Exhibit 10.1
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement (the "Agreement") is entered into this
28th day of December 2000, by and among Claimsnet.com, Inc., a Delaware
corporation ("Claimsnet"), and its wholly-owned subsidiary, HealthExchange.com,
Inc., a Delaware corporation ("HECOM") (collectively, "CLAI"); and John Deere
Health Care, Inc., a Delaware corporation ("JDHC").
BACKGROUND
A. JDHC and Virtual Health, Inc., a Georgia corporation ("VHI"),
entered into (1) an Asset Purchase/Business Agreement dated as of October 31,
1998 that provided for the sale of certain electronic medical software (the
"JDHC EMR Software") from JDHC to VHI; (2) an Enterprise Care Management System
Services Agreement dated as of October 31, 1998 that provided for the
development by VHI of new software to be called the Enterprise Care Management
System (the "ECMS Software"); (3) a Joint Services Agreement dated as of
November 30, 1998 for the provision of services and assistance to each other in
connection with the marketing of the JDHC EMR Software; and (4) a Network Access
and Proprietary Information Agreement dated as of February 4, 1999 under which
JDHC agreed to provide VHx, Inc., a Nevada Corporation and successor to VHI
("VHx"), access to JDHC's computer network and to JDHC's proprietary information
(collectively, the "Prior Business Agreements").
B. JDHC and VHI (or VHx, as the case may be) agreed to amend the
Prior Business Agreements in (1) an Agreement dated as of December 15, 1998; (2)
a First Amendment dated as of December 16, 1998; (3) a First Amendment dated as
of January 6, 1999; (4) a Second Amendment dated as of January 6, 1999; (5) an
Amendment to Joint Services Agreement dated as of February 4, 1999; (6) an
Amendment to Asset Purchase/Business Agreement and Enterprise Care Management
Services Agreement dated as of February 4, 1999; and (7) a Third Amendment dated
as of December 12, 1999 (collectively the "Amendments" and together with the
Prior Business Agreements, the "Prior Agreements").
C. Under the terms of the Prior Agreements, a $1.4 million debt
payment was due from VHx to JDHC on October 30, 2000, and an additional $1.4
million debt payment is due from VHx to JDHC on June 30, 2001.
D. Under the terms of the Prior Agreements, JDHC agreed to pay
VHI a licensing fee for limited use of the ECMS Software in the amount of
$425,000 per year for a period of three years, to be paid semi-annually upon
successful completion of beta testing and each six month anniversary thereafter.
JDHC has paid to VHx the sum of $212,500 on December 9, 1999 as an advance
payment of the first installment.
E. Pursuant to the Prior Agreements, VHI obtained a surety bond
from Amwest Surety Insurance Company in the amount of $2,900,000.00 on December
23, 1998 ("Surety Bond No. 1376226"). Surety Bond No. 1376226 was provided by
VHI to JDHC as security to guarantee the payments due to JDHC under the Prior
Agreements.
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F. Prior to January 13, 1999, VHI merged with ExtraCorp, a Nevada
corporation. ExtraCorp was the surviving corporation in the merger. ExtraCorp
subsequently changed its name to VHx on January 13, 1999.
G. VHx developed the Online Provider Directory portion of the
ECMS Software on behalf of JDHC, but the remaining components of the ECMS
Software have not been developed.
H. CLAI and JDHC are entering into a separate Online Provider
Directory Support Agreement (the "Online Provider Directory Support Agreement")
contemporaneously with this Agreement.
I. Pursuant to an Asset Purchase Agreement dated as of March 20,
2000 between CLAI and VHx and amended as of April 18, 2000 (the "VHx/Claimsnet
Asset Purchase Agreement"), and with the consent of JDHC, the Prior Agreements
listed on Annex A to the Assignment and Assumption dated April 18, 2000 between
CLAI and VHx (hereinafter the "Assigned Agreements") were assigned from VHx to
CLAI.
Pursuant to the VHX/Claimsnet Asset Purchase Agreement, Claimsnet,
through its wholly-owned subsidiary HECOM, acquired from VHx certain of the
properties and assets of VHx, including all of the properties and assets related
to the Assigned Agreements, and assumed certain liabilities from VHx, including
the obligation, under certain circumstances, to satisfy liabilities of VHx to
JDHC arising from the J. Assigned Agreements.
