EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated as of November
19, 1997, between PROXYMED, INC., a Florida corporation ("BUYER"), with its
principal business address at 0000 Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx,
Xxxxxxx 00000, and US HEALTHDATA INTERCHANGE, INC., a Delaware corporation
("SELLER"), with its principal business address at 0000 Xxxxxx X, Xxxxxxxxx,
Xxxxx 00000.
Seller is in the business of providing electronic processing of claims
for payment for health care services ("E-PROCESSING") provided by physicians and
other health care providers ("PROVIDERS") from third party payors of such
services ("TPPS"), including insurance companies, health maintenance
organizations and employer health care plans (the "BUSINESS").
Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, the
Business and substantially all of the assets and properties of Seller.
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
ARTICLE 1. TRANSFER OF ASSETS
1.1 THE ASSETS. Subject to the terms and conditions set forth in this
Agreement, Seller agrees to sell, convey, transfer, assign and deliver to Buyer,
and Buyer agrees to purchase from Seller at the Closing described in ARTICLE 3
hereof, the Business and all of the assets and properties of Seller as of the
Closing Date (as defined below) of every kind, character and description,
whether tangible, intangible, real, personal or mixed, and wherever located,
including, but without limitation to, the following (but excluding the assets
referenced in SECTION 1.2 below):
(a) OPERATIONAL CONTRACTS. All right, title and interest of
Seller in all contracts and agreements in effect as of the Closing
under which Seller (i) provides, or is permitted to provide, directly
for TPPs E-Processing ("TPP CONTRACTS"), (ii) may engage in
E-Processing through other companies who have TPP Contracts with TPPs
with which Seller has no TPP Contract ("VAN CONTRACTS") and (iii) may
provide, or is permitted to provide, E-Processing for Providers
("PROVIDER CONTRACTS"); all such TPP Contracts and VAN Contracts in
effect as of the date hereof are listed in SCHEDULE 1.1(A);
(b) OTHER CONTRACTS. All right, title and interest of Seller
in the contracts and licenses that Seller has relating to the Business
other than those referred to in the other subsections of this Section
1.1 which are listed on SCHEDULE 1.1(B) (the "OTHER CONTRACTS"),
including without limitation any remaining noncompete, nondisclosure or
similar ongoing benefits ("Restrictive Covenants") under any agreement
to which Seller has been a party which Restrictive Covenants are in
effect as of the Closing though
beyond the expiration of the underlying agreement, other than those
agreements described in SECTION 1.2(H) below;
(c) LEASED PROPERTY. All right, title and interest of Seller
in the lease (the "LEASE") of the real property in respect of Seller's
address above (the "LEASED PROPERTY") together with all rights and
privileges under such lease;
(d) EQUIPMENT. All right, title and interest of Seller in all
furniture, fixtures, motor vehicles and other tangible personal
property of every kind and description that are located upon or within
the Leased Property, and/or are owned or leased by Seller, and/or are
utilized in connection with Seller's operations (whether or not upon or
within the Leased Property), a current list of which is attached hereto
as SCHEDULE 1.1(D) ("EQUIPMENT");
(e) SOFTWARE PROGRAMS AND CONTRACTS. All of Seller's right,
title and interest in all software programs, and all other contracts,
agreements, licenses and other commitments and arrangements, oral or
written, with any person or entity respecting the ownership, license,
acquisition, design, development, distribution, marketing, use or
maintenance of software programs, source and object codes, related
technical or user documentation and databases relating to Seller's
business, including, without limitation, the Systems Integration
Agreement, the Marketing Agreement and the Development and License
Agreement each dated July ___, 1995 among Systems Xcellence USA, Inc.,
a Texas corporation ("SX USA"), Systems Xcellence International LLC, a
Wyoming limited liability company (together with SX USA, "SX"), and
Seller (the "SX AGREEMENTS"), including any Third Party Software (as
defined in the SX Agreements) to which Seller has rights to the extent
set forth in the SX Agreements, and the software developed by Seller
described on SCHEDULE 1.1(E) (the Assets referred to in this SECTION
1.1(E), the "SOFTWARE PROGRAMS AND CONTRACTS");
(f) ACCOUNTS RECEIVABLE. All the accounts receivable of Seller
which have not been collected through the Closing Date (the "ACCOUNTS
RECEIVABLE"), including the account receivable identified as "other
receivable" on Seller's Financial Statements (as defined below);
(g) TRADEMARKS AND TRADE NAMES. All right, title and interest
of Seller in any trademarks and trade names used in the Business,
including without limitation Seller's corporate name "US HealthData
Interchange, Inc." and any variation thereof.
(h) OTHER INTANGIBLES. All right, title and interest of Seller
in any trade names, trademarks, service marks, copyrights, patents,
patent rights, licenses, brand names, trade secrets, technical
know-how, goodwill, rights, domain names, telephone numbers and other
intangibles used in the Business;
(i) BOOKS AND RECORDS. All right, title and interest of Seller
in all papers, customer and vendor lists, computerized databases and
records in Seller's care, custody or
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control relating to any or all of the Assets and the operation of the
Business, including but not limited to all personnel and labor
relations records, sales records, marketing materials, and accounting
and financial records;
(j) PREPAID EXPENSES AND DEPOSITS. All right, title and
interest of Seller in all prepaid expenses and other prepaid items and
deposits relating to any of the Assets and the operation of the
Business ("PREPAID ITEMS");
(k) PERMITS, ETC. All right, title and interest of Seller in
all currently effective permits, licenses, franchises, consents or
authorizations issued by, and all registrations and filings with any
governmental agency in connection with the Business, whenever issued or
filed; and
(l) ALL PROPERTY NOT ELSEWHERE DESCRIBED. All right, title and
interest of Seller in all other assets and properties of Seller of
every kind, character or description owned, used or held for use
(whether or not exclusively) in connection with the Business, whenever
located and whether or not similar to the things set forth elsewhere in
this Section 1.1, including without limitation any and all right, title
and interest of Seller in or to be a member of ShareNET.
1.2 EXCLUDED ASSETS. The assets to be transferred pursuant hereto shall
not included any of the assets of Seller listed below (the "EXCLUDED ASSETS"):
(a) Seller's income tax records and returns and corporate
minute books and stock records;
(b) Any governmental licenses, permits or similar
authorizations which are not transferable ("Excluded Permits");
(c) Any and all trademarks and trade names which are
identified in SCHEDULE 1.2;
(d) Any off the shelf software which by the terms of its
license is not transferable;
(e) Any assets located at 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx or assets used by both Seller and its Affiliates
("SHARED ASSETS") (An "AFFILIATE" of any party is anyone who controls,
is controlled by or is under common control with such party.);
(f) Any interest in the Asset Purchase Agreement (the "XXXXXX
AGREEMENT") dated October 1, 1994 between US HealthData Interchange
Inc., a Texas corporation now known as NguyenVu, Inc., and Seller
(other than the liabilities and obligations under Sections I.3 and I.6
thereof assumed pursuant to SECTION 2.1(B)(III) below and the
Restrictive Covenant benefits contained therein) or in any agreements
or arrangements
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relating thereto (collectively, the "XXXXXX ARRANGEMENTS"), including
without limitation the Employment Agreement and
Nondisclosure/Noncompetition Agreement each dated October 1, 1994
between Seller and X.X. Xxxxxx ("XX. XXXXXX") and the lawsuit (the
"XXXXXX LAWSUIT") No. 97-02674-M in the 000xx Xxxxxxxx Xxxxxxxx Xxxxx
xx Xxxxxx Xxxxxx, Xxxxx.
(g) Any claims, rights or benefits arising under any of the
leases, licenses, contracts or other agreements included in the Assets
(the "CONTRACTS") which arose prior to the Closing (other than Accounts
Receivable arising thereunder), including without limitation any claims
against SX;
(h) Any confidentiality, standstill, letter of intent or
similar agreements which Seller or any of its Affiliates may have
entered into as to the proposed sale of the Business;
(i) Any right, title and interest of Seller in all of Seller's
bank/cash accounts and any cash of Seller;
(j) Any prepaid items of Seller associated with Excluded
Assets; and
(k) Any interest of any of Seller in any equity interests of
any entity.
