EXHIBIT 1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated April 11, 1997,
between PROXYMED, INC., a Florida corporation, ("Buyer") with its principal
business address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ COMPUTER SYSTEMS, INC., a Florida corporation, ("Company") with its
principal business address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and ▇▇▇▇▇ ▇▇▇▇▇, the sole Shareholder of Company (the "Shareholder"). Company
and Shareholder are sometimes collectively referred to in this Agreement as
"Selling Parties".
Buyer desires to purchase from Company and Company desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement,
substantially all of the assets, properties and business of Company.
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
ARTICLE 1. TRANSFER OF ASSETS
Subject to the terms and conditions set forth in this Agreement,
Company agrees to sell, convey, transfer, assign and deliver to Buyer, and Buyer
agrees to purchase from Company at the Closing described in Article 3 hereof,
all the assets, properties and business of Company of every kind, character and
description, whether tangible, intangible, real, personal or mixed, and wherever
located, all of which are sometimes collectively referred to in this Agreement
as the "Assets," including, but without limitation to, the following:
1.1 CONTRACTS AND AGREEMENTS. All right, title and interest of Company
in the contracts and licenses that Company has (including those Company has with
its customers and clients) relating to Company's business other than those
specifically referred to elsewhere in this Agreement and as more fully described
on SCHEDULE 1.1 (with commencement dates, expiration dates and renewal options),
to be assumed by Buyer pursuant to Article 4 (such contracts, agreements and
licenses together here and after collectively referred as the "Contracts");
1.2 LEASED PROPERTY. All right, title and interest of Company in any
lease of the real property as more fully described on SCHEDULE 1.2, together
with all rights and privileges under such leases (hereinafter referred to as the
"Leased Property"). Company does not own, lease, possess or control any other
real property, however, Shareholder owns the building wherein Company has its
offices and leases the premises described on SCHEDULE 1.2 to Company;
1.3 EQUIPMENT. All furniture, fixtures, equipment, motor vehicles,
computer hardware and other tangible personal property of every kind and
description that are located upon or within the Leased Property, and/or are
owned or leased by Company, and/or are utilized in
connection with Company's operations (whether or not upon or within the Leased
Property), a current list of which is more fully described on SCHEDULE 1.3
(hereinafter referred to collectively as the "Equipment");
1.4 SOFTWARE PROGRAMS AND CONTRACTS. All of Company's right, title and
interest to all owned or leased software programs, and all other contracts,
agreements, licenses and other commitments and arrangements, oral or written,
with any person or entity respecting the ownership, license, acquisition,
design, development, distribution, marketing, use or maintenance of software
programs, source and object codes, related technical or user documentation and
databases relating to Company's business, as more fully described on SCHEDULE
1.4 (with commencement dates, expiration dates and renewal options for leases
and licenses), except for off the shelf software (hereafter referred to
collectively as the "Software Programs and Contracts"), and to be assumed by
Buyer pursuant to Article 4;
1.5 INVENTORIES. All computer hardware equipment and software products
and other tangible personal property of every kind and description, including
work in process, supplies, spare parts and repair materials that are actually on
hand as of the Closing Date, whether on or within the Leased Property or in
route thereto or elsewhere, not included in SCHEDULE 1.3 above, which are held
and/or utilized in connection with Company's sales, marketing and distribution
of products to its Customers, a current list of which is more fully described on
SCHEDULE 1.5 (hereinafter referred to collectively as the "Inventories");
1.6 BANK/CASH ACCOUNTS. All of Company's bank/cash accounts, including
investments and cash equivalents as of the Closing Date;
1.7 OTHER INTANGIBLES. All trade names, trademarks, service marks,
copyrights, patents, patent rights, licenses, brand names, trade secrets,
technical know-how, goodwill, rights, if any, to domain names and phone numbers
and other intangibles more fully described on Schedule 1.7;
1.8 BOOKS AND RECORDS. All papers, computerized databases and records
in Company's care, custody or control relating to any or all of the above
described Assets and the operation thereof, including but not limited to all
personnel and labor relations records, sales records, marketing materials, and
accounting and financial records;
1.9 PREPAID EXPENSES AND DEPOSITS. All prepaid expenses and other
prepaid items and deposits relating to any of the Assets and the operation of
Company's business;
1.10 PERMITS, ETC. All permits, licenses, franchises, consents or
authorizations issued by, and all registrations and filings with any
governmental agency in connection with Company's business, whenever issued or
filed, excepting only those which by law or by their terms are non-transferable
and those which have expired; and
1.11 ALL PROPERTY NOT ELSEWHERE DESCRIBED. All other properties of
Company of every kind, character or description owned, used or held for use
(whether or not exclusively) in
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connection with Company's business, wherever located and whether or not similar
to the things set forth elsewhere in this Article 1, except for accounts
receivable (including deferred federal taxes) which will be retained by Company.
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. In consideration for the transfer and
assignment by Company of the Assets and in consideration of the representations,
warranties and covenants of Selling Parties set forth herein, Buyer on the
conditions set forth herein:
(a) shall pay to Company or its assignee(s) at the Closing (as
hereinafter defined) Three Million Two Hundred Thousand Dollars
($3,200,000) in cash as more fully described in Section 3.2 hereof;
(b) shall deliver to Company or its designee(s) that number of
shares of Common Stock of Buyer which equals $2,000,000 of ProxyMed's
Common Stock, $.001 par value, at its fair market value defined as the
average of the closing price of the Common Stock as reported to have
traded on the NASDAQ/NMS System at the close of business on the seven
(7) trading days spanning the three (3) trading days prior and the
three (3) trading days after the date of the announcement of this
Agreement;
(c) shall pay Company or its assignee or designee, if Buyer
meets certain financial targets for the business being acquired,
contingency payments, if any, as follows:
(i) twelve (12) months after the Closing Date, Buyer
may earn an additional $1,000,000 if the net pretax operating
profit ("NPOP") for the trailing twelve (12) months exceeds
$250,000;
(ii) between the twelve (12) and twenty-forth (24)
months after the Closing Date, Buyer may earn an additional
$1,000,000 if net pretax operating profit for this second
trailing twelve (12) months exceeds $250,000;
(iii) contingency payments, if any, pursuant to (i)
and (ii) above shall be payable on or before 60 days after
each trailing twelve (12) month period, at the sole discretion
of Buyer, at least fifty percent (50%) in cash and the
remaining balance, if any, in Buyer's Common Stock based on
the fair market value defined as the closing price at which
the Common Stock is reported to have traded at the end of day
on the NASDAQ/NMS System on the day before the earnings
release for the respective immediately preceding applicable
quarterly or annual financial period, as adjusted for any
stock splits, stock dividends or other recapitalization. Any
payments in Common Stock shall be Rule 144 restricted stock
with restricted legend
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and stop transfer instructions, with no registration rights.
Buyer shall have the right to prepay these additional payments
in cash or common stock without penalty or other liability to
Selling Parties (if such prepayment is in stock, it shall be
valued at the lower of the closing price on the date
immediately prior to the prepayment dates); or the date of
execution of this Agreement, as adjusted for any stock splits,
stock dividends or other recapitalization;
(iv) "Net Pretax Operating Income" shall be defined
as the net sales less cost of sales and less direct and
indirect operating costs and before purchased R&D and
amortization of goodwill pertaining to Company's business
being acquired, less any administrative and accounting
expenses provided by Buyer which were previously incurred by
Company to such extent that such expenses will not exceed the
percentage that such expenses bore to the total operating
expenses of Company as such expenses bore to Company's prior
two (2) complete fiscal years. Contingency payments, if any,
shall be paid after ProxyMed's chief financial officer has
certified the Net Pretax Operating Income of Company's
business being acquired hereunder. The contingency payments
shall be measured each trailing twelve (12) month period. Any
excess or any deficiency over or under the net pretax
operating income target amounts during any year shall be
carried over as a credit or debit against the target amounts
for the following year;
(v) As a further condition to earn the contingency
payments pursuant to (i) and (ii), the Shareholder at the time
each payment becomes payable must be and remain a full time
employee of the Buyer and devote his full time and best
efforts to maximize the sales and the profits of the business
being acquired, unless Shareholder is terminated without cause
under Section 5(a) of his Employment Agreement with the
Company, in which case he shall be entitled to the payments as
set out under Section 5(c) of his Employment Agreement;
(vi) Upon written request, Shareholder shall have the
right to have the chief financial officer's calculations of
pretax net operating income reviewed by an outside public
accountant at Shareholder's expense. In the event of a
material difference, Buyer's independent public accountant and
Shareholder's public accountant shall select a third public
accountant, whose determination shall be final and binding,
with expenses to be borne equally by Buyer and Company;
(d) shall assume and discharge, and shall indemnify Company
against, liabilities and obligations of Company under the leases,
contracts or other agreements, if any, specified on SCHEDULE 4 but only
to the extent that such liabilities or obligations accrue on or after
the Closing Date, unless Buyer has
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elsewhere in this Agreement specifically agreed to assume any such
liability or obligations.
(e) Notwithstanding anything to the contrary, Buyer
does not owe a fiduciary obligation to the Shareholder requiring the
Buyer to operate the acquired business in a manner that maximizes the
ability to make the contingency payments pursuant to Section 2.1(c).
Buyer, through its Board of Directors and officers will operate Buyer's
business, including the business being acquired hereunder, in its best
judgment and in the interest of the shareholders of Buyer. However, in
the event that the business being acquired hereunder requires capital
expenditures in excess of $100,000, Buyer agrees to discuss such
expenditures with Shareholder prior thereto and, to the extent that
such expenditures may adversely affect Shareholder's ability to earn
his contingency payments, Buyer may reduce his financial targets
proportionally. Likewise, to the extent that Buyer operates the
business being acquired in a manner not in the ordinary course which
adversely affects Shareholder's ability to earn contingency payments
pursuant to Section 2.1(c), Buyer may reduce his financial targets
proportionately. Furthermore, the ▇▇▇▇▇ Division shall receive credit
at fair market value for all inter-Company products and services
provided by ▇▇▇▇▇.
2.2 ALLOCATION OF PURCHASE PRICE. The parties agree that the Purchase
Price (defined as the sum of the amounts specified in clauses (a), (b) and (c)
above shall be allocated as set forth on SCHEDULE 2.2 and that such allocation
will be used by the parties in reporting the transaction contemplated by this
Agreement for federal and state tax purposes.
