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EXHIBIT 2.1
CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
has been marked with an asterisk to denote where omissions have been made. The
confidential material has been filed separately with the Commission.
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") effective as of this 30th day
of July, 2001 (the "Effective Date") by and among Neoforma GAR, Inc., a Delaware
corporation ("GAR"), XXXXXXXX.XXX, INC., a Delaware corporation ("Neoforma" and
together with GAR, each a "Seller" and collectively, the "Sellers"), MED XS
SOLUTIONS, INC. ("MedXS"), an Ohio corporation, and MED-XS ASSET SERVICES, INC.,
an Ohio corporation ("NEWCO", and collectively with MedXS, the "Buyers").
RECITALS
WHEREAS, GAR is engaged in the business of providing online and live
auctions of surplus, refurbished and used medical equipment (the "GAR
Business"), and owns certain assets utilized in the sale and liquidation of the
contents of hospitals and other healthcare facilities (the "NCL Business", and
together with the GAR Business, collectively, the "Auction Business");
WHEREAS, GAR is a wholly-owned subsidiary of Neoforma;
WHEREAS, Neoforma has determined that the Auction Business does not fit
within Neoforma's core business and Neoforma intends to disengage from the
Auction Business;
WHEREAS, NEWCO, a newly formed wholly owned subsidiary of MedXS desires
to purchase substantially all of the assets used in the Auction Business.
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and provisions hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
CONTRIBUTION OF ASSETS
1.1. Contribution of Assets. Subject to the terms and conditions set
forth herein, and free and clear of all liens and encumbrances, Sellers shall
sell, transfer, assign and deliver to NEWCO and NEWCO shall accept and acquire
from Sellers, those assets, tangible or intangible, relating to the Auction
Business (collectively, "Assets") set forth in this Section 1.1.
(a) All of Sellers' right, title and interest in and to the
inventory, fixed assets, all software, coded software and hardware, and tangible
and intangible assets used and utilized in the operation of the Auction Business
set forth in Schedule l.l(a). These items will be delivered to NEWCO in hard
copy or current electronic form, if any, to the extent they exist and are in
Sellers' possession or control.
(b) All of Sellers' right, title and interest in and to: (i) the
contracts, which Neoforma represents are all of the material contracts relating
to the Auction Business, between GAR and third parties set forth in Schedule
1.1(b)(i), subject to Neoforma or GAR obtaining any necessary consents from
third parties ("Acquired Contracts"), (ii) Auction Business programs set forth
in Schedule 1.1(b)(ii) ("Technology"), (iii) databases, precursors, portions and
work in
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progress with respect thereto and all inventions, works of authorship,
technology, information, know-how, materials and tools relating thereto or to
the development, support or maintenance thereof set forth in Schedule
1.1(b)(iii) and (iv) copyrights, patent rights, trade secret rights, and
trademark rights set forth in Schedule 1.1(b)(iv) (collectively "Intellectual
Property").
(c) All goodwill of the Assets, together with the exclusive right
of NEWCO to represent itself as carrying on the Auction Business as successor to
GAR.
(d) All papers and records (whether in written, magnetic media or
other form) of any kind presently in or in the future coming to the care,
custody, or control of Sellers, relating to any of the Assets or the past or
present operation of the GAR Business, including but not limited to customer
lists, supplier lists, purchase and sale records, accounting records,
maintenance records, operating and management manuals, and blank forms
("Business Records").
1.2. Excluded Assets. Sellers are not selling, and the Assets do not
include, the following (the "Excluded Assets"):
(a) Auction Business's cash and cash equivalents, other than as
provided in Section 1.2(a);
(b) Any assets not set forth in Section 1.1 above and the
Schedules referenced therein and any assets set forth on Schedule 1.2(b).
1.3. Assumed Liabilities. As additional consideration for the
conveyance, transfers and assignments made to NEWCO pursuant to Section 1.1,
NEWCO, effective with such transfer, shall assume and become responsible for
only those liabilites listed on Schedule 1.3, the "Assumed Liabilities".
1.4 Closing. The Closing of the contribution and transfer of the Assets
and related transactions pursuant to this Agreement (the "Closing") shall take
place as promptly as possible, but in no event later than fourteen (14) days
from the date of this Agreement (the "Closing Date") at 1:00 p.m. at the offices
of Neoforma, 0000 Xxxxxx Xxxx, Xxx Xxxx, Xxxxxxxxxx 00000, or at such other time
and place as the parties mutually agree in writing. If any condition to closing
has not been met by August 13th, 2001, the Closing Date may be extended by NEWCO
for up to seven (7) calendar days or for some additional period of time as the
parties may mutually agree. At the Closing, (i) NEWCO shall deliver to Neoforma
the cash portion of the Purchase Price (as defined in Section 2.1 hereof), and a
Promissory Note in the form attached hereto for the balance of the Purchase
Price and all necessary executed documentation reasonably requested by Neoforma
for perfection of its security interest in the Assets, and (ii) Neoforma shall
deliver to NEWCO such bills of sale, consents as required by Section 5.3, and
other documents and instruments dated as of the Closing Date as NEWCO reasonably
deems necessary or appropriate to transfer title of the Assets to NEWCO and to
consummate the transactions contemplated hereby.
