<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 1, 1999
------------------------------------------------
Date of Report (date of earliest event reported)
e-MedSoft.com
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Nevada 0-26567 84-1037630
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
1300 Marsh Landing Parkway, Suite 106, Jacksonville, FL 32250
-------------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(904) 543-1001
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 1, 1999 e-MedSoft.com (the "Company") acquired a computer
software clinical management system known as SamSyn from University Affiliates
IPA, Inc. ("UA"), an affiliate of the University of Southern California School
of Medicine. The Company purchased this technology from UA pursuant to an
Asset Purchase Agreement dated September 1, 1999 (the "Purchase Agreement").
At the closing the Company paid to UA $2,000,000 in cash and issued 1,721,973
shares of the Company's common stock which were valued at $4,468,162 (or
$2.5948 per share).
UA originally acquired SamSyn from the University of Southern California
("USC"), and in the Purchase Agreement the Company agrees that USC and its
affiliated faculty practice groups retain a perpetual, royalty-free license to
use and adopt SamSyn for their internal purposes.
The Purchase Agreement also provides that the Company would cause Sam
J.W. Romeo to be elected to its Board of Directors for an initial term of two
years and thereafter if Dr. Romeo consents so to serve, for an additional two
years. Accordingly the Company has added Dr. Romeo to its Board of Directors
effective September 1, 1999.
Dr. Romeo, who has more than 30 years of experience in the health care
field, currently serves as the President and Chief Executive Officer of
University Affiliates IPA, Inc., an affiliate of the University of Southern
California. In addition to having held senior faculty positions at the USC
School of Medicine, the Medical College of Wisconsin, and the St. Louis
University School of Medicine, Dr. Romeo has also served as the Medical
Director of several HMOs in California, Florida and New York, and is licensed
to practice medicine in the States of California, Florida, Idaho, Missouri and
Wisconsin. Dr. Romeo received the prestigious Physician Executive of the Year
Award given by the American College of Medical Practice Executives in October
of 1998. Dr. Romeo received his medical degree from the St. Louis University
School of Medicine and then received his MBA with Magna Cum Laude honors from
National University. Dr. Romeo, who was a Commander in the United States
Navy, is a former Associates Dean of Clinical Affairs of both the Medical
College of Wisconsin as well as the University of Southern California School
of Medicine.
Concurrently with the execution and closing of the Purchase Agreement,
the Company and UA also entered into a Software License and Services Agreement
(the "License Agreement") which has a ten year term and provides the Company
with exclusive access to UA's network of more than 2,500 physicians and 80,000
patients. Under the License Agreement the Company has sole responsibility for
the development of new software which utilizes the Company's technology and
the current version of SamSyn. This "New Software" must have certain features
including, among others, being web based and using Java. This agreement
further requires that the Company is to enable the New Software to go live on
UA's computer systems no later than December 31, 1999.
In the License Agreement the Company grants to UA, among other things a
worldwide license to use SamSyn in exchange for payment to the Company from
September 1, 1999 until the date UA accepts the New Software, of $100,000 each
calendar quarter. The Company further grants to UA, for the term of the
agreement, a worldwide license to use the New Software and to exclusively,
within the five county area in and around Los Angeles, sublicense or otherwise
permit the use of the New Software to designated health care professionals, in
exchange for the monthly payment to the Company, commencing on the date of
acceptance of the New Software, of license fees which are calculated as
varying percentages of monthly revenues as defined in the License Agreement.
2
<PAGE>
The Company and UA also entered into a Registration Rights Agreement
which provides certain "piggyback registration rights" to UA relating to the
1,721,973 shares of the Company's common stock. This agreement essentially
provides that if at any time the Company undertakes to file a registration
statement on its own behalf or on behalf of any of its security holders, it
must provide notice of such fact to UA and offer to include the 1,721,973
shares owned by UA in the registration statement subject to the terms and
conditions set forth in the Registration Rights Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION LOCATION
10.7 Asset Purchase Agreement dated Filed herewith electronically
September 1, 1999 among Sanga
e-Health LLC, e-MedSoft.com, and
University Affiliates IPA, Inc.
10.8 Software License and Services Filed herewith electronically
Agreement dated September 1, 1999
between University Affiliates IPA,
Inc. and e-MedSoft.com
10.9 Registration Rights Agreement Filed herewith electronically
dated September 1, 1999 between
University Affiliates IPA, Inc.
and e-MedSoft.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
e-MedSoft.com
Dated: September 13, 1999 By:/s/ Margaret A. Harris
Margaret A. Harris, Chief Financial
Officer
3
ASSET PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 1, 1999,
AMONG
SANGA E-HEALTH, LLC,
E-MEDSOFT.COM
AND
UNIVERSITY AFFILIATES IPA, INC.
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of September 1,
1999, is made among Sanga e-Health, LLC, a California limited liability
company ("SEH"), e-MedSoft.com, a Nevada corporation ("Purchaser") and
University Affiliates IPA, Inc., a California nonprofit mutual benefit
corporation ("Seller").
RECITALS
A. Seller is the owner of a computer software clinical management system
known as SamSyn, having acquired SamSyn from the University of Southern
California, a California nonprofit mutual benefit corporation ("USC"),
pursuant to the terms of the SamSyn Agreement.
B. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all of Seller's right, title and interest in SamSyn on
the terms and conditions set forth herein.
C. SEH is the controlling parent of Purchaser and owns of record and
beneficially approximately fifty percent (50%) of the issued and outstanding
capital stock of Purchaser. SEH desires that Purchaser acquire all of
Seller's right, title and interest in SamSyn on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals (which are
hereby incorporated by reference), the agreements hereafter set forth and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows. Capitalized and
certain other terms used herein shall have the definitions referred to, or set
forth, in Exhibit A hereto.
ARTICLE 1. PURCHASE AND SALE
1.1 Agreement to Purchase and Sell; Purchased Assets. On the Closing
Date (as defined in Section 1.2) and upon the terms and subject to the
conditions set forth in this Agreement, Seller shall sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser shall purchase and accept from
Seller, for the purchase price set forth in Section 1.3, all of Seller's
right, title and interest in and to SamSyn, the SamSyn Intellectual Property
and any Related Documentation and Seller shall assign to Purchaser and
Purchaser shall assume any and all rights to license, sell, market, distribute
or otherwise exploit SamSyn and the SamSyn Intellectual Property, to the
extent that Seller has such rights.
1.2 Closing. Consummation of the transactions contemplated hereby (the
"Closing") shall take place at 9:30 a.m. (Pacific Daylight Time) on September
1, 1999 (or if the conditions to Closing shall not have been satisfied or
waived by such date then as soon as practicable thereafter, but in no event
later than September 15, 1999 (the "Closing Date")) at the offices of Seller
at 1000 South Fremont Ave., Alhambra, California or at such other place and
time as the parties agree.
1.3 Purchase Price. The total purchase price for the Purchased Assets
to be paid by Purchaser (the "Purchase Price") shall be $6,468,162, which
shall be paid to Seller as follows:
2
<PAGE>
(a) the sum of $2,000,000 payable in cash by wire transfer of same
day funds to an account to be designated by Seller (the "Cash Consideration");
and
(b) 1,721,973 shares of Purchaser's common stock, being that number
of such shares determined by dividing $4,468,162 by the lesser of (i) $3.87,
and (ii) the average closing price of Purchaser's common stock reported on the
NASDAQ OTC system over the thirty (30) trading days ended August 24, 1999 (the
"Stock Consideration").
1.4 Seller's Closing Deliveries. Subject to the conditions set forth
in this Agreement, at the Closing, simultaneous with Purchaser's deliveries
hereunder, Seller shall deliver or cause to be delivered to Purchaser the
following, all in form and substance reasonably satisfactory to Purchaser:
(a) A bill of sale or other appropriate instrument of assignment
from Seller transferring to Purchaser Seller's interest in the Purchased
Assets as provided herein.
(b) The License Agreement as provided in Section 7.1(b).
(c) The Registration Rights Agreement as provided in Section
7.1(c).
(d) Such other documents as Purchaser shall reasonably request in
connection with the consummation of the transactions contemplated by this
Agreement.
1.5 Purchaser's Closing Deliveries. Subject to the conditions set forth
in this Agreement, at the Closing, simultaneous with Seller's deliveries
hereunder, Purchaser shall deliver or cause to be delivered to Seller the
following, all in form and substance reasonably satisfactory to Seller:
(a) The Cash Consideration as provided in Section 1.3(a).
(b) Stock Certificates in the name of Seller representing the Stock
Consideration as provided in Section 1.3(b).
(c) The License Agreement and the Guaranty as provided in Section
7.1(b).
(d) The Registration Rights Agreement as provided in Section
7.1(c).
(e) Such other documents as Seller shall reasonably request in
connection with the consummation of the transactions contemplated by this
Agreement.
ARTICLE 2. SAMSYN AGREEMENT
2.1 Purchaser and SEH recognize and acknowledge that the Purchased
Assets were originally acquired by Seller from USC pursuant to the terms of
the SamSyn Agreement, a copy of which has been provided to and reviewed by
Purchaser and SEH, and that USC, USC Care Medical Group, Inc. and USC's
affiliated faculty practice groups (collectively the "USC Plans") retain a
perpetual, royalty-free license to use and adopt the Purchased Assets for
3
<PAGE>
their internal purposes and have the right to license or otherwise make SamSyn
available to any third party controlled by or under the control of the USC
Plans. Purchaser and SEH agree that Purchaser's acquisition of the Purchased
Assets is subject to the rights of the USC Plans pursuant to the SamSyn
Agreement and that they shall take no action with respect to the Purchased
Assets that would in any way interfere with or be inconsistent with such
rights of the USC Plans. Accordingly and as required by the SamSyn Agreement,
any modifications, updates or enhancements of SamSyn that may be delivered by
the USC Plans shall not be used by Purchaser or SEH without the express
written consent of USC. Pursuant to the terms of the License Agreement, the
parties have agreed and acknowledged that the new software to be developed by
Purchaser pursuant to the License Agreement will be completely new software
with different functionality than SamSyn and not an update, upgrade,
modification or enhancement of SamSyn.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Purchaser the following as of the
date hereof:
3.1 Corporate Organization; Authority. Seller is a nonprofit mutual
benefit corporation duly organized, validly existing and in good standing
under the laws of the State of California. Seller has the corporate power and
authority to execute and deliver this Agreement, the License Agreement and the
Registration Rights Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement, the License
Agreement and the Registration Rights Agreement by Seller, the performance by
Seller of its obligations hereunder and thereunder, and the consummation by
Seller of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Seller, which authorization
constitutes all action necessary on the part of Seller to authorize such
execution, delivery and performance. This Agreement, the License Agreement
and the Registration Rights Agreement have been duly and validly executed and
delivered by Seller and constitute valid and binding obligations of Seller
enforceable against it in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, receivership, moratorium or other laws
relating to or affecting the rights and remedies of creditors generally and to
general equitable principles (regardless of whether at law or in equity).
3.2 No Violation. The execution, delivery and performance by Seller of
this Agreement, the License Agreement and the Registration Rights Agreement do
not and will not conflict with or result in any violation of, or constitute a
breach or default under, any term of the charter documents, by-laws or other
organizational documents of Seller, or any agreement, permit or other
instrument to which Seller or any of the Purchased Assets are subject (other
than those violations, breaches or defaults for which Seller will have
obtained a waiver or release prior to the Closing), or any law, regulation,
order, judgment or decree of any Governmental Authority to which any of the
same are subject.
3.3 Purchased Assets. Seller is the owner of SamSyn and has not
transferred, sold or assigned any interest in and to SamSyn to any third party
and has the right, power and authority to sell the same to Purchaser. To
Seller's knowledge, other than the Lien of USC, there is no Lien against
SamSyn and at Closing there will be no Lien against SamSyn.
4
<PAGE>
3.4 Litigation. Seller has not received any written notice of any
action, suit, inquiry, judicial or administrative proceeding, arbitration or
investigation ("Claims") which is pending or, to Seller's Knowledge,
threatened, against or involving the Purchased Assets before any Governmental
Authority, nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority outstanding against Seller which, individually or in
the aggregate, would reasonably be expected to impair the ability of Seller to
consummate the transactions contemplated by this Agreement, the License
Agreement or the Registration Rights Agreement.
3.5 Consents and Approvals. No consent, waiver, authorization or
approval of any Governmental Authority or any other Person is required in
connection with the execution, delivery and performance by Seller of this
Agreement, the License Agreement or the Registration Rights Agreement (other
than a release of Lien from USC which Seller shall have obtained prior to the
Closing).
