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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 24, 1998
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INFOCURE CORPORATION
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(exact name of registrant as specified in chapter)
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Delaware 001-12799 58-2271614
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1765 The Exchange, Suite 450 Atlanta, GA 30339
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(Address of principal executive office) (zip code)
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Registrant's telephone number, including area code: 770-221-9990
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Not Applicable
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(Former name or former address, if changed since last report)
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Contents
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Page
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Item 2: Acquisition or Disposition of Assets.................... 3
Item 7: Financial Statements and Exhibits....................... 3
Signatures....................................................... 5
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Item 2. Acquisition or Disposition of Assets.
On February 24, 1998, InfoCure Corporation ("InfoCure or the "Company") acquired
the assets, subject to the assumption of certain liabilities, of Micro-Software
Designs, Inc. ("MSD"), a New York corporation, pursuant to the terms of an asset
purchase agreement dated as of February 19, 1998. The transaction was effective
January 1, 1998 for certain accounting purposes. MSD is headquartered in
Ridgefield, Connecticut and provides computerized office information systems for
oral and maxillofacial surgeons. The aggregate consideration consisted of
$12,469,770 in cash, 270,000 shares of common stock having a fair market value
on the date of acquisition equal to $2,700,000 and the assumption of liabilities
totaling $723,426. An additional contingent payment of up to $4,400,000 will be
paid on the achievement by the former MSD operations of net income targets
during the 24-month period commencing January 1, 1998. This payment shall be
made in cash.
In addition, on March 2, 1998, InfoCure acquired all of the outstanding capital
stock of Medical Software Integrators, Inc. ("MSI"), a Georgia corporation,
pursuant to the terms of a stock purchase agreement dated as of February 26,
1998. The transaction was effective January 1, 1998 for certain accounting
purposes. MSI is headquartered in Marietta, Georgia and provides practice
management systems and decision support tools to anesthesiologists. The
aggregate consideration consisted of $5,760,000 in cash and 101,767 shares of
common stock having a fair market value on the date of acquisition equal to
$1,440,000. An additional contingent payment of up to $2,200,000 will be paid on
the achievement by the former MSI operations of net income targets during the
24-month period commencing January 1, 1998. This payment shall be made in shares
of common stock of the Company.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of InfoCure Corporation
Financial statements for InfoCure prepared in accordance with
Regulation S-B and required to be filed pursuant to this section are
not available at this time. Such financial statements will be filed by
InfoCure as soon as practicable by an amended Current Report on Form 8
-K which will be filed within 60 days after the filing of this Current
Report on Form 8-K.
(b) Pro Forma Financial Information
The pro forma financial statements of InfoCure required to be filed
pursuant to this section are not available at this time. Such pro
forma financial information will be filed by InfoCure as soon as
practicable by an amended Current Report on Form 8-K which will be
filed within 60 days after the filing of this Current Report on
Form 8-K.
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(c) Exhibits
The following exhibits are filed herewith:
Exhibit Number Description
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2.1 Asset Purchase Agreement by and among Micro-Software
Designs, Inc., MD Acquisition, Inc., InfoCure Corporation,
Joseph Walsh and Sarah Walsh, dated February 19, 1998
2.2 Stock Purchase Agreement between InfoCure Corporation and
Kurt I. Lawrence, Karen A. Lawrence and Philip E. Warenik,
dated February 26, 1998
99.1 Press Release dated February 23, 1998
99.2 Press Release dated March 3, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INFOCURE CORPORATION
/s/ Frederick L. Fine
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Date: March 11, 1998 Frederick L. Fine
Chairman, President and
Chief Executive Officer
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<PAGE>
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 19, 1998,
BUT EFFECTIVE AS OF JANUARY 1, 1998
AMONG
MICRO-SOFTWARE DESIGNS, INC. ("SELLER"),
MD ACQUISITION, INC. ("BUYER"),
INFOCURE CORPORATION ("INFOCURE"),
JOSEPH WALSH ("J. WALSH")
AND
SARAH WALSH ("S. WALSH")
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into
this 19th day of February, 1998, but effective as of January 1, 1998, by and
among MICRO-SOFTWARE DESIGNS, INC., a New York corporation (the "Seller"), MD
ACQUISITION, INC., a Connecticut corporation (the "Buyer"), INFOCURE
CORPORATION, a Delaware corporation ("InfoCure"), JOSEPH WALSH, a resident of
the State of Connecticut ("J. Walsh") and SARAH WALSH, a resident of the State
of Connecticut ("S. Walsh") (J. Walsh and S. Walsh are sometimes referred to
collectively herein as the "Shareholders" or individually as a "Shareholder").
Seller, Buyer, InfoCure and Shareholders are referred to collectively herein as
the "Parties."
RECITALS:
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A. Shareholders own collectively one hundred percent (100%) of the issued
and outstanding capital stock of Seller consisting of one hundred (100) shares
of Seller's voting common stock in the following proportions: J. Walsh, fifty
(50) shares or fifty percent (50%) and S. Walsh, fifty (50) shares or fifty
percent (50%).
B. Seller is engaged in the medical practice management software business
(the "Business").
C. On the terms and subject to the conditions set forth herein, the
Parties desire to enter into this Agreement, pursuant to which Buyer will
purchase from Seller and Seller will sell to Buyer, substantially all of
Seller's assets and properties relating to the Business.
COVENANTS:
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In consideration of the mutual representations, warranties and covenants
and subject to the conditions herein contained, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF THE ASSETS.
1.1. Purchased Assets. On the terms and subject to the conditions contained
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in this Agreement, on the Closing Date (as hereinafter defined), Buyer shall
purchase from Seller, and Seller shall sell, assign and deliver to Buyer, the
Purchased Assets (as hereinafter defined), free and clear of all liens, security
interests, options, charges and other restrictions whatsoever (hereinafter
referred to as "Encumbrances") except for the Permitted Encumbrances referenced
in Section 4.7. below. The term "Purchased Assets" shall mean all the following
assets, properties, rights, titles and interests of every kind and nature,
whether tangible or intangible, and wherever located and by whomever possessed,
related to the Business of Seller on the date hereof, with such changes therein
after the date hereof as shall be permitted pursuant to the terms hereof (the
"Purchased Assets") including, without limitation, all of the following assets
related to the Business (but excluding all "Excluded Assets" as defined in
Section 1.2.):
1.1.1. All cash and cash equivalents on hand and in banks,
certificates of deposit, commercial paper, stocks, bonds and other liquid
investments of Seller;
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1.1.2. All prepayments and prepaid expenses (including, without
limitation, any and all prepaid insurance, lease payments and deposits and
customer deposits) (the "Prepayments");
1.1.3. All inventories, work in process and supplies;
1.1.4. All rights existing under all supply and distribution
agreements and arrangements, sales and purchase agreements and orders (including
unfilled orders for products and services of the Business), real and personal
property leases, license agreements, consulting agreements, confidentiality and
non-disclosure agreements, including, without limitation, such agreements with
current or prior customers and current or prior employees, agents, officers and
directors ("Confidentiality Agreements"), and under all other contracts,
agreements and arrangements, but only to the extent the foregoing are assignable
or transferable to Buyer; provided, however, Seller hereby covenants that all of
the foregoing will be assigned or transferred to Buyer at Closing, except for
those agreements, arrangements, orders and leases set forth on SCHEDULE 1.1.4
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attached hereto;
1.1.5. All lists and records pertaining to customer accounts
(whether past or current), suppliers, distributors, personnel and agents and all
other books, ledgers, files, documents correspondence and business records;
provided that Seller shall be given copies of these records upon request, as
such records exist as of the Closing Date;
1.1.6. All claims, deposits, warranties, guarantees, refunds,
causes of action, rights of recovery, rights of set-off and rights of recoupment
of every kind and nature, other than those relating exclusively to Excluded
Assets or Excluded Liabilities (each as defined below);
1.1.7. All Owned Software, all of Seller's interest in Customer
Software, all of Seller's interest in Other Software, all Intangibles owned by
Seller, and all of Seller's interest in all Intangibles not owned by Seller, as
those terms are defined in Section 4.9. hereof, together with all copies and
tangible embodiments of the foregoing (in whatever form or medium and including,
without limitation, all copies of all or any part thereof, in object code,
source code or other format, and in all magnetic or optical media);
1.1.8. All, to the extent transferable, permits, licenses,
franchises, orders, registrations, certificates, variances, approvals and
similar rights obtained from governments and governmental agencies and all data
and records pertaining thereto;
1.1.9. All insurance, warranty and condemnation proceeds received
after the Effective Date with respect to damage, non-conformances of or loss to
the Purchased Assets;
1.1.10. All rights to receive mail and other communications
addressed to Seller and relating to the Purchased Assets including, without
limitation, accounts receivable payments;
1.1.11. All fixed assets, furniture, equipment and other tangible
personal property, whether owned, leased or otherwise (including, without
limitation, items which, have been fully
<PAGE>
depreciated or expensed), including, without limitation, the assets which are
set forth on SCHEDULE 1.1.11 attached hereto;
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1.1.12. All books, records, ledgers, files, documents,
correspondence, lists, studies and reports and other printed or written
materials;
1.1.13. All accounts, notes and other receivables, including,
without limitation, all receivables from any current or former employee of
Seller (collectively, the "Receivables"); and
1.1.14. All goodwill as a going concern and associated with the
items listed above (including, without limitation, the goodwill associated with
(i) the items referred to in subsections 1.1.7. and 1.1.8. above; (ii) all
telephone numbers, facsimile numbers and web pages owned and used by Seller in
its business) and (iii) the names "Micro Designs" and "Micro-Software Designs,
Inc." and "Micro-Designs Software Corporation" (except that Seller may continue
to use its corporate name for the purpose of winding up its affairs for ninety
(90) days following the Closing Date), and any derivation thereof, and all of
the right, title and interest of the Seller in the logos relating to such names.
1.2. Excluded Assets. Notwithstanding the foregoing, the following assets
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are expressly excluded from the purchase and sale contemplated hereby (the
"Excluded Assets") and, as such, are not included in the Purchased Assets:
1.2.1. Seller's rights under or pursuant to this Agreement
(including, without limitation, Seller's rights to the Purchase Price);
1.2.2. Seller's general ledger, accounting records, minute books
and corporate seal; provided that Buyer shall be given copies upon request of
the general ledger and accounting records for any calendar year beginning on or
after January 1, 1994, as such documents exist as of the Closing Date;
1.2.3. Any right to receive mail and other communications addressed
to Seller relating exclusively to the Excluded Assets or to all liabilities
other than the Assumed Liabilities (as defined in Section 2.2. below);
1.2.4. Those assets of Seller which are set forth on SCHEDULE
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1.2.4; and
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1.2.5. Shares of the capital stock of Seller.
2. PURCHASE PRICE; ASSUMPTION OF LIABILITIES.
2.1. Amount of Purchase Price. In consideration for the purchase of the
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Purchased Assets, Buyer agrees to assume the Assumed Liabilities and to pay
Seller:
A. An amount (the "Base Consideration Amount") equal to
$15,469,770.00.
B. A contingent amount (not to exceed in the aggregate
$4,400,000.00) based upon the performance of Seller's Business during the
twenty-four (24) month period beginning
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on January 1, 1998, and ending December 31, 1999, also as determined as provided
herein and under GAAP (the "Earnout Amount").
The "Purchase Price" shall be equal to the sum of the Assumed Liabilities,
the Base Consideration Amount and the Earnout Amount, as adjusted.
2.1.1. Payment of the Base Consideration Amount.
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The Base Consideration Amount shall be paid as follows:
A. $12,769,770.00 in cash by wire transfer at Closing;
B. Delivery to Seller of share certificates representing the
number of shares of InfoCure's $.001 par value voting common stock (the "Stock")
which, when multiplied by the Determined Value per share, equals $2,700,000.00.
The Determined Value per share shall be deemed by the parties to be Ten and
No/100 Dollars ($10.00) per share. Thus, the number of shares of Stock to be
issued to Seller pursuant to this Section 2.1.1.B. is 270,000 shares.
2.1.2. The Earnout Amount. The Earnout Amount is the amount of
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additional consideration which, if earned, shall not exceed, in the aggregate,
$4,400,000.00 in cash, and which is comprised of two (2) portions: (i) the First
Tier Earnout Amount (as defined below) and (ii) the Second Tier Earnout Amount
(as defined below). No Earnout Amount shall be due to Seller if either Joseph
Walsh or Sarah Walsh fails to remain employed with the Buyer or an affiliate of
the Buyer for the full twenty-four (24) month period beginning January 1, 1998,
and ending December 31, 1999 (such twenty-four (24) month period hereinafter
referred to as the "Measurement Period") unless such failure is due to the
termination of such individual's employment without cause (as provided in his or
her employment agreement with Buyer) or for "Good Reason" (as defined in his or
her employment agreement with Buyer) or by reason of such individual's death or
Total and Permanent Disability (as defined in his or her employment agreement
with Buyer).
A. Seller shall be entitled to receive $2,400,000.00 (the
"First Tier Earnout Amount") if the Business of Seller being acquired by Buyer
hereunder produces, during the Measurement Period, net income before interest,
taxes and amortization ("EBITA") of at least an amount equal to $5,280,000.00
(the "First Tier Target EBITA").
B. Seller shall be entitled to receive up to an additional
$2,000,000.00 (the "Second Tier Earnout Amount") based on the amount by which
the EBITA of the Business of Seller being acquired by Buyer hereunder, during
the Measurement Period exceeds a threshold equal to $8,400,000.00 (the "Second
Tier Target EBITA"). If the Business of Seller being acquired by Buyer hereunder
produces EBITA during the Measurement Period in excess of the Second Tier Target
EBITA, then for each One and No/100 Dollar ($1.00) of such excess, Seller shall
be paid an additional Six and No/100 Dollars ($6.00), but in no event shall the
Second Tier Earnout Amount exceed $2,000,000.00.
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C. Special Exceptions in the Event of Termination Without
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Cause or For Good Reason. Notwithstanding Sections 2.1.2.A. and 2.1.2.B. above,
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and in lieu of any amounts paid to Seller pursuant to Section 2.1.2.A. or
2.1.2.B. above, if either Joseph Walsh or Sarah Walsh is terminated without
cause (as provided in his or her employment agreement with Buyer) or if either
Joseph Walsh or Sarah Walsh terminates his or her employment for "Good Reason"
(as defined in his or her employment agreement with Buyer), then (i) Seller
shall be entitled to receive the First Tier Earnout Amount on January 1, 2000,
if and only if the Business of Seller has produced EBITA (as defined in Section
2.1.2.A. below) for the period commencing on January 1, 1998, and ending on the
last day of the calendar month immediately preceding the date of such
termination (such period hereinafter referred to as the "Revised Measurement
Period") of at least an amount (the "First Threshold") equal to the product of:
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(1) ninety percent (90%) times (2) $5,280,000.0 times (3) a fraction, the
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numerator of which is the number of calendar months comprising the Revised
Measurement Period and the denominator of which is 24 and (ii) Seller shall also
be entitled to receive on January 1, 2000, Six and No/100 Dollars ($6.00) for
every One and No/100 Dollars ($1.00) of EBITA produced during the Revised
Measurement Period that is in excess of an amount (the "Second Threshold") equal
to the product of (1) ninety percent (90%) times (2) $8,400,000.00 times (3) a
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fraction, the numerator of which is the number of calendar months comprising the
Revised Measurement Period and the denominator of which is 24; provided in no
event shall the total amount paid to Seller under both subsections (i) and (ii)
of this Section 2.1.2.C. exceed in the aggregate $4,400,000.00; and provided
further, in no event shall any amount be paid to Seller under Section 2.1.2.A.
or 2.1.2.B. above if either Joseph Walsh's or Sarah Walsh's employment is
terminated without cause or for Good Reason prior to January 1, 2000, and the
Business fails to produce EBITA during the Revised Measurement Period of at
least an amount equal to the First Threshold, and in no event shall any amount
be paid to Seller under Section 2.1.2.B. above if such EBITA exceeds the First
Threshold, but is less than the Second Threshold.
D. Prorations; Adjustments. The parties agree that if
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Buyer is combined or merged with one (1) or more affiliates of InfoCure, then
InfoCure shall endeavor to track and determine in a fair and equitable manner
that portion of such new entity's EBITA which should fairly and reasonably be
allocated as arising out of the historical customer base and products and
services of Buyer and Seller as previously conducted.
E. Set-Off. If earned, the Earnout Amount shall be due and
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payable January 31, 2000, subject to setoff for any indemnifiable damages
payable to the Seller Indemnified Parties as provided in Section 12.1.
F. Procedure. In order to insure the parties hereto that
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the Earnout Amount is computed by the Accountants in accordance with this
Agreement and with GAAP in a fair and disinterested manner, the parties agree as
follows:
Each party shall have the right to examine during normal business
hours such books and records of the other party as may be reasonably necessary
in order to verify any determination of the Accountants under this Agreement. If
any party disagrees with any such determination, then that party may submit, at
its sole expense, within thirty (30) days an alternate
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determination prepared by a certified public accountant, which the other party
may accept or reject in its reasonable discretion. If the other party rejects
the alternate determination, then the contesting party shall be entitled to
submit such dispute to a certified public accountant acceptable to both parties
who shall determine the accuracy and correctness of the Accountant's original
determination. Both parties shall each bear one-half (1/2) of the expenses of
such certified public accountant. Any additional amounts payable by a party as a
result of the other party's alternate determination shall be made within fifteen
(15) days following the acceptance of such alternate determination or the
resolution of such dispute, as the case may be.
