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EXHIBIT 10.19
AGREEMENT AND PLAN OF MERGER
AMONG INFOCURE CORPORATION,
R I ACQUISITION CORPORATION,
ROVAK, INC.,
AND THE SHAREHOLDERS OF ROVAK, INC.
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TABLE OF CONTENTS
PAGE
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SECTION I.
DEFINITIONS........................................................................................ 2
1.1 CERTAIN DEFINITIONS................................................................... 2
SECTION II.
SALE AND TRANSFER OF COMPANY SHARES; CLOSING....................................................... 4
2.1 CONSTITUENT CORPORATIONS...............................................................4
2.2 EFFECTIVE DATE.........................................................................4
2.3 MERGER OF COMPANY INTO RIA.............................................................4
2.4 ADDITIONAL DOCUMENTS...................................................................5
2.5 AMENDMENT OF ARTICLES OF INCORPORATION.................................................5
2.6 BYLAWS.................................................................................5
2.7 DIRECTORS AND OFFICERS.................................................................5
2.8 CONVERSION OF SHARES OF THE COMPANY....................................................5
2.9 SHARES OF RIA AFTER THE EFFECTIVE DATE.................................................6
2.10 DISSENTERS RIGHTS......................................................................6
2.11 TREASURY SHARES OF COMPANY.............................................................6
2.12 RIGHTS OF SHAREHOLDERS AFTER EFFECTIVE DATE. .........................................6
2.13 ADJUSTMENT AMOUNT. ...................................................................6
2.14 ADJUSTMENT PROCEDURE...................................................................6
2.15 ESCROW. ..............................................................................7
2.16 EARN OUT...............................................................................7
2.17 TAX COVENANTS..........................................................................8
SECTION III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS..................................................... 8
3.1 CORPORATE............................................................................. 8
3.2 FINANCIAL STATEMENTS.................................................................. 9
3.3 CUSTOMERS............................................................................. 9
3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES...................................... 10
3.5 GUARANTIES/LIENS..................................................................... 10
3.6 NO UNDISCLOSED LIABILITIES........................................................... 10
3.7 ACCOUNTS RECEIVABLE.................................................................. 11
3.8 OWNERSHIP OF INTELLECTUAL PROPERTY................................................... 11
3.9 PROPERTY AND EQUIPMENT............................................................... 13
3.10 LICENSE AGREEMENTS................................................................... 13
3.11 CONSULTING AND DEVELOPMENT AGREEMENTS................................................ 14
3.12 MAINTENANCE/COMMITMENTS.............................................................. 14
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3.13 ALL INTANGIBLE ASSETS USED IN THE BUSINESS........................................... 14
3.14 EMPLOYEES/CONSULTANTS/DIRECTORS...................................................... 14
3.15 ASSUMED AGREEMENTS................................................................... 15
3.16 LITIGATION AND ADVERSE EVENTS........................................................ 16
3.17 COMPLIANCE WITH APPLICABLE LAW....................................................... 16
3.18 TAXES AND TAX RETURNS................................................................ 16
3.19 CONSENTS............................................................................. 16
3.20 BROKERS AND FINDERS.................................................................. 16
3.21 RELATED TRANSACTIONS................................................................. 16
3.22 NO UNTRUE STATEMENTS................................................................. 16
SECTION IV.
REPRESENTATIONS AND WARRANTIES OF BUYER................................................................ 18
4.1 ORGANIZATION AND STANDING OF INFOCURE AND RIA........................................18
4.2 AUTHORIZATION........................................................................ 18
4.3 CORPORATE............................................................................ 19
4.4 BROKERS AND FINDERS.................................................................. 19
4.5 NO UNTRUE STATEMENTS................................................................. 19
SECTION V.
CONDITIONS TO THE OBLIGATIONS OF INFOCURE AND RIA......................................................19
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE.......................................... 19
5.2 THIRD PARTY CONSENTS................................................................. 19
5.3 OPINION OF COUNSEL TO THE SHAREHOLDERS............................................... 19
5.4 UPDATE DISCLOSURE SCHEDULE........................................................... 19
5.5 PUBLIC OFFERING...................................................................... 20
5.6 ESCROW AGREEMENT. .................................................................. 20
5.7 EMPLOYMENT AGREEMENT................................................................. 20
5.8 EMPLOYMENT AGREEMENT................................................................. 20
5.9 LEASE AGREEMENT...................................................................... 20
5.10 NO MATERIAL ADVERSE CHANGE........................................................... 20
5.11 TERMINATION OF CERTAIN AGREEMENTS.................................................... 20
5.12 S-4 REGISTRATION STATEMENT........................................................... 20
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS...................................................... 20
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE.......................................... 21
6.2 OPINION OF COUNSEL TO INFOCURE.......................................................21
6.3 PUBLIC OFFERING...................................................................... 21
6.4 ESCROW AGREEMENT. .................................................................. 21
SECTION VII.
OTHER COVENANTS........................................................................................ 21
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7.1 CONDUCT OF BUSINESS.................................................................. 21
SECTION VIII.
CONFIDENTIALITY AND SECURITY........................................................................... 22
8.1 CONFIDENTIALITY...................................................................... 22
SECTION IX.
INDEMNIFICATION........................................................................................ 25
9.1 INDEMNIFICATION BY THE SHAREHOLDERS.................................................. 25
9.2 INDEMNIFICATION BY INFOCURE..........................................................26
9.3 REIMBURSEMENT........................................................................ 27
9.4 CLAIMS............................................................................... 27
9.5 RESOLUTION OF DISPUTES............................................................... 28
SECTION X.
COVENANT NOT TO COMPETE................................................................................ 28
SECTION XI.
TERMINATION AND ABANDONMENT............................................................................ 29
11.1 TERMINATION AND ABANDONMENT.......................................................... 29
11.2 RIGHTS AND OBLIGATIONS ON TERMINATION................................................ 30
SECTION XII.
