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ASSETS PURCHASE AGREEMENT
between
SMITHKLINE BEECHAM CLINICAL LABORATORIES, INC.
and
ACTAMED CORPORATION
DATED
DECEMBER 31, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 PURCHASE AND SALE ........................................................2
Section 1.1 Agreement to Sell ..............................................2
Section 1.2 Other Software .................................................2
Section 1.3 Excluded Assets ................................................3
Section 1.4 Agreement to Purchase ..........................................3
Section 1.5 The Purchase Price .............................................3
Section 1.6 Series D Price .................................................4
Section 1.7 Purchase Price Adjustment ......................................5
Section 1.8 Number of Sites Adjustment .....................................5
ARTICLE 2 CLOSINGS .................................................................6
Section 2.1 Initial Closing ................................................6
Section 2.2 Staging of the Transactions ....................................6
Section 2.3 Regions to be Transferred ......................................7
Section 2.4 Procedures Applicable if Transfer Benchmarks Are Not Met .......8
Section 2.5 Deliveries by SBCL at Each of the Transfer Dates ...............9
Section 2.6 Deliveries by ActaMed at Each of the Transfer Dates ............9
Section 2.7 Prorations ....................................................10
Section 2.8 Non-Transferable Assets .......................................10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES ..........................................11
Section 3.1 By SBCL .......................................................11
Section 3.2 By ActaMed ....................................................16
ARTICLE 4 TRANSITION MATTERS ......................................................26
Section 4.1 Prior to Region Transfer ......................................26
Section 4.2 Region Transition Matters .....................................26
Section 4.3 General Covenants .............................................27
Section 4.4 Confidentiality of Trade Secrets ..............................29
Section 4.5 Efforts to Satisfy Conditions .................................30
Section 4.6 Expenses ......................................................31
Section 4.7 Antitrust Notification ........................................31
ARTICLE 5 ACTAMED COVENANTS TO SBCL ...............................................31
Section 5.1 Additional Covenants Of ActaMed ...............................31
Section 5.2 Informational Covenants Of ActaMed ............................35
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ARTICLE 6 EMPLOYEE MATTERS ........................................................38
Section 6.1 Termination of Employment by SBCL and
Offer of Employment by ActaMed ..............................38
Section 6.2 Transitional Employee Leasing Arrangement .....................38
Section 6.3 ActaMed Compensation and Benefits .............................39
Section 6.4 Past Service Credit ...........................................39
Section 6.5 Termination of Employment; Nonsolicitation; Termination
of Agreement ................................................39
Section 6.6 Payment of Wage and Benefit Costs .............................39
Section 6.7 Taxes, Unemployment Insurance and Related Items ...............40
Section 6.8 Examination and Audit .........................................41
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACTAMED ..........................41
Section 7.1 Conditions Precedent To Obligations Of ActaMed ................41
Section 7.2 Conditions Precedent To The Obligations Of SBCL ...............42
ARTICLE 8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS ...................43
Section 8.1 Survival Of Representations, Warranties and Covenants .........43
Section 8.2 Obligation to Indemnify .......................................44
ARTICLE 9 DISPUTE RESOLUTION ......................................................49
Section 9.1 Informal Dispute Resolution ...................................49
Section 9.2 Arbitration ...................................................50
Section 9.3 Litigation ....................................................51
ARTICLE 10 TERMINATION ............................................................51
Section 10.1 Termination ...................................................51
Section 10.2 Risk of Loss ..................................................52
ARTICLE 11 MISCELLANEOUS ..........................................................53
Section 11.1 General Provisions ............................................53
</TABLE>
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CONFIDENTIAL TREATMENT REQUESTED
ASSETS PURCHASE AGREEMENT
This Assets Purchase Agreement (this "ASSETS PURCHASE AGREEMENT" or
"AGREEMENT"), dated as of December 31, 1997, is an agreement by and between
SMITHKLINE BEECHAM CLINICAL LABORATORIES, INC., a corporation organized and
existing under the laws of Delaware ("SBCL") and ACTAMED CORPORATION, a
corporation organized and existing under the laws of Georgia ("ACTAMED").
Capitalized terms used in this Assets Purchase Agreement and not otherwise
defined herein are defined in EXHIBIT A attached to this Assets Purchase
Agreement.
PREAMBLE
ActaMed is in the business of providing electronic data interchange
products and services to the health care industry, including its ProviderLink
software, and desires to develop business involving automated laboratory order
entry and results reporting services.
SBCL provides laboratory testing services to certain Providers who use SBCL
Software for electronic clinical laboratory test order entry and/or test result
reporting between an SBCL Lab and such Provider. In addition, SBCL uses the
SBCL Software to allow certain [*] to send laboratory test orders entered
electronically to an SBCL Lab and/or to have the test results reported
electronically back to [*] or the Provider ordering the test.
The Parties previously entered into a Development Agreement dated
October 31, 1997 pursuant to which ActaMed and SBCL are jointly developing the
ActaLab Software.
ActaMed desires to purchase and SBCL desires to sell certain assets
associated with SBCL's provision of Lab EDI Services, as more fully set forth
herein. Concurrently with the execution and delivery of this Purchase
Agreement, SBCL and ActaMed are entering into (i) a License Agreement whereby,
among other things, SBCL grants ActaMed an irrevocable non-exclusive license to
the SBCL Software (as defined therein); and (ii) a Services Agreement whereby
ActaMed agrees, among other things, to provide Lab EDI Services to Automated
Providers and SBCL agrees to pay certain compensation to ActaMed in connection
therewith. This Assets Purchase Agreement states the parties' agreements
relating to the purchase and sale of the SCAN Assets and certain transition
matters.
The Parties contemplate that there will be a staged transfer to
ActaMed of the SCAN Assets. The transfer of Region One SCAN Assets is to occur
on the Region One Transfer Date. The transfer of the other Regions will occur
sequentially when the Transfer Benchmarks for transfer of such Regions have been
met.
AGREEMENT
In consideration of the recitals and of the respective covenants,
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
[*] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ARTICLE 1
PURCHASE AND SALE
SECTION 1.1 AGREEMENT TO SELL. SBCL hereby agrees to sell, convey,
assign, transfer and deliver to ActaMed, upon and subject to the terms and
conditions of this Assets Purchase Agreement, all right, title and interest of
SBCL in and to the following assets located in Region One, and, subject in
addition to fulfillment of the conditions precedent set forth in Section 2.3,
the following assets in Regions Two, Three, and Four, in every case free and
clear of all Liens:
1.1.1 The personal computers, modems, bar code
readers, bar code label printers, requisition and results printers and other
peripherals (not including [*]) and spare parts owned by SBCL and provided by
SBCL to Automated Providers for Lab EDI Services (or which comprised all or
part of such items located at an SBCL Site before the Applicable Transfer
Date, but not located at an SBCL Site on the Applicable Transfer Date),
including all documentation supplied to Automated Providers for purposes of
utilizing SBCL Software;
1.1.2 SBCL's contractual right to use the telephone
lines that are installed at an SBCL Site and are used by SBCL in providing Lab
EDI Services to the extent assignable and assumed by ActaMed;
1.1.3 The letter agreements, as amended, between SBCL
and Automated Providers relating to Automated Providers' use of SBCL's Lab EDI
Services;
1.1.4 The vendor contracts between SBCL and various
vendors who provide products or services to Automated Providers in connection
with SBCL's provision of Lab EDI Services to SBCL Sites to the extent assignable
and assumed by ActaMed;
1.1.5 All personal computers, peripherals, spare parts
and other fixed assets not located at an SBCL Site on the Applicable Transfer
Date, but used solely by the Transferred Employees and exclusively in connection
with SBCL's provision of software development, field or remote support for SBCL
Sites; and
1.1.6 SBCL's rights to the ActaLab Software.
SECTION 1.2 OTHER SOFTWARE.
1.2.1 In conjunction with the sale of each PC System and
each personal computer described in Section 1.1.5 (an "Employee Computer") to
ActaMed in accordance herewith, SBCL shall assign to ActaMed all of SBCL's
rights in the copies of Third Party Software (excluding any office software used
by the Employees, including without limitation, cc:mail) that, as of the
Applicable Transfer Date, are (i) installed by, or in accordance with the
[*] CONFIDENTIAL TREATMENT REQUESTED
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instructions of, SBCL and (ii) is resident on such PC System or Employee
Computer, which rights shall be sufficient to permit ActaMed to:
(a) continue using such copy of the Third Party
Software on the applicable PC System or Employee Computer,
(b) move such copy to a replacement computer so
long as the copy is deleted from the PC System or Employee Computer on which it
resides on the Applicable Transfer Date or subsequent transferee computer
system, and
(c) assign ActaMed's rights in such copy to a
purchaser of the applicable components of the PC System (but not to a purchaser
of any Employee Computer) on which it resides at the Applicable Transfer Date,
or replacement computer with respect to any PC System;
PROVIDED, that (A) ActaMed agrees to comply with any applicable terms and
conditions imposed by the supplier of such Third Party Software, (B) except as
expressly set forth herein, nothing in this Section 1.2 shall be construed as
assigning to ActaMed, or granting to ActaMed, any rights under any agreements
between SBCL and the vendors of such Third Party Software, and (C) nothing in
this Agreement shall be construed as conveying to ActaMed or any other party any
software installed on any PC System or Employee Computer other than by SBCL or
pursuant to SBCL's instructions.
1.2.2 SBCL shall transfer to ActaMed, proportionately
with the number of SBCL Sites transferred to ActaMed from time to time in
accordance with this Agreement, all of SBCL's rights in, including the
single-site licenses for, any copy of Microsoft Windows which was resident on
a PC System when it was delivered to SBCL by the manufacturer or other
supplier for installation at an SBCL Site, and subsequently removed by SBCL.
SBCL shall deliver the licenses to ActaMed.
SECTION 1.3 EXCLUDED ASSETS. The SCAN Assets shall not include
computers, modems, bar code readers, bar code label printers, requisition and
results printers and other peripherals and fixed assets acquired by SBCL for use
in providing Lab EDI Services, but which have never been so used.
SECTION 1.4 AGREEMENT TO PURCHASE. ActaMed hereby agrees to purchase
the SCAN Assets from SBCL, upon and subject to the terms and conditions of this
Assets Purchase Agreement and in reliance on the representations, warranties and
covenants of SBCL contained herein, for the Purchase Price and the execution and
delivery of the Assumption Agreement. ActaMed shall not assume or be
responsible for any liabilities or obligations of SBCL other than the
Liabilities assumed by virtue of the Assumption Agreement.