2.1.3. Escrow Agreement. As security for the indemnities provided
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herein by Seller and Shareholders, Seller shall deposit in escrow with the
escrow agent named in the Escrow Agreement attached hereto as EXHIBIT A the sum
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of $500,000.00 in cash (which shall be deducted from the cash portion of the
Base Consideration Amount referenced in Section 2.1.1.A. above and one hundred
four thousand six hundred ninety-eight (104,698) shares of the stock.
2.1.4. Marketability of Stock; Registration Rights Agreements. In
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order to provide Seller with a market for the shares of Stock issued to it as
part of the Purchase Price, InfoCure agrees, for a period of thirty-six (36)
months, to file with the Securities and Exchange Commission (the "SEC") in a
timely manner the reports required under SEC rules necessary to permit Seller to
sell its shares of Stock (and to permit each of Seller's shareholders to sell
his or its shares of Stock) under SEC Securities Act Rule 144.
In addition, InfoCure agrees to enter into, with Seller, a
registration rights agreement in the form attached hereto as EXHIBIT B (the
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"Registration Rights Agreement"). The Registration Rights Agreement will grant
to Seller and to each of Shareholders who acquires Stock from Seller the right
to "piggyback" a registration of the Stock held by them on any primary or
secondary offering of the Stock by InfoCure registered with the SEC to the
extent permitted by SEC rules. This right will extend for a period of thirty-
six (36) months from the Closing Date and be subject to the "market-out"
provisions usually contained in such agreements. Because there may be other
persons to whom InfoCure has issued stock and with whom InfoCure has a
registration rights agreement, Seller's Stock will be registered and subject to
sale, pro rata, with all other holders of InfoCure's shares outstanding at the
time Seller must elect to avail itself of its registration rights.
2.2. Assumed Liabilities. Simultaneously with the sale, transfer,
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conveyance and assignment of the Purchased Assets, Buyer shall assume and become
liable for the payment and/or discharge of the following liabilities and
obligations in respect of the Business (the "Assumed Liabilities"):
2.2.1. Those relating to or arising out of the contracts, licenses
and permits assigned to Buyer and which are listed on SCHEDULE 2.2.1.
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2.2.2. Obligations to employees for accrued benefits arising on or
after January 1, 1998, which are listed on SCHEDULE 2.2.2.
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2.2.3. Those matters set forth on SCHEDULE 2.2.1.
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<PAGE>
2.3. Excluded Liabilities. Except for the Assumed Liabilities set forth in
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Section 2.2., Buyer shall not assume, and shall have no liability for, any
debts, liabilities, obligations, expenses, taxes, contracts or commitments of
the Seller or the Business of any kind, character or description, whether
accrued, absolute, contingent or otherwise, arising out of any act or omission
occurring or state of facts existing prior to or on the Closing Date
(collectively the "Excluded Liabilities" and individually an "Excluded
Liability"). The Seller shall remain fully liable for the Excluded Liabilities.
2.4. Allocation of the Purchase Price Among the Purchased Assets. The
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Purchase Price shall be allocated among each item or class of the Purchased
Assets in accordance with SCHEDULE 2.4 hereto. Seller and Buyer agree that they
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will prepare and file their federal and any state or local income tax returns
based on such allocation of the Purchase Price. Seller and Buyer agree that they
will prepare and file any notices or other filings required pursuant to Section
1060 of the Internal Revenue Code of 1986, as amended, and that any such notices
or filings will be prepared based on such allocation of the Purchase Price.
3. CLOSING.
3.1. Time and Place of the Closing. The closing of the purchase and sale of
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the Purchased Assets shall take place at Morris, Manning & Martin, L.L.P.,
Atlanta, Georgia, at 10:00 A.M., local time, on the second (2nd) business day
following the date on which all conditions to Closing contained in Sections 9.
and 10. have been satisfied or complied with or, if not all conditions have been
satisfied or complied with, all such conditions which have not been so satisfied
or complied with have been waived by the party entitled to the benefit of such
condition. Throughout this Agreement, such event is referred to as the "Closing"
and such date and time are referred to as the "Closing Date."
The parties agree to use their best efforts to cause all conditions to
Closing to occur on or before February 24, 1998 and, if that is done, then the
assets will be deemed to have been transferred as of the beginning of business
on January 1, 1998, but all documents shall be dated the date the Closing occurs
and all representations, warranties and covenants shall extend to that date.
3.2. Procedure at the Closing. At the Closing, the parties agree to take
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the following steps in the order listed below (provided, however, that upon
their completion all such steps shall be deemed to have occurred
simultaneously):
3.2.1. Seller and Shareholders shall deliver to Buyer a Certificate
in the form of EXHIBIT C hereto, certifying that each of the conditions to the
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obligation of Buyer to purchase the Purchased Assets from Seller which is set
forth in Sections 9.1. through 9.8. of this Agreement has been satisfied.
3.2.2. Buyer and InfoCure shall each deliver to Seller a
Certificate in the form of EXHIBIT D hereto, certifying that each of the
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conditions to the obligations of Seller to sell the Purchased Assets to Buyer
which is set forth in Section 10. in this Agreement has been satisfied.
<PAGE>
3.2.3. Seller shall deliver to Buyer such deeds, bills of sale,
endorsements assignments, lease assignments and estoppel agreements (duly
executed by the lessor under the leases) and other instruments, including a Bill
of Sale in the form of EXHIBIT E hereto and a Lease Assignment in the form of
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EXHIBIT F hereto, as shall be sufficient to vest in Buyer good and marketable
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title to the Purchased Assets, free and clear of all Encumbrances other than
Permitted Encumbrances.
3.2.4 Buyer shall pay to Seller the Purchase Price (less amounts
to be escrowed pursuant to Section 2.1.3.) by wire transfer in accordance with
the Wire Transfer Instructions attached hereto as EXHIBIT G.
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3.2.5 Buyer shall deliver to Seller instruments, in the form of
EXHIBIT H hereto, as shall be sufficient to effect the assumption by Buyer of
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the Assumed Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS.
In order to induce Buyer to enter into this Agreement and to consummate the
transactions contemplated hereunder, Seller and Shareholders, jointly and
severally, make the following representations and warranties as of the date
hereof and as of the Closing Date:
4.1. Organization, Power and Authority of Seller. Seller is a corporation
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duly organized and legally existing in good standing under the laws of New York
and has full corporate power and authority to own or lease its properties and
operate its business, to enter into this Agreement and to carry out the
transactions and agreements contemplated hereby.
The amount and character of Seller's business does not require Seller to
qualify to do business in any foreign jurisdiction other than Connecticut, where
it is duly qualified as of the Closing Date.
Except as set forth on SCHEDULE 4.1, all of Seller's issued and outstanding
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stock is owned by Shareholders, and no other person has any right, claim or
beneficial interest in such shares or other interest in Seller which would
adversely affect or interfere in any manner with this Agreement or the
consummation of the transactions contemplated hereby or affect or interfere with
the ownership and operation of the Purchased Assets and Business by Buyer after
the Closing.
<PAGE>
4.2. No Subsidiaries and Affiliates. Except as set forth on SCHEDULE 4.2,
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Seller has within the two (2) year period ending on the Closing Date never owned
or controlled, and does not own or control, directly or indirectly, any stock,
partnership interest, joint venture interest or other security, equity
participation or interest in any corporation, partnership, trust or other
business organization.
4.3. Financial Statements of Seller. Seller has delivered to Buyer the
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following financial statements of Seller, copies of which are attached as
SCHEDULE 4.3:
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4.3.1. Audited balance sheets at December 31 of each of the years
1996 and 1997 and unaudited internal balance sheets as of December 31, 1995;
4.3.2. Audited statements of income and retained earnings and
changes in stockholder's equity for the years ended December 31, 1996 and
December 31, 1997 and unaudited statement of income and retained earnings and
changes in stockholder's equity for the year ended December 31, 1995;
4.3.3. The audited balance sheet of Seller, dated December 31, 1997
(the "Closing Date Balance Sheet"), and the audited statement of income and
retained earnings and changes in stockholder's equity for the year ended
December 31, 1997 (the "Closing Date Income Statement") prepared by the
accounting firm of BDO Seidman (the "Accountants") in accordance with this
Agreement and with generally accepted accounting principles ("GAAP")
consistently applied are referred to herein collectively as the "Closing Date
Financial Statements."
The financial statements are prepared in accordance with
generally accepted accounting principles which have been consistently applied
through the respective periods and present fairly the financial position of
Seller at each of such balance sheet dates and the results of its operations for
each of the periods covered.
4.4. Liabilities of Seller. Except as set forth in SCHEDULE 4.4, Seller has
--------------------- ------------
no liabilities, debts, commitments or obligations (whether individually or in
the aggregate), of any nature, accrued, absolute, contingent or otherwise,
except:
A. The Assumed Liabilities; and
B. Normal liabilities incurred in the ordinary course of business,
in amounts and for terms consistent, individually and in the aggregate, with
Seller's past practices, since December 31, 1997.
4.5. Tax Matters.
-----------
4.5.1. Except as set forth on SCHEDULE 4.5, Seller has timely filed
------------
all tax returns and reports required to be filed by it, including, without
limitation, all federal, state and local tax returns, and has paid in full or
made adequate provision by the establishment of reserves for all taxes and other
charges which have become due or which are attributable to the conduct of
<PAGE>
Seller's business or ownership of the Purchased Assets prior to Closing. Seller
will continue to make adequate provision for all such taxes and other charges
for all periods through the Closing Date.
Except as set forth on SCHEDULE 4.5, Seller and Shareholders have no
------------
knowledge of any tax deficiency proposed or threatened against Seller. There
are no tax liens upon any property or assets of Seller.
Except as set forth on SCHEDULE 4.5, Seller has made all payments of
------------
estimated taxes when due in amounts sufficient to avoid the imposition of any
penalty.
4.5.2. Except as set forth on SCHEDULE 4.5, all taxes and other
------------
assessments and levies which Seller was required by law to withhold or to
collect have been duly withheld and collected, and have been paid over to the
proper governmental entity.
4.5.3. Except as set forth in SCHEDULE 4.5, the federal and state
------------
income tax returns and local returns, if any, of Seller have never been audited
by the income tax authorities, nor are any such audits in process. Except as set
forth in SCHEDULE 4.5, there are no outstanding agreements or waivers extending
------------
the statute of limitations applicable to any federal or state income tax returns
of Seller for any period.
4.5.4 Under its contracts with its customers for sales or licenses
of Seller Software, to the knowledge of Seller and Shareholders, such customers
are liable for any and all sales or use taxes imposed by virtue of or with
respect to such sales or licenses.
4.6. Real Estate of Seller.
---------------------
4.6.1. Seller does not own any real property.
4.6.2. The leases described in SCHEDULE 4.6 cover all of the real
------------
estate leased, used or occupied by Seller in connection with its Business
(collectively, the "Real Property"). Except as set forth in SCHEDULE 4.6, the
------------
leases described in SCHEDULE 4.6 are in full force and effect and Seller holds a
------------
valid and existing leasehold interest under each of such leases. Seller has
delivered to Buyer complete and accurate copies of such of the leases described
in SCHEDULE 4.6 and none of such leases has been modified, except to the extent
------------
that such modifications are disclosed by the SCHEDULE 4.6.
------------
Seller is not in default and no circumstances exist which would result
in a default, under any of such leases, and to the best knowledge of Seller and
Shareholders, no other party to such leases has the right to terminate,
accelerate performance under or otherwise modify (including upon the giving of
notice or the passage of time) any of such leases. To the best knowledge of
Seller and Shareholders, no lessor under any such lease is in default under any
of such leases.
<PAGE>
4.6.3. Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, granted a security deed, subleased or encumbered any interest
in any of the leaseholds or subleaseholds described in SCHEDULE 4.6 which has
------------
not been released or terminated.
4.7. Good Title to and Condition of Seller's Assets.
----------------------------------------------
4.7.1. Except as described in SCHEDULE 4.7.1, Seller has good and
--------------
marketable title to all of the Purchased Assets (other than its interest in its
leasehold premises and leased personal property set forth on SCHEDULE 2.2.1),
--------------
free and clear of all Encumbrances, except for (i) Encumbrances for current
taxes, assessments or government changes or levies on property not yet due or
delinquent or (ii) Encumbrances related to the Assumed Liabilities (Encumbrances
of the type described in clauses (i) and (ii) above are sometimes referred to as
"Permitted Encumbrances") which are set forth in SCHEDULE 4.7.
------------
4.7.2. The inventory and supplies of Seller consist of items of a
quality and quantity usable and saleable in the normal course of Seller's
business at values in the aggregate at least equal to the values at which such
items are carried on its books. The values of obsolete or slow-moving inventory
and inventory of below standard quality, if any, have been written down to the
lower of cost or realizable market values or have been written off.
The value at which such inventories are carried on the Closing Date
Balance Sheet reflects the normal inventory valuation policies of Seller,
stating inventories at the lower of cost or market on a first-in first-out
basis, all determined in accordance with generally accepted accounting
principles.
4.8. Receivables of Seller. Seller has previously delivered to Buyer a
---------------------
complete list of all receivables of Seller as of December 31, 1997, including
accounts receivable, notes receivable and insurance proceeds receivable. Except
for any reserve for bad debts shown on the Closing Date Balance Sheet, and
except as otherwise revealed in the audit performed by BDO Seidman, all of the
receivables listed thereon or set forth or reflected in the Closing Date Balance
Sheet, were, as of the dates as of which the information is given therein, and
as of the Closing Date will be valid accounts receivable which are or will be
current and collectible subject to the terms of payment as shall have been
agreed upon between Seller and each customer and as have been disclosed by
Seller to Buyer, and, except as set forth on SCHEDULE 4.8 are not subject to any
------------
settoff or adjustment.
4.9. Intellectual Property Rights of Seller.
--------------------------------------
4.9.1. SCHEDULE 4.9.1 (i) contains a complete list of each
--------------
registration of patents, copyrights, trademarks, service marks, trade names,
maskworks, other Intangibles and Software (collectively "Registrations") which
have been issued to Seller and are related to the Business; (ii) identifies each
pending Registration of Seller with respect to the Intangibles and Software
(defined in Section 4.9.2.M.) which are related to the Business; (iii)
identifies all of Seller's applications for or Registrations regarding the
Intangibles and Software which have been withdrawn, abandoned, or have lapsed or
been denied and (iv) specifies any advice to Seller with
11
<PAGE>
respect to the Registration or protectability of the Intangibles and Software
which are related to the Business, summarizing such advice.
SCHEDULE 4.9.1 also identifies (i) each license agreement or other
--------------
written or oral agreement or permission which are related to the Business
("License Agreement") and which Seller has granted to any third party with
respect to any of the Intangibles or Software; (ii) each item of the Intangibles
and Software used or possessed by Seller that any third party owns and the
license, sublicense, agreement or other permission in connection therewith which
are related to the Business (the "Third Party License Agreement"), together with
the term thereof, and all royalties or other amounts due thereon and (iii) each
source code escrow agreement entered into by Seller and relating to such
Intangibles and Software.
Seller has supplied Buyer with correct and complete copies of all
License Agreements and Third Party License Agreements, and except as specified
in SCHEDULE 4.9.1 all License Agreements and Third Party License Agreements may
--------------
be assigned to Buyer free of cost or expense without obtaining the consent or
approval of any other person.
Seller has complied with all License Agreements and Third Party
License Agreements, and to the best of Seller's and Shareholders' knowledge all
other parties to such agreements have complied with all provisions thereof; and
no default or event of default exists under any of the License Agreements or
Third Party License Agreements.
4.9.2.
A. SCHEDULE 4.9.2 is an accurate and complete list and
--------------
description (including a name, product description, the language in which it is
written and the type of hardware platform(s) on which it runs) of all of the
following:
(i) All Software owned by Seller or under development by
Seller related to the Business ("Owned Software").
(ii) All Software, other than the Owned Software, related
to the Business and that is either (x) offered or provided to customers of
Seller when the Owned Software is licensed to such customers or (y) used by
Seller to provide services to customers of Seller which services utilize the
Owned Software (collectively, "Customer Software"; the Owned Software and the
Customer Software are collectively referred to as the "Seller Software").
(iii) All Software, other than Seller Software, related to
the Business that is licensed or marketed to or from third parties or otherwise
used by Seller for any purpose whatsoever (collectively, "Other Software").
B. To the extent not set forth in SCHEDULE 4.9.1, SCHEDULE 4.9.2
-------------- --------------
separately sets forth an accurate and complete list and description of each
copyright, trademark, trademark application or registration, service mark,
service mark application or registration, patent application or registration,
and name and logo included in the Intangibles (as defined below in this Section)
owned, marketed or licensed by Seller related to the Business to or from
12
<PAGE>
third parties, used or under development by Seller related to the Business.
SCHEDULE 4.9.2 indicates Seller's ownership of such items or the source of
- --------------
Seller's right to use such items.
C. No Software other than the Owned Software, Customer Software
and Other Software is required to operate Seller's business as currently
conducted and as contemplated by existing Seller Software product and service
plans.
D. Except as explained on SCHEDULE 4.9.2 or otherwise disclosed
--------------
in this Agreement or any Schedule, Seller has good and marketable title to the
Owned Software and Intangibles attributable to the Owned Software, and has the
full right to use all of the Customer Software and Other Software, and
Intangibles attributable thereto, as used or required to operate Seller's
business as currently conducted, free and clear of any liens, claims, charges or
encumbrances which would affect the use of such Software in connection with the
operation of Seller's business as currently conducted.
E. No rights of any third party not previously obtained are
necessary to market, license, sell, modify, update, and/or create derivative
works for any Software as to which Seller takes any such action in its Business
as currently conducted.
