Asset Purchase Agreement - MEGA Life and Health Insurance Co. and HealthAxis.com Inc.
ASSET PURCHASE AGREEMENT
(Insight Claims System)
This Asset Purchase Agreement (this "Agreement") is entered into as of
the 29th day of December, 2000 (the "Effective Date"), by and between MEGA Life
and Health Insurance Company ("MEGA"), and HealthAxis.com, Inc. ("HealthAxis").
WHEREAS, MEGA, operating through its Student Insurance division
("Student Insurance") is the owner of all rights in and to a certain computer
software system known as the Insight Claims System (herein so called), which has
been developed by Student Insurance for performance of various administrative
and claims processing functions in its student insurance business; and
WHEREAS, HealthAxis desires to acquire full ownership of all right,
title and interest of MEGA in the Insight Claims System for the purpose of
commercializing the system as a browser-based administration and claims
processing system for license and/or resale in the health insurance payer
market; and
WHEREAS, MEGA has agreed to sell HealthAxis all of such right, title
and interest on the terms provided herein.
NOW, THEREFORE, for and in consideration of the payment of the Purchase
Price, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is hereby agreed as follows:
1. Purchase and Sale of Assets. MEGA does hereby sell to HealthAxis,
and HealthAxis does hereby purchase from MEGA, full ownership of all right,
title and interest of MEGA in the Insight Claims System, including all source
code and object code versions, as well as all documentation that are required
for the operation of the claims system. The currently existing Insight Claims
System which is being acquired by HealthAxis is more fully described on Exhibit
"A" attached hereto and incorporated herein by reference. MEGA expressly agrees
that the sale of the Insight Claims System under this Agreement constitutes a
complete transfer of all of its rights, title and interest with respect to the
system and that MEGA reserves no rights to use, market or otherwise further
transfer the system. Without limiting the generality of the foregoing, MEGA
hereby sells, transfers, assigns, waives, and/or sublicenses any and all Moral
Rights (as defined below) MEGA may have in or with respect to the Insight Claims
System to the maximum extent permitted under the laws of any relevant
jurisdiction worldwide. For purposes of this Section "Moral Rights" means any
right to (i) divulge a copyrighted work to the public; (ii) retract a
copyrighted work from the public; (iii) claim authorship of a copyrighted work;
(iv) object to any distortion, mutilation or other modification of a copyrighted
work; or (v) any and all similar rights, existing under the law of any
jurisdiction in the world, or under any treaty.
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2. Purchase Price. The Purchase Price payable by HealthAxis to MEGA
shall be One Million Six Hundred Thousand Dollars ($1,600,000.00) (the "Purchase
Price"). The Purchase Price shall be payable in cash within thirty (30) days of
the Effective Date of this Agreement. Payment of the Purchase Price shall be the
entire consideration payable by HealthAxis to MEGA for the system, and this
Agreement does not transfer, and HealthAxis does not assume, any liabilities,
costs, debts, claims and/or obligations of MEGA relating to the Insight Claims
System or otherwise.
3. Representations and Warranties of MEGA; Disclaimer. MEGA hereby
warrants and represents to HealthAxis as follows:
(a) Organization and Corporate Power. MEGA is a corporation
duly incorporated and validly existing under the laws of the State of
Oklahoma, and has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated
herein. Student Insurance is a distinct operating division of MEGA with
no separate existence as a legal entity.
(b) Authorization. The execution, delivery, and performance by
MEGA of this Agreement have been duly and validly authorized by all
necessary corporate action of MEGA, and this Agreement, when executed
and delivered by the parties thereto, will constitute the legal, valid,
and binding obligation of MEGA enforceable against MEGA in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, and similar statutes affecting creditors'
rights generally and judicial limits on equitable remedies.
(c) No Conflict with Other Instruments or Agreements. The
execution, delivery, and performance by MEGA of this Agreement is not
in conflict with, and will not result in a breach or violation of, or
constitute a default under, any material agreement to which MEGA or
Student Insurance is a party, or by which MEGA or Student Insurance is
bound.
(d) Title to Insight Claims System. MEGA has good and
marketable title in and to the Insight Claims System in its own name,
or in the name of Student Insurance, including any patents, patent
applications, service marks, trade names, trademarks, trademark
applications, copyrights, copyright applications, trade secrets,
know-how, data or other proprietary or intellectual property rights
included in the system, and such are not subject to any mortgage,
pledge, lien, lease, claim, encumbrance, charge, security interest,
royalty obligations or other interest or claim of any kind or nature
whatsoever. The system does not include any inventions of any of MEGA's
officers, employees or consultants made or owned prior to their
appointment by MEGA. All current or former employees and consultants
have assigned in writing all of their rights in the intellectual
property rights related to the system to MEGA. No current or former
employee or consultant of MEGA owns or has claimed an interest in any
intellectual property rights related to the system.
