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EXHIBIT 2.8 ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of this 26th
day of March 1999, by and between SWEETWATER HEALTH ENTERPRISES, INC., a Texas
corporation (hereinafter referred to as "Buyer"), and HEALTHCARE CREDENTIALS
MANAGEMENT SERVICES, INC., a Delaware corporation (hereinafter referred to as
"Seller").
W I T N E S S E T H:
WHEREAS, Seller owns and is engaged in the business of providing
physician credentialing and verification services (all of which are sometimes
hereinafter collectively referred to as the "Services"); and
WHEREAS, Seller desires to sell, and Buyer desires to acquire certain
selected assets of Seller and all rights to continue the Services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, for valuable consideration paid and each and every
covenant and agreement as set forth below, and the performance thereof, it is
agreed by and between the parties as follows:
PURCHASE OF ASSETS.
1.1 ASSETS TO BE SOLD TO BUYER. Seller does hereby agree to sell,
assign and transfer to Buyer, and Buyer does hereby agree to purchase from
Seller for the consideration and upon the terms and conditions hereinafter set
forth, all as of the Effective Date (as hereinafter defined in Section 4.1
hereof), all the Seller's right, title and interest in and to the following
assets used in the business of or related to Seller's provision of the
Services (hereinafter sometimes referred to as the "Subject Assets"):
(A) Ongoing contracts and services to existing customer
accounts (hereinafter referred to as the "Customers," a list of which is set
forth on SCHEDULE 1.1(A) attached hereto and made a part hereof), work in
progress for Services and prospects of Seller for Services (collectively, the
"Transferred Business");
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(B) All of Seller's rights including copyrights, trade
names, trademarks (including all goodwill associated therewith), patents, and
other intangible assets, if any, used to provide Services to the Customers,
including without limitation those set forth on SCHEDULE 1.1(B) attached hereto
and made a part hereof. Seller hereby agrees to assign (to the extent
assignable) and transfer to Buyer all of its rights, if any, to any noncompete,
confidentiality and nondisclosure agreements with any employee associated with
the Transferred Business. Seller makes no representation or warranty as to the
enforceability or assignability of any such noncompete, confidentiality or
nondisclosure agreements;
(C) All electronic data processing equipment listed on
SCHEDULE 1.1(C)(I), operating supplies and other inventories used by Seller in
the Transferred Business on 31 January 1999, and/or located on any floors used
by Seller at the facility located at 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxxx (the "Service Center") as of 31 January 1999 (collectively, the
"Included Tangible Assets"), but excluding, without limitation, any furniture,
fixtures, telephone equipment, vehicles, machinery, spare parts and any items
not set forth on SCHEDULE 1.1(C)(I) (the "Excluded Tangible Assets");
(D) All right, title and interest of Seller in and to
any trade secrets, know-how, procedures, market information, surveys, other
proprietary information and other intangible assets relating to the Transferred
Business, including without limitation those items set forth on SCHEDULE
1.1(D), which include the Data and the Software (as those terms are therein
defined);
(E) All permits, licenses, listings, approvals and
authorizations by third parties or government authorities used or held by
Seller for the operation of the Transferred Business, to the extent they can be
assigned, transferred or conveyed to Buyer, including the telephone numbers
used to provide the Services, including without limitation those set forth on
SCHEDULE 1.1(E) attached hereto and made a part hereof;
(F) All copies of lists of subscribers and suppliers,
records and other data and information with respect to the Transferred Business
and Seller's subscribers and vendors files, litigation files for at least the
past three (3) years and other records used in connection with or required to
continue the Transferred Business as it is presently being conducted by Seller,
excluding records relating to tax matters, the corporate minute book and
shareholder records of Seller. With respect to any records retained by Seller
which were used in connection with the Transferred Business, Buyer shall be
entitled to inspect the same and obtain copies of (or originals if reasonably
requested by and necessary to Buyer and if Seller is provided with legible
copies) at reasonable times and locations and in the manner agreed to by Buyer
and Seller. Seller agrees either to retain all files with respect to the
Transferred Business for a period of at least six (6) years following closing
of this transaction, or, at Seller's option, to deliver such files to the Buyer
prior to such time. Buyer agrees to keep all transferred files and to make them
available for inspection for as long as may be required under Medicare or other
applicable government requirements or under Customer Contracts (as hereinafter
defined);
(G) Customer and sales correspondence files for all
Customers;
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(H) All of Seller's interest in and to software licenses
and software maintenance agreements applicable to the Transferred Business,
including, without limitation, those licenses and agreements listed on SCHEDULE
1.1(H) attached hereto and made a part hereof; and
(I) All of Seller's rights, interests and obligations
under those contracts with suppliers and vendors listed on SCHEDULE 1.1(I)
attached hereto and made a part hereof (collective, the "Vendor Contracts").
1.2 ASSETS TO BE RETAINED. Seller is not selling to Buyer any
marketable securities, life insurance cash surrender value, prepaid insurance
premiums, or insurance policies of any type or rights to any insurance coverage
under any of Seller's existing policies, or any assets not described in Section
1.1 above.
1.3 COVENANT NOT TO COMPETE.
(A) Seller, on its own behalf, agrees for a period of
three (3) years from the Effective Date, not to directly or indirectly provide
or offer to provide physician or other healthcare practitioner credentialing or
verification services for any third party (which are collectively hereinafter
referred to as "Restricted Services") to any present Customers wherever
located, or to any prospective customers within the United States of America
(which is hereinafter referred to as the "Restricted Area"); said restricted
services constitute a valuable and extensive trade of services within said
Restricted Area. The business connections, customers, procedures, techniques
and other aspects of said business have been established and maintained at
great expense, kept and protected as confidential information and are of great
value to Buyer and provide it with a substantial competitive advantage in
conducting said business. By virtue of Seller's prior knowledge by operating
its offices in the Restricted Area, Seller has been entrusted with the
knowledge and possession of secret and confidential information now crucial to
Buyer pertaining to the business procedures and operations, including, without
limitation, information relating to research, marketing, sales volume, number
and qualification of consultants, advisors and employees, programming and
formatting information, names of customers and information pertaining to
customer's needs, specifications and other criteria. Seller and Buyer agree
that, by virtue of Seller's unique knowledge of said business operation, Buyer
would suffer great loss and irreparable injury if Seller would use or disclose
the confidential information, use it in the solicitation of Buyer's customers
or employees or use it to unfairly compete with Buyer in such areas.
(B) Seller and Buyer agree that the terms and conditions
of this restrictive covenant are reasonable and necessary for the protection of
Buyer's business, trade secrets and confidential information and to prevent
damage or loss to Buyer as a result of actions taken by Seller. Seller
acknowledges that the business of Buyer is, or may fairly be, anticipated to
encompass the Restricted Area; the noncompete restrictions contained in this
Agreement are reasonable and the consideration provided herein to Seller to be
derived from the acquisition of
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the Subject Assets in the Restricted Area by Buyer is sufficient to fully and
adequately compensate Seller for agreeing to these reasonable restrictions.
