TERMINATION AGREEMENT
TERMINATION AGREEMENT (the "Agreement") made as of this 1st
day of July, 1999, by and among HealthCore Medical Solutions, Inc., a Delaware
corporation ("HealthCore"), and those shareholders of HealthCore who have
executed this Agreement on the signature page hereof (each a "Participating
Escrow Shareholder", and collectively, the "Participating Escrow Shareholders").
W I T N E S S E T H:
WHEREAS, HealthCore and the Participating Escrow Shareholders
are parties to that certain Amended and Restated Escrow Agreement (the "Escrow
Agreement"), dated as of July 31, 1997, among HealthCore, the Participating
Escrow Shareholders, the other stockholders of HealthCore who are signatories to
the Escrow Agreement (collectively, the "Non-Participating Escrow Shareholders"
and, together with the Participating Escrow Shareholders, collectively, the
"Escrow Shareholders") and American Stock Transfer & Trust Company (the "Escrow
Agent"), pursuant to which certain of the shares of Common Stock of HealthCore
(collectively, the "HealthCore Common Stock") owned beneficially and of record
by the Escrow Shareholders (such shares being collectively referred to as the
"Escrow Shares") are held in escrow; and
WHEREAS, HealthCore is a party to that certain Agreement and
Plan of Merger, dated July 1, 1999, between HealthCore and Adatom, Inc.
("Adatom"), a California corporation, which contemplates, among other things,
the merger of Adatom with and into HealthCore (the "Merger"); and
WHEREAS, in connection with the Merger, and subject to the
terms and conditions of this Agreement, HealthCore and the Participating Escrow
Shareholders desire to terminate the Escrow Agreement as to each Participating
Escrow Shareholder, and, in connection therewith, cancel four (4) Escrow Shares
for every five (5) Escrow Shares (i.e., eighty (80%) percent of the Escrow
Shares) owned beneficially and of record by each of the Participating Escrow
Shareholders (the remaining shares held by the Participating Escrow Shareholders
following such cancellation being collectively referred to as the "Released
Shares"); and
WHEREAS, the affirmative vote of the holders of two-thirds
(2/3) of the outstanding shares of HealthCore Common Stock entitled to vote with
respect to the adoption and approval of this Agreement and the transactions
contemplated hereby, excluding the vote of the shares of HealthCore Common Stock
held by the Participating Escrow Shareholders (such vote being the "Required
Stockholder Vote") is required to, among other things, terminate the Escrow
Agreement.
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NOW, THEREFORE, HealthCore and the Participating Escrow Shareholders
hereby agree as follows:
ARTICLE 1
SURRENDER OF SHARES;
TERMINATION OF ESCROW AGREEMENT; GRANT OF PROXIES
1.1 Surrender of Shares. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
contained herein, on the Termination Closing Date (as defined in Section 5.1
hereof), the number of Escrow Shares set forth opposite each Participating
Escrow Shareholder's name on Schedule 1.1 hereto, constituting eighty (80%)
percent of the Escrow Shares owned beneficially and of record by such
Participating Escrow Shareholder, shall be and be deemed cancelled, without the
necessity of any further action on the part of the Participating Escrow
Shareholder, and such Participating Escrow Shareholders shall have no rights of
any kind or nature in or to such Escrow Shares.
1.2 Termination of Escrow Agreement.
(a) Notwithstanding anything in the Escrow Agreement to the
contrary, and subject to HealthCore's receipt of the Required Stockholder Vote,
on the Termination Closing Date the Escrow Agreement shall be deemed terminated,
and of no further force or effect, with respect to the Participating Escrow
Shareholders, only, and all of the Released Shares shall be distributed to
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the Participating Escrow Shareholders, without the restrictive legend described
in Section 9(a) of the Escrow Agreement that is currently contained on the
certificates representing the Escrow Shares shall be deleted. By the execution
of this Agreement, each Participating Escrow Shareholder authorizes and directs
the Escrow Agent under the Escrow Agreement to deliver all certificates for the
Escrow Shares to HealthCore, at a location in New York City specified by
HealthCore upon receipt from HealthCore of a letter verifying that the Required
Stockholder Vote has been obtained. Upon its receipt thereof, HealthCore shall,
within ten (10) business days thereafter, deliver to each Participating Escrow
Shareholders the number of Released Shares to which such Participating Escrow
Shareholder is entitled as more particularly set forth on Schedule 1.1 hereto.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement shall be binding upon, and shall inure to the benefit of only
those parties who have executed this Agreement. The Non-Participating Escrow
Shareholders shall have no rights, of any kind or nature, under this Agreement,
and such Non-Participating Escrow Shareholders and the shares of HealthCore
Common Stock owned by the Non-Participating Escrow Shareholders that are held in
escrow, shall remain subject to the all of terms and conditions of the Escrow
Agreement.