The Assets to be acquired pursuant to SECTION 1.1, together
with the Business but not including any Excluded Assets, herein
referred to as the "ASSETS."
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. In consideration for the transfer and
assignment by Seller of the Assets and in consideration of the representations,
warranties and covenants of Seller set forth herein, Buyer on the conditions set
forth herein:
(a) Shall pay to Seller Four Million Dollars ($4,000,000) in
cash as more fully described in SECTION 3.5 below (the "PURCHASE
PRICE"), subject to adjustment as provided in SECTION 2.3 below; plus
(b) Shall assume, discharge, and pay when due;
(i) all trade payables incurred by Seller in the
ordinary course of its business through the Closing Date which
remain unpaid on the Closing Date, whether or not such
liabilities have been invoiced to Seller as of the Closing
Date ("TRADE PAYABLES");
(ii) all other unpaid liabilities and obligations of
Seller (A) appearing on the Financial Statements or (B) which
were incurred by Seller in the ordinary course of its business
from October 31, 1997 through the Closing Date, including any
Employee Obligations (defined below) to Seller's employees,
but excluding
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any obligation for non-current charges from MCI (the sum of
the payable liabilities and obligations as would be recorded
on financial statements pursuant to GAAP (as defined below)
and assumed by Buyer under Sections 2.1(b)(i) and (ii), but
not including any obligation or liability for Unpaid Checks
(defined below), any Excluded Liability (defined below), any
matter for which Seller provides indemnification pursuant to
this Agreement other than under Section 8.3 or matters for
which the parties make a reduction of the Purchase Price at
the Closing, is referred to herein as the "ASSUMED Payables");
and
(iii) all liabilities and obligations under Section
I.3 and I.6 of the Xxxxxx Agreement and the Contracts, but
only to the extent that such liabilities or obligations accrue
on or after the Closing Date; provided that this clause (iii)
shall not limit the obligations of Buyer set forth in SECTIONS
2.1(B)(I) AND (II) (the items assumed by Buyer in this Section
2.1 the "ASSUMED LIABILITIES").
2.2 LIABILITIES AND OBLIGATIONS NOT ASSUMED; INDEMNITIES.
(a) Except as expressly set forth in SECTION 2.1 above and in
SECTION 3.4 below, Buyer does not assume and shall not be liable for
(i) any check or draft made by Seller, whether or not included among
liabilities on the Financial Statements ("Unpaid Checks") and (ii) any
debt, obligation, taxes, responsibility or liability of the Business or
Seller, or any claim against any of the foregoing, whether known or
unknown, contingent or absolute, or otherwise ("EXCLUDED LIABILITIES").
(b) Buyer shall forever defend, indemnify and hold harmless
Seller and its directors, officers, employees and Affiliates from and
against any and all liabilities, obligations, taxes, claims, demands,
damages, costs, expenses recoveries and deficiencies, including
interest, penalties and reasonable attorneys' fees ("LOSSES"), with
respect to the Assumed Liabilities.
(c) Seller shall forever defend, indemnify and hold harmless
Buyer and its directors, officers, employees and Affiliates (other than
any current parties to the Xxxxxx Lawsuit), from and against any and
all Losses with respect to (i) the Excluded Liabilities, including
without limitation any liabilities or obligations arising through the
Closing under the SX Agreements and any other liabilities or
obligations arising after the Closing to the extent that Buyer operates
under the SX Agreements after the Closing in the same manner as did
Seller immediately prior to the Closing, and (ii) notwithstanding
anything to the contrary contained in this Agreement (including without
limitation Buyer's assumption of liabilities and obligations pursuant
to Section 2.1(b)(iii), with respect to the Xxxxxx Arrangements and the
Xxxxxx Lawsuit, including any liability for the contingent payments
which may be payable under Section I.3 of the Xxxxxx Agreement;
provided, however, that Buyer shall make any offers to Xx. Xxxxxx which
may be required under Section I.6 of the Xxxxxx Agreement after the
Closing Date.
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(d) Seller shall pay and indemnify and hold Buyer harmless
from any liability or obligation in respect of any sales, transfer and
other taxes relating to the transactions contemplated hereby which are
attributable to or assessed against Buyer by law.
(e) Buyer shall pay and indemnify and hold Seller harmless
from any liability or obligation in respect of any sales, transfer and
other taxes relating to the transactions contemplated hereby which are
attributable to or assessed against Seller by law.
2.3 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be subject to
adjustment as follows:
(a) An adjustment to the Purchase Price will be made if, at
the Closing Date, the aggregate of the Assumed Payables does not equal
Two Hundred Thousand Dollars ($200,000) (the "Represented Assumed
Payables"). In such an event the Purchase Price will decrease dollar
for dollar to the extent actual Assumed Payables on the Closing Date
are greater than the Represented Assumed Payables and will increase
dollar for dollar to the extent actual Assumed Payables on the Closing
Date are less than the Represented Assumed Payables. At the Closing,
Seller shall deliver to Buyer a statement (the "Closing Assumed
Payables Statement") estimating as of the Closing Date the actual
amount (the "Estimated Assumed Payables"). If the Estimated Assumed
Payables is not equal to the Represented Assumed Payables a preliminary
adjustment will be made as of the Closing by appropriate adjustment to
the Purchase Price to be paid at Closing. Post-Closing computation of
the Assumed Payables shall initially be made after the Closing
internally by Buyer and delivered to Seller within sixty (60) days of
Closing along with all accountants' work papers and similar
documentation used in making such determination. If Seller objects to
the computation of Assumed Payables made by Buyer, then Seller shall
notify Buyer of such objection within ten (10) days of receipt of such
computation. If the parties hereto, cannot resolve such objections
within thirty (30) days of such notification, then they shall jointly
select an accountant or accounting firm to resolve such matters. The
conclusions of such accounting firm shall be binding upon the parties
hereto. Buyer shall bear all the expense of the post-Closing
calculations under this SECTION 2.3(A) unless Seller's calculation was
more than ten percent (10%) less than the finally determined actual
Assumed Payables, in which event Seller shall be responsible only for
the reasonable fee's and expenses of the third party accountant or
accounting firm referenced above.
(b) If it is finally determined subsequent to Closing that
Assumed Payables is not equal to the Represented Assumed Payables (the
amount greater than the Represented Assumed Payables, the "EXCESS
LIABILITIES" and the amount less than the Represented Amount, the
"Lesser Liabilities") then, as applicable, Seller shall pay Buyer or
Buyer shall pay Seller, as the case may be, upon the written demand
therefor from the party owed such amount, amount of the Excess
Liabilities or the Lesser Liabilities, respectively, after taking into
account any adjustment made to the Purchase Price at the Closing.
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(c) Nothing herein shall constitute a guaranty of collection
of any Accounts Receivable.
ARTICLE 3. THE CLOSING.
3.1 CLOSING. The closing of the purchase and sale of the Assets by
Seller to Buyer (the "CLOSING") shall take place at the offices of Reihsen &
Associates, 000 Xxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at. noon local
time, on the date hereof, or at such other place and/or time as the parties may
agree in writing (the "CLOSING DATE").
3.2 INSTRUMENTS OF TRANSFER; FURTHER ASSURANCES. In order to consummate
the transactions contemplated hereby, at the Closing, Seller and Buyer shall
deliver to each other (a) a completed General Conveyance, Transfer and
Assignment in substantially the form attached as Exhibit A hereto covering all
of the Assets, and (b) a completed Assumption Agreement in substantially the
form attached as Exhibit B hereto. At the Closing, and at all times thereafter
as may be necessary, each of Seller and Buyer shall execute and deliver to the
other (i) such other instruments of transfer as shall be reasonably necessary or
appropriate to vest in Buyer good and marketable title to the Assets (subject to
any exceptions set forth in this Agreement or the Schedules hereto) and to
comply with the purposes and intent of this Agreement and (ii) such other
instruments as shall be reasonably necessary or appropriate to evidence the
assignment by Seller and assumption by Buyer of the Assumed Liabilities.