1.5 Excluded Liabilities. Notwithstanding any provision in this
Agreement or in any writing to the contrary, NEWCO is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of the Sellers
(or any predecessor of Sellers or any owner or prior
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owner of all or part of its business or assets) of whatever nature, whether
presently in existence or arising hereafter. All such other liabilities and
obligations shall be retained by and remain obligations and liabilities of
Sellers ("Excluded Liabilities"). The Excluded Liabilities shall include:
(a) Any of the liabilities of Sellers under this Agreement not
being assumed by NEWCO;
(b) Any of the liabilities of Sellers for expenses, taxes or fees
incident to or arising out of the negotiation, preparation,
approval or authorization of this Agreement or consummation of
the transactions contemplated hereby;
(c) Any liability of Sellers under any agreement, contract,
commitment, license or lease, other than Acquired Contracts,
and any liability of Sellers that occurred prior to Closing;
(d) Any liability described on Schedule 1.5(d).
ARTICLE II
CONSIDERATION
2.1. Consideration; Allocation.
(a) In exchange for the contribution at closing by Sellers of the
Assets, NEWCO shall issue and deliver to Neoforma: (i) Two Hundred Fifty
Thousand Dollars ($250,000) in cash in the form of a certified check delivered
at the closing or by wire transfer payment; and (ii) Two Million Two Hundred
Fifty Thousand Dollars ($2,250,000) in the form of a two-year note dated as of
the final Closing Date, One Million Two Hundred Fifty Thousand Dollars
($1,250,000) principal paid in equal quarterly installments and One Million
Dollars ($1,000,000) principal paid two years from the Closing Date, with zero
interest rate ("Note") and secured by a security agreement covering the Assets
("Security Agreement"). Such Note and Security Agreement shall be in the form of
Exhibit A and Exhibit B, respectively, to this Agreement. The cash and Note
shall collectively be defined as the "Purchase Price".
If the Outsourcing Agreement is terminated for any reason prior to the
completion of the two-year note payment to Neoforma, NEWCO's obligation to
continue payments pursuant to the two-year note to Neoforma will terminate.
(b) The Purchase Price, and those Assumed Liabilities that are
treated as purchase price for federal income tax purposes, shall be allocated
among the Assets in accordance with the statement of allocation attached hereto
as Schedule 2.1(c).
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2.2. Assignment of Auction Services and *
(a) As a condition to Closing, Neoforma and NEWCO, along with
Novation LLC, shall execute and deliver an assignment agreement under which
Neoforma will assign its rights and obligations to perform auction services for
Novation LLC members, NEWCO will accept such assignment, and Novation LLC will
consent to such assignment (the "Assignment") in the form attached hereto as
Exhibit C
(b) Neoforma will receive a * fee pursuant to the terms set forth
in the Assignment.
2.3 *. In addition to the Purchase Price set forth above, NEWCO shall
pay to Neoforma * * * of the * of NEWCO until termination of the Outsourcing
Agreement or until January 1, 2011 whichever first occurs. For purposes of this
Agreement "*" shall mean * as determined according to generally accepted
accounting principles consistently applied. Neoforma's * of * shall be paid to
Neoforma by NEWCO within ninety (90) days of the close of its fiscal year.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represents and warrants to NEWCO as
follows:
3.1. Organization; Authorization. GAR is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority to carry on the Auction Business as it is now
being conducted. GAR is duly qualified to do business and is in good standing in
every jurisdiction in which the nature of the Auction Business conducted or
property owned by it makes such qualification necessary. The execution, delivery
and performance of this Agreement by Sellers and the performance by Sellers of
the transactions contemplated hereby have been duly approved by Sellers. This
Agreement has been duly executed and delivered by Sellers and constitutes a
valid and binding agreement of Sellers enforceable against them in accordance
with its terms.
3.2. No Consent. Except as set forth on Schedule 3.2, no consent,
order, license, approval or authorization of, or exemption by, or registration
or filing with, any governmental authority, bureau or agency, and no consent or
approval of any other third person, corporation, partnership, trust,
incorporated or unincorporated association, government (or any agency or
political subdivision thereof) or other entity of any kind (each a "Person"), is
required to be obtained or made by Sellers in connection with the execution,
delivery, or performance by Sellers of this Agreement or the consummation of the
transactions contemplated by this Agreement.
3.3. No Breach. Except as set forth on Schedule 3.3, neither the
authorization, execution, delivery or performance of this Agreement by Sellers
nor the consummation of any transactions contemplated by this Agreement will (i)
violate, conflict with or result in the material breach or termination of, or
otherwise give any Person the right to terminate, or
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CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
has been marked with an asterisk to denote where omissions have been made. The
confidential material has been filed separately with the Commission.
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constitute (or with notice or lapse of time or both would constitute) a default
(by way of substitution, novation or otherwise) under the terms of, any
contract, lease, bond, agreement, franchise or other instrument to which
Neoforma or GAR is a party relating to the Auction Business or any of the
Assets, or (ii) result in the creation of any Encumbrance (as defined below)
upon the Auction Business or any of the Assets.
