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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
DATED DECEMBER 31, 1997,
BUT EFFECTIVE AS ▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇ SERVICES, INC. ("SELLER"),
ORTHODONTIC PRACTICE MANAGEMENT SYSTEM, INC. ("BUYER"),
INFOCURE CORPORATION ("INFOCURE")
AND
HALIS, INC. ("SHAREHOLDER")
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into this _____ day of December, 1997, but effective as of December 1, 1997, by
and among HALIS SERVICES, INC., a Georgia corporation (the "Seller"),
ORTHODONTIC PRACTICE MANAGEMENT SYSTEM, INC., a Georgia corporation (the
"Buyer"), INFOCURE CORPORATION, a Delaware corporation ("InfoCure") and HALIS,
INC., a Georgia corporation ("Shareholder"). Seller, Buyer, InfoCure and
Shareholder are referred to collectively herein as the "Parties."
RECITALS:
A. Shareholder owns one hundred percent (100%) of the issued and
outstanding capital stock of Seller consisting of one thousand (1,000) shares
of Seller's voting common stock.
B. Seller is engaged in, among other things, the orthodontic practice
management software business which includes, without limitation, the
development, marketing, selling and servicing of computer hardware and software
to orthodontic healthcare providers and which business was previously engaged
in by Software Manufacturing Group, Inc., a Georgia corporation (the
"Orthodontic Business").
C. Seller is the surviving corporation of the merger of Software
Manufacturing Group, Inc. with and into Seller on June 30, 1997.
D. InfoCure owns one hundred percent (100%) of the issued and
outstanding capital stock of Buyer consisting of one hundred (100) shares of
voting common stock.
E. On the terms and subject to the conditions set forth herein, the
Parties desire to enter into this Agreement, pursuant to which Buyer will
purchase from Seller and Seller will sell to Buyer, substantially all of
Seller's assets and properties relating to the Orthodontic Business.
COVENANTS:
In consideration of the mutual representations, warranties and
covenants and subject to the conditions herein contained, the parties hereto
agree as follows:
1. PURCHASE AND SALE OF THE ASSETS.
1.1. Purchased Assets. On the terms and subject to the conditions
contained in this Agreement, on the Closing Date (as hereinafter defined),
Buyer shall purchase from Seller, and Seller shall sell, assign and deliver to
Buyer, the Purchased Assets (as hereinafter defined), free and clear of all
liens, security interests, options, charges and other restrictions whatsoever
(hereinafter referred to as "Encumbrances") except for the Permitted
Encumbrances referenced in Section 4.7. below; provided however, the transfer
of the Purchased Assets shall be deemed effective as of December 1, 1997. The
term "Purchased Assets" shall mean all the following
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assets, properties, rights, titles and interests of every kind and nature,
whether tangible or intangible, and wherever located and by whomever possessed,
related to the Orthodontic Business of Seller on the date hereof, with such
changes therein after the date hereof as shall be permitted pursuant to the
terms hereof (the "Purchased Assets") including, without limitation, all of the
following assets related to the Orthodontic Business (but excluding all
"Excluded Assets" as defined in Section 1.2.):
1.1.1 [INTENTIONALLY LEFT BLANK];
1.1.2 All prepayments and prepaid expenses (including,
without limitation, any and all prepaid insurance, lease payments and deposits
and customer deposits) (the "Prepayments");
1.1.3 All inventories, work in process and supplies;
1.1.4 All rights existing under all supply and distribution
agreements and arrangements, sales and purchase agreements and orders, leases,
license agreements, consulting agreements, confidentiality and non-disclosure
agreements, including, without limitation, such agreements with current or
prior customers and current or prior employees, agents, officers and directors
("Confidentiality Agreements"), and under all other contracts, agreements and
arrangements, but only to the extent the foregoing are assignable or
transferable to Buyer; provided, however, Seller hereby covenants that all of
the foregoing will be assigned or transferred to Buyer at Closing (to be
effective as of December 1, 1997), except for those agreements, arrangements,
orders and leases set forth on SCHEDULE 1.1.4 attached hereto;
1.1.5 All lists and records pertaining to customer accounts
(whether past or current), suppliers, distributors, personnel and agents and
all other books, ledgers, files, documents correspondence and business records;
provided that Seller shall be given copies of these records upon request, as
such records exist as of the Closing Date;
1.1.6 All claims, deposits, warranties, guarantees, refunds,
causes of action, rights of recovery, rights of set-off and rights of
recoupment of every kind and nature, other than those relating exclusively to
Excluded Assets or Excluded Liabilities (each as defined below);
1.1.7. All Owned Software, all of Seller's interest in
Customer Software, all of Seller's interest in Other Software, all Intangibles
owned by Seller, and all of Seller's interest in all Intangibles not owned by
Seller, as those terms are defined in Section 4.9. hereof, together with all
copies and tangible embodiments of the foregoing (in whatever form or medium
and including, without limitation, all copies of all or any part thereof, in
object code, source code or other format, and in all magnetic or optical
media);
1.1.8 All, to the extent transferable, permits, licenses,
franchises, orders, registrations, certificates, variances, approvals and
similar rights obtained from governments and governmental agencies and all data
and records pertaining thereto;
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1.1.9. All insurance, warranty and condemnation proceeds
received after the Closing Date with respect to damage, non-conformances of or
loss to the Purchased Assets;
1.1.10. All rights to receive mail and other communications
addressed to Seller and relating to the Purchased Assets including, without
limitation, accounts receivable payments;
1.1.11. All fixed assets, furniture, equipment and other
tangible personal property, whether owned, leased or otherwise (including,
without limitation, items which, have been fully depreciated or expensed),
including, without limitation, the assets which are set forth on SCHEDULE 1.1.11
attached hereto;
1.1.12. All books, records, ledgers, files, documents,
correspondence, lists, studies and reports and other printed or written
materials;
1.1.13. All accounts, notes and other receivables, including,
without limitation, all receivables from any current or former employee of
Seller (collectively, the "Receivables"); and
1.1.14. All goodwill as a going concern and associated with
the items listed above (including, without limitation, the goodwill associated
with (i) the items referred to in subsections 1.1.7. and 1.1.8. above and (ii)
all telephone numbers, facsimile numbers and web pages owned and used by Seller
in its business).
1.2. Excluded Assets. Notwithstanding the foregoing, the
following assets are expressly excluded from the purchase and sale contemplated
hereby (the "Excluded Assets") and, as such, are not included in the Purchased
Assets:
1.2.1. Seller's rights under or pursuant to this Agreement
(including, without limitation, Seller's rights to the Purchase Price);
1.2.2. Seller's general ledger, accounting records, minute
books and corporate seal; provided that Buyer shall be given copies upon
request of the general ledger and accounting records for any calendar year
beginning on or after January 1, 1994, as such documents exist as of the
Closing Date;
1.2.3. Any right to receive mail and other communications
addressed to Seller relating exclusively to the Excluded Assets or to all
liabilities other than the Assumed Liabilities (as defined in Section 2.2.
below);
1.2.4. Those assets of Seller which are not utilized in the
Orthodontic Business and are not included in the assets referenced in the
November 30 Balance Sheet (as defined in Section 2.1.1. below); and
1.2.5. Shares of the capital stock of Seller.
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2. PURCHASE PRICE; ASSUMPTION OF LIABILITIES.
2.1. Amount of Purchase Price. In consideration for the purchase of
the Purchased Assets, Buyer agrees to assume the Assumed Liabilities and to pay
Seller an amount equal to $2,000,000.00 (the "Base Consideration Amount"),
subject to the Net Worth Adjustment and the EBITDA Adjustment as set forth in
Sections 2.1.1.A. and 2.1.1.B. below, respectively.
The "Purchase Price" shall be equal to the sum of the Assumed
Liabilities and the Base Consideration Amount, as adjusted as provided in
Section 2.1.1. below.
2.1.1. Adjustments to the Base Consideration Amount. The Base
Consideration Amount shall be adjusted as follows:
A. Net Worth Adjustment. For purposes hereof, the
term "Actual Adjusted Net Worth" shall mean the book value of only the
following assets: the Customer Receivables (net of allowance for doubtful
accounts), Inventories, Employee receivables, Fixed Assets (net of accumulated
depreciation), Prepaids and Deposits less that portion of the Assumed
Liabilities referenced in Section 2.2.(i) as said assets and liabilities are
reflected on the audited balance sheet of Seller, dated November 30, 1997, and
prepared by the accounting firm of BDO ▇▇▇▇▇▇▇, L.L.P. (the "Accountants") in
accordance with this Agreement and with generally accepted accounting
principles ("GAAP") consistently applied (the "November 30 Balance Sheet"). For
purposes hereof, the term "Target Adjusted Net Worth" shall mean $152,515.00.
If the Actual Adjusted Net Worth is greater than the Target Adjusted Net Worth
(the amount of said excess hereinafter referred to as the "Net Worth Excess"),
then the Base Consideration Amount shall be increased One and No/100 Dollar
($1.00) for every dollar of Net Worth Excess. On the other hand, if the Actual
Adjusted Net Worth is less than the Target Adjusted Net Worth (said amount
hereinafter referred to as the "Net Worth Shortfall"), then the Base
Consideration Amount shall be reduced One and No/100 Dollar ($1.00) for every
dollar of the Net Worth Shortfall. The foregoing adjustment is referred to
herein as the "Net Worth Adjustment."
B. EBITDA Adjustment. After making the Net Worth
Adjustment as provided in Section 2.1.1.A. above, the Base Consideration Amount
shall be further adjusted as provided in this Section 2.1.1.B. For purposes
hereof, the term "Actual Annualized EBITDA" shall mean the Seller's earnings
before interest, taxes, depreciation and amortization arising from the
Orthodontic Business as reflected on an audited income statement (the "November
30 Income Statement") prepared by the Accountants in accordance with this
Agreement and with GAAP consistently applied for the eleven (11) month period
ending November 30, 1997, but which amount shall be annualized to reflect a
full twelve (12) month accounting period. Thus, by way of example only, if the
EBITDA for the foregoing eleven (11) month period is $600,000.00, then the
Actual Annualized EBITDA would be $654,545.00. For purposes hereof, the term
"Target Annualized EBITDA" shall mean $541,850.00. If the Actual Annualized
EBITDA is greater than the Target Annualized EBITDA (said amount hereinafter
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referred to as the "EBITDA Excess"), then the Base Consideration Amount shall
be increased Three and 20/100 Dollars ($3.20) for every dollar of EBITDA
Excess. On the other hand, if the Actual Annualized EBITDA is less than the
Target Annualized EBITDA (said amount hereinafter referred to as the "EBITDA
Shortfall"), then the Base Consideration Amount shall be reduced Three and
20/100 Dollars ($3.20) for every dollar of the EBITDA Shortfall. The foregoing
adjustment is referred to herein as the "EBITDA Adjustment."
