AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ACTAMED CORPORATION,
EDI ACQUISITION, INC.,
UHC GREEN ACQUISITION, INC.
AND
UNITED HEALTHCARE CORPORATION
TABLE OF CONTENTS
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ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER. . . . . . . . . . . . . . 1
1.1 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . 2
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Items to Be Delivered at Closing. . . . . . . . . . . . . . 2
ARTICLE 2 THE SURVIVING CORPORATION . . . . . . . . . . . . . . . . . 4
2.1 Articles of Incorporation . . . . . . . . . . . . . . . . . 4
2.2 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Directors and Officers. . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . 5
3.1 Conversion of Shares. . . . . . . . . . . . . . . . . . . . 5
3.2 Exchange Procedures . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF UHC AND THE COMPANY . . . 5
4.1 Ownership of Shares; Operations . . . . . . . . . . . . . . 5
4.2 Capacity and Validity . . . . . . . . . . . . . . . . . . . 6
4.3 Organization, Standing and Foreign Qualification. . . . . . 6
4.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Subsidiaries and Investments. . . . . . . . . . . . . . . . 7
4.6 EDI Financial Statements. . . . . . . . . . . . . . . . . . 7
4.7 Absence of Undisclosed Liabilities. . . . . . . . . . . . . 7
4.8 No Liabilities as Guarantor . . . . . . . . . . . . . . . . 8
4.9 Absence of Changes. . . . . . . . . . . . . . . . . . . . . 8
4.10 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 10
4.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Personal Property . . . . . . . . . . . . . . . . . . . . . 10
4.14 Intellectual Property . . . . . . . . . . . . . . . . . . . 11
4.15 Accounts and Notes Receivable . . . . . . . . . . . . . . . 11
4.16 The Proprietary Software. . . . . . . . . . . . . . . . . . 11
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.18 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 12
4.19 Environmental Conditions. . . . . . . . . . . . . . . . . . 13
4.20 Litigation and Claims . . . . . . . . . . . . . . . . . . . 13
4.21 Contracts and Commitments; Warranties . . . . . . . . . . . 13
4.22 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . 14
4.23 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 14
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4.24 Remuneration. . . . . . . . . . . . . . . . . . . . . . . . 14
4.25 Union and Employment Agreements . . . . . . . . . . . . . . 14
4.26 Officers, Directors, and Bank Accounts. . . . . . . . . . . 15
4.27 Interested Party Transactions . . . . . . . . . . . . . . . 15
4.28 Brokers and Finders . . . . . . . . . . . . . . . . . . . . 15
4.29 Investment Representations; Legend on Shares. . . . . . . . 15
4.30 Compliance with Regulation D Information Requirements . . . 16
4.31 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACTAMED AND SUBCORP . . . 17
5.1 Organization and Good Standing. . . . . . . . . . . . . . . 17
5.2 Authorization of Agreement, No Breach . . . . . . . . . . . 18
5.3 Corporate Power . . . . . . . . . . . . . . . . . . . . . . 18
5.4 ActaMed Financial Statements. . . . . . . . . . . . . . . . 18
5.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Validity and Rights of the Preferred Shares . . . . . . . . 19
5.8 Registration Rights . . . . . . . . . . . . . . . . . . . . 20
5.9 Offering. . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.10 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.11 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 20
5.12 Pending Litigation, etc.. . . . . . . . . . . . . . . . . . 20
5.13 Title to Properties . . . . . . . . . . . . . . . . . . . . 20
5.14 Intellectual Property, etc. . . . . . . . . . . . . . . . . 21
5.15 Compliance with Other Instruments . . . . . . . . . . . . . 21
5.16 Compliance with Law . . . . . . . . . . . . . . . . . . . . 22
5.17 Employees . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.18 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 22
5.19 Compliance with Environmental Laws. . . . . . . . . . . . . 22
5.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.21 Material Contracts and Agreements . . . . . . . . . . . . . 23
5.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.23 Investment Company. . . . . . . . . . . . . . . . . . . . . 24
5.24 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 24
5.25 No Conflict of Interest . . . . . . . . . . . . . . . . . . 25
5.26 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . 25
5.27 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6 RELATED AGREEMENTS OF THE PARTIES . . . . . . . . . . . . . 25
6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . 25
6.2 Access to Properties. . . . . . . . . . . . . . . . . . . . 26
6.3 Relationship with Employees and Customers . . . . . . . . . 26
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6.4 Hired Employees . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Employee Benefits . . . . . . . . . . . . . . . . . . . . . 27
6.6 Other Offers and Exclusive Dealing. . . . . . . . . . . . . 28
6.7 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . 29
6.8 Consents and Approvals. . . . . . . . . . . . . . . . . . . 29
6.9 Qualification and Corporate Existence . . . . . . . . . . . 29
6.10 Public Announcements. . . . . . . . . . . . . . . . . . . . 29
6.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Covenant Not to Compete . . . . . . . . . . . . . . . . . . 30
6.13 Closing Conditions. . . . . . . . . . . . . . . . . . . . . 30
6.14 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.15 Repayment of Debts to Company . . . . . . . . . . . . . . . 31
6.16 Compliance with Regulation D. . . . . . . . . . . . . . . . 31
6.17 Voting for Merger . . . . . . . . . . . . . . . . . . . . . 31
6.18 Antitrust Notification. . . . . . . . . . . . . . . . . . . 31
6.19 Review of Registration Statement. . . . . . . . . . . . . . 31
6.20 Escrow of Software. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACTAMED AND SUBCORP 32
7.1 Representations True and Covenants Performed at Closing . . 32
7.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 No Injunction, etc. . . . . . . . . . . . . . . . . . . . . 32
7.4 Approval of Legal Matters . . . . . . . . . . . . . . . . . 32
7.5 Governmental Approvals. . . . . . . . . . . . . . . . . . . 32
7.6 No Material Adverse Change. . . . . . . . . . . . . . . . . 32
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UHC AND THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Representations True and Covenants Performed at Closing . . 33
8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 No Injunction, etc. . . . . . . . . . . . . . . . . . . . . 33
8.4 Approval of Legal Matters . . . . . . . . . . . . . . . . . 33
8.5 Governmental Approvals. . . . . . . . . . . . . . . . . . . 33
8.6 No Material Adverse Change. . . . . . . . . . . . . . . . . 34
ARTICLE 9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Survival of Representations and Warranties of UHC and the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Survival of Representations and Warranties of ActaMed and
SubCorp . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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9.3 Obligation of UHC to Indemnify. . . . . . . . . . . . . . . 35
9.4 Obligation of ActaMed and SubCorp to Indemnify. . . . . . . 35
9.5 Claims Notice . . . . . . . . . . . . . . . . . . . . . . . 36
9.6 Procedures Involving Non-Third Party Claims . . . . . . . . 36
9.7 Procedures Involving Third Party Claims . . . . . . . . . . 36
9.8 Limitations on Indemnification. . . . . . . . . . . . . . . 37
9.9 No Release for Fraud. . . . . . . . . . . . . . . . . . . . 38
9.10 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . 38
9.12 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 10 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Tax Indemnities . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Returns and Payments. . . . . . . . . . . . . . . . . . . . 40
10.3 Tax Audit . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.4 Cooperation and Exchange of Information . . . . . . . . . . 41
10.5 Tax Sharing Agreements. . . . . . . . . . . . . . . . . . . 42
10.6 Article 9 . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 11 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 42
11.1 Method of Termination . . . . . . . . . . . . . . . . . . . 42
11.2 Notice of Termination . . . . . . . . . . . . . . . . . . . 43
11.3 Effect of Termination . . . . . . . . . . . . . . . . . . . 43
11.4 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 12 ADDITIONAL COVENANTS OF ACTAMED . . . . . . . . . . . . . . 44
12.1 Securities Law Filings. . . . . . . . . . . . . . . . . . . 44
12.2 Transactions with Substantial Holders . . . . . . . . . . . 44
12.3 Business and Financial Covenants. . . . . . . . . . . . . . 44
12.4 Corporate Existence, Business, Maintenance, Insurance . . . 46
12.5 Payment of Taxes, etc.; ERISA . . . . . . . . . . . . . . . 47
12.6 Books and Records, Compliance . . . . . . . . . . . . . . . 47
12.7 Repurchase of Preferred Shares. . . . . . . . . . . . . . . 48
12.8 Compensation. . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 13 INFORMATIONAL COVENANTS OF ACTAMED. . . . . . . . . . . . . 48
13.1 Audited Annual Financial Statements . . . . . . . . . . . . 48
13.2 Quarterly Unaudited Financial Statements. . . . . . . . . . 48
13.3 Monthly Unaudited Financial Statements. . . . . . . . . . . 49
13.4 Management's Analysis . . . . . . . . . . . . . . . . . . . 49
13.5 Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.6 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . 49
13.7 Other Information . . . . . . . . . . . . . . . . . . . . . 50
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ARTICLE 14 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . 51
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.2 Further Assurances. . . . . . . . . . . . . . . . . . . . . 52
14.3 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.4 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . 52
14.5 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . 53
14.6 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.8 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 53
14.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 53
14.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 53
14.11 Pronouns. . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.12 Time of Essence . . . . . . . . . . . . . . . . . . . . . . 53
14.13 Schedules and Exhibits. . . . . . . . . . . . . . . . . . . 53
</TABLE>
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EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
EXHIBITS
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<C>
<S>
A Defined Terms
1.4(a)(1) Services and License Agreement
1.4(a)(2) Registration Rights Agreement Amendment
1.4(a)(3) Stockholders' Agreement Amendment
1.4(a)(4) Standstill Agreement Amendment
1.4(a)(5) Terms of Transition Services Agreement
1.4(a)(6) UHC Compliance Certificate
1.4(a)(7) UHC Secretary's Certificate
1.4(a)(8) Company Compliance Certificate
1.4(a)(9) Company Secretary's Certificate
1.4(b)(2) Third Amended and Restated Articles of Incorporation
1.4(b)(3) ActaMed Compliance Certificate
1.4((b)(4) ActaMed Secretary's Certificate
1.4(b)(5) SubCorp Compliance Certificate
1.4(b)(6) SubCorp Secretary's Certificate
SCHEDULES
4.6 EDI Financial Statements
4.9 Changes
4.13(a) Company Personal Property
4.14 Company Intellectual Property
4.19 Company Environmental Conditions
4.20 Company Litigation
4.21(a) Company Contracts
4.27 Interested Party Transactions
5.4(a) ActaMed Financial Statements
5.4(b) Undisclosed Liabilities
5.5 Consent Requirements
5.6 ActaMed Derivative Securities
5.12 ActaMed Litigation
5.13 ActaMed Liens
5.14 ActaMed Intellectual Property
5.20 ActaMed Insurance Policies
5.21 ActaMed Contracts
5.22 Description of 1993 IRS Audit
5.24 ActaMed Labor Practices
5.25 ActaMed Conflicts
6.5 Hired Employees
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of March
1, 1996, is made and entered into by and among ACTAMED CORPORATION, a Georgia
corporation ("ACTAMED"), EDI ACQUISITION, INC., a Georgia corporation
("SUBCORP"), UNITED HEALTHCARE CORPORATION, a Minnesota corporation ("UHC")
and UHC GREEN ACQUISITION, INC., a Nevada corporation (the "COMPANY").
