EXHIBIT 2.1
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
AMONG
▇▇▇▇▇ INFORMATION SERVICES, INC.
("Seller"),
DELTA HEALTHCARE CONSULTING GROUP, INC.
("Buyer")
AND
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("Shareholder")
Dated May 23, 2003
ARTICLE I PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES 1
1.1 Purchase and Sale of Assets 1
1.2 Assets Being Retained by Seller 1
1.3 Assumption of Liabilities 2
ARTICLE II CONSIDERATION FOR ASSETS 2
2.1 Promissory Note 2
2.2 Security Agreement 2
2.3 Forgiveness of Indebtedness 2
ARTICLE III THE CLOSING 2
3.1 Closing 2
3.2 Seller's Obligations at Closing 3
3.3 Obligations of Buyer and Shareholder at Closing 3
ARTICLE IV CONDITIONS TO CLOSING 3
4.1. Conditions to Obligations of Parties 3
ARTICLE V COVENANTS AND OBLIGATIONS OF THE PARTIES 4
5.1 Covenant Regarding Split of Specified Fees 4
5.2 Agreement Regarding IntelliChart 4
5.3 Use of Leased Facilities 4
5.4 Confidentiality 4
5.5 Employee Matters 5
5.6 Deletion of Computer Programs, Files 5
5.7 Actions to Facilitate Closing 6
ARTICLE VI REPRESENTATIONS AND WARRANTIES 6
6.1 Representations and Warranties of Seller 6
6.2 Representations and Warranties of Buyer and Shareholder 6
ARTICLE VII TERMINATION OF AGREEMENT 7
7.1 Termination 7
7.2 Effect of Termination 7
ARTICLE VIII INDEMNIFICATION 7
8.1 Indemnification 7
8.2 Indemnification Procedures 8
8.3 Cooperation of the Parties 8
8.4 Limitation and Termination of Indemnification Obligations 8
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ARTICLE IX MISCELLANEOUS PROVISIONS 9
9.1 Governing Law, Jurisdiction and Venue 9
9.2 Assignment; Binding Upon Successors and Assigns 9
9.3 Severability 9
9.4 Counterparts; Facsimile Signatures 9
9.5 Amendment and Waivers 9
9.6 Attorneys' Fees 10
9.7 Notices 10
9.8 Construction of Agreement 11
9.9 Further Assurances 11
9.10 Entire Agreement 11
List of Exhibits
Exhibit A Listing of Assets
Exhibit B Form of Promissory Note
Exhibit C Form of Pledge and Security Agreement
Exhibit D Form of Guaranty
Exhibit E Form of Certificate of Cancellation of
Indebtedness
Exhibit F Form of ▇▇▇▇ of Sale
Exhibit G Payments Listing, Showing Amounts Payable by
Seller to Shareholder
Exhibit H Completion Items for IntelliChart Installation
with Hospital
Exhibit I IntelliChart Agreement
Exhibit J Settlement Agreement
ii
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
THIS AGREEMENT FOR SALE AND PURCHASE OF ASSETS (the "Agreement") is made
and entered into effective as of the 23rd day of May, 2003 (the "Agreement
Date"), by and between ▇▇▇▇▇ Information Services, Inc., a Utah corporation
("Seller"), Delta Healthcare Consulting Group, Inc., a Utah corporation
("Buyer') and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a Utah resident and the sole shareholder of Buyer
("Shareholder"). Seller, Buyer and Shareholder are sometimes referred to
collectively herein as the "Parties," and individually as a "Party."
Recitals
A. Seller conducts a line of business involved in providing consulting
services to hospitals and other healthcare institutions regarding methods and
systems improvements, productivity measurements, and cost benefit analyses (the
"Consulting Business").
B. On the terms and subject to the conditions set forth in this
Agreement, Seller is willing to sell to Buyer, and Buyer desires to acquire from
Seller, the assets of the Consulting Business as listed on Exhibit A attached
hereto (the "Assets").
C. Shareholder, as the sole shareholder of Buyer, is willing to make
certain agreements and covenants as set forth herein, as a condition and
inducement to the transfer of the
Assets from Seller to Buyer.
D. The Parties desire to enter into this Agreement in order to set forth
and establish their rights and obligations with respect to the transactions
contemplated hereby.
Agreement
NOW THEREFORE, intending to be legally bound, and in consideration of the
above-recited premises and the mutual promises, covenants and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
Article I
Purchase and Sale of Assets; Assumption of Liabilities
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions of this Agreement, at the Closing (as defined in Section 3.1 below),
Seller shall sell, convey, transfer, assign and deliver the Assets to Buyer, and
Buyer shall purchase, acquire and accept the Assets from Seller.
1.2 Assets Being Retained by Seller. This Agreement relates only to the
specific Assets listed on Exhibit A attached hereto. The Assets will not
include, and Seller will retain all rights and interests in, all other assets it
holds, including all assets relating to its EDNet and ARCNet products,
businesses and operations. Except as otherwise specifically provided herein,
Seller will retain all of its cash, accounts, receivables and business records.
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1.3 Assumption of Liabilities. From and after the Closing, Buyer will
assume all obligations and liabilities associated with the Consulting Business,
including all outstanding obligations under existing contracts or arrangements
for the provision of consulting services and the delivery of reports with
respect thereto, and all obligations regarding future maintenance of
IntelliChart installations. Buyer will not assume, and Seller will retain, all
obligations and liabilities relating to the businesses conducted by Seller with
the EDNet and ARCNet assets. Any claims relating to the Consulting Business,
whether relating to services rendered prior to, or services to be rendered
subsequent to, the Closing, shall be the responsibility of Buyer. Any other
claims relating to the conduct of the Seller's business prior to the Closing,
and all claims relating to business conducted by Seller after the Closing, shall
be the responsibility of Seller. Each Party agrees to indemnify and hold
harmless the other Parties with respect to claims for which the indemnifying
party is responsible, and Shareholder agrees to indemnify and hold harmless
Buyer with respect to claims for which Buyer is responsible.
Article II
Consideration for Assets
2.1 Promissory Note. In consideration for the transfer of the Assets to
Buyer as provided herein, Buyer will execute and deliver to Seller at the
Closing a promissory note in the form attached hereto as Exhibit B (the "Note").
2.2 Security Agreement. To secure the payment of the obligations
represented by the Note, Shareholder will deliver to Seller at the Closing a
fully executed: (i) Pledge and Security Agreement in the form attached hereto
as Exhibit C and providing for a pledge of all shares of the Seller's Common
Stock held by Shareholder and certain related parties as security for such
payment obligations (the "Security Agreement"); and (ii) Guaranty in the form
attached hereto as Exhibit D (the "Guaranty").
2.3 Forgiveness of Indebtedness. As additional consideration for the
transfer of the Assets to Buyer, at the Closing Buyer and Shareholder will
deliver to Seller a fully executed certificate of cancellation of indebtedness
in the form attached hereto as Exhibit E (the "Certificate of Cancellation of
Indebtedness"), pursuant to which indebtedness owed by Seller to Shareholder and
to International HealthCare Consulting Group, an entity controlled by
Shareholder ("IHCG") will be cancelled.
Article III
The Closing
3.1 Closing. The closing of the purchase and sale of the Assets and the
other transactions contemplated hereby (the "Closing") shall take place at the
offices of ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, 15 West South Temple, Suite ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or at such other location as may be mutually
agreed upon by the Parties, at 5:00 p.m., local time, on May 23, 2003, or such
later date as all conditions to the Closing as set forth in this Agreement have
been satisfied or waived, other than conditions with respect to actions the
respective parties will take at the Closing itself (the "Closing Date"). No
Party shall be required to proceed with the Closing if it does not occur by May
16, 2003. All payments, pro-rations and calculations shall be determined as if
the Closing were taking place at the end of the day on May 2, 2003.