C. Estimate and Reconciliation Procedure. An
estimate of the amount of the Net Worth Adjustment and the EBITDA Adjustment
shall be prepared by the Accountants on or prior to the Closing Date (which
estimates shall be attached hereto as EXHIBIT A) and the Base Consideration
Amount calculated and paid as of the Closing Date will reflect such estimated
adjustment which will be subject to further adjustment as set forth below in
this Section 2.1.1.C. The cost of preparing the November 30 Balance Sheet and
the November 30 Income Statement shall be borne by Buyer (the November 30
Balance Sheet and the November 30 Income Statement shall be referred to
collectively as the "November 30 Financial Statements"). The November 30
Financial Statements shall be prepared and completed within thirty (30) days
following the Closing Date. As soon as the November 30 Financial Statements are
available to Buyer, Buyer shall deliver to Seller and Shareholder said
financial statements. Seller and Shareholder shall then have fifteen (15) days
to review and object to the November 30 Financial Statements. Any disagreements
as to the amounts of any adjustment to be made to the November 30 Financial
Statements, if not mutually resolved, shall be resolved as provided in Section
2.1.1.D. Upon the final resolution of any dispute with respect to the November
30 Financial Statements, the final Net Worth Adjustment and the EBITDA
Adjustment shall be made. The Net Worth Adjustment and the EBITDA Adjustment,
if any, shall be paid in immediately available funds (after taking into
consideration the amount of the estimated adjustments referenced on EXHIBIT A).
D. Dispute Resolution. Each party shall have the
right to examine during normal business hours such books and records of the
other party as may be reasonably necessary in order to verify any determination
of the Accountants with respect to the Net Worth Adjustment and EBITDA
Adjustment. If any party disagrees with any such determination by delivering
formal written notice of such disagreement to the other party on or before the
expiration of the fifteen (15) day period provided in Section 2.1.1.C. above,
then the parties agree to submit the dispute to Deloitte & Touche, L.L.P., who
shall determine the accuracy and correctness of the Accountant's original
determination within thirty (30) days following such submission. Said
determination of Deloitte & Touche, L.L.P. shall be final and binding on the
parties hereto. The parties shall each bear one-half (1/2) of the expenses of
Deloitte & Touche, L.L.P. Any additional amounts payable by a party as a result
of the determination of Deloitte & Touche, L.L.P. shall be made within fifteen
(15) days following the resolution of such dispute.
2.3. Assumed Liabilities. Buyer agrees to and shall at the Closing
assume and agree to pay, discharge and perform when lawfully due only the
following liabilities (the "Assumed Liabilities"): (i) deferred revenue and the
liabilities (both current and long-term portions) related to those certain
capitalized leases of Seller as said liabilities are recorded on the November
30 Balance Sheet; (ii) the liabilities related to those operating leases
identified on SCHEDULE 4.11 and (iii) those certain liabilities and obligations
relating to Seller's operation of the Orthodontic Business which fall within
the categories set forth on SCHEDULE 2.2 and which arose in the ordinary course
of business from December 1, 1997, through the Closing Date (the "December
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Liabilities"). Seller shall remain responsible for all other liabilities
relating to the operation of the Orthodontic Business prior to Closing.
2.3. Procedure For Discharging Liabilities Not Assumed. Seller agrees
to and shall on or before the twentieth (20th) day following the Closing, pay,
discharge or otherwise satisfy in full all liabilities related to, arising out
of or concerning the Purchased Assets and Seller shall present evidence
acceptable to Buyer that said liabilities have been discharged and that the
Purchased Assets are free and clear of all Encumbrances.
2.4. Allocation of the Purchase Price Among the Purchased Assets. The
Purchase Price shall be allocated among each item or class of the Purchased
Assets in accordance with SCHEDULE 2.4 hereto. Seller and Buyer agree that they
will prepare and file their federal and any state or local income tax returns
based on such allocation of the Purchase Price. Seller and Buyer agree that
they will prepare and file any notices or other filings required pursuant to
Section 1060 of the Internal Revenue Code of 1986, as amended, and that any
such notices or filings will be prepared based on such allocation of the
Purchase Price.
3. CLOSING.
3.1. Time and Place of the Closing. The closing of the purchase and
sale of the Purchased Assets shall take place at ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
L.L.P., Atlanta, Georgia, at 10:00 A.M., local time, on the second (2nd)
business day following the date on which all conditions to Closing contained in
Sections 9. and 10. have been satisfied or complied with or, if not all
conditions have been satisfied or complied with, all such conditions which have
not been so satisfied or complied with have been waived by the party entitled
to the benefit of such condition. Throughout this Agreement, such event is
referred to as the "Closing" and such date and time are referred to as the
"Closing Date."
The parties agree to use their best efforts to cause all conditions to
Closing to occur on or before December 31, 1997 and, if that is done, then the
Purchased Assets will be deemed to have been transferred, and the Assumed
Liabilities will be deemed to have been assumed, as of the beginning of
business on December 1, 1997, but all documents shall be dated the actual date
the Closing occurs and all representations, warranties and covenants shall
extend to that date.
3.2. Procedure at the Closing. At the Closing, the parties agree to
take the following steps in the order listed below (provided, however, that
upon their completion all such steps shall be deemed to have occurred
simultaneously):
3.2.1. Seller and Shareholder shall deliver to Buyer a
Certificate in the form of EXHIBIT B hereto, certifying that each of the
conditions to the obligation of Buyer to purchase the Purchased Assets from
Seller which is set forth in Sections 9.1. through 9.8. of this Agreement has
been satisfied.
3.2.2. Buyer and InfoCure shall each deliver to Seller a
Certificate in the form of EXHIBIT C hereto, certifying that each of the
conditions to the obligations of Seller to sell the Purchased Assets to Buyer
which is set forth in Section 10. in this Agreement has been satisfied.
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3.2.3. Seller shall deliver to Buyer such deeds, bills of
sale, endorsements assignments, lease assignments and estoppel agreements (duly
executed by the lessor under the leases) and other instruments, including a
▇▇▇▇ of Sale in the form of EXHIBIT D hereto and a Lease Assignment in the form
of EXHIBIT E hereto, as shall be sufficient to vest in Buyer good and
marketable title to the Purchased Assets, free and clear of all Encumbrances
other than Permitted Encumbrances.
3.2.4. Buyer shall pay to Seller the Purchase Price (after
the application of the estimate of the amount of the EBITDA Adjustment and Net
Worth Adjustment as provided in Section 2.1.1.C. above) by wire transfer in
accordance with the Wire Transfer Instructions attached hereto as EXHIBIT F.
3.2.5. Buyer shall deliver to Seller instruments, in the form
of EXHIBIT G hereto, as shall be sufficient to effect the assumption by Buyer
of the Assumed Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER.
In order to induce Buyer to enter into this Agreement and to
consummate the transactions contemplated hereunder, Seller and Shareholder,
jointly and severally, make the following representations and warranties as of
the date hereof and as of the Closing Date:
4.1. Organization, Power and Authority of Seller. Seller is a
corporation duly organized and legally existing in good standing under the laws
of Georgia and has full corporate power and authority to own or lease its
properties and operate its Orthodontic Business as presently conducted, to
enter into this Agreement and to carry out the transactions and agreements
contemplated hereby.
The amount and character of Seller's Orthodontic Business do not
require Seller to qualify to do business in any foreign jurisdiction.
All of Seller's issued and outstanding stock is owned by Shareholder,
and no other person has any right, claim or beneficial interest in such shares
or other interest in Seller which would adversely affect or interfere in any
manner with this Agreement or the consummation of the transactions contemplated
hereby or affect or interfere with the ownership and operation of the Purchased
Assets and the Orthodontic Business by Buyer after the Closing.
4.2. No Subsidiaries and Affiliates. Except as set forth on SCHEDULE
4.2, Seller has within the two (2) year period ending on the Closing Date never
owned or controlled, and does not own or control, directly or indirectly, any
stock, partnership interest, joint venture interest or other security, equity
participation or interest in any corporation, partnership, trust or other
business organization.
4.3. Financial Statements of Seller. Seller has delivered to Buyer the
following financial statements of Seller:
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4.3.1. Audited balance sheets at December 31 of each of the
years 1995 and 1996;
4.3.2. Audited statements of income and retained earnings and
changes in stockholder's equity for the years ended December 31, 1995 and
December 31, 1996; and
4.3.3. The November 30 Financial Statements referenced in
Section 2.1.1.C. above.
Such financial statements present fairly the financial
position of Seller or the Orthodontic Business, as the case may be, at each of
such balance sheet dates and the results of its operations for each of the
periods covered, and have been prepared in conformity and consistent with past
practices except as may be disclosed in the notes thereto.
4.4. Liabilities of Seller. Except as set forth in SCHEDULE 4.4,
Seller has no liabilities or obligations (whether individually or in the
aggregate), either accrued, absolute, contingent or otherwise, except:
A. The Assumed Liabilities;
B. To the extent specifically set forth in or incorporated by
express reference in any of the schedules attached hereto; and
C. Liabilities incurred in the ordinary course of business,
consistent with Seller's past practices, since the date of execution of this
Agreement.
4.5. Tax Matters.
4.5.1. Except as set forth on SCHEDULE 4.5, Seller has timely
filed all tax returns and reports required to be filed by it, including,
without limitation, all federal, state and local tax returns, and has paid in
full or made adequate provision by the establishment of reserves for all taxes
and other charges which have become due or which are attributable to the
conduct of Seller's business or ownership of the Purchased Assets prior to
Closing. Seller will continue to make adequate provision for all such taxes and
other charges for all periods through November 30, 1997.
Except as set forth on SCHEDULE 4.5, Seller and Shareholder
have no knowledge of any tax deficiency proposed or threatened against Seller.
There are no tax liens upon any property or assets of Seller.
Except as set forth on SCHEDULE 4.5, Seller has made all
payments of estimated taxes when due in amounts sufficient to avoid the
imposition of any penalty.