F. With respect to Software which is licensed by Seller to third
parties or used in connection with the providing of services to third parties in
the Business:
(i) Seller maintains machine-readable master-reproducible
copies, reasonably complete technical documentation and/or user manuals for the
most current releases or versions thereof and for all earlier releases or
versions thereof currently being supported by Seller;
(ii) In each case, the machine-readable copy substantially
conforms to the corresponding source code listing;
(iii) Such Software is written in the language set forth on
SCHEDULE 4.9.2, for use on the hardware set forth on SCHEDULE 4.9.2 with
- -------------- --------------
standard operating systems;
(iv) Such Software can be maintained and modified by
reasonable competent Seller programmers familiar with such language, hardware
and operating systems; and
(v) In each case the Software operates in accordance with
the user manual thereof without operating defects of any material nature.
G. Seller has not received any notice or claim that any of the
Software or Intangibles listed on SCHEDULE 4.9.1 or SCHEDULE 4.9.2, or their
-------------- --------------
respective past or current uses by or through Seller has violated or infringed
upon, or is violating or infringing upon, any Software, patent, copyright, trade
secret or other Intangible of any person. None of the Software or Intangibles
listed on SCHEDULE 4.9.1 or SCHEDULE 4.9.2, or their respective past or current
-------------- --------------
uses
13
<PAGE>
by or through Seller has violated or infringed upon, or is violating or
infringing upon, any Software, patent, copyright, trade secret or other
Intangible of any person. Seller has adequately maintained all trade secrets and
copyrights with respect to the Software.
H. To the knowledge of Seller and Shareholders, no person is
violating or infringing upon, or has violated or infringed upon at any time, any
of Seller's proprietary rights to any of the Software or Intangibles listed on
either SCHEDULE 4.9.1 or SCHEDULE 4.9.2.
-------------- --------------
I. None of the Software or Intangibles listed on SCHEDULE 4.9.1
--------------
and SCHEDULE 4.9.2 are owned by or registered in the name of Shareholders, any
--------------
current or former owner, or Shareholders, other Shareholders, partner, director,
executive, officer, employee, salesman, agent, customer, contractor of
Shareholders or representative nor does any such person have any interest
therein or right thereto, including, but not limited to, the right to royalty
payments. Except as listed on SCHEDULE 4.9.2, Seller has granted no third party
--------------
any exclusive rights related to any Owned Software.
J. No litigation is pending and no claim has been made against
Seller or, to the knowledge of Seller or Shareholders, is threatened, which
contests the right of Seller to sell or license to any person or use any of the
Owned Software, Customer Software or Other Software. No former employer of any
employee or consultant of Seller has made a claim against Seller or, to the
knowledge of Seller and Shareholders, against any other person, that Seller or
such employee or consultant is misappropriating or violating the Intangibles of
such former employer.
K. Seller is not a party to or bound by and, upon the
consummation of the transactions contemplated by this Agreement, Buyer will not
be a party to or bound by (as a result of any acts or agreements of Seller), any
license or other agreement requiring the payment by Seller or its assigns of any
royalty or license payment, excluding such agreements relating to the Customer
Software to the extent such royalty or license payment is expressly set forth on
SCHEDULE 4.9.2.
- --------------
L. Except as set forth in SCHEDULE 4.9.2, the Owned Software,
--------------
Customer Software, and Other Software and the information used by Seller, and
the Intangibles thereunder, are fully transferable to Buyer in the manner
contemplated in this Agreement (in, object code, and if applicable, source code
forms, including all related documentation, to the extent that such
documentation has been created).
M. For purposes of this Agreement, "Software" includes any
computer program, operating system, applications system, firmware or software of
any nature, whether operational, under development or inactive, including all
object code, source code, technical manuals, user manuals and other
documentation thereof, whether in machine-readable form, programming language or
any other language or symbols and whether stored, encoded, recorded or written
on disk, tape, film, memory device, paper or other media of any nature.
"Intangible" means:
14
<PAGE>
(i) Patents, patent applications, patent disclosures, all
re-issues, divisions, continuations, renewals, extensions and continuation-in-
parts thereof and improvements thereto;
(ii) Trademarks, service marks, trade dress, logos, trade
names, and corporate names and registrations and applications for registration
thereof and all goodwill associated therewith;
(iii) Copyrights and registrations and applications for
registration thereof;
(iv) Maskworks and registrations and applications for
registration thereof;
(v) All right, title and interest in all computer
software, data and documentation (including, without limitation, modifications,
enhancements, revisions or versions of or to any of the foregoing and prior
releases of any of the foregoing applicable to any operating environment);
(vi) Trade secrets and confidential business information
(including ideas, formulas, compositions, inventions, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, flow charts, processes ideas, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information) related to the Owned Software,
Customer Software, Other Software or Seller's business or products;
(vii) Other proprietary rights;
(viii) All income, royalties, damages and payments due at
Closing or thereafter with respect to the Owned Software, Customer Software,
Other Software, or other Intangibles and all other rights thereunder including,
without limitation, damages and payments for past, present or future
infringements or misappropriations thereof, the right to sue and recover for
past, present or future infringements or misappropriations thereof;
(ix) All rights to use all of the foregoing forever; and
(x) All other rights in, to, and under the foregoing in
all countries.
4.9.3. Except as noted in SCHEDULE 4.9.3, the Owned Software and to
--------------
the best knowledge of Seller and Shareholders, the Customer Software and Other
Software, are "Millennium Compliant." For the purposes of this Agreement
"Millennium Compliant" means:
15
<PAGE>
A. The functions, calculations, and other computing processes of
the Owned Software, Other Software and Customer Software (collectively,
"Processes") perform in an accurate manner regardless of the date in time on
which the Processes are actually performed and regardless of the date input to
the Owned Software, Other Software, and Customer Software, whether before, on,
or after January 1, 2000, and whether or not the dates are affected by leap
years;
B. The Owned Software, Other Software, and Customer Software
accept, store, sort, extract, sequence, and otherwise manipulate date inputs and
date values, and return and display date values, in an accurate manner
regardless of the dates used, whether before, on, or after January 1, 2000;
C. The Owned Software, Other Software, and Customer Software
will function without interruptions caused by the date in time on which the
Processes are actually performed or by the date input to the Owned Software,
Other Software, and Customer Software, whether before, on, or after January 1,
2000;
D. The Owned Software, Other Software, and Customer Software
accept and respond to two (2) digit year and four (4) digit year date input in a
manner that resolves any ambiguities as to the century in a defined,
predetermined, and accurate manner; and
E. The Owned Software, Other Software, and Customer Software
display, print, and provide electronic output of date information in ways that
are unambiguous as to the determination of the century.
4.9.4. Without limiting any of the foregoing, to the best knowledge of
Seller and Shareholders, none of Seller's officers, directors, employees or
independent contractors have disclosed to (without proper obligation of
confidentiality) or otherwise used or utilized on behalf of any person other
than Seller, any trade secrets or proprietary information, including, without
limitation, the source codes for Seller Software.
SCHEDULE 4.9.4 identifies all individuals who have contributed to the
--------------
development of the Owned Software.
4.9.5. Except as set forth in SCHEDULE 4.9.5, Seller Software:
--------------
A. Performs in accordance with all published specifications
for such Programs;
B. Complies with all other published documentation,
descriptions and literature with respect to such Programs; and
C. Complies with all representations, warranties and other
requirements specified in all of Seller's License Agreements.
16
<PAGE>
4.9.6. Except as set forth on SCHEDULE 4.9.6, Shareholders do not have
--------------
an ownership right or other interest in any Software or Intangibles.
4.9.7. All Seller's contracts with customers in the Business
(collectively "Customer Contracts") for specific customers, whether completed or
outstanding, were or are evidenced by written agreements containing provisions
reasonably equivalent to those contained in SCHEDULE 4.9.7 hereto, with only
--------------
such changes as would not affect the rights of Buyer as assignee thereof and
would not impose on Buyer, as assignee thereof, any additional obligations.
No Customer Contract provided for the transfer to the customer therein
of any Intangibles relating to Seller Software as to which Seller thereafter
shall have no further rights. No current Customer Contract provides that the
customer therein shall be entitled to sublicense or otherwise transfer to a
third party any of the Intangibles relating to Seller Software unless such third
party agrees to be bound by the confidentiality provisions thereof and agrees to
pay Seller royalties and other amounts comparable to those under such Customer
Contract.
Except as set forth on SCHEDULE 4.9.7, each past or present customer
--------------
of Seller and each past or present customer of Seller to whom Seller disclosed
any of the Intangibles relating to Seller Software is bound by a confidentiality
provision which requires such past or present customer to take reasonable steps
to protect the rights of Seller in the Intangibles relating to Seller Software.
4.10. Adequacy of Seller's Assets. The Purchased Assets constitute, in the
---------------------------
aggregate, all of the property necessary for the conduct of Seller's Business in
the manner in which and to the extent to which it is currently being conducted.
4.11. Documents of and Information With Respect to Seller.
---------------------------------------------------
4.11.1. SCHEDULE 4.11 accurately and completely sets forth a true and
------------
complete list of all of the contracts of Seller which are material to the
Purchased Assets or Seller's Business (the "Material Contracts"), including,
without limitation, the following:
A. Each policy of insurance in force with respect to the
assets and properties of Seller and each of the performance or other surety
bonds maintained by Seller in the conduct of its business;
B. Each promissory note, loan, credit agreement, guarantee,
security agreement or similar document or instrument to which Seller is a party
or by which it is bound;
C. Each lease of personal property to which Seller is a party
or by which it is bound which involves rental payments which, if annualized,
would exceed $5,000.00;
D. Any other agreement, contract or commitment to which
Seller is a party or by which it is bound which involves a future commitment by
Seller in excess of $5,000.00 and which cannot be terminated without liability
on ninety (90) days or less notice; and
17
<PAGE>
E. The name of each bank in which Seller has an account or
safe-deposit box, the name in which the account or box is held and the names of
all persons authorized to draw thereon or to have access thereto.
The contracts listed on SCHEDULE 4.11 together with the License
-------------
Agreements and Third Party License Agreements listed on SCHEDULE 4.9.1 are
--------------
referred to herein as the "Material Contracts."
Seller has previously furnished Buyer with a true and complete copy of
each such written agreement, contract or commitment listed in SCHEDULE 4.11.
-------------
There has not been any default in any obligation to be performed by Seller which
is uncured and outstanding, nor to the best knowledge of Seller and
Shareholders, any other party, under any such instrument. Except as set forth
on SCHEDULE 4.9.1 and SCHEDULE 4.11, Seller is not a party to or bound by any
-------------- -------------
other Material Contracts.
All Material Contracts have been entered into in the ordinary course
of business, are on normal and reasonable commercial terms and are not unduly
favorable to the parties thereto other than Seller. To the best knowledge of
Seller and Shareholders, no Material Contract will likely result in a loss to
Seller upon completion of performance or which cannot readily be fulfilled or
performed by Seller in accordance with its terms without undue or unusual
expenditures of money or effort.
4.11.2 Seller carries insurance, which is customary in scope and
reasonable in character and amount, with reputable insurers, covering all of its
Business assets, properties and business, and it has provided all required
performance or other surety bonds.
All premiums and other payments which become due under the policies of
insurance listed in SCHEDULE 4.11.2 have been paid in full and, to the extent
---------------
relating to periods prior to the Closing Date, will be paid in full on or prior
to the Closing Date. All of such policies are now in full force and effect and
Seller has received no notice from any insurer, agent or broker of the
cancellation of, or any increase in premium with respect to, any of such
policies or bonds. No insurer has the right to make retrospective premium
adjustments with respect to any of such policies.
Except as set forth in SCHEDULE 4.11.2, Seller has received no
---------------
notification from any insurer, agent or broker denying or disputing any claim
made by Seller or denying or disputing any coverage for any such claim or the
amount of any claim. Except as set forth in SCHEDULE 4.11.2, Seller has no
---------------
claim against any of its insurers under any of such policies pending or
anticipated and there has been no occurrence of any kind which would give rise
to any such claim.
4.11.3. SCHEDULE 4.11.3 sets forth a complete list of all of Seller's
---------------
current Business customers (defined as having received products or services from
Seller within the last three (3) years) by category and the month of December,
1997, and year-to-date (through December 31, 1997) revenue of Seller by category
for certain periods set forth therein.
18
<PAGE>
4.12. Litigation Involving Seller and Shareholders. Except as set forth on
--------------------------------------------
SCHEDULE 4.12, there are no actions, suits, claims, governmental investigations
- -------------
or arbitration proceedings pending or, to the best knowledge of Seller and
Shareholders, threatened against or affecting Seller or any of its assets or
properties or Shareholders with respect to or relating to Seller and, to the
best of the knowledge of Seller and Shareholders, there is no basis for any of
the foregoing. There are no outstanding orders, decrees or stipulations issued
by any federal, state, local or foreign judicial or administrative authority in
any proceeding to which Seller is or was a party.
4.13. No Adverse Change. Since the date of the Closing Date Balance Sheet,
-----------------
all changes in the Business or Business properties of Seller, or in its
consolidated financial condition, including changes occurring in the ordinary
course of business, have not had or will not have an adverse effect on the
business, properties, financial condition, business prospects or operating
results of Seller. There is not, to the best knowledge of Seller and
Shareholders, any threatened or prospective event or condition of any character
whatsoever which could adversely affect the assets, properties, business,
financial condition or results of operations of the Business Seller.
4.14. Absence of Certain Acts or Events. Except as disclosed in SCHEDULE
--------------------------------- --------
4.14, since the date of the Closing Date Balance Sheet, with respect to the
- ----
Business, Seller has not:
A. Sold or transferred any of its assets other than in the ordinary
course of business;
B. Made or obligated itself to make capital expenditures aggregating
more than $10,000.00;
C. Incurred any material obligations or liabilities (including any
indebtedness) or entered into any material transaction, except for this
Agreement and the transactions contemplated hereby;
D. Suffered any theft, damage, destruction or casualty loss in excess
of $5,000.00; or
E. Except as disclosed on SCHEDULE 4.14, declared or paid any
-------------
dividends or made any other distributions with respect to its shares or redeemed
or purchased any of its shares.
4.15. Compliance With Laws by Seller.
------------------------------
4.15.1. To the best knowledge of Seller and Shareholders, Seller is in
compliance with all laws, regulations and orders applicable to Seller, its
assets, properties and business. Seller has not received notification of any
asserted past or present failure to comply with any laws, and to the best
knowledge of Seller and Shareholders, no proceeding with respect to any such
violation is contemplated.
19
<PAGE>
4.15.2. To the best knowledge of Seller and Shareholders, Seller has
not made any payment of funds prohibited by law in connection with the Business
of Seller, and no funds have been set aside to be used in connection with the
Business of Seller for any payment prohibited by law.
4.16. Employment and Labor Matters.
----------------------------
4.16.1. SCHEDULE 4.16 lists all employees and agents who on the date
-------------
hereof perform services on a regular basis in the Business operations of or for
Seller. No such employee or agent has terminated or given notice of termination
of his employment as of the date hereof, nor, to the knowledge of Shareholders
or Seller, plans to refuse employment with Buyer after the Closing Date.
4.16.2 To the best knowledge of Seller and Shareholders, Seller has
complied with all applicable federal, state and local laws, rules and
regulations and ordinances respecting health, safety and working conditions of
its employees, including, without limitation, the Occupational Safety and Health
Act of 1970, Pub. L. 91-596, as amended, and all similar applicable federal,
state and local laws, rules, regulations and ordinances, and has provided Buyer
with copies of all reports filed and notices provided under any such laws,
rules, regulations and ordinances during the last five (5) years.
To the best knowledge of Seller and Shareholders, Seller's operations
do not involve any unusual risk to the health or safety of its employees
(including, without limitation, any risk associated with hazardous airborne
contaminants or hazardous chemicals or waste materials).
4.16.3 Seller is not a party to any agreement, contract or
arrangement, written or oral, providing for any payments to any person resulting
from the consummation of the transactions contemplated hereby, except for
payments to holders of shares of Seller's capital stock. Seller's obligation to
make any such payments shall constitute Excluded Liabilities.
4.17. Employee Benefits Matters.
-------------------------
4.17.1. SCHEDULE 4.17.1 lists all plans, programs, and similar
---------------
agreements, commitments or arrangements, whether oral or written, maintained by
or on behalf of Seller or any other party that provide benefits or compensation
to, or for the benefit of, current or former employees of Seller ("Plan" or
"Plans"). Except as set forth on SCHEDULE 4.17.1 only current and former
---------------
employees of Seller participate in the Plans. Copies of all Plans and, to the
extent applicable, all related trust agreements, actuarial reports, and
valuations for the most recent three (3) years, all summary plan descriptions,
prospectuses, Annual Report Form 5500s or similar forms (and attachments
thereto) for the most recent three (3) years, all Internal Revenue Service
determination letters, and any related documents requested by Buyer, including
all amendments, modifications and supplements thereto, have been delivered to
Buyer, and all of the same are or will be true, correct and complete.
4.17.2. With respect to each Plan to the extent applicable:
20
<PAGE>
A. No litigation or administrative or other proceeding is
pending or threatened involving such Plan;
B. To the best knowledge of Seller and Shareholders, such Plan
has been administered and operated in substantial compliance with, and has been
amended to comply with all applicable laws, rules, and regulations, including,
without limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Internal Revenue Code, and the regulations issued under
ERISA and the Internal Revenue Code;
C. Seller and its predecessors, if any, have made and as of the
Closing Date will have made or accrued, all payments and contributions required,
or reasonably expected to be required, to be made under the provisions of such
Plan or required to be made under applicable laws, rules and regulations, with
respect to any period prior to the Closing Date, such amounts to be determined
using the ongoing actuarial and funding assumptions of the Plan;
D. Such Plan is fully funded in an amount sufficient to pay all
liabilities accrued (including liabilities and obligations for health care, life
insurance and other benefits after termination of employment) and claims
incurred to the date hereof, or the Closing Date Balance Sheet contains adequate
reserves or paid-up insurance has been provided, therefor;
E. On the Closing Date such Plan will be fully funded in an
amount sufficient to pay all liabilities accrued (including liabilities and
obligations for health care, life insurance and other benefits after termination
of employment) and claims incurred to the Closing Date, or adequate reserves
will be set up on Seller's books and records, or paid-up insurance will be
provided, therefor; and
F. Such Plan has been administrated and operated only in the
ordinary and usual course and in accordance with its terms, and there has not
been in the four (4) years prior hereto any increase in the liabilities of such
Plan beyond increases typically experienced by employers similar to Seller.