3.4. Title to Assets. Except as set forth in Schedule 3.4, GAR has good
and marketable title to, or valid leasehold interests in, the Assets free and
clear of all liens, pledges, claims, charges, easements, security interests,
encumbrances or other rights of any third party ("Encumbrances"). No other
Person has any right, title or interest in the Assets or Auction Business. GAR
has performed all material obligations required to be performed by it with
respect to all Assets leased by it.
3.5. Taxes. All federal, state, local and foreign income, ad valorem,
excise, sales, use, payroll, unemployment and other taxes, contributions and
assessments ("Taxes") that are due and payable by GAR have been properly
computed, duly reported, fully paid and discharged. There are no unpaid Taxes
that are or could become a lien on the property or assets of GAR or require
payment by GAR, except for current Taxes not yet due and payable. All current
Taxes not yet due and payable by GAR have been properly accrued on the balance
sheets of GAR. GAR has not incurred any liability for penalties, assessments or
interest under applicable tax laws and regulations. No unexpired waiver executed
by or on behalf of GAR with respect to any Taxes is in effect.
3.6. ERISA. Except as set forth on Schedule 3.6, GAR does not maintain
or have any liability with respect to any employee benefit, inactive, bonus,
fringe benefit or other compensatory plan, policy or arrangement (whether or not
an employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) with respect to employees,
consultants, contractors or subcontractors of the Auction Business. GAR does not
have any obligation to contribute to, or other liability with respect to, any
multiemployer plan, as defined in Section 3(37) of ERISA in connection with the
Auction Business.
3.7 Financial Statements. Schedule 3.7 contains the March 31, 2001
unaudited financial statements including the unaudited income statement and
balance sheet of GAR (the "Financials"). Except as disclosed on Schedule 3.7,
the Financials present fairly and accurately the financial position, results of
operations, and changes in financial position of GAR at the dates and for the
periods covered, in each case in conformity with sound and consistently applied
accounting principles. There are no liabilities or obligations of GAR, accrued,
absolute, contingent, inchoate, or otherwise, that arose out of or relate to any
matter, act, or omission occurring from March 31, 2001, to the date of this
Agreement, other than liabilities or obligations incurred in the ordinary course
of the Auction Business. There are no liabilities or claims which are not fully
reflected therein and except in the ordinary course of the Auction Business,
there has been no material change in GAR's financial position since the date
thereof.
3.8 Intellectual Property and Technology. Schedules 1.01(b)(ii), (iii)
and (iv) attached to this Agreement contain a true and correct list of all
technology and intellectual property owned or licensed by GAR. GAR has the right
and authority to use all of the
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Technology and Intellectual Property as necessary to enable GAR to conduct the
Auction Business in the manner presently conducted. Except as set forth on
Schedules 1.01(b)(ii), (iii) and (iv), GAR is not a party to any license,
agreement or arrangement, whether as licensee, licensor or otherwise, with
respect to the Technology and Intellectual Property.
3.9 Material Contracts. Schedule 3.9, attached to and incorporated by
reference in this Agreement for all purposes, contains a true and correct list
and a brief description of all material oral and written contracts or
arrangements obligating GAR, including without limitation, leases, union
contracts, service contracts, noncompetition, confidentiality, supply,
guarantees, bids, commitments, joint venture or partnership agreements,
contracts with municipalities, loans, mortgages, pledges and other security
agreements. Schedule 3.9 also sets forth a list of all persons or entities whose
consents are required to be obtained under any contract with respect to the
consummation of this transaction by GAR. There are no other material consents or
approvals required from any other third party with respect to this transaction.
3.10 Litigation. Except as set forth on Schedule 3.10 this is no
litigation, claim, proceeding a controversy know to Seller which is pending or
threatened against GAR or relating to its properties or business or which might
materially adversely affect the operation of GAR's business hereof by NEWCO.
3.11 Trademark and Tradenames. Except as set forth on Schedule 3.11 GAR
uses no Trademarks or Tradenames in the operation of the business and all such
Trademarks or Tradenames are being transferred to NEWCO as a part of the sale.
3.12 Insurance. Except as set forth on Schedule 3.12 GAR does not
maintain any insurance with respect to the business.
3.13 Compliance with Law. That GAR has complied in all material
respects with all applicable federal and state laws and regulations and local
ordinances relating to the employment of labor.
3.14 Changes. That since the date of the tax returns and financial
information provided to NEWCO, there has not been:
(a) Any materially adverse change in GAR's financial condition,
assets, liabilites or business, other than in the ordinary
course of business;
(b) Any event which materially and adversely causes damage,
destruction or loss to the assets; or
(c) Any material increase in the compensation payable or to become
payable by GAR to any of its officers, employees or agents or
any bonus payment or arrangements made to or with any of its
officers, employees or agents, except in the ordinary course
of business.
