at the later of: (a) the date and the
time that a Certificate of Merger reflecting the Merger is filed with the
Secretary of State of the State of Georgia or (b) the date and the time that
articles of merger reflecting the Merger are filed with the Secretary of
State of the State of Nevada.
1.4 ITEMS TO BE DELIVERED AT CLOSING. At the Closing, the parties
shall exchange the following documents in connection with the Merger.
(a) UHC and the Company shall deliver to ActaMed and SubCorp the
following:
(1) a Services and License Agreement, executed by UHC as
attached hereto as EXHIBIT 1.4(a)(1);
(2) a Second Amendment to the Registration Rights Agreement,
executed by UHC and substantially in the form of EXHIBIT 1.4(a)(2);
(3) a Second Amendment to the ActaMed Stockholders'
Agreement, executed by UHC and substantially in the form of EXHIBIT 1.4(a)(3);
(4) an Amendment to the Standstill Agreement, executed by
UHC, UHC Management Company, Inc. and HLM Partners VII, L.P. and
substantially in the form of EXHIBIT 1.4(a)(4);
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(5) a Transition Services Agreement, to be negotiated in good
faith by ActaMed and UHC and to be executed by UHC on substantially the terms
set forth on EXHIBIT 1.4(a)(5);
(6) a compliance certificate executed by an appropriate
officer of UHC and substantially in the form of EXHIBIT 1.4(a)(6);
(7) a Secretary's certificate executed by the Secretary of
UHC and substantially in the form of EXHIBIT 1.4(a)(7);
(8) a compliance certificate executed by the President of the
Company and substantially in the form of EXHIBIT 1.4(a)(8);
(9) a Secretary's certificate executed by the Secretary of
the Company and substantially in the form of EXHIBIT 1.4(a)(9);
(10) an opinion of Xxxxx X. Xxxxx to be negotiated in good
faith by ActaMed, UHC and Xx. Xxxxx;
(11) the written consents of other persons obtained pursuant
to SECTION 6.8;
(12) the resignation of each officer and director of the
Company;
(13) all of the books and records of the Company and the
Company Business including, but not limited to, (a) all corporate and other
records of the Company and each of its predecessors, including the minute
books, stock books, stock registers, books of account, leases and contracts,
deeds, title documents, customer lists, financial statements, (b) employee
records and (c) such other documents or certificates as shall be reasonably
requested by ActaMed and SubCorp;
(14) the good standing and other certificates referred to in
SECTION 6.9 hereof; and
(15) all other documents reasonably requested by ActaMed or
SubCorp.
(b) ActaMed and the SubCorp shall deliver to UHC and the Company
the following:
(1) executed counterpart originals of the Services and
License Agreement, the Registration Rights Agreement Amendment, the
Stockholders' Agreement Amendment, the Standstill Agreement Amendment, the
Transition Services Agreement and the Sublease Agreement;
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(2) a certified copy of the Third Amended and Restated
Articles of Incorporation of ActaMed, filed in the office of the Secretary of
State of Georgia and substantially in the form of EXHIBIT 1.4(b)(2);
(3) a compliance certificate executed by the President of
ActaMed and substantially in the form of EXHIBIT 1.4(b)(3);
(4) a Secretary's certificate executed by the Secretary of
ActaMed and substantially in the form of EXHIBIT 1.4(b)(4);
(5) a compliance certificate executed by the President of
SubCorp and substantially in the form of EXHIBIT 1.4(b)(5);
(6) a Secretary's certificate executed by the Secretary of
SubCorp and substantially in the form of EXHIBIT 1.4(b)(6);
(7) an opinion of Xxxxxx & Bird to be negotiated in good
faith by UHC, ActaMed and Xxxxxx & Bird; and
(8) all other documents reasonably requested by UHC or the
Company.
ARTICLE 2
THE SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective
Time, and thereafter may be amended in accordance with its terms as provided
by law and this Agreement.
2.2 BYLAWS. The Bylaws of SubCorp as in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by
laws and this Agreement.
2.3 DIRECTORS AND OFFICERS. The directors of SubCorp in office
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, and the officers of SubCorp in office immediately
prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly elected
and qualified.
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ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this ARTICLE
3, at the Effective Time, by virtue of the Merger and without any action on
the part of UHC:
(a) All of the Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be deemed canceled and cease to
be outstanding and shall be converted into the right to receive at the
Effective Time as consideration from ActaMed for the Merger 10,344,828 shares
of Series C Preferred Stock of ActaMed. If, after the date of this Agreement
and before the Effective Time, ActaMed shall take any action that would have
caused conversion of the Preferred Shares had they been outstanding, then the
Company Common Stock shall be exchanged for the number of shares of the
ActaMed Common Stock that would have been issued upon the conversion of the
Preferred Shares. If, after the date of this Agreement and before the
Effective Time, ActaMed shall take any action that would have caused an
adjustment to the Series C Conversion Price (as defined in the Restated
Articles) had the Preferred Stock been outstanding, then the Series C
Conversion Price shall be so adjusted.
(b) Any and all shares of Company Common Stock held as treasury
shares by the Company shall be canceled and retired at the Effective Time,
and no consideration shall be issued in exchange therefor.
(c) Each share of the common stock of the SubCorp issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time and shall be unaffected by the
Merger.
3.2 EXCHANGE PROCEDURES. At the Closing, UHC shall deliver to ActaMed
the certificates held by it that formerly represented Company Common Stock,
and shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in SECTION 3.1 of this Agreement. The certificates so
surrendered shall be duly endorsed as ActaMed may require. Until surrendered
for exchange in accordance with the provisions of this SECTION 3.2, each
certificate for Company Common Stock shall from and after the Effective Time
represent for all purposes only the right to receive the consideration
provided in SECTION 3.1 of this Agreement in exchange therefor.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UHC AND THE COMPANY
UHC and the Company jointly and severally represent and warrant to
ActaMed and SubCorp as follows:
4.1 OWNERSHIP OF SHARES; OPERATIONS. UHC is the owner of all right,
title and interest (legal and beneficial) in and to all of the Shares, free
and clear of any and all
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Liens of any nature whatsoever, and UHC holds no other interest in the
Company or the Company Business. Except as pursuant to this Agreement, no
person or entity has any agreement or option or any right or privilege
(whether pre-emptive or contractual) capable of becoming an agreement or
option for the purchase of any of the Shares. Substantially all of the
assets required for the operation of the Company Business have been
transferred to the Company on _____________, 199_ and the Company did not
have any operations prior to such date.
4.2 CAPACITY AND VALIDITY. UHC and the Company each have the full
power, authority and capacity necessary to enter into and perform its
obligations under this Agreement and the other UHC Documents and to
consummate the transactions contemplated hereby and thereby. This Agreement
and all other UHC Documents have been or will be duly executed and delivered
by UHC and the Company, and constitute or will constitute the legal, valid
and binding obligations of UHC and the Company, enforceable in accordance
with their respective terms. Neither the execution, delivery and performance
of this Agreement or any other UHC Document, nor the consummation of the
transactions contemplated hereby or thereby, will violate any provisions of
the articles of incorporation or bylaws of UHC or the Company, or any
Regulation or Court Order to which UHC or the Company is subject.
4.3 ORGANIZATION, STANDING AND FOREIGN QUALIFICATION. UHC is a
corporation duly incorporated, validly existing and in good standing under
the laws of Minnesota. The Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Nevada,
and has the power and authority to carry on its business in the places as it
has been and is now being conducted and to own and lease the properties and
assets which it now owns or leases. The Company is duly qualified and/or
licensed to transact business and is in good standing as a foreign
corporation in the State of Minnesota, and the character of the property
owned or leased by the Company and the nature of the business conducted by it
do not require such qualification and/or licensing in any other jurisdiction.
Copies of the articles of incorporation and all amendments thereto of the
Company (certified by the Secretary of State of the State of Nevada), the
bylaws of the Company (certified by the Secretary of the Company) and copies
of the corporate minutes of the Company, which have been made available to
ActaMed and SubCorp for review, are true and complete copies of such
documents and accurately reflect all proceedings of the shareholders and
directors of the Company (and all committees thereof). The stock record
books of the Company, which have been made available to ActaMed and SubCorp
for review, contain true, complete and adequate records of the stock
ownership of the Company and the transfer of the shares of its capital stock.
4.4 CAPITAL STOCK. The authorized capital stock of the Company
consists of 1,000 shares of Common Stock, $.01 par value per share, all of
which are issued and outstanding. All of the issued and outstanding Shares
are duly and validly issued and outstanding, are fully paid and
nonassessable, and were issued pursuant to a valid exemption from
registration under the Securities Act and all applicable state securities
-xii-
laws. There are no outstanding warrants, options, rights, calls or other
commitments of any nature relating to the Company Common Stock or any other
capital stock of the Company, and there are no outstanding securities of the
Company convertible into or exchangeable for shares of Company Common Stock
or any other capital stock of the Company. There are no shares of capital
stock held in the treasury of the Company.
4.5 SUBSIDIARIES AND INVESTMENTS. The Company has not in the past and
does not currently own, directly or indirectly, any capital stock or other
equity, ownership or proprietary interest in any corporation, partnership,
association, trust, joint venture or other entity.
4.6 EDI FINANCIAL STATEMENTS.
(a) SCHEDULE 4.6 contains audited balance sheets of EDI as of
December 31, 1994, and December 31, 1995, and audited statements of
operations and statements of cash flows for the three years ending December
31, 1995, together with the notes thereto and the reports thereon of Deloitte
& Touche, LLP.
(b) The EDI Financial Statements (1) are in accordance with the
books and records of the UHC Group, which have been properly maintained and
are complete and correct in all material respects; (2) present fairly the
financial condition, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of the Company Business as of the respective dates
indicated and the results of operations for the respective periods indicated;
(3) have been prepared in accordance with GAAP consistently applied
throughout the periods involved, and (4) reflect adequate reserves for all
known Liabilities and reasonably anticipated losses.
(c) The EDI Financial Statements contain no untrue statements of
any material fact nor do they omit to state any material fact required to be
stated to make the EDI Financial Statements not misleading. No member of the
UHC Group has received any advice or notification from its independent
certified public accountants that the UHC Group has used any improper
accounting practice that would have the effect of not reflecting or
incorrectly reflecting in the EDI Financial Statements any properties,
assets, liabilities, revenues or expenses. The EDI Financial Statements do
not contain any items of special or nonrecurring income, or other income not
earned in the ordinary course of business, individually or in the aggregate
in excess of $5,000.
(d) The Company owns all of the assets reflected in the EDI
Financial Statements and the EDI Financial Statements reflect all of the
assets currently used by EDI in connection with the Company Business.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
Liabilities that are not reflected on the EDI Financial Statements, other
than Liabilities for the performance by the Company after the Closing Date of
the contracts assigned to the Company as set forth on the Schedules hereto.
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4.8 NO LIABILITIES AS GUARANTOR. The Company is not directly or
indirectly liable, by guaranty, indemnity, or otherwise, upon or with respect
to, or obligated, by discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any debt,
dividend or other obligation of any person, corporation, association,
partnership or other entity.
4.9 ABSENCE OF CHANGES. Except as disclosed on SCHEDULE 4.9, and
except as contemplated by this Agreement, since December 31, 1995, the
business and operations of the Company have been carried on only in the
ordinary course, and there has not been any transaction or occurrence,
whether or not in the ordinary course, in which the Company (and, with
respect to (e), (f), (h), (i) and (n), any other member of the UHC Group in
connection with the Hired Employees) has:
(a) suffered or experienced any event or condition materially and
adversely affecting the business, operations, assets, properties or condition
of the Company, financial or otherwise;
(b) declared, set aside or made, or agreed to declare, set aside
or make any payments or dividends or any distribution to shareholders, or
purchased, redeemed or otherwise acquired, directly or indirectly, or agreed
to purchase, redeem or acquire, any shares of capital stock or other
securities;
(c) effected any changes in its capital structure, or issued, sold
or otherwise transferred any equity or other interest in itself or any other
securities, or granted or agreed to grant any options or rights to purchase
any securities;
(d) suffered any damage, destruction or loss, whether or not
covered by insurance, which materially and adversely affected the properties
or business of the Company, or suffered any extraordinary losses or waived
any rights of substantial value;
(e) increased the rate of compensation payable or to become
payable by it to any of its officers, directors, employees or agents over the
rate being paid to them as of December 31, 1995, or agreed so to do, except
general hourly rate increases and normal merit increases for employees other
than officers;
(f) hired, committed to hire, terminated or received the
resignation of any Hired Employee;
(g) suffered any loss or termination, or threatened loss or
termination, of any material customer or supplier;
(h) through negotiation or otherwise, made any commitment or
incurred any Liability, whether or not enforceable, to any labor organization;
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(i) directly or indirectly paid or entered into a Contract to pay
any severance or termination pay to any officer, director, employee or agent;
(j) changed any of the accounting principles followed by it or the
methods of applying such principles;
(k) offered or extended more favorable prices, discounts or
advertising, promotional, display or other allowances than were offered or
extended regularly as of the date of the most recently dated EDI Financial
Statements;
(l) entered into any commitment or transaction not in the ordinary
course of business involving aggregate value in excess of $10,000 or made or
approved the making of any capital expenditure exceeding the amount of
$10,000 in any instance;
(m) paid, discharged or satisfied any material liability other
than the payment, discharge or satisfaction of liabilities in the ordinary
course of business;
(n) except in the ordinary course of business and consistent with
past practice, canceled or compromised any debts or waived or permitted to
lapse any claims or rights or sold, transferred or otherwise disposed of any
of its properties or assets;
(o) incurred any liabilities or obligations (absolute, accrued or
contingent) in excess of $10,000, except for accounts payable incurred in the
ordinary course of business;
(p) mortgaged, pledged, subjected or agreed to subject, any of its
assets, tangible or intangible, to any Lien, except for Liens for current
property taxes not yet due and payable;
(q) terminated or amended any material Contract, License or other
instrument to which the Company is a party or suffered any loss or
termination or threatened loss or termination of any existing business
arrangement or material supplier, the termination or loss of which could
materially and adversely affect the Company;
(r) paid or agreed to pay any service charge, interest charge,
investment charge, intercompany charge or similar fee to any member of the
UHC Group that is not reflected in the Transition Services Agreement or
entered into any other transactions other than in the ordinary course of
business;
(s) charged off any bad debts or increased its bad debt reserve;
(t) experienced any significant development, quality assurance or
network operations problems.
4.10 INDEBTEDNESS. The Company has no indebtedness for money borrowed.
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4.11 TAX MATTERS.
(a) The Company has filed all Tax returns and information returns
required to be filed, taking into account any extensions of the filing
deadlines which have been validly granted to the Company, and such returns
are and will be true and correct in all material respects and properly
reflect the Tax liabilities of the Company for the periods, property or
events covered thereby, and the Company has paid all Taxes (including
penalties and interest in respect thereof, if any) that are due, whether
shown on such returns or not.
(b) Adequate provision has been made on the EDI Financial
Statements for all accrued Tax liabilities not required to be paid prior to
such date and for all current and deferred Taxes.
(c) The UHC Group has withheld or collected from each of the Hired
Employees the amount of all Taxes required to be withheld or collected
therefrom and has paid the same to the proper tax depositories or collecting
authorities.
(d) All ad valorem property taxes imposed on the Company and each
of its predecessors or its Affiliates to which it has succeeded with respect
to, or which may become a Lien on, its assets have been paid in full.
4.12 REAL PROPERTY. The Company neither owns nor leases (either as
lessee or lessor) any real property.
4.13 PERSONAL PROPERTY.
(a) SCHEDULE 4.13(a) contains a true, complete and correct list of
the material equipment, machinery, or other tangible personal property owned
by the Company, other than inventories held for resale and personal property
of the Hired Employees. The Company has good and marketable title to all of
its equipment, machinery, and items of tangible personal property (whether or
not disclosed in SCHEDULE 4.13(a)), free and clear of any and all Liens of
any kind or nature.
(b) The Company does not lease any of the equipment, machinery or
other items of tangible personal property used or employed in the Company
Business. The Company does not lease any personal property as lessor.
(c) The equipment, machinery, or other tangible personal property
owned or leased by the Company is in good operating condition and in a state
of reasonable maintenance and repair, and is considered adequate and usable
for the continued operation of the business of the Company as the same is
presently conducted.
