Ex. 10.62
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
FOUNDATION HEALTH SYSTEMS, INC.
AND
ACCESS HEALTH, INC.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated as of the 31st
day of December, 1998, is entered into by and between Foundation Health Systems,
Inc. ("SELLER"), a corporation incorporated under the laws of the State of
California, and Access Health, Inc. ("BUYER"), a corporation incorporated under
the laws of the State of Delaware.
WHEREAS, Seller owns certain assets used in connection with the
provision of call center services through a telephone triage system (the
"BUSINESS"); and
WHEREAS, Seller desires to sell the assets associated with the
Business, as more fully described herein, and Buyer desires to purchase and
assume all such assets.
NOW, THEREFORE, in consideration of the premises and subject to the
representations, warranties, covenants and conditions contained herein, the
parties agree as follows:
ARTICLE 1.
SALE OF ASSETS
SECTION 1.01 SALE OF ASSETS.
(a) Seller agrees that, at the Closing, as defined in Section 1.06
herein, it shall sell, transfer, and deliver to Buyer, for the
consideration hereinafter provided, the clinical content used
by Seller in the Business, described in Schedule 1.01(a),
including all clinical assessment guidelines, algorithms and
protocols (the "TRIAGE CLINICAL CONTENT") and all Intellectual
Property Rights therein owned by Seller (collectively, "the
ASSETS"). "INTELLECTUAL PROPERTY RIGHTS" shall mean all
worldwide patents and other patent rights, utility models,
copyrights, trade secrets, know-how, trademarks, service
marks, confidential information and other intellectual
property and proprietary rights, including without limitation
all applications and registrations with respect thereto. The
Triage Clinical Content will be stored on a CD-ROM which will
be delivered to Buyer at a mutually agreed upon time prior to
the Closing for verification of completeness.
(b) For avoidance of doubt, Buyer shall not assume or be liable
for any liabilities of Seller in respect of: (i) any tax on
any profit derived from the sale under this Agreement; and
(ii) the preparation or filing of any tax
returns and the payment of any taxes, license fees or other
charges levied, assessed or imposed upon the business and
Assets of the Seller prior to the Closing Date (as defined
herein).
SECTION 1.02 NON-ASSUMPTION OF LIABILITIES. Buyer shall not assume any
liabilities of Seller or be responsible for any obligations of Seller in
connection with the sale of Assets provided in Section 1.01 or otherwise arising
prior to the Closing.
SECTION 1.03 RIGHT TO EMPLOY CERTAIN OF SELLER'S EMPLOYEES. Buyer shall
have the right, but not the obligation, to offer employment to those employees
of Seller associated with the operation of the Business, that are set forth on
SCHEDULE 1.03.
SECTION 1.04 EXCLUDED ASSETS. For avoidance of doubt, Seller will retain
all other assets related to the Business or Seller's Fourth Generation Medical
Management System (the "4G SYSTEM"), including computer systems, network
equipment, certain clinical intellectual property, software applications and
related intellectual property (excluding all clinical assessment guidelines,
algorithms and protocols comprising the Assets), licenses to use certain
technology from other vendors (the "EXCLUDED LICENSES"), and the rights to sell
the 4G System and related technology (collectively the "4G SYSTEM ASSETS").
Seller's current 4G System products and the Excluded Licenses are generally set
forth on SCHEDULE 1.04 hereto.
(a) Excluded Licenses shall include all software licenses and
maintenance, support and related agreements with each of
Health Data Sciences Corporation, Systems Purkinje, Bolder
Heuristics and Medical Scientists.
(b) Seller shall retain the right to continue to employ all of
Seller's employees related to the development, delivery and
support of the 4G System, including technology support
professionals, clinical and technical developers and related
management and administrative personnel, except for those
employees set forth on SCHEDULE 1.03.
(c) Subject to Article 7, Seller shall retain all commercial
opportunities for the license or resale of all components of
the 4G System other than the Assets, including, but not
limited to, all CHAMPUS/Department of Defense opportunities.