SECTION 1.5 THE PURCHASE PRICE. Subject to any adjustment pursuant to
Sections 1.7 or 1.8 hereof, the purchase price for the SCAN Assets and the
rights granted to ActaMed
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pursuant to the License Agreement shall be [*]. The Purchase Price shall be
allocated among the SCAN Assets in the different Regions and the License
granted pursuant to the License Agreement as set forth in Schedule 1.5 hereto
(the "Purchase Price"). The Purchase Price shall be payable as follows:
1.5.1 on the Region One Transfer Date, in
consideration for the grant of rights pursuant to the License Agreement,
ActaMed will pay or issue to SBCL (A) [*] by wire transfer of immediately
available funds to an account designated by SBCL prior to the Region One
Transfer Date, and (B) [*] shares of ActaMed's Series D Preferred Stock;
1.5.2 on the Region One Transfer Date, in consideration
of the transfer to ActaMed of the SCAN Assets located in Region One, ActaMed
will issue to SBCL [*] shares of ActaMed's Series D Preferred Stock;
1.5.3 on the Region Two Transfer Date, in further
consideration of the grant to ActaMed of rights under the License Agreement,
and in consideration of the transfer to ActaMed of the SCAN Assets located in
Region Two, ActaMed will issue to SBCL the number of shares of ActaMed's
Series D Preferred Stock determined by dividing [*] plus [*] respectively,
by the Series D Price on such date;
1.5.4 on the Region Three Transfer Date, in further
consideration of the grant to ActaMed of rights under the License Agreement,
and in consideration of the transfer to ActaMed of the SCAN Assets located in
Region Three, ActaMed will issue to SBCL the number of shares of ActaMed's
Series D Preferred Stock determined by dividing [*] plus [*] respectively,
by the Series D Price on such date; and
1.5.5 on the Region Four Transfer Date, in further
consideration of the grant to ActaMed of rights under the License Agreement,
and in consideration of the transfer to ActaMed of the SCAN Assets located in
Region Four, ActaMed will issue to SBCL the number of shares of ActaMed's
Series D Preferred Stock determined by dividing [*] plus [*] respectively,
by the Series D Price on such date.
SECTION 1.6 SERIES D PRICE. For purposes hereof, the "Series D Price"
shall mean:
1.6.1 prior to ActaMed's initial Public Offering:
(a) [*] on the Region One Transfer Date and
the Region Two Transfer Date, [*] on the Region Three Transfer Date, and [*]
on the Region Four Transfer Date, subject to the provisions of subparagraphs
(b) and (c) below;
(b) if prior to any Transfer Date after the
Region One Transfer Date, ActaMed issues Qualified Preferred Stock, the Series
D Price on such Transfer Date shall be the Per Share Issue Price of such
Qualified Preferred Stock, and the Series D Price shall
[*] CONFIDENTIAL TREATMENT REQUESTED
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thereafter remain constant for all subsequent Transfer Dates unless adjusted
(i) in accordance with this provision, upon a subsequent issuance of
Qualified Preferred Stock or (ii) in accordance with subparagraph (c) below;
or
(c) notwithstanding anything to the contrary in
this Section 1.6.1, if, on any Applicable Transfer Date, ActaMed has achieved
less than [*] of the revenues for the cumulative months or
quarters (as may be applicable based on the detail required for the New Business
Plan) prior to such Applicable Transfer Date as set forth in the New Business
Plan, then the Series D Price shall revert to [*] and
1.6.2 after ActaMed's initial Public Offering, if a
Transfer Date occurs at least thirty (30) trading days after the effective date
of such Public Offering, the average for such 30 days of (i) the mean between
the reported high and low sales prices for ActaMed Common Stock on each such
trading day, or (ii) if no sales are reported on any such trading day, the mean
between the bid and offered prices for ActaMed Common Stock on such trading day;
or, if the Transfer Date occurs prior to the 30th day following such initial
Public Offering (including the initial day of trading when computing the number
of days), the initial offering price for ActaMed Common Stock in such initial
Public Offering less the amount of any underwriters' discounts or commissions on
a per share basis, as set forth in the effective registration statement.
1.6.3 For purposes of Section 1.6, "Qualified Preferred
Stock" shall mean shares of ActaMed's preferred stock issued in an arm's length
transaction to one or more purchasers who are not ActaMed stockholders as of the
Region One Transfer Date for an aggregate purchase price of not less than
$7,000,000; and the "Per Share Issue Price" of such Qualified Preferred Stock
shall be the consideration per equivalent share of Common Stock received by
ActaMed for the Qualified Preferred Stock, adjusted backwards to the Region One
Transfer Date for any subdivision or combination of shares of ActaMed capital
stock or similar change in ActaMed's capital structure (whether by stock split,
stock dividend, merger, share exchange, consolidation or otherwise) since the
Region One Transfer Date.
SECTION 1.7 PURCHASE PRICE ADJUSTMENT. SBCL shall transfer all of
the SCAN Assets located in Region Three on the Region Three Transfer Date.
In the event that, by [*] SBCL has not provided [*] to ActaMed [*] described
in [*] of the Services Agreement, [*] to [*] by [*]. In such case, if,
subsequent to [*] SBCL provides [*] ActaMed shall [*] that SBCL [*]
pursuant to this provision [*].
SECTION 1.8 NUMBER OF SITES ADJUSTMENT. On any Transfer Date other
than the Region One Transfer Date, if the aggregate number of SBCL Sites
located in the Regions which were previously transferred to ActaMed in
accordance herewith, plus the aggregate number of SBCL Sites located in
Regions then being or subsequently to be transferred to ActaMed, is less than
[*] then the portion of the Purchase Price
[*] CONFIDENTIAL TREATMENT REQUESTED
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otherwise payable on such Transfer Date shall be reduced to an amount equal
to the portion of the Purchase Price otherwise then payable times a fraction
the numerator of which shall be the number of SBCL Sites to be transferred on
such Transfer Date, and the denominator of which shall be [*] MINUS the
number of SBCL Sites transferred on previous Transfer Dates, and MINUS the
number of SBCL Sites located in Regions subsequently to be transferred;
PROVIDED that no such adjustment shall be made if such fraction is [*] or
more.
ARTICLE 2
CLOSINGS
SECTION 2.1 INITIAL CLOSING. Conveyance of SCAN Assets in each of the
Regions by SBCL to ActaMed shall take place as set forth in this Article Two.
Concurrently with the execution and delivery of this Assets Purchase Agreement,
SBCL and ActaMed have executed and delivered the License Agreement, the First
Amendment to the Development Agreement, the Services Agreement, the Third
Amendment to the Stockholders Agreement, the Third Amendment to the Registration
Rights Agreement, the Standstill Agreement, and such other documents as the
parties have reasonably requested, each of which shall be effective as of the
Region One Transfer Date. In addition, effective on or before such date,
ActaMed shall file in the office of the Secretary of State of Georgia its Fourth
Amended Articles.
SECTION 2.2 STAGING OF THE TRANSACTIONS.
2.2.1 The parties shall effect the transfer of the SCAN
Assets in as orderly a manner as possible and with minimal disruption to
Automated Providers. This Assets Purchase Agreement provides benchmarks that
will be used by the parties to measure the degree to which the transfer is
orderly and without disruption and provides steps the parties will take if the
benchmarks are not met to improve the transition process. Provided the
benchmarks are satisfied, the parties intend that all of the transfers be
completed as quickly as possible and that targeted transfer dates may be
accelerated in such circumstances.
2.2.2 At any time, upon not less than fifteen (15) days
written notice by SBCL to ActaMed, except to the extent a shorter period is
provided for in Section 2.2.3 hereof, SBCL shall in its sole discretion have the
right to accelerate the Region Two Transfer Date, the Region Three Transfer Date
or the Region Four Transfer Date to a date immediately after expiration of such
notice period (the "ACCELERATED TRANSFER DATE"). In such case, the transactions
contemplated by Sections 1.5.3, 1.5.4 and 1.5.5 above shall take place on such
Accelerated Transfer Date, in the manner specified in Sections 2.5 and 2.6
below, subject to the other terms and conditions of this Assets Purchase
Agreement.
2.2.3 In the event of any proposed issuance of Qualified
Preferred Stock, ActaMed shall provide SBCL with notice of its intent to
consummate such a transaction not less
[*] CONFIDENTIAL TREATMENT REQUESTED
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than forty-five (45) days prior to doing so, and shall provide SBCL notice of
an affirmative obligation to issue Qualified Preferred Stock not less than
fifteen (15) days prior to issuance. In such event, SBCL shall in its sole
discretion have the right to notify ActaMed and cause one or more Accelerated
Transfer Dates to occur thirty (30) days after the giving of such notice,
and, if SBCL so designates, conditioned upon the occurrence of the proposed
sale of Qualified Preferred Stock. The number of shares Series D Preferred
Stock issued to SBCL on any such Accelerated Transfer Date(s) shall be
calculated as if such Accelerated Transfer Date(s) occurred prior to the
closing of the sale of such Qualified Preferred Stock.
SECTION 2.3 REGIONS TO BE TRANSFERRED.
2.3.1 The SCAN Assets located in Region One will be
transferred to ActaMed on the Region One Transfer Date. The parties will
cooperate to identify and resolve any problems that arise after the transfer of
such SCAN Assets to ActaMed.
2.3.2 Provided that the applicable Transfer Benchmarks
have been met for Region One Sites, and subject to SBCL's rights under Section
2.2.2 hereof, the SCAN Assets located in Region Two will be transferred to
ActaMed three (3) months after the Region One Transfer Date (the "REGION TWO
TRANSFER DATE"). ActaMed shall notify SBCL's Relationship Manager that it is in
compliance with the Transfer Benchmarks and wishes to close the transfer of the
SCAN Assets located in Region Two fifteen (15) days prior to the scheduled
Region Two Transfer Date. SBCL shall have seven (7) days to respond to
ActaMed's notice, indicating that SBCL either (i) will close the transfer on the
scheduled Region Two Transfer Date or (ii) that ActaMed's operations relative to
the Region One Sites fail to meet the Transfer Benchmarks. If SBCL determines
that ActaMed's operations relative to the Region One Sites fail to meet the
Transfer Benchmarks to allow for the transfer of SCAN Assets located in Region
Two, the provisions of Section 2.4 will apply. The parties will cooperate to
identify and resolve any problems that arise after the transfer of the SCAN
Assets located at Region Two Sites to ActaMed.
2.3.3 Provided that the applicable Transfer Benchmarks
have been met for Region One Sites and Region Two Sites on and after the Region
Two Transfer Date, and subject to SBCL's rights under Section 2.2.2 hereof, the
SCAN Assets located in Region Three will be transferred to ActaMed three (3)
months after the Region Two Transfer Date (the "REGION THREE TRANSFER DATE").
ActaMed shall notify SBCL's Relationship Manager that it is in compliance with
the Transfer Benchmarks and wishes to close the transfer of the SCAN Assets
located in Region Three fifteen (15) days prior to the scheduled Region Three
Transfer Date. SBCL shall have seven (7) days to respond to ActaMed's notice,
indicating that SBCL either (i) will close the transfer on the scheduled Region
Three Transfer Date or (ii) that ActaMed's operations relative to the Region One
Sites and Region Two Sites fail to meet the Transfer Benchmarks. If SBCL
determines that ActaMed's operations relative to the Region One Sites and Region
Two Sites fail to meet the Transfer Benchmarks to allow for the transfer of SCAN
Assets located in Region Three, the provisions of Section 2.4 will apply. The
parties will
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cooperate to identify and resolve any problems that arise after the transfer
of the SCAN Assets located at Region Three Sites to ActaMed.
