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EXHIBIT (2)
ASSET PURCHASE AGREEMENT
AND
AMENDMENT ▇▇. ▇
▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AGREEMENT
by and among
THE ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ COMPANY
and
INFOCURE CORPORATION
and
THOROUGHBRED ACQUISITION, INC.
dated as of September 28, 1998
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LIST OF SCHEDULES
-----------------
A Definitions
B Acquired Assets
C Excluded Assets
D Assumed Liabilities
E Excluded Liabilities
F Disclosure Schedule
G Financial Statements
H Permitted Encumbrances
I Addresses
J Intentionally Omitted
K Accounts Payable Aging as of August 31, 1998
L Accounts Receivable Aging as of August 31, 1998
M Shared Real Property
N Shared Services
O Certain Shared Intellectual Property
P Acquired Business Employees as of August 27, 1998
Q Parent Financial Statements
R Engagement Letter
S Certain Customers
T Certain Suppliers
U Certain Seller Distributed Software, Third Party
Distributed Software and Third Party Internal Use Software
V Certain Agreements
W Certain Millennium Compliance Correspondence
X Certain Personal Property
Y Acquired Business Owned Real Property and Acquired
Business Leased Real Property
Z Seller Plans and Seller Other Benefit Obligations as of
August 31, 1998
AA Certain Contracts
BB Intentionally Omitted
CC Certain Matters Regarding Seller Distributed Software and
Third Party Distributed Software
DD Medicare/HCFA Claims Mandate
EE Parent Disclosure Schedule
LIST OF EXHIBITS
----------------
1 Adjusted 6/30/98 Balance Sheet; Adjusted 6/30/98 Working
Capital Statement
2 Form of Assignment Agreement
3 Opinion of Seller's Counsel
4 Opinion of Purchaser's and Parent's Counsel
5 Form of Allocation Agreement
6 Form of Parent Note
7 Form of ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement
8 Form of Lessor Documents
9 Form of Seller's Consent
10 Intentionally Omitted
11 Form of Subordination Agreement
12 Form of Parent Guaranty
13 Form of Transition Agreement
14 Form of Closing Escrow Agreement
15 Form of Commitment Letter
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ASSET PURCHASE AGREEMENT
------------------------
The Parties agree as follows:
RECITALS:
---------
Capitalized terms used in this Agreement have the meanings set forth in
the attached Schedule A.
Purchaser and Parent desire that Purchaser purchase from Seller, and
Seller desires to sell to Purchaser, substantially all of the assets used by
Seller exclusively in the Acquired Business, and Purchaser agrees to assume
certain identified liabilities of Seller in connection with the Acquired
Business, in each case on the terms and subject to the conditions set forth in
this Agreement.
As an inducement to Seller to enter into this Agreement, Parent has
agreed to guarantee all obligations of Purchaser under this Agreement, whether
currently existing or hereafter arising, pursuant to the Parent Guaranty.
1. ACQUIRED ASSETS. Subject to the terms and conditions of this Agreement,
Purchaser shall purchase from Seller, and Seller shall sell, assign and
deliver to Purchaser, in each case effective as of the Effective Time, all
right, title and interest in, to and under the Acquired Assets, free and
clear of any Lien except the Permitted Encumbrances.
2. EXCLUDED ASSETS. Purchaser will not acquire any of Seller's right, title or
interest in, to or under any of the Excluded Assets.
3. ASSUMED LIABILITIES. Subject to the terms and conditions of this Agreement,
Purchaser shall assume the Assumed Liabilities effective as of the
Effective Time, and Purchaser shall thereafter perform and discharge the
Assumed Liabilities.
4. EXCLUDED LIABILITIES. Purchaser will not assume or become liable for all or
any portion of any of the Excluded Liabilities.
5. CONSIDERATION AND DELIVERY. The consideration for the Acquired Assets will
be (a) assumption of the Assumed Liabilities by Purchaser, plus (b) payment
by Purchaser of the Purchase Price.
5.1 PURCHASE PRICE.
(a) At Closing, Purchaser will pay the Purchase Price to Seller by
payment of the Cash Payment by wire transfer of immediately
available funds.
(b) The Purchase Price will be subject to adjustment as described
on this Section 5.1(b).
(i) Within ninety (90) days after the Effective Time, Seller
will deliver to Purchaser the Closing Working Capital
Statement. Purchaser will have forty-five (45) days from
receipt of the Closing Working Capital Statement to
object to the Closing Working Capital Statement by
written notice to Seller. If Seller does not receive
notice of an objection within such time, the Closing
Working Capital Statement prepared by Seller will be
final and binding on the parties. If Purchaser timely
notifies Seller of an objection, the Parties will have
thirty (30) days from the date of Purchaser's notice to
resolve the objection. If the Parties do not resolve the
objection within such time, either Seller or Purchaser
may submit the dispute to the Independent Auditors for
resolution, and such resolution will be final and
binding on the Parties. The fees and expenses of the
Independent Auditors will
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be borne by Seller and Purchaser in proportion to the
respective differences between their positions submitted
to the Independent Auditors and the final determination
of the Independent Auditors.
(ii) The Purchase Price will be reduced if the Net Working
Capital on the Closing Working Capital Statement is less
than the Net Working Capital on the Adjusted 6/30/98
Working Capital Statement (as shown in Exhibit 1). If
the deficiency is less than the Collar Amount, there
shall be no reduction. If the deficiency is greater than
the Collar Amount, the actual amount of the reduction
shall be the amount of the deficiency less the Collar
Amount.
(iii) The Purchase Price will be increased if the Net Working
Capital on the Closing Working Capital Statement is
greater than the Net Working Capital on the Adjusted
6/30/98 Working Capital Statement (as shown in Exhibit
1). If the excess is less than the Collar Amount, there
shall be no increase. If the excess is greater than the
Collar Amount, the actual amount of the increase shall
be the amount of the excess less the Collar Amount.
(iv) If there is a Purchase Price Adjustment, within ten (10)
days after final determination of the adjustment
(whether by Purchaser's failure to object, agreement of
the Parties or determination by the Independent
Auditors), Seller or Purchaser, as applicable, will pay
the applicable amount by wire transfer of immediately
available funds to the account(s) designated by Seller
or Purchaser, as applicable.
5.2 SALES OR TRANSFER TAXES. Purchaser will pay all sales or transfer
taxes, recording fees and similar fees, charges or assessments arising
out of the transfer of the Acquired Assets pursuant to this Agreement
(Seller shall remain liable for any income or franchise taxes payable
by Seller as a result of such transfer). Seller will timely file all
returns for Taxes described in this Section 5.2.
5.3 ALLOCATION. Within a reasonable time after the Closing Working Capital
Statement has been finally determined pursuant to Section 5.1(b), the
Parties shall execute the Allocation Agreement (including appropriate
adjustments to Exhibit A thereto; the Parties acknowledge that the form
of Exhibit A to the Allocation Agreement attached at Closing is based
on the Adjusted 6/30/98 Balance Sheet). The obligations of the Parties
under that agreement are incorporated in this Agreement as if written
in this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF SELLER Except as set forth in the
Disclosure Schedule, Seller represents and warrants to Purchaser and Parent
as follows:
6.1 CORPORATE ACTION; POWER AND AUTHORITY. Seller has taken all action
required by its Articles of Incorporation and Code of Regulations or
otherwise to authorize the execution and consummation of the Seller
Agreements. When executed by Seller, the Seller Agreements will
constitute the valid and legally binding obligations of Seller,
enforceable in accordance with their terms, except that enforceability
may be limited by applicable equitable principles or bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors
rights generally. Seller has full power and authority to execute and
consummate the Seller Agreements. ▇▇▇▇▇▇▇▇ Holdings has taken all
action required by its Articles of Incorporation and Code of
Regulations or otherwise to authorize the execution and consummation of
the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement. When executed by ▇▇▇▇▇▇▇▇
Holdings, the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement will constitute the
valid and legally binding obligation of ▇▇▇▇▇▇▇▇ Holdings, enforceable
in accordance with its terms, except that enforceability may be limited
by applicable equitable principles or bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors rights generally.
▇▇▇▇▇▇▇▇ Holdings has full power and authority to execute and
consummate the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement.
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6.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. The execution and
consummation by Seller of the Seller Agreements will not: (a) violate
the terms of Seller's Articles of Incorporation or Code of Regulations
or any Order, instrument, agreement, mortgage, commitment or
understanding, written or oral, to which Seller is a party, or by which
Seller or any of the Acquired Assets is bound; (b) conflict with,
result in a breach of, constitute (with or without notice or lapse of
time or both) a default under or give any person any right to
terminate, modify, accelerate or otherwise change the existing
obligations of Seller under any such Order, instrument, agreement,
mortgage, commitment or understanding; (c) result in the creation or
imposition of any Lien upon Seller or any of the Acquired Assets; (d)
violate any Applicable Law; (e) give any Governmental Body or other
person the right to challenge any of the transactions contemplated by
the Seller Agreements under any Applicable Law; or (f) violate,
contravene or conflict with or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify any Governmental
Authorization, where the consequences of any of the events in clauses
(a) - (f), inclusive are likely to have a Seller Material Adverse
Effect. The execution and consummation by ▇▇▇▇▇▇▇▇ Holdings of the
▇▇▇▇▇▇▇▇ Holdings Transfer Agreement will not: (a) violate the terms of
▇▇▇▇▇▇▇▇ Holdings' Articles of Incorporation or Code of Regulations or
any Order, instrument, agreement, mortgage, commitment or
understanding, written or oral, to which ▇▇▇▇▇▇▇▇ Holdings is a party,
or by which ▇▇▇▇▇▇▇▇ Holdings or any of the assets acquired under the
▇▇▇▇▇▇▇▇ Holdings Transfer Agreement is bound; (b) conflict with,
result in a breach of, constitute (with or without notice or lapse of
time or both) a default under or give any person any right to
terminate, modify, accelerate or otherwise change the existing
obligations of ▇▇▇▇▇▇▇▇ Holdings under any such Order, instrument,
agreement, mortgage, commitment or understanding; (c) result in the
creation or imposition of any Lien upon ▇▇▇▇▇▇▇▇ Holdings or any of the
assets acquired under the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement; (d)
violate any Applicable Law; (e) give any Governmental Body or other
person the right to challenge any of the transactions contemplated by
the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement under any Applicable Law; or
(f) violate, contravene or conflict with or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or modify any
Governmental Authorization, where the consequences of any of the events
in clauses (a) - (f), inclusive are likely to have a ▇▇▇▇▇▇▇▇ Holdings
Material Adverse Effect.
6.3 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Ohio. Seller has full power and authority to carry on the Acquired
Business as it is now being conducted and to own and lease the Acquired
Assets. Seller is qualified to transact business as a foreign
corporation in all jurisdictions where the conduct of the Acquired
Business or ownership of the Acquired Assets require Seller to be so
qualified and where the failure to be so qualified could have a Seller
Material Adverse Effect. ▇▇▇▇▇▇▇▇ Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio. ▇▇▇▇▇▇▇▇ Holdings has full power and authority to carry
on its business as it is now being conducted and to own and lease the
assets acquired under the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement.
▇▇▇▇▇▇▇▇ Holdings is qualified to transact business as a foreign
corporation in all jurisdictions where the conduct of its business or
ownership of the assets acquired under the ▇▇▇▇▇▇▇▇ Holdings Transfer
Agreement require ▇▇▇▇▇▇▇▇ Holdings to be so qualified and where the
failure to be so qualified could have a ▇▇▇▇▇▇▇▇ Holdings Material
Adverse Effect.
6.4 FINANCIAL STATEMENTS. Attached as Schedule G are copies of the
Financial Statements. The Financial Statements: (i) were prepared in
accordance with GAAP, consistently applied; and (ii) present, in all
material respects, the financial condition of the Acquired Business as
of the respective dates thereof and the results of operations of the
Acquired Business for the applicable periods; provided, however, that
the Most Recent Financial Statements are subject to normal year-end
adjustments and each of the Financial Statements are without footnotes
and other presentation items.
6.5 RECEIVABLES AND PAYABLES.
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(a) Attached as Schedule L to this Agreement is an aging, as of
August 31, 1998, of all receivables generated exclusively by
the Acquired Business that are trade accounts receivable.
Schedule L is true and correct in all material respects.
Schedule L identifies the applicable account debtors.
(b) Solely for the purposes of this Section 6.5(b), a "material
receivable" means a trade account receivable generated
exclusively by the Acquired Business with an aggregate
outstanding balance of at least $25,000 as of August 31, 1998.
To Seller's Knowledge, as of the date of this Agreement: (i)
each of the material receivables has been generated in the
Ordinary Course of Business and represents a valid debt due
and owing to Seller; (ii) no account debtor with respect to
any of the material receivables has raised an objection in
writing or made a claim in writing that the account debtor is
not obligated to pay or is entitled to a credit or adjustment
with respect to all of the applicable material receivable or a
portion thereof equal to or greater than $5,000, (iii) no
account debtor with respect to any of the material receivables
has asserted in writing any actual or purported right of
set-off or otherwise threatened in writing to withhold all of
the applicable material receivable or a portion thereof equal
to or greater than $5,000, and (iv) no account debtor with
respect to any of the material receivables is currently
involved in any bankruptcy or similar proceedings.
(c) Attached as Schedule K to this Agreement is an aging, as of
August 31, 1998, of all accounts payable generated exclusively
by the Acquired Business that are trade accounts payable.
Schedule K is true and correct in all material respects.
Schedule K identifies the applicable payees.
(d) Solely for the purposes of this Section 6.5(d), a "material
payable" means a trade account payable generated exclusively
by the Acquired Business with an aggregate outstanding balance
of at least $10,000 as of August 31, 1998. To Seller's
Knowledge, as of the date of this Agreement, each of the
material payables has been generated in the Ordinary Course of
Business and represents a valid debt due and owing to the
identified payee.
6.6 ABSENCE OF CERTAIN CHANGES. Since June 30, 1998 and except for
execution of the Seller Agreements and consummation of the transactions
contemplated by the Seller Agreements, (a) no event has occurred which
has resulted in a Seller Material Adverse Effect, and (b) Seller has
operated the Acquired Business in the Ordinary Course of Business.
6.7 PERSONAL PROPERTY.
(a) Schedule X sets forth a complete and correct list as of May
31, 1998 of all items of inventory, furniture, fixtures,
machinery, equipment, vehicles and other personal property
owned by Seller or leased by Seller pursuant to a capitalized
lease and in either case used exclusively in the Acquired
Business and with a net book value as of June 30, 1998 of at
least $10,000.
(b) The inventory included in the Acquired Assets has been
acquired only in bona fide transactions entered into in the
Ordinary Course of Business.
6.8 REAL PROPERTY.
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(a) Schedule Y sets forth a complete and correct list as of August
31, 1998 of all Acquired Business Owned Real Property and all
Acquired Business Leased Real Property. Schedule M sets forth
a complete and correct list as of August 31, 1998 of all
Shared Real Property. Except for the Acquired Business Owned
Real Property, the Acquired Business Leased Real Property and
the Shared Real Property, Seller does not use any other owned
or leased real property in any material respect in the conduct
of the Acquired Business in the Ordinary Course of Business
(the Parties agree and acknowledge that for purposes of this
Section
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6.8(a), the Shared Services shall not be deemed to be material
to the conduct of the Acquired Business).
(b) With respect to the Acquired Business Leased Real Property:
(i) Seller has delivered to Purchaser or Parent correct and
complete copies of the applicable leases; (ii) there are no
Proceedings pending or, to Seller's Knowledge, threatened
against Seller that, if resolved adversely to Seller, are
likely to result in a material disruption to the operation of
the Acquired Business in the Ordinary Course of Business; and
(iii) to Seller's Knowledge, there are no Proceedings pending
or threatened that, if resolved adversely to the applicable
lessor, are likely to result in a material disruption to the
operation of the Acquired Business in the Ordinary Course of
Business.
6.9 LITIGATION; COMPLIANCE WITH LAWS, ETC. There is no Proceeding pending,
or, to Seller's Knowledge, threatened, against (a) Seller with respect
to the Acquired Business, the ownership or operation of the Acquired
Assets, or the transactions contemplated by this Agreement, or (b)
▇▇▇▇▇▇▇▇ Holdings with respect to its business, the assets acquired
under the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement, or the transactions
contemplated by the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement. There is no
Order outstanding against (a) Seller with respect to the Acquired
Business or the ownership or operation of the Acquired Assets, or (b)
▇▇▇▇▇▇▇▇ Holdings with respect to its business or the assets acquired
under the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement. Seller has not received
any notice of any actual or alleged violation of any Applicable Law.
Seller has complied at all times with all Applicable Laws with respect
to the Acquired Business or the ownership or operation of the Acquired
Assets where the consequences of failure to comply in any instance
would likely have a Seller Material Adverse Effect. Seller has not
received any notice of any actual or alleged violation of any
Applicable Law. ▇▇▇▇▇▇▇▇ Holdings has complied at all times with all
applicable laws, rules, regulations or orders with respect to its
business or the ownership or operation of the assets acquired under the
▇▇▇▇▇▇▇▇ Holdings Transfer Agreement where the consequences of failure
to comply in any instance would likely have a Seller Material Adverse
Effect.
6.10 LABOR RELATIONS.
(a) Except for payments of wages, commissions, benefits and
employment-related Taxes (including withholding) in the
Ordinary Course of Business, Seller is not liable for any
arrears of wages, commissions or benefits or
employment-related Taxes (including withholding) or any
penalties for failure to timely pay any of the foregoing with
respect to any current or former employees of the Acquired
Business.
(b) Seller is not a party to and Seller does not have any
obligations under any valid and binding agreement with any
person or party regarding the salary, commissions, rates of
pay, benefits, or working conditions of any Acquired Business
Employees, including any collective bargaining agreement.
(c) Seller does not have any policy regarding, and Seller is not a
party to any agreement regarding, the payment of any severance
or similar benefit upon termination of employment of the
Acquired Business Employees, and no Acquired Business
Employees will be entitled to any severance or similar benefit
upon termination of employment as contemplated by this
Agreement.
6.11 GOVERNMENTAL AUTHORIZATIONS. Seller has obtained all Governmental
Authorizations from all applicable Governmental Bodies required in
connection with the conduct of the Acquired Business or the ownership
or operation of any of the Acquired Assets where the consequences of
failure to have any such Governmental Authorization is likely to have
a Seller Material Adverse Effect. Seller has not received any notice
of any actual or alleged violation of or any actual or possible
revocation, modification, suspension or termination of any such
Governmental Authorization. RH has obtained all Governmental
Authorizations from all applicable Governmental Bodies required in
connection with
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the conduct of RH's business or the ownership or operation of any of
the assets acquired under the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement
where the consequences of failure to have any such Governmental
Authorization is likely to have a RH Material Adverse Effect. RH has
not received any notice of any actual or alleged violation of or any
actual or possible revocation, modification, suspension or termination
of any such Governmental Authorization.