PREAMBLE
The Boards of Directors of ActaMed, SubCorp and the Company, and UHC are
of the opinion that the transactions described in this Agreement are in the
best interests of the parties and their respective shareholders. UHC is the
sole shareholder of the Company and ActaMed is the sole shareholder of
SubCorp. The assets dedicated to the EDI Services Group of UHC ("EDI") were
transferred to the Company. This Agreement provides for the acquisition of
the Company by ActaMed pursuant to the merger of SubCorp with and into the
Company. At the effective time of such merger, the outstanding shares of the
capital stock of the Company shall be converted into the right to receive
preferred stock of ActaMed. As a result, UHC shall become a shareholder of
ActaMed and the Company shall continue to conduct its business and operations
as a wholly-owned subsidiary of ActaMed. The transactions described in this
Agreement are subject to the approval of the Federal Trade Commission and the
United States Department of Justice, and the satisfaction of several other
conditions described in this Agreement.
Capitalized terms used in this Agreement are defined in EXHIBIT A to
this Agreement.
AGREEMENT
In consideration of the mutual representations, warranties and covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. At the Effective Time, SubCorp shall be merged with and
into the Company in the Merger. The Company shall be the Surviving
Corporation of the Merger and shall be governed by the laws of the State of
Nevada. The Merger shall be consummated pursuant to the terms and subject to
the conditions of this Agreement, which has been approved and adopted by the
respective Boards of Directors (or authorized committees thereof) of ActaMed,
SubCorp and the Company, and by UHC.
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1.2 TIME AND PLACE OF CLOSING. The Closing of the transactions
contemplated by this Agreement will take place at 9:00 a.m., Atlanta, Georgia
local time, three business days after satisfaction of the conditions set
forth in Articles 7 and 8, or on such other day or at such other time as the
parties hereto may mutually agree. Notwithstanding the foregoing, if the
Closing does not occur on the first day of a month, then solely for financial
accounting and reporting purposes and filing of income tax returns in
connection with the Company, the parties hereto agree that the transactions
contemplated herein shall be deemed to have closed on as of the first day of
the month in which the Closing occurs; provided that the parties hereto agree
that for all other purposes, including, without limitation, risk of loss, the
Closing shall occur, and shall be deemed to have occurred, on the actual date
of the Closing. Executed counterparts of the documents required for the
Closing shall be exchanged by mail prior to the Closing Date, and the parties
shall inspect and approve such executed documents prior to the Closing Date.
Prior to the Closing Date any documents so exchanged shall not be deemed to
have been delivered, but shall be held in escrow for inspection and approval
pending the Closing. On the Closing Date the parties shall confirm to each
other in writing that the documents are satisfactory, the documents shall be
deemed to be delivered, the Closing shall occur and the Merger shall be
effected.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective at the later of: (a) the date and the
time that a Certificate of Merger reflecting the Merger is filed with the
Secretary of State of the State of Georgia or (b) the date and the time that
articles of merger reflecting the Merger are filed with the Secretary of
State of the State of Nevada.
1.4 ITEMS TO BE DELIVERED AT CLOSING. At the Closing, the parties
shall exchange the following documents in connection with the Merger.
(a) UHC and the Company shall deliver to ActaMed and SubCorp the
following:
(1) a Services and License Agreement, executed by UHC as
attached hereto as EXHIBIT 1.4(a)(1);
(2) a Second Amendment to the Registration Rights Agreement,
executed by UHC and substantially in the form of EXHIBIT 1.4(a)(2);
(3) a Second Amendment to the ActaMed Stockholders'
Agreement, executed by UHC and substantially in the form of EXHIBIT 1.4(a)(3);
(4) an Amendment to the Standstill Agreement, executed by
UHC, UHC Management Company, Inc. and HLM Partners VII, L.P. and
substantially in the form of EXHIBIT 1.4(a)(4);
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(5) a Transition Services Agreement, to be negotiated in good
faith by ActaMed and UHC and to be executed by UHC on substantially the terms
set forth on EXHIBIT 1.4(a)(5);
(6) a compliance certificate executed by an appropriate
officer of UHC and substantially in the form of EXHIBIT 1.4(a)(6);
(7) a Secretary's certificate executed by the Secretary of
UHC and substantially in the form of EXHIBIT 1.4(a)(7);
(8) a compliance certificate executed by the President of the
Company and substantially in the form of EXHIBIT 1.4(a)(8);
(9) a Secretary's certificate executed by the Secretary of
the Company and substantially in the form of EXHIBIT 1.4(a)(9);
(10) an opinion of Kevin H. Roche to be negotiated in good
faith by ActaMed, UHC and Mr. Roche;
(11) the written consents of other persons obtained pursuant
to SECTION 6.8;
(12) the resignation of each officer and director of the
Company;
(13) all of the books and records of the Company and the
Company Business including, but not limited to, (a) all corporate and other
records of the Company and each of its predecessors, including the minute
books, stock books, stock registers, books of account, leases and contracts,
deeds, title documents, customer lists, financial statements, (b) employee
records and (c) such other documents or certificates as shall be reasonably
requested by ActaMed and SubCorp;
(14) the good standing and other certificates referred to in
SECTION 6.9 hereof; and
(15) all other documents reasonably requested by ActaMed or
SubCorp.
(b) ActaMed and the SubCorp shall deliver to UHC and the Company
the following:
(1) executed counterpart originals of the Services and
License Agreement, the Registration Rights Agreement Amendment, the
Stockholders' Agreement Amendment, the Standstill Agreement Amendment, the
Transition Services Agreement and the Sublease Agreement;
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(2) a certified copy of the Third Amended and Restated
Articles of Incorporation of ActaMed, filed in the office of the Secretary of
State of Georgia and substantially in the form of EXHIBIT 1.4(b)(2);
(3) a compliance certificate executed by the President of
ActaMed and substantially in the form of EXHIBIT 1.4(b)(3);
(4) a Secretary's certificate executed by the Secretary of
ActaMed and substantially in the form of EXHIBIT 1.4(b)(4);
(5) a compliance certificate executed by the President of
SubCorp and substantially in the form of EXHIBIT 1.4(b)(5);
(6) a Secretary's certificate executed by the Secretary of
SubCorp and substantially in the form of EXHIBIT 1.4(b)(6);
(7) an opinion of Alston & Bird to be negotiated in good
faith by UHC, ActaMed and Alston & Bird; and
(8) all other documents reasonably requested by UHC or the
Company.
ARTICLE 2
THE SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective
Time, and thereafter may be amended in accordance with its terms as provided
by law and this Agreement.
2.2 BYLAWS. The Bylaws of SubCorp as in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by
laws and this Agreement.
2.3 DIRECTORS AND OFFICERS. The directors of SubCorp in office
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, and the officers of SubCorp in office immediately
prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly elected
and qualified.
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ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this ARTICLE
3, at the Effective Time, by virtue of the Merger and without any action on
the part of UHC:
(a) All of the Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be deemed canceled and cease to
be outstanding and shall be converted into the right to receive at the
Effective Time as consideration from ActaMed for the Merger 10,344,828 shares
of Series C Preferred Stock of ActaMed. If, after the date of this Agreement
and before the Effective Time, ActaMed shall take any action that would have
caused conversion of the Preferred Shares had they been outstanding, then the
Company Common Stock shall be exchanged for the number of shares of the
ActaMed Common Stock that would have been issued upon the conversion of the
Preferred Shares. If, after the date of this Agreement and before the
Effective Time, ActaMed shall take any action that would have caused an
adjustment to the Series C Conversion Price (as defined in the Restated
Articles) had the Preferred Stock been outstanding, then the Series C
Conversion Price shall be so adjusted.
(b) Any and all shares of Company Common Stock held as treasury
shares by the Company shall be canceled and retired at the Effective Time,
and no consideration shall be issued in exchange therefor.
(c) Each share of the common stock of the SubCorp issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time and shall be unaffected by the
Merger.
3.2 EXCHANGE PROCEDURES. At the Closing, UHC shall deliver to ActaMed
the certificates held by it that formerly represented Company Common Stock,
and shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in SECTION 3.1 of this Agreement. The certificates so
surrendered shall be duly endorsed as ActaMed may require. Until surrendered
for exchange in accordance with the provisions of this SECTION 3.2, each
certificate for Company Common Stock shall from and after the Effective Time
represent for all purposes only the right to receive the consideration
provided in SECTION 3.1 of this Agreement in exchange therefor.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UHC AND THE COMPANY
UHC and the Company jointly and severally represent and warrant to
ActaMed and SubCorp as follows:
4.1 OWNERSHIP OF SHARES; OPERATIONS. UHC is the owner of all right,
title and interest (legal and beneficial) in and to all of the Shares, free
and clear of any and all
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Liens of any nature whatsoever, and UHC holds no other interest in the
Company or the Company Business. Except as pursuant to this Agreement, no
person or entity has any agreement or option or any right or privilege
(whether pre-emptive or contractual) capable of becoming an agreement or
option for the purchase of any of the Shares. Substantially all of the
assets required for the operation of the Company Business have been
transferred to the Company on _____________, 199_ and the Company did not
have any operations prior to such date.
4.2 CAPACITY AND VALIDITY. UHC and the Company each have the full
power, authority and capacity necessary to enter into and perform its
obligations under this Agreement and the other UHC Documents and to
consummate the transactions contemplated hereby and thereby. This Agreement
and all other UHC Documents have been or will be duly executed and delivered
by UHC and the Company, and constitute or will constitute the legal, valid
and binding obligations of UHC and the Company, enforceable in accordance
with their respective terms. Neither the execution, delivery and performance
of this Agreement or any other UHC Document, nor the consummation of the
transactions contemplated hereby or thereby, will violate any provisions of
the articles of incorporation or bylaws of UHC or the Company, or any
Regulation or Court Order to which UHC or the Company is subject.
