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STOCK PURCHASE AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
A DELAWARE CORPORATION,
AS PURCHASER
AND
VENTURE5, LLC,
A COLORADO LIMITED LIABILITY COMPANY,
as Seller
September 15th, 1999
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of September 15th, 1999 ("Effective Date"), by and among SPECIALTY CARE
NETWORK, INC., a Delaware corporation ("SCN"), and VENTURE5, LLC, a Colorado
limited liability company ("Venture5").
WITNESSETH:
WHEREAS, SCN, through its subsidiary Healthcare Report Cards, Inc., a
Delaware corporation ("Subsidiary"), owns 5,368,420 shares of common stock of
XxxxxxXxxxxx.xxx, Inc., a Delaware corporation ("XxxxxxXxxxxx.xxx");
WHEREAS, Venture5 owns 2,631,580 shares of common stock of
XxxxxxXxxxxx.xxx;
WHEREAS, Venture5 desires to sell to SCN and SCN desires to purchase
from Venture5 2,205,264 shares of the common stock of XxxxxxXxxxxx.xxx owned by
Venture5 (the "Shares"), upon and subject to the terms, conditions,
representations and warranties set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, SCN and Venture5 agree as follows:
ARTICLE 1
PURCHASE AND SALE
.1 PURCHASE OF SHARES. At the Closing (as defined below), Venture5
shall sell to SCN, and SCN shall purchase from Venture5, the Shares for the
Purchase Price (as defined below).
.2 PURCHASE PRICE. The "Purchase Price" to be paid to Venture5 shall be
Four Million Dollars ($4,000,000). The Purchase Price shall be paid in cash at
the Closing.
.3 ESCROW DEPOSIT. Immediately upon the execution of this Agreement,
and pursuant to the terms of the Escrow Agreement attached hereto as Exhibit A
("Escrow Agreement"), the parties will deposit the following with the Escrow
Agent (as defined in the Escrow Agreement) acting pursuant to the Escrow
Agreement:
(a) Venture5 will deposit the certificate representing
the Shares ("Share Certificate") accompanied by a
duly endorsed stock transfer power in favor of SCN;
(b) SCN shall cause Xxxxx Xxxxxxxx ('Fatianow") to
deliver a certificate
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representing 100,000 shares of common stock of
XxxxxxXxxxxx.xxx, Inc. ("Fatianow Share Certificate")
accompanied by a duly endorsed stock transfer power
in favor of SCN;
(c) Venture5 will deposit a certificate representing
426,316 shares (the "Venture5 Shares") of common
stock of XxxxxxXxxxxx.xxx ("the Venture5 Share
Certificate");
(d) Venture5 will deliver Non-Competition Agreements, in
the form of Exhibit B attached hereto, executed by
each of Xxx Xxxxxxx' Xxxxx Xxxxx, Xxxxxxx Xxxxx and
Xxxxxxx Xxxxx;
(e) The parties thereto will deliver five (S) executed
copies of an agreement to terminate ("Termination
Agreement") that certain Shareholders' Agreement
among SCN, Venture5, Health Care Report Cards, Inc.,
XxxxxxXxxxxx.xxx, Inc. and Xxxxx Xxxxxxxx dated June
25, 1999 ("Shareholders' Agreement") in the form
attached hereto as Exhibit C
(f) Venture5 will deliver wire transfer instructions for
payment of the Purchase Price to Venture5; and
(g) SCN will deliver $60,000 in immediately available
funds ("Escrow Cash").
.4 SCN CLOSING DEPOSIT. At any time prior to 1:00 pm. MST, November 1,
1999 ("Escrow Expiration"), SCN may deposit with the Escrow Agent, acting
pursuant to the Escrow Agreement, $3,940,000, which together with the Escrow
Cash, shall upon such deposit represent the Purchase Price.
.5 CLOSING OF ESCROW TRANSACTIONS. Immediately upon receipt of the
Purchase Price from SCN ("Closing Deposit"), if such deposit was made on or
prior to the Escrow Expiration, the closing of the transactions contemplated by
this Article 1 (the "Closing") shall be deemed to have occurred (the date on
which the Closing takes place, the "Closing Date") and the Escrow Agent shall
deliver:
(a) to Venture5 the Purchase Price by wire transfer of
all cash delivered in consideration of the Purchase
Price;
(b) to Venture5 an executed original of the Termination
Agreement;
(c) to SCN the Share Certificate along with the duly
endorsed stock transfer power transferring the Shares
to SCN;
(d) to SCN the Fatianow Share Certificate along with the
duly endorsed stock transfer power transferring the
Fatianow Shares to SCN;
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(e) to SCN executed originals of the Non-Competition
Agreements;
(f) to SCN four executed originals of the Termination
Agreement for transmittal to all the parties thereto
(other than Venture5); and
(g) to Venture5 the Venture5 Share Certificate.
