Exhibit 99.1
MERGER AGREEMENT
dated as of December 19, 2002
among
PS PURCHASE CORP.,
MEDIX RESOURCES, INC.,
POCKETSCRIPT, LLC,
and
XXXXXXX X. XXXXX
MERGER AGREEMENT dated as of December 19, 2002 (this "Agreement"), among
(i) POCKETSCRIPT, LLC, an Ohio limited liability company (the "Company"), (ii)
MEDIX RESOURCES, INC., a Colorado corporation ("Medix"), (iii) PS Purchase
Corp., a Delaware corporation (the "Merger Sub"), and a wholly-owned subsidiary
of Medix, and (iii) XXXXXXX X. XXXXX, ("Xxxxx " or the "Representative").
W I T N E S S E T H:
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WHEREAS, the parties to this Agreement desire to effect a strategic
business combination;
WHEREAS, Xxxxx owns approximately 25% of the issued and outstanding Units
(as hereinafter defined) of the Company;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to the
conditions of this Agreement and in accordance with Chapter 1705 of the Ohio
Revised Code (the "Ohio Statute"), the Merger Sub will merge with and into the
Company in accordance with the provisions of the Ohio Statute, with the Company
as the surviving corporation;
WHEREAS, the Board of Directors of Medix and the sole Manager of the
Company has approved and determined that this Agreement, and the transactions
contemplated herein, including the Merger (as hereinafter defined), are
advisable, fair to, and in the best interests of, their respective corporations
and stockholders; and
WHEREAS, the Board of Directors of Medix and the sole Manager of the
Company has resolved to recommend adoption and approval of the Merger, this
Agreement and the transactions contemplated herein to the stockholders of Medix
and the members of the Company (the "Members"), respectively, and has determined
that the Merger, this Agreement, and the transactions contemplated hereby are
fair to such stockholders or Members, as the case may be, and to recommend that
the stockholders of Medix and the Members, approve and adopt the Merger, this
Agreement and the transactions contemplated herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
General
Section 1.1. The Merger.
Upon the terms and subject to the conditions of this Agreement, and in
accordance with the Ohio Statute and the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as hereinafter defined), the Merger Sub shall be
merged with and into the Company (the "Merger"). As a result of the Merger, the
separate existence of the Merger Sub shall cease and the Company shall continue
as the surviving corporation of the Merger (the "Surviving Corporation"). The
corporate existence of the Company, with all its purposes, rights, privileges,
franchises, powers and objects, shall continue unaffected and unimpaired by the
Merger and, as the Surviving Corporation, it shall be governed by the laws of
the State of Ohio.
Section 1.2. Effective Time; Closing.
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Articles VII, VIII and IX hereof, the parties hereto
shall cause the Merger to be consummated by filing the Certificate of Merger
with the Secretary of State of the State of Ohio and by making all other filings
or recordings required under the Ohio Statute and the DGCL in connection with
the Merger, in such form as is required by, and executed in accordance with the
relevant provisions of, the Ohio Statute or such other applicable Law. The date
and time when the Merger shall become effective is hereinafter referred to as
the "Effective Time". The closing of the Merger and the transactions
contemplated hereby (the "Closing") shall be held at 10:00 a.m., local time, at
the offices of Moses & Singer LLP, located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, on a date mutually agreed to by the parties hereto (the
"Closing Date").
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of the Ohio Statute. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all of the property,
rights, privileges, powers and franchises of the Company and the Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and the Merger
Sub shall become the debts, liabilities, obligations, restrictions, disabilities
and duties of the Surviving Corporation.
Section 1.3. Articles of Organization.
The Certificate of Merger shall provide that the Articles of Organization
of the Company as amended and restated as set forth in such Certificate of
Merger shall become the Articles of Organization of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law or such Articles of Organization.
Section 1.4. Operating Agreement.
The Certificate of Merger shall provide that the Operating Agreement of the
Company in effect immediately prior to the Effective Time shall become the
Operating Agreement of the Surviving Corporation, until the same shall
thereafter be altered, amended or repealed in accordance with applicable law,
the Articles of Organization of the Surviving Corporation or such Operating
Agreement.
Section 1.5. Directors, Managers and Officers.
The Certificate of Merger shall provide that from and after the Effective
Time, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of the Merger Sub at the Effective Time
shall become the Managers of the Surviving Corporation, and (ii) the officers of
the Merger Sub at the Effective Time shall become the officers of the Surviving
Corporation.
Section 1.6. Taking of Necessary Action; Further Assurances.
Prior to the Effective Time, and subject to the terms and conditions
provided herein, the parties hereto shall take, or cause to be taken (as the
case may be), all such action as may be necessary or appropriate in order to
effectuate the Merger as provided in this Agreement as expeditiously as
reasonably practicable.
ARTICLE II.
Effect of Merger on Capital Stock
Section 2.1. Merger Consideration
Subject to adjustment pursuant to Article III and the Contingent Payments
(as hereinafter defined) upon the attainment of certain Qualifying Events (as
hereinafter defined) pursuant to Article IV below, the initial consideration
(the "Initial Merger Consideration") payable in the Merger with respect to all
voting units and non-voting Units issued and outstanding at the Effective Time
and all securities convertible into or exercisable or exchangeable for Units of
the Company shall be Twelve Million (12,000,000) shares (subject to adjustment
as provided in Section 3.2 hereof) of Medix common stock, $.001 par value per
share (the "Common Stock"). The Initial Merger Consideration together with the
Contingent Payments are hereinafter referred to as the "Merger Consideration".
Section 2.2. Conversion.
At the Effective Time, by virtue of the Merger and without any action on
the part of Medix, the Merger Sub, the Company or the holders of any of the
following securities:
(a) Each unit of ownership interests in the Company (each a "Unit" and
collectively, the "Units") issued and outstanding immediately prior to the
Effective Time shall be canceled and shall by virtue of the Merger and without
any action on the part of the holder thereof be converted automatically into the
right to receive with respect to each holder of a Unit, the Per Unit Merger
Consideration (as hereinafter defined), subject to adjustment pursuant to
Article III below, upon the surrender of the certificates representing such
Member's Units in the manner set forth in Section 2.3. All such Units, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing Units shall cease to have any rights with respect thereto, except
the right to receive such number of shares of Common Stock into which Units
Company have been converted. The "Per Unit Merger Consideration" shall mean, One
Hundred Twenty Thousand ($120,000) shares of Common Stock (subject to adjustment
as provided in Section 3.2 hereof) for each Unit issued and outstanding at the
Effective Time and exchanged in the Merger.
(b) Each share of common stock, $.01 par value per share, of the Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable
voting unit of the Surviving Corporation and shall constitute the only issued
and outstanding ownership interest in the Surviving Corporation.
(c) If after the date hereof and prior to the Effective Time, Medix shall
have declared a stock split (including a reverse split) of Common Stock or a
dividend payable in Common Stock or effected any recapitalization or
reclassification of its common stock or any other similar transaction, then the
Per Unit Merger Consideration shall be appropriately adjusted to reflect such
stock split, dividend, recapitalization, reclassification or similar
transaction.
(d) At the Effective Time, each option, warrant or other right or security
to purchase, convert, exchange or otherwise receive a Unit in the Company shall
be canceled and cease to exist.
Section 2.3. Exchange of Certificates.
(a) As soon as reasonably practicable after the Effective Time, Medix and
the Surviving Corporation shall mail (or cause a designated agent to mail) to
each holder of record of Units reflected on the books and records of the Company
(i) a letter of transmittal (which letter shall specify that delivery shall be
effected, and risk of loss and title to the certificates representing the Units
shall pass, only upon delivery to Medix or an agent designated by Medix a
properly executed assignment and letter of transmittal and shall be in such form
and have such other provisions as Medix may reasonably specify), and (ii)
instructions for use in effecting the assignment of the Units in exchange for
certificates representing shares of Common Stock.
(b) Upon the delivery to Medix or an agent designated by Medix of such
assignment and letter of transmittal, duly executed, and such other documents as
may reasonably be required by Medix, the holder, subject to the escrow
arrangements provided for in Section 2.3(d) below, will be entitled to receive
certificates representing the number of whole shares of Common Stock to be
issued in respect of the Units surrendered. (c) No certificate or scrip
representing fractional shares of Common Stock shall be issued upon the
surrender for exchange of Units, and such fractional share interests will not
entitle the owner thereof to vote or to any rights as a stockholder of Medix.
All fractional shares of Common Stock that a holder of Units would otherwise be
entitled to receive as a result of the Merger shall be rounded to the nearest
whole number of shares.
(d) If a certificate for Common Stock is to be sent to a Person other than
the Person in whose name the Units surrendered for exchange are registered, it
shall be a condition of the exchange that the Person requesting such exchange
shall pay to Medix any transfer or other taxes required by reason of the
delivery of such certificate to a Person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of Medix that
such tax has been paid or is not applicable. "Person" shall mean any individual,
corporation, partnership (general or limited), limited liability company,
limited liability partnership, trust, joint venture, joint-stock company,
syndicate, association, entity, unincorporated organization or government or any
political subdivision, agency or instrumentality thereof. Notwithstanding the
foregoing, the shares of Common Stock constituting the Initial Merger
Consideration (the "Escrow Shares") shall de deposited into an escrow account
(the "Escrow Account") pursuant to an escrow agreement (the "Escrow Agreement"),
among Medix, the Representative and the escrow agent (the "Escrow Agent") in
form and substance reasonably satisfactory to the parties thereto. The Escrow
Agent shall be a bank or trust company with capital and surplus exceeding
$500,000,000 reasonably satisfactory to Medix and the Representative. The Escrow
Shares shall (i) secure the obligations with respect to any adjustments or
indemnification obligations under this Agreement; (ii) insure compliance with
all applicable Law restricting the transfer or distribution of such shares and
(iii) provide for the Escrow Shares to be released in accordance with the terms
and conditions set forth in the Escrow Agreement which shall provide for timely
release of such number of Escrow Shares permitted to be sold in accordance with
the schedule for sale of shares set forth in the Escrow Agreement.
(e) The shares of Common Stock issued in exchange for the Units in
accordance with the terms hereof shall constitute satisfaction and payment in
full satisfaction of all of Medix's or the Surviving Corporation's obligations
under this Agreement with respect to the Initial Merger Consideration and all
rights pertaining to such Units, and the Representative, in his individual
capacity and, on behalf of the Members, hereby waives and releases Medix and the
Surviving Corporation from any and all claims or liabilities relating to such
exchange or arising out of the further disposition of such shares of Common
Stock.
Section 2.4. Dividends and Distributions.
No dividends or other distributions that are declared or made after the
Effective Time with respect to Common Stock payable to holders of record thereof
after the Effective Time shall be paid to a Member entitled to receive
certificates representing Common Stock until such Member has properly
surrendered such Member's certificates representing Units. Upon such surrender,
there shall be paid to the Member in whose name the certificates representing
such Common Stock shall be issued any dividends which shall have become payable
with respect to such Common Stock between the Effective Time and the time of
such surrender, without interest. After such surrender, there shall also be paid
to the Member in whose name the certificates representing such Common Stock
shall be issued any dividend on such Common Stock that shall have a record date
subsequent to the Effective Time and prior to such surrender and a payment date
after such surrender; provided that such dividend payments shall be made on such
payment dates. In no event shall the Member entitled to receive such dividends
be entitled to receive interest on such dividends.
Section 2.5. No Liability.
None of Medix, the Merger Sub, the Company or the Surviving Corporation
shall be liable to any Person in respect of any Common Stock or any dividends or
distributions with respect thereto, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
certificate shall not have been surrendered prior to six (6) months after the
Effective Time, any such Common Stock, dividends or distributions in respect
thereof or such cash shall, to the extent permitted by applicable law, be
delivered to Medix, upon demand, and any Members who have not theretofore
complied with the provisions of this Article II shall thereafter look only to
Medix for satisfaction of their claims for such Common Stock, dividends or
distributions in respect thereof or such cash.
Section 2.6. Withholding Rights.
The Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any Member such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Service Code of 1986, as amended (the
"Code") (as hereinafter defined) and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Member in respect of which such deduction and withholding was made by the
Surviving Corporation.
Section 2.7. Closing of Company Unit Journal.
At the Effective Time, the Unit journal of the Company shall be closed and
no transfer of Units shall thereafter be made. If, after the Effective Time,
assignment of Units are presented to the Surviving Corporation, they shall, when
accompanied by proper documentation, be exchanged for the Pro Rata Merger
Consideration for the Units represented thereby in the manner provided in this
Article II and any dividends or distributions payable pursuant to Section 2.4.
ARTICLE III.
Adjustments to Merger Consideration
Section 3.1. Closing Balance Sheet.
For the purpose of determining the adjustment, if any, to the Initial
Merger Consideration, as soon as practicable (but in any event within ninety
(90) days) after the Closing Date (as hereinafter defined), the Surviving
Corporation shall deliver to the Representative an audited balance sheet of the
Company prepared on an accrual basis as of the Closing Date (the "Closing
Balance Sheet"). The Closing Balance Sheet shall be accompanied by a report or
reports thereon of Medix's independent certified public accountants that the
Closing Balance Sheet presents fairly the financial position of the Company on
the Closing Date in conformity with GAAP applied on a consistent basis.
Section 3.2. Adjustment
The Initial Merger Consideration shall be decreased, dollar-for-dollar, by
the amount by which the sum of (i) the amount of the aggregate indebtedness set
forth on Schedule 3.2 of the Company Disclosure Letter, (ii) the amount, if any,
by which (A) the Company's current liabilities (accounts payable and accrued
expenses) and any outstanding indebtedness, other than (x) the indebtedness set
forth on Schedule 3.2 of the Company Disclosure Letter, (y) $100,000 paid to the
Company by Medix relating to certain prepaid programming and (z) the $100,000 in
expenses referred to in Section 10.8, exceeds (B) the sum of the Company's
current assets (including cash, cash equivalents, accounts receivables that are
less than ninety (90) days past due and prepaid expenses) and deposits, as
determined in conformity with GAAP applied on a consistent basis in accordance
with the Company's historical practices and as reflected on the Closing Balance
Sheet and (iii) the amount paid to dissenting Members that demand fair cash
value for their Units under the Ohio Statute, is greater than Fifty Thousand
Dollars ($50,000). The amount of any adjustment required pursuant to this
Section 3.2 shall be effected by a reduction in the shares of Common Stock
constituting the Initial Merger Consolidation as determined based upon an
assumed price of $0.50 per share of Common Stock. The "Company Disclosure
Letter" shall mean the Company disclosure schedules delivered by the Company to
Medix concurrently with the execution and delivery of this Agreement. The
Company Disclosure Letter shall include specific references to each provision of
this Agreement to which information contained in the Company Disclosure Letter
is intended to apply.
Section 3.3. Acceptance of Closing Balance Sheet
Following the delivery of the Closing Balance Sheet, the Surviving
Corporation will allow the Representative reasonable access during regular
business hours to all work papers, books and records and all additional
information used in preparing the Closing Balance Sheet and will make the
officers, employees and independent certified public accountants reasonably
available to discuss with the Representative such papers, books, records and
information. The Representative shall, within thirty (30) days following receipt
of the Closing Balance Sheet, notify the Surviving Corporation of its acceptance
of the Closing Balance Sheet or that the Closing Balance Sheet does not present
fairly the financial position of the Company at such date stating in detail the
specific items or amounts in dispute. If such notification is not given within
such thirty (30) day period, then the Closing Balance Sheet shall be deemed to
be the Closing Balance Sheet upon which the Adjusted Initial Merger
Consideration (as hereinafter defined) shall be determined.