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4.14 INTELLECTUAL PROPERTY. SCHEDULE 4.14 contains a list of
all material Intellectual Property owned by, registered in the name of, or
used in the Company Business by the UHC Group on the date hereof, or for
which application has been made. All licenses constituting Intellectual
Property are in full force and effect and constitute legal, valid and binding
obligations of the respective parties thereto, and there have not been and
there currently are not any Defaults thereunder by any party. The Company
owns all of such Intellectual Property free and clear of all assignments,
Licenses (or sublicenses), restrictions or Liens, except as set forth on
SCHEDULE 4.14. None of the Intellectual Property rights in the version and
form used on the Closing Date in the Company's Business infringes upon or
otherwise violates the rights of others, nor has any person asserted to UHC
Group a claim of such infringement, and to the knowledge of UHC Group, no
person is infringing upon or otherwise violating the Intellectual Property
rights of the Company. Except as set forth in SCHEDULE 4.14, the Company is
not obligated to pay any royalties to any person or entity with respect to
any Intellectual Property. The Company does not believe it is or will be
necessary to utilize any inventions of any of the employees engaged in the
Company Business (or people the Company currently intends to hire) made prior
to their employment by any member of the UHC Group. To the best knowledge of
the Company, no employee engaged in the Company Business is or has been in
violation of any term of any employment contract, patent disclosure agreement
or any other contract or agreement relating to the Intellectual Property or
the relationship of any such employee with such entity or any other party.
4.15 ACCOUNTS AND NOTES RECEIVABLE. The accounts receivable and notes
receivable of the Company as reflected in the most recently dated balance
sheet included in the EDI Financial Statements, to the extent uncollected on
the date hereof, and the accounts receivable and notes receivable reflected
on the books of the Company are: (a) valid and existing, (b) enforceable by
the Company in accordance with the terms of the instruments or documents
creating them, and (c) collectible within ninety (90) days in an amount not
less than the aggregate face amount thereof (net of reserves for doubtful and
uncollectible accounts) pursuant to the Company's normal collection practices.
4.16 THE PROPRIETARY SOFTWARE.
(a) The proprietary computer software of the Company included in the
Intellectual Property (the "SOFTWARE") performs in accordance with the
documentation and other written material used in connection with the
Software, is in machine-readable form, contains all current revisions of
such software, and includes all computer programs, materials, tapes, object
and source codes and other written materials related to the Software. The
Company has delivered to ActaMed complete and correct copies of all user
and technical documentation related to the Software.
(b) Neither the UHC Group nor, to the best knowledge of the UHC
Group, any employee or agent thereof has developed or assisted in the
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enhancement of the Software except for enhancements included in the
Software as delivered to ActaMed pursuant hereto.
(c) No employee of UHC Group is, or is now expected to be, in default
under any term of any employment contract, agreement or arrangement
relating to the Software or noncompetition arrangement, or any other
Contract or any restrictive covenant relating to the Software or its
development or exploitation. The Software was developed entirely by the
employees of UHC Group during the time they were employees only of UHC
Group or by consultants who assigned in writing all of their rights in the
Software to UHC Group.
(d) All right, title and interest in and to the Software is owned by
the Company, free and clear of all liens, claims, charges or encumbrances,
are fully transferable to the Purchaser, and no party other than the
Company has any interest in the Software, including without limitation, any
security interest, license, contingent interest or otherwise. UHC Group's
development or sale of the Software did and does not violate any rights of
any other person or entity and UHC Group has not received any communication
alleging such a violation. UHC Group does not have any obligation to
compensate any Person for the development, use, sale or exploitation of the
Software nor has UHC Group granted to any other person or entity any
license, option or other right to develop, use, sell or exploit in any
manner the Software, whether requiring the payment of royalties or not.
(e) UHC Group has kept secret and has not disclosed the source code
for the Software to any person or entity other than certain employees of
UHC Group. UHC Group has taken all appropriate measures to protect the
confidential and proprietary nature of the Software. There have been no
patents applied for and no copyrights registered for any part of the
Software. To the knowledge of UHC Group, there are no trademark rights of
any person or entity other than UHC Group in the name "ProviderLink".
(f) Except as set forth in SECTION 6.20, all copies of the Software
embodied in physical form are being delivered to ActaMed at or prior to the
Closing.
4.17 INSURANCE. UHC has maintained all appropriate types of insurance,
relative to its and the Company's Business in order to protect UHC and the
Company's assets and employees.
4.18 COMPLIANCE WITH LAWS.
(a) The Company and, in the operation of the Company Business, the
UHC Group has complied in all material respects with all applicable laws,
Regulations and orders. The Company has obtained all material permits,
licenses, orders, and
-xviii-
approvals of federal, state and local governmental and regulatory bodies that
are required for the ownership, maintenance and operation of the Company's
premises and facilities and the operation of the Company Business; and no
member of the UHC Group is aware of any pending threat of cancellation,
modification or nonrenewal of any such permits, licenses, orders or
approvals, nor any basis for such cancellation, modification or nonrenewal.
The Company is not presently in material violation or material Default of any
such permit, license, order or approval and the present uses of the Company's
assets do not in any material respect violate any law, Regulation or order.
No notice or warning from any governmental authority with respect to any
failure or alleged failure of the Company to comply with any law, Regulation
or order has been issued or given, nor is any member of the UHC Group aware
that any such notice or warning is proposed or threatened. With the
exception of the acceptance for filing of articles of merger by the
secretaries of state of the States of Georgia and Nevada, respectively, and
as set forth in SECTION 6.18, no consent or approval of, prior filing with or
notice to, or other action by, any governmental body or agency or any other
third party is required in connection with the execution and delivery of this
Agreement or any assignment, agreement or other instrument to be executed and
delivered pursuant to this Agreement by the Company or any of UHC or the
consummation of the transactions provided for herein or therein.
(b) There are no material capital expenditures that the Company
believes are reasonably likely to be required to be made in connection with
the Company Business as now conducted in order to comply with any Regulations
or other governmental requirements applicable to the Company Business as it
is now conducted.
4.19 ENVIRONMENTAL CONDITIONS. Except as set forth in SCHEDULE 4.19,
there are no present or past Environmental Conditions in any way relating to
the business, properties or assets of the Company.
4.20 LITIGATION AND CLAIMS. There are no outstanding Court Orders or
quasi-judicial or administrative decisions to which the Company is subject,
and, except as disclosed on SCHEDULE 4.20, there is no Litigation pending or
to the best knowledge of the UHC Group threatened against or relating to the
Company or its assets or businesses. The UHC Group has not been advised by
any attorney representing it that there are any "loss contingencies" (as
defined in FASB 5), which would be required by FASB 5 to be disclosed or
accrued in financial statements of EDI, were such financial statements
prepared as of the date hereof.
4.21 CONTRACTS AND COMMITMENTS; WARRANTIES.
(a) SCHEDULE 4.21(a) contains a true, correct and complete list of
all Contracts to which the Company is a party or by which the Company
benefits, except for the Contracts that (1) are terminable at will by the
Company without any Liability, (2) are described in any other Schedule
hereto, or (3) do not and can not require payments in excess of $5,000 in the
aggregate following the date hereof.
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(b) Each of the Contracts listed in SCHEDULE 4.21(a), or described
in this SECTION 4.21 but which is included in any other Schedule, is in full
force and effect. No Default under any of the terms or conditions set forth
in any of the Contracts to which the Company is a party or any document or
instrument related thereto has occurred or been asserted by any party which
could result in monetary damages or termination of the Contract or require
payments to cure such Default. Except as reflected in such Schedules,
neither the execution, delivery and performance of this Agreement or any
other agreement or other instrument or document to be executed and delivered
by the Company or UHC pursuant to this Agreement, nor the consummation of the
transactions contemplated hereby or thereby, will conflict with, result in a
breach of, or constitute a Default under any Contract to which the Company or
UHC is a party or by which any of them is bound, affect the continuation,
validity and effectiveness of any of such Contracts, or any terms thereof, or
result in the creation of any Lien upon any of the Shares or any of the
Company's assets or properties, or result in the acceleration of the maturity
of any payment date of any of the Company's obligations, or increase or
adversely affect the obligations of the Company thereunder. True, correct
and complete copies of all written Contracts or a written description of all
oral Contracts referred to in SCHEDULE 4.21(a) have been made available to
ActaMed and SubCorp for review.
(c) UHC Group has not given any warranties to any third parties with
respect to the products or services offered by the Company Business.
4.22 POWERS OF ATTORNEY. The Company has not given or granted any power
of attorney, whether limited or general, to any person, firm, corporation or
otherwise that is continuing in effect.
4.23 BENEFIT PLANS. The Company has not at any time sponsored,
contributed to or been obligated to contribute to any Benefit Plan. Neither
the Company nor UHC has at any time sponsored, contributed to or been
obligated to contribute to a "multiemployer pension plan" (as defined in
ERISA Section 4001(a)(3) and 3(37)(A)) or to a "defined benefit plan" (as
defined in ERISA Section 3(35)). Except as provided in SECTION 6.5(b) of
this Agreement, the Company, ActaMed and ActaMed's Affiliates shall have no
liability or obligation with respect to (i) employment related liabilities,
whether contingent or otherwise, arising out of any Hired Employee's or Hired
Hold-Over Employee's employment with UHC or its Affiliates or (ii) any
Benefit Plan sponsored, maintained or contributed to by UHC or its Affiliates.
4.24 REMUNERATION. The Company has provided complete and accurate
information to ActaMed relating to the direct compensation (including wages,
salaries and actual or anticipated bonuses) and benefits paid or provided in
1995, and the direct compensation and benefits (as described in the preceding
clause) to be paid in 1996, to all of the Hired Employees.
4.25 UNION AND EMPLOYMENT AGREEMENTS. The Company does not have any
employees or independent contractors. No member of the UHC Group is a party to
any
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union agreement that covered the Hired Employees or Hired Hold-Over
Employees, nor does any such member have any written or oral agreement that
is not terminable by it at will with any of the Hired Employees or Hired
Hold-Over Employees, relating to their employment by or performance of
service for the Company Business or their compensation therefor. No union
attempts to organize such employees have been made, nor are any such attempts
now threatened so far as is known to UHC or the Company.
4.26 OFFICERS, DIRECTORS, AND BANK ACCOUNTS. The Company has provided
complete and accurate information to ActaMed relating to (a) the names of all
directors and officers of any member of the UHC Group who are Hired Employees
and (b) the name and location of each bank or other institution in which the
Company has an account or safe deposit box, all account numbers and account
names, and names of all persons authorized to draw thereon or to have access
thereto.
4.27 INTERESTED PARTY TRANSACTIONS.
(a) Except as set forth in SCHEDULE 4.27, the Company is not a
party to any Contract, loan or other transaction with any of the following
persons, or in which any of the following persons have any direct or indirect
interest (other than as a Hired Employee):
(1) any director, officer, or employee of any member of the UHC
Group; or
(2) any of the spouses, parents, siblings, children, aunts,
uncles, nieces, nephews, in-laws or grandparents of any of the persons described
in clause (1).
(b) Except as set forth on SCHEDULE 4.27, no member of the UHC Group
is a consultant, partner, principal, director or shareholder of any business
entity (other than the Company or a corporation whose shares are publicly traded
and in which such member of the UHC Group beneficially owns in the aggregate no
more than a 5% equity interest) which is engaged in a business similar to the
Company Business.
4.28 BROKERS AND FINDERS. No third party is entitled to receive any
commission, fees or similar consideration in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by
or on behalf of UHC or the Company.
4.29 INVESTMENT REPRESENTATIONS; LEGEND ON SHARES. UHC hereby
acknowledges that the Preferred Shares (or Conversion Shares) delivered
pursuant to the Merger will not be registered under the Securities Act, and
the resale of such shares will therefore be subject to restrictions imposed
by federal and state securities laws. UHC represents to and agrees with
ActaMed and SubCorp as follows with respect to the Preferred Shares (and
Conversion Shares):
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(a) It is acquiring the shares for its own account for investment
purposes only, and not with a view to the distribution, transfer, or assignment
of the same in whole or in part.
(b) ActaMed and SubCorp have advised it, a reasonable time prior
to the execution of this Agreement, that the shares have not been registered
under the Securities Act and, therefore, cannot be sold or otherwise disposed
of except in a transaction which is registered under the Securities Act or
exempted from registration.
(c) It has been represented by counsel and advisers, each of whom
has been previously selected by UHC, as UHC has found necessary to consult
concerning this Agreement and the shares to be issued pursuant to this
Agreement. UHC, either alone or with its representative(s), has such
knowledge and experience in financial or business matters that it is capable
of evaluating the merits and risks of the prospective investment.
(d) UHC and its counsel and other advisers have been provided with
the information described in SECTION 4.30 and with such other information
concerning ActaMed as they have deemed relevant with respect to UHC's
investment decision relating to the shares being delivered to it. UHC has
had a reasonable opportunity to ask questions and receive answers concerning
the terms and conditions of the transactions contemplated by this Agreement,
to discuss ActaMed's business, management and financial affairs with the
management of ActaMed and SubCorp, and to obtain any additional information
which ActaMed or SubCorp possesses or can acquire without unreasonable effort
or expense that is necessary to verify the accuracy of the information
furnished. UHC has received satisfactory responses from management of
ActaMed and SubCorp to UHC's inquiries.
(e) UHC acknowledges that all certificates representing the shares
delivered to UHC shall be stamped or otherwise imprinted with a legend
substantially in the following form (together with any other legend required
by state law), and that stop transfer orders will be given to ActaMed's
transfer agent:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES ACTS AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES ACTS OR
EXEMPTIONS FROM SUCH REGISTRATIONS ARE AVAILABLE."
4.30 COMPLIANCE WITH REGULATION D INFORMATION REQUIREMENTS.
(a) ActaMed and SubCorp have provided to UHC, a reasonable time
prior to the execution of this Agreement: (1) ActaMed's Financial Statements
for the year
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ended December 31, 1995; (2) a brief description of the Preferred Shares; and
(3) a brief description of the business of ActaMed. The contents of material
exhibits to such materials have been identified and such exhibits have been
made available to UHC, upon its written request, a reasonable time prior to
the execution of this Agreement.
(b) ActaMed and SubCorp have made available to UHC a reasonable
time prior to the execution of this Agreement the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which ActaMed or SubCorp possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
the information furnished pursuant to paragraph (a) above.
(c) ActaMed and SubCorp have advised UHC of the limitations on
resale of Preferred Shares (and Conversion Shares) imposed by Regulation D
promulgated under the Securities Act.
4.31 SCHEDULES. All Schedules referenced in this ARTICLE 4 are true,
correct and complete as of the date of this Agreement, and will be true,
correct and complete as of the Closing. Matters disclosed on each such
Schedule shall be deemed disclosed only for purposes of the matters to be
disclosed on such Schedule and shall not be deemed to be disclosed for any
other purpose unless expressly provided therein.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACTAMED AND SUBCORP
ActaMed and SubCorp jointly and severally represent and warrant to UHC and
the Company as follows:
5.1 (a) ORGANIZATION AND GOOD STANDING. ActaMed and SubCorp are duly
organized and validly existing corporations in good standing under the laws of
the States of Georgia and have full corporate power to carry on their
businesses, to own and operate their properties and assets, and to consummate
the transactions contemplated by this Agreement.
(b) QUALIFIED TO DO BUSINESS. ActaMed is currently engaged in the
ActaMed Business. ActaMed is qualified to do business as a foreign corporation
in each jurisdiction in which the failure to be so qualified would have a
Material Adverse Effect.
(c) INCORPORATION DOCUMENTS. ActaMed has delivered to UHC and the
Company true, correct and complete copies of the Restated Articles and Bylaws of
ActaMed, including all amendments thereto, as presently in effect.
(d) POWER TO CONDUCT BUSINESS. ActaMed has all corporate power
and all governmental licenses, authorizations, consents and approvals
required to carry on
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the ActaMed Business as now conducted and as proposed to be conducted and to
own, operate and lease its properties and assets, except for those licenses,
authorizations, consents and approvals the failure of which to have would not
have a Material Adverse Effect.