4.3 ORGANIZATION, STANDING AND FOREIGN QUALIFICATION. UHC is a
corporation duly incorporated, validly existing and in good standing under
the laws of Minnesota. The Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Nevada,
and has the power and authority to carry on its business in the places as it
has been and is now being conducted and to own and lease the properties and
assets which it now owns or leases. The Company is duly qualified and/or
licensed to transact business and is in good standing as a foreign
corporation in the State of Minnesota, and the character of the property
owned or leased by the Company and the nature of the business conducted by it
do not require such qualification and/or licensing in any other jurisdiction.
Copies of the articles of incorporation and all amendments thereto of the
Company (certified by the Secretary of State of the State of Nevada), the
bylaws of the Company (certified by the Secretary of the Company) and copies
of the corporate minutes of the Company, which have been made available to
ActaMed and SubCorp for review, are true and complete copies of such
documents and accurately reflect all proceedings of the shareholders and
directors of the Company (and all committees thereof). The stock record
books of the Company, which have been made available to ActaMed and SubCorp
for review, contain true, complete and adequate records of the stock
ownership of the Company and the transfer of the shares of its capital stock.
4.4 CAPITAL STOCK. The authorized capital stock of the Company
consists of 1,000 shares of Common Stock, $.01 par value per share, all of
which are issued and outstanding. All of the issued and outstanding Shares
are duly and validly issued and outstanding, are fully paid and
nonassessable, and were issued pursuant to a valid exemption from
registration under the Securities Act and all applicable state securities
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laws. There are no outstanding warrants, options, rights, calls or other
commitments of any nature relating to the Company Common Stock or any other
capital stock of the Company, and there are no outstanding securities of the
Company convertible into or exchangeable for shares of Company Common Stock
or any other capital stock of the Company. There are no shares of capital
stock held in the treasury of the Company.
4.5 SUBSIDIARIES AND INVESTMENTS. The Company has not in the past and
does not currently own, directly or indirectly, any capital stock or other
equity, ownership or proprietary interest in any corporation, partnership,
association, trust, joint venture or other entity.
4.6 EDI FINANCIAL STATEMENTS.
(a) SCHEDULE 4.6 contains audited balance sheets of EDI as of
December 31, 1994, and December 31, 1995, and audited statements of
operations and statements of cash flows for the three years ending December
31, 1995, together with the notes thereto and the reports thereon of Deloitte
& Touche, LLP.
(b) The EDI Financial Statements (1) are in accordance with the
books and records of the UHC Group, which have been properly maintained and
are complete and correct in all material respects; (2) present fairly the
financial condition, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of the Company Business as of the respective dates
indicated and the results of operations for the respective periods indicated;
(3) have been prepared in accordance with GAAP consistently applied
throughout the periods involved, and (4) reflect adequate reserves for all
known Liabilities and reasonably anticipated losses.
(c) The EDI Financial Statements contain no untrue statements of
any material fact nor do they omit to state any material fact required to be
stated to make the EDI Financial Statements not misleading. No member of the
UHC Group has received any advice or notification from its independent
certified public accountants that the UHC Group has used any improper
accounting practice that would have the effect of not reflecting or
incorrectly reflecting in the EDI Financial Statements any properties,
assets, liabilities, revenues or expenses. The EDI Financial Statements do
not contain any items of special or nonrecurring income, or other income not
earned in the ordinary course of business, individually or in the aggregate
in excess of $5,000.
(d) The Company owns all of the assets reflected in the EDI
Financial Statements and the EDI Financial Statements reflect all of the
assets currently used by EDI in connection with the Company Business.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
Liabilities that are not reflected on the EDI Financial Statements, other
than Liabilities for the performance by the Company after the Closing Date of
the contracts assigned to the Company as set forth on the Schedules hereto.
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4.8 NO LIABILITIES AS GUARANTOR. The Company is not directly or
indirectly liable, by guaranty, indemnity, or otherwise, upon or with respect
to, or obligated, by discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any debt,
dividend or other obligation of any person, corporation, association,
partnership or other entity.
4.9 ABSENCE OF CHANGES. Except as disclosed on SCHEDULE 4.9, and
except as contemplated by this Agreement, since December 31, 1995, the
business and operations of the Company have been carried on only in the
ordinary course, and there has not been any transaction or occurrence,
whether or not in the ordinary course, in which the Company (and, with
respect to (e), (f), (h), (i) and (n), any other member of the UHC Group in
connection with the Hired Employees) has:
(a) suffered or experienced any event or condition materially and
adversely affecting the business, operations, assets, properties or condition
of the Company, financial or otherwise;
(b) declared, set aside or made, or agreed to declare, set aside
or make any payments or dividends or any distribution to shareholders, or
purchased, redeemed or otherwise acquired, directly or indirectly, or agreed
to purchase, redeem or acquire, any shares of capital stock or other
securities;
(c) effected any changes in its capital structure, or issued, sold
or otherwise transferred any equity or other interest in itself or any other
securities, or granted or agreed to grant any options or rights to purchase
any securities;
(d) suffered any damage, destruction or loss, whether or not
covered by insurance, which materially and adversely affected the properties
or business of the Company, or suffered any extraordinary losses or waived
any rights of substantial value;
(e) increased the rate of compensation payable or to become
payable by it to any of its officers, directors, employees or agents over the
rate being paid to them as of December 31, 1995, or agreed so to do, except
general hourly rate increases and normal merit increases for employees other
than officers;
(f) hired, committed to hire, terminated or received the
resignation of any Hired Employee;
(g) suffered any loss or termination, or threatened loss or
termination, of any material customer or supplier;
(h) through negotiation or otherwise, made any commitment or
incurred any Liability, whether or not enforceable, to any labor organization;
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(i) directly or indirectly paid or entered into a Contract to pay
any severance or termination pay to any officer, director, employee or agent;
(j) changed any of the accounting principles followed by it or the
methods of applying such principles;
(k) offered or extended more favorable prices, discounts or
advertising, promotional, display or other allowances than were offered or
extended regularly as of the date of the most recently dated EDI Financial
Statements;
(l) entered into any commitment or transaction not in the ordinary
course of business involving aggregate value in excess of $10,000 or made or
approved the making of any capital expenditure exceeding the amount of
$10,000 in any instance;
(m) paid, discharged or satisfied any material liability other
than the payment, discharge or satisfaction of liabilities in the ordinary
course of business;
(n) except in the ordinary course of business and consistent with
past practice, canceled or compromised any debts or waived or permitted to
lapse any claims or rights or sold, transferred or otherwise disposed of any
of its properties or assets;
(o) incurred any liabilities or obligations (absolute, accrued or
contingent) in excess of $10,000, except for accounts payable incurred in the
ordinary course of business;
(p) mortgaged, pledged, subjected or agreed to subject, any of its
assets, tangible or intangible, to any Lien, except for Liens for current
property taxes not yet due and payable;
(q) terminated or amended any material Contract, License or other
instrument to which the Company is a party or suffered any loss or
termination or threatened loss or termination of any existing business
arrangement or material supplier, the termination or loss of which could
materially and adversely affect the Company;
(r) paid or agreed to pay any service charge, interest charge,
investment charge, intercompany charge or similar fee to any member of the
UHC Group that is not reflected in the Transition Services Agreement or
entered into any other transactions other than in the ordinary course of
business;
(s) charged off any bad debts or increased its bad debt reserve;
(t) experienced any significant development, quality assurance or
network operations problems.
4.10 INDEBTEDNESS. The Company has no indebtedness for money borrowed.
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4.11 TAX MATTERS.
(a) The Company has filed all Tax returns and information returns
required to be filed, taking into account any extensions of the filing
deadlines which have been validly granted to the Company, and such returns
are and will be true and correct in all material respects and properly
reflect the Tax liabilities of the Company for the periods, property or
events covered thereby, and the Company has paid all Taxes (including
penalties and interest in respect thereof, if any) that are due, whether
shown on such returns or not.
(b) Adequate provision has been made on the EDI Financial
Statements for all accrued Tax liabilities not required to be paid prior to
such date and for all current and deferred Taxes.
(c) The UHC Group has withheld or collected from each of the Hired
Employees the amount of all Taxes required to be withheld or collected
therefrom and has paid the same to the proper tax depositories or collecting
authorities.
(d) All ad valorem property taxes imposed on the Company and each
of its predecessors or its Affiliates to which it has succeeded with respect
to, or which may become a Lien on, its assets have been paid in full.
4.12 REAL PROPERTY. The Company neither owns nor leases (either as
lessee or lessor) any real property.
4.13 PERSONAL PROPERTY.
(a) SCHEDULE 4.13(a) contains a true, complete and correct list of
the material equipment, machinery, or other tangible personal property owned
by the Company, other than inventories held for resale and personal property
of the Hired Employees. The Company has good and marketable title to all of
its equipment, machinery, and items of tangible personal property (whether or
not disclosed in SCHEDULE 4.13(a)), free and clear of any and all Liens of
any kind or nature.
(b) The Company does not lease any of the equipment, machinery or
other items of tangible personal property used or employed in the Company
Business. The Company does not lease any personal property as lessor.
(c) The equipment, machinery, or other tangible personal property
owned or leased by the Company is in good operating condition and in a state
of reasonable maintenance and repair, and is considered adequate and usable
for the continued operation of the business of the Company as the same is
presently conducted.
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4.14 INTELLECTUAL PROPERTY. SCHEDULE 4.14 contains a list of
all material Intellectual Property owned by, registered in the name of, or
used in the Company Business by the UHC Group on the date hereof, or for
which application has been made. All licenses constituting 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
there currently are not any Defaults thereunder by any party. The Company
owns all of such Intellectual Property free and clear of all assignments,
Licenses (or sublicenses), restrictions or Liens, except as set forth on
SCHEDULE 4.14. None of the Intellectual Property rights in the version and
form used on the Closing Date in the Company's Business infringes upon or
otherwise violates the rights of others, nor has any person asserted to UHC
Group a claim of such infringement, and to the knowledge of UHC Group, no
person is infringing upon or otherwise violating the Intellectual Property
rights of the Company. Except as set forth in SCHEDULE 4.14, the Company is
not obligated to pay any royalties to any person or entity with respect to
any Intellectual Property. The Company does not believe it is or will be
necessary to utilize any inventions of any of the employees engaged in the
Company Business (or people the Company currently intends to hire) made prior
to their employment by any member of the UHC Group. To the best knowledge of
the Company, no employee engaged in the Company Business is or has been in
violation of any term of any employment contract, patent disclosure agreement
or any other contract or agreement relating to the Intellectual Property or
the relationship of any such employee with such entity or any other party.
4.15 ACCOUNTS AND NOTES RECEIVABLE. The accounts receivable and notes
receivable of the Company as reflected in the most recently dated balance
sheet included in the EDI Financial Statements, to the extent uncollected on
the date hereof, and the accounts receivable and notes receivable reflected
on the books of the Company are: (a) valid and existing, (b) enforceable by
the Company in accordance with the terms of the instruments or documents
creating them, and (c) collectible within ninety (90) days in an amount not
less than the aggregate face amount thereof (net of reserves for doubtful and
uncollectible accounts) pursuant to the Company's normal collection practices.