3.6 Restricted Securities. Seller understands that the issuance of the
Stock Consideration pursuant to this Agreement has not been registered
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
under any state securities laws, that the Stock Consideration will be
characterized as "restricted securities" under the federal securities laws
inasmuch as it will be initially acquired from Purchaser in a transaction not
involving a public offering and that under such laws and applicable
regulations, such securities may be resold without registration under the
Securities Act only pursuant to the terms of Rule 144 under the Securities
Act. Seller confirms that it is acquiring the Stock Consideration solely for
its own account and not with a view to the resale or distribution thereof.
3.7 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
ARTICLE 3, IT IS UNDERSTOOD AND AGREED THAT THE PURCHASED ASSETS SOLD AND
ASSIGNED UNDER THIS AGREEMENT ARE PROVIDED TO AND ACCEPTED BY PURCHASER "AS
IS" AND THAT PURCHASER AND SEH DISCLAIM ALL WARRANTIES WHATSOEVER, WHETHER
EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY THAT SAMSYN SHALL NOT
INFRINGE ON THE RIGHTS OF ANY THIRD PARTY. SELLER MAKES NO WARRANTIES OR
REPRESENTATIONS AS TO SAMSYN'S PROPRIETARY MARKS OR USE THEREOF OR
REPRESENTATIONS OR WARRANTIES ARISING BY STATUTE OR OTHERWISE IN LAW, FROM A
COURSE OF DEALING OR USAGE OF TRADE. SELLER SHALL NOT BE LIABLE FOR ANY
DIRECT, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING FROM OR RELATED TO
THE USE OF SAMSYN OR ANY UPDATES, MODIFICATIONS, ENHANCEMENTS, IMPROVEMENTS OR
DERIVATIVE WORKS THERETO BY PURCHASER, SEH OR ANY OTHER PERSON.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SEH.
Purchaser and SEH hereby jointly and severally represent and warrant to Seller
the following as of the date hereof:
4.1 Organization; Authority. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Nevada. SEH is a
limited liability company duly organized, validly existing and in good
standing under the laws of California. Each of Purchaser and SEH has the
power and authority to execute and deliver this Agreement and, as applicable,
the License Agreement, the Guaranty and the Registration Rights Agreement
(collectively, the "Transaction Documents") and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of the
5
<PAGE>
Transaction Documents by each of Purchaser and SEH, as applicable, the
performance by each of Purchaser and SEH of its obligations hereunder and
thereunder, and the consummation by Purchaser and SEH of the transactions
contemplated hereby and thereby, have been duly authorized by the Board of
Directors and the shareholders of Purchaser and by the managers and members of
SEH pursuant to and in accordance with the laws and governing documents
governing SEH, which authorizations constitute all action necessary on the
part of Purchaser and SEH to authorize such execution, delivery and
performance. The applicable Transaction Documents have been duly and validly
executed and delivered by Purchaser and SEH and constitute valid and binding
obligations of each of Purchaser and SEH, enforceable against each of them in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
equitable principles (regardless of whether at law or in equity).
4.2 No Violation. The execution, delivery and performance by Purchaser
and SEH of the Transaction Documents do not and will not conflict with or
result in any violation of, or constitute a breach or default under, any term
of the charter documents, by-laws, operating agreements or other
organizational documents of Purchaser or SEH, or any agreement, permit or
other instrument to which Purchaser or SEH is a party or by which Purchaser,
SEH or their properties is subject, or any law, regulation, order, judgment or
decree of any Governmental Authority to which any of the same are subject.
4.3 Litigation. Neither Purchaser nor SEH has received any written
notice of any Claim which is pending or, to Purchaser's or SEH's knowledge, is
threatened, against or involving Purchaser or SEH before any Governmental
Authority, nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority outstanding against Purchaser or SEH which,
individually or in the aggregate, would reasonably be expected to impair the
ability of Purchaser to consummate the transactions contemplated by the
Transaction Documents.
4.4 Consents and Approvals. No consent, waiver, authorization or
approval of any Governmental Authority or any other Person is required in
connection with the execution, delivery and performance by Purchaser or SEH of
the Transaction Documents.
4.5 Availability of Financing. Purchaser has all funds necessary to
perform its obligations hereunder, including to pay the Cash Consideration at
the Closing.
4.6 Stock Consideration. Upon delivery of the Stock Consideration at
the Closing, Seller shall acquire legal, valid and marketable title to the
Stock Consideration free of any Liens; provided that the parties recognize
that, upon such delivery, as a portion of the proceeds from the sale of
SamSyn, pursuant to certain existing agreements between Seller and USC, the
Stock Consideration will be subject to a security interest of USC. The Stock
Consideration will be issued pursuant to a valid exemption from registration
under the Securities Act.
4.7 Capitalization. The authorized capital stock of Purchaser consists
of (i) 100,000,000 shares of Common Stock, of which 53,316,470 shares are
issued and outstanding, and (ii) 5,000,000 shares of Preferred Stock, $.001
par value, none of which are issued or outstanding. The Stock Consideration
has been duly authorized and on the Closing Date will be validly issued, fully
6
<PAGE>
paid and nonassessable and not subject to preemptive rights. There are no
outstanding subscriptions, options, rights, warrants, convertible securities,
or other agreements or commitments obligating Purchaser to issue any
additional shares of its capital stock.
4.8 Subsidiaries. Purchaser does not have any subsidiaries or own any
interest in any other Person except Relay Systems, Inc., e-Net Technology
Limited and various other subsidiaries and affiliates based in the United
Kingdom.
4.9 SEC Filings; Offering Documents. Purchaser has delivered to Seller
a copy of each report filed by Purchaser with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (the SEC Filings") and a copy of each offering or private
placement memorandum or similar document heretofore used by Purchaser in
connection with the offering or sale of its securities ("Offering Documents").
The SEC Filings, as of their respective filing dates, complied in all material
respects with all applicable requirements of the Exchange Act and the SEC
Filings and the Offering Documents, as of their respective filing or
distribution dates, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements and information therein, in light of the
circumstances under which they were made, not misleading.
4.10 Absence of Liabilities. Purchaser has no liabilities, obligations
or indebtedness of any nature, whether absolute, accrued, contingent or
otherwise and whether due or to become due, that would be required to be
reflected on a balance sheet prepared in accordance with generally accepted
accounting principles, that are not reflected in Purchaser's financial
statements included in the SEC Filings.
4.11 No Material Adverse Change. There has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings,
business, operations or prospects of Purchaser from that set forth in the SEC
Filings.
4.12 Tax Matters. For purposes of this Agreement, "Tax" or "Taxes"
shall include any and all federal, state, county, local, foreign and other
taxes, including income, gross receipts, capital stock, franchise, profits,
employee and payroll related, withholding, unemployment, real property,
personal property, stamp, excise, sales, use, transfer or value added taxes.
(a) All Tax declarations, reports and returns required to be filed by
Purchaser (alone or as a member of any affiliated, combined or unitary group)
have been duly and timely filed; (b) such Tax declarations, reports and
returns are true and correct; (c) all Taxes shown on such declarations,
returns or reports and on assessments received with respect thereto have been
paid in full; (d) there are no material unresolved claims for Taxes with
respect to which Purchaser is or may be liable; (e) no deficiencies for any
Taxes for which Purchaser is or may be liable have been asserted or assessed
or, to Purchaser's knowledge, proposed (and are currently pending), (f) no
waivers of the time to assess any Taxes for which Purchaser is or may be
liable have been given or requested, and (g) Purchaser is not a party to any
pending action or proceeding before any Governmental Authority for the
assessment or collection of any Taxes.
7
<PAGE>
4.13 Compliance with Laws. Purchaser is in compliance with all
applicable statutes, laws, rules, regulations and orders promulgated by any
Governmental Authority affecting its properties or the operation of its
business.
4.14 Intellectual Property. Purchaser owns or has the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property used in the operation of its business. Purchaser has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties and Purchaser has never
received any Claim alleging any such interference, infringement,
misappropriation or violation. To Purchaser's knowledge, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of Purchaser.
ARTICLE 5. COVENANTS.
5.1 Satisfaction of Conditions. The parties shall use reasonable
efforts to cause the conditions precedent to the obligations of Purchaser and
Seller set forth in Sections 7.1 and 7.2 to be fulfilled.
5.2 Further Assurances. Upon the reasonable request of any party at any
time after the Closing, the other parties shall promptly execute and deliver
such documents as reasonably necessary to effectuate the purposes of this
Agreement.
5.3 Taxes. Purchaser agrees to pay any sales, transfer and other taxes
(except income taxes of Seller) arising from or related to the transactions
contemplated hereby.
5.4 Reports Under Exchange Act; Rule 144. For a period of two years
following the Closing Date, Purchaser shall (i) file the reports required to
be filed by it under the Securities Act and the Exchange Act in a timely
manner and take such further action as Seller shall reasonably request to
enable Seller to sell the Stock Consideration received by Seller without
registration, including making publicly available the information necessary to
permit transfers of such shares pursuant to Rule 144, and (ii) upon the
request of Seller (a) deliver to Seller a written statement as to its
compliance with such filing requirements, and (b) furnish to Seller a copy of
its SEC Filings made after the date hereof. If, during such period, Seller
desires to transfer any of the Stock Consideration received by Seller in
compliance with Rule 144, Purchaser shall use its best efforts to provide
Seller with a legal opinion with respect to such compliance.
5.5 Election to Board. Immediately following the Closing, Seller and
SEH shall take all necessary action to cause Sam J.W. Romeo ("Romeo") to be
elected to the Board of Directors of Purchaser for an initial term of two
years and thereafter, if Romeo consents so to serve, shall cause Romeo to be
elected for an additional two year term, and, during such term or terms, to
cause Romeo to be entitled to compensation and indemnification rights no less
than that of any other member of such Board of Directors.
ARTICLE 6. INDEMNIFICATION
6.1 Seller's Indemnification. Seller shall indemnify and hold harmless
Purchaser and its Affiliates, successors and assigns, from and against and in
respect of any and all losses, costs, fines, liabilities, claims, penalties,
8
<PAGE>
damages and expenses (including reasonable legal fees and expenses incurred in
the investigation and defense of claims and actions) (collectively, "Losses")
resulting from, in connection with or arising out of any breach of any
representation, warranty or covenant made by Seller in this Agreement.
6.2 Purchaser's Indemnification. Purchaser shall indemnify and hold
harmless Seller and its Affiliates, successors and assigns from and against
and in respect of any and all Losses resulting from, in connection with or
arising out of:
(a) any breach of any representation, warranty or covenant made by
Purchaser or SEH in this Agreement; or
(b) the use, marketing, distribution, sale, licensing, development
or exploitation of the Purchased Assets by Purchaser or any Affiliate of
Purchaser following the Closing, except the use, licensing or development of
the Purchased Assets by Seller following the Closing pursuant to the terms of
the License Agreement.
6.3 Indemnification Procedures.
(a) Procedures Relating to Indemnification. In the event that a
third party files a lawsuit, enforcement action or other proceeding against a
party entitled to indemnification under this Article 6 (an "Indemnified
Party") or the Indemnified Party receives notice of, or becomes aware of a
condition or event which otherwise entitles such party to the benefit of any
indemnity hereunder in connection with a claim by a third party (a "Third
Party Claim"), the Indemnified Party shall give written notice thereof (the
"Claim Notice") promptly to each party obligated to provide indemnification
pursuant to this Article 6 (an "Indemnifying Party"). All claims for
indemnification by the Indemnified Party shall be bona fide. The Claim Notice
shall describe in reasonable detail the nature of the claim, including an
estimate, if practicable, of the amount of damages that have been or may be
suffered or incurred by the Indemnified Party attributable to such claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. Notwithstanding the foregoing, failure by an Indemnified Party to
provide notice on a timely basis of a Third Party Claim shall not relieve the
Indemnifying Party of its obligations hereunder, unless, and then solely to
the extent that, the Indemnifying Party is prejudiced thereby.
(b) Conduct of Defense. The Indemnifying Party shall have the
right, upon written notice to the Indemnified Party (the "Defense Notice")
within fifteen days of its receipt from the Indemnified Party of the Claim
Notice, to conduct at its expense the defense against such Third Party Claim
in its own name, or, if necessary, in the name of the Indemnified Party;
provided, however, that the Indemnified Party shall have the right to approve
the defense counsel representing the Indemnifying Party in such defense, which
approval shall not be unreasonably withheld or delayed, and in the event the
Indemnifying Party and the Indemnified Party cannot agree upon such counsel
within ten days after the Defense Notice is provided, then the Indemnifying
Party shall propose an alternate defense counsel, which shall be subject again
to the Indemnified Party's approval, which approval shall not be unreasonably
withheld or delayed.
