Asset Purchase Agreement - SmithKline Beecham Clinical Laboratories Inc. and Healtheon Corp.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "ASSET PURCHASE AGREEMENT" or
"AGREEMENT"), dated December 31, 1998, is an agreement by and between
SMITHKLINE BEECHAM CLINICAL LABORATORIES, INC., a corporation organized and
existing under the laws of Delaware ("SELLER") and Healtheon Corporation, a
corporation organized and existing under the laws of Delaware ("BUYER").
Capitalized terms used in this Asset Purchase Agreement and not otherwise
defined herein are defined in EXHIBIT A hereto.
PREAMBLE
Buyer is in the business of providing and managing certain information
services and desires to provide services to Seller relating to reporting of
results of clinical laboratory tests to Providers. Seller provides laboratory
testing services to certain Providers who receive clinical laboratory test
result reports via teleprinters and related assets owned by Seller.
Buyer desires to purchase and Seller desires to sell teleprinters and
related assets as more fully set forth herein. Concurrently with the execution
and delivery of this Agreement, Seller and Buyer are entering into a Services
Agreement whereby Buyer agrees, among other things, to facilitate the provision
of Teleprinter Services to Providers and Seller agrees to pay certain
compensation to Buyer in connection therewith. This Agreement states the
parties' agreements relating to the purchase and sale of the Purchased Assets
and certain transition matters.
AGREEMENT
NOW THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1. AGREEMENT TO SELL. At the Closing, Seller hereby
agrees to sell, convey, assign, transfer and deliver to Buyer, upon and subject
to the terms and conditions of this Agreement, all right, title and interest of
Seller in and to the following assets, free and clear of all Liens:
1.1.1. All of the teleprinters owned by Seller and used for
Teleprinter Services or intended by Seller to be used for Teleprinter Services
located at Provider Sites, or in the case of inventory, spare or replacement
teleprinters, at Provider Sites, Seller Labs or Seller's suppliers, or with
Seller's sales and distribution representatives;
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1.1.2. The printer stands and incidental supplies owned by Seller
and used or intended by Seller for use in conjunction with the teleprinters
described in Section 1.1.1; and
1.1.3. To the extent assignable and assumed by Buyer, the contracts
between Seller and Key Communications, Inc. relating to the provision of
products or services to Providers in connection with Seller's provision of
Teleprinter Services to Provider Sites.
SECTION 1.2. INVENTORY. Seller shall count and identify by way
of performing a physical inventory as of the Closing Date, any Purchased
Assets not located at a Provider Site, such inventory to be completed as soon
as practicable but in all events [*] following the Closing. The portion of
the Purchased Assets identified pursuant to the physical inventory shall be
listed on a schedule which shall be delivered to Buyer within [*] after
completion of the physical inventory.
SECTION 1.3. AGREEMENT TO PURCHASE. Buyer hereby agrees to
purchase the Purchased Assets from Seller, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations,
warranties and covenants of Seller contained herein, for (i) the Purchase
Price and (ii) the execution and delivery of the assumption agreement
referenced in Section 5.2.4.
SECTION 1.4. PURCHASE PRICE. The purchase price for the Purchased
Assets shall be thirteen million dollars ($13,000,000), to be paid by (i) a wire
transfer in the amount of two million dollars ($2,000,000) in United States
federal funds to such account as Seller shall designate prior to the Closing,
and (ii) the issuance to Seller of the Consideration Shares.
SECTION 1.5. ASSUMPTION OF CONTRACTS. To the extent assignable,
Seller will assign to Buyer on the Closing Date, and Buyer will assume, all of
Seller's obligations under the Assumed Contracts.
SECTION 1.6. CALCULATION OF CONSIDERATION SHARES.
1.6.1. If Buyer has not consummated an initial public offering of
its common stock pursuant to the Securities Act as of the Closing, then the
number of Consideration Shares shall be 1,833,333.
1.6.2. If Buyer has consummated an initial public offering of
its common stock pursuant to the Securities Act as of the Closing, then the
number of Consideration Shares shall be the result of eleven million dollars
($11,000,000) divided by [*] for the five (5) business days (or such lesser
number of business days since the consummation of such initial public
offering) immediately preceding the Closing Date.
1.6.3. The number of Consideration Shares shall be equitably
adjusted for any subdivision or combination of shares of Buyer capital stock or
similar change in Buyer's
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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capital structure (whether by stock split, stock dividend, merger, share
exchange, consolidation or otherwise) occurring between the date hereof and
the Closing Date.
ARTICLE II
CLOSING
SECTION 2.1. TIME AND PLACE. Unless otherwise mutually agreed to in
writing by both parties, the closing of the transactions (the "Closing")
contemplated hereby shall be held at the offices of Pepper Hamilton LLP, at 3000
Two Logan Square, 18th and Arch Streets, Philadelphia, Pennsylvania, and shall
be held promptly after the satisfaction or waiver of all of the conditions
precedent set forth in Article V hereof, or at such time as the parties may
otherwise mutually agree (the date of Closing, the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. BY SELLER. Seller hereby represents and warrants to
Buyer as follows:
3.1.1. ORGANIZATION AND STANDING. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware.
Seller has full power and authority to provide Teleprinter Services.
3.1.2. POWER AND AUTHORITY. Seller has the requisite power and
authority to execute, deliver and perform this Agreement and each of the
Collateral Documents by Seller and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement
and each of the Collateral Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action on the part of Seller and requires no further
authorization or consent by Seller. This Agreement is and each of the
Collateral Documents will be, once fully executed, valid and binding
obligations, enforceable in accordance with their respective terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity.
3.1.3. VALIDITY OF CONTEMPLATED TRANSACTIONS.
(a) NO VIOLATION. The execution, delivery and performance
of this Agreement and each of the Collateral Documents to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not (i) violate, breach or contravene any of the terms, conditions or
provisions of the Certificate of
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Incorporation or Bylaws of Seller, (ii) violate any Regulation or Court Order
applicable to Seller or to any of the Purchased Assets, or (iii) violate,
breach or contravene any of the terms, conditions or provisions of any
mortgage, indenture, agreement, contract, commitment, lease or other
instrument, document or understanding, oral or written, to which Seller is a
Party.
(b) REQUIRED FILINGS. Seller will not be required to make
any filing or registration with, or obtain any Permit from, any Governmental
Entity in order to execute, deliver and perform its obligations under this
Agreement and each of the Collateral Documents to which it is a party.
3.1.4. REAL PROPERTY. Seller neither owns nor leases (either as
lessee or lessor) any real property related exclusively to its provision of
Teleprinter Services.
3.1.5. PERSONAL PROPERTY.
(a) Except as provided in Section 3.1.5(c), Seller owns and
has good title to the Purchased Assets, free and clear of any and all Liens of
any kind or nature, except for Liens which will have been removed on or prior to
the Closing Date.
(b) Except as provided in Section 3.1.5(c), Seller does not
lease from any Person any of the Purchased Assets, and Seller does not lease any
personal property as lessor in connection with its provision of Teleprinter
Services.
(c) Certain of the Purchased Assets are subject to
equipment financing leases. Seller expects that such leases will have been
paid in full on or prior to the Closing Date or within a [*] period after
Closing as contemplated by Section 5.1.6. Upon repayment of such leases,
Buyer will have good title to such Purchased Assets, free and clear of any
and all Liens of any kind or nature.
3.1.6. COMPLIANCE WITH LAWS. To Seller's knowledge, in its
provision of Teleprinter Services and incidental services or benefits provided
to Providers in connection with the provision of Teleprinter Services, Seller
has complied in all material respects with all applicable Regulations.
3.1.7. LITIGATION. There is no Litigation pending or, to Seller's
knowledge threatened, against or related to Seller, which seeks to prohibit or
delay the execution, delivery or performance of this Agreement or the Collateral
Documents or the consummation of the transactions contemplated hereby or
thereby.
3.1.8. CONTRACTS AND COMMITMENTS; WARRANTIES.
(a) All Assumed Contracts are in full force and effect. No
material Default by Seller, or, to Seller's knowledge, any other party, under
any of the terms or conditions set forth in any Assumed Contract to which it is
bound has occurred or, to Seller's knowledge, been asserted. The execution,
delivery and performance of this Agreement and the
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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Collateral Documents, and the consummation of the transactions contemplated
hereby or thereby, will not conflict with, result in a breach of, or
constitute a Default under any such Assumed Contract, affect the
continuation, validity and effectiveness of any of such Contract, or any
terms thereof, or result in the creation of any Lien upon any of the
Purchased Assets, or result in the acceleration of the maturity of any
payment date of any of Seller's obligations, or increase or adversely affect
the obligations of Seller or Buyer (after assumption) thereunder. Seller has
provided true, correct and complete copies of the Assumed Contracts to Buyer
for review.
3.1.9. CONDITION OF ASSETS. The Purchased Assets are in good
operating condition, and are able to provide Teleprinter Services to each of the
Providers, subject to ordinary wear and tear and repairs needed which are
consistent with past practice. Seller has maintained and repaired the Purchased
Assets in the ordinary course of business consistent with past practice. Except
as expressly provided herein or in the Services Agreement, Seller otherwise
makes no representation, warranty, statement or promise to Buyer concerning the
Purchased Assets, the quality, value, physical aspects or condition thereof, any
dimensions or specifications of the Purchased Assets, the feasibility,
desirability, convertibility of the Purchased Assets for or into any particular
use, the current or projected income or expenses of the Purchased Assets or any
other matter with respect to the Purchased Assets. In entering into this
Agreement, Buyer has not relied upon any representation, statement or warranty
of Seller except as expressly set forth in this Agreement or in the Services
Agreement, and that, subject to the foregoing, Buyer acknowledges that it is
purchasing the assets "as is" and "where is". Buyer does hereby waive and
Seller does hereby disclaim all other warranties of any kind or type whatsoever
with respect to the Purchased Assets, whether expressed or implied, including by
way of description but not limitation, those of fitness for a particular purpose
and use.
