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EXHIBIT 10.7
STOCK PURCHASE AGREEMENT
AMONG INFOCURE CORPORATION ("BUYER"),
AND THE SHAREHOLDERS ("SHAREHOLDERS") OF
DR SOFTWARE, INC. ("COMPANY")
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TABLE OF CONTENTS
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SECTION I.
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION II.
SALE AND TRANSFER OF COMPANY SHARES; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Company Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Delivery of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Net Worth Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Absence of Certain Finance and Business Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Guaranties/Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Ownership of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Property and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 License Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Consulting and Development Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Maintenance/Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 All Intangible Assets Used in the Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Employees/Consultants/Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Assumed Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Litigation and Adverse Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.21 Related Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.22 No Untrue Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION IV.
INVESTOR REPRESENTATIONS REGARDING THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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4.1 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Ownership of Company Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION V.
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Organization and Standing of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 S4 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Representations and Warranties; Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Third Party Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Opinion of Counsel to the Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Update Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Public Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.7 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.8 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.9 Section 338(h)(10) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.10 S4 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION VII.
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Representations and Warranties; Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Opinion of Counsel to Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Public Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.5 S4 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.6 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.7 Common Stock of Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.8 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.9 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION VIII.
OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 Standstill Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Section 338(h) (10) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.4 Covenants Relating to Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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SECTION IX.
CONFIDENTIALITY AND SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION X.
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Indemnification by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Resolution of Disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION XI.
COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION XII.
TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.1 Termination and Abandonment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.2 Rights and Obligations on Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION XIII.
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.1 Investigations; Survival of Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2 Payment of Certain Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.3 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.4 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.5 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.6 Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.8 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.10 Non-Waiver of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.11 Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.12 Duplicate Originals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.13 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.14 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.15 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.16 Counterparts and Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.17 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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STOCK PURCHASE AGREEMENT
AMONG INFOCURE CORPORATION ("BUYER"),
AND THE SHAREHOLDERS ("SHAREHOLDERS") OF
DR SOFTWARE, INC. ("COMPANY")
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 10th day
of February, 1997 by and among InfoCure Corporation, a Delaware corporation
("Buyer"), and the undersigned Shareholders ("Shareholders") of DR Software,
Inc., a Georgia corporation ("Company").
WHEREAS, Shareholders desire to sell, and Buyer desires to purchase,
all of the issued and outstanding shares ("Company Shares") of capital stock of
Company for the consideration and 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) "Affiliate" means any person, corporation, or other
business entity (i) which, whether directly or indirectly through one or more
intermediaries, is controlled by the Shareholders (individually or as a group)
or (ii) in which Shareholders (individually or as a group) own, directly or
indirectly through one or more intermediaries, 5% or more of the voting power
for the election of the governing board.
(b) "Business" means the development, marketing and
support of the Software as currently conducted by Company.
(c) "Closing" is defined in Section 2.3.
(d) "Closing Date" means the date and time as of which
the Closing actually takes place.
(e) "Copyright" means all copyright ownership of the
Software and Documentation.
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(f) "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(f) of the
Disclosure Schedule.
(g) "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 excluding
Development Software. A list of the Distributor Software is set forth in
Section 1.1(g) of the Disclosure Schedule.
(h) "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(h) of the Disclosure Schedule.
(i) "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.
(j) "Escrow Fund" is defined in Section 2.5.
(k) "Escrow Shares" are defined in Section 2.5.
(l) "GAAP" means generally accepted United States
accounting principles, consistently applied on an accrual basis.
(m) "Hardware" means all computers, components,
peripherals, and other equipment currently offered for sale by Company in the
course of its business. Section 1.1(m) of the Disclosure Schedule lists all
Hardware currently being sold by Company.
(n) "Intellectual Property" means all patents, patent
pending, copyrights, trade secrets, techniques, know-how, and other intangible
assets that are legally protectable or recognized as forms of property, whether
or not reduced to practice or a writing.
(o) "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.
(p) "Management of Company" means the current chief
executive officer, the chief operating officer, and the chief financial officer
of Company.
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(q) "Public Offering" means the first public offering of
common stock of Buyer the net proceeds of which paid to the issuer, after
deduction of the underwriters discount, shall exceed $12 million.
(r) "Purchase Price is defined in Section 2.2.
(s) "Purchase Price Delivery Date" is defined in Section
2.4.
(t) "Shareholder" shall include holders of options or
warrants to purchase shares of common stock of Company.
(u) "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(u) of the Disclosure Schedule.
(v) "Trademarks" mean the trademarks listed in Section
1.1(v) of the Disclosure Schedule.
SECTION II.
SALE AND TRANSFER OF COMPANY SHARES; CLOSING
2.1 COMPANY SHARES. Subject to the terms and conditions of this
Agreement, at the Closing, Shareholders will sell and transfer the Company
Shares to Buyer, and Buyer will purchase the Company Shares from Shareholders.
2.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for
the Company Shares will be: (a) the sum of Two Million One Hundred Twenty-Eight
Thousand Five Hundred and No/100ths United States Dollars (US$2,128,500.00),
minus the Net Worth Shortfall (as hereafter defined), if any, and (b) a number
of shares of common stock of Buyer equal to the product of (i) One Million Two
Hundred Fifty-Seven Thousand (1,257,000) and (ii) the final exchange ratio
("Exchange Ratio") used to exchange the total number of outstanding shares of
InfoCure to be issued for each share in American Medcare Corporation ("AMC")
prior to the Public Offering. The Exchange Ratio will be that set forth in the
merger agreement pursuant to which AMC will merge into Buyer and will be
applicable to the exchange of all shares of common stock of AMC into shares of
common stock of Buyer. The Exchange Ratio has been tentatively calculated at
0.0640072, which would result in a total of 80,457 shares of common stock of
Buyer. The Exchange Ratio is an estimate only and is subject to change prior
to the Public Offering; provided however, that in no event shall the number of
shares of Buyer issued pursuant to this paragraph 2.2 be less than the quotient
of $522,971 divided by the price to the public per
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share of common stock of Buyer offered pursuant to the SB Registration
Statement (as hereinafter defined).