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3.2 Seller's Obligations at Closing. At the Closing, Seller will take the
actions and deliver the documents and instruments referenced below:
3.2.1 ▇▇▇▇ of Sale. Seller will deliver to Buyer an executed
Assignment and ▇▇▇▇ of Sale in the form attached hereto as Exhibit F (the "▇▇▇▇
of Sale"), conveying to Buyer legal title in and to the Assets, and all rights,
title and interests of Seller with respect thereto.
3.2.2 Possession of Acquired Assets. Simultaneously with delivery
of the ▇▇▇▇ of Sale, Seller will take such steps as may be necessary to put
Buyer in possession and operating control of the Assets and the Consulting
Business.
3.2.3 Settlement of Accounts. At the Closing, Seller will pay to
Shareholder all amounts due to Shareholder, with respect to his employment and
otherwise, as set forth in the listing of payments set forth in Exhibit G
attached hereto (the "Payments Listing"), being all obligations owed by Seller
to Shareholder other than those forgiven pursuant to the Certificate of
Cancellation of Indebtedness. Seller and Shareholder will also execute and
exchange executed counterparts of the Settlement Agreement, as defined in
Section 5.5.1 below.
3.2.4 Execution of IntelliChart Agreement. At or promptly after
the Closing, Seller will execute and deliver to Buyer the IntelliChart
Agreement, as defined in Section 5.2 below.
3.3 Obligations of Buyer and Shareholder at Closing. At the Closing,
Buyer and Shareholder shall deliver to Seller the following:
3.3.1 Note and Security Agreement. Buyer and Shareholder will
deliver to Seller the executed Note, Security Agreement and Guaranty, as
contemplated by Sections 2.1 and 2.2 above.
3.3.2 Certificate of Cancellation of Indebtedness. Shareholder
will deliver to Seller the Certificate of Cancellation of Indebtedness as
contemplated by Section 2.3 above, executed by Shareholder and on behalf of
IHCG.
3.3.3 Resignation. Shareholder will deliver to Seller an executed
resignation from his position as a member of Seller's Board of Directors, in a
form reasonably acceptable to Seller, with such resignation to be effective as
of the Closing.
Article IV
Conditions to Closing
4.1. Conditions to Obligations of Parties. Neither Party shall be
obligated to proceed with the Closing, unless the other Party has performed and
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complied with, or will perform and comply with at the Closing, all of the
covenants contained in this Agreement required to be performed by such other
Party at or prior to the Closing.
Article V
Covenants and Obligations of the Parties
5.1 Covenant Regarding Split of Specified Fees. Seller has installed an
IntelliChart application with Texas Children's Hospital ("Hospital"), and a fee
of $16,110 is due and payable from the Hospital to Seller upon acceptance of the
installation. Upon the Hospital's acceptance of such installation, the fees
paid by Hospital to Seller with respect to such installation will be split
equally between Seller and Buyer. Hospital has indicated that the items listed
on Exhibit H attached hereto (the "Completion List") must be completed,
corrected or resolved prior to Hospital's acceptance of the installation.
Seller agrees to use its commercially reasonable best efforts to address the
items set forth on the Completion List in order to obtain the Hospital's
acceptance of the installation, thereby triggering the payment of the above
referenced fee. However, in no event will Seller's efforts to achieve such
acceptance be required to exceed the levels set forth in Exhibit H. Until such
time as the Hospital pays the fees associated with its acceptance of the
IntelliChart installation, Seller shall retain responsibility for maintaining
such installation or otherwise settling or terminating the agreement with the
Hospital with respect thereto. To the extent intellectual property rights or
licenses with respect to IntelliChart are granted to Buyer hereunder, Buyer
hereby grants to Seller all rights (to the extent Buyer possesses such rights)
to such intellectual property as may be required for Seller to be able to
perform its obligations hereunder. From and after the Hospital's acceptance of
the IntelliChart installation, Buyer will assume all responsibilities for
maintenance of the above-referenced installation, and will be entitled to retain
all fees paid with respect to such future maintenance activities.
5.2 Agreement Regarding IntelliChart. At or promptly after the Closing,
Seller will enter into an agreement with Buyer with respect to IntelliChart and
related intellectual property rights, upon the terms and conditions set forth in
Exhibit I attached hereto (the "IntelliChart Agreement"). Buyer and Shareholder
covenant and agree not to use the IntelliChart software or related intellectual
property in a manner inconsistent with the IntelliChart Agreement.
5.3 Use of Leased Facilities. From and after the Closing, Buyer shall
have the right to continue the operation of the Consulting Business from that
portion of the leased facilities from which the Consulting Business is currently
operated, upon the following terms and conditions: (i) Buyer shall not required
to pay any rent with respect to such space until June 15, 2003; (ii) For all
periods commencing after June 15, 2003, Buyer will pay its pro-rata share of all
rent of such facility, together with all costs and expenses associated
therewith, with such payment to be made upon demand from Seller or its successor
in interest, within time periods required by Seller or by the underlying lease,
(iii) Buyer will observes all aspects of the lease applicable to such space and
such restrictions as may be reasonably imposed from time to time by Seller, and
(iv) Seller may terminate Buyer's rights with respect to the use of such
facilities upon any sale of all or substantially all of Seller's remaining
assets, or upon thirty (30) days prior written notice. Any rights of Buyer to
utilize any portion of such leased facilities shall terminate on any termination
of the underlying lease. Buyer agrees to execute a sublease agreement
reasonably prepared by Seller to document the arrangement referenced above.
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5.4 Confidentiality. From and after the Closing Date, each of Parties
will hold in strict confidence and will not divulge, communicate or use in any
way, any business plans or strategies, customer lists, financial data, know-how,
trade secrets or other information of the other Party, except that Buyer will be
entitled to use the trade secrets acquired from Buyer as part of the Assets
related to the Consulting Business.
5.5 Employee Matters.
5.5.1 Termination of Shareholder's Employment; Settlement of
Accounts. The Parties agree and covenant that Shareholder's employment with
Seller will terminate effective May 2, 2003. The Parties further agree and
acknowledge that upon the payment to Shareholder at the Closing of the amounts
indicated in the Payment Listing, and the delivery by Shareholder at the Closing
of the Certificate of Cancellation of Indebtedness, all obligations owed by
Seller to Shareholder in connection with his employment with Seller and the
termination of such employment shall have been satisfied in full, and from and
after the Closing, Shareholder will forever release and hold harmless Seller
from and against any claims arising from Shareholder's employment with Seller,
and any obligations of Seller arising in connection with such employment.
Concurrently with the Closing, Seller and Shareholder will execute a Mutual
Release and Settlement Agreement in the form attached hereto as Exhibit J (the
"Settlement Agreement").
5.5.2 Termination of Other Employees of Consulting Business. The
Parties understand and acknowledge that effective May 2, 2003, Seller plans to
terminate the employment of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Consulting
Employees"), two employees involved with the operation of the Consulting
Business. Buyer agrees that effective upon the Closing it will offer employment
to each of the two Consulting Employees, on terms no less favorable to them than
the terms on which they are currently employed by Seller.
5.5.3 Assumption of Responsibility for Accrued Vacation Benefits.
Upon the Closing, Buyer will assume all responsibility for, and will pay and/or
satisfy by granting comparable benefits with credit for time worked at Seller,
all obligations owed by Seller to the Consulting Employees with respect to
accrued vacation benefits relating to the periods of their employment with
Seller.
5.5.4 Continuation of Health Coverage. Upon the Closing, and
subject to compliance by the covered individuals with applicable legal
requirements, Seller will pay the premiums associated with the continued
coverage of Shareholder, the Consulting Employees and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under the
Corporation's health insurance benefit plans, for the period ending on May 31,
2003, consistent with the terms of such benefit plans as currently administered.
5.6 Deletion of Computer Programs, Files. Seller shall be entitled, prior
to the Closing, to delete from the desktop and laptop computers to be
transferred to Buyer at the Closing, all programs and files associated with
Seller's ongoing business, or not being sold by Seller hereunder, or as to which
Buyer is not acquiring any rights hereunder. If Seller does not take such
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action, then Buyer will take all such action immediately upon the Closing, and
will not make any unauthorized use of any such programs or files.