Simultaneously with the consummation of the transfer, subject to the terms of
this Agreement, Buyer shall be entitled to full possession and enjoyment of all
the Assets to be sold, conveyed, transferred, assigned and delivered pursuant to
this Agreement.
3.3 CONSENTS. From and after the date of this Agreement, Seller agrees
to provide to Buyer all reasonably requested assistance in securing any
necessary consent to the assignment of any Contract ("CONTRACTS REQUIRING
CONSENT"). Buyer shall use reasonable efforts to obtain consents for the
Contracts Requiring Consent and any consents of governmental bodies, customers,
and other persons required in order for Seller to sell and transfer the Business
and the Assets and Buyer to assume the Assumed Liabilities pursuant to this
Agreement. At the Closing, Buyer and Seller shall enter into a Subcontract in
substantially the form of Exhibit C attached hereto in respect of the Contracts
Requiring Consent for which no consent to assignment is received on or prior to
the Closing. There shall be no recourse against Seller in the event any such
consent is not received or any party to any Contract terminates its Contract as
a result of the transactions contemplated hereby.
3.4 EMPLOYEES.
(a) Seller shall continue to employ at least twenty-three (23)
of the employees who are its employees immediately prior to the Closing
(the "RETAINED EMPLOYEES") through the next regularly scheduled payroll
date (the "TRANSFER DATE") occurring after the Closing but shall make
such Retained Employees available for use by Buyer in the operation of
the Business through Transfer Date (subject to termination for cause
after consultation with Buyer and any voluntary termination by any such
Retained Employee).
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Through the Transfer Date Seller shall continue such Retained
Employees' then current compensation and benefits making payment of the
payroll due on such date with all necessary withholdings. An upward
adjustment to the Purchase Price shall be made at the Closing equal to
the compensation and the cost of the benefits to such Retained
Employees from the Closing Date through the Transfer Date. Buyer shall
offer each of the then employed Retained Employees employment with such
employment effective on the Transfer Date at the same wage rates
(including as to commission arrangements) as then employed and provide
at least such other employee benefits as Buyer provides to like
employees and shall employ each such Retained Employee who accepts such
offer on such terms (or terms more favorable to such Retained Employee)
for a period of at least thirty (30) days subsequent to the Closing
Date (subject to termination for cause and any voluntary termination by
any such Retained Employee). Buyer acknowledges that it also shall
assume pursuant to Section 2.1(b) all liabilities and obligations which
accrue on or after the Closing Date and all accrued Employee
Obligations under the employment agreements included in the Contracts.
Except as set forth below in this SECTION 3.4, Buyer shall be
responsible for, and forever defend, indemnify and hold Seller harmless
from, all Losses resulting from, relating to, or arising out of
termination of employment of the Retained Employees, including in
respect of severance and similar obligations to such persons, benefits
in respect of accrued vacation, sick leave, or personal days and any
liability or obligation to Retained Employees arising under the Workers
Adjustment and Retraining Notification Act (collectively "EMPLOYMENT
OBLIGATIONS").
(b) Seller shall offer to continue the medical and dental
insurance benefits for all Retained Employees following the Closing
Date. These medical and dental benefits shall be extended under the
Consolidated Omnibus Budget Reconciliation Action 1985 ("COBRA"). If
any Retained Employee elects such benefits, Buyer shall reimburse such
Retained Employees for the premium costs of such extended medical and
dental insurance coverage for a period of thirty (30) days after the
Closing.
(c) Without limitation of SECTION 2.2(A) above, except to the
extent of liabilities and obligations assumed by Buyer under SECTION
2.1(B) above, Buyer is not assuming any obligations of Seller relating
to any Employee Plan. For purposes of this Agreement, the term
"EMPLOYEE PLAN" includes all pension, retirement, disability, medical,
dental or other health insurance plans, life insurance or other death
benefit plans, profit sharing, deferred compensation, stock option,
bonus or other incentive plans, vacation benefit plans, severance plans
or other employee benefit plans or arrangements including, without
limitation, any pension plan as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA") and any welfare plan
as defined in Section 3(1) of ERISA, whether or not funded, covering
any Subject Employee (as defined below) or to which Seller is a party
or bound or makes or has made any contribution or by which Seller may
have any liability to any Subject Employee (including any such plan
formerly maintained by or in connection with which Seller may have any
liability to any Subject Employee, and any such plan which is a
multiemployer plan as defined in Section 3(37)(A) of ERISA). For
purposes of this Agreement the term "SUBJECT EMPLOYEE" includes all
current or former officer, directors, employees or
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consultants of Seller who are or were employed or otherwise compensated
in connection with activities involving the Assets being purchased.
3.5 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall deliver to
Seller against delivery of the items specified in Sections 3.2 a cashier's check
or wire transfer of immediately available funds to an account designated in
writing by Seller in the amount of Four Million Dollars ($4,000,000), as
adjusted pursuant to SECTION 2.4 above.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the following
representations and warranties are true and correct, and hereby acknowledges
that such representations and warranties constitute the basis upon which Buyer
is induced to enter into and perform this Agreement. Each representation and
warranty set forth in this ARTICLE 4 shall survive for a period of nine(9)
months after the Closing, and in the case of SECTIONS 4.10 AND 4.11 for a period
of eighteen (18) months after the Closing and in the case of the second sentence
of SECTION 4.17 for an unlimited period after the Closing, regardless of any
investigation made by or on behalf of Buyer.
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATIONS. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller has all necessary corporate power to own its
properties and to carry on its business as now owned and operated by it, and is
duly qualified to transact its business and is in good standing in all
jurisdictions in which the nature of its business or the location of its
properties makes such qualification necessary except for failures to be duly
qualified or in good standing as would not have a material adverse effect on the
Business or the Assets ("MATERIAL ADVERSE Effect"). OmNex Health, Inc., a
Delaware corporation, is the sole stockholder of Seller.
4.2 FINANCIAL STATEMENTS. SCHEDULE 4.2(A) to this Agreement contains
the audited balance sheets of Seller for the fiscal years ended March 31, 1997
and 1996, and the related statements of income and retained deficit and
statements of cash flows for such periods. SCHEDULE 4.2(B) to this Agreement
sets forth the unaudited balance sheet of Seller as of October 31, 1997,
together with the related unaudited statement of operations and retained deficit
for the seven (7) month period then ending, certified by the Vice
President-Finance of Seller. The financial statements in SCHEDULES 4.2(A) AND
4.2(B) are referred to as the "Financial Statements." The Financial Statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") consistently followed by Seller throughout the periods indicated, and
fairly present the financial position of Seller as of the respective dates of
the balance sheets included in the Financial Statements, and the results of its
operations for the respective periods indicated, subject to Seller's parent
company recording on its books certain liabilities of Seller which are not being
assumed by Buyer and, in the case of unaudited Financial Statements, to normal
year end adjustments.
4.3 ABSENCE OF UNDISCLOSED LIABILITIES. To Seller's knowledge, except
to the extent disclosed, reflected or reserved against in the Financial
Statements or as disclosed in
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SCHEDULE 4.3, it has no material debts, liabilities or obligations (whether
absolute, accrued, contingent or otherwise) including, without limitation, any
liabilities for environmental pollution.