.6 TERMINATION OF ESCROW. If SCN shall not have made the Closing
Deposit prior to the Escrow Expiration, and this Agreement shall not have been
terminated prior to the Escrow Expiration pursuant to Article 7 hereof, on the
Escrow Expiration this Agreement shall be considered immediately terminated and:
(a) the Escrow Agent shall deliver to Venture5 the Share
Certificate and corresponding stock transfer power
and the Venture5 Share Certificate;
Q,) the Escrow Agent shall deliver to Venture5 the
original executed Non-Competition Agreements;
(c) the Escrow Agent shall deliver to Xxxxx Xxxxxxxx the
Fatianow Share Certificate and stock transfer power;
(d) the Escrow Agent shall deliver to Venture5 all
original copies of the executed Termination
Agreement; and
(e) the Escrow Agent shall pay to Venture5 $60,000 in
immediately available funds in full satisfaction of
any and all liabilities that SCN may have to Venture5
due to SCN's failure to make the Closing Deposit
prior to the Escrow Expiration.
.7 RIGHTS IN ESCROWED SHARES. During the period the Shares are held in
escrow pursuant to the terms of this Agreement and the Escrow Agreement, and
subject to the obligations and restrictions contained in this Agreement
(including without limitation, the restrictions on transfer and encumbrance of
the Shares), Venture5 shall maintain all rights in and title to the Shares, and
shall remain subject to such rights provided and obligations imposed under the
Shareholders' Agreement, which agreement shall remain in full force and effect.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF VENTURE5
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Venture5 represents and warrants to SCN that the following
statements are true as of the date of this Agreement:
.1 ORGANIZATION, STANDING, ENFORCEABILITY AND AUTHORIZATION.
(a) Venture5 is a limited liability company duly organized,
validly existing and operating under the laws of the State of Colorado. Venture5
is in good standing under the laws of the State of Colorado and has all
requisite corporate power and authority to enter into this Agreement, to carry
out the transactions contemplated hereby and to perform its obligations
hereunder.
(b) This Agreement constitutes and all other agreements,
documents and instruments executed or to be executed by Venture5 in connection
herewith (the "Related Agreements") when duly executed and delivered will
constitute the valid and legally binding obligations of Venture5 and are
enforceable in accordance with their terms, except as such enforceability may be
limited by equitable principles and by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or similar laws relating to or affecting
the rights of creditors generally.
(c) The execution and delivery of this Agreement, the Related
Agreements, and all other documents and instruments executed or to be executed
by Venture5 pursuant to this Agreement, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Venture5. This Agreement and the Related Agreements have
been or will have been, at the time of their respective executions and
deliveries, duly executed and delivered by a duly authorized Manager of
Venture5.
.2 OWNERSHIP OF SHARES. Venture5 is now, and immediately prior to the
Closing will be, the record and beneficial owner of the Shares. Each of the
Shares to be sold by Venture5 to SCN is now, and at the Closing will be, owned
by Venture5 free and clear of any lien, pledge, charge, adverse claim, security
interest, encumbrance (including any imposed by law in any jurisdiction), title
retention agreement, option or right to purchase of any kind.
.3 TITLE TO SHARES. Upon delivery of the certificates representing the
Shares to SCN hereunder and payment and delivery to Venture5 of the
consideration specified herein, SCN will acquire valid title thereto, free and
clear of any lien, pledge, charge, adverse claim, security interest, encumbrance
(including any imposed by law in any jurisdiction), title retention agreement,
option or right to purchase of any kind, other than (a) any restrictions imposed
by applicable securities laws, (b) any liens, pledges, charges, adverse claims,
security interests, encumbrances, title retention agreements, options, equities
or rights to purchase created by or through SCN or any of SCN's Affiliates.
.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of
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this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default wider any provision of the Articles of Organization
or Operating Agreement of Venture5 or any violation of; or default under any
mortgage, indenture, trust, lease, partnership or other agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation or Legal Requirement
applicable to Venture5 or its members, nor will they result in the creation or
imposition of any lien, pledge, charge, adverse claim, security interest, or
other encumbrance of any nature whatsoever on the Shares, nor will they prevent
or materially delay the consummation of the transactions contemplated hereby.
For purposes of this Agreement, the term "Legal Requirement" shall mean
any federal, state or local law, statute, legislation, ordinance, code, rule,
regulation, decree, award, order, permit, franchise, consent or authorization
of; any federal, state, local or other governmental body or agency, department,
commission, bureau, board, council, court, magistrate, panel or instrumentality
of the United States, any political subdivision thereof or any state or local
governmental authority.
.5 AUTHORIZATIONS; CONSENTS. No consents, licenses, approvals or
authorizations of; or registrations or declarations with, any governmental
authority, agency, bureau or commission, or any third party, are required to be
obtained or made by Venture5 or the Members in connection with the execution,
delivery, performance, validity and enforceability of this Agreement or any
Related Agreement or the sale or transfer of the Shares.
.6 LITIGATION. No action, suit, proceeding or governmental
investigation is pending or to the knowledge of Venture5 threatened, at law or
in equity, which seeks to question, delay or prevent, or could have the effect
of delaying or preventing, the consummation of all or any portion of the
transactions contemplated hereby.
.7 BROKERS AND FINDERS. No person or entity is entitled to any
brokerage commission, finder's fee or like payment in connection with the
transactions contemplated in this Agreement.
.8 ACCURACY. The representations and warranties made by Venture5 to SCN
set forth in this Agreement, the Schedules to this Agreement, including any
Updated Disclosure Schedule (as defined below) delivered to SCN prior to
Closing, and the written agreements, instruments and documents delivered and to
be delivered pursuant to or in connection with this Agreement, do not include an
untrue statement of material fact or omit to state any material fact necessary
to make them, in light of the circumstances in which they were or are made, not
misleading.
