EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of this 30th day of December, 1998, by and among PROXYMED, INC., a
Florida corporation ("ProxyMed"), PROXYMED ACQUISITION CORP., a Florida
corporation ("PAC" or collectively with ProxyMed, the "Acquirors"), both with
its principal business address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; KEY COMMUNICATIONS SERVICE, INC., an Indiana corporation ("Key"),
with its principal business address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇; and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, A. ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇, the
shareholders of Key (collectively, the "Stockholders"). Key and Stockholders are
sometimes collectively referred to in the Agreement as "Acquired Parties".
WHEREAS, upon the terms and conditions of the Agreement, the parties
desire that PAC, a wholly owned subsidiary of ProxyMed, be merged into Key, with
Key being the surviving corporation, in an exchange of voting common stock for
voting common stock, all as more particularly set forth herein (the "Merger");
and
WHEREAS, Stockholders own all of the issued and outstanding capital
stock of Key; and
WHEREAS, it is the intention of the parties hereto that (a) the Merger
shall qualify as a tax-free reorganization under Sections 368 of the Internal
Revenue Code of 1986, as amended, and related sections thereunder; and (b) the
Merger shall qualify as a transaction in securities exempt from registration or
qualification under the Securities Act of 1933, as amended (the "Act"), and
under the applicable securities laws of the state or jurisdiction where the
Stockholders reside; and
WHEREAS, Acquirors have been advised by its respective accounting firm
that as to each of their respective companies that the accounting for this
transaction meets the requirements to qualify as a pooling of interests as set
forth in Accounting Principles Board Opinion No. 16, Accounting for Business
Combinations (hereafter "APB No. 16"), and ProxyMed and Acquired Parties intend
that this purchase be accounted for as a pooling of interests, and
WHEREAS, ProxyMed and Acquired Parties intend for this transaction to
be treated as pooling of interests accounting pursuant to the terms and
conditions of this Agreement.
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in the Agreement, the parties agree as
follows:
ARTICLE 1. ARTICLES OF MERGER
1.1 The Articles of Merger, including the Plan of Merger, are attached
hereto as Exhibit "A" is incorporated herein by reference.
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ARTICLE 2. EXCHANGE OF SECURITIES
2.1 EXCHANGE OF SECURITIES. In consideration for the transfer and
assignment by the Stockholders and in consideration of the representations,
warranties and covenants of Acquired Parties set forth herein, ProxyMed, on the
conditions set forth herein, shall deliver to each Stockholder in proportion as
their interest appear on Schedule 1.1 at the Closing two million seventy-eight
thousand one hundred six (2,078,106) shares of voting common stock of ProxyMed,
$.001 par value, as more fully described on Section 3.2 hereof (the "Common
Stock").
ARTICLE 3. THE CLOSING
The closing of the Merger (the "Closing") shall take place at the
offices of ProxyMed at 10:00 a.m. EDT, or by facsimile, on December, 31, 1998,
or at such other place and/or time as the parties may agree in writing, but in
no event later than January 31, 1999 (the "Closing Date"). In the event that the
conditions specified in the Agreement have not been fulfilled by such Closing
dates, ProxyMed (if such failure of conditions is on the part of Acquired
Parties) or Key (if such failure of conditions is on the part of ProxyMed) may
extend the Closing for a period or periods not exceeding an aggregate of thirty
(30) days by written notice, and the no shop period described in Section 8.3
shall likewise be automatically extended to such Closing date.
3.1 ACQUIRED PARTIES' OBLIGATIONS AT THE CLOSING. At the Closing,
Acquired Parties shall deliver or cause to be delivered to ProxyMed: Stock
certificates representing the Shares, with Stock powers attached, and such other
good and sufficient instruments of conveyance, assignment and transfer, in form
and substance reasonably satisfactory to ProxyMed's counsel, so as to
effectively vest in ProxyMed good title to the Shares, together with all
documents, books and records required to be delivered to ProxyMed under the
provisions of the Agreement.
Each of the Acquired Parties, at any time before or after the
Closing, shall execute, acknowledge and deliver any further deeds, assignments,
conveyances and other assurances, documents and instruments of transfer
reasonably requested by ProxyMed and shall take any other action consistent with
the terms of the Agreement that may reasonably be requested by ProxyMed for the
purpose of assigning, transferring, granting, conveying and confirming to
ProxyMed, or reducing to possession, the Stock and assets of Key. If requested
by ProxyMed, Acquired Parties agree to prosecute or otherwise enforce in their
own names for the benefit of ProxyMed any claims, rights or benefits that are
transferred to ProxyMed by this Agreement and that require prosecution or
enforcement in either of the Acquired Parties' name. Any prosecution or
enforcement of claims, rights, or benefits under this Section shall be solely at
ProxyMed's expense, unless the prosecution or enforcement is made necessary by a
breach of the Agreement by Acquired Parties.
3.2 PROXYMED'S OBLIGATIONS AT THE CLOSING. At the Closing, ProxyMed
shall deliver to each of the Stockholders against delivery of the items
specified in Section 3.1 certificates for that number of shares of Common Stock
of ProxyMed as described in Section 2.1 hereof. The Common Stock issued shall be
Rule 144 restricted stock (except for one hundred ten thousand
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(110,000) treasury shares of registered Common Stock) (the "Treasury Stock"),
with restricted legend and stop transfer instructions. Stockholders shall be
granted registration rights as described in Section 12.11.
ARTICLE 4. [INTENTIONALLY OMITTED]
ARTICLE 5. [INTENTIONALLY OMITTED]
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF ACQUIRED PARTIES
Acquired Parties, jointly and severally, hereby represent and warrant
to ProxyMed that the following facts and circumstances are and, except as
contemplated hereby, at all times up to the Closing, will be true and correct,
and hereby acknowledge that such facts and circumstances constitute the basis
upon which ProxyMed is induced to enter into and perform the Agreement. Each
representation and warranty set forth in this Article 6 shall survive the
Closing subject to the limitations as set forth in Article 17.
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATIONS. Key is an S
corporation pursuant to Section 1361, ET SEQ. of the Internal Revenue Code
("Code"), and duly organized, validly existing, and in good standing under the
laws of the State of Indiana, has all necessary corporate powers to own its
properties and to carry on its business as now owned and operated by it, and is
duly qualified to transact business and is in good standing as a foreign
corporation in which the failure to be so qualified would have a material
adverse effect on Key. SCHEDULE 6.1 lists all the states that Key is so
qualified to do business in.
6.2 FINANCIAL STATEMENTS. SCHEDULE 6.2 to the Agreement sets forth the
audited consolidated balance sheets of Key as of April 30, 1998 (the "Last
Fiscal Year End"), and as of April 30, 1997 (the "Prior Fiscal Year End"), and
the related statements of income and retained earnings for such years. SCHEDULE
6.2 to the Agreement also includes unaudited consolidated balance sheets of Key
for the interim period ending October 31, 1998 (the "Stub Period Date"), and the
related unaudited statements of income and retained earnings for such periods,
certified by the Chief Financial Officer of Key and formally reviewed by
ProxyMed's independent auditors. The financial statements in SCHEDULE 6.2 are
referred to as the "Financial Statements". The Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently followed by Key throughout the periods indicated, and fairly
present (except for the unaudited Financial Statements which are subject to the
independent auditor's review report but which Key represents are accurate in all
material respects) the financial position of Key as of the respective dates of
the balance sheets included in the Financial Statements and the results of their
operations for the respective periods indicated, including the Stub Period. Key
has no liabilities or obligations of any nature (known or unknown, absolute,
accrued, contingent or otherwise) of the type required to be reflected or
disclosed in a balance sheet (or the notes thereto) prepared in accordance with
GAAP that were not fully reflected or reserved against in the Financial
Statements, except for obligations that have arisen in the ordinary course of
business and are not individually or in the aggregate material to Key. Key had
independent public accountants to audit or review its Financial
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Statements, whose unqualified opinions or review reports with respect to such
Financial Statements are included SCHEDULE 6.2.
6.3 ABSENCE OF SPECIFIED CHANGES. Except as set forth on SCHEDULE 6.3
hereof, since October 31, l998, there has not been any:
(a) Transaction by Key except in the ordinary course of business;
(b) Capital expenditure or purchase commitments for such by Key
exceeding $25,000 which are not for resale;
(c) Material adverse change in the financial condition,
liabilities, assets, business or prospects of Key;
(d) Destruction, damage to, or loss of any assets of Key (whether
or not covered by insurance) that materially adversely affects the financial
condition, business or prospects of Key;
(e) Labor trouble or other event or condition of any character
materially adversely affecting the financial condition, business, assets or
prospects of Key;
(f) Change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or rates) by
Key;
(g) Revaluation by Key of any of its Stock;
(h) Increase in the salary or other compensation payable or to
become payable by Key to any of its officers or directors, or the declaration,
payment or commitment or obligation of any kind for the payment by Key of a
bonus or other additional salary or compensation to any such person;
(i) Sale or transfer of any asset of Key, except in the ordinary
course of business;
(j) Execution, creation, amendment or termination of any contract,
agreement or license to which Key is a party, except in the ordinary course of
business;
(k) Loan by Key to any person or entity, or guaranty or
indemnification by Key of any loan;
(l) Waiver or release of any right or claim of Key, except in the
ordinary course of business;
(m) Mortgage, pledge or other encumbrance of any asset of Key;
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(n) Other event or condition of any character that has or might
reasonably have a material adverse effect on the financial condition, business,
prospects or Stock of Key;
(o) Any loss of customers or third party payers or providers or
trading partners resulting in or possibly resulting in a material adverse change
in the volume of transactions or revenues of Key;
(p) Distributions to any Stockholders or third parties other than
for the payments in an amount sufficient for each Stockholder of Key to timely
pay federal, state, local or other applicable income taxes on such Stockholder's
distributive share of Key's income or gains;
(q) Agreement by Key to do any of the things described in the
preceding clauses (a) through (p).
6.4 TAX MATTERS.
(a) All federal, state and local tax returns for all periods ending
on or before the Closing that are or were required to be filed by or with
respect to Key and Stockholders have been filed on a timely basis, and in
accordance with the laws, regulations and administrative requirements of any
applicable taxing authority. All such tax returns that have been filed on or
before the Closing were, when filed, and continue to be, true, correct and
complete in all material respects.
