EXHIBIT 10.22
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated, January 12, 1999,
between PROXYMED, INC., a Florida corporation ("Buyer"), with its principal
business address at 0000 Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000,
and SPECIALIZED MEDICAL MANAGEMENT, INC., a Texas corporation ("Seller"), with
its principal business address at 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xx. Xxxxx,
Xxxxx 00000-0000, and TEXAS HEALTH MANAGEMENT SERVICES, INC., a Texas
corporation, the sole shareholder of Seller ("Shareholder"), with its principal
business address at 000 Xxxx Xxx Xxxxxxx Xxxx., #0000, Xxxxxx, Xxxxx 00000-0000.
Seller and Shareholder are sometimes collectively referred to in this Agreement
as "Selling Parties".
Buyer desires to purchase from Seller and Seller desires to sell to Buyer,
on the terms and subject to the conditions of this Agreement, substantially all
of the electronic data interchange ("EDI") assets, properties and EDI business
of Seller.
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
ARTICLE 1. TRANSFER OF EDI ASSETS
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees
to purchase from Seller at the Closing described in Article 3 hereof, all the
EDI assets, properties and EDI business of Seller of every kind, character and
description (except for real property), whether tangible, intangible, personal
or mixed, and wherever located, all of which are sometimes collectively referred
to in this Agreement as the "EDI Assets" or "Assets", including the following:
1.1 CONTRACTS AND AGREEMENTS. All right, title and interest of Seller in
the contracts and licenses that Seller has (including those Seller has with its
customers and clients) relating to Seller's EDI business other than those
specifically referred to elsewhere in this Agreement and as more fully described
on SCHEDULE 1.1 (with commencement dates, expiration dates and renewal options),
to be assumed by Buyer pursuant to Article 4 (such contracts, agreements and
licenses together here and after collectively referred as the "Contracts").
Seller shall provide Buyer with copies of all contracts listed on SCHEDULE 1.1
prior to Closing;
1.2 REAL PROPERTY. Buyer is not purchasing any leased or owned real
property from Seller;
1.3 EQUIPMENT. All furniture, fixtures, equipment, computer hardware and
other tangible personal property of every kind and description that are located
upon or within the real property of Seller, and/or are owned or leased by
Seller, and/or are utilized in connection with Seller's EDI operations (whether
or not upon or within the real property), a current list of which is more fully
described on SCHEDULE 1.3 (hereinafter referred to collectively as the
"Equipment");
1.4 SOFTWARE PROGRAMS AND CONTRACTS. All of Seller's right, title and
interest to all owned or leased software programs, and all other contracts,
agreements, licenses and other commitments and arrangements, oral or written,
with any person or entity respecting the ownership, license, acquisition,
design, development, distribution, marketing, use or maintenance of software
programs, source and object codes, related technical or user documentation and
databases relating to Seller's EDI business, as more fully described on SCHEDULE
1.4 (with commencement dates, expiration dates and renewal options for leases
and licenses), except for off-the-shelf, generally available software (hereafter
referred to collectively as the "Software Programs and Contracts"), and to be
assumed by Buyer pursuant to Article 4;
1.5 INVENTORIES. Buyer is not purchasing any inventory from Seller;
1.6 ACCOUNTS RECEIVABLE. All of Seller's accounts receivable relating to
its EDI business as of the Closing Date IN AN AMOUNT NO LESS THAN $170,000
("Accounts Receivable");
1.7 OTHER INTANGIBLES. All trade names, trademarks, service marks,
copyrights, patents, patent rights, licenses, brand names, trade secrets,
technical know-how, goodwill, rights, if any, to domain names and phone numbers
and other intangibles relating to EDI business as more fully described on
Schedule 1.7;
1.8 BOOKS AND RECORDS. All papers, computerized databases and records in
Seller's care, custody or control relating to any or all of the EDI business and
the operation thereof, including but not limited to all personnel and labor
relations records, sales records, marketing materials, and accounting and
financial records;
1.9 PREPAID EXPENSES AND DEPOSITS. Buyer is not purchasing any prepaid
expenses and other prepaid items and deposits relating to any of the EDI
business and the operations thereof;
1.10 PERMITS, ETC. Buyer is not purchasing any permits, licenses,
franchises, consents or authorizations issued by, and all registrations and
filings with any governmental agency in connection with Seller's EDI business
and the operations thereof, inasmuch as Seller warrants and represents that
there are none; and
1.11 ALL PROPERTY NOT ELSEWHERE DESCRIBED. Except as described in SCHEDULE
1.11, all other properties of Seller of every kind, character or description
owned, used or held for use (whether or not exclusively) primarily in connection
with Seller's EDI business, wherever located and whether or not similar to the
things set forth elsewhere in this Article 1.
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. In consideration for the transfer and
assignment by Seller of the EDI Assets and in consideration of the
representations, warranties and covenants of Selling Parties set forth herein,
Buyer on the conditions set forth herein:
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(a) shall pay to Seller or its assignee(s) at the Closing (as
hereinafter defined) One Million Dollars ($1,000,000) in cash as more
fully described in Section 3.2 hereof; and
(b) shall assume and discharge, and shall indemnify Seller against,
liabilities and obligations of Seller under the contracts or other
agreements, if any, specified on SCHEDULE 4 but only to the extent that
such liabilities or obligations accrue on or after the Closing Date.
2.2 ALLOCATION OF PURCHASE PRICE. The parties agree that the Purchase
Price (defined as the amounts specified in Section 2.1(a) above) shall be
allocated as set forth on SCHEDULE 2.2 and that such allocation will be used by
the parties in reporting the transaction contemplated by this Agreement for tax
purposes.
ARTICLE 3. THE CLOSING
The closing of the purchase and sale of the EDI Assets by Seller to Buyer
(the "Closing") shall take place at the offices of Seller at 10:00 a.m. local
time, on January 15, 1999, or at such other place and/or time as the parties may
agree in writing (the "Closing Date"). The Schedules described herein shall be
completed to the satisfaction of Buyer and Seller at least three (3) days prior
to Closing. In the event that the conditions specified in this Agreement have
not been fulfilled by such date, Buyer (if such failure of conditions is on the
part of Selling Parties) or Seller (if such failure of conditions is on the part
of Buyer) may extend the Closing Date for a period or periods not exceeding an
aggregate of thirty (30) days by written notice to the other party and the no
shop period described in the Letter of Understanding dated December 14, 1998,
shall likewise be automatically extended to such Closing Date. If on the
original or any postponed Closing Date, Seller has been unable to obtain all
waivers and consents of third parties required by this Agreement, then Buyer, on
written notice, may postpone the Closing to a time not later than 10:00 a.m.
local time, on March 31, 1999.
3.1 SELLING PARTIES' OBLIGATIONS AT THE CLOSING. At the Closing, Selling
Parties shall deliver or cause to be delivered to Buyer:
(a) Assignment and assumption agreements for all contracts and
agreements, personal property and equipment leases, and all other
contracts and agreements of Seller to be assumed in connection herewith,
in form and substance satisfactory to Buyer's counsel, and accompanied by
all consents required; and
(b) Instruments of assignment and transfer (including a xxxx of sale
and assignments of trademarks) of all of the other EDI Assets of Seller to
be transferred hereunder, in form and substance satisfactory to Buyer's
counsel.
Simultaneously with the consummation of the transfer, Seller,
through its officers, agents, and employees, shall put Buyer into full
possession and enjoyment of all the EDI Assets to be sold, conveyed,
transferred, assigned and delivered by this Agreement.
