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EXHIBIT 10.27
PLAN OF MERGER
AMONG INFOCURE CORPORATION, CMA CORPORATION,
KCOMP MANAGEMENT SYSTEMS, INC.
AND THE SHAREHOLDERS OF
KCOMP MANAGEMENT SYSTEMS, INC.
THIS PLAN OF MERGER ("Agreement") is made as of the 5th day of May,
1997 by and among INFOCURE CORPORATION, a Delaware corporation ("IFC"), CMA
CORPORATION, a California corporation ("CMA"), KComp Management Systems, Inc., a
California corporation ("Company") and the undersigned Shareholders
(collectively "Shareholders") of the Company.
WHEREAS, the Company intends to merge ("Merger") into CMA, a wholly
owned subsidiary of IFC.
NOW, THEREFORE, in consideration of the mutual promises herein made and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION I.
DEFINITIONS
1.1 CERTAIN DEFINITIONS
(a) "Affiliate" means any person, corporation, or other
business entity (i) which, whether directly or indirectly through one or more
intermediaries, is controlled by the Shareholders (individually or as a group)
or (ii) in which Shareholders (individually or as a group) own, directly or
indirectly through one or more intermediaries, 5% or more of the voting power
for the election of the governing board.
(b) "Business" means the development, marketing and
support of the Software, including upgrades, as currently conducted by Company
and the sales and marketing of Hardware, including upgrades (as of the Closing).
(c) "Copyright" means all copyright ownership of the
Software and Documentation.
(d) "Development Software" means all software, object,
source, and executable code licensed by Company as licensee which is used in the
conduct of the development, maintenance, and support of the Software. A list of
the Development Software is set forth in Section 1.1(d) of the Disclosure
Schedule.
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(e) "Distributor Software" means all software, object,
source, and executable code, sublicensed, sold, leased or distributed by Company
as licensor or lessor which is not owned by Company. The term excludes
Development Software. A list of the Distributor Software is set forth in Section
1.1(e) of the Disclosure Schedule.
(f) "Distributorship Agreements" means all appointments of
Company to sell or license Hardware or Distributor Software. A list of such
appointments is set forth in Section 1.1(f) of the Disclosure Schedule.
(g) "Documentation" means all technical manuals and notes,
user manuals, and all other documents developed or in development relating to or
used in the development, maintenance, support, enhancement and use of the
Software, including pending improvements, fixes and enhancements regardless of
the media upon which the Documentation exists, which is owned by Company.
(h) "GAAP" means generally accepted United States
accounting principles, consistently applied on an accrual basis.
(i) "Hardware" means all computers, components,
peripherals, and other equipment to be offered for sale by Company as of the
Closing in the course of its business. Section 1.1(h) of the Disclosure Schedule
lists all Hardware currently being sold by Company.
(j) "Intellectual Property" means all patents, patent
pending, copyrights, trade secrets, techniques, know-how, and other intangible
assets which are legally protectable or recognized as forms of property, whether
or not reduced to practice or a writing.
(k) "License Agreements" means those agreements entered
into by Company (or its predecessors) as licensor for the licensing of any
Software, Distributor Software and/or Intellectual Property of Company.
(l) "Management of Company" means the current chief
executive officer, the chief operating officer, and the chief financial officer
of Company.
(m) "Public Offering" means the first public offering of
common stock of IFC the net proceeds of which paid to the issuer, after
deduction of the underwriters discount, shall exceed $12 million and shall occur
prior to June 30, 1997.
(n) "Shareholder" shall include holders of warrants and
options to purchase shares of capital stock of Company, if any.
(o) "Software" means all software, object, source and
executable code, licensed, sold or leased by Company as licensor or lessor, and
all fixes, updates, upgrades and enhancements heretofore developed or being
developed as well as other software developed or
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being developed for marketing to dentists, dental practices, physicians,
clinics, hospitals and medical groups which is owned by Company. A list of the
Software is set forth in Section 1.1(o) of the Disclosure Schedule.
(p) "Stock" means all of the capital stock of Company as
set forth in Section 1.1(p) of the Disclosure Schedule.
(q) "Trademarks" mean the trademarks listed in Section
1.1(q) of the Disclosure Schedule.
SECTION II.
THE MERGER
2.1 CONSTITUENT CORPORATIONS. The constituent corporations to the
Merger are the Company and CMA.
2.2 EFFECTIVE DATE.
(a) This Agreement has been submitted to the Shareholders
of the Company for approval as provided by the appropriate statutes of the State
of Georgia and the State of California. If all of the conditions precedent to
the Merger have either been fulfilled or waived in writing, a Certificate of
Merger, substantially in the form as set forth in Section 2.2 of the Disclosure
Schedule, shall be executed, delivered, filed and recorded in accordance with
the laws of the States of Georgia and California as soon as practical
thereafter, unless otherwise agreed by the parties in writing. The Merger will
become effective when the Certificate of Merger is filed with the Secretary of
State of the State of Georgia and of the State of California or as otherwise set
forth in the Certificate of Merger. The date on which the Merger shall become
effective is referred to herein as the "Effective Date" or "Closing."
(b) The parties shall use their best efforts to cause the
Effective Date to be on or before 8:00 a.m. Atlanta on the day on which the
Public Offering commences, or such other date or place as the parties hereafter
mutually agree in writing, subject to the conditions set forth hereinafter. The
Public Offering of the common stock of IFC shall be deemed to have commenced at
the time which is the latest of the time at which (i) the IFC's Registration
Statement on Form SB-2 No. 333-18923 ("SB Registration Statement") filed with
the Securities and Exchange Commission ("Commission") becomes effective; or (ii)
the underwriters have agreed to purchase the shares of common stock of IFC
pursuant to the Public Offering or (iii) the Registration Statement on Form S-4
No. 333-20571 ("S4 Registration Statement") registering the shares of common
stock of IFC to be issued pursuant to certain other acquisitions and mergers
becomes effective. The Merger shall be effective on the date of Closing,
notwithstanding subsequent delivery of the Cash Consideration as set forth in
paragraph 2.8 below.
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2.3 MERGER OF COMPANY INTO CMA. Upon the Effective Date, the
Company shall merge into CMA in accordance with the applicable statutes of the
State of Georgia and the State of California. The separate existence and
corporate organization of the Company shall cease on the Effective Date and CMA,
as the surviving corporation ("Surviving Corporation"), shall succeed to and
possess all of the properties, rights, privileges, powers, franchises,
immunities and purposes and be subject to all the debts, liabilities,
obligations, restrictions, disabilities, penalties and duties of the Company,
all without further act or deed.
2.4 ADDITIONAL DOCUMENTS. At any time after the Effective Date,
upon request by the Surviving Corporation, the proper officers and directors of
the Company as of the Effective Date shall execute and deliver any and all
deeds, assignments and other instruments, and shall take or cause to be taken
such further or other action as the Surviving Corporation may deem necessary or
desirable in order to vest, perfect or confirm title to and possession of all of
the properties, rights, privileges, powers, franchises, immunities and purposes
in the Surviving Corporation and otherwise to carry out fully the provisions and
purposes of this Agreement.
2.5 AMENDMENT OF CERTIFICATE OF INCORPORATION. From and after the
Effective Date and until thereafter amended as provided by law, the certificate
of incorporation of CMA as in effect immediately prior to the Effective Date
shall be the certificate of incorporation of the Surviving Corporation, except
that on the Effective Date the certificate of incorporation of CMA shall be
amended by amending Article First thereof to read as follows: "The name of this
corporation is KComp Management Systems, Inc."
2.6 BYLAWS. From and after the Effective Date and until thereafter
amended as provided by law, the bylaws of CMA as in effect immediately prior to
the Effective Date, shall be the bylaws of the Surviving Corporation.
2.7 DIRECTORS AND OFFICERS. From and after the Effective Date, the
directors and officers of the Surviving Corporation shall be the directors and
officers of CMA. Such directors and officers shall hold office for the time
specified in and subject to the provisions contained in the bylaws of the
Surviving Corporation and applicable law.
2.8 CONVERSION OF SHARES OF THE COMPANY.
(a) At the Effective Date, by virtue of the Merger and
without further action on the part of the Company, CMA or the Surviving
Corporation, the outstanding shares of the Company ("Company Shares") shall be
converted in and become the right to receive ("Aggregate Consideration") an
aggregate of (i) $800,000 ("Cash Consideration") and (ii) such number of shares
of common stock, par value $.001, of IFC ("Common Stock") equal to the quotient
of (iii) 800,000 divided by (2) the price of a share of Common Stock to the
public pursuant to the Public Offering plus 2,500 share of Common Stock. The
cash and shares of Common Stock are to be exchanged as set forth in the
Certificate of Merger or as set forth in Section 2.8 of the Disclosure Schedule.
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(b) Delivery by IFC of the Cash Consideration (subject to any
reduction pursuant to paragraph 2.13 by certified or official bank check or
checks payable in New York Clearing House (next day) funds or wire transfers or
other means of immediately available funds to the respective accounts of the
Shareholders located in the United States as designated by the Shareholders,
shall occur one business day after IFC receives the proceeds of the Public
Offering (such time and date of delivery and payment is called the "Purchase
Price Delivery Date").
2.9 SHARES OF CMA AFTER THE EFFECTIVE DATE. Each share of common
stock of CMA which shall be outstanding immediately prior to the Effective Date
shall be and remain shares of the Surviving Corporation after the Effective
Date.
2.10 DISSENTERS RIGHTS. Company and CMA shall have fully complied
with the requirements to provide the Shareholders with notice to dissenters
rights under applicable laws.
2.11 TREASURY SHARES OF COMPANY. On the Effective Date, all shares
of common stock of the Company then held in the treasury, if any, shall
automatically cease to exist and all certificates representing such shares shall
be canceled.
2.12 RIGHTS OF SHAREHOLDERS AFTER EFFECTIVE DATE. After the
Effective Date and until the surrender of the outstanding share certificates of
common stock of the Company, each such outstanding certificate, which prior to
the Effective Date represented shares of common stock of the Company shall be
deemed for all corporate purposes to evidence the right to receive payment in
the amount (cash and shares of Common Stock) for and into which such shares
shall have been converted.