SECTION 1.05 PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for
the Assets shall be thirty-eight million four hundred thousand dollars
($38,400,000), shall be payable by certified or cashiers check, wire transfer or
other same day funds, and shall be payable at the Closing, as set forth in
Section 1.06 below.
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SECTION 1.06 CLOSING. The closing of the transactions contemplated by
this Agreement shall take place at 4:00 p.m. PST on December 31st, 1998, at the
offices of the Seller, or such other place, time or date mutually agreed between
the parties in writing (such closing being called the "CLOSING" and such date
being called the "CLOSING DATE."
SECTION 1.07 POST-CLOSING OBLIGATIONS. From time to time, at either
party's request, whether at or after the Closing and without further
consideration, the other party, at its expense, will execute and deliver such
further instruments of conveyance and transfer and take such other action as the
requesting party reasonably may require to convey and transfer to Buyer any of
the Assets to be sold and otherwise to effectuate the terms of this Agreement.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof and the Closing Date, Seller represents and warrants
to Buyer, that:
SECTION 2.01 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Seller is,
and on the Closing Date will be, duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware. Seller has the corporate
power and authority to own and hold its properties and to carry on its business
as now conducted.
SECTION 2.02 NO BREACH. the execution, delivery and performance by
Seller of this Agreement and related agreements contemplated herein do not and
will not on the Closing Date (i) contravene or conflict with the Certificate of
Incorporation or Bylaws of Seller; (ii) contravene, violate, or conflict with
any law, regulation, judgment, order or decree applicable to Seller; or (iii)
constitute a default under or give rise to any right to terminate any agreement,
contract or other instrument binding upon Seller, or any material license,
permit or other similar authorization held by Seller.
SECTION 2.03 OWNERSHIP. (i) Seller has good and marketable title to the
assets and owns all right, title and interest in and to the Assets, free and
clear of any and all mortgages, pledges, security interests, liens, charges,
claims, restrictions and other encumbrances; (ii) there are no outstanding
agreements or assignments inconsistent with the provisions of this Agreement or
which would impair the exercise by Buyer of its full ownership rights in the
Assets; (iii) no licenses or rights are required to be obtained from Seller or
any third party in order for Buyer to fully exploit the Assets; (iv) no third
party has been granted, and Seller shall not grant, any right in the Assets;
(v) no past or present employee or consultant of Seller has any interest in the
Assets and Seller has no knowledge of facts that could reasonably be expected to
give rise to such a claim; (vi) Seller owns all Intellectual Property Rights in
the Triage Clinical Content and has not acquired any Intellectual Property
Rights relating to the Triage Clinical Content from any third party;
(vii) Seller has no knowledge that any third party is infringing upon any of the
Intellectual Property Rights; (viii) the Triage Clinical Content does not
infringe the Intellectual Property Rights of any third party; (ix) the Triage
Clinical Content conforms to the description in Schedule 1.01(a); and (x) the
CD-ROM containing the Triage Clinical Content which was
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verified by Buyer has not been altered in any manner from the time of
verification to the Closing and has been stored under appropriate conditions.
SECTION 2.04 VALIDITY. Seller has the full legal power and authority to
execute and deliver this Agreement and all other agreements and documents
necessary to consummate the transactions contemplated hereunder and all
corporate action of Seller necessary for such execution and delivery and the
performance hereof and thereof will have been duly taken on or before the
Closing. No stockholder action by Seller is required to transfer the Assets to
Buyer or consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement and all agreements
related to the contemplated transaction when duly executed and delivered by
Seller and, when duly executed by the Buyer, will constitute the legal, valid,
and binding obligation of Seller enforceable in accordance with their terms,
subject as to enforcement of remedies to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting the rights of creditors generally. The
execution and delivery by Seller of this Agreement, and the performance of its
obligations hereunder, does not require any action of any party other than
Seller pursuant to or conflict with, or result in any violation of, or default
under, or breach of any material contract, agreement or other undertaking of
Seller, pursuant to any order or decree to which Seller is a party, or to which
the Assets are subject, and will not conflict with, or result in any violation
of, or default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any benefit or creation of any security interest under (any such
event, a "CONFLICT"). No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or foreign governmental
authority, instrumentality, agency or commission ("GOVERNMENT ENTITY") or any
third party (so as not to trigger any Conflict), is required by or with respect
to the company in connection with the execution and delivery of this Agreement,
the sale and transfer of the Assets or the consummation of the transactions
contemplated hereby.
