LLC PREORGANIZATIONAL AGREEMENT
This LLC Preorganizational Agreement (this"Agreement") is dated as of August 1,
1997, and is among MB Holding Corp., a Nevada corporation ("Holding") , MB
Software Corporation, a Colorado corporation ("Shareholder"), Imagine
Investments, Inc., a Delaware corporation ("Imagine") and Healthcare
Innovations, LLC, an Arkansas limited liability company (the"Company").
WITNESSETH:
WHEREAS, Holding, a wholly owned subsidiary of Shareholder, and Imagine have
formed and organized the Company as of the date hereof subject to the terms of
that certain Operating Agreement dated of even date herewith; and
WHEREAS, Shareholder has transferred its stock of Oak Tree Receivables, Inc.,
Intercoastal Rehabilitation, Inc., and C.C. Acquisition Corp. to Holding, and
Holding has by statutory mergers converted such entities to limited liability
companies and has contributed its membership interests in the following Arkansas
limited liability companies to the Company: Oak Tree Receivables, LLC, N.F.P.M.,
LLC, Intercoastal Rehabilitation, LLC, and C.C.H.E., LLC (collectively, the
"Subsidiaries"), and Imagine has contributed One Million and No/100 Dollars
($1,000,000.00) and a Promissory Note in the principal amount of One Million and
No/100 Dollars ($1,000,000) executed by Oak Tree Receivables, Inc. as maker in
favor of Imagine (the "Note") to the Company; and
WHEREAS, Shareholder has previously granted a security interest in stock of said
subsidiary corporations securing indebtedness owing by its subsidiary, Oak Tree
Receivables, Inc., by assumption, to Imagine and has transferred such stock
subject to a Stock Pledge Agreement dated June 30, 1997, to Holding; and
WHEREAS, it is the parties' intent and desire that the security interest in
favor of Imagine be terminated in light of the fact that current owner of the
Note is also the owner of such subsidiaries (or their successors, as the case
may be); and
WHEREAS, the parties wish to enter into such other agreements related to or
incident to the formation and acquisition of the Company; and
WHEREAS, the parties hereto wish to enter into this Agreement to set forth their
respective rights and agreements with respect to the matters set forth herein
regarding the capitalization and formation of the Company;
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NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I - OAK TREE INDEBTEDNESS
With respect to the indebtedness of Oak Tree Receivables, Inc. (and Oak
Tree Receivables, LLC, its successsor by merger) pursuant to a Promissory Note,
Loan Agreement and Stock Pledge Agreement, all dated June 30, 1997, the
obligations of which were assumed by Oak Tree Receivables, Inc. by an Assignment
and Assumption Agreement dated July 24, 1997, with Shareholder, the parties
agree that the security interest in favor of Imagine pursuant to the Stock
Pledge Agreement dated June 30, 1997, is hereby released in all respects.
ARTICLE II- PAYMENT OF EXISTING SUBSIDIARIES' INCOME TAX LIABILITIES
The parties agree that all income, loss and gain of the Subsidiaries or
their predecessors, or attributable to any merger or transfer up to and
including the transfer to Company shall be included on the consolidated tax
returns of Shareholder and any federal or state income tax liability with
respect thereto shall be paid by Shareholder and/or its affiliated corporations,
so that the Subsidiaries or Company will have no income tax liability for any
period prior to and including the date of transfer to Company.
ARTICLE III - OTHER LOANS
As soon as practical after formation and capitalization of the Company,
Imagine agrees in good faith that it intends to provide a loan to Holding the
sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) payable with
interest at the rate of prime plus two percent (2%) payable quarterly, with all
principal and any unpaid accrued interest due at the end of a three (3) year
term. The loan documents shall provide for such collateral, covenants and
limitations on additional borrowing as satisfactory to Imagine. Any funding
obligation of Imagine hereto is strictly conditional upon the parties
negotiating and executing formal agreements and documents with respect thereto
which are mutually satisfactory to the parties.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Holding and Shareholder represent and warrant to Imagine and the
Company as follows as of the date hereof:
4.1 Organization, Power and Qualification of Holding and Shareholder. Each
ofHolding and Shareholder is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation, has all
requisite corporate power and authority to own, lease and operate its
properties, to carry on its business as now being conducted, to enter into this
Agreement and to perform its obligations hereunder (in the case of Shareholder).
