UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported ):
February 19, 2000
MEDIX RESOURCES, INC
(Exact name of registrant as specified in its charter)
Colorado 000-24768 84-1123311
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) (File Number) Identification No.)
7100 East Belleview Ave., Suite 301, Englewood, CO 80111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 741-4828
None
(Former name or former address, if changes since last report)
Item 2. Disposition of Assets
On February 19, 2000, the Company sold the assets of its remaining staffing
businesses to Medical Staffing Network, Inc. of Coral Springs, Florida The
purchase price received by the Company was $1,000,000 with $500,000 paid in
cash and $500,000 in a subordinated promissory note providing for interest
at prime plus 1% with principal and interest to be repaid on May 19, 2001
Item 5. Other Events
Press release dated February 23, 2000 announcing the sale of Medix
Resources, Inc.'s remaining staffing operations.
Item 7(b). Pro forma Financial Information
The pro forma financial information required for the asset sale described
in Item 2 above will be furnished by filing an amendment to this Form 8-K,
no later than 60 days from the due date of this Form 8-K filing.
Item 7(c). Exhibits
Exhibit No. Description
*10.1 Security Agreement, dated February 19,
2000, between the Registrant and
Medical Staffing Network, Inc.
*10.2 Asset Purchase Agreement, dated as of
February 19, 2000, among the
Registrant, Medical Staffing Network,
Inc., National Care Resources -
Colorado, Inc., National Care Resources
- Texas, Inc. and TherAmerica, Inc.
*10.3 Subordinated Promissory Note, dated
February 19, 2000, of Medical Staffing
Network, Inc., in favor of the
Registrant
*99.1 Press release, dated February 23, 2000
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.
MEDIX RESOURCES, INC.
Date: March 6, 2000 By: /s/ John R. Prufeta
---------------------
John R. Prufeta, Chief Executive Officer
SECURITY AGREEMENT
Medical Staffing Network, Inc., a Delaware corporation ( "Debtor"), with
offices at 3111 North University Drive, Suite 406, Coral Springs, Florida 33065,
in consideration of the acceptance by Medix Resources, Inc., a Colorado
corporation ("Secured Party") with offices at 7100 East Belleview Avenue, Suite
301, Englewood, Colorado 80111, of a Subordinated Promissory Note (the "Note")
in the principal amount of Five Hundred Thousand and No/100 Dollars
($500,000.00) from Debtor in connection with Debtor's purchase of certain assets
of National Care Resources-Colorado, Inc., a Colorado corporation, National Care
Resources-Texas, Inc., a Colorado corporation and TherAmerica, Inc., a Colorado
corporation, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby grants to the Secured Party
a lien upon and security interest in Debtor's accounts receivable (the
"Collateral").
This Security Agreement is entered into to secure payment of the Note to
Secured Party, together with the interest and other charges described in the
Note, a copy of which is attached as Exhibit 1. The obligation of the Debtor
under the Note is hereinafter referred to as the "Obligation."
Incident thereto, Debtor agrees with Secured Party as follows:
Debtor warrants and represents that:
(a) The security interest granted to Secured Party in the Collateral shall
constitute a subordinated lien subject to the terms of (i) an Amended and
Restated Credit Agreement (the "Credit Agreement") dated as of February 10, 2000
among the Debtor, MSN Holdings, Inc., a Delaware corporation, the lenders
signatory thereto (the "Lenders") and Banc of America Commercial Finance
Corporation ("BACF"), as agent for the Lenders, and (ii) a Subordination
Agreement (the "Subordination Agreement") dated as of February 19, 2000 among
Debtor, Secured Party and BACF.
(b) Debtor is the lawful owner of such Collateral and, except as set forth
in the Credit Agreement and the Subordination Agreement, has the right to
pledge, sell, assign, transfer and create a security interest in the same;
(c) Except as set forth in the Credit Agreement and the Subordination
Agreement, the Collateral shall continue to be free from any pledges, liens,
encumbrances and security interests or other claims in favor of others, and
Debtor will warrant and, at Secured Party's request, defend the same from all
claims and demands of all persons, except those persons described in the Credit
Agreement and the Subordination Agreement;
<PAGE>
(d) Except as provided in the Credit Agreement and the Subordination
Agreement, Debtor will not permit any of the Collateral to be levied upon under
legal process;
(e) Except as provided in the Credit Agreement and the Subordination
Agreement, Debtor will not sell, transfer, or otherwise dispose of any of the
Collateral or any interest therein, or offer to do so, except in the ordinary
course of business, without the prior written consent of Secured Party, which
consent shall not be unreasonably withheld or delayed;
(f) Except as provided in the Credit Agreement and the Subordination
Agreement, Debtor will not permit anything to be done that may materially impair
the value of any of the Collateral or any of the security intended to be
afforded by this Security Agreement.
Upon request and as instructed by Secured Party, Debtor agrees to comply
with the requirements of all applicable state laws in order to grant to Secured
Party a valid lien upon, and a security interest in, the Collateral described
herein, or which may be described in any amendment supplementary hereto.
Debtor agrees to promptly notify Secured Party of any change in its
mailing address or principal place of business to permit a prompt refiling of
any outstanding notices, if necessary. Debtor shall also advise Secured Party
within 30 days of Debtor's knowledge of any new facts which, under the
applicable provisions of law, would materially adversely affect the priority of
the secured interest granted to Secured Party by this instrument.
Debtor shall be in default under this Security Agreement upon the
happening of any of the following events or conditions and Debtor's failure to
cure such default within ten days after receipt of written notice of a monetary
default or within 30 days after receipt of written notice of a non-monetary
default:
(a) Default in the payment or performance of any obligation, covenant
or liability contained or referred to herein, or if there should occur an event
of default under the Note or any other obligation secured hereby;
(b) If any written warranty, representation or statement pertaining
to Collateral secured by this Security Agreement, made or furnished to Secured
Party by Debtor, or by any other party or agency clearly authorized by Debtor to
make such written warranty, representation or statement, proves to have been
false in any material respect when made or furnished;
(c) Debtor makes an assignment for the benefit of creditors, institutes or
suffers the institution of a case or other proceeding under any applicable
bankruptcy law, or any similar order or decree having the same general purpose,
and which, if involuntary, is not dismissed, stayed, discharged or vacated
within 90 days thereafter or suffers the attachment, execution or other judicial
seizure of all or any substantial part of its assets remaining undismissed or
undischarged for a period of 30 days after the levy thereof;
<PAGE>
(d) Dissolution, merger or transfer of a substantial part of the property
of Debtor; or
(e) Appointment of a receiver for the Collateral or any part thereof
or for any property in which Debtor has an interest.
(a) Upon the occurrence of any event of default, as described above, and
at any time thereafter, Secured Party may declare the Obligation secured hereby
immediately due and payable, and shall have, in addition to all other remedies
available at law or equity, the remedies of a secured party under the Uniform
Commercial Code as adopted in Florida. Secured Party may, with judicial
assistance, take possession of the Collateral and Debtor will not resist or
interfere with such action. Unless the Collateral is perishable or threatens to
decline speedily in value or is a type customarily sold on a recognized market,
Secured Party will give Debtor reasonable notice of the time and place of any
public sale thereof, or of the time after which any private sale or any other
intended disposition thereof is to be made. The requirements of reasonable
notice shall be met if such notice is mailed, postage prepaid, to the address of
Debtor shown at the beginning of this Security Agreement at least 15 days before
the time of the sale or disposition. Expenses of retaking, holding, preparing
for sale, selling or the like shall include the Secured Party's reasonable
attorneys' fees and legal expenses.
(b) In case of the exercise of any of the rights of Secured Party
hereunder, all Collateral and other property or security given to secure the
indebtedness secured hereby may be offered for sale for one total price, and the
proceeds of such sale accounted for in one account without distinction between
items of security or without assigning to them any proportion of the proceeds of
such sale. Debtor insofar as it legally may so do, hereby waives the application
of any doctrine of marshaling of the Collateral, or such other property or
security, which may be offered for sale separately, and sales may be held from
time to time, and all powers of Secured Party shall not be fully executed until
all Collateral, and such other property or security, shall have been sold.
No waiver by Secured Party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. All rights of Secured
Party hereunder shall inure to the benefit of its successors and assigns; and
all obligations of Debtor shall bind its successors and assigns.
The covenants and agreements contained in this Security Agreement shall
extend to and inure to the benefit of, and be binding upon, the respective
successors and assigns of the parties hereto, the same as if they were in every
case named and expressed.
A reproduction of this Security Agreement or any financing statement
relating hereto shall be sufficient as a financing statement and may be filed in
any public office as a financing statement.
Unless otherwise indicated herein, the Secured Party's discretion under
this Security Agreement shall be exercised reasonably to the extent required by
law.