SECTION 2.05 LITIGATION AND INVESTIGATIONS. Except in the case of a
claim Buyer may have against Seller, there is no (i) action, suit, claim,
proceeding, or investigation pending or, to its knowledge, threatened against or
affecting the Assets, or any of the employees providing services relating to the
Assets, by any private party or any federal, state, municipal, or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign; (ii) arbitration proceeding relating to the Assets pending
under collective bargaining agreements or otherwise; or (iii) governmental or
professional inquiry pending or, to the knowledge of Seller, threatened against
or affecting the Assets. Seller is not in default with respect to any order,
writ, injunction, or decree known to or served upon them of any court or of any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign.
SECTION 2.06 TRADEMARKS, PATENTS AND OTHER RIGHTS. Set forth in
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SCHEDULE 2.06 is a list of all patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇ applications,
trade names and copyrights, and all applications for such which are in the
process of being prepared, owned by, or registered in the name of, Seller and
relating to the Assets.
SECTION 2.07 FEES AND COMMISSIONS. Seller has not agreed to pay or
become liable to pay any broker's, finder's, or originator's fees or commissions
by reason of services alleged to have been rendered for, or at the instance of,
Seller in connection with this Agreement and the transactions contemplated
hereby.
SECTION 2.08 YEAR 2000 COMPLIANCE. Seller makes no representation or
warranty with regard to information systems readiness for or that the Assets
will not otherwise be affected by the commencement of the year 2000.
SECTION 2.09 OTHER APPROVALS. SCHEDULE 2.09 sets forth a list of all
consents, approvals, qualifications, orders or authorizations of, or filings
with, any governmental authority, including any court or other governmental
third party, required in connection with Seller's valid execution, delivery, or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement, with the exception of any clearance required
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"),
which clearance has been obtained.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and the Closing Date, Buyer represents and
warrants to Seller:
SECTION 3.01 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Buyer is,
and on the Closing Date will be, duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware. Buyer has the corporate
power and authority to own and hold its respective properties and to carry on
its respective business as now conducted.
SECTION 3.02 NO BREACH. The execution, delivery and performance by Buyer
of this Agreement and related agreements contemplated herein do not and will not
on the Closing Date (i) contravene or conflict with the respective Articles of
Incorporation or respective Bylaws of Buyer; (ii) contravene, violate, or
conflict with any material law, regulation, judgment, order or decree applicable
to Buyer; or (iii) constitute a default under or give rise to any right to
terminate any material agreement, contract or other instrument binding upon
Buyer, or any material license, permit or other similar authorization held by
Buyer.
SECTION 3.03 VALIDITY. Buyer has the full legal power and authority to
execute and deliver this Agreement and all other agreements and documents
necessary to consummate the transactions contemplated hereunder and all
corporate action of Buyer necessary for such execution and delivery and the
performance thereof will have been duly taken. This Agreement
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and all agreements related to the contemplated transaction when duly executed
and delivered by Buyer and, when duly executed by the other parties thereto,
will constitute the legal, valid, and binding obligation of Buyer enforceable
in accordance with their terms, subject as to enforcement of remedies to the
discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally. The execution and delivery by Buyer of
this Agreement, and the performance of its obligations hereunder, does not
require any action of any party other than Buyer pursuant to any material
contract, agreement or other undertaking of Buyer, or pursuant to any order
or decree to which Buyer is a party or to which its properties or assets are
subject.
SECTION 3.04 FEES AND COMMISSIONS. Buyer has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of,
Buyer in connection with this Agreement and the transactions contemplated
hereby.
SECTION 3.05 OTHER APPROVALS. SCHEDULE 3.05 sets forth a list of all
consents, approvals, qualifications, orders or authorizations of, or filings
with, any governmental authority, including any court or other governmental
third party, required in connection with Buyer's valid execution, delivery, or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement, with the exception of any clearance required
under the HSR act, which clearance has been obtained.