Holding and Shareholder havebeen duly qualified to do business in all states in
which the character of its property or activities require such qualification
under applicable law. At the time of contribution to the Company, Holding owned
100% of the outstanding membership interests of each of the Subsidiaries free
from all encumbrances.
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4.2 Authorization. The execution and delivery of this Agreement, and each other
agreement and certificate or other document delivered, or to be delivered, in
connection with the transfers contemplated by this Agreement have been duly and
validly authorized by all necessary corporate and other action on the part of
Holding and Shareholder and this Agreement constitutes, and all other documents
and agreements to be delivered by Holding or Shareholder on or before the date
of closing, shall constitute valid and legally binding obligations of Holding
and to Shareholder enforceable against them in accordance with their terms,
subject to the application of bankruptcy, reorganization, insolvency, moratorium
or other similar laws affecting the rights of creditors.
4.3 The Subsidiaries. Each of the Subsidiaries is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Arkansas, and has all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of the Subsidiaries has been or will be duly
qualified to do business in all states which the character of its property or
actions require such qualifications under applicable law.
4.4 No Violation. Neither the execution, delivery or performance by Holding and
Shareholder of this Agreement or any other agreement delivered, or to be
delivered, in connection with the transactions contemplated by this Agreement,
nor the execution by Holding of the Operating Agreement, nor compliance with the
terms and provisions hereof or thereof, nor the consummation of the transactions
contemplated herein or therein, including, without limitation, the transfer to
the Company of Holding's right, title and interest in and to the Subsidiaries,
(i) will contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of, any of the terms, covenants, conditions or provisions of any
agreement or other instrument to which Shareholder, Holding or any Subsidiary is
a party or by which Shareholder, Holding, any Subsidiary or any of their
respective properties or assets is bound or subject, or (iii) will violate any
provision of the organizational documents of Shareholder, Holding or any
Subsidiary.
4.5 Proceedings or Investigations. There is no action, suit or legal,
administrative, arbitration or other proceeding or governmental investigation
pending or, to the best knowledge of Shareholder, threatened against
Shareholder, Holding or any of the Subsidiaries before or by any court, tribunal
or Federal, state, municipal or other governmental department, commission,
board, bureau, agency, or instrumentality, domestic or foreign, and, to the best
knowledge of Shareholder, no such action, suit, or legal, administrative,
arbitration or other proceeding or governmental investigation is probable of
assertion against Shareholder, Holding or any of the Subsidiaries, which, if
adversely determined, could reasonably be expected to have a material adverse
effect on the value or operations of any Subsidiary or its assets, or adversely
affect or impede the transfer to the Company of all of Holding's right, title
and interest in the Subsidiaries. To the best of the knowledge of Shareholder,
each of the Subsidiaries is in compliance with all laws, rules, regulations,
reporting and licensing requirements and orders applicable to its business or to
its employees conducting its business.
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4.6 Consents. No consents or approvals of any public body or authority or
shareholders of Shareholder or Holding, and no consents or waivers from any
parties to leases, licenses, franchises, permit, indentures, agreement or other
instruments are required for the lawful consummation of the transactions
contemplated hereby.
4.7 Financial Statements. The unaudited financial statements of the Subsidiaries
for the quarter ended June 30, 1997 (collectively, the "Financial Statements")
present fairly the financial position, results of operations and cash flows of
each Subsidiary, or its predecessor, at the dates and for the fiscal periods
then ended, in accordance with GAAP, and reflect all material claims, debts and
liabilities, absolute or contingent, direct or indirect, of each Subsidiary.
Holding has delivered true and complete copies of the Financial Statements to
Imagine.
4.8 No Adverse Change. Since June 30, 1997, the businesses of Subsidiary has
been carried on in the normal course and there has been no material adverse
change in the business, financial condition, results of operations, assets or
liabilities of the Subsidiaries.
4.9 Taxes. (a) All tax returns required to be filed by or on behalf of the
Subsidiaries, or their predecessors, have been timely filed, or requests for
extensions have been timely filed, granted and have not expired, for periods
ending on or before June 30, 1997, and all such returns filed are complete and
accurate in all material respects.
(b) There is no audit examination, deficiency or refund litigation or
matter that has been raised by a taxing authority with respect to any previously
filed tax returns of any of the Subsidiaries (or their predecessors) or any
prior tax payments or periods that could reasonably be expected to result in a
determination the effect of which would have a material adverse effect. All
taxes due with respect to completed and settled examinations or concluded
litigation have been paid or adequately reserved for.