<PAGE>
Debtor shall execute, deliver and record a UCC-1 Financing Statement with
the Secretary of State of Florida.
The parties agree to execute, acknowledge, deliver and file, or cause to
be executed, acknowledged, delivered and filed, all further instruments,
agreements or documents as may be necessary to consummate the transactions
provided for in this Agreement and to do all further acts necessary to carry out
the purpose and intent of this Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida without reference to its conflicts of law
principles. Venue and jurisdiction of all actions relating to the performance or
interpretation of this Agreement may be brought only in the courts of the State
of Florida located in Broward County or in the United States District Court for
the Southern District of Florida. The parties consent to personal jurisdiction
in the courts described in this Section for the purpose of all actions, and
waive all objections to venue and the right to assert that a court chosen under
this Section is improper based on the doctrine of forum non conveniens.
If litigation is brought concerning this Agreement, the prevailing party
shall be entitled to receive from the non-prevailing party, and the
non-prevailing party shall upon final judgment and the expiration of all appeals
immediately pay upon demand, all reasonable attorneys' fees and expenses of the
prevailing party.
This Agreement constitutes the entire understanding of the parties and
supersedes all prior discussions, negotiations, agreements and understandings,
whether oral or written, with respect to its subject matter. This Agreement may
be modified only by a written instrument properly executed by all of the
parties.
If any one or more of the provisions of this Agreement is held invalid,
illegal or unenforceable, the remaining provisions of this Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision which
comes closest to the intent of the parties.
Except as otherwise provided in this Agreement, each party shall pay its
own legal fees and disbursements and other expenses incurred in connection with
this Agreement.
This Agreement may be executed by the parties in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
WAIVER OF JURY TRIAL. IF LITIGATION IS BROUGHT TO ENFORCE THIS AGREEMENT,
THE PARTIES KNOWINGLY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM HAS TO A
TRIAL BY JURY. THE PARTIES AGREE THIS PROVISION IS A MATERIAL INDUCEMENT TO THE
PARTIES' ENTERING INTO THIS AGREEMENT.
<PAGE>
Initialed (Sellers): Initialed (Shareholder):
Initialed (Buyer):
IN WITNESS WHEREOF, the parties have executed this Security Agreement on
the 19th day of February, 2000.
DEBTOR
MEDICAL STAFFING NETWORK, INC.
By: __________________________
Robert J. Adamson, President
SECURED PARTY
MEDIX RESOURCES, INC.
By: _____________________________
John Yeros, President
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into
as of the 19th day of February, 2000 by and among National Care Resources -
Colorado, Inc., a Colorado corporation ("NCR-CO"), National Care Resources -
Texas, Inc., a Colorado corporation ("NCR-TX"), TherAmerica, Inc., a Colorado
corporation ("TherAmerica"; collectively, with NCR-CO and NCR-TX, "Sellers"),
Medix Resources, Inc., a Colorado corporation (the "Shareholder"), each with a
principal business address at 7100 East Belleview Avenue, Suite 301, Englewood,
Colorado 80111, and Medical Staffing Network, Inc., a Delaware corporation with
a principal business address at 3111 North University Drive, Suite 406, Coral
Springs, Florida 33065 ("Buyer").
For value received, and in consideration of the mutual promises contained
in this Agreement, the parties agree to the following recitals, terms and
conditions.
1. Recitals.
(a) Sellers own and operate a supplemental healthcare staffing business
under the trade names National Care Resources and TherAmerica (the "Business").
(b) The Shareholder is the sole shareholder of each Seller.
(c) Sellers desire to sell, and Buyer desires to purchase, certain of the
assets used in or relating to the operation of the Business, as a going concern,
in accordance with the terms and conditions set forth in this Agreement.
2. Transfer of Assets. Except as expressly excluded below, Sellers agree to
sell, assign, transfer and deliver to Buyer, and Buyer agrees to purchase and
accept from Sellers, at the Closing (as defined below), as described below, all
of Sellers' assets and properties, real and personal, tangible and intangible,
of every kind and description, wherever located, which are used by Sellers in
connection with the operation of the Business, as a going concern including,
without limitation, the following assets (collectively, the "Assets"):
<PAGE>
Initialed (Sellers): Initialed (Shareholder):
Initialed (Buyer):
(a) Tangible Personal Property. All machinery, equipment, tools, furniture,
fixtures, office equipment, supplies, inventory, and other items of tangible
personal property of every kind owned by Sellers and used in connection with the
Business (wherever located and whether or not carried on Sellers' books)
including, without limitation, those listed on Schedule 2(a) (the "Tangible
Personal Property"), and any additions, improvements, replacements and
alterations thereto made between the date of this Agreement and the Closing Date
(as defined below), together with any express or implied warranty by the
manufacturers of any item or component part thereof, and all maintenance records
and other documents relating thereto; together with all of Sellers' other
tangible assets of every kind and description, real, personal or mixed, wherever
located, which are owned by Sellers and used in connection with the Business.
(b) Leased Real Property. All of Sellers' interests in real property
leased by Sellers in Texas and used in connection with the Business (the "Leased
Real Property"), which interests, together with the leases relating thereto (the
"Real Property Leases"), are more particularly described on Schedule 2(b).
(c) Contracts. All of Sellers' interests in Sellers' contracts with its
customers entered into in the ordinary course of the Business, Sellers' rights
under covenants not to compete and/or confidentiality agreements with Sellers'
employees (to the extent such rights are assignable), and Sellers' contracts and
commitments described on Schedule 2(c) (the "Contracts").
(d) Intellectual Property. All of the intellectual property rights that
are owned or used by Sellers in connection with the Business, including the
following: (A) the names National Care Resources, TherAmerica and NC
Resources-Texas, Inc., and all trademarks, service marks, licenses, trade names,
logos and other designations (the "Marks") and all registrations and
applications for registration relating thereto, (B) all computer databases,
software and licenses thereto, and all copyrighted works (the "Copyrights") and
registrations therefor, (C) all inventions that are the subject of letters
patent or applications therefor (the "Patents") and (D) all confidential or
proprietary processes, technical data and other similar information that is of
commercial value to the Business (the "Trade Secrets") (the Marks and
registrations therefor, Copyrights and registrations therefor, Patents and Trade
Secrets being referred to collectively herein as the "Intellectual Property"),
together with the goodwill related thereto, and all royalty income from the
Intellectual Property accruing after the Closing Date. All items of Intellectual
Property included in the Assets are described on Schedule 2(d).
(e) Permits. All permits, authorizations, certificates, approvals and
licenses relating to the operation of the Business including, without
limitation, those listed on Schedule 2(e) (the "Permits").
<PAGE>
(f) Records. All of Sellers' records, technical data, asset ledgers, books
of account, inventory records, budgets, customer and supplier lists, payroll and
personnel records, computer programs, advertising material, marketing
information, policy or operational manuals, correspondence and other files
created or maintained in connection with the Business; provided that Sellers
will be permitted access to the books of account of Sellers from time to time
during normal business hours upon two business days written notice to Buyer for
the purpose of closing out those records for accounting, tax and related
purposes.
(g) Deposits and Prepaid Expenses. All of Sellers' utility, rent and
equipment deposits, rights to refunds and prepaid expenses listed on Schedule
2(g).
(h) Claims. All of Sellers' rights to any choses in action, claims, causes
or rights of action arising in connection with the Business, except as they
relate to any Excluded Assets (as defined below) or any breach of this
Agreement.
(i) Goodwill. Any and all of Sellers' goodwill in and going concern value
of the Business, together with Sellers' confidentiality and non-competition
agreements with employees, whether oral or written, and Sellers' rights to its
existing telephone numbers set forth on Schedule 2(i).
(j) Other Intangibles. All other intangible assets of any kind or
description, wherever located, which are owned by Sellers and used in connection
with the operation of the Business.
(k) Excluded Assets. The following assets shall be excluded from the
Assets and shall be retained by Sellers (collectively, the "Excluded Assets").
(1) Cash. All cash on hand and on deposit in banks, cash equivalents
and investments.
(2) Personal Property Disposed Of. All tangible personal property
disposed of or consumed in the ordinary course of business of the Business or
with the written consent of Buyer between the date hereof and the Closing Date.
(3) Assets of Benefit Plans. Pension, profit sharing or savings plans
and trusts and the assets thereof.
(4) Certain Records. Sellers' corporate minute books and stock books
or of any of Sellers' predecessors in interest.
(5) Certain Contracts. Any contracts or other agreements entered into
by Sellers or by which Sellers or any of the Assets is bound set forth in
Schedule 2(k)(5); provided, however, that Buyer shall have the option of
assuming one or more of such contracts and receiving assignments of such assumed
contracts.