5.2 AUTHORIZATION OF AGREEMENT, NO BREACH. The execution and delivery
of this Agreement have been duly authorized by all necessary corporate action
on the part of ActaMed and SubCorp, and no further corporate action of any
nature is required pursuant to the charter or bylaws of ActaMed or SubCorp.
All persons who have executed or will execute this Agreement, or any other
agreement or document called for by this Agreement, on behalf of ActaMed or
SubCorp have been duly authorized to do so by all necessary corporate action.
This Agreement constitutes, and all of the ActaMed Documents to be executed
and delivered by ActaMed or SubCorp pursuant to this Agreement will
constitute, legal, valid and binding obligations of ActaMed and SubCorp,
enforceable against ActaMed and SubCorp in accordance with their respective
terms, except as enforceability may be limited by applicable equitable
principles, or by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect affecting the enforcement of
creditors' rights generally. The execution, delivery and performance of this
Agreement and the other ActaMed Documents and the consummation of the
transactions contemplated hereby and thereby will not (1) violate or result
in a breach of or Default or acceleration under the charter or bylaws of
ActaMed or SubCorp or any material instrument or agreement to which ActaMed
or SubCorp is a party or is bound, (2) violate any Court Order,
quasi-judicial or administrative decision or award of any court, arbitrator,
mediator, tribunal, administrative agency or governmental body applicable to
or binding upon ActaMed or SubCorp or upon the securities, property or
business of ActaMed or SubCorp, or (3) violate any Regulation of any
administrative agency or governmental body relating to ActaMed or SubCorp, or
to the securities, property, or business of ActaMed or SubCorp.
5.3 CORPORATE POWER. ActaMed and SubCorp have the requisite corporate
power to execute and deliver the ActaMed Documents to which either is a party.
5.4 ACTAMED FINANCIAL STATEMENTS.
(a) The Company has set forth as SCHEDULE 5.4(a) hereto the
balance sheets of ActaMed at December 31, 1994 and December 31, 1995 and the
statements of operations, statements of stockholders equity and statements of
cash flows of ActaMed for the years ended December 31, 1994 and December 31,
1995, which have been audited by Deloitte & Touche, LLP independent
accountants; and
(b) The ActaMed Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis during the respective periods covered
thereby. The ActaMed Financial Statements are correct and complete and present
fairly in all material respects the financial position of ActaMed at the date of
the balance sheet included therein and the results of operations and cash flows
of ActaMed
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for the respective periods covered by the statements of operations and cash
flows included therein. Except as set forth on SCHEDULE 5.4(b) hereto,
ActaMed has no material obligations or liabilities of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or not
due) which are required to be disclosed in the ActaMed Financial Statements
in accordance with GAAP and which, either individually or in the aggregate,
would have a Material Adverse Effect and which are not disclosed by the
ActaMed Financial Statements.
5.5 CONSENTS. No consent, approval or authorization of, or
qualification, designation, declaration or filing with, or notice to any
governmental authority on the part of ActaMed is required in connection with
(a) the valid execution and delivery of the ActaMed Documents and (b) the
issuance of the Preferred Shares (and the Conversion Shares, except (1) as
set forth on SCHEDULE 5.5, (2) the filing of the Restated Articles in the
office of the Secretary of State of the State of Georgia, which filings will
be accomplished on or prior to the Closing Date, (3) the filing of a Form D
with the SEC and (4) the qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) of the
offer and sale of the Preferred Shares (and the Conversion Shares) under any
applicable state securities laws, which qualification, if required, will be
accomplished in a timely manner prior to or promptly upon completion of the
Closing, as required by such laws.
5.6 CAPITALIZATION. After giving effect to the issuance of the
Preferred Shares, the capital stock of ActaMed, as authorized by its Restated
Articles will consist of: (1) 50,000,000 shares of ActaMed Common Stock, no
par value per share, 9,321,250 of which are issued and outstanding,
10,344,828 of which will be reserved for issuance upon conversion of the
Preferred Shares, 8,800,880 of which will be reserved for issuance upon
conversion of issued and outstanding Series A Preferred Stock, 3,448,276 of
which will be reserved for issuance upon conversion of issued and outstanding
Series B Preferred Stock, and 5,624,188 of which will be reserved for
issuance upon exercise of stock options granted or to be granted to officers,
key employees, directors and consultants of ActaMed; (2) 8,800,880 shares of
Series A Preferred Stock all of which are issued and outstanding, and (3)
3,448,276 shares of Series B Preferred Stock, all of which are issued and
outstanding, and 10,344,828 shares of the Preferred Shares, all of which will
be issued and outstanding. As of the Closing Date none of such issued shares
will be held in the treasury of ActaMed. Except as set forth above and on
SCHEDULE 5.6 hereto, as of the Closing Date ActaMed will not have outstanding
any stock or securities convertible into or exchangeable for any shares of
its capital stock and no person will have any right against ActaMed to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance of any capital stock or any stock or
securities convertible into capital stock of ActaMed. All of the outstanding
shares of capital stock of ActaMed are validly issued, fully paid and
nonassessable.
5.7 VALIDITY AND RIGHTS OF THE PREFERRED SHARES. The Preferred Shares,
when issued to UHC pursuant to this Agreement, will be validly issued, fully
paid and nonassessable, will have the designations, preferences, limitations,
and relative rights set
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forth in the Restated Articles and will be free and clear of all liens,
claims and encumbrances. Any and all of the Conversion Shares, when
issuable, will be validly issued, fully paid and nonassessable.
5.8 REGISTRATION RIGHTS. Except as set forth in the Registration
Rights Agreement, as of the Closing Date ActaMed will not be under any
obligation to register under the Securities Act any of its then outstanding
securities or any of its securities which may thereafter be issued.
5.9 OFFERING. Subject to the accuracy of representations and
warranties by UHC and the Company in ARTICLE 4 hereof, the issuance of the
Preferred Shares (and the issuance of the Conversion Shares) constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act, and from the qualification requirements of any applicable
state securities or "blue sky" laws.
5.10 CHANGES. Since the date of the latest ActaMed Financial
Statements, there has not been any adverse change in the assets, liabilities,
financial condition or operations of the ActaMed Business from that reflected
in the ActaMed Financial Statements, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had a
Material Adverse Effect, any adverse change in the prospects of the ActaMed
Business or any other event or condition (or events or conditions) of any
character which, either individually or cumulatively, has had a Material
Adverse Effect.
5.11 SUBSIDIARIES. Other than SubCorp, ActaMed has no Subsidiaries.
Except as set forth in this Agreement, ActaMed does not own, or have the
right to acquire, any securities or other equity or ownership interest in any
corporation, association or other business entity or person.
5.12 PENDING LITIGATION, ETC. Other than as set forth in SCHEDULE 5.12
hereto, there are no actions at law, suits in equity or other proceedings or,
to the best knowledge of ActaMed, investigations in any court, tribunal or by
or before any other governmental or public authority or agency or any
arbitrator or arbitration panel or any governmental or private third-party
insurance agency, pending or, to the best knowledge of ActaMed, threatened
against or affecting ActaMed that:
(a) either individually or in the aggregate, would have a Material
Adverse Effect; or
(b) would question the validity or enforceability of this Agreement,
the ActaMed Documents, or any of the transactions contemplated hereby and
thereby. ActaMed is not in default with respect to any Court Order.
5.13 TITLE TO PROPERTIES. ActaMed has good and marketable title to its
properties and assets and has good title to all its respective leasehold
interests, in each case subject to no Lien, other than as set forth on
SCHEDULE 5.13 hereto. SCHEDULE 5.13
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accurately lists with respect to the personal property owned by ActaMed (a)
each financing statement, deed, agreement or other instrument which has been
filed, recorded or registered pursuant to any United States federal, state or
local law or regulation that names a business entity as debtor or lessee or
as the grantor or the transferor of the interest created thereby, and (b) as
to each such financing statement, deed, agreement or other instrument, the
names of the debtor, lessee, grantor or transferor and the secured party,
lessor, grantee or transferee and the name of the jurisdiction in which such
financing statement, deed, agreement or other instrument has been filed,
recorded or registered. ActaMed has not signed any agreement or instrument
authorizing any secured party thereunder to file any such financing
statement, deed, agreement or other instrument.
5.14 INTELLECTUAL PROPERTY, ETC. ActaMed owns or possesses the rights
to use, free from burdensome restrictions or conflicts with the rights of
others, all copyrights, trademarks, service marks, trade names, patents and
intellectual property licenses, and all rights with respect to the foregoing,
necessary for the conduct of the ActaMed Business as now conducted and as
proposed to be conducted, and is in compliance in all material respects with
the terms and conditions, if any, of all such copyrights, trademarks, service
marks, trade names, patents and intellectual property licenses and the terms
and conditions of any agreements relating thereto. Except as set forth on
SCHEDULE 5.14, there are no outstanding options, licenses, or material
agreements of any kind relating to the foregoing, nor is ActaMed bound by or
a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights and processes of any other
person or entity. ActaMed has not received any communications alleging that
it has violated or, by conducting its business as proposed, would violate any
of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. To
ActaMed's knowledge, none of its employees are obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of their best
efforts to promote the interests of ActaMed or that would conflict with
ActaMed's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of ActaMed's business by the
employees of ActaMed, nor the conduct of ActaMed's business as proposed,
will, to ActaMed's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. ActaMed does not believe it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire)
made prior to their employment by ActaMed.
5.15 COMPLIANCE WITH OTHER INSTRUMENTS. ActaMed is not in violation of or
in default in any material respect under any term of its organizational
documents, any term or provision of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, and is not in violation in any
material respect of any applicable order, statute, rule or regulation, and to
ActaMed's knowledge there is no state of facts which, with the
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passage of time or giving of notice or both, would constitute any such
violation or default that would in the aggregate have a Material Adverse
Effect. The execution, delivery and performance of and compliance with the
ActaMed Documents, the issuance of the Preferred Shares (and the Conversion
Shares) and the consummation of any other transaction contemplated by the
ActaMed Documents have not resulted and will not result in any such
violation, or be in conflict with, or constitute a default under any of the
foregoing, or result in the creation of any Lien upon any of the properties
or assets of ActaMed.
5.16 COMPLIANCE WITH LAW. ActaMed is in compliance with all statutes,
laws and ordinances and all governmental rules and regulations to which it is
subject, the violation of which, either individually or in the aggregate,
would have a Material Adverse Effect. Neither the execution, delivery or
performance of this Agreement or any of the other ActaMed Documents nor the
consummation of the transactions contemplated by the ActaMed Documents will
cause ActaMed to be in violation of any law or ordinance, or any order, rule
or regulation, of any federal, state, municipal or other governmental or
public authority or agency.
5.17 EMPLOYEES. To the best knowledge of ActaMed, no employee of
ActaMed is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
intellectual property of ActaMed or the relationship of any such employee
with such entity or any other party.
5.18 BENEFIT PLANS. Except as provided in this Agreement, applicable
law and the terms of any Benefit Plan sponsored, maintained or contributed to
by UHC or its Affiliates, neither UHC nor its Affiliates shall have any
liability or obligation with respect to (i) employment related liabilities,
whether contingent or otherwise, arising out of any Hired Employee's or Hired
Hold-Over Employee's employment with the Company, ActaMed or ActaMed's
Affiliates or (ii) any Benefit Plan sponsored, maintained or contributed to
by ActaMed or its Affiliates.
5.19 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) ActaMed is, and will
continue to be, in compliance with all applicable federal, state and local
environmental laws, regulations and ordinances governing the ActaMed Business
with respect to all discharges into the ground and surface water, emissions
into the ambient air and generation, accumulation, storage, treatment,
recycling, transportation, labeling or disposal of waste materials or process
by-products, except violations which, either individually or in the
aggregate, would not have a Material Adverse Effect. ActaMed is not liable
for any material penalties, fines or forfeitures for failure to comply with
any of the foregoing. All licenses, permits or registrations required for
the ActaMed Business as presently conducted and proposed to be conducted,
under any federal, state, or local environmental laws, regulations or
ordinances have been or will, in a timely manner, be obtained or made, other
than such licenses, permits or registrations as to which the failure to
obtain or make, either individually or in the aggregate, will not have a
Material Adverse Effect, and ActaMed is in compliance therewith in all
material respects.
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(b) No release, emission or discharge into the environment of
hazardous substances, as defined under the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, or hazardous waste, as
defined under the Resource Conservation and Recovery Act, or air pollutants
as defined under the Clean Air Act, or pollutants, as defined under the Clean
Water Act, by ActaMed has occurred or is presently occurring on or from any
property owned or leased by ActaMed in excess of federal, state or local
permitted releases or reportable quantities, or other concentrations,
standards or limitations under the foregoing laws or any state or local law
governing the protection of health and the environment or under any other
federal, state or local laws or regulations (then or now applicable, as the
case may be) other than such releases, emissions or discharges, either
individually or in the aggregate, would not have a Material Adverse Effect.
(c) To its knowledge, ActaMed has never (1) owned, occupied or
operated a site or structure on or in which any hazardous substance was or is
stored, transported or disposed of in violation of any federal, state or
local environmental laws, regulations or ordinances at such time as such site
or structure was owned, occupied or operated by ActaMed or at any other time,
or (2) transported or arranged for the transportation of any hazardous
substance other than in full compliance with all applicable federal, state
and local environmental laws, regulations and ordinances governing the
ActaMed Business or the storage, transportation or disposal of hazardous
substances except for such violations as, either individually or in the
aggregate, would not have a Material Adverse Effect. ActaMed has never
caused or been held legally responsible for any release or threatened release
of any hazardous substance, or received notification from any federal, state
or other governmental authority of any such release or threatened release, or
that ActaMed may be required to pay any costs or expenses incurred or to be
incurred in connection with any efforts to mitigate the environmental impact
of any release or threatened release, of any hazardous substance from any
site or structure owned, occupied or operated by ActaMed, except such
releases or threatened releases as, either individually or in the aggregate,
would not have a Material Adverse Effect.
5.20 INSURANCE. The ActaMed Business has fire, casualty, liability, and
business interruption insurance policies with recognized insurers, in such
amounts and with such coverage as set forth on SCHEDULE 5.20.
5.21 MATERIAL CONTRACTS AND AGREEMENTS. SCHEDULE 5.21 lists the
parties to, and subject matter of, all material Contracts of the ActaMed
Business, including without limitation, all employment or labor contracts,
leases or compensation plans. Except as set forth on SCHEDULE 5.21, all
material Contracts set forth on such list are valid, binding, and in full
force and effect, without any breach by ActaMed or, to the best of ActaMed's
knowledge, any other party thereto.
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5.22 TAXES. Except as set forth on SCHEDULE 5.22, all federal, state
and other tax returns of ActaMed required by law to be filed have been duly
filed, except for such returns the failure of which to file would not have a
Material Adverse Effect, and all federal, state and other taxes, assessments,
fees and other federal governmental charges upon ActaMed or any of the
properties, incomes or assets of ActaMed that are due and payable have been
paid. No extensions of the time for the assessment of deficiencies have been
granted to ActaMed in connection with any federal tax, assessment, fee or
other federal governmental charge. There are no Liens, on any properties or
assets of the ActaMed Business imposed or arising as a result of the
delinquent payment or the non-payment of any tax, assessment, fee or other
governmental charge that, either individually or in the aggregate, would have
a Material Adverse Effect. ActaMed:
(a) has not assumed and is not liable for any federal, state or
other income tax liability of any other person, including any predecessor
corporation, as a result of any purchase of assets or other business
acquisition transaction; and
(b) has not indemnified any other person or otherwise agreed to
pay on behalf of any other person tax liability growing out of or which may
be asserted on the basis of any tax treatment adopted with respect to all or
any aspect of such a business acquisition transaction.
The charges, accruals and reserves, if any, on the books of ActaMed in
respect of federal, state and local corporate franchise and income taxes for
all fiscal periods to date are adequate in accordance with GAAP, and ActaMed
knows of no additional unpaid assessments for such periods or other
governmental charges payable by ActaMed in connection with the execution and
delivery of this Agreement, the ActaMed Documents or the issuance of the
Preferred Shares by ActaMed, other than stock transfer taxes, recording fees
and filing fees in connection with state securities or "blue sky" filings.