(c) None of the Subsidiaries (or their predecessors) has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect.
(d) Adequate provision of any taxes due or to become due for the
Subsidiaries (or their predecessors) for any period or periods through and
including June 1997, has been made and is reflected on the June 1997 financial
statements included in the Financial Statements. Deferred taxes of the
Subsidiaries reflected in the Financial Statements are adequate, subject in the
case of interim financial statements to normal recurring year end adjustments.
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(e) Each of the Subsidiaries (or their predecessors) has collected and
withheld all taxes which it has been required to collect or withhold and has
timely submitted all such collected and withheld amounts to the appropriate
authorities. Each of the Subsidiaries is in compliance with the back-up
withholding and information reporting requirements under the Internal Revenue
Code (the "Code") and any state, local or foreign laws, and the rules and
regulations thereunder.
(f) None of the Subsidiaries (or their predecessors) has made any payments,
is not obligated to make any payments, or is not a party to any contract,
agreement or other arrangement that could obligate it to make any payments that
would be disallowed as a deduction under Section 280G of the Code.
(g) There are no liens with respect to taxes upon any of the assets of the
Subsidiaries.
(h) To the best of Shareholder's knowledge, there has not been an ownership
change, as defined in Code Section 382(g), of any of the Subsidiaries or any of
their predecessors that occurred during or after any taxable period in which any
Subsidiary or any of its predecessors incurred a net operating loss that carries
over to any taxable period ending after December 31, 1996.
(i) None of the Subsidiaries has filed a consent under Section 341(f) of
the Code concerning collapsible corporations.
(j) None of the Subsidiaries has or has had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
4.10 Properties. Except as disclosed in the Financial Statements and except for
claims, liens, pledges or encumbrances ("Liens:), arising in the ordinary course
of business after the date hereof, each Subsidiary has good and marketable
title, free and clear of all Liens, to all its properties and assets whether
tangible or intangible, real, personal or mixed, reflected in the Financial
Statements as being owned by the Subsidiaries as of the date hereof, except for
such defects in title which individually or in the aggregate would not have a
material adverse effect. All buildings, and all fixtures, equipment and other
property and assets, held under leases or subleases by the Subsidiaries are held
under valid instruments enforceable in accordance with their respective terms
except where the failure to have such valid and enforceable instruments would
not have a material adverse effect. All equipment of the Subsidiaries in regular
use has been well maintained and is in good serviceable condition, reasonable
wear and tear excepted, except for such defects which individually or in the
aggregate would not have a material adverse effect. N.F.P.M., LLC, one of the
Subsidiaries, owns all of the assets set forth on Schedule A hereto, free and
clear of all Liens.
4.11 Material Contract Defaults. None of the Subsidiaries is, or has received
any notice or has any knowledge that any other party is, in default in any
respect under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which a Subsidiary is a party or by which a
Subsidiary or the assets, business or operations thereof may be bound or
affected
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or under which it or its assets, business or operations receives benefits,
except for those defaults which would not have, individually or in the
aggregate, a material adverse effect; and there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such a
default, except for those defaults which would not have, individually or in the
aggregate, a material adverse effect.
4.12 Benefit Plans. (a) Schedule B-1 hereto lists all existing employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in which employees or former employees of the
Subsidiaries currently participate (the "Plans").
(b) Each Plan is and has been in substantial compliance, in form and
operation, in all material respect with all applicable laws and has been
administered in all material respects in accordance with its terms. To
Shareholder's knowledge, no event has occurred and no condition exists with
respect to any Plan which is likely to subject the Company, directly or
indirectly (through an indemnification agreement or otherwise), to any material
liability (including, without limitation, liability for taxes, breach of
fiduciary duty, or for a "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code). There is no action, suit, or claim
(other than routine claims for benefits in the ordinary course) with respect to
any Plan pending or threatened which is reasonably likely to have a material
adverse effect. No Plan is currently under investigation or audit by any
governmental agency and, to the knowledge of Shareholder, no such investigation
or audit is contemplated or under consideration. Each Plan intended to be a
qualified plan under Section 401(a) of the Code is so qualified and a favorable
determination letter as to qualification under Section 401(a) of the Code has
been issued and the related trust has been determined to be exempt from taxation
under Section 501(a) of the Code.