4.5.2. Except as set forth on SCHEDULE 4.5, all taxes and
other assessments and levies which Seller was required by law to withhold or to
collect have been duly withheld and collected, and have been paid over to the
proper governmental entity.
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4.5.3. Except as set forth in SCHEDULE 4.5, the federal and
state income tax returns and local returns, if any, of Seller have never been
audited by the income tax authorities, nor are any such audits in process.
Except as set forth in SCHEDULE 4.5, there are no outstanding agreements or
waivers extending the statute of limitations applicable to any federal or state
income tax returns of Seller for any period.
4.5.4. Under its contracts with its customers for sales or
licenses of Seller Software, to the knowledge of Seller and Shareholder, such
customers are liable for any and all sales or use taxes imposed by virtue of or
with respect to such sales or licenses.
4.6. Real Estate of Seller.
4.6.1. Seller does not own any real property.
4.6.2. The leases described in SCHEDULE 4.6 cover all of the
real estate leased, used or occupied by Seller in connection with its
Orthodontic Business (collectively, the "Real Property"). Except as set forth
in SCHEDULE 4.6, to the knowledge of Seller and Shareholder, the leases
described in SCHEDULE 4.6 are in full force and effect and Seller holds a valid
and existing leasehold interest under each of such leases. Seller has delivered
to Buyer complete and accurate copies of such of the leases described in
SCHEDULE 4.6 and none of such leases has been modified, except to the extent
that such modifications are disclosed by the SCHEDULE 4.6.
Seller is not in default and, to the knowledge of Seller and
Shareholder, no circumstances exist which would result in a default, under any
of such leases, and to the knowledge of Seller and Shareholder, no other party
to such leases has the right to terminate, accelerate performance under or
otherwise modify (including upon the giving of notice or the passage of time)
any of such leases. To the knowledge of Seller and Shareholder, no lessor under
any such lease is in default under any of such leases.
4.6.3. Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, granted a security deed, subleased or encumbered
any interest in any of the leaseholds or subleaseholds described in SCHEDULE
4.6.
4.7. Good Title to and Condition of Seller's Assets.
4.7.1. Seller has good and marketable title to all of the
Purchased Assets (other than its interest in its leasehold premises), free and
clear of all Encumbrances, except for (i) Encumbrances for current taxes,
assessments or government changes or levies on property not yet due or
delinquent or (ii) Encumbrances related to the Assumed Liabilities
(Encumbrances of the type described in clauses (i) and (ii) above are sometimes
referred to as "Permitted Encumbrances") which are set forth in SCHEDULE 4.7.
4.7.2. The inventory and supplies of Seller consist of items
of a quality and quantity usable and saleable in the normal course of Seller's
business at values as shown on the November 30 Financial Statements. The values
of obsolete or slow-moving inventory and
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inventory of below standard quality, if any, have been written down to the
lower of cost or realizable market values or have been written off.
The value at which such inventories are carried on the November
30 Balance Sheet reflects the normal inventory valuation policies of Seller,
stating inventories at the lower of cost or market on a first-in first-out
basis, all determined in accordance with generally accepted accounting
principles.
4.8. Receivables of Seller. Seller has previously delivered to Buyer
a complete list of all receivables of Seller relating to the Orthodontic
Business as of November 30, 1997, including accounts receivable, notes
receivable and insurance proceeds receivable. To the knowledge of Seller and
Shareholder, all of the receivables listed thereon or set forth or reflected in
the November 30 Balance Sheet, were, as of the dates as of which the
information is given therein, and as of the Closing Date will be valid accounts
receivable which are or will be current and collectible.
4.9. Intellectual Property Rights of Seller.
4.9.1. SCHEDULE 4.9.1 (i) contains a complete list of each
registration of patents, copyrights, trademarks, service marks, trade names,
maskworks, other Intangibles and Software (collectively "Registrations") which
have been issued to Seller and are related to the Orthodontic Business; (ii)
identifies each pending Registration of Seller with respect to the Intangibles
and Software (defined in Section 4.9.2.M.) which are related to the Orthodontic
Business and (iii) identifies all of Seller's applications for or Registrations
regarding the Intangibles and Software which have been withdrawn, abandoned, or
have lapsed or been denied.
SCHEDULE 4.9.1 also identifies (i) each license agreement or
other written or oral agreement or permission which is related to the
Orthodontic Business ("License Agreement") and which Seller has granted to any
third party with respect to any of the Intangibles or Software; (ii) each item
of the Intangibles and Software used or possessed by Seller that any third
party owns and the license, sublicense, agreement or other permission in
connection therewith which are related to the Orthodontic Business (the "Third
Party License Agreement"), together with the term thereof, and all royalties or
other amounts due thereon and (iii) each source code escrow agreement entered
into by Seller and relating to such Intangibles and Software.
Seller has supplied Buyer with correct and complete copies of
all License Agreements and Third Party License Agreements, and except as
specified in SCHEDULE 4.9.1, all License Agreements and Third Party License
Agreements may be assigned to Buyer free of cost or expense without obtaining
the consent or approval of any other person.
Seller has complied with all License Agreements and Third
Party License Agreements, and to the knowledge of Seller and Shareholder, no
default or event of default exists under any of the License Agreements or Third
Party License Agreements.
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4.9.2.
A. SCHEDULE 4.9.2 is an accurate and complete list
and description (including a name, product description, the language in which
it is written and the type of hardware platform(s) on which it runs) of all of
the following:
(i) All Software owned by Seller or under
development by Seller related to the Orthodontic Business ("Owned Software").
(ii) All Software, other than the Owned
Software, related to the Orthodontic Business and that is either (x) offered or
provided to customers of Seller when the Owned Software is licensed to such
customers or (y) used by Seller to provide services to customers of Seller
which services utilize the Owned Software (collectively, "Customer Software";
the Owned Software and the Customer Software are collectively referred to as
the "Seller Software").
(iii) All Software, other than Seller
Software, related to the Orthodontic Business that is licensed or marketed to
or from third parties or otherwise used by Seller in the Orthodontic Business
for any purpose whatsoever (collectively, "Other Software").
B. To the extent not set forth in SCHEDULE 4.9.1,
SCHEDULE 4.9.2 separately sets forth an accurate and complete list and
description of each copyright, trademark, trademark application or
registration, service ▇▇▇▇, service ▇▇▇▇ application or registration, patent
application or registration, and name and logo included in the Intangibles (as
defined below in this Section) owned, marketed or licensed by Seller related to
the Orthodontic Business to or from third parties, used or under development by
Seller related to the Orthodontic Business. SCHEDULE 4.9.2 indicates Seller's
ownership of such items or the source of Seller's right to use such items.
C. No Software other than the Owned Software,
Customer Software and Other Software is required to operate the Orthodontic
Business as currently conducted.
D. Except as explained on SCHEDULE 4.9.2, Seller has
good and marketable title to the Owned Software and Intangibles attributable to
the Owned Software, and has the full right to use all of the Customer Software
and Other Software, and Intangibles attributable thereto, as used or required
to operate the Orthodontic Business as currently conducted, free and clear of
any liens, claims, charges or encumbrances which would affect the use of such
Software in connection with the operation of the Orthodontic Business as
currently conducted.
E. Other than as disclosed on SCHEDULE 4.9.1, no
rights of any third party not previously obtained are necessary to market,
license, sell, modify, update, and/or create derivative works for any Software
as to which Seller takes any such action in its Orthodontic Business as
currently conducted.
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F. With respect to Software which is licensed by
Seller to third parties or used in connection with the providing of services to
third parties in the Orthodontic Business:
(i) Seller maintains machine-readable
master-reproducible copies, reasonably complete technical documentation and/or
user manuals for the most current releases or versions thereof and for all
earlier releases or versions thereof currently being supported by Seller;
(ii) In each case, the machine-readable copy
substantially conforms to the corresponding source code listing;
(iii) Such Software is written in the language
set forth on SCHEDULE 4.9.2, for use on the hardware set forth on SCHEDULE
4.9.2 with standard operating systems;
(iv) Such Software can be maintained and
modified by reasonable competent Seller programmers familiar with such
language, hardware and operating systems; and
(v) In each case the Software operates in
accordance with the user manual thereof without operating defects of any
material nature.
G. None of the Software or Intangibles listed on
SCHEDULE 4.9.1 or SCHEDULE 4.9.2, or their respective past or current uses by
or through Seller has violated or infringed upon, or is violating or infringing
upon, any Software, patent, copyright, trade secret or other Intangible of any
person. Seller has adequately maintained all trade secrets and copyrights with
respect to the Software. Seller has performed all obligations imposed upon it
in all material respects with regard to the Customer Software and Other
Software which are required to be performed by it on or prior to the date
hereof, and neither Seller nor, to the knowledge of Seller and Shareholder, any
other party, is in breach of or default thereunder in any respect, nor to
Seller's or Shareholder's knowledge, is there any event which with notice or
lapse of time or both would constitute a default thereunder.
H. To the knowledge of Seller and Shareholder, no
person is violating or infringing upon, or has violated or infringed upon at
any time, any of Seller's proprietary rights to any of the Software or
Intangibles listed on either SCHEDULE 4.9.1 or SCHEDULE 4.9.2.
I. None of the Software or Intangibles listed on
SCHEDULE 4.9.1 and SCHEDULE 4.9.2 are owned by or registered in the name of
Shareholder, any current or former owner, or shareholder, other shareholder,
partner, director, executive, officer, employee, salesman, agent, customer,
contractor of Shareholder or representative nor does any such person have any
interest therein or right thereto, including, but not limited to, the right to
royalty payments. Except as listed on SCHEDULE 4.9.1, Seller has granted no
third party any exclusive rights related to any Owned Software.
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J. No litigation is pending and no claim has been
made against Seller or, to the knowledge of Seller or Shareholder, is
threatened, which contests the right of Seller to sell or license to any person
or use any of the Owned Software, Customer Software or Other Software. No
former employer of any employee or consultant of Seller has made a claim
against Seller or, to the knowledge of Seller and Shareholder, against any
other person, that Seller or such employee or consultant is misappropriating or
violating the Intangibles of such former employer.
K. Seller is not a party to or bound by any license
or other agreement requiring the payment by Seller or its assigns of any
royalty or license payment, excluding such agreements relating to the Customer
Software to the extent such royalty or license payment is expressly set forth
on SCHEDULE 4.9.1.