4.4 ABSENCE OF SPECIFIED CHANGES. Except as set forth on SCHEDULE 4.4
hereof or in connection with the transactions contemplated by this Agreement,
since September 30, 1997, there has not been any:
(a) Contract, commitment or transaction by Seller except in
the ordinary course of business;
(b) Capital expenditure or purchase commitments by Seller
exceeding $20,000 for any single item, or $20,000 in the aggregate, or
entry by Seller into any leases of capital equipment or real or
personal property under which the annual lease charge is in excess of
$20,000;
(c) Material adverse change in the financial condition,
liabilities, Assets, or Business of Seller except as may arise under
generally prevailing economic conditions or Seller's industry or health
care industry conditions;
(d) Destruction, damage to, or loss of any Assets of Seller
(whether or not covered by insurance) that would have a Material
Adverse Effect ;
(e) Labor trouble or other event or condition relating to
employees of any character that would have a Material Adverse Effect;
(f) Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies
or rates) by Seller;
(g) Increase in the salary or other compensation payable or to
become payable by Seller to any of its officers, directors, employees
or consultants who have provided and continue to provide substantial
services to Seller or the declaration, payment or commitment or
obligation of any kind for the payment by Seller of a bonus or other
additional salary or compensation to any such person;
(h) Sale or transfer of any Asset of Seller except in the
ordinary course of business;
(i) Execution, creation, amendment or termination of any
contract, agreement or license to which Seller is a party except as to
Provider Contracts;
(j) Loan by Seller to any person or entity, or guaranty by
Seller of any loan;
(k) Knowing or intentional waiver or release of any right or
claim of Seller;
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(l) Mortgage, pledge or other encumbrance of any Asset of
Seller;
(m) Distributions or dividends to any shareholders or third
parties other than intercompany transfers in the ordinary course of
business and sweep of all cash out of Seller's bank/cash accounts at or
before the Closing; or
(n) Agreement by Seller to do any of the things described in
the preceding clauses (a) through (m).
4.5 TAX MATTERS. Seller and/or the affiliated group, within the meaning
of Section 1504 of the Internal Revenue Code of 1986, as amended (the "CODE"),
of which Seller is a member have filed or caused to be filed in a timely manner
(within any applicable extension periods) all tax returns, reports and forms
required to be filed by the Code or by applicable state, local or foreign tax
laws, all taxes shown to be due on such returns, reports and forms have been or
will be timely paid in full, and no tax liens have been filed and no material
claims are being asserted in writing with respect to any taxes.
4.6 CONTRACTS; REAL PROPERTY; ETC.
(a) The Contracts consist of all material written and oral
contracts, leases, licenses and agreements, and any other commitments
or understandings entered into by Seller other than those included in
Excluded Assets. True, correct and complete copies of the Contracts
have been delivered or made available to Buyer. Except as set forth on
SCHEDULE 4.6, to Seller's knowledge all such contracts and agreements
are valid and in full force, and there does not exist any default or
event that with notice or lapse of time, or both, would constitute
default under any of these contracts and agreements. To Seller's
knowledge, except as set forth in SCHEDULE 4.6, there have been no
claims or defaults, and there are no facts or conditions which if
continued, or unnoticed, will result in a default under any of the
Contracts.
(b) Except for the Contracts and any contracts or agreements
included in the Excluded Assets, Seller is not a party to, nor are the
Assets bound by, any other agreement not entered into in the ordinary
course of business, any indenture, mortgage, deed of trust, lease or
any other agreement that is unusual in nature, duration or amount
(including, without limitation, any agreement requiring the performance
by Seller of any obligation for a period of time extending beyond one
year from Closing Date or calling for consideration of more than
$20,000 or requiring purchases at prices in excess of, or sales at
prices lower than, prevailing market prices). Seller has no right,
title or interest in any real property or lease of real property other
than under the Lease.
4.7 OTHER TANGIBLE PERSONAL PROPERTY. The Equipment constitutes
substantially all the items of tangible personal property owned by, in the
possession of, or used by Seller in connection with its business, excluding any
such property included in Excluded Assets. No material item of Equipment is held
under any lease, security agreement, conditional sales
11
contract, or other title retention or security arrangement, or is in the
possession of anyone other than an employee of Seller.
4.8 ACCOUNTS RECEIVABLE. The Accounts Receivable are valid and genuine
and arose from bona fide sales and deliveries of goods, performance of services
or other transactions in the ordinary course of Seller's business except as to
the Account Receivable designated as "other receivable" on the Financial
Statements which arose outside the ordinary course of business, but is a valid
obligation of the obligor therefor. To Seller's knowledge the Financial
Statements contain adequate reserves for the outstanding Accounts Receivable,
however, Seller makes no representation or warranty with respect to the
collectibility of any of the Accounts Receivable or the adequacy or
enforceability of any security therefor.
4.9 TRADE NAMES, TRADEMARKS AND COPYRIGHTS. Except as set forth in
SCHEDULE 4.9 and its corporate name, Seller does not use any trademark, service
xxxx, trade name, copyright or brand name in its business, or own any
trademarks, trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications, brand names, domain names
or telephone numbers (collectively, "TRADE NAMES"). Except as set forth in
SCHEDULE 4.9 or included in the Excluded Assets, no person (other than Seller)
owns any Trade Name, the use of which is necessary in connection with the
performance of any Contract. Except as set forth in SCHEDULE 4.9, to Seller's
knowledge it has the right and authority to use such Trade Names, as are
necessary to enable it to conduct and to continue to conduct the Business, and
such use does not and will not conflict with, infringe or violate any
intellectual or proprietary rights of others.
4.10 INTELLECTUAL PROPERTIES. Seller has no right, title or interest in
any patents, inventions, industrial models, processes, designs, formulas and
applications for patents ("INTELLECTUAL PROPERTIES") other than as set forth in
SCHEDULE 4.10. Except as set forth in SCHEDULE 4.10, there have not been any
administrative, judicial, arbitration, or other adversary proceedings including
Seller concerning the Intellectual Properties listed in SCHEDULE 4.10. To
Seller's knowledge, except as disclosed SCHEDULE 4.10, the manufacture, use or
sale of the inventions, models, designs and systems covered by the Intellectual
Properties listed in SCHEDULE 4.10 does not violate or infringe on any patent or
any proprietary or personal right of any party, firm or corporation, and to
Sellers knowledge, other than as disclosed in SCHEDULE 4.10, Seller has not
infringed and is not now infringing on any patent or other right belonging to
any party. Except as set forth in SCHEDULE 4.10, Seller is not a party to any
license, agreement or arrangement, whether as licensee, licensor or otherwise,
with respect to any Intellectual Properties other than as to off the shelf
software. To Seller's knowledge it has the right and authority to use such
Intellectual Properties as are necessary to enable it to conduct and to continue
to conduct all phases of the Business in the manner presently conducted.
4.11 TITLE TO ASSETS. Except as set forth in SCHEDULE 4.11, Seller has
good and marketable title to all the Assets and its interest in the Assets to be
conveyed to Buyer hereunder, whether real or personal, mixed, tangible, and
intangible; provided that Seller makes no representation or warranty as to any
right, title or interest of Seller in or to be a member of
12
ShareNET. Except as set forth in SCHEDULE 4.11, all the Assets are free and
clear of mortgages, liens, pledges, charges, encumbrances, equities, claims,
easements, rights of way, covenants, conditions or restrictions, except for (i)
those disclosed in this Agreement, in the Financial Statements or in the other
Schedules to this Agreement; (ii) liens for current taxes not yet due and
payable; and (iii) possible minor matters that, in the aggregate, do not exceed
$20,000 in amount and do not materially detract from or interfere with the
present or intended use of any of the Assets, nor materially impair business
operations of Seller. Except for the foregoing, all the Assets are being sold
hereunder on an "as is, where is" basis. Seller is in possession of the Leased
Property. Except as set forth in SCHEDULE 4.11, neither any stockholder,
officer, director or employee of Seller, nor any spouse, child or other relative
of any of these persons, owns, or has any interest, directly or indirectly, in
any of the real or personal property owned by or leased to Seller or any
Intellectual Properties or Trade Names owned or licensed by Seller.