(c) Conduct by Indemnified Party. In the event that the
Indemnifying Party shall fail to give the Defense Notice within the time and
as prescribed by Section 6.3(b), then the Indemnified Party shall have the
9
<PAGE>
right to conduct such defense in good faith with counsel reasonably acceptable
to the Indemnifying Party, but the Indemnified Party (or any insurance carrier
defending such Third Party Claim on the Indemnified Party's behalf) shall be
prohibited from compromising or settling the claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. Failure at any time of the Indemnifying Party to
diligently defend a Third Party Claim as required herein shall entitle the
Indemnified Party to assume the defense and settlement of such Third Party
Claim as if the Indemnifying Party had never elected to do so as provided in
this Section.
(d) Cooperation. In the event that the Indemnifying Party does
deliver a Defense Notice and thereby elects to conduct the defense of such
Third Party Claim in accordance with Section 6.3(b), the Indemnified Party
will cooperate with and make available to the Indemnifying Party such
assistance, personnel, witnesses and materials as the Indemnifying Party may
reasonably request, all at the expense of the Indemnifying Party. Regardless
of which party defends such Third Party Claim, the other party shall have the
right at its expense to participate in the defense assisted by counsel of its
own choosing.
(e) Settlements. Without the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld or delayed), the
Indemnifying Party (or any insurance carrier defending such Third Party Claim
on the Indemnifying Party's behalf) will not enter into any settlement of any
Third Party Claim if pursuant to or as a result of such settlement, such
settlement would lead to liability or create any financial or other obligation
on the part of the Indemnified Party for which the Indemnified Party is not
entitled to indemnification hereunder. If a firm offer is made to settle a
Third Party Claim and the Indemnifying Party desires to accept such offer, the
Indemnifying Party will give written notice to the Indemnified Party to that
effect. If the Indemnified Party objects to such firm offer within ten days
after its receipt of such notice, the Indemnified Party may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will not
exceed the amount of such settlement offer, plus costs and expenses paid or
incurred by the Indemnified Party up to the point such notice had been
delivered.
(f) Binding Obligations. Any judgment entered or settlement agreed
upon in the manner provided herein shall be binding upon the Indemnifying
Party, and shall be conclusively deemed to be an obligation with respect to
which the Indemnified Party is entitled to prompt indemnification hereunder,
subject to the Indemnifying Party's right to appeal an appealable judgment or
order.
(g) Mitigation. Each Indemnified Party shall reasonably consult
and cooperate with each Indemnifying Party with a view towards mitigating
Losses in connection with claims for which a party seeks indemnification under
this Section 6.3.
6.4 Nature of Other Liabilities. In the event any Indemnified Party
should have a claim against any Indemnifying Party hereunder which does not
involve a Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice") describing in
reasonable detail the nature of the claim and the basis of the Indemnified
Party's request for indemnification under this Agreement.
10
<PAGE>
6.5 Survival of Representations, Warranties and Covenants. The
respective representations, warranties and covenants of each of the parties to
this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby; provided, however, that no party entitled to
indemnification under Section 6.1 or 6.2 shall commence any suit or proceeding
alleging a breach of representation. warranty or covenant under this agreement
after three (3) years following the Closing Date (the "Expiration Date"),
except as to any matter as to which a claim is submitted in writing to the
Indemnifying Party prior to the Expiration Date and identified as a claim for
indemnification pursuant to this Agreement, in which event the representation,
warranty or covenant which is the subject of the claim shall continue to
survive and remain a basis for indemnity as to such claim until such claim is
finally resolved or disposed of.
6.6 Limitation on Seller's Representations and Warranties.
Notwithstanding anything contained in this Agreement to the contrary, each
representation and warranty of Seller in this Agreement is subject to and
qualified by the knowledge of Purchaser or SEH and under no circumstances,
regardless of the Knowledge of Seller, shall Seller be liable for breach of a
representation or warranty if such breach is based on items, facts,
circumstances or matters which Purchaser or SEH knew or knows.
ARTICLE 7. CONDITIONS TO CLOSING.
7.1 Conditions to Obligations of Purchaser. All obligations of
Purchaser under this Agreement are subject to the fulfillment of the following
conditions at or prior to Closing:
(a) Representations and Warranties of Seller. All representations
and warranties made by Seller in this Agreement shall be complete and accurate
in all material respects on and as of the Closing Date, as if again made by
Seller on and as of such date.
(b) License Agreement. Purchaser and Seller shall have executed
and delivered a license agreement substantially in the form set forth in
Exhibit B (the "License Agreement"), providing for licensing to Seller of any
software owned by Purchaser, including SamSyn, and accepted for usage by
Seller, and SEH shall have executed and delivered the Guaranty attached to the
License Agreement (the "Guaranty").
(c) Registration Rights Agreement. Purchaser and Seller shall have
executed and delivered a registration rights agreement substantially in form
set forth in Exhibit C (the "Registration Rights Agreement"), providing for
the granting to Seller of certain piggyback registration rights with respect
to the Stock Consideration.
(d) Performance of Seller's Obligations. Seller shall have
delivered or caused delivery of all other documents and agreements described
in Section 1.4 and shall have otherwise performed in all material respects all
obligations required under this Agreement by it on or prior to the Closing.
(e) Pending Proceedings. No injunction, restraining order or other
ruling or order issued by any Governmental Authority or other legal restraint
or prohibition preventing the consummation of the transactions contemplated by
the Transaction Documents shall be in effect.
11
<PAGE>
(f) Consents and Approvals. All consents, waivers, authorizations
and approvals of, and all filings with or notices to, any Governmental
Authority or other Person that may be required in connection with the
execution, delivery and performance of the Transaction Documents, if any,
shall have been obtained, made or given and shall be in full force and effect.
7.2 Conditions to Obligations of Seller. All obligations of the Seller
under this Agreement are subject to the fulfillment of the following
conditions at or prior to Closing:
(a) Representations and Warranties of Purchaser. All
representations and warranties made by Purchaser and SEH in this Agreement
shall be complete and accurate on and as of the Closing Date, as if again made
by Purchaser and SEH on and as of such date.
(b) License Agreement. Purchaser and Seller shall have executed
and delivered the License Agreement.
(c) Registration Rights Agreement. Purchaser and Seller shall have
executed and delivered the Registration Rights Agreement.
(d) Release of Lien of USC. USC shall have executed a release of
its Lien against SamSyn.
(e) Performance of Purchaser's Obligations. Purchaser shall have
delivered the Cash Consideration and all other documents and agreements
described in Section 1.5 and otherwise performed in all material respects all
obligations required under this Agreement to be performed by Purchaser and SEH
on or prior to the Closing Date.
(f) Pending Proceedings. No injunction, restraining order or other
ruling or order issued by any Governmental Authority or other legal restraint
or prohibition preventing the consummation of the transactions contemplated by
the Transaction Documents shall be in effect.
(g) Consents and Approvals. All consents, waivers, authorizations
and approvals of, and all filings with or notices to, any Governmental
Authority or other Person that may be required in connection with the
execution, delivery and performance of the Transaction Documents, if any,
shall have been obtained, made or given and shall be in full force and effect.
ARTICLE 8. MISCELLANEOUS PROVISIONS.
8.1 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, each of the signatories hereto and their respective
successors and assigns; provided, however, that Purchaser shall not assign or
delegate this Agreement or any of its rights or obligations created hereunder
without the prior consent of Seller, which consent shall not be unreasonably
withheld.
8.2 Remedies. Article 6 contains the exclusive remedies for all claims
among the parties relating to this Agreement, all of which claims shall be
made pursuant to, and subject to, Article 6.
8.3 Publicity. No party to this Agreement shall issue or cause the
publication of any press release or make any other announcement with respect
to this Agreement or the transactions contemplated hereby without the prior
consent of the other parties, except where such release or announcement is
12
<PAGE>
required by applicable law. Seller shall be notified in writing as to the
content of any such release or announcement prior to the publication thereof
and Purchaser and SEH will incorporate any reasonable comments which Seller
has thereto prior to its publication.
8.4 Notices. All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder shall be in writing
and hand delivered or sent by (i) nationally-recognized next business day
delivery service, (ii) facsimile, with a hard copy to be sent by next business
day courier or first class U.S. Mail, or (iii) mailed by certified or
registered first class mail, return receipt requested, postage prepaid,
addressed as set forth below; receipt shall be deemed to occur on the earlier
of the date of actual receipt or receipt by the sender of confirmation that
the delivery was completed or that the addressee has refused to accept such
delivery or has changed its address without giving notice of such change as
set forth herein.
(a) if to Purchaser or SEH, as follows:
20750 Ventura Boulevard, Suite 202
Woodland Hills, California 91354
Attention: Chief Executive Officer
Facsimile No. (310) 246-9047
(b) if to Seller as follows:
1000 South Fremont Avenue, A-11
Alhambra, California 91807
Attention: Chief Executive Officer
Facsimile No.: (626) 943-1090
or such other address or persons as the parties may from time to time
designate in writing in the manner provided in this Section.
8.5 Entire Agreement. This Agreement, together with the Exhibits
attached hereto, represent the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated herein and
therein, and no representations, warranties or covenants have been made in
connection with this Agreement, other than those expressly set forth herein.
This Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements among the parties relating to
the subject matter of this Agreement and all prior drafts of this Agreement,
all of which are merged into this Agreement. Neither Seller nor any Affiliate
of Seller shall have any liability for statements, claims, forecasts,
projections or other information, financial or otherwise, provided by or on
behalf of Seller or in connection with the Purchased Assets prior to the
Closing. Purchaser and SEH agree that they are not relying on any financial
data, statements, claims, projections, forecasts or other information other
than as expressly set forth in Article 3 in entering into this Agreement or
consummating the transactions contemplated hereby. Notwithstanding the
foregoing, those certain Nondisclosure and Work for Hire Agreements among
Purchaser, Seller and certain employees of Seller regarding certain
confidential information provided by Seller to Purchaser shall remain in full
force and effect and Purchaser and SEH hereby represent to Seller that any
employee, agent or representative of Purchaser or SEH who has had access to
SamSyn or other confidential information of Seller has executed such a
Nondisclosure and Work for Hire Agreement.
13
<PAGE>
8.6 Amendments and Waivers. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties hereto or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any waiver on the part of any party of any such right,
power or privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of
any other such right, power or privilege.
8.7 Severability. This Agreement shall be deemed severable and the
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term
or provision hereof.
8.8 Headings. The article and section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision
hereof.
8.9 Terms. All references herein to Articles, Sections, and Exhibits
shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require. All references to singular or plural shall include
the other as the context may require.
8.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect
to choice of law principles. The parties agrees that any state or federal
court located in the County of Los Angeles shall have exclusive jurisdiction
of any action or proceeding relating to, or arising under or in connection
with this Agreement and each party consents to personal jurisdiction of such
courts and waives any objection to such courts' jurisdiction and agrees that
such jurisdiction is a convenient forum for any such action or proceeding.
8.11 Attorneys' Fees. In the event any party commences a legal
proceeding to enforce any of the terms of this Agreement, the prevailing party
in such action shall have the right to recover reasonable attorneys' fees and
costs from the other party or parties.
8.12 Exhibits. The Exhibits attached hereto are a part of this
Agreement as if fully set forth herein.
8.13 Brokers and Finders. Each of the parties hereto represents and
warrants to each other party that there are no outstanding broker, finder or
investment banker fees or commissions owed or to be owed by it in connection
with the transactions contemplated by this Agreement.
8.14 No Third Party Beneficiaries. Except as expressly contemplated in
this Agreement, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto and nothing in this Agreement is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
8.15 Expenses. Except as expressly provided otherwise in this
Agreement, each party shall bear all expenses incurred on behalf of such party
in connection with the preparation, execution and performance of this
Agreement, and the transactions contemplated hereby.
14
<PAGE>
8.16 Construction. This Agreement, the License Agreement and the
Registration Rights Agreement were initially prepared by Seller's counsel as a
matter of convenience only, and such documents have been thoroughly reviewed
by Purchaser and SEH and their legal counsel and, therefore, no interpretation
will be made in favor of Purchaser, SEH or their Affiliates with respect to
this Agreement, the License Agreement or the Registration Rights Agreement for
the reason that such documents were prepared by Seller's legal counsel.
8.17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
SANGA E-HEALTH, LLC,
a California limited liability company
By:/s/ John Andrews
Its President
"SEH"
E-MED.SOFT.COM,
a Nevada corporation
By:/s/ John Andrews
Its President
"PURCHASER"
UNIVERSITY AFFILIATES IPA, INC.,
a California nonprofit mutual
benefit corporation
By:/s/ Sam J. W. Romeo
Its President
"Seller"
15
<PAGE>
EXHIBIT A
DEFINITIONS
Affiliate shall mean a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
another Person.
Agreement shall have the meaning set forth in the Preamble.
Cash Consideration shall have the meaning set forth in Section 1.3(a).