2.3 CLOSING. The closing ("Closing") of the sale of the Company
Shares as contemplated by this Agreement shall occur at the offices of Glass,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP in Atlanta, Georgia at 9:00 a.m. local time
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 hereafter. The Public Offering of the common stock of Buyer shall be
deemed to have commenced at the time, which is the latest of (i) the time at
which the Buyer's Registration Statement on Form SB-2 No. 333-18923 ("SB
Registration Statement") as filed with the Securities and Exchange Commission
("Commission") becomes effective, or (ii) the time at which the underwriters
have agreed to purchase the shares of common stock of Buyer pursuant to the
Public Offering or (iii) the time at which the Registration Statement on Form
S4, No. 333-20571 ("S4 Registration Statement") registering the shares of
common stock of Buyer to be issued pursuant to this Agreement and certain other
acquisitions and mergers becomes effective. The sale of the Company Shares
shall be effective on the date of Closing, notwithstanding subsequent delivery
of the Purchase Price as set forth in Paragraph 2.4 below.
2.4 DELIVERY OF PURCHASE PRICE. Delivery by the Buyer of the
shares of Buyer comprising the Purchase Price for the respective accounts of
the Shareholders (less the Escrow Shares described in paragraph 2.5), delivery
of the Escrow Shares to the escrow agent as described in paragraph 2.5, and
payment of the monetary portion of the Purchase Price 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, shall take place at the offices of Glass,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP in Atlanta, Georgia, or at such other
location as Buyer may designate by written notice to Shareholders, at 10:00
a.m., local time, one business day after Buyer receives the proceeds of the
Public Offering (such time and date of delivery and payment are called the
"Purchase Price Delivery Date").
2.5 ESCROW. On or before the Closing, the parties shall enter
into an Escrow Agreement in a form acceptable to Buyer and the Shareholders
establishing an escrow fund ("Escrow Fund") in an amount equal to 10% of the
Purchase Price. The shares of common stock of Buyer will be valued at the
price to the public of the shares offered in the Public Offering only for
purposes of calculating the Purchase Price. At the option of the Shareholders
the Escrow Fund shall consist of all stock ("Escrow Shares"), all cash or a
combination thereof.
2.6 NET WORTH SHORTFALL.
(a) If the consolidated stockholders' equity of the
Company as of the Closing determined in accordance with GAAP consistent with
the basis on which the Financial Statements referred to in paragraph 3.2 were
prepared is less than negative $100,000 ("Net Worth Shortfall"), the monetary
portion of the Purchase Price shall be decreased by the amount of the
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Net Worth Shortfall; otherwise the monetary portion of the Purchase Price shall
not be adjusted by this paragraph 2.6. 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 calculation shall be made without taking into effect the
election pursuant to Section 338(h)(10) under the Internal Revenue Code.
(b) The parties shall use their best efforts to estimate
the amount of the adjustment on or prior to the Closing and the Purchase Price
as of the Closing will reflect such tentative adjustment which will be subject
to further adjustment pursuant to the provisions of paragraph 2.6(a). Any
adjustments shall be made by decreasing the monetary portion of the Purchase
Price.
(c) Buyer shall cause, at its expense, a balance sheet of
the Company as of the Closing to be prepared and completed within ninety (90)
days after the Closing. As soon as such financial statement is available to
Buyer, Buyer 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 10.5, 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, any adjustment shall be made to the monetary
portion of the Purchase Price as provided in subparagraph 2.6(a) and the amount
of any remaining Net Worth Shortfall (after consideration of the estimate made
pursuant to subparagraph 2.6(b)) shall be immediately paid by the Shareholders
to Buyer; provided however, that any amounts withheld pursuant to subparagraph
2.6(b) in excess of the Net Worth Shortfall shall be refunded promptly by Buyer.
SECTION III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to
Buyer on the date hereof as follows:
3.1 CORPORATE.
(a) Except as set forth in Schedule 3.1(a) of the
Disclosure Schedule, Company is a corporation duly organized, validly existing
and in good standing under the laws of Georgia 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
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51,882 shares of common stock of Company issued and outstanding and there are
no warrants, options, convertible securities or other rights to acquire capital
stock of Company outstanding.
(c) To the knowledge of the Management, Company holds all
licenses, permits, authorizations and other approvals from all governmental
authorities necessary for the conduct of the Business of Company, which failure
could have a material adverse affect 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 are the
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.
3.2 FINANCIAL STATEMENTS. (a) Except as disclosed in Section
3.2(a) of the Disclosure Schedule, the audited balance sheets as of September
30, 1996, and December 31, 1995 and the statements of income of Company for the
nine months ended September 30, 1996 and the year ended December 31, 1995
present fairly in all material respects in the aggregate the results of the
operations of Company during those periods. Said financial statements are
sometimes collectively referred to as "Financial Statements." A true, correct
and complete copy of the Financial Statements are set forth in Section 3.2(a)
of the Disclosure Schedule.