(b) Key has been a subchapter S corporation since May 1, 1987,
pursuant to Section 1361, ET SEQ., of the Code. To the best knowledge of the
Shareholders, no such elections have been revoked, and nothing has occurred that
would cause Key to fail to qualify as an S corporation.
(c) Acquired Parties have paid, or made provision for the payment
of, all federal, state and local taxes of any kind or nature that have or may
become due of Key for all periods ending on or before the Closing, including,
without limitation, all taxes reflected on the tax returns referred to in this
Section 6.4, or in any assessment, proposed assessment, or notice, received by
or any such liabilities assumed by any of the Acquired Parties, except such
taxes, if any, as are set forth in SCHEDULE 6.4(c) that are being contested in
good faith and as to which adequate reserves (determined in accordance with GAAP
consistently applied) have been provided. Any shortages in such accrual or
reserves for contested assessments over the actual, final assessed amount shall
be fully paid by ProxyMed and shall not be treated as an adjustment to the
purchase price nor shall it be subject to the Acquired Parties indemnification
obligations or any liability of the Acquired Parties nor shall it be chargeable
against the escrow balance pursuant to Section 12.16. ProxyMed's payment
obligation hereunder shall not be subject to the $125,000 limit of Section
12.14. The charges, accruals and reserves with respect to taxes on the books of
Key are determined in accordance with GAAP consistently applied. In all material
respects, all taxes that Key is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the appropriate taxing
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authority. There are no liens with respect to taxes upon any of the properties
or assets, real or personal, tangible or intangible, of Key (except for taxes
not yet due).
(d) There are no closing agreements, requests for rulings or
requests for technical advice with respect to any taxes, pending between Key and
any taxing authority.
(e) All elections with respect to taxes affecting Key as of the
date hereof are set forth in SCHEDULE 6.4(e).
(f) There is no existing tax sharing agreement that may or will
require that any payment be made by or to Key on or after the Closing, except as
disclosed on SCHEDULE 6.4(f).
(g) Key has not agreed to and is not required to make any
adjustment pursuant to Section 481(a) of the Internal Revenue Code, nor has the
Internal Revenue Service proposed any such adjustment or change in accounting
method with respect to Key. Key does not have any application pending with any
taxing authority requesting permission for any change in accounting method.
(h) There is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, as a consequence of this
transaction could give rise to the payment of any amount that would not be
deductible by ProxyMed or Key by reason of Section 280G of the Internal Revenue
Service Code.
(i) Except as provided for in SCHEDULE 6.4(i), Key does not own an
interest in any (i) domestic international sales corporation, (ii) foreign sales
corporation, (iii) controlled foreign corporation, or (iv) passive foreign
investment company.
(j) The Stockholders acknowledge that as a result of the
consummation of the transactions contemplated by this Agreement, the
Stockholders' S corporation status will terminate as of the Closing Date. The
Stockholders agree that Key will file any required S corporation federal, state
and local tax returns for Key for all relevant periods through the Closing Date,
and all applicable taxes for such periods shall be paid by such applicable
taxpayer.
6.5 LEASED PROPERTY. SCHEDULE 6.5 to the Agreement is a complete and
accurate description of each parcel of real property leased to Key and a list of
the policies of leasehold title insurance, if any, issued to Key for these
properties. True, correct and complete copies of the leased property have been
delivered to ProxyMed. All real property leases are valid and in full force, and
there does not exist any default or event that with notice or lapse of time or
both would constitute a default under any of these leases.
6.6 ZONING. To the best knowledge of Key, the zoning of each leased
property described in SCHEDULE 6.6 permits the presently existing improvements
and the continuation of the business presently being conducted on such parcel.
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6.7 INVENTORIES. The inventories described in SCHEDULE 6.7 consist of
items of quality and quantity useable, salable or rentable in the ordinary
course of business by Key except for obsolete or slow moving items and items
below standard quality, which are set forth on Key's books and records in
accordance with Key's practices and procedures consistent with the method of
treating such items in prior periods. All items included in the inventories are
the property of Key, except for sales made in the ordinary course of business.
For each of these items either Key has made full payment or Key's liability to
make payment is reflected in the Financial Statements of Key. As of the Closing,
no items included in the inventories will be pledged as collateral or held by
Key on consignment from others.
6.8 CONTRACTS AND AGREEMENTS. The contracts described in SCHEDULE 6.8
consist of all written and oral contracts, licenses and agreements, and any
other commitments or understandings entered into by Key in the ordinary course
of business with its customers, clients and other third parties calling for
consideration of more than $20,000 other than those specifically referred to
elsewhere in the Agreement. Except as set forth on SCHEDULE 6.8, all such
contracts and agreements are valid and in full force, and there does not exist
any default or threat of default or event caused by Key that with notice or
lapse of time, or both, would constitute default under any of these contracts
and agreements that would either give rise to a right to terminate such contract
or would result in additional liability to Key in excess of $20,000 individually
or $50,000 in the aggregate, including product warranty claims. There have been
no claims or defaults, and to the best knowledge of Key, there are no facts or
conditions which if continued, or unnoticed, will result in a default under
these contracts or agreements.
Except as set forth in SCHEDULE 6.8, Key is not a party to,
nor are the Shares bound by, any other agreement not entered into in the
ordinary course of business, any indenture, mortgage, deed of trust, lease or
any other agreement that is unusual in nature, duration or amount. Key is not a
party to, nor are the Stockholders bound by, any agreement that is materially
adverse to the business, property, or financial condition or Stock or assets of
Key.
6.9 OTHER TANGIBLE PERSONAL PROPERTY. The tangible personal property
described in the books and records of Key constitutes all the items of tangible
personal property owned by, in the possession of, or used by Key in connection
with its business, including all furniture, fixtures, equipment, computer
hardware and vehicles, whether or not located on or within any leased property
of Key or elsewhere. Except as stated in SCHEDULE 6.9, no tangible personal
property used by Key in connection with its business is held under any lease,
security agreement, conditional sales contract, or other title retention or
security arrangement, or is in the possession of anyone other than an employee
of Key.
6.10 TRADE NAMES, TRADEMARKS, COPYRIGHTS, ETC. Except as set forth in
SCHEDULE 6.10, Key does not use any trademark, service ▇▇▇▇, trade name,
copyright, brand name, telephone and facsimile number or domain name in its
business, or own any trademarks, trademark registrations or applications, trade
names, service marks, copyrights, copyright registrations or applications or
brand names. To the best knowledge of Acquired Parties, no person (other than
Key) owns any trademark, trademark registration or application, service ▇▇▇▇,
trade name, copyright, copyright registration or application, or brand name, the
use of which is
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necessary or contemplated in connection with the performance of any contract to
which Key is a party. To the best knowledge of the Acquired Parties, Key has the
right and authority to use such trade names, trademarks, copyrights, telephone
and facsimile numbers and domain names as are necessary to enable it to conduct
and to continue to conduct its business, and such use does not and will not
conflict with, infringe or violate any intellectual or proprietary rights of
others.
6.11 PATENTS AND PATENT RIGHTS. SCHEDULE 6.11 to the Agreement is a
complete schedule of all patents, inventions, industrial models, processes,
designs, formulas and applications for patents ("Intellectual Properties") owned
by Key or in which Key has any rights or licenses. The patents and applications
for patents listed in SCHEDULE 6.11 are valid and in full force and effect and
are not subject to any taxes, maintenance fees or actions falling due within
ninety (90) days after the Closing. Except as set forth in SCHEDULE 6.11 or
6.20, there have not been any administrative, judicial, arbitration, or other
adversary proceedings concerning the Intellectual Properties listed in SCHEDULE
6.11. Each patent application is awaiting action by its respective patent office
except as otherwise indicated in SCHEDULE 6.11. To the best knowledge of the
Acquired Parties, the manufacture, use or sale of the inventions, models,
designs and systems covered by the Intellectual Properties listed in SCHEDULE
6.11 do not violate or infringe on any patent or any proprietary or personal
right of any person, firm or corporation, and Key has not infringed and is not
now infringing on any patent or other right belonging to any person, firm or
corporation. Except as set forth in SCHEDULE 6.11, Key is not a party to any
license, agreement or arrangement, whether as licensee, licensor or otherwise,
with respect to any patent, application for patent, invention, design, model,
process, trade secret or formula. Key has the right and authority to use such
inventions, trade secrets, processes, models, designs and formulas as are
necessary to enable it to conduct and to continue to conduct all phases of its
business in the manner presently conducted, and such use does not and will not
conflict with, infringe or violate any patent or other rights of others.
6.12 CONFIDENTIAL INFORMATION. The confidential information used by Key
in the operation of its business, including all processes, know-how and other
technical data, is accurate and sufficient. Key is the sole owner of each of the
confidential information, free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others, except as specifically
stated in SCHEDULE 6.12. Key has taken all reasonable security measures to
protect the secrecy, confidentiality and value of the confidential information;
any of its employees and any other persons, who, either along or in concert with
others, developed, invented, discovered, derived, programmed or designed these
secrets, or who have knowledge of or access to information relating to them,
have been put on notice and have entered into appropriate agreements that Key's
confidential information is proprietary to Key only, and are not to be divulged
or misused. All the confidential information is presently valid and protectable,
and is not part of the public knowledge or literature, nor to Key's knowledge
have they been used, divulged or appropriated for the benefit of any past or
present employees or other persons, or to the detriment of Key.
6.13 SOFTWARE PROGRAMS, CONTRACTS AND OTHER INTANGIBLE PROPERTY.
SCHEDULE 6.13 to the Agreement is a true and complete list of all software
programs, contracts and all other intangible assets significant to the operation
of the business (other than those specifically referred
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to elsewhere in the Agreement and other than generic off-the-shelf software
available to the public generally), including, without limitation, all of Key's
right, title and interest owned and leased software programs, databases, and all
other agreement, contracts, licenses and other commitments, oral or written,
with any person or entity respecting the ownership, license, acquisition,
design, development, distribution, marketing, use or maintenance of software
programs, source and object codes, related technical or user documentation
manuals relating to Key's business. To the best of knowledge of Acquired
Parties, Key has the right and authority to use such software programs,
databases and other intangible property as are necessary to enable Key to
continue to conduct its business, and such use does not and will not conflict
with, infringe or violate any intellectual or proprietary rights of others.