(C) Seller further agrees that for a period of three (3)
years from the Effective Date, it shall not directly or indirectly, either as
an agent, partner, shareholder, consultant, lender, guarantor, or in any other
capacity, participate in, engage in or have a financial interest in, any
business which is engaged in the Restrictive Services competitive with that of
Buyer or any successors or assigns of Buyer in the Restricted Area. The
ownership of a minority interest (less than 5%) in a corporation or other
entity, even though such entity may be a competitor of Buyer, shall not be
deemed financial participation in a competitor so long as such investment is a
passive investment. Notwithstanding the foregoing, the ownership by Seller of
shares in Buyer, if any, regardless of amount, shall not be deemed financial
participation in a competitor.
(D) Seller further agrees that for a period of three (3)
years from the Effective Date it will not, directly or indirectly:
(i) Own (except as set forth in Section 1.3(c)
above), manage, operate, control, lend money, or guarantee borrowings, or so
participate in the ownership, management, operation, control, or financial
affairs, or be connected in any manner with any business which provides
services (other than consulting services of the type provided in the past by
affiliates of Seller), which are the Restricted Services offered by Buyer,
within the Restricted Area.
(ii) Canvass, solicit or accept any business, in
competition with the Restricted Services business of Buyer, or its parent
company, or either's subsidiaries or affiliates within the Restricted Area.
(iii) Request or advise any of the customers,
suppliers or other business contacts of Buyer within the Restricted Area to
transfer, withdraw, curtail or cancel their business with Buyer.
(iv) Induce (other than through general
advertising) or attempt to induce any employees, sales representatives,
consultants or other Buyer personnel to terminate their relationships or breach
their agreements with Buyer, and, specifically, not to employ any of Buyer's
personnel while employed or within four (4) months of their cessation of
employment with Buyer, without Buyer's prior written consent.
(v) Divulge, transmit or otherwise disclose or
cause to be divulged, transmitted or otherwise disclosed, or use any non-public
information acquired by Seller during the term of its existence, within the
Restricted Area while providing Restricted Services.
(vi) The noncompete covenants in Sections 1.2
and 1.3 constitute the only agreements, express or implied, by such parties not
to compete or not to solicit for Restricted Services in the Restricted Area. If
Buyer believes that Seller has breached this covenant, then it shall give
Seller written notice of the circumstances surrounding such alleged breach.
Seller shall then have five (5) days to cure such alleged
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breach. If such breach has occurred and is not cured within the allocated time
frame, Buyer shall be entitled to equitable relief, including but not limited
to injunctive relief, as well as money damages, and, specifically, if Buyer has
filed a civil complaint or formal injunctive action, then Buyer shall have the
right of set-off against any of Buyer's future payment obligations to Seller,
if any.
2. LIABILITIES.
2.1 ASSUMPTION OF LIABILITIES BY BUYER.
(A) It is specifically agreed and understood
by the parties that Buyer shall assume none of the Seller's current or
long-term liabilities other than: (i) ongoing obligations to provide Services
to the Customers pursuant to the Customer Contracts (as defined in Section 5.11
hereof), and (ii) those obligations set forth in the Vendor Contracts
(collectively, the "Assumed Liabilities").
(B) Buyer shall have no obligation to
offer employment to any of Seller's employees. Seller hereby agrees to
indemnify, defend and hold Buyer harmless from any claim, action, cause of
action, liability, damage or expense asserted against Buyer by any current or
former employee of Seller and caused by or arising out of Buyer not employing
or not offering to employ any of Seller's employees.
(C) For those of Seller's employees who may
be employed by Buyer, if any, (i) initial compensation, benefits, continued
employment and subsequent compensation and benefits shall be subject to the
benefit policies and employment practices of Buyer's parent, Medirisk, Inc.
("Medirisk") and shall be at the sole determination of Buyer, and (ii) Buyer
shall not be liable for any prior unused or untaken vacation or any other
benefits except those which become available as a result of such employees'
employment with Buyer.
2.2 INDEMNIFICATION AND LIMITATION OF LIABILITY.
(A) Seller shall defend, indemnify and hold
harmless Buyer against and in respect of:
(i) any and all losses, damages,
deficiency or liability resulting from (A) any misrepresentation, breach of
warranty or nonfulfillment of any agreement on the part of Seller under this
Agreement; (B) the failure of Seller to comply with any applicable laws
concerning bulk transfers; and (C) any obligation incurred by Seller prior to
the Effective Date which is not assumed by Buyer hereunder, including, without
limitation, any loss, damage, deficiency or liability arising out of any
collection activities of Seller or its agents or employees; and
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(ii) any and all assessments, judgments
and reasonable costs and expenses incident to any of the foregoing, excluding
in-house legal and accounting expenses, if any. (Each of the foregoing items
are sometimes hereinafter referred to as a "Buyer Loss.")
Provided that the indemnification procedures set forth elsewhere in this
Section 2.2 have been complied with by the Indemnified Party (as hereinafter
defined), Seller shall reimburse Buyer for any payments made by Buyer in
respect of any Buyer Loss to which the foregoing indemnity by Seller relates,
provided Buyer's demand for such reimbursement is made prior to two (2) years
after the Effective Date, and if Seller fails to reimburse Buyer for any
payments made by Buyer hereunder within thirty (30) days of notice from Buyer
to Seller, Buyer shall be entitled at its option, and as a nonexclusive remedy,
to setoff against any amounts which may become due to Seller under any future
payment obligations between the parties or otherwise, the amount of any such
liability, obligation or claim.
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(B) Buyer shall defend, indemnify and hold
harmless Seller against and in respect of:
(i) any and all loss, damage,
deficiency or liability resulting from (A) any misrepresentation, breach of
warranty or nonfulfillment of any agreement on the part of Buyer under this
Agreement; and (B) any failure by Buyer after the Effective Date to pay or
perform any liability or obligation of Seller which has been assumed by Buyer
pursuant to this Agreement or incurred by Buyer after the Effective Date; and
(ii) any and all assessments, judgments
and reasonable costs and expenses incident to any of the foregoing excluding
in-house legal and accounting expenses, if any. (Each of the foregoing items
are sometimes hereinafter referred to as a "Seller Loss;" the term "Loss" shall
mean a Buyer Loss or a Seller Loss, as the context requires.)
Buyer shall reimburse Seller for any payments made by Seller in respect of any
Seller Loss to which the foregoing indemnity by Buyer relates, provided
Seller's demand for such reimbursement is made prior to two (2) years after the
Effective Date, and Seller, as Indemnified Party, has complied with the
indemnification procedures set forth elsewhere in this Section 2.2.