ARTICLE 3. THE CLOSING
The closing of the purchase and sale of the Assets by Company to Buyer
(the "Closing") shall take place at the offices of Company at 10:00 a.m. local
time, on April 30, 1997, or at such other place and/or time as the parties may
agree in writing (the "Closing Date"). The Schedules described herein shall be
completed to the satisfaction of Buyer and Seller at least three (3) days prior
to Closing. In the event that the conditions specified in this Agreement have
not been fulfilled by such date, Buyer (if such failure of conditions is on the
part of Selling Parties) or Company (if such failure of conditions is on the
part of Buyer) may extend the Closing Date for a period or periods not exceeding
an aggregate of 30 days by written notice to Company and the no shop period
described in Section 8.3 shall likewise be automatically extended to such
Closing Date. Buyer and Seller agree that, within at least three (3) days prior
to the scheduled Closing, Buyer and Seller will determine which of the Contracts
and Agreements described on SCHEDULE 1.1 are material and for which written
waivers and consents of third parties and governmental agencies will be required
as a condition of Closing ("Material Contracts"). If on the original or any
postponed Closing Date, Company has been unable to obtain all waivers and
consents of third parties and governmental agencies required by this Agreement,
then Buyer, on written notice, may postpone the Closing to a time not later than
10:00 a.m. local time, on June 30, 1997.
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3.1 SELLING PARTIES' OBLIGATIONS AT THE CLOSING. At the Closing,
Selling Parties shall deliver or cause to be delivered to Buyer:
(a) Assignment and assumption agreements for all contracts and
agreements, personal property and equipment leases, and all other
contracts and agreements of Company to be assumed in connection
herewith, in form and substance satisfactory to Buyer's counsel, and
accompanied by all consents required; and
(b) Assignments in recordable form of all the Leased Property,
and accompanied by all consents of lessors required and estoppel
certificates;
(c) Instruments of assignment and transfer (including a ▇▇▇▇
of sale and assignments of trademarks) of all of the other Assets of
Company to be transferred hereunder, in form and substance satisfactory
to Buyer's counsel.
Simultaneously with the consummation of the transfer, Company, through
its officers, agents, and employees, shall put Buyer into full possession and
enjoyment of all the Assets to be sold, conveyed, transferred, assigned and
delivered by this Agreement.
Selling Parties, at any time before or after the Closing Date, shall
execute, acknowledge and deliver any further deeds, assignments, conveyances and
other assurances, documents and instruments of transfer, reasonably requested by
Buyer and shall take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying and confirming to Buyer, or
reducing to possession, any or all property and assets to be conveyed and
transferred by this Agreement, If requested by Buyer, Selling Parties agree to
prosecute or otherwise enforce in their own names for the benefit of Buyer any
claims, rights, or benefits that are transferred to Buyer by this Agreement and
that require prosecution or enforcement in either of the Selling Parties' name.
Any prosecution or enforcement of claims, rights, or benefits under this Section
shall be solely at Buyer's expense, unless the prosecution or enforcement is
made necessary by a breach of this Agreement by Selling Parties.
3.2 BUYER'S OBLIGATIONS AT THE CLOSING. At the Closing, Buyer shall
deliver to Company against delivery of the items specified in Section 3.1 a
certified or bank cashier's check or a wire transfer of immediately available
funds in the amount of $3,200,000 payable to Company and issuance to Company of
that number of shares of Common Stock of the Buyer more fully described in
Section 2.1(b) hereof. The Common Stock issued shall be Rule 144 restricted
stock with restricted legend and stop transfer instructions. Company shall not
be granted any registration rights. Such shares shall be issued to the
Shareholder and the relative proportions as set forth in written instructions of
Company to Buyer at least ten (10) business days prior to the Closing.
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ARTICLE 4. ASSUMPTION OF LIABILITIES
Buyer is not assuming any debt, liability or obligation of Company,
whether known or unknown, fixed or contingent, except as herein specifically
otherwise provided. Selling Parties agree to indemnify and hold Buyer harmless
against all debts, claims, liabilities and obligations of Company not expressly
assumed by Buyer hereunder, and to pay any and all attorneys' fees and legal
costs incurred by Buyer, its successors and assigns in connection therewith.
Buyer shall have the benefit of and shall perform and assume all leases,
contracts, agreements, and licenses, if any, specifically listed on SCHEDULE 4,
in accordance with the terms and conditions thereof, with the written consent of
the other parties where required, except to the extent modifications are
specifically set forth on such SCHEDULE 4 and except to the extent set forth in
the assignments or assignment and assumption agreements. In addition,
Shareholder shall lease the building he owns where Company's business is being
conducted to Buyer at fair market rental and lease terms as are customary for
the area, and Buyer shall accept such lease on terms to be negotiated in good
faith by Buyer and Shareholder.
ARTICLE 5. EXCISE AND PROPERTY TAXES
Buyer shall pay all sales, use and transfer taxes arising out of the
transfer of the Assets. Buyer shall not be responsible for any business,
occupations, withholding or similar tax, or for any taxes of any kind relating
to Company for any period before the Closing Date.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
Selling Parties, jointly and severally, hereby represent and warrant to
Buyer that the following facts and circumstances are and, except as contemplated
hereby, at all times up to the Closing Date will be true and correct, and hereby
acknowledge that such facts and circumstances constitute the basis upon which
Buyer is induced to enter into and perform this Agreement. Each warranty set
forth in this Article 6 shall survive the Closing and any investigation made by
or on behalf of Buyer.
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATIONS. Company is a
corporation duly organized, validly existing, and in good standing under the
laws of Florida has all necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it, and is duly qualified to
transact interstate business and is in good standing in all jurisdictions in
which the nature of its business or of its properties makes such qualification
necessary. SCHEDULE 6.1 lists all the shareholders of Company and their
respective interests.
6.2 FINANCIAL STATEMENTS. SCHEDULE 6.2(a) to this Agreement sets forth
the consolidated balance sheets of Company as of January 31, 1997, and as March
31, 1996, and the related statement of income and retained earnings for such
years. SCHEDULE 6.2(b) to this Agreement sets forth unaudited consolidated
balance sheets of Company as of March 31, 1997 (the "Stub Period Date"),
together with related unaudited statement of income and retained earnings for
the two (2) month period then ending, certified by the chief financial officer
of Company. The financial statements in SCHEDULES 6.2(a) and 6.2(b) are referred
to as the
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"Financial Statements." The Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") as of the date
of this Agreement consistently followed by Company throughout the periods
indicated, and fairly present the financial position of Company as of the
respective dates of the balance sheets included in the Financial Statements, and
the results of their operations for the respective periods indicated. Company
has no liabilities or obligations of any nature (known or unknown, absolute,
accrued, contingent or otherwise) of the type required to be reflected or
disclosed in a balance sheet (or the notes thereto) prepared in accordance with
GAAP that were not fully reflected or reserved against in the Financial
Statements. Buyer, at its expense, will retain independent public accountants to
audit the financial statements as of and for the ten (10) months ended January
31, 1997, whose unqualified opinions with respect to such financial statements
are included SCHEDULE 6.2(a). As of the Closing, Company will have (i) at least
$520,000 net worth; (ii) current assets other than accounts receivable of at
least $410,000; and (iii) financial statements reflecting no material
deviation from the financial information previously provided to Buyer.
6.3 ABSENCE OF SPECIFIED CHANGES. Except as set forth on SCHEDULE 6.3
hereof, since January 31, 1997, there have not been any:
(a) Transaction by Company except in the ordinary course of
business;
(b) Capital expenditure or purchase commitments by Company
exceeding $5,000, except for resale;
(c) Adverse change in the financial condition, liabilities,
assets, business or prospects of Company;
(d) Destruction, damage to, or loss of any assets of Company
(whether or not covered by insurance) that materially adversely affects
the financial condition, business or prospects of Company;
(e) Labor trouble or other event or condition of any character
materially adversely affecting the financial condition, business,
assets or prospects of Company;
(f) Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies
or rates) by Company;
(g) Revaluation by Company of any of its Assets;
(h) Increase in the salary or other compensation payable or to
become payable by Company to any of its officers, directors, employees,
or consultants or the declaration, payment or commitment or obligation
of any kind for the payment by Company of a bonus or other additional
salary or compensation to any such person;
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(i) Sale or transfer of any Asset of Company, except in the
ordinary course of business;
(j) Execution, creation, amendment or termination of any
contract, agreement or license to which Company is a party, except in
the ordinary course of business;
(k) Loan by Company to any person or entity, or guaranty by
Company of any loan;
(l) Waiver or release of any right or claim of Company, except
in the ordinary course of business;
(m) Mortgage, pledge or other encumbrance of any Asset of
Company;
(n) Other event or condition of any character that has or
might reasonably have an adverse effect on the financial condition,
business, Assets or prospects of Company;
(o) Loss, known to Company, of customers of third party payors
resulting in a material adverse change in customers or third party
payors;
(p) Distributions to any shareholders or third parties; or
(q) Agreement by Company to do any of the things described in
the preceding clauses (a) through (p).
6.4 TAX MATTERS.
(a) All federal, state and local tax returns for all periods
ending on or before the Closing Date that are or were required to be
filed by or with respect to Company, either separately or as a member
of an affiliated group of corporations, have been filed on a timely
basis, and in accordance with the laws, regulations and administrative
requirements of any applicable taxing authority. All such tax returns
that have been filed on or before the Closing Date were, when filed,
and continue to be, true, correct and complete in all material
respects.
(b) Company has made available to Buyer all reports of and
communications for all open years from Internal Revenue Service agents
and the corresponding agents of other state, local and foreign
governmental agencies who have examined the respective books and
records applicable to Company or any affiliated group of which Company
is a member. SCHEDULE 6.4(b) describes all adjustments in respect of
Company to income tax returns filed by, or on behalf of, Company or any
affiliated group of corporations of which Company is or was
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a member for all open taxable years, that have been proposed by any
representative of any taxing authority, and SCHEDULE 6.4(b) describes
the resulting taxes, if any, proposed to be assessed. All deficiencies
proposed (plus interest, penalties and additions to tax that were or
are proposed to be assessed thereon, if any) as a result of such
examinations have been paid, reserved against, settled, or, as
described in SCHEDULE 6.4(b) are being contested in good faith by
appropriate proceedings. Except as set forth in SCHEDULE 6.4(b),
neither Company, nor any affiliated party to Company has given or been
requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other entity) of any statue of
limitations relating to the payment of taxes for which Company may be
liable.