6.12 CONTRACTS.
(a) Schedule AA contains a true and correct list as of August 31,
1998 of all material Contracts as of the date of this
Agreement (solely for purposes of this Section 6.12, a
Contract shall be "material" if the Contract is not cancelable
on 30 days or less notice without payment of a penalty in
excess of $1,000 and includes the committed future expenditure
by Seller in any 12-month period of at least $10,000; provided
that under no circumstances shall a purchase order entered
into in the Ordinary Course of Business or a Contract with a
customer to provide products and/or services be deemed a
"material" Contract). Correct and complete copies, in all
material respects, of the material Contracts have been
provided by Seller to Purchaser or Parent.
(b) Seller is not in default under any Contract where the
consequences of the default would likely have a Seller
Material Adverse Effect.
(c) To Seller's Knowledge, no Acquired Business Employee or any
Affiliate of any Acquired Business Employee owns any material
equity interest in any person that has or had within the last
three (3) years prior to the date of this Agreement any
material business dealings with the Acquired Business.
(d) To Seller's Knowledge, no event has occurred which, with the
giving of notice or the passage of time, or both, would
constitute a default by Seller or the other party under a
material Contract (assuming the discharge by Purchaser after
the Effective Time of all executory obligations under the
material Contracts).
(e) To Seller's Knowledge, as of the date of this Agreement,
Seller has not received any written notice that the other
party to any material Contract intends to cancel, terminate or
materially modify the applicable Contract.
(f) To Seller's Knowledge, Seller has not received, as of the date
of this Agreement, any written notice from a customer or
supplier of the Acquired Business threatening to commence
litigation which, if decided adversely to Seller, would result
in damages payable by Seller in an amount equal to or greater
than $25,000.
(g) Attached as Schedule S is a list of all customers of the
Acquired Business who paid at least $25,000 in the aggregate
to the Acquired Business during the period from October 1,
1997 through August 31, 1998. Schedule S is true and correct
in all material respects. Attached as Schedule T is a list of
all persons to whom the Acquired Business paid at least
$25,000 in the aggregate in connection with the Acquired
Business during the period from October 1, 1997 through August
31, 1998 (except employees). Schedule T is true and correct in
all material respects.
(h) To Seller's Knowledge, all of the Contracts with customers of
the Acquired Business are assignable to Purchaser as
contemplated by this Agreement. Purchaser and Parent agree and
acknowledge that (i) Seller shall not be deemed to have
breached the representation in the preceding sentence unless
the consequences of the breach, in the aggregate, are likely
to have a Seller Material Adverse Effect, and (ii) Seller has
not, and Seller is not obligated to, perform any research or
analysis of the assignability of the Contracts describe in the
first sentence of this Section 6.12(h).
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6.13 TITLE TO PROPERTIES; ENCUMBRANCES. Seller has good and assignable
title to all of the Acquired Assets, free and clear of any Liens
except the Permitted Encumbrances. Except for those systems and
related equipment located at customer locations, the Acquired Assets
are located only at the Acquired Business Owned Real Property, the
Acquired Business Leased Real Property and the Shared Real Property.
▇▇▇▇▇▇▇▇ Holdings has good and assignable title to all of the RH
Intellectual Property Intangibles, free and clear of any Liens, except
the RH Permitted Encumbrances.
6.14 INTELLECTUAL PROPERTY INTANGIBLES.
(a) Except for the applicable Shared Intellectual Property and the
RH Intellectual Property Intangibles, the Intellectual
Property Intangibles are all fictional business names, trading
names, registered and unregistered trademarks, service marks,
patents, patent applications, inventions and discoveries that
may be patentable, copyrights in both published works and
unpublished works, rights in mask works, know-how, trade
secrets, confidential information, customer lists, software,
data, process technology, plans and drawings used by Seller in
the operation of the Acquired Business. The RH Intellectual
Property Intangibles are all fictional business names, trading
names, registered and unregistered trademarks, service marks,
patents, patent applications, inventions and discoveries that
may be patentable, copyrights in both published works and
unpublished works, rights in mask works, know-how, trade
secrets, confidential information, customer lists, software,
data, process technology, plans and drawings owned by ▇▇▇▇▇▇▇▇
Holdings that are used by Seller exclusively in the operation
of the Acquired Business.
(b) Seller has not taken any action (or failed to take any action)
in connection with the operation of the Acquired Business that
constitutes infringement or misappropriation of the
Proprietary Rights of any other Person where the consequences
of any such infringement or misappropriation are likely to
have a Seller Material Adverse Effect. ▇▇▇▇▇▇▇▇ Holdings has
not taken any action (or failed to take any action) in
connection with the operation of its business that constitutes
infringement or misappropriation of the Proprietary Rights of
any other Person where the consequences of any such
infringement or misappropriation are likely to have a ▇▇▇▇▇▇▇▇
Holdings Material Adverse Effect. To Seller's Knowledge,
neither Seller nor ▇▇▇▇▇▇▇▇ Holdings has received any written
notice asserting any claim or otherwise alleging that Seller
or ▇▇▇▇▇▇▇▇ Holdings has infringed or misappropriated the
Proprietary Rights of any other Person where the consequences
of any such infringement or misappropriation are likely to
have a Seller Material Adverse Effect or a ▇▇▇▇▇▇▇▇ Holdings
Material Adverse Effect.
(c) Schedule U contains a complete list of (i) the Seller
Distributed Software currently being distributed by Seller,
and (ii) a complete list of all the Third Party Distributed
Software and the Third Party Internal Use Software which (A)
is material to the current operation of the Acquired Business
in the Ordinary Course of Business, and (B) is not either
implied by the sale of a product or the subject of a
fully-paid-up license of a commercially available software
program or database.
(d) Schedule V identifies: (i) all material agreements pursuant to
which Seller or RH has granted any person a license to use any
of the Intellectual Property Intangibles or the RH
Intellectual Property Intangibles except for customer
Contracts, and (ii) all source code escrow agreements
regarding the Intellectual Property Intangibles or the RH
Intellectual Property Intangibles.
(e) Schedule W contains copies of all letters or other written
communications provided to multiple users of the same product
distributed by the Acquired Business with respect to whether
such product is "millennium compliant", "Y2K qualified" or
"Y2K compliant".
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(f) Schedules CC and DD are true and correct in all material
respects.
6.15 EMPLOYEE BENEFIT PLANS. Schedule Z contains a complete and correct
list, in all material respects, of all Seller Plans and Seller Other
Benefit Obligations as of August 31, 1998.
6.16 CONSENTS AND APPROVALS. No Governmental Authorization, filing with
any Governmental Body or waiver, consent or approval from or filing
with any other person is required for Seller to consummate the Seller
Agreements without creating a default (or event which with notice,
lapse of time or both would constitute a default) or liability. No
Governmental Authorization, filing with any Governmental Body or
waiver, consent or approval from or filing with any other person is
required for RH to consummate the ▇▇▇▇▇▇▇▇ Holdings Transfer
Agreement without creating a default (or event which with notice,
lapse of time or both would constitute a default) or liability.
6.17 BROKERS. Except for BT Alex. ▇▇▇▇▇ Incorporated, no broker or finder
has acted for Seller or RH in connection with this Agreement.
6.18 SHARED ASSETS AND SHARED SERVICES. Except for the Shared Assets,
there are no Excluded Assets that are used by Seller in the operation
of the Acquired Business in the Ordinary Course of Business and that
are, in the aggregate, material to the operation of the Acquired
Business in the Ordinary Course of Business. Except for the Shared
Services, there are no services that are routinely provided by
Seller's corporate or other divisions to the Acquired Business that
are material to the operation of the Acquired Business in the
Ordinary Course of Business.
6.19 INVESTMENT REPRESENTATIONS. ▇▇▇▇▇▇▇▇ Holdings is the sole party in
interest as to the Parent Note and any Converted Securities and is
acquiring the Parent Note and any Converted Securities for it's own
account, for investment only and not with a view toward the resale or
distribution thereof. Seller and ▇▇▇▇▇▇▇▇ Holdings acknowledge that
neither the Parent Note nor the Converted Securities are registered
under the Securities Act or the securities laws of any state or other
jurisdiction. ▇▇▇▇▇▇▇▇ Holdings is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act. Seller
agrees that ▇▇▇▇▇▇▇▇ Holdings will not attempt to pledge, transfer,
convey or otherwise dispose of any of the Parent Note or the
Converted Securities or any interest therein except in a transaction
that is the subject of either (a) an effective registration statement
under the Securities Act and any applicable state securities laws or
(b) an opinion of counsel, which counsel and which opinion of counsel
shall be reasonably satisfactory to Parent, to the effect that such
registration is not required.
7. SELLER'S REPRESENTATION AND WARRANTY DISCLAIMERS; PURCHASER'S AND PARENT'S
ACKNOWLEDGEMENT.
7.1 GENERAL DISCLAIMER. THE EXPRESS WARRANTIES AND REPRESENTATIONS SET
FORTH IN SECTION 6 (AS SUCH REPRESENTATIONS AND WARRANTIES HAVE BEEN
QUALIFIED BY THE DISCLOSURE SCHEDULE) ARE IN LIEU OF ALL OTHER
WARRANTIES, CONDITIONS OR REPRESENTATIONS OF SELLER (EXPRESS OR
IMPLIED, ORAL OR WRITTEN), WITH RESPECT TO THE ACQUIRED ASSETS, THE
ASSUMED LIABILITIES OR THE ACQUIRED BUSINESS, INCLUDING WITHOUT
LIMITATION ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF
CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING.
7.2 SPECIFIC DISCLAIMER. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE
SELLER AGREEMENTS, SELLER SHALL NOT BE DEEMED TO HAVE MADE TO PURCHASER
OR PARENT ANY REPRESENTATION OR WARRANTY OTHER THAN IS EXPRESSLY MADE
BY SELLER IN SECTION 6 OF THIS AGREEMENT (AS SUCH REPRESENTATIONS AND
WARRANTIES HAVE BEEN QUALIFIED BY THE DISCLOSURE SCHEDULE). WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, AND NOTWITHSTANDING ANY
OTHERWISE
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EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN SECTION 6 OF
THIS AGREEMENT (AS SUCH REPRESENTATIONS AND WARRANTIES HAVE BEEN
QUALIFIED BY THE DISCLOSURE SCHEDULE) OR OTHERWISE IN THE SELLER
AGREEMENTS, SELLER DOES NOT MAKE AND HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY TO PURCHASER OR PARENT WITH RESPECT TO:
(a) ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED OR
MADE AVAILABLE TO PURCHASER OR PARENT REGARDING FUTURE
REVENUES, EXPENSES OR EXPENDITURES OR RESULTS OF FUTURE
OPERATIONS OF THE ACQUIRED BUSINESS;
(b) ANY OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE TO PURCHASER
OR PARENT OR THEIR COUNSEL, ADVISORS OR ACCOUNTANTS WITH
RESPECT TO SELLER OR THE ACQUIRED BUSINESS, EXCEPT AS
EXPRESSLY COVERED BY A REPRESENTATION IN SECTION 6 OF THIS
AGREEMENT (AS SUCH REPRESENTATIONS AND WARRANTIES HAVE BEEN
QUALIFIED BY THE DISCLOSURE SCHEDULE);
(c) ANY PROPOSED PRODUCTS OF THE ACQUIRED BUSINESS (PROVIDED THIS
SECTION 7.2(c) SHALL NOT IN ANY RESPECT LIMIT OR MODIFY THE
EXPRESS REPRESENTATIONS AND WARRANTIES IN SECTION 6.14(f));
(d) THE CONDITION OF ANY PERSONAL PROPERTY (INCLUDING ANY
INVENTORY);
(e) THE COLLECTABILITY OF ANY RECEIVABLES;
(f) THE ASSIGNABILITY OF EITHER (i) ANY CONTRACTS WITH CUSTOMERS
OF THE ACQUIRED BUSINESS (PROVIDED THAT THIS SECTION 7.2(f)
SHALL NOT IN ANY RESPECT LIMIT OR MODIFY THE EXPRESS
REPRESENTATIONS AND WARRANTIES IN SECTION 6.12(h)), OR (ii)
ANY CONTRACTS WHICH CONTAIN COVENANTS OR AGREEMENTS NOT TO
COMPETE OR COVENANTS OR AGREEMENTS NOT TO DISCLOSE
INFORMATION; OR
(g) WHETHER ANY SELLER DISTRIBUTED SOFTWARE, SELLER INTERNAL USE
SOFTWARE, THIRD PARTY DISTRIBUTED SOFTWARE, THIRD PARTY
INTERNAL USE SOFTWARE, OR ANY HARDWARE, SOFTWARE, OR DATA
OWNED, LEASED, LICENSED, DISTRIBUTED OR USED BY OR IN
CONNECTION WITH THE ACQUIRED BUSINESS: (i) IS OR WILL BE
"MILLENNIUM COMPLIANT", "YEAR 2000 COMPLIANT", OR "YEAR 2000
QUALIFIED" OR OTHERWISE WILL PROCESS, FUNCTION, ACCEPT, STORE,
DISPLAY OR OPERATE WITHOUT ERROR OR INTERRUPTION IN RESPECT OF
DATES BEFORE OR AFTER JANUARY 1, 2000 (PROVIDED THAT THIS
SECTION 7.2(g) SHALL NOT IN ANY RESPECT LIMIT OR MODIFY THE
EXPRESS REPRESENTATIONS AND WARRANTIES IN SECTION 6.14(f)); OR
(ii) OPERATES OR WILL OPERATE CONTINUOUSLY AND/OR WITHOUT
ERROR (INCLUDING WHEN INCORPORATED WITH ANY OTHER PRODUCTS
PROVIDED BY SELLER OR ANY OTHER PERSON AS PART OF AN
INTEGRATED SYSTEM).
7.3 PURCHASER'S AND PARENT'S ACKNOWLEDGEMENT. Purchaser and Parent
acknowledge that they have conducted an independent investigation of
the Acquired Business, the Acquired Assets and the Assumed Liabilities
and Purchaser and Parent are entering into this Agreement solely on the
basis of such investigation and the express representations and
warranties of Seller in Section 6 (as such representations and
warranties have been qualified by the Disclosure Schedule). Purchaser
and Parent acknowledge that (a) neither the representations and
warranties in Section 6.14(f), nor any other representations or
warranties in Section 6 which may at any time be breached if the matter
giving rise to the breach constitutes a Customer Claim, will survive
the Closing, (b) the breach of the
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representations and warranties described in the foregoing clause (a) is
not grounds for indemnification by Seller under Section 16.2, and (c)
that the sole and exclusive remedy of Purchaser and Parent with respect
to a breach of the representations and warranties described in the
foregoing clause (a) shall be under Section 10.1(c) (provided that this
Section 7.3 shall not limit Purchaser's and Parent's remedies under
Section 17).
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT. Except as set forth
in the Parent Disclosure Schedule, Purchaser and Parent jointly and
severally represent and warrant to Seller as follows:
8.1 CORPORATE ACTION. Purchaser has taken all action required by its
Articles of Incorporation and Bylaws or otherwise to authorize the
execution and consummation of the Purchaser Agreements. When executed
by Purchaser, the Purchaser Agreements will constitute the valid and
legally binding obligations of Purchaser enforceable in accordance with
their terms, except that enforceability may be limited by applicable
equitable principles or bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors rights generally. Parent has
taken all action required by its Articles of Incorporation and Bylaws
or otherwise to authorize the execution and consummation of the Parent
Agreements. When executed by Parent, the Parent Agreements will
constitute the valid and legally binding obligations of Parent
enforceable in accordance with their terms, except that enforceability
may be limited by applicable equitable principles or bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors
rights generally.
8.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. The execution and
consummation by Purchaser of the Purchaser Agreements will not (a)
violate the terms of Purchaser's Articles of Incorporation or Bylaws or
any instrument, agreement, judgment or decree to which Purchaser is a
party, or by which Purchaser or any of its properties is bound, (b) be
in conflict with, result in a breach of or constitute (with giving of
notice or lapse of time or both) a default under any such instrument,
agreement, judgment or decree, (c) result in the creation or imposition
of any Lien upon Purchaser or its properties or assets, (d) violate any
applicable federal, state, local or foreign law, regulation or order,
or (e) give any governmental authority or other person the right to
challenge any of the transactions contemplated by the Purchaser
Agreements under any applicable laws, rules, regulations, Orders,
decrees, judgments, awards, covenants, restrictions and ordinances
applicable to Purchaser, where the consequences of any of the events in
clauses (a) - (e), inclusive are likely to result in a Parent Material
Adverse Change. The execution and consummation by Parent of the Parent
Agreements will not (a) violate the terms of Parent's Articles of
Incorporation or Bylaws or any instrument, agreement, judgment or
decree to which Parent is a party, or by which Parent or any of its
properties is bound, (b) be in conflict with, result in a breach of or
constitute (with giving of notice or lapse of time or both) a default
under any such instrument, agreement, judgment or decree, (c) result in
the creation or imposition of any Lien upon Parent or its properties or
assets, (d) violate any applicable federal, state, local or foreign
law, regulation or order, or (e) give any governmental authority or
other person the right to challenge any of the transactions
contemplated by the Parent Agreements under any applicable laws, rules,
regulations, Orders, decrees, judgments, awards, covenants,
restrictions and ordinances applicable to Parent, where the
consequences of any of the events in clauses (a) - (e), inclusive are
likely to result in a Parent Material Adverse Change.
8.3 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia. Purchaser has full power and authority to execute and
consummate the Purchaser Agreements. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Parent has full power and authority to execute and
consummate the Purchaser Agreements.
8.4 FINANCING. Attached as Exhibit 15 is a true and correct copy of the
Commitment Letter (Purchaser and Parent acknowledge that their
obligation to close this Agreement is not subject to any condition
relative to the financing contemplated by the Commitment Letter or any
other financing). Purchaser and Parent have received all written
consents and approvals required of Purchaser's or Parent's
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lenders as a condition to execution or performance of the Purchaser
Agreements or the Parent Agreements (including a commitment by all
parties to the Subordination Agreement other than Seller to execute and
deliver the Subordination Agreement at Closing) and Purchaser has
delivered a correct and complete copy of all such consents and approval
to Seller.
8.5 NO BREACH BY SELLER. To Purchaser's Knowledge, as of the date of this
Agreement, Seller has not breached any of its representations,
warranties, covenants or agreements set forth in this Agreement. Seller
acknowledges that any breach of the representation in the preceding
sentence must be proved by clear and convincing evidence.
8.6 BROKERS. Except for ▇.▇.▇▇▇▇▇ Securities Corporation, no broker or
finder has acted for Purchaser or Parent in connection with this
Agreement.