.9 ACKNOWLEDGEMENT. Venture5 acknowledges that its equity owners were
employees of XxxxxxXxxxxx.xxx prior to the Effective Date. As a result of those
employment relationships, Venture5 is familiar with the operations of
XxxxxxXxxxxx.xxx prior to the Effective Date and has an understanding of the
business opportunities that XxxxxxXxxxxx.xxx is pursuing and may pursue,
including business opportunities with those third parties listed on Schedule
2.9, attached hereto.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SCN
SCN represents and warrants to Venture5 as follows:
.1 ORGANIZATION AND STANDING. SCN is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
SCN has all requisite corporate power and authority to enter into this
Agreement, to carry out the transactions contemplated hereby and to perform its
obligations hereunder.
.2 AUTHORIZATION. The execution and delivery of this Agreement, and all
other agreements, documents and instruments executed or to be executed by SCN
pursuant to this Agreement (the "Purchaser Related Agreements"), and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate and other action on the part of SCN. This
Agreement and the Purchaser Related Agreements have been, or will have been, at
the time of their respective executions and deliveries, duly executed and
delivered by a duly authorized officer of SCN.
.3 ENFORCEABILITY. This Agreement constitutes, and each of the
Purchaser Related Agreements when duly executed and delivered will constitute,
the valid and legally binding obligation of SCN, enforceable in accordance with
its terms, except as such enforceability may be limited by equitable principles
and by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or similar laws relating to or affecting the rights of creditors
generally.
.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of this Agreement, and the Purchaser Related Agreements, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in any violation or default under any provision of the
Certificate of Incorporation or Bylaws of SCN, or of any violation of; or
default under any mortgage, indenture, trust, lease, partnership or other
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation or Legal
Requirement applicable to SCN or any of its properties, the result of which
(either individually or in the aggregate) will prevent or materially delay the
consummation of the transactions contemplated hereby.
.5 AUTHORIZATIONS, CONSENTS. No consents, licenses, approvals or
authorizations of; and registrations or declarations with, any governmental
authority, bureau, agency or commission, or any third party, are required to be
obtained or made by SCN in connection with the execution, delivery, performance,
validity and enforceability of this Agreement or the Purchaser Related
Agreements or SCN's acquisition of the Shares pursuant hereto.
.6 LITIGATION. No action, suit, proceeding or governmental
investigation is pending or to the knowledge of SCN threatened, at law or in
equity, which seeks to question, delay or prevent the consummation of all or any
portion of the transactions contemplated hereby.
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.7 BROKERS AND FINDERS. No person or entity is entitled to any
brokerage commission, finder's fee or like payment from SCN connection with the
transactions contemplated in this Agreement.
.8 ACCURACY. The representations and warranties made by SCN to Venture5
set forth in this Agreement and the written agreements, instruments and
documents delivered and to be delivered pursuant to or in connection with this
Agreement, do not include an untrue statement of material fact or omit to state
any material fact necessary to make them, and in light of the circumstances in
which they were or are made, not misleading.
.9 PROSPECTIVE BUSINESS. To the knowledge of SCN, its officers and
directors, Schedule 2.9 provides a list of all the third parties with whom
XxxxxxXxxxxx.xxx has been engaged in substantial discussions regarding
prospective and potentially material business opportunities. However, in its
on-going and day-to-day business operations, XxxxxxXxxxxx.xxx is exploring and
will continue to explore all of the business opportunities that are or may
become available to it.
ARTICLE 4
COVENANTS OF VENTURE5
.1 NO SALE, TRANSFER OR ENCUMBRANCE OF SHARES. Venture5 agrees that,
between the date of this Agreement and the Closing Date, Venture5 shall not,
directly or indirectly, sell or otherwise transfer the Shares, pledge,
hypothecate or grant any security interest in the Shares, or agree or commit to
transfer or encumber any of the Shares or any interest in or right relating to
the Shares.
.2 NO SOLICITATION OR NEGOTIATION. Venture5 agrees that between the
date of this Agreement and the Closing Date it will not, nor will it permit any
officer, manager, member or agent of Venture5, to (i) solicit any proposal or
offer from any person or entity (other than SCN) relating to the sale of the
Shares, (ii) provide any non-public information to any person or entity (other
than SCN) for use in preparing any proposal or offer relating to the sale of the
Shares, or (iii) respond to or enter into any negotiations regarding any
proposal or offer from any person or entity (other than SCN) with respect to the
foregoing.
.3 FILINGS AND CONSENTS. Venture5 shall use commercially reasonable
efforts to make or give each filing or notice required to be made or given
pursuant to any applicable Legal Requirement by Venture5 in connection with the
execution and delivery of this Agreement or in connection with the consummation
or performance of any of the transactions contemplated hereby.