6.14 TITLE TO ASSETS. The books and records and Financial Statements of
Key disclose all the assets of Key. Key has good, marketable and unencumbered
title to all the assets and its interest in the assets to be conveyed to
ProxyMed hereunder, whether real or personal, mixed, tangible and intangible,
which constitute all the Stock and interest in assets that are used in the
business of Key. All the assets are free and clear of mortgages, liens, pledges,
charges, encumbrances, equities, claims, easements, rights of way, covenants,
conditions or restrictions, except for (i) those disclosed in Key's balance
sheets included in the Financial Statements or in the Schedules to the
Agreement; (ii) the lien of current taxes not yet due and payable; and (iii)
possible minor matters that, in the aggregate, are not substantial in amount and
do not materially detract from or interfere with the present or intended use of
any of the assets or materially impair business operations. All the assets are
in good operating condition and repair, ordinary wear and tear excepted.
However, notwithstanding the preceding sentence, ProxyMed is accepting the
assets "as is, where is". Except as set forth on this Schedule, neither any
officer, nor any director or employee of Key, nor any spouse, child or other
relative of Key, owns or has any interest, directly or indirectly, in any of the
real or personal property owned by or leased to Key, or in any copyrights,
patents, trademarks, trade names or trade secrets licensed by Key.
6.15 CUSTOMERS AND TRANSACTIONS. SCHEDULE 6.15 to the Agreement is a
correct and current list of all customers and clients of Key generating revenues
over $5,000 during the Last Fiscal Year End and up to the date of this
Agreement. Except as indicated in Schedule 6.15, the Acquired Parties have no
information and are not aware of any facts indicating that any of these
customers and clients intend to cease doing business with Key or materially
alter the amount of business that they are presently doing with Key.
6.16 EXISTING EMPLOYMENT ARRANGEMENTS. SCHEDULE 6.16 to the Agreement
is a list of all employment contracts and collective bargaining agreements, and
all pension, bonus, profit-sharing, deferred compensation, stock option, or
other agreements or arrangements providing for employee or outside consultant
remuneration or benefits to which Key is a party or by which Key is obligated,
whether in writing or in the nature of informal, oral understandings. All these
contracts and arrangements are in full force and effect, and neither Key nor
Stockholders have knowledge that any party is in default under them or that
there are any threats of default. There have been no claims of defaults and, to
the best knowledge of Acquired Parties, there are no facts or conditions which
if continued, or on notice, will result in a default under these contracts or
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arrangements. There is no pending or, to the best knowledge of Acquired Parties,
threatened labor dispute, strike or work stoppage affecting Key's business.
6.17 INSURANCE POLICIES. SCHEDULE 6.17 to the Agreement is a
description of all insurance policies held by Key concerning its assets. All
these policies are in the respective principal amounts set forth in SCHEDULE
6.17. Key has maintained and now maintains (i) insurance on all its assets of a
type customarily insured, covering property damage and loss of income by fire or
other casualty; and (ii) adequate insurance protection against all liabilities,
claims and risks against which it is customary to insure, including without
limitation, errors and omissions coverage.
6.18 UNREGISTERED SECURITIES. Except for the Treasury Shares which are
registered, the Stockholders (i) understand that the shares of Common Stock to
be issued pursuant to Section 2.1 of the Agreement are not registered under the
Securities Act of 1933, as amended, (the "Act") or under any state securities
laws, and that they are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering; (ii) are
acquiring the Common Stock solely for their own account for investment purposes
and not with a view to the "distribution" thereof (as such term is defined in
judicial and administrative interpretations under Section 2(11) of the Act);
(iii) have received certain information concerning ProxyMed, including without
limitation the Reports referred to in Section 7.2 and have had the opportunity
to obtain additional information as desired in order to evaluate the merits of
purchasing and holding said Common Stock; (iv) are able to bear the economic
risk and lack of liquidity inherit in holding the Common Stock until such time
as the Common Stock is registered and may be sold pursuant to Rule 144 and in
accordance with the terms and conditions of this Agreement; (v) have sufficient
knowledge and experience in financial and business matters that they are capable
of evaluating the merits and risk of an investment in ProxyMed; and (vi)
understand that the certificates representing said Common Stock will be stamped
or otherwise imprinted with the legend in substantially the following form:
The Shares of Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any other jurisdiction, including without
limitation, Indiana, and may not be sold transferred, pledged,
hypothecated or otherwise disposed of in any manner unless they
are registered under such Act and any securities laws of any
applicable jurisdiction or unless exemptions from such
registrations are available and that an opinion of counsel,
satisfactory to ProxyMed, Inc. to that affect is delivered to
ProxyMed, Inc.
6.19 COMPLIANCE WITH LAWS. To the best of Acquired Parties' knowledge,
Key has complied with, and is not in violation in any material respect of
applicable federal, state or local statutes, laws and regulations (including,
without limitation, any applicable environmental, health, building, zoning or
other law, ordinance or regulation) affecting its properties (including the
leased property) or the operation of its business.
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6.20 LITIGATION. Except as set forth in SCHEDULE 6.20, there is no
suit, action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending or, to the best knowledge of Acquired
Parties, threatened against or affecting Key, or its business, Stock or
financial condition. The matters set forth in SCHEDULE 6.20 if decided adversely
to Key will not result in a material adverse change in the business, assets,
Stock or financial condition of Key. Acquired Parties have furnished or made
available to ProxyMed copies of all court papers and other documents relating to
the matters set forth in SCHEDULE 6.20. Key is not in default with respect to
any order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality. Except as set forth in SCHEDULE
6.20, Key is not presently engaged in any legal action to recover moneys due to
it or damages sustained by it in excess of $20,000.
6.21 ASSETS SUFFICIENT FOR CONDUCT OF BUSINESS. The assets, including
without limitation, all accounts receivable, prepaid expenses, equipment,
inventories, intangibles, goodwill, books and records, agreements, contracts,
licenses, and all other properties of every kind, character and description
owned or held for use in connection with Key's business, wherever located,
exclusive of sufficient working capital as may be needed from time to time, (the
"Assets"), constitute all of the assets required for ProxyMed to conduct the
business of Key substantially as it is presently conducted.
6.22 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Other than any
transactions for which a written waiver shall have been received, neither the
entry into the Agreement nor the consummation of the transactions contemplated
hereby will, to the best knowledge of Acquired Parties, result in or constitute
any of the following: (i) a breach of any term or provision of the Agreement;
(ii) a default or an event that, with notice or lapse of time or both, would be
a default, breach or violation of the Articles of Incorporation or Bylaws of Key
or any lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust or other agreement, instrument or arrangement
to which Key is a party or by which Key or the Stock are bound; (iii) an event
that would permit any party to terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation; (iv) the creation or
imposition of any lien, charge or encumbrance on any of the assets of Key or the
Stock; or (v) the violation of any law, regulation, ordinance, judgment, order
or decree applicable to or affecting Key or the Stock.
6.23 AUTHORITY AND CONSENTS. Except as set forth in SCHEDULE 6.23, Key
has the right, power, legal capacity and authority to enter into, and perform
its obligations under the Agreement, and no approvals, consents or permits of
any persons or governmental agency other than Acquired Parties or filings,
registrations or approvals as may be required under applicable federal and state
securities laws are necessary in connection with it. The execution and delivery
of the Agreement and the consummation of this transaction by the Acquired
Parties have been, or prior to the Closing will have been, duly authorized by
all necessary corporate action of Key (including any necessary action by Key's
security holders, and by Fifth Third Bank). The Agreement constitutes a legal,
valid and binding obligation of the Acquired Parties enforceable
11
in accordance with its terms except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
6.24 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as set
forth in SCHEDULE 6.24, neither Key nor any officer, director or, to the best
knowledge of the Acquired Parties, any employee of Key, nor any spouse or child
of any of them has any direct or indirect interest in any competitor, supplier,
customer or client of Key or in any person with whom Key is doing business.
6.25 PERSONNEL IDENTIFICATION AND COMPENSATION. Before the Closing, Key
shall disclose to ProxyMed in such form as shall be reasonably acceptable to
ProxyMed a list of the names and addresses of all officers, directors,
employees, agents and consultants of Key, stating the rates of compensation
payable to each and setting forth all vacation time, sick leave and other paid
time off accrued for each of them through the Closing, and the date and amounts
of each person's last salary increase. Except as set forth on SCHEDULE 6.25, no
other person, except accountants, auditors and attorneys regularly performs
compensable services for Key.
6.26 BANK ACCOUNTS, ETC. SCHEDULE 6.26 lists (i) the names and
addresses of all persons holding a power of attorney on behalf of Key; and (ii)
the names and addresses of all banks or other financial institutions in which
Key has cash or cash equivalent account, investment, deposit or safe-deposit
box, with the names of all persons authorized to draw on these accounts,
investments and deposits or who have access to these boxes and their respective
account numbers.
6.27 MILLENNIUM COMPLIANCE. The proprietary hardware and software of
Key, when used prior to, during and after the turn-of-the-century, is either
programmed to process turn-of-the-century dates or is subject to correction or
modification without material cost or adverse effect on the business and
operations of Key. This capability includes, without limitation, date formats
that have century recognition, calculations that accommodate same-century and
multi-century formulas and date values, date interface values that reflect the
century and calculations that accommodate the occurrence of leap year.
6.28 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of the Acquired Parties, except as set
forth in SCHEDULE 6.28, Key has obtained all permits, licenses and other
authorizations which are required in connection with the conduct of the business
under regulations relating to pollution or protection of the environment,
including regulations relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, hazardous substances or wastes
into the environment (including without limitation ambient air, surface water,
ground water or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, hazardous substances or wastes.
12
(b) To the best knowledge of the Acquired Parties, except as set
forth in SCHEDULE 6.28, Key is in full compliance in the conduct of the business
with all terms and conditions of the required permits, licenses and
authorizations, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(c) Except as set forth in SCHEDULE 6.28, the Acquired Parties are
not aware of, nor has Key nor any of its subsidiaries received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
compliance or continued compliance with those laws or any regulations, code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical or hazardous
substance or waste.
(d) Except as set forth in SCHEDULE 6.28, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice or
demand letter, notice of violation, investigation or proceeding pending or
threatened against Key in connection with the conduct of the business relating
in any way to those laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
6.29 LABOR MATTERS. Except as set forth on SCHEDULE 6.29, Key is in
compliance in all material respects with all currently applicable federal, state
and local laws and regulations respecting employing, discrimination,
discrimination in employment, disability, terms and conditions of employment,
wages and hours, occupational safety and health and employment practices except
for such failures to comply as would not reasonably be expected to have a
material adverse effect, either individually or in the aggregate, on Key. As of
the date hereof, Key has received no notice from any governmental entity and, as
of the date hereof, there has not been asserted before any governmental entity
any claim, action or proceeding to which Key is a party, and there is not any
investigation or hearing pending or threatened concerning Key, arising out of or
based upon any such laws, regulations or practices.