4.12 EXISTING EMPLOYMENT ARRANGEMENTS. SCHEDULE 4.12 to this Agreement
is a list of all employment contracts, collective bargaining agreements, pension
plans, bonus plans, profit-sharing plans, deferred compensation plans, stock
option plans, or other agreements or arrangements providing for employee or
consultant (other than accountants, auditors or attorneys) remuneration or which
benefits Seller or by which Seller is obligated or which benefit Seller's
employees or such consultants, whether legally binding or in the nature of
informal understandings. To Seller's knowledge, all these contracts and
arrangements are in full force and effect, and neither Seller nor any other
party is in default under them. To Seller's knowledge there has been no claims
of defaults and there are no facts or conditions which if continued, or on
notice, will result in a default under these contracts or arrangements. To
Seller's knowledge, there is no pending or, threatened labor dispute, strike or
work stoppage affecting the Business.
4.13 INSURANCE POLICIES. SCHEDULE 4.13 to this Agreement is a list of
all insurance policies concerning the Business or the Assets as of the date
hereof.
4.14 COMPLIANCE WITH LAWS. To the best of Seller's knowledge, Seller,
the operation of the Business and the use of its properties have complied in all
material respects with all, applicable federal, state or local statutes, laws
and regulations (including, without limitation, any applicable environmental,
health, building, zoning or other law, ordinance or regulation) and any order,
writ, injunction or decree of any federal, state, local or foreign court,
department, agency or instrumentality affecting Seller or its properties
(including the Leased Property) or the operation of the Business, except as
would not have a Material Adverse Effect. The exclusion of Excluded Permits and
the Shared Assets from the Assets being transferred to Buyer shall not preclude
the operation of the Business by Buyer in substantially the manner operated
prior to the Closing, assuming Buyer obtains all such governmental licenses,
permits or other authorizations unique to it which are necessary for it to do
business and Buyer provides the executive management and corporate, accounting,
financial and other services currently provided to Seller by its Affiliates or
at its Affiliates locations.
4.15 LITIGATION. Except for the Xxxxxx Lawsuit or the other matters set
forth in SCHEDULE 4.15, to Seller's knowledge there is no suit, action,
arbitration or legal,
13
administrative or other proceeding, or governmental investigation pending or
threatened against or affecting Seller, the Business or the Assets. Other than
the Xxxxxx Lawsuit, Seller is not presently engaged in any legal action to
recover moneys due to it or damages sustained by it.
4.16 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry
into this Agreement by Seller nor the consummation of the transactions
contemplated hereby by Seller will result in or constitute (i) a default or an
event that, with notice or lapse of time or both, would be a default, breach or
violation of the Certificate of Incorporation or Bylaws of Seller or to the
knowledge of Seller, except as to any failure to obtain required consents for
the assignment of any Contract, any Contract; (ii) to the knowledge of Seller,
except as to any failure to obtain required consents for the assignment of any
Contract, an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation under any
Contract; (iii) to the knowledge of Seller, except as to any failure to obtain
required consents for the assignment of any Contract, the creation or imposition
of any lien, charge or encumbrance on any of the Assets; or (iv) the violation
of any law, regulation, ordinance, judgment, order or decree applicable to or
affecting Seller or the Assets.
4.17 AUTHORITY AND CONSENTS. Except as set forth in SCHEDULE 4.17 or
any consents required for the assignment of any Contract, Seller has the right,
power, legal capacity and authority to enter into, and perform its obligations
under this Agreement, and no approvals or consents of any persons other than
Seller are necessary in connection with it. The execution and delivery of this
Agreement and the consummation of this transaction by Seller have been duly
authorized by all necessary corporate action of Seller, including approval by
its Board of Directors and sole stockholder and no additional approval or
authority is required in connection with the bankruptcy actions Case Nos.
96-1329 through 96-1334 (HSB) in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Cases") or under the Order Approving
Settlement Agreement between Xxxx X. Xxxxx, Xx., as Trustee, and Avatex
Corporation issued in the Bankruptcy Cases, or any other bankruptcy action. This
Agreement constitutes a legal, valid and binding obligation of Seller
enforceable in accordance with its terms, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally
and except that the remedy of specific performance and injunctive and other
forms of equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
4.18 PERSONNEL IDENTIFICATION AND COMPENSATION. SCHEDULE 4.18 is a list
of the names and addresses of all employees or significant consultants of Seller
stating the rates of compensation payable to each and setting forth all vacation
time, sick leave and other paid time off accrued for each of them through the
date indicated in SCHEDULE 4.18 and the date and amounts of each such person's
last salary increase. No other person, except accountants, auditors and
attorneys regularly performs compensable services for Seller.
4.19 BULK TRANSFER NOTICE. Except as otherwise provided herein or
contained on any Schedule hereto, Seller shall transfer the Assets free and
clear of all debts and encumbrances or other obligations owed to any third party
prior to the Closing Date, and Buyer has agreed to waive any formal requirements
of any applicable state bulk sale transfer laws. Seller agrees to
14
hold Buyer harmless and indemnify Buyer against any such claims asserted against
Buyer from any creditors entitled to advance notice of the sale of the Assets
under any applicable state bulk sales transfer laws.
4.20 KNOWLEDGE, ETC. Certain of the representations and warranties of
the parties hereto are made "to the best knowledge" or "to the knowledge" or
words of similar import. The parties hereto agree that the meaning of such
expression shall in all cases be understood as comprising matters which the
person, or in the case of an entity, an executive officer of such entity,
actually knows or, by virtue of his position should know. All matters disclosed
under any Schedule delivered pursuant to this ARTICLE 4 shall be deemed
disclosed under each other Schedule and Section of this ARTICLE 4 to the extent
responsive to such Schedule or Section and an exception to each applicable
representation and warranty made by Seller herein.
ARTICLE 5. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer hereby represents and warrants to Seller that the following
representations and warranties are true and correct, and hereby acknowledges
that such representations and warranties constitute the basis upon which Seller
is induced to enter into and perform this Agreement. Each representation and
warranty set forth in this ARTICLE 5 shall survive for a period of nine (9)
months after the Closing and in the case of the second sentence of Section 5.1
for an unlimited time after the Closing, regardless of any investigation made by
or on behalf of Seller.
5.1 AUTHORITY AND CONSENTS. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Buyer has the right, power, legal capacity and authority to enter into, and
perform its obligations under this Agreement, and no approvals or consents of
any persons, including its Board of Directors or shareholders, are necessary in
connection with it. The execution and delivery of this Agreement and the
consummation of this transaction by Buyer have been duly authorized by all
necessary corporate action of Buyer. This Agreement constitutes a legal, valid
and binding obligation of Buyer enforceable in accordance with its terms, except
as limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally and except that the remedy of specific performance
and injunctive and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
5.2 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry
into this Agreement nor the consummation of the transactions contemplated hereby
will result in or constitute (i) a default or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of Buyer or, to the knowledge of Buyer, any lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trustee other agreement, instrument or arrangement to which
Buyer is a party or by which Buyer is bound; (ii) to the knowledge of Buyer, an
event that would permit any party to terminate any agreement or to accelerate
the maturity of any indebtedness or other obligation; or (iii) to the knowledge
of Buyer, the violation of any law, regulation, ordinance, judgment, order or
decree applicable to or affecting Buyer.
15
5.3 BUYER'S NET WORTH. Section I.6 of the Xxxxxx Agreement requires
that if Seller "desires to abandon (other than by sale) the Business, [it] shall
notify X.X. Xxxxxx and shall offer to sell the operating assets of the Business
to Xx. Xxxxxx at a price to be negotiated. [Seller] shall have no obligation to
offer to sell the Business to Xx. Xxxxxx before selling the Business to another
party; provided, however, that such third party has a minimum net worth of
$10,000,000." Buyer hereby represents and warrants to Seller that it has as of
the date hereof and will have as of the Closing Date a net worth in excess of
$10,000,000.
ARTICLE 6. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Business and the Assets and
assume the Assumed Liabilities under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set out below in
this ARTICLE 6, Buyer may waive any or all of these conditions in accordance
with SECTION 10.2 hereof and shall be deemed to have waived any condition which
it knows is unmet at the time of Closing and shall retain no rights or remedies,
at law or in equity, or under this Agreement in respect of any Losses or for
indemnification which would otherwise result from any default which would
otherwise arise from such unmet condition.