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Selling Parties, at any time before or after the Closing Date, shall
execute, acknowledge and deliver any further assignments, conveyances and other
assurances, documents and instruments of transfer, reasonably requested by Buyer
and shall take any other action consistent with the terms of this Agreement that
may reasonably be requested by Buyer for the purpose of assigning, transferring,
granting, conveying and confirming to Buyer, or reducing to possession, any or
all property and EDI Assets to be conveyed and transferred by this Agreement. If
requested by Buyer, Selling Parties agree to prosecute or otherwise enforce in
their own names for the benefit of Buyer any claims, rights, or benefits that
are transferred to Buyer by this Agreement and that require prosecution or
enforcement in either of the Selling Parties' name. Any prosecution or
enforcement of claims, rights, or benefits under this Section shall be solely at
Buyer's expense, unless the prosecution or enforcement is made necessary by a
breach of this Agreement by Selling Parties.
3.2 BUYER'S OBLIGATIONS AT THE CLOSING. At the Closing, Buyer shall
deliver to Seller against delivery of the items specified in Section 3.1 a wire
transfer of immediately available funds in the amount of $1,000,000 payable to
Seller.
ARTICLE 4. ASSUMPTION OF LIABILITIES
Buyer is not assuming any debt, liability or obligation of Seller, whether
known or unknown, fixed or contingent, except as specifically provided herein.
Selling Parties agree to indemnify and hold Buyer harmless against all debts,
claims, liabilities and obligations of Seller not expressly assumed by Buyer
hereunder, and to pay any and all reasonable attorneys' fees and legal costs
incurred by Buyer, its successors and assigns in connection therewith, except as
provided in Section 12.4. Buyer shall have the benefit of and shall perform and
assume all contracts, agreements, and licenses, if any, specifically listed on
SCHEDULE 4, in accordance with the terms and conditions thereof, with the
written consent of the other parties where required, except to the extent
modifications are specifically set forth on such SCHEDULE 4 and except to the
extent set forth in the assignments or assignment and assumption agreements.
Buyer agrees to indemnify each of the Selling Parties and hold each of them
harmless against all debts, claims, liabilities and obligations of the Buyer
expressly assumed by the Buyer hereunder, and to pay any and all reasonable
attorney's fees and legal costs incurred by either of the Selling Parties, and
their respective successors and assigns in connection therewith, except as
provided in Section 12.13.
ARTICLE 5. PROPERTY TAXES
Seller shall pay all sales, use and transfer taxes arising out of the
transfer of the EDI Assets and EDI business to Buyer and shall pay its portion,
prorated as of the Closing Date, of any personal property taxes of the EDI
Assets being sold hereunder. Buyer shall not be responsible for any EDI
business, occupations, withholding or similar tax, or for any taxes of any kind
relating to Seller for any period before the Closing Date.
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
Selling Parties, jointly and severally, hereby represent and warrant to
Buyer that the following facts and circumstances are and, except as contemplated
hereby, at all times up to the Closing Date will be true and correct, and hereby
acknowledge that such facts and circumstances constitute the basis upon which
Buyer is induced to enter into and perform this Agreement. Any exceptions to the
representations and warranties made hereby are disclosed on a SCHEDULE attached
hereto corresponding to the Section numbers of this Article, except as otherwise
specified herein. All such representations and warranties are subject to the
items set forth in the SCHEDULES even though express references to the SCHEDULES
are not set forth below.
6.1 [INTENTIONALLY OMITTED].
6.2 FINANCIAL REPORTS. SCHEDULE 6.2 to this Agreement sets forth the
Financial Reports of Seller's EDI business as of December 31, 1997, and for the
eleven (11) months ended November 30,1998 (the "Stub Period Date"), certified as
complete and accurate by the chief financial officer of Seller and the
Shareholder. The Financial Reports in SCHEDULE 6.2 are referred to as the
"Financial Reports." The Financial Reports accurately and completely present the
financial position of the EDI business of Seller for the respective periods
indicated, except that the Financial Reports for the Stub Period Date are
subject to normal year-end adjustments and lack other representation items.
Seller's EDI business has no liabilities or obligations of any nature (known or
unknown, absolute, accrued, contingent or otherwise) of the type required to be
reflected or disclosed in a balance sheet (or the notes thereto) that were not
fully reflected or reserved against in the Financial Reports or disclosed
elsewhere in this Agreement.
(a) Financial Reports[INTENTIONALLY OMITTED].
6.3 ABSENCE OF SPECIFIED CHANGES. Except as set forth on SCHEDULE 6.3
hereof, since the Stub Period Date, there has not been any:
(a) Transaction by Seller relating to its EDI business except in the
ordinary course of EDI business;
(b) [INTENTIONALLY OMITTED];
(c) Material adverse change in the financial condition, liabilities,
Assets, EDI business or prospects relating to the EDI business of Seller;
(d) Destruction, damage to, or loss of any EDI Assets of Seller
(whether or not covered by insurance) that materially adversely affects
the financial condition, EDI business or prospects relating to the EDI
business of Seller;
(e) Labor trouble or other event or condition of any character
materially adversely affecting the financial condition, EDI business,
Assets or prospects relating to the EDI business of Seller;
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(f) [INTENTIONALLY OMITTED];
(g) [INTENTIONALLY OMITTED];
(h) [INTENTIONALLY OMITTED];
(i) Sale or transfer of any EDI Asset of Seller, except in the
ordinary course of EDI business;
(j) Execution, creation, amendment or termination of any contract,
agreement or license relating to Seller's EDI, except in the ordinary
course of EDI business;
(k) [INTENTIONALLY OMITTED];
(l) Waiver or release of any right or claim of Seller relating to
the EDI Assets, except in the ordinary course of EDI business;
(m) Mortgage, pledge or other encumbrance of any EDI Asset of
Seller;
(n) Other event or condition of any character that has or might
reasonably have a material adverse effect on the financial condition, EDI
business, Assets or prospects of Seller relating to its EDI business;
(o) Loss of any EDI customers or third party payers of Seller
resulting in a material adverse change in revenues or number of
transactions.
(p) [INTENTIONALLY OMITTED]; or
(q) Agreement by Seller to do any of the things described in the
preceding clauses (a) through (p).
6.4 [INTENTIONALLY OMITTED]
6.5 [INTENTIONALLY OMITTED]
6.6 [INTENTIONALLY OMITTED]
6.7 [INTENTIONALLY OMITTED]
6.8 CONTRACTS, ETC. The contracts described in SCHEDULES 1.1 and 1.4
consist of all written and oral contracts, licenses and agreements, and any
other commitments, or understandings entered into by Seller in the ordinary
course of EDI business with its customers, clients and other third parties other
than those specifically referred to elsewhere in this
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Agreement. True, correct and complete copies of the contracts and agreements
described in SCHEDULES 1.1 and 1.4 have been delivered to Buyer. Except as set
forth on SCHEDULES 1.1 AND 1.4, all such contracts and agreements are valid and
in full force, and to the Seller's Knowledge, there does not exist any default
or threat of default, or event that with notice or lapse of time, or both, would
constitute default under any of these contracts and agreements. There have been
no claims or defaults, and to the Knowledge of the Selling Parties, there are no
facts or conditions which if continued, or unnoticed, will result in a default
under these contracts or agreements.
As used in this Section 6.8 and the remainder of this Agreement, an
individual will be deemed to have "Knowledge" or "Known" of a particular fact or
other matter if such individual is actually or consciously aware of such fact or
other matter upon exercising reasonable inquiry and diligence as appropriate
within the scope of such individual's position. Selling Parties will only be
deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a President, Chief Executive Officer, Chief
Financial Officer, Senior Vice President, Vice President, Secretary or Assistant
Secretary, as of December 14, 1998 and/or as of the Closing Date, has Knowledge
of such fact or other matter.