6.30 DOCUMENTS DELIVERED. Each copy or original of any agreement,
contract or other instrument which is identified in any exhibit delivered by
Acquired Parties or their counsel to ProxyMed (or its counsel or
representatives), whether before or after the execution hereof, is in fact what
is purported to be by Acquired Parties and has not been amended, canceled or
otherwise modified.
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6.31 FULL DISCLOSURE. None of the representations and warranties made
by Acquired Parties or made in any letter, certificate or memorandum furnished
or to be furnished by Acquired Parties, or on their behalf, contains or will
contain any untrue statement of a material fact, or omits any material fact the
omission of which would make any statements made herein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to Acquired Parties which materially adversely affects, or in the future may (so
far as Acquired Parties can now reasonably foresee) materially adversely affect
the assets, Stock, liabilities, business, operations or prospects of Key that
has not been set forth herein or heretofore communicated to ProxyMed in writing.
6.32 CAPITALIZATION OF KEY AND OWNERSHIP OF CAPITAL STOCK. Stockholders
are the sole and exclusive lawful record and beneficial owner of all of the
Stock of Key and all of the number and class of issued and outstanding shares of
the Stock of Key as set forth opposite Stockholders' names on SCHEDULE 6.32
hereto, including, without limitation, all options, warrants and any other
rights in or to any of the Stock of Key. Upon the Closing, the Stock will be
free and clear of any claims, pledges, security interest, liens or encumbrances
or other restrictions of limitations of any kind. Shares of Stock of Key are
validly issued, fully paid and non-assessable and upon consummation of the
transaction contemplated hereby, ProxyMed will acquire good and valid title to
the Stock, free and clear of all pledges, security interest, liens, claims,
encumbrances, agreements and options of any nature whatsoever. The authorized
Stock of Key consists solely of one thousand (1,000) Shares of common stock, no
par value, of which approximately Sixty-Seven and Forty-Two Thousandths (67.042)
Shares are issued and outstanding. No Shares will be held in Key's treasury on
the Closing. Except as set forth on SCHEDULE 6.32, there are no outstanding
subscriptions, options, warrants, preemptive or preferential rights, Stockholder
agreements, convertible securities or other agreements or contracts of any
character (contractual or otherwise) for the issuance, sale or transfer to any
person or entity of Shares of Stock of Key, and none of the Shares of Stock have
been issued in violation of any preemptive rights.
6.33 ABSENCE OF UNDISCLOSED LIABILITIES. To Stockholders' knowledge,
Key does not have and will not have as of the Closing, except as to the extent
reflected or reserved against on its Financial Statements reflected in SCHEDULES
6.2 hereto, any debts, liabilities or obligations (whether absolute, accrued,
contingent or otherwise), including, without limitation, any liabilities for
environmental pollution, any foreign or domestic tax liabilities or deferred tax
liabilities incurred in respect of or measured by Key's income, or any other
material debts, liabilities or obligations relating to or arising out of any
act, omission, transaction, circumstance, sale of goods or services, stated
facts or other condition, except for obligations not required under GAAP to be
disclosed or reflected on the Financial Statements which are obligations that
are not individually or in the aggregate material to Key.
6.34 KNOWLEDGE, ETC. Certain of the representations and warranties of
the parties hereto are made "to the best knowledge", "to the knowledge of" or
words of similar import. The parties hereto agree that the meaning of such
expressions shall in all cases be understood as comprising matters which the
person, or in the case of an entity, an officer, director, Stockholder or
employee of such entity, actually knows or, by virtue of his/her position,
should have known after due inquiry.
14
ARTICLE 7. PROXYMED'S REPRESENTATIONS AND WARRANTIES.
ProxyMed hereby represents and warrants to Acquired Parties that the
following representations are true and correct and, except as contemplated
hereby, at all times up to the Closing will be true and correct, and hereby
acknowledges that such representations constitute the basis upon which the
Acquired Parties are induced to enter into and perform the Agreement. Each
warranty set forth in this Article 7 shall survive the Closing.
7.1 AUTHORITY AND CONSENTS. ProxyMed represents and warrants that
ProxyMed is a corporation duly organized, existing and in good standing under
the laws of Florida. ProxyMed has the right, power, legal capacity and authority
to enter into and perform its obligations under the Agreement, and no approvals
or consents of any persons, other than its Board of Directors are necessary in
connection with it. The execution and delivery of the Agreement and the
consummation of this transaction by ProxyMed have been, or prior to the Closing
will have been, duly authorized by all necessary corporate action of ProxyMed,
subject to delivery to its Board of Directors, at ProxyMed's expense, of an
acceptable fairness opinion from an independent investment banker. The Agreement
constitutes a legal, valid and binding obligation of Key enforceable in
accordance with its terms, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
7.2 REPORTS. ProxyMed has delivered to legal counsel for Key and
Stockholders copies of its reports on Forms ▇▇-▇, ▇▇-▇, ▇-▇, and any amendments
thereto, containing financial exhibits, filed with the Securities and Exchange
Commission since January 1, 1998 (the "Reports"). The Reports were timely filed
and did not, at the time they were filed, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. There has not been any material or adverse
change in the business, Stock or liabilities of ProxyMed which has occurred
since the date of the last report, and which has not been disclosed to Key and
Stockholders. There is no fact known to ProxyMed which materially adversely
affects its condition, assets, liabilities, business, operations or prospects
that has not been set forth in its Reports.
7.3 SHARES OF COMMON STOCK. Except for the Treasury Shares which are
registered, the shares of ProxyMed's Common Stock delivered to the Stockholders
at the Closing pursuant to Section 2.1 will be Rule 144 restricted stock validly
and legally issued, and will be fully paid and not assessable, with registration
rights as described in Section 12.11.
7.4 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry
into the Agreement nor the consummation of the transactions contemplated hereby
will result in or constitute any of the following: (i) a breach of any term or
provisions of the Agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of ProxyMed or, to the knowledge of ProxyMed, any
lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust or other agreement, instrument or arrangement
to which
15
ProxyMed is a party or by which ProxyMed is bound; (iii) to the knowledge of
ProxyMed, an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation; or (iv) to the
knowledge of ProxyMed, the violation of any law, regulation, ordinance,
judgment, order or decree applicable to or affecting ProxyMed.
7.5 AUTHORIZED CAPITAL STOCK OF PROXYMED. The authorized, issued and
outstanding capital stock of ProxyMed is set out in its Form 10-Q for the period
ending September 30, l998. There have been no material changes.
7.6 LITIGATION. Except as disclosed on SCHEDULE 7.6 to this Agreement,
there is no action, suit, claim or proceeding of any nature pending or, to
ProxyMed's knowledge, threatened against ProxyMed, its properties or any of its
officers or directors that is not disclosed in its SEC documents that would have
a material adverse effect on ProxyMed. Except as disclosed on SCHEDULE 7.6,
there is no investigation pending or, to ProxyMed's knowledge, threatened
against ProxyMed, its properties or any of its officers or directors by or
before any governmental entity that is not disclosed in the SEC documents and
that would have a material adverse effect on ProxyMed.
7.7 NO UNDISCLOSED LIABILITIES. Except as disclosed on SCHEDULE 7.7,
ProxyMed does not have any liability, indebtedness, claim, obligation, expense,
claim, deficiency, guarantee or endorsement of any type, whether accrued,
absolute, contingent, mature or other, which has not been reflected in the SEC
documents and that would have a material adverse effect on ProxyMed.
7.8 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as described in
Schedule 7.8, there is no agreement (non-competition or otherwise), commitment,
judgment, injunction, order or decree to which ProxyMed is a party or otherwise
binding upon ProxyMed that is not disclosed in the SEC documents which has or is
reasonably likely to have the effect of prohibiting or impairing any business
practice of ProxyMed, any acquisition of property (tangible or intangible) by
ProxyMed or the conduct of business by ProxyMed that would result in a material
adverse effect on ProxyMed.
ARTICLE 8. ACQUIRED PARTIES' OBLIGATIONS BEFORE CLOSING.
Acquired Parties covenant that, except as otherwise agreed in writing
by ProxyMed, from the date of the Agreement until the Closing:
8.1 PROXYMED'S ACCESS TO PREMISES AND INFORMATION. ProxyMed and its
counsel, accountants and other representatives shall be entitled to have full
access during normal business hours to all Key's properties, books, accounts,
records, contracts and documents of or relating to the Stock, but shall not
disrupt nor inhibit Key's normal business operations. Acquired Parties shall
furnish or cause to be furnished to ProxyMed and its representatives all data
and information concerning the business, finances and properties of Key that may
reasonably be requested.
16
8.2 CONDUCT OF BUSINESS IN NORMAL COURSE. Acquired Parties shall carry
on Key's business and activities diligently and in substantially the same manner
as they previously have been carried on, and shall not make or institute any
unusual or novel methods of management, accounting or operation that will vary
materially from the methods used by Key as of the date of the Agreement, and
will do nothing that may negate a pooling of interests accounting. Key shall use
its best efforts, without making any commitments on behalf of ProxyMed, to
preserve its business organization intact, to keep available to Key its present
officers and employees, and to preserve its present relationships with
suppliers, customers and others having business relationships with it.
8.3 NO SHOP. Acquired Parties and ProxyMed hereby ratify and confirm
that they have entered into a legally binding agreement dated December 4, l998,
whereby Acquired Parties have agreed among other things not to offer or solicit
for sale or sell Key except to ProxyMed for a period of time, all as more fully
set out on Addendum "A" attached hereto and incorporated herein by reference.
The parties hereby agree that upon the execution of this Agreement, the "no
shop" period shall be extended to the date of Closing unless otherwise
terminated pursuant to said Addendum "A", (b) through (e).
8.4 MAINTENANCE OF INSURANCE. Key shall continue to carry its existing
insurance, subject to variations in amounts required by the ordinary operations
of its business. At the request of ProxyMed and at ProxyMed's sole expense, the
amount of insurance against fire and other casualties which, at the date of the
Agreement, Key carries on any of the assets or in respect of its operations
shall be increased by such amount or amounts as ProxyMed shall specify.