(C) If any demand, claim or suit is asserted or
instituted with respect to which a party may be entitled to indemnification
under the foregoing provisions, such party (the "Indemnified Party") shall give
prompt notice thereof to the party or parties who may be liable for
indemnification (the "Indemnifying Party"), including full details to the
extent then known. The Indemnifying Party shall thereafter undertake the
defense of the claim at its cost and expense. The Indemnified Party shall be
entitled at its own expense to participate in the defense of such asserted
demand, claim or suit. The Indemnified Party shall reasonably cooperate with
the Indemnifying Party.
(D) Any proposed settlement of any such demand,
claim or suit must be approved by each of the Indemnifying Party and the
Indemnified Party. If the Indemnifying Party favors any proposed settlement of
any such demand, claim or suit and the Indemnified Party does not favor such
settlement, then upon tender by the Indemnifying Party of sums sufficient to
pay such settlement (which may be in the form of a bond), the Indemnifying
Party shall be relieved of all further responsibility in connection therewith,
and the Indemnified Party shall be permitted to continue the defense thereof.
The parties agree to cooperate in good faith in the defense or settlement of
any such demand, claim or suit.
(E) No Indemnifying Party shall be obligated
to pay any liability asserted against such Indemnifying Party hereunder until
such time, if ever, as the aggregate amount of Losses (other than Losses with
respect to Litigation (as defined in Section 5.5 hereof), Taxes (as defined in
Section 5.13 hereof), Y2K (as defined in Section 5.15 hereof) or Software
Ownership (as defined in SCHEDULE 1.1(D) hereof)) incurred or suffered by the
Indemnified Party exceeds $50,000.00, in which event the Indemnifying Party
shall be liable for all the Losses (other than Losses with respect to
Litigation, Xxxxx, X0X or Software Ownership) against which the Indemnifying
Party has given an indemnity, regardless of the amount of the Loss or whether
the
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amount of such Loss (other than Losses with respect to Litigation, Xxxxx, X0X
or Software Ownership) had theretofore been included in the $50,000.00 amount
referred to above. Notwithstanding anything in the foregoing to the contrary,
the Indemnifying Party shall be liable for all Losses with respect to
Litigation, Xxxxx, X0X or Software Ownership against which the Indemnifying
Party has given indemnity without regard to the amount of the Loss, and without
limitation as to when a claim is filed against the Indemnified Party with
respect thereto, or when the Indemnified Party makes any claim for
reimbursement against the Indemnifying Party. In no event shall the
indemnification obligation of an Indemnifying Party hereunder exceed Two
Million and No/100 ($2,000,000.00) Dollars in the aggregate; provided, however,
that such limitation shall not apply to Software Ownership.
(F) In no event shall either party hereunder be
liable to the other for special, incidental, consequential or punitive damages.
2.3 EXCLUSIVE REMEDY. The parties agree that their
respective indemnification obligations set forth in this Section 2 shall be
their respective sole and exclusive remedy with respect to a breach of any
provision of this Agreement.
3. PURCHASE CONSIDERATION.
3.1 INITIAL CONSIDERATION. In consideration of this
Agreement and the transfer of the Subject Assets, Buyer will pay Seller the
amount of Four Million and No/100 ($4,000,000.00) Dollars (hereinafter referred
to as the "Initial Consideration"), payable in immediately available funds at
Closing.
3.2 ADDITIONAL CONSIDERATION.
(A) As further consideration for this
Agreement and the transfer of the Subject Assets, Buyer shall also pay to
Seller, with respect to the one (1) year period commencing upon the Effective
Date and terminating upon the first anniversary thereof (the "Additional
Consideration Period"), an amount equal to:
(i) the product resulting from multiplying:
(A) the amount of Applicable Revenues (as hereinafter
defined) in excess of $1,000,000.00 (such excess amount not to exceed
$650,000.00); by
(B) eighty (80%) percent; plus
(ii) the product resulting from multiplying:
(A) the amount of Applicable Revenues in excess of
$1,650,000.00; by
(B) seventy-five (75%) percent.
(The foregoing total amount is hereinafter referred to as "Additional
Consideration.")
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For purposes of this Agreement, the term "Applicable Revenues" shall refer to
(y) the total revenues recordable, regardless of source, during the Additional
Consideration Period, with respect only to licenses and/or sales of Seller's
"HCOL," "appSTAT," "In-File" products (including custom queries) or any
replacement products therefor, and (z) which are in fact collected by or on
behalf of Buyer during the Additional Consideration Period or within ninety
(90) days thereafter. By way of explanation and not of limitation, if
Applicable Revenues were $1,300,000.00, then Seller would receive Additional
Consideration of $240,000.00 [($1,300,000.00 - $1,000,000.00) x 0.80 =
$300,000.00 x 0.80 = $240,000.00] while if Applicable Revenues were
$2,400,000.00, then Seller would receive Additional Consideration of
$1,082,500.00 [([$2,400,000.00 - $1,650,000.00] x 0.75) + ([$1,650,000.00 -
$1,000,000.00] x 0.80) = ($750,000.00 x 0.75) + ($650,000.00 x 0.80) =
$562,500.00 + $520,000.00 = $1,082,500.00].
(B) The Additional Consideration shall be
payable to Seller at one time in a lump sum not more than one hundred twenty
(120) days after the close of the Additional Consideration Period. Buyer shall
provide Seller with quarterly reports concerning Applicable Revenues during the
Additional Consideration Period.
(C) Seller shall have the option, at its sole
cost and expense, to audit Buyer's pertinent financial records no more than
once each year during the Additional Consideration Period and for one (1) year
thereafter to ensure that Buyer is satisfying its obligation to pay such
royalties. If Seller's audit shows that Buyer's payments of Additional
Consideration are more than five (5%) percent less than what they should have
been, Buyer shall pay Seller the cost of Seller's audit, plus the unpaid
Additional Consideration and interest thereon calculated at the rate of ten
(10%) percent per annum from the original due date through the date of payment.
(D) For purposes of this Agreement, the term
"Purchase Price" shall refer to the total Initial Consideration and the
Additional Consideration paid hereunder.