L. Except as set forth in SCHEDULE 4.9.1 or SCHEDULE
4.9.2, the Owned Software, Customer Software, and Other Software and the
information used by Seller, and the Intangibles thereunder, are fully
transferable to Buyer in the manner contemplated in this Agreement (in, object
code, and if applicable, source code forms, including all related
documentation, to the extent that such documentation has been created).
M. For purposes of this Agreement, "Software" means
any computer program, operating system, applications system, firmware or
software of any nature, whether operational, under development or inactive,
including all object code, source code, technical manuals, user manuals and
other documentation thereof, whether in machine-readable form, programming
language or any other language or symbols and whether stored, encoded, recorded
or written on disk, tape, film, memory device, paper or other media of any
nature.
"Intangible" means:
(i) Patents, patent applications, patent
disclosures, all re-issues, divisions, continuations, renewals, extensions and
continuation-in-parts thereof and improvements thereto;
(ii) Trademarks, service marks, trade dress,
logos, trade names, and corporate names and registrations and applications for
registration thereof and all goodwill associated therewith;
(iii) Copyrights and registrations and
applications for registration thereof;
(iv) Maskworks and registrations and applications
for registration thereof;
(v) All right, title and interest in all
computer software, data and documentation (including, without limitation,
modifications, enhancements, revisions or versions of or to any of the foregoing
and prior releases of any of the foregoing applicable to any operating
environment);
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(vi) Trade secrets and confidential business
information (including ideas, formulas, compositions, inventions, whether
patentable or unpatentable and whether or not reduced to practice, know-how
(excluding know-how unrelated to the Owned Software, Customer Software, Other
Software, or the Orthodontic Business or products), manufacturing and production
processes and techniques, research and development information, drawings, flow
charts, processes ideas, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing, and business data, pricing and
cost information, business and marketing plans, and customer and supplier lists
and information);
(vii) Other proprietary rights;
(viii) All income, royalties, damages and payments
due at Closing or thereafter with respect to the Owned Software, Customer
Software, Other Software, or other Intangibles and all other rights thereunder
including, without limitation, damages and payments for past, present or future
infringements or misappropriations thereof, the right to ▇▇▇ and recover for
past, present or future infringements or misappropriations thereof;
(ix) All rights to use all of the foregoing
forever; and
(x) All other rights in, to, and under the
foregoing in all countries.
4.9.3. The Owned Software and to the best knowledge of Seller
and Shareholder, the Customer Software and Other Software, are substantially
"Millennium Compliant." For the purposes of this Agreement "Millennium
Compliant" means:
A. The functions, calculations, and other computing
processes of the Owned Software, Other Software and Customer Software
(collectively, "Processes") perform in an accurate manner regardless of the
date in time on which the Processes are actually performed and regardless of
the date input to the Owned Software, Other Software, and Customer Software,
whether before, on, or after January 1, 2000, and whether or not the dates are
affected by leap years;
B. The Owned Software, Other Software, and Customer
Software accept, store, sort, extract, sequence, and otherwise manipulate date
inputs and date values, and return and display date values, in an accurate
manner regardless of the dates used, whether before, on, or after January 1,
2000;
C. The Owned Software, Other Software, and Customer
Software will function without interruptions caused by the date in time on
which the Processes are actually performed or by the date input to the Owned
Software, Other Software, and Customer Software, whether before, on, or after
January 1, 2000;
D. The Owned Software, Other Software, and Customer
Software accept and respond to two (2) digit year and four (4) digit year date
input in a manner that resolves any ambiguities as to the century in a defined,
predetermined, and accurate manner; and
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E. The Owned Software, Other Software, and Customer
Software display, print, and provide electronic output of date information in
ways that are unambiguous as to the determination of the century.
F. For purposes of this Section 4.9.3., "date input"
does not include data received by a system using the Owned Software, Other
Software and Customer Software from a third party whose computer system is
networked or connected by Internet, except for date input for which the Owned
Software, Other Software and Customer Software are designed to accept according
to parameters established by such software.
4.9.4. Without limiting any of the foregoing, to the
knowledge of Seller and Shareholder, none of Seller's officers, directors,
employees or independent contractors have disclosed to (without proper
obligation of confidentiality) or otherwise used or utilized on behalf of any
person other than Seller, any trade secrets or proprietary information,
including, without limitation, the source codes for Seller Software.
SCHEDULE 4.9.4 identifies all individuals compensated at an
annual rate in excess of $30,000.00 who have contributed to the development of
the Owned Software.
4.9.5. Seller Software:
A. Performs substantially in accordance with all
published specifications for such Programs;
B. Complies in all material respects with all other
published documentation, descriptions and literature with respect to such
Programs; and
C. Complies in all material respects with all
representations, warranties and other requirements specified in all of Seller's
License Agreements.
4.9.6. Except as set forth on SCHEDULE 4.9.6, Shareholder
does not have an ownership right or other interest in any Software or
Intangibles related to the Orthodontic Business.
4.9.7. All Seller's contracts with customers in the
Orthodontic Business (collectively "Customer Contracts") for specific
customers, whether completed or outstanding, were or are evidenced by written
agreements containing provisions reasonably equivalent to those contained in
SCHEDULE 4.9.7 hereto, with only such changes as would not affect the rights of
Buyer as assignee thereof and would not impose on Buyer, as assignee thereof,
any additional obligations.
No Customer Contract provided for the transfer to the
customer therein of any Intangibles relating to Seller Software as to which
Seller thereafter shall have no further rights. No current Customer Contract
provides that the customer therein shall be entitled to sublicense or otherwise
transfer to a third party any of the Intangibles relating to Seller Software
unless such
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third party agrees to be bound by the confidentiality provisions thereof and
agrees to pay Seller royalties and other amounts comparable to those under such
Customer Contract.
Except as set forth on SCHEDULE 4.9.7, each past or present
customer of Seller and each past or present customer of Seller to whom Seller
disclosed any of the Intangibles relating to Seller Software is bound by a
confidentiality provision which requires such past or present customer to take
reasonable steps to protect the rights of Seller in the Intangibles relating to
Seller Software.
4.10. Adequacy of Seller's Assets. The Purchased Assets constitute, in
the aggregate, all of the property necessary for the conduct of Seller's
Orthodontic Business in the manner in which and to the extent to which it is
currently being conducted.
4.11. Documents of and Information With Respect to Seller.
4.11.1. SCHEDULE 4.11 accurately and completely sets forth a
true and complete list of all of the contracts of Seller which are material to
the Purchased Assets or Seller's Orthodontic Business (the "Material
Contracts"), including, without limitation, the following:
A. Each policy of insurance in force with respect to the
assets and properties of Seller and each of the performance or other surety
bonds maintained by Seller in the conduct of its business;
B. Each promissory note, loan, credit agreement,
guarantee, security agreement or similar document or instrument to which Seller
is a party or by which it is bound;
C. Each lease of personal property to which Seller is a
party or by which it is bound which involves rental payments which, if
annualized, would exceed $5,000.00;
D. Any other agreement, contract or commitment to which
Seller is a party or by which it is bound which involves a future commitment by
Seller in excess of $5,000.00 and which cannot be terminated without liability
on ninety (90) days or less notice; and
E. The name of each bank in which Seller has an account
or safe-deposit box, the name in which the account or box is held and the names
of all persons authorized to draw thereon or to have access thereto.
The contracts listed on SCHEDULE 4.11 together with the
License Agreements and Third Party License Agreements listed on SCHEDULE 4.9.1
are referred to herein as the "Material Contracts."
Seller has previously furnished Buyer with a true and
complete copy of each such agreement, contract or commitment listed in SCHEDULE
4.11. There has not been any material default in any obligation to be performed
by Seller, nor to the best knowledge of Seller and
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Shareholder, any other party, under any such instrument. Except as set forth on
SCHEDULE 4.9.1 and SCHEDULE 4.11, Seller is not a party to or bound by any
other Material Contracts.
All Material Contracts have been entered into in the ordinary
course of business, are on normal and reasonable commercial terms and are not
unduly favorable to the parties thereto other than Seller. To the knowledge of
Seller and Shareholder, no Material Contract will likely result in a loss to
Seller upon completion of performance or which cannot readily be fulfilled or
performed by Seller in accordance with its terms without undue or unusual
expenditures of money or effort.
4.11.2. Seller carries insurance as set forth in SCHEDULE
4.11.2.
All premiums and other payments which have become due under
the policies of insurance listed in SCHEDULE 4.11.2 have been paid in full and,
to the extent relating to periods prior to the Closing Date, will be paid in
full on or prior to the Closing Date. All of such policies are now in full
force and effect and Seller has received no notice from any insurer, agent or
broker of the cancellation of, or any increase in premium with respect to, any
of such policies or bonds. No insurer has the right to make retrospective
premium adjustments with respect to any of such policies.
Except as set forth in SCHEDULE 4.11.2, Seller has received
no notification from any insurer, agent or broker denying or disputing any
claim made by Seller or denying or disputing any coverage for any such claim or
the amount of any claim. Except as set forth in SCHEDULE 4.11.2, Seller has no
claim against any of its insurers under any of such policies pending or
anticipated and there has been no occurrence of any kind which would give rise
to any such claim.
4.11.3. SCHEDULE 4.11.3 sets forth a complete list of all of
Seller's current Orthodontic Business customers (defined as having received
products or services from Seller within the last three (3) years).
4.12. Litigation Involving Seller and Shareholder. Except as set
forth on SCHEDULE 4.12, there are no actions, suits, claims, governmental
investigations or arbitration proceedings pending or, to the knowledge of Seller
and Shareholder, threatened against or affecting Seller or any of its assets or
properties or Shareholder with respect to or relating to Seller and, to the
knowledge of Seller and Shareholder, there is no basis for any of the foregoing.
There are no outstanding orders, decrees or stipulations issued by any federal,
state, local or foreign judicial or administrative authority in any proceeding
to which Seller is or was a party.
4.13. No Adverse Change. Since the date of the November 30 Balance
Sheet, all changes in the Orthodontic Business or Orthodontic Business
properties of Seller, or in the financial condition of its Orthodontic Business,
including changes occurring in the ordinary course of business, have not had or
will not have an adverse effect on the business, properties, financial
condition, business prospects or operating results of the Orthodontic Business
of Seller. There is not, to the knowledge of Seller and Shareholder, any
threatened or prospective event or
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condition of any character whatsoever which could adversely affect the assets,
properties, business, financial condition or results of operations of the
Orthodontic Business Seller.