Except as set forth in SCHEDULE 4, Seller is not a party to, nor are
the EDI Assets bound by, any other agreement not entered into in the ordinary
course of EDI business, any indenture, mortgage, deed of trust, lease or any
other agreement that is unusual in nature, duration or amount (including,
without limitation, any agreement requiring the performance by Seller of any
obligation for a period of time extending beyond one year from Closing Date or
calling for consideration of more than $5,000 or requiring purchases at prices
in excess of, or sales at prices lower than, prevailing market prices). To
Selling Parties' Knowledge, all contracts which will be assigned to or assumed
by Buyer under this Agreement are valid and binding upon the parties thereto. To
Selling Parties' Knowledge, there is no default or threat of default, or event
that with notice or lapse of time, or both, would constitute a default by any
party to any of the agreements listed in SCHEDULE 4, except as set forth on
SCHEDULE 4. Seller has not received notice that any party to any of the
agreements listed in SCHEDULE 4 intends to cancel or terminate any of these
agreements or to exercise or not exercise any options under any of these
agreements. To Selling Parties' Knowledge, Seller is not a party to, nor is
Seller or the EDI Assets bound by, any agreement that is materially adverse to
the EDI business, property or financial condition of Seller's EDI business.
6.9 OTHER TANGIBLE PERSONAL PROPERTY. The tangible personal property
described in Section 1.3 and SCHEDULE 1.3 of this Agreement constitutes
substantially all the items of tangible personal property owned by, in the
possession of, or used by Seller in connection with its EDI business. Except as
stated in SCHEDULE 1.3, no tangible personal property used by Seller in
connection with its EDI business is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement, or
is in the possession of anyone other than an employee of Seller.
6.10 TRADE NAMES; TRADEMARKS; COPYRIGHTS; ETC. Except as set forth in
SCHEDULE 6.10, Seller does not use any other trademark, service
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xxxx, trade name, copyright or brand name, or own any trademarks, trademark
registrations or applications, trade names, service marks, copyrights, copyright
registrations or applications or brand names, telephone or facsimile number, or
domain name in its EDI business. To the Knowledge of Selling Parties, no person
(other than Seller) owns any trademark, trademark registration or application,
service xxxx, trade name, copyright, copyright registration or application, or
brand name, the use of which is necessary or contemplated in connection with the
performance of any contract to which Seller is a party. To the Knowledge of
Seller, Seller has the right and authority to use its trade names, trademarks,
copyrights, telephone or facsimile number, or domain name in its EDI business as
are necessary to enable it to conduct and to continue to conduct its EDI
business, and to its Knowledge, such use does not and will not conflict with,
infringe or violate any intellectual or proprietary rights of others.
6.11 PATENTS AND PATENT RIGHTS. SCHEDULE 6.11 to this Agreement is a
complete schedule of all patents, inventions, industrial models, processes,
designs, formulas and applications for patents owned by Seller or in which
Seller has any rights, licenses or immunities relating to its EDI business
("Intellectual Properties") The patents and applications for patents listed in
SCHEDULE 6.11 are valid and in full force and effect and are not subject to any
taxes, maintenance fees or actions falling due within 90 days after the Closing
Date. Except as set forth in SCHEDULES 6.11 or 6.20, there have not been any
administrative, judicial, arbitration, or other adversary proceedings concerning
the Intellectual Properties listed in SCHEDULE 6.11. Each patent application is
awaiting action by its respective patent office except as otherwise indicated in
SCHEDULE 6.11. To the Knowledge of Seller, the manufacture, use or sale of the
inventions, models, designs and systems covered by the Intellectual Properties
listed in SCHEDULE 6.11 do not violate or infringe on any patent or any
proprietary or personal right of any person, firm or corporation, and Seller, to
its Knowledge, has not infringed and is not now infringing on any patent or
other right belonging to any person, firm or corporation. Except as set forth in
SCHEDULE 6.11, Seller is not a party to any license, agreement or arrangement,
whether as licensee, licenser or otherwise, with respect to any patent,
application for patent, invention, design, model, process, trade secret or
formula. relating to its EDI business. Seller has the right and authority to use
such inventions, trade secrets, processes, models, designs and formulas as are
necessary to enable it to conduct and to continue to conduct all phases of its
EDI business in the manner presently conducted, and such use does not and will
not conflict with, infringe or violate any patent or other rights of others.
6.12 TRADE SECRETS. SCHEDULE 6.12 to this Agreement is a true and complete
list, without extensive or revealing descriptions, of trade secrets used by
Seller in (or owned by Seller and useful in) the operation of its EDI business,
including all customer lists, processes, know-how and other technical data. The
specific location of each trade secret's documentation, including its complete
description, specifications, charts, procedures and other material relating to
it, is also set forth with it in such SCHEDULE 6.12. Each trade secret's
documentation is current, accurate and sufficient in detail and content to
identify and explain it, and to allow its full and proper use by Buyer without
reliance on the special knowledge or memory of others. Seller is the sole owner
of each of these trade secrets, free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others, except as specifically
stated in SCHEDULE 6.12. Seller has taken all reasonable security measures to
protect the secrecy, confidentiality and value of these trade secrets; any of
its employees and any other persons, who, either along or in concert with
others, developed, invented, discovered, derived, programmed or designed these
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secrets, or who have knowledge of or access to information relating to them,
have been put on notice and have entered into appropriate agreements that
Seller's trade secrets are proprietary to Seller and are not to be divulged or
misused. All these trade secrets are presently valid and protractible, and are
not part of the public knowledge or literature, nor to Seller's Knowledge have
they been used, divulged or appropriated for the benefit of any past or present
employees or other persons, or to the detriment of Seller.
6.13 OTHER INTANGIBLE PROPERTY. SCHEDULE 6.13 to this Agreement is a true
and complete list of all software programs, contracts and all other intangible
EDI Assets, other than those specifically referred to elsewhere in this
Agreement, including, without limitation, all of Seller's right, title and
interest owned and leased software programs, databases, and all other agreement,
contracts, licenses and other commitments, oral or written, with any person or
entity respecting the ownership, license, acquisition, design, development,
distribution, marketing, use or maintenance of software programs, source and
object codes, related technical or user documentation manuals relating to
Seller's EDI business.
6.14 TITLE TO EDI ASSETS. Seller has good and marketable title to all the
EDI Assets and its interest in the EDI Assets to be conveyed to Buyer hereunder,
whether real or personal, mixed, tangible, and intangible, which constitute all
the EDI Assets and interest in EDI Assets that are used in the EDI business of
Seller. All the EDI Assets are free and clear of mortgages, liens, pledges,
charges, encumbrances, equities, claims, easements, rights of way, covenants,
conditions or restrictions, except for (i) those disclosed in Seller's Financial
Reports as of the Stub Period Date, or in the Schedules to this Agreement; (ii)
the lien of current taxes not yet due and payable relating to any of its EDI
Assets and EDI business; and (iii) possible minor matters that, in the
aggregate, are not substantial in amount and do not materially detract from or
interfere with the present or intended use of any of these EDI Assets, nor
materially impair EDI business operations. All the EDI Assets are in good
operating condition and repair, ordinary wear and tear excepted. Except as set
forth on the appropriate Schedule listing such EDI Assets, neither any officer,
nor any director or employee of Selling Parties, nor any spouse, child or other
relative of any of these persons, owns, or has any interest, directly or
indirectly, in any of the personal property or EDI Assets, owned by or leased to
Seller, or any copyrights, patents, trademarks, trade names or trade secrets
licensed by Seller.
6.15 CUSTOMERS AND TRANSACTIONS. SCHEDULE 6.15 to this Agreement is a
correct and current list of all customers and clients of Seller together with
summaries of the sales made to each customer or client during the Stub Period.
Except as indicated in Schedule 6.15, Seller has no Knowledge of any facts
indicating that any of these customers and clients intent to cease doing EDI
business with Seller or materially alter the amount of the EDI business that
they are presently doing with Seller.
6.16 EXISTING EMPLOYMENT ARRANGEMENTS. SCHEDULE 6.16 to this Agreement is
a list of all employment contracts and collective bargaining agreements, and all
pension, bonus, profit-sharing, deferred compensation, stock option, or other
agreements or arrangements providing for employee or outside consultant
remuneration or benefits of those directly related to the EDI business and to
whom Buyer may wish to make an offer of employment, to which Seller is a party
or by which Seller is obligated, whether legally binding or in the nature of
informal
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understandings. All these contracts and arrangements are in full force and
effect, and neither Seller nor Shareholder have Knowledge that any party is in
default under them. The Seller has received no oral or written notice of claims
of defaults and, to the Knowledge of Selling Parties, there are no facts or
conditions which if continued, or on notice, will result in a default under
these contracts or arrangements. There is no pending or, to the Knowledge of
Selling Parties, threatened labor dispute, strike or work stoppage affecting
Seller's EDI business.