ARTICLE 4.
JOINT COVENANTS OF THE PARTIES
SECTION 4.01 CONFIDENTIALITY OF BUSINESS INFORMATION. Each party shall
use Confidential Information and all notes, documents and materials prepared by
or for it which reflect, interpret, evaluate, include or are derived from
Confidential Information ("EVALUATION MATERIAL") solely to evaluate and consider
the proposed transactions. Upon the Closing, all Confidential Material and
Evaluation Material relating to the Assets shall be owned by Buyer. Neither
party shall use the Disclosing Party's Confidential Information or Evaluation
Material to compete with or adversely affect the business or operations of the
other or its Affiliates or for any other purpose except as permitted herein.
For the purposes of this paragraph "CONFIDENTIAL INFORMATION" means all
information in whatever form furnished to a party or its representatives by or
on behalf of the other party which is marked as confidential or which the
Receiving Party should have reason to know is treated as confidential by the
Disclosing Party; provided that it does not include information which (i) is
already in the Receiving Party's possession, and not previously provided by the
Disclosing Party, provided that such information is not known by the receiving
party to be subject to another confidentiality agreement with or other
obligation of secrecy to the Disclosing Party or any third party, or
(ii) becomes generally available to the public other than as a result of a
disclosure by the Receiving party or the Receiving party's representatives.
Upon request by a party at any time, the other party shall promptly return the
original and all copies of all non-oral Confidential Information of the
Disclosing Party and either
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deliver or destroy the original and all copies of all Evaluation Material.
Any party shall, upon request, certify as to its compliance with the
preceding sentence. Prior to disclosing any information to a Representative,
the party disclosing to such Representative shall obtain from such
Representative an agreement to keep such information confidential and make no
disclosure thereof, except as otherwise consistent with the terms of this
Section 6.01. In the event that any disclosure is required to be made, each
party shall cooperate with the other in order to limit the disclosure to the
extent permitted by law. This Section 6.01 shall survive the termination of
this Agreement. Notwithstanding the foregoing, in the event that the
Confidentiality Agreement between Buyer and Seller, dated as of June 17,
1998, which shall remain in effect after Closing, contains a more restrictive
term with regard to use and disclosure of Confidential Information than this
Section 6.01, such agreement shall control and supercede this Section 6.01
with respect to such Confidential Information, except with respect to the
Buyer's ownership upon Closing of Confidential Information and Evaluation
Material relating to the Assets.
SECTION 4.02 USE OF NAME. Buyer shall not use any and all trade names,
trademarks, logos and trade dress belonging to Seller or its Affiliates,
including, without limitation, those containing the words "FHS", "Foundation
Health Systems", "QualMed", "4th Generation Medical Management", or
"HealthLine", on its literature, inventory, products, labels, packaging,
supplies or other materials relating to the Business as soon as available
supplies thereof are exhausted and in any event within ninety (90) days after
the Closing Date. Buyer shall re-label (by sticker or other reasonable method)
its products, literature and other materials and supplies with its own trade
name.
SECTION 4.03 ANNOUNCEMENTS. The initial press releases with respect to the
execution of this Agreement shall be reasonably acceptable to Buyer and Seller.
Thereafter, so long as this Agreement is in effect, neither Buyer nor Seller nor
any of their respective Affiliates shall issue or cause the publication of any
press release with respect to the transactions contemplated hereby or this
Agreement without consulting with the other party, except as may be required by
law or by any listing agreement with a national securities exchange or market.
SECTION 4.04 RELEASE. In consideration for the sale of the Assets
hereunder, Buyer, for itself and its affiliates, hereby fully releases and
discharges Seller, its subsidiaries, divisions, successors, assigns,
representatives, shareholders, officers, directors, agents, employees,
representatives, and assigns (collectively for purposes of this section
"SELLER") from any and all actions, causes of action, claims, obligations,
costs, losses, liabilities, damages and demands of whatsoever character, whether
or not known, suspected or claimed ("CLAIMS"), which Buyer has or hereafter may
have against Seller, solely to the extent such Claims arise out of or in any way
relate to the Assets and Seller's ownership and use thereof prior to the
Closing. This release does not apply to any Claim based upon or asserted to be
based upon an act, omission or occurrence to the extent occurring subsequent to
Closing. It is further understood and agreed that all rights under Section 1542
of the Civil Code of California are hereby expressly waived by Buyer. Said
section reads as follows:
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A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor.
Notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of Seller pursuant to
this Section 4.04 and under the terms hereof, Buyer expressly acknowledges that
this Agreement is intended to include in its effect, without limitation, all
Claims which Buyer does not know or suspect to exist in its favor at the time of
execution hereof, and this release contemplates the extinguishment of any such
claim or claims. This Section 4.04 shall be in, and remain in, effect as a full
and complete release according to its terms, notwithstanding the discovery or
existence of any additional or different facts. Notwithstanding anything herein
to the contrary, nothing in this Section 4.04 shall prevent Buyer from enforcing
its rights pursuant to this Agreement, that certain Master Services Agreement by
and among Seller and Buyer, of even date herewith (the "SERVICES AGREEMENT"),
and that certain License Agreement between Seller and Buyer, of even date
herewith.
ARTICLE 5.
NON-COMPETITION COVENANT
SECTION 5.01 NON-COMPETITION. Seller will not compete with Buyer during
the term of the Services Agreement, and for two years following its termination.
During the term of the Services Agreement and for two (2) years following its
termination, Seller shall not, directly or indirectly, own, operate, manage or
control, or participate in the ownership, operation, management or control of,
or be connected with or have any interest in or license or sublicense any
Intellectual Property Rights to any enterprise, person, firm, corporation or
business that is engaged in the commercial delivery of telephonically - based
triage services (including referral and health care assessment services
delivered as part of telephonically based triage services) or that licenses
clinical triage algorithms and guidelines for use by others in the provision of
telephonically - based triage services, provided that this covenant shall not
apply to the activities of Managed Health Network, Inc. as conducted on the date
hereof and shall not prohibit the Seller from (i) providing provider referral
services to Members (as defined in the Services Agreement), or (ii) undertaking
utilization review relating to Members. Notwithstanding the foregoing, if there
is a change of control of Seller such that more than fifty percent (50%) of the
ownership interest with respect to Seller prior to such change of control event
is held after such event by an unrelated person or entity (the "ACQUIROR"), and
such Acquiror operates telephonically-based triage services, such Acquiror and
Seller shall have the right, at its discretion, either to (i) extinguish the
noncompetition covenant set forth herein by making a liquidated damages payment
of Ten Million Dollars ($10,000,000) in immediately available funds to Buyer, or
(ii) extinguish the noncompetition covenant set forth herein by extending the
term of the Services Agreement until the date two (2) years from the later of
the previously-existing date of termination thereunder or the date of
consummation of such change of control of Seller and maintaining services
pursuant thereto during the extension period for at least as many Members (as
defined in the Services Agreement) as were receiving services
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pursuant thereto immediately prior to the earlier of Seller's execution of an
agreement in connection with such change of control or public announcement
that either an offer had been made to consummate, or Seller was in
discussions to consummate, a change in control.
SECTION 5.02 SEVERABILITY. If any particular prohibition or restriction
contained in Section 5.01 is judged by a court of competent jurisdiction to be
unenforceable, but would be judged enforceable by a court of competent
jurisdiction if that particular prohibition or restriction was deleted or
reduced, then the prohibitions or restrictions contained in Section 5.01 shall
apply with that particular prohibition or restriction deleted or reduced by the
minimum amount necessary.
SECTION 5.03 ACKNOWLEDGEMENTS. Seller acknowledges that:
(a) The prohibitions and restrictions contained in Section 5.01 are
reasonable and necessary; and
(b) Seller has received valuable consideration for agreeing to the
covenants in Section 5.01.