4.18. Due Authorization; Binding Obligation. The execution, delivery and
-------------------------------------
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by necessary corporate action of
Seller. This Agreement has been duly executed and delivered by Seller and
Shareholders and is a valid and binding obligation of each of them, enforceable
in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will:
A. Conflict with or violate any provision of the articles of
incorporation or bylaws of Seller, or of any law, ordinance or regulation or any
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against Seller or
Shareholders; or
21
<PAGE>
B. Result in any breach of or default under any mortgage, contract,
agreement, indenture, will, trust or other instrument which is either binding
upon or enforceable against Seller or Shareholders or the assets and properties
of Seller or Shareholders.
Without limiting the generality of the foregoing, neither Seller or
Shareholders are a party to any continuing agreement or understanding, made by
him or it or on his or its behalf, which limits in any way the ability of:
A. Seller and Shareholders to enter into this Agreement and perform
their respective obligations hereunder;
B. Seller to sell the Purchased Assets to Buyer and Buyer to purchase
the Purchased Assets, all on the terms and subject to the conditions set forth
herein; or
C. The parties hereto to consummate the transactions contemplated
hereby, nor has Seller or Shareholders breached any such agreement, or any prior
agreement, which breach would entitle the other party thereto to any equitable
or monetary remedies.
4.19. Consents and Approvals. Except as set forth in SCHEDULE 4.19, no
---------------------- -------------
consent, authorization or approval of, or exemption by, or filing with, any
governmental, public or self-regulatory body or authority (a "Governmental
Agency") or any other third party, including, without limitation, the licensors
of any Software, is required in connection with the execution, delivery and
performance by Seller or Shareholders of this Agreement or the consummation of
the transactions contemplated hereby or thereby or for the continuation by Buyer
of the business of Seller after the Closing in the same manner as presently
conducted or proposed to be conducted.
4.20. Related Party Transactions. Except as set forth in SCHEDULE 4.20,
-------------------------- -------------
Seller is not directly or indirectly a party to any contract, agreement, or
lease with, or any other commitment to:
A. Shareholders or any other party owning, or formerly owning,
beneficially or of record, directly or indirectly, any of the shares of capital
stock of Seller;
B. Any person related by blood, adoption or marriage to any such
party;
C. Any director or officer of Seller;
D. Any corporation or other entity in which any of the foregoing
parties has, directly or indirectly, at least a five percent (5%) beneficial
interest in the share capital or other type of equity interest in such entity;
or
E. Any partnership in which any such party is a general partner (any
or all of the foregoing being herein referred to as "Related Parties").
Without limiting the generality of the foregoing, except as disclosed in
SCHEDULE 4.20,
- -------------
22
<PAGE>
A. No Related Party, directly or indirectly, owns or controls any
assets or properties which are or have been used in the business of Seller; and
B. No Related Party, directly or indirectly, engages in or has any
significant interest in or connection with any business (x) which is or which
within the last three (3) years has been a competitor, customer or supplier of
Seller or has done business with Seller or (y) which as of the date hereof sells
or distributes products or services which are similar or related to Seller's
products or services.
4.21. Accuracy of Information Furnished by Seller and Shareholders. To the
------------------------------------------------------------
best knowledge of Seller and Shareholders, no representation, statement or
information in writing made or furnished by Seller or Shareholders or by any of
them to Buyer, including, without limitation, those contained in this Agreement
and the various schedules attached hereto and the other information and
statements previously furnished by Seller to Buyer in writing, contains or shall
contain any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein in light of
circumstances in which they were made, not misleading.
4.22. Customer Prepayments. Set forth on SCHEDULE 4.22 is a list of all
-------------------- -------------
existing contracts pursuant to which Seller is obligated to perform services
relating to its Business software products, including the amount of prepayments
received by Seller as of December 31, 1997, under such contracts, a description
of the services yet to be performed for which payment has been received, and the
number of employee hours Seller reasonably estimates must be expended by its
employees to complete such services. Such contracts are based on a good faith
estimate basis rather than a fixed bid basis. Also set forth on SCHEDULE 4.22 is
-------------
a list of all Business products and services prepaid and not yet delivered or
provided.
4.23. Books and Records. The books of account and other financial records
-----------------
to be transferred to Buyer pursuant hereto are complete and correct, are
maintained in accordance with all applicable laws, and are accurately reflected
in the Financial Statements. Seller has provided to Buyer and its
representatives true and complete copies of or access to all minute books, stock
register and other corporate records of Seller existing on the date hereof.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND INFOCURE.
In order to induce Seller to enter into this Agreement and consummate the
transactions contemplated hereunder, Buyer and InfoCure, jointly and severally,
makes the following representations and warranties:
5.1. Organization, Power and Authority of Buyer. Buyer is a corporation
------------------------------------------
duly organized and validly existing under the laws of the State of Georgia, with
full corporate power and authority to enter into this Agreement and to carry out
the transactions and agreements contemplated hereby.
5.2 Due Authorization; Binding Obligation. The execution, delivery and
-------------------------------------
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly
23
<PAGE>
authorized by all necessary corporate actions of Buyer. This Agreement has been
duly executed and delivered by Buyer and is a valid and binding obligation of
Buyer, enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will:
A. Conflict with or violate any provision of the articles of
incorporation or bylaws of Buyer or of any decree or order of any court or
administration or other governmental body which is either applicable to, binding
upon or enforceable against Buyer; or
B. Result in any breach of or default under any mortgage, contract,
agreement, indenture, will, trust or other instrument which is either binding
upon or enforceable against Buyer.
5.3. Accuracy of Information Furnished by Buyer. No representation,
------------------------------------------
statement or information made or furnished by Buyer to Seller in writing
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein, in light of the circumstances
in which they were made, not misleading.
5.4. Accuracy of Information Furnished by Buyer and InfoCure. No
-------------------------------------------------------
representation, statement or information in writing made or furnished by Buyer
or InfoCure or by both of them to Seller and Shareholders, including, without
limitation, those contained in this Agreement and the various schedules attached
hereto and the other information and statements previously furnished by Buyer to
Seller in writing, contains or shall contain any untrue statement of a material
fact or omits or shall omit any material fact necessary to make the information
contained therein in light of circumstances in which they were made, not
misleading.
5.5. No Adverse Change. Since December 31, 1997, all changes in the
-----------------
business or properties of Buyer or InfoCure, or in their consolidated financial
condition, including changes occurring in the ordinary course of business, have
not had or will not have an adverse effect on the business, properties,
financial condition, business prospects or operating results of Buyer or
InfoCure. There is not, to the best knowledge of Buyer and InfoCure, any
threatened or prospective event or condition of any character whatsoever which
could adversely affect the assets, properties, business, financial condition or
results of operations of Buyer or InfoCure.
6. ADDITIONAL COVENANTS OF SELLER AND SHAREHOLDERS.
24
<PAGE>
6.1. Best Efforts. Seller and Shareholders will each use its respective
------------
best efforts to cause to be satisfied as soon as practicable and prior to the
Closing Date all of the conditions set forth in Section 9. to the obligation of
Buyer to purchase the Purchased Assets.
6.2. Conduct of Business Pending the Closing. From and after the
---------------------------------------
execution and delivery of this Agreement and until the Closing Date, except as
otherwise provided by the prior written consent of Buyer:
6.2.1. Seller will: (i) conduct its business and operations in the
manner in which the same have heretofore been conducted; (ii) preserve its
business organization intact; (iii) keep available the services of its officers,
employees, agents and distributors and (iv) preserve its relationships with
customers, suppliers and others having dealings with Seller;
6.2.2. Seller will maintain all of its properties in customary
repair, order and condition, reasonable wear and use and damage by unavoidable
casualty excepted, and to maintain insurance of such types and in such amounts
upon all of its properties and with respect to the conduct of its business as
are in effect on the date of this Agreement;
6.2.3. Seller will: (i) not sell or transfer any of its assets other
than in the ordinary course of business consistent with past practices or (ii)
not incur any material obligations or liabilities or enter into any material
transaction, contract, arrangement or agreement without the prior written
consent of Buyer; and
6.2.4. Seller will not increase the compensation payable or to become
payable to any director, officer, employee or agent of Seller, make any profit-
share payment or other arrangement (whether current or deferred) to or with any
director, officer, employee or agent, hire any employee, officer or director,
consultant, or agent without the prior written approval of Buyer.
6.3. Access to Seller's Plants, Properties and Records. From and after
-------------------------------------------------
the execution and delivery of this Agreement, Seller will afford to the
representatives of Buyer access, during normal business hours and upon
reasonable notice, to Seller's premises sufficient to enable Buyer to inspect
the assets and properties of Seller, and Seller will furnish to such
representatives during such period all such information relating to the
foregoing investigation as Buyer may reasonably request; provided, however, that
any furnishing of such information to Buyer and any investigation by Buyer shall
not affect the right of Buyer to rely on the representations and warranties made
by Shareholders or Seller in or pursuant to this Agreement, and, provided
further that Buyer will hold in confidence all documents and information
concerning Seller so furnished.
6.4. No Other Discussions. Commencing on the date hereof and extending
--------------------
through and including the earlier of the Closing Date or termination of this
Agreement pursuant to Section 13.3., Seller will, and Shareholders will use
Shareholders' best efforts to cause Seller to, discontinue negotiations with
others and will not continue or enter into discussions or negotiate with or
entertain or accept the unsolicited offer of any other party concerning the
potential sale of all or any part of the assets or shares of Seller or the
merger, consolidation or other business
25
<PAGE>
combination of Seller with any person other than Buyer. Seller will, and
Shareholders will use Shareholders' best efforts to cause Seller to, notify
Buyer of any offers or inquiries with respect thereto and provide copies of any
written offers or proposals.
6.5. Employee Benefit Plans and Termination of Employment of Certain of
------------------------------------------------------------------
Seller's Employees. Seller, Buyer, and Shareholders hereby covenant
------------------
and agree as follows with regard to all ERISA Plans (as defined in Section
4.17.3. hereof) maintained by Seller and with respect to the termination of
employment of Seller employees by Buyer following the Closing:
A. Benefit Plans. Shareholders and Seller covenant and agree to hold
-------------
Buyer harmless from and indemnify Buyer against all liabilities for any benefits
payable under any Benefit Plan as of the Closing Date.
B. Health Insurance. Seller and Shareholders hereby covenant and
----------------
agree that Seller will promptly pay (or properly accrue on the Closing Date
Balance Sheet) all obligations that are payable under any health insurance plan
maintained by Seller or Seller as of the Closing Date.
C. Disability Insurance. Seller will promptly pay (or properly
--------------------
accrue on the Closing Date Balance Sheet) all obligations that are payable under
any disability plan maintained by Seller as of the Closing Date with respect to
any Seller employee.
D. Bonuses. Seller and Shareholders hereby covenant and agree that
-------
Seller will pay all bonuses earned by employees or former employees of Seller as
of the Closing Date. Buyer shall have no liability for bonuses earned or
expected as of the Closing Date.
E. COBRA and HIPAA. Seller hereby covenants and agrees that it will
---------------
promptly deliver to all employees of Seller, and such employees' dependents,
appropriate notices and documentation under applicable provisions of the
Consolidated Budget Reconciliation Act of 1985 and the Health Insurance
Portability and Accountability Act of 1996.
F. Prior Service Credit for 401(k), Employee Stock Option and
----------------------------------------------------------
Employee Stock Purchase Plans. In determining whether an employee of Buyer has
- -----------------------------
met the waiting period requirement for participation in Buyer's 401(k), Employee
Stock Option and Employee Stock Purchase Plans, Buyer hereby covenants and
agrees to provide such employee with credit for time employed by Seller.
G. Termination of Employment of Certain Employees. The parties
----------------------------------------------
acknowledge that upon the Closing Date, Buyer intends to terminate the
employment of certain of Seller's employees, whose employment Seller and
Shareholders have represented and warranted to be "at will."
7. OTHER COVENANTS OF SHAREHOLDERS.
26
<PAGE>
In order to induce Buyer to enter into this Agreement and to consummate the
transactions contemplated hereunder, Shareholders agrees with Buyer as follows:
7.1. No Other Discussions. Commencing on the date hereof and extending
--------------------
through and including the earlier of the Closing Date or termination of this
Agreement pursuant to Section 13.3., Shareholders will discontinue negotiations
with others and will not enter into discussions or negotiate with or entertain
or accept the unsolicited offer of any other party concerning the potential sale
of all or any part of the assets or shares of the Business of Seller or the
merger or consolidation or other business combination of Seller with respect to
its Business with any person other than Buyer. Shareholders will notify Buyer of
any offers or inquiries with respect thereto and provide copies of any written
offers or proposals.
7.2. Best Efforts; Cooperation With Accountants. Shareholders will use
------------------------------------------
their respective best efforts to cause to be satisfied as soon as practicable
and prior to the Closing Date all of the conditions set forth in Section 9. to
the obligation of Buyer to purchase the Purchased Assets and will cooperate with
the Accountants in the preparation of the Closing Date Balance Sheet.
27
<PAGE>
8. ADDITIONAL COVENANTS OF BUYER AND INFOCURE.
8.1. Best Efforts. Each of Buyer and InfoCure will use its best efforts
------------
to cause to be satisfied as soon as practicable and prior to the Closing Date
all of the conditions set forth in Section 10. to the obligation of Seller to
sell the Purchased Assets pursuant to this Agreement.
8.2. Restrictive Covenant Regarding Oral Surgery Business. Except as
----------------------------------------------------
otherwise consented to between the parties hereto (which consent shall not be
unreasonably withheld), InfoCure hereby agrees, on its own behalf and on behalf
of any subsidiary, affiliate or related entity other than Buyer (a "Related
----------------
Entity"), that during the Measurement Period, it shall not, directly or
indirectly, market, sell, service and/or support computer hardware and software
to/for healthcare professionals specializing in oral surgery ("Oral Surgeon");
provided, however, that nothing herein shall be construed as preventing the
- -------- -------
following:
A. The continued performance by InfoCure and Rovak, Inc. ("Rovak") of
the orthodontic practice management system and forms business.
B. The performance of any installations or services identified on
SCHEDULE 8.2.
- ------------
C. Continuing to service and support platforms and maintain code (for
the purpose of complying with regulatory or industry requirements) installed by
InfoCure or a Related Entity, provided said Oral Surgeons have been first
introduced to Buyer.
9. CONDITIONS TO THE OBLIGATION OF BUYER AND INFOCURE.
The obligation of Buyer to purchase the Purchased Assets shall be subject
to the fulfillment at or prior to the Closing Date of each of the following
conditions, each of which is for the benefit of Buyer and InfoCure and any one
(1) or more of which may be waived by either Buyer or InfoCure:
9.1. Accuracy of Representations and Warranties and Compliance With
--------------------------------------------------------------
Obligations.
-----------
The representations and warranties of Shareholders and Seller contained in
this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time.
Shareholders and Seller shall have performed and complied with all of their
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date.
Shareholders and Seller shall have delivered to Buyer a certificate, dated
as of the Closing Date and signed by each Shareholder and the President of
Seller, certifying that such representations and warranties are thus true and
correct and that all such obligations have been thus performed and complied
with.
28
<PAGE>
9.2. Opinion of Counsel. Buyer shall have received an opinion dated the
------------------
Closing Date from O'Connell, Flaherty & Attmore, L.L.C., counsel for Seller and
Shareholders, substantially in form and substance as set forth on EXHIBIT I
---------
attached hereto.
9.3. Receipt of Necessary Consents. All necessary consents or approvals
-----------------------------
of third parties to any of the transactions contemplated hereby, the absence of
which would affect Buyer's rights hereunder, shall have been obtained and shown
by written evidence reasonably satisfactory to Buyer.
9.4. No Adverse Litigation. There shall not be pending or threatened any
---------------------
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Purchased Assets
to Buyer or any other transaction contemplated hereby, or which might affect the
right of Buyer to own the Purchased Assets or to operate the business formerly
operated by Seller and which, in the judgment of Buyer, makes it inadvisable to
proceed with the purchase of the Purchased Assets.
9.5. Restrictive Covenant Agreements. Each of Seller and Shareholders
-------------------------------
shall have each entered into a restrictive covenant agreement (the "Restrictive
Covenant Agreement") with Buyer, substantially in the form of EXHIBIT J hereto.
---------
9.6. Employment Agreements. J. Walsh and S. Walsh shall have each
---------------------
entered into an employment agreement with Buyer, substantially in the forms of
EXHIBIT K and EXHIBIT L hereto, respectively.
- --------- ---------
9.7. Directors and Shareholders Resolutions; Good Standing. Seller shall
-----------------------------------------------------
have delivered to Buyer a certificate evidencing the good standing of Seller as
of a recent practicable date, and a certified copy of the resolutions of the
Directors and Shareholders of Seller approving the execution, delivery and
performance by Seller of this Agreement and all the other transactions to be
taken by Seller contemplated herein.
9.8. Employee Covenants Agreements. Each employee, agent, officer and
-----------------------------
director of Seller listed on SCHEDULE 9.8 shall have executed and delivered to
------------
Buyer a Covenants Agreement in favor of Buyer in the form of EXHIBIT M.