Section 3.4. Dispute Resolution
In the event that the Representative notifies the Surviving Corporation
that the Closing Balance Sheet does not present fairly the financial position of
the Company and the Surviving Corporation does not agree with the
Representative's claim, the Representative and the Surviving Corporation shall
meet and use their respective reasonable best efforts to resolve the items or
amounts in dispute. If the Representative and the Surviving Corporation are
unable to reach an agreement within thirty (30) days after receipt of the
Representative's notification, a mutually acceptable nationally-recognized
accounting firm (the "Accounting Referee") will review the disputed items or
amounts and compute the Adjusted Initial Merger Consideration. In reviewing the
Closing Balance Sheet, the Accounting Referee shall consider only the items or
amounts in dispute (and to the extent required, any other items or amounts
necessary to derive the disputed items or amounts). Such determination shall be
made within thirty (30) days after the date on which the Accounting Referee is
selected and shall be binding on the parties. The fees, costs and expenses of
the Accounting Referee shall be borne by the party that is furthermost from the
Accounting Referee's final determination.
Section 3.5. Adjusted Initial Merger Consideration.
Within ten (10) days following the acceptance by the Representative of the
Closing Balance Sheet or resolution of any Closing Balance Sheet dispute, Medix
shall be entitled to have released from the Escrow Account or set-off against
and the Members hereby agree to surrender for cancellation and release from the
Escrow Agreement or set-off against the number of shares of Common Stock equal
to the amount, on a dollar-for-dollar basis, (based on the Average Closing Price
as of the Closing Date) that current liabilities exceeds current assets by an
amount greater than $50,000 as finally determined in accordance with this
Article III. The Initial Merger Consideration as adjusted pursuant to this
Article III is hereinafter referred to as the "Adjusted Initial Merger
Consideration".
Section 3.6. Payment of Liabilities.
On the Closing Date, Medix shall cause the Surviving Corporation to pay in
full all of the indebtedness set forth in Schedule 3.2 of the Company Disclosure
Letter, excluding the indebtedness to KeyBank National Association.
ARTICLE IV.
Contingent Consideration
Section 4.1. Qualifying Events.
In addition to the Initial Merger Consideration, the Members shall be
entitled to receive contingent consideration upon the attainment of certain
performance criteria or milestones (each, a "Qualifying Event") as set forth
below (each a "Contingent Payment" and collectively, the "Contingent Payments").
The number of shares of Common Stock to be issued and delivered upon the
achievement of each Qualifying Event shall be determined by dividing $1,000,000
by the average closing price of Common Stock, as listed on the American Stock
Exchange ("AMEX"), for the period commencing on the Closing Date to the date of
satisfaction of the applicable Qualifying Event (the "Contingent Payment
Price").
(a) Telcom Contingent Payment. The Members shall be entitled to receive an
aggregate of $1,000,000 of Common Stock if the Surviving Corporation (which for
purposes of this Section 4.1 shall include the Surviving Corporation, Medix and
their respective affiliates) executes and delivers a marketing or strategic
alliance agreement with a national telecommunication company set forth on
Schedule 4.1 (such Schedule 4.1 may be amended by Medix and Xxxxx upon their
mutual consent, such consent not to be unreasonably withheld) within six (6)
months of the Closing Date. Such agreement must be satisfactory in form and
substance to the Surviving Corporation in its reasonable discretion and must
include a minimum term of one (1) year and the potential of generating material
revenue for the Surviving Corporation if the Surviving Corporation performs its
obligations under the agreement.
(b) Hardware Vendor Contingent Payment. The Members shall be entitled to
receive an aggregate of $1,000,000 of Common Stock if the Surviving Corporation
executes and delivers a strategic development, marketing or distribution
agreement with a national handheld vendor set forth on Schedule 4.1 within six
(6) months of the Closing Date. Such agreement must be satisfactory in form and
substance to the Surviving Corporation in its reasonable discretion and must
include, without limitation, material performance obligations on the part of
such vendor, a term of at least one (1) year, and the potential of generating
material revenue for the Surviving Corporation if Surviving Corporation performs
its obligations under the agreement.
(c) RXHub Contingent Payment. The Members shall be entitled to receive an
aggregate of $1,000,000 of Common Stock if within one (1) year from the date
on which the public announcement is made that PocketScript Express launched
the RxHub System, not less than five thousand (5,000) physicians shall have
executed an average of at least two hundred fifty (250) electronic
prescriptions utilizing the RxHub System.
(d) Pharmaceutical Company Contingent Payment. The Members shall be
entitled to receive an aggregate of $1,000,000 of Common Stock if the Surviving
Corporation executes and delivers a marketing or strategic alliance agreement
with a national pharmaceutical company set forth on Schedule 4.1 within six (6)
months of the Closing Date. Such agreement must be satisfactory in form and
substance to the Surviving Corporation in its reasonable discretion and must
include, without limitation, material performance obligations on the part of the
Pharmaceutical Company, a minimum term of one (1) year, and the potential of
generating material revenue for the Surviving Corporation if the Surviving
Corporation performs its obligations under the agreement.
Section 4.2. Maximum Amount of Contingent Payments.
In no event and under no circumstances shall the aggregate amount of
Contingent Payment payable pursuant to this Article IV exceed $4,000,000 in
value as determined based on the applicable Contingent Payment Price.
Section 4.3. Delivery of Contingent Payments
Medix shall deliver to the Escrow Agent for deposit into the Escrow Account
the number of shares of Common Stock calculated in accordance with this Article
IV within thirty (30) days of satisfying the milestone applicable to each
respective Qualifying Event. The shares of Common Stock issued and delivered in
connection with the satisfaction of the applicable Qualifying Event and
deposited in the Escrow Account shall be released in accordance with the terms
and conditions of the Escrow Agreement. Upon issuance and delivery of the Common
Stock relating to the Contingent Payments, such issuance shall constitute
satisfaction and payment in full of all of Medix's or the Surviving
Corporation's obligations under this Agreement with respect to the Contingent
Payment in question and the Representative, in his individual capacity and on
behalf of the Members, hereby waives and releases Medix and the Surviving
Corporation from any and all claims or liabilities relating to such Contingent
Payment or arising out of the further disposition of such shares of Common
Stock.
ARTICLE V.
Representation and Warranties of
the Company and Xxxxx
The Company and Xxxxx, in his individual capacity and as Representative of
the Members pursuant to Section 8.16 below, jointly and severally, represent and
warrant to Medix and the Merger Sub as follows:
Section 5.1. Title - Member
Each Member is the beneficial and record owner of, and has good and valid
title to, the number, percentage and class of Units (both voting and non-voting)
set forth opposite such Member's name on Schedule 5.1 of the Company Disclosure
Letter, with the full power and authority to vote such Units and to transfer and
otherwise dispose of such Units free and clear of all security interests,
judgments, liens, pledges, adverse claims, charges, escrows, options, warrants,
rights of first refusal, rights of first offer, mortgages, indentures, security
interests, or other agreements, arrangements, encumbrances or defects of any
kind or character (collectively, "Encumbrances"). The Units are such Member's
only voting, equity or other financial instrument (including, but not limited
to, any right to receive distributions or profits from the Company) in the
Company. Except as described on Schedule 5.1 of the Company Disclosure Letter,
there are no agreements or understandings between any Member and any other
Person with respect to the voting, sale or other disposition of any Member's
Units or any other matter relating to the Company.
Section 5.2. Authority - Xxxxx.
Xxxxx has full and absolute legal right, power and authority to execute and
deliver each of the Merger Documents (as hereinafter defined) to which Xxxxx is
a party, and to perform his obligations contemplated thereby. This Agreement has
been validly executed and delivered by Xxxxx, and constitutes a valid and
binding obligation of Xxxxx enforceable against him in accordance with its
terms. Each other Merger Document executed by Xxxxx, when executed and delivered
in accordance with the provisions hereof, shall be a valid and binding
obligation of Xxxxx, enforceable against him in accordance with its respective
terms. As used herein, the term "Merger Documents" shall mean collectively the
following: (i) this Agreement, (ii) the Employment Agreement (as hereinafter
defined), (iii) the Escrow Agreement, (iv) the Registration Rights Agreement (as
hereinafter defined), (v) the Voting Agreement (as hereinafter defined) and (vi)
each other agreement, certificate or other instrument delivered herewith.
Section 5.3. Organization; Power - Company.
The Company is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Ohio, has all requisite
power and authority to own, lease and operate the assets, properties and rights
used to carry on the business, operations and affairs of the Company as now
being conducted and to execute and deliver the Merger Documents to which it is a
party, to perform its obligations thereunder and to consummate the transactions
contemplated thereby.
Section 5.4. Authority - Company.
The Company has taken all limited liability company action necessary to
authorize the execution and delivery of the Merger Documents to which the
Company is a party, the performance of its obligations thereunder and the
consummation of the transactions contemplated thereby (other than with respect
to the Merger, the approval and adoption of this Agreement and the transactions
contemplated hereby by the Members of the Company in accordance with applicable
law and the Company's Articles of Organization and Operating Agreement and the
filing and recordation of appropriate merger documents as required by the Ohio
Statute). This Agreement has been executed and delivered by one or more managers
or officers of the Company in accordance with such authorization and constitutes
a valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms. Each Merger Document and each other document or
instrument contemplated thereby, when executed and delivered in accordance with
the provisions thereof, shall be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
Section 5.5. Qualifications.
The Company is qualified in all jurisdictions wherein the character of the
property owned or leased or the nature of the activities conducted by it makes
such qualification necessary. Schedule 5.5 of the Company Disclosure Letter sets
forth a list of all such jurisdictions.
Section 5.6. No Conflict.
The execution and delivery by the Company and Xxxxx of the Merger Documents
to which it or he is a party, consummation of the transactions contemplated
thereby, and their compliance with the provisions thereof, will not (i) violate
or conflict with the Company's articles of organization or operating agreement,
each as amended to the date hereof; (ii) violate, constitute a default (whether
with notice, lapse of time, or both), conflict with, or give rise to any right
of termination, cancellation, or acceleration under any agreement, indenture,
note, bond, mortgage, deed of trust, lease, security, license, permit, or
instrument to which the Company or Xxxxx is a party, or to any of their
respective assets are subject; (iii) result in the imposition of any Encumbrance
on any of the assets of the Company; (iv) violate or conflict with any Laws (as
hereinafter defined); or (v) require any consent, approval or other action of,
notice to, or filing with any Person, except for those that have been obtained
or made. "Laws" means all laws, rules, regulations, ordinances, orders,
judgments, injunctions, decrees and other legislative, administrative or
judicial restrictions.
Section 5.7. Capitalization.
(a) Schedule 5.7 of the Company Disclosure Letter sets forth all Units of
the Company, including the names of the holders thereof and the number,
percentage and class held by each. All of the issued and outstanding Units of
the Company are duly authorized, validly issued, fully paid and nonassessable.
Except for the Units listed on Schedule 5.7 of the Company Disclosure Letter
there are no other membership, equity, voting or profit-sharing interests,
rights or securities of or with respect to the Company.
(b) Except as set forth on Schedule 5.7 of the Company Disclosure Letter,
there are no outstanding (i) securities convertible into or exchangeable for
Units or any other equity interests of the Company, (ii) options, warrants or
other rights to purchase or otherwise acquire from the Company or any equity
owner thereof Units or any other equity interests of the Company or securities
convertible into or exchangeable for Units or any other equity interests of the
Company, (iii) contracts, agreements or commitments, relating to the issuance by
the Company of any Units or any other equity interests of the Company, any
convertible or exchangeable securities, or any options, warrants or other rights
to acquire Units or any other equity interests of the Company, or (iv) voting
trusts, voting agreements, proxies or other agreements, instruments or
understandings with respect to the voting, issuance, redemption, transfer or
other disposition of the Units or any other equity interests of the Company to
which the Company or any equity owner is a party. No Person has the right to
nominate or elect directors or managers of the Company except through the
ownership of units of Units. There are no preemptive rights and, except with
respect to the Units listed on Schedule 5.7 of the Company Disclosure Letter,
there are no contracts, agreements or understandings (whether written or oral)
providing for the sharing of profits, revenues or other distributions or
payments from the Company.
Section 5.8. Subsidiaries; Investments.
The Company does not, directly or indirectly, own, have the power to vote
or to exercise a controlling influence with respect thereto, through management
contract or otherwise, nor does it have the right to acquire any equity interest
or other interest in, any corporation, partnership, joint venture, or other
Person, nor has it made, nor has it any commitments to make, any loans or
guarantees to any Person.
Section 5.9. Financial Information.
(a) Schedule 5.9 of the Company Disclosure Letter sets forth the unaudited
balance sheet (the "Balance Sheet") of the Company for the seven (7) month
period ended November 30, 2002 (the "Balance Sheet Date") and the related
statements of income for the period then ended, including any footnotes thereto
(all of the foregoing being hereafter collectively referred to as the "Financial
Statements").
(b) The Financial Statements referred to above fairly present the financial
position of the Company as of the dates indicated and the results of operations
and cash flows of the Company and for the periods indicated on an accrual basis.
The Financial Statements have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and in accordance with the books
and records of the Company maintained in accordance with historical practice.
The Financial Statements are complete and correct and consistent with the books
and records of the Company. The assets and accounts receivable set forth in the
Financial Statements are the result of bona fide transactions or claims in the
Ordinary Course of Business. "Ordinary Course of Business" shall mean the
ordinary course of business of the Company consistent with past practice and
custom, including with respect to quantity, quality and frequency.
Section 5.10. Absence of Undisclosed Liabilities.
(a) The Company does not have any loss or liability in excess of $5,000
individually or $10,000 in the aggregate of any nature, whether or not accrued,
absolute, contingent, determined or determinable or any loss contingency, which
is not disclosed or provided for on the Balance Sheet or required under GAAP to
be disclosed on the Balance Sheet, and there is no basis or event for or
relating to any present or future action, suit, proceeding, charge, claim or
demand giving rise to any such loss or liability. All reserves established by
the Company on the Balance Sheet are adequate to cover any loss or liability of
the Company.
(b) Except as set forth on Schedule 3.2 of the Company Disclosure Letter,
the Company has repaid in full all indebtedness or other obligations of the
Company for borrowed money, evidence of which has been delivered to Medix.
Section 5.11. No Consent or Approval Required.
Except as set forth on Schedule 5.11 of the Company Disclosure Letter, no
consent, waiver, approval or authorization of, or declaration to or filing with,
any governmental or regulatory authority, or any other Person, is required for
the valid authorization, execution and delivery by the Company and Xxxxx of the
Merger Documents to which it or he is a party or for the consummation of the
transactions contemplated thereby, including but not limited to, the consent of
creditors with respect to any loans or other indebtedness of the Company and
under Office Leases (as hereinafter defined).
Section 5.12. Changes.