4. CLOSING.
4.1 PLACE, TIME AND ACTIONS REQUIRED. Subject to the
satisfaction of those conditions set forth in Section 8 hereof, without
limitation, the sales and purchases provided for in Section 1 shall be
consummated effective on 31 March 1999 (the "Effective Date") at a closing (the
"Closing") to be held on a date mutually agreeable to Buyer and Seller (the
"Closing Date"), but not later than 31 March 1999, at the offices of Buyer's
parent, Medirisk, Inc., Two Xxxxxxxx Xxxxxx, Xxxxx 000, 3565 Piedmont Road,
N.E., Atlanta, Georgia. At or prior to the Closing and on the condition that
Buyer has paid the Initial Consideration to be paid at Closing and has
otherwise complied with all Buyer's conditions to Closing outlined herein,
Seller will deliver to Buyer:
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(A) At Seller's cost, instruments of transfer,
assignment and conveyance, bills of sale and other instruments in form and
substance satisfactory to Buyer sufficient to convey, transfer, and assign to
Buyer all right, title and interest in and to the Subject Assets to be
purchased hereunder;
(B) In tangible medium, the source code for the
Software and all documentation, user guides and training manuals then in
existence with respect thereto;
(C) All required consents to assignment of the
Vendor Contracts;
(D) Certified copies of the resolutions, which
have been duly adopted by the Board of Directors and sole shareholder of
Seller, and which shall be in full force and effect at the time of delivery,
authorizing the execution and delivery of this Agreement and the Related
Agreements (as hereinafter defined) and the consummation of the transactions
provided for herein;
(E) Documents in forms acceptable to Buyer
necessary to effectuate the change of Seller's corporate names to names that
are dissimilar to its present names, or to Buyer's name, and that do not
contain the words "healthcare" or "credential" in good form for filing in the
offices of appropriate government officials, including the States of Delaware
and Georgia, as required;
(F) The originals of all Customer Contracts;
and
(G) An original of Seller's counsel's legal
opinion referenced in Section 8.1(d) hereof.
4.2 SALES/TRANSFER TAXES. Buyer will pay all sales and
use taxes, if any, due upon the transfer of the Subject Assets to Buyer. Seller
shall pay when due, prorated as of the Effective Date, all state and local,
personal property taxes assessed on the assets of Seller transferred to Buyer
hereunder; provided, however, that if any such payment made by Seller covers
any period after the Effective Date, Buyer shall promptly pay Seller the pro
rata amount paid with respect to such period.
4.3 FURTHER ASSURANCES. Seller shall, from time to
time, at Buyer's request, whether at or after the Closing and without further
consideration, promptly execute and deliver to Buyer such other and further
documents, information, instruments of sale, transfer, conveyance and
assignment as Buyer may reasonably request to effectuate the terms of this
Agreement (collectively, the "Related Agreements").
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5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represent and warrant to Buyer that:
5.1 ORGANIZATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business in, and is in good standing,
under the laws of the State of Georgia. Seller has full power and authority
(corporate and otherwise) to own its properties and to carry on its businesses
as now being conducted by it and is qualified to do business and is in good
standing in each jurisdiction in which the nature of its businesses makes such
qualification necessary, except where the failure to qualify would not have a
Material Adverse Effect (as hereinafter defined).
5.2 AUTHORIZATION. The execution, delivery and
performance of this Agreement by the Seller has been duly authorized by all
necessary corporate action of the Seller and this Agreement constitutes the
valid and binding obligation of the Seller enforceable against it in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law.)
5.3 CONSENTS OF THIRD PARTIES. Except for any and all
conflicts, breaches, terminations, accelerations, defaults, violations and
creations specified in (I) clauses (b) through (d) below that would not have a
material adverse effect upon the assets herein being transferred as a whole (a
"Material Adverse Effect"), or (II) clauses (b) and (e) below with respect to
the assignability of the Customer Contracts, the execution, delivery and
performance of this Agreement by the Seller will not (a) violate or conflict
with the certificate of incorporation or bylaws of the Seller; (b) require any
consent or approval under, conflict with, result in the breach, termination or
acceleration of, or constitute a default under, any lease, agreement,
commitment or other instrument to which the Seller is a party or by which the
Seller or any of its properties are bound; (c) constitute a violation of any
law, regulation, order, writ, judgment, injunction or decree applicable to the
Seller or any of its properties; (d) result in the creation of any Lien upon
the properties or assets herein transferred; or (e) have any impact on Buyer's
right to conduct the Transferred Business as currently being conducted by the
Seller.
5.4 ABSENCE OF CERTAIN CHANGES. Since 31 January 1999:
(a) the Seller has operated its business in the ordinary and usual course; (b)
there has not been any change in the business, financial condition or results
of operations of the Seller that has had or will have a Material Adverse
Effect; (c) there has not been any damage, destruction or loss (whether or not
covered by insurance) to the Subject Assets that has had or could reasonably be
expected to have a Material Adverse Effect; (d) no Customer, other than as
listed on SCHEDULE 5.4(D), has cancelled, discontinued, or given written or
verbal notice of its intention to cancel, discontinue or substantially reduce
its applicable service with Seller which would have an adverse effect upon its
business; and (e) except as otherwise set forth on SCHEDULE 5.4(E)(I) hereto,
the Seller is not in default and, to the best knowledge of the Seller, no
Customer is in default, under any Customer Contract, and each such contract
(whether written agreement or outstanding purchase orders) is
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in full force and effect on the date hereof and such Customer Contracts contain
no material changes in the standard form of agreement and specifically no
deviation in warranties or limitation of Seller's liability other than as
listed on SCHEDULE 5.4(E)(II).
5.5 LITIGATION; COMPLIANCE WITH LAW
(A) Except as set forth on SCHEDULE 5.5(A),
there is no judicial or administrative action, proceeding or investigation
pending or, to the best of the knowledge of the Seller, threatened, that
questions the validity of this Agreement or any action taken or to be taken by
the Seller in connection with this Agreement. There is no litigation,
proceeding or governmental investigation pending or, to the best of the
knowledge of the Seller, threatened, or any order, injunction or decree
outstanding against the Seller that, if adversely determined, would
individually or in the aggregate have a Material Adverse Effect (all of the
foregoing hereinafter collectively referred to as "Litigation").
(B) The Seller is not in violation of any
applicable law, regulation, ordinance or other requirement of any governmental
body or court, which violations in the aggregate would have a Material Adverse
Effect, and no written notice has been received by the Seller alleging any such
violations, which violations in the aggregate would have a Material Adverse
Effect.
(C) Seller, through its collectors,
service representatives, salespersons, any other employee or otherwise, has
complied with all applicable collection, credit reporting, licensing and other
laws and regulations governing the provision of the Services. Seller agrees
that it will be solely responsible for responding to and resolving any
disputes, claims or complaints arising out of actions taken by either its
employees or agents prior to the Effective Date.
5.6 OPTIONS TO PURCHASE. Seller does not currently have
outstanding any options, rights to purchase, contracts, or any other right
entitling anyone to acquire any of the Subject Assets or the Transferred
Business except as otherwise expressly contemplated herein.