3.1.10. BROKERS AND FINDERS. No third party is entitled to receive
any commission, fees or similar consideration in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Seller for which Buyer could become obligated.
3.1.11. INVESTMENT REPRESENTATIONS; LEGEND ON SHARES.
(a) Seller hereby acknowledges that (i) the Consideration
Shares delivered pursuant to this Agreement have not been registered under the
Securities Act, and the resale of such shares is therefore subject to
restrictions imposed by federal and state securities laws including without
limitation that such shares cannot be sold or otherwise disposed of except in a
transaction which is registered under the Securities Act or exempted from
registration; (ii) Buyer has advised Seller, a reasonable time prior to the
execution of this Agreement, that the shares have not been registered under the
Securities Act; and (iii) all certificates representing the shares delivered to
Seller shall be stamped or otherwise imprinted with a legend substantially in
the following form (together with any other legend required by state law), and
that stop transfer orders will be given to Buyer's transfer agent:
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"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACTS AND MAY
NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND ANY
APPLICABLE STATE SECURITIES ACTS OR EXEMPTIONS FROM SUCH
REGISTRATIONS ARE AVAILABLE."
(b) Seller is an accredited investor (as such term is
defined in Rule 506 of Regulation D promulgated by the SEC) and is acquiring the
Consideration Shares for its own account for investment purposes only, and not
with a view to the distribution, transfer, or assignment of the same in whole or
in part. Seller has been represented by counsel and advisers, each of whom has
been previously selected by Seller, as Seller has found necessary to consult
concerning this Agreement and the shares to be issued pursuant to this
Agreement. Seller, either alone or with its representative(s), has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the prospective investment. Seller and its
counsel and other advisers have been provided with such information concerning
Buyer as they have deemed relevant with respect to Seller's investment decision
relating to the shares being delivered to it. Seller has had a reasonable
opportunity to ask questions and receive answers concerning the terms and
conditions of the transactions contemplated by this Agreement, to discuss
Buyer's business, management and financial affairs with the management of Buyer,
and to obtain any additional information which Buyer possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
of the information furnished. Seller has received satisfactory responses from
management of Buyer to Seller's inquiries.
3.1.12. NUMBER OF PROVIDER SITES. The Purchased Assets include
[*] teleprinters that are being used at Provider Sites.
3.1.13. FULL DISCLOSURE. No representation or warranty by Seller
contained in this Agreement contains any untrue statement of a material fact or
omits a material fact necessary to make the statements made herein true and not
misleading.
SECTION 3.2. BY BUYER. Buyer hereby represents and warrants to
Seller as follows:
3.2.1. ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware.
Buyer has full power and authority to carry on its business as it is now being
conducted and to own and operate the properties and assets now owned and
operated by it.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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3.2.2. POWER AND AUTHORITY. Buyer has the requisite power and
authority to execute, deliver, and, subject to obtaining the approval of Buyer's
Board of Directors and the waivers required under the Investors' Rights
Agreement (as set forth in Section 5.1.5), perform this Agreement and each of
the Collateral Documents to be executed and delivered hereunder by Buyer and to
consummate the transactions contemplated hereby and thereby. This Agreement is
and each of the Collateral Documents will be, once fully executed, valid and
binding obligations, enforceable in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity.
3.2.3. VALIDITY OF CONTEMPLATED TRANSACTIONS.
(a) NO VIOLATION. The execution, delivery, and, subject to
obtaining the approval of Buyer's Board of Directors and the waivers required
under the Investors' Rights Agreement (as set forth in Section 5.1.5),
performance of this Agreement and each of the Collateral Documents to which it
is a party, and the consummation of the transactions contemplated hereby and
thereby, do not and will not (i) violate, breach or contravene any of the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of Buyer,
(ii) violate any Regulation or Court Order applicable to Buyer, or (iii)
violate, breach or contravene any of the terms, conditions or provisions of any
mortgage, indenture, agreement, contract, commitment, lease or other instrument,
document or understanding, oral or written, to which Buyer is a party.
(b) NO DEFAULT. No Default by Buyer under any Contract has
occurred or, to Buyer's knowledge, been asserted, which could reasonably be
expected to have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the Collateral Documents, and the consummation
of the transactions contemplated hereby or thereby, will not conflict with,
result in a breach of, or constitute a Default under any such Contract, affect
the continuation, validity and effectiveness of any such Contract, or any terms
thereof, or result in the acceleration of the maturity of any payment date of
any of Buyer's obligations, or increase or adversely affect the obligations of
Buyer thereunder, except such as could not reasonably be expected to cause a
Material Adverse Effect; provided, however, that the execution, delivery and
performance of this Agreement and the Collateral Documents, and the consummation
of the transactions contemplated hereby or thereby, could conflict with, result
in a breach of, or constitute a Default under the Investors' Rights Agreement
if, and only if, the waivers referenced in Section 5.1.5 are not obtained prior
to Closing.
(c) REQUIRED FILINGS. Buyer will not be required to make
any filing or registration with, or obtain any Permit from, any Governmental
Entity in order to execute, deliver and perform its obligations under this
Agreement and each of the Collateral Documents to which it is a party.
3.2.4. LITIGATION. There is no Litigation pending or, to Buyer's
knowledge threatened, against or related to Buyer, which seeks to prohibit or
delay the
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execution, delivery or performance of this Agreement or the Collateral
Documents or the consummation of the transactions contemplated hereby or
thereby. There are no actions at law, suits in equity or other proceedings
or, to the knowledge of Buyer, any investigations, in any court, tribunal or
by or before any other governmental or public authority or agency or any
arbitrator or arbitration panel or any governmental or private third-party
insurance agency, pending or, to the knowledge of Buyer, threatened, against
or affecting Buyer that either individually or in the aggregate, would have a
Material Adverse Effect, or, would question the validity or enforceability of
this Agreement, the Collateral Documents, or any of the transactions
contemplated hereby and thereby. Buyer is not in default with respect to any
Court Order.
3.2.5. BUYER FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) SCHEDULE 3.2.5 hereto contains a true and correct copy
of (i) the balance sheets of Buyer at December 31, 1996, December 31, 1997 and
June 30, 1998 and the statements of operations, statements of stockholders
equity and statements of cash flows of Buyer for the years ended December 31,
1996 and December 31, 1997, and the six months ended June 30, 1998, which have
been audited by Ernst & Young LLP, independent accountants (the "BUYER FINANCIAL
STATEMENTS"), and (ii) the September 30, 1998 unaudited financial statements of
Buyer delivered in accordance with the Investors' Rights Agreement (the "BUYER
UNAUDITED STATEMENTS").
(b) The Buyer Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis during the respective periods
covered thereby. The Buyer Financial Statements are correct and complete and
present fairly in all material respects the financial position of Buyer at the
date of the balance sheets included therein and the results of operations and
cash flows of Buyer for the respective periods covered by the statements of
operations and cash flows included therein. Buyer has no material obligations
or liabilities of any nature whatsoever (whether absolute, accrued, contingent
or otherwise and whether due or not due) which would be required by GAAP to be
disclosed in the Buyer Unaudited Statements and which are not disclosed by the
Buyer Unaudited Statements. Buyer has no material obligations or liabilities of
any nature whatsoever (whether absolute, accrued, contingent or otherwise, known
or unknown, and whether due or not due) which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect and
which are not disclosed by the Buyer Unaudited Statements.
(c) The Buyer Unaudited Statements have been prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as otherwise disclosed therein) and
certified by the chief financial officer of Buyer as presenting fairly the
financial condition and results of operations of Buyer and any of its
Subsidiaries for the periods covered by the statements (subject to customary
exceptions for interim unaudited financial statements).
3.2.6. CONSENTS. No consent, approval or authorization of, or
qualification, designation, declaration or filing with, or notice to any
governmental authority on
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the part of Buyer is required in connection with (a) the valid execution and
delivery of this Agreement and the Collateral Documents and (b) the issuance
of the Consideration Shares.
3.2.7. CAPITALIZATION.
(a) The authorized capital stock of Buyer consists of the
authorized, issued and outstanding capital stock set forth in SCHEDULE 3.2.7.
None of such issued shares is held in the treasury of Buyer. Except as set
forth in SCHEDULE 3.2.7, Buyer does not have outstanding any stock or securities
convertible into or exchangeable for any shares of its capital stock and no
Person has any right against Buyer to subscribe for or to purchase, or any
options for the purchase, or any agreements providing for the issuance, of any
capital stock or any stock or securities convertible into capital stock of
Buyer.
(b) All of the issued and outstanding shares of Buyer
capital stock have been validly issued and are fully paid and non-assessable.
The Consideration Shares, when issued to Seller pursuant to this Agreement, will
be validly issued, fully paid and nonassessable, will have the designations,
preferences, limitations, and relative rights of common stock as set forth in
Buyer's charter, a true and correct copy of which is attached hereto in SCHEDULE
3.2.7, and will be free and clear of all liens, claims and encumbrances.
3.2.8. REGISTRATION RIGHTS. Except as provided in the Investors'
Rights Agreement or in a separate writing delivered to and acknowledged by
Seller prior to or concurrently with Closing, and except for the registration
rights to be provided to Seller as contemplated by this Agreement, Buyer is not
under any obligation to register under the Securities Act any of its outstanding
securities or any of its securities which may hereafter be issued.
3.2.9. OFFERING. Subject to the accuracy of the representations
and warranties by Seller in Section 3.1.11 hereof, the issuance of the
Consideration Shares at the Closing constitutes a transaction exempt from the
registration requirements of Section 5 of the Securities Act, and from the
qualification requirements of any applicable state securities or "blue sky"
laws.
3.2.10. CHANGES. Since the date of the most recent Buyer Financial
Statements and except as set forth in a separate writing delivered to and
acknowledged by Seller prior to or concurrently with Closing, there has not been
(i) any adverse change in the assets, liabilities or financial condition of
Buyer from that reflected in the Buyer Financial Statements, other than any such
changes disclosed in the Buyer Unaudited Statements, which, either individually
or in the aggregate with other adverse changes, has had or could reasonably be
expected to have a Material Adverse Effect or (ii) any adverse change in the
prospects of Buyer or any other event or condition (or events or conditions) of
any character which, either individually or cumulatively, has had or could
reasonably be expected to have a Material Adverse Effect.