K. The parties have determined that it would be in their mutual
best interests to amicably terminate the business relationships among them.
In consideration of the mutual promises contained in this Agreement,
the parties agree as follows:
1. Termination of Assigned Agreements. The Assigned
Agreements are hereby terminated and shall have no further force and effect.
2. Cancellation of Debt Payments. The $1.4 million debt
payment due to JDHC on October 30, 2000 and the $1.4 million debt payment due to
JDHC on June 30, 2001, in each case together with all interest, penalties,
premiums, and other charges and amounts due thereunder, are hereby cancelled.
3. Forgiveness of Prepaid License Fees. JDHC hereby forgives
the obligation to repay the $212,500 advanced by JDHC to VHx as a prepaid
licensing fee for the ECMS Software.
4. No Further Obligations of JDHC. JDHC shall have no
further obligations or liabilities and shall owe no further licensing fees,
royalties, or payments arising out of the Assigned Agreements, except as may be
provided in the separate Online Provider Directory Support Agreement between
JDHC and CLAI executed contemporaneously with this Agreement.
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5. No Further Obligations of CLAI. CLAI shall not have any
further obligation to furnish the ECMS Software or to maintain or support the
JDHC EMR Software and shall owe no further licensing fees, royalties, or
payments arising out of the Assigned Agreements, except as may be specifically
provided in the separate Online Provider Directory Support Agreement executed
contemporaneously with this Agreement.
6. Mutual Releases. The parties mutually release all claims
as set forth below:
(a) JDHC hereby releases and forever discharges CLAI, and
each of its respective past, present and future, officers, directors,
shareholders (other than VHx and its affiliates in the event that they may be
deemed to be a shareholder of Claimsnet), agents, attorneys, employees,
corporate affiliates, controlling persons, subsidiaries, successors and assigns
(collectively "CLAI Releasees") from any and all claims, demands, proceedings,
causes of action, orders, obligations, contracts, agreements, debts, and
liabilities (collectively "JDHC Claims") whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which JDHC now has, has
ever had, or may hereafter have against CLAI and/or CLAI Releasees arising
contemporaneously with or prior to this Agreement, including any JDHC Claims
with respect to the Assigned Agreements. JDHC agrees never to assert any claim,
demand or action against CLAI and/or CLAI Releasees based upon any of the JDHC
Claims released under this paragraph.
(b) CLAI hereby releases and forever discharges JDHC, and
each of its past, present and future, officers, directors, shareholders, agents,
attorneys, employees, corporate affiliates, controlling persons, subsidiaries,
successors and assigns (collectively "JDHC Releasees") from any and all claims,
demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts, and liabilities (collectively "CLAI Claims"), whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in equity,
which CLAI now has, has ever had, or may hereafter have against JDHC and/or JDHC
Releasees arising contemporaneously with or prior to this Agreement, including
any CLAI Claims with respect to the Assigned Agreements. CLAI agrees never to
assert any claim, demand or action against JDHC and/or JDHC Releasees based upon
any of the CLAI Claims released under this paragraph.
7. Purchase and Sale of JDHC EMR Software.
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(a) In consideration of the mutual releases and other
good and valuable consideration contained herein, CLAI hereby sells, transfers,
assigns, conveys and delivers to JDHC, and JDHC hereby purchases, accepts and
acquires from CLAI, all right, title and interest of CLAI in and to the JDHC EMR
Software and the assets related thereto (collectively, the "Assets"), as owned
or held by CLAI, consisting of the assets identified in Schedule 1 attached to
this Agreement.
(b) CLAI agrees to transfer to JDHC any and all third
party licenses required for the operation of the JDHC EMR Software at no charge
to JDHC. CLAI will use reasonable efforts to assist JDHC in resolving any
licensing related issues, but will not be required to bear any expenses in
connection with such assistance.
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(c) CLAI agrees to execute such Bills of Sale, Assignments
or other documents to evidence transfer of the JDHC EMR Software to JDHC, as
reasonably requested by JDHC.
8. Waiver of Rights Under Surety Bond No. 1376226.
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JDHC hereby waives its right to payment under Surety Bond No. 1376226
of the $1.4 million debt due to JDHC on October 30, 2000 and the $1.4 million
debt payment due to JDHC on June 30, 2001.