.4 UPDATED DISCLOSURE SCHEDULE. Between the Effective Date and the
Closing Date, if Venture5 becomes aware of any fact or condition that causes any
of its representations, warranties, obligations, covenants or agreements in this
Agreement to become untrue, misleading, or inaccurate in any material respect,
or which causes any covenant or agreement to become untrue
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or non-performable in any material respect, it will immediately deliver to SCN
an updated disclosure schedule ("Venture5 Updated Disclosure Schedule") setting
forth the facts or conditions that cause such representation, warranty,
obligation, covenant or agreement to become untrue, misleading, or inaccurate or
which causes Venture5 to become incapable of performing the transactions
contemplated hereby.
ARTICLE 5
COVENANTS OF SCN
SCN agrees with Venture5 that:
.1 FILINGS AND CONSENTS. Purchaser shall use commercially reasonable
efforts to make or give each filing or notice required to be made or given
pursuant to any applicable Legal Requirement by Purchaser in connection with the
execution and delivery of this Agreement or in connection with the consummation
or performance of any of the transactions contemplated hereby.
.2 UPDATED DISCLOSURE SCHEDULE. Between the Effective Date and the
Closing Date, if SCN becomes aware of any fact or condition that causes any of
its representations, warranties, obligations, covenants or agreements in this
Agreement to become untrue, misleading, or inaccurate in any material respect,
or which causes any covenant or agreement to become untrue or non-performable in
any material respect, it will immediately deliver to Venture5 an updated
disclosure schedule ("SCN Updated Disclosure Schedule") setting forth the facts
or conditions that cause such representation, warranty, obligation, covenant or
agreement to become untrue, misleading, or inaccurate or which causes SCN to
become incapable of performing the transactions contemplated hereby.
.3 NO SOLICITATION OR NEGOTIATION. SCN agrees that between the date of
this Agreement and the Closing Date it will not, nor will it permit any officer,
shareholder or agent of SCN, to (i) solicit any proposal or offer from any
person or entity (other than Xxxxx Xxxxxxxx or Venture5) relating to the sale of
the Shares, (ii) provide any non-public information to any person or entity
(other than Xxxxx Xxxxxxxx or Venture5) for use in preparing any proposal or
offer relating to the sale of the Shares, or (iii) respond to or enter into any
negotiations regarding any proposal or offer from any person or entity (other
than Xxxxx Xxxxxxxx or Venture5) with respect to the foregoing.
ARTICLE 6
COVENANTS OF ALL PARTIES
The parties hereto agree that:
.1 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement, each party will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under
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applicable Legal Requirements to consummate the transactions contemplated by
this Agreement SCN and Venture5 each agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable In order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
.2 CERTAIN FILINGS, ETC. SCN and Venture5 shall cooperate with one
another (a) in determining whether any action by or in respect of; or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, in furnishing such information as may be required in
connection therewith, and in seeking timely to obtain any such actions,
consents, approvals or waivers.
.3 PUBLIC ANNOUNCEMENTS. The parties agree not to issue any press
release or make any public statement with respect to this Agreement or the
transactions contemplated hereby prior to the Closing without the prior consent
of SCN and Venture5 (which consent shall not be unreasonably withheld or
delayed), except to the extent that any party hereto is required by law to make
any such disclosure and such party notifies the other parties hereto a
reasonable time before making such disclosure of the nature and content of the
intended disclosure, and consults with such other parties regarding the nature
and content of such disclosure. In the event the parties mutually agree to make
a public announcement, the provisions of this Section 6.3 no longer will be in
full force and effect.
ARTICLE 7
TERMINATION OF AGREEMENT
.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated prior
to the Closing:
(a) by the mutual written agreement of SCN and Venture5;
(b) by SCN if Venture5 shall deliver to SCN a Venture5
Updated Disclosure Schedule pursuant to Section 4.4
hereof prior to the Escrow Expiration;
or
(c) by Venture5 if SCN shall deliver to Venture5 a SCN
Updated Disclosure Schedule pursuant to Section 5.2
hereof prior to the Escrow Expiration.
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.2 EFFECT OF TERMINATION.
(a) Upon the termination of this Agreement pursuant to Section
7.1(a): (i) subject to Section 9.1 hereof, each party shall pay its own costs
and expenses; (ii) the parties shall deliver a termination notice to the Escrow
Agent with directions to make the deliveries from the Escrow Account in
accordance with Section 7 of the Escrow Agreement ("Mutual Termination Notice");
and (iii) no party hereto shall have any obligation or liability to the other
parties hereto under this Agreement.
(b) Upon the termination of this Agreement pursuant to Section
7.1(1,): (i) subject to Section 9.1 hereof, each party shall pay its own costs
and expenses; (ii) SCN shall deliver a termination notice to the Escrow Agent,
along with a copy of the Venture5 Updated Disclosure Schedule with directions to
make the deliveries from the Escrow Account in accordance with Section 7 of the
Escrow Agreement ("SCN Termination Notice"); and (iii) no party hereto shall
have any obligation or liability to the other party hereto under this Agreement.
(c) Upon the termination of this Agreement pursuant to Section
7.1(c): (i) subject to Section 9.1 hereof, each party shall pay its own costs
and expenses; (ii) Venture5 shall deliver a termination notice to the Escrow
Agent, along with a copy of the SCN Updated Disclosure Schedule with directions
to make the deliveries from the Escrow Account in accordance with Section 7 of
the Escrow Agreement ("Venture5 Termination Notice"); (iii) the Escrow Agent,
acting pursuant to the Escrow Agreement, shall pay to Venture5 $60,000 in
immediately available funds; and (iv) no party hereto shall have any obligation
or liability to the other party hereto under this Agreement.