8.7 PARENT FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES AND EVENTS. The
Parent Financial Statements: (i) were prepared in accordance with GAAP,
consistently applied; and (ii) present, in all material respects, the
financial condition of Parent as of the respective dates thereof and
the results of operations of Parent's business for the applicable
periods; provided, however, that interim financial statements are
subject to normal year-end adjustments and do not contain footnotes and
other presentation items. Since January 1, 1998 and except for (a)
execution of the Purchaser Agreements and the Parent Agreements and
consummation of the transactions contemplated by the Purchaser
Agreements and the Parent Agreements and (b) matters that have been
disclosed in a filing with the Securities and Exchange Commission on
Form 10-K, Form 10-Q or Form 8-K, no Parent Material Adverse Change has
occurred. Neither Purchaser nor Parent is currently in default under,
nor has an event occurred which with notice, passage of time or both
would constitute a default under, any material liability of Purchaser
or Parent. No event has occurred which, with the passage of time, would
constitute an Acceleration Event (as that term is defined in the Parent
Note). Except for those liabilities of Parent identified in the Parent
Financial Statements or otherwise disclosed in a filing with the
Securities and Exchange Commission on Form 10-K, Form 10-Q or Form 8-K,
and those liabilities incurred by Parent in the Ordinary Course of
Business since January 1, 1998, Parent does not have any material
liabilities, whether accrued, absolute, contingent or otherwise. None
of Parent's Form 10-KSB dated April 1, 1998 (including the Annual
Report to Shareholders for the year ended December 31, 1997
incorporated by reference therein), Forms 10-QSB dated May 15, 1998 and
August 14, 1998, Forms 8-K and 8-K/A dated April 8, 1998, April 24,
1998 and May 11, 1998 contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the
statements contained in any such document not misleading.
8.8 PURCHASER'S CAPITAL STRUCTURE; ABSENCE OF OTHER OBLIGATIONS. Purchaser
is a wholly owned subsidiary of Parent. Except for the Purchaser
Agreements, Purchaser is not a party to nor are any of Purchaser's
assets bound by any agreement, Order, instrument, judgment or decree.
Except for the liabilities and obligations of Purchaser under the
Purchaser Agreements, Purchaser does not have any liability or
obligation.
9. COVENANTS. The Parties covenant and agree as follows:
9.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Until the Closing, and unless
Purchaser otherwise consents in writing, Seller will operate the
Acquired Business substantially as previously operated and only in the
Ordinary Course of Business.
9.2 SELLER MATERIAL ADVERSE CHANGES. Seller will not without the prior
consent of Purchaser take any affirmative action, or fail to take any
reasonable action within its control, the consequences of which are
likely to have a Seller Material Adverse Effect.
9.3 OTHER TRANSACTIONS. Until the Closing or earlier termination of this
Agreement, Seller will deal exclusively and in good faith with
Purchaser and Parent regarding a Sale Transaction, and Seller will not
(and Seller will direct Seller's officers, directors, financial
advisors, accountants, agents and
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counsel not to): (a) solicit submission of offers from any person
relating to a Sale Transaction; (b) participate in any discussions or
negotiations regarding, or furnish any nonpublic information to any
person regarding any Sale Transaction by any person other than
Purchaser and Parent; or (c) enter into any agreement or understanding,
whether oral or written, that would have the effect of preventing
consummation of this Agreement. If Seller or its representatives or
agents should receive any proposal for a Sale Transaction or any
inquiry regarding such proposal from a third party, Seller will
promptly so inform Purchaser.
9.4 CONSENTS, WAIVERS AND APPROVALS. Seller, Purchaser and Parent will each
use best efforts to obtain prior to the Closing (a) the Lessor
Documents from each lessor of any Acquired Business Leased Real
Property and (b) all other material consents, waivers, approvals, and
releases, and to make prior to the Closing all material filings
(including Governmental Authorizations and filings with Governmental
Bodies), in each case as necessary to effect the transactions
contemplated hereby (provided, that Seller shall not be obligated to
obtain any consents, waiver, approvals or releases from Customers).
Seller, Purchaser and Parent will each use best efforts to cause NEC to
enter into an agreement with Purchaser and Parent to continue
Purchaser's right to use certain equipment at Seller's San Diego
facility on substantially the same terms ad conditions as currently in
effect. All such consents, waivers, releases, approvals and filings
will be in writing and in form and substance reasonably satisfactory to
the other Party.
9.5 SUPPLEMENTAL DISCLOSURE.
(a) Seller will have the continuing obligation up to and including
the Closing Date to supplement or amend the Disclosure
Schedule with respect to any material matter subsequently
arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or
listed in the Disclosure Schedule. Any such supplemental
disclosure will be deemed to have been disclosed as of the
date of this Agreement if Purchaser and Parent proceed with
and ultimately consummate the Closing following receipt of
such supplemental disclosure.
(b) Prior to Closing, Seller shall confirm the accuracy of its
representation and warranties under Section 6.12(f) by
interviewing the operations centers general managers in
Birmingham, Daytona Beach, San Diego and Portland. In the
event such interviews reveal any matter which, if existing or
known at the date of this Agreement, would have been required
to be set forth or listed in the Disclosure Schedule in
response to Section 6.12(f), Seller will notify Purchaser of
the same. Purchaser and Parent acknowledge and agree that no
information contained in any such supplemental disclosure
shall be deemed to constitute a breach of Section 6.12(f)
unless, in the aggregate, the matters listed in such
supplemental disclosure are likely to result in Seller
Material Adverse Effect.
(c) Purchaser and Parent will have the continuing obligation up to
and including the Closing Date to disclose to Seller in
writing any matter coming to Purchaser's Knowledge after the
date of this Agreement that constitutes a breach by Seller of
any of its representations, warranties, covenants or
agreements set forth in this Agreement (any such matter will
be deemed to have been within Purchaser's Knowledge as of the
date of this Agreement if Purchaser and Parent proceed with
and ultimately consummate the Closing after such matter comes
to Purchaser's Knowledge).
(d) Purchaser and Parent will have the continuing obligation up to
and including the Closing Date to supplement or amend the
Parent Disclosure Schedule with respect to any material matter
subsequently arising or discovered which, if existing or known
at the date of this Agreement, would have been required to be
set forth or listed in the Parent Disclosure Schedule. Any
such supplemental disclosure will be deemed to have been
disclosed as of the date of this Agreement if Seller proceeds
with and ultimately consummates the Closing following receipt
of such supplemental disclosure.
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9.6 CONDITIONS PRECEDENT. Seller will use its reasonable efforts in good
faith to satisfy the conditions set forth in Section 10 hereof.
Purchaser and Parent will use reasonable efforts in good faith to
satisfy the conditions set forth in Section 11 hereof.
9.7 ACCESS. Seller will give Purchaser and Parent and their counsel,
accountants and other representatives reasonable access during normal
business hours to all of the books, records, assets and personnel of
the Acquired Business. Seller will furnish Purchaser and Parent with
such information concerning the affairs of the Acquired Business as
Purchaser and Parent may reasonably request to verify that the
representations and warranties contained in this Agreement are true and
correct in all material respects. Notwithstanding the foregoing,
Purchaser and Parent acknowledge and agree (a) that their examinations
of the materials and information made available to Purchaser and Parent
under this Section (or otherwise in connection with Purchaser's and
Parent's due diligence investigation) will be conducted in such a
manner so as not to unreasonably disrupt the normal business operations
of Seller; (b) that such examinations will take place in a manner
reasonably acceptable to Seller and its counsel; (c) that neither
Purchaser nor Parent shall contact any customers or suppliers of the
Acquired Business in connection with Purchaser's and Parent's due
diligence investigation unless and approved in advance by Seller (such
approval will not be unreasonably withheld); and (d) that all
information supplied to Purchaser and Parent or their representatives
in the course of such investigations will be subject to the
Non-disclosure Agreement between Parent and Seller dated July 21, 1998.
9.8 CERTAIN ACTIONS. Each of the Parties will refrain from taking any
action which would render any representation or warranty contained in
Sections 6 or 8 of this Agreement inaccurate as of the Closing Date.
Each Party will promptly notify the other of any action or proceeding
that is instituted or threatened against such Party to restrain,
prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement.
9.9 PAYMENT OF PERSONAL PROPERTY TAX REIMBURSEMENT. The Parties shall
follow the same procedures to determine the amount of the Personal
Property Tax Reimbursement Amount as required for the Purchase Price
Adjustment Amount. Within ten (10) days after final determination of
the Personal Property Tax Reimbursement Amount (whether by Purchaser's
failure to object, agreement of the Parties or determination by the
Independent Auditors), Purchaser will pay the Personal Property Tax
Reimbursement Amount by wire transfer of immediately available funds to
the account(s) designated by Seller.
9.10 PAYMENT OF AGREEMENT-RELATED EXPENSES. Except as provided in the
following sentence, all expenses incurred by a Party in connection
with or related to the authorization, preparation, negotiation and
consummation of this Agreement and the agreements, documents or
instruments contemplated hereby will be borne solely by that Party.
The Auditors' Report Expenses shall be borne by Purchaser and Parent
and paid to D&T by wire transfer of immediately available funds on the
earlier of the Closing Date or the effective date of termination of
this Agreement; provided, however, that if this Agreement is
rightfully terminated by Purchaser pursuant to Section 15.1(a) due to
a material breach by Seller or pursuant to Section 15.1(b), then
Seller shall bear the Auditors' Report Expenses. Notwithstanding
anything to the contrary in this Agreement, Purchaser and Parent shall
bear all amounts payable to ▇.▇. ▇▇▇▇▇ Securities Corporation and
FINOVA Capital Corporation in connection with the transactions
contemplated by this Agreement.
9.11 CERTAIN CONSENTS. In the event any of the Contracts (except for the
leases for the Acquired Business Leased Real Property) requires
consent to assignment and such consent is not obtained prior to the
Closing, then until such consent has been obtained or the applicable
Contract terminates, the Contract shall not be deemed assigned to
Purchaser but instead Purchaser shall be deemed to be Seller's
subcontractor or the Parties shall make such other arrangements as
necessary to assure Purchaser the benefits of the underlying Contract.
In that event, Purchaser shall perform all obligations of Seller under
the applicable Contract and shall be entitled to all benefits from
such
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Contract. The obligations to be performed by Purchaser shall be
Assumed Executory Obligations for purposes of this Agreement and the
benefits to inure to Purchaser shall be Acquired Assets for purposes
of this Agreement.
9.12 AUDITORS' REPORT. Seller shall provide to D&T reasonable access to all
necessary books, records and personnel of Seller to permit D&T to
deliver the Auditors' Report to the Parties no later than September
30, 1998. The Parties shall take all actions reasonably requested by
D&T in connection with the Auditors' Report, including the delivery of
the representation letters contemplated by the Engagement Letter. The
Parties acknowledge and agree that, except as set forth in the
following sentence, the Auditors' Report is to be used solely for the
purpose of inclusion in a filing on Form 8-K required to be filed by
Parent as a result of this Agreement and a Form S-1 registration
statement planned to be filed by Parent prior to the Effective Time,
and neither the Auditors' Report nor any information contained therein
shall be used for any purpose in connection with this Agreement or the
representations, warranties, covenants or agreements of either Party
under this Agreement, including the preparation of the Closing Net
Working Capital Statement and the determination of any Purchase Price
Adjustment pursuant to Section 5.1(b). Seller acknowledges that
delivery of the Auditors' Report shall be a condition to Purchaser's
and Parent's obligations to close as described in Section 10.9.
9.13 UNEMPLOYMENT TAX RATINGS. Seller will cooperate with Purchaser to
effectuate the assignment to Purchaser (to the extent permitted under
Applicable Law) of the benefits of any unemployment tax ratings or
similar ratings in any jurisdiction in which any of the Acquired
Assets and Acquired Business Employees are located; provided, however,
that Seller shall not be required to effectuate any such assignment
where such assignment would adversely impact Seller with respect to
any such ratings in those jurisdictions where any Excluded Assets or
employees of Seller other than Acquired Business Employees are
located.
9.14 CLOSING ESCROW AGREEMENT. If required under Section 12.1, the Parties
shall execute, deliver and perform their respective obligations under,
and shall cause their respective outside counsel to execute and
deliver, the Closing Escrow Agreement.
9.15 HSD TRANSITION EMPLOYEES. Purchaser shall in good faith identify the
applicable Acquired Business Effective Time Employees and take such
other actions as may be required to complete Schedule 3 to the
Transition Agreement.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND PARENT. The
obligations of Purchaser and Parent to consummate this Agreement will be
subject to the satisfaction, on or before the Closing Date, of the
following conditions, any of which may be waived by Purchaser and Parent in
writing.
10.1 REPRESENTATIONS.
(a) The representations and warranties made by Seller in Section 6
hereof other than the Materiality-qualified Representations
and the representations and warranties in Section 6.14(f) will
be true and correct in all material respects on the Closing
Date as though such representations and warranties had been
made on such date (without giving any effect to any subsequent
disclosure pursuant to Section 9.5) and Seller will deliver to
Purchaser and Parent a certificate dated as of the Closing
Date to the foregoing effect.
(b) The Materiality-qualified Representations will be true and
correct in all respects on the Closing Date as though such
representations and warranties had been made on such date
(without giving any effect to any subsequent disclosure
pursuant to Section 9.5) and Seller will deliver to Purchaser
and Parent a certificate dated as of the Closing Date to the
foregoing effect.
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(c) There shall not exist such breaches of the representations and
warranties of Seller described in clause (a) of Section 7.3
that the consequences of such breaches, either individually or
in the aggregate, are likely to have a Seller Material Adverse
Effect.
10.2 COVENANTS. Seller will have performed in all material respects all of
the covenants, acts and undertakings to be performed by Seller on or
prior to the Closing Date, and Seller will deliver to Purchaser and
Parent a certificate dated as of the Closing Date to the foregoing
effect.
10.3 NO INJUNCTION, ETC. No Proceeding or legislation will have been
instituted, threatened or proposed to enjoin, prohibit, or obtain
substantial damages in respect of the Seller Agreements or any of the
transactions contemplated by the Seller Agreements.
10.4 OPINION OF COUNSEL. An opinion of in-house counsel for Seller will
have been delivered to Purchaser and Parent, dated as of the Closing
Date, in the form of the attached Exhibit 3.
10.5 INCUMBENCY. Seller will have delivered a certificate of incumbency
executed by the president and secretary of Seller listing the persons
authorized to execute the Seller Agreements.
10.6 CERTIFIED RESOLUTIONS. Seller will have delivered to Purchaser and
Parent a certificate executed by a duly authorized officer of Seller
containing copies of the resolutions duly adopted by the board of
directors of Seller approving and authorizing the Seller Agreements
and their consummation. Such officer will also certify that such
resolutions have not been revoked or modified and remain in full force
and effect.
10.7 ASSIGNMENT AGREEMENT; ▇▇▇▇▇▇▇▇ HOLDINGS TRANSFER AGREEMENT; TRANSITION
AGREEMENT. Seller and ▇▇▇▇▇▇▇▇ Holdings, as applicable, shall have
executed the Assignment Agreement, the Transition Agreement and the
▇▇▇▇▇▇▇▇ Holdings Transfer Agreement and performed all acts required
to be performed by each of them under those agreements on or prior to
the Closing Date, including the execution and delivery of such
assignment documentation as may be required by such agreements.
10.8HSR ACT. All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise been
terminated.
10.9 AUDITORS' REPORT. Purchaser and Parent shall have received the
Auditors' Report, and the Auditors' Report shall not reflect
differences from the Draft Auditors' Report that, taken as a whole,
have a Seller Material Adverse Effect.
10.10 LESSOR DOCUMENTS. Purchaser and Parent shall have received the Lessor
Documents for each Acquired Business Leased Real Property as executed
by each of the applicable lessors.
10.11 SELLER'S CONSENT; SUBORDINATION AGREEMENT. Purchaser and Parent shall
have received the Seller's Consent and the Subordination Agreement,
each as fully executed by Seller.
10.12 CLOSING ESCROW AGREEMENT. If required under Section 12.1, Seller and
its outside counsel shall have executed the Closing Escrow Agreement.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation of Seller to
consummate this Agreement will be subject to the satisfaction, on or before
the Closing Date, of the following conditions, any of which may be waived
by Seller in writing.
11.1 REPRESENTATIONS. The representations and warranties made by Purchaser
and Parent in Section 8 hereof will be true and correct in all
material respects on the Closing Date with the same force and
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effect as though such representations and warranties had been made on
and as of such date and Purchaser and Parent will deliver to Seller a
certificate dated as of the Closing Date to the foregoing effect.
11.2 COVENANTS. Purchaser and Parent will have performed in all material
respects all of the covenants, acts or undertakings to be performed by
it on or before the Closing Date, and Purchaser and Parent will
deliver to Seller a certificate dated as of the Closing Date to the
foregoing effect.
11.3 CERTIFIED RESOLUTIONS. Purchaser will have delivered to Seller a
certificate executed by duly authorized officers and containing true
and correct copy of resolutions duly adopted by the Purchaser's Board
of Directors approving and authorizing the Purchaser Agreements and
their consummation. Such officers will also certify that such
resolutions have not been revoked or modified and remain in full force
and effect. Parent will have delivered to Seller a certificate
executed by duly authorized officers and containing true and correct
copy of resolutions duly adopted by the Parent's Board of Directors
approving and authorizing the Parent Agreements and their
consummation. Such officers will also certify that such resolutions
have not been revoked or modified and remain in full force and effect.
11.4 OPINION OF COUNSEL. An opinion of counsel for Purchaser and Parent
will have been delivered to Seller, dated as of the Closing Date, in
the form of the attached Exhibit 4.
11.5 NO INJUNCTION, ETC. No Proceeding or legislation will have been
instituted, threatened or proposed to enjoin, or prohibit, or to
obtain substantial damages in respect of the Purchaser Agreements or
the Parent Agreements or the transactions contemplated by any of the
Purchaser Agreements or the Parent Agreements.
11.6 INCUMBENCY. Purchaser will have delivered a certificate of incumbency
executed by its president and secretary identifying the persons
authorized to execute the Purchaser Agreements. Parent will have
delivered a certificate of incumbency executed by its president and
secretary identifying the persons authorized to execute the Parent
Agreements.
11.7 HSR ACT. All applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise been terminated.
11.8 ASSIGNMENT AGREEMENT, TRANSITION AGREEMENT AND ▇▇▇▇▇▇▇▇ HOLDINGS
TRANSFER AGREEMENT. Purchaser shall have executed the Assignment
Agreement, the Transition Agreement and the ▇▇▇▇▇▇▇▇ Holdings Transfer
Agreement and performed all acts required to be performed by Purchaser
on or prior to the Closing Date under such agreements, including the
payment of all consideration payable to ▇▇▇▇▇▇▇▇ Holdings, including
the Parent Note.
11.9 SUBORDINATION AGREEMENT. Seller and ▇▇▇▇▇▇▇▇ Holdings shall have
received the Subordination Agreement, each as fully executed by all
parties thereto other than Seller.
11.10 PARENT GUARANTY. Seller shall have received the Parent Guaranty as
executed by Parent.
11.11 CLOSING ESCROW AGREEMENT. If required under Section 12.1, Purchaser,
Parent and their outside counsel shall have executed the Closing
Escrow Agreement.
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12. CLOSING.