(c) Company has paid, or made provision for the payment of,
all taxes that have or may become due for all periods ending on or
before the Closing Date, including, without limitation, all taxes
reflected on the tax returns referred to in this Section 6.4, or in any
assessment, proposed assessment, or notice, received by Company or any
affiliated party with Company, except such taxes, if any, as are set
forth in SCHEDULE 6.4(c) that are being contested in good faith and as
to which adequate reserves (determined in accordance with GAAP
consistently applied) have been provided. The charges, accruals and
reserves with respect to taxes on the books of Company are determined
in accordance with GAAP consistently applied. In all material respects,
all taxes that Company is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required, have
been paid to the appropriate taxing authority. There are no liens with
respect to taxes upon any of the properties or assets, real or
personal, tangible or intangible, of Company (except for taxes not yet
due).
(d) There are no closing agreements, requests for rulings or
requests for technical advice, in respect of any taxes, pending between
Company and any taxing authority.
(e) All elections with respect to taxes affecting Company as
of the date hereof are set forth in SCHEDULE 6.4(e).
(f) There is no existing tax sharing agreement that may or
will require that any payment be made by or to Company on or after the
Closing Date except as disclosed on SCHEDULE 6.4(f).
(g) Company has not agreed to and is not required to make any
adjustment pursuant to Section 481(a) of the Internal Revenue Code, nor
has the Internal Revenue Service proposed any such adjustment or change
in accounting method with respect to Company. Company does not have any
application pending with any taxing authority requesting permission for
any change in accounting method.
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(h) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, as a
consequence of this transaction could give rise to the payment of any
amount that would not be deductible by Buyer or Company by reason of
Section 280G of the Internal Revenue Service Code.
(i) Except as provided for in SCHEDULE 6.4(i), Company does
not own an interest in any (i) domestic international sales
corporation, (ii) foreign sales corporation, (iii) controlled foreign
corporation, or (iv) passive foreign investment company.
6.5 LEASED PROPERTY. SCHEDULE 1.2 to this Agreement is a complete and
accurate legal description of each parcel of real property leased to Company,
together with a substantially true and correct floor plan and a list of the
policies of leasehold title insurance issued to Company for these properties.
True, correct and complete copies of the Leased Property have been delivered to
Buyer. All the Leased Property are valid and in full force, and there does not
exist any default or event that with notice or lapse of time, or both, would
constitute a default under any of these leases.
6.6 ZONING. To the best knowledge of Selling Parties, The zoning of
each Leased Property described in SCHEDULE 1.2 permits the presently existing
improvements and the continuation of the business presently being conducted on
such parcel.
6.7 INVENTORIES. The Inventories consist of items of quality and
quantity useable, saleable or rentable in the ordinary course of business by
Company except for obsolete or slow moving items and items below standard
quality, all of which have been written down on the books of Company to net
realizable market value or have been provided for by adequate reserves. All
items included in the Inventories are the property of Company, except for sales
made in the ordinary course of business; for each of these sales either the
Purchaser has made full payment or the Purchaser's liability to make payment is
reflected in the books of Company. As of the Closing Date, no items included in
the Inventories will be pledged as collateral or held by Company on consignment
from others. All the inventories are free of defects and, to the extent that
they consist of finished or semi-finished goods, also comply with the
specifications submitted by the purchasers thereof. Or with original
manufacturers specifications.
6.8 CONTRACTS, ETC. The contracts described in SCHEDULE 1.1 and 1.4
consist of all written and oral contracts, licenses and agreements, and any
other commitments, or understandings entered into by Company in the ordinary
course of business with its customers, clients and other third parties other
than those specifically referred to elsewhere in this Agreement. True, correct
and complete copies of the contracts and agreements described in SCHEDULES 1.1
and 1.4 have been delivered to Buyer. Except as set forth on SCHEDULES 1.1 AND
1.4, all such contracts and agreements are valid and in full force, and there
does not exist any default or threat of default, or event that with notice or
lapse of time, or both, would constitute default under any of these contracts
and agreements. There have been no claims or defaults, and to the best knowledge
of the Selling Parties, there are no facts or conditions which if continued, or
unnoticed, will result in a default under these contracts or agreements.
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Except as set forth in SCHEDULE 4, Company is not
a party to, nor are the Assets bound by, any other agreement not entered into
in the ordinary course of business, any indenture, mortgage, deed of trust,
lease or any other agreement that is unusual in nature, duration or amount
(including, without limitation, any agreement requiring the performance by
Company of any obligation for a period of time extending beyond one year from
Closing Date or calling for consideration of more than $5,000 or requiring
purchases at prices in excess of, or sales at prices lower than, prevailing
market prices). To Selling Parties' knowledge, all contracts which will be
assigned to or assumed by Buyer under this Agreement are valid and binding upon
the parties thereto. To Selling Parties' knowledge, there is no default or
threat of default, or event that with notice or lapse of time, or both, would
constitute a default by any party to any of the agreements listed in SCHEDULE 4,
except as set forth on SCHEDULE 4. Company has not received notice that any
party to any of the agreements listed in SCHEDULE 4 intends to cancel or
terminate any of these agreements or to exercise or not exercise any options
under any of these agreements. To Selling Parties' knowledge, Company is not a
party to, nor is Company or the Assets bound by, any agreement that is
materially adverse to the business, property, or financial condition of Company.
6.9 OTHER TANGIBLE PERSONAL PROPERTY. The tangible personal property
described in Section 1.3 and SCHEDULE 1.3 of this Agreement constitutes all the
items of tangible personal property owned by, in the possession of, or used by
Company in connection with its business. Except as stated in SCHEDULE 1.3, no
tangible personal property used by Company in connection with its business is
held under any lease, security agreement, conditional sales contract, or other
title retention or security arrangement, or is in the possession of anyone other
than an employee of Company.
6.10 TRADE NAMES; TRADEMARKS; COPYRIGHTS; ETC. Except as set forth in
SCHEDULE 6.10, Company does not use any other trademark, service ▇▇▇▇, trade
name, copyright or brand name, or own any trademarks, trademark registrations or
applications, trade names, service marks, copyrights, copyright registrations or
applications or brand names, telephone or facsimile number, or domain name in
its business. To the best knowledge of Selling Parties, no person (other than
Company) owns any trademark, trademark registration or application, service
▇▇▇▇, trade name, copyright, copyright registration or application, or brand
name, the use of which is necessary or contemplated in connection with the
performance of any contract to which Company is a party. To the best knowledge
of Company, Company has the right and authority to use such trade names,
trademarks, copyrights, telephone or facsimile number, or domain name in its
business as are necessary to enable it to conduct and to continue to conduct,
and such use does not and will not conflict with, infringe or violate any
intellectual or proprietary rights of others.
6.11 PATENTS AND PATENT RIGHTS. SCHEDULE 6.11 to this Agreement is a
complete schedule of all patents, inventions, industrial models, processes,
designs, formulas and applications for patents ("Intellectual Properties") owned
by Company or in which Company has any rights, licenses or immunities. The
patents and applications for patents listed in SCHEDULE 6.11 are valid and in
full force and effect and are not subject to any taxes, maintenance fees or
actions falling due within 90 days after the Closing Date. Except as set forth
12
in SCHEDULES 6.11 or 6.20, there have not been any administrative, judicial,
arbitration, or other adversary proceedings concerning the Intellectual
Properties listed in SCHEDULE 6.11. Each patent application is awaiting action
by its respective patent office except as otherwise indicated in SCHEDULE 6.11.
To the best knowledge of Company, the manufacture, use or sale of the
inventions, models, designs and systems covered by the Intellectual properties
listed in SCHEDULE 6.11 do not violate or infringe on any patent or any
proprietary or personal right of any person, firm or corporation, and Company
has not infringed and is not now infringing on any patent or other right
belonging to any person, firm or corporation. Except as set forth in SCHEDULE
6.11, Company is not a party to any license, agreement or arrangement, whether
as licensee, licensor or otherwise, with respect to any patent, application for
patent, invention, design, model, process, trade secret or formula. Company has
the right and authority to use such inventions, trade secrets, processes,
models, designs and formulas as are necessary to enable it to conduct and to
continue to conduct all phases of its business in the manner presently
conducted, and such use does not and will not conflict with, infringe or violate
any patent or other rights of others.
6.12 TRADE SECRETS. SCHEDULE 6.12 to this Agreement is a true and
complete list, without extensive or revealing descriptions, of trade secrets
used by Company in (or owned by Company and useful in) the operation of its
business, including all customer lists, processes, know-how and other technical
data. The specific location of each trade secret's documentation, including its
complete description, specifications, charts, procedures and other material
relating to it, is also set forth with it in such SCHEDULE 6.12. Each trade
secret's documentation is current, accurate and sufficient in detail and content
to identify and explain it, and to allow its full and proper use by Buyer
without reliance on the special knowledge or memory of others. Company is the
sole owner of each of these trade secrets, free and clear of any liens,
encumbrances, restrictions, or legal or equitable claims of others, except as
specifically stated in SCHEDULE 6.12. Company has taken all reasonable security
measures to protect the secrecy, confidentiality and value of these trade
secrets; any of its employees and any other persons, who, either along or in
concert with others, developed, invented, discovered, derived, programmed or
designed these secrets, or who have knowledge of or access to information
relating to them, have been put on notice and have entered into appropriate
agreements that Company's trade secrets are proprietary to Company and are not
to be divulged or misused. All these trade secrets are presently valid and
protectible, and are not part of the public knowledge or literature, nor to
Company's knowledge have they been used, divulged or appropriated for the
benefit of any past or present employees or other persons, or to the detriment
of Company.
6.13 OTHER INTANGIBLE PROPERTY. SCHEDULE 6.13 to this Agreement is a
true and complete list of all software programs, contracts and all other
intangible assets, other than those specifically referred to elsewhere in this
Agreement, including, without limitation, all of Company's right, title and
interest owned and leased software programs, databases, and all other agreement,
contracts, licenses and other commitments, oral or written, with any person or
entity respecting the ownership, license, acquisition, design, development,
distribution, marketing, use or maintenance of software programs, source and
object codes, related technical or user documentation manuals relating to
Company's business.