---------
9.9. Assignment of Intellectual Property. At or prior to Closing,
-----------------------------------
Shareholders shall assign to Buyer any rights they may have in or to the
Software and Intangibles.
9.10. Buyer's Lender's Approval. On or before February 24, 1998, Buyer
-------------------------
shall have obtained the commitment of Finova Capital Corporation ("Finova") to
make a term loan or loans to Buyer sufficient to fund fully all of Buyer's
obligations under this Agreement to pay the cash portion of the Purchase Price
(the "Finova Commitment"). The term of the loan shall be sufficient so that such
loan can be amortized over a period of no less than five (5) years.
9.11. Lender's Loan. On or before the Closing, Finova shall have made to
-------------
Buyer a term loan equal to or in excess of the cash portion of the purchase
price, on the same terms and conditions as set out in the Finova Commitment.
29
<PAGE>
9.12. Subscription Agreement. Seller and Shareholders shall have each
----------------------
entered into a Subscription Agreement with InfoCure in the form of EXHIBIT N.
---------
9.13. Source Code.
-----------
Seller shall deliver its source code to Buyer within seven (7) days of the
Closing Date.
10. CONDITIONS TO OBLIGATION OF SELLER.
The obligation of Seller to sell the Purchased Assets shall be subject to
the fulfillment at or prior to the Closing Date of each of the following
conditions, each of which is for the benefit of Seller and the Shareholders and
any one (1) or more of which may be waived by them:
10.1. Accuracy of Representations and Warranties and Compliance With
--------------------------------------------------------------
Obligations.
-----------
The representations and warranties of Buyer and InfoCure contained in this
Agreement shall have been true and correct at and as of the date hereof, and
they shall be true and correct at and as of the Closing Date with the same force
and effect as though made at and as of that time.
Buyer and InfoCure shall have performed and complied with all of their
respective obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date.
Each of Buyer and InfoCure shall have delivered to Seller a certificate,
dated as of the Closing Date and signed by each of their respective Presidents,
certifying that such representations and warranties are thus true and correct
and that all such obligations have been thus performed and complied with.
10.2. Opinion of Counsel. Seller shall have received an opinion, dated
------------------
the Closing Date, from Morris, Manning & Martin L.L.P., counsel to Buyer and
InfoCure, substantially in form and substance as set forth in EXHIBIT O attached
---------
hereto.
10.3. No Adverse Litigation. There shall not be pending or threatened any
---------------------
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Purchased Assets
by Seller or any other transaction contemplated hereby or which, in the judgment
of Seller, makes it inadvisable to proceed with the sale of the Purchased
Assets.
11. ADDITIONAL AGREEMENTS.
30
<PAGE>
11.1. Execution of Further Documents. From and after the Closing, upon
------------------------------
the reasonable request of Buyer, Seller and Shareholders shall, and Shareholders
shall cause Seller to, execute, acknowledge and deliver all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may be required to convey and transfer to and vest in Buyer and protect its
rights, title and interest in the Purchased Assets and as may be appropriate
otherwise to carry out the transactions contemplated by this Agreement.
11.2. Use of Name. After the Closing, Seller shall not conduct any
-----------
business under the name "Micro-Software Designs", "Micro-Designs" or "Micro-
Designs Software Corporation" or under any name deceptively or confusingly
similar thereto, and shall only use such name as necessary to wind down Seller's
Business.
11.3. Nonassignable Contracts. To the extent that the assignment
-----------------------
hereunder by Seller to Buyer of any contract, commitment, license, lease or
other agreement of Seller (the "Contracts") is prohibited or is not permitted
without the consent of any other party to the Contract, this Agreement shall not
be deemed to constitute an assignment of any such Contract if such consent is
not given or if such assignment otherwise would constitute a breach of, or cause
a loss of contractual benefits under, any such Contract, and Buyer shall assume
no obligations or liabilities thereunder.
Prior to the Closing, Seller shall advise Buyer promptly in writing with
respect to any Contract as to which it knows it will not receive any required
consent. Without in any way limiting Seller's obligation pursuant to Section
9.3. to obtain all consents and waivers necessary for the sale, transfer,
assignment and delivery of the Contracts and the Purchased Assets to Buyer
hereunder, if any such consent is not obtained or if such assignment is not
permitted irrespective of consent and the Closing hereunder is consummated,
Seller shall, if requested by Buyer, cooperate with Buyer in any reasonable
arrangement designed to provide Buyer with the rights and benefits (subject to
the obligations) under the Contract, including, if reasonably requested by
Buyer, by enforcing for the benefit of Buyer any and all rights of Seller
against any other person arising out of breach or cancellation by such other
person, acting as an agent on behalf of Buyer, subcontracting to Buyer the right
to perform under the Contract on the same economic terms as applied to Seller
prior to the Closing and acting as Buyer shall otherwise reasonably require, in
each case at Buyer's expense.
Acceptance of any such arrangement shall constitute a waiver by Buyer of
any claim or alleged breach under this Agreement with respect to such Contracts.
31
<PAGE>
11.4. Enforcement of Confidentiality Agreements. From and after the
-----------------------------------------
Closing Date, Seller and Shareholders shall enforce, on behalf of Buyer, any
confidentiality agreements which cannot be assigned to Buyer pursuant to this
Agreement.
11.5. Announcements. Seller and Buyer shall work together after the
-------------
Closing to coordinate the preparation and mailing by each of any announcements
each of them desires to make to customers relating to this transaction.
12. INDEMNIFICATION.
12.1. Agreement by Seller and Shareholders to Indemnify. Seller and
-------------------------------------------------
Shareholders, jointly and severally (Seller and Shareholders, the "Seller
Indemnifying Parties"), agree that they will indemnify and hold harmless Buyer
and InfoCure and each of their respective officers, directors, shareholders,
successors and assigns (collectively, the "Seller Indemnified Parties") in
respect of the aggregate of all indemnifiable damages caused to the Business or
any of the Seller Indemnified Parties.
For this purpose, "indemnifiable damages" caused to the Business or any of
the Seller Indemnified Parties means the aggregate of all expenses, losses,
penalties, costs, deficiencies, liabilities and damages (including related
counsel fees and expenses) incurred or suffered by the Business or such Seller
Indemnified Party resulting from:
A. Any inaccurate representation or warranty made by Seller or
Shareholders in or pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Seller or by Shareholders in this Agreement;
C. The failure of any of Seller and Shareholders to pay, discharge or
perform any liability or obligation of Seller and Shareholders which is not an
Assumed Liability; or
D. Any actions, claims, proceedings, demands, grievances or disputes
brought or initiated by third parties against the Business or any of the Seller
Indemnified Parties in connection with an Excluded Liability; or
E. With respect to any agreements, oral or written, with customers
that are not in the form of the license agreement identified as "A" in SCHEDULE
--------
4.9.7 and with respect to any distribution of the Seller Software not subject to
- -----
any written agreement (such contractual and non-contractual relationships are
collectively referred to as the "Subject Relationships"), any losses associated
with the loss or claim of loss of trade secret or confidential information
rights as a result of the failure to obtain trade secret and confidential
information protection contained in the license agreement identified as "A" in
SCHEDULE 4.9.7 (the "A Agreement"); or
- --------------
F. With respect to the Subject Relationships, any losses or claims of
loss occurring as a result of a customer or such customer's employees or agents
exceeding the scope of the licenses for the Seller Software expressly set forth
in the A Agreement; or
32
<PAGE>
G. With respect to the Subject Relationships, any losses or damages
suffered by the Seller Indemnified Parties that would have been waived,
disclaimed, or limited had the Subject Relationship been governed by the terms
of the A Agreement, such losses or damages including, without limitation, claims
related to implied warranties, claims of lost profits or consequential damages,
claims of damages for intellectual property infringement in excess of the rights
available to a customer under the A Agreement, or claims or damages in excess of
any cap on liability set forth in the A Agreement.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable damages", the Seller Indemnified Parties shall
have the right to be put in the same financial position as they would have been
had each of the representations and warranties of Seller and Shareholders been
true and correct and had each of the covenants of Seller and Shareholders been
performed in full.
The amount of any indemnifiable damages otherwise payable to a Seller
Indemnified Party hereunder shall be reduced if the indemnifiable damages
incurred by such Seller Indemnified Party will provide such Seller Indemnified
Party with income tax deductions or credits. The amount of the reduction shall
be the amount of the actual cash tax savings realized by such Seller Indemnified
Party as a result of such deductions or credits, discounted to its present value
as of the date of the payment of the indemnifiable damages from the date such
indemnifiable damages were incurred by such Seller Indemnified Party at the rate
of interest charged on such date by the Internal Revenue Service on underpayment
of taxes.
The foregoing obligation of Seller Indemnifying Parties to indemnify the
Seller Indemnified Parties shall be subject to each of the following principles
or qualifications:
12.1.1. Each of the representations and warranties made by Seller and
Shareholders in this Agreement or pursuant hereto, shall survive for a period of
two (2) years after the Closing Date, notwithstanding any investigation at any
time made by or on behalf of Buyer or InfoCure, and thereafter all such
representations and warranties shall be extinguished; provided, however, that
the representations and warranties made by Seller and Shareholders to the extent
they relate to Seller's title to the Assets shall survive forever and that the
representations and warranties made by Seller and Shareholders in Section 4.5.
hereof ("Tax Matters") shall in each case survive until the first (1st)
anniversary of the later of:
A. The date on which applicable period of limitation on
assessment or refund of tax has expired; or
B. The date on which the applicable taxable year (or portion
thereof) has been closed.
No claim for the recovery of indemnifiable damages may be asserted by a
Seller Indemnified Party against Seller Indemnifying Parties or their successors
in interest after such representations and warranties shall be thus
extinguished; provided, however, that claims first asserted in writing within
the applicable period shall not thereafter be barred unless, if unresolved,
they are not prosecuted by the commencement of litigation within ninety (90)
days
33
<PAGE>
after the date when such representations and warranties were extinguished.
In addition, the Seller Indemnifying Parties shall have no liability with
respect to indemnifiable damages until the total of all such damages exceeds
$40,000.00 in which event the Seller Indemnifying Parties shall be obligated to
indemnify the Seller Indemnified Parties as provided herein for all such
damages. Notwithstanding the foregoing, in no event shall the aggregate
liability of the Seller Indemnifying Parties under this Section 12. exceed the
Purchase Price.
12.2. Agreements by Buyer and InfoCure to Indemnify. Buyer and InfoCure
---------------------------------------------
(the "Buyer Indemnifying Parties"), jointly and severally, agree to indemnify
and hold Seller and Shareholders (the "Seller Indemnified Parties") harmless in
respect of the aggregate of all indemnifiable damages of any of Seller
Indemnified Parties.
For this purpose, "indemnifiable damages" of any of Seller Indemnified
Parties means the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including related counsel fees and expenses) incurred
or suffered by any of Seller Indemnified Parties resulting from:
A. Any inaccurate representation or warranty made by Buyer or
InfoCure or pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Buyer or InfoCure in this Agreement; or
C. Buyer's non-assumption of the AT&T Lease and Envoy/NEIC Lease
listed on SCHEDULE 1.1.4.
--------------
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable damages", each of Seller Indemnified Parties shall
have the right to be put in the same financial position as they would have been
had each of the representations and warranties of Buyer Indemnifying Parties
been true and correct and had each of the covenants of Buyer Indemnifying
Parties been performed in full.
The amount of any indemnifiable damages otherwise payable to any Seller
Indemnified Party hereunder shall be reduced if the indemnifiable damages
incurred by Seller Indemnified Party will provide such Party with income tax
deductions or credits. The amount of the reduction shall be the amount of the
actual cash tax savings realized by Seller Indemnified Party as a result of such
deductions or credits discounted to its present value as of the date of the
payment of the indemnifiable damages from the date such indemnifiable damages
were incurred by Seller Indemnified Party at the rate of interest charged on
such date by the Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Buyer Indemnifying Parties to indemnify Seller
Indemnified Parties shall be subject to each of the following principles or
qualifications:
34
<PAGE>
12.2.1. Each of the representations and warranties made by Buyer and
InfoCure in Article V. of this Agreement shall survive for a period of two (2)
years after the Closing Date, and thereafter all such representations and
warranties shall be extinguished.
No claim for the recovery of indemnifiable damages pursuant to clause (i)
of Section 12.2. may be asserted by Seller Indemnified Parties against Buyer
Indemnifying Parties or its successors in interest after such representations
and warranties shall be thus extinguished; provided, however, that claims first
asserted in writing within the applicable period shall not thereafter be barred.
12.3. Matters Involving Third Parties. If any third party shall notify
-------------------------------
Buyer or Seller (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 12. then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent that) the Indemnifying Party thereby is
damaged.
If any Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then:
A. The Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice satisfactory to the Indemnified Party;
B. The Indemnified Party may retain separate co-counsel at its sole
cost and expense (except that the Indemnifying Party will be responsible for the
fees and expenses of the separate co-counsel to the extent the Indemnified Party
concludes that the counsel the Indemnifying Party has selected has a conflict of
interest);
C. The Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably);
D. The Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any settlement which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld or delayed unreasonably).
If no Indemnifying Party notifies the Indemnified Party within fifteen (15)
days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it may deem appropriate.
35
<PAGE>
12.4. Other Agreements. Any indemnity obligations which Seller may have to
----------------
Buyer can be discharged by the Escrow Agent from the funds held in escrow
pursuant to Section 2.1.2. above.
13. MISCELLANEOUS.
13.1. Brokers' Commission. Buyer will indemnify and hold harmless Seller
-------------------
and Shareholders from the commission, fee or claim of any person, firm or
corporation employed or retained or claiming to be employed or retained by Buyer
to bring about, or to represent it in, the transactions contemplated hereby.
Seller and Shareholders will indemnify and hold harmless Buyer from the
commission, fee or claim of any person, firm or corporation employed or retained
or claiming to be employed or retained by Seller or Shareholders to bring about,
or to represent them in the transactions contemplated hereby.
13.2. Amendment and Modification. The parties hereto may amend, modify and
--------------------------
supplement this Agreement in such manner as may be agreed upon by them in
writing.
36
<PAGE>
13.3 Termination.
-----------
13.3.1. Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned:
13.3.1.1. By the mutual written consent of all of the Parties
hereto at any time prior to the Closing Date;
13.3.1.2. Unless terminated pursuant to Section 13.3.1.1. by
any Party in the event of the breach by any other Party of any provision of this
Agreement, which breach is not remedied by the breaching Party within ten (10)
days after receipt or notice thereof from the terminating party; or
13.3.1.3. Unless terminated pursuant to Section 13.3.1.1., by
any Party hereto if the Closing has not taken place by January 15, 1998.
If this Agreement is terminated pursuant to clause 13.3.1.1.
of this Section 13.3.1., no Party shall have any liability for any costs,
expenses, loss of anticipated profit or any further obligation for breach of
warranty or otherwise to any other Party to this Agreement. Any termination of
this Agreement pursuant to clauses 13.3.1.2. or 13.3.1.3. of this Section
13.3.1. shall be without prejudice to any other rights or remedies of the
respective parties.
13.3.2 The risk of any loss to the properties to be sold by Seller
hereunder and all liability with respect to injury and damage occurring in
connection therewith shall be the sole responsibility of Seller until the
completion of the Closing. If, in the opinion of Buyer, any material part of
said properties shall be damaged by fire or other casualty prior to the
completion of the Closing hereunder, then Buyer shall have the right and option:
13.3.2.1. To terminate this Agreement, without liability to
any party thereto; or
13.3.2.2. To proceed with the Closing hereunder, in which
event such casualty shall not constitute a breach by Seller of any
representation, warranty or covenant in this Agreement, and Buyer shall be
entitled to receive and retain the insurance proceeds arising from such
casualty.
37
<PAGE>
13.4. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective successors, assigns, heirs
and legal representatives. This Agreement may not be assigned by Buyer and
InfoCure, jointly and severally, except to another corporation controlled by or
under common control with Buyer. In any such event, Buyer and InfoCure, jointly
and severally, shall remain directly liable for all undertakings and obligations
hereunder. This Agreement, including any rights to receive payments hereunder,
may not be assigned by Seller except to its Shareholders upon a dissolution or
liquidation of Seller.
13.5. Entire Agreement. This Agreement and the exhibits and schedules
----------------
attached hereto contain the entire agreement of the parties hereto with respect
to the purchase of the Purchased Assets and the other transactions contemplated
herein, and supersede all prior understandings and agreements of the parties
with respect to the subject matter hereof. Any reference herein to this
Agreement shall be deemed to include the schedules and exhibits attached hereto.
13.6. Headings. The descriptive headings in this Agreement are inserted for
--------
convenience only and do not constitute a part of this Agreement.
13.7. Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts, each of which shall be deemed an original, and all of
which together will constitute one and the same instrument.
13.8. Notices. Any notice, request, information or other document to be
-------
given hereunder to any of the Parties by any other Party shall be in writing and
delivered personally or sent by certified or registered mail, postage prepaid,
as follows:
If to Seller or Shareholders, addressed to:
Micro-Software Designs, Inc.
239 Ethan Allen Highway
Ridgefield, Connecticut 06877
Attention: Joseph Walsh
With a copy to:
O'Connell, Flaherty & Attmore, L.L.C.
Hartford Square North
10 Columbus Boulevard
Hartford, Connecticut 06106-1944
Attention: Robert A. DeFrino, Esq.
If to Buyer, addressed to:
InfoCure Corporation
1765 The Exchange
38
<PAGE>
Suite 450
Atlanta, Georgia 30339
Attention: James K. Price
39
<PAGE>
With copy to:
Morris, Manning & Martin, L.L.P.
3343 Peachtree Road
Suite 1600
Atlanta, Georgia 30326
Attention: Richard L. Haury, Jr., Esq.