12.1 TIME AND PLACE. The Closing will be held at the offices of Coolidge,
Wall, Womsley & Lombard, Dayton Ohio, commencing at 9:00 a.m. on the
second business day following satisfaction or waiver of all of the
conditions set forth in Sections 10 and 11, or at such other place or
time or on such other date as the Parties may agree; provided that (a)
the Closing shall not occur prior to September 30, 1998; and (b) if
(i) all of the conditions in Section 10 of this Agreement have been
satisfied or waived by Purchaser as Parent except the condition in
Section 10.8, and (ii) all of the conditions in Section 11 of this
Agreement have been satisfied or waived by Seller except the condition
in Section 11.7, then the Closing will be held at the offices of
Coolidge, Wall, Womsley & Lombard, Dayton Ohio, commencing at 9:00
a.m. on September 30, 1998 and the Parties will execute, deliver and
perform their respective obligations under, and cause their respective
outside counsel to execute and deliver, the Closing Escrow Agreement.
The Parties agree and acknowledge in the event of an Escrowed Closing:
(i) the Effective Time shall be deemed to have occurred as of the
close of business on September 30, 1998; (ii) Seller will operate the
Acquired Business in the Ordinary Course of Business during the
Interim Period (with all receipts generated in connection therewith
promptly paid over to Purchaser); (iii) the Acquired Business shall be
operated for the sole benefit of and at the sole risk of Purchaser
during the Interim Period, and Purchaser shall bear all risk of loss
with respect to any of the Acquired Assets or Assumed Liabilities from
and after the deemed Effective Time pursuant to such clause (b)
(including that Purchaser and Parent shall reimburse Seller within 60
days after the Closing Escrow Termination Date for costs and expenses
incurred by Seller in operating the Acquired Business during the
Interim Period; such costs and expenses will include all wages,
salaries, commissions, benefits and related Taxes payable to or in
respect of the Acquired Business Employees); and (iv) prior to
September 30, 1998, the Parties will cooperate to establish reasonable
and mutually satisfactory procedures for operation of the Acquired
Business during the Interim Period.
12.2 TRANSACTIONS AT THE CLOSING. At the Closing, each of the following
transactions will occur:
(a) Seller will deliver to Purchaser and Parent the following:
(i) copies of the Seller's Articles of Incorporation,
certified as of a date within 30 days prior thereto by
the Secretary of State of Ohio, Seller's Code of
Regulations, certified as of such a date by Seller's
Secretary, and a certificate of good standing for Seller
from the Secretary of State of Ohio;
(ii) such bills of sale and other instruments of transfer as
are necessary to vest in Purchaser all of Seller's right,
title and interest in, to and under the Acquired Assets,
free and clear of all Liens (except the Permitted
Encumbrances); and
(iii) the certificates, opinion, agreements, instruments,
documents, consents, waivers, releases, approvals and
other documents required as a condition to the
obligations of Purchaser and Parent to close under
Section 10.
(b) Purchaser and Parent will deliver to Seller the following:
(i) the Cash Payment (payable by wire transfer of immediately
available funds to the account(s) designated by Seller);
(ii) a certificate of good standing of Purchaser from the
Secretary of State of Georgia as of the most recent
practicable date and a certificate of good standing of
Parent from the Secretary of State of Delaware as of the
most recent practicable date; and
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(iii) the Parent Guaranty and the certificates, opinion,
agreements, instruments, documents, consents, waivers,
releases, approvals and other documents required as a
condition to the obligation of Seller to close under
Section 11.
12.3 DEFAULT AT CLOSING. If either Party fails or refuses to consummate
the transactions set forth in this Agreement on or prior to the
Closing Date, all conditions to that Party's obligation to close
under Section 10 or Section 11, as applicable, have been
satisfied, and if the other Party is not then in material breach
under terms of this Agreement and such other Party stands ready,
willing and able to make tender of its deliveries required under
Section 12.2, then, in addition to any other remedies available to
such other Party, the other Party may invoke any equitable
remedies to cause the consummation of the transactions set forth
in this Agreement, including, without limitation, an action or
suit for specific performance.
13. ACQUIRED BUSINESS EMPLOYEES.
13.1 TERMINATIONS. No later than October 12, 1998, Purchaser shall
identify in writing to Seller those Acquired Business Employees to
whom Purchaser intends to offer employment (as determined by
Purchaser in its sole discretion). At the Effective Time (or, in
the event of an Escrowed Closing, at the Closing Escrow
Termination Date), Seller will terminate all of the Acquired
Business Effective Time Employees and Purchaser will offer
employment (and will hire all persons who accept such offer of
employment) to the Acquired Business Effective Time Employees
identified in Purchaser's notice contemplated by the preceding
sentence (on such terms and conditions as Purchaser may determine
in its sole discretion). Seller makes no representation or
warranty and provides no assurance that any Acquired Business
Employee will remain employed by Seller until the Effective Time
(or, in the event of an Escrowed Closing, the Closing Escrow
Termination Date) or that any such person will accept an offer of
employment from Purchaser.
13.2 REIMBURSEMENT OF EXCESS TERMINATION-RELATED AMOUNTS. Seller shall
pay to applicable Acquired Business Employees all
Termination-related Amounts. In the event that the number of
Acquired Business Effective Time Employees to whom (a) Purchaser
does not extend an offer of employment effective as of the
Effective Time, or (b) Purchaser does extend an offer of
employment effective as of the Effective Time but the terms and
conditions of employment (including duties, responsibilities and
location) are such that even if the Acquired Business Effective
Time Employee accepts the offer, the Acquired Business Effective
Time Employee will be entitled to severance under Seller's
standard severance policy or any compensation or benefits under
the WARN Act, exceeds 225, Purchaser shall reimburse Seller for
all Termination-related Amounts paid by Seller to the excess
Acquired Business Effective Time Employees and the applicable
Taxes payable by Seller with respect to such Termination-related
Amounts. The Parties agree that for purposes of determining the
amount of any reimbursement to Seller under this Section 13.2, the
Parties shall determine an average amount payable to or in respect
of each applicable employee and Purchaser shall be responsible for
an amount equal to the per employee average, multiplied by the
number of employees in excess of 225. Amounts payable by Purchaser
under this Section 13.2 shall be paid to Seller within thirty (30)
days after receipt of each request therefor accompanied by
reasonably sufficient supporting material to verify the amount.
13.3 WITHHOLDING. Purchaser and Seller agree to adopt the alternative
procedure described in Section 5 of Revenue Procedure 96-60 as
promulgated by the Internal Revenue Service with respect to wage
reporting, F.I.C.A., withholding and similar Taxes applicable to
the Acquired Business Employees who become employees of Purchaser.
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14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Seller or Purchaser and Parent in this Agreement will
survive until the 18-month anniversary of the Effective Time, except that
(a) to the extent any representations or warranties relate to Taxes, such
representations and warranties shall be deemed to survive for the period of
the applicable statute of limitations, (b) the representations and
warranties described in clause (a) of Section 7.3 shall not survive the
Closing, (c) the representations and warranties in Section 6.14 (other than
Section 6.14 (f)) and the representations and warranties under Section 8.5
shall survive until the third (3rd) anniversary of the Effective Time, and
(d) the representations and warranties in Sections 6.1, 6.13, and 8.1 shall
survive indefinitely. No claim for breach of a representation or warranty
(including an Indemnification Claim) may be brought by any person unless
written notice of such claim is given on or prior to the last day of the
applicable survival period in this Section 14 (in which event each
representation and warranty with respect to any asserted claim will survive
until such claim is finally resolved and all obligations with respect
thereto are fully satisfied).
15. TERMINATION.
15.1 GROUNDS. This Agreement may, by notice given on or prior to the
earlier of the Termination Date or the Closing Date, be terminated: (a)
by either Seller or Purchaser if a material breach of any provision of
this Agreement has been committed by the other Party and such breach
has not been cured by the earlier of the Termination Date or ten (10)
days after receipt by the breaching Party of written notice from the
non-breaching Party describing the breach and such breach has not been
waived by the non-breaching Party; (b) by Purchaser if any of the
conditions in Section 10 has not been satisfied as of the Termination
Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Purchaser to comply with its
obligations under this Agreement) and Purchaser has not waived such
condition on or before the Termination Date; (c) by Seller, if any of
the conditions in Section 11 has not been satisfied of the Termination
Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Seller to comply with its
obligations under this Agreement) and Seller has not waived such
condition on or before the Termination Date; (d) by mutual consent of
Purchaser and Seller; or (e) by either Purchaser or Seller if the
Closing has not occurred (other than through the failure of any Party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before the Termination Date or
such later date as the Parties may agree upon.
15.2 EFFECT OF TERMINATION. Each Party's right of termination under Section
15.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will
not be an election of remedies. If this Agreement is terminated
pursuant to Section 15.1, all further obligations of the Parties under
this Agreement will terminate, except that the obligations in Section
9.10 will survive; provided, however, that if this Agreement is
terminated by a Party because of the breach of the Agreement by the
other Party or because one or more of the conditions to the terminating
Party's obligations under this Agreement is not satisfied as a result
of the other Party's failure to comply with its obligations under this
Agreement, the terminating Party's right to pursue all legal remedies
will survive such termination unimpaired.
16. INDEMNIFICATION.
16.1 LOSSES. For purposes of Sections 16 and 17 of this Agreement, "LOSSES"
will mean all damages, losses, costs, expenses (including legal,
accounting, investigation and other fees and expenses), interest,
penalties, charges and liabilities.
16.2 INDEMNIFICATION BY SELLER. Seller shall indemnify, defend and hold
harmless the Purchaser Indemnified Persons from and against any Loss
incurred by the Purchaser Indemnified Persons related to or arising
out of (a) the breach of any of the warranties, representations,
covenants or
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agreements of Seller in this Agreement, (b) any Excluded Liability or
Excluded Asset, (c) Seller's use of the R/2000 and ProMed Marks prior
to the Effective Time, or (d) any claim by Synergex with regard to
Seller's use or distribution of Synergex' products on or before the
Effective Time.
16.3 INDEMNIFICATION BY PURCHASER. Purchaser and Parent jointly and
severally agree to indemnify, defend and hold harmless the Seller
Indemnified Persons from and against any Loss incurred by the Seller
Indemnified Persons related to or arising out of (a) the breach of any
of the warranties, representations, covenants or agreements of
Purchaser and/or Parent in this Agreement, or (b) any Acquired Asset
or Assumed Liability (except to the extent that Seller is obligated to
indemnify the Purchaser Indemnified Persons under Section 16.2 with
respect to the applicable event, circumstance, action or omission that
generates the Loss).
16.4 PROCEDURES FOR INDEMNIFICATION.
(a) An Indemnification Claim will be made by Indemnitee by
delivery of a written declaration to Indemnitor requesting
indemnification and specifying the basis on which
indemnification is sought and the amount of asserted Losses
and, in the case of a Third Party Claim, containing such other
information as Indemnitee will have concerning such Third
Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 16.5 hereof will be observed
by Indemnitee and Indemnitor.
(c) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnitor will have ten (10) days to
object to such Indemnification Claim by delivery of a written
notice of such objection to Indemnitee specifying in
reasonable detail the basis for such objection. Failure to
timely so object will constitute acceptance of the
Indemnification Claim by the Indemnitor and the
Indemnification Claim will be paid in accordance with Section
16.4(d). If any objection is timely interposed by the
Indemnitor and the dispute is not resolved within fifteen (15)
days from the date Indemnitee receives such objection, such
dispute will be resolved as provided in Section 18.12 of this
Agreement.
(d) Upon determination of the amount of an Indemnification Claim
(including a Third Party Claim), whether by agreement between
Indemnitor and Indemnitee, by an arbitration award or
otherwise, Indemnitor will pay the amount of such
Indemnification Claim within ten (10) days of the date such
amount is determined.
16.5 DEFENSE OF THIRD PARTY CLAIMS.
(a) Should any Third Party Claim be made the obligations and
liabilities of the parties with respect to such Third Party
Claim will be subject to this Section 16.5.
(b) Within a reasonable time (i.e., such time as will not
prejudice the contest, defense, litigation, or settlement of a
Third Party Claim) following the receipt of notice of a Third
Party Claim, the party receiving the notice of the Third Party
Claim will (i) notify the other party of its existence setting
forth in writing and with reasonable specificity the facts and
circumstances of which such party has received notice, and
(ii) if the party giving such notice is an Indemnitee, specify
in writing the basis hereunder upon which the Indemnitee's
claim for indemnification is asserted and tendering defense of
the Third Party Claim to Indemnitor.
(c) If the defense of a Third Party Claim is so tendered and
within ten (10) days thereafter such tender is accepted
without qualification by the Indemnitor as evidenced by
written notice to Indemnitee, then, except as provided below,
the Indemnitee will not, and the Indemnitor will,
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have the right to contest, defend, litigate and settle such
Third Party Claim. The Indemnitee will have the right to be
represented by counsel of its own choice and at Indemnitee's
expense to participate in any contest, defense, litigation or
settlement conducted by the Indemnitor; provided that the
Indemnitee will be entitled to reimbursement therefor if the
Indemnitor loses its right to contest, defend, litigate and
settle the Third Party Claim as provided below.
Notwithstanding the preceding provisions of this Section 16.5,
if the Third Party Claim is asserted against both a Purchaser
Indemnified Person and a Seller Indemnified Person, and
representation of both of them by the same counsel would be
inappropriate due to actual or potentially differing interests
between them, Indemnitee shall be entitled to retain the right
to contest, defend or litigate such Third Party Claim as it
relates to Indemnitee and will have the exclusive right, in
its discretion exercised in good faith, and with the advice of
counsel, to settle any such matter, either before or after the
initiation of litigation, at such time and upon such terms as
it deems fair and reasonable, provided that at least ten (10)
days prior to any such settlement, written notice of its
intention to settle will be given to the Indemnitor. If,
pursuant to the preceding sentence, the Indemnitee so
contests, defends, litigates or settles a Third Party Claim,
the Indemnitee will be reimbursed by the Indemnitor for the
reasonable attorneys' fees and other expenses of defending,
contesting, litigating and/or settling the Third Party Claim
which are incurred from time to time, promptly following the
presentation to the Indemnitor of itemized bills for such
attorneys' fees and other expenses.
(d) The Indemnitor will lose its right to contest, defend,
litigate and settle the Third Party Claim if it fails to
diligently contest the Third Party Claim (except in connection
with a settlement thereof in accordance with the terms
hereof). So long as the Indemnitor has not lost its right to
defend, contest, litigate and settle as herein provided, the
Indemnitor will have the exclusive right to contest, defend
and litigate the Third Party Claim and will have the exclusive
right, in its discretion exercised in good faith, and with the
advice of counsel, to settle any such matter, either before or
after the initiation of litigation, at such time and upon such
terms as it deems fair and reasonable, provided that at least
ten (10) days prior to any such settlement, written notice of
its intention to settle will be given to the Indemnitee and
the settlement includes an unconditional release of the
Indemnitee.
(e) All expenses (including without limitation attorneys' fees and
expenses) incurred by the Indemnitor in connection with the
foregoing will be paid by the Indemnitor.
(f) No failure by an Indemnitor to acknowledge in writing its
indemnification obligations under this Section 16 will relieve
it of such obligations to the extent they exist. If an
Indemnitee is entitled to indemnification against a Third
Party Claim, and the Indemnitor fails to accept or assume the
defense of a Third Party Claim pursuant to Section 16.5(c), or
if, in accordance with the foregoing, the Indemnitor loses its
right to contest, defend, litigate and settle such a Third
Party Claim, the Indemnitee will have the right, without
prejudice to its right of indemnification hereunder, in its
discretion exercised in good faith, to contest, defend and
litigate such Third Party Claim, and may, in its discretion
exercised in good faith, and with the advice of counsel,
settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as
it deems fair and reasonable, provided that at least ten (10)
days prior to any such settlement, written notice of its
intention to settle is given to the Indemnitor. If, pursuant
to this Section 16.5(f), the Indemnitee so contests, defends,
litigates or settles a Third Party Claim for which it is
entitled to indemnification hereunder, the Indemnitee will be
reimbursed by the Indemnitor for the reasonable attorneys'
fees and other expenses of defending, contesting, litigating
and/or settling the Third Party Claim which are incurred from
time to time, promptly following the presentation to the
Indemnitor of itemized bills for such attorneys' fees and
other expenses.
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16.6 LIMITATIONS.
(a) All notices of Loss must be delivered to the Indemnitor prior
to expiration of the applicable periods for the warranties and
representations as set forth in Section 16 hereof.
(b) Except as set forth in Section 16.6(c), no Indemnitor will
have any obligation until the aggregate of all Losses payable
by the Indemnitor to the Indemnitee with respect to all
Indemnification Claims under this Section 16 exceeds the
Floor. Upon the aggregate of all Losses (except the Exempt
Indemnification Obligations) payable by an Indemnitor with
respect to Indemnification Claims under this Section 16
exceeding the Floor, the Indemnitor will be liable to the
Indemnitee on a dollar-for-dollar basis, for all Losses
(except the Exempt Indemnification Obligations) above the
Floor.
(c) The Floor shall not apply to the Exempt Indemnification
Obligations and such amounts shall be payable by the
Indemnitor from the first dollar. The Parties acknowledge that
obligations to pay any Purchase Price Adjustment Amount, any
Personal Property Tax Reimbursement Amount, any amount
described in Section 5.2 or any reimbursement of
Termination-related Amounts as described in Section 13.2 are
not Indemnification Claims and are not subject to the Floor.
(d) The payment of any Loss hereunder will constitute an
additional adjustment to the Purchase Price under Section 5.
(e) Except for the equitable remedies under the terms of Section
12.3, indemnification for Customer Claims under Section 17 and
matters that Purchaser or Parent establishes by clear and
convincing evidence amount to fraud under applicable law, the
remedies provided in this Section 16 (as limited by this
Section 16.6) are the sole and exclusive remedies of Purchaser
with respect to claims arising out of: (i) the warranties,
representations, covenants and agreements of Seller in this
Agreement; (ii) any Excluded Asset or Excluded Liability; or
(iii) any Acquired Asset or Assumed Liability. Except for the
equitable remedies under the terms of Section 12.3,
indemnification for Customer Claims under Section 17 and
matters that Seller establishes by clear and convincing
evidence amount to fraud under applicable law, the remedies
provided in this Section 16 (as limited by this Section 16.6)
are the sole and exclusive remedies of Seller with respect to
claims arising out of: (i) the warranties, representations,
covenants and agreements of Purchaser and/or Parent in this
Agreement; (ii) any Excluded Asset or Excluded Liability;
(iii) any Acquired Asset or Assumed Liability; or (iv) the
ownership or operation of the Acquired Business or the
Acquired Assets for any period ending after the Effective
Time. Except as permitted under applicable law as a remedy for
fraud proven by clear and convincing evidence, no Party shall
have the right of rescission of the transactions under this
Agreement.