13
6.14 TITLE TO ASSETS. Company has good and marketable title to all the
Assets and its interest in the Assets to be conveyed to Buyer hereunder, whether
real or personal, mixed, tangible, and intangible, which constitute all the
Assets and interest in Assets that are used in the business of Company. All the
Assets are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions or
restrictions, except for (i) those disclosed in Company's balance sheets as of
the Stub Period Date, included in the Financial Statements, or in the Schedules
to this Agreement; (ii) the lien of current taxes not yet due and payable; and
(iii) possible minor matters that, in the aggregate, are not substantial in
amount and do not materially detract from or interfere with the present or
intended use of any of these Assets, nor materially impair business operations.
All the Assets are in good operating condition and repair, ordinary wear and
tear excepted. Company is in possession of all premises leased to it from
others. Except as set forth on the appropriate Schedule listing such assets,
neither any officer, nor any director or employee of Company, nor any spouse,
child or other relative of any of these persons, owns, or has any interest,
directly or indirectly, in any of the real or personal property owned by or
leased to Company or any copyrights, patents, trademarks, trade names or trade
secrets licensed by Company. Company does not occupy any Leased Property in
violation of any law, regulation or notice.
6.15 CUSTOMERS AND TRANSACTIONS. SCHEDULE 6.15 to this Agreement is a
correct and current list of all customers and clients of Company together with
summaries of the sales made to each customer or client during the most recent
fiscal year. Except as indicated in Schedule 6.15, Company has no information
and is not aware of any facts indicating that any of these customers and clients
intent to cease doing business with Company or materially alter the amount of
the business that they are presently doing with Company.
6.16 EXISTING EMPLOYMENT ARRANGEMENTS. SCHEDULE 6.16 to this Agreement
is a list of all employment contracts and collective bargaining agreements, and
all pension, bonus, profit-sharing, deferred compensation, stock option, or
other agreements or arrangements providing for employee or outside consultant
remuneration or benefits to which Company is a party or by which Company is
obligated, whether of a legally binding or in the nature of informal
understandings. All these contracts and arrangements are in full force and
effect, and neither Company nor to Selling Parties' knowledge, any other party
is in default under them. There has been no claims of defaults and, to the best
knowledge of Selling Parties, there are no facts or conditions which if
continued, or on notice, will result in a default under these contracts or
arrangements. There is no pending or, to the best knowledge of Selling Parties,
threatened labor dispute, strike or work stoppage affecting Company's business.
6.17 INSURANCE POLICIES. SCHEDULE 6.17 to this Agreement is a
description of all insurance policies held by Company concerning the Assets. All
these policies are in the respective principal amounts set forth in SCHEDULE
6.17. Company has maintained and now maintains (i) insurance on all the Assets
of a type customarily insured, covering property damage and loss of income by
fire or other casualty, and (ii) adequate insurance protection against all
liabilities, claims, and risks against which it is customary to insure,
including without limitation, and errors and omissions coverage.
14
6.18 UNREGISTERED SECURITIES. Company and Shareholder (i) understand
that the Common Stock issued or to be issued pursuant to Section 2.1 of the
Agreement has not been, and will not be registered under the Securities Act of
1933, as amended, (the "Act") or under any state securities laws, and that they
are being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (ii) is acquiring the Common
Stock solely for their own account for investment purposes and with a view to
the "distribution" thereof (as such term is defined in judicial and
administrative interpretations under Section 2(11) of the Act), (iii) has
received certain information concerning Buyer, including without limitation the
Reports referred to in Section 7.2 and have had the opportunity to obtain
additional information as desired in order to evaluate the merits of purchasing
and holding said Common Stock, (iv) are able to bear the economic risk and lack
of liquidity inherit in holding the Common Stock until such time as the Common
Stock may be registered or may be sold pursuant to Rule 144, (v) have sufficient
knowledge and experience in financial and business matters that they are capable
of evaluating the merits and risk of an investment in Buyer, (vi) understand
that the certificates representing said Common Stock will be stamped or
otherwise imprinted with the legend in substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING WITHOUT
LIMITATION, NEW YORK, AND MAY NOT BE SOLD TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY
ARE REGISTERED UNDER SUCH ACT AND ANY SECURITIES LAWS OF ANY
APPLICABLE JURISDICTION OR UNLESS EXEMPTIONS FROM SUCH
REGISTRATIONS ARE AVAILABLE AND THAT AN OPINION OF COUNSEL,
SATISFACTORY TO PROXYMED, INC. TO THAT EFFECT IS DELIVERED TO
PROXYMED, INC.
6.19 COMPLIANCE WITH LAWS. To the best of Selling Parties' knowledge,
Company has complied with, and is not in violation of, applicable federal, state
or local statutes, laws and regulations (including, without limitation, any
applicable environmental, health, building, zoning or other law, ordinance or
regulation) affecting its properties (including the Leased Property) or the
operation of its business.
6.20 LITIGATION. Except as set forth in SCHEDULE 6.20, there is no
suit, action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending or, to the best knowledge of Selling Parties,
threatened, against or affecting Company, or any of its business, Assets or
financial condition. The matters set forth in SCHEDULE 6.20 if decided adversely
to Company will not result in a material adverse change in the business, Assets
or financial condition of Selling Parties. Selling Parties have furnished or
made available to Buyer copies of all relevant court papers and other documents
relating to the matters set forth in SCHEDULE 6.20. Company is not in default
with respect to any order, writ, injunction or decree of any federal, state,
local or foreign court, department, agency or instrumentality. Except as set
forth in SCHEDULE 6.20. Company is not presently engaged in any legal action to
recover moneys due to it or damages sustained by it.
15
6.21 ASSETS SUFFICIENT FOR CONDUCT OF BUSINESS. The Assets constitute
all of the assets, exclusive of sufficient working capital as may be needed from
time to time, required for Buyer to conduct the business of Company as it is
presently conducted.
6.22 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry
into this Agreement nor the consummation of the transactions contemplated hereby
will result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of Company or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which Company is a party or by
which Company or the Assets are bound; (iii) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation; (iv) the creation or imposition of any lien,
charge or encumbrance on any of the Assets; or (v) the violation of any law,
regulation, ordinance, judgment, order or decree applicable to or affecting
Company or the Assets.
6.23 AUTHORITY AND CONSENTS. Except as set forth in SCHEDULE 6.23
Company has the right, power, legal capacity and authority to enter into, and
perform its obligations under this Agreement, and no approvals, consents or
permits of any person or governmental authority other than Selling Parties are
necessary in connection with it. The execution and delivery of this Agreement
and the consummation of this transaction by Company have been, or prior to the
Closing will have been, duly authorized by all necessary corporate action of
Company (including any necessary action by Company's security holders). This
Agreement constitutes a legal, valid and binding obligation of Company
enforceable in accordance with its terms except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally.
6.24 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as set
forth in SCHEDULE 6.24, neither Company nor any officer, director or, to the
best knowledge of the Selling Parties, any employee of Company, nor any spouse
or child of any of them has any direct or indirect interest in any competitor,
supplier, customer or client of Company or in any person with whom Company is
doing business.
6.25 PERSONNEL IDENTIFICATION AND COMPENSATION. SCHEDULE 6.25 is a list
of the names and addresses of all officers, directors, employees, agents and
consultants of Company, stating the rates of compensation payable to each and
setting forth all vacation time, sick leave and other paid time off accrued for
each of them through the Closing Date and the date and amounts of each persons
last salary increase. No other person, except accountants, auditors and
attorneys regularly performs compensable services for Company.
6.26 BANK ACCOUNTS, ETC. SCHEDULE 6.26 lists (i) the names and
addresses of all persons holding a power of attorney on behalf of Company and
(ii) the names and addresses of all banks or other financial institutions in
which Company has cash or a cash equivalents, accounts, investments, deposits or
a safe-deposit box, with the names of all persons authorized to draw on these
accounts or deposits or who have access to these boxes.
16
6.27 BULK TRANSFER NOTICE. Except as contained on any SCHEDULE hereto,
Company has transferred the Assets sold hereunder free and clear of all debts
and encumbrances or other obligations owed to any third party prior to the
Closing Date, and Buyer has agreed to waive any formal requirements of any
applicable state bulk sale transfer laws. Company and Shareholder agree to hold
Buyer harmless and indemnify Buyer against any such claims asserted against
Buyer from any creditors entitled to advance notice of the sale of the Assets
under any applicable state bulk sales transfer laws, and Buyer may offset any
such claimed amounts due it hereunder against any amounts due Company or
Shareholder by Buyer.
6.28 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of the Selling Parties, except as
set forth in SCHEDULE 6.28, Company has obtained all permits, licenses
and other authorizations which are required in connection with the
conduct of the business under regulations relating to pollution or
protection of the environment, including regulations relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or hazardous substances or wastes into the
environment (including without limitation ambient air, surface water,
groundwater, or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or hazardous
substances or wastes.
(b) To the best knowledge of the Selling Parties, except as
set forth in SCHEDULE 6.28, Company is in full compliance in the
conduct of the business with all terms and conditions of the required
permits, licenses and authorizations, and is also in full compliance
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in those laws or contained in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(c) Except as set forth in SCHEDULE 6.28, Company is not aware
of, nor has Company nor any of its subsidiaries received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or
prevent compliance or continued compliance with those laws or any
regulations, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, or
which may give rise to any common law or legal liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing,
study or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or
hazardous substance or waste.
17
(d) Except as set forth in SCHEDULE 6.28, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation, or proceeding
pending or threatened against Company in connection with the conduct of
the business relating in any way to those laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
6.29 LABOR MATTERS. To the best knowledge of the Selling Parties,
Company is in compliance in all material respects with all currently applicable
federal, state and local laws and regulations respecting employing,
discrimination, discrimination in employment, disability, terms and conditions
of employment, wages and hours, occupational safety and health and employment
practices except for such failures to comply as would not reasonably be expected
to have a material adverse effect, either individually or in the aggregate, on
Company. As of the date hereof, Company has received no notice from any
governmental entity and, as of the date hereof, there has not been asserted
before any governmental entity any claim, action or proceeding to which Company
is a party, and there is not any investigation or hearing pending or threatened
concerning Company, arising out of or based upon any such laws, regulations or
practices.
6.30 DOCUMENTS DELIVERED. Each copy or original of any agreement,
contract or other instrument which is identified in any exhibit delivered by
Selling Parties or their counsel to Buyer (or its counsel or representatives),
whether before or after the execution hereof, is in fact what is purported to be
by Selling Parties and has not been amended, canceled or otherwise modified.