Any party may change the address to which notices hereunder are to be sent
to it by giving written notice of such change of address in the manner herein
provided for giving notice. Any notice delivered personally shall be deemed to
have been given on the date it is so delivered, and any notice delivered by
registered or certified mail shall be deemed to have been given on the date it
is received or refused, if delivery is refused.
13.9. Schedules. To the extent any disclosure in a schedule puts Buyer on
---------
actual notice of the facts reflected therein, such disclosure shall be deemed to
be a disclosure in all other schedules under this Agreement as to such facts.
13.10. Governing Law/Arbitration/Consent to Jurisdiction. This Agreement
-------------------------------------------------
shall be governed by and construed in accordance with the laws of the State of
Georgia applicable to contracts made and to be performed herein. Any dispute,
controversy or claim arising out of, relating to or in connection with, this
Agreement, or the breach, termination or validity thereof shall be finally
settled by arbitration conducted in accordance with this Section. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") in effect at the time
of the arbitration, except as they may be modified herein or by mutual agreement
of the parties. The seat of the arbitration shall be Atlanta, Georgia, and each
party hereto irrevocably submits to the jurisdiction of the arbitration panel in
Atlanta, Georgia. The arbitration shall be conducted by three (3) arbitrators,
at least two (2) of which are attorneys having more than seven (7) years
experience in the general mergers and acquisitions field. The party initiating
arbitration (the "Claimant") shall identify its arbitrator within twenty (20)
days of receipt of a request for arbitration (the "Request") and shall notify
the Claimant of such appointment in writing. If the Respondent fails to identify
an arbitrator within such twenty (20) day period, the arbitrator named in the
Request shall decide the controversy or claim as the sole arbitrator. Otherwise,
the two (2) arbitrators appointed by the parties shall appoint a third (3rd)
arbitrator within twenty (20) days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator. When the third (3rd) arbitrator
has accepted the appointment, the two (2) party-appointed arbitrators shall
promptly notify the parties of the appointment. If the two (2) arbitrators
appointed by the parties fail or are unable to so appoint a third (3rd)
arbitrator, then the appointment of the third (3rd) arbitrator shall be made by
the AAA, which shall promptly notify the parties of the appointment. The third
(3rd) arbitrator shall act as chair of the panel. The arbitration award shall be
in writing and shall be final and binding on the parties. The award may include
an award of costs, including reasonable attorneys' fees and disbursements.
Judgment upon the award may be entered by any court having jurisdiction thereof
or having jurisdiction over the parties or their assets. Notwithstanding the
foregoing, the parties may apply to any court of competent jurisdiction for a
40
<PAGE>
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this Section and without
any abridgment of the powers of the arbitrators. The parties agree to be subject
to the jurisdiction of the Superior Court of Cobb County or United States
District Court for the Northern District of Georgia (provided said court has
subject matter jurisdiction), which shall be the exclusive venue and
jurisdiction for such adjudication, and the parties hereby agree to subject
themselves to the jurisdiction and venue of such court for all such purposes and
agree to waive any objections thereto.
13.11. Agreement as to Certain Contracts. Seller agrees to use its best
---------------------------------
efforts to cooperate with Buyer to obtain such consents as requested by Buyers.
If any consent required under any such Contracts, including any Material
Contract (as defined in Section 4.11.) is not obtained, Seller and Buyer will
enter into any reasonable arrangement designed to provide for (i) the complete
and full enjoyment by Buyer of all rights and benefits granted under any such
Contracts and (ii) the performance by Buyer of the obligations thereunder. Such
arrangements may include, without limitation, the appointment of Buyer as
Seller's agent or attorney-in-fact for such purpose, enforcement by Seller for
the benefit of Buyer of any and all rights of Seller against a third party or
otherwise, and Buyer using reasonable efforts to undertake any such arrangement
with Seller so as to impose on Seller the minimal expense, expenditure of time
and disruption of Seller's business as is reasonably practicable in the
circumstances. If a consent to assignment cannot be obtained, Buyer and Seller
shall enter into a reasonable alternative arrangement which may include a
subcontract arrangement structured in such a way so as not to impose any
additional cost to Seller and so as to enable Buyer to perform such Contract,
upon agreement of Buyer and Seller.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
41
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BUYER:
MD Acquisition, Inc.
Attest:/s/ James K. Price By:/s/ Frederick L. Fine
---------------------------- ----------------------------
James K. Price , Secretary Frederick L. Fine, President
------------------
(CORPORATE SEAL)
INFOCURE:
InfoCure Corporation
Attest:/s/ James K. Price By:/s/ Frederick L. Fine
---------------------------- ----------------------------
James K. Price , Secretary Frederick L. Fine, President
------------------
(CORPORATE SEAL)
SELLER:
Micro-Software Designs, Inc.
Attest:/s/ Sarah Walsh By:/s/ Joseph Walsh
--------------------------- ----------------------------
Sarah Walsh , Secretary Joseph Walsh, President
------------------
(CORPORATE SEAL)
SHAREHOLDERS:
/s/ Joseph Walsh
-------------------------------
Joseph Walsh
/s/ Sarah Walsh
-------------------------------
Sarah Walsh
42
<PAGE>
EXHIBITS
--------
Exhibit A Escrow Agreement
Exhibit B Registration Rights Agreement
Exhibit C Certificates of Seller and Shareholders
Exhibit D Certificates of Buyer and InfoCure
Exhibit E Bill of Sale
Exhibit F Lease Assignment
Exhibit G Wire Transfer Instructions
Exhibit H Assignment and Assumption Agreement
Exhibit I Opinion of Seller's Counsel
Exhibit J Restrictive Covenant Agreement
Exhibit K Employment Agreement - Joseph Walsh
Exhibit L Employment Agreement - Sarah Walsh
Exhibit M Covenants Agreements
Exhibit N Subscription Agreement
Exhibit O Opinion of Buyer's Counsel
43
<PAGE>
SCHEDULES
---------
Schedule 1.1.4 Agreements not to be Assigned or Transferred
Schedule 1.1.11 Fixed Assets
Schedule 1.2.4 Excluded Assets
Schedule 2.1.1 Closing Date Financial Statements
Schedule 2.2 Assumed Liabilities
Schedule 2.4 Allocation of Purchase Price
Schedule 4.2 Subsidiaries
Schedule 4.3 Financial Statements
Schedule 4.4 Liabilities of Seller
Schedule 4.5 Tax Matters
Schedule 4.6 Real Estate
Schedule 4.7 Liens and Encumbrances
Schedule 4.9.1 Registration; License Agreements
Schedule 4.9.2 Software and Intangibles
Schedule 4.9.3 Millennium Compliant Matters
Schedule 4.9.4 Key Software Development Employees
Schedule 4.9.6 Interest in Software or Intangibles
Schedule 4.9.7 Standard Form Contracts
Schedule 4.11 Documents of and Information with Respect to
Seller
Schedule 4.11.2 Insurance Matters
Schedule 4.11.3 Customer List
44
<PAGE>
Schedule 4.12 Litigation
Schedule 4.14 Absence of Certain Acts or Events
Schedule 4.16 Employment and Labor Matters
Schedule 4.17.1 Benefit Plans
Schedule 4.19 Consents and Approvals
Schedule 4.20 Related Party Transactions
Schedule 4.22 Customer Prepayments
Schedule 9.8 Persons Signing Covenants Agreements
45
<PAGE>
STOCK PURCHASE AGREEMENT
MADE AS OF
FEBRUARY 26, 1998,
BUT EFFECTIVE JANUARY 1, 1998
BETWEEN
INFOCURE CORPORATION,
BUYER
AND
KURT I. LAWRENCE, KAREN A. LAWRENCE AND
PHILIP E. WARENIK
SELLERS
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. DEFINITIONS.......................................................... 5
2. SALE AND TRANSFER OF SHARES; CLOSING................................. 11
2.1. Shares.......................................................... 11
------
2.2. Purchase Price.................................................. 11
--------------
2.3. Closing......................................................... 13
-------
2.4. Closing Obligations............................................. 13
-------------------
2.5. Adjustment Procedure............................................ 14
--------------------
3. REPRESENTATIONS AND WARRANTIES OF SELLERS............................ 15
3.1. Organization and Good Standing.................................. 15
------------------------------
3.2. Authority; No Conflict.......................................... 15
----------------------
3.3. Capitalization.................................................. 17
--------------
3.4. Financial Statements............................................ 17
--------------------
3.5. Books and Records............................................... 18
-----------------
3.6. Title to Properties; Encumbrances............................... 18
---------------------------------
3.7. Condition and Sufficiency of Assets............................. 19
-----------------------------------
3.8. Accounts Receivable............................................. 19
-------------------
3.9. Inventory....................................................... 20
---------
3.10. No Undisclosed Liabilities..................................... 20
--------------------------
3.11. Taxes.......................................................... 20
-----
3.12. No Material Adverse Change..................................... 21
--------------------------
3.13. Employee Benefits Matters...................................... 21
-------------------------
3.14. Compliance With Legal Requirements; Governmental
------------------------------------------------
Authorizations............................................... 22
--------------
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
3.15. Legal Proceedings; Orders...................................... 23
-------------------------
3.16. Absence of Certain Changes and Events.......................... 24
-------------------------------------
3.17. Contracts; No Defaults......................................... 25
----------------------
3.18. Insurance...................................................... 27
---------
3.19. Environmental Matters.......................................... 28
---------------------
3.20. Employees...................................................... 29
---------
3.21. Labor Relations; Compliance.................................... 29
---------------------------
3.22. Intellectual Property Rights of Company........................ 30
---------------------------------------
3.23. Certain Payments............................................... 36
----------------
3.24. Disclosure..................................................... 37
----------
3.25. Relationships With Related Persons............................. 37
----------------------------------
3.26. Brokers or Finders............................................. 38
------------------
3.27. Special Representative Regarding MSI Integrated
-----------------------------------------------
Services, Inc................................................ 38
--------------
4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 38
4.1. Organization and Good Standing.................................. 39
------------------------------
4.2. Authority....................................................... 39
---------
4.3. Investment Intent............................................... 39
-----------------
4.4. Certain Proceedings............................................. 39
-------------------
4.5. Brokers or Finders.............................................. 39
------------------
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE........................... 39
5.1. Access and Investigation........................................ 39
------------------------
5.2. Operation of the Business of Company............................ 40
------------------------------------
5.3. Negative Covenant............................................... 40
-----------------
5.4. Required Approvals.............................................. 40
------------------
5.5. Notification.................................................... 40
------------
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
5.6. Payment of Indebtedness by Related Persons..................... 41
------------------------------------------
5.7. No Negotiation................................................. 41
--------------
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE............................ 41
6.1. Approvals of Governmental Bodies/Third Party Consents.......... 41
-----------------------------------------------------
6.2. Best Efforts................................................... 41
------------
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE................. 41
7.1. Accuracy of Representations.................................... 42
---------------------------
7.2. Sellers' and Company's Performance............................. 42
----------------------------------
7.3. Consents....................................................... 43
--------
7.4. Additional Documents........................................... 43
--------------------
7.5. No Proceedings................................................. 43
--------------
7.6. No Claim Regarding Stock Ownership or Sale Proceeds............ 43
---------------------------------------------------
7.7. No Prohibition................................................. 43
--------------
7.8. Approval of Buyer's Lender..................................... 43
--------------------------
7.9. Due Diligence.................................................. 43
-------------
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE................ 43
8.1. Accuracy of Representations.................................... 44
---------------------------
8.2. Buyer's Performance............................................ 45
-------------------
8.3. Consents....................................................... 45
--------
8.4. Additional Documents........................................... 45
--------------------
8.5. No Injunction.................................................. 45
-------------
9. TERMINATION......................................................... 45
9.1. Termination Events............................................. 45
------------------
9.2. Effect of Termination.......................................... 46
---------------------
10. INDEMNIFICATION; REMEDIES............................................ 46
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
10.1. Agreement by Sellers to Indemnify............................. 46
---------------------------------
10.2. Agreements by Buyer to Indemnify.............................. 48
--------------------------------
10.3. Matters Involving Third Parties............................... 49
-------------------------------
10.4. Other Agreements.............................................. 50
----------------
11. GENERAL PROVISIONS................................................... 50
11.1. Expenses...................................................... 50
--------
11.2. Public Announcements.......................................... 50
--------------------
11.3. Confidentiality............................................... 50
---------------
11.4. Notices....................................................... 51
-------
11.5. Jurisdiction; Service of Process.............................. 52
--------------------------------
11.6. Further Assurances............................................ 52
------------------
11.7. Waiver........................................................ 52
------
11.8. Entire Agreement and Modification............................. 53
---------------------------------
11.9. Disclosure Schedule........................................... 53
-------------------
11.10. Assignments, Successors and No Third-Party Rights............ 53
-------------------------------------------------
11.11. Severability................................................. 54
------------
11.12. Section Headings; Construction............................... 54
------------------------------
11.13. Time of Essence.............................................. 54
---------------
11.14. Governing Law................................................ 54
-------------
11.15. Counterparts................................................. 54
------------
</TABLE>
-iv-
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of February 26,
1998, but effective as of January 1, 1998, by INFOCURE CORPORATION, a Delaware
corporation ("Buyer"), KURT I. LAWRENCE, a resident of Georgia ("Mr. Lawrence"),
KAREN A. LAWRENCE, a resident of Georgia ("Ms. Lawrence") and PHILIP E. WARENIK,
a resident of Georgia ("Warenik" and collectively with Mr. Lawrence and Ms.
Lawrence, "Sellers").
RECITALS:
Sellers desire to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of Medical Software
Integrators, Inc., a Georgia corporation (the "Company"), for the consideration
and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
14. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1.:
"ADJUSTMENT AMOUNT" - as defined in Section 2.5.
"APPLICABLE CONTRACT" - any Contract (i) under which Company has or may
acquire any rights; (ii) under which Company has or may become subject to any
obligation or liability or (iii) by which Company or any of the assets owned or
used by it is or may become bound.
"BEST EFFORTS" - the efforts that a prudent Person desirous of achieving a
result would reasonably use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
-------- -------
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"BREACH" - a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (i) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision or (ii) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence or circumstance.
"BUYER" - as defined in the first paragraph of this Agreement.
-1-
<PAGE>
"BUYER'S STOCK" - the Common Stock of InfoCure Corporation, a Delaware
corporation, having a par value of $.001 per share.
"CLOSING" - as defined in Section 2.3.
"CLOSING DATE" - the date and time as of which the Closing actually takes
place.
"COMPANY" - as defined in the Recitals of this Agreement.
"CONSENT" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" - all of the transactions contemplated by this
Agreement, including:
A. The sale of the Shares by Sellers to Buyer;
B. The execution, delivery, and performance of the Employment
Agreements, the Restrictive Covenant Agreements, the Escrow Agreement and the
Registration Rights Agreements;
C. The performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
D. Buyer's acquisition and ownership of the Shares and exercise of
control over the Company.
"CONTRACT" - any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DAMAGES" - any loss, liability, claim, damages (including, without
limitation, incidental and consequential damages), expense (including, without
limitation, costs of investigation and defense and reasonable attorneys' fees)
or diminution of value, whether or not involving a third party.
"DISCLOSURE SCHEDULE" - the disclosure schedule delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS" - as defined in Section 2.4.A.(iv).
"ENCUMBRANCE" - any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENTAL REQUIREMENTS" - means federal, state and local laws relating
to pollution or protection of the environment, including laws or provisions
relating to emissions,
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<PAGE>
discharges, releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials, substances, or wastes into air, surface water,
groundwater, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials, substances, or wastes.
"ERISA" - the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ESCROW AGREEMENT" - as defined in Section 2.4.(vii).
"FACILITIES" - any real property, leaseholds, or other interests currently
or formerly owned or operated by Company and any buildings, plants, structures,
or equipment (including motor vehicles, tank cars, and rolling stock) currently
or formerly owned or operated by Company.
"GAAP" - generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the financial statements referred to
in Section 3.4. were prepared.
"GOVERNMENTAL AUTHORIZATION" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" - any:
A. Nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
B. Federal, state, local, municipal, foreign, or other government;
C. Governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
D. Multi-national
organization or body; or
E. Body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"IRC" - the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" - the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
A. Such individual is actually aware of such fact or other matter;
or
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<PAGE>
B. A prudent individual given his position with Company could be
expected to discover or otherwise become aware of such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer within the last five (5) years, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"OPERATING INCOME" - means the net income of Company determined in
accordance with GAAP before income taxes and after all other charges except:
A. Unless otherwise approved by Mr. Lawrence, any general and
administrative expense (i.e., allocation of Buyer's general corporate overhead)
----
attributable to the Buyer and all subsidiaries of Buyer that is not directly
related to the operation of Company in the Ordinary Course of Business;
provided, however, Operating Income shall include reimbursement by Company of
expenses at a fair market price mutually agreed to by Buyer and Mr. Lawrence for
expenses previously incurred by Company, but that have for administrative
convenience or efficiency reasons been centralized with Buyer; and
B. Any amortization of goodwill of Buyer and all Subsidiaries of
Buyer.
In the event that certain expenses incurred by the Company are for the principal
or partial benefit of Buyer or other subsidiaries of Buyer, then the parties
hereto shall endeavor to track and determine in a fair and equitable manner that
portion of such expenses that should fairly and reasonably be allocated to Buyer
or such other subsidiaries of Buyer, and therefore not included in arriving at
Operating Income for purposes of this Agreement.
"ORDER" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" - an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
A. Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
B. Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
C. Such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons
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<PAGE>
exercising similar authority), in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business as such
Person.
"ORGANIZATIONAL DOCUMENTS" - (i) the Articles or Certificate of
Incorporation and the Bylaws of a corporation; (ii) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person and (iii) any amendment to any of the foregoing.