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3.2.11. SUBSIDIARIES. Except as set forth in SCHEDULE 3.2.11, Buyer
has no Subsidiaries. Except as set forth in this Agreement, Buyer does not own,
or have the right to acquire, any securities or other equity or ownership
interest in or the assets of any corporation, association or other business
entity or Person.
3.2.12. TITLE TO PROPERTIES. Buyer has good and marketable title to
its properties and assets and has good title to all its respective leasehold
interests.
3.2.13. INTELLECTUAL PROPERTY, ETC. Buyer owns or possesses the
rights to use, free from burdensome restrictions or conflicts with the rights of
others, all Intellectual Property necessary for the conduct of Buyer's business
as now conducted and as proposed to be conducted. All licenses constituting
Buyer's Intellectual Property are in full force and effect and constitute legal,
valid and binding obligations of the respective parties thereto, and there have
not been and are not any Defaults thereunder by any party that could reasonably
be expected to have a Material Adverse Effect. Buyer has not received any
communications alleging that it has violated or, by conducting its business as
proposed, would violate any of the Intellectual Property rights of any other
Person. To Buyer's knowledge, none of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that could reasonably be expected to interfere with the
use of their best efforts to promote the interests of Buyer and cause a Material
Adverse Effect, or that could reasonably be expected to conflict with Buyer's
business and cause a Material Adverse Effect. Neither the execution nor
delivery of this Agreement, nor the carrying on of Buyer's business by the
employees of Buyer, nor the conduct of Buyer's business, will, to Buyer's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a Default under, any Contract under which any of
such employees is now obligated, which conflict or breach could reasonably be
expected to have a Material Adverse Effect. Buyer does not believe it is or
will be necessary to utilize any inventions of any of its employees made prior
to their employment by Buyer.
3.2.14. COMPLIANCE WITH LAW AND ORGANIZATIONAL DOCUMENTS. Buyer is
in compliance with all Regulations to which it is subject, the violation of
which, either individually or in the aggregate, would have a Material Adverse
Effect, and Buyer is not in violation or in Default under any term of its
organizational documents.
3.2.15. EMPLOYEE BENEFIT PLANS. Except where an inaccuracy in this
Section 3.2.15 could not reasonably be expected to have a Material Adverse
Effect:
(a) all Employee Benefit Plans conform (and at all times
have conformed) in all respects to, and are being administered and operated (and
have at all time been administered and operated) in compliance with their terms,
the requirements of ERISA, the Code and all other applicable laws;
(b) neither Buyer nor any Controlled Group Member sponsors
or contributes to, and has not in the past sponsored or contributed to, and has
no Liability with
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respect to, any defined benefit plan subject to Title IV of ERISA or any
multi-employer plan (as defined in Section 3(37) of ERISA). Neither Buyer nor
any ERISA Affiliate has any current or contingent obligation to any
multi-employer plan (as defined in Section 3(37) of ERISA).
(c) neither Buyer nor any Controlled Group Member maintains
any plan or arrangement that provides post retirement medical benefits, post
retirement death benefits or other post retirement welfare benefits, other than
to the extent required by Part 6 of Title I of ERISA.
3.2.16. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Buyer is in compliance with all environmental
Regulations applicable to Buyer with respect to all discharges into the ground
and surface water, emissions into the ambient air and generation, accumulation,
storage, treatment, recycling, transportation, labeling or disposal of waste
materials or process by-products, except violations which, either individually
or in the aggregate, would not have a Material Adverse Effect. Buyer is not
liable for any penalties, fines or forfeitures for failure to comply with any of
the foregoing. All licenses, permits or registrations required for the Buyer's
business as presently conducted and proposed to be conducted, under any
environmental Regulations have been or will, in a timely manner, be obtained or
made, except where the lack thereof would not either individually or in the
aggregate, have a Material Adverse Effect, and Buyer is in compliance therewith
in all material respects.
(b) Except such as would not, either individually or in the
aggregate, cause a Material Adverse Effect, no release, emission or discharge
into the environment of hazardous substances, as defined under the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, or
hazardous waste, as defined under the Resource Conservation and Recovery Act, or
air pollutants as defined under the Clean Air Act, or pollutants, as defined
under the Clean Water Act, by Buyer has occurred or is presently occurring on or
from any property owned or leased by Buyer in excess of federal, state or local
permitted releases or reportable quantities, or other concentrations, standards
or limitations under the foregoing Regulations governing the protection of
health and the environment or under any other Regulations (then or now
applicable, as the case may be).
(c) Except such as would not, either individually or in the
aggregate, cause a Material Adverse Effect, Buyer has never (1) to its
knowledge, owned, occupied or operated a site or structure on or in which any
hazardous substance was or is stored, transported or disposed of in violation of
any environmental Regulations at such time as such site or structure was owned,
occupied or operated by Buyer or at any other time, or (2) stored, transported
or disposed of or arranged for the storage, transportation or disposal of any
hazardous substance other than in full compliance with all applicable
environmental Regulations. Buyer has never caused or been held legally
responsible for any release or threatened release of any hazardous substance, or
received notification from any federal, state or other governmental authority of
any such release or threatened release, or that Buyer may be required to pay any
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costs or expenses incurred or to be incurred in connection with any efforts
to mitigate the environmental impact of any release or threatened release, of
any hazardous substance from any site or structure owned, occupied or
operated by Buyer.
3.2.17. INSURANCE. Buyer has fire, casualty, liability, and
business interruption insurance policies with recognized insurers, in such
amounts and with such coverage as set forth in SCHEDULE 3.2.17. Except as set
forth in a separate writing (applicable only to Buyer) delivered to and
acknowledged by Seller prior to or concurrently with Closing, substantially
similar liability insurance (taking into account, with respect to Buyer, the
growth of Buyer's business and, therefore, insured risk, during such period) has
been maintained by Buyer and ActaMed without interruption for each of the last
two (2) years.
3.2.18. TAXES. All federal, state and other tax returns of Buyer
required by law to be filed have been duly filed and all federal, state and
other Taxes, assessments, fees and other federal governmental charges upon Buyer
or any of the properties, incomes or assets of Buyer that are due and payable
have been paid, except where an inaccuracy in the foregoing could not reasonably
be expected to have a Material Adverse Effect. No extensions of the time for
the assessment of deficiencies have been granted to Buyer in connection with any
federal tax, assessment, fee or other federal governmental charge. There are no
Liens on any properties or assets of the Buyer imposed or arising as a result of
the delinquent payment or the non-payment of any tax, assessment, fee or other
governmental charge. The charges, accruals and reserves, if any, on the books
of Buyer in respect of all Taxes for all fiscal periods to date are adequate and
in accordance with GAAP, and Buyer knows of no additional unpaid assessments for
such periods or other governmental charges payable by Buyer in connection with
the execution and delivery of this Agreement, the Collateral Documents or the
issuance of the Consideration Shares by Buyer, other than stock transfer taxes,
recording fees and filing fees in connection with state securities or "blue sky"
filings, if any.
3.2.19. INVESTMENT COMPANY. Buyer is not an "investment company",
or an "affiliated person" of an "investment company", or a company "controlled"
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, and Buyer is not an "investment adviser" or an
"affiliated person" of an "investment adviser" as such terms are defined in the
Investment Advisers Act of 1940, as amended.
3.2.20. LABOR RELATIONS. Buyer is not engaged in any unfair labor
practices. There is:
(a) no unfair labor practice complaint pending or, to the
best of Buyer's knowledge, threatened against Buyer before the National Labor
Relations Board or any court or labor board, and no grievance or arbitration
proceedings arising out of or under collective bargaining agreements is so
pending or, to the best of Buyer's knowledge, threatened,
(b) no strike, lock-out, labor dispute, slowdown or work
stoppage pending or, to the best of Buyer's knowledge, threatened against Buyer,
and
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(c) no union representation or certification question
existing or pending with respect to the employees of Buyer, and, to the best
knowledge of Buyer, no union organization activity taking place, other than such
actions or proceedings as, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.2.21. NO CONFLICT OF INTEREST. Buyer is not indebted, directly or
indirectly, to any Substantial Holder, or, to Buyer's knowledge, to any
Affiliate of a Substantial Holder, in any amount whatsoever. To the best
knowledge of Buyer, none of the Substantial Holders, or any of their Affiliates,
is indebted to any firm or corporation with which Buyer is affiliated or with
which Buyer has a business relationship, or any firm or corporation which
competes with Buyer. Except as set forth in Schedule 3.2.21, no Substantial
Holder, or, to Buyer's knowledge, any Affiliate of a Substantial Holder, is
directly or indirectly interested in any contract with Buyer or any of its
Subsidiaries.
3.2.22. FUNDAMENTAL TRANSACTIONS. Except as disclosed in writing to
Seller prior to or concurrently with Closing, Buyer is not engaged in any
substantive negotiations that Buyer reasonably believes will lead to a change in
control of Buyer or a change in ownership of a substantial portion of Buyer's
assets.
3.2.23. BROKERS AND FINDERS. No third party is entitled to receive
any commission, fees or similar consideration in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Buyer for which Seller could become obligated.
3.2.24. FULL DISCLOSURE. No representation or warranty by Buyer
contained in this Agreement contains any untrue statement of a material fact or
omits a material fact necessary to make the statements made herein or therein
true and not misleading.
ARTICLE IV
COVENANTS
SECTION 4.1. COVENANTS OF SELLER.
4.1.1. OPERATION OF THE BUSINESS. Except with the prior written
consent of Buyer or as necessary to effect the transactions contemplated by this
Agreement, Seller shall, from and after the date hereof until the Closing, in
connection with its provision of Teleprinter Services: (i) provide Teleprinter
Services in substantially the same manner as presently being conducted; (ii)
maintain and repair the Purchased Assets consistent with past practice; (iii)
perform its obligations under the vendor contracts referenced in Section 1.1.3;
and (iv) notify Buyer of any development that could materially and adversely
affect Seller's ability to fulfill its obligations under this Agreement or its
ability to continue to provide Teleprinter Services.