2.13 ESCROW. On or before the Closing, the parties shall enter into
an escrow agreement ("Escrow Agreement") establishing an escrow fund ("Escrow
Fund") in the amount of $80,000 in cash or Common Stock as the Shareholders
shall designate.
2.14 NEW WORTH SHORTFALL.
(a) In the event the Net Worth is more than minus $242,703
(meaning it is either a positive Net Worth or it is a negative Net Worth in an
amount up to but not exceeding minus $242,703), the Aggregate Consideration will
be increased by increasing the amounts set forth in Paragraph 2.8 (a)(i) and
(a)(i)(y) by an amount equal to one-half the difference between the Net Worth as
of the Closing determined as set forth in subparagraph (b) and minus $242,703.
In the event it is less than minus $242,703 (meaning a negative Net Worth
exceeding minus $242,703), the Aggregate Consideration will be reduced by
reducing the amounts set forth in paragraph 2.8 (a) (i) and (a)(ii)(z) by an
amount equal to one-half the difference between minus $242,703 and the Net Worth
as of the Closing determined as set forth in subparagraph (b).
(b) IFC shall cause an audited balance sheet to be prepared
as of the Closing in order to determine the Net Worth of Company, at the expense
of IFC by the independent auditors
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of IFC. The audit shall be completed within ninety (90) days after the Closing.
The Shareholders' advisors may observe the audit and procedures and will have
access to all work papers, procedures and personnel of IFC's independent
auditors. As soon as such audited financial statement is available to IFC, IFC
shall deliver to the Shareholders the financial statement as certified by the
independent auditors. The Shareholders shall have thirty (30) days to review and
object to the balance sheet. Any disagreements as to the amounts of any
adjustment to be made to the balance sheet, if not mutually resolved, shall be
resolved as provided in paragraph 9.5, except that the arbitrator(s) shall be
person(s) experienced in financial and accounting matters. Upon the final
resolution of the Net Worth as of the Closing, a final adjustment shall be made
to the Aggregate Consideration as provided in Paragraph 2.8. All said
adjustments shall be made on a pro rata basis among the Shareholders.
(c) The Parties shall use their best efforts to estimate
the amount of the adjustment, if any, on or prior to the Closing and the
Aggregate Consideration as of the Closing will reflect such tentative adjustment
which will be subject to further adjustment pursuant to the provisions of
subparagraphs (a) and (b). All deliveries of the balance of the Aggregate
Consideration by IFC or a return of a portion of the Aggregate Consideration by
the Shareholders shall be made within ten (10) days of the final resolution of
the determination of the Net Worth pursuant to subparagraph (b).
2.15 ADDITIONAL CONSIDERATION.
(a) If the income from operations ("Operating Income") of
the Company (which is defined as the Company's earnings from operations
exclusive of interest, taxes, depreciation, extraordinary expenses, and overhead
burden from IFC and its Affiliates) for the twelve-month period ending July 31,
1998, determined in accordance with GAAP, exceeds $400,000, the Shareholders
will receive, on a pro rata basis, as additional consideration ("Additional
Consideration") in exchange for the Company Shares an amount equal to the
product of (i) 5.5 times (ii) the amount of the income from operations of the
Company in excess ("Excess") of $400,000; provided, however, in no event shall
the Excess exceed $27,273 for calculating the Additional Consideration. The
Additional Consideration shall be payable in cash.
(b) IFC shall cause the Company to prepare a statement of
operations for the twelve-month period ending July 31, 1998 within 120 days
thereafter. A copy of the statement of operations shall be promptly provided to
the Shareholders. The Shareholders shall have thirty (30) days to review and
object to the income from operations contained in the statement of operations.
The Shareholders and their advisors shall be given access to all work papers and
procedures and personnel used by the Company's accountants. Any disagreements
shall be resolved by the Company's independent accountants. Within ten (10) days
of the final resolution of the adjustment, payment shall be made by IFC to the
Shareholders pro rata, subject to the right of set off for any amounts payable
to IFC or Company pursuant to Section IX hereof.
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(c) If the Operating Income of the Company for the
twelve-month period ending July 31, 1998, determined in accordance with GAAP,
exceeds $427,273, the Shareholder, ▇▇▇▇ ▇▇▇▇▇▇, will receive as further
consideration ("Further Additional Consideration") 3,443.2 shares of Common
Stock for each $10,000 of Operating Income in excess of $427,273 but less than
$750,000. The foregoing ratio assumes a public offering price of a share of
Common Stock of $9.00 per share. If the public offering price is greater or less
than $9.00 per share, the number of shares of Common Stock shall be decreased or
increased, respectively. The formula for the determination of the number of
shares of Common Stock is as follows:
The product of (A) Operating Income for said
twelve-month period (not to exceed $750,000) less $427,273 times (B) 3.0986
divided by the price to the public of a share of Common Stock pursuant to the
Public Offering.
2.16 OUTSTANDING NOTES/ELECTION.
(a) At the time of the Closing, the principal of and the
accrued interest on any notes payable to directors, officers and Shareholders
shall not exceed in the aggregate $250,000. Such obligations shall be replaced
by delivery by Company at the Closing of promissory notes ("Notes") to the
Shareholders, pro rata, in the aggregate principal amount not to exceed
$250,000. Any amounts in excess of $250,000 shall constitute a capital
contribution.
(b) Each holder of Notes may elect to purchase shares of
Common Stock of the IFC ("Purchased Shares") equal to the quotient of (i) the
principal amount of the holder's Notes divided by (ii) 120% of the price to the
public of a share of Common Stock of IFC included in the SB Registration
Statement. The election is to be made in writing not more than thirty (30) days
and not less than ten days prior to the date on which the payment of the last
installments of such Notes are otherwise due. Payment for the Purchased Shares
is to be made in cash and/or surrender of Notes at its principal amount. The
holders of the Notes are third-party beneficiaries under this Agreement and can
independently enforce this paragraph 2.16.
(c) The purchase of the Purchased Shares shall occur upon
the maturity date of the Notes. The Purchased Shares will not be issued pursuant
to any registration statement. The Purchased Shares and the shares of Common
Stock required pursuant to paragraph 2.15(c) will be "Restricted Securities"
within the meaning of Rule 144 promulgated by the Commission. The issuance of
such shares of Common Stock is subject to compliance with the applicable federal
and state securities laws. The acquirors of such shares of Common Stock will be
required by the IFC to make such representatives and warranties customarily made
to issuers as a condition to the private placement of securities. IFC hereby
agrees that such shares of Common Stock shall, upon their acquisition by the
Shareholders, be duly authorized, validly issued, fully paid and non-assessable.
(d) The Notes shall have a final maturity date of July 1,
1999. The interest shall be at the annual rate of 7%. Principal and interest
shall be paid in five (5) equal quarterly
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installments commencing July 1, 1998. IFC shall have right to offset any amounts
payable to IFC or Company pursuant to this Agreement, including Section IX,
against amounts payable pursuant to the Notes.
SECTION III.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to IFC
on the date hereof as follows:
3.1 CORPORATE AND SHAREHOLDER.
(a) Company is a corporation duly organized, validly
existing and in good standing under the laws of California and is qualified to
conduct business in all other jurisdictions in which the character of its assets
and the nature of its business requires it to be qualified to do business and in
which the failure to be so qualified could have a materially adverse effect on
its business, operations, prospects, assets or financial condition.
(b) A true, correct and complete copy of the Articles of
Incorporation and bylaws of Company are as set forth in Section 3.1(b) of the
Disclosure Schedule. There are 357,240 shares of common stock of Company
outstanding. There are no outstanding warrants, options, convertible securities
or other rights to acquire any shares of capital stock or other securities of
Company.
(c) Company holds all licenses, permits, authorizations and
other approvals from all governmental authorities necessary for the conduct of
the Business of Company as currently conducted, and in which failure to hold
such items could have a material adverse effect on the business, operations,
prospects, assets or financial condition of Company. A complete list of such
licenses, permits, authorizations and approvals are set forth in Section 3.1(c)
of the Disclosure Schedule.
(d) Company has no subsidiaries.
(e) The Company Shares owned by each Shareholder are set
forth in Section 3.1(e) of the Disclosure Schedule.
(f) Each Shareholder has the right, power and capacity to
execute, deliver and perform his undertakings pursuant to this Agreement and all
other agreements, documents and certificates contemplated or required by this
Agreement, to which such Shareholder is a party hereby (collectively, "Security
Holders' Documents") and to consummate the transactions contemplated hereby and
thereby.
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(g) This Agreement and each of Security Holders' Documents
to which such Shareholder is or will be a party constitute, or will constitute,
upon execution and delivery by the Shareholder, the valid and binding
obligations of such Shareholder, enforceable against such Shareholder in
accordance with their respective terms, except to the extent the enforceability
may be limited by bankruptcy, insolvency, moratoriums or other laws affecting
the enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in law or in equity.
(h) The execution, delivery and performance by each
Shareholder of this Agreement and such of Security Holders' Documents to which
such Shareholder is a party and the consummation of the transactions
contemplated hereby and thereby will not, with or without the giving of notice
or the lapse of time, or both, (i) violate any provision of law, statute, rule
or regulation to which such Shareholder is subject, (ii) violate any order,
judgment or decree applicable to such Shareholder or Company, or (iii) conflict
with, or result in a breach or default under, any term or condition of any court
order, trust document, will, shareholder agreement, articles of incorporation,
bylaws, or any other agreement, document or instrument to which such Shareholder
or Company is a party or by which such Shareholder or Company is bound.
(i) Each Shareholder has sole and exclusive record title to
and ownership of all of the Company Shares registered in such Shareholder's
name, as set forth in Section 3.1(e) of the Disclosure Schedule, free and clear
of any liens, restrictions (except federal and state securities law restrictions
of general applicability), claims, charges, options, rights of first refusal or
encumbrances, with no defects of title whatsoever.