8.5 EMPLOYEES AND COMPENSATION. Except in the ordinary course of
business and except as to any Shareholder, Key shall not do, or agree to do, any
of the following acts: (i) grant any increase in salaries payable or to become
payable to any officer, employee, sales agent or representative or consultant;
or (ii) increase benefits payable to any officer, employee, sales agent or
representative or consultant under any bonus or pension plan or other contract
or commitment.
NEW TRANSACTIONS. Key shall not do or agree to do any of the
following acts:
(a) Enter into any contract, commitment or transaction not in the
usual and ordinary course of its business; or
(b) Make any capital expenditures or commitments in excess of
$5,000 for any single item or $5,000 in the aggregate, or enter into any leases
of capital equipment or property under which the annual lease charge is in
excess of $5,000; or
(c) Sell or dispose of any capital assets with a net book value in
excess of $5,000 individually, or $5,000 in the aggregate not in the usual and
ordinary course of business; or
17
(d) Declare any dividends or make any distributions other than as
described in Section 6.3(p).
8.7 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS. Other than in the
usual and ordinary course of business, Key shall not do, or agree to do, any of
the following acts: (i) pay any obligation or liability, fixed or contingent,
other than current liabilities; (ii) waive or compromise any right or claim; or
(iii) cancel, without full payment, any note, loan or other obligation owing to
Key.
8.8 EXISTING AGREEMENTS. Other than in the usual and ordinary course of
business, Key shall not modify, amend, cancel or terminate any of its existing
contracts or agreements, or agree to do any of those acts.
8.9 ESTOPPEL CERTIFICATES. Key shall obtain estoppel certificates to
any leased premises in form and substance satisfactory to ProxyMed and will
furnish to ProxyMed executed copies of those estoppel certificates obtained by
Key.
8.10 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Acquired Parties
shall assure that all representations and warranties of Acquired Parties set
forth in the Agreement, any Schedule, and in any written statements delivered to
ProxyMed by Acquired Parties under the Agreement will also be true and correct
as of the Closing as if made on that date and that all conditions precedent to
the Closing shall have been met. Acquired Parties shall promptly disclose to
ProxyMed any information contained in the Schedules to the Agreement which,
because of an event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the Closing.
ARTICLE 9. CONDITIONS PRECEDENT TO PROXYMED'S PERFORMANCE
The obligations of ProxyMed to exchange the Stock under the Agreement
are subject to the satisfaction, at or before the Closing, of all the conditions
set out below in this Article 9. ProxyMed may waive any or all of these
conditions in accordance with Section 14.2 hereof; provided, however, that no
such waiver of a condition shall constitute a waiver by ProxyMed of any of its
other rights or remedies, at law or in equity, if Acquired Parties shall be in
default of any of their representations, warranties or covenants under the
Agreement.
9.1 STOCK CERTIFICATES. Key shall have delivered to ProxyMed at or
prior to Closing (a) certificates evidencing the Stock, together with stock
powers and instruments of conveyance and transfer; (b) written resignation of
all directors of Key; and (c) corporate minute books, corporate seal, and stock
ledger and transfer books of Key.
9.2 ACCURACY'S OF ACQUIRED PARTIES' REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Acquired Parties in the Agreement, any
Schedule, or in any written statement that shall be delivered to ProxyMed by
Acquired Parties under the Agreement shall be true and correct in all material
respects on and as of the Closing as though made at that time.
18
9.3 ABSENCE OF LIENS. At or prior to the Closing, ProxyMed shall have
received a Uniform Commercial Code ("UCC") search report dated as of a date not
more than ten (10) days before the Closing issued by the Indiana Secretary of
State and any other applicable governmental authority or by a title company or
other company reasonably satisfactory to counsel for ProxyMed indicating that
there are no UCC filings with such Secretary of State and any other applicable
governmental authority which name any of Acquired Parties as debtor or otherwise
indicating any lien on the assets of Key or the Stock, except for the liens
otherwise disclosed in Schedules hereto or that shall be released at or prior to
the Closing.
9.4 ACQUIRED PARTIES' PERFORMANCE. Acquired Parties shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Agreement to be performed or complied
with by Acquired Parties on or before the Closing.
9.5 CERTIFICATION BY KEY. ProxyMed shall have received a certificate,
dated the Closing, signed by Key's Chief Executive Officer and Chief Financial
Officer certifying, in such detail as ProxyMed and its counsel may reasonably
request, that the conditions specified in Sections 9.2 and 9.4 have been
fulfilled.
9.6 OPINION OF ACQUIRED PARTIES' COUNSEL. ProxyMed shall have received
from ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for Acquired Parties, an opinion dated as
of the Closing, in form and substance reasonably satisfactory to ProxyMed and
its counsel.
9.7 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by the Agreement or to its consummation, shall have been instituted
or threatened on or before the Closing.
9.8 CORPORATE APPROVAL. The execution and delivery of the Agreement by
the Acquired Parties, and the performance of its covenants and obligations under
it, shall have been duly authorized by all necessary corporate action, and
ProxyMed has received copies of all resolutions pertaining to that
authorization, certified by the Secretary for Key.
9.9 ESTOPPEL CERTIFICATES. ProxyMed shall have received from Key
estoppel certificates and consents relating to any leased property in a form
reasonably satisfactory to ProxyMed's counsel.
9.10 CONSENTS. All necessary agreements and consents which Key is
obligated to obtain so as to consummate the transaction contemplated by the
Agreement, or otherwise pertaining to the matters covered by it, shall have been
obtained by Key and delivered to ProxyMed.
9.11 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to ProxyMed
under the Agreement shall be satisfactory in all reasonable respects, to
ProxyMed and its counsel.
19
9.12 EMPLOYMENT AGREEMENT. ProxyMed and the Stockholders shall have
entered into employment agreements substantially in the form of SCHEDULE 9.12
hereto, which employment agreements shall supersede and render void and
unenforceable the employment agreements of the Stockholders in effect
immediately prior to the Closing.
9.13 CONTINUITY OF MANAGEMENT. ProxyMed shall have made arrangements
suitable to it for the employment by ProxyMed of sufficient of Key's employees
to continue the operation of the business being transferred without disruption
thereto.
9.14 CONDITION OF ASSETS. The assets shall not have been materially or
adversely affected in any way as a result of any fire, accident, storm or other
casualty or labor or civil disturbance or act of God or the public enemy.
9.15 [INTENTIONALLY OMITTED]
9.16 EXCHANGE OF STOCK. Key shall have exchanged its Stock for the
Common Stock at Closing as specified in Section 2.1.
9.17 ARTICLES OF MERGER. The Articles of Merger shall be executed by
Key and upon Closing delivered to ProxyMed or its designee to be filed with the
Secretary of State of Florida in accordance with Section 607.1105 of the Florida
Act, provided that the Articles of Merger have also been filed with the
Secretary of State of Indiana in accordance with 23-1-40-5(b) of the Indiana
Code.
ARTICLE 10. CONDITIONS PRECEDENT TO ACQUIRED PARTIES' PERFORMANCE
The obligations of the Acquired Parties exchange the Stock under the
Agreement are subject to the satisfaction, at or before the Closing, of all the
following conditions set out below in this Article 10. Acquired Parties may
waive any or all of these conditions in accordance with Section 14.2 hereof;
provided, however, that no such waiver of a condition shall constitute a waiver
by the Acquired Parties of any of its other rights or remedies, at law or in
equity, if Acquired Parties shall be in default of any of their representations,
warranties or covenants under the Agreement.
10.1 ACCURACY OF PROXYMED'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties by ProxyMed contained in the Agreement or in any
written statement delivered by ProxyMed under the Agreement, including but not
limited to the Reports delivered to Acquired Parties pursuant to Section 7.2
hereof, shall be true on and as of the Closing as though such representations
and warranties were made on and as of that date.
10.2 PROXYMED'S PERFORMANCE. ProxyMed shall have performed and complied
with all covenants and agreements, and satisfied all conditions that it is
required by the Agreement to perform, comply with, or satisfy, before or at the
Closing.
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10.3 OPINION OF PROXYMED'S COUNSEL. ProxyMed shall have furnished the
Stockholders with an opinion, dated as of the Closing, of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq., counsel for ProxyMed, in form and substance satisfactory to the
Stockholders and its counsel, to the effect that:
(a) ProxyMed is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida and has all requisite
corporate power to perform its obligations under the Agreement;
(b) All corporate proceedings required by law or by the provisions
of the Agreement to be taken by ProxyMed on or before the Closing, in connection
with the execution and delivery of the Agreement and the consummation of the
transactions contemplated by the Agreement, have been duly and validly taken;
(c) ProxyMed has the corporate power and authority to acquire the
Stock for the consideration set forth in Section 2.1 of the Agreement;
(d) Every consent, approval, authorization or order of any court
or governmental agency or body that is required for the consummation by ProxyMed
of the transactions contemplated by the Agreement has been obtained or has been
waived by Key and will be in effect on the Closing Date;
(e) The consummation of the transaction contemplated by the
Agreement does not violate or contravene any of the provisions of the Articles
of Incorporation, Bylaws of ProxyMed or any indenture, agreement, statute,
judgment or order to which ProxyMed is a party or by which ProxyMed is bound;
(f) The Agreement has been duly and validly authorized and, when
executed and delivered by ProxyMed, will be valid and binding on ProxyMed and
enforceable in accordance with its terms, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally;
and
(g) The shares of ProxyMed's Stock delivered to the Stockholders
at Closing will be validly and legally issued and will be fully paid and not
assessable.
10.4 PROXYMED'S CORPORATE APPROVAL. ProxyMed shall have received
corporate authorization and approval from its Board of Directors, including the
delivery of a fairness opinion acceptable to the Board from an investment banker
retained by the Board, for the execution and delivery of the Agreement, and all
corporate action necessary or proper to fulfill the obligations of the Acquired
Parties to be performed under the Agreement on or before the Closing.
10.5 CERTIFICATION BY PROXYMED. Stockholders shall have received a
certificate, dated as of the Closing, signed by an executive officer of ProxyMed
certifying, in such detail as
21
Stockholders and its counsel may reasonably request, that the conditions
specified in Section 10.1 and 10.2 have been fulfilled.
10.6 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by the Agreement or to its consummation, shall have been instituted
or threatened on or before the Closing.