(f) Notwithstanding anything to the contrary contained in this
Agreement, neither Seller nor ▇▇▇▇▇▇▇▇ Holdings shall have any
liability under this Section 16 or otherwise (including under
or in connection with the ▇▇▇▇▇▇▇▇ Holdings Transfer
Agreement), and neither Purchaser nor Parent shall be entitled
to recover against Seller or ▇▇▇▇▇▇▇▇ Holdings, whether under
a claim for breach of contract, breach of warranty, strict
liability, tort, contribution or other theory of recovery with
respect to or arising out of (provided, however, that this
Section shall not apply to matters that Purchaser or Parent
establishes by clear and convincing evidence constitute fraud
under applicable law):
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(i) any falsity or breach of a representation or the breach
of a warranty or covenant under this Agreement to the
extent that the existence of such falsity or breach upon
which liability would be based (A) is within Purchaser's
Knowledge at or prior to the execution of this Agreement
(as proven by clear and convincing evidence), or (B)
comes within Purchaser's Knowledge prior to the Closing
(as proven by clear and convincing evidence); provided,
however, that as to the foregoing clause (B), any such
falsity or breach so disclosed to Purchaser or Parent
after the execution and delivery of this Agreement but
prior to the Closing shall not affect the right of
Purchaser or Parent under the terms of Section 10 to
elect not to close the transactions contemplated by this
Agreement (it being understood that if, despite such
right of Purchaser and Parent to elect not to close
Purchaser and Parent nevertheless elects to close,
Purchaser and Parent shall thereafter have no claim
against Seller by reason of, in connection with or
arising from such falsity or breach);
(ii) any projections, estimates or budgets heretofore
delivered or made available to Purchaser regarding
future revenues, expenses or expenditures or results of
future operations of the Acquired Business;
(iii) any other information or documents provided to Purchaser
or Parent or their counsel, advisors or accountants with
respect to Seller or the Acquired Business, except as
expressly covered by a representation in Section 6 of
this Agreement (as such representations and warranties
have been qualified by the Disclosure Schedule);
(iv) any proposed products of the Acquired Business;
(v) the condition of any Personal Property (including any
inventory);
(vi) the collectability of any Receivables;
(vii) the assignability of any Contracts with customers of the
Acquired Business (provided that the foregoing shall not
in any manner limit, modify or otherwise affect
Purchaser's and Parent's rights and remedies under
Sections 17 and 22) or any Contracts which contain
covenants or agreements not to compete or covenants or
agreements not to disclose information;
(viii) the failure to obtain any consents, releases, waivers
or approvals required under any Contracts as a result of
consummation of the transactions contemplated by this
Agreement or as a condition to the valid and effective
assignment of any Contracts pursuant to this Agreement
(provided that the foregoing shall not in any manner
limit, modify or otherwise affect Purchaser's and
Parent's rights and remedies under Sections 17 and 22);
(ix) the Auditors' Report or any information contained
therein;
(x) the RH Intellectual Property Intangibles or the ▇▇▇▇▇▇▇▇
Holdings Transfer Agreement (Purchaser and Parent
acknowledge that the transactions under the ▇▇▇▇▇▇▇▇
Holdings Transfer Agreement are "AS IS,WHERE IS" and
that ▇▇▇▇▇▇▇▇ Holdings has disclaimed any and all
warranties with respect to the RH Intellectual Property
Intangibles; provided that this Section 16.6(f)(x) shall
not limit in any respect Seller's liability and the
Purchaser Indemnified Persons' remedies under Section
16.2 for a breach of Section the representations or
warranties in Section 6.13 and Section 6.14 that
expressly pertain to ▇▇▇▇▇▇▇▇ Holdings or the RH
Intellectual Property Intangibles);
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(xi) except as provided in Section 17, the failure of any
Seller Distributed Software, Seller Internal Use
Software, Third Party Distributed Software or Third
Party Internal Use Software or any hardware, software,
or data owned, leased, licensed, distributed or used by
or in connection with the Acquired Business: (A) to be
"millennium compliant", "year 2000 compliant", or "year
2000 qualified" or otherwise process, function, accept,
store, display or operate without error or interruption
in respect of dates before or after January 1, 2000, or
(B) to operate continuously and without error (including
when incorporated with any other products provided by
Seller or any other person as part of an integrated
system);
(xii) the falsity of or breach by Seller of any representation
or warranty in Section 6.14(f); or
(xiii) any Customer Claims (provided that this Section 16.6(f)
shall not in any manner limit, modify or otherwise
affect Purchaser's and Parent's rights and remedies
under Section 17).
(h) Notwithstanding anything to the contrary contained in this
Agreement, neither Purchaser nor Parent shall have any
liability under this Section 16 or otherwise, and neither
Seller nor ▇▇▇▇▇▇▇▇ Holdings shall be entitled to recover
against Purchaser or Parent, whether under a claim for breach
of contract, breach of warranty, strict liability, tort,
contribution or other theory of recovery with respect to or
arising out of (provided, however, that this Section shall not
apply to matters that Seller or ▇▇▇▇▇▇▇▇ Holdings establishes
by clear and convincing evidence constitute fraud under
applicable law) any falsity or breach of a representation or
the breach of a warranty or covenant under this Agreement to
the extent that the existence of such falsity or breach upon
which liability would be based (i) is within Seller's
Knowledge at or prior to the Closing, or (ii) is disclosed in
a written notice furnished to Seller prior to the Closing;
provided, however, that as to the foregoing clause ii), any
such falsity or breach so disclosed to Seller after the
execution and delivery of this Agreement but prior to the
Closing shall not affect the right of Seller under the terms
of Section 11 to elect not to close the transactions
contemplated by this Agreement (it being understood that if,
despite such right of Seller to elect not to close Seller
nevertheless elects to close, Seller shall thereafter have no
claim against Purchaser and Parent by reason of, in connection
with or arising from such falsity or breach).
(i) Notwithstanding anything to the contrary in this Agreement, in
determining the amount of any "Loss" suffered by a Party: (i)
no Party shall be entitled to recover under this Section 16
any consequential damages, including business interruption or
lost profits, or any punitive damages; and (ii) "Loss" shall
not be calculated using a multiple of earnings, book value or
any other item which may have been used in arriving at the
Purchase Price.
(j) In the event that, after taking into account the limitations
in this Section 16.6 or elsewhere in this Agreement, Seller
nevertheless becomes obligated to pay Losses to a Purchaser
Indemnified Person, in no event shall the aggregate amount of
such liability of Seller (including any and all liabilities of
Seller for costs, expenses and attorney's fees paid or
incurred in connection therewith or in connection with curing
of any and all breaches of Seller's representations,
warranties, covenants or agreement) exceed the Cap; provided
that the Cap shall not apply to matters that the Purchaser
Indemnified Person establishes by clear and convincing
evidence amount to fraud under applicable law or to Exempt
Indemnification Obligations. In the event that, after taking
into account the limitations in this Section 16.6 or elsewhere
in this Agreement, Purchaser and/or Parent nevertheless
becomes obligated to pay Losses to Seller, in no event shall
the aggregate amount of such liability of Purchaser
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and Parent (including any and all liabilities of Purchaser and
Parent for costs, expenses and attorney's fees paid or
incurred in connection therewith or in connection with curing
of any and all breaches of Purchaser's representations,
warranties, covenants or agreement) exceed the Cap; provided
that the Cap shall not apply to matters that Seller
establishes by clear and convincing evidence amount to fraud
under applicable law.
17. SPECIAL INDEMNIFICATION.
17.1 GENERAL. Seller agrees to indemnify and hold the Purchaser
Indemnified Persons harmless from Customer Claims Losses, and
Purchaser and Parent agree to indemnify and hold harmless the
Seller Indemnified Persons from Customer Claims Losses, each as
follows: (a) Seller shall bear the first $500,000 of Customer
Claims Losses; (b) each of (i) Seller and (ii) Purchaser and
Parent, shall bear 50% of the next $4,000,000 of Customer Claims
Losses (i.e., up to $4,500,000 in the aggregate); and (c)
Purchaser and Parent shall bear all Customer Claims Losses in
excess of $4,500,000 in the aggregate. Notwithstanding anything to
the contrary in this Agreement, Seller shall not have any further
liability under this Section 17 from and after September 30, 2001.
17.2 DEFINITIONS. "Customer Claims Losses" means all Losses arising out
of or related to Customer Claims. "Customer Claims" means either
(a) any claims, demands, actions, causes of action or Proceedings
asserted or threatened to be asserted by, on behalf of or with
respect to any person that is a customer of the Acquired Business
as of the Effective Time (an "Acquired Business Customer"),
regardless of whether such claim is asserted under any breach of
contract, breach of warranty, products liability, strict liability
or other theory, with respect to or arising out of any agreement,
contract, commitment, liability or obligation to the Acquired
Business Customer as of the Effective Time, including without
limitation (i) claims with respect to any hardware, software,
databases or services sold, leased, licensed or otherwise provided
to the Acquired Business Customer prior to the Effective Time,
(ii) claims relating to the failure any of Seller Distributed
Software or Third Party Distributed Software or any other
hardware, software, databases sold, leased, licensed or otherwise
provided to the Acquired Business Customer prior to the Effective
Time to be "millennium compliant", "year 2000 compliant", or "year
2000 qualified" or otherwise process, function, accept, store,
display or operate without error or interruption in respect of
dates before or after January 1, 2000, or to operate continuously
and without error (including when incorporated with any other
products provided by Seller or any other person as part of an
integrated system), and (iii) claims related to the disputes
identified in Section 6.12(f) of the Disclosure Schedule, or (b)
any Losses or other costs incurred by Purchaser or Parent, which,
in their reasonable judgment, are necessary to minimize, mitigate
or avoid potential claims, demands, actions, causes of action or
Proceedings under clause (a) above, including without limitation
the cost to cause any of the services or software or hardware
referenced in clause (a) to become "millennium compliant", "year
2000 compliant", or "year 2000 qualified" .
17.3 PROCEDURES. Purchaser shall assume responsibility for the defense
and settlement of any Customer Claims. Seller's consent (which
shall not be unreasonably withheld) will not be required for
settlements of any Customer Claim of less than $100,000; provided,
however that as a condition to any settlement, regardless of the
amount of Customer Claims described in clause (a) of Section 17.2,
Purchaser shall secure from the Acquired Business Customer a
unconditional release of Seller from any past or future liability.
Notwithstanding any provision to the contrary in this Agreement,
the Floor will not apply to the obligations of the Parties under
this Section. Purchaser shall provide Seller a monthly report of
all Customer Claims Losses. All such reports shall become final
and binding on the Parties unless Seller objects in writing within
30 days after receipt of the report. To the extent that Seller
becomes obligated
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to pay any amounts under this Section, Seller's payment shall be
effected first through a reduction of the Principal Sum (as
defined in the Parent Note) in accordance with the Parent Note,
with any remainder paid by Seller by wire transfer within thirty
(30) days after the applicable report becomes final (whether by
agreement, by failure of Seller to timely object or by resolution
under Section 18.12).
18. MISCELLANEOUS.
18.1 ACCOUNTING RECORDS. From and after the Effective Time, Seller and its
representatives will have reasonable access to all of the Books and
Records for the period prior to the Effective Time, but only to the
extent that such access may reasonably be required by such persons in
connection with matters relating to or affected by the operations of
the Acquired Business prior to the Effective Time. Such access will be
afforded by Purchaser upon receipt of reasonable advance notice and
during normal business hours. From and after the Effective Time,
Purchaser and its representatives will have reasonable access to all
of the books and records of the Acquired Business for the period prior
to the Effective Time which are retained by Seller, but only to the
extent that such access may reasonably be required by such persons in
connection with matters relating to or affected by the operations of
the Acquired Business prior to the Effective Time. Such access will be
afforded by Seller upon receipt of reasonable advance notice and
during normal business hours.
18.2 NOTICE. All notices, requests, demands and other communications
hereunder will be in writing and will be deemed given and received (a)
on the date of delivery when delivered by hand or when transmitted by
confirmed simultaneous telecopy, (b) on the following business day
when sent by receipted overnight courier, or (c) five (5) business
days after deposit in the United States Mail when mailed by registered
or certified mail, return receipt requested, first class postage
prepaid, when addressed as set forth in Schedule I. Any party may
change the address to which notices are to be sent to it by giving
written notice of such change of address to the other parties in the
manner above provided for giving notice.
18.3 ASSIGNMENT; BINDING EFFECT. This Agreement may not be assigned by
either Party without the prior written consent of the other Party.
This Agreement will be binding upon the Parties and their respective
successors and permitted assigns.
18.4 HEADINGS; EXHIBITS AND SCHEDULES. The Section, Subsection and other
headings in this Agreement are inserted solely as a matter of
convenience and for reference, and are not a part of this Agreement.
The Exhibits and Schedules attached hereto are a material part of this
Agreement and are incorporated herein by this reference.
18.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same
agreement and will become effective when one counterpart has been
signed by each party and delivered to the other party hereto.
18.6 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties hereto with respect
to the subject matter hereunder, including the Letter of Intent;
provided, however, that if the Closing does not occur for any reason,
the Non-disclosure Agreement between the Parties dated July 21, 1998
shall survive according to its terms. Neither this Agreement, nor any
provision hereof, may be changed, waived, discharged, supplemented or
terminated orally, but only by an agreement in writing signed by the
party against which the enforcement of such change, waiver, discharge
or termination is sought.
18.7 TIME OF ESSENCE. Time is of the essence in this Agreement.
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18.8 GOVERNING LAW. This Agreement will be governed by and construed and
enforced in accordance with the laws of the state of Ohio as applied
to contracts between Ohio residents executed and performed wholly
within that state.
18.9 DISCLOSURE. Purchaser, Parent and Seller each agree not to issue any
press release or make any public announcement or other disclosure to
competitors, customers, employees or any other person (except to
employees and agents on a need-to-know basis in order to complete the
transactions contemplated by this Agreement and who agree to maintain
the confidentiality of the disclosed information) concerning this
Agreement except as required by law or with the advance written
approval of the other Parties, which approval will not be unreasonably
withheld.
18.10 PARTIAL ILLEGALITY OR UNENFORCEABILITY. Wherever possible, each
provision hereof will be interpreted in such manner as to be
effective under applicable law, but in case any one or more of the
provisions contained herein will, for any reason, be held to be
illegal or unenforceable in any respect, such illegality or
unenforceability will not affect any other provisions of this
Agreement, and this Agreement will be construed as if such illegal or
unenforceable provision or provisions had never been contained herein
unless the deletion of such provision or provisions would result in
such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
18.11 SINGULAR OR PLURAL. All defined terms used herein will have the same
meaning, whether used in the singular or plural form, unless the
context clearly requires otherwise.
18.12 ARBITRATION.
(a) Any controversy, dispute or claim arising out of or relating
to this Agreement or the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement
(except in connection with the determination of a Purchase
Price Adjustment Amount or a Personal Property Tax
Reimbursement Amount or enforcement of the Parent Note or a
breach of Section 19) will be submitted to arbitration in
accordance with the commercial rules of the AAA, by which each
Party will be bound.
(b) If the Parties have not agreed during their negotiations on a
single arbitrator to whom the controversy, dispute or claim
will be submitted, either Party may select an arbitrator and
send written notice to the other party of the selection. The
Party receiving such notice will have 10 days from the date
such Party receives such notice of such selection to select a
second arbitrator and send notice of such to the party who
selected the first arbitrator. Failure to select the second
arbitrator and to send timely notice, as provided above,
empowers the arbitrator first selected to resolve the
controversy. If both arbitrators have been duly named, they
will as soon as is reasonably practicable (but within 30 days
from the date the latter of the two arbitrators is named) name
a third arbitrator who must not be from the Dayton, Ohio or
Atlanta, Georgia metropolitan areas and who will be the sole
arbitrator to hear and rule upon the dispute. The provisions
of the Federal Rules of Civil Procedure which provide for
discovery will be applicable to any such arbitration. The
parties agree that such discovery must be completed within six
(6) months after the claim has been filed with the AAA and
service on the other party effected.
(c) Any arbitration proceedings will be conducted in Dayton, Ohio
unless the Parties otherwise agree.
(d) The Parties agree to be bound by the decision of the
arbitrator and the decision thereof to be entered into any
appropriate court or other jurisdiction. The prevailing Party
in the arbitration will be promptly reimbursed for its
reasonable costs and fees (including attorneys'
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fees) incurred in connection with the arbitration and will not
be responsible for the costs of arbitration.
18.13 "PERSON." The term "person" will be broadly interpreted to include,
without limitation, any corporation, partnership, association,
limited liability company, other association, trust or individual.
18.14 "BEST EFFORTS." The use of the term "best efforts" herein will in no
event require any party to (a) expend funds which are not
commercially reasonable in relation to the transactions contemplated
hereby or (b) take, or cause to be taken, any action which would have
a material adverse effect with respect to it.
18.15 "INCLUDING." Whenever the term "including" is used in this Agreement,
it will mean "including, without limitation," (whether or not such
language is specifically set forth) and will not be deemed to limit
the range of possibilities of those items specifically enumerated.
18.16 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall confer
any rights upon any person other than the Parties and their
respective heirs, successors and permitted assigns.
18.17 FURTHER ASSURANCES. From and after the Closing, the Parties shall,
without further consideration, execute and deliver promptly such
further assignments, endorsements and other documents, and to take
all such further actions, as either may from time to time reasonably
request with respect to the transactions contemplated by this
Agreement, and the fulfillment of any condition precedent to the
obligations of either Party waived by that Party in order to
consummate the Agreement. The Parties also agree to promptly deliver
to each other any assets (including mail) they receive which properly
are the property of the other Party or an Affiliate.
19. CERTAIN COVENANTS OF SELLER.
19.1 COVENANT NOT TO COMPETE. Subject to the conditions in Section 19.2,
and as further consideration for Purchaser's and Parent's obligations
under this Agreement, Seller covenants and agrees that, prior to the
fifth (5th) anniversary of the Effective Time, Seller will not (a)
engage in the Restricted Business in the United States, or (b)
solicit for employment any Acquired Business Effective Time Employees
that were offered and accepted employment with Purchaser immediately
after the Effective Time (or the Closing Escrow Termination Date, as
applicable).
19.2 EXCEPTIONS. Notwithstanding anything in this Agreement to the
contrary: (i) Section 19.1 shall not survive any termination of this
Agreement prior to Closing pursuant to Section 15.1; and (ii) it
shall not be a violation of Section 19.1 if either: (A) Seller at any
time directly or indirectly holds less than fifteen percent (15%) of
the outstanding voting power of any person engaged in the Restricted
Business, (B) a person engaged in the Restricted Business acquires
any securities of Seller or any successor in interest to Seller or a
person who at any time holds any securities of Seller engages in the
Restricted Business, (C) Seller sells any significant portion of its
assets to any person that is engaged in the Restricted Business (and
Section 19.1 shall not apply to such asset transferee), or (D) Seller
merges with or consolidates into any person that is engaged in the
Restricted Business where either (i) the total consideration paid in
any such transaction exceeds $250,000,000, or (ii) the percentage of
overall revenues of such other person that are generated by its
operations within the Restricted Business are less than 20% as of the
lost recently completed fiscal year of such person (and Section 19.1
shall not apply to the surviving person in any such merger or
consolidation).