5.7 Actions to Facilitate Closing. From and after the date hereof, each
Party will exercise its reasonable efforts to complete and perform the items to
be completed and performed by it at or prior to the Closing.
Article VI
Representations and Warranties
6.1 Representations and Warranties of Seller. Seller hereby represents
and warrants to Buyer that each of the following statements is true and correct:
6.1.1 Organization and Authorization. Seller is a corporation
duly organized and in good standing under the laws of the State of Utah, has the
full power and authority to enter into and perform its obligations under this
Agreement, and has obtained the necessary approval of its Board of Directors to
take such actions.
6.1.2 Execution; Binding Agreement. This Agreement has been duly
and validly executed and delivered by Seller and constitutes a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
6.1.3 No Representations Regarding Assets. The Assets were
originally acquired by Seller from IHCG, and Shareholder oversees the Consulting
Business on behalf of Seller. Accordingly, Shareholder is familiar with the
Consulting Business and the condition of the Assets, and Seller makes no
representation or warranty with respect thereto. THE ASSETS ARE BEING SOLD "AS
IS AND WHERE IS," WITHOUT WARRANTY AS TO MERCHANTABILITY, USEFULNESS FOR ANY
PARTICULAR PURPOSE, OR CONDITION, OR ANY OTHER WARRANTY.
6.2 Representations and Warranties of Buyer and Shareholder. Buyer and
Shareholder hereby represent and warrant to Seller that each of the following
representations, warranties and statements is true and correct:
6.2.1 Power and Authority. Buyer is a corporation duly organized
and in good standing under the laws of the State of Utah, and Shareholder is a
resident of the State of Utah. Buyer and Shareholder have the legal capacity,
power and authority to enter into and perform their obligations under this
Agreement, and all other agreements and instruments contemplated hereby to which
Buyer or Shareholder is or is intended to be a party.
6.2.2 Execution; Binding Agreement. This Agreement has been duly
and validly executed and delivered by Buyer and Shareholder, and constitutes a
valid and binding obligation of Buyer and Shareholder, enforceable against such
Parties in accordance with its terms.
6.2.3 No Representations Regarding Assets. The Assets were
originally acquired by Seller from IHCG, and Shareholder oversees the Consulting
Business on behalf of Seller. Accordingly, Shareholder is familiar with the
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operations and financial condition and prospects of the Consulting Business and
the utility and condition of the Assets. Buyer and Shareholder understand and
acknowledge that Seller makes no representation or warranty with respect to the
Assets of the Consulting Business. Buyer and Shareholder understand and
acknowledge that the Assets are being sold "AS IS AND WHERE IS," WITHOUT
WARRANTY OF ANY KIND (it being understood that Seller has undertaken certain
obligations with respect to IntelliChart as set forth in Section 5.1 above).
6.2.4 Due Diligence. Buyer and Shareholder have conducted all due
diligence they have desired to conduct with respect to the Assets and the
Consulting Business and are satisfied with the results thereof. Buyer and
Shareholder are aware of and understands the nature and condition of the Assets
and the Consulting Business and the obligations and liabilities associated
therewith.
Article VII
Termination of Agreement
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing as set forth below:
7.1.1 Mutual Agreement. This Agreement may be terminated at any
time prior to the Closing by the mutual written agreement of the Parties.
7.1.2 For Failure of Closing. This Agreement may be terminated by
any Party hereto if the Closing has not occurred by 11:59 p.m., local time in
Salt Lake City, Utah, on May 16, 2003, provided that the right to terminate this
Agreement under this Section 7.1.2 shall not be available to any Party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date.
7.1.3 For Failure of Closing Conditions. Any Party may terminate
this Agreement by giving written notice of termination to the other Party, if
prior to the Closing the other Party has breached any of its representations,
warranties, or covenants contained in this Agreement in any material respect.
7.2 Effect of Termination. If this Agreement is terminated as provided
above, all rights and obligations of the Parties hereunder shall terminate
without liability of any Party to any other Party; provided, however, that
nothing herein will relieve any Party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement prior to such termination.
Article VIII
Indemnification
8.1 Indemnification. Each Party (as an "Indemnifying Party") agrees to
defend, indemnify and hold harmless each of the other parties (as an
"Indemnified Party"), from and against each claim, loss, liability, cost and
expense (including without limitation, interest, penalties, costs of preparation
and investigation, and the reasonable fees, disbursements and expenses of
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attorneys, accountants and other professional advisors) (collectively "Losses"),
directly or indirectly relating to, resulting from or arising out of any untrue
representation, misrepresentation, breach of warranty or non-fulfillment of any
covenant, agreement or other obligation by or of the Indemnifying Party pursuant
to this Agreement.
8.2 Indemnification Procedures. An Indemnified Party shall promptly
notify an Indemnifying Party of any claim, demand, action or proceeding for
which indemnification will be sought under Section 8.1 above and, if such claim,
demand, action or proceeding is a third party claim, demand, action or
proceeding, the Indemnifying Party will have the right at its expense to assume
the defense thereof using counsel reasonably acceptable to the Indemnified
Party. The Indemnified Party shall have the right to participate, at their own
expense, with respect to any such third party claim, demand, action or
proceeding. In connection with any such third party claim, demand, action or
proceeding, the Indemnifying Party and the Indemnified Party shall cooperate
with each other and provide each other with access to relevant books and records
in their possession. No such third party claim, demand, action or proceeding
shall be settled without the prior written consent of the Indemnified Party. If
a firm written offer is made to settle any such third party claim, demand,
action or proceeding and the Indemnifying Party proposes to accept such
settlement and the Indemnified Party refuses to consent to such settlement,
then: (i) the Indemnifying Party shall be excused from, and the Indemnified
Party shall be solely responsible for, all further defense of such third party
claim, demand, action or proceeding; and (ii) the maximum liability of the
Indemnifying Party relating to such third party claim, demand, action or
proceeding shall be the amount of the proposed settlement if the amount
thereafter recovered from the Indemnified Party on such third party claim,
demand, action or proceeding is greater than the amount of the proposed
settlement. Whether or not an Indemnifying Party shall have assumed the defense
of any such third party claim, action, demand or proceeding, no Indemnified
Party shall admit any liability with respect to, or settle, compromise or
discharge, any such claim, demand, action or proceeding without the Indemnifying
Party's prior written consent, which shall not be unreasonably withheld.
8.3 Cooperation of the Parties. The Parties shall cooperate with each
other in the resolution of any claim or liability with respect to which an
Indemnifying Party is obligated to indemnify any Indemnified Party hereunder,
including by making commercially reasonable efforts to mitigate or resolve any
such claim or liability. In the event that an Indemnified Party shall fail to
make such commercially reasonable efforts to mitigate or resolve any claim or
liability, then notwithstanding anything else to the contrary herein, the
Indemnifying Party shall not be required to indemnify any person for any losses
that could reasonably be expected to have been avoided if the Indemnified Party
had made such efforts.
8.4 Limitation and Termination of Indemnification Obligations. The
indemnification obligations set forth in this Article VIII with respect to the
breach of any representations or warranties set forth herein shall terminate on
the date which is one year following the Closing; provided that such obligations
shall not terminate (i) as to any item as to which the Indemnified Party shall
have, before the expiration of such one year period, previously made a claim by
delivering a notice of such claim (stating in reasonable detail the basis of
such claim) to the Indemnifying Party, or (ii) as to any claim relating to a
breach of a covenant, which requires performance following the Closing. All of
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the representations and warranties of the parties contained in this Agreement
shall survive the Closing for a period of one year. All of the covenants of the
parties made herein and to be fulfilled following the Closing shall continue
following the Closing, in accordance with their terms.
Article IX
Miscellaneous Provisions
9.1 Governing Law, Jurisdiction and Venue. The internal laws of the State
of Utah (irrespective of its choice of law principles) will govern the validity
of this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties hereto. In the event of any
claim or dispute arising hereunder, the parties consent to the exclusive
jurisdiction and venue of the federal and state courts in the State of Utah.