2.3.4 Provided that the applicable Transfer Benchmarks
have been met for Region One Sites, Region Two Sites and Region Three Sites on
and after the Region Three Transfer Date, and subject to SBCL's rights under
Section 2.2.2 hereof, the SCAN Assets located in Region Four will be transferred
to ActaMed three (3) months after the Region Three Transfer Date (the "REGION
FOUR TRANSFER DATE"). ActaMed shall notify SBCL's Relationship Manager that it
is in compliance with the Transfer Benchmarks and wishes to close the transfer
of the SCAN Assets located in Region Four fifteen (15) days prior to the
scheduled Region Four Transfer Date. SBCL shall have seven (7) days to respond
to ActaMed's notice, indicating that SBCL either (i) will close the transfer on
the scheduled Region Four Transfer Date or (ii) that ActaMed's operations
relative to the Region One Sites, Region Two Sites and Region Three Sites fail
to meet the Transfer Benchmarks. If SBCL determines that ActaMed's operations
relative to the Region One Sites, Region Two Sites and Region Three Sites fail
to meet the Transfer Benchmarks to allow for the transfer of SCAN Assets located
in Region Four, the provisions of Section 2.4 will apply. The parties will
cooperate to identify and resolve any problems that arise after the transfer of
the SCAN Assets located at Region Four Sites to ActaMed.
SECTION 2.4 PROCEDURES APPLICABLE IF TRANSFER BENCHMARKS ARE NOT MET.
If, prior to any scheduled Transfer Date after the Region One Transfer Date,
SBCL determines that ActaMed has failed to meet the requisite Transfer
Benchmarks, ActaMed shall, on or prior to five (5) business days following the
scheduled Transfer Date, either (i) submit a written remediation plan to SBCL
detailing the steps required to accomplish such Transfer Benchmarks and the
means to achieving such steps, or (ii) notify SBCL, in writing, that ActaMed
believes the failure to meet such Transfer Benchmarks is for reasons beyond the
control of ActaMed, including without limitation, a failure by SBCL to perform
in accordance with the terms and conditions of the Services Agreement. Within
ten (10) business days following receipt of such a remediation plan or notice,
SBCL shall make a determination, considering available resources and the
contents of the plan or notice, as to whether the problem is remediable within a
reasonable period of time. If SBCL determines that the problem is remediable as
aforesaid, it shall set a date not less than thirty (30) nor more than ninety
(90) days from the scheduled Transfer Date as a measurement date (the
"Measurement Date") for satisfaction of the applicable Transfer Benchmarks. If
SBCL determines that the applicable Transfer Benchmarks are met on or before the
Measurement Date, then the original Transfer Date shall be reset for a date
immediately following the date which is ten (10) days after such applicable
Transfer Benchmarks were met, and on which date such applicable Transfer
Benchmarks continue to be met. If ActaMed disagrees with SBCL's determination
as to whether the problem is remediable, the dispute shall be resolved pursuant
to the provisions of Article IX hereof. If a Transfer Date is extended or reset
hereunder, all subsequent Transfer Dates will be rescheduled, subject to this
Section 2.4, at three (3) month intervals after the extended or reset Transfer
Date.
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SECTION 2.5 DELIVERIES BY SBCL AT EACH OF THE TRANSFER DATES. At each
of the Transfer Dates, SBCL shall execute and deliver to ActaMed the following
documents to the extent relating to the SCAN Assets in the Region being
transferred:
2.5.1 a Bill of Sale and Assignment (in the form
attached as EXHIBIT 2.5.1) covering the SCAN Assets for the Region being
transferred;
2.5.2 an SBCL Compliance Certificate (in the form
attached as EXHIBIT 2.5.2) pursuant to which SBCL will make the representations
and warranties as to itself and the SCAN Assets in the Region being transferred
contained in Section 3.1 hereof (other than the representations and warranties
contained in Sections 3.1.3, 3.1.4(a)-(e), 3.1.6(d) and 3.1.7(b), which shall be
made only on the Region One Transfer Date), which certificate shall attach
revised Disclosure Schedules to the extent necessary to make the representations
and warranties made on such Transfer Date (with the exceptions noted above) true
and correct in all material respects; PROVIDED that to the extent that any such
representation and warranty is dependent upon information provided by
Transferred Employee or other people employed by ActaMed, such representations
and warranties shall be given only to the best of SBCL's knowledge;
2.5.3 an SBCL Secretary's Certificate (in the form
attached as EXHIBIT 2.5.3);
2.5.4 any other consents or waivers obtained pursuant to
Section 7.1.5 covering the Region transferred, including consents to the
assignment and assumption of each of the Vendor Contracts applicable to the SCAN
Assets in the Region that ActaMed is assuming;
2.5.5 all of the books and records, including but not
limited to, books of account, leases, contracts, and customer lists, of SBCL
relating exclusively to the SCAN Assets for the Region transferred; and
2.5.6 such other documents or certificates as may be
reasonably requested by ActaMed.
SECTION 2.6 DELIVERIES BY ACTAMED AT EACH OF THE TRANSFER DATES. At
each of the Transfer Dates, ActaMed shall execute and deliver to SBCL the
following documents to the extent relating to the Region being transferred:
2.6.1 the applicable number of shares of Series D
Preferred Stock, as determined in accordance with Sections 1.5, 1.6 and 1.8 of
this Assets Purchase Agreement;
2.6.2 an Assumption Agreement (in the form attached
hereto as EXHIBIT 2.6.2) covering, for the Region transferred, (i) the Vendor
Contracts for the Region transferred, (ii) the Phone Lines and (iii) the
Provider Agreements for the Region transferred;
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2.6.3 an ActaMed Compliance Certificate (in the form
attached hereto as EXHIBIT 2.6.3), pursuant to which ActaMed will make the
representations and warranties contained in Section 3.2 hereof, which
certificate shall attach revised Disclosure Schedules to the extent necessary to
make the representations and warranties made on such Transfer Date true and
correct in all material respects;
2.6.4 an ActaMed Secretary's Certificate (in the form
attached hereto as EXHIBIT 2.6.4); and
2.6.5 such other documents or certificates as may be
reasonably requested by SBCL.
SECTION 2.7 PRORATIONS. All amounts previously paid or payable with
respect to the items identified on Schedule 2.7, or for any other items
reflecting actual costs incurred solely in connection with the provision of
Lab EDI Services which are to be prorated on the basis of days, for or in
respect of periods which straddle any Transfer Date shall be apportioned on a
pro rata basis based on the respective number of days in the pre-Transfer
Date and post-Transfer Date periods.
SECTION 2.8 NON-TRANSFERABLE ASSETS.
2.8.1 To the extent that any SCAN Asset which would
otherwise be transferred on an Applicable Transfer Date (a "TRANSFERRED ASSET")
is not capable of being sold, assigned, transferred, conveyed or delivered
without obtaining a Required Consent, or if such sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance or
delivery would constitute a violation of any Contract or License constituting or
relating specifically to a Transferred Asset, or a violation of any Regulation,
or would result in the imposition of any significant additional Liability or
obligation on SBCL or ActaMed, or a substantial diminution in the value or use
of such Transferred Asset, this Assets Purchase Agreement shall not constitute a
sale, assignment, transfer, conveyance or delivery of such Transferred Asset or
an attempted sale, assignment, transfer, conveyance or delivery thereof, nor
shall it constitute an assumption of any Liability under any Contract or License
constituting or relating specifically to such Transferred Asset. Any such
Transferred Asset and any Contract or License which constitutes or relates
exclusively to any such Transferred Asset or Assets shall be a "NON-TRANSFERABLE
ASSET". SBCL shall use its best efforts, and ActaMed shall reasonably cooperate
therein, to provide ActaMed with the benefit of any such Non-Transferable Asset.
2.8.2 Anything in this Assets Purchase Agreement to the
contrary notwithstanding, SBCL shall not be obligated to sell, assign, transfer,
convey or deliver, or cause to be sold, assigned, transferred, conveyed or
delivered to ActaMed, and ActaMed shall not be obligated to purchase or assume,
any Non-Transferable Asset without first having obtained all Required Consents
or prevented the imposition of such Liability or obligation or diminution in
value or use. Both before and after the Applicable Transfer Date, SBCL and
ActaMed shall use their collective best efforts to obtain any Required Consents
or to prevent the imposition of any
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such Liability or obligation or any such diminution in value or use so as to
transfer each such Non-Transferable Asset to ActaMed without adversely
modifying, amending or burdening such Non-Transferable Asset. Any costs
associated with such efforts shall be borne by SBCL.
2.8.3 To the extent that on a given Transfer Date, there
is any Non-Transferable Asset, SBCL shall, from and after such Transfer Date,
cooperate with ActaMed in any reasonable and lawful arrangement designed to
provide the benefit of such Non-Transferable Asset to ActaMed, and ActaMed, so
long as such benefit is so provided, shall satisfy or perform any Liability
under or in connection with such Non-Transferable Asset which would be a
Liability assumed by ActaMed if such Non-Transferable Asset were a Transferred
Asset. Any costs associated with such efforts shall be borne by SBCL.
2.8.4 At any time after a given Transfer Date, if any
Non-Transferable Asset becomes capable of being sold, assigned, transferred,
conveyed or delivered to ActaMed without a violating any Contract, License or
Regulation or resulting in the imposition of any significant additional
Liability or obligation on SBCL or ActaMed or a substantial diminution in the
value or use of such Asset, then, at such time, such Non-Transferable Asset
shall be deemed to have been sold, assigned, transferred, conveyed and delivered
to ActaMed effective as of the Applicable Transfer Date hereof pursuant to the
execution and delivery of a Bill of Sale and Assignment and an Assumption
Agreement with respect to the Transferred Assets on such Applicable Transfer
Date; PROVIDED, HOWEVER, that if and to the extent that SBCL has theretofore
provided ActaMed with comparable assets or compensation for such Asset, an
equitable adjustment shall be made between SBCL and ActaMed to effectuate fully
the intent of the foregoing provision.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 BY SBCL. Except as set forth on a Disclosure Schedule
hereto, SBCL hereby represents and warrants to ActaMed, and shall (except as
contemplated by Section 2.5.2 hereof) represent and warrant to ActaMed on each
Transfer Date as to itself and the SCAN Assets being transferred on such
Transfer Date, as follows:
3.1.1 CAPACITY AND VALIDITY. SBCL has the full power
and corporate authority necessary to enter into and perform its obligations
under this Assets Purchase Agreement and the other documents to be executed and
delivered by SBCL hereunder or in connection herewith (the "SBCL DOCUMENTS") and
to consummate the transactions contemplated hereby and thereby. This Assets
Purchase Agreement and all other SBCL Documents have been or will be duly
executed and delivered by SBCL, and constitute or will constitute the legal,
valid and binding obligations of SBCL, enforceable 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
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affecting the enforcement of creditors' rights generally. The execution,
delivery and performance of this Assets Purchase Agreement or any other SBCL
Document, and the consummation of the transactions contemplated hereby or
thereby, will not violate any provisions of the articles of incorporation or
bylaws of SBCL, or any Regulation or Court Order to which SBCL is subject.