MISCELLANEOUS PROVISIONS............................................................................... 30
12.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES............................................... 30
12.2 HEADINGS............................................................................. 30
12.3 FURTHER ASSURANCES................................................................... 30
12.4 FORCE MAJEURE........................................................................ 30
12.5 CUMULATIVE REMEDIES.................................................................. 31
12.6 ENTIRE AGREEMENT..................................................................... 31
12.7 SPECIFIC PERFORMANCE................................................................. 31
12.8 NOTICES.............................................................................. 31
12.9 NON-WAIVER OF DEFAULT................................................................ 31
12.10 PARTIAL INVALIDITY................................................................... 32
12.11 DUPLICATE ORIGINALS.................................................................. 32
12.12 ASSIGNMENT........................................................................... 32
12.13 FEES AND EXPENSES.................................................................... 32
12.14 GOVERNING LAW........................................................................ 32
12.15 COUNTERPARTS AND EXHIBITS............................................................ 32
12.16 PUBLICITY............................................................................ 32
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AGREEMENT AND PLAN OF MERGER
AMONG INFOCURE CORPORATION,
R I ACQUISITION CORPORATION,
ROVAK, INC.,
AND THE SHAREHOLDERS OF ROVAK, INC.
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made as of the 19TH
DAY OF JUNE, 1997 BY AND AMONG INFOCURE CORPORATION, A DELAWARE CORPORATION
("INFOCURE"), R I ACQUISITION CORPORATION, A MINNESOTA CORPORATION ("RIA"),
ROVAK, INC., A MINNESOTA CORPORATION ("COMPANY"), and the UNDERSIGNED
SHAREHOLDERS ("Shareholders") of THE COMPANY.
WHEREAS, THE PARTIES DESIRE THAT THE COMPANY MERGE ("MERGER") INTO RIA, A
WHOLLY-OWNED SUBSIDIARY OF INFOCURE, on the terms set forth in this Agreement.
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) "Adjustment Amount" is defined in Section 2.5.
(b) "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.
(c) "Business" means the development, marketing and support of
the Software as currently conducted by Company.
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(d) "Closing" is defined in Section 2.3.
(e) "Closing Date" means the date and time as of which the
Closing actually takes place.
(f) "Copyright" means all copyright ownership of the Software
and Documentation.
(g) "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(g) of the Disclosure Schedule.
(h) "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(h) of
the Disclosure Schedule.
(i) "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(i) of the Disclosure Schedule.
(j) "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.
(k) "Escrow Fund" is defined in Section 2.7.
(l) "Escrow Shares" are defined in Section 2.7.
(m) "GAAP" means generally accepted United States accounting
principles, consistently applied on an accrual basis.
(n) "Hardware" means all computers, components, peripherals,
and other equipment currently offered for sale by Company in the course of its
business. Section 1.1(n) of the Disclosure Schedule lists all Hardware currently
being sold by Company.
(o) "Intellectual Property" means all patents, patent pending,
copyrights, trade secrets, techniques, know-how, and other intangible assets and
are legally protectable or recognized as forms of property, whether or not
reduced to practice or a writing.
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(p) "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.
(q) "Management of Company" means the current chief executive
officer, the chief operating officer, and the chief financial officer of
Company.
(r) "Public Offering" means the first public offering of common
stock of INFOCURE AT WHICH THE PRICE PER SHARE OF COMMON STOCK OF INFOCURE TO
THE PUBLIC IS NOT LESS THAN $5.00 PER SHARE.
(s "PURCHASE PRICE DELIVERY DATE" IS DEFINED IN SECTION 2.8.
(t) "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 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(g)
of the Disclosure Schedule.
(u) "Trademarks" mean the trademarks listed in Section 3.8(c)
of the Disclosure Schedule.
(v) "Shareholder" shall include holders of warrants to purchase
shares of common stock of Company.
SECTION II.
SALE AND TRANSFER OF COMPANY SHARES; CLOSING
2.1 CONSTITUENT CORPORATIONS. THE CONSTITUENT CORPORATIONS TO THE
MERGER ARE THE COMPANY AND RIA.
2.2 EFFECTIVE DATE.
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(A) THIS AGREEMENT HAS BEEN SUBMITTED TO THE SHAREHOLDERS AND BOARD OF
DIRECTORS OF THE COMPANY AND TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF RIA
FOR APPROVAL AS PROVIDED BY THE APPROPRIATE STATUTES OF THE STATE OF MINNESOTA.
IF ALL OF THE CONDITIONS PRECEDENT TO THE MERGER HAVE EITHER BEEN FULFILLED OR
WAIVED IN WRITING, ARTICLES OF MERGER SHALL BE EXECUTED, DELIVERED, FILED AND
RECORDED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA AS SOON AS
PRACTICAL THEREAFTER, UNLESS OTHERWISE AGREED BY THE PARTIES IN WRITING. THE
MERGER WILL BECOME EFFECTIVE WHEN THE ARTICLES OF MERGER IS FILED WITH THE
SECRETARY OF STATE OF THE STATE OF MINNESOTA OR AS OTHERWISE SET FORTH IN THE
ARTICLES 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 9:00 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 INFOCURE SHALL BE DEEMED TO HAVE
COMMENCED AT THE TIME WHICH IS THE LATEST OF THE TIME AT WHICH (I) INFOCURE'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 INFOCURE PURSUANT TO THE PUBLIC OFFERING OR (III) THE REGISTRATION
STATEMENT ON FORM S-4 NO. 333-20571 ("S4
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REGISTRATION STATEMENT") REGISTERING THE SHARES OF COMMON STOCK OF INFOCURE 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 AGGREGATE CONSIDERATION AS SET FORTH IN PARAGRAPH 2.8 BELOW.