"PERSON" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN" - as defined in Section 3.13.1.
"PROCEEDING" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"RELATED PERSON" - with respect to a particular individual:
A. Each other member of such individual's Family;
B. Any Person that is directly or indirectly controlled by such
individual or one (1) or more members of such individual's Family;
C. Any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
D. Any Person with respect to which such individual or one (1) or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
A. Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
B. Any Person that holds a Material Interest in such specified
Person;
C. Each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
D. Any Person in which such specified Person holds a Material
Interest;
E. Any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and
-5-
<PAGE>
F. Any Related Person of any individual described in clause B. or C.
For purposes of this definition, (i) the "Family" of an individual includes
(1) the individual; (2) the individual's spouse and former spouses; (3) any
other natural person who is related to the individual or the individual's spouse
within the second degree and (4) any other natural person who resides with such
individual and (2) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least five
percent (5%) of the outstanding voting power of a Person or equity securities or
other equity interests representing at least five percent (5%) of the
outstanding equity securities or equity interests in a Person.
"REPRESENTATIVE" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"RESTRICTIVE COVENANT AGREEMENTS" - as defined in Section 2.4.A.(iii).
"SECURITIES ACT" - the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" - as defined in the first paragraph of this Agreement.
"SHARES" - as defined in the Recitals of this Agreement.
"SUBSIDIARY" - with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one (1) or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of Company.
"TAX RETURN" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" - a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
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<PAGE>
15. SALE AND TRANSFER OF SHARES; CLOSING.
15.1. SHARES. Subject to the terms and conditions of this Agreement, at the
------
Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Sellers.
15.2. PURCHASE PRICE. The purchase price (the "Purchase Price") for the
--------------
Shares shall equal: (i) the "Base Consideration Amount" (as defined in Section
2.2.A. below) plus the "Earnout Amount" (as defined in Section 2.2.C. below).
A. The "Base Consideration Amount" shall be equal to Seven Million
Two Hundred Thousand and No/100 Dollars ($7,200,000.00).
B. The Base Consideration Amount shall be paid:
(i) Eighty percent (80%) (i.e., $5,760,000.00) in cash (the
----
"Cash Base Consideration"); and
(ii) Twenty percent (20%) (i.e., $1,440,000.00) in Buyer's Stock
----
valued at the average of the closing bid price per share of Buyer's Stock for
the five (5) trading days on which such stock is traded immediately preceding
the Closing Date (the "Stock Base Consideration").
Ten percent (10%) of the Cash Base Consideration (i.e., $576,000.00)
----
shall be paid to the Escrow Agent at Closing as provided in Section 2.4.A.(vii)
below and the balance of the Cash Base Consideration shall be paid to the
Sellers in the following proportions: Mr. Lawrence seventy-six and one-half
percent (76.5%), Ms. Lawrence ten percent (10%) and Warenik thirteen and one-
half percent (13.5%). Any Buyer's Stock payable hereunder and issued by Buyer
in payment of the Stock Base Consideration shall have the benefit of the
Registration Rights Agreement (as defined in Section 2.4.B.(ii)).
C. The "Earnout Amount" shall mean an amount not to exceed Two
Million Two Hundred Thousand and No/100 Dollars ($2,200,000.00) in the aggregate
or One Million One Hundred Thousand and No/100 Dollars ($1,100,000.00) with
respect to each of two (2) separate "Earnout Periods." The "Earnout Periods"
shall mean the "First Earnout Period" (January 1, 1998, through and including
December 31, 1998) and the "Second Earnout Period" (January 1, 1999, through and
including December 31, 1999).
The exact amount of the Earnout Amount for the First Earnout Period
and the Second Earnout Amount shall be determined as follows:
(i) If the Operating Income of Company determined at the end of
the First Earnout Period exceeds One Million Two Hundred Thousand and No/100
Dollars ($1,200,000.00), then for each One and No/100 Dollar ($1.00) of such
excess the Sellers shall earn an additional Six and No/100 Dollars ($6.00) of
Purchase Price for the First Earnout Period; and
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<PAGE>
(ii) If the Operating Income of Company determined at the end of
the Second Earnout Period exceeds One Million Two Hundred Thousand and No/100
Dollars $1,200,000.00), then for each One and No/100 Dollar ($1.00) of such
excess the Sellers shall earn an additional Six and No/100 Dollars ($6.00) of
Purchase Price for the Second Earnout Period.
D. The Earnout Amount for the First Earnout Period and the Earnout
Amount for the Second Earnout Period, if any, due Sellers under Section 2.2.C.
shall be paid as follows:
(i) In Buyer's Stock, which stock shall be valued at the
average of the closing bid price per share of Buyer's Stock for the five (5)
trading days on which such stock is traded immediately preceding December 31,
1998 (in the case of the First Earnout Period) or December 31, 1999 (in the case
of the Second Earnout Period), as the case may be. Any Earnout Amount which is
due Sellers shall be paid within one hundred twenty (120) days of the end of the
respective Earnout Period for which the Earnout Amount is earned and shall be
paid to Sellers in the following proportions: Mr. Lawrence seventy-six and one-
half percent (76.5%), Ms. Lawrence ten percent (10%) and Warenik thirteen and
one-half percent (13.5%). The Earnout Amount shall be paid to Sellers only if
-------
the employment conditions set forth in Section 2.2.D.(ii) are satisfied and if
an Earnout Amount is earned for the First Earnout Period, Buyer shall deliver
said Earnout Amount for the First Earnout Period to the Escrow Agent pursuant to
the terms and conditions of the Escrow Agreement (as defined in Section
2.4.A.(vii)).
(ii) Buyer agrees to pay or to cause the Company to pay the
Earnout Amount to each of the Sellers in the portions set forth above if and
only if said Seller remains employed full-time by the Company, the Buyer or a
Subsidiary of Buyer throughout the entire term of both of the Earnout Periods
unless his or her full-time employment is terminated during either of the
Earnout Periods by death, disability, or by the Company, Buyer or a Subsidiary
of Buyer for a reason other than for cause; provided, however, with respect to
Ms. Lawrence, she shall only be entitled to receive her portion of the Earnout
Amount if Mr. Lawrence is entitled to receive his portion of the Earnout Amount.
For purposes of this Section, "disability" and "cause"
shall be defined in the same manner as said terms are defined or provided in Mr.
Lawrence's and Mr. Warenik's respective Employment Agreements of even date
herewith.
Should any one of the Sellers forfeit his or her right to
receive part of the Earnout Amount, said amount shall not be payable to any
Seller.
(iii) In order to ensure the parties hereto that the Earnout
Amount is computed by the Accountants in accordance with this Agreement and with
GAAP in a fair and disinterested manner, the parties agree that the procedure
set forth in Section 2.5 shall be used to settle any disputes.
(iv) Any Buyer's Stock issued by the Buyer in payment of the
Earnout Amount shall have the benefit of the Registration Rights Agreement as
defined in Section 2.4.B.(ii).
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<PAGE>
15.3. CLOSING. The purchase and sale (the "Closing") provided for in this
-------
Agreement will take place at the offices of Morris, Manning & Martin, L.L.P.,
Buyer's counsel, at 1600 Atlanta Financial Center, 3343 Peachtree Road, N.E.,
Atlanta, Georgia 30326, at 10:00 a.m. (local time) on February ___, 1998, or at
such other time and place as the parties may agree; provided, however, the
Closing shall be effective as of January 1, 1998.
Except as otherwise provided in Section 9., failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.3. will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
15.4. CLOSING OBLIGATIONS. At the Closing:
-------------------
A. Sellers will deliver to Buyer:
(i) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with a medallion guaranteed
signatures (guaranteed by a commercial bank or by a member firm of the New York
Stock Exchange), for transfer to Buyer;
(ii) Opinion of Counsel. Buyer shall have received an opinion
------------------
dated the Closing Date from Manko & Hogan, counsel for Sellers, substantially in
the form of EXHIBIT A attached hereto;
---------
(iii) Restrictive Covenant Agreements. Company and each Seller
-------------------------------
shall have each entered into a restrictive covenant agreement (the "Restrictive
Covenant Agreement") with Buyer, substantially in the form of EXHIBIT B hereto;
---------
(iv) Employment Agreements. Mr. Lawrence and Warenik shall
---------------------
have entered into an employment agreement with Buyer, substantially in the forms
of EXHIBIT C and EXHIBIT D hereto, respectively;
--------- ---------
(v) Good Standing Certificate. Seller shall have delivered to
-------------------------
Buyer a certificate evidencing the good standing of Company as of a recent
practicable date;
(vi) Employee Covenants Agreements. Each employee, agent,
officer and director of Company listed on SCHEDULE 2.4 to the Disclosure
------------
Schedule shall have executed and delivered to Buyer a Covenants Agreement in
favor of Buyer in the form of EXHIBIT E;
---------
(vii) Escrow Agreement. Each Seller shall have entered into an
----------------
escrow agreement (the "Escrow Agreement") with Buyer and SunTrust Bank, Atlanta
as escrow agent substantially in the form of EXHIBIT F hereto;
---------
(viii) A certificate substantially in the form of EXHIBIT G
---------
hereto, executed by Sellers representing and warranting to Buyer that each of
Seller's representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement
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<PAGE>
and is accurate in all respects as of the Closing Date as if made on the Closing
Date (giving full effect to any supplements to the Disclosure Schedule that were
delivered by Sellers to Buyer prior to the Closing Date in accordance with
Section 5.5.);
(ix) PER Agreement. An exclusive distributorship agreement
-------------
with Physician's Equity Resources, Inc., in the form of EXHIBIT L;
---------
(x) Subscription Agreements. Subscription Agreements of each
-----------------------
Seller in the form of EXHIBIT M;
---------
(xi) Termination of Shareholders Agreement. A Termination of
-------------------------------------
Shareholders Agreement, executed by Sellers and Company in the form of EXHIBIT
-------
N;
- -
(xii) Termination of Steve Avery's Employment Agreement. A
-------------------------------------------------
Termination of Steve Avery's Employment Agreement, executed by Company and Steve
Avery in the form of EXHIBIT O; and
---------
(xiii) Assignment and Assumption of Lease; Assumption Agreement. An
--------------------------------------------------------
Assignment and Assumption of Lease and an Assumption Agreement in the form of
EXHIBIT P.
- ---------
B. Buyer will deliver to Sellers:
(i) The following amounts by wire transfer to accounts
specified in EXHIBIT H attached hereto by Mr. Lawrence, Ms. Lawrence and
---------
Warenik, respectively: $3,965,760.00 to Mr. Lawrence, $518,400.00 to Ms.
Lawrence and $699,840.00 to Warenik;
(ii) Certificates representing seventy-seven thousand eight
hundred fifty-two (77,852) shares of Buyer's Stock issued to Mr. Lawrence,
thirteen thousand seven hundred thirty-eight (13,738) shares of Buyer's Stock
issued to Ms. Lawrence and ten thousand one hundred seventy-seven (10,177)
shares of Buyer's Stock issues to Warenik and the Registration Rights Agreements
of Sellers substantially in the form of EXHIBIT I hereto;
---------
(iii) The sum of $576,000.00 to the Escrow Agent by wire transfer
in accordance with the Escrow Agreement;
(iv) A certificate in the form of EXHIBIT J hereto executed by
---------
Buyer to the effect that, except as otherwise stated in such certificate, each
of Buyer's representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date; and
(v) Sellers shall have received an opinion dated the Closing
Date from Morris, Manning & Martin, L.L.P., counsel for Buyer, substantially in
the form of EXHIBIT K hereto.
---------
15.5. ADJUSTMENT PROCEDURE. In order to insure the parties hereto that the
--------------------
Earnout Amount portion of the Purchase Price is computed by BDO Seidman, L.L.P.
(the "Accountants")
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<PAGE>
in accordance with this Agreement and with GAAP in a fair and disinterested
manner, the parties agree as follows:
Each party shall have the right to examine during normal business hours
such books and records of the other party as may be reasonably necessary in
order to verify any determination of the Accountants under this Agreement. If
any party disagrees with any such determination, then that party may submit, at
its sole expense, within thirty (30) days an alternate determination prepared by
a certified public accountant, which the other party may accept or reject in its
reasonable discretion. If the other party rejects the alternate determination,
then the contesting party shall be entitled to submit such dispute to a
certified public accountant acceptable to both parties who shall determine the
accuracy and correctness of the Accountant's original determination. Both
parties shall each bear one-half (1/2) of the expenses of such certified public
accountant. Any additional amounts payable by a party as a result of the other
party's alternate determination shall be made within fifteen (15) days following
the acceptance of such alternate determination or the resolution of such
dispute, as the case may be.
16. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers, jointly and severally, represent and warrant to Buyer as follows:
16.1. ORGANIZATION AND GOOD STANDING.
------------------------------
A. SCHEDULE 3.1 of the Disclosure Schedule contains a complete and
------------
accurate list of Company's name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization
(including the identity of each stockholder and the number of shares held by
each).
Company is a corporation duly organized, validly existing, and in good
standing under the laws of Georgia, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts.
Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
B. Sellers have delivered to Buyer copies of the Organizational
Documents of Company, as currently in effect.
16.2. AUTHORITY; NO CONFLICT.
----------------------
A. This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with its terms.
Upon the execution and delivery by Sellers of the Escrow Agreement, the
Employment Agreements, the Registration Rights Agreement and the Restrictive
Covenant Agreements (collectively, the "Sellers' Closing
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<PAGE>
Documents"), the Sellers' Closing Documents will constitute the legal, valid,
and binding obligations of Sellers, enforceable against Sellers in accordance
with their respective terms.
Sellers have the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and the Sellers' Closing
Documents and to perform their obligations under this Agreement and the Sellers'
Closing Documents.
B. Except as set forth in SCHEDULE 3.2 of the Disclosure Schedule,
------------
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) Contravene, conflict with, or result in a violation of (1)
any provision of the Organizational Documents of Company or (2) any resolution
adopted by the board of directors or the stockholders of Company;
(ii) Contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which Company or either Seller, or any of
the assets owned or used by Company, may be subject;
(iii) Contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Company or that otherwise relates to the business
of, or any of the assets owned or used by, Company;
(iv) Cause Buyer or Company to become subject to, or to become
liable for the payment of, any Tax;
(v) Cause any of the assets owned by Company to be reassessed
or revalued by any taxing authority or other Governmental Body;
(vi) Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
(vii) Result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by Company.
Except as set forth in SCHEDULE 3.2 of the Disclosure Schedule, none of the
------------
Sellers nor Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
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<PAGE>
C. If, pursuant to the terms of Section 2.2.C., Sellers are entitled
to receive an Earnout Amount, said Earnout Amount shall be paid in Buyer's Stock
which Sellers shall acquire for their own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act. Each
Seller is an "accredited investor" as such term is defined in Rule 501(a) under
the Securities Act.
16.3. CAPITALIZATION. The authorized equity securities of Company consist
--------------
of one hundred thousand (100,000) shares of common stock, no par value per
share, of which sixty-six thousand six hundred sixty-seven (66,667) shares are
issued and outstanding and constitute the Shares.
Sellers are and will be on the Closing Date the record and beneficial
owners and holders of the Shares, free and clear of all Encumbrances. Mr.
Lawrence owns fifty-one thousand (51,000) of the Shares, Ms. Lawrence owns six
thousand six hundred sixty-seven (6,667) of the Shares and Warenik owns nine
thousand (9,000) of the Shares.
With the exception of the Shares (which are owned by Sellers), all of the
outstanding equity securities and other securities of Company are owned of
record and beneficially by Company, free and clear of all Encumbrances. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of Company.
All of the outstanding equity securities of Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are
no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of Company.
None of the outstanding equity securities or other securities of Company
was issued in violation of the Securities Act or any other Legal Requirement.
Company does not own, nor does it have any Contract to acquire, any equity
securities or other securities of any Person (other than Company) or any direct
or indirect equity or ownership interest in any other business.
16.4. FINANCIAL STATEMENTS. Sellers have delivered to Buyer, as set forth
--------------------
on SCHEDULE 3.4:
------------
A. Unaudited balance sheets of Company as of December 31, 1995, and
as of June 30 in each of the years 1994 and 1995, and the related statements of
income for each of the fiscal years then ended.
B. Audited balance sheets of Company as of December 31 in each of
the years 1996 and 1997, and the related statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended,
prepared by the accounting firm of BDO Seidman, L.L.P. (the "Accountants") in
accordance with this Agreement and with GAAP consistently applied (collectively
the "Financial Statements" and such balance sheet dated December 31, 1997, and
related statements of income, changes in stockholders' equity and cash flow
sometimes hereinafter refereed to as the "Closing Date Financial Statements").
-13-
<PAGE>
The Financial Statements and notes, if any, fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow of Company as at the respective dates of and for the periods referred
to in such financial statements, all in accordance with GAAP, subject, in the
case of interim Financial Statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes.
No financial statements of any Person, other than Company, are required by
GAAP to be included in the Financial Statements of Company.
16.5. BOOKS AND RECORDS. The books of account, minute books, stock record
-----------------
books, and other records of Company, all of which have been made available to
Buyer, are complete and correct and have been maintained in accordance with
sound business practices.
The minute books of Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of Company, and no meeting
of any such stockholders, Board of Directors, or committee has been held for and
no material action has been taken at any meeting for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of Company.
16.6. TITLE TO PROPERTIES; ENCUMBRANCES. SCHEDULE 3.6 of the Disclosure
--------------------------------- ------------
Schedule contains a complete and accurate list of all real property, leaseholds,
or other interests therein owned by Company. Sellers have delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which Company acquired such real property and interests, and copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of
Sellers or Company and relating to such property or interests.