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(e) Governmental Authorities. Except as may be herein
disclosed, (i) MEGA is not required to submit any notice, report, or
other filing with any governmental or regulatory authority in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein, and (ii) no
consent, approval, or authorization of any governmental or regulatory
authority is required to be obtained by MEGA or any affiliate in
connection with MEGA's execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated herein.
(f) Litigation; Third Party Rights. There are no actions,
suits, proceedings, or governmental investigations or inquiries pending
or, to the knowledge of MEGA, threatened against MEGA or Student
Insurance or any of its properties, assets, operations, or businesses
that might delay, prevent, or hinder the consummation of the
transactions contemplated herein. MEGA has no knowledge of any claims
or facts or circumstances that the Insight Claims System may in any way
infringe or conflict with the rights of any third party whatsoever.
(g) Disclaimer of Other Representations and Warranties. Except
for the express warranties stated above, MEGA makes no other
representations or warranties whatsoever, express or implied, with
regard to the Insight Claims System, including any warranties of
merchantability or fitness for a particular use. HealthAxis has had an
adequate opportunity to inspect the Insight Claims System and is
familiar with it by virtue of various technology outsourcing and
consulting services provided by HealthAxis to MEGA, including services
directly related to the development of the system on behalf of MEGA.
Accordingly, HealthAxis hereby accepts the Insight Claims System "AS
IS, WITH ALL FAULTS", and acknowledges that MEGA has not made, and does
not make, any representation or warranty whatsoever as to the quality,
attributes or functionality of the system (including, but not limited
to, the attributes and functionality shown on Exhibit "A" which has
been prepared by HealthAxis and not by MEGA), or with respect to any
bugs or defects that may be contained therein.
4. Representations and Warranties of HealthAxis. HealthAxis hereby
warrants and represents to MEGA as follows:
(a) Organization and Corporate Power. HealthAxis is a
corporation duly incorporated and validly existing under the laws of
the State of Pennsylvania, and has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated herein.
(b) Authorization. The execution, delivery, and performance by
HealthAxis of this Agreement have been duly and validly authorized by
all necessary corporate action of HealthAxis, and this Agreement, when
executed and delivered by the parties thereto, will constitute the
legal, valid, and binding obligation of HealthAxis enforceable against
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it in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, and similar statutes
affecting creditors' rights generally and judicial limits on equitable
remedies.
(c) No Conflict with Other Instruments or Agreements. The
execution, delivery, and performance by HealthAxis of this Agreement
will not result in a breach or violation of, or constitute a default
under any material agreement to which HealthAxis is a party or by which
HealthAxis is bound.
(d) Governmental Authorities. Except as may be herein
disclosed, (i) HealthAxis is not required to submit any notice, report,
or other filing with any governmental or regulatory authority in
connection with the execution and delivery by HealthAxis of this
Agreement and the consummation of the purchase, and (ii) no consent,
approval, or authorization of any governmental or regulatory authority
is required to be obtained by HealthAxis or any affiliate in connection
with its execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein.
(e) Litigation. There are no actions, suits, proceedings, or
governmental investigations or inquiries pending or, to the knowledge
of HealthAxis, threatened against HealthAxis or its properties, assets,
operations, or businesses that might delay, prevent, or hinder the
consummation of the transactions contemplated herein.
5. Closing. The purchase and sale contemplated herein shall be closed
simultaneously with the execution hereof to be effective as of the Effective
Date. Upon execution hereof, the Purchase Price shall become unconditionally due
and payable in the time and manner specified in Section 2 above. At the closing,
or at such other time and place as the parties to this Agreement may mutually
agree, MEGA shall deliver to HealthAxis the Insight Claims System (including
without limitation, all source code thereto and programmers' notes, test
scripts, build scripts and any and all other documentation and information
necessary and useful to understanding and using the system which are in MEGA's
possession or control), and such other documents as may be reasonably required
to effect a valid transfer of the system to HealthAxis, free and clear of any
and all liens, claims or encumbrances.