<PAGE>
(6) Employees' Property. Any personal property owned by employees of
the Sellers including, but not limited to, the property listed on Schedule
2(k)(6).
(7) Insurance. All insurance policies relating to the Business in
force prior to or at the time of Closing.
(8) Accounts Receivable. All of Sellers' accounts receivable and
trade accounts in connection with the Business ("Receivables").
(9) Other Assets. Those assets set forth on Schedule 2(k)(9).
3. Liabilities.
(a) The Assets shall be sold and conveyed to Buyer free and clear of all
liabilities, obligations, liens, security interests and encumbrances whatsoever.
Buyer shall in no event assume or be liable for any liability or obligation not
specifically assumed pursuant to this Section 3 and in instruments of assumption
delivered by it at Closing, and, except as expressly provided in this Section 3,
Sellers shall retain responsibility for all liabilities accrued as of the
Closing Date and all liabilities arising from the Sellers' operations prior to
the Closing Date, whether or not accrued and whether or not disclosed.
Specifically, but without limiting the generality of the foregoing sentence,
Buyer shall not assume any liability or obligation of Sellers with respect to
(i) malpractice liability and any other similar claims, (ii) taxes and related
penalties and interest of any kind, (iii) employees or former employees of
Sellers, including any liability for accrued salaries, wages, payroll taxes,
severance pay entitlements, health, medical, retirement, deferred compensation
benefits or any other obligations or expenses arising out of or relating to the
employment by Sellers of its employees or Sellers' termination of such
employees, (iv) any debt of Sellers, whether or not appearing on Sellers' books
and (v) any other liabilities relating to the period prior to the Closing Date.
Sellers shall retain and shall assume and discharge all liabilities and costs
under the Consolidated Omnibus Budget Reconciliation Act, as amended ("COBRA")
(including liabilities for violations thereof), for all "qualifying events" (as
defined in COBRA) occurring with respect to Sellers' employees and their
dependents, including qualifying events that occur as a result of the sale of
the Assets contemplated by this Agreement.
<PAGE>
(b) As exceptions to the provisions of Section 3(a) above, Buyer will
assume at Closing (i) the obligations of Sellers under the Contracts and Real
Property Leases disclosed to Buyer, to the extent that such obligations are not
performed or to be performed prior to the Closing Date, are disclosed in the
text of such Contracts and Real Property Leases and accrue subsequent to the
Closing Date, (ii) the obligation to pay accounts payable which arise from
services rendered or products furnished in the ordinary course of business to
Sellers by the vendors listed on Schedule 3(b), to the extent such accounts
payable are not paid or to be paid prior to the Closing Date and are not more
than one day past due as of the Closing Date and (iii) accrued vacation and
accrued sick leave for employees of the Business in an amount not exceeding
$18,980.
4. Consideration.
(a) Purchase Price. Subject to the Post-Closing Adjustment provided for in
Section 4(e), the aggregate purchase price (the "Purchase Price") for the Assets
shall be equal to $1,000,000. Buyer shall pay the Purchase Price to Sellers as
follows:
(1) $500,000 (the "Initial Payment") shall be paid by wire transfer
to an account designated by Sellers or a cashier's or certified check drawn upon
a federally insured Florida lending institution on the Closing Date; and
(2) $500,000 shall be paid pursuant to a Secured Subordinated Promissory
Note (the "Note") in the form of Exhibit A which shall be secured as provided
under a Security Agreement (the "Security Agreement") in the form of Exhibit B.
(3) Sellers hereby assign all of their rights to payments under this
subsection (a) to, and instruct Buyer to make such payments directly to, the
Shareholder.
(b) Allocation. The Purchase Price shall be allocated among the Assets as
set forth on Schedule 4(b). For tax purposes, the parties shall report the
transactions contemplated by this Agreement in accordance with such allocation.
(c) Adjustment of Certain Items. With respect to certain expenses incurred
in the operation of the Business the following adjustments shall be made:
(1) Operating Expenses. Subject to the specific provisions of this
Subsection and Section 3 above, Sellers shall continue to be responsible for all
costs and expenses attributable to the operation of the Business or ownership of
the Assets up to the Closing Date, and Buyer shall become responsible for all
costs and expenses attributable to the operation of the Business or ownership of
the Assets from and after the Closing Date.
(2) Taxes. Personal property taxes shall be apportioned at the Closing as
of the Closing Date based on current tax bills available; and if not available,
based on the most recent tax bills available with appropriate subsequent
adjustment when bills for the current year are received.
<PAGE>
(3) Utilities. Electric, water, sewer and similar charges shall be
paid directly to the obligee by Sellers and Buyer based on meter readings as of
the Closing Date and at the prevailing rates, if possible; otherwise such
charges shall be apportioned based on the number of operating days occurring
before and after the Closing Date during the billing period for each such
charge.
(4) Personal Property Leases. The next payment due to personal
property lessors after the Closing Date with respect to any leased personal
property that is assigned to and assumed by Buyer shall be apportioned between
Sellers and Buyer based on the time in such period before and after the Closing
Date.
(5) Employee Expenses. Salaries, wages, commissions, payroll taxes,
vacation pay and sick pay shall be prorated between Sellers and Buyer as of the
Closing Date with respect to all of Sellers' employees who enter the employment
of Buyer following the Closing.
Appropriate cash payments by Sellers or Buyer, as the case may
require, shall be made from time to time, as soon as practicable after the facts
giving rise to the obligation for such payments are known, to give effect to the
prorations provided in this Subsection.
(d) Noncompetition. In order to ensure to Buyer the full benefits of the
Assets and the Business, each Seller and the Shareholder, for themselves and
their affiliates, will execute and deliver at the Closing a Confidential
Information and Noncompete Agreement (the "Noncompetition Agreement") in the
form attached hereto as Exhibit C pursuant to which they will covenant and agree
not to engage in the healthcare staffing business for five (5) years following
the Closing Date in states within which business is conducted by Sellers or
Buyer.
(e) Post-Closing Adjustments to Purchase Price. If any adjustments to
Sellers' earnings before interest, taxes, depreciation and amortization
("EBITDA") as of November 21, 1999 (the "Reference Date") are required to be
made within 12 months after the Closing Date (the "Post-Closing Adjustment
Period") because items of income or expense that should have been included in
the calculation of EBITDA were not reflected on the books and financial records
of Sellers, the Purchase Price shall be adjusted by multiplying two by the
amount of each adjustment. No adjustment to the Purchase Price shall be made
pursuant to this subsection unless the aggregate value of the adjustments to be
made equals or exceeds $20,000. If adjustments are made that result in a net
increase in the Purchase Price, the amount of the adjustment shall be paid by
Buyer to Sellers. If the adjustment results in a net reduction of the Purchase
Price, the Sellers and the Shareholder shall pay the amount of the adjustment to
the Buyer. The adjustment shall be paid within 90 days after the close of the
Post-Closing Adjustment Period.
<PAGE>
5. Closing. The closing ("Closing") of the sale and purchase contemplated
by this Agreement shall take place on the 7th day of February, 2000, or at such
other time as the parties may mutually agree ("Closing Date"), at Buyer's office
or at such other place as the parties may mutually agree. The Closing may be
performed by facsimile signatures (which shall be deemed originals) with hard
copies of originals to follow by overnight mail and by wire transfer of funds on
the date of delivery of facsimile signatures.
6. Closing Documentation.
(a) Sellers' and Shareholder's Documents. At Closing, Sellers and the
Shareholder shall deliver to Buyer the following fully executed documents:
(1) A Bill of Sale in the form attached to this Agreement as Exhibit D;
(2) An Assignment of Trade Names and Intellectual Property Rights ("Trade
Name Assignment") in the form attached to this Agreement as Exhibit E;
(3) Assignments and Assumptions of Real Property Leases ("Real Property
Assignment") in the form attached to this Agreement as Exhibit F;
(4) An Assignment and Assumption of Contracts ("Contract Assignment") in
the form attached as Exhibit G;
(5) The Noncompetition Agreement;
(6) The Security Agreement;
(7) A Subordination Agreement in the form attached as Exhibit H;
(8) Duly entered corporate resolutions of each Seller authorizing the
transactions contemplated by this Agreement, accompanied by a certification of
the Secretary of each Seller to the effect that such resolutions are in full
force and effect and have not been amended, modified or rescinded, together with
good standing certificates from the Secretary of State of Colorado and all
states in which the Sellers are qualified to do business;
(9) An opinion of counsel (the "Sellers' Opinion") substantially in
the form attached to this Agreement as Exhibit I which shall include a statement
permitting reliance on the opinion by Banc of America Commercial Finance
Corporation ("Banc of America"), if required under the Amended and Restated
Credit Agreement ("Credit Agreement") dated as of February 10, 2000 among MSN
Holdings, Inc., Buyer, the Lenders (as defined therein) and Banc of America;
<PAGE>
(10) Such releases, consents, waivers and approvals, in forms reasonably
satisfactory to Buyer, as may be necessary to effect the conveyance, transfer,
assignment and delivery of the Assets, free and clear of all liens,
encumbrances, claims, options, rights of first refusal and other agreements
(collectively, "Liens");
(11) Such other instruments of transfer or assignment, in forms reasonably
satisfactory to Buyer, as may be necessary in order to vest Buyer with good and
marketable title to the Assets; and
(12) Such other instruments and agreements as Buyer or its counsel may
reasonably request.