5.23 INVESTMENT COMPANY. ActaMed is not an "investment company", or an
"affiliated person" of an "investment company", or a company "controlled" by
an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, and ActaMed is not an "investment adviser" or an
"affiliated person" of an "investment adviser" as such terms are defined in
the Investment Advisers Act of 1940, as amended.
5.24 LABOR RELATIONS. ActaMed is not engaged in any unfair labor
practices which, either individually or in the aggregate, would have a
Material Adverse Effect. Except as set forth on SCHEDULE 5.24, there is:
(a) no unfair labor practice complaint pending or, to the best of
ActaMed's knowledge, threatened against ActaMed before the National Labor
Relations Board or any court or labor board, and no grievance or arbitration
proceedings arising out of or under collective bargaining agreements is so
pending or, to the best of ActaMed's knowledge, threatened,
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(b) no strike, lock-out, labor dispute, slowdown or work stoppage
pending or, to the best of ActaMed's knowledge, threatened against ActaMed, and
(c) no union representation or certification question existing or
pending with respect to the employees of ActaMed, and, to the best knowledge
of ActaMed, no union organization activity taking place, other than such
actions or proceedings as, either individually or in the aggregate, would not
have a Material Adverse Effect.
5.25 NO CONFLICT OF INTEREST. Except as set forth in SCHEDULE 5.25,
ActaMed is not indebted, directly or indirectly, to any Substantial Holder,
or, to ActaMed's knowledge, to any Affiliate of a Substantial Holder, in any
amount whatsoever. To the best knowledge of ActaMed, and except as set forth
on SCHEDULE 5.25, no Substantial Holders, or any of their Affiliates, are
indebted to any firm or corporation with which ActaMed is affiliated or with
which ActaMed has a business relationship, or any firm or corporation which
competes with ActaMed. Except as contemplated by the ActaMed Documents, no
Substantial Holder, or, to ActaMed's knowledge, any Affiliate of a
Substantial Holder, is directly or indirectly interested in any contract with
ActaMed or any of its Subsidiaries.
5.26 BROKERS OR FINDERS. No broker, agent, finder or consultant or
other person has been retained by or on behalf of ActaMed or SubCorp (other
than legal or accounting advisors), or is may be entitled to be paid based
upon any agreements or understandings made by ActaMed or SubCorp in
connection with the transactions contemplated hereby.
5.27 FULL DISCLOSURE. This Agreement, the other ActaMed Documents, and
any report or financial statement referred to in SECTION 5.4 hereof and any
certificate, report, statement or other writing furnished to UHC or the
Company by or on behalf of ActaMed in connection with the negotiation of this
Agreement and the other ActaMed Documents and the sale of the Preferred
Shares, taken as a whole, do not contain any untrue statement of a material
fact or omit to state a material fact with respect to which disclosure has
been requested and which is necessary to make the statements contained herein
or therein not misleading.
ARTICLE 6
RELATED AGREEMENTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS. Prior to the Closing Date, except with the
prior written consent of ActaMed and SubCorp and except as necessary to
effect the transactions contemplated in this Agreement, the Company shall and
UHC shall cause the Company to:
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(a) conduct the Company Business in substantially the same manner
as presently being conducted, and refrain from entering into any transaction
or Contract other than in the ordinary course of business, and not make any
change in its methods of management, marketing, or operations other than in
the ordinary course of business;
(b) consult with ActaMed and SubCorp prior to undertaking any new
business opportunity not in the ordinary course of business and not undertake
such new business opportunity without the prior written consent of ActaMed
and SubCorp, which consent will not be unreasonably withheld;
(c) confer on a regular and reasonable basis with one or more
designated representatives of ActaMed and SubCorp to report material
operational matters and to report the general status of ongoing operations;
(d) notify ActaMed and SubCorp of any change in the normal course
of the Company Business or in the operation of its properties, and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), adjudicatory proceedings,
budget meetings or submissions involving any material property of the
Company, and keep ActaMed and SubCorp fully informed of such events and
permit its representatives prompt access to all materials prepared in
connection therewith; and
(e) not take any action, or omit to take any action, which would
cause the representations and warranties contained in ARTICLE 4 hereof,
including but not limited to the representations and warranties in SECTION
4.9 of this Agreement, to be untrue or incorrect at any time through and
including the Closing Date.
6.2 ACCESS TO PROPERTIES. At all times prior to the Closing Date,
employees, attorneys, accountants, agents and other authorized and designated
representatives of ActaMed and SubCorp will be allowed reasonable access to
the properties, books and records of the Company and other members of the UHC
Group relating to the Company Business, including without limitation, deeds,
title documents, leases, customer lists, insurance policies, minute books,
share certificate books, share registers, accounts, Tax returns, financial
statements and all other data that, in the reasonable opinion of ActaMed and
SubCorp, are required for ActaMed and SubCorp to make such investigation as
they may desire of the Hired Employees and the properties and business of the
Company and the Company Business. ActaMed and SubCorp shall also be allowed
reasonable access to consult with the officers, employees, accountants,
counsel and agents of the members of the UHC Group in connection with such
investigation. No investigation by ActaMed and SubCorp shall diminish or
otherwise affect any of the representations, warranties, covenants or
agreements of the Company or UHC under this Agreement.
6.3 RELATIONSHIP WITH EMPLOYEES AND CUSTOMERS. At all times prior to
the Closing Date, UHC shall cause each member of the UHC Group to use its
best efforts (without making any commitments other than in the ordinary
course of business), to
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(a) preserve the Company Business organization intact, (b) keep the Hired
Employees available to the Company Business, (c) preserve the present
relationships of the Company Business with its suppliers and customers and
others having business relationships, and (d) take all steps reasonably
necessary to maintain the intangible assets and Intellectual Property of the
Company. Prior to the Closing and for two (2) years thereafter, no member of
the UHC Group shall, directly or indirectly, on its own behalf or on behalf
of others, solicit, divert or take away, or attempt to solicit, divert or
take away, any of the Hired Employees.
6.4 HIRED EMPLOYEES. Immediately after the Closing, the Company will
offer employment (to commence on the Closing Date) to all of the Hired
Employees; provided, however, that, if any Hold-Over Employee presents a
medical release from his or her attending physician which allows such
employee to return to work within nine months after the beginning of his or
her leave of absence, then the Company will offer employment (to commence
immediately) to such Hold-Over Employee on the day he or she returns to work
("HIRED HOLD-OVER EMPLOYEE"), and if any Hold-Over Employee does not have a
medical release to return to work within such nine-month period, then the
Company will not be obligated to offer employment to him or her. UHC shall
cause each member of the UHC Group to terminate the employment of each of the
Hired Employees effective as of the Closing Date; provided, however, that no
member of the UHC Group shall terminate the employment of any Hired Hold-Over
Employee until such employee presents a medical release from his or her
attending physician and will continue to provide each Hired Hold-Over
Employee with benefits in accordance with UHC's standard policies and
procedures until the earlier of (a) the day such employee has a medical
release to return to work, or (b) nine (9) months after the beginning of such
employee's leave of absence.
6.5 EMPLOYEE BENEFITS.
(a) The Company has never been a participating employer in any
Benefit Plan sponsored, maintained or contributed to by UHC or its
Affiliates. Except as provided in SECTION 6.5(B) below, no portion of the
assets of any Benefit Plan heretofore sponsored or maintained by any member
of the UHC Group for the Hired Employees or Hired Hold-Over Employees (and no
amount attributable to any such Benefit Plan) shall be transferred to the
Company, and the Company shall not be required to sponsor or maintain any
such Benefit Plan after the Closing Date. The amounts payable to the Hired
Employees or Hired Hold-Over Employees on account of all benefit arrangements
(including, but not limited to, all accrued, but unpaid, sick leave but
excluding the UHC 401(k) Plan) shall be either maintained in such Benefit
Plan or paid to the Hired Employees and Hired Hold-Over Employees, in each
case in accordance with the applicable Benefit Plan documents, except that
such amounts shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent.
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(b) Certain Hired Employees and Hired Hold-Over Employees will
have account balances under the UHC 401(k) Plan as of the Closing Date. UHC
warrants that the UHC 401(k) Plan that will make the transfer described below
is "qualified" within the meaning of Section 401(k) of the Internal Revenue
Code, has received a favorable determination letter from the Internal Revenue
Service dated August, 1995 and no event has occurred and no condition exists
that could reasonably be expected to result in the revocation of any such
determination letter. The vested and nonvested account balances under the
UHC 401(k) Plan for those Hired Employees and Hired Hold-Over Employees will
be transferred to the ActaMed 401(k) Plan as soon as administratively
feasible after the Closing Date but (i) for Hired Employees, no later than 60
days after the second "valuation date" (as defined in the UHC 401(k) Plan)
following the Closing Date and (ii) for Hired Hold-Over Employees, no later
than 60 days after the second "valuation date" following the Hired Hold-Over
Employee's initial hire date with the Company. The account balances to be
transferred will include cash and any outstanding participant loans. The
amount transferred will be calculated in accordance with normally accepted
practices by record keepers and ERISA trustees. ActaMed warrants that the
ActaMed 401(k) Plan that will receive the transfer is "qualified" within the
meaning of Section 401(k) of the Internal Revenue Code, has adopted a
standardized prototype plan (as defined in Section 3.08 of Rev. Proc. 89-9,
1989-1 CB 780) with an IRS opinion letter dated November 8, 1993 and no event
has occurred and no condition exists that could reasonably be expected to
result in the ActaMed 401(k) Plan losing its status as a qualified,
standardized prototype plan. The ActaMed 401(k) Plan will be amended to
address the transfer of accounts from the UHC 401(k) Plan including the
preservation of all Section 411(d)(6) optional forms of benefits available to
the Hired Employees or Hired Hold-Over Employees under the UHC 401(k) Plan,
distribution rules under Section 401(k) of the Internal Revenue Code, past
service credit and participation in the ActaMed 401(k) Plan by such Hired
Employees and Hired Hold-Over Employees. United HealthCare Corporation will
assume no liability for the payment of account balances that are transferred
following the date of transfer and ActaMed will assume no liability for the
payment of account balances that are not transferred. However, as provided
in SECTION 5.18 of this Agreement, ActaMed and its Affiliates shall continue
to be liable to UHC and its Affiliates for any other loss suffered by UHC and
its Affiliates arising out of the ActaMed 401(k) Plan. Similarly, as
provided in SECTION 4.23 of this Agreement, UHC and its Affiliates shall
continue to be liable to ActaMed and its Affiliates for any other loss
suffered by ActaMed and its Affiliates arising out of the UHC 401(k) Plan.
(c) The Company, ActaMed and ActaMed's Affiliates shall not be
liable for any claim for insurance, reimbursement or other benefits payable
by reason of any event which occurs prior to the Closing Date.
Notwithstanding the foregoing, prior employment of Hired Employees by the UHC
Group shall be counted for purposes of eligibility for a medical and dental
plan which shall be provided by ActaMed to such Hired Employees without any
limitations based upon pre-existing conditions effective (i) for Hired
Employees and their dependents, as of the first day of the month following
the Closing Date and (ii) for Hired Hold-Over Employees and their dependents,
as of the
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later of the Hired Hold-Over Employee's initial date of employment with the
Company or the first day of the month following the Closing Date.
6.6 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and until this
Agreement is terminated prior to Closing pursuant to ARTICLE 10, UHC shall
not, acting in any capacity, directly or indirectly, through any officer,
director, employee, agent or otherwise of the UHC or any member of the UHC
Group, (a) solicit, initiate or encourage submission of proposals or offers
from any person, corporation or other entity relating to any purchase of the
Shares, or any merger, sale of substantial assets or similar transaction
involving the Company or the Company Business, (b) participate in any
discussions or negotiations regarding, or, except as required by a legal or
judicial process, furnish to any other person, corporation or other entity
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any other person, corporation or other entity to purchase the Shares, or
engage in a merger, purchase of substantial assets or similar transaction
involving the Company or the Company Business, or (c) approve or undertake
any such transaction. UHC shall promptly communicate to ActaMed and SubCorp
the terms of any such proposal or offer upon knowledge or receipt of such
proposal or offer.
6.7 CERTAIN TAX MATTERS. UHC shall cause all Tax returns of the
Company required to be filed on or before the Closing Date, taking into
account any extensions of the filing deadlines granted to the Company that
had not yet been filed prior to the date hereof (including those relating to
periods after the Closing Date), to be prepared by the Company but not to be
filed without prior examination by or on behalf of ActaMed and SubCorp.
6.8 CONSENTS AND APPROVALS. The Company and UHC agree to use their
best efforts to obtain the waiver, consent and approval of all persons whose
waiver, consent or approval (a) is required in order to consummate the
transactions contemplated by this Agreement, or (b) is required by any
Contract, Court Order or License to which the Company or UHC is a party or
subject on the Closing Date, and (1) which would prohibit, or require the
waiver, consent or approval of such transactions, or (2) under which such
transactions would, without such waiver, consent or approval, constitute a
Default under the provisions thereof, result in the acceleration of any
obligation thereunder, or give rise to a right of any party thereto to
terminate its obligations thereunder. All written waivers, consents and
approvals obtained by UHC and the Company shall be produced at the Closing in
form and content reasonably satisfactory to ActaMed and SubCorp.
6.9 QUALIFICATION AND CORPORATE EXISTENCE. The Company shall deliver to
ActaMed and SubCorp (a) a certificate of the Secretary of State of the State of
Nevada, dated as of a date no more than ten (10) business days prior to the
Closing Date, stating that the Company is a corporation in good standing under
the laws of such state and has paid all applicable franchise or other fees and
taxes due to such state and (b) certificates of the appropriate officials of the
State of Minnesota, all dated as of a date no more than
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ten (10) business days prior to the Closing Date, stating that the Company is
duly qualified and in good standing to transact business as a foreign
corporation as stated in SECTION 4.3 of this Agreement in such state and has
paid all applicable franchise or other fees and taxes due to each such state.
6.10 PUBLIC ANNOUNCEMENTS. Each party hereto agrees that neither it,
nor or any of its representatives, shall make any public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the other parties hereto unless required by law or judicial
process, in which case notification shall be given to the other parties
hereto prior to such disclosure.
6.11 CONFIDENTIALITY.
(a) Each party hereto agrees not to use, copy or disclose the
trade secrets of any other party, except as permitted by this Agreement.
Each party shall treat any other's trade secrets with at least that degree of
care it uses with respect to its own such trade secrets. Each party will
give access to any other party's trade secrets only to such of its personnel
as have a need to such access and to no other person whatsoever. The
requirements herein contained with respect to non-disclosure and non-use and
protection of each party's trade secrets shall permanently survive
termination of any other provisions of this Agreement. If any party is
ordered by a court, administrative agency, or other governmental body of
competent jurisdiction to disclose trade secrets, or if it is served with or
otherwise becomes aware of a motion or similar request that such an order be
issued, then such party will not be liable to the other party for disclosure
of trade secrets required by such order if the disclosing party complies with
the following requirements: (1) if an already issued order calls for
immediate disclosure, then the disclosing party shall immediately move for or
otherwise request a stay of such order to permit the other party to respond;
(2) the disclosing party promptly notifies the other party of the motion or
order; and (3) the disclosing party not oppose a motion or similar request by
the other party for an order protecting the trade secrets including joining
or agreeing to (or non-opposition to) a motion for leave to intervene by such
other party.
(b) The term "TRADE SECRETS" means information related to a party
(1) which derives economic value, actual or potential, from not being
generally known to or readily ascertainable by other persons who can obtain
economic value from its disclosure or use, and (2) which is the subject of
efforts by said party that are reasonable under the circumstances to maintain
its secrecy.
6.12 COVENANT NOT TO COMPETE. UHC hereby acknowledges and agrees that
the exclusivity and noncompetition provisions of the Services and License
Agreement are an important and substantial part of the consideration to
ActaMed for the consummation of the transactions contemplated hereby, and the
parties hereby incorporate by reference those provisions of the Services and
License Agreement.
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6.13 CLOSING CONDITIONS. ActaMed, SubCorp, the Company and UHC each
agree to use its best efforts to satisfy the closing conditions set forth in
ARTICLES 1, 7 and 8 of this Agreement.