6.17 INSURANCE POLICIES. SCHEDULE 6.17 to this Agreement is a description
of all insurance policies held by Seller concerning the EDI Assets. All these
policies are in the respective principal amounts set forth in SCHEDULE 6.17.
Seller has maintained and now maintains (i) insurance on all the EDI Assets of a
type customarily insured, covering property damage and loss of income by fire or
other casualty; and (ii) adequate insurance protection against all liabilities,
claims, and risks against which it is customary to insure, including without
limitation, and errors and omissions coverage.
6.18 [INTENTIONALLY OMITTED]
6.19 COMPLIANCE WITH LAWS. To Selling Parties' Knowledge, Seller has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations affecting the EDI Assets or the operation of its
EDI business, except as set forth in SCHEDULE 6.19 and for such exceptions as
would not individually or collectively have a materially adverse effect in the
EDI business or the Assets.
6.20 LITIGATION. Except as set forth in SCHEDULE 6.20, there is no suit,
action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending or, to the best Knowledge of Selling Parties,
threatened, against or affecting Seller's EDI business, or Assets. The matters
set forth in SCHEDULE 6.20, if decided adversely to Seller, will not result in a
material adverse change in its EDI business or Assets. Selling Parties have
furnished or made available to Buyer copies of all court papers and other
documents relating to the matters set forth in SCHEDULE 6.20. Seller is not in
default with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality. Except as
set forth in SCHEDULE 6.20, Seller is not presently engaged in any legal action
to recover moneys due to it or damages sustained by it relating to its EDI
business or Assets.
6.21 EDI ASSETS SUFFICIENT FOR CONDUCT OF EDI BUSINESS. The EDI Assets
constitute substantially all of the EDI Assets, exclusive of sufficient working
capital, as may be needed from time to time, required for Buyer to conduct the
EDI business of Seller as it is presently conducted.
6.22 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry into
this Agreement nor the consummation of the transactions contemplated hereby will
result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of Seller or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which Seller is a party or by
which Seller or the EDI
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business and Assets are bound; (iii) an event that would permit any party to
terminate any agreement or to accelerate the maturity of any indebtedness or
other obligation to which either Selling Party is a party; (iv) the creation or
imposition of any lien, charge or encumbrance on any of the EDI Assets; or (v)
the violation of any law, regulation, ordinance, judgment, order or decree
applicable to or affecting Seller's EDI business or Assets.
6.23 AUTHORITY AND CONSENTS. Except as set forth in SCHEDULE 6.23 Selling
Parties have the right, power, legal capacity and authority to enter into, and
perform its obligations under this Agreement, and no approvals, consents or
permits of any person or governmental authority other than Selling Parties are
necessary in connection with it. The execution and delivery of this Agreement
and the consummation of this transaction by Selling Parties have been, or prior
to the Closing will have been, duly authorized by all necessary corporate action
of Selling Parties (including any necessary action by Selling Parties security
holders). This Agreement constitutes a legal, valid and binding obligation of
Selling Parties enforceable in accordance with its terms except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally.
6.24 [INTENTIONALLY OMITTED].
6.25 [INTENTIONALLY OMITTED].
6.26 [INTENTIONALLY OMITTED]
6.27 BULK TRANSFER NOTICE. Selling Parties represent and warrant that
there are no state or local bulk sales laws or regulations to which the EDI
Assets may be subject.
6.28 [INTENTIONALLY OMITTED]
6.29 LABOR MATTERS. To the Knowledge of the Selling Parties, as to those
employees directly involved in Seller's EDI business whom Buyer may wish to
offer employment, Seller is in compliance in all material respects with all
currently applicable federal, state and local laws and regulations respecting
employing, discrimination, discrimination in employment, disability, terms and
conditions of employment, wages and hours, occupational safety and health and
employment practices except for such failures to comply as would not reasonably
be expected to have a material adverse effect, either individually or in the
aggregate, on Seller. As of the date hereof, Seller has received no notice from
any governmental entity and, as of the date hereof, there has not been asserted
before any governmental entity any claim, action or proceeding to which Seller
is a party, and the Seller has received no notice of any investigation or
hearing pending or threatened concerning Seller, arising out of or based upon
any such laws, regulations or practices.
6.30 DOCUMENTS DELIVERED. Each copy or original of any agreement, contract
or other instrument which is identified in any exhibit delivered by Selling
Parties or their counsel to Buyer (or its counsel or representatives), whether
before or after the execution hereof, is in fact what is purported to be by
Selling Parties and has not been amended, canceled or otherwise modified.
11
6.31 FULL DISCLOSURE. None of the written representations and warranties
made by Selling Parties or made in any letter, certificate or memorandum
furnished or to be furnished by Selling Parties, or on their behalf, contains or
will contain any untrue statement of a material fact, or omits any material fact
the omission of which would make the statements made herein, in light of the
circumstances under which they were made, not misleading. There is no fact Known
to Selling Parties which materially adversely affects, or in the future may (so
far as Seller can now reasonable foresee) materially adversely affect the
condition, EDI Assets, liabilities, EDI business, operations or prospects of
Seller's EDI business that has not been set forth herein or heretofore
communicated to Buyer in writing pursuant hereto.
6.32 [INTENTIONALLY OMITTED]
6.33 ABSENCE OF UNDISCLOSED LIABILITIES. Seller does not have and will not
have as of the Closing, except as to the extent reflected or reserved against on
the face of its Financial Reports reflected in SCHEDULE 6.2 hereto, any material
debts, liabilities or obligations (whether absolute, accrued, contingent or
otherwise) including, without limitation, any liabilities for environmental
pollution, any foreign or domestic tax liabilities or deferred tax liabilities
incurred in respect of or measured by Seller's income, or any other material
debts, liabilities or obligations relating to or arising out of any act,
omission, transaction, circumstance, sale of goods or services, stated facts or
other condition related to its EDI business or the Assets.
ARTICLE 7. BUYER'S REPRESENTATIONS AND WARRANTIES AND AGREEMENT
Buyer hereby represents and warrants to Selling Parties that the following
representations are true and correct and, except as contemplated hereby, at all
times up to the Closing Date will be true and correct, and hereby acknowledges
that such representations constitute the basis upon which the Selling Parties
are induced to enter into and perform this Agreement.
7.1 AUTHORITY AND CONSENTS. Buyer represents and warrants that Buyer is a
corporation duly organized, existing and in good standing under the laws of
Florida. Buyer has the right, power, legal capacity and authority to enter into,
and perform its obligations under this Agreement, and no approvals or consents
of any persons other than its Board of Directors are necessary in connection
with it. The execution and delivery of this Agreement and the consummation of
this transaction by Buyer have been, or prior to the Closing will have been,
duly authorized by all necessary corporate action of Buyer. This Agreement
constitutes a legal, valid and binding obligation of Seller enforceable in
accordance with its terms, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
7.2 [INTENTIONALLY OMITTED]
7.3 [INTENTIONALLY OMITTED]
7.4 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry into
this Agreement nor the consummation of the transactions contemplated hereby will
result in or
12
constitute any of the following: (i) a breach of any term or provisions of this
Agreement; (ii) a default or an event that, with notice or lapse of time or
both, would be a default, breach or violation of the Articles of Incorporation
or Bylaws of Buyer or, to the Knowledge of Buyer, any lease, license, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of trust
or other agreement, instrument or arrangement to which Buyer is a party or by
which Buyer is bound; (iii) to the knowledge of Buyer, an event that would
permit any party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation; or (iv) to the knowledge of Buyer, the
violation of any law, regulation, ordinance, judgment, order or decree
applicable to or affecting Buyer.