Claim Notice shall have the meaning set forth in Section 6.3(a).
Claims shall have the meaning set forth in Section 3.4.
Closing shall have the meaning set forth in Section 1.2.
Closing Date shall have the meaning set forth in Section 1.2.
Defense Notice shall have the meaning set forth in Section 6.3(b).
Exchange Act shall have the meaning set forth in Section 4.9.
Expiration Date shall have the meaning set forth in Section 6.5.
Governmental Authority means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,
instrumentality, government or self-regulatory organization, commission,
tribunal, court or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
including shall mean "including, without limitation" and shall not be limited
by the terms following said term.
Indemnified Party shall have the meaning set forth in Section 6.3(a).
Indemnifying Party shall have the meaning set forth in Section 6.3(a).
Indemnity Notice shall have the meaning set forth in Section 6.4.
Intellectual Property shall mean (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations and renewals in connection therewith, (e)
all trade secrets (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists, pricing, cost, profit and sales information, business, marketing and
research and development plans and proposals and other information of a
similar nature), (f) all computer software and programs (including data and
related documentation), and (g) all copies and tangible embodiments thereof
(in whatever form or medium).
<PAGE>
Knowledge as used in this Agreement with respect to Seller's awareness of the
presence or absence of a fact, event or condition shall mean actual, not
implied or imputed, present knowledge of Romeo.
License Agreement shall have the meaning set forth in Section 7.1(b).
Liens shall mean all liens, charges, priorities, encumbrances and
hypothecations.
Losses shall have the meaning set forth in Section 6.1.
Offering Documents shall have the meaning set forth in Section 4.9.
Person shall mean any individual, partnership, corporation, company, limited
liability company, trust, Governmental Authority or other entity.
Purchase Price shall have the meaning set forth in Section 1.3.
Purchased Assets shall have the meaning set forth in Section 1.1.
Purchaser shall have the meaning set forth in the Preamble.
Registration Rights Agreement shall have the meaning set forth in Section
7.1(c).
Related Documentation shall mean any and all operator, user and training
manuals or materials developed in conjunction with SamSyn.
Romeo shall have the meaning set forth in Section 5.5.
SamSyn shall mean that certain clinical management computer software system
developed originally by USC and which is the subject of the SamSyn Agreement
and, as of the date of this Agreement, known and used by Seller as SamSyn,
including object and source code.
SamSyn Agreement shall mean that certain SamSyn Agreement between USC and
Seller effective as of January 1, 1998 relating to the assignment of SamSyn to
Seller.
SEC shall have the meaning set forth in Section 4.9.
SEC Filings shall have the meaning set forth in Section 4.9.
Securities Act shall have the meaning set forth in Section 3.6.
SEH shall have the meaning set forth in the Preamble.
Seller shall have the meaning set forth in the Preamble.
Stock Consideration shall have the meaning set forth in Section 1.3(b).
Third Party Claim shall have the meaning set forth in Section 6.3(a).
Transaction Documents shall have the meaning set forth in Section 4.1.
USC shall have the meaning set forth in Recital A.
USC Plans shall have the meaning set forth in Article 2.
<PAGE>
EXHIBIT B
FORM OF LICENSE AGREEMENT
<PAGE>
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
SOFTWARE LICENSE AND SERVICES AGREEMENT
This SOFTWARE LICENSE AND SERVICES AGREEMENT (this "Agreement") is
entered into this 1st day of September, 1999 (the "Effective Date"), between
University Affiliates IPA, Inc., a California nonprofit mutual benefit
corporation ("IPA"), and e-MedSoft.com., a Nevada corporation ("E-Med").
Pursuant to the terms and conditions of this Agreement, E-Med licenses
certain software to IPA, provides to IPA the right to sublicense such
software, and agrees to provide related services to IPA and DHCPs, and it is
the intention of the parties that IPA will utilize such software.
1. Definitions.
1.1. "Accepts" and "Acceptance" means the written certification by
IPA that an item of software performs in a manner satisfactory for use by the
IPA Members. There shall be no default Acceptance, and none other than by
this affirmative written certification.
1.2. "Asset Purchase Agreement" means that agreement dated of even
date herewith by and between Sanga e-Health, LLC, a California limited
liability company, IPA, and E-Med, pursuant to which E-Med purchased SamSyn
from IPA.
1.3. "Default" shall have the meaning set forth in Section 12.1
hereof.
1.4. "Designated Health Care Professionals" shall have the meaning
set forth in Section 5.1 hereof.
1.5. "DHCPs" shall mean Designated Health Care Professionals.
1.6. "E-Med" shall have the meaning set forth in the preamble
hereto.
1.7. "E-Med Software" means SamSyn, NS and the Other E-Med Software.
1.8. "E-Med Software List" shall have the meaning set forth in
Section 6.1 hereof.
1.9. "Go Live" means, with respect to each item of E-Med Software,
the point in time at which there is fully functioning data exchange with
respect to such software on the computer systems of IPA or DHCPs, as the case
may be.
1.10. "Including" means including without limitation.
1.11. "Indemnifying Party" shall have the meaning set forth in
Section 10.3 hereof.
1.12. "Indemnified Party" shall have the meaning set forth in
Section 10.3 hereof.
1.13. "IPA" shall have the meaning set forth in the preamble hereto.
<PAGE>
1.14. "IPA Members" means DHCPs who have entered into agreements
with IPA such that they become participating providers of IPA and who use
SamSyn, NS or any Other E-Med Software.
1.15. "New Software" shall have the meaning set forth in Section 4.1
hereof.
1.16. "NS" means New Software.
1.17. "Other E-Med Software" means all software owned by E-Med, and
the Upgrades thereto from time to time, other than SamSyn and NS.
1.18. "Person" means any individual, corporation, company, limited
liability company, trust, governmental authority or other entity.
1.19. "Proprietary Information" shall have the meaning set forth in
Section 11.1 hereof.
1.20. "Project Manager" shall have the meaning set forth in Section
4.6 hereof.
1.21. "Right of First Refusal Notice" shall have the meaning set
forth in Section 5.3 hereof.
1.22. "SamSyn" means that certain clinical management computer
software system known and used by IPA as SamSyn, including object and source
code, as more particularly described in Section 4.1 hereof.
1.23. "SamSyn Agreement" means that certain SamSyn Agreement between
USC and IPA effective as of January 1, 1998 relating to the assignment of
SamSyn to IPA.
1.24. "Services" shall have the meaning set forth in Section 7.1
hereof.
1.25. "Termination Date" shall have the meaning set forth in Section
3.1 hereof.
1.26. "Term" means ten years from the Effective Date, except as set
forth in Section 5.5.
1.27. "Territory" means the California counties of Los Angeles,
Orange, Riverside, San Bernardino and Ventura.
1.28. "Third Party Non-Territory License" shall have the meaning set
forth in Section 5.3 hereof.
1.29. "Upgrades" means bug fixes, upgrades, new versions, updates,
enhancements, and added functionality without regard to the manner in which
such functionality is added to the software upgraded.
1.30. "Y2K" refers to the problem that some computer systems
currently have, or may or will have, with respect to the change of year from
1999 to 2000, including leap year and including the use of "99" as year data
as a function of which such systems are not able correctly to read, calculate,
or output using dates before, during, or after 1999.
2
<PAGE>
2. Representations and Warranties.
2.1. E-Med represents and warrants to IPA that:
2.1.1. It has full power and authority to enter into and
perform this Agreement and that such ability is not limited or restricted by
any agreements or understandings between E-Med and other Persons;
2.1.2. Immediately subsequent to the execution of the Asset
Purchase Agreement, E-Med will have all rights in E-Med Software and no Person
other than E-Med will have any ownership claim to the rights licensed,
assigned, or otherwise provided to IPA under this Agreement;
2.1.3. Any information or materials contained in or relating
to the Other E-Med Software are either original with E-Med, in the public
domain, or E-Med is licensed to dispose of them as contemplated by this
Agreement. Such materials, and their contemplated disposition under this
Agreement, do not and shall not infringe any Person's rights including without
limitation, patents, copyrights, including rights in a joint work, trademarks,
trade dress, rights of publicity, privacy, moral rights, literary rights,
performance, trade secret, libel and intellectual property rights including
rights under patent, copyright, and trademark law, or any other right;
2.1.4. All rights granted to IPA hereunder are free and clear
of all liens, claims and encumbrances, including such of any Person that
contributed in any way to Other E-Med Software;
2.1.5. There is no claim, action, suit or proceeding relating
to the rights of E-Med in and to the Other E-Med Software pending or
threatened before any court, examiner, board, tribunal, arbiter, or other
adjudicatory entity;
2.1.6. E-Med is solvent and has the financial resources to
complete and deliver the Services and E-Med Software;
2.1.7. E-Med has the technical expertise and resources to
fulfill its obligations under this Agreement;
2.1.8. The E-Med Software shall be of good and marketable
quality, be free from all defects in design, materials, workmanship,
performance and title; and the Other E-Med Software and the NS shall meet the
needs of the IPA Members;
2.1.9. The E-Med Software shall provide adequate security for
the protection of the Proprietary Information;
2.1.10. The E-Med Software shall not experience difficulties,
bugs, or other than correct performance, as a consequences of Y2K, or any
other feature of the software or its interaction with the hardware with which
it is reasonably expected to interact and does not contain any viruses or
other code that will delay or disrupt the use of the E-Med Software, destroy
or render less than fully useful any data manipulated by the E-Med Software;
2.1.11. The Services shall be provided in a workmanlike
manner, and will result in the E-Med Software, at all times during the Term,
complying with the provisions of Section 2.1.8; and
3
<PAGE>
2.1.12. The E-Med Software can, with currently commercially
available additional interface software, permit third parties to enter and
read data, such as in a web based environment.
2.2. IPA represents and warrants to E-Med that it has full power
and authority to enter into and perform this Agreement, and that such ability
is not limited or restricted by any agreements or understandings between IPA
and other Persons, other than as expressly set forth herein.
3. Term.
3.1. This Agreement will begin on the Effective Date and will
terminate on the date which is the tenth (10th) anniversary of the Effective
Date, unless earlier terminated by either party pursuant to the terms hereof
and except as otherwise provided in Section 5.5 (the "Termination Date"). The
parties may agree to extend the Term by executing an addendum in writing to
that effect not less than sixty (60) days prior to the expiration of the Term.
Neither the expiration nor earlier termination of this Agreement shall relieve
either party of any obligation it may owe to the other which may have accrued
as of the date of such termination.
4. Development of NS; Deployment; Related Costs.
4.1. E-Med will have sole responsibility for the development of new
software which utilizes E-Med technology and the current version of SamSyn
(the "New Software" or "NS"). The Workplan for such development is set forth
on Exhibit A. The parties acknowledge and agree that NS will be completely new
software, with different functionality than SamSyn, and is not an update,
upgrade, modification or enhancement of SamSyn. In this respect, the parties
acknowledge that SamSyn is a clinical management computer software system,
utilizing a Unix operating system and a Universe based database that uses
TOADS to perform all front end activity and that SamSyn performs scheduling,
billing and managed care activities requiring Termite as an emulator.
4.2. The NS will be an integrated office management system
performing all functions necessary for office management and providing access
to all patient, insurance and physician information based on user definitions
and will have the following features:
4.2.1. be web based;
4.2.2. be logic driven;
4.2.3. use Java, and Java Scripting as a language; and
4.2.4. use Oracle as a database.
4.3. The NS will enable IPA and DHCP's to engage in an online
submission and review of at least the following information:
4.3.1. eligibility;
4.3.2. referrals and authorizations;
4.3.3. submission and payment of claims;
4
<PAGE>
4.3.4. physician information; and
4.3.5. covered benefits.
4.4. E-Med shall enable NS to Go Live on IPA's computer systems no
later than December 31, 1999.
4.5. IPA will cooperate with E-Med and will provide the personnel
set forth in Exhibit B to assist in the development of NS by E-Med and to be
responsible for the deployment of NS by IPA. The persons set forth in Exhibit
B shall devote to the deployment of NS that percentage of their full time
indicated opposite their respective names on Exhibit B.
4.6. E-Med shall each be solely responsible for paying directly or
reimbursing IPA, within fifteen (15) days of a written request from IPA, for
all costs and expenses relating to the work to be performed by IPA personnel
in connection with E-Med's development of NS and IPA's deployment thereof,
including salaries, benefits and expenses of the persons listed in Exhibit B
based on the portion of their full time devoted to such development and/or
deployment as set forth in Exhibit B.
4.7. E-Med shall reimburse IPA, within fifteen (15) days of a
written request from IPA, for all installation, deployment, training,
marketing, sales and similar costs incurred by IPA or its employees in IPA's
effort to attain Acceptance of NS on IPA's computer systems and the computer
systems of DHCPs.