Except as set forth on Schedule 5.12 of the Company Disclosure Letter,
since the Balance Sheet Date there has not been any:
(i) material adverse change in the business, assets, properties, rights,
affairs, operations, financial condition or prospects of the Company or any
deviation from historical accounting and other practices in connection with the
maintenance of the Company's books and records;
(ii) damage, destruction or loss, whether or not covered by insurance,
affecting the assets, properties or business of the Company;
(iii) declaration or payment of any dividend or distribution in respect of
the Units of the Company, or any direct or indirect redemption, purchase or
other acquisition of any of such Units or any issuance of any securities by the
Company;
(iv) increase in or prepayment of the compensation payable or to become
payable by the Company to any of its Members, directors, managers, officers,
employees, consultants or agents, or the making of any bonus payment or similar
arrangement (including without limitation any change-in-control or "golden
parachute" agreement or understanding) or adoption, amendment, modification or
termination of any bonus, incentive, stock option, profit-sharing, severance or
other plan, agreement or commitment for the benefit of the Members, directors,
managers, officers or employees of the Company or any action with respect to any
other Company Benefit Plan (as hereinafter defined);
(v) cancellation or write-off of any indebtedness or other obligation due
to the Company;
(vi) obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) created or incurred, or any
transaction, contract or commitments entered into, by the Company other than
such items created or incurred in the Ordinary Course of Business and consistent
with past practice, but in no event greater than $5,000 in the aggregate;
(vii) change in the manner in which the Company bills its clients, handles
its accounts or otherwise deals with clients but excluding variable end user
agreements and any changes involving amounts less than $5,000;
(viii) waiver, cancellation or release of any rights or claims of the
Company except in the Ordinary Course of Business and consistent with past
practices and for fair value, or any lapse or other loss of a right of the
Company to use its assets;
(ix) sale, lease, license, assignment or transfer of assets of the Company
except in the Ordinary Course of Business and consistent with past practices;
(x) commitments for capital expenditures by the Company in excess of $5,000
in the aggregate;
(xi) change in the Ordinary Course of Business and consistent with past
practice, with respect to the payment of accounts payable or other current
liabilities and the collection of accounts receivable, including, without
limitation, any acceleration or deferral of the payment or collection thereof,
as applicable;
(xii) grant of a security interest or other Encumbrance in any of the
assets, properties or rights of the Company;
(xiii) change in the articles of organization, operating agreement or other
governing documents of the Company, except as contemplated by the Merger
Documents;
(xiv) transactions with any affiliated Person;
(xv) to the Company's and Burn's best knowledge, any material change in the
Laws or regulations governing the Company and its business, operations, affairs,
assets, properties or rights;
(xvi) any material adverse change in the Company's cash, cash equivalents
or marketable securities or other liquid assets reflected in the Financial
Statements;
(xvii) any license or sublicense of any rights under or with respect to any
Intellectual Property (as hereinafter defined) other than in the Ordinary Course
of Business;
(xviii) other events or conditions of any character which materially
adversely affect, or could materially adversely affect, the business,
operations, affairs, assets, properties or rights of the Company; and
(xix) any commitment, agreement, arrangement or understanding (whether
written or oral) to do any of the foregoing.
Section 5.13. Contracts.
(a) Schedule 5.13 of the Company Disclosure Letter sets forth a list of all
written or oral contracts, agreements, understandings, licenses, commitments and
other instruments (including all amendments, modifications or extensions
relating thereto) to which the Company is a party or by which any of its assets,
properties or rights are bound, other than contracts or agreements involving
amounts not in excess of $5,000 annually (each a "Contract" and collectively,
the "Contracts"). Except for the Contracts set forth on Schedule 5.13 of the
Company Disclosure Letter, there are no other contracts, agreements,
understandings, licenses, commitments or other instruments relating to the
Company and its business, operations and affairs.
(b) With respect to each Contract listed on Schedule 5.13 of the Company
Disclosure Letter:
(i) each Contract is legal, valid binding, enforceable and in full force
and effect;
(ii) each Contract will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the consummation of
the transactions contemplated by the Merger Documents;
(iii) the Company is not in breach or default or alleged to be in breach or
default under any of the Contracts, and the Company has no notice or knowledge
of any state of facts which would, with or without the giving of notice or lapse
of time or both, constitute a default thereunder;
(iv) to the Company's and Burn's best knowledge, the other parties to each
Contract are not in breach or default or alleged to be in breach or default
thereunder and no event has occurred which with the lapse of time would
constitute or breach or default or permit termination, modification or
acceleration under any Contract;
(v) no party to a Contract has repudiated any provision of any such
Contract;
(vi) the Company has furnished to Medix a correct and complete copy of each
Contract (including any amendments, modifications or renewals relating thereto);
and
(vii) each Contract involving amounts in excess of $5,000 annually is
established in a written instrument executed and delivered by the parties
thereto.
(c) No products or services leased or sold by the Company is subject to any
warranty, guaranty or indemnity that is not included in the standard terms of
sale or lease of the Company in the Ordinary Course Business. The Company has
provided Medix true and complete copies of all sales or purchase orders or
standard terms of sale or lease used by the Company.
(d) All products or services sold, leased or provided by the Company prior
to the Closing, conform in all material respects to contractual commitments,
express or implied warranties, specifications, and quality standards established
by the Company. The Company has no liability for replacement or repair of any
products or services sold or leased except as may arise in the Ordinary Course
of Business. No product liability claims have been asserted or threatened
against the Company or any of its products or services and the Company and Xxxxx
are not aware of any events or circumstances that could reasonably be expected
to result in a product liability claim.
Section 5.14. Employee Benefit Plans.
(a) Schedule 5.14 of the Company Disclosure Letter hereto contains a true
and complete list of (i) each plan, program, policy, payroll practice, contract,
agreement or other arrangement, or commitment therefore, providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits of any kind,
whether formal or informal, funded or unfunded, written or oral, and whether or
not legally binding, which is now or previously has been sponsored, maintained,
contributed to or required to be contributed to the Company by or pursuant to
which the Company has any liability, contingent or otherwise, including, but not
limited to, any "employee benefit plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (each,
a "Company Benefit Plan"); and (ii) each management, employment, bonus, option,
equity (or equity related), severance, consulting, non-compete, confidentiality
or similar agreement or contract, pursuant to which the Company has any
liability, contingent or otherwise, between the Company and any current, former
or retired employee, officer, consultant, independent contractor, agent or
director of the Company (an "Employee") (each, an "Employee Agreement"). Neither
the Company nor any ERISA Affiliate (as defined in 2.13(b)) currently sponsors,
maintains, contributes to, or is required to contribute to, nor has the Company
ever sponsored, maintained, contributed to or been required to contribute to, or
incurred any liability to, (i) any "multiemployer plan" (as defined in ERISA
Section 3(37)) or (ii) any Company Benefit Plan which provides, or has any
liability to provide, life insurance, medical, severance or other employee
welfare benefits to any Employee upon his or her retirement or termination of
employment, except as required by Section 4980B of the Code.
(b) An "ERISA Affiliate" is defined as (i) any entity that is a member of a
controlled group with the Company, as described in Section 414(b) of the Code,
or that is under common control with the Company, for the purposes of Section
414(c) of the Code or ERISA Section 4001(a)(14); (ii) any entity that is part of
an affiliated service group with the Company as described in Section 414(m) of
the Code; or (iii) any entity that is required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.
(c) The Company has made available to Medix current, accurate and complete
copies of all documents embodying or relating to each Company Benefit Plan and
each Employee Agreement, including all amendments thereto, trust or funding
agreements relating thereto (if any), the three most recent annual reports
(Series 5500 and related schedules) required under ERISA, summary annual
reports, the most recent determination letter received from the Internal Revenue
Service (the "IRS"), the most recent summary plan description (with all material
modifications), if the Company Benefit Plan is funded, the most recent annual
and periodic accounting of Company Benefit Plan assets, and all material
communications to any Employee or Employees relating to any Company Benefit Plan
or Employee Agreement.
(d) With respect to each Company Benefit Plan (i) the Company and each
ERISA Affiliate, if any, has performed all obligations required to be performed
by it under each Company Benefit Plan and Employee Agreement and neither the
Company nor any ERISA Affiliate is in default under or in violation of, any
Company Benefit Plan, (ii) each Company Benefit Plan has been established and
maintained in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA and the Code, including without limiting the foregoing, the timely filing
of all required reports, documents and notices, where applicable, with the IRS
and the Department of Labor (the "Department"); (iii) each Company Benefit Plan
intended to qualify under Section 401 of the Code is, and since its inception
has been, so qualified and a determination letter has been issued by the IRS to
the effect that each such Company Benefit Plan is so qualified and that each
trust forming a part of any such Company Benefit Plan is exempt from tax
pursuant to Section 501 (a) of the Code and no circumstances exist which would
adversely affect this qualification or exemption; (iv) no "prohibited
transaction," within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any Company Benefit Plan; (v) no action or
failure to act and no transaction or holding of any asset by, or with respect
to, any Company Benefit Plan has or may subject the Company or any ERISA
Affiliate or any fiduciary to any tax, penalty or other liability, whether by
way of indemnity or otherwise; (vi) there are no actions, proceedings,
arbitrations, suits or claims pending, or to the best knowledge of the Company
and any ERISA Affiliate threatened or anticipated (other than routine claims for
benefits) against the Company or any ERISA Affiliate or any administrator,
trustee or other fiduciary of any Company Benefit Plan with respect to any
Company Benefit Plan or Employee Agreement, or against any Company Benefit Plan
or against the assets of any Company Benefit Plan; (vii) no event or transaction
has occurred with respect to any Company Benefit Plan that would result in the
imposition of any tax under Chapter 43 of Subtitle D of the Code; (viii) each
Company Benefit Plan can be amended, terminated or otherwise discontinued
without liability to the Company or any ERISA Affiliate; (ix) no Company Benefit
Plan is under audit or investigation by the IRS, the Department or the Pension
Benefit Guaranty Corporation (the "PBGC"), and to the best knowledge of the
Company and any ERISA Affiliate, no such audit or investigation is pending or
threatened.
(e) The execution of, and performance of the transactions contemplated in,
this Agreement and the other Merger Documents will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Benefit Plan or Employee Agreement that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligations to fund
benefits with respect to any Employee.
(f) With respect to each Company Benefit Plan (other than a multiemployer
plan) which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan"), hereto, (i) no steps have been taken to
terminate any Pension Plan now maintained or contributed to, no termination of
any Pension Plan has occurred pursuant to which all liabilities have not been
satisfied in full, no liability under Title IV of ERISA has been incurred by the
Company or any ERISA Affiliate which has not been satisfied in full, and no
event has occurred and no condition exists that could reasonably be expected to
result in the Company or any ERISA Affiliate incurring a liability under Title
IV of ERISA or could constitute grounds for terminating any Pension Plan; (ii)
no proceeding has been initiated by the PBGC to terminate any Pension Plan or to
appoint a trustee to administer any Pension Plan; (iii) each Pension Plan which
is subject to Part 3 of Subtitle B of Title I of ERISA or Section 412 of the
Code, has been maintained in compliance with the minimum funding standards of
ERISA and the Code and no such Pension Plan has incurred any "accumulated
funding deficiency," as defined in Section 412 of the Code and Section 302 of
ERISA, whether or not waived; (iv) neither the Company nor any ERISA Affiliate
has sought nor received a waiver of its funding requirements with respect to any
Pension Plan and all contributions payable with respect to each Pension Plan
have been timely made; (v) no reportable event, within the meaning of Section
4043 of ERISA, and no event described in Section 4062 or 4063 of ERISA, has
occurred with respect to any Pension Plan; and (vi) the present value of all
accrued benefits of each Pension Plan, determined on a plan termination basis
using the actuarial assumptions established by the PBGC as in effect on the date
of determination, does not as of the date hereof and will not as of the Closing
Date exceed the fair market value of the assets (which for this purpose shall
not include any accrued but unpaid contributions) of such Pension Plan.
Section 5.15. Labor Relations; Employees.
The Company employs a total of 14 employees (including managers, officers
and contract employees) in connection with its business, operations and affairs,
and the names, positions, time devoted to the business, length of employment
with the Company, current salaries and benefits of such employees are set forth
on Schedule 5.15 of the Company Disclosure Letter. The employees set forth on
Schedule 5.15 of the Company Disclosure Letter constitute all of the individuals
used in connection with the Company's business, operations and affairs in the
Ordinary Course of Business. Except as set forth on Schedule 5.15 of the Company
Disclosure Letter:
(a) no employees or group of employees have attempted to conduct an
election for a collective bargaining unit;
(b) during the preceding five (5) year period, the Company has not been
subject to any administrative or judicial restrictions relating to labor and
employment practices;
(c) there is no unfair labor practices complaint or other complaint
relating to employee matters against the Company pending before the National
Labor Relations Board or any other governmental authority;
(d) there is no labor strike, dispute, slowdown or stoppage pending or
threatened against the Company;
(e) the Company is not delinquent in payments to any of its employees for
any compensation, benefits or reimbursements;
(f) the Company is not a party or bound by any collective bargaining
agreement;
(g) the Company has not been cited under the U.S. Occupational Safety and
Health Act or any other applicable Law relating to harassment and
discrimination, as a result of the Company's work environment or conditions or
of any of its employees and neither the Company nor Xxxxx is aware of any events
or circumstances that could reasonably be expected to constitute or result in a
harassment or discrimination claim or a hostile work environment;
(h) no employee, contract employee or consultant is subject to any
confidentiality, non-disclosure or non-compete agreement with a third party or
any other restrictions with respect to such persons duties or activities for the
Company or in connection with or relating to the Company's business, operations
and affairs; and
(i) each employee, contract employee and consultant of the Company has
executed and delivered confidentiality and work-for hire agreements and such
agreements are in full force and effect and an enforceable obligation against
each such employee, contract employee or consultant.
Section 5.16. Compliance with Laws; Governmental Authorizations.
Schedule 5.16 of the Company Disclosure Letter sets forth a summary of all
Federal, state, local and foreign governmental, regulatory or agency licenses,
permits, orders, authorizations, certifications and approvals necessary or
required by applicable Law for the business, operations and affairs of the
Company as currently conducted (collectively, the "Permits"). The Company has at
all times complied with all applicable Laws, including but not limited to the
Health Insurance Portability and Accountability Act of 1996. The Company has
obtained Permits necessary to conduct the business, operations and affairs of
the Company as presently conducted. The Permits are valid and in full force and
effect and the Company has at all times complied with all requirements or
conditions relating to the Permits. There have been no violations of such
Permits and such Permits are, and will continue to be after the consummation of
the transactions contemplated in the Merger Documents, valid and in full force
and effect. True and complete copies of all Permits and all amendments,
extensions and modifications thereto have been delivered to Medix.
Section 5.17. Insurance.
(a) Schedule 5.17 of the Company Disclosure Letter sets forth a list of all
policies of insurance held by the Company, specifying the insurer, amount of
coverage, type of insurance and policy number. The Company has delivered to
Medix correct and complete copies of all summaries and descriptions of such
policies.
(b) Except as set forth on Schedule 5.17 of the Company Disclosure Letter:
(i) all due premiums have been paid and are not subject to adjustment; no
claims are pending thereunder; and no notice of cancellation or termination has
been received with respect to any such policy;
(ii) such policies will not terminate or be subject to adjustment as a
result of the transactions contemplated by the Merger Documents;
(iii) the amounts and types of coverage under such policies are customary
in the Company's industry to insure against the risk relating to the assets,
properties, business and operations of the Company; and
(iv) such insurance complies in all respects, including, but not limited
to, the amount and type of coverage required by any applicable Law, Permit or
third party contract.