4.14. Absence of Certain Acts or Events. Since the date of the
November 30 Balance Sheet, with respect to the Orthodontic Business, Seller has
not:
A. Sold or transferred any of its assets other than in the
ordinary course of business;
B. Made or obligated itself to make capital expenditures
aggregating more than $10,000.00;
C. Incurred any material obligations or liabilities (including
any indebtedness) or entered into any material transaction, except for this
Agreement and the transactions contemplated hereby;
D. Suffered any theft, damage, destruction or casualty loss in
excess of $5,000.00; or
E. Declared or paid any dividends or made any other
distributions with respect to its shares or redeemed or purchased any of its
shares.
4.15. Compliance With Laws by Seller.
4.15.1 To the knowledge of Seller and Shareholder, Seller is in
compliance in all material respects with all laws, regulations and orders
applicable to the Orthodontic Business of Seller, and its assets and properties
used in the Orthodontic Business. Seller has not received notification of any
asserted past or present failure to comply with any laws, and to the knowledge
of Seller and Shareholder, no proceeding with respect to any such violation is
contemplated.
4.15.2. To the knowledge of Seller and Shareholder, Seller has
not made any payment of funds prohibited by law in connection with the
Orthodontic Business of Seller, and no funds have been set aside to be used in
connection with the Orthodontic Business of Seller for any payment prohibited
by law.
4.16. Employment and Labor Matters.
4.16.1. SCHEDULE 4.16 lists all employees and agents who on the
date hereof perform services on a regular basis in the Orthodontic Business
operations of or for Seller. No such employee or agent has terminated or given
notice of termination of his employment as of the date hereof, nor, to the
knowledge of Shareholder or Seller, plans to refuse employment with Buyer after
the Closing Date.
4.16.2. To the knowledge of Seller and Shareholder, Seller has
complied in all material respects with all applicable federal, state and local
laws, rules and regulations and ordinances respecting health, safety and
working conditions of its employees, including, without limitation, the
Occupational Safety and Health Act of 1970, Pub. L. 91-596, as amended, and all
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similar applicable federal, state and local laws, rules, regulations and
ordinances, and has provided Buyer with copies of all reports filed and notices
provided under any such laws, rules, regulations and ordinances during the last
five (5) years.
4.16.3. Seller is not a party to any agreement, contract or
arrangement, written or oral, providing for any payments to any person
resulting from the consummation of the transactions contemplated hereby, except
for payments to holders of shares of Seller's capital stock. Seller's
obligation to make any such payments shall constitute Excluded Liabilities.
4.17. Employee Benefits Matters.
4.17.1. SCHEDULE 4.17.1 lists all plans, programs, and similar
agreements, commitments or arrangements, whether oral or written, maintained by
or on behalf of Seller or any other party that provide benefits or compensation
to, or for the benefit of, current or former employees of Seller ("Plan" or
"Plans"). Except as set forth on SCHEDULE 4.17.1 only current and former
employees of Seller participate in the Plans. Buyer does not adopt or assume,
and Seller shall not assign or transfer to Buyer, any Plan. If requested by
Buyer, copies of all Plans and, to the extent applicable, all related trust
agreements, actuarial reports, and valuations for the most recent three (3)
years, all summary plan descriptions, prospectuses, Annual Report Form 5500s or
similar forms (and attachments thereto) for the most recent three (3) years,
all Internal Revenue Service determination letters, and any related documents
requested by Buyer, including all amendments, modifications and supplements
thereto, will be delivered to Buyer, and all of the same are or will be true,
correct and complete.
4.17.2. With respect to each Plan to the extent applicable:
A. No litigation or administrative or other
proceeding is pending or, to the knowledge of Seller and Shareholder,
threatened involving such Plan;
B. To the best knowledge of Seller and Shareholder,
such Plan has been administered and operated in substantial compliance with,
and has been amended to comply with all applicable laws, rules, and
regulations, including, without limitation, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code, and the
regulations issued under ERISA and the Internal Revenue Code;
C. Seller and its predecessors, if any, have made and
as of the Closing Date will have made or accrued, all payments and
contributions required, or reasonably expected to be required, to be made under
the provisions of such Plan or required to be made under applicable laws, rules
and regulations, with respect to any period prior to the Closing Date, such
amounts to be determined using the ongoing actuarial and funding assumptions of
the Plan;
D. Such Plan is fully funded in an amount sufficient
to pay all liabilities accrued (including liabilities and obligations for
health care, life insurance and other benefits after termination of employment)
and claims incurred to the date hereof, or the November 30 Balance Sheet
contains adequate reserves or paid-up insurance has been provided, therefor;
and
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E. To the knowledge of Seller and Shareholder, such
Plan has been administrated and operated only in the ordinary and usual course
and in accordance with its terms, and there has not been in the four (4) years
prior hereto any increase in the liabilities of such Plan beyond increases
typically experienced by employers similar to Seller.
4.18. Due Authorization; Binding Obligation. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by necessary corporate action of
Seller. This Agreement has been duly executed and delivered by Seller and
Shareholder and is a valid and binding obligation of each of them, enforceable
in accordance with its terms, subject to bankruptcy, reorganization, moratorium
or other similar laws of general application affecting the enforcement of
creditors' rights, and to general principles of equity.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will:
A. Conflict with or violate any provision of the articles of
incorporation or bylaws of Seller, or of any law, ordinance or regulation or
any decree or order of any court or administrative or other governmental body
which is either applicable to, binding upon or enforceable against Seller or
Shareholder; or
B. Result in any breach of or default under any mortgage,
contract, agreement, indenture, will, trust or other instrument which is either
binding upon or enforceable against Seller or Shareholder or the assets and
properties of the Orthodontic Business of Seller or Shareholder, which breach
or default would have a material adverse effect on the business, properties or
financial condition of the Orthodontic Business of Seller.
Without limiting the generality of the foregoing, neither Seller or
Shareholder is a party to any continuing agreement or understanding, made by it
or on its behalf, which limits in any way the ability of:
A. Seller and Shareholder to enter into this Agreement and
perform their respective obligations hereunder;
B. Seller to sell the Purchased Assets to Buyer and Buyer to
purchase the Purchased Assets, all on the terms and subject to the conditions
set forth herein; or
C. The parties hereto to consummate the transactions
contemplated hereby, nor has Seller or Shareholder breached any such agreement,
or any prior agreement, which breach would entitle the other party thereto to
any equitable or monetary remedies.
4.19. Consents and Approvals. Except as set forth in SCHEDULE 4.19 and
SCHEDULE 4.9.1., no consent, authorization or approval of, or exemption by, or
filing with, any governmental, public or self-regulatory body or authority (a
"Governmental Agency") or any other third party, including, without limitation,
the licensors of any Software, is required in connection with the execution,
delivery and performance by Seller or Shareholder of this
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Agreement or the consummation of the transactions contemplated hereby or
thereby or for the continuation by Buyer of the business of Seller after the
Closing in the same manner as presently conducted or proposed to be conducted.
4.20. Related Party Transactions. Except as set forth in SCHEDULE
4.20, Seller is not directly or indirectly a party to any contract, agreement,
or lease with, or any other commitment to:
A. Shareholder or any other party owning, or formerly owning,
beneficially or of record, directly or indirectly, any of the shares of capital
stock of Seller;
B. Any person related by blood, adoption or marriage to any such
party;
C. Any director or officer of Seller;
D. Any corporation or other entity in which any of the
foregoing parties has, directly or indirectly, at least a five percent (5%)
beneficial interest in the share capital or other type of equity interest in
such entity; or
E. Any partnership in which any such party is a general partner
(any or all of the foregoing being herein referred to as "Related Parties").
Without limiting the generality of the foregoing, except as disclosed
in SCHEDULE 4.20,
A. No Related Party, directly or indirectly, owns or controls
any assets or properties which are or have been used in the business of Seller;
and
B. No Related Party, directly or indirectly, engages in or has
any significant interest in or connection with any business (x) which is or
which within the last three (3) years has been a competitor, customer or
supplier of Seller or has done business with Seller or (y) which as of the date
hereof sells or distributes products or services which are similar or related
to Seller's products or services.
4.21. Accuracy of Information Furnished by Seller and Shareholder. No
representation contained in this Agreement and no information or statements
contained in the various schedules attached hereto, contains or shall contain
any untrue statement of a material fact or omits or shall omit any material
fact necessary to make the information contained therein in light of
circumstances in which they were made, not misleading.
4.22. Customer Prepayments. Set forth on SCHEDULE 4.22 is a
description of arrangements with existing customers pursuant to which Seller is
obligated to perform services relating to its Orthodontic Business software
products, including the amount of prepayments received by Seller as of November
30, 1997, under such contracts.
4.23. Books and Records. The books of account and other financial
records to be transferred to Buyer pursuant hereto are complete and correct,
and are accurately reflected in the Financial Statements. Seller has provided
to Buyer and its representatives true and complete
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copies of or access to all minute books, stock register and other corporate
records of Seller existing on the date hereof.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND INFOCURE.
In order to induce Seller to enter into this Agreement and consummate
the transactions contemplated hereunder, Buyer and InfoCure, jointly and
severally, make the following representations and warranties:
5.1. Organization, Power and Authority of Buyer. Buyer is a
corporation duly organized and validly existing under the laws of the State of
Georgia, with full corporate power and authority to enter into this Agreement
and to carry out the transactions and agreements contemplated hereby.
5.2. Due Authorization; Binding Obligation. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
actions of Buyer. This Agreement has been duly executed and delivered by Buyer
and is a valid and binding obligation of Buyer, enforceable in accordance with
its terms.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will:
A. Conflict with or violate any provision of the articles of
incorporation or bylaws of Buyer or of any decree or order of any court or
administration or other governmental body which is either applicable to,
binding upon or enforceable against Buyer; or
B. Result in any breach of or default under any mortgage,
contract, agreement, indenture, will, trust or other instrument which is either
binding upon or enforceable against Buyer.
5.3. Accuracy of Information Furnished by Buyer. No representation,
statement or information made or furnished by Buyer to Seller in writing
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein, in light of the
circumstances in which they were made, not misleading.