(b) Further Assurances. From time to time after the Closing Date, at
Buyer's request, and without further consideration, Sellers and Shareholder, as
applicable, shall execute and deliver such other instruments of conveyance and
transfer and take such other actions as Buyer may reasonably require in order to
more effectively convey, transfer, assign or deliver the Assets to Buyer, its
successors or assigns.
(c) Buyer's Documents. At Closing, Buyer shall deliver or cause to be
delivered to Sellers the following:
(1) Duly entered corporate resolutions of Buyer authorizing the transaction
contemplated by this Agreement, accompanied by a certification of the Secretary
of Buyer to the effect that such resolutions are in full force and effect and
have not been amended, modified or rescinded, together with a good standing
certificate from the Delaware Secretary of State dated not more than 10 days
prior to the Closing Date;
(2) The Initial Payment, Note and Security Agreement;
(3) The Noncompetition Agreement;
(4) An Assumption of Accounts Payable in the form of Exhibit J.
(5) The Trade Name Assignment;
(6) The Real Property Assignments;
(7) The Contract Assignment;
(8) The Subordination Agreement;
<PAGE>
(9) An opinion of counsel (the "Buyer's Opinion") substantially in the
form attached to this Agreement as Exhibit K; and
(10) Such other instruments and agreements as Sellers or their counsel
may reasonably request.
7. Warranties and Representations. Sellers and the Shareholder warrant and
represent to Buyer as follows:
(a) Sellers are the owners of and have good, absolute and marketable title
to the Assets, and, as of the Closing Date, the Assets shall be free and clear
of all Liens of every kind, except those Liens assumed by the Buyer in
accordance with this Agreement.
(b) All income tax returns, profit and loss statements, balance sheets,
cash flow statements and other financial information furnished and to be
furnished to Buyer in connection with this transaction are complete and fairly
represent the financial information set forth therein. There has been no
material adverse change in the financial condition of the Business since
September 30, 1999. Except as described in this Agreement, reflected in the
financial statements furnished by Sellers to Buyer or set forth on Schedule
7(b), there is no liability or obligation of Sellers related to the operation of
the Business, whether accrued, absolute or contingent, other than liabilities
and obligations that have been incurred in the ordinary course of business since
September 30, 1999, and are not material, in the aggregate, to the Business or
the operations or financial condition of Sellers.
(c) Neither Shareholder nor any Seller has entered into any other contract
for the sale of the Assets.
(d) Each Seller and the Shareholder is a corporation which is duly
organized and in good standing under the laws of the State of Colorado, with all
requisite power and authority to carry on the Business as it is presently
conducted. Each Seller is qualified to do business and in good standing under
the laws of the jurisdictions listed on Schedule 7(d).
(e) Each Seller has duly filed all federal, state and local tax returns
required to be filed by it and has paid all federal, state and local taxes
required to be paid with respect to the periods covered by such returns. All
federal, state and local taxes of Sellers shall be paid as of the Closing Date.
Except as set forth in Schedule 7(e), neither the Internal Revenue Service nor
any other taxing authority is now asserting or, to the knowledge of Sellers or
the Shareholder, threatening to assert against any Seller any deficiency or
claim for additional taxes or interest thereon or penalties in excess of $1,000
in connection therewith, which additional taxes, interest or penalties, if any,
Sellers shall promptly pay upon assessment.
<PAGE>
(f) Each Seller and the Shareholder has full power and authority to enter
into this Agreement and to carry out the transactions contemplated by this
Agreement.
(g) The transactions contemplated by this Agreement have been duly
authorized by appropriate corporate actions on the part of each Seller and the
Shareholder and, upon the execution and delivery of this Agreement, it shall be
a valid and binding obligation of the Sellers and the Shareholder.
(h) Neither the execution and delivery by the Sellers or the Shareholder
of this Agreement nor the consummation by Sellers or the Shareholder of the
transactions contemplated herein will, with or without the giving of notice or
passage of time, or both, be contrary to or violate, breach, or constitute a
default under, or permit the termination or acceleration of maturity of, or
result in the imposition of any Lien upon any property or asset of any Seller or
the Shareholder pursuant to any provision of any note, bond, indenture,
mortgage, deed of trust, evidence of indebtedness or lease agreement, other
agreement or instrument or any judgment, order, injunction or decree by which
any Seller or the Shareholder is bound, to which any Seller or the Shareholder
is a party, or to which the assets of any Seller or the Shareholder is subject;
nor is the effectiveness or enforceability of this Agreement or such other
documents adversely affected by any provision of the articles of incorporation
or bylaws of any Seller or the Shareholder.
(i) Sellers have all necessary licenses and permits to carry on the
Business, and the Business is being operated and Sellers' property is being used
in compliance with all applicable laws, ordinances and regulations. No
authorization or approval of, or filing with, any governmental agency, authority
or other body or any other third persons will be required in connection with
Sellers' or the Shareholder's execution and delivery of this Agreement or
consummation of the transactions contemplated herein.
(j) There are no legal actions, suits, arbitrations, or other legal,
administrative or other proceedings pending or threatened against any Seller or
the Shareholder, their respective properties, assets or the Business, and
Sellers and the Shareholder are not aware of any fact which might result in any
such action, suit, arbitration or other legal, administrative or other
proceeding, except as disclosed in Schedule 7(j). Neither Sellers nor the
Shareholder is in default with respect to any currently effective judgment,
order, writ, injunction, decree, demand or assessment issued by any court or of
any federal, state, municipal or other governmental agency, board, commission,
bureau, instrumentality or department. Neither Sellers nor the Shareholder is
charged or threatened with or under investigation with respect to any violation
of any provision of any federal, state, municipal or other law or administrative
rule or regulation.
<PAGE>
(k) No Seller is in default under any material agreements relating to the
Business, including, without limitation, the Contracts. All Contracts are in
full force and effect, valid and enforceable in accordance with their respective
terms. There are no existing material defaults of any Seller or events of
default that, with the giving of notice or lapse of time, or both, would
constitute defaults of Sellers under the Contracts, nor are material amendments
pending with respect to any Contracts. Except as set forth in Schedule 7(k), no
Contract is a governmental contract subject to price redetermination or
renegotiation. No Seller has any oral agreements with customers which require
Sellers to provide services at no charge or at rates significantly below the
average rates for such services set forth in Sellers' written customer
contracts.
(l) The Shareholder is the sole stockholder of each Seller.
(m) Except as set forth in Schedule 7(m), all material equipment used in
connection with the Business is in proper working order, ordinary wear and tear
excepted, and in compliance with the rules and regulations of all applicable
statutes, ordinances, rules and regulations.
(n) A true, correct and complete copy of each Real Property Lease to which
any Seller is a party is attached to this Agreement as Schedule 7(n). The
payments due under each Real Property Lease are current as of the Closing Date.
There have been no violations or breaches under any Real Property Lease by any
Seller or the applicable landlord, and no Seller has notified any landlord of
any intention to terminate the Real Property Lease. No Seller has carried out
any alterations or caused any damage to any Leased Real Property which would
require such Seller, as tenant, to restore the Leased Real Property to its
original condition at the expiration of the applicable Real Property Lease. Each
Real Property Lease may be assigned to Buyer, subject to approval of the
applicable landlord, and prior to the Closing Date, Sellers shall furnish Buyer
with evidence of each landlord's consent to the assignment of the applicable
Real Property Lease to Buyer in a form satisfactory to Buyer.