6.14 EXPENSES. Except as otherwise provided herein and except that UHC
shall pay all of the expenses of the Company (including, but not limited to,
the audit by Deloitte & Touche, LLP of the books and records of the Company
and the Company Business), the parties to this Agreement shall each bear its
respective expenses incurred in connection with the preparation, execution
and performance of this Agreement and the transactions contemplated hereby,
including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
6.15 REPAYMENT OF DEBTS TO COMPANY. On or before the Closing Date, all
loans and advances from the Company to any member of the UHC Group, whether
or not disclosed in SCHEDULE 4.27, shall be repaid to the Company in full and
the Company shall have delivered to ActaMed and SubCorp appropriate
instruments or writings to evidence the receipt of such repayments, and all
guaranties by the Company of loans obtained by any member of the UHC Group,
from third parties shall have been released.
6.16 COMPLIANCE WITH REGULATION D. ActaMed shall file five copies of a
notice on SEC Form D no later than fifteen (15) days after the execution of
this Agreement.
6.17 VOTING FOR MERGER. UHC agrees to vote for and approve the Merger
and the transactions contemplated by this Agreement and waives its
dissenter's rights under the General Corporation Law of the State of Nevada.
6.18 ANTITRUST NOTIFICATION. Each of the parties will promptly file
with the United States Federal Trade Commission and the United States
Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional
information which may reasonably be requested in connection therewith
pursuant to the HSR Act and will comply in all material respects with the
requirements of the HSR Act. UHC and ActaMed shall each pay fifty percent
(50%) of the applicable filing fees.
6.19 REVIEW OF REGISTRATION STATEMENT. ActaMed shall give UHC the
opportunity to review and comment upon those portions of any Registration
Statement or amendment thereto prepared by ActaMed in connection with a
proposed initial public offering which describe UHC and ActaMed's
relationship therewith, prior to filing such Registration Statement or
amendment thereto with the Securities and Exchange Commission, and shall
cooperate with UHC and use its reasonable efforts to accommodate the
reasonable comments of UHC.
6.20 ESCROW OF SOFTWARE. On the Closing Date, the Company shall deliver
to one copy of the Software to Fort Xxxx (the "ESCROW AGENT"), which copy shall
serve as a
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prototype of the Software delivered to ActaMed on the Closing Date and which
copy shall be made available to UHC for the defense of any claims by ActaMed
or others regarding the functionality and performance of the Software.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF ACTAMED AND SUBCORP
The obligations of ActaMed and SubCorp to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions,
all or any of which may be waived, in whole or in part, by ActaMed and
SubCorp for purposes of consummating such transactions, but without prejudice
to any other right or remedy which ActaMed and SubCorp may have hereunder as
a result of any misrepresentation by, or breach of any agreement, covenant or
warranty of, UHC or the Company contained in this Agreement or any schedule,
certificate or instrument furnished or caused to be furnished by UHC or the
Company hereunder.
7.1 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by UHC or the Company in the UHC
Documents shall be true and correct in all material respects 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.
7.2 COVENANTS. All of the terms, covenants and conditions in the UHC
Documents to be complied with or performed by UHC or the Company on or prior
to the Closing shall have been complied with and performed in all material
respects.
7.3 NO INJUNCTION, ETC. No action, proceeding, investigation,
Regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin,
restrain, prohibit, or obtain substantial damages in respect of, or which is
related to, or arises out of, this Agreement or the consummation of the
transactions contemplated hereby, or which is related to or arises out of the
Company Business, if such action, proceeding, investigation, regulation or
legislation, in the reasonable judgment of ActaMed and SubCorp, would make it
inadvisable to consummate such transactions.
7.4 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments
and documents deemed necessary or appropriate by ActaMed and SubCorp or their
counsel to effectuate this Agreement and the consummation of the transactions
contemplated hereby, or incidental thereto, and all other related legal
matters, shall have been approved by such counsel.
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7.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received by ActaMed and SubCorp.
7.6 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the financial condition, operating results or assets of the
Company or EDI between the date of the EDI Financial Statements and the Closing
Date, and UHC shall have delivered to ActaMed a certificate dated as of the
Closing Date certifying to such effect.
ARTICLE 8
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF UHC AND THE COMPANY
The obligations of UHC and the Company to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions,
all or any of which may be waived, in whole or in part, by UHC and the
Company for purposes of consummating such transactions, but without prejudice
to any other right or remedy which they may have hereunder as a result of any
misrepresentation by, or breach of any agreement, covenant or warranty of
ActaMed or SubCorp contained in this Agreement, or any certificate or
instrument furnished by it hereunder.
8.1 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by ActaMed or SubCorp in the ActaMed
Documents shall be true and correct in all material respects 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.
8.2 COVENANTS. All of the terms, covenants and conditions in the ActaMed
Documents to be complied with or performed by ActaMed or SubCorp on or prior to
the Closing shall have been complied with and performed in all material
respects.
8.3 NO INJUNCTION, ETC. No action, proceeding, investigation, Regulation
or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain, prohibit, or
obtain substantial damages in respect of, or which is related to, or arises out
of, this Agreement or the consummation of the transactions contemplated hereby,
or which is related to or arises out of the business of ActaMed or SubCorp, if
such action, proceeding, investigation, Regulation or legislation, in the
reasonable judgment of UHC, would make it inadvisable to consummate such
transactions.
8.4 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments and
documents deemed necessary or appropriate by UHC or their counsel to effectuate
this
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Agreement and the consummation of the transactions contemplated hereby, or
incidental hereto, and all other related legal matters, shall have been approved
by such counsel.
8.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received by UHC and the Company.
8.6 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the financial condition, operating results or assets of
ActaMed between the date of the ActaMed Financial Statements and the Closing
Date, and ActaMed shall have delivered to UHC a certificate dated as of the
Closing Date certifying to such effect.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF UHC AND THE COMPANY.
ActaMed, SubCorp, UHC and the Company acknowledge and agree that, as
contemplated by SECTION 6.2, prior to the Closing Date, ActaMed and SubCorp
intend to perform such investigation of the Company as they may deem
appropriate; provided, however, no investigation by ActaMed and SubCorp shall
diminish or otherwise affect any of the representations, warranties, covenants
or agreements made or to be performed by UHC or the Company pursuant to this
Agreement or ActaMed's and SubCorp's right to rely fully upon such
representations, warranties, covenants and agreements. All such
representations, warranties, covenants and agreements made or to be performed by
UHC or the Company pursuant to this Agreement shall survive the execution and
delivery hereof and the Closing hereunder. The representations and warranties
shall thereafter terminate and expire (a) with respect to any General Claim with
respect to which a Claims Notice has not been given, on the later of (i)
eighteen months after the Closing Date or (ii) the first anniversary of the date
on which such covenant is to be performed hereunder; and (b) with respect to any
Tax Claim, on the later of (i) the ninetieth (90th) day after the date upon
which the Liability to which any such Tax Claim may relate is barred by all
applicable statutes of limitation and (ii) the ninetieth (90th) day after the
date upon which any claim for refund or credit related to such Tax Claim is
barred by all applicable statutes of limitation. With respect to any Ownership
Claim, Undisclosed Liability Claim or any type of claim not specifically
addressed above, such representations, warranties, covenants and agreements
shall survive without limit of time.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF ACTAMED AND SUBCORP.
Except for the covenants and agreements contained in ARTICLES 12 and 13, which
shall survive termination of this Agreement in accordance with their respective
terms, all the representations, warranties, covenants and agreements, made or to
be performed by ActaMed and SubCorp pursuant to this Agreement shall be
considered to have been relied upon by UHC and shall survive the delivery to UHC
of the Preferred
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Shares (and the Conversion Shares) and shall terminate and expire, with
respect to any Claim for which a Claims Notice has not been given, on the
first anniversary of the Closing Date.
9.3 OBLIGATION OF UHC TO INDEMNIFY. Subject to the limitations of
SECTIONS 9.1 and 9.8, UHC agrees to indemnify and hold harmless each ActaMed
Indemnitee against and in respect of:
(a) all Losses, asserted against, imposed upon or incurred by any
ActaMed Indemnitee by reason of or resulting from:
(1) a breach of any representation or warranty of UHC or the
Company contained in or made pursuant to this Agreement; or
(2) any nonfulfillment of any covenant or agreement of UHC or
the Company contained in or made pursuant to this Agreement;
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any Loss in connection with SECTION 9.3(a) or to the enforcement of this SECTION
9.3;
(c) all Losses asserted against, imposed upon or incurred by any
ActaMed Indemnitee by reason or resulting from:
(1) any and all costs, judgments, claims, actions at law or in
equity, interest charges and reasonable attorneys' fees with respect to any
cause of action or proceeding, by any participant or dependent or beneficiary of
any participant, arising out of or by reason of the sponsorship by any member of
the UHC Group of any Benefit Plan prior to the Effective Time;
(2) any Environmental Condition, and arising out of or in
connection with any event or events which occurred prior to the Effective Time;
and
(3) any Litigation pending or threatened as of the Closing Date,
or Litigation arising out of events which occurred prior to the Effective Time,
against or affecting the Company regardless of whether it is disclosed on
SCHEDULE 4.20 or any other Schedule attached to ARTICLE 4 hereto.
9.4 OBLIGATION OF ACTAMED AND SUBCORP TO INDEMNIFY. Subject to the
limitations of SECTIONS 9.1 and 9.8, ActaMed and SubCorp agree to indemnify and
hold harmless each UHC Indemnitee against and in respect of:
(a) all Losses asserted against, imposed upon or incurred by any UHC
Indemnitee by reason of or resulting from:
-xli-
(1) a breach of any representation or warranty of ActaMed or
SubCorp contained in or made pursuant to this Agreement; or
(2) any nonfulfillment of any covenant or agreement of the
ActaMed or SubCorp contained in or made pursuant to this Agreement; and
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any Loss in connection with SECTION 9.4(a) or to the enforcement of this SECTION
9.4.
9.5 CLAIMS NOTICE. A Claim shall be made by any Indemnitee by delivery
of a Claims Notice to any Indemnifying Party requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
9.6 PROCEDURES INVOLVING NON-THIRD PARTY CLAIMS. If the Claim
involves a matter other than a Third Party Claim, the Indemnifying Party
shall have forty-five (45) days to object to such Claim by delivery of a
written notice of such objection to such Indemnitee specifying in reasonable
detail the basis for such objection. If an objection is timely interposed by
the Indemnifying Party, the Indemnifying Party and the Indemnitee shall
cooperate in the compromise of the Claim. Failure to object in a timely
manner shall constitute a final and binding acceptance of the Claim by the
Indemnifying Party on behalf of all Indemnitors, and the Claim shall be paid
in accordance with SECTION 9.10 hereof.
9.7 PROCEDURES INVOLVING THIRD PARTY CLAIMS.
The obligations and liabilities of the parties hereunder with respect to a
Third Party Claim shall be subject to the following terms and conditions:
(a) The Indemnitee shall give the Indemnifying Party written notice
of a Third Party Claim promptly after receipt by the Indemnitee of notice
thereof, and the Indemnifying Party may undertake the defense, compromise and
settlement thereof by representatives of its own choosing reasonably acceptable
to the Indemnitee. The failure of the Indemnitee to notify the Indemnifying
Party of such claim shall not relieve the Indemnifying Party of any liability
that they may have with respect to such claim except to the extent the
Indemnifying Party demonstrates that the defense of such claim is prejudiced by
such failure. The assumption of the defense, compromise and settlement of any
such Third Party Claim by the Indemnifying Party shall be an acknowledgment of
the obligation of the Indemnifying Party to indemnify the Indemnitee with
respect to such claim hereunder. If the Indemnitee desires to participate in,
but not control, any such defense, compromise and settlement, it may do so at
its sole cost and expense. If,
-xlii-
however, the Indemnifying Party fails or refuses to undertake the defense of
such Third Party Claim within ten (10) days after written notice of such
claim has been given to the Indemnifying Party by the Indemnitee, the
Indemnitee shall have the right to undertake the defense, compromise and
settlement of such claim with counsel of its own choosing. In the
circumstances described in the preceding sentence, the Indemnitee shall,
promptly upon its assumption of the defense of such claim, make a Claim as
specified in SECTION 9.5 which shall be deemed a Claim that is not a Third
Party Claim for the purposes of the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any Third
Party Claim or the litigation or resolution thereof involves an issue or
matter which could have a material adverse effect on the business,
operations, assets, properties or prospects of the Indemnitee (including,
without limitation, the administration of the tax returns and
responsibilities under the tax laws of the Indemnitee), the Indemnitee shall
have the right to control the defense, compromise and settlement of such
Third Party Claim undertaken by the Indemnifying Party, and the reasonable
costs and expenses of the Indemnitee in connection therewith shall be
included as part of the indemnification obligations of the Indemnifying Party
hereunder. If the Indemnitee shall elect to exercise such right, the
Indemnifying Party shall have the right to participate in, but not control,
the defense, compromise and settlement of such Third Party Claim at its sole
cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of the Indemnifying Party under this Article shall be made without the
prior written consent by or on behalf of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. If the Indemnifying Party
assumes the defense of such a Third Party Claim, (1) no compromise or settlement
thereof may be effected by the Indemnifying Party without the Indemnitee's
consent unless (A) there is no finding or admission of any violation of law or
any violation of the rights of any person and no effect on any other claim that
may be made against the Indemnitee (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party and (C) the compromise
or settlement includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnitee of a release, in form and substance
satisfactory to the Indemnitee, from all liability in respect of such Third
Party Claim, and (2) the Indemnitee shall have no liability with respect to any
compromise or settlement thereof effected without its consent.
9.8 LIMITATIONS ON INDEMNIFICATION.
(a) No party to this Agreement shall be entitled to indemnification
under this Agreement to the extent that such party's Losses are increased or
extended by the willful misconduct, violation of law or bad faith of such party.
(b) No Indemnifying Party shall be required to indemnify an
Indemnitee with respect to any Loss arising out of or with respect to a General
Claim unless the amount of such Loss, when aggregated with all other such
Losses, shall exceed
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the Threshold Amount (as defined below), at which time Claims may be asserted
to the extent that all Losses or Asserted Liabilities are in excess of the
Threshold Amount; provided, however, that the Threshold Amount shall not
apply to any Loss: (A) which results from or arises out of an Ownership
Claim, Tax Claim or Undisclosed Liability Claim, (B) which results from or
arises out of fraud or intentional misrepresentation or an intentional breach
of a representation, warranty, covenant or agreement in this Agreement; or
(C) which results from or arises out of any Litigation incident to any of the
matters referred to in the foregoing clauses (A) and (B). The Threshold
Amount shall be One Hundred Thousand Dollars ($100,000). Notwithstanding the
foregoing, for any breach of SECTION 4.13, UHC shall indemnify each ActaMed
Indemnitee for any individual Loss in excess of $10,000 per item of tangible
personal property and any aggregate Loss exceeding $50,000 for items of
tangible personal property.
(c) In no event shall the aggregate liability of the Indemnifying
Party for any General Claim under this ARTICLE 9 exceed $10 million.
9.9 NO RELEASE FOR FRAUD. Nothing contained in this Agreement shall
relieve or limit the liability of any party or any officer or director of such
party from any Liability arising out of or resulting from common law fraud or
intentional misrepresentation in connection with the transactions contemplated
by this Agreement or in connection with the delivery of any of the Transaction
Documents. Each party shall have a right to indemnification for any Loss
incurred as the result of any common law fraud or intentional misrepresentation
by any other party or any officer or director of such other party without regard
to the Threshold Amount, the maximum liability or any period of limitation.
9.10 PAYMENT.
(a) If any party is required to make any payment under this
ARTICLE 9, such party shall promptly pay the Indemnified Party the amount so
determined. If there is a dispute as to the amount or manner of determination
of any indemnity obligation owed under this ARTICLE 9, the Indemnifying Party
shall nevertheless pay when due such portion, if any, of the obligation as shall
not be subject to dispute. The difference, if any, between the amount of the
obligation ultimately determined as properly payable under this ARTICLE 9 and
the portion, if any, theretofore paid shall bear interest as provided in
SECTION 9.10(c).
(b) Any items as to which an Indemnified Party is entitled to payment
under this ARTICLE 9 may be paid by set-off against amounts payable to the
Indemnifying Party to the extent that such amounts are sufficient to pay such
items.
(c) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the Indemnifying Party shall pay the
Indemnified Party interest on the unpaid principal amount of the obligation from
the date the amount
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became due until payment in full, at the per annum rate of interest announced
from time to time by NationsBank South, N.A., to be its "prime rate."