6.1 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Seller in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as though made on
and as of that date.
6.2 SELLER'S PERFORMANCE. Seller shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by Seller
on or before the Closing Date.
6.3 CERTIFICATION BY SELLER. Buyer shall have received a certificate,
dated the Closing Date, signed by Seller's Vice President certifying, in such
detail as Buyer and its counsel may reasonably request, that the conditions
specified in SECTIONS 6.1 AND 6.2 have been fulfilled.
6.4 OPINION OF SELLER'S COUNSEL. Buyer shall have received from Reihsen
& Associates, counsel for Seller, an opinion dated the Closing Date, in form and
substance reasonably satisfactory to Buyer and its counsel, that:
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
all necessary corporate power to own its properties as now owned and
operate its business as now operated;
(b) This Agreement has been duly and validly authorized by
Seller and, when executed and delivered by Seller, will be valid and
binding on Seller and enforceable in accordance with its terms, except
(i) as limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally and except that the remedy
of specific performance and injunctive and other forms of equitable
relief are subject to
16
certain equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought and (ii) that such
counsel need express no opinion as to SECTION 8.14 of this Agreement;
(c) Except as disclosed in this Agreement, such counsel does
not know of any suit, action, arbitration or legal, administrative or
other proceeding or governmental investigation pending or threatened
against or affecting Seller or its business or any of its properties;
(d) Except as disclosed in this Agreement, neither the
execution nor delivery of this Agreement by Seller nor the consummation
of the transactions contemplated in this Agreement by Seller will
constitute (i) a default, or an event that would with notice or lapse
of time or both constitute a default under, or violation or breach of,
(A) Seller's Certificate of Incorporation or Bylaws or (B) to such
counsel's knowledge without independent inquiry, any Contract or
statute, rule, regulation, judgment, order or decree to which Seller is
a party, or by which Seller or the Assets may be bound, or (ii) to such
counsel's knowledge without independent inquiry, an event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
Seller, or (iii) to such counsel's knowledge without independent
inquiry, an event that would result in the creation or imposition of
any security interest or lien on any of the Assets;
(e) To such counsel's knowledge without independent inquiry,
every consent, approval, authorization or order of any court or
governmental agency or body that is required for the consummation by
Seller of the transactions contemplated by this Agreement has been
obtained or has been waived by Buyer, and such counsel has not been
informed that any such consent, approval, authorization or order has
been rescinded or is no longer in effect as of the Closing Date.
6.5 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, other than the Xxxxxx
Lawsuit, shall have been instituted or threatened on or before the Closing Date.
ARTICLE 7. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell and transfer the Business and the
Assets under this Agreement are subject to the satisfaction, at or before the
Closing, of all the following conditions.
7.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Buyer contained in this Agreement shall be
true in all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of that date.
17
7.2 BUYER'S PERFORMANCE. Buyer shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied, complied with by Buyer on or before the
Closing Date.
7.3 OPINION OF BUYER'S COUNSEL. Buyer shall have furnished Seller with
an opinion, dated the Closing Date, of Xxxxx X. Xxxxxxx, Esq., counsel for
Buyer, in form and substance reasonably satisfactory to Seller and its counsel,
that:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has all
necessary corporate power to perform its obligations under this
Agreement;
(b) All corporate proceedings required by law or by the
provisions of this Agreement to be taken by Buyer on or before the
Closing Date, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, have been duly and validly taken;
(c) Buyer has the corporate power and authority to acquire the
Assets for the consideration set forth herein;
(d) Every consent, approval, authorization or order of any
court or governmental agency or body that is required for the
consummation by Buyer of the transactions contemplated by this
Agreement has been obtained or has been waived by Seller, and will be
in effect on the Closing Date;
(e) Neither the execution nor delivery of this Agreement by
Buyer nor the consummation of the transactions contemplated by this
Agreement by Buyer will constitute (i) a default, or an event that
would with notice or lapse of time or both constitute a default under,
or violation or breach of, (A) Buyer's Articles of Incorporation or
Bylaws or (B) to such counsel's knowledge without independent inquiry,
any Contract or any indenture, license, lease, franchise, mortgage,
instrument or other agreement to which Buyer is party or statute, rule,
regulation, judgment, order or decree to which Buyer is a party, or by
which Buyer or its assets may be bound, or (ii) to such counsel's
knowledge without independent inquiry, an event that would permit any
party to any agreement or instrument to terminate it or to accelerate
the maturity of any indebtedness or other obligation of Buyer, or (iii)
to such counsel's knowledge without independent inquiry, an event that
would result in the creation or imposition of any lien, on any security
interest or lien on the assets of Buyer; and
(f) This Agreement has been duly and validly authorized and,
when executed and delivered by Buyer, will be valid and binding on
Buyer and enforceable in accordance with its terms, except as limited
by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief are
subject to
18
certain equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought.
7.4 CERTIFICATION BY BUYER. Seller shall have received a certificate,
dated the Closing Date, signed by Buyer's Vice President certifying, in such
detail as Seller and its counsel may reasonably request, that the conditions
specified in SECTION 7.1 AND 7.2 have been fulfilled.
7.5 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, other than the Xxxxxx
Lawsuit, shall have been instituted or threatened on or before the Closing Date.
7.6 PAYMENT OF PURCHASE PRICE. The Buyer shall have paid the Purchase
Price to be paid at the Closing as specified in SECTION 2.1(A) as adjusted
pursuant to SECTION 2.3.
ARTICLE 8. PARTIES' OBLIGATIONS AFTER THE CLOSING
A. SELLER'S OBLIGATIONS.
8.1 PRESERVATION OF GOODWILL. Following the Closing, Seller will not
knowingly take any action to impair the goodwill, business reputation, employee
relations and prospects connected with the Assets to be conveyed to Buyer
hereunder.
8.2 CHANGE OF NAME. Seller agrees that after the Closing Date it shall
not use or employ the name of "US HealthData Interchange" or any variation
thereof, except as its corporate name for such matters as may be necessary to
wind it up or exist as a non-operational shell corporation and that, as soon as
practicable but in no event later than thirty (30) days after the Closing Date,
Seller will take and cause to be taken all necessary action by its Board of
Directors, sole stockholder and any other persons and make such filings as are
necessary in order to change Seller's name.
8.3 SELLER'S INDEMNITIES.
(a) Seller shall indemnify, defend and hold harmless Buyer
against and in respect of any and all Losses that Buyer shall incur or
suffer, which arise out of or result from any breach of, or failure by
Seller to perform, any of its representations, warranties, covenants or
agreements in this Agreement except as may be waived as set forth
herein.
(b) Seller shall not be liable for indemnification under
SECTION 8.3(A) above or under any warranty, representation or covenant,
or breach or violation thereof or misrepresentation under any warranty
or representation, unless and until the aggregate amount sought by
Buyer exceeds Fifty Thousand Dollars ($50,000) (the "Basket"), in which
event Buyer shall be entitled to indemnification for all amounts sought
which would otherwise be included in the Basket and the aggregate
maximum liability of Seller in respect of the foregoing shall not
exceed One Million Dollars ($1,000,000).
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8.4 ACCESS TO RECORDS. From and after the Closing, Seller shall allow
Buyer, and its counsel, accountants and other representatives, such access to
records which after the Closing are in the custody or control of Seller as Buyer
reasonably requests in writing in order to comply with its obligations under the
law or under any Contracts.
8.5 NONSOLICITATION OF EMPLOYEES. Seller shall not, for two (2) years
from the date of this Agreement, directly solicit any employee of Buyer or of
any direct or indirect subsidiary of Buyer to leave such employment if such
employee was at the Closing an employee of Seller.