3.15 Equipment. That all of GAR's equipment is in good working order
and repair and
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shall be in good working order and repair as of the date of the closing. At the
time of the closing, NEWCO will inspect all vehicles and other personal property
to satisfy NEWCO that such property is in good working order and repair.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCO
NEWCO represents and warrants to Sellers as follows:
4.1. Organization; Authorization. NEWCO is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio, and has full power and authority to carry on its business as it is now
being conducted. The execution, delivery and performance of this Agreement by
NEWCO and the performance by NEWCO of the transactions contemplated hereby have
been duly authorized and approved by all necessary corporate proceedings of
NEWCO. This Agreement has been duly executed and delivered by NEWCO and
constitutes a valid and binding agreement of NEWCO enforceable against them in
accordance with its terms.
4.2. No Consent. No consent, order, license, approval or authorization
of, or exemption by, or registration or filing with, any governmental authority,
bureau or agency, and no consent or approval of any Person is required to be
obtained or made by NEWCO in connection with the execution, delivery, or
performance by NEWCO of this Agreement or the consummation of the transactions
contemplated by this Agreement.
4.3. No Breach. Neither the authorization, execution, delivery or
performance of this Agreement by NEWCO nor the consummation of any transactions
contemplated by this Agreement will (i) violate any provision of the Certificate
of Incorporation or bylaws of NEWCO or (ii) violate, conflict with or result in
the material breach or termination of, or otherwise give any Person the right to
terminate, or constitute (or with notice or lapse of time or both would
constitute) a default (by way of substitution, novation or otherwise) under the
terms of, any material contract, lease, bond, agreement, franchise or other
instrument to which NEWCO is a party.
4.4. Litigation. There are no actions, suits, or claims, or any
administrative inquiries, arbitration, proceedings or investigations or by any
agency, pending or threatened against NEWCO.
4.5. Capital Stock. The authorized capital stock of NEWCO consists of
Fifteen Hundred (1500) shares of Stock. All of the Stock is and at all times
will be validly issued, fully paid and nonassessable, and has and will be issued
in compliance with all applicable federal, state and foreign securities laws.
4.6 Finder's Fees. Neither NEWCO nor any of its affiliates, associates,
officers, directors, employees or agents has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
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ARTICLE V
OTHER OBLIGATIONS AND COVENANTS
5.1. Employees.
(a) Identification. Sellers and NEWCO will work closely to create
an efficient transition plan for all Auction Business employees ("Auction
Employees") of GAR. Neoforma and GAR, will, and Neoforma will cause GAR to,
terminate all of their employees and agents engaged in the Auction Services
business except as set forth below in Section 5.1(b). Except for those employees
set out in Section 5.1(b) below, NEWCO shall hire all of the persons employed by
Neoforma or GAR in the Auction Business. NEWCO shall not assume the liability
for the accrued vacations or severance obligations of the transferred employees.
(b) Transition Officer. * will be provided to NEWCO, as a
transition officer, until *. All reimbursable type (i.e. travel and
entertainment) expenses with respect to * will be paid by NEWCO.
(c) Retention. It will be NEWCO's responsibility to enter into
retention agreements, prior to the Closing Date, with key Selected Auction
Employees that are satisfactory to such Selected Auction Employees.
(d) Benefit Plans. Effective as of the Closing Date, GAR employees
who become employees of NEWCO as of the Closing Date shall cease participation
in all employee benefit plans, programs, policies and arrangements maintained or
contributed to for their benefit by Sellers ("Neoforma Plans") (except to the
extent set forth in Section 5.1(b) or as such Neoforma Plans provide for
continued participation by former employees).
(e) Benefit Plan Claims. Sellers shall retain responsibility for
and continue to pay, to the extent covered by Neoforma Plans, all medical, life
insurance, disability and other welfare and government-mandated plan expenses
and benefits for each Selected Auction Employee who becomes an employee of NEWCO
as of the Closing Date with respect to claims incurred by such employees or
their covered dependents on or prior to the Closing Date. Expenses and benefits
with respect to claims incurred by such employees or their covered dependents
after the Closing Date under, and to the extent covered by, NEWCO's employee
benefit plans, programs, policies and arrangements, and government-mandated
plans shall be the responsibility of NEWCO. Sellers shall make all required
payments (the "Continuing Payments") to continue the Neoforma Plans through the
last day of the calendar month in which the Closing takes place (the "closing
month"). NEWCO shall reimburse Neoforma for that portion of the Continuing
Payments attributable to the time during the closing month subsequent to GAR's
employees employed by NEWCO commence participation in the employee benefit
plans, programs, policies and arrangements maintained or contributed to for
their benefit by NEWCO or any of its affiliates. For purposes of this paragraph,
a medical claim shall be deemed incurred when the services or supplies that are
the subject of such claim are performed or provided. Sellers shall be
responsible for all legally-mandated continuation of health care coverage
(including, without limitation, as may be required by Section 4980B of the Code
or sections 601-609 of ERISA) for all current and former employees of GAR and
their respective
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CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
has been marked with an asterisk to denote where omissions have been made. The
confidential material has been filed separately with the Commission.
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covered dependents who participated in a plan maintained by Sellers and who had
or have a loss of health care coverage due to a qualifying event occurring on or
prior to the Closing Date.