<PAGE>
(o) Sellers have complied, and through the Closing Date will continue to
comply, in all material respects with federal, state and local laws, rules and
regulations. In particular, Sellers are operating and have operated the Business
in compliance with all applicable local, state and federal environmental laws,
rules, regulations and ordinances including, but not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss.ss.9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss.6901 et seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq.,
and the environmental laws, rules and regulations of the States of Colorado and
Texas as each such statute or regulation has been amended from time to time
(collectively, "Environmental Laws and Regulations"). Sellers have not knowingly
accepted for storage, and to their knowledge, do not store, any nitrate film or
any hazardous substance or hazardous material. Sellers have never knowingly
caused the release of an amount of any hazardous substance or hazardous material
into the environment which release would constitute a violation of any
Environmental Laws and Regulations. For purposes of this paragraph, "hazardous
substance," "release" and "environment" shall have the same meanings as those
terms are defined by Section 101 of CERCLA, 42 U.S.C. ss.9601, and "hazardous
material" shall have the same meaning as that term is defined by Environmental
Laws and Regulations. Sellers do not own, lease, rent or otherwise utilize any
underground storage tanks and, to Sellers' knowledge, there are no waste tanks,
containers, cylinders, drums or cans buried, stored or deposited in or at any of
the Leased Real Property. To Sellers' knowledge, the Leased Real Property does
not contain (i) any asbestos or (ii) any polychlorinated biphenyl (PCB)
substances.
(p) Sellers have not established and do not maintain any employee pension
benefit plans, deferred compensation plans or other plans which are subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
(q) Except as set forth in Schedule 7(q), since September 30, 1999, none
of Sellers' major customers have terminated or indicated an intention to
terminate its business with, or reduce the volume of its business with, Sellers.
Sellers have no customers whose business is or has within 90 days prior to the
Closing Date been the subject of competitive bidding procedures, except as
disclosed in Schedule 7(q).
(r) Schedule 7(r) lists the names of all full-time and part-time office
employees of Sellers and sets forth a job description or title and compensation
for each such person. All such employees are or, as of the Closing Date, will be
subject to Noncompetition and Confidential Information Agreements (the "Employee
Confidentiality Agreements") in a form reasonably satisfactory to the Buyer.
Schedule 7(r) also sets forth a list of all written and oral employment and
noncompetition agreements with employees of the Business. During the past three
years there has not been, and there is not now, any strike, labor dispute, slow
down, work stoppage, or other material interference with or impairment by labor
of the business of Sellers pending or, to the knowledge of Sellers, threatened
or contemplated against or directly affecting the Business. Sellers' employees
are not represented by any labor or trade union, nor has there been any attempt
to organize Seller's employees during the 90 day period prior to the date of
this Agreement. There has been no employee turnover since September 30, 1999,
except as noted on Schedule 7(r). Except as set forth in Schedule 7(r), Sellers
warrant that there has been no carryover of employee vacation or sick pay from
prior fiscal years.
(s) Except for the trade names "National Care Resources" and
"TherAmerica," Sellers have no patents, trademarks, service marks, trade names,
copyrights, computer programs or program rights, licenses or other similar
intangible property rights and interest which are used in connection with the
Business. Sellers have the right to use, free and clear of any claims or rights
of others, all trade secrets, customer lists, intellectual property and
operating methods required for or incident to the operation of the Business.
Sellers are not using or in any way making use of any confidential information
or trade secrets of any third party, including without limitation, a former
employer of any present or past employee or Sellers.
<PAGE>
(t) Neither Sellers nor the Shareholder owns directly or indirectly, on an
individual or joint basis, any material interest in any customer, competitor or
supplier of the Business, or any organization which has a material contract or
arrangement with the Business. None of the customers of Sellers has become a
customer of Sellers because of personal or financial relationships with Sellers'
management or affiliated persons or entities.
(u) Neither Sellers nor Shareholder has dealt with a broker or finder in
connection with this Agreement, and no broker or other person is entitled to any
commission or finder's fee in connection with the consummation of the
transaction contemplated by this Agreement.
(v) No representation or warranty by the Sellers or the Shareholder in
this Agreement contains any untrue statement of a material fact, or omits to
state any material fact required to make the statements contained herein not
misleading.
All of the foregoing warranties and representations shall survive the
closing of the transactions contemplated by this Agreement for a period of 18
months after the Closing Date.
8. Warranties and Representations of Buyer. Buyer warrants and represents
to Sellers and Shareholder as follows:
(a) Buyer is a corporation which is duly organized and in good standing
under the laws of the State of Delaware and is duly qualified to do business and
in good standing under the laws of the State of Florida. Buyer has all requisite
power and authority to carry on its business as it is presently conducted.
(b) Buyer has full power and authority to enter into this Agreement and to
carry out the transactions contemplated by this Agreement, except that, if
required by the Credit Agreement, Buyer must obtain consent to the transactions
contemplated by this Agreement from Banc of America.
(c) The transactions contemplated by this Agreement (including execution
and delivery of the Note and Security Agreement) have been duly authorized by
appropriate corporate actions, and upon the execution and delivery of this
Agreement, it shall be a valid and binding obligation of the Buyer.
<PAGE>
(d) Buyer and its officers, directors, employees, and stockholders have no
obligation (nor has any third party alleged the existence for such an
obligation) to any third party (except Banc of America) to (i) maintain the
confidentiality of any information, (ii) not solicit customers or suppliers,
(iii) not engage in any competitive activity, (iv) fulfill any fiduciary duty,
or (v) comply with a contractual or other obligation that would in any way be
violated by the transactions contemplated hereby or the operation of the
Business after the closing of the transactions contemplated hereby.
(e) The execution and delivery by Buyer of this Agreement, the
consummation by Buyer of the transactions contemplated herein and the operation
of the Business after the Closing will not, with or without the giving of notice
or passage of time, or both, be contrary to or materially violate, breach or
constitute a material default under any provision of any note, bond, indenture,
mortgage, deed of trust, evidence of indebtedness or lease agreement, other
agreement or instrument or any judgment, order, injunction or decree by which
Buyer is bound, to which Buyer is a party, or to which its assets are subject.
The effectiveness or enforceability of this Agreement or such other documents
will not be adversely affected by any provision of the certificate of
incorporation or bylaws of Buyer.
(f) No filing or registration with, or authorization, consent or approval
of, any governmental agency is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement by Buyer or is
necessary for the consummation of the transactions contemplated by this
Agreement.
(g) Buyer has not dealt with a broker or finder in connection with this
Agreement, and no broker or other person is entitled to any commission or
finder's fee in connection with the consummation of the transactions
contemplated by this Agreement.
(h) No representation or warranty by Buyer in this Agreement contains any
untrue statement of a material fact, or omits to state any material fact
required to make the statements contained herein not misleading.
All of the foregoing warranties and representations shall survive the
closing of the transactions contemplated by this Agreement for a period of 18
months after the Closing Date.
9. Expenses of Sale. Except as otherwise provided in this Agreement, each
party agrees to bear its own legal, accounting and other expenses in connection
with the preparation and consummation of this Agreement.
10. Risk of Loss. The risk of loss and damage to the Assets shall be borne
by Sellers prior to Closing. If the Assets are damaged and cannot be
substantially restored to their current condition prior to Closing, Buyer may
elect to terminate its obligations under this Agreement. Alternatively, Buyer
may elect to purchase the Assets in their damaged condition, in which event
Buyer shall be entitled to the benefit of any insurance on the Assets, or if not
insured, a reduction of the Purchase Price.
<PAGE>
11. Default. If either party fails to perform its obligations under this
Agreement within the time specified, time being of the essence, the other party
may seek damages or exercise any other right available to it under applicable
law.
12. Conditions Precedent.
(a) Conditions Precedent to Buyer's Obligations. Buyer's obligations
pursuant to this Agreement are subject to the satisfaction of the following
conditions on or before the Closing Date:
(i) The execution of the Employee Confidentiality Agreements by all
of Sellers' employees listed in Schedule 7(r).
(ii) Execution of the Noncompetition Agreement, Security Agreement
and a Sublease for the Leased Real Property located at 7100 East Belleview
Avenue, Suite 301, Englewood, Colorado 80111.
(iii)Consent by the applicable landlords to the assignment of the
Real Property Leases to Buyer and to subletting of a portion of the Englewood,
Colorado office to Buyer.
(iv) Sellers' and Shareholder's representations and warranties
contained in this Agreement being true and correct.
(v) Sellers' delivery to Buyer of all documents described in Section
6(a) above and all bills, instruments of transfer and assignment documents
necessary or appropriate to transfer to Buyer good and marketable title in and
to the Assets, free and clear of all Liens.
(vi) Sellers and the Shareholder having duly performed and complied
with all covenants, agreements and obligations required by this Agreement to be
performed by or complied with by Sellers or the Shareholder, as applicable, on
or before the Closing Date.
(vii)No action or proceeding shall be pending by or before any Court
or other governmental body or agency seeking to restrain, prohibit or invalidate
the transactions contemplated by this Agreement.
(viii) Buyer having received the written consent of Banc of America
to the transactions contemplated by this Agreement.
(b) Conditions Precedent to Sellers' and Shareholder's Obligations.