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4.1.2. ACCESS TO INFORMATION. At all times prior to the Closing,
the attorneys, accountants, agents and other authorized and designated
representatives of Buyer will be allowed upon reasonable advance notice and
with minimal disruption to Seller's business operations, reasonable access to
the properties, books and records of Seller relating to the Purchased Assets,
including without limitation, title documents, leases, customer lists, and other
data that, in the reasonable opinion of both Buyer and Seller, are required for
Buyer to obtain such information as it may reasonably request about the
Purchased Assets or to verify the Non-Telecom Baseline Amount and the Initial
Baseline Telecom Amount (as defined in the terms and conditions set forth on
EXHIBIT B hereto). Buyer shall also be allowed reasonable opportunity to
consult with the officers, employees, accountants, counsel and agents of Seller
in connection with such investigation.
4.1.3. OTHER OFFERS AND EXCLUSIVE DEALING. Prior to the Closing
Date, Seller shall not, directly or indirectly, (a) solicit, initiate or
encourage submission of proposals or offers from any Person, corporation or
other entity for the purpose of selling the Purchased Assets, or relating to the
provision of Teleprinter Services to Providers, (b) participate in any
discussions or negotiations regarding, or, except as required by a legal or
judicial process, furnish to any other Person, corporation or other entity any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to purchase the Purchased Assets or to obtain the right to provide
Teleprinter Services to Providers, or (c) approve or undertake any such
transaction; provided, however, that this covenant shall not limit in any way
the ability of Seller or any of its Affiliates to be sold to (whether via sale
of stock or substantially all assets), or merged or consolidated with, any other
Person, or to take any actions deemed appropriate in connection therewith.
4.1.4. NOTICE OF CHANGE. Seller shall promptly notify Buyer of the
existence or happening of any fact, event or occurrence prior to the Closing and
of which Seller has knowledge which may materially alter the accuracy or
completeness of any representation or warranty contained in Section 3.1 of this
Agreement.
4.1.5. OTHER DELIVERIES. At or prior to Closing, Seller shall have
delivered to Buyer any written disclosures referenced in this Agreement which
have not been delivered as of the date hereof, which other disclosures shall be
incorporated into this Agreement pursuant to Section 10.2 as if they were
attached to this Agreement at the date hereof.
4.1.6. BEST EFFORTS. Subject to the other provisions of this
Agreement, Seller shall use its best efforts to cause the conditions listed in
Section 6.1 hereof to be satisfied expeditiously and on the Closing Date and to
take all actions necessary in order to consummate the transactions contemplated
hereby and by the Collateral Documents on the terms and conditions herein and
therein.
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SECTION 4.2. COVENANTS OF BUYER. Buyer covenants and agrees as
follows:
4.2.1. PRIOR COVENANTS. Buyer hereby acknowledges its covenants
made in Section 5.1.1 ("Transactions with Affiliates"), Section 5.1.2
("Corporate Existence, Business, Maintenance, Insurance") and Section 5.2
("Informational Covenants of Healtheon") of the Asset Purchase Agreement between
ActaMed and Seller dated December 31, 1997, as amended by Amendment No. 1 to
Asset Purchase Agreement dated May 18, 1998 among Seller, ActaMed and Buyer (the
"Prior Covenants"). Buyer agrees that (i) to the extent the Prior Covenants
apply for so long as Seller owns stock of Buyer, such Prior Covenants shall also
apply for so long as an Affiliate of Seller owns stock of Buyer (or a designated
percentage thereof, as applicable), and (ii) the Consideration Shares shall be
taken into account in assessing Losses, if any, arising from a breach of any of
the Prior Covenants.
4.2.2. NOTICE OF CHANGE. Buyer shall promptly notify Seller of the
existence or happening of any fact, event or occurrence prior to the Closing and
of which Buyer has knowledge which may materially alter the accuracy or
completeness of any representation or warranty contained in Section 3.2 of this
Agreement.
4.2.3. OTHER DELIVERIES. At or prior to Closing, Buyer shall have
delivered to Seller completed schedules to, and any other written disclosures
referenced in, this Agreement which have not been delivered as of the date
hereof, which other schedules and disclosures shall be incorporated into this
Agreement pursuant to Section 10.2 as if they were attached to this Agreement at
the date hereof.
4.2.4. BEST EFFORTS. Subject to the other provisions of this
Agreement, Buyer shall use its best efforts to cause the conditions listed in
Section 5.2 hereof to be satisfied expeditiously and on the Closing Date and to
take all actions necessary in order to consummate the transactions contemplated
hereby and by the Collateral Documents on the terms and conditions herein and
therein.
4.2.5. COVENANTS OF SELLER AND BUYER
4.2.6. CONFIDENTIALITY OF TRADE SECRETS. Each party hereto agrees
not to use, copy or disclose the Trade Secrets of the other party, except as
permitted by this Agreement and the Collateral Documents. Each party shall
treat the other's Trade Secrets with at least that degree of care it uses with
respect to its own such Trade Secrets. Seller will give access to its Trade
Secrets relating to its provision of Teleprinter Services to those Buyer
personnel who have a need for such access and to no other Person whatsoever.
Buyer will give access to its Trade Secrets relating to its anticipated
performance under the Services Agreement to those Seller personnel who have a
need for such access and to no other Person whatsoever. If any party is ordered
by a court, administrative agency, or other governmental body of competent
jurisdiction to disclose Trade Secrets, or if it is served with or otherwise
becomes aware of a motion or similar request that such an order be issued, then
such party will not be liable to the other party
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for disclosure of Trade Secrets required by such order if the disclosing
party complies with the following requirements: (1) if an already issued
order calls for immediate disclosure, then the disclosing party shall
immediately move for or otherwise request a stay of such order to permit the
other party to respond; (2) the disclosing party promptly notifies the other
party of the motion or order; and (3) the disclosing party does not oppose a
motion or similar request by the other party for an order protecting the
Trade Secrets including joining or agreeing to (or non-opposition to) a
motion for leave to intervene by such other party. Notwithstanding anything
to the contrary contained in this Agreement, Seller may disclose to the OIG
as part of the disclosure Seller makes under its Integrity Agreement the fact
that Seller and Buyer have entered into the transactions contemplated by the
parties and any information relating to such transaction or this Agreement
which Seller determines, in good faith upon advice of counsel, is required
or, in light of Seller's obligations under the Integrity Agreement,
appropriate for Seller to make, or Seller proposes to make in response to a
request for such information from the OIG, provided that Buyer shall be given
opportunity (which shall be reasonable in light of all facts and
circumstances) to review and comment upon the information Seller intends to
include in any such submission. In the event that any such disclosure that
Seller intends to make includes any information that constitutes Trade
Secrets of Buyer, Seller will provide reasonable (in light of all facts and
circumstances, including the time frame in which such disclosure is required
to be made) assistance to Buyer to take reasonable steps to assure that such
Trade Secrets of Buyer are maintained in confidence, including, but not
limited to, (i) requesting that the OIG treat such information as trade
secrets within the meaning of the Freedom of Information Act, 5 U.S.C.
Section 552(b)(4), (ii) requesting of the OIG that Seller and Buyer be given
prior notice of a proposed release of such information to Persons or entities
outside of the OIG; (iii) requesting that the OIG otherwise assure the
confidentiality of the information provided by Buyer as if such information
was a Trade Secret of Seller as provided for in Section 46 of the Integrity
Agreement and taking other reasonable steps that may be requested by Buyer
and to which Seller may, in its sole discretion, agree to assure that the OIG
honors its confidentiality obligations in that section; (iv) where such
information is o be provided in response to a request by the OIG, take
reasonable steps to narrow the request from the OIG in an appropriate manner
in order to limit the amount of information, if any, that constitutes Trade
Secrets of Buyer covered by such request; and (v) make reasonable efforts to
permit Buyer, with the concurrence of the OIG, to disclose such information
directly to the OIG, provided that in any such case, Buyer shall give Seller
a timely opportunity to review, comment upon and approve the information
Buyer intends to include in such submission. The additional safeguards
described in subsections (i) through (v) above are designed to help assure
the confidentiality of the Trade Secrets, the disclosure of which would have
a material adverse impact on Buyer. These additional provisions are not
intended to interfere with Seller's ability to meet its disclosure
obligations under the Integrity Agreement. Each party shall promptly notify
the other in the event it receives an inquiry, investigation or request for
information from the OIG or other governmental agency into the matters
relating to the proposed transactions. The provisions of this Section 4.3.1
shall apply in addition to similar provisions in the Services Agreement and
shall permanently survive termination of any other provisions of this
Agreement or the Collateral Documents.
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4.2.7. PUBLIC ANNOUNCEMENTS AND REGISTRATION STATEMENTS. The
parties hereto shall jointly develop a mutually acceptable plan (the
"COMMUNICATION PLAN") for communicating the transactions contemplated by this
Agreement and the Services Agreement to Providers and the public. The
parties agree to use their collective best efforts to complete the
Communication Plan within [*] after Closing, and each party agrees to abide
by such Communication Plan. Without limiting the foregoing, neither party
shall send any communication to any Provider describing, or otherwise in
connection with, the transactions and relationships contemplated by this
Agreement and the Services Agreement, and neither party shall make any
disclosure of the transactions contemplated hereby except pursuant to the
Communication Plan, unless the form and content of such communication shall
have been approved in advance by the other, or unless required by law or
judicial process, in which case notification shall be given to the other
party hereto sufficiently prior to such disclosure to allow the party
receiving such notice to comment on, or take reasonable action to avoid or
mitigate, such disclosure. Buyer shall not make any filings with any
governmental authority, including registration statements pursuant to the
Securities Act, without giving Seller the reasonable opportunity to review
and comment on any disclosures pertaining to Seller. In any of the foregoing
circumstances, the disclosing party shall use its commercially reasonable
efforts to incorporate or otherwise accommodate all reasonable comments or
requests of the other party with respect to such contemplated disclosure or
filing.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The
obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing, of
each and every one of the following conditions, all or any of which may be
waived, in whole or in part, by Buyer for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Buyer may
have hereunder as a result of any misrepresentation by, or breach of any
agreement, covenant or warranty of Seller contained in this Agreement or any of
the Collateral Documents.