Section 5.18. Title to Assets.
(a) Except as set forth in Schedule 5.18 of the Company Disclosure Letter,
the Company has good and marketable title to, or a valid leasehold interest in,
all of the assets, properties, interests in assets or properties (whether real,
personal or mixed) or rights which are reflected on the Balance Sheet, free and
clear of all Encumbrances.
(b) The Company has delivered to Medix a list, attached as Schedule 5.18 of
the Company Disclosure Letter, of all assets and properties of the Company
relating to or used in connection with the business, operations and affairs of
the Company, in each case whether owned or leased. Such list identifies all
items by type, amount, make and model, indicates leased items, and, for all
items (including vehicles) on which the manufacturer has inscribed a serial
number, by serial number. Schedule 5.18 of the Company Disclosure Letter also
includes the net book value and original cost of each item. All of the assets
listed on Schedule 5.18 of the Company Disclosure Letter are in good working
order and condition, normal wear and tear excepted, and, to the best knowledge
of the Company and Xxxxx, are free from defects, which would cause the assets to
fail. Each asset is substantially fit for the purposes for which it is utilized.
The assets and properties listed on Schedule 5.18 of the Company Disclosure
Letter constitute substantially all of the Company's right, title and interest
in and to the assets, properties, interests in assets and properties and rights
(of every kind and description and wherever located), used or owned by the
Company relating to or in connection with its business, operations and affairs
as currently conducted and as proposed to be conducted after consummation of the
transactions contemplated by the Merger Documents.
Section 5.19. Litigation.
Except as set forth on Schedule 5.19 of the Company Disclosure Letter,
there are no (i) actions, suits, claims, investigations, administrative or other
proceedings by or before any governmental authority, arbitrator, mediator or
other dispute resolution Person or court, whether at law or in equity, whether
civil or criminal in nature, pending or threatened against the Company or any of
its assets, properties, interests in assets of properties or rights, or (ii)
judgments, decrees, injunctions or orders of any governmental authority,
arbitrator, mediator or other dispute resolution Person or court against or
binding upon or threatened against the Company or any of its assets, properties,
interests in assets of properties or rights, or questioning the validity or
enforceability of any of the Merger Documents and the transactions contemplated
thereby. The Company is not in default under any such judgment, decree,
injunction or order. The Company has delivered to Medix correct and complete
copies of all documents and correspondence relating to, or a description of, any
of the matters described in this Section 5.19.
Section 5.20. Related Party Transactions.
Except as set forth on Schedule 5.20 of the Company Disclosure Letter and
except for compensation to regular employees of the Company in the Ordinary
Course of Business, during the preceding three (3) year period, no current or
former Member, manager, director, officer, employee or holder of any securities
of the Company, or a member of the immediate family of any such Person or any
entity directly or indirectly controlled by any of the foregoing, has been (i) a
party, either directly or indirectly, to any transaction with or received any
compensation, economic gain or other benefits (whether or not financial
benefits) from the Company; (ii) the direct or indirect owner of an interest
(other than non-affiliated holdings in publicly held entities) in any business
that is or was a competitor, supplier or customer of the Company; or (iii) to
the Company's and Burn's best knowledge, the recipient of any compensation,
economic gain or other benefits (whether or not financial benefits) from any
business entity, or any person employed by, or any stockholder or partner of, or
otherwise affiliated with, such business entity, that is a client, supplier,
vendor or competitor of the Company. All such transactions listed on Schedule
5.20 of the Company Disclosure Letter are no less favorable than would be
available if contracting with an independent third party.
Section 5.21. Real Property.
(a) The Company neither owns any real property nor has any interest in any
real property, and is not obligated under or a party to any option, right of
first refusal or other contractual right to purchase, acquire, sell or dispose
of any parcel of real property.
(b) Schedule 5.21 of the Company Disclosure Letter sets forth a complete
and correct list of all real property leased by the Company ("Leased Real
Property"). Medix has complete and correct copies of all leases relating to such
Leased Real Property (each an "Office Lease" and collectively, the "Office
Leases") and all existing or proposed amendments or modifications thereto. The
Company is not a lessor, sublessor or grantor under any contract granting to
another Person any right to the possession, use, occupancy or enjoyment or any
parcel of Leased Real Property.
(c) Except as set forth on Schedule 5.21 of the Company Disclosure Letter:
(i) all improvements on the Leased Real Property are in good operating
condition and repair (ordinary wear and tear excepted), and there does not exist
any condition which interferes with the use thereof;
(ii) to the Company's knowledge, the Leased Real Property and the operation
and maintenance thereof do not violate any material Laws;
(iii) each Office Lease is in full force and effect, as amended or
modified, all rent and other sums and charges payable thereunder are current,
and no rent has been paid more than one month in advance;
(iv) no notice of default or termination under any Office Lease is
outstanding, no termination event or condition or uncured default on the part of
the tenant named therein, or the lessor thereunder, exists under any Office
Lease and, to the Company's knowledge, no event has occurred and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default or termination event or condition under any Office Lease,
and all Office Leases are as of the date hereof, and will continue to be, after
the consummation of the transactions contemplated herein or in the Merger
Documents, in full force and effect and do now and will then constitute legal,
valid and binding obligations of the parties thereto;
(v) the tenant named in the Office Lease has not advanced any amounts to or
on behalf of the lessor thereunder for which the tenant has not been reimbursed,
the tenant has not sublet the premises demised therein or any portion thereof,
nor has the tenant assigned, by operation of law or otherwise, any of the Office
Leases or any portion thereof;
(vi) the lessor under each Office Lease has no charge, lien, claim, defense
or offset of any kind under any Office Lease or otherwise against the Company;
(vii) there are covenants of "quiet enjoyment" in the Office Leases, and
the leasehold estate under, and leasehold interest in, each Office Lease is held
free and clear of any Encumbrance or other matter affecting title thereto; and
(viii) the Company is in full and complete possession of the premises
described under each Office Lease and is fully occupying the same and conducting
business therefrom.
Section 5.22. Tax Matters.
(a) All Federal, foreign, state and local Tax (as hereinafter defined)
returns, declarations, reports, claims and information statements, informational
returns, including any schedule, attachment or amendment relating thereto
(collectively "Returns") for the Company for periods ending on or before the
Closing Date have been or will be filed by their respective due dates, including
any extensions thereof. All of the Company's Federal, state, local and foreign
Tax liabilities, if any, as shown to be due on such Tax Returns for all periods
prior to the Closing Date, have been paid or will be paid in full to the
appropriate taxing authorities by the Company on or before the Closing Date. All
such Tax Returns filed through the date hereof are true and correct and do not
omit any items of income or claim any deduction or exclusion, which is or may be
subject to challenge. The Company shall have made the entity classification
election pursuant to Treasury Regulation 301.7701-3 to be treated as
"corporation" under the Code and such election shall be effective as of the
Closing Date. The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any person
employed by the Company as a full, part-time or contract employee or otherwise.
(b) In addition, (i) the Company has not waived any statute of limitations
affecting any Tax liability or agreed to any extension of time during which a
Tax assessment or deficiency assessment may be made; (ii) there are no pending
Tax audits of any Returns of the Company, and no material unresolved questions
or claims concerning the Company's Tax liability; (iii) the Company has made
full provision on its books and records and full provision will be made on the
Closing Balance Sheet for all Taxes payable for any periods that end on or
before the Closing Date for which no Return has yet been filed and for periods
which begin on or before the Closing Date and end after the Closing Date to the
extent such Taxes are attributable to the portion of the periods ending on the
Closing Date; (iv) the Company has not accrued or otherwise incurred any
liability for any Federal, state, local or foreign Taxes, except in the Ordinary
Course of Business and consistent with past practice; and (v) the Company has
never been a party to any Tax sharing agreement or arrangement with any Person.
The Company has delivered to Medix correct and complete copies of all Tax
Returns and examination reports since the date of its organization.
(c) For purposes of this Agreement, "Tax" or "Taxes" means, with respect to
any Person, (i) all income or franchise taxes (including any tax on or based
upon net income, or gross income, or income as specially defined, or earnings,
profits, selected items of income, earnings or profits) or net worth or capital
stock value and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, registration, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, real property, personal property, windfall profits
taxes, alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges or any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) on such Person and (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of being a "transferee" (within the meaning of Section 6901 of
the Code or similar provision of the Code or of any other applicable law) of any
Person, including, but not limited to, as a member of an affiliated,
consolidated or combined group.
Section 5.23. Intellectual Property.
(a) Schedule 5.23 of the Company Disclosure Letter contains a correct and
complete list of all (i) patents, trademarks, trademark applications, trade
names, service marks, service xxxx applications, or copyrights, and to the
extent registered, the registration numbers, which are used or owned by the
Company, (ii) applications, filings and other formal actions pursuant to
Federal, state, local and foreign laws taken by the Company to perfect or record
its interest in the Intellectual Property, and (iii) other Intellectual Property
of the Company used in connection with or relating to its business, operations
and affairs. The Company owns or has the right to use or bring infringement
actions with respect to all Intellectual Property listed on Schedule 5.23 of the
Company Disclosure Letter. The Company has not received any notice of any
adversely held Intellectual Property or of any claim of any other Person
relating to any Intellectual Property of the Company.
(b) All of the patents, copyrights, trademarks, trade names and service
marks listed on Schedule 5.23 of the Company Disclosure Letter are valid and
protectable, properly registered and in full force and effect and are not
subject to any taxes or fees. The Company (i) has not licensed, assigned or
granted to any Person rights of any nature to use any Intellectual Property;
(ii) is not obligated to pay royalties to anyone for use of the Intellectual
Property of a third party; and (iii) does not market, sell or use any product,
service or information that violates or infringes any Intellectual Property of a
third party. No current or former member, manager, officer, director, investor,
lender, employee, consultant or independent contractor of the Company has any
interests in or rights to any Intellectual Property owned or used by the
Company. Neither the Company nor any current or former employee, consultant or
agent has disclosed any material non-public information relating to Intellectual
Property to any third party, except pursuant to a non-disclosure agreement.
(c) There is no pending or threatened claim or litigation against the
Company contesting the right to use its Intellectual Property, asserting the
misuse of any thereof, or asserting the infringement or other violation of any
Intellectual Property of a third party. No third party has infringed or violated
any Intellectual Property of the Company. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of its
Intellectual Property, including but not limited to, client lists and
information, trade secrets, proprietary processes, models, formulae, designs,
improvements, systems, inventions, know-how, and other confidential and
proprietary information. Schedule 5.23 of the Company Disclosure Letter contains
a list of all Intellectual Property licensed by the Company (excluding
off-the-shelf software), including all software used by the Company (excluding
off-the-shelf software), and in the case of customized software, the vendor and
the party providing support therefore.
(d) Neither the execution, delivery or performance of the Merger Documents
nor the consummation of the transactions contemplated thereby, will (i) breach,
violate or conflict with any instrument or agreement governing any Intellectual
Property, (ii) cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any Intellectual Property, or (iii) in any way
impair the right of the Company to use, sell, license or dispose of or to bring
any action for the infringement of, any Intellectual Property or portion
thereof.
(e) Medix has received a copy, or a description, of the Intellectual
Property listed on Schedule 5.23 of the Company Disclosure Letter.
(f) As used herein, the term "Intellectual Property" shall mean all
patents, patent applications, trademarks, trademark applications, trade names,
service marks, service xxxx applications, logos, slogans, copyrights, copyright
applications, franchises, inventions, models, databases, systems, processes,
formulae, trade secrets, know-how, customer lists or account information,
computer software, programs, algorithms codes and any other confidential,
proprietary or technical information (whether or not subject to patent or
copyright protection).
Section 5.24. Accounts Receivable; Clients and Vendors.
(a) Except as set forth on Schedule 5.24 of the Company Disclosure Letter,
all accounts and notes due and uncollected as reflected on the Balance Sheet (i)
have arisen from bona fide transactions in the Ordinary Course of Business and
consistent with past practice of the Company and represent valid obligations due
to the Company; (ii) are enforceable in accordance with their respective terms;
(iii) are not subject to deduction, set-off or counterclaim; and (iv) will be
collected in accordance with their respective terms in their recorded amounts.
Schedule 5.24 of the Company Disclosure Letter lists any obligor who, together
with all of its affiliates, owed accounts and notes due and uncollected as
reflected on the Balance Sheet, in an aggregate amount of $5,000 or more.
(b) Except as set forth on Schedule 5.24 of the Company Disclosure Letter,
as of the date hereof there is (i) no account debtor or note debtor delinquent
in its payment by more than ninety (90) days; (ii) to the best knowledge of the
Company and Xxxxx, no account debtor or note debtor is insolvent or bankrupt;
(iii) no account receivable or note receivable has been pledged to any third
party; or (iv) no claim, refusal or threatened refusal to pay, or any rights of
set-off against, any accounts or notes receivable of the Company.
(c) Since January 1, 2002, no client listed on Schedule 5.24 of the Company
Disclosure Letter has cancelled or otherwise terminated or threatened to cancel
or otherwise terminate its relationship with the Company or has during such
period decreased or threatened to decrease, modify, or limit, its business
relationship with the Company in any material respect.
Section 5.25. Guaranties.
The Company is not a guarantor or otherwise liable for any debt, liability
or other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such liability, debt or other obligation or to purchase (or to
advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such liability, debt or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such liability, debt or other obligation or
(d) as an account party in respect of any letter of credit issued to support
such liability, debt or other obligation.
Section 5.26. Environmental Matters.
(a) The Company has obtained all Permits which are required under all
Federal, state and local statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, concessions, grants, franchises, agreements or
governmental restrictions relating to the environment or the release of any
materials into the environment (collectively, "Environmental Laws"). The Company
is in compliance with the terms and conditions of all such Permits and are also
in compliance and has at all times complied with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Environmental Law applicable to the
Company and its business, operations, affairs, assets, properties or operations
or in any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder.
(b) The Company (i) has not handled, stored or released any pollutants,
contaminants, toxic or hazardous substances, materials, wastes, constituents,
compounds, chemicals, natural or manmade elements or forces (including, without
limitation, petroleum or any by-products or fractions thereof, any form of
natural gas, lead, asbestos and asbestos-containing materials, building
construction materials and debris, polychlorinated biphenyls ("PCBs") and
PCB-containing equipment, radon, and other radioactive elements, ionizing
radiation, electromagnetic field radiation and other non-ionizing radiation,
sonic forces and other natural forces, infectious, carcinogenic, mutagenic or
etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and
urea formaldehyde foam insulation) that are regulated by any Environmental Laws
(collectively, "Hazardous Substances"); (ii) is not and will not be liable or
responsible for clean-up costs, remedial work or damages in connection with the
handling, storage or release by the Company of any Hazardous Substance prior to
the Closing Date; and (iii) has not received any claim for clean-up costs,
remedial work or damages from any Person or Federal, state or local government
or any agency or political subdivision thereof, in connection with the handling,
storage or release by the Company of any Hazardous Substance.
(c) The Company has not been assessed and is not liable for, subject to or
have been assessed or threatened, with respect to any claims, judgments,
damages, penalties, fines, liens, costs or expenses in connection with any
Environmental Laws or suffered any diminution in value, restrictions or loss of
use of any owned or leased property as a result of Environmental Laws.
Section 5.27. Records.