6.31 FULL DISCLOSURE. None of the representations and warranties made
by Selling Parties or made in any letter, certificate or memorandum furnished or
to be furnished by Selling Parties, or on their behalf, contains or will contain
any untrue statement of a material fact, or omits any material fact the omission
of which would make the statements made herein, in light of the circumstances
under which they were made, not misleading. There is no fact known to Selling
Parties which materially adversely affects, or in the future may (so far as
Company can now reasonable foresee) materially adversely affect the condition,
Assets, liabilities, business, operations or prospects of Company that has not
been set forth herein or heretofore communicated to Buyer in writing pursuant
hereto.
6.32 CAPITALIZATION OF COMPANY AND OWNERSHIP OF CAPITAL STOCK.
Shareholder is the sole and exclusive lawful record and beneficial owner of all
of the capital stock of Company and all of the number of shares of the Stock of
Company as set forth opposite Shareholder's name on SCHEDULE 1.1 hereto. On the
Closing Date, the Stock will be free and clear of any claims, pledges, security
interest, liens or encumbrances or other restrictions of limitations of any
kind. Shares of Stock of Company are validly issued, fully paid and
non-assessable. The authorized capital stock of Company consists solely of 500
shares of common stock, par value $1.00 per share of which 500 shares are issued
and outstanding. No shares are or will be held in Company's treasury now or on
the Closing Date. There are no outstanding subscriptions, options, warrants,
preemptive or preferential rights, shareholder agreements, convertible
securities or other
18
agreements or contracts of any character (contractual or otherwise) for the
issuance, sale or transfer to any person or entity of shares of capital stock of
Company, and none of the shares of stock has been issued in violation of any
preemptive rights.
6.33 ABSENCE OF UNDISCLOSED LIABILITIES. Company does not have and will
not have as of the Closing, except as to the extent reflected or reserved
against on the face of its Financial Statements reflected in SCHEDULES 6.2(a)
and 6.2(b) hereto, any material debts, liabilities or obligations (whether
absolute, accrued, contingent or otherwise) including, without limitation, any
liabilities for environmental pollution, any foreign or domestic tax liabilities
or deferred tax liabilities incurred in respect of or measured by Company's
income, or any other material debts, liabilities or obligations relating to or
arising out of any act, omission, transaction, circumstance, sale of goods or
services, stated facts or other condition.
ARTICLE 7. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer hereby represents and warrants to Selling Parties that the
following representations are true and correct and, except as contemplated
hereby, at all times up to the Closing Date will be true and correct, and hereby
acknowledges that such representations constitute the basis upon which the
Selling Parties are induced to enter into and perform this Agreement. Each
warranty set forth in this Article 7 shall survive the Closing and any
investigation made by or on behalf of Selling Parties.
7.1 AUTHORITY AND CONSENTS. Buyer represents and warrants that Buyer is
a corporation duly organized, existing and in good standing under the laws of
Florida. Buyer has the right, power, legal capacity and authority to enter into,
and perform its obligations under this Agreement, and no approvals or consents
of any persons other than its Board of Directors are necessary in connection
with it. The execution and delivery of this Agreement and the consummation of
this transaction by Buyer have been, or prior to the Closing will have been,
duly authorized by all necessary corporate action of Buyer. This Agreement
constitutes a legal, valid and binding obligation of Company enforceable in
accordance with its terms, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
7.2 REPORTS. Buyer has delivered to Company and Shareholder copies of
its reports on Form 10-KSB, 10-QSB, 8K, and amendments thereto, containing
financial exhibits, filed since December 31, 1995 (the "Reports"). The Reports
were timely filed with the Securities and Exchange Commission and did not, at
the time they were filed, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. There has not been any material or adverse change in the
business, assets or liabilities of Buyer which has occurred since the date of
the last report, and which has not been disclosed to Company and Shareholder.
There is no fact known to Buyer which materially adversely affects its
condition, assets, liabilities, business, operations or prospects that has not
been set forth in its Reports.
19
7.3 SHARES OF COMMON STOCK. The shares of Buyer's Common Stock
delivered to the Shareholder at the Closing and those that may be issued
pursuant to contingency payments pursuant to Section 2.1 will be Rule 144
restricted stock validly and legally issued and will be fully paid and not
assessable.
7.4 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry
into this Agreement nor the consummation of the transactions contemplated hereby
will result in or constitute any of the following: (i) a breach of any term or
provisions of this Agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of Buyer or, to the knowledge of Buyer, any lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust or other agreement, instrument or arrangement to which
Buyer is a party or by which Buyer is bound; (iii) to the knowledge of Buyer, an
event that would permit any party to terminate any agreement or to accelerate
the maturity of any indebtedness or other obligation; (iv) to the knowledge of
Buyer, the violation of any law, regulation, ordinance, judgment, order or
decree applicable to or affecting Buyer.
ARTICLE 8. SELLING PARTIES' OBLIGATIONS BEFORE CLOSING.
Selling Parties covenant that, except as otherwise agreed in writing by
Buyer, from the date of this Agreement until the Closing:
8.1 BUYER'S ACCESS TO PREMISES AND INFORMATION. Buyer and its counsel,
accountants and other representatives shall be entitled to have full access
during normal business hours to all Company's properties, books, accounts,
records, contracts and documents of or relating to the Assets, but shall not
restrict or inhibit Company's normal business operations. Selling Parties shall
furnish or cause to be furnished to Buyer and its representatives all data and
information concerning the business, finances and properties of Company that may
reasonably be requested.
8.2 CONDUCT OF BUSINESS IN NORMAL COURSE. Company shall carry on its
business and activities diligently and in substantially the same manner as they
previously have been carried on, and shall not make or institute any unusual or
novel methods of management, accounting or operation that will vary materially
from the methods used by Company as of the date of this Agreement. Company shall
use its best efforts, without making any commitments on behalf of Buyer, to
preserve its business organization intact, to keep available to Company its
present officers and employees, and to preserve its present relationships with
suppliers, customers and others having business relationships with it.
8.3 NO SOLICITATION. From the date of this Agreement to April 30, 1997
(the "Exclusivity Period"), Company and Shareholder will not, directly or
indirectly through any officer, director, stockholder or agent of Company, or
otherwise (i) solicit, initiate or encourage the submission of inquiries,
takeover proposals or offers from any corporation, partnership, person or other
entity or group relating to any acquisition or purchase of all or substantially
all of the assets of, or equity interest in Company or any merger, consolidation
or business combination involving the Company; (ii) enter into negotiations
regarding the foregoing or
20
furnish to any person or entity information concerning the Company for any of
the foregoing purposes; or (iii) otherwise cooperate with or assist, to
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. For purposes of this Agreement,
"takeover proposal" means any inquiry, proposal or offer from the Interested
Party relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of Company or any of its subsidiaries or over 20%
of any class of equity securities of Company or any of its subsidiaries or any
offer that if consummated would result in any person beneficially owning 20% or
more of any class of equity securities of Company of any of its subsidiaries, or
any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries other than the transactions
contemplated by this Agreement, or any other transaction the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the closing of this Agreement or which would reasonably be
expected to dilute materially the benefits to Buyer of the transactions
contemplated herein.
8.4 MAINTENANCE OF INSURANCE. Company shall continue to carry its
existing insurance, subject to variations in amounts required by the ordinary
operations of its business. At the request of Buyer and at Buyer's sole expense,
the amount of insurance against fire and other casualties which, at the date of
this Agreement, Company carries on any of the Assets or in respect of its
operations shall be increased by such amount or amounts as Buyer shall specify.
8.5 EMPLOYEES AND COMPENSATION. Company shall not do, or agree to do,
any of the following acts: (i) grant any increase in salaries payable or to
become payable to any officer, employee, sales agent or representative, or
consultant, or (ii) increase benefits payable to any officer, employee, sales
agent or representative or consultant under any bonus or pension plan or other
contract or commitment. Company will pay each employee the base salary, bonus,
and severance, if any, plus any other compensation due, including any unused
vacation, through the date of Closing, and comply with all tax withholding
provisions of applicable federal, state, local and foreign laws and have or will
pay over to the proper governmental authorities all amounts required to be so
withheld and paid over. Company's employees will be free to become employees of
Buyer should the Buyer elect to offer employment to any of Company's employees
and such employees accept any such offer of employment.
8.6 NEW TRANSACTIONS. Company shall not do or agree to do any of
the following acts:
(a) Enter into any contract, commitment or transaction not in
the usual and ordinary course of its business;
(b) Make any capital expenditures or commitments in excess of
$5,000 for any single item or $5,000 in the aggregate, or enter into
any leases of capital equipment or property under which the annual
lease charge is in excess of $5,000 except for resale;
21
(c) Sell or dispose of any capital assets with a net book
value in excess of $5,000 individually, or $5,000 in the aggregate; or
(d) Declare any dividends or make any distributions.
8.7 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS. Company shall not do,
or agree to do, any of the following acts: (i) pay any obligation or liability,
fixed or contingent, other than current liabilities; (ii) waive or compromise
any right or claim; or (iii) cancel, without full payment, any note, loan or
other obligation owing to Company.
8.8 EXISTING AGREEMENTS. Company shall not modify, amend, cancel or
terminate any of its existing contracts or agreements, or agree to do any of
those acts.
8.9 CONSENT OF OTHERS. As soon as reasonably practical after the
execution and delivery of this Agreement, and in any event on or before the
Closing Date, Company shall obtain any written consents required by the terms
and conditions of the items described in Sections 1.1, 1.2, 1.3, 1.4, 1.8, 1.10,
1.12, 3.1, 4, 6.23 and 6.24 and setout in any of their respective Schedules to
this Agreement in form and substance satisfactory to Buyer and will furnish to
Buyer executed copies of those consents obtained by Company. In addition,
Company shall use all reasonable efforts to obtain estoppel certificates to any
leased premises in form and substance satisfactory to Buyer and will furnish to
Buyer executed copies of those estoppel certificates obtained by Company.
8.10 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Selling Parties
shall use all reasonable efforts to assure that all representations and
warranties of Selling Parties set forth in this Agreement and in any written
statements delivered to Buyer by Selling Parties under this Agreement will also
be true and correct as of the Closing Date as if made on that date and that all
conditions precedent to the Closing shall have been met. Company shall promptly
disclose to Buyer any information contained in the Schedules to this Agreement
which, because of an event occurring after the date hereof, is incomplete or is
no longer correct as of all times after the date hereof until the Closing Date;
provided, however, that none of such disclosures shall be deemed to modify,
amend or supplement the representations and warranties of Company or the
Schedules hereto for the purposes of Article 9 hereof, unless Buyer shall have
consented thereto in writing.
