X-XXXX.XXX, INC.
One Xxxxx Square
000 X. 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
September 22, 2000
iSummit Partners, LLC
d/b/a MyFamilyMD
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, MD, Chairman
Re: Contribution and Exchange Agreement
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Gentlemen:
Reference is made to the Contribution and Exchange Agreement
("Exchange Agreement") dated as of the date hereof, by and among X-Xxxx.xxx,
Inc., a Delaware corporation ("I-trax"), and I-trax, Inc., a wholly owned
subsidiary of I-trax (the "Holding Company"), on the one hand, and Xxxxxx
Xxxxxxx, A. Xxxxx Xxxxxxx, and Granton Marketing Nederland BV (collectively, the
"Members"), and iSummit Partners, LLC, a New York limited liability company
(d/b/a MyFamilyMD) ("MyFamilyMD"), on the other hand. Capitalized terms used
herein and not otherwise defined herein shall have the meaning given to such
terms in the Exchange Agreement.
Reference is also made to the Intellectual Property Letter
Agreement ("Intellectual Property Agreement") dated as of August 30, 2000 by and
between I-trax and MyFamilyMD and to the Financial Statements of MyFamilyMD
attached to Section 6(g) of the Disclosure Schedule and certain matters that are
disclosed in such Financial Statements.
In connection with the execution today of the Exchange
Agreement and notwithstanding anything to the contrary contained therein, the
Parties, intending to be legally bound, hereby acknowledge and agree as follows
with respect to the matters covered specifically herein:
1. Liabilities of MyFamilyMD. The Members, as a condition to
Closing, shall satisfy, severally in accordance with their Membership
Percentage, on behalf of MyFamilyMD all liabilities (including all accounts
payable and accrued expenses) incurred prior to or as of the Closing Date on the
earlier of: (x) the applicable due date and (y) the Closing Date. In the event
the Members fail to satisfy such liabilities in accordance with this Paragraph
1, such liabilities shall be accounted for pursuant to Paragraph 4 below.
2. Liabilities Paid or Reimbursed by I-trax.
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(a) Notwithstanding Paragraph 1 above, I-trax,
as a condition to Closing, shall satisfy on behalf of MyFamilyMD, or shall
reimburse MyFamilyMD for, the following liabilities of MyFamilyMD incurred after
August 1, 2000 or applicable for the period after August 1, 2000: (i) rent for
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the premises occupied by MyFamilyMD at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx,
Xxx Xxxx 00000-0000 (the "Premises"), (ii) cost of electricity, electricity to
operate the air conditioning, telephone and heat for the Premises, and (iii) any
other cost and expense approved by Xxxx Xxxxx, the Chief Operating Officer of
I-trax.
(b) For purposes hereof, "approval by Xxxx
Xxxxx" shall mean a submission to Xx. Xxxxx of a written request related to the
proposed or incurred expenses and obtaining a signature of Xx. Xxxxx on such
written request, a procedure currently utilized by I-trax with respect to any
expenses incurred by I-trax and its employees.
3. Liabilities Incurred on Account of MyFamilyMD Employees. As
of August 16, 2000 certain employees of MyFamilyMD were hired as employees of
I-trax. In connection with such employment and notwithstanding Paragraph 1
above, I-trax shall satisfy on behalf of MyFamilyMD or I-trax, as the case may
be, the following liabilities incurred after August 16, 2000 and related to such
employees: (i) health insurance, including dental, short and long term
disability, life and accidental death and dismemberment, (ii) federal, state and
local taxes, and (iii) workers' compensation insurance, and state and federal
unemployment insurance.
4. Closing Date Balance Sheet.
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(a) Within 30 days after the Closing Date,
I-trax will prepare and deliver to the Members a draft balance sheet (the "Draft
Closing Date Balance Sheet") for MyFamilyMD as of the close of business on the
Closing Date. I-trax will prepare the Draft Closing Date Balance Sheet in
accordance with GAAP applied on a basis consistent with the preparation of the
Financial Statements; provided, however, that assets, liabilities, gains,
losses, revenues, and expenses in interim periods or as of dates other than
year-end (which normally are determined through the application of so-called
interim accounting conventions or procedures) will be determined, for purposes
of the Draft Closing Date Balance Sheet, through full application of the
procedures used in preparing the most recent audited balance sheet included
within the Financial Statements.