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1.3 Grant of Proxies. Contemporaneously with the execution hereof, each
of the Participating Escrow Shareholders shall execute and deliver to HealthCore
an irrevocable proxy (collectively, the "Voting Proxies") appointing Xxxx X.
Xxxxx ("Xxxxx"), the Chairman of the Board and Chief Executive Officer of
HealthCore, as proxy to vote all of the shares of HealthCore Common Stock owned
beneficially and of record by such Participating Escrow Shareholder, including,
without limitation, the Released Shares, for a period expiring on the earliest
of (a) the first date by which both (i) the closing of the transactions
contemplated by the Merger Agreement shall have occurred ("Merger Closing"), and
(ii) HealthCore shall have received the Required Stockholder Vote, (b) the
termination of the agreements contained in the Merger Agreement, and (c) with
respect to those shares of HealthCore Common Stock other than the Escrow Shares
sold by the Participating Escrow Shareholders, HealthCore's receipt of notice of
the consummation of the sale of such shares of HealthCore Common Stock.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF PARTICIPATING ESCROW SHAREHOLDERS
Each Participating Escrow Shareholder represents and warrants to
HealthCore as follows:
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2.1 Authority. Such Participating Escrow Shareholder has the right,
power, authority and legal capacity to enter into and perform such Participating
Escrow Shareholder's obligations under this Agreement and to consummate the
transactions contemplated hereby to be performed by such Participating Escrow
Shareholder, and this Agreement has been duly executed and delivered by such
Participating Escrow Shareholder and is a valid and binding agreement of such
Participating Escrow Shareholder enforceable against such Participating Escrow
Shareholder in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies.
2.2 Title to the Escrow Shares. Such Participating Escrow Shareholder
owns, beneficially and of record, the number of Escrow Shares set opposite the
name of such Participating Escrow Shareholder on Schedule 1.1, free and clear of
any and all liens, claims or encumbrances, of any kind or nature, and upon
delivery to HealthCore of the certificate or certificates evidencing such Escrow
Shares, duly endorsed for transfer to HealthCore, HealthCore will acquire good,
valid, indefeasible and marketable title thereto, free and clear of any and all
liens, claims or encumbrances, of any kind or nature.
2.3 Examination of Documents. HealthCore has delivered to such
Participating Escrow Shareholder, and such Participating Escrow Shareholder has
examined, the Annual Report of Form 10-KSB of HealthCore for the fiscal year
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ended September 30, 1998 (the "1998 Form 10-KSB"), HealthCore's Quarterly Report
on Form 10-QSB for each of the quarters ended December 31, 1998 and March 31,
1999, including the financial statements contained therein, and HealthCore's
Current Report on Form 8-K, filed with SEC on July 9, together with the exhibits
thereto, and has had the opportunity to discuss HealthCore's operations with
HealthCore's officers and employees.
2.4 Acknowledgment. Each of the Participating Escrow Shareholders
acknowledges that in the event the Merger is not consummated, and HealthCore
continued its current business activities as more particularly described in
HealthCore's most recent 10QSB, it is highly unlikely as of the date hereof that
the conditions in the Escrow Agreement for release of the Escrow Shares would be
satisfied prior to the last possible date for the attainment thereof, and thus
each Participating Escrow Shareholder may be required to forfeit all of his or
her Escrow Shares pursuant to the terms of the Escrow Agreement. Each
Participating Escrow Shareholder further acknowledges that, in light of the
foregoing, he or she carefully considered whether or not to enter into this
Agreement and has concluded that to do so is prudent and provides the best
opportunity at this time to realize ownership of even a portion of the Escrow
Shares.
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ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF HEALTHCORE
HealthCore represents and warrants to the Participating Escrow
Shareholders as follows:
3.1 Authority. The Board of Directors of HealthCore has unanimously
approved this Agreement and the transactions contemplated hereby. The Required
Stockholder Vote is the only vote of the holders of any class or series of the
capital stock of HealthCore necessary to approve this Agreement and the
transactions contemplated hereby, and HealthCore has all other requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by HealthCore
and constitutes a valid and binding obligation of HealthCore enforceable against
HealthCore in accordance with its terms, subject to HealthCore's receipt of the
Required Stockholder Vote.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Conditions to Obligations of HealthCore. The obligations of
HealthCore hereunder are conditioned upon the following:
(a) HealthCore shall have received the Required Stockholder Vote;
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(b) The Merger and the transactions contemplated thereby shall
have been consummated by September 30, 1999, or such later date as HealthCore
and Adatom shall have agreed to in writing;
(c) All warranties and representations of the Participating
Escrow Shareholders contained in this Agreement or in any schedule or instrument
delivered hereunder or otherwise made in connection with the transactions
contemplated hereby shall be true and correct, on and as of the Termination
Closing Date, with the same force and effect as if made on and as of the
Termination Closing Date;
(d) The Participating Escrow Shareholders shall have performed
and complied with all of the covenants and agreements required by or pursuant to
this Agreement, and any schedule or instrument delivered hereunder, to be
performed or complied with on or prior to the Termination Closing Date; and
(e) All documents delivered and action taken pursuant hereto
shall be satisfactory in form and substance to HealthCore and its counsel.