8.11 SALES AND USE TAX. Shareholder hereby agrees to indemnify and hold
Buyer harmless against any claims arising out of sales and use and other tax
liabilities of Company accrued prior to the Closing Date.
8.12 STATUTORY FILINGS. Company shall cooperate fully with Buyer in
preparing and filing all information and documents deemed necessary or desirable
by Buyer under any statutes or governmental rules or regulations pertaining to
the transactions contemplated by this Agreement.
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
22
The obligations of Buyer to purchase the Assets under this Agreement
are subject to the satisfaction, at or before the Closing, of all the conditions
set out below in this Article 9. Buyer may waive any or all of these conditions
in accordance with Section 14.2 hereof; provided, however, that no such waiver
of a condition shall constitute a waiver by Buyer of any of its other rights or
remedies, at law or in equity, if Selling Parties shall be in default of any of
their representations, warranties or covenants under this Agreement.
9.1 [INTENTIONALLY OMITTED]
9.2 ACCURACIES OF SELLING PARTIES' REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Selling Parties in this Agreement or in any
written statement that shall be delivered to Buyer by Selling Parties under this
Agreement shall be true and correct in all material respects on and as of the
Closing Date as though made at that time.
9.3 ABSENCE OF LIENS. At or prior to the Closing, Buyer shall have
received a UCC search report dated as of a date not more than five days before
the Closing Date issued by the Florida Secretary of State or by a title company
or other company reasonably satisfactory to counsel for Buyer indicating that
there are no filings under the Uniform Commercial Code on file with such
Secretary of State which name any of Selling Parties as debtor or otherwise
indicating any lien on the Assets, except for the liens otherwise disclosed in
Schedules hereto.
9.4 SELLING PARTIES' PERFORMANCE. Selling Parties shall have performed,
satisfied, and compiled in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or compiled with by
Selling Parties on or before the Closing Date.
9.5 CERTIFICATION BY COMPANY. Buyer shall have received a certificate,
dated the Closing Date, signed by Company's president and its chief financial
officer certifying, in such detail as Buyer and its counsel may reasonably
request, that the conditions specified in Section 9.2 and 9.4 have been
fulfilled.
9.6 OPINION OF SELLING PARTIES' COUNSEL. Buyer shall have received
from, ▇▇▇▇▇▇▇ ▇. Bist, Esq. counsel for Selling Parties, an opinion dated the
Closing Date, in form and substance satisfactory to Buyer and its counsel, that:
(a) The authorized capital stock of Company consists of 500
shares of common stock, par value of $1.00 of which 500 shares of the
authorized stock have been issued, (the "Stock"). The stock constitutes
all outstanding and issued capital stock of Company and all such shares
are validly issued, fully paid and nonassessable. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ is
the sole and exclusive legal and beneficial owner of all the issued and
outstanding shares of stock of Company. To the best of counsel's
knowledge and belief, there are no outstanding subscriptions, options,
warrants, preemptive or preferential rights, convertible securities,
shareholder agreements or other agreements or contracts of any
character (contractual of otherwise) for the issuance, sale and
transfer to any person or entity of shares of capital stock of Company,
and none of the shares has been issued in violation of any preemptive
rights.
23
(b) Company is a corporation duly organized, validly existing
and in good standing under the laws of Florida and has all necessary
corporate power to own its respective properties as now owned and
operate its respective business as now operated;
(c) This Agreement has been duly and validly authorized and,
when executed an delivered by Selling Parties, will be valid and
binding on Selling Parties and enforceable in accordance with its
terms, except as limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally;
(d) To the best of counsel's knowledge and belief and without
independent inquiry and except as set forth in SCHEDULE 6.20 to this
Agreement, such counsel does not know of any suit, action, arbitration
or legal, administrative or other proceeding or governmental
investigation pending or threatened against or affecting Company or its
business or any of its properties, or financial or other condition;
(e) To the best of counsel's knowledge and belief and without
independent inquiry, neither the execution nor delivery of this
Agreement nor the consummation of the transaction contemplated in this
Agreement will constitute (i) a default, or an event that would with
notice or lapse of time or both constitute a default under, or
violation or breach of, (A) Company's Articles of Incorporation, Bylaws
or (B) to such counsel's knowledge without independent inquiry any
indenture, license, lease, franchise, mortgage, instrument or other
agreement or statute, rule, regulation, judgment, order or decree to
which Company is a party, or by which Company or the Stock may be
bound, or (ii) an event that would permit any party to any agreement or
instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Company or (iii) to such counsel's
knowledge without independent inquiry, an event that would result in
the creation or imposition of any lien, charge or encumbrance on any of
the Stock;
(f) To such counsel's knowledge and belief without independent
inquiry, every consent, approval, authorization or order of any court
or governmental agency or body that is required for the consummation by
Buyer of the transactions contemplated by this Agreement has been
obtained or has been waived by Buyer, and such counsel has not been
informed that any such consent, approval, authorization or order has
been rescinded or is no longer in effect as of the Closing Date;
(g) Shareholder has good and marketable title to all his
Stock, including those described in the Schedules to this Agreement,
free and clear or all liens, encumbrances, equities, conditional sales
contracts, security interests, charges and restrictions, except as set
forth in this Agreement or the Schedules hereto.
9.7 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
24
9.8 CORPORATE APPROVAL. The execution and delivery of this Agreement by
Company, and the performance of its covenants and obligations under it, shall
have been duly authorized by all necessary corporate action, and Buyer shall
have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Company.
9.9 ESTOPPEL CERTIFICATES. Buyer shall have received from Company
estoppel certificates and consents relating to the Lease Property in a form
satisfactory to Buyer's counsel.
9.10 [INTENTIONALLY OMITTED]
9.11 CONSENTS. All necessary agreements and consents of any parties to
the consummation of the transaction contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by Company and
delivered to Buyer.
9.12 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to Buyer under
this Agreement shall be satisfactory in all reasonable respects, to Buyer and
its counsel.
9.13 EMPLOYMENT AGREEMENT. Buyer and the Shareholder shall have entered
into an employment agreement substantially in the form of SCHEDULE 9.13 hereto.
9.14 CHANGE OF CORPORATE NAME. If so requested by Buyer, Company shall
have changed its corporate name to a name reasonably approved by Buyer.
9.15 [INTENTIONALLY OMITTED]
9.16 CONTINUITY OF MANAGEMENT. Buyer shall have made arrangements
reasonably suitable to it for the employment by Buyer of sufficient Company
employees to continue the operation of the business being transferred without
disruption thereto. Buyer hereby waives its rights under this Section if it
fails to give at least three (3) days written notice thereof to Company prior to
the Closing.
9.17 CONDITION OF ASSETS. The Assets shall not have been materially or
adversely affected in any way as a result of any fire, accident, storm or other
casualty or labor or civil disturbance or act of God or the public enemy.
ARTICLE 10. CONDITIONS PRECEDENT TO COMPANY'S PERFORMANCE
The obligations of Company to sell and transfer the Assets under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
following conditions set out below in this Article 10. Except for Sections 10.4
and 10.7, Company may waive any or all of these conditions in accordance with
Section 14.2 hereof; provided, however, that no such waiver of a condition shall
constitute a waiver by Company of any of its other rights or remedies, at law or
in equity, if Buyer shall be in default of any of its representations,
warranties or covenants under this Agreement.
25
10.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement, including but not
limited to the Reports delivered to Selling Parties pursuant to Section 7.2
hereof, shall be true on and as of the Closing as though such representations
and warranties were made on and as of that date.
10.2 BUYER'S PERFORMANCE. Buyer shall have performed and complied with
all covenants and agreements, and satisfied all conditions that it is required
by this Agreement to perform, comply with, or satisfy, before or at the Closing.
10.3 OPINION OF BUYER'S COUNSEL. Buyer shall have furnished Company
with an opinion, dated the Closing Date, of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. counsel for
Buyer, in form and substance satisfactory to the Shareholder and his counsel, to
the effect that:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has all
requisite corporate power to perform its obligations under this
Agreement;
(b) All corporate proceedings required by law or by the
provisions of this Agreement to be taken by Buyer on or before the
Closing Date, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, have been duly and validly taken;
(c) Buyer has the corporate power and authority to acquire
the Assets for the consideration set forth herein;
(d) To such counsel's knowledge without independent inquiry,
every consent, approval, authorization or order of any court or
governmental agency or body that is required for the consummation by
Buyer of the transactions contemplated by this Agreement has been
obtained or has been waived by Company and will be in effect on the
Closing Date;
(e) The consummation of the transaction contemplated
by this Agreement does not violate or contravene any of the provisions
of the Articles of Incorporation, Bylaws of Buyer or to the best of
such counsel's knowledge without independent inquiry any indenture,
agreement, statute, judgment or order to which Buyer is a party or by
which Buyer is bound;
(f) This Agreement has been duly and validly authorized and,
when executed and delivered by Buyer, will be valid and binding on
Buyer and enforceable in accordance with its terms, except as limited
by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally;
26
(g) The shares of Buyer's Common Stock delivered to the
Shareholder at Closing will be validly and legally issued and will be
fully paid and not assessable.
10.4 BUYER'S CORPORATE APPROVAL. Buyer shall have received corporate
authorization and approval from its Board of Directors for the execution and
delivery of this Agreement and all corporate action necessary or proper to
fulfill the obligations of Buyer to be performed under this Agreement on or
before the Closing Date.
10.5 CERTIFICATION BY BUYER. Shareholder shall have received a
certificate, dated the Closing Date, signed by an executive officer of Buyer
certifying, in such detail as Shareholder and his counsel may reasonably
request, that the conditions specified in Section 10.1 and 10.2 have been
fulfilled.
10.6 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
10.7 CONSENTS. All necessary agreements and consents of any parties to
the consummation of the transaction contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained on or before
the Closing Date.
10.8 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to Selling
Parties under this Agreement shall be satisfactory in all reasonable respects,
to Shareholder and his counsel.
10.9 EMPLOYMENT AGREEMENT. Buyer shall have entered into an employment
agreement with Shareholder substantially in the form of SCHEDULE 9.13 hereto.