9.11 EXCLUSIVE REMEDY. Except for equitable remedies and any action for
common law fraud, the remedies provided in this ARTICLE 9 constitute the sole
and exclusive remedies for recovery against the Indemnifying Party based upon
this Agreement.
9.12 ARBITRATION. All disputes arising under this ARTICLE 9 (other than
claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by UHC and ActaMed in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The arbitration shall be held in
such place in Atlanta, Georgia as may be specified by the arbitrator (or any
place agreed to by UHC, ActaMed and the arbitrator). The decision of the
arbitrator shall be final and binding as to any matters submitted under this
ARTICLE 9; provided, however, if necessary, such decision and satisfaction
procedure may be enforced by either UHC or ActaMed in any court of record having
jurisdiction over the subject matter or over any of the parties to this
Agreement. All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys' fees) shall be borne by
the party against which the decision is rendered, or, if no decision is
rendered, such costs and expenses shall be borne equally by the Indemnifying
Party as one party and the Indemnitees as the other party. If the arbitrator's
decision is a compromise, the determination of which party or parties bears the
costs and expenses incurred in connection with any such arbitration proceeding
shall be made by the arbitrator on the basis of the arbitrator's assessment of
the relative merits of the parties' positions.
ARTICLE 10
TAX MATTERS
10.1. TAX INDEMNITIES.
(a) From and after the Closing Date, UHC shall indemnify ActaMed and
the Company against all Taxes (i) imposed on the Company with respect to any
taxable period or portion thereof that ends before or on (but includes) the
Closing Date (ii) imposed on UHC or any member of an affiliated group with which
UHC files a consolidated or combined income tax return (other than the Company)
with respect to any taxable period.
(b) From and after the Closing Date, ActaMed and Company shall
indemnify UHC against all Taxes imposed on the Company with respect to its
income, business, property or operations for any taxable period or portion
thereof that begins after the Closing Date.
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(c) For purposes of Sections 10.01(a) and (b), in the case of
Taxes that are payable with respect to a taxable period that begins before
the Closing Date and ends after the closing Date, the portion of any such Tax
that is allocable to the portion of the period ending on the Closing Date
shall: (i) in the case of Taxes that are either (x) based upon or related to
income or receipts of (y) imposed in connection with any sale, other transfer
or assignment or any deemed sale, transfer or assignment of property (real or
personal, tangible or intangible), be deemed equal to the amount which would
be payable if the taxable year ended on the Closing Date, and (ii) in the
case of Taxes imposed on a periodic basis with respect to the assets of the
Company or otherwise measured by the level of any item, be deemed to be the
amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period) multiplied by a fraction the numerator of which is the
number of calendar days in the portion of such period ending on the Closing
Date and the denominator of which is the number of calendar days in the
entire period. For purposes of clause (i) above, any exemption, deduction,
credit or other item that is calculated on an annual basis shall be allocated
to the period beginning before the Closing Date and, pursuant to clause (i)
treated as ending on the Closing Date, based on the pro rata portion of such
item determined by multiplying the total amount of such item times a
fraction, the numerator of which is the number of calendar days in the period
up to and including the Closing Date and the denominator of which is the
total number of calendar days in the entire period.
10.2. RETURNS AND PAYMENTS.
(a) From the date of this Agreement through and after the Closing
Date, UHC shall prepare and file or otherwise furnish to the appropriate party
(or cause to be prepared and filed or so furnished) in a timely manner all Tax
returns, reports and forms ("RETURNS") with respect to the Company for any
taxable period ending on or before the Closing Date, and ActaMed shall do the
same for any taxable period ending after the Closing Date. With respect to any
Return required to be filed with respect to the Company after the Closing Date
and as to which an amount of Tax is allocable to UHC under Section 10.01(c),
ActaMed shall provide UHC and its authorized representatives with a copy of such
completed Return and a statement (including all necessary supporting schedules
and information required to support such statement) that certifies and sets
forth the calculation of the amount of Tax shown on such Return that is
allocable to UHC pursuant to Section 10.01(c) at least 30 days prior to the due
date (including any extension thereof) for the filing of such Return, and UHC
and its authorized representatives shall have the right to review such Return
and statement (including any supporting Schedules or other documents relevant
thereto) prior to the filing of such Return. UHC and ActaMed agree to consult
and to attempt in good faith to resolve any issues arising as a result of the
review of such Return and statement by UHC or its authorized representatives.
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(b) UHC and ActaMed shall each pay or cause to be paid when due and
payable all Taxes that have not been paid as of the Closing Date that are
allocable to them pursuant to the provisions of Section 10.01.
(c) Payment of any amounts due under this Article 10 shall be made
(i) with respect to agreed amounts, at least three calendar days before the
payment of any such Tax is due, provided that no such payment shall be due prior
to 10 business days following receipt of written notice that payment of such Tax
is due, or (ii) within 10 business days following either an agreement between
UHC and ActaMed that an amount is payable by UHC or ActaMed to the other or
within 10 business days of a "determination" as defined in section 1313(a) of
the Internal Revenue Code.
10.3 TAX AUDIT
(a) After the Closing, ActaMed shall promptly notify UHC in writing
of the commencement of any Tax audit or administrative or judicial proceeding
and shall also separately notify UHC in writing of any demand or claim on
ActaMed or the Company which, if determined adversely to the taxpayer or after
the lapse of time would be grounds for indemnification by UHC under this Article
10. Such notice shall contain factual information (to the extent known to
ActaMed or the Company) describing the asserted Tax liability in reasonable
detail and shall include copies of any notice or other document received from
any taxing authority in respect of any such asserted Tax liability. If ActaMed
fails to give UHC prompt notice of an asserted Tax liability as required by this
Section 10.03, then (a) if UHC is precluded by the failure to give prompt notice
from contesting the asserted Tax liability in the appropriate administrative or
judicial forums, then UHC shall not have any obligation to indemnify ActaMed for
any loss or damage arising out of such asserted Tax liability, and (b) if UHC is
not so precluded from contesting but such failure to give prompt notice results
in a detriment to UHC, then any amount which UHC is otherwise required to pay
ActaMed pursuant to this Article 10 with respect to such liability shall be
reduced by the amount of such detriment.
(b) UHC may elect to direct, through counsel of its own choosing and
at its own expense, any audit, or administrative or judicial proceeding
involving any asserted liability with respect to which indemnity may be sought
under this Article 10 (any such audit or proceeding relating to an asserted Tax
liability are referred to herein collectively as a "CONTEST"). If UHC elects to
direct the Contest of an asserted Tax liability, it shall within 30 calendar
days of receipt of the notice of an asserted Tax liability notify ActaMed of its
intent to do so, and ActaMed shall cooperate in good faith and shall cause the
Company or its successor to cooperate in good faith, at UHC's expense, in each
phase of such Contest. If UHC elects not to direct the Contest, fails to notify
ActaMed of its election as herein provided or contests its obligation to
indemnify under Section 10.01, ActaMed or the Company may pay, compromise or
contest, at its own expense, such asserted liability. However, in such case,
neither ActaMed nor the Company (including any designated representative of
either) may settle or compromise any asserted liability over the objection of
UHC; PROVIDED, HOWEVER, that UHC's consent
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to settlement or compromise shall not be unreasonably withheld. In any
event, each of ActaMed (or the Company) and UHC may participate, at its own
expense, in the Contest. If UHC chooses to direct the Contest, ActaMed shall
promptly empower and shall cause the Company or its successor promptly to
empower (by power of attorney and such other documentation as may be
appropriate) such representatives of UHC as it may designate to represent
ActaMed or the Company or its successor in the Contest insofar as the Contest
involves an asserted Tax liability for which UHC would be liable under this
Article 10.
10.4. COOPERATION AND EXCHANGE OF INFORMATION. UHC and ActaMed will
provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax return, amended return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes or participating in or conducting any audit or other proceeding in respect
of Taxes. Such cooperation and information shall include providing copies of
relevant Tax returns or portions thereof, together with accompanying schedules
and related work papers and documents relating to rulings or other
determinations by taxing authorities, but in no event shall UHC or ActaMed be
required to disclose to the other any information relating to the operations of
either, as the case may be, other than information relating to the Company. The
Seller and ActaMed shall make its employees available on a mutually convenient
basis to provide explanations of any documents or information provided
hereunder. UHC and ActaMed will retain all returns, schedules and work papers
and all material records or other documents relating to Tax matters of the
Company for its taxable period first ending after the Closing Date and for all
prior taxable periods until the later of: (i) the expiration of the statute of
limitations of the taxable periods to which such returns and other documents
relate, without regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax periods; or (ii)
eight years following the due date (without extension) for such returns. After
such time, before ActaMed shall dispose of any of such books and records, at
least 90 calendar days prior written notice to such effect shall be given by
ActaMed to UHC, and UHC shall be given an opportunity, at its cost and expense,
to remove and retain all or any part of such books and records as UHC may
select. Any information obtained under this Section 10.05 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of returns or claims for refund or in conducting an audit or other proceeding.
10.5. TAX SHARING AGREEMENTS. UHC shall cause any tax-sharing agreements
or arrangements with the Company to be terminated as of the Closing Date, with
no amounts payable thereunder after the Closing other than those amounts payable
thereunder in respect of current tax payable accounts.
10.6. ARTICLE 9. The provisions of this Article 10 shall supersede the
provisions of Article 9 with respect to the matters set forth herein, except to
the extent explicitly referenced in this Article 10.
ARTICLE 11
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TERMINATION
11.1 METHOD OF TERMINATION. This Agreement and the transactions
contemplated by it may be terminated at any time prior to the Closing Date:
(a) by the mutual consent of UHC and ActaMed;
(b) by UHC, if ActaMed and SubCorp shall (1) fail to perform in any
material respect their agreements contained herein required to be performed by
any of them on or prior to the Closing Date, or (2) materially breach any of
their representations, warranties or covenants contained herein;
(c) by ActaMed, if UHC or the Company shall (1) fail to perform in
any material respect their agreements contained herein required to be performed
by any of them on or prior to the Closing Date, or (2) materially breach any of
their representations, warranties or covenants contained herein;
(d) by either UHC or ActaMed if there shall be any order, writ,
injunction or decree of any court or governmental or regulatory agency binding
on ActaMed, SubCorp, the Company or UHC, which prohibits or restrains ActaMed,
SubCorp, the Company and/or UHC from consummating the Merger, provided that
ActaMed, SubCorp, the Company and UHC shall have used their best efforts to have
any such order, writ, injunction or decree lifted and the same shall not have
been lifted within thirty (30) days after entry, by any such court or
governmental or regulatory agency;
(e) pursuant to SECTION 11.4; or
(f) without action of either party if the Closing has not occurred on
or before April 30, 1996.
11.2 NOTICE OF TERMINATION. Notice of termination of this Agreement, as
provided for in this ARTICLE 11, shall be given by the parties so terminating to
the other parties hereto in accordance with SECTION 14.1 of this Agreement.
11.3 EFFECT OF TERMINATION. If this Agreement terminates pursuant to
SECTION 11.1 (a), (d), (e) or (f), then this Agreement shall become void and of
no further force and effect, and each party shall pay the costs and expenses
incurred by it in connection with this Agreement as set forth in SECTION 6.14
and no party (nor any of its officers, directors, employees, agents,
representatives or shareholders) shall be liable to any other party for any
costs, expenses, damages (direct or indirect) or loss of anticipated profits.
11.4 RISK OF LOSS. The Company and UHC assume all risk of condemnation,
destruction, loss or damage due to fire or other casualty from the date of this
Agreement until the Closing. If the condemnation, destruction, loss, or damage
is such that the business of the Company is interrupted or curtailed or the
assets of the Company are
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materially affected, then ActaMed and SubCorp shall have the right to
terminate this Agreement. If ActaMed and SubCorp nonetheless elect to close,
the Company and UHC shall remit all net condemnation proceeds or third party
insurance proceeds to ActaMed and SubCorp and the number of shares of Series
C Preferred Stock to be delivered to UHC at the Closing shall be adjusted to
reflect such condemnation, destruction, loss, or damage to the extent that
insurance or condemnation proceeds are not sufficient to cover such
destruction, loss or damage. If ActaMed and SubCorp and UHC are unable to
agree upon the amount of such adjustment, the dispute shall be resolved
jointly by the independent accounting firms then employed by ActaMed and
SubCorp and the Company, and if said accounting firms do not agree, they
shall appoint a nationally recognized accounting firm, whose determination of
the dispute shall be final and binding.
ARTICLE 12
ADDITIONAL COVENANTS OF ACTAMED
ActaMed covenants and agrees that, except as provided in SECTION 12.1
below, until such time as ActaMed has consummated a Public Offering:
12.1 SECURITIES LAW FILINGS. Upon consummation of a Public Offering and
for so long as the UHC holds the Conversion Shares, ActaMed will timely file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder, to the extent
required from time to time to enable the UHC to sell the Conversion Shares
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any UHC, ActaMed will deliver a written
statement as to whether it has complied with such requirements.
12.2 TRANSACTIONS WITH SUBSTANTIAL HOLDERS. ActaMed shall not, directly
or indirectly, knowingly enter into any material transaction or agreement with
any of its Substantial Holders or any Affiliate or officer of ActaMed or a
Substantial Holder, or a material transaction or agreement in which a
Substantial Holder or Affiliate or officer of ActaMed or a Substantial Holder
has a direct or indirect interest, unless such transaction or agreement is on
terms and conditions no less favorable to ActaMed or any of its Subsidiaries
than could be obtained at the time in an arm's length transaction with a third
person that is not such a Substantial Holder or Affiliate or officer of ActaMed
or a Substantial Holder, and such transaction or agreement has been reviewed and
approved by a majority of those members of ActaMed's Board of Directors who have
no such interest in the transaction. Except as provided in SECTION 14.4, this
SECTION 12.2 shall not be enforceable against ActaMed by any person or entity
not a party to this Agreement.
12.3 BUSINESS AND FINANCIAL COVENANTS. ActaMed covenants that:
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(a) MERGER, ACQUISITIONS, SALE OF ASSETS. Without the prior written
consent of the holders of a majority interest of the Series A Preferred Stock,
Series B Preferred Stock and the Series C Preferred Stock, each voting
separately as a class:
(1) ActaMed shall not merge, effect a statutory share exchange,
or consolidate with any entity at a price per preferred share less than the
Series C Conversion Price.
(2) ActaMed shall not sell, assign, lease or otherwise dispose
of all or substantially all of its assets (whether now owned or hereafter
acquired) in a transaction that would result in a price per preferred share less
than the Series C Conversion Price.
(b) MERGER, ACQUISITIONS, SALE OF ASSETS. Without the prior written
consent of the holders of a majority interest of the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock, voting as a
single class:
(1) ActaMed shall not merge, effect a statutory share exchange,
or consolidate with any entity at a price per Preferred Share equal to or
greater than the Series C Conversion Price.
(2) ActaMed shall not sell, assign, lease or otherwise dispose
of all or substantially all of its assets (whether now owned or hereafter
acquired) in a transaction that would result in a price per preferred share
equal to or greater than the Series C Conversion Price.
(3) The Company shall not permit any of its Subsidiaries to
merge, effect a statutory share exchange, or consolidate with any entity other
than ActaMed, or to sell, assign, lease or otherwise dispose of, all or
substantially all of its assets (whether now owned or hereafter acquired) except
to ActaMed.
(4) Except for (A) up to 500,000 shares of ActaMed Common Stock
which may be issued pursuant to ActaMed's 1996 Stock Option Plan approved by the
Board of Directors, (B) up to 100,000 shares of ActaMed Common Stock which may
be issued pursuant to ActaMed's 1996 Directors Stock Option Plan approved by the
Board of Directors, (C) up to 975,000 shares of ActaMed Common Stock which may
be issued pursuant to ActaMed's 1995 Stock Option Plan approved by the Board of
Directors, (D) any remaining shares which may be issued under ActaMed's 1994
Stock Option Plan, 1993 Stock Option Plan and 1992 Stock Option Plan, (E) the
reissuance of any unvested options that terminate under such option plans,
(F) the issuance of shares of ActaMed Common Stock pursuant to additional stock
option plans that may be established from time to time by the Board of Directors
of ActaMed in its discretion, and (E) the conversion of the Series A Preferred
Stock, the Series B Preferred Stock and the Series C Preferred Stock, ActaMed
will not, and will not permit any of its Subsidiaries, to hereafter issue or
sell any shares of any securities convertible into, or any warrants, rights,
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or options to purchase shares of, the capital stock of ActaMed or such
Subsidiary to any person or entity other than ActaMed, and ActaMed will not
pledge any of the capital stock of any Subsidiary to any person or entity.