5.4. Accuracy of Information Furnished by Buyer and InfoCure. No
representation, statement or information in writing made or furnished by Buyer
or InfoCure or by both of them to Seller and Shareholder, including, without
limitation, those contained in this Agreement and the various schedules
attached hereto and the other information and statements previously furnished
by Buyer to Seller in writing, contains or shall contain any untrue statement
of a material fact or omits or shall omit any material fact necessary to make
the information contained therein in light of circumstances in which they were
made, not misleading.
5.5. No Adverse Change. Since November 30, 1997, all changes in the
business or properties of Buyer or InfoCure, or in their consolidated financial
condition, including changes
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occurring in the ordinary course of business, have not had or will not have an
adverse effect on the business, properties, financial condition, business
prospects or operating results of Buyer or InfoCure. There is not, to the best
knowledge of Buyer and InfoCure, any threatened or prospective event or
condition of any character whatsoever which could adversely affect the assets,
properties, business, financial condition or results of operations of Buyer or
InfoCure.
6. ADDITIONAL COVENANTS OF SELLER AND SHAREHOLDER.
6.1. Best Efforts. Seller and Shareholder will each use its
respective best efforts to cause to be satisfied as soon as practicable and
prior to the Closing Date all of the conditions set forth in Section 9. to the
obligation of Buyer to purchase the Purchased Assets.
6.2. Conduct of Business Pending the Closing. From and after the
execution and delivery of this Agreement and until the Closing Date, except as
otherwise provided by the prior written consent of Buyer, with respect to the
Orthodontic Business of Seller:
6.1.1. Seller will: (i) conduct its business and operations in
the manner in which the same have heretofore been conducted; (ii) preserve its
business organization intact; (iii) keep available the services of its
officers, employees, agents and distributors and (iv) preserve its
relationships with customers, suppliers and others having dealings with Seller;
6.2.2. Seller will maintain all of its properties in customary
repair, order and condition, reasonable wear and use and damage by unavoidable
casualty excepted, and maintain insurance of such types and in such amounts
upon all of its properties and with respect to the conduct of its business as
are in effect on the date of this Agreement;
6.2.3. Seller will: (i) not sell or transfer any of its assets
other than in the ordinary course of business consistent with past practices or
(ii) not incur any material obligations or liabilities or enter into any
material transaction, contract, arrangement or agreement without the prior
written consent of Buyer; and
6.2.4. Seller will not increase the compensation payable or to
become payable to any director, officer, employee or agent of Seller, make any
profit-share payment or other arrangement (whether current or deferred) to or
with any director, officer, employee or agent, hire any employee, officer or
director, consultant, or agent without the prior written approval of Buyer.
6.3. Access to Seller's Plants, Properties and Records. From and
after the execution and delivery of this Agreement, Seller will afford to the
representatives of Buyer access, during normal business hours and upon
reasonable notice, to Seller's premises sufficient to enable Buyer to inspect
the assets and properties of Seller, and Seller will furnish to such
representatives during such period all such information relating to the
foregoing investigation as Buyer may reasonably request; provided, however,
that any furnishing of such information to Buyer and any investigation by Buyer
shall not affect the right of Buyer to rely on the representations and
warranties made by Shareholder or Seller in or pursuant to this Agreement, and,
provided further that Buyer will hold in confidence all documents and
information concerning Seller so furnished.
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6.4. No Other Discussions. Commencing on the date hereof and extending
through and including the earlier of the Closing Date or termination of this
Agreement pursuant to Section 13.3., Seller will, and Shareholder will use
Shareholder's best efforts to cause Seller to, discontinue negotiations with
others and will not continue or enter into discussions or negotiate with or
entertain or accept the unsolicited offer of any other party concerning the
potential sale of all or any part of the assets of the Orthodontic Business or
shares of Seller or the merger, consolidation or other business combination of
Seller with respect to its Orthodontic Business with any person other than
Buyer. Seller will, and Shareholder will use Shareholder's best efforts to
cause Seller to, notify Buyer of any offers or inquiries with respect thereto
and provide copies of any written offers or proposals.
6.5. Employee Benefit Plans and Termination of Employment of Certain
of Seller's Employees. Seller, Buyer, and Shareholder hereby covenant and agree
as follows with regard to all employee benefit Plans (as defined in Section
4.17.1. hereof) maintained by Seller and with respect to the termination of
employment of Seller employees by Buyer following the Closing:
A. Benefit Plans. Shareholder and Seller covenant and agree to
hold Buyer harmless from and indemnify Buyer against all liabilities for any
benefits payable under any Benefit Plan as of the Closing Date.
B. Health Insurance. Seller and Shareholder hereby covenant and
agree that Seller will promptly pay (or properly accrue on the November 30
Balance Sheet) all obligations that are payable under any health insurance plan
maintained by Seller or Seller as of the Closing Date.
C. Disability Insurance. Seller will promptly pay (or properly
accrue on the November 30 Balance Sheet) all obligations that are payable under
any disability plan maintained by Seller as of the Closing Date with respect to
any of Seller's employees.
D. Bonuses. Seller and Shareholder hereby covenant and agree that
Seller will pay all bonuses earned by employees or former employees of Seller
as of the Closing Date. Except as otherwise agreed pursuant to Section 11.6.
below, Buyer shall have no liability for bonuses earned or expected as of the
Closing Date.
E. Seller's Employees to Enter Buyer's Health Plan. Buyer hereby
covenants and agrees that it will cover each employee of Seller whom Buyer
employs in Buyer's group health plan, without requiring a waiting period and
without imposing any limitation for a pre-existing health condition, subject to
general enrollment requirements mandated by such plan. Each of Seller and
Shareholder agrees to cooperate with Buyer in ensuring the transition of health
benefits from Seller's plan to Buyer's plan so as to avoid any lapse in
coverage.
F. COBRA and HIPAA. Seller hereby covenants and agrees that it
will promptly deliver to all employees of Seller, and such employees'
dependents, appropriate notices and documentation under applicable provisions of
the Consolidated Budget Reconciliation Act of 1985 and the Health Insurance
Portability and Accountability Act of 1996.
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G. Prior Service Credit for 401(k), Employee Stock Option and
Employee Stock Purchase Plans. In determining whether an employee of Buyer has
met the waiting period requirement for participation in Buyer's 401(k),
Employee Stock Option and Employee Stock Purchase Plans, Buyer hereby covenants
and agrees to provide such employee with credit for time employed by Seller.
H. Reimbursement by Buyer. Buyer hereby covenants and agrees
promptly to reimburse Seller for payments made by Seller on behalf of each
employee of Seller whom Buyer employs between December 1, 1997, through the
Closing Date with respect to any medical, dental, life and short-term
disability benefits provided by Seller, which expenses shall be reconciled as
provided in Section 11.G. below.
I. Termination of Employment of Certain Employees. The
parties acknowledge that upon the Closing Date, Buyer intends to terminate the
employment of certain of Seller's employees, whose employment Seller and
Shareholder have represented and warranted to be "at will."
7. OTHER COVENANTS OF SHAREHOLDER.
In order to induce Buyer to enter into this Agreement and to
consummate the transactions contemplated hereunder, Shareholder agrees with
Buyer as follows:
7.1. No Other Discussions. Commencing on the date hereof and extending
through and including the earlier of the Closing Date or termination of this
Agreement pursuant to Section 13.3., Shareholder will discontinue negotiations
with others and will not enter into discussions or negotiate with or entertain
or accept the unsolicited offer of any other party concerning the potential
sale of all or any part of the assets of the Orthodontic Business or shares of
Seller or the merger or consolidation or other business combination of Seller
with respect to its Orthodontic Business with any person other than Buyer.
Shareholder will notify Buyer of any offers or inquiries with respect thereto
and provide copies of any written offers or proposals.
7.2. Best Efforts; Cooperation With Accountants. Shareholder will use
its best efforts to cause to be satisfied as soon as practicable and prior to
the Closing Date all of the conditions set forth in Section 9. to the
obligation of Buyer to purchase the Purchased Assets and will cooperate with
the Accountants in the preparation of the November 30 Balance Sheet.
8. ADDITIONAL COVENANTS OF BUYER AND INFOCURE.
8.1. Best Efforts. Each of Buyer and InfoCure will use its best
efforts to cause to be satisfied as soon as practicable and prior to the
Closing Date all of the conditions set forth in Section 10. to the obligation
of Seller to sell the Purchased Assets pursuant to this Agreement.
9. CONDITIONS TO THE OBLIGATION OF BUYER AND INFOCURE.
The obligation of Buyer and InfoCure to purchase the Purchased Assets
shall be subject to the fulfillment at or prior to the Closing Date of each of
the following conditions, each of
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which is for the benefit of Buyer and InfoCure and any one (1) or more of which
may be waived by either Buyer or InfoCure:
9.1. Accuracy Header of Representations and Warranties and Compliance
With Obligations.
The representations and warranties of Shareholder and Seller contained
in this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time.
Shareholder and Seller shall have performed and complied with all of
their obligations required by this Agreement to be performed or complied with
at or prior to the Closing Date.
Shareholder and the President or Vice President of Seller shall have
delivered to Buyer a certificate, dated as of the Closing Date and signed by
Shareholder and the President or Vice-President of Seller, certifying that such
representations and warranties are thus true and correct and that all such
obligations have been thus performed and complied with.
9.2. Opinion of Counsel. Buyer shall have received an opinion dated
the Closing Date from ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., counsel for Seller and
Shareholder, substantially in form and substance as set forth on EXHIBIT H
attached hereto.
9.3. Receipt of Necessary Consents. Except as described on SCHEDULE
4.19, all necessary consents or approvals of third parties to any of the
transactions contemplated hereby, the absence of which would affect Buyer's
rights hereunder, shall have been obtained and shown by written evidence
reasonably satisfactory to Buyer.
9.4. No Adverse Litigation. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body
which shall seek to restrain, prohibit or invalidate the sale of the Purchased
Assets to Buyer or any other transaction contemplated hereby, or which might
affect the right of Buyer to own the Purchased Assets or to operate the
Orthodontic Business formerly operated by Seller and which, in the judgment of
Buyer, makes it inadvisable to proceed with the purchase of the Purchased
Assets.
9.5. Restrictive Covenant Agreements. Seller and HALIS shall have each
entered into a restrictive covenant agreement (the "Restrictive Covenant
Agreement") with Buyer and InfoCure, substantially in the form of EXHIBIT I
hereto.
9.6. Employment Agreements. ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
each entered into an employment agreement with Buyer, substantially in the
forms of EXHIBIT J and EXHIBIT K hereto, respectively.