5.7 GOOD TITLE. Except for those liabilities set forth
in SCHEDULE 5.7, Seller owns, and on the Closing Date will be the owner of, and
has, and on the Closing Date will have, good and marketable title to all of the
Subject Assets, tangible or intangible, including, without limitation, the
Included Tangible Assets, free and clear of all liens, mortgages, pledges,
encumbrances, income taxes, withholding taxes, employment taxes, sales taxes
and property taxes. Items on SCHEDULE 5.7 shall be paid and discharged by
Seller at or prior to Closing. The Included Tangible Assets will on the
Effective Date be, in all material respects, in reasonable repair and in
satisfactory operating condition for their intended usages, and will constitute
all of the tangible assets necessary to allow Buyer to conduct the Transferred
Business as it is currently conducted by Seller.
5.8 SOFTWARE LICENSES AND MAINTENANCE AGREEMENTS.
SCHEDULE 1.1(H) contains a complete list of all software licenses and
maintenance agreements applicable to the Transferred Business.
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5.9 RENTAL AND LEASE AGREEMENTS. SCHEDULE 5.9 contains
a complete list of all rental and lease agreements for realty and/or personalty
applicable to the Transferred Business.
5.10 BOOKS AND RECORDS. All books, records and other
financial information, if any, provided or to be provided by Seller to Buyer
are true and correct, and accurately reflect the existence of the Subject
Assets and the results of operations of the Transferred Business for the
periods of time therein stated, and such books, records and financial
information reflect revenues and income from the Transferred Business, and not
from other sources, unless expressly disclosed to Buyer.
5.11 COPIES OF AGREEMENTS. True, accurate and complete
copies of all agreements, contracts or standing purchase orders for Services
between Seller and the Customers (collectively, the "Customer Contracts") have
been provided to Buyer.
5.12 DISCHARGE OF ENCUMBRANCES. Seller will make financial
arrangements to satisfy any claim with respect to any failure to satisfy
applicable bulk sales regulations as they relate to notice, accounting and
payment of debts and liabilities in the State of Georgia with respect to the
transfer of the Subject Assets, including full indemnification of Buyer. In
addition to other general indemnification provisions provided hereunder to
Buyer, Seller specifically agrees to fully indemnify and hold Buyer harmless
(including attorneys' fees), even if the law does not so require, if any claim
is asserted by any third party against Buyer as the result of Seller's failure
to comply or complete its payment obligations resulting in a verifiable claim
or lien upon the Subject Assets, which indemnification shall be accomplished
by Seller's payment within thirty (30) days to such third party after written
notice by Buyer to Seller of such claim or lien or by delivery of a bond or
letter of credit to Buyer, issued by a financial institution reasonably
acceptable to Buyer, to guarantee Seller's performance hereunder for the
benefit of Buyer. In the event Buyer seeks such indemnification from Seller,
Buyer shall comply with the provisions set forth in Section 2.2(c) hereof
dealing with notice and the opportunity of Seller to defend. However,
notwithstanding the foregoing, if the debt is not discharged by Seller or the
bond or letter of credit issued to Buyer within the thirty (30) days required
above, then, at Buyer's option, such indemnification may be accomplished
either by an offset of any such amounts against future obligations payable to
Seller by Buyer or, immediately upon request by Buyer to Seller, by a payment
from Seller to Buyer of immediately available funds sufficient to satisfy such
claim or lien. If Buyer elects to offset such third party claims against
future obligations to Seller, such payment amount to third party claimants by
Buyer shall bear interest at the prevailing prime rate of NationsBank, N.A.,
Atlanta, Georgia, or any successor thereto, until such amount plus interest
shall actually be offset against payments due to Seller.
5.13 TAXES. All Taxes (as hereinafter defined) to which
the Subject Assets or the Transferred Business are subject which are due and
payable prior to the Effective Date shall have been paid to date. Any such
amounts owed by Seller subsequently discovered and assessed against Buyer shall
be promptly paid by Seller. Seller has no other outstanding tax obligations or
tax disputes, whether federal, state or local, which will result in any lien or
charge on the Subject Assets or the Transferred Business or result in any cost
or liability of Buyer except for current
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property, income, withholding, employment or sales tax obligations accruing
(but not due or payable) on or prior to the Effective Date. Seller shall pay
all such tax obligations when due. For purposes of this Agreement, the term
"Taxes" means all taxes, assessments, charges, duties, fees, levies or other
governmental charges, including all federal, state, local or other income,
unitary, business, franchise, capital stock, real property, personal property,
intangible taxes, withholding, FICA, unemployment compensation, disability,
transfer, sales, use, excise and other taxes, assessments, charges, duties,
fees, or levies of any kind whatsoever (whether or not requiring the filing of
returns), and all deficiency assessments, additions to tax, penalties and
interest.
5.14 MISSTATEMENTS OR OMISSIONS OF MATERIAL FACTS. No
representation or warranty by Seller in this Agreement (including the Schedules
attached hereto), nor any other certificate or document furnished by Seller,
contains or will contain as of the date hereof or as of the Closing Date any
untrue statement of a material fact, or omits or will omit to state as of the
date hereof or as of the Closing Date a material fact necessary to make the
statements contained herein or therein not misleading, and if discovered such
untrue statement or omission can result in termination of this Agreement by
Buyer without any further liability to Seller.
5.15 YEAR 2000 WARRANTY. Except as set forth below with
respect to the appSTAT software, Seller disclaims any representation or
warranty that any of the Software is Y2K Compliant (as hereinafter defined).
SCHEDULE 5.15 sets forth a nonexclusive listing of the year 2000 deficiencies
of the Software. Except as set forth on SCHEDULE 5.15, Seller hereby represents
and warrants that the appSTAT software is Y2K Compliant; provided, however,
that Seller makes no warranty with respect to any third-party software that the
appSTAT software may require in order to operate properly. Seller further
warrants and represents that, to the extent that the HCOL software is not Y2K
Compliant, the total out-of-pocket expense to third-party vendors that might be
incurred by Buyer to make HCOL Y2K Compliant before 31 December 1999 shall not
exceed $400,000.00 in the aggregate, assuming that (i) such compliance efforts
commence not later than 1 July 1999, and (ii) such efforts are continuing and
diligent until completed. For purposes of this Agreement, software is deemed to
be "Y2K Compliant" if the century change to the year 2000 is supported in the
logic and data of such software, such that when a date on or after 1 January
2000 is either processed, entered into or is intended to be generated as a
result of the operation of such software, such software will not fail or
otherwise produce incorrect results. Buyer agrees that if it determines to
proceed with making HCOL Y2K Compliant, it shall so notify Seller not later
than 1 July 1999 and shall provide Seller a copy of its detailed project plan
(including estimated costs, which shall not include overhead, and estimated
timetable) to make HCOL Y2K Compliant. Further, Buyer agrees to accept Seller's
input as to the content and implementation of the plan and will provide
sufficient information to Seller to enable it to monitor the project's status
until completion, including the opportunity to meet with vendors. (For purposes
of Section 2.2 hereof, all of the foregoing is hereinafter collectively
referred to as "Y2K.")