(b) Section 3.2(b) of the Disclosure Schedule contains a
list of the amounts outstanding under all indebtedness of the Company to
financial institutions and other lenders, including loans from shareholders and
capital leases and the principal amounts outstanding as of January 31, 1997.
Correct and complete copies of each such loan agreement, if any, have been
furnished to Buyer.
3.3 CUSTOMERS
(a) Company has granted more than 2,200 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
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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 January 1, 1996 through December 31, 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 December 31, 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 the amount of business
conducted with Company. 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.
3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES
(a) Since September 30, 1996, there has not been any (i)
event or events due to actions or omissions of the Company and/or its employees
which will have a material adverse effect taken as a whole on the financial
condition or Business of Company (including software and service revenues)
except as set forth in Section 3.4(a) of the Disclosure Schedule or (ii)
declaration or payment of any dividend on the capital stock or the redemption
of any shares of capital stock of Company, except as set forth in Section
3.4(a) of the Disclosure Schedule.
(b) Since September 30, 1996, no material loss, damage or
destruction of the tangible assets has occurred, whether or not covered by
insurance, which had a material adverse affect on the financial condition of
Company or on the Business.
(c) Since September 30, 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 and support 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 of the Company were sold except
for the licensing of the Software and sale of Third Party Software and sale of
hardware in the ordinary course of the Business or sale of tangible assets
which were immaterial.
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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.
Except as set forth in Section 3.6 to the Disclosure Schedule,
Company has no liabilities, absolute or contingent, known or unknown, except
those recorded on the Financial Statements as of September 30, 1996 and those
incurred in the ordinary course of business of Company since September 30,
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. Except as set forth in Section 3.7 of
the Disclosure Schedule, 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 six (6) months of their due date without the engagement of
any collection agency or attorney or the commencement of any action, except to
the extent of any reserves for bad debts and doubtful accounts established on
its financial books and records as of the Closing, which reserves have been
established in a manner which is consistent with past practices. In the event
that any such receivables are not collected within said six months, in
determining amounts to be indemnified pursuant to Article X, any subsequent
recovery net of the cost of recovery shall be deducted from the amounts to be
indemnified for all purposes.
3.8 OWNERSHIP OF INTELLECTUAL PROPERTY
(a) Software. Except as set forth in Section 3.8(a) of
the Disclosure Schedule, Company is the sole and exclusive owner (including as
copyright 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.
Except as set forth in Section 3.8(a) of the Disclosure Schedule, 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)(i) 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 moral rights; (ii) all other
Intellectual Property rights, including, without limitation, trade secrets,
know-how,
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inventions (patented and unpatented), and discoveries, embodied in or used in
the development of the Software, or any part thereof, and the screen displays
generated by the Software; and (iii) all Documentation; in each case except the
Development Software used in the development of the Software and the
Distributor Software. The Copyrights, Trademarks, Software, Documentation, and
other Intellectual Property of Company are collectively hereinafter referred to
as "Company Intellectual Property". Section 3.8(b)(ii) of the Disclosure
Schedule contains a correct and complete list of all registered Copyrights, the
date of registration and jurisdiction of such registrations. Company has not
filed any patent applications and does not hold any patents.
(c) Trademarks. Company is the sole and exclusive owner
of the Trademarks which include all identifying names and marks which are
associated with the Software or which are otherwise used in the Business
conducted by Company. A complete and correct list of all such Trademarks is
set forth in Section 1.1(v) of the Disclosure Schedule, none of which are
registered or have any applications for registrations pending. Section 1.1(v)
of the Disclosure Schedule also lists the date of registration, registration
number and jurisdiction of the registration of each Trademark or the date of
application if the trademark application is pending.
(d) Software Developers. Section 3.8(d) of the
Disclosure Schedule sets forth the list of all persons and entities (other than
past or present full-time employees of Company) that have been engaged by the
Company 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 Buyer. The employees and former employees of
Company do not have any right, title or interest in the Software,
Documentation, Copyrights, Trademarks, or other Company Intellectual Property.
Section 3.8(d) of the Disclosure Schedule sets forth the current form of
agreements with its employees regarding ownership of the Company Intellectual
Property.
(e) Rights of Licensees. The ownership rights of Company
in Company Intellectual Property are subject only to the non-exclusive licenses
granted (i) to end users and (ii) to distributors of the 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
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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 the actions
described in Section 3.8(h) of the Disclosure Schedule with respect to
maintaining 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 Buyer.
(j) Clear Title. Except for liens for taxes not yet
due, the right, title and ownership of Company in the Company Intellectual
Property and all other assets of Company are free and clear of all mortgages,
liens, restrictions as to its use or right to license its use, security
interests and ownership rights of others except as set forth in Section 3.8(j)
of the Disclosure Schedule.
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 Leased Property. The fixed assets
owned by the Company and the Leased Property are generally in good operating
condition and repair, reasonable wear and tear excepted and constitute all of
the fixed assets used in the Business.
(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.
(c) Since December 31, 1996, Company has not sold or
otherwise disposed of any fixed assets, other than in the ordinary course of
business.
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3.10 LICENSE AGREEMENTS.
(a) Except as disclosed in Section 3.10(a) of the
Disclosure Schedule, 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 Buyer. 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 contained 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. To the knowledge of
Management, all such obligations can be fulfilled in the ordinary course of
providing support and maintenance services.