All records, books, minutes, and other records and information relating to
the Company are complete and correct and reflect accurately all corporate
actions, issuances of Units and other securities and other actions taken by or
on behalf of the Company.
Section 5.28. Bank Accounts; Powers of Attorney.
Schedule 5.28 of the Company Disclosure Letter sets forth a list of (i) the
name of each bank in which the Company has an account, safe deposit box, or lock
box, and the names of all persons authorized to draw thereon, or to have access
thereto, and (ii) the names of all persons holding powers of attorney from the
Company and a summary statement of the terms thereof.
Section 5.29. Brokers and Finders.
No Person acting on behalf or under the authority of the Company or any
Member is or will be entitled to any broker's, finder's, or similar fee or
commission in connection with the transactions contemplated hereby.
Section 5.30. Investment Representations and Warranties.
Each of the Investment Letters and the Affiliates Letters (as such terms
are hereinafter defined) are true and correct in all respects.
Section 5.31. Disclosure.
None of the Merger Documents or other materials referred to herein, or
furnished to Medix by or on behalf of the Company or Xxxxx, contains any untrue
statement of a material fact by the Company or Xxxxx or omits to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
ARTICLE VI.
Representations and Warranties of Medix and the Merger Sub
Each of Medix and the Merger Sub hereby represents and warrants to the
Company as follows:
Section 6.1. Organization; Powers.
Each of Medix and the Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of Medix and the Merger Sub has all requisite corporate
power and authority to execute and deliver the Merger Documents to which it is a
party, to perform its obligations thereunder and to consummate the transactions
contemplated thereby.
Section 6.2. Authority.
Each of Medix and the Merger Sub has taken all corporate action necessary
to authorize its execution and delivery of the Merger Documents to which it is a
party, the performance of its obligations thereunder, and its consummation of
the transactions contemplated thereby (other than with respect to the Merger,
the approval and adoption of this Agreement and the transactions contemplated
hereby by the stockholders of Medix, in accordance with applicable law and
Medix's certificate of incorporation and by-laws and the filing and recordation
of appropriate merger documents as required by the Ohio Statute). This Agreement
has been executed and delivered by one or more officers of each of Medix and
Merger Sub in accordance with such authorization and constitutes a valid and
binding obligation of each of Medix and Merger Sub, enforceable against Medix or
Merger Sub in accordance with its terms. Each Merger Document and each other
document or instrument contemplated thereby, when executed and delivered in
accordance with the provisions thereof, shall be a valid and binding obligation
of each of Medix and Merger Sub, enforceable against Medix or Merger Sub in
accordance with its terms.
Section 6.3. No Conflict.
The execution and delivery by each of Medix and Merger Sub of the Merger
Documents to which it is a party, consummation of the transactions contemplated
thereby, and its compliance with the provisions thereof, will not (i) violate or
conflict with the certificate of incorporation or by-laws, each as amended to
the date hereof, of each of Medix and the Merger Sub (ii) violate, constitute a
default (whether with notice, lapse of time, or both), conflict with, or give
rise to any right of termination, cancellation, or acceleration under any
agreement, indenture, note, bond, mortgage, deed of trust, lease, security,
license, permit, or instrument to which either Medix or the Merger Sub is a
party, or to which it or any of their respective assets are subject; or (iii)
result in the imposition of any Encumbrance on any asset of either Medix or
Merger Sub; or (iv) violate or conflict with any Laws.
Section 6.4. Litigation.
There are no (i) actions, suits, claims, investigations, administrative or
other proceedings by or before any governmental authority, arbitrator, mediator
or other dispute resolution Person or court, whether at law or in equity,
whether civil or criminal in nature, pending or threatened against Medix or the
Merger Sub, or any of their assets, properties, interests in assets of
properties or rights, or (ii) judgments, decrees, injunctions or orders of any
governmental authority, arbitrator, mediator or other dispute resolution Person
or court against or binding upon or threatened against Medix or the Merger Sub
or any of their assets, properties, interests in assets of properties or rights,
or questioning the validity or enforceability of any of the Merger Documents and
the transactions contemplated thereby. Medix or the Merger Sub is not in default
under any such judgment, decree, injunction or order. Medix or the Merger Sub
has delivered to the Company correct and complete copies of all documents and
correspondence relating to, or a description of, any of the matters described in
this Section 6.4.
Section 6.5. No Consent or Approval Required.
No consent, waiver, approval or authorization of, or declaration to or
filing with, any governmental or regulatory authority, or any other Person, is
required for the valid authorization, execution and delivery by Medix or the
Merger Sub of the Merger Documents to which it is a party or for the
consummation of the transactions contemplated thereby that has not been
obtained, except for (i) applicable requirements under the Securities Act and
Exchange Act (as hereinafter defined); (ii) state securities and "blue sky"
laws; (iii) applicable requirements of AMEX; (iv) filings and recordations of
appropriate Merger Documents as required by the Ohio Statute; and (v) approval
by the stockholders of Medix, in accordance with applicable Law and Medix's
certificate of incorporation and by-laws.
Section 6.6. Common Stock.
Except for obtaining the approval of the stockholders of Medix for the
Merger and the issuance of shares of Common Stock as Merger Consideration, the
Common Stock issuable in connection with the Initial Merger Consideration are
duly authorized by all necessary action and will be when issued and sold in
accordance with the terms of this Agreement, validly issued, fully paid and
non-assessable and free and clear of all Taxes and Encumbrances. The shares of
Common Stock issuable in connection with Contingent Payments upon satisfaction
of the applicable Qualifying Event are duly authorized by all necessary action
and will be when issued and sold in accordance with the terms of this Agreement
validly issued, fully paid and non-accessible and free and clear of all Taxes
and Encumbrances. The shares of Common Stock have been issued in compliance with
all applicable agreements, instruments or Laws, including but not limited to,
the Securities Act of 1933 (the "Securities Act") and applicable state
securities or "blue sky" laws. The "Medix Disclosure Letter" shall mean the
Medix disclosure schedules delivered by Medix to the Company currently with the
execution and delivered of this Agreement. The Medix Disclosure Letter shall
include references to each provision of this Agreement to which information
contained in the Medix Disclosure Letter is intended to apply.
Section 6.7. Medix Reports and Financial Statements.
(a) Medix has filed all forms, reports, statements and other documents
required to be filed by Medix with the Securities and Exchange Commission
("SEC") since September 30, 2002 (the "Medix Reports"), each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, and the
Securities Exchange Act of 1934 (the "Exchange Act"), and the rules and
regulations promulgated thereunder, each as in effect on the date so filed. None
of the Medix Reports (including any financial statements or schedules included
or incorporated by reference therein) contained when filed any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) All of financial statements of Medix included in the Medix Reports have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated financial position of
Medix and its subsidiaries at the respective dates thereof and the consolidated
results of its operations and changes in cash flows for the periods indicated
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(c) There are no liabilities of Medix or any of its subsidiaries of any
kind whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to Medix and its subsidiaries, taken as a whole,
other than (i) liabilities disclosed or provided for in the consolidated balance
sheet of Medix and its subsidiaries at September 30, 2002, including the notes
thereto; (ii) liabilities disclosed in the Medix Reports; (iii) liabilities
incurred on behalf of Medix under this Agreement and the contemplated Merger;
and (iv) liabilities incurred in the Ordinary Course of Business consistent with
past practice since September 30, 2002.
Section 6.8. Disclosure.
None of the Merger Documents or other materials referred to herein
furnished to the Company by Medix or the Merger Sub or the Medix Reports,
contain any untrue statement of a material fact or omits to state a material
fact required in order to the make the statements contained herein or therein,
in light of the circumstances in which they were made, not misleading, and such
statements remain true and complete in all material respects as of the date of
this Agreement.
ARTICLE VII.
Conditions to Closing of Each Party
The obligations of each party to perform this Agreement are subject to the
following conditions precedent:
Section 7.1. Legal Action.
No temporary restraining order, preliminary injunction, or permanent
injunction or other order preventing the consummation of the transactions
contemplated by the Merger Documents shall have been issued by any Federal,
state or local court or any administrative or regulatory agency or commission or
other governmental authority or agency (domestic or foreign) and remain in
effect. Each party agrees to use its best efforts to have any such order or
injunction lifted.
Section 7.2. Legislation.
No Federal, state, local or foreign Law shall have been enacted which
prohibits, restricts or delays the consummation of the transactions contemplated
hereby, by the Merger Documents, or any of the conditions to the consummation of
such transactions.
Section 7.3. Escrow Agreement.
Each of Medix, the Representative (as attorney-in-fact for the Members
pursuant to Section 8.17) and the Escrow Agent shall have executed and delivered
the Escrow Agreement in form and substance reasonably satisfactory to the
parties thereto. The Escrow Agreement shall provide for the release of shares of
Common Stock received as Merger Considerations as follows: 3,000,000 shares on
the three month anniversary of the Closing Date, an additional 2,000,000 shares
on the six month anniversary of the Closing Date and an additional 1,000,000
shares on each three month anniversary of the Closing Date thereafter with any
remaining shares of Common Stock held in the Escrow Account released 24 months
after the Closing Date; (iii) permit, subject to compliance with applicable Law,
including but not limited to, the Securities Act and state securities and blue
sky laws, the unrestricted sale of shares of Common Stock received by the
Members as Contingent Payments as follows: 1/3 upon receipt, 1/3 on the three
month anniversary of the date of the applicable Qualifying Event and the final
1/3 on the six month anniversary of the applicable Qualifying Event; and (iv)
otherwise be in form and substance satisfactory to the parties thereto.
Section 7.4. Registration Rights Agreement.
Medix and the Representative (as attorney-in-fact for the Members pursuant
to Section 8.17) shall have executed and delivered a registration rights
agreement (the "Registration Rights Agreement") which shall (i) provide for the
registration (and maintenance thereof) of all of the shares of Common Stock
received as Merger Consideration and (ii) permit, subject to compliance with
applicable Law, including but not limited to, the Securities Act and state
securities and blue sky laws, the unrestricted sale of shares of Common Stock
received by the Members as the Initial Merger Consideration in accordance with
the terms and conditions of the Escrow Agreement.
Section 7.5. Employment Agreements.
The Company, Medix and each of Xxxxx and Xxxxxx shall have executed and
delivered an employment agreement in form and substance satisfactory to the
parties thereto (each, an "Employment Agreement" and collectively, the
"Employment Agreements"), and each such Employment Agreement shall be in full
force and effect and an enforceable obligation against the Surviving
Corporation, Xxxxx and Xxxxxx as of the Closing Date.
ARTICLE VIII.
Conditions to Closing of Medix and the Merger Sub
The obligation of the Medix and the Merger Sub to pay the Merger
Consideration and perform this Agreement are subject to the following conditions
precedent:
Section 8.1. Company Approval.
The Members of the Company by resolutions or consents duly adopted shall
have approved the Merger and the execution, delivery and performance of the
Merger Documents to which it or they are a party, the transactions contemplated
thereby and compliance with the provisions thereof by the Company and Medix
shall have received a certificate signed by the Secretary of the Company, that
such resolutions or consents are in full force and effect and are all the
resolutions adopted in connection with the execution, delivery and performance
of the Merger Documents to which it or they are a party and the transactions
contemplated thereby.
Section 8.2. Key Employees- Employment Agreements.
Medix, the Company and Xxxxx shall have identified the key employees of the
Company and the Company and each such key employee shall have executed and
delivered employment agreements in form and substance satisfactory to Medix, and
each such employment agreement shall be in full force and effect and an
enforceable obligation against such employee as of the Closing Date.
Section 8.3. Due Diligence.
Medix and the Merger Sub shall have completed an examination of the
financial, accounting, business and legal records of the Company and such
examination shall be satisfactory to Medix and the Merger Sub and its counsel in
their reasonable discretion.
Section 8.4. Representations and Warranties.
On the Closing Date, (i) the representations and warranties of the Company
and the Representative contained in this Agreement or the Company Disclosure
Letter delivered pursuant hereto shall be true and correct with the same effect
as though made on and as of the Closing Date and (ii) the documents and
information required to be delivered to Medix or the Merger Sub by the Company
and Xxxxx (in his individual capacity and as the Representative on behalf of the
Members) under the Merger Documents are true and correct as of the Closing Date
with the same effect as though made on and as of the Closing Date and there have
been no amendments, modifications or changes to such documents or information
that have not been disclosed to Medix or the Merger Sub, and Medix shall have
received a certificate signed by an authorized officer of the Company, as to the
Company, to that effect, and a certificate from Xxxxx, as to Xxxxx, to that
effect.
Section 8.5. Performance of Obligations.
The Company and Xxxxx (in his individual capacity and as Representative on
behalf of the Members) shall have performed all the covenants, agreements and
obligations contained in this Agreement to be performed or complied with by the
Company and Xxxxx on or prior to the Closing Date, and the Medix shall have
received a certificate signed by an authorized officer of the Company, as to the
Company, to that effect, and a certificate from Xxxxx, as to Xxxxx, to that
effect.
Section 8.6. Certified Copies.
Medix shall have received such certified copies or other copies of such
documents as it or its counsel may reasonably request, including, but not
limited to, a certificate signed by the Secretary of the Company, dated as of
the Closing Date and certifying: (a) that attached thereto is a true and
complete copy of the articles of organization of the Company, as in effect on
the date of such certification; (b) that attached thereto is a certificate of
existence from the Secretary of State of the State of Ohio, along with foreign
qualifications, from the applicable jurisdictions, both as of a recent date; (c)
that attached thereto is a true and complete copy of the operating agreement of
the Company as in effect on the date of such certification; (d) that attached
thereto is a true and complete copy of the resolutions or consents authorizing
the execution of the Merger Documents and the transactions contemplated thereby,
and such resolutions constitute all resolutions relating to such transactions
and have not been amended or modified as of the Closing Date; and (e) to the
incumbency and specimen signature of each officer or Manager of the Company
executing any of the Merger Documents, and any certificate or instrument
furnished pursuant thereto.
Section 8.7. Opinion of Counsel.
The Purchaser shall have received an opinion of Katz, Teller, Xxxxx and
Xxxx, counsel for the Company, dated the Closing Date and addressed to the
Purchaser covering matters as to authorization, enforceability and other matters
customary for the transactions contemplated by this Agreement and otherwise in
form reasonably satisfactory to Medix.
Section 8.8. Consents and Approvals.
The Company shall have made all registrations, filings and applications,
given all notices and obtained all governmental or other third party consents,
transfers, approvals , orders, qualifications and waivers necessary or desirable
for the consummation of the transactions contemplated by the Merger Documents,
including but not limited to all consents, assignments or notices under any
contracts or agreements, Office Leases and Permits (including all state boards
of pharmacology) and the Vendor Services Agreement between Express Scripts, Inc.
and the Company, dated July 21, 2002, the RxHub POC Provider Pilot Participation
Agreement between RxHub and the Company, dated June 28, 2002 and the Point of
Care Alliance Agreement between Medco Health Solutions, Inc., and the Company
dated June 28, 2002, and the Company shall deliver to Medix copies of all such
registrations, filings, applications, notices, consents, transfers, approvals,
orders, qualifications and waivers in form and substance satisfactory to Medix.
Section 8.9. Absence of Changes.
No event, occurrence, fact, condition, change, development or effect shall
exist or have occurred or come to exist or been threatened that, individually or
in the aggregate, has had or resulted in or could be expected to become or
result in a material adverse effect on the business, assets, operations,
results, financial condition or prospects of the Company, and Medix shall have
received a certificate signed by an authorized officer of the Company to that
effect.