4.16 THE PROPRIETARY SOFTWARE.
(a) The proprietary computer software of the Company included in the
Intellectual Property (the "SOFTWARE") performs in accordance with the
documentation and other written material used in connection with the
Software, is in machine-readable form, contains all current revisions of
such software, and includes all computer programs, materials, tapes, object
and source codes and other written materials related to the Software. The
Company has delivered to ActaMed complete and correct copies of all user
and technical documentation related to the Software.
(b) Neither the UHC Group nor, to the best knowledge of the UHC
Group, any employee or agent thereof has developed or assisted in the
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enhancement of the Software except for enhancements included in the
Software as delivered to ActaMed pursuant hereto.
(c) No employee of UHC Group is, or is now expected to be, in default
under any term of any employment contract, agreement or arrangement
relating to the Software or noncompetition arrangement, or any other
Contract or any restrictive covenant relating to the Software or its
development or exploitation. The Software was developed entirely by the
employees of UHC Group during the time they were employees only of UHC
Group or by consultants who assigned in writing all of their rights in the
Software to UHC Group.
(d) All right, title and interest in and to the Software is owned by
the Company, free and clear of all liens, claims, charges or encumbrances,
are fully transferable to the Purchaser, and no party other than the
Company has any interest in the Software, including without limitation, any
security interest, license, contingent interest or otherwise. UHC Group's
development or sale of the Software did and does not violate any rights of
any other person or entity and UHC Group has not received any communication
alleging such a violation. UHC Group does not have any obligation to
compensate any Person for the development, use, sale or exploitation of the
Software nor has UHC Group granted to any other person or entity any
license, option or other right to develop, use, sell or exploit in any
manner the Software, whether requiring the payment of royalties or not.
(e) UHC Group has kept secret and has not disclosed the source code
for the Software to any person or entity other than certain employees of
UHC Group. UHC Group has taken all appropriate measures to protect the
confidential and proprietary nature of the Software. There have been no
patents applied for and no copyrights registered for any part of the
Software. To the knowledge of UHC Group, there are no trademark rights of
any person or entity other than UHC Group in the name "ProviderLink".
(f) Except as set forth in SECTION 6.20, all copies of the Software
embodied in physical form are being delivered to ActaMed at or prior to the
Closing.
4.17 INSURANCE. UHC has maintained all appropriate types of insurance,
relative to its and the Company's Business in order to protect UHC and the
Company's assets and employees.
4.18 COMPLIANCE WITH LAWS.
(a) The Company and, in the operation of the Company Business, the
UHC Group has complied in all material respects with all applicable laws,
Regulations and orders. The Company has obtained all material permits,
licenses, orders, and
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approvals of federal, state and local governmental and regulatory bodies that
are required for the ownership, maintenance and operation of the Company's
premises and facilities and the operation of the Company Business; and no
member of the UHC Group is aware of any pending threat of cancellation,
modification or nonrenewal of any such permits, licenses, orders or
approvals, nor any basis for such cancellation, modification or nonrenewal.
The Company is not presently in material violation or material Default of any
such permit, license, order or approval and the present uses of the Company's
assets do not in any material respect violate any law, Regulation or order.
No notice or warning from any governmental authority with respect to any
failure or alleged failure of the Company to comply with any law, Regulation
or order has been issued or given, nor is any member of the UHC Group aware
that any such notice or warning is proposed or threatened. With the
exception of the acceptance for filing of articles of merger by the
secretaries of state of the States of Georgia and Nevada, respectively, and
as set forth in SECTION 6.18, no consent or approval of, prior filing with or
notice to, or other action by, any governmental body or agency or any other
third party is required in connection with the execution and delivery of this
Agreement or any assignment, agreement or other instrument to be executed and
delivered pursuant to this Agreement by the Company or any of UHC or the
consummation of the transactions provided for herein or therein.
(b) There are no material capital expenditures that the Company
believes are reasonably likely to be required to be made in connection with
the Company Business as now conducted in order to comply with any Regulations
or other governmental requirements applicable to the Company Business as it
is now conducted.
4.19 ENVIRONMENTAL CONDITIONS. Except as set forth in SCHEDULE 4.19,
there are no present or past Environmental Conditions in any way relating to
the business, properties or assets of the Company.
4.20 LITIGATION AND CLAIMS. There are no outstanding Court Orders or
quasi-judicial or administrative decisions to which the Company is subject,
and, except as disclosed on SCHEDULE 4.20, there is no Litigation pending or
to the best knowledge of the UHC Group threatened against or relating to the
Company or its assets or businesses. The UHC Group has not been advised by
any attorney representing it that there are any "loss contingencies" (as
defined in FASB 5), which would be required by FASB 5 to be disclosed or
accrued in financial statements of EDI, were such financial statements
prepared as of the date hereof.
4.21 CONTRACTS AND COMMITMENTS; WARRANTIES.
(a) SCHEDULE 4.21(a) contains a true, correct and complete list of
all Contracts to which the Company is a party or by which the Company
benefits, except for the Contracts that (1) are terminable at will by the
Company without any Liability, (2) are described in any other Schedule
hereto, or (3) do not and can not require payments in excess of $5,000 in the
aggregate following the date hereof.
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(b) Each of the Contracts listed in SCHEDULE 4.21(a), or described
in this SECTION 4.21 but which is included in any other Schedule, is in full
force and effect. No Default under any of the terms or conditions set forth
in any of the Contracts to which the Company is a party or any document or
instrument related thereto has occurred or been asserted by any party which
could result in monetary damages or termination of the Contract or require
payments to cure such Default. Except as reflected in such Schedules,
neither the execution, delivery and performance of this Agreement or any
other agreement or other instrument or document to be executed and delivered
by the Company or UHC pursuant to this Agreement, nor the consummation of the
transactions contemplated hereby or thereby, will conflict with, result in a
breach of, or constitute a Default under any Contract to which the Company or
UHC is a party or by which any of them is bound, affect the continuation,
validity and effectiveness of any of such Contracts, or any terms thereof, or
result in the creation of any Lien upon any of the Shares or any of the
Company's assets or properties, or result in the acceleration of the maturity
of any payment date of any of the Company's obligations, or increase or
adversely affect the obligations of the Company thereunder. True, correct
and complete copies of all written Contracts or a written description of all
oral Contracts referred to in SCHEDULE 4.21(a) have been made available to
ActaMed and SubCorp for review.
(c) UHC Group has not given any warranties to any third parties with
respect to the products or services offered by the Company Business.
4.22 POWERS OF ATTORNEY. The Company has not given or granted any power
of attorney, whether limited or general, to any person, firm, corporation or
otherwise that is continuing in effect.
4.23 BENEFIT PLANS. The Company has not at any time sponsored,
contributed to or been obligated to contribute to any Benefit Plan. Neither
the Company nor UHC has at any time sponsored, contributed to or been
obligated to contribute to a "multiemployer pension plan" (as defined in
ERISA Section 4001(a)(3) and 3(37)(A)) or to a "defined benefit plan" (as
defined in ERISA Section 3(35)). Except as provided in SECTION 6.5(b) of
this Agreement, the Company, ActaMed and ActaMed's Affiliates shall have no
liability or obligation with respect to (i) employment related liabilities,
whether contingent or otherwise, arising out of any Hired Employee's or Hired
Hold-Over Employee's employment with UHC or its Affiliates or (ii) any
Benefit Plan sponsored, maintained or contributed to by UHC or its Affiliates.
4.24 REMUNERATION. The Company has provided complete and accurate
information to ActaMed relating to the direct compensation (including wages,
salaries and actual or anticipated bonuses) and benefits paid or provided in
1995, and the direct compensation and benefits (as described in the preceding
clause) to be paid in 1996, to all of the Hired Employees.
4.25 UNION AND EMPLOYMENT AGREEMENTS. The Company does not have any
employees or independent contractors. No member of the UHC Group is a party to
any
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union agreement that covered the Hired Employees or Hired Hold-Over
Employees, nor does any such member have any written or oral agreement that
is not terminable by it at will with any of the Hired Employees or Hired
Hold-Over Employees, relating to their employment by or performance of
service for the Company Business or their compensation therefor. No union
attempts to organize such employees have been made, nor are any such attempts
now threatened so far as is known to UHC or the Company.
4.26 OFFICERS, DIRECTORS, AND BANK ACCOUNTS. The Company has provided
complete and accurate information to ActaMed relating to (a) the names of all
directors and officers of any member of the UHC Group who are Hired Employees
and (b) the name and location of each bank or other institution in which the
Company has an account or safe deposit box, all account numbers and account
names, and names of all persons authorized to draw thereon or to have access
thereto.
4.27 INTERESTED PARTY TRANSACTIONS.
(a) Except as set forth in SCHEDULE 4.27, the Company is not a
party to any Contract, loan or other transaction with any of the following
persons, or in which any of the following persons have any direct or indirect
interest (other than as a Hired Employee):
(1) any director, officer, or employee of any member of the UHC
Group; or
(2) any of the spouses, parents, siblings, children, aunts,
uncles, nieces, nephews, in-laws or grandparents of any of the persons described
in clause (1).
(b) Except as set forth on SCHEDULE 4.27, no member of the UHC Group
is a consultant, partner, principal, director or shareholder of any business
entity (other than the Company or a corporation whose shares are publicly traded
and in which such member of the UHC Group beneficially owns in the aggregate no
more than a 5% equity interest) which is engaged in a business similar to the
Company Business.
4.28 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 UHC or the Company.
4.29 INVESTMENT REPRESENTATIONS; LEGEND ON SHARES. UHC hereby
acknowledges that the Preferred Shares (or Conversion Shares) delivered
pursuant to the Merger will not be registered under the Securities Act, and
the resale of such shares will therefore be subject to restrictions imposed
by federal and state securities laws. UHC represents to and agrees with
ActaMed and SubCorp as follows with respect to the Preferred Shares (and
Conversion Shares):
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(a) It is acquiring the 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.
(b) ActaMed and SubCorp have advised it, a reasonable time prior
to the execution of this Agreement, that the shares have not been registered
under the Securities Act and, therefore, cannot be sold or otherwise disposed
of except in a transaction which is registered under the Securities Act or
exempted from registration.
(c) It has been represented by counsel and advisers, each of whom
has been previously selected by UHC, as UHC has found necessary to consult
concerning this Agreement and the shares to be issued pursuant to this
Agreement. UHC, 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.