9. Other Consideration.
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In consideration of the mutual releases and other good and valuable
consideration contained herein, CLAI will contemporaneously with the execution
of this Agreement issue to JDHC 243,770 shares of CLAI's Common Stock (the
"Shares"). Claimsnet shall file with the Securities and Exchange Commission a
registration statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the resale of the Shares as soon
as practicable following execution of this Agreement but in no event later than
45 days following the execution date of this Agreement. The Shares shall be
subject to the following restrictions on resale: 33% of the Shares shall be
eligible for resale commencing on the effective date under the Securities Act of
the registration statement relating to the Shares; 33% of the Shares shall be
eligible for resale commencing on the date three calendar months following the
effective date under the Securities Act of the registration statement relating
to the Shares; 33% of the Shares shall be eligible for resale commencing on the
date six calendar months following the effective date under the Securities Act
of the registration statement relating to the Shares.
10. Representations and Warranties of CLAI.
--------------------------------------
CLAI represents and warrants that:
(a) CLAI is a corporation duly incorporated, validly
existing, and in good standing under the laws of Delaware, and has all requisite
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted.
(b) CLAI has the full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement and the performance by CLAI of its
obligations hereunder have been duly and validly authorized by all necessary
corporate action on the part of CLAI.
(c) This Agreement has been duly and validly authorized,
executed and delivered by CLAI and constitutes the legal, valid and binding
obligation of CLAI enforceable against CLAI in accordance with its terms.
(d) CLAI owns all right, title and interest in and to the
JDHC EMR Software free and clear of all liens, pledges, security interests,
charges, claims, restrictions, and encumbrances of any nature whatsoever of any
third party.
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(e) The execution and delivery of this Agreement by CLAI
does not, and the performance by CLAI of its obligations under this Agreement,
will not (a) conflict with or violate the certificate of incorporation or bylaws
of CLAI; (b) conflict with or violate any law applicable to CLAI or its assets
and properties, which conflict or violation would have a material adverse effect
on the business, prospects, financial condition or results of operations of
CLAI; or (c) result in any breach of or constitute a default (or an event which
with notice or elapse of time or both would become a default) under any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, or other instrument or obligation to which CLAI is a party or by
which CLAI is bound, or to which any of its properties or assets is subject.
(f) CLAI has not taken any action that would cause
JDHC EMR Software to infringe on any copyright, trademark, service mark, trade
name, trade secret, or patent of any third party. To the knowledge of CLAI, no
litigation regarding the JDHC EMR Software is pending or has been threatened.
(g) CLAI has not transferred, licensed, sold, furnished,
or otherwise provided access to or use of the JDHC EMR Software to any third
party other than the John Deere Medical Groups.
(h) To the knowledge of CLAI, there are no third party
obligations relating to the JDHC EMR Software.
(i) Pursuant to the VHx/CLAI Asset Purchase Agreement,
CLAI acquired the rights of VHx pursuant to, under, and in connection with, the
Assigned Agreements, including the rights to any claims for breach of the
Assigned Agreements or other claims arising from the Assigned Agreements prior
to the date of assignment.
(j) CLAI has provided JDHC with true and correct copies
of all documents pertaining to the assignment by VHx of the Prior Agreements to
CLAI under the VHx/Claimsnet Asset Purchase Agreement and any modifications,
amendments or revisions thereto (including any agreements affecting the
respective rights or responsibilities of VHx and CLAI with respect to the Prior
Agreements).
11. Representations and Warranties of JDHC.
--------------------------------------
JDHC represents and warrants that:
(a) JDHC is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, and has all requisite
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted.
(b) This Agreement has been duly and validly authorized,
executed and delivered by JDHC and constitutes the legal, valid and binding
obligation of JDHC enforceable against JDHC in accordance with its terms.
(c) JDHC has the full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the performance by JDHC of its obligations
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hereunder have been duly and validly authorized by all necessary corporate
action on the part of JDHC.