(c) All contributions and premium payments required to have been made or
accrued under or with respect to any Plan have been timely made or accrued.
Except as set forth in Schedule B-1, the consummation of the transactions
contemplated hereby will not give rise to any right to severance, separation or
similar pay or benefits.
4.13 Environmental Matters. To the knowledge of Shareholder, none of the
Subsidiaries, nor any properties owned or operated by a Subsidiary has been or
is in violation of or liable under any Environmental Law, except for such
violations or liabilities that, individually or in the aggregate, are not
reasonably likely to have a material adverse effect., There are no actions,
suits or proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letter or requests for information from any
environmental agency) instituted or pending, or to the knowledge of Shareholder
threatened, relating to the liability of any properties owned or operated by any
of the Subsidiaries under any Environmental Law, except for liabilities or
violations that would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
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regulatory authority relating to (i) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulation, whether by type or by quantity, including any material
containing any such substance as a component.
4.14 Insurance. Attached hereto as Schedule B-2 is an accurate schedule as of
the date hereof reflecting the insurance policies maintained with respect to the
ownership and operation of the business and assets of the Subsidiaries and their
employees, which Schedule reflects the policies, numbers, terms, identity of
insurers, amounts of coverage and all claims made on the policies since the
effective date of the policies and true and correct copies of all policies of
general and professional liability and all endorsements and amendments thereto.
All policies set forth on Schedule B-3 are in full force and effect and may be
maintained in full force and effect after transfer to the Company.
4.15 Absence of Certain Business Practices. To the best of Shareholder's
knowledge, none of the Subsidiaries, nor any of their officers, employees,
agents, or affiliates nor any other person acting on their behalf, has, directly
or indirectly, during the immediately preceding twenty-four (24) month period
given, accepted, or agreed to give or accept any gift or similar benefit to or
from any customer, supplier, governmental employee or other person who is or may
be in a position to help or hinder the business of any Subsidiary (or assist any
Subsidiary in connection with any actual or proposed transaction) that (i) might
subject any Subsidiary, their affiliates, or any other person to any damage or
penalty in any civil, criminal or governmental litigation or other proceeding,
(ii) if not given or accepted in the past, might have had an adverse effect on
the assets or operations or the business of any Subsidiary, (iii) if not
continued in the future, might adversely affect the assets or the business or
might subject any Subsidiary to damages or penalties in any private or
governmental litigation or other proceeding.
4.16 Disclosure. To the best of Shareholder's knowledge, no representation or
warranty of Shareholder contained in this Agreement or in any statement or
certificate furnished or to be furnished to any party pursuant hereto in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements made herein or therein, in the
light of the circumstances under which they were made, not misleading.
4.17 Other Matters. Neither Holding, any Subsidiary nor Shareholder has taken or
has agreed to take any action, and has no knowledge of any fact or
circumstances, that would materially impede or delay the consummation of the
transactions contemplated hereby.
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4.18 Brokers and Finders. Neither Shareholder, Holding nor any Subsidiary nor
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for any of such parties in connection with this Agreement
or the transactions contemplated hereby.
4.19 Subsidiaries. For purposes of this Agreement, the term Subsidiaries shall
also be deemed to include the predecessor entities of such subsidiaries.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF IMAGINE
Imagine represents and warrants to Shareholder and the Company as
follows as of the date hereof:
5.1 Organization, Power and Qualification of Imagine. Imagine is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to own, lease
and operate its properties, to carry on its business as now being conducted, to
enter this Agreement and the Operating Agreement to perform its obligations
hereunder and thereunder. Imagine has been duly qualified to do business in all
states in which the character of its property or activities require such
qualification under applicable law.
Imagine has no subsidiaries.
5.2 Authorization. The execution and delivery of this Agreement, the Operating
Agreement and each other agreement and certificate or other document delivered,
or to be delivered, in connection with the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate and
other action on the part of Imagine and this Agreement constitutes, and all
other documents and agreements to be delivered by Imagine on or before the date
of closing, shall constitute valid and legally binding obligations of Imagine
enforceable against it in accordance with its terms, subject to the application
of bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the rights of creditors.