SECTION 5.04 DAMAGES. Seller and Buyer acknowledge that it will be
difficult to compute the amount of damage or loss to Buyer if Seller violates
any of its agreements under Section 5.01, that Buyer will be without an
adequate legal remedy if Seller violates the provisions of this Section 5.01
and that any such violation may cause substantial irreparable injury and
damage to Buyer not fully compensable by monetary damages. Therefore, Seller
and Buyer agree that in the event of any violation by Seller of this Section
5.01, Buyer shall be entitled (i) to recover from Seller monetary damages,
(ii) to obtain specific performance, injunctive or other equitable relief, of
either a preliminary or permanent type, and (iii) to seek any and all other
available rights or remedies at law or in equity which may be exercised
concurrently with the rights granted hereunder.
SECTION 5.05 TERMINATION OF COVENANT. At any time that Seller elects to
terminate the Services Agreement, as provided therein, Seller shall have the
right to terminate the provisions of this Article 5 upon payment to Buyer of the
amount of Ten Million Dollars ($10,000,000) in immediately available funds, in
addition to any payment due under the Services Agreement.
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ARTICLE 6.
INDEMNIFICATIONS
SECTION 6.01 SELLER'S INDEMNIFICATION. Seller agrees to indemnify and
hold Buyer harmless from and against any and all liabilities, losses, damages,
costs, and expenses (including reasonable attorneys' fees) incurred or
maintained by Buyer because of any inaccuracy in, or breach or violation of, the
representations, warranties, and covenants made by Seller in this Agreement.
Seller agrees to indemnify and hold Buyer harmless from any and all claims and
liabilities arising out of the activities of Seller relating to the Assets prior
to the Closing Date.
SECTION 1.02 BUYER'S INDEMNIFICATION. Buyer agrees to indemnify and hold
Seller harmless from and against any and all liabilities, losses, damages,
costs, and expenses (including reasonable attorneys' fees) incurred or sustained
by Seller because of any inaccuracy in, or breach or violation of, the
representations, warranties, and covenants made by it in this Agreement.
SECTION 6.03 LIMITATION ON AND EXPIRATION OF INDEMNIFICATION.
Notwithstanding anything in this Article 6 to the contrary, Seller's rights
to indemnification from Buyer, and Buyer's rights to indemnification from
Seller shall be limited as follows:
(a) All rights of the parties hereto to indemnification hereunder
for breaches of representations and warranties (other than
those set forth in Section 2.03 hereof) shall expire one (1)
year after the closing date; PROVIDED, HOWEVER, if, prior to
such expiration, a state of facts shall have become known
which threatens to give rise to a liability against which any
party hereto would be entitled to indemnification hereunder
and the indemnified party shall have given notice of such
facts to the indemnifying party, then the rights of the
indemnified party to indemnification with respect to such
liability shall continue until such liability shall have been
finally determined and disposed of; PROVIDED, FURTHER, that
Seller shall continue to indemnify and hold harmless Buyer for
any breach of the representations and warranties under Section
2.03 herein for the term of the services agreement.
(b) No party shall be shall be entitled to indemnification
pursuant to Section 6.01 or 6.02 unless and until the
aggregate amount of damages to which the foregoing indemnity
relates, sustained by such party with respect to any
individual claim, exceeds $100,000.
SECTION 6.04 NOTICE AND CONTROL OF LITIGATION. If any claim or
liability is asserted in writing against a party entitled to indemnification
under this Article 6 (the "INDEMNIFIED PARTY") which would give rise to a
claim under this Article 6, the Indemnified Party shall notify the person
providing the indemnity ("INDEMNIFYING PARTY") in writing of the same within
thirty (30) days of receipt of such written assertion of a claim or
liability. The Indemnifying Party shall have the right to defend a claim and
control the defense, settlement and
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prosecution of any litigation. If the Indemnifying Party, within ten (10) days
after notice of such claim, fails to defend such claim, the Indemnified Party
will (upon further notice to the Indemnifying Party) have the right to undertake
the defense, compromise or settlement of such claim on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof. Anything in this Section
6.04 notwithstanding, (i) if there is a reasonable probability that a claim
may adversely affect the Indemnified Party other than as a result of money
damages or other money payments, the Indemnified Party shall have the right, at
its own cost and expense, to defend, compromise and settle such claim, and
(ii) the Indemnifying Party shall not, without the written consent of the
Indemnified Party settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant to the Indemnified Party a release from all liability in respect to
such claim. All parties agree to cooperate fully as necessary in the defense of
such matters. Should the Indemnified Party fail to notify the Indemnifying
Party in the time required above, this indemnity shall terminate and be of no
further force and effect with respect to the subject matter of the required
notice in the event that the Indemnified Party's failure to notify in the time
required above adversely affects the Indemnifying Party's ability to defend such
matter.