Sellers' and Shareholder's obligations pursuant to this Agreement are subject to
the satisfaction of the following conditions on or before the Closing Date:
<PAGE>
(i) Consent by the applicable landlords to the assignment of the Real
Property Leases to Buyer and to subletting of a portion of the Englewood,
Colorado office to Buyer.
(ii) Buyer's delivery to Sellers of all documents described in Section
6(b) above.
(iii)Buyer's delivery of the Initial Payment, the Note, the Security
Agreement and an executed Sublease for the Leased Real Property located at 7100
East Belleview Avenue, Suite 301, Englewood, Colorado 80111.
(iv) Buyer having duly performed and complied with all covenants,
agreements and obligations required by this Agreement to be performed by or
complied with by Buyer on or before the Closing Date.
(v) No action or proceeding shall be pending by or before any Court or
other governmental body or agency seeking to restrain, prohibit or invalidate
the transactions contemplated by this Agreement.
(vi) Buyer's representations and warranties contained in this
Agreement being true and correct.
13. Confidentiality and Communications.
<PAGE>
(a) Sellers, Shareholder and Buyer shall use their respective best efforts
to keep confidential all information furnished to them or their representatives,
accountants, legal counsel, advisors or bankers in the course of negotiations
relating to this Agreement and the business and financial reviews and
investigations referred to in this Agreement, except to the extent that any such
information may be generally available to the public. Without limiting the
generality of the foregoing, Buyer agrees that prior to the Closing (i) it shall
not disclose information about the Business obtained during due diligence,
except to its representatives, accountants, legal counsel, advisors or bankers
who have a need to know such information to assist Buyer in this transaction,
(ii) it shall not, without the prior consent of Sellers, contact any of Sellers'
customers (such consent not to be unreasonably withheld in connection with
Buyer's need to make prudent inquiry or to assure a smooth transition of
ownership without loss of customers), and (iii) it will not solicit the
employment of any of Sellers' employees except as mutually agreed by Buyer and
Sellers. Sellers and Buyer have instructed their respective officers, employees
and other representatives having access to such information of such obligation
of confidentiality. Notwithstanding the foregoing, any disclosure of such
information may be made to the extent required by applicable law or regulation,
judicial or regulatory process, and reviews by financial institutions which are
lenders to either party, and such information may be used as evidence in or in
connection with any pending or threatened litigation relating to this Agreement
or any transaction contemplated hereby. In the event that the transactions
contemplated by this Agreement are not consummated for any reason, each party
agrees to return to the other party all materials containing such information
immediately on request, except as may be required in respect of litigation. The
obligations arising under this Section shall survive any termination or
abandonment of this Agreement, but shall lapse on the date which is 18 months
after the termination or abandonment of this Agreement.
(b) No public announcement of the execution of this Agreement or the
transactions contemplated herein shall be made without the mutual prior written
approvals of Buyer and Sellers, which approvals shall not be unreasonably
withheld. No party shall make any disclosure of the Purchase Price or other
terms hereunder except to its lenders or investors without the prior written
approval of the other party; provided that any party may disclose such
information as may be required under federal or state laws.
14. Collection of Accounts Receivable. Buyer agrees to take all reasonable
steps necessary to collect the accounts receivable of Sellers (the "Outstanding
Accounts Receivable") that are outstanding as of the Closing Date. Buyer shall
remit to Sellers on a biweekly basis an amount equal to 90% of the Outstanding
Accounts Receivable collected by Buyer during the preceding two weeks until all
of the Outstanding Accounts Receivable have been collected or Buyer determines
that the uncollected Outstanding Accounts Receivable are not collectible. To
permit Sellers to determine the accuracy of each remittance made by Buyer under
this Section, Buyer shall provide to Sellers sufficient detail of the amount of
Outstanding Accounts Receivable collected and from whom such Outstanding
Accounts Receivable have been collected at the time of each payment to Sellers
under this Section.
15. Indemnification.
(a) From and after the Closing, Sellers and the Shareholder, jointly and
severally, shall reimburse, indemnify and hold harmless Buyer and its successors
and assigns (each an "Indemnified Buyer Party") against and in respect of all
damages, losses, deficiencies, liabilities, costs and expenses incurred or
suffered by any Indemnified Buyer Party that result from or arise out of:
(1) liabilities and obligations of Sellers or the Shareholder of any
nature whatsoever (including liabilities for taxes), except for those
liabilities and obligations of Sellers which Buyer specifically assumes pursuant
to this Agreement;
<PAGE>
(2) actions, suits, claims, or legal, administrative, arbitration,
governmental or other proceedings or investigations against any Indemnified
Buyer Party that relate to Sellers, the Shareholder or the Business in which the
principal event giving rise thereto occurred prior to the Closing Date (unless
and to the extent arising specifically from action of or failure to act by
Buyer) or which result from or arise out of any action or inaction prior to the
Closing Date of Sellers or the Shareholder or any director, officer, employee,
agent or representative of Sellers;
(3) any material misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of Sellers or the Shareholder under this
Agreement, or from any material misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to Buyer
pursuant to this Agreement or in connection with the negotiation, execution or
performance of this Agreement; and
(4) all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, and reasonable costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any of the foregoing or to the enforcement of this Section.
(b) From and after the Closing, Buyer shall reimburse, indemnify and hold
harmless Sellers and Shareholder and their respective successors and assigns
(each an "Indemnified Seller Party") against and in respect of all damages,
losses, deficiencies, liabilities, costs and expenses incurred or suffered by
any Indemnified Seller Party that result from or arise out of:
(1) liabilities and obligations of Buyer of any nature whatsoever
(including liabilities for taxes), except for liabilities and obligations for
which Buyer is entitled to indemnification by Sellers and Shareholder pursuant
to this Agreement;
(2) actions, suits, claims, or legal, administrative, arbitration,
governmental or other proceedings or investigations against any Indemnified
Seller Party that relate to Buyer or the Business in which the principal event
giving rise thereto occurred from and after the Closing Date (unless and to the
extent arising specifically from action of or failure to act by a Seller or
Shareholder) or which result from or arise out of any action or inaction from
and after the Closing Date of Buyer or any director, officer, employee, agent or
representative of Buyer;
(3) any material misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement, or from
any material misrepresentation in or omission from any certificate, schedule,
statement, document or instrument furnished to Sellers or Shareholder pursuant
to this Agreement or in connection with the negotiation, execution or
performance of this Agreement;
(4) Buyer's performance or nonperformance under any Real Property
Lease on or after the Closing Date;
<PAGE>
(5) failure of Buyer to comply with the terms of the Note or the Security
Agreement; and
(6) all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, and reasonable costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any of the foregoing or to the enforcement of this Section.
(c) In the event that an Indemnified Buyer Party or an Indemnified Seller
Party seeks indemnification (the "Indemnitee") from the other party or parties
to this Agreement (the "Indemnitor"), the Indemnitee shall promptly notify the
Indemnitor in writing of such claim or demand, specifying the nature of such
claim or demand and the amount or the estimated amount thereof to the extent
then feasible, which estimate shall not be conclusive of the final amount of
such claim and demand (the "Claim Notice"). The Indemnitor shall have ten
business days from the date of delivery of the Claim Notice (the "Notice
Period") to notify the Indemnitee whether or not the Indemnitor disputes its
liability to the Indemnitee hereunder with respect to such claim or demand and,
notwithstanding any such dispute, whether or not it desires, at its sole cost
and expense, to defend the Indemnitee against any such claim or demand.
<PAGE>
(d) In the event that Indemnitor notifies the Indemnitee within the Notice
Period that it desires to defend the Indemnitee against such claim or demand
then, except as hereinafter provided, the Indemnitor shall have the right to
defend the Indemnitee by appropriate proceedings, which proceedings shall be
promptly settled or prosecuted by it to a final conclusion in such a manner as
to avoid any risk of Indemnitee becoming subject to further liability in respect
of such matter; provided, however, Indemnitor shall not, without the prior
written consent of the Indemnitee, consent to the entry of any judgment against
the Indemnitee or enter into any settlement or compromise which does not
include, as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnitee of a release, in form and substance satisfactory to
the Indemnitee, as the case may be, from all liability in respect of such claim
or litigation. If any Indemnitee desires to participate in, but not control, any
such defense or settlement, it may do so at its sole cost and expense. If, in
the reasonable opinion of the Indemnitee, any such claim or demand or the
litigation or resolution of any such claim or demand involves an issue or matter
which would reasonably be expected to have a materially adverse effect on the
business, operations, assets, properties or prospects of the Indemnitee, then
the Indemnitee shall have the right to control the defense or settlement of any
such claim or demand and its reasonable costs and expenses shall be included as
part of the indemnification obligation of Indemnitor hereunder; provided,
however, that the Indemnitee shall not select legal counsel or expert witnesses
or settle any such claim or demand without the prior written consent of the
Indemnitor, which consent shall not be unreasonably withheld. If the Indemnitee
elects to exercise such right, the Indemnitor shall have the right to
participate in, but not control, the defense or settlement of such claim or
demand at its sole cost and expense.