(e) Company is not in default of any material 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) Except as described in Section 1.1(g) of the
Disclosure Schedule, 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. Except as described in
Section 3.11 of the Disclosure Schedule, there are no consulting and software
development agreements, written or oral, entered into by Company pursuant to
which others performed or are performing services to Company as a consultant or
in a similar capacity relating to software development 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 support and/or maintenance services for any customer, 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 Buyer 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 for any
customer or to port any software for any customer not otherwise disclosed
pursuant to this Agreement ("Development Agreements"). A correct and complete
copy of the written Development Agreements have been furnished to Buyer and a
description of all oral agreements is set forth in Section 3.12(b) of the
Disclosure Schedule. 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 default by Company arising under the Maintenance Agreements or
Development Agreements which could give the other party the right to terminate
the agreement or to demand monetary damages.
3.13 ALL INTANGIBLE ASSETS USED IN THE BUSINESS. The Company
Intellectual Property, the Distributor Software and the Development Software
constitute all of the intangible assets used in the conduct of the Business as
conducted since September 30, 1996 and 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 December 31, 1996 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 representative 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
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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 or to pay benefits.
Company has no obligations to provide any benefits to any retired or former
employees, including medical and hospital benefits (excluding COBRA);
(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 substantial compliance and has been in substantial 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 all required
reports have been timely filed; and
(f) Company has no employment contracts or agreements
with any of its employees. Schedule 3.14(f) of the Disclosure Schedule
contains a copy of the most recent employee benefit brochure provided or made
available to the employees of the Company. Except as set forth in Section
3.14(f), all employees are "at will" employees of Company.
3.15 ASSUMED AGREEMENTS
(a) Sections 3.2(b), 3.10(b) and (d), 3.12(a), 3.12(b) or
3.15(a) of the Disclosure Schedule list all agreements of Company as of
December 31, 1996 under which the Company has not performed all of its
obligations not otherwise disclosed in the Disclosure Schedule (i) for amounts
payable to it in excess of $5,000 or (ii) which are not to be fulfilled within
six (6) months of the Closing other than Maintenance Agreements ("Material
Contracts"). Section 3.15(a) shall be updated as of the Closing. Such
commitments represent all of the then outstanding Material Contracts and, to
the knowledge of the Management of Company, all of the Material Contracts can
be performed by the Company in the ordinary course of business without a
financial loss to Company.
(b) Company is not in default of any term or condition
under any Material Contract in the Disclosure Schedule and no default by
Company has occurred which under any such Material Contract could constitute a
default which would give the other party the right to terminate the Material
Contract or to demand money damages.
(c) Company has not waived any of its material rights
under any Material Contracts nor is the other party to the Material Contracts
in default in any material respect under any such agreement.
(d) Correct and complete copies of the Material Contracts
listed in Section 3.15(a) of the Disclosure Schedule have been made available
to Buyer.
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3.16 LITIGATION AND ADVERSE EVENTS. There are no investigations,
suits, actions, administrative, arbitration or other proceedings pending, or,
to the knowledge of the Management of Company, threatened against Company.
3.17 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Section 3.17 of the Disclosure Schedule, Company 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) Except as set forth in Section 3.17 of the Disclosure
Schedule, 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). Except as set forth in Section 3.17 of the Disclosure
Schedule, Company has timely paid or accrued all taxes and tax withholdings.
No representations are made in this Agreement regarding the liability of the
Company for any taxes resulting from the exercise of the election by the
Shareholders under Sections 338(h)(10) of the Internal Revenue Code.
(b) Company has provided Buyer with correct and complete
copies of all tax returns, including income, property and sales tax returns
filed for the years 1992 to date. No tax returns of the Company are currently
being audited by any governmental authority.
3.19 CONSENTS. No consents or approvals are required to effect the
transactions contemplated herein by Company and Shareholders, except as set
forth in Section 3.19 of the Disclosure Schedule.
3.20 BROKERS AND FINDERS. None of the Shareholders or 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 Buyer or Company.
3.21 RELATED TRANSACTIONS. Section 3.21 of the Disclosure Schedule
contains a complete and correct list of all transactions since September 30,
1996 between Company and any Shareholder or Affiliate of any Shareholder except
employment and related benefits arising therefrom and other transactions
disclosed as being between a Shareholder or an Affiliate of any Shareholder and
Company in the Disclosure Schedule.
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3.22 NO UNTRUE STATEMENTS. No statements (including
representations and warranties) contained in this Agreement (including in the
Disclosure Schedule and documents described as having been provided to Buyer in
this Agreement or in the Disclosure Schedule), contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements herein and therein contained not materially misleading.
SECTION IV.
INVESTOR REPRESENTATIONS REGARDING THE SECURITIES
4.1 INVESTMENT REPRESENTATIONS.
Each Shareholder represents to Buyer as follows:
(a) The Shareholder is acquiring the common stock of
Buyer for the account of the Shareholder (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 promulgated thereunder ("Rules"), in violation of the Act or any of
the Rules.
(b) The Shareholder has such knowledge and experience in
financial and business matters that the Shareholder is capable of evaluating
the merits and economic risks of this particular investment and acknowledges
that an investment in the common stock of Buyer involves numerous risks,
including the risks set forth in the S4 Registration Statement.
(c) Unless the common stock of Buyer are issued pursuant
to the S4 Registration Statement, the Shareholder agrees that the certificate
or certificates representing the common stock of Buyer 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 Buyer that registration is not required. In
addition such stock may not be transferred except as permitted under the
provisions of the standstill agreement set forth in paragraph 8.2 hereof and
the Act and Rules.