Section 8.10. Repayment or Conversion of Indebtedness.
Except as set forth on Schedule 8.11 of the Company Disclosure Letter, all
of the Members of the Company shall have converted any loans made to the Company
into Units of the Company prior to the Effective Time and the Company shall have
repaid in full all indebtedness or other obligations for borrowed money. Medix
shall have received evidence of such conversion or repayment in form and
substance satisfactory to Medix, including delivery to Medix of payoff letters.
Section 8.11. Release of Security Interests.
Except with respect to Encumbrances securing the indebtedness set forth in
Schedule 3.2 of the Company Disclosure Letter, all Encumbrances relating to the
assets, properties, interests in assets or properties and rights of the Company
shall have been terminated and released and Medix shall have received
confirmation of release of any security interests, pledges or other Encumbrances
in form and substance satisfactory to Medix.
Section 8.12. General Release.
Each of the Members of the Company shall have executed and delivered to
Medix a general release in form and substance satisfactory to Medix releasing
Medix, the Surviving Corporation and their respective affiliates, effective as
of the Closing Date, from all liabilities and obligations of any kind
whatsoever, other than liabilities and obligations under this Agreement or the
other Merger Documents.
Section 8.13. Purchaser Approvals.
Medix shall have obtained all necessary filings, approvals, consents and
waivers to effect the transactions contemplated by the Merger Documents,
including but not limited to, any approvals, consents or filing under the
Securities Act, the Exchange Act, the rules and regulations under AMEX and the
approval of the stockholders of Medix relating to the execution, delivery and
performance of this Agreement and the Merger.
Section 8.14. Rights of First Refusal.
All rights of first refusal, or similar rights, held by any Person with
respect to the Company, shall have expired without exercise. Medix shall have
received evidence of such expiration in form and substance satisfactory to
Medix.
Section 8.15. Reorganization; Operating Agreement.
(a) The Company and Way Over the Line, LLC, a limited liability company,
shall have merged or otherwise combined or consolidated their respective
businesses, operations and assets with the Company as the surviving entity.
Medix shall have received evidence of such merger, combination or consolation in
form and substance satisfactory to Medix.
(b) The Company shall have amended and restated its operating agreement
(the "Operating Agreement") in form and substance satisfactory to Medix and such
amended and restated Operating Agreement shall be in full force and effect as of
the Effective Time.
Section 8.16. Appointment of Representative.
Each of the Members shall have appointed Xxxxxxx X. Xxxxx as the
representative of the Members (the "Representative"), to act as attorney-in-fact
and representative for all purposes under the Merger Documents and the
transactions contemplated thereby, with the right in such capacity to do any and
all things and to execute any and all documents in such Member's place and stead
in connection with the Merger Documents and the transactions contemplated
thereby. Medix shall have received evidence of such appointment in form and
substance satisfactory to Medix.
Section 8.17. Investment Letters; Affiliate Letters
(a) Each of the Members shall have executed and delivered an investment
letter (the "Investment Letter") in form and substance satisfactory to Medix.
(b) Each "affiliate" of the Company as such term is defined under Section
145 of the Securities Act shall and executed and delivered to Medix an affiliate
agreement (the "Affiliate Agreements") in form and substance satisfactory to
Medix.
Section 8.18. Xxxxxx Non-Competition Agreement.
The Company and Xxxxxx shall have executed and delivered a non-competition
agreement (the "Non-Competition Agreement") in form and substance satisfactory
to Medix.
Section 8.19. Dissenters' Rights.
Members holding not less than ninety-five percent (95%) of the outstanding
Units of the Company shall have voted in favor of the Merger and waived any and
all dissenters' rights or rights to demand fair cash value under the Ohio
Statute.
Section 8.20. Voting Agreement.
Each of Medix, Xxxxx, Xxxxxx and such other Members as Medix may determine
in its sole discretion shall have executed and delivered a voting agreement (the
"Voting Agreement") and such Voting Agreement shall be in form and substance
satisfactory to Medix.
Section 8.21. Fairness Opinion.
Medix shall have received, at its own cost and expense, an opinion dated as
of the Closing Date from a firm selected by Medix in its sole discretion to the
effect that, as of such date, the Merger is fair to Medix's stockholders from a
financial point of view and such opinion shall not have been withdrawn.
Section 8.22. Non-Compete Agreements.
The Company and each of Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxx
Xxxxxxx, and Xxxxxx Xxxxxxx shall have executed and delivered non-compete and
confidentiality agreements in form and substance satisfactory to Medix, and each
such agreement shall be in full force and effect and an enforceable obligation
against each such person as of the Closing Date.
Section 8.23. Audited Financial Statements.
Medix shall have obtained, at its own cost and expense, audited Financial
Statements of the Company prior to the Closing Date.
Section 8.24. Acceptance by Counsel.
The sufficiency of all agreements, documents and certificates delivered
hereunder and related proceedings shall be reasonably accepted to Moses & Singer
LLP, counsel to Medix and the Merger Sub.
ARTICLE IX.
Conditions to the Closing of the Company and Xxxxx
The obligation of the Company and Xxxxx to perform this Agreement is
subject to the following conditions precedent:
Section 9.1. Representations and Warranties.
On the Closing Date, (i) the representations and warranties of Medix and
the Merger Sub contained in this Agreement or the Medix Disclosure Letter
delivered pursuant hereto shall be true and correct with the same effect as
though made on and as of the Closing Date and (ii) the documents and information
required to be delivered to the Company by Medix or the Merger Sub under the
Merger Documents are true and correct as of the Closing Date with the same
effect as though made on and as of the Closing Date and there have been no
amendments, modifications or changes to such documents or information that have
not been disclosed to the Company, and the Company shall have received a
certificate signed by an authorized officer of Medix and a certificate from an
authorized officer of the Merger Sub, as to the Merger Sub, to that effect.
Section 9.2. Performance of Obligations.
Each of Medix and the Merger Sub shall have performed all the covenants,
agreements and obligations contained in this Agreement to be performed or
complied with by Medix or the Merger Sub on or prior to the Closing Date, and
the Company shall have received a certificate signed by an authorized officer of
Medix as to Medix, to that effect, and a certificate from an authorized officer
of the Merger Sub, as to the Merger Sub, to that effect.
Section 9.3. Certified Copies.
The Company shall have received such certified copies or other copies of
such documents as it or its counsel may reasonably request, including, but not
limited to, a certificate signed by the Secretary of each of Medix and the
Merger Sub, dated as of the Closing Date and certifying: (a) that attached
thereto is a true and complete copy of the certificate of incorporation of Medix
or the Merger Sub, as the case may be, as in effect on the date of such
certification; (b) that attached thereto is a long-form good standing
certificate from the Secretary of State of Colorado and Delaware, as applicable;
(c) that attached thereto is a true and complete copy of the by-laws of Medix or
the Merger Sub, as the case may be, as in effect on the date of such
certification; (d) that attached thereto is a true and complete copy of the
resolutions authorizing the execution of the Merger Documents and the
transactions contemplated thereby by each of the Board of Directors of Medix and
the Merger Sub and such resolutions constitute all resolutions relating to such
transactions and have not been amended or modified as of the Closing Date; and
(e) to the incumbency and specimen signature of each officer of Medix or the
Merger Sub executing any of the Merger Documents, and any certificate or
instrument furnished pursuant hereto.
Section 9.4. Financing
Medix shall have raised not less than $1 million in additional financing
since October 25, 2002.
Section 9.5. Consents and Approvals.
Each of Medix and the Merger Sub shall have made all applicable
registrations, filings and applications, given all notices and obtained all
governmental, administrative, regulatory or other third party consents,
transfers, approvals, orders, qualifications and waivers necessary or desirable
for the consummation of the transactions contemplated by the Merger Documents
and shall deliver to the Company copies of all such registrations, filings,
applications, notices, consents, transfers, approvals, order qualifications and
waivers in form and substance satisfactory to the Company and Xxxxx thereto.
Section 9.6. Opinion of Counsel.
The Purchaser shall have received an opinion of Moses & Singer LLP, counsel
for Medix and the Merger Sub, dated the Closing Date and addressed to the
Company and the Representative covering matters as to authorization,
enforceability and other matters customary for the transactions contemplated by
this Agreement and otherwise in form reasonably satisfactory to the Company.
Section 9.7. Absence of Changes.
No event, occurrence, fact, condition, change, development or effect shall
exist or have occurred or come to exist or been threatened that, individually or
in the aggregate, has had or resulted in or could be expected to become or
result in a material adverse effect on the business, assets, operations,
results, financial condition or prospects of Medix, and the Company shall have
received a certificate signed by an authorized officer of Medix to that effect.
Section 9.8. Acceptance by Counsel.
The sufficiency of all agreements, documents and certificates delivered
hereunder and related proceedings shall be reasonably acceptable to Katz,
Teller, Xxxxx & Xxxx, counsel to the Company.
ARTICLE X.
Covenants and Agreements
Section 10.1. Filings and Consents.
Each of the Company, Xxxxx, Medix and the Merger Sub shall cooperate and
use their respective best efforts to make all registrations, filings and
applications, to give all notices and to obtain all governmental,
administrative, regulatory or other third party consents, transfers, approvals,
orders, qualifications and waivers necessary or desirable for the consummation
of the transactions contemplated by the Merger Documents and the applicable
party shall deliver to the other party copies of all such registrations,
filings, applications, notices, consents, and waivers.
Section 10.2. Access to Records and Properties of the Company.
From and after the date hereof until the Closing, the Company shall afford,
and Xxxxx shall cause the Company to afford, (a) to Medix and its authorized
representatives, including, but not limited to, its counsel and accountants,
free and full access at all reasonable times to the personnel, assets, business,
properties, books, records (including Tax Returns filed and in preparation) of
the Company in order that Medix may have full opportunity to make such due
diligence investigation as it may desire to make of the affairs of the Company;
and (b) to the accountants of Medix, free and full access at all reasonable
times to the books, data and records of Seeskin, Paas, Xxxxxxxxx & Co., the
Company's independent certified public accountants. The investigation
contemplated by this Section shall not affect or otherwise diminish or obviate
in any respect any of the representations and warranties of the Company and
Xxxxx contained in this Agreement or the indemnification obligations pursuant to
Article XII.
Section 10.3. Conduct of Business.
From the date of this Agreement to the Closing Date, and except as
otherwise contemplated by this Agreement, the Company and Xxxxx covenant and
agree to operate the Company's business, operation and affairs only in the
Ordinary Course of Business and consistent with past practice and use their best
efforts to preserve and maintain the Company's business, assets, properties,
rights, relationships with suppliers, customers, clients, employees, agents and
others having business dealings with the Company. Without limiting the
generality of the foregoing, except as otherwise contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, without
the prior written consent of Medix, the Company will not, and Xxxxx will cause
the Company not to:
(a) create, incur or assume any debt, liability or obligation, direct or
indirect, whether accrued, absolute, contingent or otherwise, relating to the
Company, other than in the Ordinary Course of Business and consistent with past
practice, but in no event greater than $5,000;
(b) cause the Company, to assume, guarantee, endorse or otherwise become
responsible (whether directly, indirectly, contingently or otherwise) for the
obligations of, or make any loans or advances to, any other Person, other than
in the Ordinary Course of Business and consistent with past practice, but in no
event greater than $5,000;
(c) waive or release any rights of value relating to the Company, or cause
the Company to cancel, compromise, release or assign any indebtedness owed to
them or any claims held by them, other than in the Ordinary Course of Business
and consistent with past practice, but in no event greater than $5,000;
(d) transfer, sell, assign or otherwise convey any of the assets,
properties, interests in assets or properties or rights of the Company, other
than in the Ordinary Course of Business and consistent with past practice, but
in no event greater than $5,000;
(e) mortgage, pledge, subject to any lien, claim or charge or otherwise
Encumber any of the assets, properties, interests in assets or properties or
rights of the Company or in any way create or consent to the creation of any
title condition affecting such assets, properties, interests or rights other
than in the Ordinary Course of Business and consistent with past practice, but
in no event greater than $5,000;
(f) with respect to the managers, directors, officers or employees of the
Company:
(i) increase the rate or terms of compensation payable or to become payable
to any of them;
(ii) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or permitted by any existing plan, agreement or
arrangement to any of them;
(iii) commit to any additional pension, profit sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or increase the rate or terms of any such plan,
agreement or arrangement which now exists, to the extent applicable to any of
them; or
(iv) enter into any employment or severance agreement with or for the
benefit of them;
(g) enter into or terminate any lease or make any change in any lease,
other than in the Ordinary Course of Business and consistent with past practice,
but in no event greater than $5,000;
(h) make or become obligated to make any capital expenditures relating to
the Company or enter into any commitments therefore, other than in the Ordinary
Course of Business and consistent with past practice, but in no event greater
than $5,000;
(i) make any alteration in the manner of keeping the books, accounts or
records of the Company, or in the accounting practices therein reflected, except
as required by applicable Law or GAAP;
(j) the Company shall not (i) change or amend its articles of organization
or operating agreement; (ii) issue any Units or other equity interests in the
Company, or issue or sell any securities convertible into or exchangeable for or
carrying the right to, or options with respect to, or warrants to purchase or
rights to subscribe to, any Units or other equity interests in the Company or
enter into any agreement obligating the Company to undertake any of the
foregoing; or (iii) pay any dividends or distributions with respect to any
membership or other equity interests in the Company;
(k) take any action that would cause any representation or warranty herein
to be untrue; or
(l) commit or agree to take any of the foregoing actions.
Section 10.4. Efforts to Consummate.
Subject to the terms and conditions provided herein, the parties hereto
shall use their respective reasonable best efforts to take or cause to be taken
all action and do or cause to be done all things reasonably necessary, proper or
advisable to consummate and make effective, as soon as reasonably practicable,
the transactions contemplated by the Merger Documents, including, but not
limited to, the obtaining of all consents, authorizations, orders and approvals
of any Person, required in connection with the consummation of the transactions
contemplated by the Merger Documents.
Section 10.5. Negotiation With Others.
(a) Negotiation. From and after the date hereof, until the earlier of the
Closing Date or the termination of this Agreement pursuant to Article XI, the
Company, Xxxxx and Xxxxxx will not, and Xxxxx will cause the Company not to,
directly or indirectly (through representatives, agents or otherwise): (i)
solicit, initiate discussions or engage in negotiations with any Person (whether
such negotiations are initiated by the Company, Xxxxx, Xxxxxx or otherwise),
concerning the possible acquisition, recapitalization or reorganization (whether
by way of merger, reorganization, purchase of equity interests, purchase of
indebtedness, purchase of assets or otherwise) of the Company (collectively, a
"Transaction"); (ii) provide information with respect to the Company to any
Person, relating to a Transaction with the Company; or (iii) enter into any
agreement or understanding with any Person, concerning a Transaction with the
Company. If the Company, Xxxxx or Xxxxxx receives any unsolicited offer or
proposal to enter into negotiations relating to a Transaction or for any
information concerning the Company, or any of the assets, properties or rights
of the Company, the Company, Xxxxx or Xxxxxx, as the case may be, shall promptly
notify Medix of such offer or proposal, the identity of the Person making such
offer or proposal and the terms of such offer or proposal (including without
limitation, the purchase price and financing therefore).