4.8. Both E-Med and IPA shall appoint a project manager (each a
"Project Manager") whose duties will include acting as the primary liaison
between the parties in connection with the development and deployment of NS.
The Project Managers shall, until the Acceptance of NS, meet on a periodic
basis as mutually agreed upon for the purpose of reporting on the progress of
the development effort and resolving any technical issues that may arise.
E-Med shall be responsible for all costs incurred by either party in attending
these meetings.
5. License Grants.
5.1. E-Med grants to IPA, for the Term, a worldwide license to use
SamSyn and to exclusively, to the exclusion of all other Persons including
E-Med, sublicense or otherwise permit the use of SamSyn to any IPA Member or
any other designated provider of health care services (collectively with IPA
Members, the "Designated Health Care Professionals" or "DHCPs") in exchange
for the payment by IPA to E-Med, from the Effective Date until the date of
Acceptance of NS by IPA, of $100,000 each calendar quarter, payable upon the
first day of each such quarter and prorated with respect to any partial
quarter. In the event that E-Med is in Default hereunder, IPA shall have the
right to use SamSyn, and sublicense or otherwise permit the use of SamSyn to
DHCPs, without any further payment of any fees to E-Med.
5.2. E-Med grants to IPA, for the Term, a worldwide license to use
NS and to exclusively, to the exclusion of all other Persons including E-Med
within the Territory, sublicense or otherwise permit the use of NS in the
Territory to DHCPs in exchange for the payment by IPA to E-Med monthly,
commencing upon the date of Acceptance of NS by IPA, of license fees equal to
the following:
For the managed care functions of NS, as described in part in
Section 4.3, the greater of:
5
<PAGE>
1.92% of the monthly gross revenues derived by IPA from
managed care payors in the form of capitation payments for professional
medical services in the Territory on a prospective basis, and for which IPA
bears financial risk with respect to the future provision of such DHCPs'
services; or
$45,000 unless IPA requires that the managed care
functions of NS be more extensive than those set forth in Section 4.3 (in
which event the parties shall agree to an increase in such amount).
For the billing and collection functions of NS, (i) 3.5%
of the monthly revenues collected by IPA on behalf of DHCPs in the Territory
who are IPA Members as a result of the billing and collection services
provided by IPA to such DHCPs, or, as the case may be, (ii) such percentage of
the monthly revenues collected by IPA on behalf of DHCPs in the Territory who
are not IPA Members as a result of the billing and collection services
provided by IPA to such DHCPs as shall be determined unanimously by the Board
of Directors of E-Med based on market factors.
5.3. Pursuant to the provisions of this Section 5.3, if at any time
after the Effective Date, E-Med shall propose to license NS to a third party
for the purpose of such third party sublicensing, or otherwise permitting the
use of, NS to entities outside of the Territory (a "Third Party Non-Territory
License"), E-Med shall adhere to the following procedures. Prior to its entry
into any Third Party Non-Territory License, E-Med shall notify IPA in writing
(the "Right of First Refusal Notice") of its intentions to enter into a Third
Party Non-Territory License, and, in such writing, E-Med shall set forth the
terms under which it proposes to enter into such Third Party Non-Territory
License. Within thirty (30) days after its receipt of the Right of First
Refusal Notice, IPA shall notify E-Med whether it seeks to exclusively license
NS on the same terms and conditions as those set forth in the Right of First
Refusal Notice. In the event that IPA declines to license NS on the terms and
conditions set forth in the Right of First Refusal Notice, or does not respond
to E-Med within thirty (30) days of its receipt of the Right of First Refusal
Notice, E-Med may enter into the Third Party Non-Territory License. If IPA
notifies E-Med that it will exclusively license NS on such terms and
conditions, the parties shall amend this Agreement or shall enter into a new
agreement on the terms and conditions set forth in the Right of First Refusal
Notice and/or such other terms and conditions on which the parties may agree.
5.4. E-Med grants to IPA, for the Term, a worldwide license to use
the Other E-Med Software and to exclusively, to the exclusion of all other
Persons including E-Med in the Territory, sublicense or otherwise permit the
use of the Other E-Med Software to DHCPs in exchange for the prompt payment by
IPA to E-Med, commencing upon the Acceptance of the Other E-Med Software by
IPA, of license fees equal to the lowest of (a) ninety percent (90%) of
E-Med's listed price available or intended to be available to third party
customers for any item of Other E-Med Software, (b) the lowest price paid to
E-Med for such other item of E-Med Software by any other customer of E-Med ,
or (c) such other price as may be agreed upon by the parties.
5.5. E-Med acknowledges that it has reviewed the SamSyn Agreement
and that, pursuant to the SamSyn Agreement, the University of Southern
California, a California nonprofit public benefit corporation, USC Care
Medical Group, Inc. and the faculty practice groups affiliated with the
University of Southern California (collectively, "USC") retain a perpetual,
royalty-free license to use and adopt SamSyn for their internal purposes and
6
<PAGE>
have the right to license or otherwise make SamSyn available to any third
party controlled by or under the control of USC. E-Med agrees that its
rights in SamSyn are subject to the rights of USC pursuant to the SamSyn
Agreement and that it will take no action with respect to SamSyn that would in
any way interfere with or be inconsistent with such rights of USC.
Accordingly, and as required by the SamSyn Agreement, any modifications,
updates or enhancements of SamSyn that may be delivered by USC shall not be
used by E-Med without the express written consent of USC. Notwithstanding the
provisions of Sections 1.26 or 3.1, with respect only to USC's use of SamSyn
pursuant to the terms of the SamSyn Agreement, the term of the license granted
under Section 5.1 of this Agreement shall be perpetual. As set forth in
Section 4, the parties acknowledge and agree that NS will be completely new
software, with different functionality than SamSyn, and will not be an update,
upgrade, modification or enhancement of SamSyn.
5.6. E-Med grants to IPA the right to (a) make copies of the E-Med
software for distribution to DHCPs, (b) make such copies of the E-Med Software
as are convenient for the purposes of backup or archiving, and (c) make such
copies of user manuals or documentation for internal distribution or
distribution to DHCPs as is otherwise convenient.
5.7. E-Med shall not permit any Person other than IPA to use,
sublicense or otherwise permit the use of the E-Med Software in the Territory.
6. Delivery of Software
6.1. Monthly Product Lists. E-Med shall provide IPA with a
comprehensive list of the E-Med Software owned by E-Med and the price list
relating thereto on a monthly basis (the "E-Med Software List"). The E-Med
Software List shall be provided to IPA no later than the fifth (5th) day of
every month.
6.2. Prompt Delivery After Order. Upon the order by IPA of any
E-Med Software, E-Med shall deliver such software to IPA no later than fifteen
(15) calendar days after E-Med's receipt of such order.
6.3. Acceptance. Subsequent to IPA's receipt of any E-Med Software,
including NS, IPA shall have ninety (90) days to Accept such software, and
upon such Acceptance, IPA's payment obligations with respect to the software
shall arise.
7. Services to be Provided.
7.1. E-Med shall provide to IPA, and shall provide to DHCPs, on
behalf of IPA, all installation, implementation, training, consulting or other
services required to (i) enable the E-Med Software to Go Live on the computer
and electronic systems of, as the case may be, IPA or DHCPs, and (ii) maintain
the E-Med Software in operation ((i) and (ii) to be collectively known as the
"Services"). E-Med shall provide the Services commencing on the installation
of any such E-Med Software. E-Med will only use Approved Employees in its
provision of the Services.
7.2. The Services shall include at least:
7.2.1. An "800" number help desk support, 6:00 a.m. to 9:00
p.m. Pacific time, on weekdays, holidays (such dates previously provided to
IPA in writing) excepted;
7
<PAGE>
7.2.2. 24 hour Beeper service for emergency calls.
7.2.3. Helpdesk support which extends to all specific
questions and problems, including interactions between hardware and software.
7.2.4. A range of services including answering simple "how to"
questions, to in-depth application and technical assistance, and shall include
assistance on (i) all software in use by IPA and DHCPs and (ii) communications
between the E-Med Software and third party systems.
7.2.5. An average response time to support calls during the
week (normal support hours) of less than one hour of the call, and within an
average of two hours at all other times.
8. Upgrades. E-Med shall provide to IPA:
8.1. All Upgrades pertaining to any E-Med Software licensed by IPA.
Such Upgrades shall be provided to IPA prior to being provided to any other
customer of E-Med.
8.2. All manuals and documentation pertaining to such Upgrades;
8.3. All support and/or Services necessary for the use of such
Upgrades; and
8.4. Any training on Upgrades that E-Med provides to any other
client.
9. Ownership of Inventions.
9.1. Subsequent to the Effective Date, the E-Med Software, the NS
and all discoveries, improvements, inventions, and trade secrets, conceived
and first reduced to practice with respect thereto, shall be the sole and
exclusive property of E-Med, subject to the licenses granted herein, and E-Med
shall retain any and all rights to make any filings relating to intellectual
property protection thereon.
10. Indemnification.
10.1. E-Med shall indemnify and hold harmless IPA and DHCPs, their
parents, affiliated and subsidiary entities, assignees, licensees, and
purchasers, and the officers, employees, and agents of all of them, against
any suits, losses, liabilities, damages, claims, settlements, costs and
expenses, including reasonable attorneys' and experts' fees, arising from: (i)
any breach of E-Med's representations and warranties or any other provision of
this Agreement by E-Med; (ii) any use of proprietary information E-Med has
obtained from sources other than IPA; or (iii) any claim that the Other E-Med
Software or the NS infringes any patent, copyright, trademark, trade secret or
other proprietary or intellectual property right of any third party.
10.2. IPA shall indemnify and hold harmless E-Med, its assignees,
licensees and purchasers, and the officers, employees, and agents of all of
them, against any suits, losses, liabilities, damages, claims, settlements,
costs and expenses, including reasonable attorneys' and experts' fees, arising
from: (i) any breach of IPA's representations and warranties or any other
provision of this Agreement by IPA; or (iii) any use of proprietary
information IPA has obtained from sources other than E-Med.
8
<PAGE>
10.3. Under this Section, the party required to provide the
indemnification (the "Indemnifying Party"), at the Indemnifying Party's sole
expense, shall maintain control and direction of the defense of such a claim
or claims brought against the party entitled to indemnification (the
"Indemnified Party"). The Indemnified Party must promptly and in writing
notify the Indemnifying Party of the claim and cooperate in defending against
the claim. If, in the reasonable judgment of the Indemnified Party, the
Indemnifying Party is financially unable to conduct a reasonable defense of
the action, then the Indemnified Party may undertake complete control of the
action, all the while reserving its right to obtain full restitution of all
its fees and costs, including attorneys' and experts' fees, under this
section.
10.4. If in E-Med's reasonable opinion any of the E-Med Software
used under this Agreement is likely to become the subject of such a claim, IPA
agrees to permit E-Med, at E-Med's option and expense, to attempt to either
secure for IPA the right to continue using the E-Med Software or, at no cost
to IPA, replace or modify it so that it becomes noninfringing without
affecting the functionality of the E-Med Software.
11. Proprietary Information.
11.1. During the course of this Agreement, each party may become
aware of information relating to the other party's products, project and
product plans, research and development, inventions, processes, techniques,
designs or other technical, financial, creative and business information, as
well as financial, insurance, and medical information of third parties, such
as patients and clients of IPA or DHCPs. All such information is considered
proprietary and confidential ("Proprietary Information"). Proprietary
Information includes, without limitation, financial information, patient
identities and their medical and financial information, pricing, strategic
partnering and or alliances.
11.2. The parties shall: (i) preserve and protect the
confidentiality of all Proprietary Information (including the execution of
nondisclosure and work for hire agreements by employees or other Persons with
access to Proprietary Information); (ii) not disclose to anyone except as
necessary to carry out the terms hereof, the existence, source, content or
substance of the Proprietary Information; (iii) not use Proprietary
Information in any way other than in furtherance of this Agreement; and (iv)
not disclose, use or copy any information or materials received in confidence
during or subsequent to the term of this Agreement from a third party or about
a third party.
11.3. This Section does not impose any obligation on either party if
the information is: (a) publicly known at the time of disclosure; (b) already
known to the receiving party at the time; (c) furnished by the disclosing
party to others without restrictions on its use or disclosure; or (d)
independently developed by the receiving party without use of the Proprietary
Information.