9.2 Assignment; Binding Upon Successors and Assigns. No Party hereto may
assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto, except that as referenced in Section 1.1
above, before or after the Closing, Buyer may assign rights and obligations
hereunder to an entity wholly owned by Buyer which acquires all of the Assets
and assumes the conduct of the Consulting Business. Subject to the foregoing,
this Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
9.3 Severability. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement will remain in full force and effect and will be
interpreted so as reasonably to effect the intent of the Parties hereto. The
Parties further agree to replace any void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.
9.4 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which will be an original as regards any
Party whose signature appears thereon and all of which together will constitute
one and the same instrument. This Agreement will become binding when one or
more counterparts hereof, individually or taken together, will bear the
signatures of each of the Parties reflected hereon as signatories. This
Agreement may be considered duly executed and delivered by a party hereto when
an electronic facsimile transmission of the signature page hereto and purporting
to reflect the execution of such signature page by a representative of such
party shall have been delivered by such party to the other parties hereto. Each
party hereto agrees that if it executes this agreement by delivery of a
facsimile transmission of the signature pages as provided in the preceding
sentence, it will thereafter deliver to each of the parties hereto duly executed
original counterparts of such signature pages.
9.5 Amendment and Waivers. Any term or provision of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the Party or Parties to be bound thereby. The
waiver by a Party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default.
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9.6 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing Party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including without limitation, costs, expenses and fees on
any appeal).
9.7 Notices. Any notice or other communications pursuant to this
Agreement will be in writing and will be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
Parties at the following addresses (or at such other address for a Party as will
be specified by like notice):
(i) If to Seller:
▇▇▇▇▇ Information Services, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
P. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇, LLP.
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Shareholder:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(ii) If to Buyer:
Delta Healthcare Consulting Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to Shareholder
All such notices and other communications will be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the Party receiving such copy will have
confirmed receipt of the communication, (c) in the case of delivery by
10
nationally-recognized courier, on the business day following dispatch by
overnight courier service (on the third business day following dispatch in the
case of international deliveries), and (d) in the case of mailing, on the third
business day following such mailing.
9.8 Construction of Agreement. This Agreement has been negotiated by the
respective Parties hereto and the language hereof will not be construed for or
against either Party. A reference to a Section or an Exhibit will mean a
Section in, or Exhibit to, this Agreement unless otherwise explicitly set forth.
The titles and headings herein are for reference purposes only and will not in
any manner limit the construction of this Agreement which will be considered as
a whole.
9.9 Further Assurances. Each Party agrees to cooperate fully with each
other Party and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
such other Party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
9.10 Entire Agreement. This Agreement and the Exhibits hereto constitute
the entire understanding and agreement of the Parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
effective as of the Agreement Date.
"Seller" "Buyer"
▇▇▇▇▇ Information Services, Delta Healthcare Consulting
Inc. Group, Inc.
By:_____________________ By:_____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
President
Title:__________________
"Shareholder"
_________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
11
EXHIBIT A
LISTING OF ASSETS TO BE SOLD TO BUYER
The Acquired Assets to be transferred by Seller to Buyer at the Closing are
the following:
Hardware:
1. 2 desktop computers, with four monitors, as used by Shareholder and
the Consulting Employees, and having the serial numbers indicated
below:
Mike's PC - (No Serial) Intel P3 1200mHz, 512mb SDRAM
Cory's PC - (No Serial) Intel P2 600mHz, 256mb SDRAM
Cory's Monitor - Futura L703ILD95MLC0019180
Mike's Monitor - Micron 700Vx YA009836041685
Frank's Monitor - AOC 7 GLR EGGO90808030
Don's Monitor - Futura K9034LD 03MLD00033709
2. 3 laptop computers, as used by Shareholder and the Consulting
Employees, and having the serial numbers indicated below:
Mike's Laptop - Micron Transport MEIRFB44739
Frank's Laptop - Dell Inspiron (Service Tag FQ0Y811) 34225452325
Don's Laptop - Dell Inspiron (Service Tag 6Q0Y811) 14634411301
3. Photocopy machine utilized in the Consulting Business Panasonic Model
FP 3037
Furniture:
1. 1 Conference room table
2. 4 Blue side chairs located in ▇▇▇▇▇ and Don's offices
3. 4 Four desks currently used by Frank, Don, ▇▇▇▇ and ▇▇▇▇
4. 4 Swivel chairs currently used by Frank, Don, ▇▇▇▇, and ▇▇▇▇
5. Southwest ▇▇▇▇ Freedom Phone System
6. Lexmark Optra T610N Laser Printer currently in ▇▇▇▇▇ and Don's office
7. 3 Book cases, teak and oak currently in Frank, Don and Joe's offices
8. Computer credenza currently in Joe's office, section used for printer
table
9. Filing cabinets (all legal size) in storage unit, 1 two-drawer legal
file cabinet in Frank's office, 4 drawer letter file cabinet in ▇▇▇▇
and Cory's office
A-1
Other items:
1. All contracts relating to consulting services provided through the
Consulting Business.
2. Copies of all customer listings and records relating to such
consulting services.
3. All marketing materials relating to the Consulting Business.
4. The content of the Seller's web pages relating to the Consulting
Business (but not rights to the web site or domain name, which will be
retained by Seller).
DHCG Storage Unit Inventory
Items have been tagged with a U of U sticky-note with the exception of the
miscellaneous boxes.
4 4-drawer legal filing cabinets
1 2-drawer horizontal filing cabinet
1 Composite wood secretary's desk
1 Composite wood secretary's desk with return
1 Composite wood bookshelf
1 Manual comb binding machine
3 Composite wood pamphlet organizers
1 Exhibition booth (two containers)
Miscellaneous storage boxes containing:
HCG financial date
HCG correspondence
HCG working papers
3 white boards currently in office
1 adding machine in Don's office
2 4-drawer filing cabinets in hallway
A-2
EXHIBIT B
SECURED PROMISSORY NOTE
$25,698.53
May 15, ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
FOR VALUE RECEIVED, the undersigned, Delta Healthcare Consulting Group,
Inc., a Utah corporation ("Maker"), hereby promises to pay to ▇▇▇▇▇ Information
Services, Inc., a Utah corporation ("Payee"), or order in the manner hereinafter
provided, the original principal amount of twenty-five thousand seven hundred
and NO/100 Dollars ($25,700.00), together with interest on the portion of such
principal amount from time to time outstanding, at the simple rate of eight
percent (8%) per annum.
Maker shall pay to Payee the amount of $2,000.00 per quarter, commencing on
August 14, 2003 and continuing on the 14th day of each of the next 15 quarters
(provided that if the scheduled payment date is not a business day on which
banks in Utah are open, the payment due date shall be deferred until the next
such business day). At the end of such 15 quarter period, the entire unpaid
principal balance hereof shall become due and payable.
All payments shall be credited first to the payment of accrued interest,
and then to a reduction in the outstanding principal amount hereof.
This Promissory Note is secured by a pledge of shares of the outstanding
stock of Payee, pursuant to a Pledge and Security Agreement of even date
herewith by and between Maker and Payee (the "Security Agreement").
Subject to the terms of this Promissory Note, Maker may without premium or
penalty at any time and from time to time, prepay all or any portion of the
amounts owing hereunder.
Upon the occurrence of any default by Maker of his payment obligations
hereunder and after the notice and cure period indicated hereafter (unless all
events of default have been timely cured by Maker within ten (10) days prior
written notice of such default to Maker, or waived by Payee), Payee may, at his
option, by written notice to Maker, declare the entire unpaid principal balance
hereof immediately due and payable regardless of any prior forbearance.
Payee shall have the right to sell, assign or otherwise transfer its entire
interest and rights under this Promissory Note and the Security Agreement.