(d) In making this decision to acquire the common stock
of Buyer, the Shareholder has been given the opportunity to discuss the
business, management and financial affairs of Buyer with officers of Buyer 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 Buyer and an investment in the
common stock of Buyer and the Shareholder desire no further information for
such evaluation. The Shareholder acknowledges receipt of a copy of the S4
Registration Statement as filed with the Securities and Exchange Commission on
January 28, 1997.
(e) The Shareholder acknowledges that no representations
were made by Buyer to the Shareholder with respect to the business, management
or financial affairs of Buyer except as set forth in Section V of this
Agreement, and except that Buyer and American Medcare
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Corporation ("AMC") are negotiating with several companies the purchase or
merger of their businesses by or into Buyer or subsidiary ("Acquisitions") and
the financing of the cash payments for such purchases through the Public
Offering. The Shareholder acknowledges that there can be no assurances that
the Acquisitions will be effected or that the Public Offering will occur or
that the net proceeds of the Public Offering will be sufficient to meet the
obligations of Buyer, including working capital requirements, or that Buyer
will be profitable after the Acquisitions. The Shareholder acknowledges that
no representations are made by Buyer as to the definitive Exchange Ratio.
(f) The Shareholder acknowledges that no representations
are or were made by Buyer with respect to the business or financial affairs of
Buyer except as set forth herein in the S4 and SB Registration Statements; and
no representations are made with respect to any business plan or projections by
Buyer.
4.2 OWNERSHIP OF COMPANY SHARES. Each Shareholder represents to
Buyer that the Shareholder is the sole and exclusive record and beneficial
owner of all shares of Company Shares registered in the Shareholder's name as
set forth in Section 3.1(f) of the Disclosure Schedule. Section 3.1(f) of the
Disclosure Schedule contains the principal residence or domicile of the
Shareholder. Each Shareholder represents that the shares of 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 Company Shares
registered in the Shareholder's name. Each Shareholder represents that the
Shareholder's right, title and interest in the Company Shares were acquired on
or before January 1, 1994 and no other person has any right, title or interest
therein, except as set forth in Section 3.21 of the Disclosure Schedule.
SECTION V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders on the date
hereof as follows:
5.1 ORGANIZATION AND STANDING OF BUYER. Buyer 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.
5.2 AUTHORIZATION.
(a) The execution, delivery and performance of this
Agreement including the issuance of the common stock of Buyer, have been duly
authorized by all requisite corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and
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constitutes the legal, valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms. Upon the execution and delivery by
Buyer of the Escrow Agreement, the Escrow Agreement will constitute the legal,
valid, and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
(b) The execution and delivery of this Agreement, and the
consummation by Buyer 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 Buyer, any mortgage, indenture,
contract, agreement, license, permit, instrument, judgment, decree, order,
statute, regulation or ruling of any court or governmental authority to which
Buyer or any subsidiary is a party or by which it is bound.
(c) The common stock of Buyer to be issued and delivered
to Company will be validly issued, fully paid and non-assessable securities and
will not be subject to any outstanding warrants, options, preemptive rights or
other restrictions except those arising under applicable federal and state
securities laws.
5.3 BROKERS AND FINDERS. Neither Buyer 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.
5.4 NO UNTRUE STATEMENTS. No statements (including
representations) by Buyer contained in this Agreement, and no written
statements furnished by Buyer 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.
5.5 S4 REGISTRATION STATEMENT. The S4 and SB Registration
Statements do not contain any untrue statement of a material fact or omits to
state therein such facts required to be stated therein or necessary to make
such statements therein not misleading. The foregoing representation does not
include any statement in the S4 and SB Registration Statements furnished to the
Buyer or AMC by any Shareholder for use in connection with the preparation of
the S4 and SB Registration Statements or any omission by any Shareholder to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer 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 Buyer, but such waiver shall not waive
any representation, warranty or covenant of the Shareholders.
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6.1 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 Buyer a certificate
of the Shareholders dated the Closing, certifying as to the fulfillment of the
foregoing conditions.
6.2 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.
6.3 OPINION OF COUNSEL TO THE SHAREHOLDERS. An opinion of counsel
to the Shareholders dated the Closing and addressed to Buyer reasonably
satisfactory in all respects to Buyer.
6.4 AUTHORIZATION. Evidence that all actions required to be taken
by the Shareholders or Company pursuant to this Agreement, including the
execution and delivery thereof, has been taken to authorize and consummate the
transactions contemplated herein.
6.5 UPDATE DISCLOSURE SCHEDULE. The Shareholders shall have
updated the Disclosure Schedule as herein provided.
6.6 PUBLIC OFFERING. The Public Offering shall have commenced.
6.7 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement.
6.8 EMPLOYMENT AGREEMENT. Buyer and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have
entered into an employment agreement in form and substance satisfactory to
Buyer.
6.9 SECTION 338(H)(10) ELECTION. The Shareholders shall have
delivered to Buyer an election under Section 338(h)(10) of the Internal Revenue
Code for Company on Internal Revenue Service Form 8023-A in accordance with
paragraph 8.3 hereof.
6.10 S4 REGISTRATION STATEMENT. The S4 Registration Statement,
which includes shares of common stock of Buyer to be issued pursuant to the
transactions contemplated by this Agreement has been declared effective by the
Commission.
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SECTION VII.
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 Buyer:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties made by Buyer 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; Buyer 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 Buyer shall have delivered to the Shareholders a certificate of an
officer of Buyer dated the Closing, certifying as to the fulfillment of the
foregoing conditions.