SECTION 6.05 ADJUSTMENT FOR INSURANCE AND TAXES. The amount which an
Indemnifying Party is required to pay to, for or on behalf of the other party
(hereinafter referred to as an "INDEMNITEE") pursuant to this Article 6 shall be
adjusted (including, without limitation, retroactively) (i) by any insurance
proceeds actually recovered by or on behalf of such Indemnitee in reduction of
the related indemnifiable loss (the "INDEMNIFIABLE LOSS") and (ii) to take
account of any tax benefit realized as a result of any Indemnifiable Loss.
Amounts required to be paid, as so reduced, are hereinafter sometimes called an
"INDEMNITY PAYMENT". If an Indemnitee has received or has had paid on its
behalf an Indemnity Payment for an Indemnifiable Loss and subsequently receives
insurance proceeds for such Indemnifiable Loss, or realizes any tax benefit as a
result of such Indemnifiable Loss, then the Indemnitee shall (x) promptly notify
the Indemnifying Party of the amount and nature of such proceeds and benefits
and (y) pay to the Indemnifying Party the amount of such insurance proceeds or
tax benefit or, if lesser, the amount of the Indemnity Payment.
SECTION 6.06 MITIGATION OF LOSS. Each Indemnitee is obligated to use all
reasonable efforts to mitigate to the fullest extent practicable the amount of
any Indemnifiable Loss for which it is entitled to seek indemnification
hereunder, and the Indemnifying Party shall not be required to make any payment
to an Indemnitee in respect of such Indemnifiable Loss to the extent such
Indemnitee failed to comply with the foregoing obligation.
SECTION 6.07 SUBROGATION. Upon making any Indemnity Payment, the
Indemnifying Party will, to the extent of such payment, be subrogated to all
rights of the Indemnitee against any third party in respect of the Indemnifiable
Loss to which the payment relates; PROVIDED, HOWEVER, that until the Indemnitee
recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third party on account of
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such payment are hereby made expressly subordinated and subjected in right of
payment of the Indemnitee's rights against such third party. Without
limiting the generality of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute, upon request, all instruments
reasonably necessary to evidence and perfect the above-described subrogation
and subordination rights.
SECTION 6.08 EXCLUSIVE REMEDY. Following the Closing, and with the
exception of the provisions of Articles 4 and 5, the indemnities provided for in
this Article 6 shall be the sole and exclusive remedies of the parties and their
respective officers, directors, employees, Affiliates, agents, representatives,
successors and assigns for any breach of or inaccuracy in any representation or
warranty or any breach, nonfulfillment or default in the performance of any of
the covenants or agreements contained in this Agreement (but not any such
covenants or agreements to the extent they are, by their terms, to be performed
after the Closing Date). The parties shall not be entitled to a recission of
this Agreement or to any further indemnification rights or claims of any nature
whatsoever in respect thereof (whether by contract, common law, statute, law,
regulation or otherwise, including, without limitation, under the Racketeer
Influence and Corrupt Organizations Act of 1970, as amended), all of which the
parties hereby waive, PROVIDED, HOWEVER, nothing herein is intended to waive any
claims for fraud.
ARTICLE 7.
MISCELLANEOUS
SECTION 7.01 DEFINITIONS. For the purposes of this Agreement:
(a) The term "KNOWLEDGE" shall be defined as actual knowledge and
knowledge of such other facts as to show bad faith;
(b) The term "AFFILIATE" (or "AFFILIATES") shall mean an entity that
is controlled by, controls, or is under common control with a
party (directly or indirectly).