20. ▇▇▇▇▇ LEASE PORTFOLIO. Purchaser and Parent acknowledge Seller's desire to
transfer the ▇▇▇▇▇ Lease Portfolio to one or more persons that routinely
provides lease financing to Parent's customers.
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Purchaser and Parent agree to cooperate with ▇▇▇▇▇ and to provide
reasonable assistance to ▇▇▇▇▇ (including through introductions to
appropriate representatives of such lease financing sources) in connection
with any such proposed sale of the ▇▇▇▇▇ Lease Portfolio. Purchaser and
Parent also agree to cooperate with ▇▇▇▇▇ (including, subject to applicable
legal restrictions through the exchange of information) in the collection
of amounts coming due to ▇▇▇▇▇ from the ▇▇▇▇▇ Lease Portfolio.
21. ELECTRONIC MEDICAL RECORDS/CLINICAL PRODUCT LINE. Nothing in this Agreement
shall entitle Purchaser or Parent to any right, title or interest in or
restrict Seller in the use and/or disposal of those rights, properties and
assets of Seller described in Exhibit C under the heading "Electronic
Medical Records/Clinical Product Line".
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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The parties have executed this Agreement as of this ____ day of
September, 1998.
INFOCURE CORPORATION
BY
-------------------------------
TITLE:
---------------------------
THOROUGHBRED ACQUISITION, INC.
BY
-------------------------------
TITLE:
---------------------------
THE ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ COMPANY
BY
-------------------------------
TITLE:
---------------------------
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SCHEDULE A
DEFINITIONS
"6/30/98 Balance Sheet" means the balance sheet of HSD as of the close
of business on June 30, 1998, a copy of which is set forth in Exhibit 1.
"6/30/98 Working Capital Statement" means the statement identified as
such in Exhibit 1.
"Acquired Assets" has the meaning set forth in Schedule B.
"Acquired Business" means the business operations of HSD.
"Acquired Business Customer" has the meaning set forth in Section 17.
"Acquired Business Effective Time Employees" means those Acquired
Business Employees who remain employees of Seller as of the Effective Time (or,
in the event of an Escrowed Closing, the Closing Escrow Termination Date).
"Acquired Business Employees" means those persons who are employees of
Seller engaged in the Acquired Business as of the applicable date, excluding the
Excluded Employees. The Acquired Business Employees as of August 27, 1998 are
identified in Schedule P.
"Acquired Business Leased Real Property" means the leased locations
identified as such in Schedule Y.
"Acquired Business Owned Real Property" means HSD's Dayton, Ohio
headquarters building.
"Adjusted 6/30/98 Balance Sheet" means the statement identified as such
in Exhibit 1.
"Adjusted 6/30/98 Working Capital Statement" means the statement
identified as such in Exhibit 1.
"Affiliate" has the meaning given that term in Rule 144 promulgated
under the Securities Act of 1933.
"Agreement" means this Asset Purchase Agreement.
"Allocation Agreement" means an agreement in the form of the attached
Exhibit 5.
"Annual Financial Statements" means the unaudited internal balance
sheet for the Acquired Business as of the close of Business on September 30,
1997 and the unaudited internal statement of income for the one-year period
ended on such date.
"Applicable Laws" means all laws, rules, regulations, Orders, decrees,
judgments, awards, covenants, restrictions and ordinances applicable to Seller
in connection with the Acquired Business or the ownership or operation of any of
the Acquired Assets or the Assumed Liabilities, including Environmental Laws,
the Americans with Disabilities Act, ERISA and other laws relating to employees
or employee benefits, occupational health and safety laws, the Code and other
laws relating to Taxes, and zoning and land use regulations.
"Assignment Agreement" means an agreement in the form of the attached
Exhibit 2.
"Assumed Executory Obligations" has the meaning set forth in Schedule
D.
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"Assumed Liabilities" has the meaning set forth in Schedule D.
"Assumed Balance Sheet Liabilities" has the meaning set forth in
Schedule D.
"Auditors' Report" means the final auditors' report described in the
Engagement Letter.
"Auditors' Report Expenses" means all amounts payable to D&T pursuant
to the Engagement Letter; provided, however, that, notwithstanding anything to
the contrary in the Agreement, amounts payable as a result of procedures
performed by D&T with regard to the filing of any registration statements by
Purchaser shall not be "Auditors' Report Expenses" and shall be payable by
Purchaser under all circumstances.
"Books and Records" has the meaning set forth in Schedule B.
"Cap" means an amount equal to $40,000,000.
"Cash Payment" means an amount equal to $13,130,389.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, and the regulations promulgated thereunder.
"Closing" means the closing of the transactions contemplated by Section
12.
"Closing Escrow Agreement" means an agreement in substantially the form
of Exhibit 14.
"Closing Escrow Termination Date" means the date that the Closing
Escrow Agreement terminates under Section 3.1 of the Closing Escrow Agreement.
"Closing Working Capital Statement" means a statement reflecting the
Working Capital Acquired Assets and Working Capital Assumed Liabilities as of
the Effective Time. The Closing Working Capital Statement will be prepared on a
basis consistent with the 6/30/98 Working Capital Statement (including in the
determination of all reserves and allowances). For purposes of determining the
count of the inventory included in the Working Capital Acquired Assets, the
Parties will jointly conduct a physical inventory after the close of business on
the last business day immediately preceding the Effective Time.
"Closing Date" means the date on which the Closing occurs.
"COBRA" means the continuation health care coverage requirements of
Section 162(k)/4980 of the Code and Sections 601-608 of ERISA and the
regulations promulgated thereunder.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collar Amount" means an amount equal to $250,000.
"Commitment Letter" means the letter (in substantially the form of
Exhibit 15) between FINOVA Capital Corporation and Parent (and certain
affiliates of Parent) dated September 26, 1998.
"Contracts" has the meaning set forth in the attached Schedule B.
"Converted Securities" means the "Conversion Shares" as defined in the
Parent Note.
"Copyrights" has the meaning set forth in the attached Schedule B.
"Customer Claims" has the meaning set forth in Section 17.
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"Customer Claims Losses" has the meaning set forth in Section 17.
"D&T" means Deloitte & Touche, LLP.
"Derivative Works" means any and all works based upon all or a portion
of the Seller Distributed Software or the Seller Internal Use Software,
including without limitation, translations, condensations, revisions,
modifications, adaptations, conversion, enhancements, releases, additions,
changes or alterations, and any other form into which the Seller Distributed
Software or Seller Internal Use Software may be transformed, adapted or
restated.
"Disclosure Schedule" means the attached Schedule F.
"Documentation" means all documentation and manuals, relating in any
way to the Seller Distributed Software or the Seller Internal Use Software or
the Source Code, User Documentation, programming and technical documentation and
manuals prepared by or on behalf of Seller and currently in use, whether in hard
copy or written form or in machine-readable only format.
"Draft Auditors' Report" means the draft of the Auditors' Report dated
September 22, 1998.
"Effective Time" means the close of business on September 30, 1998.
"Engagement Letter" means the engagement letter between D&T and Seller
dated as of August 24, 1998, a copy of which is attached as Schedule R.
"Environmental Laws" means all federal, state and local statutory and
common laws, regulations or orders relating to pollution, protection of the
environment or workplace health and safety, including those relating to the
manufacture, production, distribution, use, treatment, storage, disposal,
transport or handling, emission, discharge or release of pollutants,
contaminants, chemicals, industrial or toxic materials or wastes, Hazardous
Materials or nuisance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to Seller, any other person that,
together with Seller, would be treated as a single employer under Section 414 of
the Code.
"Escrowed Closing" means a Closing pursuant to clause (b) of the first
sentence of Section 12.1.
"Excluded Assets" has the meaning set forth in Schedule C.
"Excluded Balance Sheet Assets" has the meaning set forth in Schedule
C.
"Excluded Balance Sheet Liabilities" means those liabilities or
obligations identified as such in Schedule E.
"Excluded Employees" means H. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Jr. and ▇▇▇▇▇ ▇▇▇▇.
"Excluded Liabilities" has the meaning set forth in Schedule E.
"Exempt Indemnification Obligations" means (a) with respect to Seller,
the obligations of Seller under Sections 16.2(b), (c) and (d), and (b) with
respect to Purchaser and Parent, the obligations of Purchaser and Parent under
Section 16.3(b).
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"Facilities" means any real property, leaseholds or other interests
currently or formerly owned and operated by Seller in connection with the
Acquired Business and any buildings, plants, structures or equipment currently
or formerly owned or operated by Seller in connection with the Acquired
Business.
"Financial Statements" means the Annual Financial Statements and the
Most Recent Financial Statements.
"Floor" means $500,000.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Applicable Law.
"Governmental Body" means any: (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive or toxic or a pollutant or contaminant under or pursuant
to any Environmental Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or substitutes
therefor, and asbestos and asbestos-containing materials.
"HSD" means Seller's Healthcare Systems Division.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976.
"Indemnification Claim" means a claim for indemnification under Section
16.2 or Section 16.3.
"Indemnitee" means either a Purchaser Indemnified Person seeking
indemnification under Section 16.2 or a Seller Indemnified Person seeking
indemnification under Section 16.3.
"Indemnitor" means either Seller with respect to claims for
indemnification under Section 16.2 or Purchaser and Parent, jointly and
severally, with respect to claims for indemnification under Section 16.3.
"Independent Auditors" means the St. Louis, Missouri office of the
certified public accounting firm of
Ernst & Young.
"Intellectual Property Intangibles" has the meaning set forth in the
attached Schedule B.
"Interim Period" means the time from the completion of an Escrowed
Closing until the Closing Escrow Termination Date.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Lessor Documents" means agreements and instruments in substantially
the form of the attached Exhibit 8.
"Letter of Intent" means the letter of intent between Seller and Parent
dated as of September 17, 1998.
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"Lien" means any mortgage, pledge, hypothecation, claim, security
interest, encumbrance, right or interest of others, lease, license, easement,
encroachment, covenant, title defect, lien, option or right of first refusal.
"Loss" has the meaning set forth in Section 16.1 (subject to the
limitations of Section 16.6).
"Marks" has the meaning set forth in the attached Schedule B.
"Materiality-qualified Representations" means those representations and
warranties of Seller set forth in Section 6 of this Agreement which contain
qualifying language based on materiality or the consequences of a breach of the
representation or warranty having a Seller Material Adverse Effect.
"Most Recent Financial Statements" means the 6/30/98 Balance Sheet and
an unaudited internal income statement for Seller from October 1, 1997 to the
close of business on June 30, 1998.
"Net Working Capital" means the difference between the Working Capital
Acquired Assets, less the Working Capital Assumed Liabilities, as shown on the
Closing Working Capital Statement or the Adjusted 6/30/98 Working Capital
Statement, as applicable.
"Order" means any award, decision, injunction, judgment, order, ruling
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other governmental authority or agency or any
arbitrator.
"Other Benefit Obligations" means all legally enforceable obligations
to provide benefits, other than wages or salary, as compensation for services
rendered, to present or former employees of Seller engaged in the Acquired
Business, other than obligations that are Plans.
"Ordinary Course of Business" means consistent with past custom and
practice (including with respect to nature, quantity and frequency) in the
normal day-to-day business operations of the applicable person.
"Parent" means InfoCure Corporation.
"Parent Agreements" means this Agreement, the ▇▇▇▇▇▇▇▇ Holdings
Transfer Agreement and the other agreements, documents, certificates and
instruments executed by Parent pursuant to, or in connection with, this
Agreement or the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement, including the Parent Note
and the Parent Guaranty.
"Parent Disclosure Schedule" means Schedule EE.
"Parent Financial Statements" means the audited balance sheets of
Parent as of December 31, 1997 and the audited statements of income and cash
flows for Parent for the year ended December 31, 1997, and the unaudited balance
sheets of Parent as of June 30, 1998 and the unaudited statements of income and
cash flows for Parent for the period from January 1, 1998 until June 30, 1998.
Copies of the Parent Financial Statements are attached as Schedule Q.
"Parent Guaranty" means a guaranty in the form of the attached Exhibit
12.
"Parent Material Adverse Change" means an event, change or occurrence
which, individually or together with any other event, change or occurrence, has
a material adverse impact on Parent or the ability of Purchaser and Parent to
perform their obligations under the Purchaser Agreements or the Parent
Agreements; provided, that "Parent Material Adverse Change" shall not be deemed
to include the impact of (a) changes in any laws, rules, regulations, Orders,
decrees, judgments, awards, covenants, restrictions and
5
39
ordinances applicable to Purchaser or Parent or interpretations thereof by any
Governmental Authorities, (b) changes in GAAP, or (c) actions taken by Purchaser
or Parent or omissions by Purchaser or Parent which were taken or omitted, as
applicable, with the prior written consent of Seller or otherwise required to
consummate the Purchaser Agreements or the Parent Agreements.
"Parent Note" means a note in substantially the form of the attached
Exhibit 6.
"Parties" means Purchaser, Parent and Seller.
"Patents" has the meaning set forth in the attached Schedule B.
"Pension Plan" has the meaning given in Section 3(2)(A) of ERISA.
"Permitted Encumbrances" means those Liens identified in Schedule H.
"Personal Property" has the meaning set forth in the attached Schedule
B.
"Personal Property Tax Reimbursement Amount" means an amount equal to
that portion of any personal property or similar Taxes paid by Seller with
respect to any of the Acquired Assets to the extent the same relates to any
period after the Effective Time.
"Plan" has the meaning given in Section 3(3) of ERISA.
"Plan Sponsor" has the meaning given in Section 3(16)(B) of ERISA.
"Proceeding" means an action, audit, claim, demand, suit, arbitration,
grievance, or investigation (whether civil, criminal, administrative, informal
or otherwise) commenced, conducted, heard by or otherwise involving any
governmental authority or agency or arbitrator.
"Proprietary Rights" means any and all trademarks, copyrights, patent
rights, trade secrets, confidential and proprietary information rights.
"Purchase Price" means $13,130,389, subject to adjustment pursuant to
Section 5.1(b).
"Purchaser" means Thoroughbred Acquisition, Inc., a wholly owned
subsidiary of Parent.
"Purchaser Agreements" means this Agreement, the ▇▇▇▇▇▇▇▇ Holdings
Transfer Agreement, and the other agreements, documents, certificates and
instruments executed by Purchaser pursuant to, or in connection with, this
Agreement or the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement, including the Transition
Agreement.
"Purchaser Indemnified Persons" means Purchaser, Parent and each of
their respective officers, directors and employees.
"Purchase Price Adjustment" means an adjustment to the Purchase Price
pursuant to Section 5.1(b).
"Purchase Price Adjustment Amount" means the amount of any adjustment
to the Purchase Price as finally determined pursuant to Section 5.1(b).
"Purchaser's Knowledge" means the actual knowledge of ▇▇▇▇▇▇▇▇▇ ▇.
Fine, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Receivables" has the meaning set forth in the attached Schedule B.
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40
"Restricted Business" means the license to physicians, third party
providers of physician management services to physicians (e.g., MSO's and
service bureaus) and, to the extent they provide practice management services on
behalf of staff physicians, hospitals, of application software that performs, at
a minimum, the following functions: financial management scheduling and
administration.
"Returns" means all returns, declarations, reports, statements, and
other documents required to be filed in respect of Taxes.
"▇▇▇▇▇" means ▇▇▇▇▇ Capital Corporation.
"▇▇▇▇▇ Lease Portfolio" means all currently effective (as of the
Effective Time) leases between ▇▇▇▇▇ and any customer of the Acquired Business.
"▇▇▇▇▇▇▇▇ Holdings" means ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Holdings, Inc.
"▇▇▇▇▇▇▇▇ Holdings Material Adverse Effect" means a material adverse
impact on (a) the assets, acquired under the ▇▇▇▇▇▇▇▇ Holdings Transfer
Agreement, or (b) the ability of ▇▇▇▇▇▇▇▇ Holdings to perform its obligations
under the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement; provided, that "▇▇▇▇▇▇▇▇
Holdings Material Adverse Effect" shall not be deemed to include the impact of
(x) changes in any Applicable Laws or interpretations thereof by any
Governmental Authorities, (y) changes in GAAP, and (z) actions taken by ▇▇▇▇▇▇▇▇
Holdings or omissions by ▇▇▇▇▇▇▇▇ Holdings which were taken or omitted, as
applicable, with the prior written consent of Purchaser or otherwise required to
consummate the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement.
"▇▇▇▇▇▇▇▇ Holdings Transfer Agreement" means an agreement in
substantially the form of Exhibit 7.
"RH Intellectual Property Intangibles" means the following:
(a) the following registered trademarks and all common law trademarks
owned by ▇▇▇▇▇▇▇▇ Holdings (including "InTouch") and used
exclusively in the Acquired Business (collectively, the "▇▇
▇▇▇▇▇"):
(i) ARM (Reg. No. 1583358);
(ii) FI2001 (stylized) (Reg. No. 1959803);
(iii) FISCAL INFORMATION INC. AND DESIGN (Reg. No. 1330595);
(iv) KREDO (stylized) (Reg. No. 1800032);
(v) KREDO (stylized) (Reg. No. 1800036);
(vi) MEDPRINT+ (Reg. No. 2104072);
(vii) PAR (Reg. No. 1414772);
(viii) SENTINEL SERIES (Reg. No. 1650407); and
(ix) TELEDUN (Reg. No. 1364302);
(b) all patents, patent applications, and inventions and discoveries
owned by ▇▇▇▇▇▇▇▇ Holdings and used exclusively in connection with
the Acquired Business that may be patentable (collectively, the
"RH PATENTS");
(c) the following registered copyrights and all other copyrights in
both published works and unpublished works owned by ▇▇▇▇▇▇▇▇
Holdings and used exclusively in the Acquired Business
(collectively, the "RH COPYRIGHTS"):
(i) THE DOCTOR'S GUIDE TO IN-HOUSE COMPUTERS (Reg. No. TX
917625);
(ii) THE PATIENT-CENTERED SYSTEM OF CARE (Reg. No. TX
4442443);
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41
(iii) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ CORPORATION LAB SYSTEMS MANUAL (Reg. No.
TX 2913632);
(iv) ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ CORPORATION LAB/XRAY SUB SYSTEMS (Reg.
No. TX 2892935);
(v) THE ▇▇▇▇▇▇▇▇ SOLUTION - THE R/2000 (Reg. No. TX 4456161);
(vi) YOUR INFORMATION MANAGEMENT STRATEGY (Reg. No. TX
4522823);
(vii) MEDICAL ACCOUNTING SYSTEMS EVALUATING GUIDEBOOK (Reg. No.
TX 917624); and
(viii) HOSPITAL FORMS AUDIT (Reg. No. A 550634).