B. BUYER'S OBLIGATIONS.
8.6 RECORDS OF SELLER. From the Closing Date, and so long as required
under applicable law or for other reasonable business purposes (including
without limitation defending or prosecuting the Xxxxxx Lawsuit or defending or
prosecuting any other claim), Buyer agrees that it shall not destroy any
original records of Seller existing on the Closing Date without first offering
to give Seller such records (which option must be exercised within twenty (20)
days after the giving thereof by Buyer), and Buyer shall provide Seller with
reasonable access to review any such books and records and to make copies
thereof during normal business hours of Buyer in connection with tax returns,
tax audits, claims that could reasonably be expected to be asserted against
Seller, or for any other valid business purpose or for other reasonable business
purposes (including without limitation defending or prosecuting the Xxxxxx
Lawsuit or defending or prosecuting any other claim).
8.7 ACCESS TO RECORDS. From and after the Closing, Buyer shall allow
Seller, and its counsel, accountants and other representatives, such access to
records which after the Closing are in the custody or control of Buyer as Seller
reasonably requires in order to comply with their respective obligations under
the law or under contracts assumed by Buyer pursuant to this Agreement.
8.8 BUYER'S INDEMNITIES.
(a) Buyer shall indemnify, defend and hold harmless Seller
against and in respect of any and all Losses that Seller shall incur or
suffer, which arise out of or result from any breach of, or failure by
Buyer to perform, any of its representations, warranties, covenants or
agreements in this Agreement.
(b) Except for Buyer's obligation to pay the full Purchase
Price for the Assets referred to in SECTION 2.1 hereof and to pay all
amounts due and satisfy all obligations and liabilities in connection
with the Assumed Liabilities (subject to Seller's indemnification
obligations under SECTION 2.2(C) above) and indemnification obligations
other than under SECTION 8.8(A) ABOVE, Buyer shall not be liable for
indemnification under SECTION 8.3(A) above or under any warranty,
representation or covenant, or breach or violation thereof or
misrepresentation under any warranty or representation, unless and
until the aggregate amount sought by Seller exceeds the Basket, in
which event Seller shall be entitled to
20
indemnification for all amounts sought which would otherwise be
included in the Basket and the aggregate maximum liability of Buyer in
respect of the foregoing shall not exceed One Million Dollars
($1,000,000).
C. ASSERTION OF CLAIMS.
8.9 ASSERTION OF CLAIMS. All claims for indemnification by Seller
pursuant to SECTION 8.3 hereof or Buyer pursuant to SECTION 8.4 hereof, or any
other indemnification provision of this Agreement, shall be asserted and
resolved as follows:
(a) Any person claiming indemnification hereunder is
hereinafter referred to as the "Indemnified Party" and any person
against whom such claims are asserted hereunder is hereinafter referred
to as the "Indemnifying Party." In the event that any Losses are
asserted against or sought to be collected from an Indemnified Party by
a third party, said Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of the Losses, specifying the nature and
specific basis for such Losses and the indemnity claim and the amount
or the estimated amount thereof to the extent then feasible and
enclosing a copy of all papers (if any) served with respect to the
claim (the "Claim Notice"). The Indemnifying Party shall not be
obligated to indemnify the Indemnified Party with respect to any such
Losses if the Indemnified Party fails to notify the Indemnifying Party
thereof in accordance with the provisions of this Agreement in
reasonably sufficient time so that the Indemnifying Party's ability to
defend against the Losses is not prejudiced. The Indemnifying Party
shall have thirty (30) days from the date the Claim Notice is given in
accordance with the notice provisions hereof (the "Notice Period") to
notify the Indemnified Party (x) whether it disputes the liability of
the Indemnifying Party to the Indemnified Party hereunder with respect
to such Losses, and (y) whether it desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party
against such Losses; which election to defend may be made without
prejudicing the Indemnifying Party as to its liability hereunder, other
than with respect to the costs of defense. Notwithstanding the
foregoing, any Indemnified Party is hereby authorized prior to and
during the Notice Period to file any motion, answer or other pleading
that it shall deem necessary or appropriate to protect its interests or
those of the Indemnifying Party (and of which it shall have given
notice and opportunity to comment to the Indemnifying Party) and that
is not prejudicial to the Indemnifying Party. (A) In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against such
Losses, except as hereinafter provided, the Indemnifying Party shall
have the right to defend by all appropriate proceedings, and with
counsel of its own choosing, in appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by the Indemnifying
Party to a final conclusion. If the Indemnified Party desires to
participate in any such defense or settlement, it may do so at its sole
cost and expense but it shall have no right to control the defense of
such proceeding. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and
its counsel in contesting any Losses that the Indemnifying Party elects
to contest, or, if appropriate and related to the claim in question, in
making any counterclaim against the
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person asserting the third party Losses, or any cross-complaint against
any person. No claim with respect to which the Indemnifying Party has
not admitted its liability may be settled or otherwise compromised
without the prior written consent of the Indemnifying Party. Any party
settling or compromising a claim in violation of the preceding sentence
shall be solely liable for the amount of the settlement or compromise.
(B) If the Indemnifying Party does not notify the Indemnified Party
within 30 days after the receipt of a Claim Notice that it elects to
undertake the defense thereof, the Indemnified Party shall have the
right to defend at the expense of the Indemnifying Party the claim with
counsel of its choosing reasonably satisfactory to the Indemnifying
Party, subject to the right of the Indemnifying Party to assume the
defense of any claim at any time prior to settlement or final
determination thereof. Any such defense shall be prosecuted promptly
and vigorously by the Indemnified Party. In the case of either (A) or
(B), if the Indemnifying Party has not yet admitted its liability for a
claim the Indemnified Party shall send a written notice to the
Indemnifying Party of any proposed settlement of any claim received by
the Indemnified Party. The Indemnifying Party shall have an option for
30 days following receipt of such notice to (i) admit liability for the
claim if it has not already done so, and (ii) if liability has been
admitted, reject, in its reasonably judgment, the proposed settlement.
Failure to reject such settlement in writing within such 30 day period
shall be deemed an acceptance of such settlement. If the Indemnified
Party settles any such claim over the objection of the Indemnifying
Party, the Indemnified Party shall thereby waive any right to indemnify
therefor, unless the Indemnifying Party has prior to the time of
settlement admitted liability for such claim in writing.
(b) In the event any Indemnified Party should have a claim for
Losses against any Indemnifying Party hereunder that does not involve a
Loss being asserted against or sought to be collected from it by a
third party (for example, but without limitation, a Loss resulting from
a breach of a representation, warranty or covenant), the Indemnified
Party shall send a Claim Notice (including an explanation, in
reasonable detail, of the basis for such claim, the particular
representation, warranty or covenant claimed to be breached by the
Indemnifying Party, and the manner in which the amount claimed to be
due was computed, together with all documents in the possession of the
Indemnified Party relating to such claim for Losses) with respect to
such claim to the Indemnifying Party. If the Indemnifying Party does
not notify the Indemnified Party within thirty (30) days from the date
the Claim Notice is given that it disputes such claim for Losses, the
amount of such Losses shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
8.10 LOSSES NET OF INSURANCE AND TAX BENEFIT. The amount of any Losses
for which indemnification is provided under SECTIONS 8.3 AND 8.8 hereof, or any
other indemnification provision of this Agreement, shall be net of any amounts
actually recovered under insurance policies and any tax benefit received.
8.11 TERMINATION OF INDEMNIFICATION. The obligations to indemnify,
defend and hold harmless a party hereto, pursuant to SECTION 8.3 OR 8.8 HEREOF
(but not pursuant to any other indemnification provisions of this Agreement,
including without limitation under SECTION 2.2(C) above), shall terminate nine
(9) months after the Closing as to all matters except as arise out of
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any breach of the representations and warranties set forth in SECTIONS 4.10 AND
4.11 which shall terminate eighteen (18) months after the Closing and as to any
breach of the representations and warranties contained in the second sentence of
SECTION 4.17 and the second sentence of SECTION 5.1 shall continue without
termination; provided however, that such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which the party to
be indemnified shall have made a claim prior to the termination of
indemnification therefor by delivering a written notice (stating in reasonable
detail the basis of such claim) to the party to be providing the
indemnification. Buyer hereby agrees that with respect to any Losses, Seller
shall not be required to pay any amounts in connection with making claims under
insurance policies covering such Losses, unless Buyer agrees to fully reimburse
Seller therefor upon receipt of any insurance proceeds.