5.2. Payment of Accounts Payable. From and following the Closing Date,
Sellers shall promptly pay when due all accounts payable and all other amounts
owed or to be paid with respect to all liabilities relating to the Auction
Business accruing prior to and including the Closing Date, other than those
liabilities set forth on Schedule 1.3. Any such amount so owed or to be paid by
Sellers shall be referred to herein as a "Payable." Sellers shall promptly send
to NEWCO on a monthly basis a written confirmation of Sellers' payment of each
Payable. If NEWCO receives a xxxx with respect to, or other written notice of, a
Payable, NEWCO shall promptly forward such xxxx or notice to Sellers for
payment. Upon receipt of such xxxx or notice, Sellers shall promptly pay such
Payable, and shall notify NEWCO of such payment (a "Payment Notice"). If NEWCO
does not receive a Payment Notice from Sellers with respect to the applicable
Payable by the due date of such Payable, NEWCO may pay such Payable and Sellers
shall promptly reimburse NEWCO for all amounts paid by NEWCO with respect to
such Payable. Sellers promptly shall notify promptly NEWCO of any bona fide
dispute with respect to any Payable. Sellers shall consult with NEWCO with
respect to any such dispute and Neoforma shall use commercially reasonable
efforts to settle such dispute promptly.
5.3 Consents. Sellers shall use its best efforts to obtain written
consents to assignment of all Acquired Contracts that require consent. NEWCO, in
its sole discretion, may agree to close before obtaining all consents. In the
event Sellers are unable to obtain written consents to assignment of all
Acquired Contracts that require consent within six(6) months of the Closing,
there shall be allowed as a credit against the next payment due on the Note an
amount equal to fifty percent (50%) of the Gross Profits received by Sellers
with respect to each Acquired Contract for which the consent to the assignment
was note received for the twelve (12) month period prior to the Closing.
5.4 Access to Records. From and after Closing, Sellers shall allow
NEWCO and its representatives access to such records of the Auction Business
that are in the custody and control of the Sellers after Closing.
ARTICLE VI
INDEMNIFICATION
6.1 Survival. All representations and warranties made by Sellers and
NEWCO in this Agreement shall survive the Closing for a period of one year,
except that the representations and warranties in Section 3.5 shall survive
until the expiration of the applicable statute of limitations, and shall not be
extinguished or in any way modified on the date thereof or as a result of any
investigation made by or on behalf of Sellers or NEWCO.
6.2. Indemnification by Neoforma. Sellers jointly and severally agree
to indemnify and hold harmless NEWCO from and against any and all losses,
liabilities, damages, obligations, costs and expenses including, without
limitation, reasonable costs and expenses (including reasonable attorneys' fees
and expenses) of enforcing the provisions of this Section 6.2 if NEWCO is the
prevailing parties in enforcing such provisions, or of investigating, preparing
to
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defend and defending any claim, action, suit, proceeding, inquiry or
investigation in respect thereof, suffered or incurred by NEWCO resulting from,
relating to or arising out of:
(a) the inaccuracy or breach of any representation or warranty of
Sellers under this Agreement or any documents executed to convey the Assets
under this Agreement;
(b) breach of any agreement or covenant by Sellers under this
Agreement or any other documents executed to convey the Assets or assign the
Acquired Contracts or any other documents entered into under this Agreement;
(c) all liabilities, obligations, and commitments of or relating
to the Auction Business or the Assets (or actions in respect thereof) not
expressly assumed by NEWCO pursuant to Section 1.3.
6.3. Indemnification by Buyers. Buyers jointly and severally agree to
indemnify and hold harmless Sellers from and against any and all losses,
liabilities, damages, obligations, costs and expenses, including, without
limitation, reasonable costs and expenses (including reasonable attorneys' fees
and expenses) of enforcing the provisions of this Section 6.3 if Sellers are the
prevailing party in enforcing such provisions, or of investigating, preparing to
defend and defending any claim, action, suit proceeding, inquiry or
investigation in respect thereof, suffered or incurred by Neoforma or GAR
resulting from, relating to or arising out of:
(a) the inaccuracy or breach of any representation or warranty of
NEWCO under this Agreement or any documents executed to convey the Assets under
this Agreement;
(b) breach of any agreement or covenant by NEWCO under this
Agreement or any documents executed to convey the Assets under this Agreement;
and
(c) the Assumed Liabilities specified in Section 1.3.