(d) The execution and delivery of this Agreement by JDHC
does not, and the performance by JDHC of its obligations under this Agreement,
will not (a) conflict with or violate the certificate of incorporation or bylaws
of JDHC; (b) conflict with or violate any law applicable to JDHC or its assets
and properties, which conflict or violation would have a material adverse effect
on the business, prospects, financial condition or results of operations of
JDHC; or (c) result in any breach of or constitute a default (or an event which
with notice or elapse of time or both would become a default) under any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, or other instrument or obligation to which JDHC is a party or by
which JDHC is bound, or to which any of its properties or assets is subject.
(e) As of April 18, 2000, the milestones established
in the Prior Agreements for the development by VHx of the ECMS Software had not
been satisfied.
(f) As of October 30, 2000, the $1.4 million debt
described in paragraph C under the heading "Background" above had not been paid.
12. Indemnification.
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(a) CLAI will indemnify and hold harmless JDHC, its
successors and assigns, including any subsidiary, officer, director, employee,
agent, contractor, licensee or customer, from any and all loss, liability, claim
or damage (including court costs and attorneys fees) sustained as a result of
any breach by CLAI of any of its representations, warranties, covenants or
agreements under this Agreement.
(b) JDHC will indemnify and hold harmless CLAI, its
successors and assigns, including any subsidiary, officer, director, employee,
agent, contractor, licensee or customer, from any and all loss, liability, claim
or damage (including court costs and attorneys fees) sustained as a result of
any breach by JDHC of any of its representations, warranties, covenants or
agreements under this Agreement.
13. Conditions Precedent.
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The following conditions precedent shall have occurred before the
execution of this Agreement: The representations and warranties made by the
parties to this Agreement shall be true and correct in all material respects at
and as of the date of this Agreement as though such representations and
warranties were made at and as of such times.
14. Confidential Information.
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(a) Acknowledgement of Confidentiality. Each party
acknowledges that it may have been exposed to confidential and proprietary
information of another party including, custom work product, and other technical
information (including functional and technical specifications, designs,
drawings, analysis, research, processes, computer programs, methods, ideas,
"know-how" and the like), business information (sales and marketing research,
materials, plans, accounting and financial information, personnel records and
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the like), member data (including member information and patient records) and
other information designated as confidential expressly or by the circumstances
in which it was provided ("Confidential Information"). Confidential Information
does not include (i) information already known or independently developed by the
recipient, (ii) information in the public domain through no wrongful act of the
recipient, or (iii) information received by the recipient from a third party who
was free to disclose it.
(b) Covenant Not to Disclose. With respect to another party's
Confidential Information, each party hereby agrees it shall not hereafter use,
commercialize or disclose such Confidential Information to any person or entity,
except as required by order of a court of competent jurisdiction or other
judicial or governmental process or to comply with applicable law, including any
applicable securities or tax regulation requirement, or as may be agreed upon in
writing among the parties. If any party intends to disclose Confidential
Information, then reasonable notice will be provided to all parties of the
proposed disclosure so that the non-disclosing parties have a reasonable
opportunity to review and discuss the proposed disclosure.
(c) Return of Confidential Information. Upon specific
request, each party shall collect and return all copies of Confidential
Information and notes made therefrom or summaries thereof to the party
originally providing such Confidential Information within twenty (20) days of
the date of the request.
15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original.
16. Acknowledgement. Each of the parties herein represents
that they have read this document and know its contents. They further represent
that they have agreed to the terms of this Agreement after a full and thorough
discussion of all provisions with their respective attorneys. Each party was
represented in the negotiation and drafting of this Agreement. Each party has
signed with full knowledge of the rights which they have and the obligations
that they are assuming as a result of the terms of this Agreement.
17. No Admissions. This Agreement should not be construed as
an admission of, nor stipulation to, liability by any party whether it be on the
basis of third party liability, tort liability, or contract liability, arising
out of the agreements between the parties.
18. Parties in Interest. This Agreement will be binding and
shall inure to the benefit of each of the parties hereto, their successors,
assigns, employees, attorneys, and representatives, and as such, each of the
parties and their successors in interest will be bound by the terms of this
Agreement.
19. Severability. If any provision of this Agreement is held
to be void, invalid or inoperative, such shall not affect any other provisions
herein, and the remainder shall continue in full force and effect as though such
void, invalid or inoperative provision had not been a part hereof.