7.2 OPINION OF COUNSEL TO BUYER. An opinion of Glass, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to Buyer, dated the Closing, reasonably
satisfactory in all respects to the Shareholders.
7.3 PUBLIC OFFERING. The Public Offering shall have commenced.
7.4 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement.
7.5 S4 REGISTRATION STATEMENT. The S4 Registration Statement,
which includes shares of common stock of Buyer to be issued pursuant to the
transactions contemplated by this Agreement has been declared effective by the
Commission.
7.6 AUTHORIZATION. Evidence that all actions required to be taken
by Buyer pursuant to this Agreement have been taken, including its instructions
to the transfer agent to issue the common stock of Buyer and deliver the
certificates to the Shareholders and/or Escrow Agent and delivery of copies of
the articles of incorporation, bylaws, and board resolutions certified by the
secretary or assistant secretary of Buyer evidencing the authorization of the
issuance of the common stock of Buyer.
7.7 COMMON STOCK OF BUYER. The common stock of Buyer is delivered
by Buyer to the Shareholders.
7.8 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.
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7.9 EMPLOYMENT AGREEMENT. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Buyer shall have
entered into an Employment Agreement in form and substance satisfactory to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION VIII.
OTHER COVENANTS
8.1 CONDUCT OF BUSINESS. From the date hereof to the Closing,
except as otherwise consented to or approved by Buyer 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
Buyer, to distributors; (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 in the ordinary course of its business and (iv)
not appoint new distributors without the prior written consent of Buyer;
provided however, that Company may discharge without consideration a certain
loan owed from ▇▇▇▇▇▇ ▇▇▇▇▇▇ of approximately $51,030, including principal and
interest.
(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 8.1(a).
(c) Full Access. To afford to Buyer, 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 Buyer or its
authorized representatives shall from time to time reasonably request.
8.2 STANDSTILL AGREEMENT. Each Shareholder agrees to execute the
standstill agreement in the form attached hereto as Exhibit 8.2. Buyer
represents that the form of the standstill agreement is identical to those
being executed by the directors and executive officers of Buyer.
8.3 SECTION 338(H) (10) ELECTION. The Shareholders shall deliver
to Buyer an election under Section 338(h)(10) of the Internal Revenue Code for
Company on Internal Revenue Service Form 8023-A in accordance with the
instructions to the form. The Buyer and Shareholders agree to allocate the
Purchase Price among the assets of the Company in accordance with Treasury
Regulation Section 1.338(h)(10)-1 and the other Treasury Regulations referred
to therein, as determined by Buyer's and the Company's independent certified
public accountants prior to Closing.
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8.4 COVENANTS RELATING TO TAXES. Following Closing, in the event
that the Company receives notice of any audit of any tax return for the Company
for any taxable period, through and including the Closing Date by any taxing
authority, except as specifically provided below, the Company shall promptly
notify the Shareholders, individually, of the commencement of any such audit or
examination and the Shareholders may participate in such audit or examination
and shall be kept fully apprised of the progress of such audit or examination.
For taxable periods prior to and through the Closing Date, except as
specifically provided below, the Shareholders shall have the right to control
any audit or examination relating to state and federal income taxes ("Taxes")
of the Company by any taxing authority, including but not limited to initiating
any claims, filing any original or amended returns, contesting, resolving, and
defending against any assessment, notice of deficiency or other adjustment or
proposed adjustment relating to or with respect to any Taxes of the Company
after reviewing such action with the Company, and shall be entitled to any
refunds with respect to such taxable periods payable to the Shareholders. The
Shareholders shall keep the Company fully apprised of the progress of such
audit or examination and the Company may participate in such audit or
examination. The Shareholders agree that they will not agree to any audit
adjustment or revision that would result in taxable income to the Company,
without the Company's approval. The Company agrees that it will not agree to
any audit adjustment or revision that would adversely affect the taxable
incomes of the Shareholders, individually, without the Shareholders' approval,
which approval shall not be unreasonably withheld.
The Company shall pay the federal and state tax liabilities arising out of the
Section 338(h)(10) election to be made by the Shareholders as provided in
Section 8.3 of this Agreement. The Company shall have control over all audits
or examinations relating to taxes of the Company related to periods after the
Closing and to the Section 338(h)(10) election. The Company shall keep the
Shareholders fully apprised of the progress of such audit examination and the
Shareholders may participate in such audit or examination. The Company agrees
that it will not agree to any audit or revision that would result in taxable
income to the Shareholders, without the Shareholders' approval, unless the
Company promptly pays such liability.
SECTION IX.
CONFIDENTIALITY AND SECURITY
9.1 CONFIDENTIALITY
(a) The parties acknowledge that information, documents
and materials regarding each other have heretofore been exchanged under a
confidentiality understanding. The provisions of this Section IX 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
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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.
(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 consultants 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
IX 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 IX.
(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.
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(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 as long as they may be legally protected or constitute a trade
secret.
(iv) Any portion of such Owner's confidential
information or trade secret that:
(A) is rightfully received from a third
party, who has a lawful right to disclose it, without accompanying markings or
disclosure restrictions;
(B) is independently developed by
employees of the Recipient who have not had access to such confidential
information or trade secret;
(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 IX, 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 Buyer 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 Buyer have been and will be used
by them and the Shareholder only in furtherance of the acquisition 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
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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 Buyer as of the
Closing for purposes of this Agreement, including this Section IX.
(i) Notwithstanding the foregoing, nothing in this
Section IX shall restrict the disclosure of any confidential information in any
registration statement filed with the Commission in contemplation of the Public
Offering, including the prospectus which is a part thereof, and the public
distribution of the prospectus, including preliminary prospectuses and
registration statement.