3.1.2 ORGANIZATION, GOOD STANDING AND FOREIGN
QUALIFICATION. SBCL is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware, and has the corporate power and
authority to carry on its business in such 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, in each case in connection with its provision of Lab EDI
Services.
3.1.3 PROJECTIONS.
(a) The aggregate costs reflected by the line
items [*] attached hereto as DISCLOSURE SCHEDULE 3.1.3 (the "PROJECTIONS")
are accurate in all material respects and do not omit to state any material
fact required to be stated therein to make such Projections not misleading;
PROVIDED that such Projections are indicative only of general expenses
(excluding one-time or transactional expenses, which include any expenses
incurred with respect to this transaction) for [*] projected to be incurred
in connection with SBCL's provision of Lab EDI Services to [*] SCAN Sites and
assume that ActaMed will provide services to only such number of SCAN Sites
and only in the same manner that SBCL did prior to transfer.
(b) The Projections were prepared in accordance
with the books and records of SBCL in all material respects, which books and
records have been properly maintained and are complete and correct in all
material respects.
(c) SBCL has not received any advice or
notification from its independent certified public accountants that SBCL has
used any improper accounting practice that would have the effect of not
reflecting or incorrectly reflecting in the Projections any expenses associated
with SBCL's provision of Lab EDI Services.
3.1.4 ABSENCE OF CHANGES. Except as contemplated by
this Assets Purchase Agreement, since December 1, 1997, SBCL's provision of Lab
EDI Services has been carried on only in the ordinary course of SBCL's business,
and there has not been any transaction or occurrence in which SBCL has:
(a) suffered or experienced any event or
condition materially increasing the expenses incurred by SBCL in the provision
of Lab EDI Services;
[*] CONFIDENTIAL TREATMENT REQUESTED
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(b) increased the rate of compensation payable or
to become payable by it to any of the Transferred Employees or agreed to do so,
except general hourly rate increases, normal merit increases and increases due
to promotions;
(c) failed to provide notice to ActaMed that it
hired or committed to hire any Person who will perform services directly
relating to SBCL's provision of Lab EDI Services, or terminated or received the
resignation of any Transferred Employee;
(d) through negotiation or otherwise, made any
commitment or incurred any Liability, whether or not enforceable, to any labor
organization affecting Transferred Employees;
(e) directly or indirectly paid or entered into a
Contract to pay any severance or termination pay to any Transferred Employee;
(f) experienced problems with the SCAN Network
or [*] (as defined in the Services Agreement) (such as network operations,
quality assurance or software development problems) which have materially and
adversely affected SBCL's provision of Lab EDI Services to SBCL Sites in
Regions not yet transferred to ActaMed pursuant to this Assets Purchase
Agreement.
3.1.5 REAL PROPERTY. SBCL neither owns nor leases
(either as lessee or lessor) any real property related exclusively to its
provision of Lab EDI Services.
3.1.6 PERSONAL PROPERTY.
(a) SBCL owns and has good title to the SCAN
Assets, free and clear of any and all Liens of any kind or nature.
(b) DISCLOSURE SCHEDULE 3.1.6 contains (i) a
sample configuration of a PC System which is representative of PC Systems
provided to Automated Providers by SBCL for the provision of Lab EDI Services,
and (ii) a list of the SCAN Assets in the Region being transferred, which list
is true and complete in all material respects to the best of SBCL's knowledge.
(c) SBCL does not lease any equipment, machinery
or other items of tangible personal property for use exclusively in the
provision of Lab EDI Services. SBCL does not lease any personal property as
lessor in connection with its provision of Lab EDI Services.
(d) As of the Region One Transfer Date, there
are not less than [*] SBCL Sites located in all Regions.
[*] CONFIDENTIAL TREATMENT REQUESTED
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3.1.7 COMPLIANCE WITH LAWS.
(a) To the best knowledge of SBCL, in its
provision of Lab EDI Services, SBCL has complied in all material respects with
all applicable Regulations relating to the provision of Lab EDI Services.
(b) To the best knowledge of SBCL, the SCAN
Software complies as of the Region One Transfer Date with all applicable
Regulations relating to SBCL's provision of Lab EDI Services.
(c) SBCL has obtained all consents or approvals
required from, has made all necessary filings with, and has provided all
required notices to, any governmental body or agency or any other third party in
connection with the execution and delivery of this Assets Purchase Agreement or
any of the SBCL Documents.
3.1.8 LITIGATION AND CLAIMS. There are no outstanding
Court Orders or quasi-judicial or administrative decisions to which SBCL is
subject relating to the SCAN Assets located at SBCL Sites and there is no
Litigation pending or, to SBCL's knowledge, threatened relating to (i) the SCAN
Assets located at SBCL Sites or (ii) SBCL's provision of Lab EDI Services. SBCL
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 SBCL's financial statements by reason of the Lab EDI
Services provided by SBCL.
3.1.9 CONTRACTS AND COMMITMENTS; WARRANTIES.
(a) DISCLOSURE SCHEDULE 3.1.9 contains, to the
best knowledge of SBCL, a list, which is true and correct in all material
respects, of all Vendor Contracts and all Contracts to which SBCL is a party
solely because it provides Lab EDI Services using the SCAN Network, except for
Contracts (other than Vendor Contracts) that (i) are terminable on thirty (30)
days or less notice by SBCL without any Liability, (ii) are described in any
other Section of the Disclosure Schedule hereto, or (iii) do not require
payments in excess of $5,000 in the aggregate following the date hereof (unless
renewed which renewal is at the discretion of ActaMed).
(b) Each of the Contracts listed in DISCLOSURE
SCHEDULE 3.1.9, or described in this Section 3.1.9, is in full force and effect.
No Default by SBCL under any of the terms or conditions set forth in any of the
Contracts to which SBCL is a party or any document or instrument related thereto
has occurred or been asserted by any party which could result in acceleration of
any obligations under or termination of the Contract. The execution, delivery
and performance of this Assets Purchase Agreement or any other SBCL Document,
and the consummation of the transactions contemplated hereby or thereby, will
not conflict with, result in a breach of, or constitute a Default under any
Contract to which SBCL is a party or by which it 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 SCAN Assets
located at SBCL Sites, or result in the acceleration of the maturity of any
payment date of any of SBCL's
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obligations, or increase or adversely affect the obligations of SBCL
thereunder. SBCL has provided, upon request, true, correct and complete
copies of the Contracts referred to in DISCLOSURE SCHEDULE 3.1.9 to ActaMed
for review.
3.1.10 CONDITION OF ASSETS. To the best of SBCL's
knowledge, the PC Systems located at SBCL Sites in a Region to be transferred on
an Applicable Transfer Date are in good operating condition so as to allow, in
the aggregate, a level of connectivity with the SCAN Network which is consistent
with SBCL's historically experienced level of connectivity. No representation
or warranty is hereby given as to the condition or state of repair of any
individual component of a PC System.
3.1.11 BROKERS AND FINDERS. No third party is entitled
to receive any commission, fees or similar consideration in connection with the
transactions contemplated by this Assets Purchase Agreement based on any
arrangement or agreement made by or on behalf of SBCL.
3.1.12 INVESTMENT REPRESENTATIONS; LEGEND ON SHARES.
(a) SBCL hereby acknowledges that (i) the shares
of Series D Preferred Stock (or, if applicable, Conversion Shares) delivered
pursuant to this Assets Purchase Agreement have not been registered under the
Securities Act, and the resale of such shares is therefore subject to
restrictions imposed by federal and state securities laws including without
limitation that such shares cannot be sold or otherwise disposed of except in a
transaction which is registered under the Securities Act or exempted from
registration; (ii) ActaMed has advised SBCL, a reasonable time prior to the
execution of this Assets Purchase Agreement, that the shares have not been
registered under the Securities Act; and (iii) all certificates representing the
shares delivered to SBCL 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."
(b) SBCL is an accredited investor (as such term
is defined in Rule 506 of Regulation D promulgated by the SEC) and is acquiring
the shares of Series D Preferred Stock (and, if applicable, Conversion 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. SBCL has
been represented by counsel and advisers, each of whom has been
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previously selected by SBCL, as SBCL has found necessary to consult
concerning this Assets Purchase Agreement and the shares to be issued
pursuant to this Assets Purchase Agreement. SBCL, 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. SBCL and its counsel and other advisers have been
provided with such information concerning ActaMed as they have deemed
relevant with respect to SBCL's investment decision relating to the shares
being delivered to it. SBCL has had a reasonable opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Assets Purchase Agreement, to discuss
ActaMed's business, management and financial affairs with the management of
ActaMed, and to obtain any additional information which ActaMed possesses or
can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of the information furnished. SBCL has received
satisfactory responses from management of ActaMed to SBCL's inquiries.
3.1.13 THIRD PARTY SOFTWARE. SBCL has sufficient rights
and licenses in Third Party Software to convey the rights contemplated by
Section 1.2 hereof, free and clear of any liens, claims or encumbrances, in each
case subject to the exclusions and limitations expressly set forth in Section
1.2 hereof.
3.1.14 SCHEDULES. All Sections of the Disclosure
Schedule referenced in this Section 3.1 are true, correct and complete as of the
date of this Assets Purchase Agreement, and will be true, correct and complete
as of each Transfer Date. Matters disclosed in each such Section of the
Disclosure Schedule shall be deemed disclosed for purposes of the matters to be
disclosed in any Section of the Disclosure Schedule.
SECTION 3.2 BY ACTAMED. Except as set forth on a Disclosure Schedule
hereto, ActaMed hereby represents and warrants to SBCL, and will represent and
warrant to SBCL on each Transfer Date, as follows:
3.2.1 ORGANIZATION, GOOD STANDING AND AUTHORITY.
ActaMed is a duly organized and validly existing corporation in good standing
under the laws of the State of Georgia and has full corporate power and
authority to carry on its business, to own and operate its properties and
assets, and to consummate the transactions contemplated by this Assets Purchase
Agreement and the other documents to be executed and delivered by ActaMed
hereunder (the "ACTAMED DOCUMENTS"). ActaMed is currently engaged in the
ActaMed Business and 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. The Fourth Amended Articles have been duly filed and are
currently in effect. ActaMed has delivered to SBCL true, correct and complete
copies of the Fourth Amended Articles and the bylaws of ActaMed, including all
amendments thereto, as presently in effect. ActaMed has all governmental
licenses, authorizations, consents and approvals required to carry on the
ActaMed Business as now conducted and as proposed to be conducted and to own,
operate and lease its properties and
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assets, except for those licenses, authorizations, consents and approvals the
failure of which to have would not have a Material Adverse Effect.