6.4. Notice of Third Party Claims. The party seeking indemnification
under this Article VI (the "Indemnitee") shall, within thirty (30) days of
receipt, provide the party from whom indemnification is sought (the
"Indemnitor") with notice of all third party actions, suits, proceedings,
claims, demands or assessments which may be subject to the indemnification
provisions of this Article VI (collectively, "Third Party Claims") brought at
any time following the Closing Date, and shall otherwise make available all
relevant information material to the defense of any Third Party Claims. The
Indemnitor shall have the right to defend any such Third Party Claim at its sole
expense. Where such Third Party Claim affects the interests of the Indemnitee,
the Indemnitee may elect to participate in (but not control) the defense of such
claim at its sole expense; provided, that the Indemnitor shall pay the
Indemnitee's expenses (including reasonable attorneys' fees and expenses) if the
Indemnitor's counsel would be inappropriate due to a conflict of interest
between the Indemnitee and any party represented by such counsel with respect to
such claim. No claim shall be settled or compromised without the consent of the
Indemnitee (which consent shall not be unreasonably withheld, it being
understood that it shall be reasonable for the Indemnitee to decline to consent
to any settlement or compromise that does not include as a condition thereof a
release of all claims against such Indemnitee) unless the Indemnitee shall have
failed, after the lapse of a reasonable time, but in no event more than thirty
(30) days, after notice to it of such proposed settlement to notify the
Indemnitor or the Indemnitee's objection thereto. The Indemnitee's failure to
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give timely notice or to provide copies of documents or to furnish relevant data
in connection with any Third Party Claim shall not constitute a basis for
reduction of any claim for indemnification by the Indemnitee, except to the
extent that such failure shall result in any material prejudice to the
Indemnitor's ability to defend such claim. Further, where the Indemnitor has
undertaken the defense of a Third Party Claim, the Indemnitee, recognizing its
community of interest with the Indemnitor in the resolution of the claim, shall
provide such reasonable support to the Indemnitor as shall be reasonably
requested, including affidavits, documents and testimony. The cost of reasonable
out of pocket expenses incurred by the Indemnitee in providing such support to
the Indemnitor shall be reimbursed to the Indemnitee by the Indemnitor. If the
Indemnitor declines to defend any Third Party Claim, the Indemnitor shall pay
all of the Indemnitee's expenses (including, without limitation, reasonable
attorneys' fees and expenses) relating to such Third Party Claim.
6.4 Other Indemnification. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable, or common
law remedy any party may have for breach of representation, warranty or
covenant.
ARTICLE VII
CONFIDENTIALITY AND NON-SOLICITATION
7.1. Confidentiality and Non-Solicitation. Neither Neoforma nor any of
its affiliates shall, directly or indirectly, use or disclose to any person any
confidential or proprietary information of or relating to NEWCO, the Auction
Business or the Assets except with NEWCO's prior written consent, except as
shall be disclosed to Neoforma's attorneys and accountants. Neither NEWCO nor
any of its affiliates shall, directly or indirectly, use or disclose to any
person any confidential or proprietary information of or relating to Neoforma or
GAR without Neoforma's or GAR's prior written consent, except as shall be
disclosed to NEWCO's attorneys and accountants. For purposes of this Section,
the term "confidential or proprietary information" shall mean all information
that is known to a party or its respective affiliates or to their employees,
consultants or others in a confidential relationship with such party and relates
to such matters as marketing plans, strategies, customer lists, forecasts,
prices of any other party hereto and shall further include all terms and
conditions under this Agreement, provided that the term "confidential or
proprietary information" shall not include information (i) rightfully received
by Neoforma, GAR, or NEWCO, as the case may be, from parties other than the
parties to this Agreement; (ii) generally available to the public; (iii)
possessed by that party, as evidenced by written records, before receipt from
the other party; or (iv) required to be disclosed by applicable law. If
disclosure is required by law, the party required to make such disclosure shall
give notice to the other party hereto so that such other party may seek a
protective order. None of the parties hereto shall, for a period of three years
after Closing, directly or indirectly induce or attempt to induce any employee
of the other to leave their employ, or in any way interfere with the
relationship between the party and its employees.
ARTICLE VIII
NON COMPETITION
8.1 Covenant Not to Compete.
a) For a period of * from the Effective Date, to the extent that
the
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CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
has been marked with an asterisk to denote where omissions have been made. The
confidential material has been filed separately with the Commission.
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Assignment Agreement is still in force, Neoforma shall not, directly or
indirectly, own, manage, operate, join, control or be connected in any manner
with (except for any relationships created hereunder) any business engaged in
hospital consignment sales, auctions of used hospital medical equipment, or
hospital facility closures and other similar liquidations (the "Hospital
Business"). Furthermore, Neoforma agrees for the same period that it will not
directly or indirectly contact any person or entity (except as contemplated
hereunder) for whom it provided Auction Services with the purpose of soliciting
such person or entity for Auction Services. In the event that Neoforma becomes
connected with a Hospital Business as a result of a merger or acquisition,
Neoforma shall use its best efforts to dispose of such Hospital Business within
six months of such acquisition or merger.
b) For the term of this Agreement, and for * after termination of
the Outsourcing Agreement, Neoforma shall not, directly or indirectly, own,
manage, operate, join, control or be connected in any manner with (except for
any relationships created hereunder) any business engaged in the Hospital
Business, except in connection with any acquisition, merger or consolidation of
Neoforma (a "Merger").
ARTICLE IX
PRE-CLOSING COVENANTS
9.1 Due Diligence. From the date hereof until the Closing Date or other
termination of this Agreement, GAR shall afford officers and authorized
representatives of MedXS and NEWCO with reasonable access to GAR's financial,
operational and statistical books and records and shall permit NEWCO to conduct
physical inspections of the Assets.
9.2 Continuation of Business. From the date hereof until the Closing
Date, Sellers shall:
(a) conduct the Auction Business only in the usual and ordinary
course as it has previously been conducted, and not introduce any new methods of
management, operations or accounting, without NEWCO's prior written consent;
(b) maintain and preserve the Assets in as good working order and
condition as at present;
(c) perform all of their obligations under agreements relating to
or affecting the Assets;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage for the Assets; and
(e) use their best efforts to maintain and preserve the Auction
Business organization intact, retain its present employees and maintain its
relationships with its prospects, customers, employees, third parties, suppliers
and others having business relations with it.