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6. REPRESENTATIONS AND WARRANTIES OF BUYER.
6.1 EXISTENCE AND POWER. Buyer is a corporation validly
existing and in good standing under the laws of the State of Texas, and has the
full corporate power and authority to enter into and perform this Agreement.
6.2 AUTHORIZATION. The execution, delivery and
performance of this Agreement by the Buyer have been duly authorized by all
necessary corporate action of the Buyer and this Agreement constitutes the
valid and binding obligation of the Buyer enforceable against it in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law.)
6.3 CONSENTS OF THIRD PARTIES. Except for conflicts,
breaches, terminations, accelerations, defaults and violations specified in
clauses (b) and (c) below that could not reasonably be expected to have a
material adverse effect on the Buyer's ability to perform its obligations under
this Agreement, the execution, delivery and performance of this Agreement by
the Buyer will not (a) violate or conflict with the certificate of
incorporation or bylaws of the Buyer; (b) require any consent or approval or
conflict with, or result in the breach, termination or acceleration of, or
constitute a default under, any lease, agreement, commitment or other
instrument to which the Buyer is a party or by which it or its properties are
bound; or (c) constitute a violation of any law, regulation, order, writ,
judgment, injunction or decree applicable to the Buyer or any of its
properties.
7. CONDUCT OF SELLER PENDING CLOSING DATE OR EFFECTIVE DATE.
7.1 MAINTAIN BUSINESS. From the date hereof until the
Closing Date or Effective Date (whichever shall later occur), Seller shall:
(a) make no distributions of Subject Assets to be purchased by Buyer to
anyone, (b) conduct the operations of the Transferred Business in the ordinary
course of business, (c) keep and maintain the properties and facilities of the
Transferred Business in good condition, repair and working order, reasonable
wear and tear excepted, and fully insured for liability and property damages,
(d) use its best efforts to preserve intact the Transferred Business, (e) use
its best efforts to retain the service of its employees, agents and
consultants involved with the Transferred Business on terms and conditions not
less favorable than those existing prior to the execution hereof, (f)
cooperate with Buyer's representatives (without disclosure of this Agreement
or contemplated sale to Seller's employees, suppliers or Customers) in
reviewing facts and establishing and implementing procedures necessary to
effect the sale of the Subject Assets contemplated herein, (g) conduct its
activities in a manner consistent with this Agreement, (h) not enter into,
assume or make any contract, loan, license, designation, loan commitment,
purchase, sale or disposition of assets of the Seller not in the ordinary
course of business, (i) not declare dividends for any shareholder, and (j)
promptly advise Buyer in writing of any adverse material change in its
financial condition or business affairs.
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7.2 DISCLOSURE OF TRANSACTION. Except as required by the
laws of the United States, including regulations of the Securities and Exchange
Commission, neither Seller nor any officer, director, employee, agent or
representative of Seller shall furnish, either directly or indirectly, any term
of this Agreement, not otherwise publicly announced, to any third party, nor
shall Seller or any officer, director, employee or representative acting on
behalf of Seller, from the date hereof through the Closing Date or Effective
Date (whichever shall later occur), permit Seller or any of its officers,
directors, agents or representatives to make, solicit or initiate proposals or
offers for (i) any business combination or restructuring involving Seller, or
the purchase, sale, lease or other disposition of any of Seller's assets or
business, however structured or to be effected, other than transactions in the
ordinary course of business involving assets which, in the aggregate, are not
material, or (ii) the issuance, purchase, sale or other disposition of any
shares of capital stock of Seller. Seller further agrees that neither it nor
any of its officers, directors, agents or representatives acting on its behalf
during such period will, or will permit Seller or any of its officers,
directors, agents or representatives to, negotiate with any party other than
Buyer or its subsidiaries, or provide information in furtherance of any such
proposal or offer. Except as required by the laws of the United States,
including the regulations of the Securities and Exchange Commission, neither
Buyer, nor any officer or director of Buyer, or agent of Buyer, shall disclose
the existence of this Agreement or the contemplated sale, or any term or
provision or covenant contained herein to the general public, or to any of
Seller's employees, officers, customers, or suppliers, or to any other third
party prior to the Closing Date.
8. CONDITIONS.
8.1 CONDITIONS TO BE SATISFIED BY SELLER. The obligation
of Buyer to consummate and effect the Closing provided for herein shall be
subject to the following conditions:
(A) The representations and warranties of
Seller set forth in Section 5 shall be true as of the Closing Date or Effective
Date (whichever shall later occur), and Seller shall have performed all
obligations required hereby to be performed by it prior to the Closing Date or
Effective Date (whichever shall later occur).
(B) The Subject Assets will be transferred to
Buyer free and clear of all leases, liens, or other financial security
interests. Buyer shall not assume any liability for any lines of credit or
other financial arrangements concerning the Subject Assets. Seller shall have
obtained consent agreements satisfactory to Buyer providing for assignment and
transfer of Seller's rights in all software licenses and maintenance
agreements, leases, and rental agreements to be assigned, applicable to the
Subject Assets and listed on SCHEDULES 1.1(H) or 1.1(I).
(C) Buyer shall have been afforded the
opportunity to make or cause to be made such investigation of the Transferred
Business and its financial and legal condition as its deems necessary or
advisable to familiarize itself therewith. Seller shall have permitted the
Buyer and its authorized representatives to have or caused to it to be
permitted to have full access to the premises, books and records of Seller, and
the officers of the Seller shall have furnished Buyer with such financial and
operating data with respect to the Transferred Business.
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(D) Buyer shall have received from counsel for
Seller (which may be Seller's in-house counsel) an opinion to the effect that
(i) Seller is duly organized and existing and in good standing in the State of
Delaware and is duly qualified to do business in and is in good standing in the
State of Georgia, (ii) the sale of Seller's assets and property pursuant to
this Agreement will not result in the material violation of, or limit Buyer's
right to control the purchased assets through any law, rule, regulation, order,
judgment or decree to which the Seller or its property is subject, (iii) the
sale of Seller's assets and property pursuant to the Agreement does not give
rise to any dissenter's rights or rights of appraisal in any of Seller's
shareholders, (iv) that Seller has full power and authority to sell the
property and assets to be conveyed and assigned under this Agreement, (v) that
as of the Closing Date there are no liens or encumbrances against such property
and assets, (vi) that all corporate proceedings required to be taken by Seller
to authorize it to enter into this Agreement and any other instrument
evidencing such conveyance and assignment and to perform its obligations
hereunder have been duly and properly taken, and (vii) this Agreement and any
other such instrument are binding obligations of Seller enforceable against
Seller in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
(E) Buyer and Seller shall have entered into a
Management Transition Agreement, upon terms mutually acceptable to the parties,
pursuant to which Seller will provide certain management and transition
services to Buyer as set forth therein.