3.2.2 AUTHORIZATION OF AGREEMENT, NO BREACH. The
execution and delivery of this Assets Purchase Agreement have been duly
authorized by all necessary corporate action on the part of ActaMed, and no
further corporate action of any nature is required pursuant to the Articles or
the bylaws of ActaMed. All Persons who have executed or will execute this
Assets Purchase Agreement, or any other agreement or document called for by this
Assets Purchase Agreement on behalf of ActaMed have been duly authorized to do
so by all necessary corporate action. This Assets Purchase Agreement and the
other ActaMed Documents have been duly executed and delivered by ActaMed and
constitute legal, valid and binding obligations of ActaMed, enforceable against
ActaMed 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 Assets Purchase 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
Articles or the bylaws of ActaMed or any material contract to which ActaMed 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 upon the
securities, property or business of ActaMed or (3) violate any Regulation
relating to ActaMed, or to the securities, property, or business of ActaMed.
3.2.3 ACTAMED FINANCIAL STATEMENTS.
(a) DISCLOSURE SCHEDULE 3.2.3 hereto contains a
true and correct copy of (i) the balance sheets of ActaMed at December 31, 1995
and December 31, 1996 and the statements of operations, statements of
stockholders equity and statements of cash flows of ActaMed for the years ended
December 31, 1995 and December 31, 1996, which have been audited by Deloitte &
Touche, LLP independent accountants (the "ACTAMED FINANCIAL STATEMENTS"), and
(ii) the unaudited balance sheets of ActaMed at September 30, 1997 and the
statements of operations, statements of stockholders equity and statements of
cash flows of ActaMed for quarter ended September 30, 1997 (the "ACTAMED
UNAUDITED STATEMENTS").
(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 sheets included therein and the
results of operations and cash flows of ActaMed for the respective periods
covered by the statements of operations and cash flows included therein.
ActaMed has no material obligations or liabilities of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or not due)
which would be required by GAAP to be
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disclosed in the ActaMed Financial Statements and which, either individually
or in the aggregate, would have a Material Adverse Effect and which are not
disclosed by the ActaMed Financial Statements.
(c) The ActaMed Unaudited Statements have been
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as otherwise disclosed therein)
and certified by the chief financial officer of ActaMed as presenting fairly the
financial condition and results of operations of ActaMed and any of its
Subsidiaries for the periods covered by the statements (subject to customary
exceptions for interim unaudited financial statements).
3.2.4 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 shares of Series D Preferred Stock (and, if applicable, the Conversion
Shares), except the filing of the Fourth Amended Articles in the office of the
Secretary of State of the State of Georgia, which filing will be accomplished
concurrently with the execution and delivery of this Assets Purchase Agreement.
3.2.5 CAPITALIZATION.
(a) After giving effect to the authorization of
the shares of Series D Preferred Stock, the capital stock of ActaMed, as
authorized by its Articles consists of the authorized, issued and outstanding
capital stock set forth on DISCLOSURE SCHEDULE 3.2.5. None of such issued
shares is held in the treasury of ActaMed. ActaMed does not have outstanding
any stock or securities convertible into or exchangeable for any shares of its
capital stock and no Person has any right against ActaMed to subscribe for or to
purchase, or any options for the purchase, or any agreements providing for the
issuance, of any capital stock or any stock or securities convertible into
capital stock of ActaMed.
(b) All of the issued and outstanding shares
of ActaMed capital stock have been validly issued and are fully paid and
non-assessable. The shares of Series D Preferred Stock, when issued to SBCL
pursuant to this Assets Purchase Agreement, will be validly issued, fully
paid and nonassessable, will have the designations, preferences, limitations,
and relative rights set forth in the Articles and will be free and clear of
all liens, claims and encumbrances. Any and all of the Conversion Shares,
when issued, will be validly issued, fully paid and nonassessable.
3.2.6 REGISTRATION RIGHTS. Except as set forth in the
Registration Rights Agreement, 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.
3.2.7 OFFERING. Subject to the accuracy of
representations and warranties by SBCL in Section 3.1 hereof, the issuance of
the shares of Series D Preferred Stock (and the
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issuance of the Conversion Shares) on the Applicable Transfer Date
constitutes a transaction exempt from the registration requirements of
Section 5 of the Securities Act, and from the qualification requirements of
any applicable state securities or "blue sky" laws.
3.2.8 CHANGES. Since the date of the latest ActaMed
Unaudited Statements, there has not been (i) 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 or (ii) 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.
3.2.9 SUBSIDIARIES. Other than EDI Services Inc.,
ActaMed has no Subsidiaries. Except as set forth in this Assets Purchase
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.
3.2.10 PENDING LITIGATION, ETC. There are no actions at
law, suits in equity or other proceedings or, to the 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
knowledge of ActaMed, threatened against or affecting ActaMed that either
individually or in the aggregate, would have a Material Adverse Effect, or,
would question the validity or enforceability of this Assets Purchase Agreement,
the ActaMed Documents, or any of the transactions contemplated hereby and
thereby. ActaMed is not in default with respect to any Court Order.
3.2.11 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 DISCLOSURE SCHEDULE 3.2.11 hereto. DISCLOSURE SCHEDULE 3.2.11
accurately lists with respect to the personal property owned by ActaMed (i) each
financing statement, deed, agreement or other instrument which has been filed,
recorded or registered pursuant to any Regulation that names a business entity
as debtor or lessee or as the grantor or the transferor of the interest created
thereby, and (ii) 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.
3.2.12 INTELLECTUAL PROPERTY, ETC. ActaMed owns or
possesses the rights to use, free from burdensome restrictions or conflicts with
the rights of others, all Intellectual Property necessary for the conduct of the
ActaMed Business as now conducted and as proposed to be conducted. All licenses
constituting ActaMed's Intellectual Property are in full force and effect and
constitute legal, valid and binding obligation of the respective parties
thereto, and
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there have not been and are not any Defaults thereunder by any party. 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 such Intellectual
Property. ActaMed has not received any communications alleging that it has
violated or, by conducting its business as proposed, would violate any of the
Intellectual Property rights of any other Person. To ActaMed's knowledge,
none of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of their best efforts to promote the interests of
ActaMed or that would conflict with the ActaMed Business as proposed to be
conducted. Neither the execution nor delivery of this Assets Purchase
Agreement, nor the carrying on of the ActaMed Business by the employees of
ActaMed, nor the conduct of the ActaMed 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
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.
3.2.13 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 Regulation, and to ActaMed's knowledge,
there is no state of facts which, with the 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
shares of Series D Preferred Stock (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.
3.2.14 COMPLIANCE WITH LAW. ActaMed is in compliance
with all Regulations to which it is subject, the violation of which, either
individually or in the aggregate, would have a Material Adverse Effect. The
execution, delivery or performance of this Assets Purchase Agreement or any of
the other ActaMed Documents, and the consummation of the transactions
contemplated by the ActaMed Documents, will not cause ActaMed to be in violation
of any Regulation.
3.2.15 EMPLOYEES. To the knowledge of ActaMed, no
employee of ActaMed is in violation of any term of any employment contract,
patent disclosure agreement or any other Contract relating to the Intellectual
Property of ActaMed or the relationship of any such employee with such entity or
any other party.
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3.2.16 EMPLOYEE BENEFIT PLANS.
(a) DISCLOSURE SCHEDULE 3.2.16 contains a
current, correct and complete list of all the Employee Benefit Plans.
(b) All Employee Benefit Plans conform (and at
all times have conformed) in all material respects to, and are being
administered and operated (and have at all times been administered and operated)
in material compliance with, the requirements of ERISA, the Code and all other
applicable Regulations. All returns, reports and disclosure statements required
to be made under ERISA and the Code with respect to all such Employee Benefit
Plans have been timely filed or delivered. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA, involving any of the Employee Benefit Plans, that could subject
ActaMed to any material penalty or tax imposed under the Code or ERISA.
(c) Any Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code and exempt from tax under Section
501(a) of the Code has been determined by the Internal Revenue Service to be so
qualified or an application for such determination is pending. Any such
determination that has been obtained remains in effect and has not been revoked,
and with respect to any application that is pending, ActaMed has no reason to
suspect that such application for determination will be denied. Nothing has
occurred since the date of any such determination that is reasonably likely to
affect adversely such qualification or exemption, or result in the imposition of
excise taxes or income taxes or unrelated business income under the Code or
ERISA with respect to any such Employee Benefit Plan.
(d) ActaMed and the ERISA Affiliates do not
sponsor or contribute to, and have not in the past sponsored or contributed to,
and have no Liability with respect to, any defined benefit plan subject to Title
IV of ERISA or any multi-employer plan (as defined in Section 3(37) of ERISA).
Neither ActaMed nor any ERISA Affiliate has any current or contingent obligation
to any multi-employer plan (as defined in Section 3(37) of ERISA). ActaMed does
not have any Liability with respect to any employee benefit plan or arrangement
other than with respect to the Employee Benefit Plans listed in DISCLOSURE
SCHEDULE 3.2.16.
(e) There are no pending or, to the knowledge of
ActaMed, threatened claims by or on behalf of any such Employee Benefit Plans,
or by or on behalf of any individual participants or beneficiaries of any such
Employee Benefit Plans, alleging any violation of ERISA or any other Applicable
Regulations, or claiming benefit payments (other than those made in the ordinary
operation of such plans), nor is there, to the knowledge of ActaMed, any basis
for such claim. Such Employee Benefit Plans are not the subject of any pending
(or to the knowledge of ActaMed, any threatened) investigation or audit by the
Internal Revenue Service, the U.S. Department of Labor or the Pension Benefit
Guaranty Corporation or any similar regulatory agency, foreign or domestic.
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(f) ActaMed has timely made all required payments
and contributions under the Employee Benefit Plans including the payment of all
insurance premiums. All such payments and contributions have been deducted
fully by ActaMed for federal income tax purposes. Such deductions have not been
challenged or disallowed by any governmental entity and ActaMed has no reason to
believe that such deductions are not properly allowable. ActaMed has not
incurred any Liability for any tax, excise tax, penalty or fee with respect to
any Employee Benefit Plan, and, to the best of ActaMed's knowledge, no event has
occurred and no circumstance exists or has existed that could give rise to any
such Liability.
(g) The execution of and performance of the
transactions contemplated by this Assets Purchase Agreement will not (either
alone or upon the occurrence of any additional or subsequent events) result in
any payment, acceleration, vesting or increase in benefits with respect to any
employee or former employee of ActaMed, including one that would be an "excess
parachute payment" under Section 280G of the Code.
(h) ActaMed does not maintain any plan or
arrangement that provides post retirement medical benefits, post retirement
death benefits or other post retirement welfare benefits, other than to the
extent required by Part 6 of Title I of ERISA.
(i) ActaMed does not maintain or contribute to,
nor has it in the past maintained or contributed to, any "welfare benefit fund"
(within the meaning of Section 419 of the Code).