ARTICLE 8. PARTIES' OBLIGATIONS BEFORE CLOSING.
Selling Parties covenant that, except as otherwise agreed in writing by
Buyer, from the date of this Agreement until the Closing:
8.1 BUYER'S ACCESS TO PREMISES AND INFORMATION. Buyer and its counsel,
accountants and other representatives shall be entitled to have full access
during normal EDI business hours to all Seller's properties, books, accounts,
records, contracts and documents of or relating to the EDI business and Assets,
but shall not restrict or inhibit Seller's normal EDI business operations.
Selling Parties shall furnish or cause to be furnished to Buyer and its
representatives all data and information concerning the EDI business, Assets,
finances and properties of Seller that may reasonably be requested.
8.2 CONDUCT OF EDI BUSINESS IN NORMAL COURSE. Seller shall carry on its
EDI business and activities diligently and in substantially the same manner as
they previously have been carried on, and shall not make or institute any
unusual or novel methods of management, accounting or operation that will vary
materially from the methods used by Seller as of the date of this Agreement.
Seller shall use its reasonable best efforts, without making any commitments on
behalf of Buyer, to preserve its EDI business organization intact, to keep
available to Seller its present officers and employees, and to preserve its
present relationships with suppliers, customers and others having EDI business
relationships relating to its EDI business with it. Buyer has been informed that
the President of Seller, Xxxxxx Xxxxx, has left its employment as of December
31, 1998.
8.3 NO SOLICITATION. Parties hereby ratify and confirm that they have
entered into a legally binding agreement dated December 14, l998, whereby
Selling Parties on behalf of themselves and their affiliates have agreed not to
offer or solicit for sale or sell Seller except to Buyer for a period of time,
all as more fully set out on Addendum A attached hereto and incorporated herein
by reference. Selling Parties and Buyer hereby agree to extend the "no shop"
period to January 15, 1999.
8.4 MAINTENANCE OF INSURANCE. Seller shall continue to carry its existing
insurance, subject to variations in amounts required by the ordinary operations
of its EDI business. At the request of Buyer and at Buyer's sole expense, the
amount of insurance against fire and other casualties which, at the date of this
Agreement, Seller carries on any of the Assets or in respect of
13
its EDI business and operations shall be increased by such amount or amounts as
Buyer shall specify.
8.5 EMPLOYEES AND COMPENSATION. As to the EDI Employees as defined in
SCHEDULE 12.16-A and identified in SCHEDULE 12.16-B, Seller shall not do, or
agree to do, any of the following acts relating to its EDI business: (i) grant
any increase in salaries payable or to become payable to any officer, employee,
sales agent or representative, or consultant; or (ii) increase benefits payable
to any officer, employee, sales agent, representative or consultant under any
bonus or pension plan or other contract or commitment. Seller will remain liable
to pay each employee the base salary, bonus and severance, if any, plus any
other compensation due, including any unused vacation or sick time, through the
date of Closing, and comply with all tax withholding provisions of applicable
federal, state, local and foreign laws and have or will pay over to the proper
governmental authorities all amounts required to be so withheld and paid over.
Seller's employees directly involved with its EDI business will be free to
become employees of Buyer after the Transition Period (as defined in Section
12.16) should the Buyer elect to offer employment to any such employees and such
employees accept any such offer of employment.
8.6 NEW TRANSACTIONS. In regards to its EDI business, Seller shall not do,
or agree to do, any of the following acts:
(a) Enter into any contract, commitment or transaction not in the
usual and ordinary course of its EDI business;
(b) Make any capital expenditures or commitments or enter into any
leases of capital equipment or property;
(c) Sell or dispose of any capital EDI Assets; or
(d) Declare any dividends or make any distributions.
8.7 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS. In regards to its EDI
business, Seller shall not do, or agree to do, any of the following acts: (i)
pay any obligation or liability, fixed or contingent, other than to pay current
liabilities as they become due and payable (ii) waive or compromise any right or
claim; or (iii) cancel, without full payment, any note, loan or other obligation
owing to Seller.
8.8 EXISTING AGREEMENTS. In regards to its EDI business, Seller shall not
modify, amend, cancel or terminate any of its existing contracts or agreements,
or agree to do any of those acts.
8.9 CONSENT OF OTHERS. As soon as reasonably practical after the execution
and delivery of this Agreement, and in any event on or before the Closing Date,
Seller shall use reasonable best efforts to obtain any written consents required
by the terms and conditions of the items described in Sections 1.1, 1.2, 1.3,
1.4, 1.8, 1.10, 1.12, 3.1, 4, 6.23 6.24, 10.7 and 10.9 , and as set out in any
of their respective Schedules to this Agreement in form and substance
14
satisfactory to Buyer and will furnish to Buyer executed copies of those
consents obtained by Seller.
8.10 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Selling Parties shall
use all reasonable efforts to assure that all representations and warranties of
Selling Parties set forth in this Agreement and in any written statements
delivered to Buyer by Selling Parties under this Agreement will also be true and
correct as of the Closing Date as if made on that date and that all conditions
precedent to the Closing shall have been met. Seller shall promptly disclose to
Buyer any information contained in the Schedules to this Agreement which,
because of an event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the Closing Date;
provided, however, that none of such disclosures shall be deemed to modify,
amend or supplement the representations and warranties of Seller or the
Schedules hereto for the purposes of Article 9 hereof, unless Buyer shall have
consented thereto in writing.
8.11 SALES AND USE TAXES. Selling Parties hereby agree to indemnify and
hold Buyer harmless against any claims arising out of sales, use and other tax
liabilities relating to its EDI business accrued prior to the Closing Date.
Shareholder agrees to furnish to Buyer certificate(s) in good standing from the
appropriate governmental agencies where it is incorporated and where it does
business and is subject to any such taxes, and any and/or any related
certificates that Buyer may reasonably request, as evidence that all sales, use
and other tax liabilities that are due and payable of the Seller relating to its
EDI business, including without limitation, any sales or use taxes, owed by
Seller as of the Closing Date have been paid.
8.12 STATUTORY FILINGS. Seller shall cooperate fully with Buyer in
preparing and filing all information and documents deemed necessary or desirable
by Buyer under any statutes or governmental rules or regulations pertaining to
the transactions contemplated by this Agreement.
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the EDI Assets under this Agreement
are subject to the satisfaction, at or before the Closing, of all the conditions
set out below in this Article 9. Buyer may waive any or all of these conditions
in accordance with Section 14.2 hereof; provided, however, that no such waiver
of a condition shall constitute a waiver by Buyer of any of its other rights or
remedies, at law or in equity, if Selling Parties shall be in default of any of
their representations, warranties or covenants under this Agreement.
9.1 [INTENTIONALLY OMITTED]
9.2 ACCURACY OF SELLING PARTIES' REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Selling Parties in this Agreement or in any
written statement that shall be delivered to Buyer by Selling Parties under this
Agreement shall be true and correct in all material respects on and as of the
Closing Date as though made at that time.
9.3 ABSENCE OF LIENS. At or within ten (10) days prior to the scheduled
Closing, Buyer shall have received a UCC search report dated as of a date not
more than five days before the Closing Date issued by the appropriate state
governmental agency in Texas and the county
15
within which Seller's principal place of business is located reasonably
satisfactory to counsel for Buyer indicating that there are no filings under the
Uniform Commercial Code on file which name any of Seller as debtor or otherwise
indicating any lien not satisfied on the Assets, except for the liens otherwise
disclosed in Schedules hereto.
9.4 SELLING PARTIES' PERFORMANCE. Selling Parties shall have performed,
satisfied, and compiled in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or compiled with by
Selling Parties on or before the Closing Date.
9.5 CERTIFICATION BY SELLER. Buyer shall have received a certificate,
dated the Closing Date, signed by Seller's president and its chief financial
officer certifying, in such detail as Buyer and its counsel may reasonably
request, that the conditions specified in Section 9.2 and 9.4 have been
fulfilled.