(j) Each Shareholder (i) has had full and complete access
to information concerning Company, (ii) has had the opportunity to consult with
legal and financial advisers prior to executing this Agreement and the Security
Holders' Documents, (iii) has reviewed this Agreement and accompanying
documents; (iv) has sufficient knowledge and experience to evaluate the merits
of the transactions contemplated by this Agreement and the Security Holders'
Documents; and (v) has been given the opportunity to examine all documents
related to the transactions contemplated by this Agreement and to ask questions
of Company.
3.2 FINANCIAL STATEMENTS. The balance sheets as of March 31, 1996
and March 31, 1997 and the statements of operations of Company for the fiscal
years then ended audited by BDO ▇▇▇▇▇▇▇ LLP have been prepared in accordance
with GAAP and presents fairly the results of the operations of Company during
those periods. Said financial statements are sometimes collectively referred to
as "Financial Statements." A true, correct and complete copy of the Financial
Statements are set forth in Section 3.2 of the Disclosure Schedule. Prior to the
Closing, all directors, shareholders and affiliates loans will have been
canceled and the amounts thereof contributed to the capital of Company to the
extent they exceed $250,000 (principal and interest).
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3.3 CUSTOMERS
(a) Company or its predecessor has granted over 725
licenses to use the Software to end users. Section 3.3(a)(i) of the Disclosure
Schedule contains the list of the licensed users of the Software who are
currently provided maintenance under existing customer service agreements, each
of which can be terminated upon 90 days prior written notice by either the
customer or Company. Section 3.3(a)(i) of the Disclosure Schedule shall be
updated as of the Closing. Section 3.3(a)(ii) of the Disclosure Schedule
contains a list of the licensed users of the Software who have not entered into
such service agreements and who were charged for maintenance and support during
the period December 1, 1995 through November 30, 1996 on a time and materials
basis. Section 3.3(a)(iii) of the Disclosure Schedule contains a list of all
customers of Company whose aggregate fees and other charges during the twelve
(12) month period ending November 30, 1996 exceeded $50,000.
(b) Except as set forth in Section 3.3(b) of the Disclosure
Schedule, Company has not received any notice or other communication (written
or, to the knowledge of the Management of Company, oral) from any customer
listed on Section 3.3(a)(i), (ii) or (iii) of the Disclosure Schedule
terminating or reducing in any material respect or setting forth an intention to
terminate or reduce in any material respect in the future the amount of business
conducted with Company. (The termination or reduction in any material respect or
notice of any intention to terminate or reduce in any material respect during
the next succeeding 12 months of the amount of business conducted with Company
by any customer listed in Section 3.3(a)(iii) of the Disclosure Schedule shall
constitute a material adverse event and a breach of this warranty and
representation.) To the knowledge of the Management of Company, the consummation
of the transactions contemplated herein will not have a material adverse effect
on the business relationships with any of the customers listed on Section
3.3(a)(iii) of the Disclosure Schedule.
(c) Section 3.3(c) of the Disclosure Schedule sets forth a
list of licensees of the Software for which Company has any warranty or other
unfulfilled obligation under the applicable License Agreement and a description
of the unfulfilled obligation and the agreement under which it arises. Company
is not in material breach of its obligations thereunder.
(d) Section 3.3(d) of the Disclosure Schedule sets forth
the 1996 revenues, commissions and gross profits from the sale of Hardware and
upgrades by all Shareholders and all entities affiliated with any Shareholder to
customers of the Company.
3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES.
(a) Since March 31, 1997, there has not been any event or
events which will have a material adverse effect taken as a whole on the
financial condition of Company (including software and service revenues) except
as set forth in Section 3.4(a) of the Disclosure Schedule or the declaration or
payment of any dividend on the capital stock or the redemption of any shares of
capital stock of Company.
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(b) Since March 31, 1997, no material loss, damage or
destruction of the assets has occurred, whether or not covered by insurance,
which may have a material adverse affect on the financial condition of Company
or on the Business.
(c) Since March 31, 1997, the Business has been conducted
substantially in the manner heretofore conducted consistent with past practices,
including with respect to the fees charged and the terms and conditions of the
License Agreements and Maintenance Agreements entered into, and no waiver or
release of any right was granted by Company except (i) of an immaterial value;
(ii) in the ordinary course of business consistent with past practices, and no
assets were sold except for the licensing of the Software in the ordinary course
of the Business; (iii) the Business has been expanded to include the
development, licensing and support of the Software and, upon the Closing, the
marketing and sale of Hardware, including upgrades; and (iv) all obligations and
liabilities between the Company and any Affiliate of a Shareholder have been
paid or canceled.
3.5 GUARANTIES/LIENS. Company is not guaranteeing the obligations
of any person and has no commitment to guarantee any of the obligations of any
person and is not currently granting and Company has no commitment to grant to
anyone an interest in or liens on any of its assets to secure the obligations of
Company or another except as set forth in Section 3.5 of the Disclosure
Schedule.
3.6 NO UNDISCLOSED LIABILITIES. Company has no liabilities,
absolute or contingent, known or unknown, except those recorded on the Financial
Statements as of March 31, 1996 and those incurred in the ordinary course of
business of Company since March 31, 1996, all of which are recorded on the
financial books and records of Company, are consistent with past practices and
are not in the aggregate materially adverse to the financial condition or
prospects of Company.
3.7 ACCOUNTS RECEIVABLE. The accounts receivable of Company,
billed and unbilled, as of the Closing will be valid and enforceable obligations
of third parties and will be collectible in full, without offset or fulfillment
of any condition, within three (3) months of their due date without the
engagement of any collection agency or attorney or the commencement of any
action, except to the extent of any reserves for bad debts and doubtful accounts
established on its financial books and records as of the Closing, which reserves
have been established in a manner which is consistent with past practices.
3.8 OWNERSHIP OF INTELLECTUAL PROPERTY.
(a) Software. Except as set forth in Section 3.8(a)(i) of
the Disclosure Schedule, (i) Company is the sole and exclusive owner throughout
the United States of the Software, including the software and software code
developed or being developed by or on behalf of or at the request of Company
(regardless of the state of the development of the software and whether it has
been released); and (ii) the Software constitutes all the software used and/or
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licensed in the conduct of the Business of Company, except for the Distributor
Software and the Development Software. Company has not granted licenses to
others to use or to sublicense others to use the Software outside of the United
States and to the knowledge of the Management of Company, the Software or
derivatives thereof are not being used or distributed outside of the United
States.
(b) Other Intellectual Property Rights. Except as set
forth in Section 3.8(b) of the Disclosure Schedule, Company is the sole and
exclusive owner throughout the United States of (i) all Copyrights, whether or
not registered, including but not limited to the moral rights; (ii) all other
Intellectual Property rights, including, without limitation, trade secrets,
know-how, inventions (patented and unpatented), and discoveries, embodied in or
used in the development of the Software, or any part thereof, and the screen
displays generated by the Software; and (iii) all Documentation; in each case
except the Development Software used in the development of the Software and the
Distributor Software. The Copyrights, Trademarks, Software, Documentation, and
other Intellectual Property of Company are collectively hereinafter referred to
as "Company Intellectual Property". Section 3.8(b)(ii) of the Disclosure
Schedule contains a correct and complete list of all registered Copyrights, the
date of registration and jurisdiction of such registrations. Company has not
filed any patent applications and does not hold any patents.
(c) Trademarks. Company is the sole and exclusive owner of
the Trademarks which include all identifying names and marks which are
associated with the Software or which are otherwise used in the Business
conducted by Company. A complete and correct list of all such Trademarks is set
forth in Section 1.1(q) of the Disclosure Schedule, none of which are registered
or have any applications for registrations pending.
(d) Software Developers. Section 3.8(d) of the Disclosure
Schedule sets forth the list of all persons and entities (other than full time
employees of Company) that have assisted at any time, directly or indirectly, in
the design, development, correction, improvement, modification, and/or
enhancement of the Software, Copyrights and/or Trademarks or from whom such
property has been acquired. Section 3.8(d) of the Disclosure Schedule also
identifies the written agreements and describes all oral agreements pursuant to
which each such person or entity assigned or licensed its rights in such
intellectual property to Company or acknowledged Company's ownership rights
therein. Correct and complete copies of each such agreement or assignment or
license has been furnished to IFC. The employees and former employees of Company
do not have any right, title or interest in the Software, Copyrights,
Trademarks, or other Company Intellectual Property. Section 3.8(d) of the
Disclosure Schedule sets forth the current form of agreements with its employees
regarding ownership of the Company Intellectual Property.
(e) Rights of Licensees. The ownership rights of Company in
Company Intellectual Property are subject only to the non-exclusive licenses
granted (i) to end users and (ii) to distributors by Company as described in
Paragraph 3.10 of this Agreement.
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(f) No Infringements. The Company Intellectual Property
does not, and did not at any time, violate or infringe any copyright, patent,
trade secrets, know-how, trademarks or other intellectual property rights of any
third party, is not in the public domain, has not been licensed by Company
and/or permitted to be duplicated by Company except as disclosed in this
Agreement or provided by law and, to the knowledge of the Management of Company,
the Company Intellectual Property (i) has not been duplicated except as
permitted under the applicable licenses and law, (ii) has not been reverse
compiled or engineered and (iii) there are no claims or actions pending or
threatened or which have been brought asserting such violation or infringement
or that any Company Intellectual Property is in the public domain.
(g) Distributor Software and Development Software. Section
3.8(g)of the Disclosure Schedule sets forth the complete and correct list of
license agreements pursuant to which Distributor Software and Development
Software is licensed to Company. Company does not license to others Distributor
Software or Development Software.
(h) Confidentiality. Company has taken reasonable
commercial efforts and has required its employees, consultants, and licensees to
take reasonable commercial efforts to maintain the confidentiality of the
Company Intellectual Property.
(i) Source Code Escrow Agreements. Section 3.8(i) of the
Disclosure Schedule contains a list of all source code escrow agreements entered
into by Company and all agreements licensing the source code or agreeing to
license the source code of the Software. Correct and complete copies of such
agreements have been heretofore provided to IFC.