10.7 CONSENTS. All necessary agreements and consents of any parties to
the consummation of the transaction contemplated by the Agreement, or otherwise
pertaining to the matters covered by it, including , without limitation, the
consent of Fifth Third Bank and the release of each Stockholder from their
personal guarantees relating to Key's line of credit shall have been obtained on
or before the Closing.
10.8 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to the
Acquired Parties under the Agreement shall be satisfactory in all reasonable
respects, to Stockholders and its counsel.
10.9 EMPLOYMENT AGREEMENT. ProxyMed shall have entered into an
employment agreement with each of the Stockholder's substantially in the form of
SCHEDULE 9.12 hereto.
10.10 EXCHANGE OF STOCK. ProxyMed shall have exchanged its Common Stock
for the Stock at Closing as specified in Section 2.1.
10.11 ARTICLES OF MERGER. The Articles of Merger shall be executed by
ProxyMed.
10.12 FINANCING. Stockholders shall have received the proceeds of
certain third party financing sufficient to fully settle their indebtedness to
the Fifth Third Bank.
ARTICLE 11. EMPLOYEE PLANS
ProxyMed is assuming only those obligations of Key relating to any
Employee Plan as defined in Section 11.1(a) below, which are listed on SCHEDULE
11, if any. As to such obligations which ProxyMed is assuming, the following
provisions shall apply:
11.1 DEFINITIONS.
(a) EMPLOYEE PLAN. For purposes of the Agreement, the term
"Employee Plan" includes all pension, retirement, disability, medical, dental or
other health insurance plans, life insurance or other death benefit plans,
profit sharing, deferred compensation, stock option, bonus or other incentive
plans, vacation benefit plans, severance plans or other employee benefit plans
or arrangements including, without limitation, any pension plan as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA")
and any welfare plan as defined in Section 3(1) of ERISA, whether or not funded,
covering any Subject Employee (as hereinafter defined) or to which Key is a
party or bound or makes or has made any contribution or by which Key may have
any liability to any Subject Employee (including any such plan
22
formerly maintained by or in connection with which Key may have any liability to
any Subject Employee, and any such plan which is a multi-employer plan as
defined in Section 3(37)(A) of ERISA).
(b) SUBJECT EMPLOYEE. For purposes of the Agreement the term
"Subject Employee" includes all current or former officers, directors, employees
or consultants who are or were employed or otherwise compensated in connection
with activities involving the Stock being purchased.
11.2 PLAN OPERATIONS. Key hereby represents and warrants that:
(a) PLANS LISTED. Except as listed on SCHEDULE 6.16, Key does not
maintain, is not a party to, does not contribute and is not obligated to
contribute to any Employee Plan as defined in Section 11.1(a).
(b) PLAN DOCUMENTS. With respect to any Employee Plans of Key, Key
has provided to ProxyMed complete, accurate and current copies of each of the
following:
(i) The text (including amendments) of each of the Employee
Plans, to the extent reduced to writing;
(ii) A description of all material elements of each of the
Employee Plans, to the extent not previously reduced to writing;
(iii) With respect to each Employee Plan that is an employee
benefit plan (as defined in section 3(3) of ERISA), the following:
(A) The most recent summary plan description, as
described in section 102 of ERISA;
(B) Any summary of material modifications that has been
distributed to participants or filed with the U.S. Department of Labor but that
has not been incorporated in an updated summary plan description furnished under
Subparagraph (A) above; and
(C) The annual reports, as described in section 103 of
ERISA, for the most recent three plan years for which an annual report has been
prepared (including all schedules and attachments).
(iv) With respect to each Employee Plan that is intended to
qualify under section 401(a) of the Internal Revenue Code, the most recent
determination letter concerning the plan's qualification under section 401(a) of
the Code, as issued by the Internal Revenue Service, and
23
(v) Any handbook, manual, policy statement or similar
written guidelines furnished to employees of Key, excluding any such items that
has been superseded by any subsequent handbook, manual, policy statement or
similar written guidelines.
(c) OPERATIONS IN GENERAL. Each Employee Plan and the
Administrators and Fiduciaries of each Employee Plan and Key have at all times
complied with all applicable requirements of ERISA and of any other applicable
law (including regulations and rulings thereunder) governing each Employee Plan,
and each Employee Plan has at all times been properly administered in accordance
with all such requirements of law and in accordance with its terms to the extent
consistent with all such requirements of law.
(d) PBGC, ETC. No "reportable event" (as defined in ERISA) has
occurred with respect to any Employee Plan. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred, or is expected by Key to be
incurred, by Key with respect to any Employee Plan. There has been no event or
condition which presents a risk of termination of any Employee Plan by the PBGC.
No Employee Plan is a multi-employer plan as defined in ERISA or a multiple
employer plan except as shown on SCHEDULE 6.16. With respect to any such
multi-employer plan or multiple employer plan, there has been no withdrawal of a
"substantial employer" as defined by ERISA and Key does not expect such a
withdrawal to occur.
(e) EXCISE TAXES, ETC. No Employee Plan, administrator or
fiduciary of any Employee Plan or Key has taken any action, or failed to take
any action, that could subject it or any other person to any liability for any
excise tax or for breach of fiduciary duty with respect to or in connection with
any Employee Plan.
(f) COMMUNICATION, ETC. No Employee Plan, administrator or
fiduciary of any Employee Plan or Key has any liability under any provision of
ERISA or any other applicable law by reason of any communication with any
Employee Plan, or any filing or failure to file with any government entity.
(g) PAYMENTS, ETC. No Employee Plan, administrator or fiduciary of
any Employee Plan or Key has any liability to any plan participant, beneficiary
or other person under any provision of ERISA or any other applicable law by
reason of any payment of benefits or other amounts or failure to pay benefits
with respect to or in connection with any Employee Plan. Key is not delinquent
or in arrears on other amounts owed to or with respect to any contributions
under any Employee Plan.
11.3 PLAN LIABILITIES AND COSTS. Key represents and warrants that:
(a) DEFINED BENEFIT PLANS. As of the Closing (a) all liabilities
(being the present value of accrued benefits); (b) the portion of such
liabilities that is then unfunded; (c) all vested liabilities; (d) the portion
of such vested liabilities that is then unfunded; (e) the annual contribution
required under a 30-year amortization of unfunded past service liabilities; and
(f) the current service costs of each Employee Plan that is a defined benefit
plan (as defined by ERISA) do not exceed the amount set forth in SCHEDULE 11.3
with respect to each such plan. In each
24
case, plan liabilities, plan costs and the value of plan assets shall be
determined in accordance with such actuarial method or methods and assumptions
and methods of asset valuation as are acceptable to actuaries designated by
ProxyMed.
(b) PREVIOUS YEARS' COSTS. The annual cost for the year ending the
Last Fiscal Year End of each Employee Plan is set forth in SCHEDULE 11.3.
(c) NO UNFUNDED DEFINED BENEFIT PLANS. Key does not maintain any
"pension plan" as defined in Section 3(2) of ERISA which is unfunded, unless
such pension plan is permitted to be maintained on an unfunded basis by ERISA
and is designated in SCHEDULE 11.3 as an unfunded pension plan.
11.4 TAXES AND TRUSTS. Key represents and warrants that:
(a) TAXES. Each funded Employee Plan that is a "pension plan" as
defined in Section 3(2) of ERISA is qualified under Section 401(a) of the
Internal Revenue Code of 1954 and the trust maintained in connection with such
Employee Plan is exempt from tax under Section 501(a) of the Internal Revenue
Code of 1954.
(b) SEPARATE TRUSTS. The assets of each Employee Plan are invested
in a separate trust or under a trust with one or more other such plans where the
assets of each plan are separately accounted for and available only to provide
benefits to employees and beneficiaries covered under that Plan and to pay
allocable administrative expenses. Each Employee Plan is maintained by Key under
a plan document, which does not provide for other participating employers. No
Employee Plan provides credit with respect to service other than with Key, and
neither Key nor any such Employee Plan has liability or responsibility with
respect to any such credit. This Section 11.4(b) does not apply to any plan
which is a multi-employer plan (as defined in ERISA) as set forth in SCHEDULE
11.4.
11.5 AMENDMENTS. Key shall notify ProxyMed of any amendment to any
Employee Plan required or requested by any government agency after the Closing
and, to the extent that any amendment would affect ProxyMed's obligations in any
manner, shall give ProxyMed an opportunity to participate, at ProxyMed's
expense, in any discussions or negotiations concerning such amendment, and
either party will take any action with respect to such amendment without the
approval of the other.
11.6 PAYMENT OF CONTRIBUTIONS. Key shall pay in full prior to the
Closing all contributions and other amounts due under each Employee Plan for any
period ending on or before the Closing. No Employee Plan or other person has
sought, or will seek prior to the Closing, a waiver of any funding requirements
with respect to any Employee Plan. ProxyMed agrees that all employer matching
contributions to Key's 401(k) plan for the fiscal year ending April 30, 1999,
shall be fully and timely made consistent with such plan and with prior years.
11.7 OTHER LIABILITIES. Key hereby represents that no liability to any
employee, beneficiary or other person or entity has been incurred prior to and
including the Closing in
25
connection with any Employee Plan (including, without limitation, any matching
fund liabilities to Key's 401(k) plan), by reason of any action or inaction by
Key or any person affiliated with Key, or any plan administrator or fiduciary,
or any other person other than liabilities undertaken by them under the terms of
the Employee Plan. Key hereby agrees that no liability to any employee,
beneficiary or other person or entity shall be incurred following the Closing in
connection with any Employee Plan, by reason of any action or inaction by Key or
any person affiliated with Key, or any plan administrator or fiduciary, or any
other person other than liabilities undertaken by them under the terms of the
Employee Plan.
11.8 INFORMATION. All Subject Employees and their beneficiaries and
dependents, and all other participants and beneficiaries of any Employee Plan,
all available data and benefits applicable to each of them under the terms of
each Employee Plan (including, without limitation, complete pertinent pay
history and all administrative records), shall be correctly identified and set
forth in records delivered, at the election of ProxyMed, on or prior to the
Closing by Key to ProxyMed. Any such records not delivered by the Closing and
requested by ProxyMed shall be delivered as promptly as practicable thereafter.
Key shall provide ProxyMed with all administrative forms, employee booklets,
summary plan descriptions and other employee communication materials used in
connection with each Employee Plan, to the extent requested by ProxyMed. Key
shall deliver to ProxyMed at or prior to the Closing copies of all available
prior plans and of all determination letters and applications for determination
letters (including all correspondence with respect thereto) relating to the
qualification of any Employee Plan under Section 401(a) of the Internal Revenue
Code of 1954.