ARTICLE 8
SURVIVAL AND INDEMNIFICATION
.1 SURVIVAL. The representations, warranties, covenants and agreements
set forth in this Agreement, or in any writing delivered in connection with this
Agreement, will survive the Closing Date and the consummation of the
transactions contemplated hereby, notwithstanding any examination made by or on
behalf of SCN or Venture5, the knowledge of any of their officers, directors,
shareholders, members, managers, employees or agents, and shall continue in full
force and effect for a period of two (2) years alter the Closing Date.
.2 INDEMNIFICATION.
(a) Venture5 agrees to indemnify SCN and hold SCN harmless
from and against any claim, loss, liability, damage or expense (including
attorney's fees and costs) (collectively "Losses") that SCN suffers, sustains or
becomes subject to as a result of or in connection with the breach by Venture5
of any representation, warranty, covenant or agreement of Venture5 contained in
this Agreement.
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(b) SCN agrees to indemnify Venture5 and hold Venture5
harmless from and against any Losses that Venture5 may suffer, sustain or become
subject to as a result of or in connection with the breach by SCN of any
representation, warranty, covenant or agreement of SCN contained in this
Agreement.
(c) To the extent authorized by the Delaware General
Corporation Law and the Certificates of Incorporation and Bylaws of SCN, the
Subsidiary and XxxxxxXxxxxx.xxx, SCN shall, and shall cause the Subsidiary and
XxxxxxXxxxxx.xxx to, indemnify, defend and hold harmless, jointly and severally,
Venture5 and Xxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxx
Xxxxxxxx (the "Members") from and against any Loss that Venture5 or the Members
suffer, sustain or become subject to as a result of their being a shareholder,
officer, director or employee of SCN, the Subsidiary or XxxxxxXxxxxx.xxx,
regardless of when such Loss arises; provided that, with regard to Xxxxx
Xxxxxxxx, the indemnity provided in this Section 8.2(c) shall apply only to
Losses from circumstances that occur before the Closing Date. This provision
does not provide Venture5 or the Members with any rights they are not otherwise
entitled to under the Delaware General Corporation Law, the Certificates of
Incorporation and Bylaws of the applicable entities. Additionally, the
indemnification rights referenced in this Section 8.2(c) shall not be less than
the indemnification rights granted to Xxxxx Xxxxx and all other shareholders,
officers, directors and employees of SCN, the Subsidiary and XxxxxxXxxxxx.xxx.
(d) If any third party shall notify any party (the
"Indemnified Party") with respect to any matter which may give rise to a claim
for indemnification against any other party (the "Indemnifying Party") under
this Section 8.2, then the Indemnified Party shall notify the Indemnifying Party
thereof promptly (and in any event within 15 days after receiving any written
notice from a third party); provided, however, that the failure of the
Indemnified Party to give timely notice hereunder shall not relieve the
Indemnifying Party of its indemnification obligations under this Agreement
unless, and only to the extent that such failure caused damages to SCN or
Venture5, as the case may be, for which the Indemnifying Party is obligated, to
be greater than they would have been had the Indemnified Party given timely
notice. In the event any Indemnifying Party notifies the Indemnified Party
within 15 days after the Indemnified Party has given notice of the matter that
the Indemnifying Party is assuming the defense thereof, (i) the Indemnifying
Party will defend the Indemnified Party against the matter with counsel of its
choice reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
Party may retain separate co-counsel at its sole cost and expense (except that
the Indemnifying Party will be responsible for the fees and expenses of the
separate co-counsel to the extent the Indemnified Party concludes reasonably
that the counsel the Indemnifying Party has selected has a conflict of
interest), (iii) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld unreasonably); and
(iv) the Indemnifying Party will not consent to the entry of any judgment with
respect to the matter, or enter into any settlement which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
the
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indemnifying Party does not notify the Indemnified Party that the Indemnifying
Party is assuming the defense of the matter, within 15 days after the
Indemnified Party has given notice thereof, the Indemnified Party may defend
against the matter in any manner it reasonably may deem appropriate. In the
event the Indemnifying Party chooses not to assume such defense, the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the matter without the written consent of the Indemnifying Party
(not to be withheld unreasonably).
ARTICLE 9
MISCELLANEOUS
.1 EXPENSES. Except as otherwise expressly provided herein, each party
will pay all of its expenses, including attorneys' and accountants' fees, in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated by
this Agreement; provided that in any proceeding or other attempt to enforce,
construe or to determine the validity of this Agreement, the nonprevailing party
will pay the reasonable expenses of the prevailing party, including reasonable
attorneys' fees and costs. SCN shall pay the reasonable attorney's fees of
Venrure5 incurred in the negotiation and documentation of this Agreement and the
transactions contemplated hereby, up to a maximum of Three Thousand Dollars
($3,000).
.2 NOTICES; ETC. All notices, instructions and other communications
given hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent postage prepaid, or one
business day after it is sent via a reputable nationwide overnight courier
service.
If to SCN, to: Specialty Care Network, Inc.