9.3 Transactions Requiring Consent. From the date hereof until the
Closing Date,
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CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
has been marked with an asterisk to denote where omissions have been made. The
confidential material has been filed separately with the Commission.
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without NEWCO's prior written consent and outside the ordinary course of
business, Sellers shall not:
(a) sell, transfer, convey or otherwise remove any of the Assets;
(b) enter into any material contract, commitment, liability, or
debt, or make any capital expenditure with respect to the Assets;
(c) create or assume any mortgage, pledge or other lien or
encumbrance upon any of the Assets;
(d) amend any contract to be assumed by NEWCO pursuant to this
Agreement prior to the Closing Date or waive or compromise any right or claim of
GAR;
(e) increase the compensation payable to or to become payable to
any officer, employee or agent of GAR.
9.4 Performance Covenant. Each of the parties hereto covenants and
agrees that it will take all action reasonably within its power and authority to
duly and timely carry out all of its obligations hereunder, to perform and
comply with all of the covenants, agreements, representations and warranties
hereunder applicable to it and to cause all conditions to the obligations of the
other party and other persons to close the purchase and sale of the Assets
pursuant hereto to be satisfied as promptly as possible.
9.5. No Cash Distributions to Shareholders of Neoforma. Between the
date hereof and the Closing Date, GAR shall not issue any cash distributions to
its shareholders (other than as employees) or any material compensation
adjustments to any Selected Auction Employees.
9.6 Costs of Agreement. The parties hereto each agree to bear all of
its own expenses incurred in preparing or complying with this Agreement,
including without limitation all legal and accounting expenses and fees.
9.7 No-Shop Clause.
(a) Sellers, subject to their fiduciary duty obligations and other
customary limitations, will not solicit an alternative acquisition proposal with
a third party relating to the Auction Business and its Assets ("Alternative
Acquisition Proposal"), nor enter into any letter of intent or agreement with
any party (other than NEWCO) with respect to the an Alternative Acquisition
Proposal.
(b) Sellers will agree to immediately contact NEWCO to advise them
of the receipt of any Alternative Acquisition Proposals.
ARTICLE X
CONDITIONS TO CLOSE
10.1 Conditions to NEWCO's Obligation to Close. The obligation of NEWCO
to
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close under this Agreement is subject to each of the following conditions (any
one of which, at the option of NEWCO, may be waived in writing by NEWCO)
existing on the Closing Date, or such earlier date as the context may require:
(a) Each of the representations and warranties of Sellers, the
disclosures contained in the schedules and exhibits, and all other information
delivered under this Agreement shall be true in all material respects at and as
of the Closing Date, as though each representation, warranty and disclosure were
made and delivered at and as of the Closing Date.
(b) Sellers shall comply with and perform all agreements,
covenants and conditions in this Agreement (including entering into the
Assignment contemplated by Section 2.2 hereof) required to be performed and
complied with by them. All requisite action in order to consummate the
transaction provided for in this Agreement shall be properly taken by Sellers.
(c) NEWCO shall receive written consents from all persons listed
in Schedule 1.1(b)(i) to this Agreement, subject to the conditions of Section
5.3.
(d) All corporate action by Sellers' boards of directors and
shareholders, necessary to consummate the transaction provided for in this
Agreement, shall be properly taken by Sellers. At the Closing, NEWCO shall
receive copies of all appropriate resolutions (if any) of Neoforma's board of
directors and Sellers' shareholders relating to this Agreement, certified by
Neoforma's corporate secretary.
(e) The form and substance of all instruments, certificates, and
other documents delivered and to be delivered to NEWCO pursuant to this
Agreement shall be satisfactory in all reasonable respects to NEWCO and NEWCO's
counsel.
(f) All liens on the assets are removed.
10.2 Conditions to Sellers' Obligation to Close. The obligation of
Sellers to close under this Agreement is subject to each of the following
conditions (any one of which, at the option of Sellers, may be waived in writing
by Sellers) existing on the Closing Date, or such earlier date as the context
may require:
(a) Sellers shall have received the cash and Note portions of the
Purchase Price, and the Security Agreement, properly executed any NEWCO with
regard to the Note, and NEWCO and MedXS with regard to the Security Agreement.
(b) Each of the representations and warranties of NEWCO shall be
true at and as of the Closing Date, as though each representation or warranty
were made at and as of the Closing Date.
(c) NEWCO shall comply with and perform all agreements, covenants
and conditions in this Agreement required to be performed and complied with by
them.
(d) All corporate action by NEWCO's board of directors and
shareholder necessary to consummate the transaction provided for in this
Agreement, shall be properly taken by NEWCO. At the Closing, Sellers shall
receive copies of all appropriate resolutions of
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NEWCO's board of directors and NEWCO's shareholders, certified by NEWCO's
corporate secretary, relating to this Agreement.
(e) Sellers shall have received a certificate of good standing
from the Secretary of State of the State of Ohio.