SECTION 7.02 AMENDMENTS. This Agreement may not be amended or modified
without the written consent of the parties hereto.
SECTION 7.03 WAIVER. Failure to insist upon strict compliance with
any of the terms, covenants, or conditions of this Agreement at any one time
shall not be deemed a waiver of such term, covenant, or condition at any
other time nor shall any waiver or relinquishment of any right or power
herein at any time be deemed a waiver or relinquishment of the same or any
other right or power at any other time.
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SECTION 7.04 NOTICES. All notices, payments, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if sent by registered or certified mail, postage prepaid, and
return receipt requested to the parties, addressed as follows (or at such other
addresses as designated by the parties from time to time):
IF TO SELLER: Foundation Health Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President and Chief Executive,
Government Operations and Specialty
Services
IF TO BUYER: Access Health, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Manager
SECTION 1.05 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.06 ENFORCEABILITY AND SEVERABILITY. In the event any provision
of this Agreement or portion thereof is found to be wholly or partially invalid,
illegal, or unenforceable in any proceeding, then such provision shall be deemed
to be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable, or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
SECTION 7.07 GOVERNING LAWS AND CONSENT TO JURISDICTION. The laws of the
State of California (irrespective of its choice of law principles) shall govern
all issues concerning the validity of this Agreement, the construction of its
terms and the interpretation and enforcement of the rights and duties of the
parties. Each party irrevocably submits to the exclusive jurisdiction of the
courts of the State of California and the Federal courts of the United States of
America located in the State of California (and the California state and Federal
courts having jurisdiction over appeals therefrom) in respect of the
transactions contemplated by this Agreement, the other agreements and documents
referred to herein and the transactions contemplated by this Agreement and such
other documents and agreements.
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SECTION 7.08 SECTION TITLES. The titles of the sections have been
inserted as a matter of convenience and reference only and shall not control or
affect the meaning or construction of this Agreement.
SECTION 7.09 ASSIGNMENT. This Agreement shall not be assignable or
delegated by any party without the prior written consent of the other except
that Buyer may assign this Agreement to its parent company without prior written
consent.
SECTION 7.10 EXPENSES. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated.
SECTION 7.11 SURVIVAL OF AGREEMENTS. All representations and warranties
made in Sections 2 or 3 herein shall be effective as of the Closing Date and
shall survive the execution and delivery of this Agreement until one (1) year
from the date of Closing, except for Seller's representation and warrranty under
Section 2.03, which shall survive until the termination of the Services
Agreement. All statements contained in any certificate or other instrument
delivered by Buyer or Seller, hereunder or in connection herewith shall be
deemed to constitute representations and warranties made by that entity. Such
representations and warranties shall survive until the time specified herein in
full force and effect notwithstanding any investigation by the party relying
upon them.
SECTION 7.12 BROKERAGE. Each party hereto will indemnify and hold the
others harmless against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements, or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.13 PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Seller acknowledges
that Buyer's corporate parent is in the process of being acquired by McKesson
Corporation.
SECTION 7.14 REMEDIES. All remedies for breach of this Agreement shall
be cumulative.
SECTION 7.15 THIRD PARTIES. Except as specifically provided herein, this
Agreement does not and is not intended to create any rights in any person or
entity which is not a party to this Agreement.
SECTION 7.16 SPECIFIC PERFORMANCE. Each party acknowledges and agrees
that in the event of any breach of this Agreement, each non-breaching party
would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly
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agreed that the parties will (a) waive, in any action for specific
performance, the defense of adequacy of a remedy at law and (b) be entitled,
in addition to any other remedy to which they may be entitled, at law or in
equity, to compel specific performance of this Agreement in any action
instituted in accordance with Section 7.04.
SECTION 7.17 ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement and understanding
of the parties with respect to the subject matter hereof. All Schedules and
Exhibits hereto are incorporated herein by reference.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to be effective as of the day and year first written above.
ACCESS HEALTH, INC. FOUNDATION HEALTH SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Print Name Print Name
President President/CEO Government & Specialty
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Title Services Division
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Title
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