9.6 OPINION OF SELLING PARTIES' COUNSEL. Buyer shall have received from Xx
Xxxxxx, Esquire counsel for Selling Parties, an opinion dated as of the Closing
Date, in form and substance satisfactory to Buyer and its counsel, that:
(a) ; This Agreement has been duly and validly authorized and, when
executed an delivered by Selling Parties, will be valid and binding on
Selling Parties and enforceable in accordance with its terms, except as
limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally;
(b) To the best of counsel's knowledge and belief and without
independent inquiry and except as set forth in SCHEDULE 6.20 to this
Agreement, such counsel does not know of any suit, action, arbitration or
legal, administrative or other proceeding or governmental investigation
pending or threatened against or affecting Seller or its EDI business or
any of its properties, or financial or other condition;
(c) To the best of counsel's knowledge and belief and without
independent inquiry, neither the execution nor delivery of this Agreement
nor the consummation of the transaction contemplated in this Agreement
will constitute (i) a default, or an event that would with notice or lapse
of time or both constitute a default under, or violation or breach of (A)
Selling Parties Articles of Incorporation or Bylaws, or (B) to such
counsel's knowledge without independent inquiry, any indenture, license,
lease, franchise, mortgage, instrument or other agreement or statute,
rule, regulation, judgment, order or decree to which Selling Parties are a
party, or by which Selling Parties are a party, or by which Selling
Parties or the Assets may be bound; or (ii) an event that would permit any
party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of Seller; or (iii) to
such counsel's knowledge without independent inquiry, an event that would
result in the creation or imposition of any lien, charge or encumbrance on
any of the Assets; and
(d) To such counsel's knowledge and belief without independent
inquiry, every consent, approval, authorization or order of any court or
governmental agency or body that is required for the consummation by Buyer
of the transaction
16
contemplated by this Agreement has been obtained or has been waived by
Buyer, and such counsel has not been informed that any such consent,
approval, authorization or order has been rescinded or is no longer in
effect as of the Closing Date.
9.7 ABSENCE OF LITIGATION. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
9.8 CORPORATE APPROVAL. The execution and delivery of this Agreement by
Selling Parties, and the performance of its covenants and obligations under it,
shall have been duly authorized by all necessary corporate action, and Buyer
shall have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Seller and of Shareholder.
9.9 [INTENTIONALLY OMITTED]
9.10 [INTENTIONALLY OMITTED]
9.11 CONSENTS. All necessary agreements and consents of any parties to the
consummation of the transaction contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by Seller and
delivered to Buyer.
9.12 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to Buyer under
this Agreement shall be satisfactory in all reasonable respects, to Buyer and
its counsel.
9.13 [INTENTIONALLY OMITTED]
9.14 [INTENTIONALLY OMITTED]
9.15 TRADEMARK AND PATENT MATTERS. If requested by Buyer, Buyer shall have
received a report, satisfactory to Buyer, from Seller's counsel concerning the
matters set forth in Sections 6.10 and 6.11, and all such assignments of
trademarks and patents duly assigned in recordable form to Buyer shall have been
delivered to Buyer in the form satisfactory to Buyer and its counsel.
9.16 CONTINUITY OF MANAGEMENT. Buyer shall have made arrangements
reasonably suitable to it for the employment by Buyer of sufficient Seller
employees to continue the operation of the EDI business being transferred
without disruption thereto.
9.17 CONDITION OF EDI ASSETS. The Assets shall not have been materially or
adversely affected in any way as a result of any fire, accident, storm or other
casualty or labor or civil disturbance or act of God or the public enemy.
17
9.18 XXXXXX. Buyer shall have received a copy of a new payer agreement
between Seller and Xxxxxx Methodist Health Plan and Xxxxxx Insurance Company
("Xxxxxx"), in a form satisfactory to Buyer.
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell and transfer the Assets under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
following conditions set out below in this Article 10. Except for Sections 10.4
and 10.7, Seller may waive any or all of these conditions in accordance with
Section 14.2 hereof; provided, however, that no such waiver of a condition shall
constitute a waiver by Seller of any of its other rights or remedies, at law or
in equity, if Buyer shall be in default of any of its representations,
warranties or covenants under this Agreement.
10.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement, including but not
limited to the Reports delivered to Selling Parties pursuant to Section 7.2
hereof, shall be true on and as of the Closing as though such representations
and warranties were made on and as of that date.
10.2 BUYER'S PERFORMANCE. Buyer shall have performed and complied with all
covenants and agreements, and satisfied all conditions that it is required by
this Agreement to perform, comply with, or satisfy, before or at the Closing.
10.3 OPINION OF BUYER'S COUNSEL. Buyer shall have furnished Seller with an
opinion, dated the Closing Date, of Xxxxx X. Xxxxxxx, Esquire, Chief Legal
Officer for Buyer, in form and substance satisfactory to the Shareholder and his
counsel, to the effect that:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and has all requisite
corporate power to perform its obligations under this Agreement;
(b) All corporate proceedings required by law or by the provisions
of this Agreement to be taken by Buyer on or before the Closing Date, in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement, have been
duly and validly taken;
(c) Buyer has the corporate power and authority to acquire the EDI
Assets for the consideration set forth herein;
(d) To such counsel's knowledge without independent inquiry, every
consent, approval, authorization or order of any court or governmental
agency or body that is required for the consummation by Buyer of the
transactions contemplated by this Agreement has been obtained or has been
waived by Seller and will be in effect on the Closing Date;
18
(e) The consummation of the transaction contemplated by this
Agreement does not violate or contravene any of the provisions of the
Articles of Incorporation, Bylaws of Buyer or to the best of such
counsel's knowledge without independent inquiry any indenture, agreement,
statute, judgment or order to which Buyer is a party or by which Buyer is
bound;
(f) This Agreement has been duly and validly authorized and, when
executed and delivered by Buyer, will be valid and binding on Buyer and
enforceable in accordance with its terms, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of creditors
generally.
10.4 BUYER'S CORPORATE APPROVAL. Buyer shall have received corporate
authorization and approval from its Board of Directors for the execution and
delivery of this Agreement and all corporate action necessary or proper to
fulfill the obligations of Buyer to be performed under this Agreement on or
before the Closing Date.
10.5 CERTIFICATION BY BUYER. Shareholder shall have received a
certificate, dated the Closing Date, signed by an executive officer of Buyer
certifying, in such detail as Shareholder and his counsel may reasonably
request, that the conditions specified in Section 10.1 and 10.2 have been
fulfilled.
10.6 ABSENCE OF LITIGATION. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
10.7 CONSENTS. All necessary agreements and consents of any parties to the
consummation of the transaction contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained on or before
the Closing Date.
10.8 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to Selling
Parties under this Agreement shall be satisfactory in all reasonable respects,
to Shareholder and his counsel.
10.9 PAYMENT OF PURCHASE PRICE. The Buyer shall have paid the purchase
price for the Assets to be paid at Closing as specified in Section 2.1(a).
ARTICLE 11. EMPLOYEES
11.1 EMPLOYEE PLANS. Buyer is not assuming any obligations of Seller
relating to any Employee Plan. "Employee Plan" includes all pension, retirement,
disability, medical, dental or other health insurance plans, life insurance or
other death benefit plans, profit sharing, deferred compensation, stock option,
bonus or other incentive plans, vacation benefit plans, severance plans or other
employee benefit plans or arrangements including, without limitation, any
pension plan as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA") and any welfare plan as defined in Section 3(1)
of ERISA, whether or not funded,
19
covering any employee of Seller or to which Seller is a party or bound or makes
or has made any contribution or by which Seller may have any liability to any
Subject Employee (including any such plan formerly maintained by or in
connection with which Seller may have any liability to any Subject Employee, and
any such plan which is a multiemployer plan as defined in Section 3(37)(A) of
ERISA).