Accordingly, this Promissory Note shall inure to the benefit of Payee, his
successors, assigns, transfers, conveys or purchasers. The rights and
obligations of Maker hereunder are subject to assignment and adjustment as
provided in the Asset Purchase Agreement.
The rights and remedies of Payee under this Promissory Note shall be
cumulative and not alternative. No waiver by Payee of any right or remedy under
this Promissory Note shall be effective unless in a writing signed by Payee.
B-1
Neither the failure nor any delay in exercising any right, power or privilege,
under this Promissory Note will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege by Payee will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right of Payee
arising out of the Promissory Note can be discharged by Payee, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by Payee, (b) no waiver that may be given by Payee will be applicable except in
the specific instance for which it is given, and (c) no notice to or demand on
Maker will be deemed to be a waiver of any obligation of Maker or of the right
of Payee to take further action without notice or demand as provided in this
Promissory Note unless so stated in such notice.
All notices, requests, demands, claims and other communications hereunder
shall be in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly given two (2) business days after being sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient.
Any party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
ordinary mail; or electronic mail). Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other party notice in the matter herein set forth. Any
provision of this Promissory Note that is prohibited or unenforceable in any
jurisdiction shall, as to the jurisdiction, be ineffective to the extent of the
prohibition or unenforceability without invalidating the remaining provisions of
this Promissory Note or affecting the validity or enforceability of the
prohibited or unenforceable provision in any other jurisdiction.
Maker waives diligence, protest, demand presentment for payment, dishonor,
notice of protest, and notice of nonpayment of this Promissory Note, and agrees
that this Promissory Note and any payment due or to become due hereunder may be
extended, modified, amended or renewed from time to time by the Payee hereof
without previous demand or notice.
This Promissory Note shall be governed by and construed in accordance with
the internal laws of the State of Utah. All rights and obligations of the
parties hereto shall be in addition to and not in limitation of those provided
by applicable law. The parties hereto consent to the exclusive jurisdiction of
the courts of the State of Utah and the Federal courts within the State of Utah
for the resolution of any dispute arising in connection with this Promissory
Note.
IN WITNESS WHEREOF, the undersigned have executed this Promissory Note
effective as of the date first set forth above.
Delta Healthcare Consulting Group, Inc.
By:____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
B-2
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the _____ day of May, 2003 personally appeared before me, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, the signer of the foregoing document entitled Promissory Note, who
acknowledged to me that he executed the same on behalf of Delta Healthcare
Consulting Group, Inc.
____________________________
NOTARY PUBLIC
My Commission Expires: Residing in:
_________________________________ ____________________________
B-3
EXHIBIT C
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT ( the "Agreement") is made and entered
into effective as of the 23rd day of May, 2003, by and among: ▇▇▇▇▇ Information
Services, Inc., a Utah corporation ("Pledgee"); ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a Utah resident
("▇▇▇▇▇▇▇▇"); and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, who are
children of ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇ Children"). ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Children are
sometimes referred to collectively as the "Pledgors").
Recitals
A. Pledgee, ▇▇▇▇▇▇▇▇ and Delta Healthcare Consulting Group, Inc., a
Utah corporation of which ▇▇▇▇▇▇▇▇ is the sole shareholder ("DHCG") have entered
into an Agreement for Sale and Purchase of Assets dated as of May ___, 2003 (the
"Asset Purchase Agreement"), providing for the sale by Pledgee to ▇▇▇▇▇▇▇▇ of
assets associated with the Pledgee's consulting business (the "Acquired
Assets").
B. Concurrently with the execution of this Agreement, the
transactions contemplated by the Asset Purchase Agreement are being closed, and
as a portion of the consideration for the Acquired Assets purchased by DHCG from
Pledgee, DHCG is delivering to Pledgee DHCG's promissory note of date even
herewith, in the principal amount of $25,700.00 (the "Note").
C. In connection with, and as an inducement and condition to, the
transfer of the Acquired Assets from Pledgee to DHCG, the parties are entering
into this Agreement to provide for a pledge of all 677,143 shares of the Common
Stock of Pledgee held by Pledgors (the "Pledged Shares") as security for the
payment of the Note.
Agreement
NOW THEREFORE, in consideration of the above premises, the mutual covenants
and conditions contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Pledgors and
Pledgee agree as follows:
1. Pledge and Grant of Security Interest. Pledgors hereby grant to
Pledgee an unconditional security interest in, and hereby pledge to Pledgee, the
Pledged Shares, together with all securities issued in substitution for or with
respect to such shares as well as the proceeds thereof and any property to which
Pledgors may become entitled by reason of the ownership of the Pledged Shares or
such other securities (the "Collateral").
2. Secured Obligations. This Agreement and the pledge of the Pledged
Shares as provided herein are given as security for the payment of all
principal, interest and other sums payable under the Note (the "Secured
Obligations").
C-1
3. Perfection of Security Interests. Certificates representing the
Pledged Shares, accompanied by stock powers or other instruments of assignment
duly executed by each Pledgor (for use in transferring all or a portion of the
Pledged Shares if, as and when required or permitted by this Agreement) are
herewith delivered by Pledgors to Pledgee. Pledgee shall hold such certificates
and assignments subject to the terms and conditions of this Agreement, as
security for the payment of the Note. During the term of this Agreement,
Pledgors shall also perform all acts as Pledgee may reasonably request in order
for Pledgee to perfect a valid security interest for Pledgee in the Collateral.
4. Title. Each Pledgor represents and warrants to Pledgee that the
Pledged Shares held and delivered by such Pledgor are duly and validly
authorized, issued and outstanding and are fully paid and nonassessable, and
that such Pledgor has good and marketable title thereto, free and clear of any
mortgage, pledge, lien or encumbrance, other than the lien created by this
Agreement. Pledgors, at their cost and expense, will warrant and defend title
to the Pledged Shares against the claims of all third parties and will execute
and deliver all such further instruments and take all such further action as may
from time to time may be reasonably requested by Pledgee to maintain the lien
created by this Agreement as a valid lien.
5. Voting Rights. During the term of this Agreement, and until a default
has occurred by DHCG in the performance of its obligations under the Note,
Pledgors shall retain all voting rights with respect to the Pledged Shares.
6. Stock Adjustments. In the event that during the term of this
Agreement any stock dividend, reclassification, readjustment, exchange or other
change (whether through stock-splits, exchanges, mergers, distributions or
otherwise) is declared or made in the capital structure of Pledgee, all new,
substituted and additional shares or other securities issued with respect to the
Pledged Shares by reason of any such change shall be delivered to and held by
Pledgee under the terms of this Agreement in the same manner as the Pledged
Shares originally pledged hereunder. In the event of substitution or addition
of such securities, Pledgors and Pledgee shall cooperate and execute such
documents as are reasonable so as to provide for the substitution or addition of
such collateral and, upon such substitution or addition, references to "Pledged
Shares" in this Agreement shall include such substituted or additional shares of
capital stock of Pledgee, or its successor.
7. Default. DHCG shall be deemed to be in default of the Note in the
event payment of principal or interest shall be delinquent for a period of ten
(10) days or more after written notice of default is given to DHCG.
8. Remedies Upon Default. In the event of a default by DHCG in
performing its obligations under the Note, the Pledgee shall have all of the
remedies of a secured party under the Utah Uniform Commercial Code or as
otherwise provided by law. In connection therewith, Pledgors agree that thirty
(30) days notice shall be adequate notice of any sale of the Pledged Shares.
9. Term of Agreement; Release of Collateral. This Agreement shall
continue in full force and effect until the Secured Obligations shall have been
paid in full, and the security interest created hereunder shall be terminated
and released by such payment. Promptly following the payment in full of the
C-2
Note and the termination of the security interest created hereunder, Pledgee
shall promptly deliver to Pledgors the certificates representing the Pledged
Shares then held by Pledgee, all stock assignments relating thereto, and any
other instruments or documents representing the Collateral as to which the
security interest created hereby has been terminated.