(b) Disposition of Securities; Solicitation; Voting. From and after the
date hereof, each of Xxxxx and Xxxxxx shall, (i) refrain from transferring,
selling or assigning to any Person or agreeing in any manner to transfer, sell
or assign to any Person or pledge, Encumber, deposit in a voting trust or grant
a proxy with respect to any Units or other securities of the Company presently
or hereafter owned or controlled by Xxxxx or Xxxxxx; (ii) refrain from
soliciting or entering into any agreement or arrangement with any Person with
respect to any transfer, sale or assignment of any Units or other securities of
the Company; and (iii) vote any Units, including the Units currently, or
hereafter owned or controlled by Xxxxx or Xxxxxx in favor of the Merger and the
transactions contemplated by the Merger Documents at every meeting of the
Members of the Company called therefore and at every adjournment thereof (or in
connection with any written action in lieu of any such meeting) and against any
other merger, consolidation, sale of assets, reorganization, recapitalization,
liquidation or winding-up of the Company at every meeting of members of the
Company called therefore and at every adjournment thereof (or in connection with
any written action in lieu of any such meeting). At the request of Medix, Xxxxx
and Xxxxxx shall execute and deliver such agreements or instruments necessary or
desirable to further effect this Section 10.5(b), including but not limited to
irrevocable voting proxies or a voting agreements.
(c) Breach of Sections 10.5(a) or 10.5(b). The parties hereto recognize and
acknowledge that a breach by the Company, Xxxxx or Xxxxxx, as the case may be,
of Section 10.5(a) or 10.5(b) hereof, respectively, will cause irreparable and
material loss and damage for Medix, the amount of which is not readily
determinable, and that, in addition to any remedy Medix may have in damages by
an action at law, it shall be entitled to the issuance of an injunction
restraining any such breach or any other remedy at law or in equity for any such
breach.
Section 10.6. Supplements to the Company Disclosure Letter.
From time to time prior to the Closing, the Company and Xxxxx will promptly
supplement or amend the Company Disclosure Letter with respect to any matter
hereafter arising, which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in the Company
Disclosure Letter. No supplement or amendment of the Company Disclosure Letter
made pursuant to this Section 10.6 shall be deemed to constitute a cure of any
breach of any representation of or warranty made by the Company and Xxxxx
pursuant to this Agreement or constitute a waiver of any such breach or consent
to any such breach by Medix or the Merger Sub.
Section 10.7. Notice of Developments.
The Company and Xxxxx shall give prompt written notice to Medix:
(a) any development adversely affecting the business, assets, properties,
rights, liabilities, financial condition, operations, results of operations,
affairs or future prospects of the Company; and
(b) any development affecting the ability of the Company, Xxxxx, or any
other Member to consummate the transactions contemplated by the Merger
Documents;
provided, however, no disclosure by the Company and Xxxxx pursuant to this
Section 10.7 shall be deemed to supplement or amend the Company Disclosure
Letter hereto or to constitute a cure of any representation of or warranty made
by the Company or Xxxxx pursuant to this Agreement or constitute a waiver of any
such breach or consent to any such breach by Medix.
Section 10.8. Fees and Expenses.
Medix and the Members shall bear their own respective fees and expenses
incurred in connection with the preparation for and consummation of the
transactions contemplated by the Merger Documents. Medix shall pay up to a
maximum of One Hundred Thousand Dollars ($100,000) of the Company's fees and
expenses incurred in connection with the preparation for and consummation of the
transactions contemplated by the Merger Documents.
Section 10.9. Required Payments.
The Company shall have paid its respective accrued aggregate annual amounts
required under ERISA, the Code and/or by contract to be contributed to any
Assumed Benefit Plans (including any premiums), along with any interest,
penalties or late charges, fully with respect to 2001 and 2002 fiscal years and
provision for such amounts are reflected on the Balance Sheet.
Section 10.10. Non-Compete.
(a) Xxxxx agrees that, during the Non-Compete Period (as defined below), he
shall not engage in any activities or provide any services or products either on
his own behalf or for the benefit or on behalf of any other business
organization or Person (whether as principal, partner, member, officer,
director, stockholder, agent, joint venturer consultant creditor, lender,
guarantor, surety, investor or otherwise) which are in direct or indirect
competition with or similar to the business, products and services of Medix, the
Surviving Corporation or any of their respective direct or indirect,
subsidiaries, divisions, partnerships, limited liability companies, joint
ventures and affiliates, (collectively, the "Group") in the United States or
Canada. Each of Xxxxx and Medix, expressly declares that the territorial and
time limitations contained in this Section are reasonable and are properly and
necessarily required for the adequate protection of the business, operations,
intellectual property and goodwill of Medix and the Surviving Corporation and
are given as an integral part of the Merger, but for which Medix and the Merger
Sub would not have entered into this Agreement. If such territorial or time
limitations, or any portions thereof, are deemed to be unreasonable by a court
of competent jurisdiction, whether due to passage of time, change of
circumstances or otherwise, each of Xxxxx, Medix and the Surviving Corporation
agrees to a reduction of said territorial and/or time limitations to such areas
and/or periods of time as said court shall deem reasonable. As used herein, the
term "Non-Compete Period" means a five (5) year period commencing on the Closing
Date.
(b) Xxxxx agrees that, during the Non-Compete Period, he will not directly
or indirectly, in one or a series of transactions (i) service, supervise the
service of, recruit, solicit or otherwise induce, persuade or influence any
stockholder, lender, director, officer, employee, sales agent, joint venturer,
investor, lessor, supplier, customer, client, agent, representative or any other
Person which has a business relationship with Medix, Surviving Corporation or
any other member of the Group to discontinue, reduce, or modify such employment,
agency or business relationship with Medix, the Surviving Corporation or the
Group, or (ii) seek to employ, retain or engage or employ, retain, engage or
employ or cause any business organization in direct or indirect competition with
or similar to Medix, the Surviving Corporation or the Group to seek to employ,
retain or engage or employ, retain, engage or employ any person or agent who is
then retained, engaged or employed by Medix, the Surviving Corporation or any
other member of the Group.
(c) The non-competition and non-solicitation provisions contained herein
are in addition to, and not in limitation of, any rights that Medix or the
Surviving Corporation may have by other contract, law or otherwise.
(d) Xxxxx acknowledges that the remedy at law for any breach of this
Section 10.10 may be inadequate. Accordingly, Xxxxx agrees that, upon any such
breach of this Section 10.10, Medix, the Surviving Corporation or any other
member of the Group shall, in addition to all other available remedies
(including, without limitation, seeking an injunction or other equitable
relief), be entitled to injunctive relief without having to prove the inadequacy
of the remedies available at law and without being required to post bond or
other security.
(e) The failure of Medix, the Surviving Corporation or any other member of
the Group at any time to require performance by Xxxxx of any provision hereunder
shall in no way affect the right of Medix, the Surviving Corporation or any
member of the Group thereafter to enforce the same, and the waiver by Medix, the
Surviving Corporation or any member of the Group of a breach of any provision of
this Section 10.10 shall not operate as or be construed a waiver of any
subsequent breach thereof.
(f) Xxxxx acknowledges and agrees that the covenants and restrictions
contained in this Section 10.10 are separate and distinct from any other
contractual obligations the Executive may have with respect to the subject
matter of Section 10.10 and are in connection with the sale by Xxxxx of his
controlling interest in the Company.
(g) Each of Medix, the Surviving Corporation and any other member of the
Group acknowledges and agrees that the remedies for any breach by Xxxxx of the
provisions of this Section 10.10 shall be exclusively against Xxxxx and shall
not constitute a claim against the Company or the Members or constitute an
indemnification claim pursuant to Article 12 of this Agreement.
Section 10.11. Further Assurances.
At any time or from time to time after the Closing, Xxxxx (in his
individual capacity and as Representative on behalf of the Members) and the
Company shall, at the request of Medix and without additional consideration,
execute and deliver any further instruments or documents and take any such
further action as Medix may reasonably request in order to consummate the
transactions contemplated in the Merger Documents.
ARTICLE XI.
Termination
This Agreement may be terminated at any time prior to the Closing, as
follows:
(a) by the mutual written consent of Medix on the one hand, and the Company
and Xxxxx on the other;
(b) on or after the Termination Date (as hereinafter defined) by either the
Company and Xxxxx or Medix, as the case may be, if the conditions set forth in
Articles VII, VIII and IX hereof shall not have been met by the applicable
party;
(c) by Medix, if Medix shall have determined, in its sole discretion, that
the transactions contemplated by the Merger Documents have become inadvisable or
impracticable by reason of the institution of any litigation, proceeding or
investigation to restrain or prohibit the consummation of such transactions or
which questions the validity or legality of the transactions contemplated by the
Merger Documents; or
(d) by Medix, if any Law shall have been enacted which, in its sole
discretion, impairs the conduct or operation of the Company as presently
conducted and as contemplated to be conducted; or
(e) by the Company and Xxxxx or Medix, if the closing price of the Common
Stock on the AMEX is less than $0.50 per share for five (5) consecutive trading
days].
provided, however, that if such termination shall result from the breach of any
representation, warranty, covenant or agreement by any party to this Agreement,
such party shall be fully liable for any and all damages, costs and expenses
(including, but not limited to, reasonable counsel fees) sustained or incurred
by any other party as a result of such breach. As used herein, the term
"Termination Date" shall mean April 1, 2003. Any termination pursuant to this
Article XII (other than a termination pursuant to paragraph (a) hereof) shall be
effected by written notice from the party or parties so terminating to the other
parties hereto.
ARTICLE XII.
Indemnification
Section 12.1. Definitions.
As used in this Article XII, the following terms shall have the following
meanings:
(a) "Claim" means a claim, demand, action, suit, proceeding or cause of
action, in each case (i) whether made, occurring or threatened before or after
the Closing Date; (ii) whether or not disclosed or known prior to the Closing
Date; and (iii) whether made by any governmental or quasi-governmental authority
or private Person.
(b) "Losses" shall mean any and all losses, damages, deficiencies, costs,
liabilities, expenses (including but not limited to, interest, penalties and
reasonable attorneys', accountants' and other professional fees and
disbursements), payments to avoid penalties (whether in settlement or otherwise)
and assessments, sustained, suffered or incurred by any Indemnified Person,
directly or indirectly whether or not involving any Third Party Claim (as
defined below).
Section 12.2. Indemnification.
(a) Xxxxx (in his individual capacity and as Representative on behalf of
the Members pursuant to Section 8.16) shall, and, if this Agreement shall have
been terminated prior to Closing, Xxxxx (in his individual capacity and as
Representative on behalf of the Members pursuant to Section 8.16) and the
Company shall jointly and severally, indemnify, defend and hold harmless Medix
and, if the Closing shall have occurred, the Surviving Corporation and each of
their respective affiliates, shareholders, officers, directors, employees, and
agents, from and against any and all Losses assessed, incurred or sustained by
or against any of them relating to, in connection with or arising out of (i) any
misrepresentation, inaccuracy or breach of any representation or warranty made
by the Company or Xxxxx contained in any Merger Document, the Company Disclosure
Letter or any schedule, certificate or other writing delivered in connection any
of the foregoing; (ii) any breach or failure of observance or performance of any
covenant, agreement or commitment made by the Company or Xxxxx (in his
individual capacity and as Representative on behalf of the Members pursuant to
Section 8.16) in any Merger Document; (iii) any Taxes relating to periods ending
on or before the Closing Date and any Taxes relating to the Merger Consideration
or the exchange of Units; (iv) any amounts paid to dissenting Members that
demand fair cash value for their Units under the Ohio Statute (to the extent not
otherwise provided for pursuant to Section 3.2 above) or (v) any Claims or
obligations of any kind or nature relating to the Company, the business,
operations or affairs of the Company or any of the assets, properties, interests
in assets or properties or rights of the Company which were existing at or as of
the Closing Date or arising in whole or in part out of any acts, transactions,
conditions, circumstances or facts which occurred or existed on or prior to the
Closing Date, whether or not then known or knowable.
(b) Medix shall indemnify, defend and hold harmless the Members and Xxxxx,
and if this Agreement shall have been terminated prior to Closing, the Company
and Xxxxx, from and against any and all Losses assessed, incurred or sustained
by or against any of them with respect to or arising out of (i) any
misrepresentation, inaccuracy or breach of any representation or warranty made
by Medix or the Merger Sub contained in any Merger Document, Medix Disclosure
Letter or any schedule, certificate or other writing delivered in connection any
of the foregoing, or (ii) any breach or failure of observance or performance of
any covenant, agreement or commitment made by Medix or the Merger Sub hereunder.
Section 12.3. Assertion of Claims.
No Claim shall be brought against a party (the "Indemnifying Person") under
Sections 12.2(a) or 12.2(b) and a party (the "Indemnified Person") shall not be
entitled to receive any payment with respect thereto, unless the Indemnified
Persons, or any of them, shall have given the Indemnifying Persons written
notice of the existence of any such Claim in accordance with this 12.3;
provided, however, that no delay or failure to give such notice on the part of
the Indemnified Person shall relieve the Indemnifying Persons from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Person is materially prejudiced thereby. Upon the giving of such written notice
as aforesaid, the Indemnified Persons, or any of them, shall have the right to
commence legal proceedings for the enforcement of their rights under Sections
12.2(a) or 12.2(b) hereof.
Section 12.4. Notice and Defense of Third Party Claims.
The obligations and liabilities of the Indemnifying Persons with respect to
Claims resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall give written notice to the Indemnifying
Persons within fifteen (15) days from the receipt of any Third Party Claim which
might give rise to a Claim by the Indemnified Persons against the Indemnifying
Persons based on the indemnity agreement contained in Sections 12.2(a) or
12.2(b) hereof, stating the nature and basis of said Third Party Claim, and the
amount of such Claim to the extent known; provided, however, that no delay or
failure to give such notice on the part of the Indemnified Person shall relieve
the Indemnifying Persons from any obligation hereunder unless (and then solely
to the extent) the Indemnifying Persons is materially prejudiced thereby. Such
notice shall be accompanied by copies of all relevant documentation with respect
to such Third Party Claim, including, but not limited to, any summons, complaint
or other pleading, which may have been served, or written demand, or other
document or other instrument.
(b) Medix and, after the Effective Time, the Surviving Corporation shall
have the sole right and obligation, at their sole expense, to defend against,
negotiate, settle or otherwise deal with any Third Party Claim with respect to
which they are the Indemnified Persons or Indemnifying Persons and to be
represented by counsel of their own choice, and Medix and the Surviving
Corporation will not admit any liability or settle, compromise, pay or discharge
the same without the consent of Xxxxx, which consent shall not be unreasonably
withheld; provided, however, that Xxxxx may participate in any proceeding with
counsel of his choice and at his expense. In the event Medix and the Surviving
Corporation fail to defend against, negotiate, settle or otherwise deal with
such Third Party Claim as provided above in this Section 12.4, then Xxxxx shall
have the right to defend against, negotiate, settle or otherwise deal with the
Third Party Claim in such manner as it deems appropriate.
Section 12.5. Right of Set-Off.
It is expressly acknowledged and agreed that Medix and the Surviving
Corporation may, but shall not be required to, satisfy all or any portion of any
Loss it may have hereunder against the Members by set-off against or deduction
from any Merger Consideration deposited in the Escrow Account pursuant to and in
accordance with the procedures set forth in the Escrow Agreement.