2.3 MERGER OF COMPANY INTO RIA. UPON THE EFFECTIVE DATE, THE COMPANY
SHALL MERGE INTO RIA IN ACCORDANCE WITH THE APPLICABLE STATUTES OF THE STATE OF
MINNESOTA. THE SEPARATE EXISTENCE AND CORPORATE ORGANIZATION OF THE COMPANY
SHALL CEASE ON THE EFFECTIVE DATE AND RIA, 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 ARTICLES OF INCORPORATION. FROM AND AFTER THE
EFFECTIVE DATE AND UNTIL THEREAFTER AMENDED AS PROVIDED BY LAW, THE ARTICLES OF
INCORPORATION OF RIA AS IN EFFECT IMMEDIATELY PRIOR TO THE EFFECTIVE DATE SHALL
BE THE ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION, EXCEPT THAT ON
THE EFFECTIVE DATE THE ARTICLES OF INCORPORATION OF RIA SHALL BE AMENDED BY
AMENDING THE ARTICLES TO PROVIDE: "THE NAME OF THIS CORPORATION IS ROVAK, INC."
2.6 BYLAWS. FROM AND AFTER THE EFFECTIVE DATE AND UNTIL THEREAFTER
AMENDED AS PROVIDED BY LAW, THE BYLAWS OF RIA 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 RIA. 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, RIA OR THE SURVIVING CORPORATION, THE
OUTSTANDING SHARES OF THE COMPANY ("COMPANY SHARES") SHALL BE CONVERTED INTO AND
BECOME THE RIGHT TO RECEIVE ("AGGREGATE CONSIDERATION") AN AGGREGATE OF (I)
$1,402,500 ("CASH CONSIDERATION") AND (II) SUCH NUMBER OF SHARES OF COMMON
STOCK, PAR VALUE $.001, OF
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INFOCURE ("COMMON STOCK") EQUAL TO THE QUOTIENT OF (1) 1,402,500 DIVIDED BY (2)
THE PRICE OF A SHARE OF COMMON STOCK TO THE PUBLIC PURSUANT TO THE PUBLIC
OFFERING ("STOCK CONSIDERATION"). THE CASH AND SHARES OF COMMON STOCK ARE TO BE
EXCHANGED AS SET FORTH IN THE ARTICLES OF MERGER OR AS SET FORTH IN SECTION 2.8
OF THE DISCLOSURE SCHEDULE. THE CASH CONSIDERATION AND THE STOCK CONSIDERATION
ARE SUBJECT TO ADJUSTMENT AS SET FORTH IN PARAGRAPH 2.13.
(B) DELIVERY BY INFOCURE OF THE CASH CONSIDERATION 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 INFOCURE
RECEIVES THE PROCEEDS OF THE PUBLIC OFFERING (SUCH TIME AND DATE OF DELIVERY AND
PAYMENT IS CALLED THE "PURCHASE PRICE DELIVERY DATE"). UPON THE MERGER, THE
TRANSFER AGENT OF INFOCURE WILL BE DIRECTED BY INFOCURE TO ISSUE AND DELIVER TO
THE SHAREHOLDERS THE STOCK CERTIFICATE(S) REPRESENTING THE STOCK CONSIDERATION
(SUBJECT TO ANY REDUCTION PURSUANT TO PARAGRAPH 2.15).
2.9 SHARES OF RIA AFTER THE EFFECTIVE DATE. EACH SHARE OF COMMON
STOCK OF RIA 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 RIA SHALL HAVE FULLY COMPLIED
WITH THE REQUIREMENTS TO PROVIDE THE SHAREHOLDERS WITH NOTICE OF 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
COMPANY SHARES, 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 ADJUSTMENT AMOUNT. The Adjustment Amount (which may be a
positive or negative number) will be equal to (a) the consolidated stockholders'
equity of the Company as of the Closing Date determined in accordance with GAAP
consistent with the basis on which the Financial Statements referred to in
paragraph 3.2 were prepared, minus (b) negative $161,000.00. If the Adjustment
Amount is positive, the AGGREGATE CONSIDERATION shall be increased; if the
Adjustment Amount is negative, the AGGREGATE CONSIDERATION shall be decreased.
For periods during which the Company pays income taxes on a cash basis, there
shall be accrued a deferred liability for taxes payable by reason of such
election to be taxed on a cash basis versus an accrual basis. THE AGGREGATE
CONSIDERATION WILL
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BE ADJUSTED BY INCREASING OR DECREASING THE CASH CONSIDERATION AND THE STOCK
CONSIDERATION, AS THE CASE MAY BE, EACH BY ONE-HALF (1/2) OF THE ADJUSTMENT
AMOUNT.
2.14 ADJUSTMENT PROCEDURE.
(A) INFOCURE shall cause, at its expense, a balance sheet to be
prepared as of the Closing Date of the Company. The balance sheet shall be
completed within sixty (60) days after the Closing Date. As soon as such
financial statement is available to INFOCURE, INFOCURE shall deliver to
Shareholders the financial statement. 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 financial statement as of the Closing Date, a final
adjustment shall be made to the consideration paid at the Closing as provided in
paragraph 2.13 and the amount of the final adjustment shall be immediately paid
(OR RETURNED) by the appropriate parties.
(b) The parties shall use their best efforts to estimate the
amount of the adjustment on or prior to the Closing Date and the Purchase Price
as of the Closing Date will reflect such tentative adjustment which will be
subject to further adjustment pursuant to the provisions of paragraph 2.14(A).
2.15 ESCROW. On or before the Closing Date, the parties shall enter
into an Escrow Agreement in substantially the form attached as Exhibit 2.15
ESTABLISHING AN ESCROW OF A NUMBER OF SHARES OF INFOCURE EQUAL TO THE QUOTIENT
OF 300,000 divided by the per share price to the public of the COMMON STOCK OF
INFOCURE IN THE PUBLIC OFFERING (THE "ESCROW SHARES" OR "ESCROW FUND").