10. General Provisions.
10.1 Costs and Expenses. Pledgors agree to pay for all out-of-pocket
costs and expenses, including, but without limitation, reasonable attorneys'
fees and expenses, incurred by or on behalf of Pledgee in enforcing its rights
hereunder.
10.2 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns.
10.3 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by the laws of the State of Utah.
10.4 Notices. Any notices or other communications required or
permitted to be governed hereunder shall be sent, addressed or transmitted to
the parties as provided in the Asset Purchase Agreement, and will be deemed
effective as provided therein..
10.5 Amendment. This Agreement may be amended or modified only in a
written document that refers to this Agreement and is executed by Pledgors and
Pledgee.
10.6 Attorneys' Fees. In the event any action or proceeding is
brought by any party to enforce the provisions of this Agreement, the prevailing
party in such action shall be entitled to recover its costs and reasonable
attorneys' fees.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date first above written.
Pledgors:
__________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
C-3
__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
__________________________
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
__________________________
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
__________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Pledgee:
▇▇▇▇▇ Information Services, Inc.
By:_______________________
Title:____________________
C-4
EXHIBIT D
GUARANTY
THIS GUARANTY ("Guaranty") is made and entered into as of the ___ day of
May, 2003, by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a Utah resident ("Guarantor"), to and for the
benefit of ▇▇▇▇▇ Information Services, Inc., a Utah Corporation ("Seller").
Recitals:
A. Delta Healthcare Consulting Group, Inc., a Utah Corporation ("Buyer"),
has purchased from Seller certain assets relating to Seller's consulting
business (the "Consulting Assets"), and in partial consideration for the
Consulting Assets has issued to Seller Buyer's promissory note (the "Note") in
the aggregate principal amount of twenty-five thousand seven hundred and NO/100
Dollars ($25,700.00).
B. Guarantor is a shareholder of Buyer.
C. Seller requires, as a condition precedent to selling the Consulting
Assets to Buyer and accepting the Note in partial consideration therefore, that
Guarantor guarantee the collection of all principal, interest and other charges,
costs and fees provided for in the Note, in accordance with the terms and
conditions set forth below.
D. Seller has committed to sell the Consulting Assets to Buyer and to
accept the Note in partial consideration therefore, based in part upon the
execution of this Guaranty, and Buyer and Guarantor have accepted the terms and
conditions of the Note.
E. As additional security for payment of the obligations arising under
the Note, the Guarantor and certain other parties (collectively the "Pledgors")
have entered into a Pledge and Security Agreement with Seller, dated May __,
2003 (the "Pledge Agreement"), pursuant to which all outstanding shares of
Seller held by Pledgors have been pledged to secure such obligations.
NOW, THEREFORE, in order to induce Seller to sell the Consulting Assets to
Buyer and accept the Note in partial consideration therefore, and in
consideration of other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Guarantor agrees as follows:
1. Guaranty. Guarantor hereby unconditionally and absolutely guarantees
the following (collectively the "Obligations"):
a. The collection of all payment obligations which are owed by Buyer
to Seller pursuant to the Note; and
b. The payment of all fees, charges, expenses, reasonable attorney
fees and costs of court chargeable to Guarantor as provided in this
Guaranty;
D-1
2. Satisfaction by Guarantors. Seller may make demand on Guarantor for
the satisfaction of any unpaid portion of the Obligations, upon satisfaction of
the following condition:
a. The indebtedness of Buyer to Seller under the Note shall have
matured or been accelerated due to a default by Buyer thereunder.
Upon satisfaction of the foregoing condition, Guarantor shall satisfy the
remaining unpaid balance of the Obligations.
3. Attorney Fees. Guarantor shall pay reasonable attorney fees and all
other reasonable costs and expenses which may be incurred by Seller in the
enforcement of this Guaranty. In addition, Guarantor hereby consents to the
jurisdiction of the courts of the State of Utah and to venue in Salt Lake
County, Utah as proper forum and venue for resolution of disputes under this
Guaranty.
4. Amendments. Neither this Guaranty nor any provisions hereof may be
changed, waived, discharged or terminated orally and may only be modified or
amended by an instrument in writing, signed by both Seller and Guarantor.
5. Binding Effect. This Guaranty shall be binding upon Guarantor, and
the successors and assigns of Guarantor. This Guaranty shall inure to the
benefit of Seller. and Seller's successors and assigns.
6. Survival. This Guaranty shall survive the closing of the transfer of
the Consulting Assets from Seller to Buyer, and each and every one of the
obligations and undertakings of Guarantor contained herein shall be continuing
obligations and undertakings and shall not cease and terminate until all of the
Obligations shall have been fully paid, performed and discharged, or this
Guaranty has terminated as provided below.
7. Termination. This Guaranty and the Guarantor's obligations hereunder
shall automatically cease and terminate, and be of no further force or effect,
if and when the outstanding principal amount of the Note has been reduced to no
more than $12,000, without any default occurring by Buyer under the Note or by
any of the Pledgors under the Pledge Agreement.
8. Assignment. Seller may assign Seller's rights under this Guaranty, in
whole or in part, to any other person, firm or corporation. Seller agrees to
provide prompt written notice to Guarantor of any such assignment.
9. Notices. Except as otherwise provided herein, all notices shall be in
writing and shall be deemed to have been sufficiently given or served when
presented personally or on the fifth day following the day on which the same is
deposited in the United States mail, by registered or certified mail, postage
prepaid, addressed as follows:
D-2
If to Seller, to: ▇▇▇▇▇ Information Services, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopier: 801) 568-0906
If to Guarantor, to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed by notice to the other party or parties given in
the same manner as above provided.
10. Severability. If any term or provision of this Guaranty shall, to any
extent, be determined by a court of competent jurisdiction to be void, voidable
or unenforceable, such void, voidable or unenforceable term or provision shall
not affect any other term or provision of this Guaranty.
11. Interpretation. Whenever the context shall require, the plural shall
include the singular, the whole shall include any part thereof, and any gender
shall include both other genders. The paragraph headings contained in this
Guaranty are for purposes of reference only and shall not limit, expand or
otherwise affect the construction of any provisions hereof.
12. Governing Law. This Guaranty and all matters relating hereto shall be
governed by, construed and interpreted in accordance with the laws of the State
of Utah applicable to contracts entered into and to be performed within such
State.
DATED effective as of the date first above written.
Guarantor:
____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
D-3
EXHIBIT E
CERTIFICATE OF CANCELLATION OF INDEBTEDNESS
The undersigned hereby certify that, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, effective upon the
closing of the sale of certain assets by ▇▇▇▇▇ Information Services, Inc.
("▇▇▇▇▇") to Delta Healthcare Consulting Group, Inc., pursuant to the terms of
the Agreement for Sale and Purchase of Assets (the "Agreement") entered into
between such parties and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") effective as of May __,
2003, the following indebtedness (the "Cancelled Indebtedness") owed by ▇▇▇▇▇ to
▇▇▇▇▇▇▇▇ or to International HealthCare Consulting Group ("IHCG") is hereby
cancelled and extinguished and deemed to have been satisfied in full.
A. All amounts payable by ▇▇▇▇▇ to ▇▇▇▇▇▇▇▇ in connection with ▇▇▇▇▇▇▇▇'▇
employment with ▇▇▇▇▇ (including, without limitation, all compensation payable,
or reimbursements for expenses, or accrued benefits) for periods prior to April
1, 2003.
B. Any amounts payable by ▇▇▇▇▇ to ▇▇▇▇▇▇▇▇ in connection with ▇▇▇▇▇▇▇▇'▇
employment with ▇▇▇▇▇ for any period after May 2, 2003 and prior to the Closing
(as defined in the Agreement).
C. All indebtedness owed by ▇▇▇▇▇ to ▇▇▇▇▇▇▇▇ and IHCG as a result of
funds borrowed by ▇▇▇▇▇ from IHCG (the outstanding principal amount of which is
approximately $54,029.95).