Section 12.6. Remedies Cumulative.
The remedies provided for in this Article XII shall be cumulative and shall
not preclude assertion by any party hereunder of any other rights or the seeking
of any other remedies at law or in equity against any other party.
Section 12.7. Survival of Representations; Limitation on Liability.
Notwithstanding anything to the contrary in this Agreement, the respective
obligations and liabilities of the Company and Xxxxx (in his individual capacity
and as Representative on behalf of the Members pursuant to Section 8.16), on the
one hand, and Medix and the Surviving Corporation, on the other hand, under this
Article XII shall be subject to the following limitations:
(a) The representations and warranties of the Company and Xxxxx (in his
individual capacity and as Representative on behalf of the Members pursuant to
Section 8.16) contained in this Agreement shall survive the Closing until the
second anniversary of the Closing Date (the "Indemnification Expiration Date")
for purposes of this Article XII; provided that Claims relating to (i) Sections
5.1, 5.2, 5.3 and 5.4 shall survive indefinitely and (ii) all agreements and
covenants contained herein shall survive indefinitely until, by their terms,
they are no longer operative.
(b) Neither Medix nor the Surviving Corporation may assert any Claim for
and in no event shall the Company and Xxxxx (in his individual capacity and as
Representative on behalf of the Members pursuant to Section 8.16), have any
liability for, indemnification hereunder, unless the aggregate amount of the
Losses for all such Claims for indemnification asserted against Company and
Xxxxx (in his individual capacity and as Representative on behalf of the Members
pursuant to Section 8.16), exceeds One Hundred Thousand Dollars ($100,000), in
which event, the Members shall be liable for all such amounts in excess of Fifty
Thousand Dollars ($50,000).
(c) The aggregate liability of the Members in respect of Section 12.2 shall
not exceed three (3) million shares of Common Stock, but in no event more than
the number of shares of Common Stock held in the Escrow Account.
ARTICLE XIII.
Miscellaneous
Section 13.1. Parties in Interest.
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and assigns.
Anything contained in the preceding sentence to the contrary notwithstanding,
neither this Agreement nor any of the rights, interests or obligations,
hereunder shall be assigned by the Company or Xxxxx without the prior written
consent of Medix.
Section 13.2. Entire Agreement; Amendments.
This Agreement and the other writings and agreements referred to herein or
delivered pursuant hereto contain the entire understanding of the parties with
respect to its subject matter, including but not limited to, the Letter
Agreement dated as of October 25, 2002 (the "Letter Agreement"), between the
Company and Medix. This Agreement and such other writings and agreements
referred to herein supersede all prior agreements and understandings between the
parties with respect to their subject matter, including but not limited to the
Letter Agreement. This Agreement may be amended only by a written instrument
duly executed by the parties hereto, and any condition to a party's obligations
hereunder may only be waived in writing by such party.
Section 13.3. Public Disclosure.
Each of the parties to this Agreement hereby agrees with the other parties
hereto that, except as may be required to comply with applicable Law, no press
release or similar public announcement or communication will be made or caused
to be made concerning the proposed or intended execution, or the execution or
performance of this Agreement unless specifically approved in advance and in
writing by the Company and Medix. The Company and Medix agree that any public
announcement required by applicable Law shall only be made after reasonable
notice to Medix (in the case of notice by the Company) or to the Company (in the
case of notice by Medix).
Section 13.4. Gender.
Any reference to the masculine gender shall be deemed to include the
feminine and neuter genders unless the context otherwise requires.
Section 13.5. Waivers.
Any party to this Agreement may, by written notice to the other parties
hereto, waive any provision of this Agreement. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach.
Section 13.6. Notices.
All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if sent by nationally-recognized overnight
courier, by telecopy, or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
if to the Company or Xxxxx:
PocketScript, LLC
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxx 00000
Tel: (000) 000-0000
Fax: (000 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Katz, Teller, Xxxxx & Xxxx
2400 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxx
if to Medix:
Medix Resources, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Moses & Singer LLP
1301 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Xx., Esq.;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of international overnight courier, upon receipt of
confirmation of delivery, (d) in the case of telecopy transmission, when
received, and (e) in the case of mailing, on the third business day following
posting.
Section 13.7. Counterparts.
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. Delivery of an
executed counterpart by facsimile shall be equally as effective as delivery of a
manually executed counterpart.
Section 13.8. Headings.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 13.9. Construction.
The parties have participated jointly in the negotiation and drafting of
this Agreement. The language used in this Agreement shall be deemed the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party. In the event of any
ambiguity or question of intent or interpretation, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of authorship of
any provision of this Agreement. Any reference to any Federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that such
party is in breach of the first representation, warranty, or covenant.
Section 13.10. Incorporation of Appendices, Exhibits and Schedules.
The exhibits, appendices and schedules identified or referred to in this
Agreement are incorporated herein by reference and made a part hereof.
Section 13.11. Severability.
Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction.
Section 13.12. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
within such state without giving effect to the principles of conflict of laws.
Section 13.13. Arbitration.
All disputes between the Company (prior to the Effective Time) and Xxxxx on
the one hand and Medix (and after the Effective Time, the Surviving Corporation)
on the other hereunder shall be settled by arbitration before a panel consisting
of three (3) arbitrators pursuant to the commercial arbitration rules of the
American Arbitration Association, in New York, New York; provided, however, that
any award pursuant to such arbitration shall be accompanied by a written opinion
of the arbitrators giving the reasons for the award. One (1) arbitrator shall be
selected by each of Xxxxx, on the one hand, and Medix, on the other, and the
third arbitrator shall be selected by the other two (2) arbitrators. Any other
rules regarding the selection process shall be made pursuant to the rules of
such Association. The award rendered by the arbitrators shall be conclusive and
binding upon the parties hereto, and judgment upon the award may be entered in
any court having jurisdiction thereof or application may be made to such court
for a judicial acceptance of the award and an order of enforcement. Each party
shall pay its own expenses of arbitration and the expenses of the arbitrators
(including his/her compensation) shall be equally shared; except that if any
matter of dispute raised by a party or any defense or objection thereto was
unreasonable, the arbitrator may assess, as part of his/her award, all or any
part of the arbitration expenses (including reasonable attorneys' fees and
expenses) of the other party and of the arbitrator against the party raising
such unreasonable matter of dispute or defense or objection thereto. Nothing
herein set forth shall prevent Xxxxx on the one hand and Medix on the other from
settling any dispute by mutual agreement at any time.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Merger Agreement on the date first above written.
PS PURCHASE CORP.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: CEO Medix Resources
MEDIX RESOURCES, INC.,
a Colorado corporation
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: CEO Medix Resources
POCKETSCRIPT, LLC,
an Ohio limited liability company
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CEO
Individually and as Representative on
behalf of the Members pursuant to Section
8.16
/s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxx
AGREED AND ACCEPTED:
for purposes of Section 10.5 only
/s/ Xxxx Xxxxxx
------------------------------------------
Name: Xxxx Xxxxxx
Table of Contents
ARTICLE I. General
Section 1.1. The Merger
Section 1.2. Effective Time; Closing
Section 1.3. Articles of Organization
Section 1.4. Operating Agreement
Section 1.5. Directors, Managers and Officers
Section 1.6. Taking of Necessary Action; Further Assurances
ARTICLE II. Effect of Merger on Capital Stock
Section 2.1. Merger Consideration
Section 2.2. Conversion
Section 2.3. Exchange of Certificates
Section 2.4. Dividends and Distributions
Section 2.5. No Liability
Section 2.6. Withholding Rights
Section 2.7. Closing of Company Unit Journal
ARTICLE III. Adjustments to Merger Consideration
Section 3.1. Closing Balance Sheet
Section 3.2. Adjustment
Section 3.3. Acceptance of Closing Balance Sheet
Section 3.4. Dispute Resolution
Section 3.5. Adjusted Initial Merger Consideration
Section 3.6. Payment of Liabilities
ARTICLE IV. Contingent Consideration
Section 4.1. Qualifying Events
Section 4.2. Maximum Amount of Contingent Payments
Section 4.3. Delivery of Contingent Payments
ARTICLE V. Representation and Warranties of the Company and Xxxxx
Section 5.1. Title - Member
Section 5.2. Authority - Xxxxx
Section 5.3. Organization; Power - Company
Section 5.4. Authority - Company
Section 5.5. Qualifications
Section 5.6. No Conflict
Section 5.7. Capitalization
Section 5.8. Subsidiaries; Investments
Section 5.9. Financial Information
Section 5.10. Absence of Undisclosed Liabilities
Section 5.11. No Consent or Approval Required
Section 5.12. Changes
Section 5.13. Contracts
Section 5.14. Employee Benefit Plans
Section 5.15. Labor Relations; Employees
Section 5.16. Compliance with Laws; Governmental Authorizations
Section 5.17. Insurance
Section 5.18. Title to Assets
Section 5.19. Litigation
Section 5.20. Related Party Transactions
Section 5.21. Real Property
Section 5.22. Tax Matters
Section 5.23. Intellectual Property
Section 5.24. Accounts Receivable; Clients and Vendors
Section 5.25. Guaranties
Section 5.26. Environmental Matters
Section 5.27. Records
Section 5.28. Bank Accounts; Powers of Attorney
Section 5.29. Brokers and Finders
Section 5.30. Investment Representations and Warranties
Section 5.31. Disclosure
ARTICLE VI. Representations and Warranties of Medix and the Merger Sub
Section 6.1. Organization; Powers
Section 6.2. Authority
Section 6.3. No Conflict
Section 6.4. Litigation
Section 6.5. No Consent or Approval Required
Section 6.6. Common Stock
Section 6.7. Medix Reports and Financial Statements
Section 6.8. Disclosure
ARTICLE VII. Conditions to Closing of Each Party
Section 7.1. Legal Action
Section 7.2. Legislation
Section 7.3. Escrow Agreement
Section 7.4. Registration Rights Agreement
Section 7.5. Employment Agreements
ARTICLE VIII. Conditions to Closing of Medix and the Merger Sub
Section 8.1. Company Approval
Section 8.2. Key Employees- Employment Agreements
Section 8.3. Due Diligence
Section 8.4. Representations and Warranties
Section 8.5. Performance of Obligations
Section 8.6. Certified Copies
Section 8.7. Opinion of Counsel
Section 8.8. Consents and Approvals
Section 8.9. Absence of Changes
Section 8.10. Repayment or Conversion of Indebtedness
Section 8.11. Release of Security Interests
Section 8.12. General Release
Section 8.13. Purchaser Approvals
Section 8.14. Rights of First Refusal
Section 8.15. Reorganization; Operating Agreement
Section 8.16. Appointment of Representative
Section 8.17. Investment Letters; Affiliate Letters
Section 8.18. Xxxxxx Non-Competition Agreement
Section 8.19. Dissenters' Rights
Section 8.20. Voting Agreement
Section 8.21. Fairness Opinion
Section 8.22. Non-Compete Agreements
Section 8.23. Audited Financial Statements
Section 8.24. Acceptance by Counsel
ARTICLE IX. Conditions to the Closing of the Company and Xxxxx
Section 9.1. Representations and Warranties
Section 9.2. Performance of Obligations
Section 9.3. Certified Copies
Section 9.4. Financing
Section 9.5. Consents and Approvals
Section 9.6. Opinion of Counsel
Section 9.7. Absence of Changes
Section 9.8. Acceptance by Counsel
ARTICLE X. Covenants and Agreements
Section 10.1. Filings and Consents
Section 10.2. Access to Records and Properties of the Company
Section 10.3. Conduct of Business
Section 10.4. Efforts to Consummate
Section 10.5. Negotiation With Others
Section 10.6. Supplements to the Company Disclosure Letter
Section 10.7. Notice of Developments
Section 10.8. Fees and Expenses
Section 10.9. Required Payments
Section 10.10. Non-Compete
Section 10.11. Further Assurances
ARTICLE XI. Termination
ARTICLE XII. Indemnification
Section 12.1. Definitions
Section 12.2. Indemnification
Section 12.3. Assertion of Claims
Section 12.4. Notice and Defense of Third Party Claims
Section 12.5. Right of Set-Off
Section 12.6. Remedies Cumulative
Section 12.7. Survival of Representations; Limitation on Liability
ARTICLE XIII. Miscellaneous
Section 13.1. Parties in Interest
Section 13.2. Entire Agreement; Amendments
Section 13.3. Public Disclosure
Section 13.4. Gender
Section 13.5. Waivers
Section 13.6. Notices
Section 13.7. Counterparts
Section 13.8. Headings
Section 13.9. Construction
Section 13.10. Incorporation of Appendices, Exhibits and Schedules
Section 13.11. Severability
Section 13.12. Governing Law
Section 13.13. Arbitration
DEFINITIONS
The following terms used in this Agreement are found in the following Sections:
Section or
Term Location
---- --------
Accounting Referee 1.11(d)
Acquisition Preamble
Adjusted Closing Date Payment 1.11(e)
Agreement Preamble
AMEX 1.11(b)
Assigned Contracts 1.1(e)
Assignment of Intellectual Property 2.2
Assumed Obligations 1.8
Average Closing Price 1.11(b)
Balance Sheet 2.8(a)
Balance Sheet Date 2.8(a)
Xxxx of Sale 2.2
Claim 9.1(a)
Closing 1.13
Closing Balance Sheet 1.11(a)
Closing Convertible Preferred Stock 1.10
Closing Date 1.13
Closing Payment Date 1.10
Code 1.1(e)
Common Stock 1.11(b)
Company Preamble
Company Benefit Plan 2.13(a)
Consulting Agreement 5.3
Contingent Convertible Preferred Stock 1.10
Contingent Payments 1.10
Controlling Member Preamble
Convertible Preferred Stock 1.10
Department 2.13(d)
Employee 2.13(a)
Employee Agreement 2.13(a)
Employee Handbook 2.14(h)
Employment Agreement 5.2(a)
Employment Agreements 5.2(a)
Encumbrances 2.17(a)
Environmental Laws 2.25(a)
ERISA 2.13(a)
ERISA Affiliate 2.13(b)
Exchange Act 5.16
Excluded Assets 1.2
Excluded Obligations 1.9
Financial Statements 2.8(a)
GAAP 1.9(g)
Group 7.12(a)
Hazardous Substances 2.25(b)
Indemnified Person 9.3
Indemnifying Person 9.3
Instrument of Assumption 2.2
Intellectual Property 2.22(f)
IRS 2.13(c)
Laws 2.5
Leased Real Property 2.20(b)
Losses 9.1(b)
Medix Preamble
Member 2.3
Members 2.3
Misys 1.12(a)
Non-Compete Period 7.12(a)
Office Leases 1.2(c)
Ordinary Course of Business 1.8(a)
PBGC 2.13(d)
PCBs 2.25(b)
Pension Plan 2.13(f)
Permits 1.1(g)
Pharmaceutical Company 1.12(d)
Primary Obligor 2.24
Merger Documents 2.2
Purchase Price 1.10
Purchased Assets 1.1
Purchaser Preamble
Qualifying Event 1.12
Registrable Securities 7.13(c)
Returns 2.21(a)
RIM 1.12(b)
SEC 7.13(c)
Securities Act 2.29
Tax 2.21(c)
Taxes 2.21(c)
Termination Date 8.1
Third Party Claim 9.4
Transaction 7.5(a)
Transfer Taxes 5.15
Working Capital 1.11(b)