2.16 EARN OUT.
(A) THE AGGREGATE CONSIDERATION HEREINAFTER REFERRED TO SHALL BE
INCREASED ("EARN OUT") based on the actual net operating profit (net income
before interest and taxes) of Company or its successor for the TWELVE MONTH
PERIOD ended JANUARY 31, 1998 as follows:
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ACTUAL NET OPERATING PROFIT ADDITIONAL SHARES OF INFOCURE
--------------------------- -----------------------------
$371,000 OR LESS NONE
BETWEEN $371,000 AND $500,000 THE PRODUCT OF THE ADDITIONAL
SHARES (AS HEREINAFTER DEFINED)
TIMES THE QUOTIENT OF (I) $500,000
minus actual net operating profit,
divided by (ii) $129,000
$500,000 OR MORE SUCH NUMBER OF SHARES OF COMMON
STOCK EQUAL TO THE QUOTIENT OF (I)
1,000,000 DIVIDED BY (II) THE PRICE
OF A SHARE OF COMMON STOCK PURSUANT
TO THE PUBLIC OFFERING ("ADDITIONAL
SHARES")
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(B) INFOCURE shall cause, at its expense, an income statement showing
net operating profit of the Company or its successor to be prepared as of
JANUARY 31, 1998. The income statement sheet shall be completed within sixty
(60) days after JANUARY 31, 1998. As soon as such financial statement is
available to INFOCURE, INFOCURE shall deliver to Shareholders the financial
statement. Shareholders shall have thirty (30) days to review and object to the
income statement. Any disagreements as to the amounts of any adjustment to be
made to the income statement, 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 financial statement as of JANUARY 31, 1998, THE ADDITIONAL SHARES EARNED
shall be immediately paid to the SHAREHOLDERS.
(c) For purposes of this paragraph 2.16 only, net operating profit
shall not be reduced for any income taxes, interest, expenses related to the
Public Offering, allocations of corporate overhead by INFOCURE or its
subsidiaries (other than the Company), expenses related to corporate meetings
and other divisions, incentive compensation payable to ▇▇▇▇ ▇▇▇▇▇▇▇ in excess of
the base salary stated in his employment agreement and extraordinary one time
charges; it being understood that interpretations consistent herewith,
allocations, credits, debits and adjusting transactions are subject to quarterly
review by INFOCURE and a single representative of the Shareholders.
2.17 TAX COVENANTS. THE PARTIES HERETO INTEND THAT THE MERGER
CONSTITUTES A TAX- FREE REORGANIZATION BY STATUTORY MERGER OF THE COMPANY WITH
AND INTO RIA WITHIN THE MEANING OF SECTION 368(A)(1)(A) AND SECTION 368(A)(2)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED ("CODE"), AND CORRESPONDING
PROVISIONS OF STATE INCOME TAX LAW, AND THE PARTIES AGREE TO FILE ALL REPORTS
AND STATEMENTS WITH THE INTERNAL REVENUE SERVICE AND STATE TAX AUTHORITIES
NECESSARY TO REFLECT SUCH STATUS AND NOT TO TAKE ANY POSITION THEREON OR
OTHERWISE THAT IS OR WOULD BE INCONSISTENT WITH SUCH TREATMENT, EXCEPT FOR SUCH
PORTIONS OF THE EARN OUT WHICH IS REQUIRED TO BE OTHERWISE TREATED AS INTEREST.
INFOCURE HEREBY AGREES THAT FOR INFOCURE'S FINANCIAL REPORTING PURPOSES AND FOR
INFOCURE'S TAX PURPOSES IN CONNECTION WITH THE INFOCURE COMMON STOCK
CONSIDERATION ISSUED TO THE SHAREHOLDERS, INFOCURE SHALL NOT UTILIZE A VALUE PER
SHARE WHICH IS LESS THAN THE PRICE OF A SHARE OF COMMON STOCK TO THE PUBLIC
PURSUANT TO THE PUBLIC OFFERING.
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SECTION III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to
INFOCURE on the date hereof as follows:
3.1 CORPORATE
(a) Company is a corporation duly organized, validly existing
and in good standing under the laws of Minnesota 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)(i) of the
Disclosure Schedule. There are 8,217 shares of common stock of Company issued
and outstanding and no warrants or options or other rights to acquire capital
stock of Company are outstanding.
(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, which failure could have a
material adverse effect on its 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) This Agreement constitutes the legal, valid, and binding
obligation of Shareholders, enforceable against Shareholders in accordance with
its terms. Upon the execution and delivery by Shareholders of the Escrow
Agreement, the Escrow Agreement will constitute the legal, valid, and binding
obligation of Shareholders, enforceable against Shareholders in accordance with
its respective terms.
(e) Company has no subsidiaries.
(f) The shareholders of Company of record and beneficial owners
and the shares of common stock of Company owned by each shareholder and the
holders of all warrants, options, convertible securities and other rights to
acquire common stock of Company are set forth in Section 3.1(f) of the
Disclosure Schedule. Each Shareholder represents that the Company Shares
registered in the Shareholder's name are free and clear of any and all liens,
restrictions, claims, charges, options, rights of first refusal or encumbrances,
with no defects of title whatsoever. Each Shareholder has the exclusive right,
power and authority to vote and to transfer the shares of common stock
registered in the Shareholder's name.
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3.2 FINANCIAL STATEMENTS. The audited balance sheets as of DECEMBER
31, 1996, and December 31, 1995 and the statements of income of Company for the
TWELVE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995, AND THE UNAUDITED
BALANCE SHEET AS OF MARCH 31, 1997 AND THE UNAUDITED STATEMENTS OF INCOME OF THE
COMPANY FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996, have been
prepared in accordance with GAAP and present 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 ON PAGES F-58
THROUGH F-66 OF THE PROSPECTUS DATED JUNE 6, 1997 OF THE S-4 REGISTRATION
STATEMENT.
3.3 CUSTOMERS
(a) Company (or its predecessors) has granted over 1,100
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 an annual maintenance agreement with
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 contracted for maintenance and support
during the period October 1, 1995 through September 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 September 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.
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3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES
(a) Since December 31, 1996, 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.
(b) Since December 31, 1996, 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 December 31, 1996, 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
and (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.