ARTICLE XI
WAREHOUSE
11.1 Use of warehouse. For a period of thirty (30) days after the
Closing NEWCO shall have the rent free use of Seller's warehouses. Within such
thirty (30) day period NEWCO shall remove all inventory and equipment being
purchased hereunder.
ARTICLE XII
TERMINATION
12.1 This Agreement may be terminated as follows:
(a) at any time prior to Closing by the mutual consent of all
parties;
(b) at Closing by NEWCO if the conditions described at Section 9.1
have not been met;
(c) at Closing by Sellers if the conditions described at Section
9.2 have not been met;
(d) at any time prior to Closing by any party if the other party
has materially breached any covenant, representation or
warranty contained in this Agreement.
The non-breaching party shall give the breaching party written notice
that it intends to terminate under Section 12.1(b)-(d) and the breaching party
will have a reasonable time to cure.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Further Assurances. From time to time after the Closing Date, upon
NEWCO's reasonable request, Sellers will (at Sellers' cost) execute, deliver and
acknowledge all such further instruments of transfer and conveyance and do and
perform all such other acts and things as NEWCO may reasonably require to more
effectively transfer the Auction Business and the Assets to NEWCO and to put
NEWCO in possession of the Auction Business and the Assets.
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13.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
NEWCO, GAR and Neoforma.
13.3 Waiver of Compliance; Consents.
(a) Any failure of Sellers, on the one hand, or NEWCO, on the
other hand, to comply with any obligation, covenant, agreement or condition
herein may be waived in writing by the party entitled to the performance of such
obligation, covenant or agreement or who has the benefit of such condition, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or conditions shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
(b) Whenever this Agreement requires or permits consents by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth above.
13.4 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or three (3) days after being mailed by
certified or registered mail, return receipt requested, with postage prepaid:
(a) If to Neoforma or GAR to:
Xxxxxxxx.xxx, Inc.
0000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
or to such other person or address as Neoforma shall furnish to NEWCO in writing
pursuant to the above.
(b) If to Sellers to:
Med XS Solutions, Inc.
0000 Xxxx Xxx.
Xxxxxx, XX 00000
or to such other person or address as NEWCO shall furnish to Neoforma in writing
pursuant to the above.
13.5 Terminology. For purposes of this Agreement, the phrase "in the
ordinary course of business" and the phrase "in accordance with past practice"
shall refer to the customary operations and practices of GAR in the conduct of
the Auction Business, but shall in no event include any acts or failures to act
which would cause GAR to violate or breach any covenant, agreement,
representation or warranty made by GAR under this Agreement. As used herein, the
term "affiliate" shall mean with respect to any person, any other person
controlling, controlled by or under common control with, such person.
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13.6 Assignment. This Agreement shall not be assigned by either party
hereto without the prior written consent of the other parties hereto. No
permitted assignment shall release the assignor from its obligations hereunder.
Subject to the foregoing, this Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their respect
successors, assigns, heirs, executors and personal representative.
13.7 Governing Law. ALL MATTERS WITH RESPECT TO THIS AGREEMENT,
INCLUDING BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION, EFFECT AND
PERFORMANCE, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
13.8 Counterparts. This Agreement may be executed in two or more fully
or partially executed counterparts, each of which shall be deemed an original,
but all counterparts together shall constitute one and the same instrument.
13.9 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.10 Joint Effort. The provisions of this Agreement have been
examined, negotiated and revised by counsel for each party, and no implication
shall be drawn against any party hereto by virtue of the drafting of this
Agreement.
13.11 Entire Agreement. This Agreement, and the Exhibits and Schedules
hereto and any other document to be furnished pursuant to the provisions hereof
embody the entire Agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings, other than those
expressly set forth or referred to in such documents. This Agreement and such
documents supersede all prior agreements and understandings between the parties
with respect to such subject matter.
13.12 Bulk Sales Law. The parties hereto hereby agree to waive
compliance by the other with the provisions of any applicable Bulk Sales Law of
any jurisdiction.
13.13 Confidentiality. The parties hereto shall keep the terms of this
Agreement confidential unless disclosure is required by law or authorized in
writing by the parties hereto.
13.14 Publicity. All press releases and other publicity and
communications relating to the sale of the Auction Business will require the
approval of Neoforma and NEWCO, which approval shall not be unreasonably
withheld or delayed.
13.15 No Third Party Beneficiaries. The provisions of this Agreement
are intended solely for the benefit of the parties hereto, and no other party is
entitled to any rights, benefits or privileges created hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
XXXXXXXX.XXX, INC. NEOFORMA GAR, INC.
a Delaware corporation a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
------------------------------- --------------------------------
Name: Xxxxxx Xxxxxxxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Chief Financial Officer Title: Secretary
MED-XS ASSET SERVICES, INC. MED XS SOLUTIONS, INC.
an Ohio corporation an Ohio corporation
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxx
----------------------------- --------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxx Xxxxxx
Title: Chief Executive Officer Title: Chief Executive Officer
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EXHIBIT A
Promissory Note
EXHIBIT B
Security Agreement
EXHIBIT C
Assignment Agreement
SCHEDULES
To Come