(d) UHC and its counsel and other advisers have been provided with
the information described in SECTION 4.30 and with such other information
concerning ActaMed as they have deemed relevant with respect to UHC's
investment decision relating to the shares being delivered to it. UHC 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 ActaMed's business, management and financial affairs with the
management of ActaMed and SubCorp, and to obtain any additional information
which ActaMed or SubCorp possesses or can acquire without unreasonable effort
or expense that is necessary to verify the accuracy of the information
furnished. UHC has received satisfactory responses from management of
ActaMed and SubCorp to UHC's inquiries.
(e) UHC acknowledges that all certificates representing the shares
delivered to UHC 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 ActaMed's
transfer agent:
"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."
4.30 COMPLIANCE WITH REGULATION D INFORMATION REQUIREMENTS.
(a) ActaMed and SubCorp have provided to UHC, a reasonable time
prior to the execution of this Agreement: (1) ActaMed's Financial Statements
for the year
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ended December 31, 1995; (2) a brief description of the Preferred Shares; and
(3) a brief description of the business of ActaMed. The contents of material
exhibits to such materials have been identified and such exhibits have been
made available to UHC, upon its written request, a reasonable time prior to
the execution of this Agreement.
(b) ActaMed and SubCorp have made available to UHC a reasonable
time prior to the execution of this Agreement the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which ActaMed or SubCorp possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
the information furnished pursuant to paragraph (a) above.
(c) ActaMed and SubCorp have advised UHC of the limitations on
resale of Preferred Shares (and Conversion Shares) imposed by Regulation D
promulgated under the Securities Act.
4.31 SCHEDULES. All Schedules referenced in this ARTICLE 4 are true,
correct and complete as of the date of this Agreement, and will be true,
correct and complete as of the Closing. Matters disclosed on each such
Schedule shall be deemed disclosed only for purposes of the matters to be
disclosed on such Schedule and shall not be deemed to be disclosed for any
other purpose unless expressly provided therein.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACTAMED AND SUBCORP
ActaMed and SubCorp jointly and severally represent and warrant to UHC and
the Company as follows:
5.1 (a) ORGANIZATION AND GOOD STANDING. ActaMed and SubCorp are duly
organized and validly existing corporations in good standing under the laws of
the States of Georgia and have full corporate power to carry on their
businesses, to own and operate their properties and assets, and to consummate
the transactions contemplated by this Agreement.
(b) QUALIFIED TO DO BUSINESS. ActaMed is currently engaged in the
ActaMed Business. ActaMed is qualified to do business as a foreign corporation
in each jurisdiction in which the failure to be so qualified would have a
Material Adverse Effect.
(c) INCORPORATION DOCUMENTS. ActaMed has delivered to UHC and the
Company true, correct and complete copies of the Restated Articles and Bylaws of
ActaMed, including all amendments thereto, as presently in effect.
(d) POWER TO CONDUCT BUSINESS. ActaMed has all corporate power
and all governmental licenses, authorizations, consents and approvals
required to carry on
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the ActaMed Business as now conducted and as proposed to be conducted and to
own, operate and lease its properties and assets, except for those licenses,
authorizations, consents and approvals the failure of which to have would not
have a Material Adverse Effect.
5.2 AUTHORIZATION OF AGREEMENT, NO BREACH. The execution and delivery
of this Agreement have been duly authorized by all necessary corporate action
on the part of ActaMed and SubCorp, and no further corporate action of any
nature is required pursuant to the charter or bylaws of ActaMed or SubCorp.
All persons who have executed or will execute this Agreement, or any other
agreement or document called for by this Agreement, on behalf of ActaMed or
SubCorp have been duly authorized to do so by all necessary corporate action.
This Agreement constitutes, and all of the ActaMed Documents to be executed
and delivered by ActaMed or SubCorp pursuant to this Agreement will
constitute, legal, valid and binding obligations of ActaMed and SubCorp,
enforceable against ActaMed and SubCorp in accordance with their respective
terms, except as enforceability may be limited by applicable equitable
principles, or by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect affecting the enforcement of
creditors' rights generally. The execution, delivery and performance of this
Agreement and the other ActaMed Documents and the consummation of the
transactions contemplated hereby and thereby will not (1) violate or result
in a breach of or Default or acceleration under the charter or bylaws of
ActaMed or SubCorp or any material instrument or agreement to which ActaMed
or SubCorp is a party or is bound, (2) violate any Court Order,
quasi-judicial or administrative decision or award of any court, arbitrator,
mediator, tribunal, administrative agency or governmental body applicable to
or binding upon ActaMed or SubCorp or upon the securities, property or
business of ActaMed or SubCorp, or (3) violate any Regulation of any
administrative agency or governmental body relating to ActaMed or SubCorp, or
to the securities, property, or business of ActaMed or SubCorp.
5.3 CORPORATE POWER. ActaMed and SubCorp have the requisite corporate
power to execute and deliver the ActaMed Documents to which either is a party.
5.4 ACTAMED FINANCIAL STATEMENTS.
(a) The Company has set forth as SCHEDULE 5.4(a) hereto the
balance sheets of ActaMed at December 31, 1994 and December 31, 1995 and the
statements of operations, statements of stockholders equity and statements of
cash flows of ActaMed for the years ended December 31, 1994 and December 31,
1995, which have been audited by Deloitte & Touche, LLP independent
accountants; and
(b) The ActaMed Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis during the respective periods covered
thereby. The ActaMed Financial Statements are correct and complete and present
fairly in all material respects the financial position of ActaMed at the date of
the balance sheet included therein and the results of operations and cash flows
of ActaMed
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for the respective periods covered by the statements of operations and cash
flows included therein. Except as set forth on SCHEDULE 5.4(b) hereto,
ActaMed has no material obligations or liabilities of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or not
due) which are required to be disclosed in the ActaMed Financial Statements
in accordance with GAAP and which, either individually or in the aggregate,
would have a Material Adverse Effect and which are not disclosed by the
ActaMed Financial Statements.
5.5 CONSENTS. No consent, approval or authorization of, or
qualification, designation, declaration or filing with, or notice to any
governmental authority on the part of ActaMed is required in connection with
(a) the valid execution and delivery of the ActaMed Documents and (b) the
issuance of the Preferred Shares (and the Conversion Shares, except (1) as
set forth on SCHEDULE 5.5, (2) the filing of the Restated Articles in the
office of the Secretary of State of the State of Georgia, which filings will
be accomplished on or prior to the Closing Date, (3) the filing of a Form D
with the SEC and (4) the qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) of the
offer and sale of the Preferred Shares (and the Conversion Shares) under any
applicable state securities laws, which qualification, if required, will be
accomplished in a timely manner prior to or promptly upon completion of the
Closing, as required by such laws.
5.6 CAPITALIZATION. After giving effect to the issuance of the
Preferred Shares, the capital stock of ActaMed, as authorized by its Restated
Articles will consist of: (1) 50,000,000 shares of ActaMed Common Stock, no
par value per share, 9,321,250 of which are issued and outstanding,
10,344,828 of which will be reserved for issuance upon conversion of the
Preferred Shares, 8,800,880 of which will be reserved for issuance upon
conversion of issued and outstanding Series A Preferred Stock, 3,448,276 of
which will be reserved for issuance upon conversion of issued and outstanding
Series B Preferred Stock, and 5,624,188 of which will be reserved for
issuance upon exercise of stock options granted or to be granted to officers,
key employees, directors and consultants of ActaMed; (2) 8,800,880 shares of
Series A Preferred Stock all of which are issued and outstanding, and (3)
3,448,276 shares of Series B Preferred Stock, all of which are issued and
outstanding, and 10,344,828 shares of the Preferred Shares, all of which will
be issued and outstanding. As of the Closing Date none of such issued shares
will be held in the treasury of ActaMed. Except as set forth above and on
SCHEDULE 5.6 hereto, as of the Closing Date ActaMed will not have outstanding
any stock or securities convertible into or exchangeable for any shares of
its capital stock and no person will have any right against ActaMed to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance of any capital stock or any stock or
securities convertible into capital stock of ActaMed. All of the outstanding
shares of capital stock of ActaMed are validly issued, fully paid and
nonassessable.
5.7 VALIDITY AND RIGHTS OF THE PREFERRED SHARES. The Preferred Shares,
when issued to UHC pursuant to this Agreement, will be validly issued, fully
paid and nonassessable, will have the designations, preferences, limitations,
and relative rights set
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forth in the Restated Articles and will be free and clear of all liens,
claims and encumbrances. Any and all of the Conversion Shares, when
issuable, will be validly issued, fully paid and nonassessable.
5.8 REGISTRATION RIGHTS. Except as set forth in the Registration
Rights Agreement, as of the Closing Date ActaMed will not be under any
obligation to register under the Securities Act any of its then outstanding
securities or any of its securities which may thereafter be issued.
5.9 OFFERING. Subject to the accuracy of representations and
warranties by UHC and the Company in ARTICLE 4 hereof, the issuance of the
Preferred Shares (and the issuance of the Conversion Shares) constitute
transactions 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.
5.10 CHANGES. Since the date of the latest ActaMed Financial
Statements, there has not been any adverse change in the assets, liabilities,
financial condition or operations of the ActaMed Business from that reflected
in the ActaMed Financial Statements, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had a
Material Adverse Effect, any adverse change in the prospects of the ActaMed
Business or any other event or condition (or events or conditions) of any
character which, either individually or cumulatively, has had a Material
Adverse Effect.
5.11 SUBSIDIARIES. Other than SubCorp, ActaMed has no Subsidiaries.
Except as set forth in this Agreement, ActaMed does not own, or have the
right to acquire, any securities or other equity or ownership interest in any
corporation, association or other business entity or person.
5.12 PENDING LITIGATION, ETC. Other than as set forth in SCHEDULE 5.12
hereto, there are no actions at law, suits in equity or other proceedings or,
to the best knowledge of ActaMed, 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 best knowledge of ActaMed, threatened
against or affecting ActaMed that:
(a) either individually or in the aggregate, would have a Material
Adverse Effect; or
(b) would question the validity or enforceability of this Agreement,
the ActaMed Documents, or any of the transactions contemplated hereby and
thereby. ActaMed is not in default with respect to any Court Order.
5.13 TITLE TO PROPERTIES. ActaMed has good and marketable title to its
properties and assets and has good title to all its respective leasehold
interests, in each case subject to no Lien, other than as set forth on
SCHEDULE 5.13 hereto. SCHEDULE 5.13
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accurately lists with respect to the personal property owned by ActaMed (a)
each financing statement, deed, agreement or other instrument which has been
filed, recorded or registered pursuant to any United States federal, state or
local law or regulation that names a business entity as debtor or lessee or
as the grantor or the transferor of the interest created thereby, and (b) as
to each such financing statement, deed, agreement or other instrument, the
names of the debtor, lessee, grantor or transferor and the secured party,
lessor, grantee or transferee and the name of the jurisdiction in which such
financing statement, deed, agreement or other instrument has been filed,
recorded or registered. ActaMed has not signed any agreement or instrument
authorizing any secured party thereunder to file any such financing
statement, deed, agreement or other instrument.