(j) Any Employee Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies and
has been administered in material respects in accordance with all of the
applicable requirements of Section 4980B of the Code, Part 6 of Title I of
ERISA, Title XXII of the Public Health Service Act, the Social Security Act and
all other applicable Regulations.
(k) Any Employee Benefit Plan that is a group
health plan (within the meaning of Section 4980D(f)(1) of the Code) complies and
has been administered in material respects in accordance with all of the
applicable requirements of Subtitle K of the Code, Part 7 of Title I of ERISA,
the Public Health Service Act and all other applicable Regulations, and
(l) Neither ActaMed nor any ERISA Affiliate has
contributed to a non-conforming group health plan (as that term is defined in
Code section 5000(c)) or incurred any tax liability under Code section 5000(a).
3.2.17 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) ActaMed is in compliance with all applicable
environmental Regulations applicable to the ActaMed Business with respect to all
discharges into the ground and surface water, emissions into the ambient air and
generation, accumulation,
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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 environmental Regulations 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.
(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 Regulations governing the
protection of health and the environment or under any other 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
environmental Regulations 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 environmental Regulations 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.
3.2.18 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
DISCLOSURE SCHEDULE 3.2.18.
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3.2.19 MATERIAL CONTRACTS AND AGREEMENTS. DISCLOSURE
SCHEDULE 3.2.19 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 such
Schedule, all Contracts set forth on such list are valid, binding, and in full
force and effect, without any breach by ActaMed or, to ActaMed's knowledge, any
other party thereto.
3.2.20 TAXES. All federal, state and other tax returns
of ActaMed required by law to be filed have been duly filed and all federal,
state and other Taxes, assessments, fees and other federal governmental charges
upon 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.
(a) ActaMed has not assumed and is not liable for
any Tax liability of any other Person, including any predecessor corporation, as
a result of any purchase of assets or other business acquisition transaction;
(b) ActaMed has not indemnified or agreed to
indemnify 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;
(c) The charges, accruals and reserves, if any,
on the books of ActaMed in respect of all 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 Assets Purchase Agreement,
the ActaMed Documents or the issuance of the Shares of Series D Preferred Stock
by ActaMed, other than stock transfer taxes, recording fees and filing fees in
connection with state securities or "blue sky" filings.
3.2.21 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.
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3.2.22 LABOR RELATIONS. ActaMed is not engaged in any
unfair labor practices. 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,
(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.
3.2.23 NO CONFLICT OF INTEREST. 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, 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.
3.2.24 BROKERS OR FINDERS. No broker, agent, finder or
consultant or other Person has been retained by or on behalf of ActaMed (other
than legal or accounting advisors), or is or may be entitled to be paid based
upon any agreements or understandings made by ActaMed in connection with the
transactions contemplated hereby.
3.2.25 FULL DISCLOSURE. This Assets Purchase Agreement,
the other ActaMed Documents, and any report or financial statement referred to
in this Section 3.2 hereof and any certificate, report, statement or other
writing furnished to SBCL by or on behalf of ActaMed in connection with the
negotiation of this Assets Purchase Agreement and the other ActaMed Documents
and the sale of the shares of Series D Preferred Stock, 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.
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ARTICLE 4
TRANSITION MATTERS
SECTION 4.1 PRIOR TO REGION TRANSFER.
4.1.1 SBCL CONTINUED OPERATION. Except (i) as
contemplated by the Implementation Plan, (ii) with the prior written consent
of ActaMed, or (iii) as necessary to effect the transactions contemplated by
this Assets Purchase Agreement, SBCL shall, with respect to all SBCL Sites in
each Region which has not been transferred, until the Applicable Transfer
Date for the Region:
(a) provide Lab EDI Services using the SCAN
Network in substantially the same manner as presently being conducted;
(b) use its best efforts to preserve its present
relationships with Automated Providers and vendors; and
(c) notify ActaMed of any development materially
and adversely affecting its ability to provide Lab EDI Services, and of any
governmental complaints, investigations or hearings (or written communications
indicating that the same is contemplated) or administrative proceedings,
involving its ability to provide Lab EDI Services, and permit its
representatives prompt access to all materials prepared in connection therewith.
4.1.2 SCAN EXPENSE STATEMENTS. SBCL will cooperate with
ActaMed and Ernst & Young, or another of the "Big 6" national accounting firms
chosen by ActaMed and approved by SBCL ("CPA"), and provide CPA access to SBCL's
business and accounting records relating to SBCL's provision of Lab EDI Services
so that CPA may prepare audited financial statements, as of December 31, 1995,
December 31, 1996, and December 31, 1997, with respect to SBCL's provision of
such services, to the extent required for ActaMed to complete a registration of
the ActaMed Common Stock with the Securities Exchange Commission. ActaMed will
be responsible for, and pay, the expense of said audit, and ActaMed and SBCL
shall use their collective best efforts to cause said audit to be completed on
or prior to April 30, 1998.
SECTION 4.2 REGION TRANSITION MATTERS.
4.2.1 IMPLEMENTATION PLAN. (a) As a further condition
precedent to the occurrence of the Region One Transfer Date, the parties have
prepared a detailed plan regarding the transition of SBCL Sites into ActaMed
Sites (the "IMPLEMENTATION PLAN"), a copy of which is attached hereto as
SCHEDULE 4.2.1. SBCL's nominees to the Implementation Committee shall review
the Implementation Plan and shall notify ActaMed as to any proposed changes to
the Implementation Plan on or prior to January 15, 1998. ActaMed shall
implement all such
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changes, except to the extent its designees to the Implementation Committee
reasonably believe that any such change would materially impact ActaMed's
ability to meet the Transfer Benchmarks or the Performance Standards (as
defined in the Services Agreement), or would have a Material Adverse Effect
on ActaMed. If SBCL's designees to the Implementation Committee disagree
with ActaMed's assessment of a proposed change, the dispute shall be resolved
in accordance with the provisions of Article IX hereof. The Implementation
Plan shall continue in force, without any modification in respect of the
disputed change, until resolution of the matter.
(b) In the event of any conflict between the
terms of the Implementation Plan, on the one hand, and this Assets Purchase
Agreement, the Services Agreement, the License or the Development Agreement, on
the other, the terms of the relevant Transaction Document shall govern and
control over those of the Implementation Plan.
4.2.2 IMPLEMENTATION COMMITTEE. ActaMed and SBCL shall
form an implementation committee, consisting of an equal number of
representatives of ActaMed and SBCL (the "IMPLEMENTATION COMMITTEE"), authorized
and directed to (i) apply the Implementation Plan to each Region prior to it
being transferred to ActaMed, (ii) oversee, manage and implement the transition
of SBCL Sites into ActaMed Sites in accordance with the Implementation Plan;
(iii) revise and adapt the Implementation Plan to changing circumstances; and
(iv) determine the steps to be taken by the parties in those instances where the
Implementation Plan does not address an issue or problem presented. The
Implementation Committee shall initially be comprised of the people named on
SCHEDULE 4.2.2 hereto. From such list, ActaMed and SBCL shall each designate
one person (each an "RELATIONSHIP MANAGER") who together will manage the
Implementation Committee.
4.2.3 ASSISTANCE FROM SBCL. SBCL will provide resources
to assist ActaMed in the transition of SBCL Sites to ActaMed Sites as more fully
provided in the Services Agreement.
SECTION 4.3 GENERAL COVENANTS.
4.3.1 ACCESS TO PROPERTIES. At all times prior to the
last Transfer Date, the Transferred Employees, attorneys, accountants, agents
and other authorized and designated representatives of ActaMed will be allowed
upon reasonable advance notice and with minimal disruption to SBCL's business
operations, reasonable access to the properties, books and records of SBCL
relating to the SCAN Assets located at SBCL Sites, including without limitation,
title documents, leases, customer lists, and other data that, in the reasonable
opinion of both ActaMed and SBCL, are required for ActaMed to obtain such
information as it may reasonably request about the Transferred Employees or such
SCAN Assets. ActaMed shall also be allowed reasonable opportunity to consult
with the officers, employees, accountants, counsel and agents of SBCL in
connection with such investigation.
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4.3.2 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and
until notice of termination of this Assets Purchase Agreement prior to the last
Transfer Date pursuant to Article X hereof, SBCL shall not, acting in any
capacity, directly or indirectly, through any officer, director, employee,
agent, affiliate or otherwise of SBCL, (a) solicit, initiate or encourage
submission of proposals or offers from any Person, corporation or other entity
for the primary or specific purpose of selling the SCAN Assets located at SBCL
Sites, or relating to the provision of Lab EDI Services to Automated Providers,
(b) participate in any discussions or negotiations regarding, or, except as
required by a legal or judicial process, furnish to any other Person,
corporation or other entity any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to purchase the SCAN Assets located at
SBCL Sites or to obtain the right to provide Lab EDI Services to Automated
Providers, or (c) approve or undertake any such transaction. Nothing in this
Section 4.3.2 shall restrict what SBCL may otherwise do under the Services
Agreement.
4.3.3 CONSENTS AND APPROVALS. SBCL will use its 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 Assets Purchase Agreement, or (b) is
required by any Contract to be assumed by ActaMed, or by any Court Order or
License to which SBCL is a party or subject on any Transfer Date in
connection with the provision of Lab EDI Services, and which would prohibit,
or require the waiver, consent or approval of such transactions, or 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 SBCL relating to a Region shall be provided to ActaMed
on the Transfer Date relating to such Region in form and content reasonably
satisfactory to ActaMed. Without limiting the generality of the foregoing,
SBCL shall cause the [*] to sell to ActaMed in accordance with the terms and
conditions of this Agreement the SCAN Assets located in Region Two on or
prior to December 31, 1998.
To the extent that SBCL's rights under any Contract or other SCAN
Asset to be assigned to ActaMed hereunder may not be assigned without the
consent of another Person which has not been obtained, this Assets Purchase
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful. If notwithstanding
the best efforts of SBCL described above any such consent shall not be obtained,
or if any attempted assignment would be ineffective or would impair ActaMed's
rights under the SCAN Asset in question so that ActaMed would not in effect
acquire the benefit of all such rights, ActaMed to the maximum extent permitted
by law, shall act after the Applicable Transfer Date as SBCL's agent in order to
obtain for it the benefits thereunder and shall cooperate, to the maximum extent
permitted by law, with SBCL in any other reasonable arrangement designed to
provide such benefits to ActaMed.
4.3.4 PUBLIC ANNOUNCEMENTS. The parties hereto are in
the process of jointly developing a plan (the "COMMUNICATION PLAN") for
communicating the transactions
[*] CONFIDENTIAL TREATMENT REQUESTED
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contemplated by this Assets Purchase Agreement and the Services Agreement to
Automated Providers, Transferred Employees and the public, a draft of which
attached as SCHEDULE 4.3.4 hereto. The parties agree to use their collective
best efforts to complete the Communication Plan by January 6, 1998, and each
party agrees to abide by such Communication Plan. Without limiting the
foregoing, neither party shall send any communication to any Automated
Providers or Transferred Employee describing, or otherwise in connection
with, the transactions and relationships contemplated by this Agreement (and
such other agreements) unless the form and content of such communication
shall have been approved in advance by the other unless required by law or
judicial process, in which case notification shall be given to the other
party hereto prior to such disclosure.