20. Confidentiality of Terms. The terms of this Agreement
shall be kept confidential among the parties and shall not be disclosed to
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anyone other than the parties except as required by order of a court of
competent jurisdiction or other judicial or governmental process or to comply
with applicable law, including any applicable securities or tax regulation
requirement, or as may be agreed upon in writing among the parties. If any party
intends to disclose the terms of this Agreement, then reasonable notice will be
provided to all parties of the proposed disclosure so that the non-disclosing
parties have a reasonable opportunity to review and discuss the proposed
disclosure.
21. Entire Agreement. Except as provided for within the
Online Provider Directory Support Agreement, this Agreement constitutes the
entire agreement between the parties relative to the subject matter hereof. No
other promises, agreements, representations, or warranties of any kind
whatsoever have been made by any party except as specifically set forth in this
Agreement. All prior discussions and negotiations regarding the subject matter
by and among the parties are now merged and integrated into and superseded by
this Agreement.
22. Interpretation. For purposes of interpreting this
Agreement, this Agreement shall be conclusively deemed to have been drafted by
all parties.
23. Modifications. This Agreement may not be modified except
by a writing signed by all parties.
24. Definition. The term "including" as used herein means
"including, but not limited to."
25. Disputes, Choice of Law. Except for certain emergency
judicial relief authorized under Section 26 ("Injunctive Relief") which may be
brought at any time, the parties agree that all disputes between them shall be
submitted for informal resolution to their respective chief executive officers.
Any remaining dispute shall be submitted to a panel of three (3) arbitrators,
with each party to the dispute choosing one (1) panel member and the third
member chosen by the first two (2) panel members. The proceedings shall be
conducted in accordance with the rules of the JAMS/ENDISPUTE, New York, New
York. The award of the arbitrators shall include a written explanation of their
decision and shall be binding upon the parties and enforceable in any court of
competent jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF GEORGIA WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS. ANY ARBITRATION CLAIM BROUGHT BY CLAI AGAINST
JDHC SHALL BE INITIATED AND MAINTAINED IN MOLINE, ILLINOIS. ANY ARBITRATION
CLAIM BROUGHT BY JDHC AGAINST CLAI SHALL BE INITIATED AND MAINTAINED IN DALLAS,
TEXAS.
26. Injunctive Relief. The parties acknowledge that violation
by one party of the provisions of Section 14 ("Confidential Information") or
Section 20 ("Confidentiality of Terms") would cause irreparable harm to the
other party not adequately compensable by monetary damages. In addition to other
relief, it is agreed that injunctive relief shall be available to prevent any
actual or threatened violation of such previsions.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to by
duly executed as of the day and year first above written.
JOHN DEERE HEALTH CARE, INC.
/s/ Jon Chapman
- --------------------------------
Name: Jon Chapman
Title: Senior Vice President
CLAIMSNET.COM, INC.
/s/ Paul W. Miller
- --------------------------------
Name: Paul W. Miller
Title: Chief Operating Officer
HEALTHEXCHANGE.COM, INC.
/s/ Paul W. Miller
- --------------------------------
Name: Paul W. Miller
Title: Chief Financial Officer
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Schedule 1
a. The presently existing versions of the JDHC EMR Software executables,
as installed at any John Deere Medical Group (JDMG) facility, and the
included HELP files.
b. All presently existing versions of the JDHC EMR Software source and
object code, as well as code that represents any function that has
since been removed from the JDHC EMR Software, or was developed and not
yet installed or in production. This includes code in the form of
Visual Basic, Visual C++, and Stored Procedures, and/or any other such
software that is part of or related to the JDHC EMR Software,
regardless of type.
c. The existing JDHC EMR Database structures for Microsoft SQL
Server 6.5, including all data elements.
d. All automated SQA test scripts.
e. All existing documentation relating to the JDHC EMR Software. All items
listed above shall be delivered on a PC, in their respective forms.
Where appropriate, the items will be delivered on Microsoft Source Safe
directories. Some documentation may be delivered in paper form.
f. All U.S. and foreign patents, trademarks, copyrights, service marks,
and trade names, together with associated goodwill (including
registrations, licenses and applications pertaining thereto), rights
under license, maintenance, support or other agreements, and all other
intellectual property rights, trade secrets and other proprietary
information, processes and formulae relating specifically to JDHC EMR
Software.
g. Any and all information as to third party licenses required for the
operation of the JDHC EMR Software.