9.7. Directors and Shareholder Resolutions; Good Standing. Seller
shall have delivered to Buyer a certificate evidencing the good standing of
Seller as of a recent practicable date, and a certified copy of the resolutions
of the Directors and shareholders of Seller approving the execution, delivery
and performance by Seller of this Agreement and all the other transactions to
be taken by Seller contemplated herein.
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9.8. Employee Covenants Agreements. Each employee or agent of Seller
listed on SCHEDULE 9.8 shall have executed and delivered to Buyer a Covenants
Agreement in favor of Buyer in the form of EXHIBIT L.
9.9. Assignment of Intellectual Property. At or prior to Closing,
Shareholder shall assign to Buyer any rights they may have in or to the Software
and Intangibles.
9.10. Buyer's Lender's Approval. On or before December 31, 1997, Buyer
shall have obtained the commitment of Finova Capital Corporation ("Finova") to
make a term loan or loans to Buyer sufficient to fund fully all of Buyer's
obligations under this Agreement to pay the cash portion of the Purchase Price
(the "Finova Commitment"). The term of the loan shall be sufficient so that
such loan can be amortized over a period of no less than five (5) years.
9.11. Lender's Loan. On or before the Closing, Finova shall have made
to Buyer a term loan equal to or in excess of the cash portion of the purchase
price, on the same terms and conditions as set out in the Finova Commitment.
9.12. Assumption of Portion of ▇▇. ▇▇▇▇'▇ Salary. Shareholder shall
have entered into an agreement with ▇▇▇▇ ▇▇▇▇, Buyer and InfoCure in the form
of EXHIBIT M attached hereto.
10. CONDITIONS TO OBLIGATION OF SELLER.
The obligation of Seller to sell the Purchased Assets shall be subject
to the fulfillment at or prior to the Closing Date of each of the following
conditions, each of which is for the benefit of Seller and any one (1) or more
of which may be waived by it:
10.1. Accuracy of Header representations and Warranties and Compliance
With Obligations.
The representations and warranties of Buyer and InfoCure contained in
this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time.
Buyer and InfoCure shall have performed and complied with all of their
respective obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date.
Each of Buyer and InfoCure shall have delivered to Seller a
certificate, dated as of the Closing Date and signed by each of their
respective Presidents, certifying that such representations and warranties are
thus true and correct and that all such obligations have been thus performed
and complied with.
10.2. Opinion of Counsel. Seller shall have received an opinion, dated
the Closing Date, from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel to Buyer and
InfoCure, substantially in form and substance as set forth in EXHIBIT N
attached hereto.
10.3. No Adverse Litigation. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body
which shall seek to restrain,
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prohibit or invalidate the sale of the Purchased Assets by Seller or any other
transaction contemplated hereby or which, in the judgment of Seller, makes it
inadvisable to proceed with the sale of the Purchased Assets.
11. ADDITIONAL AGREEMENTS.
11.1. Execution of Further Documents. From and after the Closing, upon
the reasonable request of Buyer, Seller and Shareholder shall, and Shareholder
shall cause Seller to, execute, acknowledge and deliver all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances
as may be required to convey and transfer to and vest in Buyer and protect its
rights, title and interest in the Purchased Assets and as may be appropriate
otherwise to carry out the transactions contemplated by this Agreement.
11.2. Use of Name. After the Closing, Seller shall not conduct any
business under the name "Software Manufacturing Group", "Software Manufacturing
Group, Inc.", "Orthodontic Practice Management System, Inc." or "OPMS" or under
any name deceptively or confusingly similar thereto, and shall only use such
name as necessary to wind down Seller's Orthodontic Business.
11.3. Nonassignable Contracts. To the extent that the assignment
hereunder by Seller to Buyer of any contract, commitment, license, lease or
other agreement of Seller (the "Contracts") is prohibited or is not permitted
without the consent of any other party to the Contract, this Agreement shall
not be deemed to constitute an assignment of any such Contract if such consent
is not given or if such assignment otherwise would constitute a breach of, or
cause a loss of contractual benefits under, any such Contract, and Buyer shall
assume no obligations or liabilities thereunder.
Prior to the Closing, Seller shall advise Buyer promptly in writing
with respect to any Contract as to which it knows it will not receive any
required consent. Without in any way limiting Seller's obligation pursuant to
Section 9.3. to obtain all consents and waivers necessary for the sale,
transfer, assignment and delivery of the Contracts and the Purchased Assets to
Buyer hereunder, if any such consent is not obtained or if such assignment is
not permitted irrespective of consent and the Closing hereunder is consummated,
Seller shall, if requested by Buyer, cooperate with Buyer in any reasonable
arrangement designed to provide Buyer with the rights and benefits (subject to
the obligations) under the Contract, including, if reasonably requested by
Buyer, by enforcing for the benefit of Buyer any and all rights of Seller
against any other person arising out of breach or cancellation by such other
person, acting as an agent on behalf of Buyer, subcontracting to Buyer the
right to perform under the Contract on the same economic terms as applied to
Seller prior to the Closing and acting as Buyer shall otherwise reasonably
require, in each case at Buyer's expense.
Acceptance of any such arrangement shall constitute a waiver by Buyer
of any claim or alleged breach under this Agreement with respect to such
Contracts.
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11.4. Enforcement of Confidentiality Agreements. From and after the
Closing Date, Seller and Shareholder shall enforce, on behalf of Buyer, any
confidentiality agreements which cannot be assigned to Buyer pursuant to this
Agreement.
11.5. Announcements. Seller and Buyer shall work together after the
Closing to coordinate the preparation and mailing by each of any announcements
each of them desires to make to customers relating to this transaction.
11.6. Post-Closing Reconciliation of Operation of the Orthodontic
Business Between December 1, 1997 and the Closing Date. Seller and Shareholder
agree following Closing to prepare, no later than January 15, 1998, complete
and accurate schedules of the December Liabilities (as defined in Section 2.2.
and in accordance with SCHEDULE 2.2), together with complete and detailed
schedules of all disbursements, receipts and receivables incurred or realized
by Seller during the period between December 1, 1997, and the actual date of
Closing. The parties shall then promptly and no later than January 20, 1998,
reconcile such schedules so as to give effect to Buyer's ownership of the
Orthodontic Business during this period, and any net sums due Buyer or Seller,
as the case may be, shall be promptly remitted to such party.
12. INDEMNIFICATION.
12.1. Agreement by Seller and Shareholder to Indemnify. Seller and
Shareholder, jointly and severally (Seller and Shareholder, the "Seller
Indemnifying Parties"), agree that they will indemnify and hold Buyer harmless
in respect of the aggregate of all indemnifiable damages of Buyer.
For this purpose, "indemnifiable damages" of Buyer means the aggregate
of all expenses, losses, costs, deficiencies, liabilities and damages
(including related counsel fees and expenses) incurred or suffered by Buyer
resulting from:
A. Any inaccurate representation or warranty made by Seller or
Shareholder in or pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Seller or by Shareholder in this Agreement;
C. The failure of any of Seller and Shareholder to pay,
discharge or perform any liability or obligation of Seller and Shareholder
which is not expressly assumed by Buyer pursuant to Section 2.2. of this
Agreement or resulting from any dispute concerning any such liability or
obligation; or
D. Any liability (other than an Assumed Liability) arising out
of Seller's use of the Purchased Assets or operation of the Orthodontic
Business prior to Closing.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable damages", Buyer shall have the right to be put in
the same financial position as it
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would have been had each of the representations and warranties of Seller and
Shareholder been true and correct and had each of the covenants of Seller and
Shareholder been performed in full.
The amount of any indemnifiable damages otherwise payable to Buyer
hereunder shall be reduced if the indemnifiable damages incurred by Buyer will
provide Buyer with income tax deductions or credits. The amount of the
reduction shall be the amount of the actual cash tax savings realized by Buyer
as a result of such deductions or credits, discounted to its present value as
of the date of the payment of the indemnifiable damages from the date such
indemnifiable damages were incurred by Buyer at the rate of interest charged on
such date by the Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Seller Indemnifying Parties to indemnify
Buyer shall be subject to each of the following principles or qualifications:
12.1.1. Each of the representations and warranties made by
Seller and Shareholder in this Agreement or pursuant hereto, shall survive for
a period of two (2) years after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of Buyer, and thereafter all
such representations and warranties shall be extinguished; provided, however,
that the representations and warranties made by Seller and Shareholder to the
extent they relate to Seller's title to the Purchased Assets shall survive
forever and that the representations and warranties made by Seller and
Shareholder in Section 4.5. hereof ("Tax Matters") shall in each case survive
until the first (1st) anniversary of the later of:
A. The date on which applicable period of limitation
on assessment or refund of tax has expired; or
B. The date on which the applicable taxable year (or
portion thereof) has been closed.
No claim for the recovery of indemnifiable damages may be asserted by
Buyer against Seller Indemnifying Parties or their successors in interest after
such representations and warranties shall be thus extinguished; provided,
however, that claims first asserted in writing within the applicable period
shall not thereafter be barred. In addition, the Seller Indemnifying Parties
shall have no liability with respect to indemnifiable damages until the total
of all such damages exceeds $10,000.00 in which event the Seller Indemnifying
Parties shall be obligated to indemnify Buyer as provided herein for all such
damages. Notwithstanding the foregoing, in no event shall the aggregate
liability of the Seller Indemnifying Parties under this Section 12. exceed the
Purchase Price.
12.2. Agreements by Buyer and InfoCure to Indemnify. Buyer and
InfoCure (the "Buyer Indemnifying Parties"), jointly and severally, agree to
indemnify and hold Seller and Shareholder (the "Seller Indemnified Parties")
harmless in respect of the aggregate of all indemnifiable damages of any of
Seller Indemnified Parties.
For this purpose, "indemnifiable damages" of any of Seller Indemnified
Parties means the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including related
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counsel fees and expenses) incurred or suffered by any of Seller Indemnified
Parties resulting from:
A. Any inaccurate representation or warranty made by Buyer or
InfoCure or pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Buyer or InfoCure in this Agreement;
C. The failure of Buyer to pay, discharge or perform the
Assumed Liabilities or resulting from any dispute concerning any Assumed
Liabilities; or
D. Any liability arising out of Buyer's use of the Purchased
Assets or operation of the Orthodontic Business after the Closing.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable damages", each of Seller Indemnified Parties
shall have the right to be put in the same financial position as they would
have been had each of the representations and warranties of Buyer Indemnifying
Parties been true and correct and had each of the covenants of Buyer
Indemnifying Parties been performed in full.