12. Default; Termination.
12.1. A party will be considered to be in default (a "Default") if
(a) such party breaches or fails to comply with any term of this Agreement,
and it does not correct such breach or failure within thirty (30) days (the
"Cure Period") of receiving notice from the non-defaulting party demanding
9
<PAGE>
that such breach or failure be corrected; (b) it makes an assignment for the
benefit of its creditors, or a receiver, trustee in bankruptcy or similar
officer is appointed to take charge of all or substantially all of its assets;
(c) it files for relief under any bankruptcy or insolvency laws; (d) it is
declared a bankrupt or insolvent by a court having jurisdiction; or (e)
proceedings are instituted for the liquidation or winding up of its business
or for the termination of its charter. Upon the occurrence of any of such
events, the non-defaulting party may terminate this Agreement without
liability to the other party by delivering a notice of termination to the
defaulting party.
12.2. Neither party shall be deemed to be in Default or liable for
any costs or damages as a result of its failure to comply with its obligations
under this Agreement if such failure is caused by acts of God, riots, fires,
epidemics, war (declared or undeclared), insurrection, rebellion, civil or
military disturbances or unusually severe weather ("Force Majeure"). The
party claiming Force Majeure shall give the other party prompt written notice
of the occurrence of any of the above circumstances and such notice shall
include a statement of the anticipated delays. The period of performance of a
party claiming Force Majeure shall be extended for a period not exceeding the
period of delay; provided that should any of the above circumstances continue
for a period of ten (10) days, the non-performing party shall be considered to
be in Default and the other party shall have the right to immediately
terminate this Agreement by providing written notice to the non-performing
party of such termination.
12.3. Notwithstanding any provision of this Agreement to the
contrary, IPA shall have the right to terminate this Agreement upon payment to
E-Med of the Termination Payment specified on Exhibit C hereto.
13. Relationship of the Parties.
13.1. Each party will be deemed to be an independent contractor and
not an agent, joint venturer, or representative of the other, and neither
party may create any obligations or responsibilities on behalf of or in the
name of the other. Under no circumstances may either party hold itself out to
be a partner, employee, franchisee, representative, servant or agent of the
other party. Each party also agrees not to make false or misleading
statements, claims or representations about the other party, its products, or
the relationship of the parties.
14. Assignment.
14.1. Either party may assign this agreement or any of its rights,
obligations, or privileges hereunder to any successor organization in
connection with the transfer of substantially all of its assets. No other
assignment may be made by either party without the prior written consent of
the other party. Any assignment under this Agreement, to be effective, must
contain the assignee's written assumption of all of the assignor's obligations
hereunder.
15. Nonsolicitation
15.1. Other than the individuals specified on Exhibit D hereto, if
any (whom the Parties have agreed will be hired by E-Med), for the Term,
neither party shall employ a person who was previously employed by the other
party without the other party's prior written consent.
10
<PAGE>
16. Resolution of Disputes
16.1. General. Except as otherwise provided in this Agreement, in
the event any disagreement, dispute or claim arises between the parties with
respect to the enforcement or interpretation of this Agreement or any specific
terms and provisions set forth in this Agreement (collectively, a "Dispute"),
such Dispute shall be settled in accordance with the following procedures:
16.1.1. Meet and Confer. In the event of a Dispute between
the parties, either party may give written notice to the other party setting
forth the nature of such Dispute ("Dispute Notice"). Such parties shall meet
and confer to discuss the Dispute in good faith within fifteen (15) days of
the other party's receipt of a Dispute Notice in an attempt to resolve the
Dispute ("Meet and Confer Discussions"). Each such party shall select two (2)
representatives, who shall meet at such date(s) and time(s) as are mutually
convenient to the representatives of each participant within the Meet and
Confer Period (as defined below).
16.1.2. Mediation. If the parties are unable to resolve the
Dispute within forty-five (45) days following the date of receipt of the
Dispute Notice (the "Meet and Confer Period"), then the parties agree to try
in good faith to settle the Dispute through non-binding mediation by a single
disinterested third party mediator in accordance with the procedures of
JAMS/Endispute, Inc. A single disinterested third-party mediator shall be
selected by the parties within thirty (30) days following the end of the Meet
and Confer Period. If the parties are unable to agree upon a mediator within
such thirty (30) day period, then the parties shall proceed to binding
arbitration as provided in Section 16.2. Each party shall pay one-half (1/2)
of the expenses of the mediator and the other costs of mediation. The
mediation proceeding shall commence not more than thirty (30) days after the
written notice initiating the mediation process is given by one party to the
other party hereto and shall be conducted in the County of Los Angeles, State
of California. The mediator shall be given written statements of the parties
and may inspect any applicable documents or instruments. All mediation
proceedings shall be attended by the parties with reasonable authority to
resolve the dispute. Further, each party shall bear its own attorneys fees and
costs in connection with the mediation process regardless of the results
thereof.
16.1.2.1. If as a result of the mediation, a settlement is
reached and the parties agree that such settlement shall be reduced to
writing, then (i) the mediator shall be appointed an arbitrator for the sole
purpose of signing the settlement agreement reached through the mediation
process, (ii) the settlement agreement shall have the same force and effect as
an arbitration award, and (iii) judgment may be entered upon the settlement
agreement in accordance in any court of competent jurisdiction with applicable
law.
16.1.2.2. The Meet and Confer Discussions and the mediation
proceeding shall be subject to California Evidence Code Sections 1152 and
1152.5.
16.2. Arbitration of Disputes. If the parties are unable to resolve
the any dispute by mechanism of the mediation process described above, then
the Dispute shall be submitted to binding arbitration by either party giving
written notice to the other party, which arbitration shall be conducted in
accordance with the following provisions:
11
<PAGE>
16.2.1. Venue. The arbitration shall be conducted in the
County of Los Angeles, State of California.
16.2.2. Law. The governing law shall be the internal law,
and not the law of conflicts, of the State of California. The parties shall
have the rights of discovery as provided for in Part 4 of the California Civil
Code Procedure and the provisions of Section 1283.05 of the California Code of
Civil Procedure are hereby incorporated by reference into this Agreement
pursuant to the provisions of Section 1283.1(b) of the California Code of
Civil Procedure. In the event that either of said Sections is amended in a
manner which limits or reduces the discovery rights contained in said Sections
as of the date hereof, said amendment shall not be deemed to apply to this
Agreement unless the parties agree in writing that the same shall apply. In
the event that either Section 1283.5 or 1283.1(b) is repealed, the provisions
of Section 1283.05 shall nevertheless continue to apply and the parties shall
have the discovery rights as provided therein as of the date of this
Agreement. The California Evidence Code shall apply to all testimony and
documents submitted to the arbitrator.
16.2.3. Selection. There shall be one (1) impartial third
party arbitrator. If the parties are unable to agree upon a mutually
acceptable arbitrator within thirty (30) days after the demand for arbitration
is given, then the parties stipulate to the arbitration before a single
impartial third party arbitrator who is a retired judge on the Los Angeles
panel of JAMS/Endispute, Inc. and who is selected by the then serving chief
executive officer of JAMS/Endispute, Inc.
16.2.4. Administration. Arbitration shall be administered by
JAMS/Endispute, Inc.
16.2.5. Award. The award rendered by arbitration shall be
final and binding upon the parties, and the award may be entered in any court
of competent jurisdiction in the United States. The award shall be beyond the
power of the arbitrator if the findings of fact are not supported by
substantial evidence or the award is based on an error of law. The award
shall include written findings of fact, a summary of the evidence and reasons
underlying the decision and conclusions of law. As part of the award, the
arbitrator may award reasonable and necessary costs actually incurred by the
prevailing party, including that party's share of the arbitrator's fees, costs
and expenses, as well as any administration fees. The arbitrator or a court
of competent jurisdiction may issue a writ of execution to enforce the
arbitrator's decision. Judgment may be entered upon such decision in
accordance with applicable law in any court having competent jurisdiction
thereof. The prevailing party in the arbitration shall be entitled to have
its attorney's fees paid by the other party.
17. Miscellaneous Provisions.
17.1. Publicity. No party to this Agreement shall issue or cause
the publication of any press release or make any other announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the other parties, except where such release or announcement
is required by applicable law.
17.2. Notices. All notices, requests, consents, instructions and
other communications required or permitted to be given hereunder shall be in
writing and hand delivered or sent by (i) nationally-recognized next business
12
<PAGE>
day delivery service, (ii) facsimile, with a hard copy to be sent by next
business day courier or first class U.S. Mail, or (iii) mailed by certified or
registered first class mail, return receipt requested, postage prepaid,
addressed as set forth below; receipt shall be deemed to occur on the earlier
of the date of actual receipt or receipt by the sender of confirmation that
the delivery was completed or that the addressee has refused to accept such
delivery or has changed its address without giving notice of such change as
set forth herein.
if to E-Med, as follows:
20750 Ventura Boulevard, Suite 202
Woodland Hills, California 91354
Attention: Chief Executive Officer
Facsimile No.: (310) 246-9047
if to IPA as follows:
1000 South Fremont Avenue, A-11
Alhambra, California 91807
Attention: Chief Executive Officer
Facsimile No.: (626) 943-1090
or such other address or persons as the parties may from time to time
designate in writing in the manner provided in this Section.
17.3. Entire Agreement. This Agreement, together with the Exhibits
attached hereto, represents the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated herein and
therein, and no representations, warranties or covenants have been made in
connection with this Agreement, other than those expressly set forth herein.
This Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements among the parties relating to
the subject matter of this Agreement and all prior drafts of this Agreement,
all of which are merged into this Agreement.
17.4. Amendments and Waivers. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the Parties or, in the case of
a waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
17.5. Severability. This Agreement shall be deemed severable and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term
or provision hereof.
17.6. Headings. The article and section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision
hereof.
13
<PAGE>
17.7. Terms. All references herein to Articles, Sections, and
Exhibits shall be deemed references to such parts of this Agreement, unless
the context shall otherwise require. All references to singular or plural
shall include the other as the context may require.
17.8. Exhibits. The Exhibits attached hereto are a part of this
Agreement as if fully set forth herein.
17.9. Third Party Beneficiaries. Except as expressly contemplated
in this Agreement, this Agreement shall be binding upon and inure solely to
the benefit of each party hereto and nothing in this Agreement is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
17.10. Expenses. Except as expressly provided otherwise in this
Agreement (including Sections 4.6, 4.7, 4.8 and 5.2, each party shall bear all
expenses incurred on behalf of such party in connection with the preparation,
execution and performance of this Agreement, and the transactions contemplated
hereby and thereby.
17.11. Construction. This Agreement was initially prepared by
IPA's counsel as a matter of convenience only, and has been thoroughly
reviewed by E-Med and its legal counsel and, therefore, no interpretation will
be made in favor of E-Med with respect to this Agreement for the reason that
such document was prepared by IPA's legal counsel.
17.12. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
E-MED.SOFT.COM,
a Nevada corporation
By: /s/ John Andrews
Name: John Andrews
Title: President
UNIVERSITY AFFILIATES IPA, INC.,
a California nonprofit mutual
benefit corporation
By: /s/ Sam J. W. Romeo
Name: (print) Sam J. W. Romeo
Title: President
14
<PAGE>
GUARANTY
This GUARANTY (the "Guaranty") is made as of September 1, 1999 by and
among University Affiliates IPA, Inc., a California nonprofit mutual benefit
corporation ("IPA"), E-MedSoft.com, a Nevada corporation ("E-Med"), and Sanga
e-Health, LLC, a California limited liability company ("Guarantor").
Capitalized terms used herein have the same meanings as set forth in the
Software License And Services Agreement between IPA and E-Med dated of even
date herewith to which this Guaranty is attached (the "Agreement").
NOW THEREFORE, in order to induce IPA to enter into the Agreement and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Performance and Payment Guaranty.
Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to IPA E-Med's full and prompt payment and full and timely
performance and observance of all the terms and conditions of the Agreement
and will perform E-Med's obligations under the Agreement in the event that
E-Med fails to perform. Guarantor hereby covenants and agrees that if E-Med
should default under the Agreement, Guarantor shall forthwith faithfully
perform and fulfill all of such terms, covenants, conditions and agreements.
Guarantor shall also forthwith pay to IPA all damages, costs and expenses that
may arise in consequence of any default by IPA or the enforcement of this
Guaranty.
This Guaranty shall be a continuing guaranty and the liability of
Guarantor shall in no way be affected, modified or diminished by reason of any
assignment, amendment, renewal, supplement or modification of the Agreement.
2. Waiver.
Guarantor hereby waives: (a) presentment, demand for payment, notice
of dishonor, protest, notice of protest and all other notices or demands in
connection with delivery, acceptance and performance of this Guaranty; (b) any
right to require IPA to pursue any other remedy; and (c) any defense arising
by reason of any defense of E-Med except for a defense arising by reason of
the full performance of its obligations under the Agreement.
3. Further Assurances.
Guarantor will, at its expense, execute, acknowledge and deliver all
such further documentation, instruments and assurances and the like and take
all such further action as IPA shall reasonably require in order to carry out
the intentions of the Agreement or facilitate the performance of E-Med's
obligations under the Agreement.