(F) Seller's performance of its obligations
under this Agreement shall have been guaranteed by Seller's parent, MMI
Companies, Inc. (the "Guarantor"), pursuant to a Guaranty Agreement
substantially in accordance with the form attached hereto as EXHIBIT 8.1(F)
(the "Guaranty Agreement"), and counsel for the Guarantor (which may be
Guarantor's in-house counsel) shall have opined to the Buyer, in form
satisfactory to the Buyer, that the Guaranty Agreement is in full force and
effect.
8.2 CONDITIONS TO BE SATISFIED BY BUYER.
(A) The obligations of Seller to consummate
and effect the Closing provided for herein shall be subject to the condition
that the representations and warranties of Buyer set forth in Section 6 shall
be true as of the Closing Date, and Buyer shall have performed all obligations
required hereby to be performed by it prior to the Closing Date.
(B) Buyer shall have entered into a License
Agreement to license the object code of the appSTAT Software to Seller's
affiliate American Continental Insurance Company ("ACIC") upon terms mutually
acceptable to Buyer and ACIC.
9. REAL ESTATE LEASES[FACILITY AND LEASES. Buyer shall assume no
obligations for any real estate leases.
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10. SURVIVABILITY. All the terms and provisions of this Agreement
shall survive the Closing for a period of two (2) years unless a longer period
is otherwise specified herein or otherwise mutually agreed to by the parties.
11. ARBITRATION[ARBITRATION. Any controversy or claim arising out
of, or relating to, this Agreement, or the making, performance, or
interpretation of it, shall be settled by arbitration in Atlanta, Georgia in
accordance with the rules of the American Arbitration Association then
existing, and judgment on the arbitration award may be entered in any court
having jurisdiction over the subject matter of the controversy; provided,
however, that punitive damages may not be awarded in such arbitration.
12. BINDING EFFECT AND BENEFIT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective heirs and
permitted successors and assigns.
13. MISCELLANEOUS.
13.1 NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by
either party to the other party pursuant to this Agreement shall be in writing
and shall be hand delivered (including delivery by courier so long as a receipt
or confirmation of delivery is obtained), sent by Federal Express or other
recognized overnight delivery service, mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
facsimile transmission (followed by delivery of the original of such document),
addressed as set forth on the signature page of this Agreement. Either party
hereto may designate by notice, in the manner herein above provided, a new
address to which any notice, demand, request or communication may thereafter be
so given, served or sent. Each notice, demand, request or communication which
shall be mailed, delivered, or transmitted in the manner described above shall
be deemed sufficiently given, served, sent and received for all purposes at
such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, the affidavit of messenger or (with respect to a facsimile
transmission) the answer back being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation; provided, however, that notices sent by mail shall be deemed
received on the third business day following the date such notice is deposited
in the mail.
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If to Buyer: If to Seller:
Sweetwater Health Enterprises, Inc. Healthcare Credentials Management
c/o Medirisk, Inc. Services, Inc.
Two Piedmont Center, Suite 400 c/o MMI Companies, Inc.
0000 Xxxxxxxx Xxxx, X.X. 000 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000 Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Legal Department Attention: Legal Department
Fax: (000) 000-0000 Fax: (000) 000-0000
13.2 ENTIRE AGREEMENT. This Agreement is the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings. The headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
13.3 GOVERNING LAW. This Agreement shall be governed by
and construed under the laws of the State of Georgia.
13.4 CONFIDENTIALITY. Seller and Buyer will hold and will
cause their consultants and advisers to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of their counsel, by other requirements of law, all documents and information
concerning the other party furnished to them by the other party or their
representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(i) previously known by the other party, (ii) in the public domain through no
fault of the other party, or (iii) later lawfully acquired from other sources
by the other party, and neither party will release or disclose such information
to any other person, except its auditors, attorneys, financial advisers,
bankers and other consultants and advisers in connection with this Agreement.
If the transactions contemplated by this Agreement are not consummated, such
confidence will be maintained except to the extent that such information comes
into the public domain through no fault of either party and such information
shall not be used to the detriment of, or in relation to any investment in,
either corporation and all such documents (including copies thereof) shall be
returned to proper owner immediately on the request of either party. Both
parties shall be deemed to have satisfied their obligations to hold
confidential information concerning or supplied by the other party if it
exercise the same care as it take to preserve confidentiality for their own
similar information.
13.5 ASSIGNMENT. This Agreement shall not be assigned by
either party without the express written consent of the other party; provided,
however, that Buyer may assign its respective rights and obligations hereunder
to any respective affiliate thereof without obtaining the consent of Seller,
provided further that Buyer shall give Seller notice of such assignment.
13.6 EXPENSES. Each of the parties hereto shall pay all
of its own costs, fees and expenses relating to the acquisition, incurred prior
to the Closing Date, including, but not limited to, costs of negotiations,
brokers' and finders' fees, legal and accounting fees and other
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expenses. Each of the parties represent to the other that no broker or other
third party brought about this sale and no commission or fee is due to any
third party as a result of this Agreement or sale. Each party agrees to
indemnify and hold the other harmless with respect to any claims for same,
including reasonable attorneys' fees.
13.7 SEVERABILITY. The parties agree that construction of
this Agreement shall be in favor of its reasonable nature, legality and
enforceability, and that any construction causing unenforceability shall yield
to a construction permitting enforceability. It is agreed that the
noncompetition, nonsolicitation, nondisclosure and nonhiring covenants and
provisions of this Agreement are severable, and that if any single covenant or
provision or multiple covenants or provisions should be found unenforceable,
the entire Agreement and remaining covenants and provisions shall not fail but
shall be construed and enforceable without any severed covenant or provision in
accordance with the tenor of this Agreement. The parties specifically agree
that no covenant or provision of this Agreement shall be invalidated because of
overbreadth insofar as the parties acknowledge the scope of the covenants and
provisions contained herein to be reasonable and necessary for the protection
of Buyer and not unduly restrictive upon Seller. However, should a court or any
other trier of fact or law determine not to enforce any covenant or provision
of this Agreement as written due to overbreadth, then the parties agree that
said covenant or provision shall be enforced to the extent reasonable, with the
court or such trier to make any necessary revisions to said covenant or
provision to permit its enforceability, whether said revisions be in time,
territory, or scope of prohibited activities.