5.1.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH AGREEMENT.
(i) Each of the representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing as though made on and as of the Closing
(except for representations and warranties qualified by a materiality provision,
which representations and warranties shall be true and correct as stated
therein), and (ii) Seller shall have performed all covenants, agreements and
obligations to be performed by it under this Agreement on or prior to the
Closing.
5.1.2. NO INJUNCTION, ETC. No action, proceeding, investigation or
Regulation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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of, or which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or which is related to
or arises out of the provision of Teleprinter Services, if such action,
proceeding, investigation or Regulation, in the reasonable judgment of Buyer,
would make it inadvisable to consummate the transactions contemplated hereby.
5.1.3. COMPLIANCE. Seller shall have delivered to Buyer a
certificate (the "SELLER COMPLIANCE CERTIFICATE") to the effect that each of the
conditions specified in Sections 5.1.1, 5.1.2 and 5.1.6 is satisfied in all
respects, except that Seller shall be permitted to limit to its knowledge the
certification with respect to Section 5.1.2, insofar as Section 5.1.2 pertains
to threatened or proposed actions, proceedings, investigations or Regulations.
5.1.4. DELIVERIES. Seller shall have executed and delivered the
following documents, instruments and agreements:
(a) a bill of sale in form and substance reasonably
satisfactory to Buyer;
(b) an assignment and assumption agreement covering each of
the Assumed Contracts in form and substance reasonably satisfactory to Buyer and
Seller;
(c) a compliance plan relating to compliance by Buyer and
Seller with applicable Regulations, including, but not limited to, the federal
Physician Self-Referral Law, 42 U.S.C. 1395nn, and the regulations promulgated
thereunder, similar state physician self-referral laws and regulations, the
federal Medicare/Medicaid Antikickback Law and regulations promulgated
thereunder, and similar state antikickback laws and regulations, in form and
substance reasonably satisfactory to Buyer and Seller (the "Compliance Plan").
(d) a Seller Secretary's Certificate certifying as to the
corporate approvals of this Agreement, the Collateral Documents and the
transactions contemplated hereby and thereby, in form and substance reasonably
satisfactory to Buyer;
(e) the Services Agreement;
(f) an agreement between Buyer and Seller in form and
substance reasonably satisfactory to Buyer containing lock-up provisions
comparable to the lock-up provisions contained in the Investors' Rights
Agreement;
(g) a schedule identifying the Provider Sites, including
their addresses, as of a date not greater than three (3) business days prior to
the Closing Date, in form and substance reasonably satisfactory to Buyer, and
Seller shall update such schedule to be updated not later than three (3)
business days after the Closing Date to identify the Provider Sites, including
their addresses, as of the Closing Date;
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(h) such other documents and instruments as reasonably may
be requested by Buyer in order to consummate the transactions contemplated by
this Agreement and the Collateral Documents.
5.1.5. OTHER DELIVERIES. All disclosures required to be delivered
to Buyer under Section 4.1.5 shall have been delivered to Buyer pursuant thereto
in form and substance satisfactory to Buyer.
5.1.6. BOARD APPROVAL; WAIVER UNDER INVESTORS' RIGHTS AGREEMENT.
Buyer's Board of Directors shall have approved this Agreement and the waivers
required under the Investors' Rights Agreement in order for Buyer to issue the
Consideration Shares and grant the registration rights to Seller contemplated by
this Agreement, shall have been obtained in accordance with the terms of the
Investors' Rights Agreement.
5.1.7. FINANCING LEASES. Seller shall have repaid the financing
leases referenced in Section 3.1.5(b) or shall have made commitments for the
payment thereof within thirty (30) days after Closing.
SECTION 5.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The
obligations of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing (except
where an earlier date is specified herein), of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
Seller for purposes of consummating such transactions, but without prejudice to
any other right or remedy which Seller may have hereunder as a result of any
misrepresentation by, or breach of any agreement, covenant or warranty of Buyer
contained in this Agreement or any of the Collateral Documents.
5.2.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH AGREEMENT.
(i) Each of the representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing as though made on and as of the Closing
(except for representations and warranties qualified by a materiality or
Material Adverse Effect provision, which representations and warranties shall be
true and correct as stated therein), (ii) the representations and warranties of
Buyer set forth in this Agreement (taken as a whole and disregarding any
materiality or Material Adverse Effect provisions) shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing as
though made on and as of the Closing, except where the failure of the
representations and warranties (taken as a whole and disregarding any
materiality or Material Adverse Effect provisions) to be true and correct in all
material respects would not cause a Material Adverse Effect, and (iii) Buyer
shall have performed all covenants, agreements and obligations to be performed
by it under this Agreement on or prior to the Closing.
5.2.2. NO INJUNCTION, ETC. No action, proceeding, investigation or
Regulation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect
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of, or which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or which is related to
or arises out of the business of Buyer, if such action, proceeding,
investigation or Regulation, in the reasonable judgment of Seller, would make
it inadvisable to consummate the transactions contemplated hereby.
5.2.3. COMPLIANCE. Buyer shall have delivered to Seller a
certificate (the "BUYER COMPLIANCE CERTIFICATE") to the effect that each of the
conditions specified in Sections 5.2.1 and 5.2.2 is satisfied in all respects,
except that Buyer shall be permitted to limit to its knowledge the certification
with respect to Section 5.2.2, insofar as Section 5.2.2 pertains to threatened
or proposed actions, proceedings, investigations or Regulations.
5.2.4. DELIVERIES. Buyer shall have executed and delivered the
following documents, instruments and agreements:
(a) a certificate in form reasonably satisfactory to Seller
for the Consideration Shares;
(b) an assignment and assumption agreement covering each of
the Assumed Contracts in form and substance reasonably satisfactory to Buyer and
Seller;
(c) the Compliance Plan;
(d) a Buyer Secretary's Certificate certifying as to
Buyer's charter, bylaws, good standing, incumbent officers and the resolutions
approving this Agreement, the Collateral Documents and the transactions
contemplated hereby and thereby, in form and substance reasonably satisfactory
to Seller;
(e) the Services Agreement;
(f) either a Registration Rights Agreement between Buyer
and Seller containing registration rights for the Consideration Shares and
lock-up provisions comparable to the registration rights and lock-up
provisions contained in the Investors' Rights Agreement, or an amendment to
the Investors' Rights Agreement in form and substance reasonably satisfactory
to Seller, in either case, which grants Seller registration rights which are
the same as if the term "Registrable Securities" as used in the Investors'
Rights Agreement included the Consideration Shares; and
(g) such other documents and instruments as reasonably may
be requested by Seller in order to consummate the transactions contemplated by
this Agreement and the Collateral Documents.
5.2.5. OTHER DELIVERIES. All schedules and disclosures required to
be delivered to Seller under Section 4.2.3 shall have been delivered to Seller
pursuant thereto in form and substance satisfactory to Seller.
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ARTICLE VI
POST-CLOSING OBLIGATIONS
SECTION 6.1. EXPENSES. Except as otherwise provided herein, each of
the parties to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, without limitation, all fees
and expenses of agents, representatives, counsel and accountants.
SECTION 6.2. TRANSACTION TAXES. Buyer shall pay any documentary,
stamp, sales, transfer, use, filing or other similar taxes payable as a result
of the transactions contemplated hereby.
SECTION 6.3. YEAR 2000 COVENANTS.
6.3.1. SELLER SYSTEMS. Seller hereby represents and warrants to
Buyer that Seller's computerized laboratory computer systems known as TopLab
will not fail due to: (i) any non-recognition of date data at the change of the
century on January 1, 2000, or (ii) the failure of any calculations to
accommodate same century and multi-century formulae and date values or date data
interface values that reflect the century, in either case, where such failure
causes Seller to be unable to accurately transmit reports to Providers via the
teleprinters. Seller shall make any necessary modifications to TopLab to ensure
accuracy of this warranty.
6.3.2. TELEPRINTERS. Seller has received assurances from its
primary supplier regarding year 2000 compliance (as described in Section
6.3.1 above) of teleprinters included in the Purchased Assets. In the event
any teleprinter(s) fail to receive or print accurate and complete test
reports because of any problem related to the occurrence of dates prior to,
during, or after the year 2000 and reasonably classified as a "year 2000"
problem, for each such teleprinter with respect to which Buyer provides
reasonable notice to Seller of such failure within thirty (30) days after
Buyer knows that such failure was the result of a "year 2000" problem,
acquiring knowledge of the initial manifestation of such failure, Seller will
(i) [*] Buyer associated with [*] to the Provider Site in accordance with
Seller's directions, (ii) not hold Buyer responsible for any Loss of Seller
by reason of such failure of such teleprinter(s), and (iii) indemnify and
hold harmless Buyer (in accordance with Section 7.2.1 hereof, except that the
threshold amount provided for in Section 7.2.6(b) shall not apply) against
any Third Party Claim to the extent such claim is alleged to have been caused
by reason of such failure of such teleprinter. Buyer will use its
commercially reasonable efforts, if Seller so requests, to remedy the year
2000 non-compliance of such teleprinter(s) at Seller's cost (as provided in
clause (i) above), and Seller shall reimburse Buyer for any reasonable
expenses in connection therewith.