00 Xxxxx Xxxx.
Xxxxxxxx XX 00000
Attention: Xxxxx Xxxxx, President
Fax: (000) 000-0000
If to Venture5, to: Venture5, LLC
0000 X. Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx, Manager
Fax: (000) 000-0000
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Any party may give any notice, instruction or communication in
connection with this Agreement using any other means (including personal
delivery, telecopy or ordinary mail), but no such notice, instruction or
communication shall be deemed to have been delivered unless and until it is
actually received by the party to whom it was sent. Any party may change the
address to which notices, instructions or communications are to be delivered by
giving the other parties to this Agreement notice thereof in the manner set
forth in this Section 9.2.
.3 ASSIGNMENT. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by either party
without the prior written consent of the other party. If this Agreement is
assigned with such consent, the terms and conditions shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns; provided, however that no assignment of this Agreement or
rights thereunder or delegation of duties thereunder shall relieve any party of
its obligations under this Agreement.
.4 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which is an original, but all of which shall constitute
one instrument. Facsimile signatures to this Agreement shall be binding upon the
parties.
.5 THIRD PARTY RIGHTS. The parties do not intend to confer any benefit
hereunder on any person or entity other than the parties hereto, the Indemnified
Parties and their respective successors in interest.
.6 PRONOUNS. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as appropriate.
.7 AUTHORITY AND EXECUTION. Each person executing this Agreement on
behalf of a party hereto represents and warrants that he is duly and validly
authorized to do so on behalf of such party, with full right and authority to
execute this Agreement and to bind such party with respect to all of its
obligations hereunder.
.8 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
.9 TIME OF ESSENCE. Time is of the essence of this Agreement.
.10 INTERPRETATION. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement, and any applicable
15
rule of constructions that ambiguities are to be resolved against the drafting
party should not be applied in connection with the construction or
interpretation of this Agreement.
.11 GOVERNING LAW VENUE. The validity, interpretation and performance
of this Agreement shall be governed by and construed in accordance with the laws
of the State of Colorado. Each of the parties submits to the jurisdiction of any
state or federal court sitting in Denver, Colorado, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect if the action or proceeding may be heard and determined in any such
court. Each party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be required
of any other party with respect thereto.
[The remainder of this page is intentionally left blank.]
16
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
SPECIALTY CARE NETWORK, INC.,
a Delaware corporation
By: Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Executive Vice President
VENTURE5, LLC,
a Colorado limited liability company
Name: Xxx Xxxxxxx
--------------------------
Title: Manager
17
SCHEDULE 2.9
OnHealth Network Company
America Online, Inc.
XxxxxxxxxXxxxxx.xxx, Inc.
WellMed
Xxxxxxxx.xxx
XxxxxxxxxxXxxx.xxx
See attached documents provided to Venture 5 prior to the Effective Date
regarding the above listed third parties.
18
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into this __ day of
September, 1999 ("Effective Date") by and among SPECIALTY CARE NETWORK, INC., a
Delaware corporation ("SCN"), XXXXX XXXXXXXX, VENTURE5, LLC, a Colorado limited
liability company ("Venture5"), and ______________________________ (the "Escrow
Agent") (each, a "Party," and collectively, the "Parties").
WHEREAS, SCN and Venture5 have entered into that certain Stock Purchase
Agreement dated of even date herewith (the "Purchase Agreement"), pursuant to
which SCN will acquire the Shares (as defined in the Purchase Agreement) from
Venture5 under the terms and conditions contained therein; and
WHEREAS, the Purchase Agreement provides for the closing of the
transaction contemplated thereby to be subject to certain deposits into escrow
by SCN, Xxxxx Xxxxxxxx and Venture5, and the Purchase Agreement requires the
execution and delivery of this Escrow Agreement by the Parties as a condition to
performance of its obligations thereunder; and
WHEREAS, a copy of the Purchase Agreement has been delivered to the
Escrow Agent, and the Escrow Agent is willing to act as the Escrow Agent
hereunder;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and agreements hereinafter set forth, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:
1. Appointment of Escrow Agent. SCN, Xxxxx Xxxxxxxx and Venture5 hereby
appoint _______________________________ to serve as Escrow Agent and the Escrow
Agent hereby accepts, under the terms of this Agreement, such appointment and
the agency created thereby.
2. Terms: Effectiveness. Ml terms defined in the Purchase Agreement shall
have the same meanings when used herein. The Purchase Agreement is hereby
incorporated into this Escrow Agreement and made an integral part hereof. This
Escrow Agreement shall become effective at the Effective Date pursuant to the
Purchase Agreement.
3. Escrow Deposit. On the Effective Date, the parties are depositing the
following with the Escrow Agent, to be placed in a separate account ("Escrow
Account"):
a. the Share Certificate accompanied by a duly endorsed
stock transfer power in favor of SCN;
b. the Fatianow Share Certificate accompanied by a duly
endorsed stock transfer power in favor of SCN;
19
c. the Venture5 Share Certificate;
d. the Non-Competition Agreements executed by each of
Xxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxxx
Xxxxx;
e. five (5) executed originals of the Termination
Agreement;
f. Wire transfer instructions for payment of the
Purchase Price; and
g. $60,000 in immediately available funds ("Escrow
Cash").