(b) If the Members have any objections to the
Draft Closing Date Balance Sheet, they will deliver a detailed statement
describing their objections to I-trax within 20 days after receiving the Draft
Closing Date Balance Sheet. I-trax and the Members will use reasonable efforts
to resolve any such objections themselves. If the Parties do not obtain a final
resolution within 10 days after I-trax has received the statement of objections,
however, any remaining objection will be resolved by I-trax's auditing firm, if
it is a "Big Five" auditing firm. If I-trax's auditing firm is not a "Big Five"
auditing firm, I-trax and the Members will select a neutral "Big Five"
accounting firm mutually acceptable to them to resolve such remaining
objections. The determination of any accounting firm so selected will be set
forth in writing and will be conclusive and binding upon the Parties. I-trax
will revise the Draft Closing Date Balance Sheet as appropriate to reflect the
resolution of any objections thereto pursuant to this Paragraph 4. The "Closing
Date Balance Sheet" shall mean the Draft Closing Date Balance Sheet together
with any revisions thereto pursuant to this Paragraph 4.
(c) In the event the Parties submit any
unresolved objections to an I-trax's auditing firm or any other accounting firm
for resolution as provided in Paragraph 4(b) above, I-trax, on the one hand, and
the Members, on the other hand, will each pay 50% of such firm's fees and
expenses.
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5. Repayment of Liabilities of MyFamilyMD. In the event that
the current liabilities and, if any, long-term liabilities reflected on the
Closing Date Balance Sheet (as such liabilities may be reduced on account of
liabilities assumed by I-trax pursuant to Paragraphs 2 or 3 above) are greater
than cash reflected on the Closing Date Balance Sheet, the Members shall within
10 days of receipt of the Closing Date Balance Sheet deliver to I-trax in cash,
by wire transfer, certified check, or bank cashier's check, an amount equal to
(the "Adjustment Amount"): (a) current liabilities and, if any, long-term
liabilities reflected on the Closing Date Balance Sheet (as such liabilities may
be reduced on account of liabilities assumed by I-trax pursuant to Paragraphs 2
or 3 above), minus (b) cash. In the event the Members do not pay the Adjustment
Amount as required hereunder, the Adjustment Amount shall be deemed an Adverse
Consequence under the Exchange Agreement; provided, however, that
notwithstanding the last sentence of Section 10(f) of the Exchange Agreement,
each Escrow Share shall be valued at $1.00 and, accordingly, I-trax shall be
entitled to receive a number of Escrow Shares equal to (x) the Adjustment
Amount, divided by (y) $1.00.
6. E&Y Matters. The Members shall, prior to the earlier to
occur of (the "Target Date"): (x) the Closing Date and (y) October 22, 2000,
settle any Liability of the Members and/or MyFamilyMD to Ernst & Young LLP, and
its successors, assigns and their Affiliates (collectively, "E&Y"), including,
without limitations, under or pursuant to that certain Ernst & Young LLP Second
Bridge Agreement, dated April 6, 2000, between E&Y and MyFamilyMD, and obtain a
release from any such Liability in form and substance reasonably satisfactory to
I-trax. If such settlement is not achieved prior to the Target Date, I-trax, as
a successor in interest to MyFamilyMD under the Exchange Agreement or as the
licensee of the Existing Intellectual Property (as defined in the Intellectual
Property Agreement) and the owner of New Intellectual Property (as defined in
the Intellectual Property Agreement), shall settle any such Liability and the
amount so paid in settlement (the "Settlement Amount"): (x) shall be repaid by
the Members to MyFamilyMD (A) at Closing or (B) if I-trax shall settle any such
Liability after the Closing Date, within 10 days of such settlement, or (y) if
the Closing does not occur and the Exchange Agreement is terminated, shall be
deducted by I-trax from the Purchase Price (as defined in the Intellectual
Property Agreement) payable by I-trax to MyFamilyMD pursuant to the Intellectual
Property Agreement). In the event the Members do not pay the Settlement Amount
as required pursuant to subsection (x)(B) of the preceding sentence, the
Settlement Amount shall be deemed an Adverse Consequence under the Exchange
Agreement; provided, however, that notwithstanding the last sentence of Section
10(f) of the Exchange Agreement, each Escrow Share shall be valued at $1.00 and,
accordingly, I-trax shall be entitled to receive a number of Escrow Shares equal
to (x) the Settlement Amount, divided by (y) $1.00.
This Letter Agreement shall be governed by and construed under
the laws of the Commonwealth of Pennsylvania, without regard to principals of
conflict of laws and rules of such state. This Letter Agreement may be executed
in one or more counterparts, all of which taken together shall constitute one
instrument.
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If this Letter Agreement is acceptable to MyFamilyMD and the
Members, please signify in the space provided below.
Sincerely,
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
Chief Operating Officer
Accepted and Agreed to:
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Chairman
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A. Xxxxx Xxxxxxx
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A. Xxxxx Xxxxxxx
Granton Marketing Nederland BV
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name:
Title:
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