6.3.3. REMEDIES. Buyer and Seller agree that the remedies provided
for in this Section 6.3 shall be the exclusive remedy in the event any
teleprinter or TopLab fails
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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because of year 2000 non-compliance. Nothing in this Section 6.3 shall
affect any rights or obligations of Buyer or Seller under the Services
Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS AND INDEMNIFICATION
SECTION 7.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Notwithstanding anything herein to the contrary, all of the
representations, warranties, covenants and agreements (including, without
limitation, the corresponding indemnification obligations) contained in this
Agreement shall survive the Closing and continue in full force and effect for
one (1) year, except that the representation of Seller made in section 6.3.1
and the covenant in Section 6.3.2 shall survive for a period of [*], and
except that any representations or warranties not true when made and made
fraudulently or with the intent to defraud or mislead, shall continue in full
force and effect thereafter (subject to any applicable statute of limitations
and any extensions thereof); and, in all cases, thereafter as to any Losses
relating thereto for which a Claims Notice has been given prior to the
termination of such period of survival. Notwithstanding the foregoing,
covenants contained herein which by their terms survive for a longer period
shall continue to apply as provided in such specific terms.
SECTION 7.2. OBLIGATION TO INDEMNIFY.
7.2.1. OBLIGATIONS OF SELLER TO INDEMNIFY. From and after the
Closing, regardless of any investigation undertaken by Buyer, Seller shall
indemnify and hold harmless Buyer Indemnitees against and in respect of all
Losses asserted against, imposed upon or incurred by any Buyer Indemnitee by
reason of or resulting from (i) any misrepresentation or breach of warranty made
to Buyer by Seller in this Agreement; (ii) any failure by Seller to perform any
of the covenants, agreements or obligations required to be performed by it in
accordance with the terms and conditions of this Agreement; (iii) any and all
operation by Seller of the Purchased Assets prior to Closing; and (iv) any and
all Litigation arising out of any of the foregoing or the enforcement of this
Section 7.2.1.
7.2.2. OBLIGATION OF BUYER TO INDEMNIFY. From and after the
Closing, regardless of any investigation undertaken by Seller, Buyer shall
indemnify and hold harmless Seller Indemnitees against and in respect of all
Losses asserted against, imposed upon or incurred by any Seller Indemnitee by
reason of or resulting from (i) any misrepresentation or breach of warranty made
to Seller by Buyer in this Agreement; (ii) any failure by Buyer to perform any
of the covenants, agreements or obligations required to be performed by it in
accordance with the terms and conditions of this Agreement; (iii) any and all
operation by Buyer of the Purchased Assets after Closing; and (iv) any and all
Litigation arising out of any of the foregoing or the enforcement of this
Section 7.2.2.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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7.2.3. CLAIMS NOTICE. A Claim shall be made by any Indemnitee by
delivery of a Claims Notice to the Indemnifying Party requesting indemnification
and specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, attaching any written
documentation received from the third party claimant with respect thereto.
7.2.4. PROCEDURES INVOLVING NON-THIRD PARTY CLAIMS. If the Claim
involves a matter other than a Third Party Claim, the Indemnifying Party shall
have forty-five (45) days to object to such Claim by delivery of a written
notice of such objection to such Indemnitee specifying in reasonable detail the
basis for such objection. If an objection is timely made by the Indemnifying
Party, the Indemnifying Party and the Indemnitee shall cooperate in the
compromise of the Claim with ultimate resolution of the validity of such Claim
to be determined under Article VIII. If an objection is not timely made by the
Indemnifying Party, such failure shall be deemed to be an objection, and the
Indemnifying Party and the Indemnitee shall cooperate in the compromise of the
Claim with ultimate resolution of the validity of such Claim to be determined
under Article VIII.
7.2.5. PROCEDURES INVOLVING THIRD PARTY CLAIMS. Subject to the
rights and obligations of the Parties in this Section 7.2.5, each of Indemnitee
and Indemnifying Party shall cooperate with the other in the resolution of a
Third Party Claim. The obligations and liabilities of the parties hereunder
with respect to a Third Party Claim shall be subject to the following terms and
conditions:
(a) The Indemnitee shall give the Indemnifying Party
written notice of a Third Party Claim promptly after receipt by the Indemnitee
of notice thereof, and the Indemnifying Party may undertake the defense,
compromise and settlement thereof by representatives of its own choosing
reasonably acceptable to the Indemnitee. The failure of the Indemnitee to
notify the Indemnifying Party of such claim shall not relieve the Indemnifying
Party of any liability that it may have with respect to such claim except to the
extent the Indemnifying Party demonstrates that the defense of such claim is
prejudiced by such failure. The assumption of the defense, compromise and
settlement of any such Third Party Claim by the Indemnifying Party shall be an
acknowledgment of the obligation of the Indemnifying Party to indemnify the
Indemnitee with respect to such claim hereunder to the extent an indemnity
obligation arises pursuant to Section 7.2.1 or 7.2.2, as applicable. If the
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, the Indemnifying Party fails or refuses to undertake the defense of
such Third Party Claim within a reasonable period of time after written notice
of such claim has been given to the Indemnifying Party by the Indemnitee (but in
no event more than thirty (30) days after receipt of such notice), the
Indemnitee shall have the right to undertake the defense, compromise and
settlement of such claim with counsel of its own choosing. In the circumstances
described in the preceding sentence, the Indemnitee shall, promptly upon its
assumption of the defense of such claim, make a Claim as specified in
Section 7.2.1(iv) or 7.2.2(iv) which shall be deemed a Claim that is not a Third
Party Claim for the purposes of the procedures set forth herein.
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(b) No settlement of a Third Party Claim involving the
asserted liability of the Indemnifying Party under this Article shall be made
without the prior written consent by or on behalf of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed. If the
Indemnifying Party assumes the defense of such a Third Party Claim, (1) no
compromise or settlement thereof may be effected by the Indemnifying Party
without the Indemnitee's consent unless (a) there is no finding or admission of
any violation of law or any violation of the rights of any Person and no effect
on any other claim that may be made against the Indemnitee (b) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party and
(c) the compromise or settlement includes, as an unconditional term thereof, the
giving by the claimant or the plaintiff to the Indemnitee of a release, in form
and substance reasonably satisfactory to the Indemnitee, from all liability in
respect of such Third Party Claim, and (2) the Indemnitee shall have no
liability with respect to any compromise or settlement thereof effected without
its consent.
7.2.6. LIMITATIONS ON INDEMNIFICATION.
(a) No party to this Agreement shall be entitled to
indemnification under this Agreement to the extent that such party's Losses are
increased or extended by the willful misconduct, violation of law or bad faith
of such party.
(b) No Indemnifying Party shall be required to indemnify
an Indemnitee with respect to any Loss with respect to a Claim unless the
amount of such Loss, when aggregated with all other such Losses suffered by
that Indemnitee, shall [*], at which time Claims may be asserted to the
extent that all Losses are in excess of such threshold amount; PROVIDED,
however, that such threshold amount shall not apply to any Loss which results
from or arises out of fraud or intentional misrepresentation or an
intentional breach of a representation, warranty, covenant or agreement in
this Agreement or the Collateral Documents.
(c) The parties acknowledge there will be an
indemnification section in the Services Agreement, and that an Indemnitee shall
only be entitled to a single satisfaction of any Loss.
SECTION 7.3. NO RELEASE FOR FRAUD. Nothing contained in this
Agreement shall relieve or limit the liability of either party hereto or any
officer or director of either party from any Liability arising out of or
resulting from common law fraud or intentional misrepresentation in connection
with the transactions contemplated by this Agreement or in connection with the
delivery of any of the Collateral Documents. Each party shall have a right to
indemnification for any Loss incurred as the result of any common law fraud or
intentional misrepresentation by the other party or any officer or director of
the other party without regard to the Threshold Amount or any period of
limitation provided in this Agreement.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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7.3.1. PAYMENT.
(a) If any party is required to make any payment under this
Article, such party shall promptly pay the Indemnified Party the amount so
determined. If there is a dispute as to the amount or manner of determination
of any indemnity obligation owed under this Article, the Indemnifying Party
shall nevertheless pay when due such portion, if any, of the obligation as shall
not be subject to dispute. The difference, if any, between the amount of the
obligation ultimately determined as properly payable under this Article and the
portion, if any, theretofore paid shall bear interest as provided in Section
7.2.8(b).
(b) If all or part of any indemnification obligation under
this Agreement is not paid when due, then the Indemnifying Party shall pay the
Indemnified Party interest on the unpaid principal amount of the obligation from
the date the amount became due until payment in full, at the per annum rate of
interest published from time to time by The Wall Street Journal as the "Prime
Rate."
ARTICLE VIII
DISPUTE RESOLUTION
SECTION 8.1. INFORMAL DISPUTE RESOLUTION. Any dispute between the
parties arising out of or with respect to this Agreement, either with respect to
the interpretation of any provision of this Agreement or with respect to the
performance by Buyer or Seller, shall be resolved as provided in this Article.
8.1.1. INFORMAL DISPUTE RESOLUTION. Prior to the initiation of
formal dispute resolution procedures, the parties shall first attempt to resolve
their dispute informally, as follows:
(a) The Relationship Managers for each party shall meet
for the purpose of endeavoring to resolve such dispute. They shall meet as
often as the parties reasonably deem necessary in order to gather and furnish
to the other all information with respect to the matter in issue which the
parties believe to be appropriate and germane in connection with its
resolution. The Relationship Managers shall discuss the problem and
negotiate in good faith in an effort to resolve the dispute without the
necessity of any formal proceeding. During the course of negotiations, all
reasonable requests made by one party to another for non-privileged
information, reasonably related to this Agreement, shall be honored in order
that each of the parties may be fully advised of the other's position.
(b) If, within [*] days after a matter has been
identified for resolution pursuant to this Article, either of the
Relationship Managers concludes in good faith that amicable resolution
through continued negotiation in this forum does not appear likely, the
matter will be escalated by formal written notification to the Seller and the
Buyer.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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(c) Formal proceedings for the resolution of a dispute may
not be commenced until the earlier of: (i) the date on which the Seller and
Buyer conclude in good faith that amicable resolution through continued
negotiation of the matter does not appear likely; or (ii) fifteen (15) days
after the dispute has been referred to the Seller and the Buyer.