4. SCN Closing Deposit. At any time prior to 1:00 p.m. MST, November 1,
1999 ("Escrow Expiration"), SCN may deposit with the Escrow Agent $3,940,000,
which together with the Escrow Cash, shall upon deposit represent the Purchase
Price.
5. Closing of Escrow Transactions. Immediately upon receipt of the
Purchase Price from SCN ("Closing Deposit"), if such deposit was made on or
prior to the Escrow Expiration, the Escrow Agent shall deliver:
a. to Venture5 the Purchase Price by wire transfer of
all cash delivered;
b. to Venture5 an executed original of the Termination
Agreement;
c. to SCN the Share Certificate along with the duly
endorsed stock transfer power transferring the Shares
to SCN;
d. to SCN the Fatianow Share Certificate along with the
duly endorsed stock transfer power transferring the
Shares to SCN;
e. to SCN executed originals of the Non-Competition
Agreements; and
f. to SCN four executed originals of the Termination
Agreement.
g. to Venture5 the Venture5 Share Certificate.
Upon completion of the deliveries by the Escrow Agent pursuant to the
terms of this Section 5, all of the obligations of the Escrow Agent hereunder
shall terminate (such date being referred to herein as the "Termination Date").
6. Termination of Escrow. Upon the happening of any of the following
events (each a "Termination Event"), the Escrow Agent shall immediately make the
deliveries from the Escrow Account required in Section 7 hereof:
20
a. receipt by the Escrow Agent of joint written
instructions by SCN and Venture5 to terminate the
Escrow Agreement;
b. receipt by the Escrow Agent of a SCN Termination
Notice pursuant to Section 7.1(b) of the Purchase
Agreement;
c. receipt by the Escrow Agent of a Venture5 Termination
Notice pursuant to Section 7.1(c) of the Purchase
Agreement; or
d. passing of the Escrow Expiration and SCN not having
made the Closing Deposit.
7. Termination Deliveries. Upon the happening of a Termination Event,
the Escrow Agent shall make the following deliveries from the Escrow Account,
and upon completion of such deliveries, all of the obligations of the Escrow
Agent hereunder shall terminate (such date being referred to herein as the
"Termination Date"):
a. the Escrow Agent shall deliver to Venture5 the Share
Certificate and stock transfer power attached
thereto;
b. the Escrow Agent shall deliver to Xxxxx Xxxxxxxx the
Fatianow Share Certificate and stock transfer power
attached thereto;
c. the Escrow Agent shall deliver to Venture5 the
Venture5 Share Certificate;
d. the Escrow Agent shall deliver to Venture5 the
original executed Non-Competition Agreements;
e. the Escrow Agent shall deliver to Venture5 the five
(5) original copies of the executed Termination
Agreement;
f the Escrow Agent shall deliver to SCN the Escrow
Cash, only if the deliveries under this Section 7 are
being made because of a Termination Event described
in Section 6.a or 6.b hereof; and
g the Escrow Agent shall deliver to Venture5 the Escrow
Cash, only if the deliveries under this Section 7 are
being made because of a Termination Event described
in Section 6.c or 6.d hereof
8. Escrow Agent.
a. Escrow Agent Obligations. The obligations and duties of the
Escrow Agent are confined to those specifically enumerated in this Escrow
Agreement. The Escrow Agent shall not be subject to, nor be under any obligation
to ascertain or construe the terms and conditions of;
21
any other instrument, whether or not now or hereafter deposited with or
delivered to the Escrow Agent or referred to in this Escrow Agreement, nor shall
the Escrow Agent be obliged to inquire as to the form, execution, sufficiency or
validity of any such instrument or as to the identity, authority, or rights of
the person or persons executing or delivering the same. The Escrow Agent shall
not be a party to, or be bound by, any agreement between the Parties other than
this Escrow Agreement whether or not a copy and/or original of such agreement is
held as part of the Escrow Account or otherwise hereunder, and the Escrow Agent
shall have no duty to know or inquire as to the performance of any provision of
such agreement between the Parties.
b. Escrow Agent Liability. The Escrow Agent shall not be
personally liable for any act which it may do or omit to do hereunder in good
faith and in the exercise of its own best judgment. Any act reasonably done or
omitted by the Escrow Agent pursuant to the advice of its attorneys shall be
deemed conclusively to have been performed or omitted in good faith by the
Escrow Agent. The Escrow Agent shall not be responsible for any recitals of fact
in this Escrow Agreement, for collecting any moneys required to be deposited
with it, or for the sufficiency of any escrow deposit.
c. Conflicts. If the Escrow Agent should receive or become
aware of any conflicting demands or claims with respect to this Escrow
Agreement, or the rights of any of the Parties hereto, or any money, property,
or instruments deposited herein or affected hereby, the Escrow Agent shall have
the right in its sole discretion, without liability for interest or damages, to
discontinue any or all further acts on its part until such conflict is resolved
to its satisfaction and/or to commence or defend any action or proceeding for
the determination of such conflict. If any disagreement or dispute arises
between the Parties concerning the meaning or validity of any provision of this
Escrow Agreement or concerning any other matter relating to this Escrow
Agreement, the Escrow Agent may, in its sole and absolute discretion, interplead
any amounts held in the Escrow Account it then holds with the District Court of
the City and County of Denver, State of Colorado, and name the other Parties
hereto in such interpleader action. Upon filing the interpleader action, the
Escrow Agent shall be relieved of all liability as to the Escrow Account and
shall be entitled to recover from the other Parties its reasonable attorney's
fees and other costs incurred in commencing and maintaining such action. The
Parties by signing this Escrow Agreement submit themselves to the jurisdiction
of such Court and appoint the Clerk of such Court as their agent for the service
of all process in connection with such proceedings.