10.10 PAYMENT OF PURCHASE PRICE. The Buyer shall have paid the purchase
price of the Asset to be paid at Closing as specified in Sections 2.1(a) and
(b).
ARTICLE 11. EMPLOYEE PLANS
Buyer is not assuming any obligations of Company relating to
any Employee Plan. "Employee Plan" includes all pension, retirement,
disability, medical, dental or other health insurance plans, life
insurance or other death benefit plans, profit sharing, deferred
compensation, stock option, bonus or other incentive plans, vacation
benefit plans, severance plans or other employee benefit plans or
arrangements including, without limitation, any pension plan as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974
("ERISA") and any welfare plan as defined in Section 3(1) of ERISA,
whether or not funded, covering any Subject Employee (as hereinafter
defined) or to which Company is a party or bound or makes or has made
any contribution or by which Company may have any liability to any
Subject Employee (including any such plan formerly maintained by or in
connection with which Company
27
may have any liability to any Subject Employee, and any such plan
which is a multiemployer plan as defined in Section 3(37)(A) of ERISA).
ARTICLE 12. SELLING PARTIES' OBLIGATIONS AFTER THE CLOSING
A. SELLING PARTIES OBLIGATIONS
12.1 PRESERVATION OF GOODWILL. Following the Closing, Selling Parties
will restrict their activities so that Buyer's reasonable expectations with
respect to the goodwill, business reputation, employee relations and prospects
connected with the Assets will not be materially impaired.
12.2 CHANGE OF NAME. If requested by Buyer, Selling Parties agree that
after the Closing Date they shall not use or employ in any manner directly or
indirectly the name of ▇▇▇▇▇ Computer Systems, Inc. or any variation thereof,
and that they will take and cause to be taken all necessary action by Company's
board of directors, stockholders and any other persons in order to make this
change in Company's name on or before the Closing Date.
12.3 [INTENTIONALLY OMITTED]
12.4 SELLING PARTIES' INDEMNITIES. Selling Parties shall indemnify,
defend and hold harmless Buyer against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies, including interest, penalties and reasonable attorneys' fees
up to a maximum of the purchase price actually paid by Buyer ("Losses"), that
Buyer shall incur or suffer, which arise, result from or relate to any breach
of, or failure by Shareholder to perform, any of his representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
Shareholder under this Agreement, or from the operation of The Company prior to
the Closing Date.
Notwithstanding any other provision of this Agreement,
Shareholder shall not be liable to Buyer on any warranty, representation or
covenant made by Shareholder in this Agreement, or under any of their
indemnities in this Agreement, regarding any single claim, loss, expense,
obligation or other liability that does not exceed $5,000 provided, however,
that when the aggregate amount of all such claims, losses, expenses, obligations
and liabilities not exceeding $5,000 each reaches $5,000, Shareholder shall
thereafter be liable in full for all such breaches and indemnities and regarding
all those claims, losses, expenses, obligations and liabilities exceeding
$5,000.
12.5 ACCESS TO RECORDS. From and after the Closing, Selling Parties
shall allow Buyer, and its counsel, accountants and other representatives, such
access to records which after the Closing may be in the custody or control of
Selling Parties as Buyer reasonably requires in order to comply with its
obligations under the law or under contracts assumed by Buyer pursuant to this
Agreement.
28
12.6 NONSOLICITATION OF EMPLOYEES. None of the Selling Parties shall,
for three (3) years from the date of this Agreement, solicit any employee of
Buyer or of any direct or indirect subsidiary of Buyer to leave such employment
if such employee was at any time between the date hereof and the Closing an
employee of Company.
12.7 [INTENTIONALLY OMITTED]
12.8 GUARANTEE. Shareholder hereby unconditionally guarantees to Buyer
the full and timely performance of all of the obligations and agreements of
Company up to the purchase price actually paid by Buyer. The foregoing guarantee
shall include the guarantee of the payment of all damages, costs and expenses
which might become recoverable as a result of the nonperformance of any of the
obligations or agreements so guaranteed as a result of the nonperformance of
this guarantee. Buyer may, at its option, proceed against Shareholder for the
performance of any such obligation or agreement, or for damages for default in
the performance thereof, without first proceeding against any other party or
against any of its properties. Shareholder further agrees that its guarantee
shall be an irrevocable extension and shall continue in effect notwithstanding
any extension or modification for any guaranteed obligation, any assumption of
any such guaranteed obligation by any other party, or any other act or thing
which might otherwise operate as a legal or equitable discharge of a guarantor,
and Shareholder hereby waives all special suretyship defenses and notice
requirements.
12.9 HOLD BACK AND SETOFF. In the event that any claim is made against
Buyer or the Assets being acquired herein which arises prior to or after the
date of Closing for which Selling Parties, jointly or severally, are obligated
herein, Buyer will have the right to hold back the amount of such claim from any
contingency payments that may be due under Sections 2.1(c) until such claim has
been settled or finally determined by a court of competent jurisdiction. In the
event Buyer pays any such claim, Buyer may setoff such amounts including any
interest, reasonable attorney fees and costs it has incurred in defending
itself, from any contingency payments that may be due under Section 2.1(c) and
place such funds in an escrow account pursuant to Section 12.15(a) and (b).
12.10 LOCKUP. In the event that any shares of Common Stock of Company
issued and delivered to Shareholder, pursuant to Section 2.1(b) and (c) hereof,
as adjusted for any stock splits, stock dividends for other recapitalization,
(hereinafter referred to as the "Shares") become registered securities under the
Securities and Exchanges of 1933, as amended, the Shareholder agrees not to
sell, offer to sell, contract to sell or otherwise dispose of the Shares for a
period equal to 24 months from the date of each issuance and delivery to
Shareholder. Shareholder agrees to execute a Letter Agreement upon request of
Buyer or its underwriters, if any, to such effect. Further, Shareholder agrees
that after the expiration of any lock-up period that Buyer shall have the right
of first refusal to acquire any Shares proposed to be sold by Shareholder at the
then current market price less applicable brokerage commissions. Shareholder
shall orally notify Buyer by at least 10 a.m. eastern standard time on the date
of any proposed sale of Shares (which must be a date on which the NASDAQ/NMS is
open for trading), indicating the number of Shares proposed to be sold (the
"Sale Shares"). Shareholder shall thereafter confirm the oral notice in writing
via facsimile. Buyer shall have the right to purchase the Sale Shares by
29
providing written notification via facsimile to Shareholder of his intention to
do so by 10:00 a.m. on the next business day. If Buyer does not provide written
notification to Shareholder as contemplated in the immediately preceding
sentence, Shareholder shall thereafter have ten (10) business days within which
to sell the Sale Shares. If the Sale Shares are not sold within this ten (10)
day period, Shareholder must again comply with the above notification procedures
prior to selling the Sale Shares.
B. BUYER'S OBLIGATIONS.
12.11 RECORDS OF COMPANY. From the Closing Date, and so long as
required under applicable law, Buyer agrees that it shall not destroy any
original records of Company existing on the Closing Date without first offering
to give Shareholder such records (which option must be exercised within 20 days
after the giving thereof by the Buyer), and Buyer shall provide Shareholder with
reasonable access to review any such books and records and to make copies
thereof during normal business hours of the Buyer in connection with tax
returns, tax audits, claims that could reasonably be expected to be asserted
against Company or Shareholder, or for any other valid business purpose.
12.12 ACCESS TO RECORDS. From and after the Closing, Buyer shall allow
Selling Parties, and their counsel, accountants and other representatives, such
access to records which after the Closing are in the custody or control of Buyer
as Selling Parties reasonably require in order to comply with their respective
obligations under the law or under contracts assumed by Buyer pursuant to this
Agreement.
12.13 BUYER'S INDEMNITIES. Buyer shall indemnify, defend and hold
harmless Company and Shareholder against and in respect of any and all Losses
(as such term is defined in Section 12.4 hereof) that Company and/or Shareholder
shall incur or suffer, which arise out of or result from any breach of, or
failure by Buyer to perform, any operations of Company on or after the Closing
Date.
Notwithstanding any other provision of this Agreement, except
for Buyer's obligation to pay the consideration for the Assets referred to in
Section 2.1 hereof in connection with liabilities of Company to be specifically
assumed hereunder, Buyer shall not be liable to Company and/or Shareholder on
any warranty, representation or covenant made by Buyer in this Agreement, or
under any of its indemnities in this Agreement, regarding any single claim loss,
expense, obligation or other liability that does not exceed $5,000, provided,
however, that when the aggregate amount of all such claims, losses, expenses,
obligations and liabilities exceeding $5,000 each reaches $5,000, Buyer shall
thereafter be liable in full for all such breaches and indemnities and regarding
all those claims, losses, expenses, obligations and liabilities exceeding such
$5,000 amount.