SECTION X.
INDEMNIFICATION
10.1 INDEMNIFICATION BY THE SHAREHOLDERS.
(a) The Shareholders hereby agree, jointly and severally,
to indemnify and hold Buyer and Company, including the successor of the
Business (collectively "Buyer" for purposes of this Section X 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 or of any condition precedent (except for the
third party consents) as set forth in this Agreement.
(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 10.1 are collectively referred to as "Buyer
Losses".
(b) The period during which Buyer must give notice in
writing to the Shareholders of claims for indemnification hereunder shall
expire on the second anniversary of the
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Closing except that such period shall be extended to the applicable statute of
limitations (i) plus thirty (30) days with respect to claims for unpaid taxes
and failure to file required tax reports, including related interest, penalties
and fines ("Tax Claims"), (ii) with respect to claims regarding the ownership
of capital stock of the Company (including warrants, options and convertible
securities) or regarding the ownership by the Shareholders of the Company
Shares, (iii) for breaches of Section IX, and (iv) 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
Buyer Loss is made after the Closing by Buyer, from the date of such payment by
Buyer to the date of indemnification by the Shareholders.
(d) The total liability of each Shareholder under this
Section IX shall not exceed the consideration received or to be received by
such Shareholder pursuant to Section II and such liability shall be prorated to
each Shareholder based upon the Shareholder's percentage ownership of all of
the capital stock outstanding immediately prior to the Closing.
(e) In the event that any third party asserts an action
or claim as to which Buyer is entitled to indemnification hereunder, Buyer
shall notify the Shareholders in writing of any such asserted liability with
reasonable promptness, and the Shareholders shall have a right to compromise or
defend any such matter involving such asserted liability, through counsel of
its own choosing who shall be subject to the approval of the Buyer, which
approval will not be unreasonably withheld, at the expense of the Shareholders;
provided, however, that the Shareholders shall indemnify Buyer 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 Buyer in writing
promptly of the intention of the Shareholders to do so, Buyer 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) Buyer shall be entitled to payment hereunder only if
and to the extent the aggregate Buyer Losses under this Agreement exceed
Thirty-Five Thousand Dollars ($35,000).
(g) The amount of any Buyer Losses shall be reduced by
amounts received by the Buyer 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 Buyer Losses from the
Shareholders shall be promptly reimbursed to the Shareholders.
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10.2 INDEMNIFICATION BY BUYER.
(a) Buyer 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 Buyer set forth herein or (b)
non-fulfillment of any agreement or covenant, on the part of Buyer set forth
herein, (c) guarantees of any of the Shareholders not released pursuant to
Paragraph 13.2 hereof, (d) operation of the Company after the Closing except to
the extent resulting from negligent acts or omissions of the applicable
Shareholder after the Closing date or (e) the Shareholders making the
338(h)(10) election pursuant to Paragraph 3.8 hereof.
(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 10.2 are collectively referred to as "Shareholder
Losses".
(b) The period during which the Shareholders must give
notice in writing to Buyer of claims for indemnification hereunder shall expire
on the second anniversary of the Closing except that such period shall be
extended to the applicable statute of limitations (i) for breaches of Section
IX, (ii) for breaches of any covenant or obligation which first arises after
the Closing; or (iii) plus thirty (30) days with respect to claims for unpaid
taxes and failure to file required tax reports, including related interest,
penalties, and fines.
(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 Buyer, or if payment of a Shareholder
Losses is made after the Closing by the Shareholder, from the date of such
payment by any Shareholder to the date of indemnification by Buyer.
(d) The total liability of Buyer under this Section X
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 Buyer in writing of any such asserted
liability with reasonable promptness, and Buyer 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 Buyer; provided, however, that Buyer shall indemnify the Shareholders
against any costs and damages resulting from the failure of Buyer to defend or
pay such claims. In the event Buyer shall notify the Shareholders in writing
promptly of the
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intention of Buyer to do so, the Shareholders shall cooperate with Buyer and
its counsel in the compromising of or the defending against any such
liabilities or claims, at the expense of Buyer and provide Buyer 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), provided that the
foregoing shall not be applicable to the Shareholders loss arising out of a
breach of paragraphs 8.4 and 13.2.
(g) The amount of any Shareholder Losses 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 Losses from Buyer shall be promptly reimbursed to Buyer.
10.3 REIMBURSEMENT. Buyer or Shareholders, as the case may be,
shall be reimbursed promptly for any Shareholder Losses or Buyer Losses for
which it is to be indemnified under paragraph 10.1 or 10.2. Buyer and the
Shareholders shall have the right to set off and deduct any Buyer Losses or
Shareholder Losses, 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
Buyer or Shareholder Loss, the dispute shall be resolved as provided in
paragraph 10.5. If Shareholder reimburses Buyer for a breach of the warranties
and representations set forth in paragraph 3.7, Buyer shall assign all such
uncollected receivables to the Shareholders without further consideration.
10.4 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 10.1(e) or 10.2(e), the party to be
indemnified, on not less than fifteen (15) days' notice to the other, may make
settlement of such claim, and such settlement shall be binding on the
Shareholders and Buyer for the purposes of this Section X; provided, however,
that if within said fifteen (15) day period the indemnifying party shall have
requested the other party to contest any such claim at the expense of the
indemnifying party and has provided reasonable assurances of the ability of the
indemnifying party to pay such expenses and other losses should such occur, the
indemnified party will promptly comply and the indemnifying party shall have
the right to defend on its own behalf with counsel of its own choosing at its
expense. Any payment or settlement resulting from such contest, together with
the total expense thereof, shall be binding on the Shareholders and Buyer for
the purposes of this Section X. Failure to give notice shall not constitute a
defense, in whole or in part, to any claim by the Buyer except and only to the
extent that such failure to do so shall result in material prejudice to the
indemnifying party.