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.
(a) Section 3.6(a) of the Disclosure Schedule identifies the written
agreements and describes all oral agreements relating to all indebtedness of the
Company, including without limitation shareholder loans and capital leases.
Correct and complete copies of each such agreements have been furnished to
INFOCURE.
(b) Company has no liabilities, absolute or contingent, known or
unknown, except those recorded on the Financial Statements as of December 31,
1996 and those incurred in the ordinary course of business of Company since
December 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
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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 of the
Disclosure Schedule, Company is the sole and exclusive owner throughout the
United States of (i) 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 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, 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)(i) 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 3.8(c) 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. 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 INFOCURE. 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.
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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.
(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) Distribution 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 Distribution Software and Development
Software is licensed to Company. Company does not license to others Distribution
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 INFOCURE.
3.9 PROPERTY AND EQUIPMENT
(a) Section 3.9 of the Disclosure Schedule lists the fixed
assets, including equipment, used in the Business as currently conducted 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 December 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 INFOCURE. 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 form of end user license agreement currently
used 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 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 INFOCURE 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 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 have
been furnished to INFOCURE. 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 currently being
conducted 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 MARCH 31, 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 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
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or to pay benefits. Company has no obligations to provide any benefits to any
retired or former employees, including medical and hospital benefits;
(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; and
(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 INFOCURE. 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 commitments of Company as of MARCH
31, 1997 not otherwise disclosed in the Disclosure Schedule. Section 3.15(a)
shall be updated as of the Closing. Such commitments represent all of the then
outstanding 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 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 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
INFOCURE.
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.
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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 INFOCURE 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. None of the Shareholders, the 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 INFOCURE or Company or the Shareholders.
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 INFOCURE 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.
3.23 INVESTMENT REPRESENTATIONS.
(a) Each Shareholder is acquiring the common stock of INFOCURE 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.
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(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 INFOCURE involves numerous risks, including the risks set forth
in INFOCURE'S Registration Statement on Form SB-2, No. 333-18923 ("SB
Registration Statement").
(c) Each Shareholder agrees that the certificate or certificates
representing the common stock of INFOCURE shall be inscribed with the legend
that such stock may not be transferred in the absence of an effective
registration statement under the Act covering the stock or an opinion of counsel
satisfactory to INFOCURE that registration is not required, and such stock may
not be transferred except as permitted under the provisions of the standstill
agreement set forth in paragraph 7.2 hereof and the Act and Rules.
(d) In making this decision to acquire the common stock of INFOCURE,
each Shareholder has been given the opportunity to discuss the business,
management and financial affairs of INFOCURE with officers of INFOCURE 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 INFOCURE and an investment in the common
stock of INFOCURE and the Shareholders desire no further information for such
evaluation. Each Shareholder acknowledges receipt of a copy of the PROSPECTUS
DATED JUNE 6, 1997 WHICH IS INCLUDED IN THE S-4 Registration Statement as filed
with the Securities and Exchange Commission .
(e) Each Shareholder acknowledges that no representations were made by
INFOCURE to the Shareholders with respect to the business, management or
financial affairs of INFOCURE except as set forth in Section IV of this
Agreement, and except that INFOCURE is negotiating with several companies the
purchase or merger of their businesses by or into INFOCURE or an affiliated
company ("Acquisitions") and the financing of such purchases in part through the
Public Offering by INFOCURE, all as more fully described in the SB Registration
Statement. 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 INFOCURE , including working capital requirements, or that
INFOCURE will be profitable.
(f) Each Shareholder acknowledges that (i) INFOCURE may acquire
American Medcare Corporation and subsidiaries ("AMC") as part of the
Acquisitions; (ii) he/she has heretofore been furnished with recent financial
statements of AMC as part of the SB Registration Statement; (iii) he/she has
been advised that AMC continues to operate at a loss and has and is incurring
expenses in its efforts to acquire several businesses; (iv) no representations
are or were made by INFOCURE with respect to the business or financial affairs
of AMC except as set forth in the financial and other statements of AMC as
referenced in the preceding clause; and (v) no representations are made with
respect to any business plan, projections or acquisitions by AMC or INFOCURE.
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(g) Each Shareholder acknowledges that INFOCURE has relied on the
representations contained in this Agreement in determining that an exemption
from registration under the Act for this Agreement is available and that but for
such representations, this Agreement would not be offered to the Shareholders.
SECTION IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
INFOCURE hereby represents and warrants to the Shareholders on the date
hereof as follows:
4.1 ORGANIZATION AND STANDING OF INFOCURE AND RIA.
(A) INFOCURE 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 has full right,
power and authority to issue the shares of common stock as part of the Purchase
Price contemplated by this Agreement.
(B) RIA IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND
IN GOOD STANDING UNDER THE LAWS OF THE STATE OF MINNESOTA.
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
INFOCURE AND RIA. A duly certified copy of the resolutions of the Board of
Directors of INFOCURE AND RIA has been delivered to THE SHAREHOLDERS'
REPRESENTATIVE (AS HEREINAFTER DEFINED). This Agreement has been duly executed
and delivered by INFOCURE AND RIA and constitutes the legal, valid and binding
obligation of INFOCURE AND RIA enforceable against INFOCURE AND RIA in
accordance with its terms. Upon the execution and delivery by INFOCURE of the
Escrow Agreement, the Escrow Agreement will constitute the legal, valid, and
binding obligation of INFOCURE, enforceable against INFOCURE in accordance with
its respective terms.
(b) The execution and delivery of this Agreement, and the
consummation by INFOCURE AND RIA 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 INFOCURE OR RIA, any mortgage,
indenture, contract, agreement, license, permit, instrument, judgment, decree,
order, statute, regulation or ruling of any court or governmental authority to
which INFOCURE or any subsidiary (INCLUDING RIA) is a party or by which it is
bound.