(e) (1) If the Indemnitor elects not to defend the Indemnitee against a
claim or demand, by not giving the Indemnitee timely notice as provided above or
otherwise, then the amount of any such claim or demand, or if the same be
defended by the Indemnitor or the Indemnitee (but no Indemnitee shall have any
obligation to defend any such claim or demand), then that portion thereof as to
which such defense is unsuccessful, in each case, shall be conclusively deemed
to be a liability of the Indemnitor hereunder, unless the Indemnitor shall have
disputed its liability to the Indemnitee hereunder.
(2) In the event an Indemnitee has a claim against the Indemnitor
hereunder that does not involve a claim or demand being asserted against or
sought to be collected from the Indemnitee by a third party, the Indemnitee
shall promptly send a Claim Notice with respect to such claim to Indemnitor. If
Indemnitor does not notify the Indemnitee within the Notice Period that it
disputes such claim, the amount of such claim shall be conclusively deemed a
liability of Indemnitor hereunder.
(f) Upon the determination of liability under this Section, the Indemnitor
shall pay to the Indemnitee, within ten days after such determination, the
amount of the claim for indemnification made hereunder. In the event that the
Indemnitee is not paid in full for any such claim pursuant to the foregoing
provisions promptly after the Indemnitor's obligation to indemnify has been
determined, the Indemnitee shall have the right, notwithstanding any other
rights that it may have against any other person, firm or corporation, to set
off the unpaid amount of any such claim against any amounts owed by the
Indemnitee under any agreements entered into pursuant to this Agreement. Upon
the payment in full of a claim, either by set off or otherwise, the Indemnitor
shall be subrogated to the rights of the Indemnitee against any person, firm or
corporation with respect to the subject matter of such claim.
(g) The indemnification rights under this Section are independent of and
in addition to such rights and remedies as the parties may have at law or in
equity or otherwise for any misrepresentation, breach of warranty or failure to
fulfill any agreement or covenant hereunder on the part of any party hereto
including, without limitation, the right to seek specific performance,
rescission or restitution, none of which rights or remedies shall be affected or
diminished hereby.
<PAGE>
(h) Without precluding Buyer from exercising any other right, power or
remedy pursuant to this Agreement or at law or in equity, Buyer shall be
entitled to offset against amounts due Sellers hereunder all damages, losses,
deficiencies, liabilities, costs and expenses (including reasonable attorney's
fees) suffered, incurred or sustained, directly or indirectly, by Buyer because
a representation or warranty of Sellers or the Shareholder contained in this
Agreement is false or materially misleading or which arises or results from or
relates to any breach of or failure by Sellers or the Shareholder to perform any
of their representations, warranties, covenants or agreements contained in this
Agreement.
(i) The right to seek indemnification under this Agreement shall
expire on the date that is thirty (30) months after the Closing Date (the
"Indemnification Termination Date"). A claim for indemnification shall be
considered timely asserted if the Claim Notice to which a claim for
indemnification relates is delivered by the Indemnitee to the Indemnitor on or
before the Indemnification Termination Date.
16. Continuation of Business. Between the date of this Agreement and the
Closing Date, Sellers will continue to operate the Business in the ordinary
course of business, without change in normal operating procedures, service to
customers or reduction in operating hours. During that time period, Sellers
will not incur any new obligations or liabilities in connection with the
Business or sell all or any portion of the Assets. Between the date of this
Agreement and the Closing Date, a representative of Buyer and of Sellers shall
confer and agree on any matters which constitute (i) a departure from business
in the ordinary course or (ii) a material business decision. Such matters shall
include the following:
(a) Any departure from standard pricing (including standard discount)
practices;
(b) Any pricing decision or unusual service offering in connection with a
request for proposals from, or bid to, a prospective customer whose estimated
needs exceed 1,000 hours of temporary employee services per month;
(c) Any capital expenditures for new vehicles, new computers or other
items, the anticipated cost of which exceeds $500;
(d) Any amendment of an existing customer or vendor contract, including
periodic repricing; and
(e) Any alteration of compensation rates to be paid to employees of the
Business.
17. Miscellaneous Provisions.
<PAGE>
(a) Notices. All notices, demands or other communications required or
permitted to be given under this Agreement shall be in writing and shall be (i)
mailed by certified mail, return receipt requested, (ii) delivered in person,
(iii) sent by overnight courier (such as FedEx) or (iv) sent by facsimile
transmission with confirmation of receipt to the parties at the addresses set
forth below. Any party may, by written notice to the other parties as provided
in this Section, change the place to which all further notices to such party
shall be sent.
(i) If to the Buyer, to:
Medical Staffing Network, Inc.
3111 North University Drive, Suite 406
Coral Springs, FL 33065
Facsimile: 954-757-5621
Attention: President
with a copy to:
Steel Hector & Davis LLP
1900 Phillips Point West
777 South Flagler Drive
West Palm Beach, FL 33401-6198
Facsimile: 561-655-1509
Attention: Kim A. Hines, Esq.
(ii) If to the Sellers or Shareholder, to:
National Care Resources-Colorado, Inc.
National Care Resources-Texas, Inc.
TherAmerica, Inc.
Medix Resources, Inc.
7100 East Belleview Avenue, Suite 301
Englewood, CO 80111
Facsimile: 303-741-9519
Attention: President
with a copy to:
Lyle B. Stewart, P.C.
3751 Quebec Street
Denver, CO 80237
Facsimile: 303-267-0922
(b) Binding Effect. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties and their respective heirs, representatives,
administrators, successors and assigns.
<PAGE>
(c) Governing Law; Jurisdiction; Interpretation. This Agreement shall be
governed by and shall be construed in accordance with the laws of the State of
Florida without regard to conflicts of law principles. Venue and jurisdiction of
all actions relating to the performance or interpretation of this Agreement may
be brought only in the courts of the State of Florida located in Broward County
or the United States District Court for the Southern District of Florida. The
parties consent to personal jurisdiction in the courts described in this Section
for the purpose of all actions, and waive all objections to venue and the right
to assert that a court chosen under this Section is improper based on the
doctrine of forum non conveniens. The paragraph headings have been used solely
for convenience, and are not intended to describe, interpret, define or limit
the scope of this Agreement.
(d) Attorneys' Fees. In connection with any litigation, including
appellate or bankruptcy proceedings, arising out of or related to this
Agreement, the non-prevailing party shall pay all reasonable attorneys' fees and
costs of the prevailing party.
(e) Severability. If any term or provision of this Agreement is deemed
invalid, such invalidity shall not affect or invalidate the remainder of this
Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute but one and the same instrument.
(g) Assignability. Buyer may assign its rights under this Agreement to any
other person or entity without the prior written consent of Sellers or the
Shareholder. Buyer shall give Sellers and Shareholder written notice of any
assignment of this Agreement within five business days after such assignment.
Buyer acknowledges and agrees that its obligations under the Note shall not be
assignable.
(h) Investigation. Buyer may, through its accountants, attorneys,
engineers, agents, employees and others, make such investigations of the
business, properties and assets and of the financial and legal and other
conditions and location of the Business as it may deem necessary or advisable
with respect to those matters and the transactions contemplated by this
Agreement.
(i) Survival of Representations and Warranties. All representations,
warranties, covenants and agreements shall survive the Closing until the end of
the 18th month after the Closing Date.
(j) Time of Essence. Time is of the essence of this Agreement.
<PAGE>
(k) Entire Agreement; Amendment. This Agreement together with the
Schedules and Exhibits to this Agreement constitute the entire and sole
agreement of the parties with respect to the subject matter and supersede and
replace all previous verbal or written agreements that the parties may have
made. All modifications or amendments of this Agreement must be in writing and
signed by all parties to this Agreement.
(l) No Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with the waiver or estoppel. No written waiver shall be deemed a continuing
waiver unless specifically stated therein, and each waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
the term or condition for the future or as to any act other than that
specifically waived. The waiver by any party of any other party's breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach, and the failure of any party to exercise any right or remedy
shall not operate or be construed as a waiver or bar to the exercise of such
right or remedy upon the occurrence of any subsequent breach. No delay on the
part of a party in exercising a right, power or privilege hereunder shall
operate as a waiver thereof. No waiver on the part of a party of a right, power
or privilege, or a single or partial exercise of a right, power or privilege,
shall preclude further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies of this Agreement are cumulative and
are not exclusive of the rights or remedies that a party may otherwise have at
law or in equity.