4.2 Conditions to Obligations of the Participating Escrow Shareholders.
The obligations of the Participating Escrow Shareholders hereunder are
conditioned upon the following:
(a) All warranties and representations of HealthCore contained in
this Agreement shall be true and correct on and as of the Termination
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Closing Date with the same force and effect as if made on and as of the
Termination Closing Date.
(b) HealthCore shall have performed and complied with all of the
covenants and agreements required by or pursuant to this Agreement, and any
schedule or instrument delivered hereunder, to be performed or complied with on
or prior to the Termination Closing Date.
ARTICLE 5
CLOSING; DELIVERIES
5.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Termination Closing") shall be deemed to occur on the first date
by which both (i) the Merger Closing shall have occurred, and (ii) HealthCore
shall have received the Required Stockholder Vote (such date being the
"Termination Closing Date").
5.2 Deliveries by the Participating Escrow Shareholders.
(a) Contemporaneously with the execution hereof, the
Participating Escrow Shareholders shall deliver to HealthCore the Voting Proxies
more particularly described in Section 1.2 hereof.
(b) At the Termination Closing, the Participating Escrow
Shareholders shall deliver to HealthCore, in accordance with terms of Section
1.2(a) hereof, Certificates representing the Escrow Shares, ; and
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5.3 Deliveries of HealthCore. At the Termination Closing, HealthCore
shall have no items to deliver to the Participating Escrow Shareholders.
ARTICLE 6
SURVIVAL AND INDEMNIFICATION
6.1 Survival. The representations and warranties contained herein shall
survive the Termination Closing for a period six (6) months following the
Termination Closing Date.
6.2 Indemnification of HealthCore and Participating Escrow
Shareholders.
(a) Indemnification by Participating Escrow Shareholders. The
Participating Escrow Shareholders hereby agree to indemnify and hold harmless
HealthCore from and against any and all losses, liabilities, damages,
obligations, costs and expenses, including, without limitation, amounts paid in
settlement and reasonable costs and expenses of investigating, preparing to
defend and defending any claim, action, suit, proceeding, inquiry or
investigation in respect thereof (such losses, liabilities, damages,
obligations, costs and expenses as hereinabove set forth, collectively
"Damages") resulting from, relating to, or arising out of the inaccuracy of any
representation or warranty herein by such Participating Escrow Shareholder or
the breach of any covenant herein by such Participating Escrow Shareholder.
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(b) Indemnification by HealthCore. HealthCore hereby agrees to
indemnify and hold harmless the Participating Escrow Shareholders from and
against any and all Damages incurred by the Participating Escrow Shareholders
resulting from, relating to, or arising out of the inaccuracy of any
representation or warranty herein by HealthCore or the breach of any covenant
contained herein by HealthCore.
(c) Procedure. If any action, suit, proceeding or claim shall be
brought against the party to be indemnified by any third party, which action,
suit, proceeding or claim, if determined adversely to the interest of the party
to be indemnified and which would entitle the party to be indemnified to
indemnity pursuant to this Section 6.2, the party to be indemnified shall
promptly notify the indemnifying party of the same in writing and, if the
indemnifying party so elects, the indemnifying party shall assume the defense
thereof, including the employment of counsel satisfactory to the party to be
indemnified and the payment of all reasonable costs and expenses in respect
thereof. The party to be indemnified shall have the right to employ counsel
separate from any counsel employed by the indemnifying party in any action,
suit, proceeding or claim and to control (or, if the party to be indemnified has
elected to allow the indemnifying party to assume the defense thereof,
participate in) the defense thereof and the fees and expenses of such counsel
employed by the party to be indemnified shall be at the expense of the party to
be indemnified. The indemnifying party shall not
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be liable for any settlement of any such action, suit, proceeding or claim
effected without his or its written consent (which shall not be unreasonably
withheld), but if settled with the written consent of the indemnifying party, or
if there shall be a final judgment for plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless the party to be
indemnified from and against any loss, liability, obligation, damage, cost or
expense by reason of such settlement or judgment.
6.3 Hold Harmless; Indemnification of Xxxxx. Polan shall have no
liability of any kind or nature to the parties hereto in connection with the
exercise of the rights granted to Polan pursuant to the Voting Proxies, and the
parties hereto, jointly and severally, shall indemnify, defend and hold harmless
Polan from and against any and all Damages arising out of or in connection with
the exercise of the rights granted to Polan pursuant to the Voting Proxies.