(j) Year 2000. Except as set forth in Sections 3.8(j) of
the Disclosure Schedule, the design and performance capabilities of the Software
ensures year 2000 capabilities including calculations which accommodate same
century and multi-century formulas and date values.
3.9 PROPERTY AND EQUIPMENT.
(a) Section 3.9 of the Disclosure Schedule lists the fixed
assets, including equipment, used in the conduct of the Business as conducted
(during the prior twelve months) which are owned by Company and those which are
leased by Company ("Leased Property"). Section 3.9 of the Disclosure Schedule
contains a correct and complete copy of the agreements for the lease of fixed
assets not owned by Company. The fixed assets and the Leased Property are
generally in good operating condition and repair, reasonable wear and tear
excepted.
(b) Company is not in default in the payments due under the
leases of the Leased Property or any other obligation which would give the
lessor the right to terminate the lease for such Leased Property.
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(c) Since March 31, 1996, Company has not sold or otherwise
disposed of any fixed assets, other than in the ordinary course of business.
3.10 LICENSE AGREEMENTS.
(a) Company has not sold to others or leased or licensed
others to use the Company Intellectual Property, or any part thereof, except the
granting of written non-exclusive rights (i) to end users to use released
versions of the Software and Documentation in the ordinary course of the
Business pursuant to end user License Agreements; and (ii) to distributors,
dealers, OEM's and other remarketers (collectively "Distributors") to use and
sublicense the Software and Documentation. Section 3.10(a) of the Disclosure
Schedule contains a correct and complete list of the Distributors. A correct and
complete copy of all written agreements with Distributors currently outstanding
has been previously furnished to IFC. To the extent any agreement with a
Distributor is not in writing, a complete description of the understanding is
set forth in Section 3.10(a) of the Disclosure Schedule.
(b) The standard forms of end user License Agreement
currently used (and those used since the organization of the Company) by Company
to license the Software is listed in Section 3.10(b) of the Disclosure Schedule.
(c) Section 3.10(c) of the Disclosure Schedule contains a
list of all License Agreements under which Company has not completed its
performance thereunder, except for ongoing warranty and maintenance and support
undertakings contained therein, which list shall be updated as of the Closing.
(d) Unfulfilled warranty obligations under the License
Agreements are described in Section 3.10(d) of the Disclosure Schedule, which
description shall be updated as of the Closing.
(e) Company is not in default of its obligations under
any License Agreement.
(f) Section 3.10(c) of the Disclosure Schedule also
includes all outstanding commitments to sell, lease or license any Company
Intellectual Property hereafter.
(g) Company does not license or sublicense any
Distributor Software and is not a distributor of any software developed by
others.
3.11 CONSULTING AND DEVELOPMENT AGREEMENTS. There are no
consulting and software development agreements, written or oral, entered into by
Company pursuant to which others are performing services to Company as a
consultant or in a similar capacity or are developing software (regardless of
the party who is to hold title to the software) for Company for use or license
by Company.
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3.12 MAINTENANCE/COMMITMENTS.
(a) Section 3.12(a) of the Disclosure Schedule sets forth a
correct and complete general description of all commitments of Company
outstanding to provide services, or support and/or maintenance services,
including to provide patches, corrections, improvements, modifications and
enhancements of the Software ("Maintenance Agreements"). A copy of all written
Maintenance Agreements has been made available to IFC and, to the extent the
Maintenance Agreements are not in writing, a complete description of the
understanding is set forth in Section 3.12(a) of the Disclosure Schedule. The
current (and all other forms used within the past 12 months) standard form of
Maintenance Agreement is set forth in Section 3.12(a) of the Disclosure
Schedule.
(b) Section 3.12(b) of the Disclosure Schedule sets forth
all commitments of Company to develop any special feature or function or to port
any software not otherwise disclosed pursuant to this Agreement ("Development
Agreements"). A correct and complete copy of the Development Agreements, if any,
have been furnished to IFC. To the extent any such agreement or commitment,
where legally binding, is oral, a summary thereof is set forth in Section
3.12(b) of the Disclosure Schedule.
(c) Company has substantially complied with its obligations
under the Maintenance Agreements and Development Agreements and there is no
basis for any claim against or default by Company by any party arising under the
Maintenance Agreements or Development Agreements.
3.13 ALL INTANGIBLE ASSETS USED IN THE BUSINESS. The Company
Intellectual Property and the Development Software constitute all of the
intangible assets used in the conduct of the Business as conducted (during the
preceding 12 months) by Company.
3.14 EMPLOYEES/CONSULTANTS/DIRECTORS.
(a) Section 3.14(a) of the Disclosure Schedule sets forth a
list of all current employees and consultants engaged by Company or serving in
such capacity as of February 1, 1997 and their compensation. Section 3.14(a) of
the Disclosure Schedule will be updated as of the Closing.
(b) The employees of Company are not represented by any
collective bargaining agreement or otherwise organized.
(c) Section 3.14(c) of the Disclosure Schedule lists all
employee benefit plans which are currently in effect or as to which Company has
any ongoing obligation or liability. The term "employee benefit plan" means any
employment or consulting contract, deferred compensation, profit sharing,
pension, bonus, stock option, stock purchase or other fringe benefit or
compensation arrangement or commitment, written or oral, including each welfare
plan (as
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defined in Section 3(1) of the Employment Retirement Income Security Act of
1974, as amended ("ERISA"), which Company has established or maintained or in
which any of its employees participate or have participated or under which
Company has an obligation to make contributions or to pay benefits. Company has
no obligations to provide any benefits to any retired or former employees,
including medical and hospital benefits, except as provided by law.
(d) Company has no ERISA affiliate and never had an ERISA
affiliate.
(e) The 401(k) Plan made available to employees of Company
is in full compliance and has been in full compliance with all applicable laws
and regulations regarding the establishment, maintenance and operation of the
401(k) Plan and all contributions by Company have been paid or properly accrued
on its financial books.
(f) Company has no contracts or agreements with any of its
employees except agreements as to inventions, discoveries and copyright
ownership, a copy of which have been previously provided to IFC. Schedule
3.14(f) of the Disclosure Schedule contains a copy of the employee benefit
brochure provided or made available to the employees. All employees are "at
will" employees of Company.
3.15 ASSUMED AGREEMENTS.
(a) Sections 3.10(b) and (d), 3.12(a), 3.12(b), and
3.15(a) of the Disclosure Schedule lists all unfilled binding commitments of
Company as of April 30, 1997 not otherwise disclosed in the Disclosure
Schedule, including for indebtedness. Section 3.15(a) of the Disclosure
Schedule shall be updated as of the Closing. Such commitments represent all of
the then outstanding binding obligations of the Business and, to the knowledge
of the Management of Company, all of the commitments of Company can in the
ordinary course of business be fulfilled by the payment of money due by Company
as purchaser or obligor or by its providing of product or services, without a
financial loss to Company and in a timely manner.
(b) Company is not in default of any term or condition
under any unfilled agreement listed on Sections 3.10(b) and (d), 3.12(a),
3.12(b), and 3.15(a) of the Disclosure Schedule and there are no basis for any
claim against or default by Company by any party arising under any such
agreement, and no event has occurred which under any such agreement could
constitute a default which would give the other party to such agreement the
right to terminate the contract or to demand money damages.
(c) Company has not waived any of its rights under any of
such agreements listed on Section 3.10(b) and (d), 3.12(a), 3.12(b), or Section
3.15(a) of the Disclosure Schedule nor is the other party to such agreement in
default in any respect under any such agreement.
(d) Correct and complete copies of the agreements listed in
Section 3.15(a) of the Disclosure Agreement have been made available to IFC.
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3.16 LITIGATION AND ADVERSE EVENTS. There are no investigations,
suits, actions, administrative, arbitration or other proceedings or other
occurrences pending, or, to the knowledge of the Management of Company,
threatened against Company arising out of the conduct of the Business.
3.17 COMPLIANCE WITH APPLICABLE LAW. Company, in the conduct of
the Business, is in substantial compliance with all applicable laws, statutes,
ordinances, permits and regulations, including all such laws, statutes,
ordinances and regulations relating to wages, tax withholdings, hours, equal
pay, equal opportunity, and pollution of the environment, and there are no
violations which, if enforced, would materially adversely affect the Business or
prospects of the Business after the Closing or the value of the Business; and no
proceeding alleging any such violation is pending or, to the knowledge of the
Management of Company, threatened.
3.18 TAXES AND TAX RETURNS.
(a) Company has timely filed with the appropriate
governmental agencies all tax returns and reports required to be filed by it (or
obtained extensions in which to file). Company has paid or accrued all taxes and
withholdings of any kind now due and payable.
(b) Company has provided IFC with correct and complete
copies of all tax returns, including income, property and sales tax returns
filed since its incorporation to date. No returns are currently being audited by
any governmental authority.
3.19 CONSENTS. No consents or approvals are required to effect the
transactions contemplated herein, except as set forth in Section 3.19 of the
Disclosure Schedule.
3.20 BROKERS AND FINDERS. Neither Company nor any of its officers,
directors, employees or agents have employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement which is payable directly
or indirectly, by IFC or Company.
3.21 RELATED TRANSACTIONS. Section 3.21 of the Disclosure
Schedule contains a complete and correct list of all transactions since
January 1, 1996 between Company and any Shareholder or Affiliate of any
Shareholder.
3.22 NO UNTRUE STATEMENTS. No statements (including
representations and warranties) contained in this Agreement (including in the
Disclosure Schedule hereto and documents described as having been provided to
IFC herein and therein), contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
contained not misleading.
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3.23 ADDITIONS. On or prior to the Closing, the Company shall have
engaged the necessary personnel for the sales of Hardware, as set forth in
Section 3.23 of the Disclosure Schedule.
3.24 INVESTMENT REPRESENTATIONS.
(a) Each Shareholder is acquiring the Common Stock of IFC
for his/her own account (and not for others) and for investment purposes only
and not with a view to distribution, as such is defined by the Securities Act of
1933, as amended ("Act"),, or any rule or regulation thereunder ("Rules"), in
violation of the Act or any of said Rules.