14. NAME USAGE. Seller agrees that it will not use after
the Effective Date the name "Healthcare Credentials Management Services, Inc."
or any derivation thereof and that while Buyer does not require it to dissolve
the existing corporation, unless so required by state law or other state or
federal law or regulation as determined by its counsel, it may maintain the
current corporation only so long as it fully complies with all state and other
regulatory authorities and take steps to change the corporation's name within
sixty (60) days following the Effective Date. Such new name shall have no
relationship to "Healthcare Credentials Management Services, Inc." so as to be
confusing or misleading to the existing and future customers, prospects, and
clients of Seller and Buyer. However, in addition to other general
indemnification provisions provided hereunder to Buyer, Seller specifically
agrees to fully indemnify and hold Buyer harmless, including attorneys' fees,
if Buyer is required to defend or make payment to Seller's creditors as the
result of Seller's failure to comply with such requirements. Seller shall
promptly and adequately address all financial obligations and make adequate
provisions for all debts and liabilities of Seller and Seller and the assets
being sold hereunder. Seller's duty to indemnify Buyer is conditioned upon
Buyer's written notification to Seller of any alleged claim being made against
Buyer (as Indemnified Party), with such notification to be in compliance with
the indemnification procedures set forth in Section 2.2 hereof. Seller shall
have the right to contest, compromise and/or defend any claim.
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[Document Continued On Next Page]
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IN WITNESS WHEREOF, Buyer and Seller have duly executed and delivered
this Agreement under seal as of the date and year first above written.
BUYER: SELLER:
SWEETWATER HEALTH HEALTHCARE
CREDENTIALS MANAGEMENT
ENTERPRISES, INC. SERVICES, INC.
By: By:
----------------------- ---------------------
Title: Title:
----------------------- ---------------------
[CORPORATE SEAL] [CORPORATE SEAL]
23
MASTER EXHIBIT AND SCHEDULE LIST
EXHIBIT 8.1(F) - Form of Guaranty Agreement
SCHEDULE 1.1(A) - Customer List
SCHEDULE 1.1(B) - Trade Names and Trademarks
SCHEDULE 1.1(C)(I) - Included Tangible Assets
SCHEDULE 1.1(D) - Proprietary Information and Software
SCHEDULE 1.1(E) - Permits, Licenses, Listings, Approvals &
Authorizations
SCHEDULE 1.1(H) - Software License & Maintenance Agreements
SCHEDULE 1.1(I) - Vendor Contracts
SCHEDULE 5.4(D) - Cancelled Customers
SCHEDULE 5.4(E)(I) - Defaults by Seller or Customers on Customer
Contracts
SCHEDULE 5.4(E)(II) - Deviations in Customer Contracts
SCHEDULE 5.5(A) - Litigation
SCHEDULE 5.7 - Encumbrances on Title
SCHEDULE 5.15 - Y2K-Compatibility Insufficiencies in Software
24
EXHIBIT 8.1(F)
FORM OF GUARANTY AGREEMENT
CORPORATE GUARANTY
IN CONSIDERATION OF the entering into of that certain Asset Purchase
Agreement (the "Agreement") of even date herewith between SWEETWATER HEALTH
ENTERPRISES, INC. ("Guarantee") and HEALTHCARE CREDENTIALS MANAGEMENT SERVICES,
INC., a wholly-owned subsidiary of Guarantor ("Subsidiary"), the undersigned,
MMI COMPANIES, INC., a Delaware corporation ("Guarantor"), hereby agrees with
Guarantee as follows:
1. Guarantor hereby guarantees that all sums stated in the
Agreement to be payable by Subsidiary to Guarantee will be promptly paid in
full when due, in accordance with the provisions thereof and that Subsidiary
will perform and observe each and every covenant, agreement and condition in
the Agreement to be performed and observed by Subsidiary during the term
thereof. Upon Subsidiary's failure to so pay, perform or observe, Guarantor
will promptly pay, perform or observe the same or cause the same promptly to be
paid, performed or observed, as the case may be. Except as set forth in Section
2(b) hereof, this Guaranty shall remain in full force and effect until the
earlier to occur of the termination of the Agreement or such time as Guarantor
no longer owns a controlling interest in Subsidiary; provided, however, that
Guarantor shall remain liable to Guarantee for any unsatisfied obligation which
arises hereunder during such effective time of this Guaranty.
2. The obligations and agreements of Guarantor hereunder shall
in no way be affected or impaired by reason of the happening from time to time
of any of the following events, regardless of whether or not Guarantor has
received notice of, or further consented to, such events:
(A) The extension of the time for payment by Subsidiary or
Guarantor of any sums owing or payable under the Agreement or
this Guaranty;
(B) The modification or amendment of any of the obligations of
Subsidiary or the Guarantor under the Agreement or this
Guaranty;
(C) Any failure or delay on the part of Guarantee to enforce or
exercise any right, power or remedy available to Guarantee in
the Agreement or this Guaranty, or any action on the part of
Guarantee granting indulgence or extension in any form;
(D) The voluntary or involuntary liquidation, dissolution,
marshalling of assets and liabilities, receivership,
conservatorship, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceeding
affecting, Subsidiary or any of its assets; or
Exhibit 8.1(f)
Page 1 of 2
25
(E) The transfer of title to the assets which are the subject of
the Agreement by Guarantee.
3. Notice of acceptance of this Guaranty and notice of any
obligations, liabilities or defaults contracted for or incurred by Subsidiary
are hereby waived by Guarantor.
4. This Guaranty may not be modified or amended except by a
written agreement duly executed by Guarantor and Guarantee.
5. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Georgia.
6. The liabilities and obligations of Guarantor hereunder are
primary and are enforceable against Guarantor either before, simultaneously
with or after proceeding against Subsidiary or against any property or security
available to Guarantee.
7. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective heirs, successors and
assigns.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the 26th day of March 1999.
MMI COMPANIES, INC.
By:
------------------------
Title:
------------------------
Attest:
------------------------
Title:
------------------------
[CORPORATE SEAL]
Exhibit 8.1(f)
Page 2 of 2
26
SCHEDULE 1.1(D)
PROPRIETARY INFORMATION AND SOFTWARE
The term "Data" shall collectively refer to all databases of Seller.
The term "Software" shall collectively refer to the following software
programs created by Seller and known respectively as:
- appSTAT
- CAPS
- HCOL
- PCS
Buyer is buying all ownership rights of Seller in and to the Software.
At Closing Seller will deliver to Buyer the source code for the Software and
will not retain a copy of such source code. Neither Seller nor ACIC will have
any rights to continued usage of the Software except as set forth in the
separate license agreement for the object code of the appSTAT software
referenced in Section 8.2(b) of the Agreement.
Seller hereby represents and warrants that the development and/or
creation of the Software was done entirely by the employees of Seller or its
affiliates with no contribution from outside consultants, or, in the case of
Software developed by outside parties, that such software is wholly-owned by
Seller and is freely transferable to Buyer without the consent of any third
party. (For purposes of Section 2.2 hereof, all of this representation and
warranty is hereinafter collectively referred to as "Software Ownership.")
27
SCHEDULE 1.1(I)
VENDOR CONTRACTS
Consulting Agreement dated September 26, 1997, Letter of Agreement to Proceed
dated February 10, 1999 and Letter Agreement dated March 8, 1999 with
Renaissance Interactive
-4-