5.14 INTELLECTUAL PROPERTY, ETC. ActaMed owns or possesses the rights
to use, free from burdensome restrictions or conflicts with the rights of
others, all copyrights, trademarks, service marks, trade names, patents and
intellectual property licenses, and all rights with respect to the foregoing,
necessary for the conduct of the ActaMed Business as now conducted and as
proposed to be conducted, and is in compliance in all material respects with
the terms and conditions, if any, of all such copyrights, trademarks, service
marks, trade names, patents and intellectual property licenses and the terms
and conditions of any agreements relating thereto. Except as set forth on
SCHEDULE 5.14, there are no outstanding options, licenses, or material
agreements of any kind relating to the foregoing, nor is ActaMed bound by or
a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights and processes of any other
person or entity. ActaMed has not received any communications alleging that
it has violated or, by conducting its business as proposed, would violate any
of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. To
ActaMed's knowledge, none of its employees are 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 would interfere with the use of their best
efforts to promote the interests of ActaMed or that would conflict with
ActaMed's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of ActaMed's business by the
employees of ActaMed, nor the conduct of ActaMed's business as proposed,
will, to ActaMed's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. ActaMed does not believe it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire)
made prior to their employment by ActaMed.
5.15 COMPLIANCE WITH OTHER INSTRUMENTS. ActaMed is not in violation of or
in default in any material respect under any term of its organizational
documents, any term or provision of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, and is not in violation in any
material respect of any applicable order, statute, rule or regulation, and to
ActaMed's knowledge there is no state of facts which, with the
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passage of time or giving of notice or both, would constitute any such
violation or default that would in the aggregate have a Material Adverse
Effect. The execution, delivery and performance of and compliance with the
ActaMed Documents, the issuance of the Preferred Shares (and the Conversion
Shares) and the consummation of any other transaction contemplated by the
ActaMed Documents have not resulted and will not result in any such
violation, or be in conflict with, or constitute a default under any of the
foregoing, or result in the creation of any Lien upon any of the properties
or assets of ActaMed.
5.16 COMPLIANCE WITH LAW. ActaMed is in compliance with all statutes,
laws and ordinances and all governmental rules and regulations to which it is
subject, the violation of which, either individually or in the aggregate,
would have a Material Adverse Effect. Neither the execution, delivery or
performance of this Agreement or any of the other ActaMed Documents nor the
consummation of the transactions contemplated by the ActaMed Documents will
cause ActaMed to be in violation of any law or ordinance, or any order, rule
or regulation, of any federal, state, municipal or other governmental or
public authority or agency.
5.17 EMPLOYEES. To the best knowledge of ActaMed, no employee of
ActaMed is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
intellectual property of ActaMed or the relationship of any such employee
with such entity or any other party.
5.18 BENEFIT PLANS. Except as provided in this Agreement, applicable
law and the terms of any Benefit Plan sponsored, maintained or contributed to
by UHC or its Affiliates, neither UHC nor its Affiliates shall have any
liability or obligation with respect to (i) employment related liabilities,
whether contingent or otherwise, arising out of any Hired Employee's or Hired
Hold-Over Employee's employment with the Company, ActaMed or ActaMed's
Affiliates or (ii) any Benefit Plan sponsored, maintained or contributed to
by ActaMed or its Affiliates.
5.19 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) ActaMed is, and will
continue to be, in compliance with all applicable federal, state and local
environmental laws, regulations and ordinances governing the ActaMed Business
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. ActaMed is not liable
for any material penalties, fines or forfeitures for failure to comply with
any of the foregoing. All licenses, permits or registrations required for
the ActaMed Business as presently conducted and proposed to be conducted,
under any federal, state, or local environmental laws, regulations or
ordinances have been or will, in a timely manner, be obtained or made, other
than such licenses, permits or registrations as to which the failure to
obtain or make, either individually or in the aggregate, will not have a
Material Adverse Effect, and ActaMed is in compliance therewith in all
material respects.
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(b) 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 ActaMed has occurred or is presently occurring on or from any
property owned or leased by ActaMed in excess of federal, state or local
permitted releases or reportable quantities, or other concentrations,
standards or limitations under the foregoing laws or any state or local law
governing the protection of health and the environment or under any other
federal, state or local laws or regulations (then or now applicable, as the
case may be) other than such releases, emissions or discharges, either
individually or in the aggregate, would not have a Material Adverse Effect.
(c) To its knowledge, ActaMed has never (1) 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 federal, state or
local environmental laws, regulations or ordinances at such time as such site
or structure was owned, occupied or operated by ActaMed or at any other time,
or (2) transported or arranged for the transportation of any hazardous
substance other than in full compliance with all applicable federal, state
and local environmental laws, regulations and ordinances governing the
ActaMed Business or the storage, transportation or disposal of hazardous
substances except for such violations as, either individually or in the
aggregate, would not have a Material Adverse Effect. ActaMed 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 ActaMed may be required to pay any 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 ActaMed, except such
releases or threatened releases as, either individually or in the aggregate,
would not have a Material Adverse Effect.
5.20 INSURANCE. The ActaMed Business has fire, casualty, liability, and
business interruption insurance policies with recognized insurers, in such
amounts and with such coverage as set forth on SCHEDULE 5.20.
5.21 MATERIAL CONTRACTS AND AGREEMENTS. SCHEDULE 5.21 lists the
parties to, and subject matter of, all material Contracts of the ActaMed
Business, including without limitation, all employment or labor contracts,
leases or compensation plans. Except as set forth on SCHEDULE 5.21, all
material Contracts set forth on such list are valid, binding, and in full
force and effect, without any breach by ActaMed or, to the best of ActaMed's
knowledge, any other party thereto.
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5.22 TAXES. Except as set forth on SCHEDULE 5.22, all federal, state
and other tax returns of ActaMed required by law to be filed have been duly
filed, except for such returns the failure of which to file would not have a
Material Adverse Effect, and all federal, state and other taxes, assessments,
fees and other federal governmental charges upon ActaMed or any of the
properties, incomes or assets of ActaMed that are due and payable have been
paid. No extensions of the time for the assessment of deficiencies have been
granted to ActaMed in connection with any federal tax, assessment, fee or
other federal governmental charge. There are no Liens, on any properties or
assets of the ActaMed Business imposed or arising as a result of the
delinquent payment or the non-payment of any tax, assessment, fee or other
governmental charge that, either individually or in the aggregate, would have
a Material Adverse Effect. ActaMed:
(a) has not assumed and is not liable for any federal, state or
other income tax liability of any other person, including any predecessor
corporation, as a result of any purchase of assets or other business
acquisition transaction; and
(b) has not indemnified any other person or otherwise agreed to
pay on behalf of any other person tax liability growing out of or which may
be asserted on the basis of any tax treatment adopted with respect to all or
any aspect of such a business acquisition transaction.
The charges, accruals and reserves, if any, on the books of ActaMed in
respect of federal, state and local corporate franchise and income taxes for
all fiscal periods to date are adequate in accordance with GAAP, and ActaMed
knows of no additional unpaid assessments for such periods or other
governmental charges payable by ActaMed in connection with the execution and
delivery of this Agreement, the ActaMed Documents or the issuance of the
Preferred Shares by ActaMed, other than stock transfer taxes, recording fees
and filing fees in connection with state securities or "blue sky" filings.
5.23 INVESTMENT COMPANY. ActaMed 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 ActaMed 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.
5.24 LABOR RELATIONS. ActaMed is not engaged in any unfair labor
practices which, either individually or in the aggregate, would have a
Material Adverse Effect. Except as set forth on SCHEDULE 5.24, there is:
(a) no unfair labor practice complaint pending or, to the best of
ActaMed's knowledge, threatened against ActaMed 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 ActaMed's knowledge, threatened,
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(b) no strike, lock-out, labor dispute, slowdown or work stoppage
pending or, to the best of ActaMed's knowledge, threatened against ActaMed, and
(c) no union representation or certification question existing or
pending with respect to the employees of ActaMed, and, to the best knowledge
of ActaMed, no union organization activity taking place, other than such
actions or proceedings as, either individually or in the aggregate, would not
have a Material Adverse Effect.
5.25 NO CONFLICT OF INTEREST. Except as set forth in SCHEDULE 5.25,
ActaMed is not indebted, directly or indirectly, to any Substantial Holder,
or, to ActaMed's knowledge, to any Affiliate of a Substantial Holder, in any
amount whatsoever. To the best knowledge of ActaMed, and except as set forth
on SCHEDULE 5.25, no Substantial Holders, or any of their Affiliates, are
indebted to any firm or corporation with which ActaMed is affiliated or with
which ActaMed has a business relationship, or any firm or corporation which
competes with ActaMed. Except as contemplated by the ActaMed Documents, no
Substantial Holder, or, to ActaMed's knowledge, any Affiliate of a
Substantial Holder, is directly or indirectly interested in any contract with
ActaMed or any of its Subsidiaries.
5.26 BROKERS OR FINDERS. No broker, agent, finder or consultant or
other person has been retained by or on behalf of ActaMed or SubCorp (other
than legal or accounting advisors), or is may be entitled to be paid based
upon any agreements or understandings made by ActaMed or SubCorp in
connection with the transactions contemplated hereby.
5.27 FULL DISCLOSURE. This Agreement, the other ActaMed Documents, and
any report or financial statement referred to in SECTION 5.4 hereof and any
certificate, report, statement or other writing furnished to UHC or the
Company by or on behalf of ActaMed in connection with the negotiation of this
Agreement and the other ActaMed Documents and the sale of the Preferred
Shares, taken as a whole, do not contain any untrue statement of a material
fact or omit to state a material fact with respect to which disclosure has
been requested and which is necessary to make the statements contained herein
or therein not misleading.