(b) Each Shareholder has such knowledge and experience in
financial and business matters that he/she is capable of evaluating the merits
and economic risks of this particular investment and that an investment in the
Common Stock of IFC involves numerous risks, including the risks set forth in
the prospectus ("Prospectus") of IFC which is included in the S4 Registration.
(c) Each Shareholder agrees that the certificate or
certificates representing the Common Stock of IFC shall be inscribed with the
legend that such stock may not be transferred in violation of the provisions of
the standstill agreement set forth in paragraph 7.2 hereof.
(d) In making this decision to acquire the Common Stock of
IFC, each Shareholder has been given the opportunity to discuss the business,
management and financial affairs of IFC with officers of IFC and has had the
opportunity to ask questions of, and receive answers from, such officers and to
obtain additional information necessary to verify the accuracy of the
information received and to evaluate IFC and an investment in the Common Stock
of IFC and the Shareholders desire no further information for such evaluation.
Each Shareholder acknowledges receipt of a copy of the S4 Prospectus, which will
be updated prior to the Closing.
(e) Each Shareholder acknowledges that no representations
were made by IFC to the Shareholders with respect to the business, management or
financial affairs of IFC except as set forth in Section IV of this Agreement and
the S4 Prospectus, as amended hereafter, and except that IFC is negotiating with
several companies the purchase or merger of their businesses by or into IFC or
an affiliated company ("Acquisitions") and the financing of such purchases in
part through the Public Offering by IFC, all as more fully described in the SB
Registration Statement and the S4 Prospectus. Each Shareholder acknowledges
there can be no assurances that such Acquisitions will be effected or that the
Public Offering will occur or that the financing obtained in the Public Offering
will be sufficient to meet the obligations of IFC, including working capital
requirements, or that IFC will be profitable.
(f) Each Shareholder acknowledges that (i) no
representations are or were made by IFC with respect to the business or
financial affairs of the companies to be required except as set forth in the
financial and other statements contained in the S4 Prospectus and as
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updated prior to the Closing; and (ii) no representations are made with respect
to any business plan, projections or acquisitions by IFC.
SECTION IV.
REPRESENTATIONS AND WARRANTIES OF IFC
IFC hereby represents and warrants to the Shareholders on the date
hereof as follows:
4.1 ORGANIZATION AND STANDING.
(a) IFC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware; has full corporate
power and authority to conduct the business of developing, distributing and
marketing software, including through its subsidiaries, and is duly qualified
and is authorized to conduct business and is in good standing as a foreign
corporation in Georgia.
(b) CMA is a corporation duly organized, validly
existing and in good standing under the laws of California.
4.2 AUTHORIZATION.
(a) The execution, delivery and performance of this Agreement
has been duly authorized by all requisite corporate action on the part of IFC
and CMA. A duly certified copy of the resolutions of the Board of Directors of
IFC and CMA has been delivered to the Shareholders. This Agreement has been duly
executed and delivered by IFC and CMA, and constitutes the legal, valid and
binding obligation of IFC and CMA enforceable against each in accordance with
its terms.
(b) The execution and delivery of this Agreement, and the
consummation by IFC or CMA of the transactions contemplated herein on the
Closing, will not (with or without the giving of notice, lapse of time or both)
violate, conflict with, or result in a default under, any of the provisions of
the certificate of incorporation or by-laws of IFC or CMA, any mortgage,
indenture, contract, agreement, license, permit, instrument, judgment, decree,
order, statute, regulation or ruling of any court or governmental authority to
which IFC or any subsidiary is a party or by which it or any subsidiary is
bound.
4.3 NO CONSENTS. No consents or approvals are required to effect
the transactions contemplated herein by IFC or CMA.
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4.4 BROKERS AND FINDERS. Neither IFC or CMA nor any of their officers,
directors, employees or agents have employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement which is payable directly
or indirectly by the Shareholders.
4.5 NO UNTRUE STATEMENTS. No statements (including representations) by
IFC or CMA contained in this Agreement, and no written statements furnished by
IFC or CMA to the Shareholders pursuant to this Agreement, contain any untrue
statement of a material fact, or omit to state a material fact necessary in
order to make the statements therein contained not misleading.
SECTION V.
CONDITIONS TO THE OBLIGATIONS OF IFC
Each and every obligation of IFC and CMA under this Agreement to be
performed on or prior to the Closing shall be subject to the satisfaction on or
prior to the Closing of each of the following conditions, any of which condition
may be waived in writing by IFC, but such waiver shall not waive any
representation, warranty or covenant of the Shareholders.
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties made by any Shareholder herein as of the date of this Agreement
shall be true and correct in all material respects on the Closing with the same
effect as though made on the Closing; the Shareholders shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by them prior to or
on the Closing; and the Shareholders shall have delivered to IFC a certificate
of the Shareholders dated the Closing, certifying as to the fulfillment of the
foregoing conditions.
5.2 THIRD PARTY CONSENTS. All consents, approvals or authorizations
from third parties or government agencies required to consummate the
transactions contemplated hereby and contemplated by this Agreement, including
the consents set forth pursuant to paragraph 3.19 shall have been obtained.
5.3 OPINION OF COUNSEL TO THE SHAREHOLDERS. An opinion of counsel to
the Shareholders dated the Closing and addressed to IFC and CMA reasonably
satisfactory in all respects to IFC's counsel.
5.4 UPDATE DISCLOSURE SCHEDULE. The Shareholders shall have
updated the Disclosure Schedule as herein provided.
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5.5 PUBLIC OFFERING. The Public Offering shall have commenced as
defined in paragraph 2.3 hereof.
5.6 EMPLOYMENT AGREEMENT. ▇▇▇▇ ▇▇▇▇▇▇ shall have executed and
delivered the Employment Agreement attached hereto as Exhibit D to IFC.
5.7 ESCROW AGREEMENT. The Shareholders have entered into the
Escrow Agreement in the form attached hereto as Exhibit B ("Escrow Agreement").
5.8 GUARANTIES. The guaranties of Company are discharged in full
without cost or further obligation of the Company and evidence, reasonably
satisfactory to IFC's counsel, is delivered to IFC; provided however, that at
the written request of the Shareholders, a portion of the Aggregate
Consideration may be paid at Closing to effect the release of such guaranties.
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
Each and every obligation of the Shareholders under this Agreement to
be performed on or prior to the Closing shall be subject to the satisfaction on
or prior to the Closing of each of the following conditions, any of which
conditions may be waived in writing by the Shareholders, but such waiver shall
not waive any representation, warranty, or covenant of IFC:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties made by IFC herein as of the date of this Agreement shall be true
and correct in all material respects on the Closing with the same effect as
though made on the Closing; IFC and CMA shall have performed and complied, in
all material respects, with all agreements, covenants and conditions required by
this Agreement to be performed and complied with by it on or prior to the
Closing; and IFC and CMA shall have each delivered to the Shareholders a
certificate of an officer of IFC dated the Closing, certifying as to the
fulfillment of the foregoing conditions.
6.2 OPINION OF COUNSEL TO IFC. An opinion of Glass, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to IFC and CMA, dated the Closing, reasonably
satisfactory in all respects to the Shareholders' counsel.
6.3 AUTHORIZATION. Certification by an appropriate officer of IFC and
CMA that all corporate actions required to be taken by IFC and CMA pursuant to
this Agreement, including its execution and delivery, including copies of the
certificate of incorporation, bylaws, and board resolutions certified by the
secretary or assistant secretary of IFC or CMA, has been taken to authorize and
consummate the transactions contemplated herein.
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6.4 PUBLIC OFFERING. The Public Offering shall have commenced
as defined in paragraph 2.2 hereof.
6.5 EMPLOYMENT AGREEMENT. IFC shall have executed and delivered
an Employment Agreement attached hereto as Exhibit D to ▇▇▇▇ ▇▇▇▇▇▇.
6.6 ESCROW AGREEMENT. IFC shall execute and deliver to the
Shareholders the Escrow Agreement.
SECTION VII.
OTHER COVENANTS
7.1 CONDUCT OF BUSINESS. From the date hereof to the Closing,
except as otherwise consented to or approved by IFC in writing, the
Shareholders hereby covenant and agree that they shall cause Company:
(a) Maintain Corporate Existence, Etc. (i) to conduct the
Business in a diligent manner, consistent with past management practices,
including maintaining adequate personnel to maintain, develop, enhance, support
and market the Software, provided that any unfilled binding commitment for more
than $10,000 not set forth in the Disclosure Schedule as of the date hereof
shall not be assumed by CMA or IFC unless approved in writing by IFC; (ii) to
market and license the Software, Documentation and Distributor Software to end
users, and with the written consent of IFC, to distributors; (iii) grant
non-exclusive licenses of the Software, Documentation and Distributor Software
to end users pursuant to its standard end user License Agreement at its standard
fees; (iv) not to make any distributions to the Shareholders; and (v) not to
increase any salaries or pay bonuses except for the payment of bonuses to key
employees as heretofore approved by IFC not to exceed in the aggregate $75,000
in cash and $285,000 in deferred bonuses ("Deferred Bonuses"). The Deferred
Bonuses are to be awarded upon the Closing, and are payable in four (4) equal
quarterly amounts commencing three (3) months after the Closing. All bonuses
provided herein for purposes of determining the Net Worth of Company pursuant to
Section II shall be considered to be a liability of the Company to the extent
not paid prior to the Closing and no tax offset shall be recognized in the
calculation of Net Worth.
(b) Disposition of Assets. Not to sell or otherwise dispose of
any asset except for the granting of non-exclusive licenses and for sales in the
ordinary course of business as permitted pursuant to paragraph 7.1(a).
(c) Full Access. To afford to IFC, and to its counsel,
accountants and other authorized representatives, full access to the facilities,
contracts, books, records, Software, key personnel and public accountants of
Company during normal business hours upon reasonable prior notice; and to cause
its officers and employees to promptly furnish such additional financial and
operating data and other information as IFC or its authorized representatives
shall from time to time reasonably request.