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4.3 CORPORATE. INFOCURE was formed in November 1996 and INFOCURE AND
AMERICAN MEDCARE CORPORATION are incurring considerable expenses in its efforts
to acquire several businesses and effect the Public Offering to raise funds to
effect certain of the acquisitions and for general corporate purposes. No
representations are or were made by INFOCURE to the Shareholders with respect to
the business or financial affairs of INFOCURE and its subsidiaries or the
companies after such acquisitions.
4.4 BROKERS AND FINDERS. Neither INFOCURE 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 the Shareholders.
4.5 NO UNTRUE STATEMENTS. No statements (including representations) by
INFOCURE contained in this Agreement, and no written statements furnished by
INFOCURE 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 INFOCURE AND RIA
Each and every obligation of INFOCURE AND RIA 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 INFOCURE, 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; Shareholders shall have performed and
complied 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 Shareholders shall have delivered to INFOCURE a certificate of the
Shareholders in substantially the form attached hereto as Exhibit 5.1, 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.
5.3 OPINION OF COUNSEL TO THE SHAREHOLDERS. An opinion of counsel to
the Shareholders dated the Closing and addressed to INFOCURE reasonably
satisfactory in all respects to INFOCURE in substantially the form attached
hereto as Exhibit 5.3.
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5.4 UPDATE DISCLOSURE SCHEDULE. The Shareholders shall have updated
the Disclosure Schedule as herein provided.
5.5 PUBLIC OFFERING. The Public Offering shall have commenced.
5.6 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement in the form attached as Exhibit 2.15.
5.7 EMPLOYMENT AGREEMENT. INFOCURE and ▇▇▇▇ ▇▇▇▇▇▇▇ shall have entered
into an employment and incentive compensation agreement in form and substance
satisfactory to INFOCURE.
5.8 EMPLOYMENT AGREEMENT. INFOCURE and ▇▇▇ ▇▇▇▇▇ shall have entered
into an employment agreement in form and substance satisfactory to INFOCURE.
5.9 LEASE AGREEMENT. INFOCURE and the appropriate landlords shall have
entered into lease agreements for the continued use of Company's office and
warehouse space in form and substance satisfactory to INFOCURE on the same
economic terms currently in effect.
5.10 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change to the favorable outlook and prospects of Company or to its projected
operating profit for the period ending JANUARY 31, 1998.
5.11 TERMINATION OF CERTAIN AGREEMENTS. The salary obligation between
Company and ▇▇▇▇▇▇▇ shall be terminated in a manner satisfactory to INFOCURE. In
the event commissions and royalty payments due to ▇▇▇▇ ▇▇▇▇▇▇▇ and PCM are
terminated, the costs of said terminations paid and to be paid to ▇▇▇▇ ▇▇▇▇▇▇▇
and PCM during calendar 1997 in excess of the commissions and royalties due ▇▇▇▇
▇▇▇▇▇▇▇ and PCM under the current agreements (calculated as if such agreements
had not been terminated) based on the 1997 revenues shall be considered an
extraordinary one time charge as contemplated in paragraph 2.16(C) hereinabove
and such excess payments shall not be used in the computation of the paragraph
2.13 adjustment amount except as set forth below.
The monies paid and to be paid ▇▇▇▇▇▇▇ to terminate his salary obligation
shall be the responsibility of the Company and shall be accrued as an expense
prior to the Closing Date and applied in the computation of the shareholders'
equity as of the Closing Date pursuant to paragraph 2.13.
5.12 S-4 REGISTRATION STATEMENT. The Registration Statement on Form S-4
registering the shares of common stock of INFOCURE to be issued pursuant to this
Agreement and certain other acquisitions and mergers becomes effective.
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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 INFOCURE:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties made by INFOCURE 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; INFOCURE AND RIA shall each have performed and
complied 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 INFOCURE shall have delivered to the Shareholders a certificate of an
officer of INFOCURE in substantially the form attached hereto as Exhibit 6.1,
dated the Closing, certifying as to the fulfillment of the foregoing conditions.
6.2 OPINION OF COUNSEL TO INFOCURE. An opinion of Glass, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to INFOCURE, dated the Closing, reasonably
satisfactory in all respects to the Shareholders substantially in the form
attached as Exhibit 6.2.
6.3 PUBLIC OFFERING. The Public Offering shall have commenced.
6.4 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement in the form attached as Exhibit 2.15.
SECTION VII.
OTHER COVENANTS
7.1 CONDUCT OF BUSINESS. From the date hereof to the Closing, except
as otherwise consented to or approved by INFOCURE 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; (ii) to market and license the Software and Distributor
Software and Hardware to end users, and with the written consent of INFOCURE, to
distributors; and (iii) grant non-exclusive licenses of the Software and
Distributor Software to end users pursuant to its standard end user license
agreement at its standard fees.
(b) Disposition of Assets. Not to sell or otherwise dispose of
any asset except for the granting of non-exclusive licenses as permitted
pursuant to paragraph 7.1(a).
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(c) Full Access. To afford to INFOCURE, 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 INFOCURE or its authorized
representatives shall from time to time reasonably request.
7.2 STANDSTILL AGREEMENT. Each SHAREHOLDER DESIGNATED BY INFOCURE
AGREES TO EXECUTE A STANDSTILL AGREEMENT WHICH PROVIDES THAT THE Shareholder
agrees not to sell or otherwise dispose of any shares of common stock of
INFOCURE acquired pursuant to this Agreement for a period NOT TO EXCEED NINE (9)
months following the Public Offering without the prior written consent of
INFOCURE AND ITS UNDERWRITERS. THE AGREEMENT REFERENCED in this paragraph 7.2 is
intended to benefit INFOCURE and its underwriters and may be enforced by any of
them.
SECTION VIII.
CONFIDENTIALITY AND SECURITY
8.1 CONFIDENTIALITY
(a) The parties acknowledge that information, documents and
materials regarding each other have been exchanged 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 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.
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(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.
(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 proof of actual damages.