(d) all rights in mask works owned by ▇▇▇▇▇▇▇▇ Holdings and used
exclusively in the Acquired Business (collectively, "RH RIGHTS IN
MASK WORKS");
(e) all rights as owner or licensee of such know-how, trade secrets,
confidential information, customer lists, software, technical
information, Documentation, Technology, data, process technology,
plans, and drawings as are used exclusively in the Acquired
Business (collectively, "RH TRADE SECRETS");
(f) the right to bring suit or make any claim in its name for past or
future infringement, misappropriation or other claims related to
the ▇▇ ▇▇▇▇▇, the RH Patents, the RH Copyrights, the RH Rights in
Mask Works and the RH Trade Secrets.
"RH Permitted Encumbrances" means minor imperfections of title, none of
which materially detracts from the value of or impairs the use of the property
subject thereto.
"Rights in Mask Works" has the meaning set forth in the attached
Schedule B.
"Sale Transaction" means a sale of all or a substantial portion of the
Acquired Assets.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means The ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Company.
"Seller Agreements" means this Agreement and other agreements,
documents, certificates and instruments executed by Seller pursuant to, or in
connection with, this Agreement.
"Seller Indemnified Persons" means Seller and its officers, directors
and employees.
"Seller Material Adverse Effect" means a material adverse impact on (a)
the Acquired Assets, the Assumed Liabilities or the Acquired Business, or (b)
the ability of Seller to perform its obligations under the Seller Agreements;
provided, that "Seller Material Adverse Effect" shall not be deemed to include
the impact of (x) changes in any Applicable Laws or interpretations thereof by
any Governmental Authorities, (y) changes in GAAP, and (z) actions taken by
Seller or omissions by Seller which were taken or omitted, as applicable, with
the prior written consent of Purchaser or otherwise required to consummate the
Seller Agreements.
"Seller Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by Seller or an ERISA Affiliate of Seller.
"Seller Plan" means all Plans of which Seller or an ERISA Affiliate of
Seller is or was a Plan Sponsor, or to which Seller or an ERISA Affiliate of
Seller otherwise contributes or has contributed, or in which Seller or an ERISA
Affiliate of Seller otherwise participates or has participated, in each case
which provides or is obligated to provide benefits in respect of employees or
former employees of Seller engaged in the Acquired Business.
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42
"Seller Distributed Software" means all computer software and databases
distributed at any time by Seller in connection with the Acquired Business
(including software licensed from ▇▇▇▇▇▇▇▇ Holdings), in all languages and
versions, including all Source Code and object code, enhancements,
modifications, revisions, upgrades and releases thereto.
"Seller Internal Use Software" means all computer software and
databases used by Seller in connection with the operation of the Acquired
Business.
"Seller VEBA" means a VEBA whose members include employees of Seller or
any ERISA Affiliate of Seller.
"Seller's Consent" means an instrument in substantially the form of the
attached Exhibit 9.
"Seller's Knowledge" means the actual knowledge of H. ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇.
"Shared Assets" means the Shared Real Property, the Shared Intellectual
Property and all other properties, rights and assets of Seller, tangible and
intangible, whether owned, leased or licensed, that are used by Seller in
connection with the Shared Services.
"Shared Intellectual Property" means all fictional business names,
trading names, registered and unregistered trademarks, service marks, patents,
patent applications, inventions and discoveries that may be patentable,
copyrights in both published works and unpublished works, all rights in mask
works, know-how, trade secrets, confidential information, customer lists,
software, data, process technology, plans and drawings and other Proprietary
Rights of Seller, whether owned, leased, or licensed, that are used by Seller in
connection with the Shared Services, including the assets identified in Schedule
O.
"Shared Real Property" means the locations identified in the attached
Schedule M.
"Shared Services" means those services identified in the attached
Schedule N.
"Source Code" means the source code, human-readable version of the
Seller Distributed Software and the Seller Internal Use Software.
"Subordination Agreement" means an agreement in substantially the form
of Exhibit 11.
"Taxes" means all Federal, state, local, foreign, and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall profits,
customs, duties, or other taxes, fees, assessments, or charges of any kind
whatever, together with any interest and any penalties, additions to tax, or
additional amounts with respect thereto.
"Technology" means any and all internally prepared flow charts and
technical designs and documents created by or for Seller in the process of
creating the Seller Software and the Source Code.
"Termination-related Amounts" means all amounts payable by Seller to
those Acquired Business Employees whose employment with Seller is terminated by
Seller according to Section 13.1 and who are (a) not offered employment by
Purchaser effective as of the Effective Time according to Section 13.1, or (b)
who are offered employment by Purchaser but the terms and conditions of such
offered employment are such that even if the Acquired Business Effective Time
Employee accepts the offer, the Acquired Business Effective Time Employee will
be entitled to severance under Seller's standard severance policy or any
compensation or benefits under the WARN Act, either under law, written agreement
or applicable Seller policies as a result of
43
termination of such persons' employment, including severance and any liability
under the WARN Act. Seller and Purchaser acknowledge that (a) the
Termination-related Amounts shall not be treated as Assumed Liabilities for
purposes of this Agreement, (b) amounts payable to or in respect of such
employees as wages, commissions or benefits earned with respect to all periods
ending on or prior to the Effective Time shall not be Termination-related
Amounts, and (c) no amounts payable to or in respect of the Excluded Employees,
regardless of the cause, shall be Termination-related Amounts.
"Termination Date" means October 31, 1998.
"Third Party Claim" means a claim, suit or proceeding, including
binding arbitration or audit by a taxing authority, instituted against an
Indemnitee which, if prosecuted successfully, would be a matter for which the
Indemnitee would be entitled to indemnification under Section 16.2 or 16.3.
"Third Party Distributed Software" means computer software and
databases distributed by Seller in connection with the Acquired Business at any
time under license from third parties, including the software and databases
identified as "Third Party Distributed Software" in Schedule U.
"Third Party Internal Use Software" means computer software and
databases used by Seller for internal purposes in connection with the Acquired
Business under license from third parties.
"Transaction Expenses" has the meaning set forth in Schedule E.
"Trade Secrets" has the meaning set forth in the attached Schedule B.
"Transition Services" means those services described in Schedule J.
"Transition Agreement" means an agreement in substantially the form of
Exhibit 13.
"User Documentation" means that certain Documentation prepared by or on
behalf of Seller for use by users of the Seller Distributed Software and the
Third Party Distributed Software.
"VEBA" means a voluntary employees' beneficiary association under
Section 501(c)(9) of the Code.
"WARN Act" means the Workers Adjustment and Retraining Notification
Act, 29 U.S.C. 2101 et. seq., and the regulations promulgated thereunder.
"Working Capital Acquired Assets" means those Acquired Assets (net of
all applicable reserves and allowances) identified as such in Exhibit 1.
"Working Capital Assumed Liabilities" means those Assumed Liabilities
identified as such in Exhibit 1.
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SCHEDULE B
Acquired Assets
"Acquired Assets" means all properties, rights and assets of Seller of every
nature, kind and description used exclusively in the Acquired Business (as the
same may change in the Ordinary Course of Business through the Effective Time
and wherever located), including without limitation, the assets described below
in this Schedule B. Notwithstanding the preceding sentence or anything else to
the contrary in this Agreement, those properties, rights and assets of Seller
used exclusively in connection with HSD's electronic medical records/clinical
product line shall not be Acquired Assets.
PERSONAL PROPERTY. All furniture, fixtures, furnishings, machinery, equipment,
vehicles, leasehold improvements, goods, supplies, inventory (including spare
parts, work-in-process and materials) and other tangible personal property, in
each case as may be used exclusively in the Acquired Business and, to the extent
assignable, all related warranties (collectively, the "PERSONAL PROPERTY").
CONTRACTS. All rights of Seller under leases, contracts, license agreements,
purchase orders, sales orders and agreements of Seller that relate exclusively
to the Acquired Business or any of the Acquired Assets or Assumed Liabilities,
including all contracts and license agreements with customers of the Acquired
Business and all leases for the Acquired Business Leased Real Property but
excluding all of those certain contracts referred to in Schedule C
(individually, a "CONTRACT" and collectively, the "CONTRACTS").
BOOKS AND RECORDS, ETC. Those books, records, accounts, customer lists, files,
data, videos, catalogues, and sales materials reasonably required by Purchaser
in the conduct of the Acquired Business (collectively, the "BOOKS AND RECORDS").
LICENSES AND PERMITS. To the extent permitted under applicable law or
regulation, all licenses, permits, certificates and Governmental Authorizations
of Seller used or obtained exclusively in connection with the Acquired Business.
RECEIVABLES. All accounts, notes or other receivables generated exclusively by
the Acquired Business (collectively, the "RECEIVABLES").
INTELLECTUAL PROPERTY INTANGIBLES. All of the following (and, where applicable,
all registrations and related goodwill):
(i) all common law trademarks used exclusively in the Acquired Business
(collectively, the "MARKS");
(ii) all patents, patent applications, and inventions and discoveries used
exclusively in connection with the Acquired Business that may be
patentable (collectively, the "PATENTS");
(iii) all copyrights in both published works and unpublished works used
exclusively in the Acquired Business including web page design and
related source code (but only to the extent used exclusively in the
Acquired Business) (collectively, the "COPYRIGHTS");
(iv) all rights in mask works used solely in the Acquired Business
(collectively, "RIGHTS IN MASK WORKS");
(v) all rights as owner or licensee of such know-how, trade secrets,
confidential information, customer lists, Seller Distributed Software,
Seller Internal Use Software, Third Party Distributed Software, Third
Party Internal Use Software, technical information, financial,
marketing and business data, Documentation,
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45
Technology, process technology, plans, and drawings as are used
exclusively in the Acquired Business (collectively, "TRADE SECRETS");
and
(vi) the right to bring suit or make any claim in its name for past or
future infringement, misappropriation or other claims related to the
Marks, the Patents, the Copyrights, the Rights in Mask Works and the
Trade Secrets.
The Acquired Assets identified in the foregoing clauses (i)-(vi), inclusive are
collectively referred to as the "INTELLECTUAL PROPERTY INTANGIBLES").
CLAIMS OR CAUSES OF ACTION. All claims, demands, rights or choses in action
(other than claims under Seller's policies of insurance) arising out of
occurrences before or after the Effective Time with respect to any of the other
Acquired Assets.
MAIL AND COMMUNICATIONS. All rights to receive mail and other communications
addressed to Seller and relating exclusively to the Acquired Business, the
Acquired Assets and/or the Assumed Liabilities, including without limitations
payments with respect to the Receivables.
CREDITS, PREPAID EXPENSES, DEPOSITS, ETC. All prepaid expenses and deposits
reflected in the 6/30/98 Balance Sheet that are not Excluded Balance Sheet
Assets.
GUARANTEES, INDEMNITIES, ETC. All guarantees, warranties, indemnities or similar
rights of Seller exclusively in respect of any Acquired Asset or Assumed
Liability.
CERTAIN OTHER ASSETS. Other assets that are recorded in the 6/30/98 Balance
Sheet and not otherwise specifically referred to in this Schedule B, except for
the Excluded Balance Sheet Assets.
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46
SCHEDULE C
Excluded Assets
"Excluded Assets" means all assets of Seller other than the Acquired Assets,
including the following:
ASSETS USED IN OTHER OPERATIONS. All properties, rights and assets of Seller,
wherever located, which are not used exclusively in connection with the
operation of the Acquired Business, including the Shared Assets.
ELECTRONIC MEDICAL RECORDS/CLINICAL PRODUCT LINE ASSETS. All properties, rights
and assets of Seller either (i) acquired by Seller pursuant to the Acquisition
Agreement among Seller, Advanced Medical Applications, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇ dated February 28, 1997 (including all enhancements or modifications
to or derivative works of such acquired properties, rights and assets), or (ii)
used exclusively in connection with HSD's electronic medical records/clinical
product line, including (A) the lease for the premises located in Irvine,
California, and (B) each of the following properties rights and assets of Seller
to the extent used exclusively in connection with HSD's electronic medical
records/clinical product line: all registered trademarks and common law
trademarks, all inventions and discoveries, all copyrights in both published
works and unpublished works, all rights in mask works and all rights as owner or
licensee of such know-how, trade secrets, confidential information, customer
lists, software, databases technical information, documentation, technology,
data, process technology, plans, and drawings and the right to infringement and
other claims related to the properties, rights and assets described in this
clause (B).
CERTAIN BALANCE SHEET ASSETS. Those assets identified on the 6/30/98 Balance
Sheet as "Cash", "Inter-company Buyout, ▇▇▇▇▇", "IBM Maintenance Rebate
Receivable", Notes Receivable-Employees", "Employee Advances", "Employee
Advances-Colorado", "Employee Advances-Florida", "Intercompany ▇▇▇▇▇",
"Investment-Officer's Compensation", "Minimum Pension Asset", "Prepaid Sales
Commissions (Birmingham, Sentinel, San Diego and Portland)", "Prepaid
Taxes-Colorado", and "Post-retirement Benefits (contra-liabilities)"
(collectively, the "EXCLUDED BALANCE SHEET ASSETS").
RECORDS. Seller's corporate minute books and such other books, records,
accounts, customer lists, files, data, videos, catalogues, and sales materials
that are not reasonably required by Purchaser in the conduct of the Acquired
Business.
CERTAIN CONTRACTS. All leases, contracts, purchase orders, sales orders and
agreements of Seller that do not relate exclusively to the Acquired Business or
any of the Acquired Assets or Assumed Liabilities, including (i) the Acquisition
Agreement among Seller, Advanced Medical Applications, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇ dated February 28, 1997, (ii) the Employment Agreements between
Seller and each of ▇▇▇▇ Proud, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ Le and ▇▇▇▇ ▇▇▇▇, (iii) the
Escrow Agreement among Seller, Bank One Trust Company, Fiscal Information, Inc.,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ dated June 30, 1997, (iv)
contracts with ▇▇▇▇▇▇-Micro/Ingram Alliance, Hewlett-Packard (other than those
listed on Schedule AA), Cognos Corporation(desktop OEM), Distinct Corporation,
Data Tech, IBM (other than those listed on Schedule AA), Microage Computer
Center, Microtouch, Pioneer-Standard Electronics, Inc., Sybase, 3com, AT&T,
Cables To Go, Inc., NEC Business Communications, Lexmark, Wysitech, Inc. (other
than those listed on Schedule AA), Sun Microsystems VAR Agreement and E.R.T.H.
Systems, (v) any agreements, leases, licenses or commitments between Seller and
▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Holdings, (vi) the lease agreement with Shallowford Commons
Ltd. Partnership for Chattanooga, TN property, (vii) Business Revenue Systems,
(viii) Netcom, (ix) Superior Consulting, (x) American Medical Association
program, (xi) Link Technologies, (xii) Mini-Computer Business Applications,
(xiii) Deloitte and Touche, (xiv) Cipher Corporation, (xv) Partners in
Healthcare Management, (xvi) Integrated Medical Management, (xvii) QMS, (xviii)
Agreement (sale of certain assets) with Florida Radiology Associates, P.A., and
(xix) Lease Agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust.
REFUNDS, REBATES, ETC. All rights of Seller to any claims for refunds of Taxes
or deposits in respect of Taxes and all rights of Seller to any rebates or
similar payments or consideration.
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47
SELLER AGREEMENTS. All rights of Seller under the Seller Agreements.
BANK ACCOUNTS. Seller's bank accounts, checkbooks and cancelled checks, whether
or not used in connection with the Acquired Business.
INSURANCE. All rights of Seller under policies of insurance, including claims
arising out of occurrences with respect to the Acquired Assets, the Assumed
Liabilities or the Acquired Business at any time on or prior to the Effective
Time.
NON-TRANSFERABLE ASSETS. All assets of Seller used exclusively in connection
with the Acquired Business which are not transferable to Purchaser, whether by
operation of law or otherwise.
CERTAIN REAL PROPERTY. The Shared Real Property and the Acquired Business Owned
Real Property.
MISCELLANEOUS RIGHTS AND ASSETS. All qualifications to do business and taxpayer
identification numbers.
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48
SCHEDULE D
Assumed Liabilities
"Assumed Liabilities" means the following liabilities of Seller:
EXECUTORY OBLIGATIONS. The executory obligations of Seller under the Contracts
(collectively, the "ASSUMED EXECUTORY OBLIGATIONS").
BALANCE SHEET LIABILITIES. The liabilities of Seller identified in the 6/30/98
Balance Sheet (except for the Excluded Balance Sheet Liabilities), subject to
changes in the amount of such liabilities in the Ordinary Course of Business
from June 30, 1998 to the Effective Time (collectively, the "ASSUMED BALANCE
SHEET LIABILITIES").
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49
SCHEDULE E
Excluded Liabilities
"Excluded Liabilities" means all liabilities or obligations of Seller other than
the Assumed Liabilities, including the following:
EXCLUDED BALANCE SHEET LIABILITIES. The liabilities identified in the 6/30/98
Balance Sheet as: "Payroll Withholdings", "Salary, Wages and Bonus Payable",
"Income Taxes Payable", "Personal Property Taxes Payable", "Payroll Taxes
Payable", "Sales Tax Payable", "Group Benefits Payable", "President's Club
Expenses Payable", "Employee Fund-Recycling", "Sprint Signing Bonus-Short Term",
"Other Postretirement Benefits", and "Accrued Compensation (pension and
long-term officer)" (collectively, the "EXCLUDED BALANCE SHEET LIABILITIES").
TRANSACTION EXPENSES. All expenses incurred by Seller in connection with the
authorization, preparation, negotiation and consummation of this Agreement,
including without limitation, fees and expenses of BT Alex. ▇▇▇▇▇ Incorporated,
counsel, and accountants (collectively, the "TRANSACTION EXPENSES").
"Transaction Expenses" shall not include the Auditors' Report Expenses or
amounts payable as a result of procedures performed by D&T with regard to the
filing of any registration statements, reports on Form 8-K or other filings
under the Securities Act or the Securities Exchange Act of 1934, as amended, by
Purchaser or Parent.
EXCLUDED CONTRACTS. All executory obligations under those liabilities arising
out of those leases, contracts, purchase orders, sales orders and agreements of
Seller that are Excluded Assets (except and only to the extent any such
executory obligation is an Assumed Balance Sheet Liability).
CERTAIN TAXES. All liabilities or obligations, whenever due, in respect of Taxes
arising out of the ownership of the Acquired Assets or the operation of the
Acquired Business prior to the Effective Time, except and to the extent any such
liabilities are Assumed Balance Sheet Liabilities or Taxes for which Purchaser
is liable under Section 5.2.
CERTAIN EMPLOYEE-RELATED LIABILITIES. All liabilities or obligations arising out
of or related to the employment of the Acquired Business Employees prior to the
Effective Time, including without limitation liabilities or obligations for
unpaid wages, salaries, commissions, benefits, vacation pay, sick pay, or
holiday pay, withholding, unemployment or workers compensation taxes,
contributions or benefits, and contributions or premiums payable to, under or
with respect to any employee benefit plan or arrangement or obligations under
any self-funded employee benefit plan or arrangement, excluding any such
liabilities to the extent that are Assumed Balance Sheet Liabilities.