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7.2 PUBLIC OFFERING STATUS. IFC agrees to keep the Shareholders
informed as to the status of the Public Offering and agrees to provide the
Shareholders with copies of the registration statement and amendments thereto
(excluding exhibits) filed with the Securities and Exchange Commission promptly
after filing with the SEC. The Shareholders agree to execute standstill
agreements in the form set forth in Section 7.2 of the Disclosure Schedule.
7.3 OPTION TO RECEIVE STOCK. Each recipient of the Deferred Bonus may
elect to acquire shares of common stock of the IFC ("Bonus Shares") equal to the
quotient of (i) the amount of the Deferred Bonus divided by (ii) 120% of the
price to the public of a share of common stock of IFC included in the SB
Registration Statement. The election is to be made in writing not more than
thirty (30) days and not less than ten (10) days prior to the date on which the
payment of the last installment of the Deferred Bonus is otherwise due. Payment
by the recipient is to be made in cash and/or upon surrender of his/her right to
receive any unpaid portion of the Deferred Bonus. The Bonus Shares will be
"Restricted Securities" within the meaning of Rule 144 promulgated by the
Commission. The issuance of the Bonus Shares is subject to compliance with the
applicable federal and state securities laws. The recipient of the Bonus Shares
will be required by the IFC to make certain representations and warranties
customarily made to issuers as a condition to the private placement of
securities. The recipients of the Deferred Bonus are third-party beneficiaries
under this Agreement and can independently enforce this paragraph 7.3. IFC
hereby agrees that the Bonus Shares shall, upon their issuance, be duly
authorized, validly issued, fully paid and non-assessable. IFC shall have the
right to offset any amounts payable to IFC or Company by the recipient of the
Deferred Bonus pursuant to this Agreement, including Section IX, against
payments of the Deferred Bonus, in cash or in stock.
7.4 REGISTRATION RIGHTS. At any time after the first anniversary of the
Closing, the holders of not less than an aggregate of 20,000 shares of Common
Stock of IFC acquired pursuant to this Agreement, including Purchased Shares and
Bonus Shares, may request IFC to register such shares ("Registrable Shares") on
Form S-3 (or other successors and equivalent form of abbreviated registration
statement then available) provided that IFC qualifies for the use of such form
and such shares can not be sold in a brokerage transaction under Rule 144
promulgated by the Commission. IFC agrees to use commercially reasonable efforts
to prepare and file a registration statement on Form S-3 and cause the
registration statement to become effective. IFC shall maintain the effectiveness
of the registration statement for a period of three months. Only one
registration can be requested pursuant to this paragraph 7.4. In addition, the
holders of shares of Common Stock acquired pursuant to this Agreement shall be
given the right to "piggyback" their shares on the next public offering of the
IFC following the issuance of such shares, unless the shares can be sold in full
under Rule 144 or other rule in brokerage transactions, subject to volume
limitations placed on the public offering by the underwriters.
The holders of such Purchased Shares and Bonus Shares shall be
third-party beneficiaries under this Agreement and can independently enforce
this paragraph 7.4.
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The holders of the Registrable Shares agree, that if requested by IFC,
not to effect any public sale or distribution of the Registrable Shares during a
30 day period preceding and 90 days following the commencement of any
underwritten public offering of common stock, except to the extent the
Registrable Shares are included in such public offering. IFC will pay the cost
of preparing the registration statement and filing fees. The holders of the
Registrable Shares shall pay all underwriting discounts and selling commissions
attributable to the Registrable Shares. At the time of the registration of the
Registrable Shares such holders shall enter into an indemnity agreement and such
other agreements as are customary with respect to such offerings.
SECTION VIII.
CONFIDENTIALITY AND SECURITY
8.1 CONFIDENTIALITY.
(a) The parties acknowledge that information, documents and
materials regarding each other have been exchanged since September 1, 1996. Such
disclosures have been made under a confidentiality understanding. The provisions
of this Section VIII reflect the understanding with respect to, and shall
govern, all such exchanges and the permitted use and disclosure by a party or
its Affiliate hereafter of any confidential information and trade secrets of the
other party, regardless of when acquired. Each party hereto hereby agrees that
all information, documents and materials the party ("Recipient") received
heretofore and receives or obtains hereafter from any other party or its
Affiliate ("Owner") shall be considered valuable assets of the Owner and shall
at all times be treated by the Recipient and the officers, directors, employees
and agents of the Recipient as confidential information or trade secrets of the
Owner if so identified as such or which under the circumstances surrounding
disclosure ought to be treated as confidential information or trade secrets of
the Owner. Each party hereto, as a Recipient, hereby agrees that it shall not
hereafter (and shall use commercially reasonable efforts to ensure that its
Affiliates, officers, directors, employees and consultants do not) in any
manner, directly or indirectly (i) transmit, disclose or otherwise communicate
or make available any such confidential information or trade secrets of the
Owner to any third party, or (ii) use the same for its own account or for the
benefit of any third party, other than as permitted by this Agreement; or (iii)
make any copies of any such confidential information or trade secrets except as
is necessary to perform its obligations or exercise its rights hereunder. The
parties each agree not to reverse engineer or reverse compile the computer
software of any other party hereto.
(b) Each party hereto, as a Recipient, hereby shall take all
commercially reasonable actions necessary or desirable, including with respect
to its officers, directors, employees and all other authorized persons having
access to the confidential information or trade secrets of the Owner, to satisfy
its obligations to protect and maintain the confidentiality and security of such
confidential information or trade secrets, including the source code of the
Software.
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(c) It is recognized and acknowledged between the parties
hereto that the covenants respecting confidentiality set forth in this Section
VIII hereof are essential elements of this Agreement and shall continue after
the Closing or the termination of this Agreement for any reason. Each party
further acknowledges that the Owner of the confidential information and trade
secrets may have no adequate remedy at law if the Recipient shall violate the
terms thereof. In such event, the Owner shall have the right, in addition to any
other rights and remedies it may have, to obtain in any court of competent
jurisdiction injunctive relief or other equitable relief with regard to any
breach or threatened breach thereof or otherwise specifically enforce the
provisions of this Agreement without bond, security or proof of actual damages.
(d) The parties each agree as follows:
(i) Confidential information and trade secrets
of the Owner that are disclosed to Recipient or to which Recipient obtains
access shall not be disclosed by Recipient to others, except to directors,
officers, employees and consultants of the Recipient having a need to know in
connection with the consideration and/or consummation of the transactions
contemplated herein and Recipient shall be responsible for such other person's
compliance with the confidentiality obligations of this Section VIII.
(ii) The Recipient, when receiving such
confidential information or trade secrets from the Owner, shall protect such
confidential information and trade secrets with the same degree of care (A)
that Recipient regularly employs to safeguard its own confidential information
or trade secrets of like importance from unauthorized use or disclosure or (B)
which a prudent business person employs to safeguard its own confidential
information or trade secrets of like importance from unauthorized use or
disclosure, whichever is greater.
(iii) The rights and obligations of the parties
with respect to all such confidential information and trade secrets of the
Owner that are disclosed and subject to this Agreement shall survive
termination of this Agreement and shall remain in effect for a period of five
(5) years from the date of this Agreement; provided, however, that the
expiration of the above five (5) years shall not affect any rights of the
parties with respect to patents, trademarks, copyrights and trade secrets, and
trade secrets shall be protected by this Section VIII as long as they may be
legally protected or constitute a trade secret.
(iv) Any portion of such Owner's confidential
information or trade secret that:
(A) is rightfully received from a third
party who has a lawful right to disclose it without accompanying markings or
disclosure restrictions;
(B) is independently developed by
employees of the Recipient who have not had access to such confidential
information or trade secret;
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(C) is or becomes publicly available
through no breach or wrongful act of the Recipient;
(D) is already known by the Recipient
as evidenced by documentation bearing a date prior to the first date of
disclosure by the Owner; or
(E) is approved for release in writing
by the President of the Owner;
is not entitled to the protection provided in this Section VIII, except for
patent, trademark and copyright protection as provided by law.
(e) Confidential information and trade secrets of Company have
been and will be used by IFC only in connection with its evaluation of Company
and the decision to acquire the capital stock of Company and confidential
information and trade secrets of IFC have been and will be used by Company and
the Shareholders only in furtherance of the sale of capital stock as
contemplated herein.
(f) Notwithstanding the foregoing, nothing herein shall
restrict the right of either party to disclose such confidential information or
trade secret that is disclosed pursuant to a judicial or administrative order,
but only to the extent so ordered, provided, however, that the party receiving
such order shall notify the other party of such order in sufficient time to
permit such other party to intervene in response to such order or to take such
other reasonable steps as may be necessary to protect the confidentiality
thereof.
(g) All such confidential information and trade secrets and
copies thereof of Owner shall remain the property of the Owner. All such written
confidential information and trade secrets, and any copies thereof, shall be
promptly returned to the Owner upon written request, or destroyed at the Owner's
options. All reports and other documents prepared by a Recipient containing any
such confidential information or trade secrets shall be destroyed at the Owner's
written request and the Recipient shall so certify to Owner upon Owner's request
that it has been destroyed. The restrictions on disclosure and use shall survive
the return and destruction of such written confidential information and trade
secrets, reports and other documents and the Closing.
(h) Upon the sale of the capital stock as contemplated herein,
all trade secrets and confidential information owned by Company shall be deemed
to be owned by IFC as of the Closing for purposes of this Agreement, including
this Section VIII.
(i) Notwithstanding the foregoing, nothing in this Section
VIII shall restrict the disclosure of any confidential information in any
registration statement filed with the Securities and Exchange Commission in
contemplation of the Public Offering, including the prospectus
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which is a part thereof, and the public distribution of the prospectus,
including preliminary prospectuses and registration statement.
SECTION IX.
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE SHAREHOLDERS.