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10.5 RESOLUTION OF DISPUTES. In the event of any dispute between
Buyer and the Shareholders over any claim for indemnification under this
Section X 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 Two
Hundred Thousand Dollars ($200,000), 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 Buyer 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 XI.
COVENANT NOT TO COMPETE
(a) For a period of five (5) years following the Closing,
Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, agrees that he will not, directly or indirectly,
including through an Affiliate, own, manage, operate, control, be engaged in,
or participate in the ownership, management, operation, or control of or be
connected in any manner or have any other direct or indirect financial interest
in any business, firm, person, partnership, corporation, or concern which is
engaged in any business of the type and character which is competitive with the
Business which is being conducted by the Company on the Closing Date in the
United States. The Shareholder acknowledges that the Business is conducted
throughout the United States and the Business is the development, marketing
and/or supporting of podiatric software practice management systems and related
software services to podiatric practices.
(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.
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(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
Buyer 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 Buyer for any breach by a Shareholder of his
obligations under this Section XI, Buyer 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 Buyer has an adequate
remedy at law.
SECTION XII.
TERMINATION AND ABANDONMENT
12.1 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 (the effectiveness of the SB Registration
Statement and the S4 Registration Statement shall be deemed as not being in the
control of Buyer), under the following circumstances:
(a) The mutual written agreement of Buyer, Company, and
the Shareholders;
(b) By Buyer if the Closing has not occurred before March
30, 1997 because all conditions to the obligations of Buyer have not been
satisfied or waived or because the Shareholders have not made all required
deliveries pursuant to Section VI;
(c) By the Shareholders if the Closing has not occurred
before March 30, 1997 because all conditions to the obligations of the
Shareholders have not been satisfied or waived or because Buyer has not made
all required deliveries pursuant to Section VII; 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
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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 March 30, 1997.
12.2 RIGHTS AND OBLIGATIONS ON TERMINATION. If this Agreement is
terminated and abandoned as provided in this Section XII, 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,
provided, however, that Section IX shall not apply to any document, work paper,
material, or any other information which is published in any publication for
public distribution or filed as public information with any governmental
authority (including in the SB or S4 Registration Statements) or is otherwise
in the public domain.
SECTION XIII.
MISCELLANEOUS PROVISIONS
13.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES. The respective
representations, warranties and covenants of the Shareholders and Buyer
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 Buyer, and the indemnification
provisions set forth in Section X hereof, shall survive the Closing and remain
operative in full force and effect as provided in Section X. The updating of
the Disclosure Schedule on or before the Closing is for information purposes
only and shall not modify in any way the warranties and representations set
forth herein and in the Disclosure Schedule delivered at the time of the
execution of this Agreement.
13.2 PAYMENT OF CERTAIN INDEBTEDNESS. Within thirty (30) days of
the Closing, Buyer (or its successor) shall discharge in full certain
indebtedness of the Company heretofore guaranteed by the Shareholders or any
Shareholder and obtain a release of all such Shareholder's guaranties of such
indebtedness provided that such indebtedness can be discharged without a
penalty or other similar special charge. Buyer (or its successor) shall use
reasonable commercial efforts to obtain the release of the Shareholders from
any other guarantees of obligations of the Company as disclosed in the
Disclosure Schedule.
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13.3 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.
13.4 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.
13.5 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.
13.6 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.
13.7 ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the parties hereto regarding the acquisition of the Company
Shares by Buyer and related matters as set forth in this Agreement. 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.
13.8 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.
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13.9 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be given in writing to the address of the
party set forth below their signature to this Agreement or to such other last
authorized address/telecopier number of the intended recipient provided in
writing to the party giving such notice, and shall be deemed to have been duly
given on (i) the date of receipt if personally delivered or delivered by
overnight courier, (ii) five (5) business days after posting if transmitted by
postage prepaid registered or certified mail (return receipt requested), or
(iii) the date of transmission if transmitted by telecopy (with a copy sent
postage prepaid registered or certified mail returned receipt requested) 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.
13.10 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.
13.11 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.
13.12 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.
13.13 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Shareholders and Buyer
and their successors and assigns. Buyer may on or prior to the Closing
designate a subsidiary as the party to acquire the Company Shares; provided,
however, Buyer shall remain liable to the Shareholders for any breach of
Buyer's warranties, representations and covenants contained herein.
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13.14 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, except
that any expenses of the Shareholders paid by the Company shall be deducted
from the net worth calculation as of the closing without reduction or offset,
except as otherwise agreed by the parties in writing.
13.15 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Georgia (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect and performance.
13.16 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.
13.17 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 Buyer thereto. The Shareholders
acknowledge that Buyer will be required or may deem it desirable to make and,
as part of the proposed public offerings, will make public disclosure of the
execution of this Agreement and the terms and conditions hereof, including in
the SB and S4 Registration Statements. With respect to any disclosure prior to
the Closing, Buyer 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 13.16.
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BUYER:
INFOCURE CORPORATION
By:
---------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. Fine, Chief Executive
Officer
SHAREHOLDERS:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
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------------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
ADDRESS FOR NOTICE:
Address: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
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