ARTICLE 7
TERMINATION
7.1 Termination. Unless otherwise agreed to by HealthCore and all of
the Participating Escrow Shareholders, in writing, this Agreement shall
terminate and be of no further force or effect immediately upon the termination
of the agreements contained in the Merger Agreement.
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ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a writing signed by HealthCore and the Participating
Escrow Shareholders.
8.2 Waiver of Compliance. Any failure of HealthCore or the
Participating Escrow Shareholders to comply with any obligation, covenant,
agreement or condition herein contained may be expressly waived, in writing
only, by (i) HealthCore in the case of any failure of the Participating Escrow
Shareholders, or (ii) the Participating Escrow Shareholders in the case of any
failure of HealthCore. Such waiver shall be effective only in the specific
instance and for the specific purpose for which made or given.
8.3 Expenses. The parties hereto shall each pay their own respective
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement. The foregoing shall not be construed as limiting
any other rights which any party may have as a result of misrepresentation of or
breach by any other party.
8.4 Further Assurance. HealthCore and each Participating Escrow
Shareholder agree to cooperate and execute all documents required to effectuate
the transactions contemplated hereby and to perform all actions as reasonably
may be required thereby. Without limiting the generality of the
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foregoing, HealthCore and each of the Participating Escrow Shareholders agrees
to execute and deliver any and all such documents and instruments as may be
required by the Escrow Agent in connection with the termination of the Escrow
Agreement and the release and delivery of the Escrow Shares.
8.5 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or when mailed by certified or
registered mail (return receipt requested), postage prepaid or when delivered by
fax (evidenced by confirmation of successful transmission), as follows:
A. If to HealthCore:
HealthCore Medical Solutions, Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxx Xxxxx, Chief Executive Officer
Facsimile: (000) 000-0000
B. If to the Participating Escrow Shareholders, to the
address set forth under each such Participating
Escrow Shareholder's name on Schedule 1.1 hereto,
of, if not included thereon, the address designated
by notice to HealthCore.
or to such other person or place as the parties may designate by notice in the
manner provided in this Section 8.4.
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8.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of HealthCore and its respective successors and assigns, and to the
Participating Escrow Shareholders and their respective heirs, executors,
administrators and personal representatives, but neither this Agreement nor any
of the rights, interests and obligations hereunder shall be assigned by any of
HealthCore or the Participating Escrow Shareholders without the prior written
consent of the other parties.
8.7 Third Parties. This Agreement is not intended to and shall not be
construed to give any person other than the parties hereto any interest or
rights (including, without limitation, any third party beneficiary rights) with
respect to or in connection with any agreement or provision contained herein or
contemplated hereby.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
8.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
8.10 Headings. The headings of the sections, schedules and articles of
this Agreement are inserted for the sake of convenience only and shall not
constitute a part hereof.
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8.11 Entire Agreement. This Agreement, including the schedules and
exhibits, contains the entire understanding of the parties in respect of the
subject matter contained herein and therein and there are no other terms or
conditions, representations or warranties, written or oral, express or implied,
except as set forth herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
HEALTHCORE MEDICAL
SOLUTIONS, INC.
By: /s/ Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx, Chairman and
CEO
/s/ Xxxx X. Xxxxx
---------------------------------------------
Xxxx X. Xxxxx
Xxxx X. Xxxxx
---------------------------------------------
Xxxx X. Xxxxx, as Custodian for Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxx
---------------------------------------------
Xxxxx Xxxxx, as Attorney-In-Fact For
Xxxxxxxx X. Xxxxx, Xx.
/s/ Xxx X. Xxxxxxx
---------------------------------------------
Xxx X. Xxxxxxx
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/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx, Trustee under the
Xxxxxx X. Xxxxxx Revocable Trust
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxxx X. Xxxxxx, Trustee under the
Xxxxxxxx X. Xxxxxx Revocable Trust
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxxxx Trustee under the
Xxxxxxx X. Xxxxxxxx Revocable Trust
/s/ Xxxx X. Xxxxxxxx
---------------------------------------------
Xxxx X. Xxxxxxxx, Trustee under the
Xxxxxxx X. Xxxxxxxx Revocable Trust
/s/ Xxxxxx Xxxxxx
---------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
---------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx XxXxxxxxxx
---------------------------------------------
Xxxxxx XxXxxxxxxx
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/s/ Xxxxxx Xxxxxxx
---------------------------------------------
1164 Associates
/s/ Xxxxxxx Xxxxx
---------------------------------------------
Xxxxxxx Xxxxx
Acknowledged and Agreed
as of the Merger Closing
ADATOM, INC.
By: /s/ Xxxxxxx Xxxxxx Date: 9/19/99
----------------------------------- -----------------
Xxxxxxx Xxxxxx, President
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