(d) The parties each agree as follows:
(i) Confidential information or trade secret of the
Owner that is 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 that Recipient
regularly employs to safeguard its own confidential information or trade secret
of like importance from unauthorized use or disclosure.
(iii) The rights and obligations of the parties with
respect to all such confidential information and trade secrets of the Owner that
is 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;
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(B) is independently developed by employees of
the Recipient who have not had access to such confidential information or trade
secret;
(C) is or becomes publicly available through no
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 INFOCURE 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 INFOCURE have been and will be
used by them and the Shareholder only in furtherance of the Merger 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.
(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 of
the transactions contemplated by this Agreement.
(h) Upon the Closing, all trade secrets and confidential
information owned by Company shall be deemed to be owned by INFOCURE 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
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prospectus 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 INFOCURE, RIA and THEIR successors (collectively "INFOCURE"
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 in this paragraph 9.1 are collectively referred to as " INFOCURE
Losses".
(b) The period during which INFOCURE must give notice in
writing to the Shareholders of claims for indemnification hereunder shall expire
on June 30, 1998 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 as quoted in The Wall Street
Journal shall accrue on all amounts to be indemnified from the date of the
Closing to the date of payment by the Shareholders, or if payment of an INFOCURE
Loss is made after the Closing by INFOCURE, from the date of such payment by
INFOCURE to the date of indemnification by the Shareholders.
(d) The total liability of the Shareholders 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 INFOCURE is entitled to indemnification hereunder, INFOCURE
shall notify the Shareholders in writing of any such asserted liability with
reasonable promptness, and the
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Shareholders 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 INFOCURE, which approval will not be
unreasonably withheld, at the expense of the Shareholders; provided, however,
that the Shareholders shall indemnify INFOCURE 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 INFOCURE in writing promptly of the
intention of the Shareholders to do so, INFOCURE 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) INFOCURE shall be entitled to payment hereunder only if and
to the extent the aggregate INFOCURE Losses under this Agreement exceed
Thirty-Five Thousand Dollars ($35,000).
(g) The amount of any Loss shall be reduced by amounts received
by the INFOCURE 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 Loss from the Shareholders shall be promptly reimbursed to the
Shareholders.
9.2 INDEMNIFICATION BY INFOCURE
(a) INFOCURE 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 INFOCURE set forth herein or (b)
non-fulfillment of any agreement or covenant, on the part of INFOCURE 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 in this paragraph 9.2 are collectively referred to as "Shareholder
Losses".
(b) The period during which the Shareholders must give notice
in writing to INFOCURE of claims for indemnification hereunder shall expire on
June 30, 1998 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 as quoted in The Wall Street
Journal shall accrue on all amounts to be indemnified from the date of the
Closing to the date of payment by INFOCURE, or if payment of a Shareholder Loss
is made after the Closing by the Shareholder, from
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the date of such payment by any Shareholder to the date of indemnification by
INFOCURE.
(d) The total liability of INFOCURE 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 INFOCURE in writing of any such asserted liability
with reasonable promptness, and INFOCURE 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 INFOCURE;
provided, however, that INFOCURE shall indemnify the Shareholders against any
costs and damages resulting from the failure of INFOCURE to defend or pay such
claims. In the event INFOCURE shall notify the Shareholders in writing promptly
of the intention of INFOCURE to do so, the Shareholders shall cooperate with
INFOCURE and its counsel in the compromising of or the defending against any
such liabilities or claims, at the expense of INFOCURE and provide INFOCURE 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
only if and to the extent the aggregate of 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 INFOCURE shall be promptly reimbursed to INFOCURE.
9.3 REIMBURSEMENT. INFOCURE or Shareholders, as the case may be, shall
be reimbursed promptly for any Shareholder Loss or INFOCURE Loss for which it is
to be indemnified under paragraph 9.1 or 9.2. INFOCURE and the Shareholders
shall have the right to set off and deduct any INFOCURE Loss or Shareholder
Loss, as the case may be, against the amount of any obligation of such person
however arising to the other person. In the event of any dispute as to the right
to set off or deduction of any amount or the amount of the INFOCURE or
Shareholder Loss, the dispute shall be resolved as provided in paragraph 9.5. If
Shareholder reimburses INFOCURE for a breach of the warranties and
representations set forth in paragraph 3.7, INFOCURE shall assign all such
uncollected receivables to the Shareholders without further consideration.
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 other, may make settlement of
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such claim, and such settlement shall be binding on the Shareholders and
INFOCURE for the purposes of this Section IX; provided, however, that if within
said fifteen (15) day period the Shareholders shall have requested the other
party to contest any such claim at the expense of the Shareholders and has
provided reasonable assurances of the ability of the parties 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 on their own
behalf with counsel of their own choosing at their expense. Any payment or
settlement resulting from such contest, together with the total expense thereof,
shall be binding on the Shareholders and INFOCURE 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 INFOCURE except and only to the extent that such
failure to do so shall result in material prejudice to the Shareholders.
9.5 RESOLUTION OF DISPUTES. In the event of any dispute between
INFOCURE and the Shareholders over any claim by or on behalf of INFOCURE 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
INFOCURE 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.
SECTION X.
COVENANT NOT TO COMPETE
(a) For a period of five (5) years following the Closing, each
of ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ 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
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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 INFOCURE in the United
States. 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 stock
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 INFOCURE 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 INFOCURE for any breach by a Shareholder of his
obligations under this Section X, INFOCURE 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 INFOCURE has an adequate
remedy at law.
SECTION XI.
TERMINATION AND ABANDONMENT
11.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated at
any time and the acquisition of the Company Shares 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 INFOCURE, Company, and the
Shareholders;
(b) By INFOCURE if the Closing has not occurred before JUNE 30,
1997 because all conditions to the obligations of INFOCURE have not been
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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 INFOCURE 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 not be governed by the confidentiality obligations of
Section VIII and shall 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 published in any publication for public distribution or filed as
public information with any governmental authority or is otherwise in the public
domain.
SECTION XII.