8.12 LIMITATION OF REMEDIES. Buyer and Seller each agree that no party
hereto, shall make a claim against any other party hereto for consequential,
exemplary or punitive damages, provided that the foregoing limitation shall not
prevent an indemnified party from seeking indemnification for third party claims
alleging such damages.
8.13 COLLECTION OF ACCOUNTS RECEIVABLES. Seller shall transfer and
deliver to Buyer any payments received after the Closing Date on account of the
Accounts Receivable and Seller shall permit Buyer to collect, in the name of
Seller or otherwise, all Accounts Receivable. Seller hereby designates and
appoints Buyer as its attorney-in-fact with authority to receive, open and
dispose of all mail addressed to it, and to endorse its name on any checks,
drafts, money orders or other evidences of payment of the Accounts Receivable.
8.14 NONCOMPETITION.
(a) During the period commencing on the date hereof and ending
on the expiration of forty-two (42) months following the date hereof,
Seller shall not and shall cause its Affiliates not to, directly or
indirectly, own, manage, operate, control or otherwise engage or
participate in any business which may compete in the Business in any
state or other jurisdiction into which Seller has had sales of products
or provided its services prior to the date hereof, except that Seller
or any of its Affiliates may own securities (or instruments convertible
thereto) of any company so long as it neither owns fifty percent (50%)
or more of such company's outstanding voting securities nor operates
such company nor has its designees occupy more than one-third (1/3) of
the board seats of such company at the time such designees become board
members.
(b) In the event Seller violates the provisions of SECTION
8.14(A) above, the running of the time period of such provisions so
violated shall be automatically suspended upon the date of such
violation and shall resume on the date Seller ceases such violation.
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(c) The remedy at law for any breach of this Agreement is and
will be inadequate, and in the event of a breach of threatened breach
by Seller of the provisions of this Agreement, Buyer shall be entitled
to an injunction restraining Seller from such breach. Nothing herein
contained shall be construed as prohibiting Buyer from pursuing any
other remedies available to it for such breach or threatened breach,
including without limitation the recovery of damages from Seller.
ARTICLE 9. COSTS
9.1 FINDER'S OR BROKER'S FEES. Each of the parties represents and
warrants that it has dealt with no broker or finder in connection with any of
the transactions contemplated by this Agreement, and, insofar as it knows, no
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions, except that Seller has retained
Xxxxxxxxx & Company, Inc. as its Broker, and any fees or commissions and
expenses associated therewith is the sole obligation of Seller.
9.2 EXPENSES. Each of the parties shall pay all costs and expenses,
including, but not limited to all attorneys' fees, investment banker's fees and
accounting fees, incurred or to be incurred by it in negotiating and preparing
this Agreement and in closing and carrying out the transactions contemplated by
this Agreement.
ARTICLE 10. FORM OF AGREEMENT
10.1 HEADINGS. The subject headings of the Articles and Sections of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
10.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior agreements, representations, and
understandings of the parties; provided that the parties shall continue to be
bound by the provisions of the agreements referenced in SECTION 15.2 below. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of the provisions 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. No waiver shall be binding unless executed in writing by the party
making the waiver.
10.3 COUNTERPARTS. This Agreement may be executed simultaneously 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.
ARTICLE 11. PARTIES
11.1 PARTIES IN INTEREST. Except as otherwise expressly provided herein
to the contrary as to payment by Buyer of Retained Employee's COBRA insurance
premiums under Section
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3.4(b) above, nothing in this Agreement is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties to it and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party to this Agreement, nor shall any provision give
any third persons any right of subrogation or action over against any party to
this Agreement.
11.2 ASSIGNMENT. Buyer may not assign or delegate any of its rights or
obligations under this Agreement or any part hereof without the prior written
consent of Seller except for any assignment in connection with the sale of
substantially all of Buyer's assets or capital stock to an unaffiliated third
party. Except as otherwise set forth herein, Seller may not assign or delegate
any of its rights or duties hereunder, without the prior written consent of
Buyer. This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective heirs, legal representatives, successors and
assigns.
ARTICLE 12. REMEDIES
12.1 RECOVERY OF LITIGATION COSTS. If any legal action or any
arbitration or other preceding is brought for the enforcement of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
12.2 CONDITIONS PERMITTING TERMINATION. Either party may on the Closing
Date terminate this Agreement by written notice to the other, without liability
to the other, if any bona fide action or proceeding shall be pending against
either party on the Closing Date that could result in an unfavorable judgment,
decree or order that would prevent or make unlawful the carrying out of this
Agreement or if any condition to Closing in favor of such party has not been
satisfied.
ARTICLE 13. NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail registered or certified, postage prepaid, and
properly addressed as follows:
SELLER: 0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxx
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with copy to: Xxxxxx X. Xxxxx, Esq.
Avatex Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
with an additional copy to: Xxxxxx X. Xxxxxxx, III
Reihsen & Associates
000 Xxxxx Xxxxx, Xxxxxx 0000
Xxxxxx, Xxxxx 00000
BUYER: 0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Blue
with copy to: Xxxxx X. Xxxxxxx, Esq.
ProxyMed, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 14. GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Texas, without regard to its conflicts of laws
provisions.
ARTICLE 15. MISCELLANEOUS
15.1 ANNOUNCEMENTS. Except as and to the extent required by any
applicable law, regulation or order, including Securities and Exchange
Commission regulations, no party to this Agreement shall, and each shall direct
its representatives not to, directly or indirectly, make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
disclosure of the existence of negotiations regarding a proposed transaction
between the parties or any of the terms, conditions or other aspects of a
proposed transaction without prior written consent of the other party. In the
event any party is required by applicable law, regulation or order to make any
such disclosure, such party shall provide prior notice of such required
disclosure to the other party. Subsequent to Closing, Buyer agrees to deliver to
Seller a copy of the proposed public announcement relating to this transaction
prior to the publication thereof in order to give Seller an opportunity to make
recommendations with respect thereto, which recommendation shall in no way be
binding on Buyer.
15.2 CONFIDENTIALITY AGREEMENT. Seller and Buyer acknowledge and affirm
the Confidentiality Agreement between Buyer and Avatex Corporation (formerly
known as
26
FoxMeyer Health Corporation) dated January 28, 1997 as amended by the letter
agreement between such parties dated September 17, 1997.
15.3 SEVERABLE COVENANTS. In the event that any provision contained
herein is declared invalid or illegal, the other provisions hereof shall not be
affected or impaired thereby and shall remain valid and enforceable.
15.4 SPECIFIC PERFORMANCE. In the event of a breach or threatened
breach by any party hereto of the provisions of this Agreement, the other party
hereto shall be entitled to specific performance. Nothing herein shall be
construed as prohibiting any party hereto from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
BUYER: PROXYMED, INC.
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: Xxxxxxx Xxxxx
Title: EVP-Finance
SELLER: US HEALTHDATA INTERCHANGE, INC.
By: /s/ XXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President-Finance
The undersigned hereby unconditionally and irrevocably guaranties the
liabilities and obligations of US HealthData Interchange, Inc. under Sections
2.2(c), 2.2(d), 2.3(b), 8.3 and 8.14 of the above Asset Purchase Agreement with
ProxyMed, Inc. Nothing in the foregoing guaranty shall create any direct
liability of the undersigned to any third party to which it otherwise has no
direct liability. The undersigned agrees ProxyMed, Inc. shall not be first
required to enforce against US HealthData Interchange, Inc. any liability or
obligation guaranteed hereby before seeking enforcement against the undersigned.
AVATEX CORPORATION
By: /s/ XXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President-Finance
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