(a) The Shareholders hereby agree, jointly and severally, to
indemnify and hold IFC and CMA, and their successors (collectively "Purchaser"
for purposes of this Section IX only) harmless at all times from and after the
Closing, against and in respect of the following:
(i) All losses, liabilities, costs and damages,
including without limitation, interest, penalties and fines, resulting from any
(a) breach of a representation or warranty of the Shareholders set forth herein
or (b) non-fulfillment of any agreement or covenant, on the part of the
Shareholders set forth herein.
(ii) All expenses, including reasonable attorney
fees, arising from or incurred in connection with suits, proceedings, decrees
or judgments incident to any of the foregoing.
All losses, liabilities, costs, damages and expenses for which indemnification
is provided herein are collectively referred to as "IFC Losses".
(b) The period during which Purchaser must give notice in
writing to the Shareholders of claims for indemnification hereunder shall expire
on the second anniversary of the Closing except that such period shall be
extended to the applicable statute of limitations plus thirty (30) days with
respect to claims (i) for unpaid taxes and failure to file required tax reports,
including related interest, penalties and fines ("Tax Claims"), (ii) for
breaches of Section VIII, and (iii) for breaches of any covenant or obligation
which first arises after the Closing.
(c) Interest at the prime rate shall accrue and be paid on all
amounts to be indemnified from the date of the Closing to the date of payment by
the Shareholders, or if payment of a IFC Loss is made after the Closing by
Purchaser, from the date of such payment by Purchaser to the date of
indemnification by the Shareholders.
(d) The total liability of each Shareholder under this Section
IX shall not exceed the consideration received or to be received by such
Shareholder pursuant to Section II.
(e) In the event that any third party asserts an action or
claim as to which Purchaser is entitled to indemnification hereunder, Purchaser
shall notify the Shareholders in writing of any such asserted liability with
reasonable promptness, and the Shareholders shall have a right to compromise or
defend any such matter involving such asserted liability, through counsel
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of its own choosing who shall be subject to the approval of the Purchaser, which
approval will not be unreasonably withheld, at the expense of the Shareholders;
provided, however, that the Shareholders shall indemnify Purchaser against any
costs and damages resulting from the failure of the Shareholders to defend or
pay such claims. In the event the Shareholders shall notify Purchaser in writing
promptly of the intention of the Shareholders to do so, Purchaser shall
cooperate with the Shareholders and their counsel in the compromising of or the
defending against any such liabilities or claims, at the expense of the
Shareholders and provide the Shareholders with reasonable access to the books
and records of Company to the extent necessary for the compliance with any
document request and the reasonable defense of such claim.
(f) Purchaser shall be entitled to payment hereunder only if
and to the extent the aggregate IFC Losses under this Agreement exceed
Thirty-Five Thousand Dollars ($35,000).
(g) The amount of any IFC Loss shall be reduced by amounts
received by the Purchaser under any policy of insurance maintained by Company
prior to the Closing. Amounts received from any such policy of insurance after
the receipt of payment of any IFC Loss from the Shareholders shall be promptly
reimbursed to the Shareholders.
9.2 INDEMNIFICATION BY IFC.
(a) IFC hereby agrees to indemnify and hold the Shareholders
harmless at all times from and after the Closing, against and in respect of the
following:
(i) All losses, liabilities, costs and damages,
including without limitation, interest, penalties and fines, resulting from any
(a) breach of a representation or warranty of IFC set forth herein or (b)
non-fulfillment of any agreement or covenant, on the part of IFC set forth
herein.
(ii) All expenses, including reasonable attorney
fees, arising from or incurred in connection with suits, proceedings, decrees
or judgments incident to any of the foregoing.
All losses, liabilities, costs, damages and expenses for which indemnification
is provided herein are collectively referred to as "Shareholder Losses".
(b) The period during which the Shareholders must give notice
in writing to Purchaser of claims for indemnification hereunder shall expire on
the second anniversary of the Closing except that such period shall be extended
to the applicable statute of limitations for breaches of Section VIII and for
breaches of any covenant or obligation which first arises after the Closing.
(c) Interest at the prime rate payable shall accrue and
be paid on all amounts to be indemnified from the date of the Closing to the
date of payment by IFC, or if payment of a
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Shareholder Loss is made after the Closing by the Shareholder, from the date of
such payment by any Shareholder to the date of indemnification by IFC.
(d) The total liability of IFC under this Section IX shall not
exceed the consideration received or to be received by the Shareholders pursuant
to Section II.
(e) In the event that any third party asserts an action or
claim as to which the Shareholders are entitled to indemnification hereunder,
the Shareholders shall notify IFC in writing of any such asserted liability with
reasonable promptness, and IFC shall have a right to compromise or defend any
such matter involving such asserted liability, through counsel of its own
choosing who shall be subject to the approval of the Shareholders, which
approval will not be unreasonably withheld, at the expense of IFC; provided,
however, that IFC shall indemnify the Shareholders against any costs and damages
resulting from the failure of IFC to defend or pay such claims. In the event IFC
shall notify the Shareholders in writing promptly of the intention of IFC to do
so, the Shareholders shall cooperate with IFC and its counsel in the
compromising of or the defending against any such liabilities or claims, at the
expense of IFC and provide IFC with reasonable access to the books and records
of the Company to the extent necessary for the compliance with any document
request and the reasonable defense of such claim.
(f) The Shareholders shall be entitled to payment hereunder
with respect to Shareholder Losses for which IFC has agreed to indemnify
pursuant to paragraph 9.2(a)(i)(a) only if and to the extent the aggregate of
such Shareholder Losses under this Agreement exceed Thirty-Five Thousand Dollars
($35,000).
(g) The amount of any Shareholder Loss shall be reduced by
amounts received by the Shareholders under any policy of insurance. Amounts
received from any such policy of insurance after the receipt of payment of any
Shareholder Loss from IFC shall be promptly reimbursed to IFC.
9.3 REIMBURSEMENT. Purchaser or Shareholders, as the case may be, shall
be reimbursed promptly for any Shareholder Loss or IFC Loss for which it is to
be indemnified under paragraph 9.1 or 9.2. Purchaser and the Shareholders shall
have the right to set off and deduct any IFC Loss or Shareholder Loss, as the
case may be, against the amount of any obligation of such person however arising
to the other person; provided, however, there shall be no offset against any
salary, bonus or other compensation payable to Shareholder for services rendered
as an employee or consultant. In the event of any dispute as to the right of set
off or deduction of any amount or the amount of the IFC Loss or Shareholder
Loss, the dispute shall be resolved as provided in paragraph 9.5. If Shareholder
reimburses Purchaser for a breach of the warranties and representations set
forth in paragraph 3.7, Purchaser shall assign all such uncollected receivables
(together with all applicable documentation related thereto) to the Shareholders
without further consideration.
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9.4 CLAIMS. Should any claim be made by a person not a party to this
Agreement with respect to any matter to which the foregoing indemnity relates
for which the indemnifying party has not elected to compromise or defend as set
forth in paragraph 9.1(e) or 9.2(e), the party to be indemnified, on not less
than fifteen (15) days' notice to the indemnifying party, may make settlement of
such claim, and such settlement shall be binding on the indemnifying party for
the purposes of this Section IX; provided, however, that if within said fifteen
(15) day period the indemnifying party shall have advised the indemnified party
that the indemnifying party will contest any such claim at the expense of the
indemnifying party and has provided reasonable assurances of the ability of the
indemnifying party to pay such expenses and other losses should such occur, the
indemnified party will promptly comply and the indemnifying party shall have the
right to defend with counsel of its own choosing at its expense. Any payment or
settlement resulting from such contest, together with the total expense thereof,
shall be binding on the Shareholders and Purchaser for the purposes of this
Section IX. Failure to give notice shall not constitute a defense, in whole or
in part, to any claim by the indemnified party except and only to the extent
that such failure to do so shall result in material prejudice to the
indemnifying party.
9.5 RESOLUTION OF DISPUTES. In the event of any dispute between
Purchaser and the Shareholders over any claim by or on behalf of Purchaser or
the Shareholders for indemnification under this Section IX and the parties are
unable to resolve such dispute, either party may submit the dispute to binding
arbitration as hereinafter provided. The arbitration shall be in accordance with
the Commercial Arbitration Rules of the American Arbitration Association ("AAA")
then in effect. The arbitration shall be held before three arbitrators, unless
the amount in dispute is less than One Hundred Thousand Dollars ($100,000), in
which event the arbitration shall be held before one arbitrator. In the event
the arbitration is to be held before three arbitrators, the Shareholders and IFC
shall each appoint one arbitrator within thirty (30) days of the receipt of
notice by the party commencing the arbitration which includes a copy of the
petition filed with the AAA. The arbitrators shall select the third arbitrator.
In the event the two arbitrators fail to do so within fifteen (15) days of their
appointment or in the event a party hereto fails to designate an arbitrator or
in the event only one arbitrator is to be appointed, such arbitrator(s) shall be
appointed by the AAA. The arbitrator(s) shall be knowledgeable in the business
of software distribution. All decisions by the arbitrators shall be by majority
vote of the arbitrators. The award of the arbitrator(s) shall be binding on the
parties hereto and such awards may be entered in any applicable court. The
arbitration and all hearings in connection therewith shall be held in Georgia.
The arbitrator(s) shall have no authority to award punitive damages or any other
awards other than as herein contemplated. Notwithstanding the foregoing, the
parties hereto may seek in a court proceeding a restraining order, or a
preliminary or permanent injunction as permitted by law or equity whenever
applicable to enjoin the unauthorized use of the confidential information or
trade secret of a party hereto or as otherwise provided herein. All parties
hereto agree to service by mail in any such proceedings. The parties shall be
entitled to reasonable discovery of documents and deposition of witnesses prior
to the arbitration hearing. In the event of any dispute with respect to such
discovery, the dispute shall be submitted to the arbitrator(s) for
determination.
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SECTION X.