4.3.5 STANDSTILL. At all times prior to the last
Transfer Date, ActaMed shall not consummate, or enter into any agreement with
respect to a Sale of Assets (as that term is defined in the Articles), without
the prior written consent of SBCL.
If, at any time prior to the last Transfer
Date, (i) ActaMed consummates any Merger, Share Exchange or Consolidation (as
such terms are defined in the Articles) (a "Combination"); (ii) the holders
of ActaMed stock immediately prior to the Combination are not the holders of
a majority of the voting stock of the surviving company of the Combination,
(iii) Michael K. Hoover no longer has (or has diminished) responsibility for
overseeing and, directly or indirectly, managing the transfer of the Regions
under Section 2.3, and (iv) the Transfer Date of any remaining Region does
not occur as scheduled under Section 2.3, then SBCL may withhold [*] of the
Fixed Fee (as defined in the Services Agreement) due on or after such
scheduled date or dates until such time as all Regions have been transferred.
SECTION 4.4 CONFIDENTIALITY OF TRADE SECRETS. Each party hereto agrees
not to use, copy or disclose the Trade Secrets of the other party, except as
permitted by this Assets Purchase Agreement and the other Transaction Documents.
Each party shall treat the other's Trade Secrets with at least that degree of
care it uses with respect to its own such Trade Secrets. SBCL will give access
to its Trade Secrets relating to its provision of Lab EDI Services to those
ActaMed personnel who have a need for such access and to no other Person
whatsoever. ActaMed will give access to its Trade Secrets relating to the
provision of Lab EDI Services to those SBCL personnel who have a need for 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
Assets Purchase Agreement or the other Transaction Documents. 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
[*] CONFIDENTIAL TREATMENT REQUESTED
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party to respond; (2) the disclosing party promptly notifies the other party
of the motion or order; and (3) the disclosing party does not oppose a motion
or similar request by the other party for an order protecting the Trade
Secrets including joining or agreeing to (or non-opposition to) a motion for
leave to intervene by such other party. Notwithstanding anything to the
contrary contained in this Assets Purchase Agreement, SBCL may disclose to
the Office of Inspector General of the Department of Health and Human
Services (the "OIG") as part of the disclosure SBCL makes under its Integrity
Agreement the fact that SBCL and ActaMed have entered into the transactions
contemplated by the parties and any information relating to such transaction
or this Assets Purchase Agreement which SBCL determines, in good faith upon
advice of counsel, is required or, in light of SBCL's obligations under the
Integrity Agreement, appropriate for SBCL to make, or SBCL proposes to make
in response to a request for such information from the OIG, provided that
ActaMed shall be given opportunity (which shall be reasonable in light of all
facts and circumstances) to review and comment upon the information SBCL
intends to include in any such submission. In the event that any such
disclosure that SBCL intends to make includes any information that
constitutes Trade Secrets of ActaMed, SBCL will provide reasonable (in light
of all facts and circumstances, including the time frame in which such
disclosure is required to be made) assistance to ActaMed to take reasonable
steps to assure that such Trade Secrets of ActaMed are maintained in
confidence, including, but not limited to, (i) requesting that the OIG treat
such information as trade secrets within the meaning of the Freedom of
Information Act, 5 U.S.C. Section 552(b)(4), (ii) requesting of the OIG that
SBCL and ActaMed be given prior notice of an proposed release of such
information to Persons or entities outside of the OIG; (iii) requesting that
the OIG otherwise assure the confidentiality of the information provided by
ActaMed as if such information was a Trade Secret of SBCL [*] and taking
other reasonable steps that may be requested by ActaMed and to which SBCL
may, in its sole discretion, agree to assure that the OIG honors its
confidentiality obligations in that section; (iv) where such information is
to be provided in response to a request by the OIG, take reasonable steps to
narrow the request from the OIG in an appropriate manner in order to limit
the amount of information, if any, that constitutes Trade Secrets of ActaMed
covered by such request; and (v) make reasonable efforts to permit ActaMed,
with the concurrence of the OIG, to disclose such information directly to the
OIG, provided that in any such case, ActaMed shall give SBCL a timely
opportunity to review, comment upon and approv the information ActaMed
intends to include in such submission. The additional safeguards described in
subsections (i) through (v) above are designed to help assure the
confidentiality of the Trade Secrets, the disclosure of which would have a
material adverse impact on ActaMed. These additional provisions are not
intended to interfere with SBCL's ability to meet its disclosure obligations
under the Integrity Agreement. Each party shall promptly notify the other in
the event it receives an inquiry, investigation or request for information
from the OIG or other governmental agency into the matters relating to the
proposed transactions. The provisions of this Section 4.4 shall apply in
addition to similar provisions in the Services Agreement.
SECTION 4.5 EFFORTS TO SATISFY CONDITIONS. SBCL and ActaMed each agree
to use their respective best efforts to cause the Transfer Dates to occur as
currently scheduled. In
[*] CONFIDENTIAL TREATMENT REQUESTED
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addition, SBCL agrees to use its best efforts to satisfy the conditions set
forth in Section 7.1 hereof, and ActaMed agrees to use its best efforts to
satisfy the conditions set forth in Section 7.2 hereof. In furtherance of the
foregoing, each party will use its best efforts to take all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each condition to the obligations of the other party
contained in this Assets Purchase Agreement and will not take or fail to take
any commercially reasonable action that could reasonably be expected to
result in the nonfulfillment of any such condition. Each of ActaMed and SBCL
further agrees to use its best efforts to (i) satisfy any conditions to the
transfer of a Region set forth in Section 2.3, and (ii) deliver any and all
documents to be delivered upon the transfer of a Region, as set forth in
Sections 2.5 and 2.6.
SECTION 4.6 EXPENSES. Except as otherwise provided herein, each of
the parties to this Assets Purchase Agreement shall bear its respective
expenses incurred in connection with the preparation, execution and
performance of this Assets Purchase Agreement and the transactions
contemplated hereby, including, without limitation, all fees and expenses of
agents, representatives, counsel and accountants.
SECTION 4.7 ANTITRUST NOTIFICATION. The parties have filed 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 was
requested in connection therewith pursuant to the HSR Act. The filing fee
relating to such notification and report form will be borne equally.
ARTICLE 5
ACTAMED COVENANTS TO SBCL
SECTION 5.1 ADDITIONAL COVENANTS OF ACTAMED. ActaMed covenants and
agrees that:
5.1.1 SECURITIES LAW FILINGS. From and after
consummation of a Public Offering and for so long as a Permitted Owner holds
any Conversion Shares, ActaMed will timely file the reports required to be
filed by it under the Securities Act and the Exchange Act and the Regulations
adopted by the SEC thereunder, to the extent required from time to time to
enable the Permitted Owner to sell Conversion Shares without registration
under the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such rule may be amended from time
to time, or (b) any similar Regulation hereafter adopted by the SEC. Upon
the request of the Permitted Owner, ActaMed will deliver to the Permitted
Owner a written statement as to whether it has complied with such
requirements.
5.1.2 TRANSACTIONS WITH SUBSTANTIAL HOLDERS. ActaMed
shall not, directly or indirectly, knowingly enter into any material
transaction or agreement with any of its Substantial Holders or any Affiliate
or officer of ActaMed or a Substantial Holder, or a material
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transaction or agreement in which a Substantial Holder or Affiliate or
officer of ActaMed or a Substantial Holder has a direct or indirect interest,
unless such transaction or agreement is on terms and conditions no less
favorable to ActaMed or any of its Subsidiaries than could be obtained at the
time in an arm's length transaction with a third Person that is not such a
Substantial Holder or Affiliate or officer of ActaMed or a Substantial
Holder, and such transaction or agreement has been reviewed and approved by a
majority of those members of ActaMed's Board of Directors who have no such
interest in the transaction. Except as provided in Section 11.1.4, this
Section shall not be enforceable against ActaMed by (i) any Person other than
a Permitted Owner or (ii) any Person not a party to this Assets Purchase
Agreement.
5.1.3 BUSINESS AND FINANCIAL COVENANTS. ActaMed
covenants that:
(a) Except for shares issued (i) upon exercise
of options granted in accordance with the Stock Option Plans, the Articles
and the Stockholders Agreement, (ii) upon conversion of shares of Preferred
Stock, (iii) in connection with a Public Offering, (iv) upon exercise of the
Warrant, or (v) as permitted under the Articles and the Stockholders
Agreement, ActaMed will not, and will not permit any of its Subsidiaries, to
hereafter issue or sell any shares or any securities convertible into, or any
warrants, rights, or options to purchase shares of, the capital stock of
ActaMed or such Subsidiary to any Person other than ActaMed, and ActaMed will
not pledge any of the capital stock of any Subsidiary to any Person. ActaMed
will not, in any event, issue or sell any shares of Series D Preferred Stock
to any Person other than SBCL or its Affiliates.
(b) Except as expressly permitted by the
Articles or the Stockholders Agreement, ActaMed shall not (except for the
advancement of money for expenses in the ordinary course of business) make,
or permit any of its Subsidiaries to make, any loans or advances to any
Person or have outstanding any investment in any Person, whether by way of
loan or advance to, or by the acquisition of the capital stock, assets or
obligations of, or any other interest in, any Person.
(c) Except as expressly permitted herein or by
the Articles or the Stockholders Agreement, neither ActaMed nor any of its
Subsidiaries shall declare or make (i) any payment or the incurrence of any
Liability to make any payment in cash, property or other assets as a dividend
or other distribution in respect of any shares of capital stock of ActaMed or
any Subsidiary, excluding, however, any dividends payable to ActaMed by a
Subsidiary or dividends which may be payable solely in ActaMed Common Stock
or the common stock of any Subsidiary and (ii) except as otherwise permitted
by the Transaction Documents or a stock option agreement under the Stock
Option Plans, any payment or the incurrence of any Liability to make any
payment in cash, property or other assets for the purposes of purchasing,
retiring or redeeming any shares of any class of capital stock of ActaMed or
any Subsidiary or any warrants, options or other rights to purchase any such
shares.
(d) Neither ActaMed nor any of its
Subsidiaries will amend or change its articles of incorporation or bylaws, or
violate or breach any of the provisions thereof.
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(e) Without the consent of a majority of the
Board of Directors:
(i) Other than debt in an amount no
greater than $2,000,000 incurred to fund the cash portion of the Purchase
Price, ActaMed shall not create, incur or suffer to exist, or permit any
Subsidiary to create, incur or suffer to exist, any debt other than: (a) debt
existing on the date hereof and included in the ActaMed Financial Statements
or incurred in the ordinary course of business between the date of the
ActaMed Financial Statements and the date hereof, and any renewals or
replacements of such debt not exceeding the principal amount of the debt
being replaced or renewed; and (b) debt not in excess of $1,000,000 in the
aggregate in any one calendar year.