5.3 No Violation. Neither the execution, delivery or performance by Imagine of
this Agreement or any other agreement delivered, or to be delivered, in
connection with the transfers contemplated by this Agreement, nor compliance
with the terms and provisions hereof or thereof, nor the consummation of the
transactions contemplated herein or therein, including, (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict or be inconsistent with or result in any breach of, any of the terms,
covenants, conditions or provisions of any agreement or other instrument to
which Imagine is a party or by which Imagine or any of its respective properties
or assets is bound or subject, or (iii) will violate any provision of the
Articles of Incorporation or By-Laws of Imagine.
5.4 Proceedings or Investigations. There is no action, suit or legal,
administrative, arbitration or other proceeding or governmental investigation
pending or, to the best knowledge of Imagine, threatened against Imagine before
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or by any court, tribunal or Federal, state, municipal or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, and, to the best knowledge of Imagine, no such action, suit, or legal,
administrative, arbitration or other proceeding or governmental investigation is
probably of assertion against Imagine.
5.5 Consents. No consents or approvals of any public body or authority or
shareholders of Imagine and no consents or waivers from any parties to leases,
licenses, franchises, permits, indentures, agreements or other instruments are
required for the lawful consummation of the transactions contemplated hereby.
ARTICLE VI - INDEMNITY
6.1 Indemnity. From and after the Closing Date, Holding and Shareholder shall
indemnify and hold harmless Imagine and the Company, its Subsidiaries, and each
of its respective directors, officers, employees and agents, and each of the
heirs, executors, successors and assigns of any of the foregoing (the "Imagine
Indemnified Parties") from and against any and all Losses (as defined below)
incurred by or asserted against any of such parties in connection with or
arising out of any breach by Holding and Shareholder of any representation or
warranty of Holding and Shareholder set forth herein; provided, however, that
the Imagine Indemnified Parties shall be entitled to indemnification under this
Section 6.1 only if and to the extent its amount of Losses hereunder exceeds
$20,000, and then only to the extent of such excess; and provided further,
however, that in no event shall Shareholder's liability hereunder exceed
$200,000, it being understood that this limitation shall not apply in the event
of fraud, nor to any failure by Holding or Shareholder to comply with any
covenant or agreement set forth herein.
From and after the Closing Date, Imagine shall indemnify and hold harmless
Holding and the Company, and any of their directors, shareholders, officers,
employees and agents, and each of the heirs, executors, successors and assigns
of any of the foregoing (the 'Holding Indemnified Parties') from and against any
and all Losses (as defined below) incurred by or asserted against any of such
parties in connection with or arising out of any breach by Imagine of any
representation or warranty; provided, however, that the Holding Indemnified
Parties shall be entitled to indemnification under this Section 6.1 only if and
to the extent their aggregate amount of Losses hereunder exceeds $20,000, and
then only to the extent of such excess; and provided further, however, that in
no event shall Imagine's aggregate liability hereunder exceed $200,000, it being
understood that this limitation shall not apply in the event of fraud, nor to
any failure by Imagine to comply with any covenant or agreement set forth
herein.
"Losses" means any and all debts, losses, liabilities, claims, damages,
obligations (including those arising out of any action, such as any settlement
or compromise thereof or judgment or award therein) and any reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees and
expenses incurred in defending any lawsuit or other action).
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6.2 Claims. (a) The party being indemnified hereunder (the "Indemnified Party")
shall give written notice to the party against whom a claim for indemnification
is asserted hereunder (the "Indemnifying Party") within the earlier of twenty
(20) days of receipt of written notice or forty (40) days from discovery by the
Indemnified Party of any matters which may give rise to a claim for
indemnification or reimbursement under this Agreement (a "Claim"). The failure
to give such notice shall not affect the right of the Indemnified Party to
indemnity hereunder unless such failure has materially and adversely affected
the rights of the Indemnifying Party.
(b) In the event an action by a third party (a'Third-Party Claim') shall be
brought or asserted in respect of which indemnity may be sought by an
Indemnified Party under this Section 6.2, the Indemnified Party shall notify the
Indemnifying Party in writing thereof within such period of time as to not
prejudice the defense thereof, but in any case within ten (10) days thereof.
Subject to this Section 6.2, the Indemnifying Party shall have the opportunity
to defend and/or settle such Third-Party Claim, and employ counsel reasonably
satisfactory to the Indemnified Party, and the Indemnifying Party shall pay all
expenses related thereto, including without limitation all fees and expenses of
counsel. After receipt of such notice, the Indemnifying Party shall notify the
Indemnified Party within twenty (20) days (or such shorter period if necessary
so as not to prejudice the defense thereof) in writing whether it will assume
the defense thereof.