4. Independent Obligations.
The obligations of Guarantor under this Guaranty are independent of
the obligation of E-Med and separate dispute resolution procedures may be
brought and prosecuted against Guarantor whether or not dispute resolution
procedures are initiated against E-Med, and without the necessity of any
notice of nonpayment, nonperformance or nonobservance, or any notice of
acceptance of this Guaranty, or any other notice or demand to which Guarantor
<PAGE>
might otherwise be entitled, all of which Guarantor hereby expressly waives.
Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in no way be terminated, affected,
diminished or impaired by reason of the assertion or the failure to assert by
IPA against E-Med, or against E-Med's successors and assigns, of any of the
rights of IPA under the Agreement or otherwise by (a) the release or discharge
of E-Med in any creditors' proceedings, receivership, bankruptcy or other
proceedings, (b) the impairment, limitation or modification of the liability
of E-Med in bankruptcy, or of any remedy for the enforcement of E-Med's
obligations under the Agreement resulting from the operation of any present or
future provision of the United States Bankruptcy Code or other federal or
state statute or from the decision in any court, or (c) the rejection or
disaffirmance of the Agreement in any such proceedings.
5. Notices.
Section 17.2 of the Agreement is incorporated herein by reference as
if Guarantor were a party to the Agreement with the addition of the following
address:
if to Sanga, as follows:
20750 Ventura Boulevard, Suite 202
Woodland Hills, California 91354
Attention: Chief Executive Officer
Facsimile No.: (310) 246-9047
6. Remedies Cumulative.
Each and every right, remedy and power granted to IPA under the
Agreement, by law and equity, shall be cumulative and not exclusive of any
other, and may be exercised by IPA from time to time in such order as IPA
shall determine.
7. Resolution of Disputes.
Section 16 of the Agreement is incorporated herein by reference as if
Guarantor were a party to the Agreement.
8. Miscellaneous.
Sections 17.4, 17.5, 17.11 and 17.12 of the Agreement are
incorporated herein by reference as if Guarantor were a party to the
Agreement.
IN WITNESS WHEREOF, the parties have executed this Guaranty as of the day
and year above written.
UNIVERSITY AFFILIATES, IPA, INC.
By: /s/ Sam J. W. Romeo
Name: Sam J. W. Romeo
Title: President
"IPA"
2
<PAGE>
E-MEDSOFT.COM.
By:/s/ John Andrews
Name: John Andrews
Title: President
"E-MED"
SANGA E-HEALTH, LLC
By: /s/ John Andrews
Name: John Andrews
Title: President
"GUARANTOR"
3
<PAGE>
EXHIBIT A: WORKPLAN FOR DEVELOPMENT OF NS
Tasks Target Completion Date
EXHIBIT B: IPA PERSONNEL
% of Full Time
Name to be spent on NS
Jack Perry
Vice President, Marketing 50%
Greg Perry
Marketing Specialist 100%
Cody Ruedaflores
Marketing Specialist 100%
One support staff to
be named 100%
EXHIBIT C: TERMINATION FEES
TERMINATION DATE: TERMINATION FEE:
Prior to 2nd Anniversary Lesser of (i) $2,000,000 plus the value of
of the Effective Date the stock received by IPA under the Asset
Purchase Agreement to be determined by
multiplying the number of shares of E-Med
Common Stock received by IPA under the Asset
Purchase Agreement by the average closing
price of E-Med Common Stock over the thirty
(30) trading days immediately preceding the
date of termination ("Stock Value), and (ii)
$6,486,162
On or after the 2nd Lesser of (i) $2,000,000 plus the Stock
Anniversary of the Value on the Termination Date, and (ii)
Effective Date and $5,486,162
prior to 3rd Anniversary
of Effective Date
On or after the 3rd Lesser of (i) $2,000,000 plus the Stock
Anniversary of the Value on the Termination Date, and (ii)
Effective Date and prior $4,486,162
to 4th Anniversary of
the Effective Date
On or after the 4th Lesser of (i) $2,000,000 plus the Stock
Anniversary of the Value of the Termination Date, and (ii)
Effective Date and prior $3,486,162
to 5th Anniversary of
the Effective Date
On or after the 5th Lesser of (i) $2,000,000 plus the Stock
Anniversary of the Effective Value on the Termination Date, and (ii)
Date and prior to 6th $2,486,162
Anniversary of the Effective
Date
On or after the 6th Lesser of (i) $2,000,000 plus the Stock
Anniversary of the Effective Value of the Termination Date, and (ii)
Date and prior to 7th $1,486,162
Anniversary of the Effective
Date
On or after the 7th Lesser of (i) $2,000,000 plus the Stock
Anniversary of the Effective Value on the Termination Date, and (ii)
Date and prior to 8th $486,162
Anniversary of the Effective
Date
On or after the 8th Zero (0)
Anniversary of the
Effective Date
EXHIBIT D: CURRENT IPA EMPLOYEES TO BE HIRED BY E-MED
Robbin Messier
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
September 1, 1999, is made between e-MedSoft.com, a Nevada corporation (the
"Company") and University Affiliates IPA, Inc., a California nonprofit mutual
benefit corporation ("Holder").
RECITALS
Holder has acquired from the Company, as of the date hereof, One Million
Seven Hundred Twenty-One Thousand Nine Hundred Seventy-Three (1,721,973)
shares of the Common Stock, $.001 par value, of the Company pursuant to the
terms of that certain Asset Purchase Agreement, of even date herewith (the
"Purchase Agreement"), among the Company, Holder and Sanga e-Health, LLC.
A. The Purchase Agreement requires the execution and delivery of this
Agreement as a condition to the closing thereunder.
B. Pursuant to the terms of the Purchase Agreement, the parties desire
to provide for the Company to grant certain registration rights to Holders in
connection with such shares of the Company's Common Stock issued to Holder
pursuant to the terms of the Purchase Agreement..
NOW, THEREFORE, in consideration of the foregoing recitals (which are
hereby incorporated by reference), the agreements hereafter set forth and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows. Capitalized and
certain other terms used herein shall have the definitions referred to, or set
forth, in Exhibit A hereto.
ARTICLE 1. REGISTRATION RIGHTS
1.1 Filing. If at any time the Company shall decide to undertake on its
own behalf or on behalf of any of its security holders, or any of its security
holders entitled to exercise registration rights pursuant to contractual
commitments of the Company shall have decided to undertake, a Public Sale
under a registration statement under the Securities Act (including all
amendments and supplements to any such registration statement, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein, the "Piggyback Registration
Statement"), the Company shall:
1.1.1. give Holder forty-five (45) days' written notice thereof
before the initial filing with the SEC of such Piggyback Registration
Statement (the "Registration Notice"), which Registration Notice shall set
forth the intended method of disposition of the securities proposed to be
registered by the Company and shall offer to include in such filing such
number of Registrable Shares as Holder may request; and
1.1.2. include in the Piggyback Registration Statement (and any
related qualification under blue-sky laws or other compliance) all of the
Registrable Shares which Holder elects to have included therein (the "Elected
Registrable Shares"), subject to the provisions herein. Holder's election to
have some or all of the Registrable Shares included in any Piggyback
Registration Statement shall be made in writing and delivered to the Company
<PAGE>
within thirty (30) days after receipt of the Registration Notice (the
"Registration Election").
1.2 Termination of Registration. If, at any time after giving Holder
the Registration Notice and prior to the effective date of the Piggyback
Registration Statement filed in connection with such Registration Notice, the
Company shall determine for any reason to terminate such Piggyback
Registration Statement, the Company may, at its election, give written notice
of such determination to Holder and shall be relieved of its obligation to
register any Registrable Shares in connection with such abandoned
registration, without prejudice, however, to the rights of Holder to include
Registrable Shares in any future Piggyback Registration Statement. Holder
shall have the right to withdraw its request for inclusion of its Registrable
Shares in any Piggyback Registration Statement by giving written notice to the
Company of its determination to withdraw, without prejudice, however, to the
rights of Holder to include Registrable Shares in any future Piggyback
Registration Statement.
1.3 Period of Effectiveness. The Company shall use its best efforts to
keep any Piggyback Registration Statement continuously effective under the
Securities Act until at least the earlier of (a) one year after the effective
date thereof, or (b) the consummation of the distribution by Holder of all of
the Registrable Shares covered thereby.
1.4 Underwriting. If any offering pursuant to a Piggyback Registration
Statement shall be underwritten, in whole or in part, the Company may require
as a condition of the inclusion of any Elected Registrable Shares in such
Piggyback Registration Statement that such Elected Registrable Shares be
included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters; provided that in no
event will Holder be required to indemnify any underwriter to any extent
greater than that provided in Section 3.1. In such event, Holder shall
(together with the Company) enter into an underwriting agreement, which shall
be in a customary form, with the underwriter or underwriters which shall be
selected by the Company (the "Underwriter"). Notwithstanding any other
provision of this Agreement to the contrary, if the Underwriter determines
that the total number of securities which the Company and any other Persons
entitled and desiring to participate in such Piggyback Registration Statement
intend to include in such offering is such as to adversely affect the success
of such offering, including the price at which such securities can be sold,
then the Company will be required to include in such Registration Statement
only the amount of securities which it is so advised should be included
therein. In such event the total amount of securities to be included in such
Piggyback Registration Statement, whether for the account of the Company, any
other Person entitled to exercise "demand" or "piggyback" registration rights
or Holder, shall be reduced based on the amount of securities sought to be
registered by the Company, Holder and such Persons. The Company shall advise
Holder as to the number of its Elected Registrable Shares which shall be
registered and underwritten pursuant hereto as soon as reasonably possible
after the Company receives the Registration Election. If, as a result of the
provisions of this Section 1.4, Holder shall not be entitled to include all
Registrable Shares in a Piggyback Registration that Holder has requested to be
included or Holder otherwise disapproves of the terms of any such
underwriting, Holder may elect to withdraw its request to include Registrable
Shares in such registration, without prejudice, however, to the rights of
Holder to include Registrable Shares in any future Piggyback Registration
Statement.
2
<PAGE>
1.5 Blackout Periods. The Company shall be entitled to postpone the
filing or effectiveness of, or the updating of the information in, any
Piggyback Registration Statement (or in documents or reports incorporated
therein by reference) during any period not exceeding sixty (60) consecutive
days, or one hundred eighty (180) days in the aggregate, due to (a) the fact
that Company has material inside information that the Company has concluded
(with the advice of counsel) cannot be disclosed publicly, or (b) a material
event, including a material acquisition or merger of the Company (or a
subsidiary of the Company) ("black-out periods"); provided that any black-out
period may not extend more than fifteen (15) days after the cessation of the
circumstances described in this Section 1.5 and the Company shall not be
entitled to such postponement more than twice in any twelve (12) month period.
If the Company shall so postpone the filing or effectiveness of a Piggyback
Registration Statement, it shall, as promptly as possible, deliver a
certificate signed by the Chief Executive Officer of the Company to Holder as
to such determination, and Holder shall have the right to withdraw the request
for registration by giving written notice to the Company of its determination
to withdraw.
1.6 Sale Without Registration. Notwithstanding anything herein to the
contrary, the Company shall not be required to have any Registrable Shares of
Holder registered (or maintain the effectiveness of any prior registration of
Elected Registrable Shares) if in the opinion of counsel for the Company and
counsel for Holder, each knowledgeable and experienced in federal securities
matters, Holder may lawfully sell publicly, at the time and in the manner
Holder proposes to sell the Registrable Shares, all of the Registrable Shares
proposed to be sold without registering the sale under the Securities Act,
whether pursuant to an exemption from registration available under Section
4(1) of the Securities Act or otherwise.
1.7 Registration Procedures. In connection with the obligations of the
Company with respect to any Piggyback Registration Statement pursuant to this
Article 1, the Company shall, except as otherwise provided:
1.7.1. A reasonable time before the filing of any such Piggyback
Registration Statement or any Prospectus or any amendment or supplement
thereto, deliver to Holder a written request specifying the information to be
furnished by Holder for inclusion in the Piggyback Registration Statement and
afford to Holder and its counsel an opportunity to review those portions
thereof which relate to Holder or its intended disposition of its Elected
Registrable Shares, including the sections captioned "Plan of Distribution"
and "Selling Stockholders", or the equivalent, in any Piggyback Registration
Statement or Prospectus.
1.7.2. Prepare and file with the SEC such amendments and
post-effective amendments to the Piggyback Registration Statement as may be
necessary to keep such Piggyback Registration Statement continuously effective
for the time periods prescribed hereby; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to it with respect to
the disposition of all Shares covered by such Piggyback Registration Statement
as so amended or in such Prospectus as so supplemented.