d. Indemnification of Escrow Agent. SCN and Venture5 shall
jointly and severally indemnify and hold the Escrow Agent harmless from and
against all costs, damages, judgments, attorneys' fees (whether such attorneys
shall be regularly retained or specially employed), expenses, obligations and
liabilities of every kind and nature which the Escrow Agent may incur, sustain
or be required to pay in connection with or arising out of this Escrow Agreement
(except those arising out of the fraud or gross negligence of the Escrow Agent).
e. Court Orders. If any property subject hereto is at any time
attached, garnished, or levied upon under any final court order, or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order, or in the case any final order,
judgment or decree shall be made or entered by any court affecting such
22
property, or any part thereof, or any act by the Escrow Agent, then and in any
of such events the Escrow Agent is authorized, in its sole discretion, to rely
upon and comply with any such final order, writ, judgment or decree which it is
advised by legal counsel of its own choosing is binding upon it.
f. Interest. The Escrow Agent shall have no liability to pay
interest on any money deposited or received hereunder.
g. Escrow Agent's Conduct: Fees. The Escrow Agent shall be
fully protected in relying upon any written notice, demand, certificate or
document which it in good faith believes to be genuine, as to the truth and
accuracy of the statements made therein, the identity and authority of the
persons executing the same and the validity of any signature thereon. The fees
of the Escrow Agent shall be paid by SCN upon invoice.
h. New Escrow Agent. Any Escrow Agent may resign by notice to
SCN and Venture5. Any such resignation shall be effective upon delivery of the
Escrow Account to the successor Escrow Agent, whereupon the resigning Escrow
Agent shall be discharged of any further duties under this Escrow Agreement. If
an Escrow Agent resigns, SCN shall appoint a successor Escrow Agent with the
consent of Venture5, which consent shall not be unreasonably withheld. If no
successor is appointed within thirty (30) days after resignation, the resigning
Escrow Agent may select as successor any corporation with trust powers in the
United States.
i. Reports from Escrow Agent. The Escrow Agent shall furnish
to SCN and Venture5, upon request, a report listing each transaction made by the
Escrow Agent in the previous six months with respect to this Escrow Agreement,
and the balance of the Escrow Account.
9. Miscellaneous.
a. Successors Benefits. This Escrow Agreement shall be binding
on and inure to the benefit of the Parties hereto and their respective
successors and assigns, but will not be assignable or delegable by any Party
without the prior written consent of the other Parties. This Escrow Agreement
shall be solely for the benefit of the Parties hereto.
b. Notices. Any notices, consents or other communication
required to be sent or given under this Escrow Agreement by any of the Parties
shall in every case be in writing and shall be deemed properly served if (i)
delivered personally, (ii) sent by registered or certified mail, in all such
cases with first class postage prepaid, return receipt requested, (iii)
delivered by a recognized overnight courier service, or (iv) sent by facsimile
transmission to the Parties at the addresses as set forth below or at such other
addresses as may be furnished in writing:
If to SCN, to: Specialty Care Network, Inc.
00 Xxxxx Xxxx.
Xxxxxxxx XX 00000
Attention: Xxxxx Xxxxx, President
Fax: (000) 000-0000
23
If to Venture5, to: Venture5, LLC
0000 X. Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx, Manager
Fax: (000) 000-0000
If to Xxxxx Xxxxxxxx, to: Specialty Care Network, Inc.
00 Xxxxx Xxxx.
Xxxxxxxx XX 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
If to Escrow Agent:
Date of service of such notice shall be (a) the date such notice is personally
delivered, (b) three business days after the date of mailing if sent by
certified or registered mail, (c) one business day after date of delivery to the
overnight courier if sent by overnight courier, or (d) the next succeeding
business day after transmission by facsimile.
c. Governing Law: Venue. The validity, interpretation and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado. Each of the parties submits to the
jurisdiction of any state or federal court sitting in Denver, Colorado, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect if the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.
d. Amendments or Modification of Agreement. The terms of this
Escrow Agreement may be altered, amended, modified or revoked only in a writing
signed by all of the Parties hereto.
e. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be construed as an original for all
purposes, but all of which taken together shall constitute one and the same
agreement.
24
IN WITNESS WHEREOF, the Parties have executed this Escrow Agreement as
of the date first above written.
ESCROW AGENT
-----------------------------
By:
------------------------------------------
Its:
-----------------------------------------
Title:
---------------------------------------
SCN
SPECIALTY CARE NETWORK, INC.
a Delaware corporation
By:
------------------------------------
Name: Xxxxx Xxxxx
Title: President
VENTURE5
VENTURE5, LLC
a Colorado limited liability company
By:
------------------------------------
Name: Xxx Xxxxxxx
Title: Manager
XXXXX XXXXXXXX
---------------------------------------