The amount of any indemnifiable damages otherwise payable to any
Seller Indemnified Party hereunder shall be reduced if the indemnifiable
damages incurred by Seller Indemnified Party will provide such Party with
income tax deductions or credits. The amount of the reduction shall be the
amount of the actual cash tax savings realized by Seller Indemnified Party as a
result of such deductions or credits discounted to its present value as of the
date of the payment of the indemnifiable damages from the date such
indemnifiable damages were incurred by Seller Indemnified Party at the rate of
interest charged on such date by the Internal Revenue Service on underpayment
of taxes.
The foregoing obligation of Buyer Indemnifying Parties to indemnify
Seller Indemnified Parties shall be subject to each of the following principles
or qualifications:
12.2.1. Each of the representations and warranties made by
Buyer and InfoCure in Article V. of this Agreement shall survive for a period
of three (3) years after the Closing Date, and thereafter all such
representations and warranties shall be extinguished.
No claim for the recovery of indemnifiable damages pursuant to clause
(i) of Section 12.2. may be asserted by Seller Indemnified Parties against
Buyer Indemnifying Parties or its successors in interest after such
representations and warranties shall be thus extinguished; provided, however,
that claims first asserted in writing within the applicable period shall not
thereafter be barred.
12.3. Matters Involving Third Parties. If any third party shall notify
Buyer or Seller (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 12. then
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the Indemnified Party shall notify each Indemnifying Party thereof promptly;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
liability or obligation hereunder unless (and then solely to the extent that)
the Indemnifying Party thereby is damaged.
If any Indemnifying Party notifies the Indemnified Party within
fifteen (15) days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, then:
A. The Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice satisfactory to the Indemnified
Party;
B. The Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party concludes that the counsel the Indemnifying Party has
selected has a conflict of interest);
C. The Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably); and
D. The Indemnifying Party will not consent to the entry of
any judgment with respect to the matter, or enter into any settlement which
does not include a provision whereby the plaintiff or claimant in the matter
releases the Indemnified Party from all liability with respect thereto, without
the written consent of the Indemnified Party (not to be withheld or delayed
unreasonably).
If no Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it may deem appropriate.
12.4. Exclusivity. Following the Closing, in the absence of actual
fraud on the part of Seller (in which case Buyer may avail itself of all
statutory and common law remedies for such fraud) the right to receive
indemnification pursuant to this Section 12. shall be the sole and exclusive
remedy of Buyer, Seller, InfoCure and HALIS or their respective officers,
directors, employees, agents, affiliates, successors and assigns for monetary
damages of any kind with respect to any breach of this Agreement or conduct
otherwise relating to the negotiation and completion of the transactions
contemplated herein.
13. MISCELLANEOUS.
13.1. Brokers' Commission. Buyer will indemnify and hold harmless
Seller and Shareholder from the commission, fee or claim of any person, firm or
corporation employed or retained or claiming to be employed or retained by
Buyer to bring about, or to represent it in, the transactions contemplated
hereby. Seller and Shareholder will indemnify and hold harmless
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Buyer from the commission, fee or claim of any person, firm or corporation
employed or retained or claiming to be employed or retained by Seller or
Shareholder to bring about, or to represent them in the transactions
contemplated hereby.
13.2. Amendment and Modification. The parties hereto may amend, modify
and supplement this Agreement in such manner as may be agreed upon by them in
writing.
13.3. Termination.
13.3.1. Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned:
13.3.1.1. By the mutual written consent of all of the
Parties hereto at any time prior to the Closing Date;
13.3.1.2. Unless terminated pursuant to Section
13.3.1.1. by any Party in the event of the breach by any other Party of any
provision of this Agreement, which breach is not remedied by the breaching Party
within ten (10) days after receipt or notice thereof from the terminating party;
or
13.3.1.3. Unless terminated pursuant to Section
13.3.1.1., by any Party hereto if the Closing has not taken place by January 15,
1998.
If this Agreement is terminated pursuant to clause
13.3.1.1. of this Section 13.3.1., no Party shall have any liability for any
costs, expenses, loss of anticipated profit or any further obligation for breach
of warranty or otherwise to any other Party to this Agreement. Any termination
of this Agreement pursuant to clauses 13.3.1.2. or 13.3.1.3. of this Section
13.3.1. shall be without prejudice to any other rights or remedies of the
respective parties.
13.3.2. The risk of any loss to the properties to be sold by
Seller hereunder and all liability with respect to injury and damage occurring
in connection therewith shall be the sole responsibility of Seller until the
completion of the Closing. If, in the opinion of Buyer, any material part of
said properties shall be damaged by fire or other casualty prior to the
completion of the Closing hereunder, then Buyer shall have the right and
option:
13.3.2.1. To terminate this Agreement, without
liability to any party thereto; or
13.3.2.2. To proceed with the Closing hereunder, in
which event such casualty shall not constitute a breach by Seller of any
representation, warranty or covenant in this Agreement, and Buyer shall be
entitled to receive and retain the insurance proceeds arising from such
casualty.
13.4. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, assigns,
heirs and legal representatives. This Agreement may not be assigned by Buyer
and InfoCure, jointly and severally, except to another
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corporation controlled by or under common control with Buyer. In any such event,
Buyer and InfoCure, jointly and severally, shall remain directly liable for all
undertakings and obligations hereunder. This Agreement, including any rights to
receive payments hereunder, may not be assigned by Seller except to its
shareholders upon a dissolution or liquidation of Seller.
13.5. Entire Agreement. This Agreement and the exhibits and schedules
attached hereto contain the entire agreement of the parties hereto with respect
to the purchase of the Purchased Assets and the other transactions contemplated
herein, and supersede all prior understandings and agreements of the parties
with respect to the subject matter hereof. Any reference herein to this
Agreement shall be deemed to include the schedules and exhibits attached
hereto.
13.6. Headings. The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
13.7. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which together will constitute one and the same instrument.
13.8. Notices. Any notice, request, information or other document to
be given hereunder to any of the Parties by any other Party shall be in writing
and delivered personally or sent by certified or registered mail, postage
prepaid, as follows:
If to Seller or Shareholder, addressed to:
HALIS, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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If to Buyer, addressed to:
InfoCure Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
With copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Any party may change the address to which notices hereunder are to be
sent to it by giving written notice of such change of address in the manner
herein provided for giving notice. Any notice delivered personally shall be
deemed to have been given on the date it is so delivered, and any notice
delivered by registered or certified mail shall be deemed to have been given on
the date it is received or refused, if delivery is refused.
13.9. Schedules. To the extent any disclosure in a schedule puts
Buyer on actual notice of the facts reflected therein, such disclosure shall be
deemed to be a disclosure in all other schedules under this Agreement as to
such facts.
13.10. Limitation of the Representations, Warranties and Covenants of
Seller and Shareholder. The representations and warranties of Seller and
Shareholder as set forth in Sections 4.3., 4.4., 4.5., 4.6., 4.7., 4.8., 4.9.,
4.10., 4.11., 4.12., 4.13., 4.14., 4.15., 4.16.1., 4.19., 4.22. and 4.23. of
this Agreement, the Additional Covenants of Seller and Shareholder as set forth
in Sections 6.2., 6.3. and 6.4. of this Agreement and the Other Covenants of
Shareholder as set forth in Section 7.1. of this Agreement shall be limited to
the Orthodontic Business, to the extent not otherwise limited in said
provisions.
13.11. Governing Law/Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Georgia
applicable to contracts made and to be performed herein. The parties agree that
any claim or dispute relating to or arising out of this Agreement or the
transactions contemplated hereby shall be addressed solely by the Superior
Court of DeKalb County or United States District Court for the Northern
District of Georgia (provided said court has subject matter jurisdiction),
which shall be the exclusive venue and jurisdiction for such adjudication, and
the parties hereby agree to subject themselves to the jurisdiction and venue of
such court for all such purposes and agree to waive any objections thereto.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
BUYER:
Orthodontic Practice Management System, Inc.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. Fine
--------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. Fine, President
INFOCURE:
InfoCure Corporation
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. Fine
--------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. Fine, President
SELLER:
HALIS Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President and
Chief Financial Officer
SHAREHOLDER:
HALIS, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President
and Chief Financial Officer
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EXHIBITS
Exhibit A Estimate of Net Worth Adjustment and
EBITDA Adjustment
Exhibit B Certificates of Seller and Shareholder
Exhibit C Certificates of Buyer and InfoCure
Exhibit D ▇▇▇▇ of Sale
Exhibit E Lease Assignment
Exhibit F Wire Transfer Instructions
Exhibit G Assignment and Assumption Agreement
Exhibit H Opinion of Seller's Counsel
Exhibit I Restrictive Covenant Agreement
Exhibit J Employment Agreement - ▇▇▇▇ ▇▇▇▇
Exhibit K Employment Agreement - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit L Covenants Agreements
Exhibit M HALIS, Inc. Salary Commitment Agreement
Exhibit N Opinion of Buyer's Counsel
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SCHEDULES
Schedule 1.1.4 Agreements not to be Assigned or Transferred
Schedule 1.1.11 Fixed Assets
Schedule 1.2.4 Excluded Assets
Schedule 2.2 December Liabilities
Schedule 2.4 Allocation of Purchase Price
Schedule 4.2 Subsidiaries
Schedule 4.4 Liabilities of Seller
Schedule 4.5 Tax Matters
Schedule 4.6 Real Estate
Schedule 4.7 Liens and Encumbrances
Schedule 4.9.1 Registration; License Agreements
Schedule 4.9.2 Software and Intangibles
Schedule 4.9.4 Key Software Development Employees
Schedule 4.9.6 Interest in Software or Intangibles
Schedule 4.9.7 Standard Form Contracts
Schedule 4.11 Documents of and Information with Respect to
Seller
Schedule 4.11.2 Insurance Matters
Schedule 4.11.3 Customer List
Schedule 4.12 Litigation
Schedule 4.16 Employment and Labor Matters
Schedule 4.17.1 Benefit Plans
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Schedule 4.19 Consents and Approvals
Schedule 4.20 Related Party Transactions
Schedule 4.22 Customer Prepayments
Schedule 9.8 Persons Signing Covenants Agreements
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