1.7.3. Notify Holder and its counsel promptly (but in any event
within two Business Days), and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment has been
3
<PAGE>
filed, and, with respect to a Piggyback Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
Piggyback Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the initiation or threatening of any
proceedings for that purpose, (iii) of the receipt by the Company of any
notification with respect to (A) the suspension of the qualification or
exemption from qualification of the Piggyback Registration Statement or any of
the Elected Registrable Shares covered thereby for offer or sale in any
jurisdiction, or (B) the initiation of any proceeding for such purpose, (iv)
of the happening of any event, the existence of any condition or information
becoming known that requires the making of any changes in such Registration
Statement, Prospectus or documents so that, in the case of such Piggyback
Registration Statement or Prospectus, it will conform in all material respects
with the requirements of the Securities Act and it will not 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 not misleading, and
(v) of the initiation, status, and effectiveness of such Piggyback
Registration Statement, qualification and compliance.
1.7.4. Use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Piggyback Registration Statement or
of any order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the Elected
Registrable Shares covered thereby for sale in any jurisdiction, and, if any
such order is issued, to obtain the withdrawal thereof at the earliest
practicable moment.
1.7.5. Deliver to Holder and its counsel without charge, upon
request, one conformed copy of the Piggyback Registration Statement and each
post-effective amendment thereto, including financial statements and
schedules, and of all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
1.7.6. Deliver to Holder and its counsel without charge as many
copies of each Prospectus and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by Holder in
connection with the offering and sale of the Elected Registrable Shares
covered by such Prospectus and any amendment or supplement thereto.
1.7.7. Prior to any offering of Elected Registrable Shares, to
register or qualify the Elected Registrable Shares for offer and sale under
the securities or blue sky laws of such jurisdictions within the United States
as Holder may request; provided, however, that the Company will not be
required to qualify generally to do business in any jurisdiction where it is
not then so qualified.
1.7.8. Pay all Registration Expenses in connection with the
Piggyback Registration Statement; provided, however, that the Company shall
not be required to pay any of any Holder's legal fees or underwriting fees,
discounts or commissions relating thereto; and provided further, that Holder
shall, at its own expense, furnish to the Company such information regarding
Holder and its proposed disposition of the Elected Registrable Shares as the
Company may reasonably request in order for the Company to comply with any
legal or regulatory requirements arising from the inclusion of the Elected
Registrable Shares in any Piggyback Registration Statement or blue sky
qualification.
4
<PAGE>
ARTICLE 2. REPORTS UNDER EXCHANGE ACT; RULE 144
The Company covenants that it shall (a) file the reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner
and take such further action as Holder shall reasonably request to enable
Holder to sell the Eligible Registrable Shares without registration, including
making publicly available the information necessary to permit transfers of
such Shares pursuant to Rule 144, and (b) upon the request of Holder (i)
deliver to Holder a written statement as to its compliance with such filing
requirements, (ii) furnish to Holder a copy of its filings made under the
Securities Act or the Exchange Act, and (iii) use its best efforts to provide
Holder with a legal opinion with respect to such compliance.
ARTICLE 3. INDEMNIFICATION AND CONTRIBUTION
3.1 By Holder. Holder agrees to indemnify and hold harmless the
Company, each of its directors, and each of its officers who has signed any
Piggyback Registration Statement (or any amendment thereof) and each Person,
if any, who controls the Company (within the meaning of the Securities Act)
against any losses, damages or liabilities ("Losses") to which the Company, or
any such director, officer or controlling Person of the Company may become
subject under such Securities Act, the Exchange Act or otherwise, insofar as
Losses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Piggyback Registration Statement (or any amendment thereof) or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such indemnity
shall apply only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished by Holder in writing expressly for use
in the preparation thereof. Holder agrees to reimburse the Company and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred in connection with any such Loss. The liability of Holder
under this Section 3.1 shall in no event exceed the proceeds received by
Holder from sales of Elected Registrable Shares giving rise to such
obligations.
3.2 By the Company. The Company agrees to indemnify and hold harmless
Holder, each of its directors and officers, and each Person, if any, who
controls Holder (within the meaning of the Securities Act) against any Losses
to which Holder or any director, officer or controlling Person of Holder may
become subject under the Securities Act, the Exchange Act or otherwise insofar
as said Losses (or actions in respect thereof) are caused by, arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any Piggyback Registration Statement (or any amendment
thereof) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such Losses are caused by
any such untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to Holder
furnished to the Company in writing by Holder expressly for use in any such
Piggyback Registration Statement. The Company agrees to reimburse Holder and
any such director, officer or controlling Person for any legal or other
expenses reasonably incurred in connection with any such Loss.
5
<PAGE>
3.3 Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Article 3 or a written threat to commence such action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party, give written notice thereof (including
a reasonable explanation of the circumstances in connection therewith and
copies of all writings received relating thereto) to the latter; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of any obligations under
Section 3.1 or 3.2 hereof unless such failure to provide notice prejudices in
any material way the rights of the indemnifying party to conduct the defense
of such action or proceeding. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the contrary, (ii) the indemnifying party shall have failed
to retain within a reasonable period of time counsel reasonably satisfactory
to such indemnified party, or (iii) the named parties to any such proceeding
(including any impleaded parties) include both such indemnified party or
parties and the indemnifying parties or an Affiliate of the indemnifying
parties or such indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between the indemnifying party or parties and the indemnified party
or parties. No indemnifying party shall consent to entry of any judgment or
enter into any settlement with respect to a claim without the consent of the
indemnified party, which consent shall not be unreasonably withheld, or unless
such judgment or settlement includes as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in connection with the circumstances out of which the
action or proceeding arose for all persons that may be entitled to or
obligated to provide indemnification or contribution under this Article 3. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
3.4 Contribution. To the extent the indemnification provided for in
Section 3.1 or 3.2 is unavailable to, or insufficient to hold harmless, an
indemnified party in respect of any Losses, then each indemnifying party under
such Sections, in lieu of indemnifying such indemnified party thereunder and
in order to provide for just and equitable contribution, shall contribute to
the amount paid or payable by such indemnified party as a result of such
Losses in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and Holder on the other hand in connection with
the statements or omissions or alleged statements or omissions that resulted
in such Losses (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand
and Holder on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or supplied by Holder in writing as
provided in Section 3.1 and the parties' relative knowledge, access to
information and opportunity to correct or prevent such statement or omission,
6
<PAGE>
and any other equitable considerations appropriate in the circumstances;
provided that Holder shall not be required to make any contribution under
circumstances where Holder would not have been required to indemnify pursuant
to Section 3.1. The Company and Holder agree that it would not be just or
equitable if contribution pursuant to this Section 3.4 were determined by pro
rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 3.4.
3.5 Payment; Survival. Any Losses for which an indemnified party is
entitled to indemnification or contribution under this Article 3 shall be paid
by the indemnifying party to the indemnified party as such Losses are
incurred. The indemnity and contribution agreements contained in this Article
3 shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of Holder or any Person who controls
Holder, the Company, or the Company's directors or officers and (ii) any
termination of this Agreement.
ARTICLE 4. MISCELLANEOUS
4.1 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, each of the signatories hereto and their respective
successors and assigns.
4.2 Notices. All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder shall be in writing
and hand delivered or sent by (i) nationally-recognized next business day
delivery service, (ii) facsimile, with a hard copy to be sent by next business
day courier or first class U.S. Mail, or (iii) mailed by certified or
registered first class mail, return receipt requested, postage prepaid,
addressed as set forth below; receipt shall be deemed to occur on the earlier
of the date of actual receipt or receipt by the sender of confirmation that
the delivery was completed or that the addressee has refused to accept such
delivery or has changed its address without giving notice of such change as
set forth herein.
(a) if to the Company, as follows:
20750 Ventura Boulevard, Suite 202
Woodland Hills, California 91354
Attention: Chief Executive Officer
Facsimile No. (310) 246-9047
(b) if to Holder as follows:
1000 South Fremont Avenue, A-11
Alhambra, California 91807
Attention: Chief Executive Officer
Facsimile No.: (626) 943-1090
or such other address or persons as the parties may from time to time
designate in writing in the manner provided in this Section.
4.3 Entire Agreement. This Agreement, together with the Exhibit
attached hereto, represents the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated herein and
therein, and no representations, warranties or covenants have been made in
connection with this Agreement, other than those expressly set forth herein.
7
<PAGE>
This Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating to
the subject matter of this Agreement and all prior drafts of this Agreement,
all of which are merged into this Agreement.
4.4 Amendments and Waivers. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties hereto or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any waiver on the part of any party of any such right,
power or privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of
any other such right, power or privilege.
4.5 Severability. This Agreement shall be deemed severable and the
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term
or provision hereof.
4.6 Headings. The article and section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision
hereof.
4.7 Terms. All references herein to Articles, Sections and Exhibits
shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require. All references to singular or plural shall include
the other as the context may require.
4.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
choice of law principles. The parties agrees that any state or federal court
located in the County of Los Angeles shall have exclusive jurisdiction of any
action or proceeding relating to, or arising under or in connection with this
Agreement and each party consents to personal jurisdiction of such courts and
waives any objection to such courts' jurisdiction and agrees that such
jurisdiction is a convenient forum for any such action or proceeding.
4.9 No Third Party Beneficiaries. Except as expressly contemplated in
this Agreement, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto and nothing in this Agreement is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
4.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
4.11 No Inconsistent Agreements. The Company represents and warrants to
Holder that it has not entered into, nor will the Company on or after the date
of this Agreement enter into any agreement which is inconsistent with the
rights granted to Holder in this Agreement or which otherwise conflicts with
the provisions hereof. The rights granted to Holder hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities, if any,
under any such agreements.
8
<PAGE>
4.12 Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, Holder, in addition to being entitled to
exercise all rights provided herein, in the Purchase Agreement or granted by
law, including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement.
E-MED.SOFT.COM,
a Nevada corporation
By/s/ John Andrews
Its President
"Company"
UNIVERSITY AFFILIATES IPA, INC.,
a California nonprofit mutual benefit
corporation
By /s/ Sam J. W. Romeo
Its President
"Holder"
9
<PAGE>
EXHIBIT A
DEFINITIONS
"Affiliate" shall mean a Person that directly or indirectly, through one
of more intermediaries, controls, is controlled by, or is under common control
with, another Person. For the purposes of this definition, "control" shall
have the meaning presently specified for that word in Rule 405 promulgated by
the SEC under the Securities Act.
"Agreement" shall have the meaning set forth in the Preamble.
"Business Day" shall mean a day other than a Saturday, a Sunday or a day
on which banking institutions in California or New York are required by law,
regulation or executive order to remain closed.
"Company" shall have the meaning set forth in the Preamble.
"Elected Registrable Shares" shall have the meaning set forth in Section
1.1.2.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, government or self-regulatory organization,
commission, tribunal, court or organization or any regulatory, administrative
or other agency, or any political or other subdivision, department or branch
of any of the foregoing.
"Holder" shall have the meaning set forth in the Preamble.
"including" shall mean including without limitation and shall not be
limited by the terms following said term.
"Losses" shall have the meaning set forth in Section 3.1.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust, Government Authority or other entity.
"Piggyback Registration Statement" shall have the meaning set forth in
Section 1.1,
"Prospectus" shall mean the prospectus included in a Piggyback
Registration Statement (including any preliminary prospectus and a prospectus
that includes any information previously omitted in reliance upon Rule 430A
under the Securities Act), as amended or supplemented, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Public Sale" shall mean any sale of securities of the Company pursuant
to an effective registration statement under the Securities Act, whether or
not underwritten, but excluding any offering or sale pursuant to Form S-4 or
S-8 under the Securities Act or their then equivalents relating to Shares to
be issued solely in connection with an acquisition of any Person or Shares
issued in connection with stock option or other employee benefit plans.
"Purchase Agreement" shall have the meaning set forth in Recital A.
<PAGE>
<PAGE>
"Registrable Shares" shall mean the Shares acquired by Holder pursuant to
the Purchase Agreement.
"Registration Election" shall have the meaning set forth in Section
1.1.2.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including all SEC
and stock exchange or NASDAQ registration and filing fees and expenses, blue
sky fees and expenses, printing expenses, telephone and delivery expenses,
fees and disbursements of counsel for the Company, accounting fees and
disbursements, and other out-of-pocket expenses of Holder but not including
any underwriting discounts or commissions or transfer taxes, if any.
"Registration Notice" shall have the meaning set forth in Section 1.1.1.
"Reorganization" shall have the meaning set forth in Section 4.1.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC providing for offers and sales of securities made
in compliance therewith resulting in offers and sales by subsequent holders
that are not Affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the shares of Common Stock, $.001 par value per
share, of the Company and any other securities issued or issuable with respect
to such Common Stock by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Underwriter" shall have the meaning set forth in Section 1.4.