ARTICLE 6
RELATED AGREEMENTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS. Prior to the Closing Date, except with the
prior written consent of ActaMed and SubCorp and except as necessary to
effect the transactions contemplated in this Agreement, the Company shall and
UHC shall cause the Company to:
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(a) conduct the Company Business in substantially the same manner
as presently being conducted, and refrain from entering into any transaction
or Contract other than in the ordinary course of business, and not make any
change in its methods of management, marketing, or operations other than in
the ordinary course of business;
(b) consult with ActaMed and SubCorp prior to undertaking any new
business opportunity not in the ordinary course of business and not undertake
such new business opportunity without the prior written consent of ActaMed
and SubCorp, which consent will not be unreasonably withheld;
(c) confer on a regular and reasonable basis with one or more
designated representatives of ActaMed and SubCorp to report material
operational matters and to report the general status of ongoing operations;
(d) notify ActaMed and SubCorp of any change in the normal course
of the Company Business or in the operation of its properties, and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), adjudicatory proceedings,
budget meetings or submissions involving any material property of the
Company, and keep ActaMed and SubCorp fully informed of such events and
permit its representatives prompt access to all materials prepared in
connection therewith; and
(e) not take any action, or omit to take any action, which would
cause the representations and warranties contained in ARTICLE 4 hereof,
including but not limited to the representations and warranties in SECTION
4.9 of this Agreement, to be untrue or incorrect at any time through and
including the Closing Date.
6.2 ACCESS TO PROPERTIES. At all times prior to the Closing Date,
employees, attorneys, accountants, agents and other authorized and designated
representatives of ActaMed and SubCorp will be allowed reasonable access to
the properties, books and records of the Company and other members of the UHC
Group relating to the Company Business, including without limitation, deeds,
title documents, leases, customer lists, insurance policies, minute books,
share certificate books, share registers, accounts, Tax returns, financial
statements and all other data that, in the reasonable opinion of ActaMed and
SubCorp, are required for ActaMed and SubCorp to make such investigation as
they may desire of the Hired Employees and the properties and business of the
Company and the Company Business. ActaMed and SubCorp shall also be allowed
reasonable access to consult with the officers, employees, accountants,
counsel and agents of the members of the UHC Group in connection with such
investigation. No investigation by ActaMed and SubCorp shall diminish or
otherwise affect any of the representations, warranties, covenants or
agreements of the Company or UHC under this Agreement.
6.3 RELATIONSHIP WITH EMPLOYEES AND CUSTOMERS. At all times prior to
the Closing Date, UHC shall cause each member of the UHC Group to use its
best efforts (without making any commitments other than in the ordinary
course of business), to
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(a) preserve the Company Business organization intact, (b) keep the Hired
Employees available to the Company Business, (c) preserve the present
relationships of the Company Business with its suppliers and customers and
others having business relationships, and (d) take all steps reasonably
necessary to maintain the intangible assets and Intellectual Property of the
Company. Prior to the Closing and for two (2) years thereafter, no member of
the UHC Group shall, directly or indirectly, on its own behalf or on behalf
of others, solicit, divert or take away, or attempt to solicit, divert or
take away, any of the Hired Employees.
6.4 HIRED EMPLOYEES. Immediately after the Closing, the Company will
offer employment (to commence on the Closing Date) to all of the Hired
Employees; provided, however, that, if any Hold-Over Employee presents a
medical release from his or her attending physician which allows such
employee to return to work within nine months after the beginning of his or
her leave of absence, then the Company will offer employment (to commence
immediately) to such Hold-Over Employee on the day he or she returns to work
("HIRED HOLD-OVER EMPLOYEE"), and if any Hold-Over Employee does not have a
medical release to return to work within such nine-month period, then the
Company will not be obligated to offer employment to him or her. UHC shall
cause each member of the UHC Group to terminate the employment of each of the
Hired Employees effective as of the Closing Date; provided, however, that no
member of the UHC Group shall terminate the employment of any Hired Hold-Over
Employee until such employee presents a medical release from his or her
attending physician and will continue to provide each Hired Hold-Over
Employee with benefits in accordance with UHC's standard policies and
procedures until the earlier of (a) the day such employee has a medical
release to return to work, or (b) nine (9) months after the beginning of such
employee's leave of absence.
6.5 EMPLOYEE BENEFITS.
(a) The Company has never been a participating employer in any
Benefit Plan sponsored, maintained or contributed to by UHC or its
Affiliates. Except as provided in SECTION 6.5(B) below, no portion of the
assets of any Benefit Plan heretofore sponsored or maintained by any member
of the UHC Group for the Hired Employees or Hired Hold-Over Employees (and no
amount attributable to any such Benefit Plan) shall be transferred to the
Company, and the Company shall not be required to sponsor or maintain any
such Benefit Plan after the Closing Date. The amounts payable to the Hired
Employees or Hired Hold-Over Employees on account of all benefit arrangements
(including, but not limited to, all accrued, but unpaid, sick leave but
excluding the UHC 401(k) Plan) shall be either maintained in such Benefit
Plan or paid to the Hired Employees and Hired Hold-Over Employees, in each
case in accordance with the applicable Benefit Plan documents, except that
such amounts shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent.
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(b) Certain Hired Employees and Hired Hold-Over Employees will
have account balances under the UHC 401(k) Plan as of the Closing Date. UHC
warrants that the UHC 401(k) Plan that will make the transfer described below
is "qualified" within the meaning of Section 401(k) of the Internal Revenue
Code, has received a favorable determination letter from the Internal Revenue
Service dated August, 1995 and no event has occurred and no condition exists
that could reasonably be expected to result in the revocation of any such
determination letter. The vested and nonvested account balances under the
UHC 401(k) Plan for those Hired Employees and Hired Hold-Over Employees will
be transferred to the ActaMed 401(k) Plan as soon as administratively
feasible after the Closing Date but (i) for Hired Employees, no later than 60
days after the second "valuation date" (as defined in the UHC 401(k) Plan)
following the Closing Date and (ii) for Hired Hold-Over Employees, no later
than 60 days after the second "valuation date" following the Hired Hold-Over
Employee's initial hire date with the Company. The account balances to be
transferred will include cash and any outstanding participant loans. The
amount transferred will be calculated in accordance with normally accepted
practices by record keepers and ERISA trustees. ActaMed warrants that the
ActaMed 401(k) Plan that will receive the transfer is "qualified" within the
meaning of Section 401(k) of the Internal Revenue Code, has adopted a
standardized prototype plan (as defined in Section 3.08 of Rev. Proc. 89-9,
1989-1 CB 780) with an IRS opinion letter dated November 8, 1993 and no event
has occurred and no condition exists that could reasonably be expected to
result in the ActaMed 401(k) Plan losing its status as a qualified,
standardized prototype plan. The ActaMed 401(k) Plan will be amended to
address the transfer of accounts from the UHC 401(k) Plan including the
preservation of all Section 411(d)(6) optional forms of benefits available to
the Hired Employees or Hired Hold-Over Employees under the UHC 401(k) Plan,
distribution rules under Section 401(k) of the Internal Revenue Code, past
service credit and participation in the ActaMed 401(k) Plan by such Hired
Employees and Hired Hold-Over Employees. United HealthCare Corporation will
assume no liability for the payment of account balances that are transferred
following the date of transfer and ActaMed will assume no liability for the
payment of account balances that are not transferred. However, as provided
in SECTION 5.18 of this Agreement, ActaMed and its Affiliates shall continue
to be liable to UHC and its Affiliates for any other loss suffered by UHC and
its Affiliates arising out of the ActaMed 401(k) Plan. Similarly, as
provided in SECTION 4.23 of this Agreement, UHC and its Affiliates shall
continue to be liable to ActaMed and its Affiliates for any other loss
suffered by ActaMed and its Affiliates arising out of the UHC 401(k) Plan.
(c) The Company, ActaMed and ActaMed's Affiliates shall not be
liable for any claim for insurance, reimbursement or other benefits payable
by reason of any event which occurs prior to the Closing Date.
Notwithstanding the foregoing, prior employment of Hired Employees by the UHC
Group shall be counted for purposes of eligibility for a medical and dental
plan which shall be provided by ActaMed to such Hired Employees without any
limitations based upon pre-existing conditions effective (i) for Hired
Employees and their dependents, as of the first day of the month following
the Closing Date and (ii) for Hired Hold-Over Employees and their dependents,
as of the
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later of the Hired Hold-Over Employee's initial date of employment with the
Company or the first day of the month following the Closing Date.
6.6 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and until this
Agreement is terminated prior to Closing pursuant to ARTICLE 10, UHC shall
not, acting in any capacity, directly or indirectly, through any officer,
director, employee, agent or otherwise of the UHC or any member of the UHC
Group, (a) solicit, initiate or encourage submission of proposals or offers
from any person, corporation or other entity relating to any purchase of the
Shares, or any merger, sale of substantial assets or similar transaction
involving the Company or the Company Business, (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, corporation or other entity to purchase the Shares, or
engage in a merger, purchase of substantial assets or similar transaction
involving the Company or the Company Business, or (c) approve or undertake
any such transaction. UHC shall promptly communicate to ActaMed and SubCorp
the terms of any such proposal or offer upon knowledge or receipt of such
proposal or offer.
6.7 CERTAIN TAX MATTERS. UHC shall cause all Tax returns of the
Company required to be filed on or before the Closing Date, taking into
account any extensions of the filing deadlines granted to the Company that
had not yet been filed prior to the date hereof (including those relating to
periods after the Closing Date), to be prepared by the Company but not to be
filed without prior examination by or on behalf of ActaMed and SubCorp.
6.8 CONSENTS AND APPROVALS. The Company and UHC agree to use their
best efforts to obtain the waiver, consent and approval of all persons whose
waiver, consent or approval (a) is required in order to consummate the
transactions contemplated by this Agreement, or (b) is required by any
Contract, Court Order or License to which the Company or UHC is a party or
subject on the Closing Date, and (1) which would prohibit, or require the
waiver, consent or approval of such transactions, or (2) under which such
transactions would, without such waiver, consent or approval, constitute a
Default under the provisions thereof, result in the acceleration of any
obligation thereunder, or give rise to a right of any party thereto to
terminate its obligations thereunder. All written waivers, consents and
approvals obtained by UHC and the Company shall be produced at the Closing in
form and content reasonably satisfactory to ActaMed and SubCorp.
6.9 QUALIFICATION AND CORPORATE EXISTENCE. The Company shall deliver to
ActaMed and SubCorp (a) a certificate of the Secretary of State of the State of
Nevada, dated as of a date no more than ten (10) business days prior to the
Closing Date, stating that the Company is a corporation in good standing under
the laws of such state and has paid all applicable franchise or other fees and
taxes due to such state and (b) certificates of the appropriate officials of the
State of Minnesota, all dated as of a date no more than
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ten (10) business days prior to the Closing Date, stating that the Company is
duly qualified and in good standing to transact business as a foreign
corporation as stated in SECTION 4.3 of this Agreement in such state and has
paid all applicable franchise or other fees and taxes due to each such state.
6.10 PUBLIC ANNOUNCEMENTS. Each party hereto agrees that neither it,
nor or any of its representatives, shall make any public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the other parties hereto unless required by law or judicial
process, in which case notification shall be given to the other parties
hereto prior to such disclosure.