(c) LOANS TO AND INVESTMENTS IN OTHERS. ActaMed shall not (except
for the advancement of money for expenses in the ordinary course of business)
make, or permit any of its Subsidiaries to make, any loans or advances to any
person or entity or have outstanding any investment in any entity, whether by
way of loan or advance to, or by the acquisition of the capital stock, assets or
obligations of or any interest in, any person or entity.
(d) RESTRICTED PAYMENTS, REPURCHASE OF ACTAMED COMMON STOCK. Except
as expressly permitted herein or by the Restated Articles, neither ActaMed nor
any of its Subsidiaries shall declare or make any Restricted Payments.
(e) ARTICLES OF INCORPORATION. Neither ActaMed nor any of its
Subsidiaries will amend or change its Articles of Incorporation or Bylaws, or
violate or breach any of the provisions thereof.
(f) Without the consent of a majority of the Board of Directors:
(1) DEBT. ActaMed shall not create, incur or suffer to exist,
or permit any Subsidiary to create, incur or suffer to exist, any debt other
than:
(A) debt existing on the date hereof and included in the
ActaMed Financial Statements or incurred in the
ordinary course of business between the date of the
ActaMed Financial Statements and the date hereof, and
any renewals or replacements of such debt not exceeding
the principal amount of the debt being replaced or
renewed; and
(B) debt not in excess of $1,000,000 in the aggregate in
any one calendar year.
(2) LEASE OBLIGATIONS. ActaMed shall not create or suffer to
exist, or permit any Subsidiary to create or suffer to exist, any obligations
for the payment of rent for any property under leases or agreements to lease,
other than obligations for (A) the payment of rent which, in the aggregate, do
not exceed $1,000,000 annually and (B) payments under leases set forth on
SCHEDULE 5.21.
(3) ACQUISITIONS. ActaMed shall not acquire, or permit any
Subsidiary to acquire, directly or indirectly, the assets of or equity interests
in any other business or entity, whether by purchase, merger consolidation or
otherwise in excess of $1,000,000.
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(4) PUBLIC OFFERING. ActaMed shall not effect an initial public
offering of any equity securities, other than equity securities issued in a
merger, less than $15,000,000 at a per share price of less than 2.5 times the
then existing conversion price of the Series A Preferred Stock.
12.4 CORPORATE EXISTENCE, BUSINESS, MAINTENANCE, INSURANCE.
(a) ActaMed will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises deemed material to its
business and those of its Subsidiaries, except any Subsidiary of ActaMed may be
merged into ActaMed or another Subsidiary.
(b) ActaMed shall engage solely in the business of developing
information networks and businesses closely related thereto. ActaMed (and any
Subsidiary) will not purchase or acquire any property other than property useful
in and related to such business.
(c) ActaMed will maintain or cause to be maintained in good repair,
working order and condition all properties used or useful in the business of
ActaMed and any Subsidiary and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof. ActaMed and any
Subsidiary will at all times comply in all material respects with the provisions
of all material leases to which it is a party or under which it occupies
property so as to prevent any loss or forfeiture thereof or thereunder.
(d) ActaMed will maintain or cause to be maintained, with financially
sound and reputable insurers, appropriate insurance with respect to its
properties and business and the properties and business of any Subsidiary
against loss or damage.
12.5 PAYMENT OF TAXES, ETC.; ERISA.
(a) ActaMed will pay, and will cause any of its Subsidiaries to pay,
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its franchises, business,
income or profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a lien or charge upon any of its properties or assets, PROVIDED
that no such charge or claim need be paid if being contested in good faith by
appropriate proceedings and if such reserve or other appropriate provisions, if
any, as shall be required by generally accepted accounting principles shall have
been made therefor.
(b) ActaMed and any of its Subsidiaries will comply in all material
respects with the ERISA.
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12.6 BOOKS AND RECORDS, COMPLIANCE.
(a) ActaMed and any of its Subsidiaries will keep true records and
books of account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs in accordance
with GAAP applied on a consistent basis.
(b) ActaMed and any of its Subsidiaries shall duly observe and
conform in all material respects to all valid requirements of governmental
authorities relating to the conduct of its business or to its property or
assets.
12.7 REPURCHASE OF PREFERRED SHARES. Except as provided in the Restated
Articles, ActaMed shall not, and shall not permit any of its Subsidiaries or any
Affiliate of ActaMed to, directly or indirectly, redeem or repurchase or make
any offer to redeem or repurchase any Preferred Shares, unless ActaMed, such
Subsidiary or such Affiliate has offered to repurchase Preferred Shares PRO
RATA, from all holders of outstanding Preferred Shares) upon the same terms.
12.8 COMPENSATION. All awards of compensation, including, but not
limited to, salary, bonus and awards of stock options made to executive officers
and/or directors of ActaMed shall be determined by ActaMed in accordance with
the terms of the Stockholders' Agreement.
ARTICLE 13
INFORMATIONAL COVENANTS OF ACTAMED
ActaMed covenants and agrees that it shall deliver the following
information to UHC (including permitted transferees in accordance with SECTION
14.4, except as set forth in SECTION 13.6), for so long as UHC (or such
transferees) shall hold at least 5% of the aggregate outstanding Preferred
Shares and Conversion Shares (considered as a single class), or until such time
as ActaMed shall have consummated a Public Offering:
13.1 AUDITED ANNUAL FINANCIAL STATEMENTS. As soon as practicable and, in
any case, within one hundred and twenty (120) days after the end of each fiscal
year, financial statements of ActaMed, consisting of the balance sheet of
ActaMed as of the end of such fiscal year and the statements of operations,
statements of shareholders, equity and statements of cash flows of ActaMed for
such fiscal year, setting forth in each case, in comparative form, the figures
for the preceding fiscal year, all in reasonable detail and fairly presented in
accordance with GAAP applied on a consistent basis throughout the periods
reflected therein, except as stated therein, and accompanied by an opinion
thereon of Deloitte & Touche, or other independent certified public accountants
selected by ActaMed of good and recognized national standing in the United
States.
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13.2 QUARTERLY UNAUDITED FINANCIAL STATEMENTS. As soon as practicable
and, in any case, within forty-five (45) days after the end of each of the
first three fiscal quarters in each fiscal year, unaudited financial
statements of ActaMed setting forth the balance sheet of ActaMed at the end
of each such fiscal quarter and the statements of operations and statements
of cash flows of ActaMed for each such fiscal quarter and for the year to
date, and setting forth in comparative form figures as of the corresponding
date and for the corresponding periods of the preceding fiscal year, all in
reasonable detail and certified by an accounting officer of ActaMed as
complete and correct, as having been prepared in accordance with GAAP
consistently applied (except as otherwise disclosed therein) and as
presenting fairly, in all material respects, the financial position of
ActaMed and any of its Subsidiaries and results of operations and cash flows
thereof subject, in each case, to customary exceptions for interim unaudited
financial statements.
13.3 MONTHLY UNAUDITED FINANCIAL STATEMENTS. As soon as available,
but in any event within thirty (30) days after the end of each calendar
month, copies of the unaudited balance sheet of ActaMed as at the end of such
calendar month and the related unaudited statements of operations and cash
flows for such calendar month and the portion of the calendar year through
such calendar month, in each case setting forth in comparative form the
figures for the corresponding periods of (a) the previous calendar year and
(b) the budget for the current year, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein (except as otherwise disclosed therein) and certified by the chief
financial officer of ActaMed as presenting fairly the financial condition and
results of operations of ActaMed and any of its Subsidiaries (subject to
customary exceptions for interim unaudited financial statements).
13.4 MANAGEMENT'S ANALYSIS. All the financial statements delivered
pursuant to SECTIONS 13.1 and 13.2 shall be accompanied by an informal
narrative description of material business and financial trends and
developments and significant transactions that have occurred in the
appropriate period or periods covered thereby.
13.5 BUDGETS. As soon as practicable, but in any event within thirty
(30) days prior to the commencement of a fiscal year, an annual operating
budget for such fiscal year, approved by the Board of Directors, including
monthly income and cash flow projections and projected balance sheets as of
the end of each quarter within such fiscal year. Extensions of such due date
shall not be unreasonably withheld.
13.6 INSPECTION. Upon reasonable notice, ActaMed shall, and shall
cause any of its Subsidiaries to, permit UHC (so long as it owns 5% more of
the outstanding capital stock of ActaMed) by its representatives, agents or
attorneys:
(a) to examine all books of account, records, reports and other
papers of ActaMed or such Subsidiary except to the extent that such action
would, in the reasonable opinion of counsel, constitute a waiver of the
attorney/client privilege,
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(b) to make copies and take extracts from any thereof, except for
information which is confidential or proprietary,
(c) to discuss the affairs, finances and accounts of ActaMed or such
Subsidiary with ActaMed's or such Subsidiary's officers and independent
certified public accountants (and by this provision ActaMed hereby authorizes
said accountants to discuss with UHC and its representatives, agents or
attorneys the finances and accounts of ActaMed or such Subsidiary), and
(d) to visit and inspect, at reasonable times and on reasonable
notice during normal business hours, the properties of ActaMed and such
Subsidiary. Notwithstanding any provision herein to the contrary, the
provisions of this SECTION 13.6 are in addition to any rights of UHC under
the Georgia Business Corporation Code and shall in no way limit such rights.
The expenses of UHC in connection with any such inspection shall be for
the account of UHC. Notwithstanding the foregoing sentence, it is understood
and agreed by ActaMed that all reasonable expenses incurred by ActaMed or
such Subsidiary, any officers, employees or agents thereof or the independent
certified public accountants therefor, shall be expenses payable by ActaMed
and shall not be expenses of UHC making the inspection.
Notwithstanding anything to the contrary, no member of the UHC Group
shall be permitted access to any information of, or related to, any
competitor of UHC.
13.7 OTHER INFORMATION. ActaMed shall deliver the following provided
that in the reasonable opinion of counsel to ActaMed such disclosure will not
constitute a waiver of the attorney/client privilege, the breach of any
secrecy covenant or the release of information regarding competitors of UHC:
(a) promptly after the submission thereof to ActaMed, copies of
any detailed reports (including the auditors' comment letter to management,
if any such letter is prepared) submitted to ActaMed by its independent
auditors in connection with each annual or interim audit of the accounts of
ActaMed made by such accountants;
(b) promptly, and in any event within ten (10) days after
obtaining knowledge thereof, notice of the institution of any suit, action or
proceeding (other than a proceeding of general application which is not
directly against ActaMed or one or more of the Subsidiaries), the happening
of any event or, to the best knowledge of ActaMed, the assertion or threat of
any claim against ActaMed or any of the Subsidiaries which, either
individually or in the aggregate, would have a Material Adverse Effect;
(c) promptly upon, and in any event within thirty (30) days after
obtaining knowledge thereof, notice of any breach of, default under or
failure to comply with any material term under SECTIONS 12 or 13 of this
Agreement or any material adverse
-lvi-
change in ActaMed's relationship with its major customers, suppliers,
employees or other entity with which ActaMed has a business relationship;
(d) with reasonable promptness, a notice of any default by ActaMed
or any of its Subsidiaries under any material agreement to which it is a
party;
(e) with reasonable promptness, copies of all written materials
furnished to directors;
(f) promptly (but in any event within ten (10) days) after the
filing of any document or material with the SEC, a copy of such document or
material;
(g) promptly after the record date set by the Board of Directors
to determine the stockholders entitled to vote at ActaMed's annual meeting of
stockholders (but in any event ten (10) days prior to such meeting), a list
of all stockholders of ActaMed and their respective holdings; and
(h) promptly upon request therefor, such other data, filings and
information as any UHC may from time to time reasonably request.
ARTICLE 14
GENERAL PROVISIONS
14.1 NOTICES.
(a) All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been given if (1)
delivered by hand or if mailed by United States registered or certified mail,
return receipt requested, first class postage prepaid, (2) sent by Federal
Express or similar overnight courier service to the parties or their
assignees, or (3) sent by telecopy to the number set forth below and promptly
followed by a written copy sent by any other means specified herein,
addressed as follows:
If to UHC or the Company:
United Healthcare Corporation Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Chief Information Officer
Telephone: (___)____________
Telecopy: (___)_____________
If to ActaMed and/or SubCorp:
-lvii-
ActaMed Corporation
Xxxxx 000
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy Number: (000) 000-0000
(b) If delivered personally, the date on which a notice, request,
instruction or document is delivered shall be the date on which such delivery
is made and, if delivered by mail, telecopy, Federal Express or other
overnight courier, the date on which such notice, request, instruction or
document is first received shall be the date of delivery.
(c) Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this
SECTION 14.1.
(d) Failure of any party to send a copy of any notice to counsel
for the other party shall not affect in any way the validity of such notice
to other party.
14.2 FURTHER ASSURANCES. Each party covenants that at any time, and
from time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and
purposes of this Agreement.
14.3 WAIVER. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be waived
by any other party to whom such compliance is owed. No waiver of any
provision of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute
a continuing waiver.
14.4 ASSIGNMENT. This Agreement shall not be assignable by any of the
parties hereto without the written consent of the other parties hereto, and
no rights under this Agreement may be transferred, except that:
-lviii-
(a) the rights of ActaMed under this Agreement may be transferred
to any successor, by purchase of assets, merger or other corporate
reorganization;
(b) the rights of UHC under this Agreement may be transferred
after the Closing in connection with a transfer of Preferred Shares made in
accordance with the provisions of the Stockholders' Agreement (other than a
transfer pursuant to a registration statement under the Securities Act or a
transfer pursuant to Rule 144 thereunder); and
(c) all the rights of UHC may be transferred to an Affiliate of
UHC; PROVIDED, that any such transferee of UHC shall execute and deliver to
ActaMed an instrument satisfactory to it agreeing to be bound by the
provisions hereof and of the Stockholders' Agreement and the Registration
Rights Agreement.
14.5 BINDING EFFECT. Subject to the limitations on transfer set forth
in SECTION 14.4, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
14.6 KNOWLEDGE. The use of the terms "to ActaMed's knowledge" or "to
the best of ActaMed's knowledge" shall mean the facts known to X.X. Xxxxxx,
Xxxxxxx X. Xxxxxx, and Xxxxx X. Xxx after reasonable inquiry.
14.7 HEADINGS. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference, and are not a
part of this Agreement.
14.8 ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates and other documents delivered pursuant hereto or incorporated
herein by reference, contain and constitute the entire agreement among the
parties hereto and supersede and cancel any prior agreements,
representations, warranties, or communications, whether oral or written,
among the parties hereto relating to the transactions contemplated hereby or
the subject matter herein. This Agreement may be changed, waived, discharged
or terminated only by an agreement in writing signed by (A) ActaMed and (B)
UHC or, after the Closing Date, the holder(s) of a majority of the Preferred
Shares and any Conversion Shares considered as a single class.
14.9 GOVERNING LAW. Except as set forth in SECTION 6.12, this
Agreement shall be governed by and construed in accordance with the laws of
the State of Georgia.
14.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.11 PRONOUNS. All pronouns used herein shall be deemed to refer to
the masculine, feminine or neutral gender as the context requires.
-lix-
14.12 TIME OF ESSENCE. Time is of the essence in this Agreement.
14.13 SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached to
this Agreement are by this reference made a part hereof.
-lx-
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER DATED MARCH 1, 1996 BY AND AMONG
ACTAMED CORPORATION, SUBCORP, INC., UHC GREEN ACQUISITION, INC. AND UNITED
HEALTHCARE CORPORATION]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
ACTAMED CORPORATION EDI ACQUISITION, INC.
By : /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXX
--------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
-------------------- ---------------------
Title: President Title: President
------------------- --------------------
UNITED HEALTHCARE UHC GREEN ACQUISITION, INC.