(c) Upon receipt of notice by the Indemnified Party from the Indemnifying
Party of its election to assume the defense of such an action and approval of
the Indemnified Party of counsel to the Indemnifying Party, which approval shall
not be unreasonably withheld or delayed, the Indemnifying Party shall not be
liable to the Indemnified Party unless (i) the Indemnifying Party agrees in
writing to pay such fees and expenses, (ii) the Indemnifying Party fails either
to assume the defense of such action or to employ counsel reasonably
satisfactory to the Indemnified Party, or (iii) the Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses available
to the Indemnified Party that are different from or in addition to those
available to the Indemnifying Party or that there shall exist some other legal
conflict between the interests of the Indemnifying Party and the Indemnified
Party.
(d) If the Indemnifying Party shall not elect to assume the defense of any
Third-Party Claim, or if any of the events specified in clauses (i) through
(iii) in the preceding subsection (c) occurs, the Indemnified Party shall have
the right to maintain the defense of and to settle such Third- Party Claim, with
counsel reasonably satisfactory to the Indemnifying Party; provided, however,
that the Indemnifying Party shall retain the right to assume the defense of such
Third-Party Claim pursuant to paragraph (c) above, provided that such assumption
does not prejudice the defense of such Third-Party Claim.
(e) In the event that an offer to settle a Third-Party Claim is received,
each of the Indemnified Party and the Indemnifying Party shall notify the other
thereof, in writing, and shall consult with one another in considering such
offer. Such offer shall be accepted if the Indemnifying Party so directs in
writing unless either (A) the Indemnified Party shall agree in writing that any
liability arising out of such Third-Party Claim shall not be a Loss covered
hereunder, in which casethe Indemnified Party shall have full right to maintain
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the defense thereof, or (B) the failure to accept such settlement offer is based
on the Indemnified Party's reasonable objection to a sanction, restriction,
fine, or other penalty that would be imposed in it or its affiliates under the
settlement.
(f) Notwithstanding anything herein, and whichever party shall have the
right to maintain the defense of a Third-Party Claim, each of the Indemnifying
Party and the Indemnified Party shall consult with the other with respect
thereto, provide each other with such assistance as the other may reasonably
require in order to promptly and adequately defend such action, and have the
right to participate at its own expense in the defense thereof, with counsel
reasonably satisfactory to the other.
6.3 Survival. The representations, warranties, covenants and agreements of each
party set forth herein shall survive the date hereof for a period of eighteen
(18) months. Neither party hereto shall have any liability (for indemnification
or otherwise) with respect to any representation, warranty, covenant or
agreement set forth herein, unless on or before the eighteen-month anniversary
of the Closing Date the other party shall notify such party of a claim
specifying the factual basis of that claim in reasonable detail.
ARTICLE VII - MISCELLANEOUS
7.1 Counterparts. For the convenience of the parties, this Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original.
7.2 Survival of Covenants and Representations and Warranties. Any covenant,
representation and warranty contained herein shall survive closing of this
Agreement and the formation of the Company.
7.3 Agreement Binding. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto, their heirs,
successors and permitted assigns, but nothing herein, express or implied, is
intended to confer on any other person, any rights, benefits, or remedies by
reason of this Agreement.
7.4 Governing Law. This Agreement shall be governed by the laws of the State of
Arkansas.
7.5 Non-Assignability. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto.
7.6 Entire Agreement. This Agreement and other documents and agreements referred
to herein contain the entire agreement between the parties hereto with respect
to the subject matter hereof.
7.7 Covenant to Perform. Each party hereto expressly represents and warrants to
each other party hereto to use one's best efforts to carry out the purposes of
this Agreement and to execute such additional documents necessary to effect
same, and to refrain from taking any action contrary to the provisions of this
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Agreement and hereby acknowledges that this Agreement, or the breach hereof, is
subject to all rights of the parties at law or in equity, and may be
specifically enforced in a Court of competent jurisdiction in a proceeding
instituted by any of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this document as of the date first
written above.
MB HOLDING CORP.
By:
-------------------------------
--------------,
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MB SOFTWARE CORPORATION
By:
--------------------------------
Scott A. Haire,
President
IMAGINE INVESTMENTS, INC.
By:
--------------------------------
---------------,
---------------
HEALTHCARE INNOVATIONS, LLC
By:
---------------------------------
--------------,
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12