6.11 CONFIDENTIALITY.
(a) Each party hereto agrees not to use, copy or disclose the
trade secrets of any other party, except as permitted by this Agreement.
Each party shall treat any other's trade secrets with at least that degree of
care it uses with respect to its own such trade secrets. Each party will
give access to any other party's trade secrets only to such of its personnel
as have a need to such access and to no other person whatsoever. The
requirements herein contained with respect to non-disclosure and non-use and
protection of each party's trade secrets shall permanently survive
termination of any other provisions of this Agreement. 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 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 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.
(b) The term "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.
6.12 COVENANT NOT TO COMPETE. UHC hereby acknowledges and agrees that
the exclusivity and noncompetition provisions of the Services and License
Agreement are an important and substantial part of the consideration to
ActaMed for the consummation of the transactions contemplated hereby, and the
parties hereby incorporate by reference those provisions of the Services and
License Agreement.
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6.13 CLOSING CONDITIONS. ActaMed, SubCorp, the Company and UHC each
agree to use its best efforts to satisfy the closing conditions set forth in
ARTICLES 1, 7 and 8 of this Agreement.
6.14 EXPENSES. Except as otherwise provided herein and except that UHC
shall pay all of the expenses of the Company (including, but not limited to,
the audit by Deloitte & Touche, LLP of the books and records of the Company
and the Company Business), the parties to this Agreement shall each 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.
6.15 REPAYMENT OF DEBTS TO COMPANY. On or before the Closing Date, all
loans and advances from the Company to any member of the UHC Group, whether
or not disclosed in SCHEDULE 4.27, shall be repaid to the Company in full and
the Company shall have delivered to ActaMed and SubCorp appropriate
instruments or writings to evidence the receipt of such repayments, and all
guaranties by the Company of loans obtained by any member of the UHC Group,
from third parties shall have been released.
6.16 COMPLIANCE WITH REGULATION D. ActaMed shall file five copies of a
notice on SEC Form D no later than fifteen (15) days after the execution of
this Agreement.
6.17 VOTING FOR MERGER. UHC agrees to vote for and approve the Merger
and the transactions contemplated by this Agreement and waives its
dissenter's rights under the General Corporation Law of the State of Nevada.
6.18 ANTITRUST NOTIFICATION. Each of the parties will promptly file
with the United States Federal Trade Commission and the United States
Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional
information which may reasonably be requested in connection therewith
pursuant to the HSR Act and will comply in all material respects with the
requirements of the HSR Act. UHC and ActaMed shall each pay fifty percent
(50%) of the applicable filing fees.
6.19 REVIEW OF REGISTRATION STATEMENT. ActaMed shall give UHC the
opportunity to review and comment upon those portions of any Registration
Statement or amendment thereto prepared by ActaMed in connection with a
proposed initial public offering which describe UHC and ActaMed's
relationship therewith, prior to filing such Registration Statement or
amendment thereto with the Securities and Exchange Commission, and shall
cooperate with UHC and use its reasonable efforts to accommodate the
reasonable comments of UHC.
6.20 ESCROW OF SOFTWARE. On the Closing Date, the Company shall deliver
to one copy of the Software to Fort Knox (the "ESCROW AGENT"), which copy shall
serve as a
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prototype of the Software delivered to ActaMed on the Closing Date and which
copy shall be made available to UHC for the defense of any claims by ActaMed
or others regarding the functionality and performance of the Software.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF ACTAMED AND SUBCORP
The obligations of ActaMed and SubCorp to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions,
all or any of which may be waived, in whole or in part, by ActaMed and
SubCorp for purposes of consummating such transactions, but without prejudice
to any other right or remedy which ActaMed and SubCorp may have hereunder as
a result of any misrepresentation by, or breach of any agreement, covenant or
warranty of, UHC or the Company contained in this Agreement or any schedule,
certificate or instrument furnished or caused to be furnished by UHC or the
Company hereunder.
7.1 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by UHC or the Company in the UHC
Documents shall be true and correct in all material respects as of the
Closing Date, with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
7.2 COVENANTS. All of the terms, covenants and conditions in the UHC
Documents to be complied with or performed by UHC or the Company on or prior
to the Closing shall have been complied with and performed in all material
respects.
7.3 NO INJUNCTION, ETC. No action, proceeding, investigation,
Regulation or legislation 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 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
Company Business, if such action, proceeding, investigation, regulation or
legislation, in the reasonable judgment of ActaMed and SubCorp, would make it
inadvisable to consummate such transactions.
7.4 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments
and documents deemed necessary or appropriate by ActaMed and SubCorp or their
counsel to effectuate this Agreement and the consummation of the transactions
contemplated hereby, or incidental thereto, and all other related legal
matters, shall have been approved by such counsel.
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7.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received by ActaMed and SubCorp.
7.6 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the financial condition, operating results or assets of the
Company or EDI between the date of the EDI Financial Statements and the Closing
Date, and UHC shall have delivered to ActaMed a certificate dated as of the
Closing Date certifying to such effect.
ARTICLE 8
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF UHC AND THE COMPANY
The obligations of UHC and the Company to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions,
all or any of which may be waived, in whole or in part, by UHC and the
Company for purposes of consummating such transactions, but without prejudice
to any other right or remedy which they may have hereunder as a result of any
misrepresentation by, or breach of any agreement, covenant or warranty of
ActaMed or SubCorp contained in this Agreement, or any certificate or
instrument furnished by it hereunder.
8.1 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by ActaMed or SubCorp in the ActaMed
Documents shall be true and correct in all material respects as of the Closing
Date, with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date.
8.2 COVENANTS. All of the terms, covenants and conditions in the ActaMed
Documents to be complied with or performed by ActaMed or SubCorp on or prior to
the Closing shall have been complied with and performed in all material
respects.
8.3 NO INJUNCTION, ETC. No action, proceeding, investigation, Regulation
or legislation 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 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 ActaMed or SubCorp, if
such action, proceeding, investigation, Regulation or legislation, in the
reasonable judgment of UHC, would make it inadvisable to consummate such
transactions.
8.4 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments and
documents deemed necessary or appropriate by UHC or their counsel to effectuate
this
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Agreement and the consummation of the transactions contemplated hereby, or
incidental hereto, and all other related legal matters, shall have been approved
by such counsel.
8.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received by UHC and the Company.
8.6 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the financial condition, operating results or assets of
ActaMed between the date of the ActaMed Financial Statements and the Closing
Date, and ActaMed shall have delivered to UHC a certificate dated as of the
Closing Date certifying to such effect.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF UHC AND THE COMPANY.
ActaMed, SubCorp, UHC and the Company acknowledge and agree that, as
contemplated by SECTION 6.2, prior to the Closing Date, ActaMed and SubCorp
intend to perform such investigation of the Company as they may deem
appropriate; provided, however, no investigation by ActaMed and SubCorp shall
diminish or otherwise affect any of the representations, warranties, covenants
or agreements made or to be performed by UHC or the Company pursuant to this
Agreement or ActaMed's and SubCorp's right to rely fully upon such
representations, warranties, covenants and agreements. All such
representations, warranties, covenants and agreements made or to be performed by
UHC or the Company pursuant to this Agreement shall survive the execution and
delivery hereof and the Closing hereunder. The representations and warranties
shall thereafter terminate and expire (a) with respect to any General Claim with
respect to which a Claims Notice has not been given, on the later of (i)
eighteen months after the Closing Date or (ii) the first anniversary of the date
on which such covenant is to be performed hereunder; and (b) with respect to any
Tax Claim, on the later of (i) the ninetieth (90th) day after the date upon
which the Liability to which any such Tax Claim may relate is barred by all
applicable statutes of limitation and (ii) the ninetieth (90th) day after the
date upon which any claim for refund or credit related to such Tax Claim is
barred by all applicable statutes of limitation. With respect to any Ownership
Claim, Undisclosed Liability Claim or any type of claim not specifically
addressed above, such representations, warranties, covenants and agreements
shall survive without limit of time.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF ACTAMED AND SUBCORP.
Except for the covenants and agreements contained in ARTICLES 12 and 13, which
shall survive termination of this Agreement in accordance with their respective
terms, all the representations, warranties, covenants and agreements, made or to
be performed by ActaMed and SubCorp pursuant to this Agreement shall be
considered to have been relied upon by UHC and shall survive the delivery to UHC
of the Preferred
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Shares (and the Conversion Shares) and shall terminate and expire, with
respect to any Claim for which a Claims Notice has not been given, on the
first anniversary of the Closing Date.
9.3 OBLIGATION OF UHC TO INDEMNIFY. Subject to the limitations of
SECTIONS 9.1 and 9.8, UHC agrees to indemnify and hold harmless each ActaMed
Indemnitee against and in respect of:
(a) all Losses, asserted against, imposed upon or incurred by any
ActaMed Indemnitee by reason of or resulting from:
(1) a breach of any representation or warranty of UHC or the
Company contained in or made pursuant to this Agreement; or
(2) any nonfulfillment of any covenant or agreement of UHC or
the Company contained in or made pursuant to this Agreement;
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any Loss in connection with SECTION 9.3(a) or to the enforcement of this SECTION
9.3;
(c) all Losses asserted against, imposed upon or incurred by any
ActaMed Indemnitee by reason or resulting from:
(1) any and all costs, judgments, claims, actions at law or in
equity, interest charges and reasonable attorneys' fees with respect to any
cause of action or proceeding, by any participant or dependent or beneficiary of
any participant, arising out of or by reason of the sponsorship by any member of
the UHC Group of any Benefit Plan prior to the Effective Time;
(2) any Environmental Condition, and arising out of or in
connection with any event or events which occurred prior to the Effective Time;
and
(3) any Litigation pending or threatened as of the Closing Date,
or Litigation arising out of events which occurred prior to the Effective Time,
against or affecting the Company regardless of whether it is disclosed on
SCHEDULE 4.20 or any other Schedule attached to ARTICLE 4 hereto.
9.4 OBLIGATION OF ACTAMED AND SUBCORP TO INDEMNIFY. Subject to the
limitations of SECTIONS 9.1 and 9.8, ActaMed and SubCorp agree to indemnify and
hold harmless each UHC Indemnitee against and in respect of:
(a) all Losses asserted against, imposed upon or incurred by any UHC
Indemnitee by reason of or resulting from:
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(1) a breach of any representation or warranty of ActaMed or
SubCorp contained in or made pursuant to this Agreement; or
(2) any nonfulfillment of any covenant or agreement of the
ActaMed or SubCorp contained in or made pursuant to this Agreement; and
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any Loss in connection with SECTION 9.4(a) or to the enforcement of this SECTION
9.4.
9.