CORPORATION
By : /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
--------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
-------------------------- ---------------------------
Title: Chief Operating Officer Title: Chief Operating Officer
-------------------------- ---------------------------
-lxi-
EXHIBIT A
DEFINED TERMS
"ACTAMED" - ActaMed Corporation, a Georgia corporation.
"ACTAMED BUSINESS" - The business of selling and developing information
systems and related technology for the healthcare industry.
"ACTAMED COMMON STOCK" - The $.01 par value common stock of ActaMed.
"ACTAMED DOCUMENTS" - All of the Transaction Documents to which either
ActaMed or SubCorp is a party.
"ACTAMED FINANCIAL STATEMENTS" - The materials described in SECTION 5.4(a)
of this Agreement.
"ACTAMED INDEMNITEE" - ActaMed and SubCorp and their respective
directors, officers, employees, affiliates and assigns.
"AFFILIATE" - Any person, firm, corporation, partnership or association
controlling, controlled by or under common control with another person, firm,
corporation, partnership or association.
"AGREEMENT" - This Agreement and Plan of Merger, including the Exhibits
and Schedules delivered pursuant hereto.
"BENEFIT PLAN" - An employee benefit plan or agreement of a person for
the benefit of its shareholders, officers, directors, employees, or
independent contractors, including, without limitation, (a) any affirmative
action plans or programs, (b) any current and deferred compensation,
severance, vacation, stock purchase, stock option, bonus and incentive
compensation benefits, (c) any "employee benefit plan" (as defined in ERISA
Section 3(3)) and (d) any medical, hospital, life, health, accident,
disability, death and other fringe and welfare benefits, including any
split-dollar life insurance policies, all of which plans, programs,
practices, policies and other individual and group arrangements and
agreements, including any unwritten compensation, fringe benefit, payroll or
employment practices, procedures or policies of any kind or description.
"CLAIM" - Any claim for indemnification under ARTICLE 9, including but
not limited to a General Claim, a Tax Claim or an Ownership Claim.
"CLAIMS NOTICE" - A written notice of an indemnification claim delivered
pursuant to SECTION 9.5 hereof.
"CLOSING" - The closing referred to in SECTION 1.2 hereof.
A-1
"CLOSING DATE" - The date referred to in SECTION 1.2 hereof for the
closing of the transactions contemplated by this Agreement.
"CODE" - The Internal Revenue Code of 1986, as amended.
"COMPANY" - UHC Green Acquisition, Inc., a Nevada corporation.
"COMPANY BUSINESS" - The business of providing electronic data
interchange products and services to the health care industry, excluding
EmployerLink and LaborLink, whether conducted by the Company or any other
member of the UHC Group.
"COMPANY COMMON STOCK" - The common stock, $.01 par value, of the Company.
"CONTRACT" - Any written or oral contract, agreement, lease, plan,
instrument or other document, commitment, arrangement, undertaking, practice
or authorization that is or may be binding on any person or its property
under applicable law.
"CONVERSION SHARES" - The shares of ActaMed Common Stock issued or
issuable upon the conversion of the Preferred Shares.
"COURT ORDER" - Any judgment, decree, writ, injunction, order or ruling
of any federal, state or local court or governmental or regulatory body or
authority that is binding on any person or its property under applicable law.
"DEFAULT" - (a) a breach of or default under any Contract or License,
(b) the occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of or default under any Contract or
License, or (c) the occurrence of an event that with or without the passage
of time or the giving of notice or both would give rise to a right of
termination, renegotiation or acceleration under any Contract or License.
"EDI FINANCIAL STATEMENTS" - The materials described in SECTION 4.6(a)
of this Agreement.
"EFFECTIVE TIME" - The date and time at which the Merger becomes
effective pursuant to SECTION 1.3 of this Agreement.
"ENVIRONMENTAL CONDITION" - (a) The introduction into the environment of
any pollution, including without limitation any contaminant, irritant or
pollutant or other toxic or hazardous substance (whether or not such
pollution constituted at the time thereof a violation of any federal, state
or local law, ordinance or governmental rule or Regulation) as a result of
any spill, discharge, leak, emission, escape, injection, dumping or release
of
A-2
any kind whatsoever of any substance or exposure of any type in any work
places or to any medium, including without limitation air, land, surface
waters or ground waters, or from any generation, transportation, treatment,
discharge, storage or disposal of waste materials, raw materials, hazardous
materials, toxic materials or products of any kind or from the storage, use
or handling of any hazardous or toxic materials or other substances, as a
result of which the Company has or may become liable to any person by any
reason of which any of the assets of the Company may suffer or be subjected
to any Lien, or (b) any noncompliance with any federal, state or local
environmental law, rule, Regulation or order as a result of or in connection
with any of the foregoing.
"ERISA" - The Employee Retirement Income Security Act of 1974, as amended.
"EXCHANGE ACT" - The Securities Exchange Act of 1934, as amended.
"FASB 5" - Statement of Financing Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975.
"GAAP" - Generally accepted accounting principles.
"GENERAL CLAIM" - Any claim other than a Tax Claim, Ownership Claim or
Undisclosed Liability Claim based upon, arising out of or otherwise in
respect of: any inaccuracy in any representation or warranty or any breach of
any covenant or agreement made or to be performed by a party pursuant to this
Agreement.
"HIRED EMPLOYEES" - The employees assigned to the Company Business and
identified on SCHEDULE 6.5.
"HIRED HOLD-OVER EMPLOYEE" - See SECTION 6.4 of this Agreement.
"HSR ACT" - Section 7A of the Xxxxxxx Act, as added by Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder.
"INDEMNITEE" - A party seeking indemnification under SECTIONS 9.3 or 9.4.
"INDEMNIFYING PARTY" - The party obligated to provide indemnification
pursuant to SECTIONS 9.3 or 9.4.
"INTELLECTUAL PROPERTY" - Copyrights, trademarks, service marks, trade
names, patents, applications therefor, technology rights and licenses,
computer software (including, without limitation, any source or object codes
therefor or documentation relating thereto), trade secrets, franchises,
know-how, inventions and intellectual property rights.
A-3
"IRS" - The Internal Revenue Service.
"LIABILITY" - Any direct or indirect liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement of or by any
person (other than endorsements of notes, bills and checks presented to banks
for collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute, contingent, matured, unmatured or other.
"LICENSE" - Any license, franchise, notice, permit, easement, right,
authorization or filing.
"LIEN" - Any mortgage, lien, security interest, pledge, encumbrance,
restriction on transferability, defect of title, charge or claim of any
nature whatsoever on any property or property interest.
"LITIGATION" - Any lawsuit, action, claim, arbitration, administrative
or other proceeding, criminal prosecution or governmental investigation or
inquiry involving or affecting the Company or its business, assets or
Contracts to which the Company is a party or by which it or its business,
assets or Contracts may be bound or affected.
"LOSSES" - Any and all demands, claims, actions or causes of action,
assessments, losses, diminution in value, damages (including special and
consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
"MATERIAL ADVERSE EFFECT" - With respect to ActaMed, a material adverse
effect on the ability of ActaMed to conduct the ActaMed Business or the
impairment of ActaMed's ability to perform its obligations under the ActaMed
Documents.
"MERGER" - The merger of SubCorp with and into the Company pursuant to
this Agreement.
"OWNERSHIP CLAIM" - Any claim arising out of or otherwise in respect of
any inaccuracy in the representations and warranties set forth in SECTIONS 4.1,
4.2, 4.3, 4.4 or 4.16 or 5.2 or 5.7 of this Agreement.
"PUBLIC OFFERING" - A bona fide firm commitment underwritten offering of
ActaMed Common Stock pursuant to a registration statement filed with and
declared effective by the SEC.
"PREFERRED SHARES" - The shares of Series C Preferred Stock issued to
UHC pursuant to SECTION 3.1(a).
A-4
"REGISTRATION RIGHTS AGREEMENT" - The Registration Rights Agreement
dated May 3, 1994, by and among ActaMed and the signatures thereto, as
amended.
"REGISTRATION RIGHTS AGREEMENT AMENDMENT" - The agreement referenced in
SECTION 1.4(a)(2) hereof.
"REGULATION" - Any statute, law, ordinance, regulation, order or rule of
any federal, state, local or other governmental agency or body or of any
other type of regulatory body, including, without limitation, those covering
environmental, energy, safety, health, transportation, bribery,
recordkeeping, zoning, antidiscrimination, antitrust, wage and hour, and
price and wage control matters.
"RESTATED ARTICLES" Before the Closing, the Second Amended and Restated
Articles of Incorporated of ActaMed and, after the Closing, the Third Amended
and Restated Articles of Incorporation of ActaMed.
"RESTRICTED PAYMENT" means (a) any payment or the incurrence of any
liability to make any payment in cash, property or other assets as a dividend
or other distribution in respect of any shares of capital stock of ActaMed or
any Subsidiary, excluding, however, any dividends payable to ActaMed by a
Subsidiary or dividends which may be payable solely in ActaMed Common Stock
of ActaMed or any Subsidiary and (b) except as otherwise permitted by the
Transaction Documents or a stock option agreement under the Stock Option
Plans, any payment or the incurrence of any liability to make any payment in
cash, property or other assets for the purposes of purchasing, retiring or
redeeming any shares of any class of capital stock of ActaMed or any
Subsidiary or any warrants, options or other rights to purchase any such
shares.
"SCHEDULE" - Any of the disclosure schedules referred to in ARTICLES 4 or
5.
"SEC" - The Securities and Exchange Commission.
"SECURITIES ACT" - The Securities Act of 1933, as amended.
"SERIES A PREFERRED STOCK" - The Series A Convertible Preferred Stock of
ActaMed.
"SERIES B PREFERRED STOCK" - The Series B Convertible Preferred Stock of
ActaMed.
"SERIES C PREFERRED STOCK" - The Series C Convertible Preferred Stock of
ActaMed.
"SERVICES AND LICENSE AGREEMENT" - The agreement referenced in SECTION
1.4(a)(1) hereof.
A-5
"SHAREHOLDERS' AGREEMENT AMENDMENT" - The agreement referenced in
SECTION 1.4(a)(3) hereof.
"SHARES" - The total of 1,000 shares of Company Common Stock
constituting in the aggregate one hundred percent (100%) of the issued and
outstanding common stock of the Company.
"STANDSTILL AGREEMENT AMENDMENT" - The agreement referenced in
SECTION 1.4(a)(4) hereof.
"SUBCORP" - EDI Acquisition, Inc., a Georgia corporation.
"SUBSIDIARY" - A corporation, limited liability company, partnership,
association, trust, joint venture or other entity in which ActaMed or the
Company, as the case may be, has, directly or indirectly, an equity,
ownership or proprietary interest of greater than ten percent (10%).
"SUBSTANTIAL HOLDER" - An officer or employee of ActaMed or SubCorp who
is the beneficial owner of one percent (1%) or more of the outstanding voting
power or the outstanding equity (on a fully diluted basis) of ActaMed.
"SURVIVING CORPORATION" - The Company, as the surviving corporation of
the Merger, after the Merger.
"TAX CLAIM" - Any claim based upon, arising out of or otherwise in
respect of any inaccuracy in any representation or warranty or breach of any
covenant or agreement made or to be performed by a party pursuant to this
Agreement related to any Taxes.
"TAXES" - Any federal, state, county, local and other taxes, including
without limitation, income taxes, estimated taxes, excise taxes, sales taxes,
use taxes, gross receipts taxes, franchise taxes, taxes on earnings and
profits, employment and payroll related taxes, property taxes, real property
transfer taxes, Federal Insurance Contributions Act taxes, taxes on value
added and import duties, whether or not measured in whole or in part by net
income, imposed by the United States or any political subdivision thereof or
by any jurisdiction other than the United States or any political subdivision
thereof.
"THIRD PARTY CLAIM" - Any claim, suit or proceeding (including, without
limitation, a binding arbitration or an audit by any taxing authority) that
is instituted against an Indemnitee by a person or entity other than an
Indemnitor and which, if prosecuted successfully, would result in a Loss for
which such Indemnitee is entitled to indemnification hereunder.
A-6
"TRANSACTION DOCUMENTS" - This Agreement and the documents exchanged by
the parties at the Closing.
"TRANSITION SERVICES AGREEMENT" - The agreement referenced in SECTION
1.4(a)(5) hereof.
"UHC" - United Healthcare Corporation, a Minnesota corporation.
"UHC DOCUMENTS" - All of the Transaction Documents to which either UHC
or the Company is a party.
"UHC GROUP" - UHC and its Affiliates.
"UHC INDEMNITEE" - UHC and its directors, officers, employees,
affiliates and assigns.
"UNDISCLOSED LIABILITY CLAIM" - Any claim arising out of or otherwise in
respect of any inaccuracy in the representations and warranties set forth in
SECTIONS 4.7, 4.8, 4.10, 4.20 or 4.23.
A-7
AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT (this "Amendment") to the Agreement and Plan of Merger
dated March 1, 1996 (the "Plan of Merger") is entered into this 4th day of
April, 1996, by and among ActaMed Corporation, EDI Acquisition, Inc., United
HealthCare Corporation and EDI Services, Inc. (formerly UHC Green
Acquisition, Inc.). Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to them in the Plan of Merger.
WHEREAS, the parties hereto desire to amend the Plan of Merger as set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. SECTION 1.2. The second sentence of Section 1.2 of the Plan of
Merger is hereby deleted and is replaced in its entirety by the following
sentence:
"Notwithstanding the foregoing, if the Closing does not occur on the
first day of a month, then solely for financial accounting and reporting
purposes, the parties hereto agree that the transactions contemplated
herein shall be deemed to have closed as of the first day of the month
in which the Closing occurs or the last day of the preceding month, as
appropriate; provided that the parties hereto agree that for all other
purposes, including, without limitation, risk of loss, the Closing shall
occur, and shall be deemed to have occurred on the actual date of the
Closing."
3. SECTION 3.3. The following Section 3.3 is hereby added to the Plan
of Merger:
"3.3 BASIS OF ASSETS OF THE COMPANY. Actamed and UHC recognize and
agree that the prearranged transfer by UHC of the assets to the Company
in contemplation of and in connection with the sale of the stock of the
Company to Actamed is not a transaction described in Section 351 of the
Internal Revenue Code, that such transfer to the Company is taxable to
UHC as a taxable transfer of assets to the Company and the Company has a
fair market value basis in the assets received in the transfer from UHC
immediately prior to the time of the transaction contemplated hereby.
UHC and Actamed agree to report the foregoing transactions in a manner
consistent herewith. In addition, and in order to assure that Actamed
shall have a basis in the assets of the Company equal to the amount paid
pursuant to this Agreement, in lieu of the foregoing reporting and at
Actamed's request, Actamed and UHC will make a timely election under
Section 338(h)(10) of the Internal Revenue Code and any corresponding
elections under state or local tax law. Actamed and UHC shall cooperate
in taking all actions necessary to report the transaction as described
above, or at Actamed's request to effect the election, including the
execution and preparation of all forms, returns, elections and schedules
and other documents and instruments. Any allocation of basis among the
assets of the Company shall be initially prepared by UHC and consented
to by Actamed. Any such allocation shall, for tax purposes, be binding
on Actamed and UHC and no party shall take any position inconsistent
with such allocation. UHC and Actamed agree
that any liability for Tax arising out of or in any way attributable to
the sale or deemed sale of assets by UHC shall be for the sole account
of the UHC."
2. SECTION 4.1. The last sentence of Section 4.1 of the Plan of Merger is
hereby deleted and is replaced in its entirety by the following sentence:
"Substantially all of the assets required for the operation of the
Company Business were transferred to the Company on December 15, 1995,
and the Company did not have any operations prior to such date."
IN WITNESS WHEREOF, the undersigned parties have executed this Amendment as
of the day and year first above written.
ACTAMED CORPORATION
By: /S/ XXXXXXX X. XXXXXX
------------------------------
Xxxxxxx X. Xxxxxx, President
EDI ACQUISITION, INC.
By: /S/ XXXXXXX X. XXXXXX
------------------------------
Xxxxxxx X. Xxxxxx, President
UNITED HEALTHCARE CORPORATION
By: /s/ XXXXXXX X. XXXXX
------------------------------
Title: Chief Operating Officer
---------------------------
EDI SERVICES, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------
Title: Chief Operating Officer
---------------------------