8.1.2. FORMAL PROCEEDINGS PERMITTED. The provisions of this
Section 8.1 shall not be construed to prevent a party from instituting, and a
party being authorized to institute, formal proceedings earlier to avoid the
expiration of any applicable limitations period or any period provided for in
Section 7.1.
SECTION 8.2. ARBITRATION. If the parties are unable to resolve any
controversy arising under this Agreement as contemplated by Section 8.1 and if
such controversy is not subject to Article VII or Section 8.3, then such
controversy shall be submitted to mandatory and binding arbitration at the
election of either party (the "DISPUTING PARTY") pursuant to the following
conditions:
8.2.1. SELECTION OF ARBITRATORS. The Disputing Party shall notify
the AAA and the other party in writing describing in reasonable detail the
nature of the dispute (the "DISPUTE NOTICE"). Each of the parties shall select
a neutral arbitrator in accordance with the rules of AAA, and the two
arbitrators so selected shall select a third neutral arbitrator (the three
arbitrators referred to in this Section being hereinafter referred to as the
"PANEL").
8.2.2. CONDUCT OF ARBITRATION. The Panel shall allow reasonable
discovery as permitted by the Federal Rules of Civil Procedure, to the extent
consistent with the purpose of the arbitration. The panel shall have no power
or authority to amend or disregard any provision of this Section 8.2. The
arbitration hearing shall be commenced promptly and conducted expeditiously,
with each of Buyer and Seller being allocated one-half of the time for the
presentation of its case. Unless otherwise agreed to by the parties, an
arbitration hearing shall be conducted on consecutive days.
8.2.3. REPLACEMENT OF ARBITRATOR. Should an arbitrator refuse or
be unable to proceed with arbitration proceedings as called for by this Section
8.2, such arbitrator shall be replaced by an arbitrator selected in accordance
with the rules of the AAA.
8.2.4. FINDINGS AND CONCLUSIONS. The Panel rendering judgment upon
disputes between parties as provided in this Section shall, after reaching
judgment and award, prepare and distribute to the parties a writing describing
the findings of fact and conclusions of law relevant to such judgment and award
and containing an opinion setting forth the reasons for the giving or denial of
any award. The award of the Panel shall be final and binding on the parties,
and judgment thereon may be entered in a court of competent jurisdiction.
8.2.5. PLACE OF ARBITRATION HEARINGS. Arbitration hearings
hereunder shall be held in Washington, D.C.
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8.2.6. TIME OF THE ESSENCE. The Panel is instructed that time
is of the essence in the arbitration proceeding. The Panel shall use its
best efforts to render its judgment or award within [*] following the
conclusion of the hearing or as soon as possible thereafter. Recognizing the
express desire of the parties for an expeditious means of dispute resolution,
the Panel shall limit or allow the parties to expand the scope of discovery
as may be reasonable under the circumstances.
SECTION 8.3. IMMEDIATE INJUNCTIVE RELIEF. In the event of a breach
of the confidentiality obligations set forth in this Agreement, or in the event
a party makes a good faith determination that a breach of the terms of this
Agreement by the other party is such that the damages to such party resulting
from the breach will be so immediate, so large or severe, and so incapable of
adequate redress after the fact that a temporary restraining order or other
immediate injunctive relief is a necessary remedy, then such party may file a
pleading with a court seeking immediate injunctive relief. If a party files a
pleading with a court seeking immediate injunctive relief and this pleading is
challenged by the other party and the injunctive relief sought is not awarded in
substantial part (or in the event of a temporary restraining order is vacated
upon challenge by the other party), the party filing the pleading seeking
immediate injunctive relief shall pay all of the costs and attorneys' fees of
the party successfully challenging the pleading.
ARTICLE IX
TERMINATION
SECTION 9.1. EVENTS OF TERMINATION. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated by written notice
of termination at any time prior to the Closing only as follows:
9.1.1. MUTUAL CONSENT. By mutual consent of Seller and Buyer;
9.1.2. BY SELLER OR BUYER.
(a) By Seller if Buyer shall have (i) materially misstated
any representation or been materially in breach of any warranty contained herein
or (ii) been materially in breach of any covenant, undertaking or restriction
contained herein, and such misstatement or breach has not been cured by the
earlier of (A) 10 days after the giving of notice to such party of such
misstatement or breach or (B) the Closing;
(b) By Buyer if Seller shall have (i) materially misstated
any representation or been materially in breach of any warranty contained herein
or (ii) been materially in breach of any covenant, undertaking or restriction
contained herein, and such misstatement or breach has not been cured by the
earlier of (A) 10 days after the giving of notice to such party of such
misstatement or breach or (B) the Closing; and Final Closing Date. By either
party if the Closing has not occurred by January 15, 1999.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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SECTION 9.2. CONSEQUENCES OF TERMINATION. In the event of the
termination hereof pursuant to the provisions of Section 9.1, this Agreement
shall become void and have no effect, without any liability on the part of
either of the parties or their officers and directors; provided, however, that
(i) if this Agreement is terminated under the provisions of Section 9.1.2, the
provisions of this Section 9.2 shall not relieve the misstating or breaching
party of any liability therefor, and (ii) the obligations of the parties under
Section 4.3.1 shall survive the termination of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. GENERAL PROVISIONS.
10.1.1. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given if (1) delivered by hand or if mailed by United States registered or
certified mail, return receipt requested, first class postage prepaid, (2) sent
by Federal Express or similar overnight courier service to the parties or their
assignees, or (3) sent by telecopy to the number set forth below and promptly
followed by a written copy sent by any other means specified herein, addressed
as follows:
If to Seller:
SmithKline Beecham Clinical Laboratories, Inc.
1201 South Collegeville Road
Collegeville, PA 19426
Attention: President
Telephone: 610.454.6116
Telecopy: 610.983.2185
with a copy to:
SmithKline Beecham Corporation
One Franklin Plaza
16th and Race Streets
Philadelphia, PA 19103
Attention: General Counsel-U.S.
Telephone: 215.751.5844
Telecopy: 215.751.5132
If to Buyer:
Healtheon Corporation
4600 Patrick Henry Drive
Santa Clara, CA 95054
Attention: W. Michael Long
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Telephone: 650.614.0200
Telecopy: 650.614.3300
with a copy to:
Alston & Bird
One Atlantic Center
1201 W. Peachtree Street
Atlanta, GA 30309
Attention: John C. Weitnauer
Telephone: 404.881.7780
Telecopy: 404.881.7777
(a) If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made and, if delivered by mail, telecopy, Federal Express or other
overnight courier, the date on which such notice, request, instruction or
document is first received shall be the date of delivery.
(b) Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 10.1.1.
(c) Failure of any party to send a copy of any notice to
counsel for the other Party shall not affect in any way the validity of such
notice to other party.
10.1.2. ENTIRE AGREEMENT. This Agreement and the Collateral
Documents constitute the entire understanding and agreement among the parties
with respect to the subject matter contained herein and supersede any prior
understandings and agreements (whether written or oral) among them respecting
such subject matter, except that any other confidentiality provisions agreed to
in writing between the parties shall survive and be merely supplemented by
Section 4.3.1 of this Agreement (except to the extent such other written
provisions may be in conflict with Section 4.3.1, in which cases such other
written provisions shall be superseded to the extent necessary to resolve such
conflict). The exhibits and schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
10.1.3. HEADINGS. The headings in this Agreement (and the Table of
Contents) are for convenience of reference only and shall not affect its
interpretation.
10.1.4. ASSIGNMENT. This Agreement shall not be assignable by any
of the parties hereto without the written consent of the other party hereto, and
no rights under this Agreement may be transferred without the consent of the
non-transferring party, except that (i) all the rights and obligations of Seller
hereunder may be transferred, without the consent of (but with notice to) Buyer,
to an Affiliate of Seller or an acquiror of substantially all of Seller's assets
(whether by purchase of assets, merger or other corporate reorganization), and
(ii) all rights and obligations of Buyer hereunder may be transferred, without
the consent of (but with
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notice to) Seller, to any assignee of Buyer's rights and obligations under
the Services Agreement provided such assignment is made in accordance with
the Services Agreement. Any attempted assignment without a required consent
shall be void. Any assignment with a required consent does not release the
assigning party from any of its obligations under this Agreement unless the
consent so states.
10.1.5. BINDING EFFECT. Subject to the limitations on transfer set
forth in Section 10.1.4, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns.
10.1.6. KNOWLEDGE. As used herein, the words "TO THE KNOWLEDGE OF"
or words of similar import mean, (i) with respect to Seller, the actual
knowledge of the directors, managers and officers of Seller, and persons with
similar such responsibilities, and that knowledge which would have been acquired
by any such persons after making due and diligent inquiry of those employees of
the Company who could reasonably be expected to have actual knowledge of the
matters in question, or other due inquiry, and (ii) with respect to Buyer, the
actual knowledge of the directors, managers and officers of Buyer and persons
with similar such responsibilities, and that knowledge which would have been
acquired by any such persons after making due and diligent inquiry of those
employees of Buyer who could reasonably be expected to have actual knowledge of
the matters in question, or other due inquiry.
10.1.7. SEVERABILITY. It is the desire and intent of the parties
that all of the material provisions of this Agreement and the Services Agreement
be enforced to the fullest extent permissible and no severability shall pertain
thereto. In the event that any other provision of this Agreement is held
illegal, invalid, prohibited or unenforceable for any reason, such illegality,
invalidity, or unenforceability will not affect any other provision hereof, and
this Agreement shall be deemed modified to the extent necessary to render
enforceable the remaining provisions hereof. Notwithstanding the foregoing, if
such provision could be more narrowly interpreted so as not to be illegal,
invalid, prohibited or unenforceable, without invalidating any of the material
remaining provisions of this Agreement or the Services Agreement, it shall be so
narrowly interpreted.