ARTICLE 12. PARTIES' OBLIGATIONS AFTER THE CLOSING
A. ACQUIRED PARTIES' OBLIGATIONS.
12.1 PRESERVATION OF GOODWILL. Following the Closing, Stockholders will
conduct their activities so that ProxyMed's reasonable expectations with respect
to the goodwill, business reputation, employee relations and prospects connected
with Key's business will not be materially impaired.
12.2 TRADE NAMES. If requested by ProxyMed, Stockholders agree that
after the Closing Date they shall not use or employ in any manner not authorized
by ProxyMed directly or indirectly the name or any trade or service marks of Key
or any variation thereof.
12.3 [INTENTIONALLY OMITTED]
12.4 ACQUIRED PARTIES' INDEMNITIES. Acquired Parties shall indemnify,
defend and hold harmless ProxyMed against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies, including interest, penalties and reasonable attorneys' fees,
subject to Section 12.16 ("Losses"), that ProxyMed shall incur or suffer, which
arise, result from or relate to any breach of, or failure by Stockholders to
perform, any of his representations, warranties, covenants or agreements in the
Agreement or in any Schedule, certificate, exhibit or other instrument furnished
or to be furnished by
26
Stockholders under the Agreement, or from the operation of Key prior to the
Closing; provided, however, Acquired Parties shall only be obligated to
indemnify ProxyMed hereunder for Losses in excess of $125,000 in the aggregate,
but in no event in excess of the value of the amounts contained in escrow
pursuant to Section 12.16 and the terms thereunder.
12.5 [INTENTIONALLY OMITTED]
12.6 [INTENTIONALLY OMITTED]
12.7 [INTENTIONALLY OMITTED]
12.8 [INTENTIONALLY OMITTED]
12.9 S CORPORATION RETURN. The parties agree that Key will timely
prepare and file any required S Corporation federal, state and local tax returns
for Key for any required periods through the date of the Closing, and the
appropriate taxpayer will timely and fully pay all applicable taxes for that
period as more particularly described in Section 6.4(j).
B. PROXYMED'S OBLIGATIONS.
12.11 REGISTRATION RIGHTS. ProxyMed, at its expense, will file on or
before January 30, l999, with the Securities and Exchange Commission("SEC")
pursuant to the Securities Act of 1933, as amended, on Form S-3 or its
equivalent, a registration statement for a total of one hundred percent (100%)
of the Common Stock pro rata as to each of the Stockholders, and exercise best
efforts to cause it to become effective as soon thereafter as possible, and to
remain effective for eighteen (18) months thereafter or upon such earlier date
that the Shareholder's Common Stock is sold. Notwithstanding the foregoing or
anything elsewhere in this Agreement, in the event that ProxyMed's Common Stock
trades on the Nasdaq National Market below $6.00 a share for five (5)
consecutive trading days and for any reason ProxyMed has failed to file the
registration statement on or before January 30, 1999 and thereafter such
registration statement fails to become effective, then ProxyMed shall file a
registration statement with the SEC for one hundred percent (100%) of the Common
Stock as soon as practicable and to exercise reasonable best efforts to cause
such registration statement to become effective as soon as possible, and to
remain effective for one (1) year thereafter or upon such earlier date that the
Shareholder's Common Stock is sold. The parties shall execute a Registration
Rights Agreement in the form attached hereto as SCHEDULE 12.11.
12.12 PAYMENT OF S CORPORATION TAXES. The parties agree that sufficient
cash distributions shall be made or accrued on or before the Closing to each
Stockholder of an amount necessary to pay his federal, state and local income
taxes on those taxable earnings (excluding any penalties and interest) relating
to Key's most recent taxable year and up through the date of Closing less
$156,870 already distributed by Key for this purpose, and the obligation to make
such distribution shall not be subject to the $125,f000 limitations in Section
12.14.
27
12.13 ACCESS TO RECORDS. From and after the Closing, ProxyMed shall
allow Acquired Parties, and their counsel, accountants and other
representatives, such access to records which after the Closing are in the
custody or control of ProxyMed as Acquired Parties reasonably require in order
to comply with their respective obligations under the law or under contracts
assumed by ProxyMed pursuant to the Agreement.
12.14 PROXYMED'S INDEMNITIES. ProxyMed shall indemnify, defend and hold
harmless Acquired Parties against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees
("Losses"), that Acquired Parties shall incur or suffer, which arise, result
from or relate to any breach of, or failure by ProxyMed to perform, any of its
representations, warranties, covenants or agreements in the Agreement or in any
Schedule, certificate, exhibit or other instrument furnished or to be furnished
by ProxyMed under the Agreement, prior to the Closing; provided, however, that
ProxyMed shall only be obligated to indemnify Acquired Parties hereunder for
Losses in excess of $125,000 in the aggregate.
C. ASSERTION OF CLAIMS.
12.15 ASSERTION OF CLAIMS. All claims for indemnification by either of
the Acquired Parties pursuant to Section 12.14 hereof or ProxyMed pursuant to
Section 12.4 hereof, or any other provision of the Agreement except Section
12.3, shall be asserted and resolved as follows:
(a) Any person claiming indemnification hereunder is hereinafter
referred to as the "Indemnified Party" and any person against whom such claims
are asserted hereunder is hereinafter referred to as the "Indemnifying Party."
In the event that any Losses are asserted against or sought to be collected from
an Indemnified Party by a third party, said Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of the Losses, specifying
the nature and specific basis for such Losses and the indemnity claim and the
amount or the estimated amount thereof to the extent then feasible and enclosing
a copy of all papers (if any) served with respect to the claim (the "Claim
Notice"). The Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to any such Losses if the Indemnified Party fails
to notify the Indemnifying Party thereof in accordance with the provisions of
the Agreement in reasonably sufficient time so that the Indemnifying Party's
ability to defend against the Losses is not prejudiced, but only to the extent
such notification within such time period is practicable. The Indemnifying Party
shall have thirty (30) days from the date the Claim Notice is given in
accordance with the notice provisions hereof (the "Notice Period") to notify the
Indemnified Party (x) whether it disputes the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such Losses; and (y)
whether it desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against such Losses; which election to defend may
be made without prejudicing the Indemnifying Party as to its liability
hereunder, other than with respect to the costs of defense. Notwithstanding the
foregoing, the Indemnified Party is hereby authorized prior to and during the
Notice Period to file any motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party (and of which it shall have given notice and
28
opportunity to comment to the Indemnifying Party) and that is not prejudicial to
the Indemnifying Party.
(A) In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such Losses and except as hereinafter provided, the
Indemnifying Party shall have the right to defend by all appropriate
proceedings, and with counsel of its own choosing, which proceedings shall be
promptly settled or prosecuted by them to a final conclusion. If the Indemnified
Party desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Losses that the
Indemnifying Party elects to contest, or, if appropriate and related to the
claim in question, in making any counterclaim against the person asserting the
third party Losses, or any cross-complaint against any person. No claim with
respect to which the Indemnifying Party has admitted its liability may be
settled or otherwise compromised without the prior written consent of the
Indemnified Party. Any party settling or compromising a claim in violation of
the preceding sentence shall be solely liable for the amount of the settlement
or compromise.
(B) If the Indemnifying Party does not notify the Indemnified
Party within thirty (30) days after the receipt of a Claim Notice that it elects
to undertake the defense thereof, the Indemnified Party shall have the right to
defend at the expense of the Indemnifying Party the claim with counsel of its
choosing reasonably satisfactory to the Indemnifying Party, subject to the right
of the Indemnifying Party to assume the defense of any claim at any time prior
to settlement or final determination thereof. Any such defense shall be
prosecuted promptly and vigorously by the Indemnified Party.
In the case of either (A) or (B), if the Indemnifying Party
has not admitted its liability for a claim, the Indemnified Party shall send a
written notice to the Indemnifying Party of any proposed settlement of any claim
received by the Indemnified Party. The Indemnifying Party shall have an option
for thirty (30) days following receipt of such notice to (i) admit liability for
the claim if it has not already done so and (ii) if liability has been admitted,
reject, in its reasonably judgment, the proposed settlement. Failure to reject
such settlement within such 30-day period shall be deemed an acceptance of such
settlement. If the Indemnified Party settles any such claim over the objection
of the Indemnifying Party, the Indemnified Party shall thereby waive any right
to indemnify therefor, unless the Indemnifying Party has prior to the time of
settlement admitted liability for such claim. Notwithstanding any provisions
hereof to the contrary, the Indemnifying Party may defend any claim in the
manner described herein under a reservation of rights as to liability for such
claim.
(b) In the event any Indemnified Party should have a claim for
Losses against any Indemnifying Party hereunder that does not involve a Loss
being asserted against or sought to be collected from it by a third party (for
example, but without limitation, a Loss resulting from a breach of a
representation, warranty or covenant), the Indemnified Party shall send a Claim
Notice (including an explanation, in reasonable detail, of the basis for such
claim, the particular representation, warranty or covenant claimed to be
breached by the Indemnifying Party, and the
29
manner in which the amount claimed to be due was computed, together with all
documents in the possession of the Indemnified Party relating to such claim for
Losses) with respect to such claim to the Indemnifying Party. If the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
from the date the Claim Notice is given that it disputes such claim for Losses,
the amount of such Losses shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
12.16 LIMITATION OF STOCKHOLDER LIABILITY/ESCROW. Notwithstanding
anything in this Agreement to the contrary, the liability of the Stockholders,
jointly and severally, for any obligation or liability pursuant to this
Agreement including, but not limited to, indemnification obligations, is limited
in the aggregate to ten percent (10%) of the number of Common Stock issued
pursuant to Section 2.1. Stockholders hereby authorize ProxyMed to act as escrow
agent ("Escrow Agent") on behalf of Stockholders and each of them hereby directs
such Escrow Agent to hold in escrow ten percent (10%) of the number of shares of
Common Stock due to each Stockholder pursuant to Section 2.1 until one (1) year
after the issuance of the first independent audit report of ProxyMed which
includes Key's operations for a full twelve (12) months, unless earlier if a
party makes a claim for liability under the Agreement, in which case the parties
will exercise best efforts and promptly negotiate the resolution of such claim
in good faith according to the Agreement. If the resolution of such claim
involves payment by the Stockholders by transferring to ProxyMed a number of
shares of Common Stock held in escrow, Stockholders hereby authorize Escrow
Agent to do all things necessary to affect such transfers. Stockholders hereby
agree to indemnify Escrow Agent for acting in its capacity as Escrow Agent;
provided, however, that Stockholders do not indemnify Escrow Agent from gross
negligence or willful misconduct in connection with the escrow. Stockholders
agree to deliver to Escrow Agent on the Closing Date that number of shares as
described in this Section 12.16, with the stock powers attached and any other
necessary documentation to effectuate the escrow. During the term of the escrow,
Stockholders shall be entitled to any dividends or other rights conveyed on such
Common Stock and to vote such Common Stock, except with respect to any Common
Stock returned to ProxyMed pursuant to the terms of this Section 12.16. After
the expiration of the one (1) year period after issuance of the first
independent audit report referred to herein (but in no event later than April
30, 2000), Escrow Agent shall distribute any shares of Common Stock remaining in
escrow to the Stockholders pro rata ("Escrow Release Date").