The undersigned agree to promptly surrender to ▇▇▇▇▇, marked cancelled, any
promissory notes or other evidences of the Cancelled Indebtedness, and to
provide such additional documentation as may be reasonably requested by ▇▇▇▇▇ to
establish the cancellation of the Cancelled Indebtedness.
The undersigned agree, understand and acknowledge that upon the Closing, by
delivery of this Certificate of Cancellation of Indebtedness, and upon payment
to ▇▇▇▇▇▇▇▇ of the amounts referenced in Section 3.2.3 of the Agreement, ▇▇▇▇▇
will have fulfilled all of its obligations to ▇▇▇▇▇▇▇▇ and IHCG, whether arising
pursuant to ▇▇▇▇▇▇▇▇'▇ employment with ▇▇▇▇▇ or ▇▇▇▇▇'▇ borrowing of funds from
IHCG, or otherwise, and ▇▇▇▇▇ shall have no further outstanding financial
obligations to ▇▇▇▇▇▇▇▇ or IHCG.
Dated: May __, 2003
------------------------- International HealthCare Consulting Group
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:__________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:_______________________
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EXHIBIT F
FORM OF
▇▇▇▇ OF SALE
Pursuant to the terms of that certain Agreement for Sale and Purchase of
Assets entered into by and between ▇▇▇▇▇ Information Services, Inc. ("Seller") ,
Delta Healthcare Consulting Group, Inc. ("Buyer") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as the sole
shareholder of Buyer ("Shareholder"), dated as of May __, 2003 (the "Purchase
Agreement"), and for the consideration specified therein, Seller does hereby
grant, bargain, transfer, sell, assign, convey and deliver to Buyer), the assets
referenced in Exhibit A attached hereto (the "Assets"), and all of Seller's
rights, title and interests with respect thereto.
Seller hereby warrants that Seller is the legal owner of the Assets and
that the Assets are free from all liens, claims and encumbrances. Seller
warrants and agrees to defend his title to the Assets against the claims and
demands of all persons. Seller hereby covenants and agrees that, at any time
and from time to time forthwith upon the written request of Buyer, Seller will
do, execute, acknowledge and deliver or cause to be done, executed, acknowledged
and delivered, each and all of such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be required by
Buyer in order to assign, transfer, set over, convey, assure and confirm unto
and vest in Buyer, its successors and assigns, title to the Assets sold,
conveyed, transferred and delivered by this ▇▇▇▇ of Sale.
This ▇▇▇▇ of Sale may be executed in one or more counterparts (and by
different parties or separate counterparts), each of which shall be deemed an
original and all of which, when taken together, shall constitute one instrument.
Telecopied counterpart signature pages will be conclusive evidence of execution.
Executed at Salt Lake City, Utah, effective this ___ day of May, 2003.
Seller:
▇▇▇▇▇ Information Services, Inc.
By:______________________
▇▇▇▇ ▇▇▇▇▇▇▇▇, COO
ACCEPTED:
Buyer:
_________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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EXHIBIT G
PAYMENT LISTING
SHOWING AMOUNTS PAYABLE TO SHAREHOLDER
AT CLOSING
At the Closing, and in full satisfaction of all amounts owed by Seller to
Shareholder, Seller will pay to Shareholder the following amounts:
$2,531.71*
*Maximum of $800 in flexible spending account to be resolved.
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EXHIBIT H
COMPLETION ITEMS
FOR INTELLICHART INSTALLATION AT
TEXAS CHILDREN'S HOSPITAL
The following is a listing of items that Texas Children's Hospital has
indicated it will require before accepting the IntelliChart application, and
which Seller has agreed to use its commercially reasonable best efforts to
address, in order to facilitate the acceptance of the installation and the
release of the fee payment related thereto, as provided in Section 5.1 of the
Agreement:
See Attachment H-1
In no event will Seller be required to take actions to resolve the
foregoing items that would require more than 144 man hours of labor.
H-1
EXHIBIT I
TERMS FOR INTELLICHART AGREEMENT
Promptly after the Closing, Seller and Buyer will in good faith negotiate
an agreement regarding the respective parties' rights and obligations with
respect to the IntelliChart software product (the "IntelliChart Product") and
related intellectual property rights (the "IntelliChart Agreement"). Subject to
the final terms of the IntelliChart Agreement, it is intended that Buyer and
Seller will have rights and obligations with respect to the IntelliChart Product
and related intellectual property rights, as follows:
(a) Buyer will be granted the right to use and modify the IntelliChart
Product, and to license its use to its customers in the Consulting
Business, subject to certain restrictions and limitations as referenced
below, to protect Seller and its successors in interest
(b) In order to separate, to the extent possible, the code required for
the IntelliChart Product from the code relating to features of the
Seller's EDNet product which are not utilized by the IntelliChart
Product, Seller will promptly undertake to separately and incrementally
compile the code relating to the units, forms and features of the
IntelliChart Product, and will present to Buyer a disk with a copy of
the code required to compile the IntelliChart applications, but without
code or features not required for operation of the IntelliChart Product.
This code will be the only code to which Buyer will have access. Seller
will promptly take action to swap out the previous version of the
IntelliChart Product currently installed with any customers, in exchange
for this new, separately compiled version, and assume any costs
associated with the transition.
(c) Seller will fulfill its obligation to place source code in escrow
for the Hospital, in accordance with the contract entered into between
Seller and Hospital.
(d) With the separation procedure referenced above, Buyer will be
required to obtain its own licenses with respect to use of third party
software utilized as components within the IntelliChart Product.
(e) Seller and its successors in interest will own all intellectual
property rights with respect to the existing source and object codes of
the IntelliChart Product as of the date of Closing, as included in the
separately compiled product as referenced above (the "Existing Codes").
(f) Buyer will be granted an exclusive, world-wide, paid-up right and
license to use, modify and market the IntelliChart Product for the
purpose of providing patient classification and determining workload
requirements by patient type, to hospitals, other health care
facilities, and the departments thereof (the "Permitted Applications").
I-1
(g) Buyer will have the right to use, market and license the
IntelliChart Product or any of the Existing Code or any derivations
thereof for any Permitted Application.
(h) Buyer will not have any right to use the IntelliChart Product or
any of the Existing Code or any derivations thereof for any information
system technologies, programs or applications that provide any of the
following functionality (the "Prohibited Applications"):
Individual patient demographic identification (other than as provided
by the current IntelliChart Product)
Patient order entry and workload assignment (other than workload
identification and measurement)
Documentation of patient encounters (other than identification of
numbers of patients by class level, including turnover rates and
related information as currently provided in the IntelliChart Product)
Charge capture as a result of patient encounters (provided that this
restriction shall not preclude interfaces with hospital charging
systems)
Outcome measurement on based on patient encounter documentation
Triage, tracking, prescription writing, discharge
for use in any of the following markets (the "Prohibited Markets"):
Respiratory care
Physical therapy
Occupational therapy
Speech therapy
Recreational therapy
Emergency department
Urgent care facilities
Inpatient / outpatient surgery
General and intensive care nursing in hospitals
Labor and delivery (perinatal) departments in hospitals.
(i) Buyer and Shareholder will agree to a non-competition covenant,
restricting them from providing products or services for Prohibited
Applications in Prohibited Markets for a period of 18 months following
the Closing.
(j) Buyer will have access to the Existing Codes, in order to customize
the features of the IntelliChart Product for use in Permitted
Applications, but for no other purposes.
(k) Each IntelliChart client must execute an End User License Agreement
in a form provided or approved by Seller or its successor in interest.
(l) Except as otherwise specifically provided in Section 5.1 of the
Agreement, Buyer must provide all support for all end users of the
IntelliChart Product and any warranties with respect to the IntelliChart
Product will come only from Buyer.
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(m) Buyer will provide all required copyright notices on all
IntelliChart Products and related literature, including any copyright
notices reasonably requested by Seller or its successor in interest.
(n) Buyer will have exclusive rights to the IntelliChart name.