ARTICLE 12. PARTIES' OBLIGATIONS AFTER THE CLOSING
A. SELLING PARTIES' OBLIGATIONS.
12.1 PRESERVATION OF GOODWILL. Following the Closing, Selling Parties will
restrict their activities so that Buyer's reasonable expectations with respect
to the goodwill, EDI business reputation, employee relations and prospects
connected with the Assets will not be materially impaired.
12.2 GUARANTEE OF LIABILITIES. Selling Parties, jointly and severally,
guarantee to Buyer that all liabilities, whether current or long term, of Seller
relating to its EDI business as of the Closing Date will be fully paid and
satisfied within sixty (60) days after the Closing.
12.3 [INTENTIONALLY OMITTED]
12.4 SELLING PARTIES' INDEMNITIES. Selling Parties shall indemnify, defend
and hold harmless Buyer, including its directors, managers, officers, employees
and agents, against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees ("Losses"), that
Buyer and such other persons shall incur or suffer, which arise, result from or
relate to any breach of, or failure by Selling Party to perform, any of its
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by Seller under this Agreement, or from the EDI business and operation of the
Seller prior to the Closing Date.
Notwithstanding any other provision of this Agreement, Selling
Parties shall not be liable to Buyer on any warranty, representation or covenant
made by Selling Parties in this Agreement, or under any of their indemnities in
this Agreement, regarding any single claim, loss, expense, obligation or other
liability (except for those arising under Sections 1.6, 8.7, 8.9, 12.2 and 12.16
which shall be first dollar coverage) that does not exceed $25,000; provided,
however, that when the aggregate amount of all such claims, losses, expenses,
obligations and liabilities not exceeding $25,000 each reaches $25,000, Selling
Parties shall thereafter be liable in full for all such breaches and indemnities
and regarding all those claims, losses, expenses, obligations and liabilities
exceeding $25,000.
12.5 ACCESS TO RECORDS. From and after the Closing, Selling Parties shall
allow Buyer, and its counsel, accountants and other representatives, such access
to records which after the Closing may be in the custody or control of Selling
Parties as Buyer reasonably requires in order to comply with its obligations
under the law or under contracts assumed by Buyer pursuant to this Agreement.
20
12.6 [INTENTIONALLY OMITTED]
12.7 DEPOSIT OF CHECKS. Selling Parties shall cooperate with Buyer in
making all necessary or desirable arrangements so that checks and other payments
on Accounts Receivable purchased by Buyer pursuant to this Agreement may be
deposited into Buyer's bank accounts without endorsement by the Seller.
12.8 GUARANTEE. Shareholder hereby unconditionally guarantees to Buyer the
full and timely performance of all of the obligations and agreements of Seller.
The foregoing guarantee shall include the guarantee of the payment of all
damages, costs and expenses which might become recoverable as a result of the
nonperformance of any of the obligations or agreements so guaranteed as a result
of the nonperformance of this guarantee. Buyer may, at its option, proceed
against Seller and/or Shareholder for the performance of any such obligation or
agreement, or for damages for default in the performance thereof, without first
proceeding against any other party or against any of its properties. Selling
Parties further agree that its guarantee shall be an irrevocable extension and
shall continue in effect notwithstanding any extension or modification for any
guaranteed obligation, any assumption of any such guaranteed obligation by any
other party, or any other act or thing which might otherwise operate as a legal
or equitable discharge of a guarantor, and Shareholder hereby waives all special
suretyship defenses and notice requirements.
12.9 [INTENTIONALLY OMITTED]
12.10 [INTENTIONALLY OMITTED]
12.11 [INTENTIONALLY OMITTED]
12.12 ACCESS TO RECORDS. From and after the Closing, Buyer shall allow
Selling Parties, and their counsel, accountants and other representatives, such
access to records which after the Closing are in the custody or control of Buyer
as Selling Parties reasonably require in order to comply with their respective
obligations under the law or under contracts assumed by Buyer pursuant to this
Agreement.
12.13 BUYER'S INDEMNITIES. Buyer shall indemnify, defend and hold harmless
Seller and Shareholder, and their respective directors, managers, officers,
employees and agents, against and in respect of any and all Losses (as such term
is defined in Section 12.4 hereof) that Seller and/or Shareholder and/or such
other persons shall incur or suffer, which arise out of or result from any
breach of, or failure by Buyer to perform any obligations pursuant to this
Agreement and the EDI business and Assets acquired on or after the Closing Date.
Notwithstanding any other provision of this Agreement, except for
Buyer's obligation to pay the consideration for the Assets referred to in
Section 2.1 hereof in connection with liabilities of Seller to be specifically
assumed hereunder, Buyer shall not be liable to Seller and/or Shareholder on any
warranty, representation or covenant made by Buyer in this Agreement, or under
any of its indemnities in this Agreement, regarding any single claim loss,
expense,
21
obligation or other liability that does not exceed $25,000, provided, however,
that when the aggregate amount of all such claims, losses, expenses, obligations
and liabilities exceeding $25,000 each reaches $25,000, Buyer shall thereafter
be liable in full for all such breaches and indemnities and regarding all those
claims, losses, expenses, obligations and liabilities exceeding such $25,000
amount.
12.14 INDEMNIFICATION PROCEDURES.
(a) In connection with the indemnification provisions contained
herein, the party claiming indemnification shall promptly notify the
indemnifying party of such a claim.
(b) The indemnifying party shall be entitled to assume the defense
or settlement thereof with counsel of its own choosing, which counsel
shall be reasonably satisfactory to the indemnified party; provided,
however, that: (a) the indemnified party shall be entitled to participate
in any such action or proceeding or in any negotiations or proceedings to
settle or otherwise eliminate any claim for which indemnification is being
sought; and (b) the indemnifying party shall not be entitled to settle,
compromise, decline to appeal or otherwise dispose of such claim, action
or proceeding without the consent of the indemnified party if such claim,
action or proceeding in the reasonable judgment of the indemnified party
either (i) involves a request for relief other than money damages; or (ii)
in the event of an adverse ruling, could have a material adverse effect on
the indemnified party.
(c) In the event that the indemnifying party does not assume the
defense or settlement of any claim, action or proceeding, the indemnified
party may conduct the investigation, defense, trial and, if necessary,
appeal of, and/or may settle any such claim, action or proceeding.
(d) Any claims, legal fees or other reasonable and actual costs and
expenses paid or incurred by the indemnified party shall be paid to the
indemnified party by the indemnifying party within ninety (90) days after
receipt by the indemnifying party of the indemnified party's itemized
invoice.
12.15 [INTENTIONALLY OMITTED]
12.16 Transition Period. After the Closing Date and for a period through
April 30, 1999 (the "Transition Period"), Seller agrees, as more fully set forth
in the EDI Employee Services Agreement attached hereto as Schedule 12.16-A, to
lease to Buyer all of Seller's employees who were directly involved in the EDI
business up to the Closing Date(the "EDI Employees") and to provide the same or
similar office space and services as provided to the EDI Employees on the date
of this Agreement. Buyer shall reimburse Seller for operating expenses
associated with the EDI Employees as set forth in Schedule 12.16-B, except for
separation stay pay bonuses which will be paid directly by ProxyMed. Seller
represents and warrants that the operating expenses budget as set forth in
Schedule 12.16-B is complete and accurate in all material respects and that
22
there are no other significant operating expenses related to the EDI business
which are not reflected therein.
ARTICLE 13. COSTS
13.1 FINDER'S OR BROKER'S FEES. Each of the parties represents and warrants that
it has dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement, and, insofar as it knows, no broker or other
person is entitled to any commission or finder's fee in connection with any of
these transactions.
13.2 EXPENSES. Each of the parties shall pay all costs and expenses,
including, but not limited to attorneys' and accounting fees, incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
ARTICLE 14. FORM OF AGREEMENT
14.1 HEADINGS. The subject headings of the Articles and Sections of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
14.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
14.3 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In addition, execution of
this Agreement may be transmitted by one party to the other via facsimile.