6. Confidentiality. From and after the Effective Date, all technical
and other information directly relating to the Insight Claims System and
intellectual property rights pertaining thereto shall at all times be and remain
the sole and exclusive property of HealthAxis. At all times after the Effective
Date, MEGA shall retain in strictest confidence, and shall not disclose to third
parties or use for its benefit or for the benefit of any third party, any such
confidential information and intellectual property rights assigned under this
Agreement. Any subsequent use or licensing of the system by MEGA or Student
Insurance shall be subject to a license or other agreement to be entered into
between the parties upon mutually acceptable terms.
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7. Disclosure and Reporting. The parties acknowledge that both
HealthAxis and MEGA and/or certain of their affiliates may be required to
publicly disclose and/or otherwise report this Agreement and the transactions to
be consummated herein by virtue of the transactions being among related parties,
material, or otherwise reportable or disclosable. The parties agree to fully
cooperate to the extent necessary to meet any such disclosure or reporting
requirements.
8. Entire Agreement; Binding Nature. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement. This Agreement may be amended, modified, or supplemented only by a
written agreement signed by MEGA and HealthAxis. This Agreement shall be binding
upon the successors and assigns of the parties hereto.
9. Indemnification. In the event HealthAxis subsequently licenses or
resells the Insight Claims System or any portion thereof to a third party,
HealthAxis shall be solely responsible for performance of the system and agrees
to indemnify and hold MEGA harmless from any claims that any such third party
may make against MEGA regarding bugs, defects or failures of the system, and for
any losses, damages or liability that may be suffered or incurred by MEGA
arising out of any such third party claims.
10. Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
12. Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
13. Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
14. Further Action. The parties agree to execute, acknowledge and
deliver any further assignments, conveyances and other assurances, documents and
instruments of transfer, consistent with the terms of this Agreement, which are
reasonably requested by the other party and to take any other action, consistent
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with the terms of this Agreement, that may be reasonably requested for the
purpose of assigning, transferring, granting, conveying, and confirming to
HealthAxis or reducing to its possession, any or all of the rights and interests
in the Insight Claims System being transferred and assigned herein.
15. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date stated above.
MEGA:
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MEGA Life and Health Insurance Company,
an Oklahoma corporation
By:
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Its:
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HealthAxis:
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HealthAxis.com, Inc.,
a Pennsylvania corporation
By:
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Its:
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EXHIBIT "A"
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Insight Claims System
The existing Insight Claims System is a computer system that was developed to
provide Student Insurance the tools necessary to perform claims administration
accurately and efficiently.
1) The interfaces (data maintenance and imports) to setup the information to
control the adjudication processes described below. This includes the setup
of benefit control information, the setup of PPO agreements, providers, and
fee schedules, and the import of industry standard codes and 'usual and
customary' tables.
2) The entry or import of claim information used to support the claims
process. This includes paper claim bills (HCFAs, UB92, Super-Bills), paper
ledgers (bulk claims), e-claims (Envoy, HAIS), e-ledgers, referrals, and
various non-bill correspondence.
3) The processing of the claims information with a high level of automation.
Current functionality for processing a claim includes:
a) identifying and matching the insured, the provider, the
claim-occurrence, and the policy;
b) trapping claims subject to Technical Claims and Special Investigation;
c) examining claims for: duplicates, pre-existing conditions, required
coverage, and PPO re-pricing; generating requests for re-pricing from
external entities; automatically releasing pending claims when coverage
is received;
d) automatically calculating the benefits, considering re-priced claims,
usual and customary, limits, deductibles, products purchased, policy
exclusions, benefit variations based on types of injuries, referrals
received, and many other factors that in over 500 variations
(client-policies) defined each year. In addition, automatically
determining payees and EOB destinations;
e) auditing of the results from both automated and manual processes; and
f) providing some mechanisms for manually processing a claim.
These functions are integrated with the existing 'Insight Bid & Policy' and
'Insight Financial' modules.
4) The generation of checks with EOBs, ledger reports. In addition, the
generation of claims letters, with automated 2nd request and follow-up
procedures.
5) Some mechanisms to support positive-pay feeds to the bank (as well as
imports from several external entities for generating positive-pay).
6) A Customer Service interface providing access to claims information.
Support for logging calls. The ability to update insured information.
The technical environment for this system was constructed using Microsoft
products. This system was developed as a 3 tier application using Visual Basic,
Microsoft Transaction Server (MTS) as the middle-tier and Microsoft SQL Server
as the database. The client interface for this application works with both
Microsoft Windows and NT while the MTS and SQL Servers run on a Microsoft NT
platform.
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