(m) Further Assurances. The parties agree to execute, acknowledge, deliver
and file, or cause to be executed, acknowledged, delivered and filed, all
further instruments, agreements or documents as may be necessary to consummate
the transactions provided for in this Agreement and to do all further acts
necessary to carry out the purpose and intent of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
The parties have executed this Agreement as of the date first written
above.
SELLERS: BUYER:
NATIONAL CARE RESOURCES- MEDICAL STAFFING NETWORK, INC.
COLORADO, INC.
By:_________________________________ By:________________________________
John Yeros, its President Robert J. Adamson, President
NATIONAL CARE RESOURCES-TEXAS, INC.
By: _________________________________
John Yeros, its President
THERAMERICA, INC.
By: _________________________________
John Yeros, its President
MEDIX RESOURCES, INC.
By: _________________________________
John Yeros, its President
THIS NOTE AND THE RIGHTS EVIDENCED HEREBY ARE SUBJECT TO THE TERMS OF THAT
CERTAIN SUBORDINATION AGREEMENT DATED AS OF FEBRUARY 19, 2000 AMONG MEDIX
RESOURCES, INC., MEDICAL STAFFING NETWORK, INC., AND BANC OF AMERICA COMMERCIAL
FINANCE CORPORATION, AND ANY TRANSFEREE BY ACCEPTANCE OF SUCH TRANSFER AGREES TO
BE BOUND BY THE TERMS THEREOF.
SUBORDINATED PROMISSORY NOTE
$500,000.00 February 19, 2000
FOR VALUE RECEIVED, Medical Staffing Network, Inc., a Delaware corporation
(the "Company"), hereby promises to pay to the order of Medix Resources, Inc.
("Holder"), the principal sum of Five Hundred Thousand and No/100 Dollars
($500,000.00) (the "Original Principal Amount") in lawful money of the United
States of America, together with interest on the unpaid balance thereof equal to
one percent (1%) per annum above the prime rate published by The Wall Street
Journal ("Interest"). This Note has been issued pursuant to the terms of that
certain Asset Purchase Agreement ("Asset Agreement") dated February 19, 2000
among Holder, National Care Resources-Colorado, Inc., National Care
Resources-Texas, Inc., TherAmerica, Inc. and the Company.
1. Payment. Subject to the terms and conditions of this Note, the Original
Principal Amount of this Note plus all Interest shall be due and payable on May
19, 2001.
2. Manner of Payment. All payments under this Note shall be made in lawful
currency of the United States of America at such place as Holder shall designate
in writing and shall be payable by the Company by wire transfer to an account
designated by Holder or a cashier's or certified check drawn on a federally
insured lending institution.
3. Prepayments. The Company shall be entitled to prepay any portion of the
principal amount due hereunder without penalty.
4. Transferability. This Note may be transferred or assigned by the Holder
upon written notice of such transfer or assignment to the Company specifying the
party to whom the Note has been transferred or assigned and the address for
payment of amounts due under this Note.
<PAGE>
5. SUBORDINATION AGREEMENT. HOLDER, BY ACCEPTANCE OF THIS NOTE,
ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THAT CERTAIN
SUBORDINATION AGREEMENT DATED AS OF FEBRUARY 19, 2000 AMONG HOLDER, THE COMPANY
AND BANC OF AMERICA COMMERCIAL FINANCE CORPORATION.
6. Miscellaneous.
(a) Set Off. The Company shall be entitled to offset against amounts
due to Holder under this Note all damages, losses, deficiencies, liabilities,
costs and expenses (including reasonable attorneys' fees) suffered, incurred or
sustained, directly or indirectly, by the Company (i) because a representation
or warranty of Holder or Shareholder contained in the Asset Agreement is false
or materially misleading or (ii) which arise or relate from or relate to any
breach of or failure by Holder or Shareholder to perform any of their
representations, warranties, covenants or agreements contained in the Asset
Agreement.
(b) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Florida.
(c) Entire Agreement. This Note, together with all of the other documents
executed in connection herewith, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
(d) Amendments. No term of this Note may be amended, waived, discharged or
terminated except by a written instrument signed by the Company
and Holder.
(e) Notices. All notices, requests, demands and other communications
made under this Note shall be in writing, correctly addressed to the recipient
at the addresses set forth under such recipient's signature on the signature
page hereto and shall be deemed to have been duly given (a) upon delivery, if
served personally on the party to whom notice is to be given, (b) on the date of
receipt, refusal or non-delivery indicated on the receipt if mailed to the party
to whom notice is to be given by registered or certified mail, postage prepaid,
or by overnight courier (such as FedEx), or (c) upon confirmation of
transmission, if sent by telecopier. Any party may give written notice of a
change of address in accordance with the provisions of this Section 6(e) and
after such notice of change has been received, any subsequent notice shall be
given to such party in the manner described at such new address.
<PAGE>
(f) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to Holder upon any breach or default of the Company
under this Note shall impair any such right, power or remedy of Holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of Holder of any breach
or default under this Note, or any waiver on the part of Holder of any provision
or condition of this Note must be made in writing and shall be effective only to
the extent specifically set forth in such writing and executed by the party to
be bound. All remedies either under this Note or by law or otherwise afforded to
Holder, shall be cumulative and not alternative.
(g) Waiver of Notice; Attorneys' Fees. The Company waives presentment,
protest, notice, notice of protest and notice of dishonor and agrees to pay all
costs, including reasonable attorneys' fees, whether suit be brought or not, if
after maturity of this Note or default hereunder, counsel shall be employed to
collect this Note.
(h) Severability. In case any provision of this Note shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby, and
the invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision that comes closest to the
intent of the parties.
(i) Titles. The titles of the Sections and subsections of this Note
are for convenience or reference only and are not to be considered in construing
this Note.
IN WITNESS WHEREOF, this Note is executed as of the date first above
written.
MEDICAL STAFFING NETWORK, INC.
By: _________________________________
Robert J. Adamson, President
Address: 3111 North
University Drive
Suite 406
Coral Springs, FL 33065
ACCEPTED AND AGREED:
MEDIX RESOURCES, INC.
By: _________________________________
Name: _____________________________
Title: _____________________________
Address: 7100 East Belleview Avenue, Suite 301
Englewood, CO 80111
R O B I N S C H O E N P U B L I C R E L A T I O N S
526 Penn Street Newtown, PA 18940 t: 215/504-2122 f: 215/504-2123
e-m: [email protected]
FOR IMMEDIATE RELEASE
February 23, 2000
Contacts: General and Press Inquiries Investor Inquiries
Robin Schoen Josh Golomb
Robin Schoen Public Relations SmallCaps Online Communications
215/504-2122 212/554-4158
MEDIX SELLS BALANCE OF MEDICAL STAFFING BUSINESS
Company Now Exclusively Focused on iHealth Software Business
Denver, CO -- Medix Resources, Inc. [OTCBB:MDIX] today announced the sale of the
balance of its medical staffing operations to Medical Staffing Network, a
medical staffing company located in Boca Raton, Florida. Medix provides
Internet-based health care communication, data integration, and transaction
processing software through its Cymedix.com product line.
Specifically, Medix sold National Care Resources, TherAmerica, National Care
Resources Travel, and National Care Resources Rehab Consulting facilities
operating out of Denver, Colorado, and Houston and San Antonio, Texas. The
purchase price received by the Company was $1,000,000 with $500,000 paid in cash
and $500,000 in a subordinated note from Medical Staffing Network Inc. The
proceeds of this sale enable Medix to improve its overall financial position and
balance sheet.
"Since acquiring Cymedix Lynx and the Cymedix.com iHealth software product line
in 1998, our overarching goal has been to pursue a pure iHealth software
strategy," stated John Prufeta, Medix Resources' chief executive officer. "With
this sale, we've completely divested ourselves of our staffing operations and
can now focus solely on winning in the iHealth software market."
Denver-based Medix Resources, through Cymedix Lynx Corporation, offers
Cymedix.com, a suite of fully-secure, patented Internet communications software
products, to the healthcare industry. Additional information about Medix
Resources and its products and services can be found by visiting its Web sites,
www.medixresources.com and www.cymedix.com, or by calling 800/326-8773.
# # #
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this release, which are not historical facts,
contain forward-looking information with respect to plans, projections and/or
future performance of the Company, the occurrence of which involve certain risks
and uncertainties detailed in the Company's Form 10-KSB/A for 1998, which was
filed with the Securities and Exchange Commission on July 23, 1999, and its 1999
third quarter Form 10-QSB, which was filed with the Securities and Exchange
Commission on November 10, 1999. This information is available from the SEC or
the Company.