(ii) ActaMed shall not create or
suffer to exist, or permit any Subsidiary to create or suffer to exist, any
obligations for the payment of rent for any property under leases or
agreements to lease, other than obligations for (a) the payment of rent
which, in the aggregate, do not exceed $1,000,000 annually and (b) payments
under leases set forth on DISCLOSURE SCHEDULE 3.2.19.
(iii) ActaMed shall not acquire, or
permit any Subsidiary to acquire, directly or indirectly, the assets of or
equity interests in any other business or entity, whether by purchase, merger
consolidation or otherwise in excess of $1,000,000.
(iv) ActaMed shall not effect an
initial Public Offering of any equity securities, other than equity
securities issued in a merger, totaling less than $15,000,000 (before
discounts and commissions) in gross proceeds to ActaMed, and at a per share
price of less than 2.5 times the then existing conversion price of the Series
A Preferred Stock.
5.1.4 CORPORATE EXISTENCE, BUSINESS, MAINTENANCE,
INSURANCE.
(a) ActaMed will at all times preserve and
keep in full force and effect its corporate existence and rights and
franchises deemed material to its business and those of its Subsidiaries,
except any Subsidiary of ActaMed may be merged into ActaMed or another
Subsidiary.
(b) ActaMed shall engage solely in the
business of developing healthcare information networks (with a principle
focus on the provision of lab order entry and results reporting services) and
businesses closely related thereto. ActaMed (and any Subsidiary) will not
purchase or acquire any property other than property useful in and related to
such business.
(c) ActaMed will maintain or cause to be
maintained in good repair, working order and condition all properties used or
useful in the business of ActaMed and any Subsidiary and from time to time
will make or cause to be made all appropriate repairs,
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renewals and replacements thereof. ActaMed and any Subsidiary will at all
times comply in all material respects with the provisions of all material
leases to which it is a party or under which it occupies property so as to
prevent any loss or forfeiture thereof or thereunder.
(d) ActaMed will maintain or cause to be
maintained, with financially sound and reputable insurers, appropriate
insurance with respect to its properties and business and the properties and
business of any Subsidiary against loss or damage.
5.1.5 REPURCHASE OF SHARES OF PREFERRED STOCK.
Except as provided in Article Three, Section 5.1 of the Fourth Amended
Articles, ActaMed shall not, and shall not permit any of its Subsidiaries or
any Affiliate of ActaMed to, directly or indirectly, redeem or repurchase or
make any offer to redeem or repurchase any shares of (i) Preferred Stock
other than Series D Preferred Stock, unless ActaMed, such Subsidiary or such
Affiliate has offered to repurchase shares of Preferred Stock PRO RATA, from
all holders of outstanding shares of Preferred Stock, including without
limitation the Series D Preferred Stock, upon the same terms, or (ii) Series
D Preferred Stock unless ActaMed, such Subsidiary or such Affiliate has
offered to repurchase shares of Series D Preferred Stock PRO RATA, from all
holders of outstanding shares of Series D Preferred Stock upon the same terms.
5.1.6 COMPENSATION. All awards of compensation,
including, but not limited to, salary, bonus and awards of stock options made
to executive officers and/or directors of ActaMed shall be determined by
ActaMed in accordance with the terms of the Stockholders' Agreement and the
Articles.
5.1.7 SFA AMENDMENT. ActaMed shall deliver to SBCL,
within five (5) business days of the Region One Transfer Date, a duly
executed and delivered Amendment to that certain Amended and Restated
Development Agreement, dated the 21st day of November, 1996, but effective as
of the 3rd day of December, 1993, by and between ActaMed and The SFA Limited
Partnership, which Amendment shall provide, on terms satisfactory to SBCL and
its counsel, that the SBCL Software, the ActaLab Software and any
Intellectual Property developed under the Development Agreement shall not
constitute "ActaMed Technology," as defined in such Amended and Restated
Development Agreement with The SFA Limited Partnership.
5.1.8 NEW BUSINESS PLAN. Within thirty days after
the Region One Transfer Date, the Board of Directors of ActaMed will approve
and adopt a new business plan (the "NEW BUSINESS PLAN") for ActaMed covering
the years 1998 and 1999, which shall include projected financial data,
including statements of operations, and operational data, including number of
sites and transactions per site. The new business plan shall provide monthly
data for 1998 and quarterly data for 1999. By June 30, 1999, the Board of
Directors of ActaMed will approve and adopt an addendum to the plan, covering
the same items of financial and operational data, for the year 2000,
presented on a monthly basis. The nominal values set forth in the New
Business Plan shall not deviate from analogous figures presented in ActaMed's
existing business plan, a copy of which was forwarded to SBCL prior to
December 1, 1997, by more than seven percent (7%).
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Section 5.2 INFORMATIONAL COVENANTS OF ACTAMED. ActaMed covenants
and agrees that it shall deliver the following information to any Permitted
Owner for so long as (except as set forth in Section 5.2.6) such Permitted
Owner shall hold [*] of the aggregate outstanding shares of Preferred
Stock or Conversion Shares (considered as a single class) or until such time
as ActaMed shall have consummated a Public Offering:
5.2.1 AUDITED ANNUAL FINANCIAL STATEMENTS. As soon
as practicable and, in any case, within one hundred and twenty (120) days
after the end of each fiscal year, financial statements of ActaMed,
consisting of the balance sheet of ActaMed as of the end of such fiscal year
and the statements of operations, statements of stockholders equity and
statements of cash flows of ActaMed for such fiscal year, setting forth in
each case, in comparative form, the figures for the preceding fiscal year,
all in reasonable detail and fairly presented in accordance with GAAP applied
on a consistent basis throughout the periods reflected therein, except as
stated therein, and accompanied by an opinion thereon of Ernst & Young, or
other independent certified public accountants selected by ActaMed of good
and recognized national standing in the United States.
5.2.2 QUARTERLY UNAUDITED FINANCIAL STATEMENTS. As
soon as practicable and, in any case, within forty-five (45) days after the
end of each of the first three fiscal quarters in each fiscal year, unaudited
financial statements of ActaMed setting forth the balance sheet of ActaMed at
the end of each such fiscal quarter and the statements of operations and
statements of cash flows of ActaMed for each such fiscal quarter and for the
year to date, and setting forth in comparative form figures as of the
corresponding date and for the corresponding periods of the preceding fiscal
year, all in reasonable detail and certified by an accounting officer of
ActaMed as complete and correct, as having been prepared in accordance with
GAAP consistently applied (except as otherwise disclosed therein) and as
presenting fairly, in all material respects, the financial position of
ActaMed and any of its Subsidiaries and results of operations and cash flows
thereof subject, in each case, to customary exceptions for interim unaudited
financial statements.
5.2.3 MONTHLY UNAUDITED FINANCIAL STATEMENTS. As
soon as available, but in any event within thirty (30) days after the end of
each calendar month, copies of the unaudited balance sheet of ActaMed as at
the end of such calendar month and the related unaudited statements of
operations and cash flows for such calendar month and the portion of the
calendar year through such calendar month, in each case setting forth in
comparative form the figures for the corresponding periods of (a) the
previous calendar year and (b) the budget for the current year, prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as otherwise disclosed therein) and
certified by the chief financial officer of ActaMed as presenting fairly the
financial condition and results of operations of ActaMed and any of its
Subsidiaries (subject to customary exceptions for interim unaudited financial
statements).
[*] CONFIDENTIAL TREATMENT REQUESTED
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5.2.4 MANAGEMENT'S ANALYSIS. All the financial
statements delivered pursuant to Sections 5.2.2 and Section 5.2.3 shall be
accompanied by an informal narrative description of material business and
financial trends and developments and significant transactions that have
occurred in the appropriate period or periods covered thereby.
5.2.5 BUDGETS. As soon as practicable, but in any
event within thirty (30) days prior to the commencement of a fiscal year, an
annual operating budget for such fiscal year, approved by the Board of
Directors, including monthly income and cash flow projections and projected
balance sheets as of the end of each quarter within such fiscal year.
Extensions of such due date shall not be unreasonably withheld.
5.2.6 INSPECTION. Upon reasonable notice, ActaMed
shall, and shall cause any of its Subsidiaries to, permit any Permitted Owner
(so long as it owns [*] or more of the outstanding capital stock of ActaMed)
by its representatives, agents or attorneys:
(a) to examine all books of account, records,
reports and other papers of ActaMed or such Subsidiary except to the extent
that such action would, in the reasonable opinion of counsel, constitute a
waiver of the attorney/client privilege,
(b) to make copies and take extracts from any
thereof, except for information which is confidential or proprietary,
(c) to discuss the affairs, finances and
accounts of ActaMed or such Subsidiary with ActaMed's or such Subsidiary's
officers and independent certified public accountants (and by this provision
ActaMed hereby authorizes said accountants to discuss with the Permitted
Owner and its representatives, agents or attorneys the finances and accounts
of ActaMed or such Subsidiary), and
(d) to visit and inspect, at reasonable times
and on reasonable notice during normal business hours, the properties of
ActaMed and such Subsidiary.
Notwithstanding any provision herein to the contrary, the provisions of this
Section 5.2.6 are in addition to any rights of a Permitted Owner under the
Georgia Business Corporation Code and shall in no way limit such rights.
The expenses of the Permitted Owner in connection with any
such inspection shall be for the account of the Permitted Owner.
Notwithstanding the foregoing sentence, it is understood and agreed by
ActaMed that all reasonable expenses incurred by ActaMed or such Subsidiary,
any officers, employees or agents thereof or the independent certified public
accountants therefor, shall be expenses payable by ActaMed and shall not be
expenses of the Permitted Owner making the inspection.
Notwithstanding anything to the contrary, SBCL shall be
permitted access to any information of, or related to, any customer of
ActaMed that is a competitor of SBCL only to the
[*] CONFIDENTIAL TREATMENT REQUESTED
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extent ActaMed is not subject to confidentiality undertakings with respect to
such information; PROVIDED that such limitation shall not prevent SBCL or
auditors retained by SBCL, or if ActaMed so requires for reasons of
confidentiality only auditors retained by SBCL, from confirming the amount of
royalties payable to it under the License Agreement or Services Agreement by
reason of connectivity between Providers and commercial laboratories other
than SBCL Labs.
5.2.7 OTHER INFORMATION. ActaMed shall deliver the
following provided that in the reasonable opinion of counsel to ActaMed such
disclosure will not constitute a waiver of the attorney/client privilege, the
breach of any secrecy covenant or the release of information regarding
competitors of the Permitted Owner:
(a) promptly after the submission thereof to
ActaMed, copies of any detailed reports (including the auditors' comment
letter to management, if any such letter is prepared) submitted to ActaMed by
its independent auditors in connect