ARTICLE 15. PARTIES
15.1 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
15.2 ASSIGNMENT. Buyer may not assign or delegate any of its rights or
obligations under this Agreement or any part hereof without the prior written
consent of Seller except for any
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assignment in connection with the sale of substantially all of Buyer's assets or
capital stock to an unaffiliated third party. Except as otherwise set forth
herein the Selling Parties may not assign or delegate any of their respective
rights or duties hereunder, without the prior written consent of the Buyer. This
Agreement shall be binding on and shall inure to the benefit of the parties to
it and their respective heirs, legal representatives, successors and assigns.
ARTICLE 16. REMEDIES
16.1 RECOVERY OF LITIGATION COSTS. If any legal action or any arbitration
or other preceding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.
16.2 CONDITIONS PERMITTING TERMINATION. Subject to the provisions of
Article 3 and Article 20.2, either party may on the Closing Date terminate this
Agreement by written notice to the other, without liability to the other, if any
bona fide action or proceeding shall be pending against either party on the
Closing Date that could result in an unfavorable judgment, decree or order that
would prevent or make unlawful the carrying out of this Agreement.
16.3 DEFAULTS PERMITTING TERMINATION. If either Buyer or Selling Parties
materially default in the due and timely performance of any of its
representations, warranties, covenants, or agreements under this Agreement, the
non-defaulting party or parties may on the Closing Date give notice of
termination of this Agreement, in the manner provided in Article 18 or in
Section 20.2 as applicable. The notice shall specify with particularity the
default or defaults on which the notice is based. The termination shall be
effective ten (10) business days from the date notice is actually received (the
"Termination Date"). If the Termination Date is less than ten (10) days prior to
the scheduled Closing Date, such Closing Date shall be extended for the same
time to enable defaulting party to cure the specified default(s) on or before
the Termination Date. Such termination shall not waive, release or discharge the
non-defaulting parties' rights to seek legal and equitable relief.
16.4 BREACH OF WARRANTIES. Notwithstanding any provision of the Agreement
to the contrary, if, upon execution of the Agreement and upon the Closing, the
warranties and representations made by either party pursuant to Sections 6, 7 or
11 of the Agreement are not true and correct, and either party notifies the
other party of such fact in writing, then the rights and obligations of the
parties shall be as follows:
(a) If the applicable warranty or representation was untrue as of
the date made, then except in cases of fraud or neglect, the sole and exclusive
remedy of the non-warranting party shall be either of the following, as the
non-warranting party may elect in writing:
24
(i) To waive the breach in writing and continue with the
Closing, in which case the non-warranting party shall have no further recourse
with respect to such breach or falsity pursuant to Section 12.4 or 12.13 or
otherwise; or
(ii) To terminate the Agreement by written notice, in which
case neither party shall have any further obligations or liabilities to the
other party hereunder, except as set forth in Sections 16.4 and 20.2.
(b) If the applicable warranty or representation was true when
made, but became untrue thereafter for reasons other than a breach by the
warranting party of its other covenants and obligations under the Agreement,
then:
(i) If the breach or falsity would adversely and materially
affect the non-breaching party's rights and obligations under the Agreement, the
remedies of the non-warranting party shall be as elected under Section 16(a)
above; and
(ii) If the breach or falsity would not adversely and
materially affect the non-breaching party's rights and obligations under the
Agreement, the sole and exclusive remedy of the non-warranting party shall be
limited to those set forth elsewhere in this Agreement, and the non-warranting
party shall have no right to terminate the Agreement on account of such breach
or falsity.
16.5 EXCLUSIVE REMEDY. The indemnification provisions contained in this
Agreement and remedies provided for in Section 20.5 are the exclusive remedies
that any party hereto may have for breach of any representation, warranty or
covenant in this Agreement. The parties hereto acknowledge and agree that the
purpose of the representations and warranties contained in this Agreement is to
give an aggrieved party the right to be indemnified pursuant to such
indemnification provisions. Accordingly, the parties agree that immaterial
breaches of such representations and warranties shall not be deemed to
constitute fraud or misrepresentation under state or federal law.
ARTICLE 17. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants and agreements in this
Agreement or in any Schedule, instrument, certificate, opinion or other writing
provided for in it, shall survive the Closing for a period of two (2) years
thereafter.
ARTICLE 18. NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail registered or certified, postage prepaid, and
properly addressed as follows:
25
SELLER: Specialized Medical Management, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxx 00000-0000
Attn.: _____________________________
with copy to: Texas Health Resources, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxx 00000
Attn.: General Counsel
SHAREHOLDER: Texas Health Management Services, Inc.
000 X. Xxx Xxxxxxx Xxxx., #0000
Xxxxxx, Xxxxx 00000-0000
Attn: ______________________________
BUYER: ProxyMed, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn.: Chief Executive Officer
with copy to: ProxyMed, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn.: Chief Legal Officer
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 19. GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by, the
laws of the State of Texas, without regard to its conflict of laws provisions.
ARTICLE 20. MISCELLANEOUS
20.1 ANNOUNCEMENTS. Except as and to the extent required by any applicable
law, regulation or order, including Securities and Exchange Commission
regulations, no party to this Agreement shall, and each shall direct its
representatives not to, directly or indirectly, make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
disclosure of the existence of negotiations regarding a proposed transaction
between the parties or any of the terms, conditions or other aspects of a
proposed transaction without prior written consent of the other party, In the
event any party is required by applicable law, regulation or order to make any
such disclosure, such party shall provide prior notice of such required
disclosure to the other party. Selling Parties and Buyer agree to make a public
announcement of this transaction and Buyer will deliver to Seller a copy of the
proposed public announcement relating to this transaction prior to the
publication thereof in order to give Seller an opportunity
26
to make recommendations with respect thereto, which recommendation shall in no
way be binding on Buyer.
20.2 CONFIDENTIALITY. Buyer and Selling Parties hereby ratify and confirm
that they have entered into a legally binding agreement dated December 14, l998,
whereby Buyer and Selling Parties on behalf of themselves and their affiliates
have agreed as to matter of confidentiality, all as more fully set out on
Addendum "A" attached hereto and incorporated herein by reference.
20.3 FURTHER ACTIONS. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be requested by the other parties in order to consummate or implement
the transactions contemplated by this Agreement.
20.4 SEVERABLE COVENANTS. In the event that any provision contained herein
is declared invalid or illegal, the other provisions hereof shall not be
affected or impaired thereby and shall remain valid and enforceable.
20.5 SPECIFIC PERFORMANCE. In the event of a breach or threatened breach
by any party hereto of the provisions of this Agreement, any other party hereto
shall be entitled to specific performance. Nothing herein shall be construed as
prohibiting any party hereto from pursuing any other remedies available for such
breach or threatened breach, including the recovery of damages.
20.6 COUNTERPARTS. This Agreement may be signed in two or more
counterparts, any one of which need not contain the signatures of more that one
party, but all such counterparts taken together will constitute one and the same
instrument. In addition, execution of this Agreement may be transmitted by one
party to the other via facsimile.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as
of the day and year first above written.
BUYER:
PROXYMED, INC.
Attest:
By: /s/ XXXXX X. XXXXXXX By: /s/ XXXXXXX BLUE
-------------------- ----------------------------------
Xxxxx X. Xxxxxxx Xxxxxx Blue, Chairman of the Board
Secretary and Chief Executive Officer
SELLER:
SPECIALIZED MEDICAL MANAGEMENT,
INC.
Attest:
By: /s/ XX XXXXXX By: /s/ XXXXXX X. XXXXXXXX
-------------------- ----------------------------------------
Secretary Executive Vice President
SHAREHOLDER:
TEXAS HEALTH MANAGEMENT
SERVICES, INC.
Attest:
By: /s/ XXXXXXX XXXXXX By: /s/ XXXXXX X. XXXXXXXX
------------------------ ----------------------------------------
Secretary Xxxxxx X. Xxxxxxxx
Title: EXECUTIVE V.P./CFO
-------------------------------------
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