MISCELLANEOUS PROVISIONS
12.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES. The respective
representations, warranties and covenants of the Shareholders and INFOCURE
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 INFOCURE, 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.
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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, earthquakes, labor strikes, or inability to obtain
materials, supplies, power or equipment necessary to enable such party to
perform its obligations hereunder. 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 INFOCURE
and related matters as set forth in this Agreement AND SUPERSEDES ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS, INCLUDING THE STOCK PURCHASE AGREEMENT AMONG
INFOCURE AND THE SHAREHOLDERS HERETOFORE ENTERED INTO. 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.
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
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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 DUPLICATE ORIGINALS. For the convenience of the parties hereto,
any number of counterparts hereof may be executed, and such counterparts, taken
together, shall be deemed one and the same original.
12.12 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Shareholders and INFOCURE and
their successors and assigns. INFOCURE may on or prior to the Closing designate
a subsidiary as the party to acquire the Company Stock; provided, however,
INFOCURE shall remain liable to the Shareholders for any breach of INFOCURE'S
warranties, representations and covenants contained herein.
12.13 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.
12.14 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
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to all matters, including, but not limited to, matters of validity,
construction, effect and performance.
12.15 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.
12.16 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 INFOCURE thereto. The Shareholders acknowledge that
INFOCURE 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, INFOCURE 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 with Company
before it is released. After the Closing, the parties shall have no obligations
to the other under this paragraph 12.16.
12.17 SHAREHOLDERS' REPRESENTATIVE. By the execution and delivery of the
Agreement by the Shareholders, including counterparts thereof, each Shareholder
irrevocably constitutes and appoints ▇▇▇▇ ▇▇▇▇▇▇▇ as the true and lawful agent
and attorney-in-fact of such Shareholder ("Shareholders' Representative") with
full powers of substitution to act in the name, place and stead of such
Shareholder with the following powers:
(a) To receive, hold and deliver to INFOCURE the certificates
or instruments evidencing the common stock of Company owned by Shareholders,
accompanied by executed stock powers, signature guarantees, and any other
documents relating thereto on behalf of the Shareholders, including the power to
endorse and present any such certificate or stock power or instruments on behalf
of the Shareholders;
(b) To execute and deliver all ancillary agreements,
certificates, and documents which the Shareholders' Representative deems
necessary or appropriate in connection with the consummation of the transactions
contemplated by the terms and provisions of this Agreement;
(c) To receive and provide instructions for all payments and
other deliveries made pursuant to this Agreement and other funds payable for and
on behalf of the Shareholders;
(d) To act for the Shareholders with regard to all
indemnification matters referred to in this Agreement including, without
limitation, the power to consent to settlement of claims and the power to
compromise any claim on behalf of each such Shareholder;
(e) To enter into the Escrow Agreement and to serve as the
agent of the Shareholders with respect to all matters thereunder, and to
terminate, amend or waive any provision of the Escrow Agreement and to pay any
expenses reasonably incurred by the Escrow
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Agent or Shareholders' Representative in connection with the Escrow Agreement or
matters arising thereunder;
(f) To negotiate, terminate, amend or waive any provision of
this Agreement and to incur expenses (including fees of attorneys and
accountants) in any way relating to this transaction or any indemnification
proceedings relating thereto and deduct such expenses from amounts otherwise
payable to the Shareholders; and
(g) To do or refrain from doing any further act or deed on
behalf of the Shareholders which the Shareholders' Representative deems
necessary or appropriate in their sole discretion relating to the subject matter
of this Agreement as fully and completely as any Shareholder could do if
personally present.
The appointment of the Shareholders' Representative shall be deemed coupled with
an interest and shall be irrevocable and the INFOCURE may conclusively and
absolutely rely, without inquiry, upon any actions of the Shareholders'
Representative evidenced by a writing as the act of the Shareholder in all
matters referred to in this Agreement and the Escrow Agreement. With respect to
each Shareholder who is a natural person, the authority conferred by such
Shareholder shall not be revoked by such Shareholder's death or physical or
mental disability. In the event Shareholders' Representative refuses to serve as
Shareholders' Representative or service in such capacity is terminated for any
reason, a successor Shareholders' Representative may be designated by a writing
executed by the Shareholders who held a majority of the common stock of Company
listed on Exhibit 3.01(f) of the Disclosure Schedule. The Shareholders'
Representative shall not be responsible to the Shareholders for any loss or
damage the Shareholders may suffer by reason of the performance of the
Shareholders' Representative of his duties under this Agreement, other than loss
or damage arising from willful violation of law or gross negligence in the
performance of his duties under this Agreement.
BUYER:
INFOCURE CORPORATION
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇▇▇▇▇ ▇. Fine,
Chief Executive Officer
RIA:
R I ACQUISITION CORPORATION
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
ADDRESS FOR NOTICE:
ADDRESS:
--------------------------
--------------------------
TELECOPY NO.:
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ATTENTION:
------------------------
ROVAK:
ROVAK, INC.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
ADDRESS FOR NOTICE:
ADDRESS:
---------------------------
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TELECOPY NO.:
----------------------
ATTENTION:
-------------------------
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SHAREHOLDERS:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
---------------------
Tax ID No.:
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-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telecopy:
---------------------
Tax ID No.:
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-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
---------------------
Tax ID No.:
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-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
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Tax ID No.:
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------------------------------------------------
▇▇▇▇▇▇ ▇. (Passa) ▇▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
---------------------
Tax ID No.:
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▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
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Tax ID No.:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
---------------------
Tax ID No.:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
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Tax ID No.:
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▇▇▇▇ ▇. ▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
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Tax ID No.:
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▇▇▇ ▇▇▇▇▇▇▇▇▇
ADDRESS FOR NOTICE: ▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
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Tax ID No.:
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▇▇▇▇ ▇▇▇▇▇
ADDRESS FOR NOTICE:
Telecopy:
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Tax ID No.:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
ADDRESS FOR NOTICE:
Telecopy:
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Tax ID No.:
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