ARTICLE 13. COSTS
13.1 FINDER'S OR BROKER'S FEES. Each of the Acquired Parties and
ProxyMed represents and warrants that it has dealt with no broker or finder in
connection with any of the transactions contemplated by the Agreement, and,
insofar as it knows, no broker or other person is entitled to any commission or
finder's fee in connection with any of these transactions.
13.2 EXPENSES. Each of the parties shall pay all costs and expenses,
including, but not limited to attorneys' and accounting fees, incurred or to be
incurred by it in negotiating and preparing the Agreement and in closing and
carrying out the transactions contemplated by the Agreement.
30
13.3 TERMINATION FEE In the event this Agreement is terminated by
either party for any reason, ProxyMed agrees to pay Key $35,000 or its actual
and necessary expenses for legal and accounting fees relating to this Agreement,
whichever is less.
ARTICLE 14. FORM OF AGREEMENT
14.1 HEADINGS. The subject headings of the Articles and Sections of the
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
14.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER. The Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement, modification
or amendment of the Agreement shall be binding unless executed in writing by all
the parties. No waiver of any of the provisions of the Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
14.3 COUNTERPARTS; FACSIMILE. The Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. In addition, execution of the Agreement and the Schedules attached
hereto may be transmitted by one party to the other via facsimile.
ARTICLE 15. PARTIES
15.1 PARTIES IN INTEREST. Nothing in the Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of the
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in the Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to the
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to the Agreement.
15.2 ASSIGNMENT. ProxyMed may not assign or delegate any of its rights
or obligations under the Agreement or any part hereof without the prior written
consent of Key except for any assignment in connection with the sale of
substantially all of ProxyMed's Stock or capital stock to an unaffiliated third
party and except as provided in Section 20.7. Except as otherwise set forth
herein, the Acquired Parties may not assign or delegate any of their respective
rights or duties hereunder, without the prior written consent of ProxyMed. The
Agreement shall be binding on and shall inure to the benefit of the parties to
it and their respective heirs, legal representatives, successors and assigns.
31
ARTICLE 16. REMEDIES
16.1 RECOVERY OF LITIGATION COSTS. If any legal action or any
arbitration or other preceding is brought for the enforcement of the Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of the Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
16.2 CONDITIONS PERMITTING TERMINATION. Subject to the provisions of
Article 3 relating to the postponement of the date of Closing, either party may
terminate the Agreement by written notice to the other, without liability to the
other, if any bona fide action or proceeding shall be pending against either
party that could result in an unfavorable judgment, decree or order that would
prevent or make unlawful the carrying out of the Agreement.
16.3 DEFAULTS PERMITTING TERMINATION. If prior to Closing either
ProxyMed or a Selling Party materially defaults in the due and timely
performance of any of its representations, warranties, covenants or agreements
under the Agreement, the non-defaulting party or parties may give notice of
termination of the Agreement, in the manner provided in Article 18. The notice
shall specify with particularity the default or defaults on which the notice is
based. The termination shall be effective ten (10) business days (and if the ten
(10) days are prior to the scheduled date of Closing, such Closing shall be
extended for the same time to enable the defaulting party to cure the specified
default or defaults on or before this effective date for termination) Subject to
Section 16.4, such termination shall not waive, release or discharge the
non-defaulting parties' rights to seek legal and equitable relief.
16.4 BREACH OF WARRANTIES. Notwithstanding any provision of the
Agreement to the contrary, if, upon execution of the Agreement and upon the
Closing, the warranties and representations made by either party pursuant to
Sections 6, 7 or 11 of the Agreement are not true and correct, and either party
notifies the other party of such fact in writing, then the rights and
obligations of the parties shall be as follows:
(a) If the applicable warranty or representation was untrue as of
the date made, then except in cases of fraud or neglect, the sole and exclusive
remedy of the non-warranting party shall be either of the following, as the
non-warranting party may elect in writing:
(i) To waive the breach in writing and continue with the
Closing, in which case the non-warranting party shall have no further recourse
with respect to such breach or falsity pursuant to Section 12.4 or 12.14 or
otherwise; or
(ii) To terminate the Agreement by written notice, in which
case neither party shall have any further obligations nor liabilities to the
other party hereunder, except as set forth in Sections 16.4 and 20.2.
32
(b) If the applicable warranty or representation was true when
made, but became untrue thereafter for reasons other than a breach by the
warranting party of its other covenants and obligations under the Agreement,
then:
(i) If the breach or falsity would adversely and materially
affect the non-breaching party's rights and obligations under the Agreement, the
remedies of the non-warranting party shall be as elected under Section 16(a)
above; and
(ii) If the breach or falsity would not adversely and
materially affect the non-breaching party's rights and obligations under the
Agreement, the sole and exclusive remedy of the non-warranting party shall be
limited to those set forth elsewhere in this Agreement, and the non-warranting
party shall have no right to terminate the Agreement on account of such breach
or falsity.
ARTICLE 17. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants and agreements in any
instrument, certificate, opinion or other writing provided for in it, shall
survive the Closing and will remain in effect until and will expire upon the
Escrow Release Date.
ARTICLE 18. NOTICES
Except as otherwise specifically provided herein, any notice required
or permitted to be sent by the Agreement will be in writing and will be (i)
delivered by hand; (ii) sent by fax (if the receiving machine confirms receipt
through answerback and the sending machine prints a paper copy of the answerback
message); or (iii) mailed by registered, certified or other prepaid, receipted
delivery service, return receipt requested, to the address or fax number
provided by the Agreement. Complying notices will be effective (a) when
delivered by hand; (b) the next business day after sent by fax; (c) five
business days after deposited in the mail in the manner required above, with
proper postage prepaid; or (d) one business day after deposited with the
delivery service. Notices will be addressed as follows or as from time to time
directed in writing by either party by notice given hereunder:
KEY: Key Communications Service, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
33
with copy to: ▇▇▇▇▇, Paletti & ▇▇▇▇▇▇
The ▇▇▇▇▇▇ Building Suite 1551
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇- ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
STOCKHOLDERS: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
A. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
PROXYMED: ProxyMed, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with copy to: ProxyMed, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Legal Officer
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 19. GOVERNING LAW
The Agreement shall be construed in accordance with, and governed by,
the laws of the State of Florida, without regard to its conflict of laws
provisions.
ARTICLE 20. MISCELLANEOUS
20.1 ANNOUNCEMENTS. Except as and to the extent required by any
applicable law, regulation or order, including Securities and Exchange
Commission regulations, no party to the Agreement shall, and each shall direct
its representatives not to, directly or indirectly, make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
34
disclosure of the existence of negotiations regarding a proposed transaction
between the parties or any of the terms, conditions or other aspects of a
proposed transaction without prior written consent of the other party. In the
event any party is required by applicable law, regulation or order to make any
such disclosure, such party shall provide prior notice of such required
disclosure to the other party. ProxyMed agrees to deliver to the Stockholders a
copy of the proposed public announcement relating to this transaction prior to
the publication thereof in order to give the Stockholders an opportunity to make
recommendations with respect thereto, which recommendation shall in no way be
binding on ProxyMed.
20.2 CONFIDENTIALITY. The Parties have entered into a Confidentiality
Agreement dated December 4, 1998 and a Mutual Non-Disclosure Agreement dated
November 12, l998 which are attached hereto as Addendum A and incorporated
herein by reference.
20.3 [INTENTIONALLY OMITTED]
20.4 FURTHER ACTIONS. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be requested by the other parties in order to consummate or implement
the transactions contemplated by the Agreement.
20.5 SEVERABLE COVENANTS. In the event that any provision contained
herein is declared invalid or illegal, the other provisions hereof shall not be
affected or impaired thereby and shall remain valid and enforceable.
20.6 SPECIFIC PERFORMANCE. In the event of a breach or threatened
breach by any party hereto of the provisions of the Agreement, any other party
hereto shall be entitled to specific performance. Nothing herein shall be
construed as prohibiting any party hereto from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages.
20.7 NOMINEE. In the event ProxyMed elects to assign the Agreement to a
wholly owned subsidiary of ProxyMed, Acquired Parties hereby consent to any such
assignment so long as ProxyMed unconditionally and irrevocably guarantees the
obligations of such subsidiary hereunder and any stock issued pursuant to
Section 2.1 is that of ProxyMed.
20.8 COUNTERPARTS. The Agreement and the Schedules attached hereto may
be signed in two or more counterparts, any one of which need not contain the
signatures of more that one party, but all such counterparts taken together will
constitute one and the same instrument. In addition, execution of the Agreement
and the Schedules attached hereto may be transmitted by one party to the other
via facsimile.
35
IN WITNESS WHEREOF, the parties to the Agreement have duly executed it as of the
day and year first above written.
PROXYMED: PROXYMED, INC.
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. BLUE
------------------------------ --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Asst. Secretary ▇▇▇▇▇▇ ▇. Blue, Chairman of the
and Chief Executive Officer
PAC: PROXYMED ACQUISITION CORP.
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. BLUE
------------------------------ --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Asst. Secretary ▇▇▇▇▇▇ ▇. Blue, Chairman of the
and Chief Executive Officer
KEY: KEY COMMUNICATIONS SERVICE, INC.
ATTEST:
/s/ A. ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------ --------------------------------
A. ▇▇▇▇▇▇ ▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
and Chief Executive Officer
STOCKHOLDERS: By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Stockholder
By: /s/ A. ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
A. ▇▇▇▇▇▇ ▇▇▇▇▇, Stockholder
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Stockholder