I-3
EXHIBIT J
SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
THIS SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS (the "Agreement") is made
and entered into effective as of the ___ day of May, 2003, by and between ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and ▇▇▇▇▇ Information Services, Inc., a Utah corporation
("▇▇▇▇▇"). ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ are sometimes referred to collectively herein as
the "Parties," and individually as a "Party."
Recitals
A. Concurrently with the execution of this Agreement, the Parties,
together with Delta Healthcare Consulting Group, Inc., a Utah corporation of
which ▇▇▇▇▇▇▇▇ is the sole shareholder, ("DHCG") are consummating the transfer
of certain assets (the "Sale of Assets") from ▇▇▇▇▇ to DHCG pursuant to the
terms of an Agreement for Sale and Purchase of Assets entered into by and among
▇▇▇▇▇, DHCG and ▇▇▇▇▇▇▇▇ effective as of May __, 2003 (the "Sale Agreement").
B. As provided in the Sale Agreement, a condition to the closing of the
Sale of Assets is that the Parties enter into this Agreement.
C. In connection with the Sale of Assets and as provided in the Sale
Agreement, ▇▇▇▇▇▇▇▇ is terminating his employment arrangement with ▇▇▇▇▇, and
resigning his positions as an officer and director of ▇▇▇▇▇.
D. In connection with the Sale of Assets, the parties wish to settle
their affairs and resolve or avoid any potential claims or disputes between
them, relating to ▇▇▇▇▇▇▇▇'▇ employment with ▇▇▇▇▇.
Agreement
NOW THEREFORE, in consideration of the foregoing premises, the mutual
covenants and obligations set forth below, and other good and valuable
consideration exchanged between the parties, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Termination of ▇▇▇▇▇▇▇▇'▇ Employment; Settlement of Accounts. The
Parties agree and acknowledge that ▇▇▇▇▇▇▇▇'▇ employment with Seller has
terminated effective upon the Closing (as defined in the Sale Agreement). The
Parties further agree and acknowledge that upon the payment to ▇▇▇▇▇▇▇▇ at the
Closing of the amounts indicated in the Payment Listing (as defined in the Sale
Agreement), and the delivery by ▇▇▇▇▇▇▇▇ at the Closing of the Certificate of
Cancellation of Indebtedness (as defined in the Sale Agreement), all obligations
owed by ▇▇▇▇▇ to ▇▇▇▇▇▇▇▇ in connection with his employment with ▇▇▇▇▇ and the
termination of such employment shall have been satisfied in full.
J-1
2. Mutual Release of Claims. Effective upon the Closing of the Sale of
Assets as described in the Sale Agreement, each of the Parties hereby releases
and discharges the other Party from any and all claims, disputes, losses,
demands, actions, causes of action, damages, compensation, costs, fees,
expenses, contracts, covenants, obligations, debts and liabilities of every kind
and nature whatsoever, presently known or unknown, which such releasing Party
may, now or in the future, claim, assert or have, in tort, contract, law,
equity, or otherwise against such released Party, resulting from or arising out
of ▇▇▇▇▇▇▇▇'▇ employment with ▇▇▇▇▇, the termination of such employment, or the
past conduct of the business of ▇▇▇▇▇. Effective upon the Closing of the Sale
of Assets, all obligations owed by either Party to the other Party shall be
considered to have been satisfied and performed in full.
3. Waiver of Unknown Claims. Each of the Parties expressly understands,
acknowledges and agrees that it is possible that unknown losses or claims exist
or that present claims or losses may have been underestimated in amount of
severity, and the parties hereto took that into account in determining the
amount of consideration to be paid as provided in the Sale Agreement. Each of
the Parties further understands, acknowledges and agrees that a portion of the
consideration, having been bargained for between the parties with the knowledge
of the possibility of such unknown losses or claims, was given in exchange for a
full accord, satisfaction and discharge of all such claims and losses as set
forth in Section 2 of this Agreement.
4. Entire Consideration/Full Satisfaction of Obligations. The Parties
hereto each declare and agree that the consideration and mutual covenants
specified in the Sale Agreement, as well as the mutual covenants set forth
herein constitute the sole and entire consideration for the covenants set forth
in this Agreement and that no Party has made any promise or offer of further
payment or satisfaction or any agreement or promise to do any act or thing not
set forth herein. The consideration specified above constitutes full settlement
and satisfaction of all obligations owed by each Party to the other Party in
connection with or arising out of any of the transactions or events referenced
herein.
5. No Admission of Liability. This Agreement is not intended to be, and
shall not be deemed, construed or treated in any respect whatsoever as, an
admission of liability by any Party for any purpose.
6. No Assignment of Rights. Each of the Parties hereto represents,
warrants and covenants that it has not assigned or transferred any of its rights
to any claims, disputes, losses, demands, actions, causes of action, damages,
compensation, costs, fees, expenses, contracts, covenants, obligations, debts or
liabilities described herein and that it is lawfully entitled to make this
settlement and receive the satisfaction described herein. Each of the Parties
shall indemnify and hold harmless the other Party from and against any and all
claims and matters (including but not limited to, attorneys' fees) based upon or
arising in connection with any such assignment or transfer, or any purported
assignment or transfer of any such claims or other matters.
7. No Impact on Certain Continuing Obligations. The Parties understand,
agree and acknowledge that this Agreement and the releases set forth herein
shall not be construed to impact, impair, modify or restrict the enforceability
of any provisions of, the Sale Agreement, or any agreements between the Parties
regarding the confidential treatment of confidential information of either
J-2
Party, or rights to or assignment of any inventions or intellectual property
rights, or any rights or obligations of the Parties arising under any such
agreements, and all such agreements, as well as the rights and obligations of
the Parties arising thereunder, shall continue in accordance with their terms,
without regard to this Agreement.
8. No Impact on Indemnification Obligations, Certain Liabilities. The
Parties understand, agree and acknowledge that this Agreement shall not change
or affect any rights or obligations any Party may otherwise have with respect to
indemnification for actions taken or failed to be taken by ▇▇▇▇▇▇▇▇ in his
capacities as an officer and director of ▇▇▇▇▇, and such indemnification rights
and obligations shall be determined by ▇▇▇▇▇'▇ Bylaws, resolutions adopted by
▇▇▇▇▇'▇ Board of Directors, and the applicable provisions of the Utah Revised
Business Corporation Act. Furthermore, this Agreement shall not affect any
Party's liabilities with respect to criminal conduct, or breach of fiduciary
duty as an officer or director, or violation of applicable state or federal
securities laws.
9. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof. The
captions in this Agreement are for convenience only and do not alter or change
the substance of the Agreement. Neither modification or amendment of this
Agreement, nor any waiver of any of the terms or provisions hereof shall be of
any force or effect unless in writing and executed by all of the parties to this
Agreement. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision, nor shall any waiver
constitute a continuing waiver. No failure to exercise, and no delay in
exercising, any right, power or remedy hereunder shall impair any right, power
or remedy which either party may have, nor shall any such delay be construed to
be a waiver of any such rights, powers or remedies, or an acquiescence in any
breach or default under this Agreement.
10. Successors and Assigns. This Agreement shall be binding on, and shall
inure to the benefit of, the parties to this Agreement and their respective
legal representatives, receivers, trustees, successors, and assigns.
11. Costs and Fees. Except as otherwise specifically specified in this
Agreement, each party agrees to bear its own costs, expenses and attorneys' fees
incurred in connection with or relating to this Agreement and the matters
related thereto. If any legal action or other proceeding is brought for the
enforcement of this Agreement or because of an alleged dispute, breach, default,
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys' fees, and any other fees and costs incurred in the action or
proceeding, in addition to any other relief to which such party may be entitled.
12. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Utah, applicable to contracts entered
into and to be performed within said State.
13. Authorized Representatives. Each person who has signed this Agreement
in a representative capacity hereby represents and warrants to the other Party
hereto that he is duly authorized to execute and enter into this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date and year first above written.
▇▇▇▇▇: ▇▇▇▇▇▇▇▇:
▇▇▇▇▇ Information Services, Inc. _____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:_____________________________
Title:__________________________
J-4