TERMINATION-RELATED AMOUNTS. All liabilities or obligations in respect of the
Termination-related Amounts (provided that Purchaser acknowledges that under
certain circumstances described in Section 13.2, Purchaser may be obligated to
reimburse Seller for a portion of the Termination-related Amounts).
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AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
THE ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ COMPANY ("Seller"), THOROUGHBRED ACQUISITION,
INC. ("Purchaser") and INFOCURE CORPORATION ("Parent") agree as follows:
RECITALS:
---------
Seller, Purchaser and Parent have entered into an Asset Purchase
Agreement dated as of September 28, 1998 (the "Agreement") and a letter amending
the Agreement (the "Side Letter") dated as of the same date.
Capitalized terms used in this Amendment No. 1 (the "Amendment") that
are defined in the Agreement and not otherwise defined in this Amendment shall
have the meanings set forth in the Agreement.
The Parties desire by this Amendment to amend the Agreement and to
supersede and render null and void the Side Letter.
1. AMENDMENT. The Agreement shall be amended as set forth in this Section
1. Except as expressly set forth in this Section 1, the Agreement shall
not be amended, modified or otherwise affected by this Amendment and
the Agreement shall remain in full force and effect.
1.1 The List of Schedules shall be amended to add: "FF Section 22
Contracts". The List of Exhibits shall be amended to add the
following: "Exhibit 16 Form of Reimbursement Agreement",
"Exhibit 17 Form of Assignment of Certain Employee Claims",
and "Exhibit 18 Form of Bridge Note", and to change Exhibit 14
to "Intentionally Omitted".
1.2 Sections 6.1 and 6.2 shall be amended to change (a) the
references to ▇▇▇▇▇▇▇▇ Holdings' "Articles of Incorporation"
to "Certificate of Incorporation" and (b) the references to
▇▇▇▇▇▇▇▇ Holdings' "Code of Regulations" to "Bylaws".
1.3 Section 6.19 shall be deleted in its entirety and replaced
with the following:
"▇▇▇▇▇▇▇▇ Holdings is the sole party in interest as to the
Parent Note and the Bridge Note and any Converted Securities
and is acquiring the Parent Note and the Bridge Note and any
Converted Securities for it's own account, for investment only
and not with a view toward the resale or distribution thereof.
Seller and ▇▇▇▇▇▇▇▇ Holdings acknowledge that none of the
Parent Note, the Bridge Note or the Converted Securities are
registered under the Securities Act or the securities laws of
any state or other jurisdiction. ▇▇▇▇▇▇▇▇ Holdings is an
"accredited investor" as defined in Regulation D promulgated
under the Securities Act. Seller agrees that ▇▇▇▇▇▇▇▇ Holdings
will not attempt to pledge, transfer, convey or otherwise
dispose of any of the Parent Note, the Bridge Note or the
Converted Securities or any interest therein except in a
transaction that is the subject of either (a) an effective
registration statement under the Securities Act and any
applicable state securities laws or (b) an opinion of counsel,
which counsel and which opinion of counsel shall be reasonably
satisfactory to Parent, to the effect that such registration
is not required."
1.4 All references to ▇▇▇▇▇▇▇▇ Holdings' being an Ohio corporation
shall be amended to refer to ▇▇▇▇▇▇▇▇ Holdings as a Delaware
corporation.
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1.5 Section 7.2(f) and Sections 16.6(f)(vii) and 16.6(f)(viii)
shall be amended to provide in each case that those Sections
shall not limit the remedies of Purchaser and Parent under
Section 22.
1.6 Section 9.4 shall be deleted in its entirety and replaced with
the following:
"9.4 CONSENTS, WAIVERS AND APPROVALS. Seller, Purchaser and
Parent will each use best efforts to obtain prior to the
Closing (a) the Lessor Documents from each lessor of any
Acquired Business Leased Real Property and (b) all other
material consents (including under the Section 22 Contracts),
waivers, approvals, and releases, and to make prior to the
Closing all material filings (including Governmental
Authorizations and filings with Governmental Bodies), in each
case as necessary to effect the transactions contemplated
hereby (provided, that Seller shall not be obligated to obtain
any consents, waivers, approvals or releases from Customers).
Seller, Purchaser and Parent will each use best efforts to
cause NEC to enter into an agreement with Purchaser and Parent
to continue Purchaser's right to use certain equipment at
Seller's San Diego facility on substantially the same terms
and conditions as currently in effect. To the extent such
agreement is not obtained, the Parties will act with respect
to that portion of Seller's existing agreement with NEC
relative to such equipment in a manner similar that
contemplated by Section 9.11. All such consents, waivers,
releases, approvals and filings will be in writing and in form
and substance reasonably satisfactory to the other Party."
1.7 Sections 9.13 and 9.14 shall be deleted in their entirety and
replaced with "Intentionally Omitted".
1.8 Section 10.12 shall be deleted and replaced in its entirety by
the following:
"10.12 ASSIGNMENT OF CERTAIN EMPLOYEE CLAIMS. Seller shall
have executed and delivered the Assignment of Certain Employee
Claims."
1.9 Section 11.8 shall be amended by adding the following at the
end on the Section: "and the Bridge Note".
1.10 Section 11.11 shall be deleted and replaced in its entirety by
the following:
"11.11 REIMBURSEMENT AGREEMENT. Purchaser and Parent shall
have executed and delivered the Reimbursement Agreement."
1.11 A new Section 11.12 shall be added to the Agreement as
follows:
"11.12 ESTIMATED SECTION 22 CONTRACT COSTS. Seller shall have
determined in its reasonable good faith discretion that the
likely amount of Section 22 Contract Costs payable by Seller
under Section 22 is less than or equal to $500,000; provided,
however, that if Purchaser exercises its option under the
following sentence, the condition to closing set forth in this
sentence shall be deemed waived by Seller. In the event Seller
determines in its reasonable good faith discretion that the
likely amount of Section 22 Contract Costs payable by Seller
under Section 22 is greater than $500,000 and notifies
Purchaser in writing of the same, Purchaser may cause the
condition in the first sentence of this Section to be deemed
waived by Seller by providing Seller with a written notice
(within two (2) business days after receipt of Seller's
written notice) pursuant to which Purchaser agrees to assume
all liability for the Section 22 Contract Costs greater than
$500,000 (in such event, Purchaser may treat the Section 22
Contract Costs in excess of $500,000 as Customer Claims Losses
under Section 17)."
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1.12 Section 12.1 shall be deleted and replaced in its entirety by
the following:
"12.1 TIME AND PLACE. The Closing will be held at the offices
of Coolidge, Wall, Womsley & Lombard, Dayton Ohio, commencing
at 9:00 a.m. on the later of (a) the second business day after
satisfaction or waiver of all of the conditions set forth in
Sections 10 and 11, or (b) the second business day after the
earlier of October 12, 1998 or delivery to Seller by Purchaser
of the list contemplated by Section 13.1, or at such other
place or time or on such other date as the Parties may agree."
1.13 All references in Sections 13.1 and 19.1 to an "Escrowed
Closing" or the "Closing Escrow Termination Date" shall be
deleted in their entirety.
1.14 Section 18.12(a) shall be deleted and replaced in its entirety
by the following:
"Any controversy, dispute or claim arising out of or relating
to this Agreement or the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement
(except in connection with the determination of a Purchase
Price Adjustment Amount or a Personal Property Tax
Reimbursement Amount or enforcement of the Parent Note or the
Bridge Note or a breach of Section 19) will be submitted to
arbitration in accordance with the commercial rules of the
AAA, by which each Party will be bound."
1.15 A new Section 22 shall be added to the Agreement as follows:
"22. REIMBURSEMENT OF CERTAIN COSTS.
22.1 GENERAL. Seller shall reimburse Purchaser
and Parent for all "Section 22 Contract
Costs" as described in Section 22.3.
22.2 DEFINITIONS AND LIMITATIONS. "Section 22
Contract Costs" means the following costs
paid by Purchaser as a result of or as a
condition to obtaining any required consents
to the assignment from Seller to Purchaser
of the "Section 22 Contracts": (a) all fees,
costs and expenses payable as a condition to
such consent to assignment, and (b) either
(i) the difference of (A) all license and
support fees actually paid by Purchaser with
respect to that Third Party Distributed
Software which is the subject of the Section
22 Contracts that is distributed during the
period from the Effective Time until the
respective expiration dates of the Section
22 Contracts (in their form as of the
Effective Time) to former customers of the
Acquired Business or to customers of the
Acquired Business as of the Effective Time,
less (B) the license and support fees that
would have been payable by Seller under the
Section 22 Contracts if the transactions
contemplated by this Agreement had not
occurred and the applicable Third Party
Distributed Software was distributed to such
customers and former customers by Seller, or
(ii) if the other party to the Section 22
Contract refuses to grant an assignment, the
difference between (A) all license and
support fees actually paid by Purchaser with
respect to a reasonably comparable software
product to the Third Party Distributed
Software which is the subject of the
applicable Section 22 Contract that is
distributed during the period from the
Effective Time until the expiration date of
the applicable Section 22 Contract (in its
form as of the Effective Time) to former
customers of the Acquired Business or to
customers of the Acquired Business as of the
Effective Time, less (B) the license and
support
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fees that would have been payable by Seller
under the applicable Section 22 Contract if
the transactions contemplated by this
Agreement had not occurred and the
applicable Third Party Software was
distributed to such customers and former
customers by Seller. "Section 22 Contracts"
means those agreements, contracts and
licenses identified in Schedule FF.
Notwithstanding anything to the contrary
under this Agreement, Seller's obligations
under this Section 22 shall expire on
September 30, 2001.
22.3 REIMBURSEMENT PROCEDURES. Purchaser shall
provide Seller a monthly report of all
Section 22 Contract Costs. All such reports
shall become final and binding on the
Parties unless Seller objects in writing
within 30 days after receipt of the report.
To the extent that Seller becomes obligated
to pay any amounts under this Section,
Seller's payment shall be effected first
through a reduction of the Principal Sum (as
defined in the Parent Note) in accordance
with the Parent Note, with any remainder
paid by Seller by wire transfer within
thirty (30) days after the applicable report
becomes final (whether by agreement, by
failure of Seller to timely object or by
resolution under Section 18.12)."
1.16 Schedule A shall be amended to add the following definitions:
"Reimbursement Agreement" means an agreement in substantially
the form of Exhibit 16.
"Assignment of Certain Employee Claims" means an assignment in
substantially the form of Exhibit 17."
"Bridge Note" means an promissory note in substantially the
form of Exhibit 18."
1.17 Schedule A shall be amended to delete and replace certain
definitions as set forth below:
""Effective Time" means 12:01 a.m., Dayton, Ohio time, on
October 23, 1998."
""Parent Agreements" means this Agreement, the ▇▇▇▇▇▇▇▇
Holdings Transfer Agreement and the other agreements,
documents, certificates and instruments executed by Parent
pursuant to, or in connection with, this Agreement or the
▇▇▇▇▇▇▇▇ Holdings Transfer Agreement, including the Parent
Note, the Bridge Note and the Parent Guaranty."
""Purchaser Agreements" means this Agreement, the ▇▇▇▇▇▇▇▇
Holdings Transfer Agreement, the Reimbursement Agreement, the
Assignment of Certain Employee Claims and the other
agreements, documents, certificates and instruments executed
by Purchaser pursuant to, or in connection with, this
Agreement or the ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement,
including the Transition Agreement."
"Working Capital Acquired Assets" means those classes of
Acquired Assets (net of all applicable reserves and
allowances) identified as such on the Adjusted 6/30/98 Working
Capital Statement.
"Working Capital Assumed Liabilities" means those classes of
Assumed Liabilities identified as such on the Adjusted 6/30/98
Working Capital Statement.
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1.18 Schedule A shall be amended to add the following at the end of
the definition of RH Intellectual Property Intangibles:
"provided that the RH Intellectual Property Intangibles shall
not include any right, title or interest of ▇▇▇▇▇▇▇▇ Holdings
in any properties, rights or assets used exclusively in
connection with HSD's electronic medical records/clinical
product line, including registered trademarks and common law
trademarks, inventions and discoveries, copyrights in both
published works and unpublished works, rights in mask works
and rights as owner or licensee of such know-how, trade
secrets, confidential information, customer lists, software,
databases technical information, documentation, technology,
data, process technology, plans, and drawings and the right to
infringement and other claims related to such properties,
rights and assets."
1.19 Schedule A shall be amended to delete the following
definitions: "6/30/98 Closing Working Capital Statement",
"Closing Escrow Agreement", "Closing Escrow Termination Date",
"Escrowed Closing", and "Interim Period".
1.20 The reference to "6/30/98 Working Capital Statement" in the
definition in Schedule A of "Closing Working Capital
Statement" shall be changed to "Adjusted 6/30/98 Working
Capital Statement".
1.21 The reference to the registration number of the "MEDPRINT+" in
the definition of RH Intellectual Property Intangibles shall
read: "2104073".
1.22 Schedule X shall be deleted and replaced by the attached
Schedule X.
1.23 Schedule F shall be amended as follows:
1.23.1 Clause (a) of Section 6.5(a) shall be deleted and
replaced by the following: Bankruptcies: FPA Medical
Management and its affiliates, Gonzaga Medical Group,
Sterling Medical Group and Humana, Inc.
1.23.2 Clause (a) of Section 6.12(f) shall be deleted and
replaced by the following:
The following is a listing of customers with whom we
are attempting to resolve
implementation/delivery/installation issues: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, MD, Radiology Group of New Brunswick,
Quantum Southwest Medical, SCH Management Solutions,
St. Tammany Parish Hospital, ▇▇▇▇▇▇ Radiology
Medical, RMI Physicians Service Corp, Drs. Mori, Bean
& ▇▇▇▇▇▇, Assn. of Alexandria Radiologists, OB-GYN
Associates, Statesville-Iredell Radiologists, Retina
Assoc. of Knoxville, Consultants in Gastroenterology,
Monterey Medical Group, Catamount Associates, Metro
Washington Ortho, Pocono Computer Services,
Associates on Radiology, Advanced Healthcare
Resources, Kentuckiana Allergy, Previa, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, M.D., Dr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Drs. ▇▇▇▇▇▇,
▇▇▇▇▇▇ and ▇▇▇▇▇, Drs. Black, Penn, Kanaya and
▇▇▇▇▇▇▇▇▇▇▇ and Consulting Radiologists, Ltd.
Presseia Services Corporation has notified Seller
that Presseia desires to terminate its agreement with
Seller as a result of the transactions contemplated
by this Agreement.
1.24 Schedule AA is deleted and replaced in its entirety by the
attached Schedule AA.
1.25 A new Schedule FF shall be added in the form of the attached
Schedule FF.
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1.26 Exhibit 1 shall be deleted and replaced in its entirety by the
attached Exhibit 1.
1.27 Exhibit 7 shall be deleted and replaced in its entirety by the
attached Exhibit 7.
1.28 Exhibit 13 shall be deleted and replaced in its entirety by
the attached Exhibit 13.
1.29 Exhibit 14 shall be amended to read as follows: "Intentionally
Omitted".
1.30 New Exhibits 16, 17 and 18 shall be added in the form of the
attached Exhibits 16, 17 and 18.
2. MISCELLANEOUS. This Amendment will be governed by and construed and
enforced in accordance with the laws of the state of Ohio as applied to
contracts between Ohio residents executed and performed wholly within
that state. The Side Letter is rendered null and void by this
Amendment.
The parties have executed this Amendment effective as of the ____ day
of October, 1998.
THE ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ COMPANY
By
----------------------------------
Title:
------------------------------
INFOCURE CORPORATION
By
----------------------------------
Title:
------------------------------
THOROUGHBRED ACQUISITION, INC.
By
----------------------------------
Title:
------------------------------
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SCHEDULE X
See the attached Annexes 1 and 2
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SCHEDULE AA
Certain Contracts
See the attached Annex 1
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Annex 1 to Schedule AA
Contracts
NOTE: Many contracts listed in Sections (A) and (B) of this Annex are included
even though such contracts may not be "material" as defined in Section 6.12(a).
(A) COPIES PROVIDED TO PARENT:
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1. AIS Corporation
2. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
3. B & P Imaging
4. Chicago Title Insurance Company
5. Coverall Cleaning
6. Context Software Systems, Inc.
7. CyData, Inc.
8. Danka-American
9. Digital Information Systems Corporation (DISC) (nka Synergex)
10. Dynamic Concepts Incorporated
11. Enhanced Software Tech.
12. Envoy Services Networked Partner Agreement
13. Exclusive Software Services
14. Fort ▇▇▇▇ Escrow Services, Inc. (Kredo)
15. Fort ▇▇▇▇ Escrow Services, Inc. (ProMed)
16. Hewlett Packard (Support Services Agreement for Resellers)
17. Hewlett Packard (System Staging and Installation Agreement)
18. IBM Service Agreement (Sentinel)
19. IBM Service Agreement (R/2000 & ProMed)
20. ICX Corporation
21. Intermec Technologies Corporation
22. Intersolv Maintenance
23. Minolta Leasing Services
24. ▇▇▇▇▇ ▇▇▇▇▇▇ Settlement Agreement
25. Pitney ▇▇▇▇▇ Credit Corp. (Birmingham)
26. Pitney ▇▇▇▇▇ Credit Corp. (Daytona Beach)
27. Pitney ▇▇▇▇▇ Software Systems (LPC, Inc.)
28. ProLogic
29. Remote Control International
30. ▇▇▇▇▇▇ ▇▇▇▇
▇▇. Silvon Software, Inc.
32. Software Clearinghouse, Inc.
33. Solutions Network, Inc.
34. SunSoft, Inc. (NOTE: has expired, continuing under P.O.
basis)
35. Synergex (NOTE: has expired, continuing under a verbal
arrangement, new contract being negotiated and are currently
operating under those commercial terms)
36. Uniplex Integration Systems, Inc.
37. V Systems
38. Wysitech, Inc. (Only with respect to those contracts created
by work orders issued for projects exclusively for the
Acquired Business)
39. Xerox Business Services (Document Source Client Services
Agreement)
40. Xerox Business Services (Document Management Services
Agreement)
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(B) COPIES NOT PROVIDED TO PARENT:
1. ▇▇▇▇ South
2. Hewlett Packard (Miscellaneous Customer Specific Agreements)
3. Image Computer Group
4. Laurier Professional Services
5. Micro-Tel
6. Sales Consultants
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SCHEDULE FF
Section 22 Contracts
a. Context License Agreement
b. Enhanced Software Technologies, Inc. Software
License Agreement
c. Uniplex License Agreement
12
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EXHIBIT 1
See attached Annex 1
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EXHIBIT 7
Form of ▇▇▇▇▇▇▇▇ Holdings Transfer Agreement
See attached.
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EXHIBIT 13
Form of Transition Agreement
See attached.
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EXHIBIT 16
Form of Reimbursement Agreement
See attached.
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EXHIBIT 17
Form of Assignment of Certain Employee Claims
See attached.
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EXHIBIT 18
Form of Bridge Note
See attached.
18