10.1.8. WAIVER. The failure of either party to insist upon strict
performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder. No waiver by any party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
10.1.9. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to any choice of law or conflicting provision or rule
(whether of the Commonwealth of Pennsylvania or any other jurisdiction) that
would cause the laws of any jurisdiction other than the Commonwealth of
Pennsylvania to be applied. In furtherance of the foregoing, the internal
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law of the Commonwealth of Pennsylvania will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of
law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply. Any legal action or proceeding with
respect to this Agreement may be brought exclusively in the courts of the
Commonwealth of Pennsylvania or of the United States that are located in
Pennsylvania, and, by execution and delivery of this Agreement, each party
hereto hereby irrevocably accepts for itself and in respect of its property
and assets, generally and unconditionally the jurisdiction of the aforesaid
courts.
10.1.10. RULE OF STRICT CONSTRUCTION. The language used in this
Agreement has been chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against either party.
10.1.11. CONSTRUCTION. Unless the context of this Agreement
otherwise requires, (i) words of any gender include each other gender; (ii)
words using the singular or plural number also include the plural or singular
number, respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; and (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days.
10.1.12. AMENDMENTS. This Agreement may be amended or supplemented
only by a written instrument duly executed by each party.
10.1.13. TIME OF ESSENCE. Time is of the essence in this Agreement.
10.1.14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and either party hereto may execute any such counterpart, each
of which when executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument. The execution of this Agreement by either party hereto will not
become effective until counterparts hereof have been executed by the other party
hereto. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any other counterpart.
10.1.15. FACSIMILE SIGNATURES. This Agreement may be executed by
facsimile signature which shall be deemed to be an original for all purposes.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement on the day and year first above written.
Healtheon Corporation
-----------------------------------------------
By:
Its:
SmithKline Beecham Clinical Laboratories, Inc.
-----------------------------------------------
By:
Its:
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EXHIBIT A
DEFINITIONS
"AAA" means the American Arbitration Association.
"ActaMed" means ActaMed Corporation, a Delaware corporation and Subsidiary
of Buyer.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Agreement" means the Asset Purchase Agreement of which this Exhibit forms
a part.
"Assumed Contracts" means the Contracts referenced in Section 1.1.3.
"Buyer Indemnitee" means Buyer and its Affiliates, and its or their
respective directors, officers, employees, and permitted assigns.
"Claim" means any claim for indemnification under Article VII of the
Agreement.
"Claims Notice" means a written notice of an indemnification claim
delivered pursuant to Section 7.2.3 of the Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Documents" means the documents, agreements and instruments to
be executed and delivered in connection with the Agreement, including without
limitation the Services Agreement and other agreements and documents to be
executed at or prior to Closing as contemplated by Article V of the Agreement.
"Consideration Shares" means the number of shares of Buyer's common stock
determined pursuant to Section 1.6.
"Contract" means any written contract, agreement, lease, plan, instrument
or other document, commitment, arrangement, undertaking, practice or
authorization that is binding on any Person or its property under applicable
law.
"Controlled Group Member" means any trade or business (whether or not
incorporated) which is aggregated with Buyer pursuant to sections 414(b), (c),
(m) or (o) of the Code.
"Court Order" means any judgment, decree, writ, injunction, order or ruling
of any federal, state or local court or governmental or regulatory body or
authority that is binding on any Person or its property under applicable law.
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"Default" means (a) a breach of or default under any Contract or License,
(b) the occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of or default under any Contract or
License or (c) the occurrence of an event that with or without the passage of
time or the giving of notice or both would give rise to a right of termination,
renegotiation (but not where the right of renegotiation would arise in the
ordinary course of business or by virtue of the terms of the Contract or
License, in either case, independent of the transactions contemplated hereby) or
acceleration under any Contract or License.
"Employee Benefit Plan" means any pension, retirement profit-sharing,
deferred compensation, bonus, incentive, performance, stock option, phantom
stock, stock purchase, restricted stock, medical, hospitalization, vision,
dental or other health, life, disability, severance, termination or other
employee benefit plan, program, arrangement, agreement or policy, whether
written or unwritten, to which Buyer contributes or is obligated to contribute,
is a party to or is otherwise bound, or with respect to which Buyer may have any
Liability.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means (i) a member of any "controlled group," as defined
in Section 414(b) of the Code, of which Buyer is a member, (ii) a trade or
business, whether or not incorporated, under common control (within the meaning
of Section 414(c) of the Code) with Buyer, or (iii) a member of any affiliated
service groups (within the meaning of Section 414(m) of the Code) of which Buyer
is a member.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Indemnifying Party" means the party obligated to provide indemnification
pursuant to Sections 7.2.1 or 7.2.2 of the Agreement.
"Indemnitee" means a party seeking indemnification under Sections 7.2.1 or
7.2.2 of the Agreement.
"Integrity Agreement" means the Corporate Integrity Agreement between
Seller and the OIG.
"Intellectual Property" means copyrights, trademarks, service marks, trade
names, patents or applications therefor, technology rights and licenses,
computer software (including, without limitation, any source or object codes
therefor or documentation relating thereto), computer software licenses, trade
secrets, franchises, know-how, inventions and intellectual property rights.
"Investors' Rights Agreement" means the Amended and Restated Investors'
Rights Agreement between Healtheon Corporation, Seller and the other persons and
entities listed on schedules A and B thereto, dated in May 1998.
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"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills and checks presented to banks for collection or
deposit in the ordinary course of business) of any type, whether accrued,
absolute, contingent, matured, unmatured, known or unknown.
"License" means any license, franchise, permit, easement, right or
authorization.
"Lien" means any mortgage, lien, security interest, pledge, encumbrance,
restriction on transferability, defect of title, charge or claim of any nature
whatsoever on any property or property interest.
"Litigation" means any lawsuit, action, claim, arbitration, administrative
or other proceeding, criminal prosecution or governmental investigation or
inquiry involving or affecting a Party or its business, assets or Contracts to
which it is a party or by which it or its business, assets or Contracts may be
bound or affected.
"Losses" means any and all demands, claims, actions or causes of action,
assessments, losses, diminution in value, damages (including special and
consequential damages), Liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
"Material Adverse Effect" means a material adverse effect on the business,
operations, assets, condition (financial or otherwise), operating results,
prospects or liabilities of Buyer and its subsidiaries, taken as a whole, or on
the ability of Buyer to perform its obligations under this Agreement and the
Collateral Documents.
"OIG" means the Office of Inspector General of the Department of Health and
Human Services.
"Person" means any individual, corporation, trust, estate, business trust,
general or limited partnership, limited liability company, limited liability
partnership, unincorporated association or other legal entity.
"Prior Services Agreement" means the Services Agreement between Buyer and
Seller dated December 31, 1997.
"Provider" means a physician, clinic, hospital, patient service center or
other provider of clinical health care services who or which uses any of the
Purchased Assets to receive test result reports from a Seller Lab.
"Provider Site" means the site of a Provider utilizing a teleprinter for
Teleprinter Services.
"Public Offering" means a bona fide firm commitment underwritten offering
of the common stock of Buyer pursuant to a registration statement filed with and
declared effective by the SEC pursuant to the Securities Act.
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"Purchase Price" means the total purchase price of the Purchased Assets.
"Purchased Assets" means the assets described in subsections 1.1.1 through
1.1.3 of this Agreement.
"Regulation" means any statute, law, ordinance, regulation, requirement,
order or rule of any federal, state, or local government or other governmental
agency or body or of any other type of regulatory body, or any governmental or
administrative interpretation of any thereof, including, without limitation, (i)
those covering health, safety, environmental, energy, transportation, bribery,
record keeping, zoning, anti-discrimination, antitrust, wage and hour, and price
and wage control matters, (ii) requirements imposed by any governmental or
regulatory body which must be satisfied to qualify for Medicare reimbursements,
and (iii) any and all federal, state and local health care laws relating to or
covering the methods and ways in which Teleprinter Services, and incidental
services or benefits provided to Providers in connection with the provision of
Teleprinter Services, are provided to the Providers, including, but not limited
to, 42 U.S.C. Section 1395nn and the Clinical Laboratory Improvement Amendments
of 1988, as amended.
"Relationship Manager" means, for each party, the person designated in
writing (such writing to be delivered to the other party) by such party prior to
Closing.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Indemnitee" means Seller and its Affiliates, and its or their
respective directors, officers, employees and permitted assigns.
"Seller Lab" means any location at which Seller or its Affiliates provide,
or may in the future provide, clinical laboratory testing services, regardless
of the means used by such lab for lab order entry and results reporting.
"Services Agreement" means (except as used in the definition of "Prior
Services Agreement") the Services Agreement between Buyer and Seller in a form
and substance to be agreed by Buyer and Seller, to be entered into on or prior
to the Closing Date, containing substantially the same terms and conditions as
those set forth on EXHIBIT B to the Agreement, and such other terms as Buyer and
Seller may agree upon.
"Subsidiary" means a corporation, limited liability company, partnership,
association, trust, joint venture or other entity in which Buyer or Seller, as
the case may be, has, directly or indirectly, an equity, ownership or
proprietary interest of greater than ten percent (10%).
"Substantial Holder" means an officer or employee of Buyer who is the
beneficial owner of one percent (1%) or more of the outstanding voting power or
the outstanding equity (on a fully diluted basis) of Buyer.
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"Teleprinter Services" means the transmission by Seller of clinical
laboratory test results from a Seller Lab to a teleprinter at a Provider Site
via a telephone line in the Provider Site which is automatically dialed by the
applicable Seller Lab and the printing of such results by such teleprinter.
"Third Party Claim" means any claim, suit or proceeding (including, without
limitation, a binding arbitration or an audit by any taxing authority) that is
instituted against an Indemnitee by a Person other than a party hereto and
which, if prosecuted successfully, would result in a Loss for which such
Indemnitee is entitled to indemnification hereunder.
"Trade Secrets" means information related to a party (1) which derives
economic value, actual or potential, from not being generally known to or
readily ascertainable by other Persons who can obtain economic value from its
disclosure or use, and (2) which is the subject of efforts by said party that
are reasonable under the circumstances to maintain its secrecy.
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EXHIBIT B
SUMMARY TERMS AND CONDITIONS
SERVICES AGREEMENT
BETWEEN SBCL AND HEALTHEON CORPORATION
[*]
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.