COVENANT NOT TO COMPETE
(a) For a period of five (5) years following the Closing, each
Shareholder agrees that he will not, directly or indirectly, including through
an Affiliate, own, manage, operate, control, be engaged in, or participate in
the ownership, management, operation, or control of or be connected in any
manner or have any other direct or indirect financial interest in any business,
firm, person, partnership, corporation, or concern which is engaged in any
business of the type and character which is competitive with the Business which
is being acquired by IFC upon the purchase of the capital stock of Company in
the United States. The Shareholder's employment by IFC or any subsidiary thereof
shall not be deemed a violation of this Section X and the Employment Agreement
between Company and ▇▇▇▇ ▇▇▇▇▇▇ shall not be deemed a violation of this Section
X. The Shareholders acknowledge that the Business is conducted throughout the
United States.
(b) Notwithstanding the covenants contained in subparagraph
(a), the Shareholders shall not be prohibited from owning less than 5% of any
class of equity securities of a company which is listed on a recognized Company
Shares exchange or for which prices are quoted on the National Association of
Securities Dealers Automated Quotation System.
(c) During the non-compete period set forth in subparagraph
(a), each Shareholder in any capacity will not suggest, urge or persuade any
user of the Software not to purchase or not to do business with IFC or the
successor of the Business or solicit the employment of any employee of Company
or its successor.
(d) Each state of the United States and each month of time
covered by this covenant not to compete shall be deemed a severable unit, and
should any court determine that the inclusion of all such states or months would
render any such undertaking unreasonable or unenforceable for any reason, those
units which are necessary in the judgment of the court to be deleted in order to
render such undertaking reasonable and enforceable shall be deemed free of such
non-compete undertaking but such undertaking shall remain in full force and
effect as to each other unit of territory or time.
(e) Each Shareholder agrees that in addition to any other
rights and remedies available to IFC for any breach by a Shareholder of his
obligations under this Section X, IFC shall be entitled to enforcement of such
obligations hereunder by court injunction or other equitable remedy and the
Shareholders in such proceeding will not urge that IFC has an adequate remedy at
law.
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SECTION XI.
TERMINATION AND ABANDONMENT
11.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated
at any time and the acquisition of the capital stock of Company as herein
contemplated abandoned at any time prior to the Closing without liability of
any party to any other party, except for breaches of warranties,
representations, and covenants set forth in this Agreement which are within the
control of the defaulting or non-performing party, under the following
circumstances:
(a) The mutual written agreement of IFC and the Shareholders;
(b) By IFC if the Closing has not occurred before June 30,
1997 because all conditions to the obligations of IFC have not been satisfied or
waived or because the Shareholders have not made all required deliveries
pursuant to Section V;
(c) By the Shareholders if the Closing has not occurred before
June 30, 1997 because all conditions to the obligations of the Shareholders have
not been satisfied or waived or because IFC has not made all required deliveries
pursuant to Section VI; and
(d) Any party may terminate by written notice to the other if
any action or proceeding shall have been instituted before any court or other
governmental body or, to the knowledge of the party giving such notice, shall
have been threatened formally in writing by any public authority with requisite
jurisdiction, to restrain or prohibit the transactions contemplated by this
Agreement or to subject one or more of the parties or their directors or their
officers to liability on the grounds that it or they have breached any law or
regulation or otherwise acted improperly in connection with such proposed
transactions ("Governmental Objection"), and such action or proceeding shall not
have been dismissed or such written threat shall not have been withdrawn or
rescinded before June 30, 1997.
11.2 RIGHTS AND OBLIGATIONS ON TERMINATION. If this Agreement is
terminated and abandoned as provided in this Section XI, each party will, at the
request of the other, return all documents, work papers, and other material of
the requesting party, including all copies thereof, relating to the transactions
contemplated by this Agreement, whether so obtained before or after the
execution of this Agreement, to the party furnishing the same, and all
information received by any party to this Agreement with respect to the business
of any other party shall be governed by the confidentiality obligations of
Section VIII and shall not at any time be used for the advantage of, or
disclosed to third parties by, such party to the detriment of the party
furnishing such information except as may be required by law; provided, however,
that this shall not apply to any document, work paper, material, or any other
information which is a matter previously published in any publication for public
distribution or previously filed as public information with any governmental
authority or is otherwise in the public domain.
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SECTION XII.
MISCELLANEOUS PROVISIONS
12.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES. The respective
representations, warranties and covenants of the Shareholders and IFC contained
herein or in any certificates or other documents delivered prior to or on the
Closing shall not be deemed waived or otherwise affected by any investigations
made by any party hereto. Each and every representation, warranty and covenant
of the Shareholders and IFC, and the indemnification provisions set forth in
Section IX hereof, shall survive the Closing and remain operative in full force
and effect as provided in Section IX.
12.2 HEADINGS. The paragraph captions and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be
part of this Agreement or to affect its meaning or interpretation.
12.3 FURTHER ASSURANCES. The parties hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as the other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement, including requests
made after the Closing.
12.4 FORCE MAJEURE. A party hereto shall not be liable for failure or
delay in performing any of the party's obligations hereunder if such failure or
delay is occasioned by compliance with any governmental regulation, request or
order, or by circumstances beyond the reasonable control of the party so failing
or delaying, including, but not limited to, Acts of God, war, insurrection,
fire, flood, accident, or earthquakes. Each party shall (a) promptly notify the
other in writing of any such event of force majeure, the expected duration
thereof and its anticipated effect on the ability of such party to perform its
obligations hereunder, and (b) make reasonable efforts to remedy any such event
of force majeure.
12.5 CUMULATIVE REMEDIES. Except as herein provided and subject
to any applicable limitation herein provided, the parties shall have all
remedies for breaches of this Agreement available to them provided by law or
equity.
12.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties hereto regarding the acquisition of the Business by IFC
through the merger of the Company into CMA and related matters as set forth in
this Agreement and supersedes all prior agreements and understandings, including
the Stock Purchase Agreement among IFC and the Shareholders, as heretofore
amended. No representations or agreements, whether written or oral, other than
those contained or referenced herein, shall be binding on the parties. This
Agreement may not be amended or modified except in a writing signed by all of
the parties hereto.
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12.7 SPECIFIC PERFORMANCE. This Agreement may be specifically
enforceable in accordance with applicable principles of law and equity. The
parties hereby acknowledge that it is impossible to measure the monetary damages
which would result from a party's failure to perform any obligation imposed upon
such party by this Agreement. Therefore, if any party hereto should institute an
action or proceeding to enforce the provisions hereof, any other party against
whom such action or proceeding is thereby brought hereby waives the claim or
defense that such party has an adequate remedy at law, and such person shall not
urge in any action or proceeding the claim or defense that an adequate remedy at
law exists.
12.8 NOTICES. All notices or other communications required or permitted
to be given hereunder shall be given in writing to the address of the party set
forth below their signature to this Agreement or to such other last authorized
address/telecopier number of the intended recipient provided in writing to the
party giving such notice, and shall be deemed to have been duly given on (i) the
date of receipt if personally delivered or delivered by overnight courier, (ii)
five (5) business days after posting if transmitted by postage prepaid
registered or certified mail (return receipt requested), or (iii) the date of
transmission if transmitted by telecopy (with postage prepaid registered or
certified mail confirmation) to the party to whom such notice or communication
is being given. Any party hereto may change such party's address or the person
to whom notice is given for purposes hereof by written notice to the other
parties. Such notices are effective only upon receipt.
12.9 NON-WAIVER OF DEFAULT. Any failure by any party hereto at any time
or from time to time to enforce and/or require strict compliance with any term
or condition of this Agreement shall not constitute a waiver of such term or
condition. All waivers hereunder must be in writing executed by the party
waiving the right. The consummation of the transactions with knowledge of a
breach of a warranty, representation or covenant shall not constitute a waiver
of any such warranty, representation or covenant.
12.10 PARTIAL INVALIDITY. If any term or provision of this Agreement,
not essential to the basic purposes of the transactions contemplated herein,
shall be held to be illegal, invalid or unenforceable by a court or arbitrator
of competent jurisdiction, it is the intention of the parties hereto that (i)
the remaining terms hereof shall constitute the agreement with respect to the
subject matter hereof, (ii) all such remaining terms shall remain in full force
and effect and shall be deemed to constitute the entirety of this Agreement as
though such illegal, invalid or unenforceable provision had never been part
hereof, and (iii) such illegal, invalid, or unenforceable provision shall be
construed as closely as possible to the parties' original intent in order to
render such provision legal, valid, or enforceable, as applicable.
12.11 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Shareholders and IFC and their
successors and assigns. IFC may on or prior to the Closing designate a
subsidiary as the party to acquire the Business; provided, however, IFC shall
remain liable to the Shareholders for any breach of IFC's warranties,
representations and covenants contained herein.
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12.12 FEES AND EXPENSES. Each party hereto shall pay all expenses which
that party has incurred, including attorneys' and accountants' fees, in
connection with this Agreement and the transactions contemplated hereby.
12.13 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Georgia (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect and performance.
12.14 COUNTERPARTS AND EXHIBITS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The Disclosure
Schedule is made a part of this Agreement.
12.15 PUBLICITY. The Shareholders shall make no public announcement of
the entering into of this Agreement or the terms and conditions hereof without
the prior written consent of IFC thereto. The Shareholders acknowledge that IFC,
as a publicly-held company, may be required or deem it desirable to make and as
part of the proposed Public Offering may make such public disclosure of the
execution of this Agreement and the terms and conditions hereof at any time
hereafter. With respect to any disclosure prior to the Closing, IFC shall
provide the Shareholders with a copy of any such disclosure promptly after it is
made and, to the extent practical, will review any proposed press release and
other public announcements with Company before it is released. After the
Closing, the parties shall have no obligations to the other under this paragraph
12.16.
K COMP MANAGEMENT SYSTEMS, INC.
By_____________________________________________
Name:______________________________________
Title:_____________________________________
Address for Notice:
Address: _______________________
_______________________
Telecopy No.: _______________________
SHAREHOLDERS:
_______________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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ADDRESS FOR NOTICE:
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
___________________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
ADDRESS FOR NOTICE:
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
INFOCURE CORPORATION
By:___________________________________________
Name:______________________________________
Title:_____________________________________
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
CMA CORPORATION
By:________________________________________
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Name:_________________________
Title:________________________
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
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