30
C. ASSERTION OF CLAIMS.
12.14 ASSERTION OF CLAIMS. All claims for indemnification by either of
the Selling Parties pursuant to Section 12.13 hereof or the Buyer pursuant to
Section 12.4 hereof, or any other provision of this Agreement except Section
12.3, shall be asserted and resolved as follows:
(a) Any person claiming indemnification hereunder is
hereinafter referred to as the "Indemnified Party" and any person
against whom such claims are asserted hereunder is hereinafter referred
to as the "Indemnifying Party." In the event that any Losses are
asserted against or sought to be collected from an Indemnified Party by
a third party, said Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of the Losses, specifying the nature and
specific basis for such Losses and the indemnity claim and the amount
or the estimated amount thereof to the extent then feasible and
enclosing a copy of all papers (if any) served with respect to the
claim (the "Claim Notice"). The Indemnifying Party shall not be
obligated to indemnify the Indemnified Party with respect to any such
Losses if the Indemnified Party fails to notify the Indemnifying Party
thereof in accordance with the provisions of this Agreement in
reasonably sufficient time so that the Indemnifying Party's ability to
defend against the Losses is not prejudiced, but only to the extent
such notification within such time period is practicable. The
Indemnifying Party shall have 30 days from the date the Claim Notice is
given in accordance with the notice provisions hereof (the "Notice
Period") to notify the Indemnified Party (x) whether it disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder
with respect to such Losses and (y) whether its desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified
Party against such Losses; which election to defend may be made without
prejudicing the Indemnifying Party as to its liability hereunder, other
than with respect to the costs of defense. Notwithstanding the
foregoing, any Indemnified Party is hereby authorized prior to and
during the Notice Period to file any motion, answer or other pleading
that it shall deem necessary or appropriate to protect its interests or
those of the Indemnifying Party (and of which it shall have given
notice and opportunity to comment to the Indemnifying Party) and that
is not prejudicial to the Indemnifying Party. (A) In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against such
Losses and except as hereinafter provided, the Indemnifying Party shall
have the right to defend by all appropriate proceedings, and with
counsel of its own choosing, which proceedings shall be promptly
settled or prosecuted by them to a final conclusion. If the Indemnified
Party desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense. If requested by
the Indemnifying Party, the Indemnified Party agrees to cooperate with
the Indemnifying Party and its counsel in contesting any Losses that
the Indemnifying Party elects to contest, or, if appropriate and
related to the claim in question, in making any counterclaim against
the person asserting the third party Losses, or any cross-complaint
against any person. No claim with respect to which the Indemnifying
Party has admitted its liability may be settled or otherwise
compromised without the prior written consent of the Indemnifying
Party. Any party settling or compromising a claim in violation of the
preceding sentence shall be solely liable for the amount of the
settlement or compromise. (B) If the Indemnifying Party does not
31
notify the Indemnified Party within 30 days after the receipt of a
Claim Notice that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to defend at the expense of the
Indemnifying Party the claim with counsel of its choosing reasonably
satisfactory to the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of any claim at any time prior
to settlement or final determination thereof. Any such defense shall be
prosecuted promptly and vigorously by the Indemnified Party. In the
case of either (A) or (B), if the Indemnifying Party has not yet
admitted its liability for a claim the Indemnified Party shall send a
written notice to the Indemnifying Party of any proposed settlement of
any claim received by the Indemnified Party. The Indemnifying Party
shall have an option for 30 days following receipt of such notice to
(i) admit liability for the claim if it has not already done so and
(ii) if liability has been admitted, reject, in its reasonably
judgment, the proposed settlement. Failure to reject such settlement
within such 30 day period shall be deemed an acceptance of such
settlement. If the Indemnified Party settles any such claim over the
objection of the Indemnifying Party, the Indemnified Party shall
thereby waive any right to indemnify therefor, unless the Indemnifying
Party has prior to the time of settlement admitted liability for such
claim.
(b) In the event any Indemnified Party should have a claim for
Losses against any Indemnifying Party hereunder that does not involve a
Loss being asserted against or sought to be collected from it by a
third party (for example, but without limitation, a Loss resulting from
a breach of a representation, warranty or covenant), the Indemnified
Party shall send a Claim Notice (including an explanation, in
reasonable detail, of the basis for such claim, the particular
representation, warranty or covenant claimed to be breached by the
Indemnifying Party, and the manner in which the amount claimed to be
due was computed, together with all documents in the possession of the
Indemnified Party relating to such claim for Losses) with respect to
such claim to the Indemnifying Party. If the Indemnifying Party does
not notify the Indemnified Party within 30 days from the date the Claim
Notice is given that it disputes such claim for Losses, the amount of
such Losses shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
12.15 RIGHT OF OFFSET.
(a) Subject to the limitations contained in the second
paragraph of Section 12.4, the Buyer shall have the right at its option
to offset against any amounts (whether payable by the Buyer or any of
its affiliates) due to Shareholder under Section 2.1(c) hereof, any and
all amounts due, after giving effect to the tax consequences affecting
Buyer as a result of the matter in question (in each case as determined
in the reasonable judgment of Buyer) any of the Losses pursuant to the
provisions of this Section 12.15.
(b) In the event Shareholder notifies Buyer that it disputes
the validity or amount of any claim for Losses within 30 days from the date the
Claim Notice is given by the Buyer to Shareholder, then, in lieu of exercising
any right of offset pursuant to Section 12.15(a) or Section 12.9, the Buyer
shall deposit an amount in escrow up to but not exceeding the amount reasonably
claimed to be due by the Buyer pursuant to such Claim Notice. Such amounts shall
be held by the Buyer's regular outside counsel, or if such attorney cannot or is
unwilling to serve, a
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financial institution selected by the Buyer (the "Escrow Agent") in an interest
bearing account (only with respect to any cash deposited into such escrow)
subject to the terms and conditions of an escrow agreement (the "Escrow
Agreement") by and among Selling Parties, Buyer and Escrow Agent in the form
attached hereto as SCHEDULE 12.15. Notwithstanding the foregoing provisions of
this Section 12.15, unless and until the Buyer executes and delivers to
Shareholder a counterpart of the Escrow Agreement executed by the Buyer and the
Escrow Agent, then the Buyer may not exercise the offset rights set forth in
this Section 12.15 or in Section 12.9. Notwithstanding the foregoing provisions
of this Section 12.15 if the Buyer has delivered the executed counterpart
contemplated by the immediately preceding sentence, then if Shareholder has not
executed and delivered within ten (10) days thereafter to the Buyer a
counterpart of the Escrow Agreement executed by Shareholder, the Buyer may
directly offset amounts described above without placing such amounts in escrow,
unless and until the counterpart is received.
ARTICLE 13. COSTS
13.1 FINDER'S OR BROKER'S FEES. Each of the parties represents and
warrants that it has dealt with no broker or finder in connection with any of
the transactions contemplated by this Agreement, and, insofar as it knows, no
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions; provided, however, that Buyer shall
be responsible for any compensation or payment that may be due ▇▇▇▇ ▇▇▇▇▇.
13.2 EXPENSES. Except for the cost of the independent audit paid for by
Buyer, each of the parties shall pay all costs and expenses, including, but not
limited to attorneys' and accounting fees, incurred or to be incurred by it in
negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
ARTICLE 14. FORM OF AGREEMENT
14.1 HEADINGS. The subject headings of the Articles and Sections of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
14.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
14.3 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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ARTICLE 15. PARTIES
15.1 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
15.2 ASSIGNMENT. Buyer may not assign or delegate any of its rights or
obligations under this Agreement or any part hereof without the prior written
consent of Company except for any assignment in connection with the sale of
substantially all of Buyer's assets or capital stock to an unaffiliated third
party and except as provided in Section 20.6. Except as otherwise set forth
herein the Selling Parties may not assign or delegate any of their respective
rights or duties hereunder, without the prior written consent of the Buyer. This
Agreement shall be binding on and shall inure to the benefit of the parties to
it and their respective heirs, legal representatives, successors and assigns.
ARTICLE 16. REMEDIES
16.1 RECOVERY OF LITIGATION COSTS. If any legal action or any
arbitration or other preceding is brought for the enforcement of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
16.2 CONDITIONS PERMITTING TERMINATION. Subject to the provisions of
Article 3 relating to the postponement of the Closing Date, either party may on
the Closing Date terminate this Agreement by written notice to the other,
without liability to the other, if any bona fide action or proceeding shall be
pending against either party on the Closing Date that could result in an
unfavorable judgment, decree or order that would prevent or make unlawful the
carrying out of this Agreement.
16.3 DEFAULTS PERMITTING TERMINATION. If either Buyer or Company
materially defaults in the due and timely performance of any of its
representations, warranties, covenants, or agreements under this Agreement, the
non-defaulting party or parties may on the Closing Date give notice of
termination of this Agreement, in the manner provided in Article 18. The notice
shall specify with particularity the default or defaults on which the notice is
based. The termination shall be effective three (3) business days after the
Closing Date, unless the specified default or defaults have been cured on or
before this effective date for termination. Such termination shall not waive,
release or discharge the non-defaulting parties' rights to seek legal and
equitable relief.
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ARTICLE 17. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants and agreements in any
instrument, certificate, opinion or other writing provided for in it, shall
survive the Closing.
ARTICLE 18. NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail registered or certified, postage prepaid, and
properly addressed as follows:
COMPANY: ▇▇▇▇▇ Computer Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
with copy to: ▇▇▇▇▇▇▇ ▇. Bist, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SHAREHOLDER: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Computer Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BUYER: ProxyMed, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Blue
with copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
ProxyMed, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 19. GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Florida, without regard to its conflict of laws
provisions.
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ARTICLE 20. MISCELLANEOUS
20.1 ANNOUNCEMENTS. Except as and to the extent required by any
applicable law, regulation or order, including Securities and Exchange
Commission regulations, no party to this Agreement shall, and each shall direct
its representatives not to, directly or indirectly, make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
disclosure of the existence of negotiations regarding a proposed transaction
between the parties or any of the terms, conditions or other aspects of a
proposed transaction without prior written consent of the other party, In the
event any party is required by applicable law, regulation or order to make any
such disclosure, such party shall provide prior notice of such required
disclosure to the other party. In the event any party is required by applicable
law, regulation or order to make any such disclosure, such party shall provide
prior notice of such required disclosure to the other party. Buyer agrees to
deliver to Company a copy of the proposed public announcement relating to this
transaction prior to the publication thereof in order to give Company an
opportunity to make recommendations with respect thereto, which recommendation
shall in no way be binding on Buyer.
20.2 CONFIDENTIALITY AND NO SHOP AGREEMENT. Company and Buyer
acknowledge and affirm the Confidentiality and No Shop dated February 14 1997, a
copy of which is set forth in SCHEDULE 20.2.
20.3 FURTHER ACTIONS. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be requested by the other parties in order to consummate or implement
the transactions contemplated by this Agreement.
20.4 SEVERABLE COVENANTS. In the event that any provision contained
herein is declared invalid or illegal, the other provisions hereof shall not be
affected or impaired thereby and shall remain valid and enforceable.
20.5 SPECIFIC PERFORMANCE. In the event of a breach or threatened
breach by any party hereto of the provisions of this Agreement, any other party
hereto shall be entitled to specific performance. Nothing herein shall be
construed as prohibiting any party hereto from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages.
20.6 NOMINEE. In the event Buyer elects to assign this Agreement to a
wholly owned subsidiary of Buyer, Selling Parties hereby consent to any such
assignment so long as Buyer unconditionally and irrevocably guarantees the
obligations of such subsidiary hereunder and any stock issued pursuant to
Section 2.1(c) is that of Buyer.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
BUYER: PROXYMED, INC.
By: /s/ ▇▇▇▇▇▇ BLUE
--------------------------------------
▇▇▇▇▇▇ Blue, Chairman of the Board
and Chief Executive Officer
COMPANY: ▇▇▇▇▇ COMPUTER SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
SHAREHOLDER: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
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