Company owns (with good and marketable title in the case of real property,
subject only to the Encumbrances permitted by this Section) all the properties
and assets (whether real, personal, or mixed and whether tangible or intangible)
that they purport to own located in the facilities owned or operated by Company
or reflected as owned in the books and records of Company, including all of the
properties and assets reflected in the Closing Date Financial Statements (except
for assets held under capitalized leases disclosed or not required to be
disclosed in SCHEDULE 3.6 of the Disclosure Schedule).
------------
All material properties and assets reflected in the Closing Date Financial
Statements are free and clear of all Encumbrances and are not, in the case of
real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets:
A. Mortgages or security interests shown on the Closing Date
Financial Statements as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists;
B. Liens for current taxes not yet due; and
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<PAGE>
C. With respect to real property:
(i) Minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of Company; and
(ii) Zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject thereto.
All buildings, plants, and structures owned by Company lie wholly within
the boundaries of the real property owned by Company and do not encroach upon
the property of, or otherwise conflict with the property rights of, any other
Person.
16.7. CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
-----------------------------------
structures, and equipment of Company are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The building, plants,
structures, and equipment of Company are sufficient for the continued conduct of
Company' businesses after the Closing in substantially the same manner as
conducted prior to the Closing.
16.8. ACCOUNTS RECEIVABLE. All accounts receivable of Company that are
-------------------
reflected on the Closing Date Financial Statements or on the accounting records
of Company as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will
be as of the Closing Date current and collectible net of the respective reserves
shown on the Closing Date Financial Statements or on the accounting records of
Company as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of the Closing
Date, will not represent a greater percentage of the Accounts Receivable as of
the Closing Date than the reserve reflected in the Closing Date Financial
Statements represented of the Accounts Receivable reflected therein and will not
represent a material adverse change in the composition of such Accounts
Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been
or will be collected in full, without any set-off, within one hundred fifty
(150) days after the day on which it first becomes due and payable. To the
Knowledge of Sellers, there is no contest, claim, or right of set-off, other
than returns in the Ordinary Course of Business, under any Contract with any
obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable.
SCHEDULE 3.8 of the Disclosure Schedule contains a complete and accurate
------------
list of all Accounts Receivable as of December 31, 1997, which list sets forth
the aging of such Accounts Receivable.
-15-
<PAGE>
16.9. INVENTORY. All inventory of Company, whether or not reflected in
---------
the Closing Date Financial Statements, consists of a quality and quantity usable
and salable in the Ordinary Course of Business, except for obsolete items and
items of below-standard quality, all of which have been written off or written
down to net realizable value in the Closing Date Financial Statements or on the
accounting records of Company as of the Closing Date, as the case may be.
The quantities of each item of inventory (whether raw materials, work-in-
process, or finished goods) are not excessive, but are reasonable in the present
circumstances of Company.
16.10. NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 3.10 of
-------------------------- -------------
the Disclosure Schedule, Company has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Closing Date Financial Statements and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
16.11. TAXES.
-----
16.11.1. Except as set forth on SCHEDULE 3.11 to the Disclosure
-------------
Schedule, Company has timely filed all tax returns and reports required to be
filed by it, including, without limitation, all federal, state and local tax
returns, and has paid in full or made adequate provision by the establishment of
reserves for all taxes and other charges which have become due or which are
attributable to the conduct of Company's business prior to Closing. Company will
continue to make adequate provision for all such taxes and other charges for all
periods through the Closing Date.
Except as set forth on SCHEDULE 3.11 to the Disclosure Schedule,
-------------
Company and Sellers have no Knowledge of any tax deficiency proposed or
threatened against Company. There are no tax liens upon any property or assets
of Company.
Except as set forth on SCHEDULE 3.11 to the Disclosure Schedule,
-------------
Company has made all payments of estimated taxes when due in amounts sufficient
to avoid the imposition of any penalty.
16.11.2. Except as set forth on SCHEDULE 3.11 to the Disclosure
-------------
Schedule, all taxes and other assessments and levies which Company was required
by law to withhold or to collect have been duly withheld and collected, and have
been paid over to the proper governmental entity.
16.11.3. Except as set forth in SCHEDULE 3.11 to the Disclosure
-------------
Schedule, the federal and state income tax returns and local returns, if any, of
Company have never been audited by the income tax authorities, nor are any such
audits in process. Except as set forth in SCHEDULE 3.11, to the Disclosure
-------------
Schedule there are no outstanding agreements or waivers extending the statute of
limitations applicable to any federal or state income tax returns of Company for
any period.
-16-
<PAGE>
16.11.4. Under its contracts with its customers for sales or
licenses of Software (as defined in Section 3.22. below), to the Knowledge of
Company and Sellers, such customers are liable for any and all sales or use
taxes imposed by virtue of or with respect to such sales or licenses.
16.12. NO MATERIAL ADVERSE CHANGE. Since December 31, 1997, there has not
--------------------------
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of Company, and no event has occurred or
circumstance exists that may result in such a material adverse change.
16.13. EMPLOYEE BENEFITS MATTERS.
-------------------------
16.13.1. SCHEDULE 3.13.1 lists all plans, programs, and similar
---------------
agreements, commitments or arrangements, whether oral or written, maintained by
or on behalf of Company or any other party that provide benefits or compensation
to, or for the benefit of, current or former employees of Company ("Plan" or
"Plans"). Except as set forth on SCHEDULE 3.13.1 to the Disclosure Schedule only
---------------
current and former employees of Company participate in the Plans. Copies of all
Plans and, to the extent applicable, all related trust agreements, actuarial
reports, and valuations for the most recent three (3) years, all summary plan
descriptions, prospectuses, Annual Report Form 5500s or similar forms (and
attachments thereto) for the most recent three (3) years, all Internal Revenue
Service determination letters, and any related documents requested by Buyer,
including all amendments, modifications and supplements thereto, have been
delivered to Buyer, and all of the same are or will be true, correct and
complete.
16.13.2. With respect to each Plan to the extent applicable:
A. No litigation or administrative or other proceeding is
pending or threatened involving such Plan;
B. To the Knowledge of each Seller , such Plan has been
administered and operated in substantial compliance with, and has been amended
to comply with all applicable laws, rules, and regulations, including, without
limitation, ERISA, the Internal Revenue Code, and the regulations issued under
ERISA and the Internal Revenue Code;
C. Company and its predecessors, if any, have made and as
of the Closing Date will have made or accrued, all payments and contributions
required, or reasonably expected to be required, to be made under the provisions
of such Plan or required to be made under applicable laws, rules and
regulations, with respect to any period prior to the Closing Date, such amounts
to be determined using the ongoing actuarial and funding assumptions of the
Plan;
D. Such Plan is fully funded in an amount sufficient to
pay all liabilities accrued (including liabilities and obligations for health
care, life insurance and other benefits after termination of employment) and
claims incurred to the date hereof;
E. On the Closing Date such Plan will be fully funded in
an amount sufficient to pay all liabilities accrued (including liabilities and
obligations for health care, life
-17-
<PAGE>
insurance and other benefits after termination of employment) and claims
incurred to the Closing Date, or adequate reserves will be set up on Company's
books and records, or paid-up insurance will be provided, therefor; and
F. Such Plan has been administrated and operated only in
the ordinary and usual course and in accordance with its terms, and there has
not been in the four (4) years prior hereto any increase in the liabilities of
such Plan beyond increases typically experienced by employers similar to
Company.
16.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
---------------------------------------------------------------
A. Except as set forth in SCHEDULE 3.14 of the Disclosure Schedule:
-------------
(i) Company is, and at all times since December 31, 1992, has
been, in full compliance with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its business or the ownership or use of
any of its assets;
(ii) No event has occurred or circumstance exists that (with
or without notice or lapse of time) (1) may constitute or result in a violation
by Company of, or a failure on the part of Company to comply with, any Legal
Requirement or (2) may give rise to any obligation on the part of Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and
(iii) Company has not received, at any time since December 31,
1992, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (1) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement or (2) any actual, alleged, possible, or potential obligation on the
part of Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
B. SCHEDULE 3.14 of the Disclosure Schedule contains a complete and
-------------
accurate list of each Governmental Authorization that is held by Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
Company. Each Governmental Authorization listed or required to be listed in
SCHEDULE 3.14 of the Disclosure Schedule is valid and in full force and effect.
- -------------
Except as set forth in SCHEDULE 3.14 of the Disclosure Schedule:
-------------
(i) Company is, and at all times since December 31, 1992, has
been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in SCHEDULE
--------
3.14 of the Disclosure Schedule;
- ----
(ii) No event has occurred or circumstance exists that may
(with or without notice or lapse of time) (1) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be listed in SCHEDULE
--------
3.14 of the Disclosure Schedule or (2) result directly or indirectly in the
- ----
revocation, withdrawal, suspension, cancellation, or termination of, or any
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<PAGE>
modification to, any Governmental Authorization listed or required to be listed
in SCHEDULE 3.14 of the Disclosure Schedule;
-------------
(iii) Company has not received, at any time since December 31,
1992, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (1) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization or (2) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) All applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
SCHEDULE 3.14 of the Disclosure Schedule have been duly filed on a timely basis
- -------------
with the appropriate Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations have been duly made
on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in SCHEDULE 3.14 of the Disclosure
-------------
Schedule collectively constitute all of the Governmental Authorizations
necessary to permit Company to lawfully conduct and operate their businesses in
the manner they currently conduct and operate such businesses and to permit
Company to own and use their assets in the manner in which they currently own
and use such assets.
16.15. LEGAL PROCEEDINGS; ORDERS.
-------------------------
A. Except as set forth in SCHEDULE 3.15 of the Disclosure Schedule,
-------------
there is no pending Proceeding:
(i) That has been commenced by or against Company or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, Company; or
(ii) That challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Sellers and Company, (i) no such Proceeding has been
Threatened and (ii) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding.
Sellers have delivered to Buyer copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in SCHEDULE 3.15 of the
-------------
Disclosure Schedule. The Proceedings listed in SCHEDULE 3.15 of the Disclosure
-------------
Schedule will not have a material adverse effect on the business, operations,
assets, condition, or prospects of Company.
B. Except as set forth in SCHEDULE 3.15 of the Disclosure Schedule:
-------------
(i) There is no Order to which any of Company, or any of the
assets owned or used by Company, is subject;
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<PAGE>
(ii) Neither Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, Company; and
(iii) No officer, director, agent, or employee of Company is
subject to any Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of Company.
C. Except as set forth in SCHEDULE 3.15 of the Disclosure Schedule:
-------------
(i) Company is, and at all times since December 31, 1992, has
been, in full compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been subject;
(ii) No event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which Company,
or any of the assets owned or used by Company, is subject; and
(iii) Company has not received, at any time since December 31,
1992, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged, possible,
or potential violation of, or failure to comply with, any term or requirement of
any Order to which Company, or any of the assets owned or used by Company, is or
has been subject.
16.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
-------------------------------------
SCHEDULE 3.16 of the Disclosure Schedule, since December 31, 1997, Company has
- -------------
conducted its business only in the Ordinary Course of Business and there has not
been any:
A. Change in Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
Company of any shares of any such capital stock; or declaration or payment of
any dividend or other distribution or payment in respect of shares of capital
stock;
B. Amendment to the Organizational Documents of Company;
C. Payment or increase by Company of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
D. Adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of Company;
-20-
<PAGE>
E. Damage to or destruction or loss of any asset or property of
Company, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business, financial condition, or prospects of Company,
taken as a whole;
F. Entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement or (ii) any Contract or transaction
involving a total remaining commitment by or to Company of at least Five
Thousand and No/100 Dollars ($5,000.00);
G. Sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of Company or
mortgage, pledge, or imposition of any lien or other encumbrance on any material
asset or property of Company, including the sale, lease, or other disposition of
any of the Software and Intangibles;
H. Cancellation or waiver of any claims or rights with a value to
Company in excess of Five Thousand and No/100 Dollars ($5,000.00);
I. Material change in the accounting methods used by Company; or
J. Agreement, whether oral or written, by Company to do any of the
foregoing.
16.17. CONTRACTS; NO DEFAULTS.
----------------------
A. SCHEDULE 3.17(A) of the Disclosure Schedule contains a complete
----------------
and accurate list, and Sellers have delivered to Buyer true and complete copies,
of:
(i) Each Applicable Contract that involves performance of
services or delivery of goods or materials by Company of an amount or value in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(ii) Each Applicable Contract that involves performance of
services or delivery of goods or materials to Company of an amount or value in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(iii) Each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of
Company in excess of Five Thousand and No/100 Dollars ($5,000.00);
(iv) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than Five Thousand and No/100 Dollars ($5,000.00)
and with terms of less than one (1) year);
-21-
<PAGE>
(v) Each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Software and Intangibles;
(vi) Each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
(vii) Each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by Company with any other Person;
(viii) Each Applicable Contract containing covenants that in any
way purport to restrict the business activity of Company or any Affiliate of an
Company or limit the freedom of Company or any Affiliate of an Company to engage
in any line of business or to compete with any Person;
(ix) Each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;
(x) Each power of attorney that is currently effective and
outstanding;
(xi) Each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by Company to be responsible for consequential damages;
(xii) Each Applicable Contract for capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(xiii) Each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by Company other
than in the Ordinary Course of Business; and
(xiv) Each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
B. SCHEDULE 3.17(A) of the Disclosure Schedule sets forth reasonably
----------------
complete details concerning such Contracts, including the parties to the
Contracts, the amount of the remaining commitment of Company under the
Contracts, and Company' office where details relating to the Contracts are
located.
C. Except as set forth in SCHEDULE 3.17(C) of the Disclosure
----------------
Schedule:
(i) Neither Seller (and no Related Person of either Seller)
has or may acquire any rights under, and neither Seller has or may become
subject to any obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, Company; and
-22-
<PAGE>
(ii) To the Knowledge of Sellers and Company, no officer,
director, agent, employee, consultant, or contractor of Company is bound by any
Contract that purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor to (1) engage in or continue any conduct,
activity, or practice relating to the business of Company or (2) assign to
Company or to any other Person any rights to any invention, improvement, or
discovery.
D. Except as set forth in SCHEDULE 3.17(D) of the Disclosure
----------------
Schedule, each Contract identified or required to be identified in SCHEDULE
--------
3.17(A) of the Disclosure Schedule is in full force and effect and is valid and
- -------
enforceable in accordance with its terms.
E. Except as set forth in SCHEDULE 3.17(E) of the Disclosure
----------------
Schedule:
(i) Company is, and at all times since December 31, 1992, has
been, in full compliance with all applicable terms and requirements of each
Contract under which such Company has or had any obligation or liability or by
which such Company or any of the assets owned or used by such Company is or was
bound;
(ii) Each other Person that has or had any obligation or
liability under any Contract under which Company has or had any rights is, and
at all times since December 31, 1992, has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give Company or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) Company has not given to or received from any other
Person, at any time since December 31, 1992, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract.
F. There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
Company under current or completed Contracts with any Person and no such Person
has made written demand for such renegotiation.
G. The Contracts relating to the sale, design, manufacture, or
provision of products or services by Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
16.18.INSURANCE.
---------
A. Sellers have delivered to Buyer:
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<PAGE>
(i) True and complete copies of all policies of insurance to
which Company is a party or under which Company, or any director of Company, is
or has been covered at any time within the two (2) years preceding the date of
this Agreement;
(ii) True and complete copies of all pending applications for
policies of insurance; and
(iii) Any statement by the auditor of Company's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
B. Except as set forth on SCHEDULE 3.18(B) of the Disclosure
----------------
Schedule:
(i) All policies to which Company is a party or that provide
coverage to either Seller, Company, or any director or officer of an Company:
(1) Are valid, outstanding, and enforceable;
(2) Taken together in the reasonable judgment of Sellers,
provide adequate insurance coverage for the assets and the operations of Company
for all risks to which Company are normally exposed;
(3) Are sufficient for compliance with all Legal
Requirements and Contracts to which Company is a party or by which it is bound;
(4) Will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(5) Do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of Company.
(ii) Neither Company nor either Seller has received (1) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights or (2) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) Company has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to which
Company is a party or that provides coverage to Company or director thereof.
(iv) Company has given notice to the insurer of all claims that
may be insured thereby.
16.19. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.19 of the
--------------------- -------------
Disclosure Schedule, Company has obtained and is in compliance with all permits,
licenses and other authorizations required to do business by Environmental
Requirements. To each Seller's Knowledge, there are no conditions,
circumstances, activities, practices, incidents, or actions
-24-
<PAGE>
(collectively, "Conditions") resulting from the conduct of its business which
Conditions may reasonably form the basis of any claim or suit against Company
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling by Company, or the
emission, discharge, release or threatened release by Company into the
environment, of any pollutant, contaminant, or hazardous or toxic materials,
substances or wastes.
16.20.EMPLOYEES.
---------
A. SCHEDULE 3.20 of the Disclosure Schedule contains a complete and
-------------
accurate list of the following information for each employee or director of
Company, including each employee on leave of absence or layoff status:
employer; name; job title; current compensation and any change in compensation
since December 31, 1996; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
B. No employee or director of Company is to Sellers' Knowledge a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of Company or (ii) the ability of Company to conduct its
business, including any Proprietary Rights Agreement with Sellers or Company by
any such employee or director. To Sellers' Knowledge, no director, officer, or
other key employee of Company intends to terminate his employment with such
Company.
C. SCHEDULE 3.20 of the Disclosure Schedule also contains a complete
-------------
and accurate list of the following information for each retired employee or
director of Company, or their dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance coverage and other
benefits.
16.21.LABOR RELATIONS; COMPLIANCE. Since December 31, 1992, Company has not
---------------------------
been nor is a party to any collective bargaining or other labor Contract. Since
December 31, 1992, there has not been, there is not presently pending or
existing, and to Sellers' Knowledge there is not Threatened:
A. Any strike, slowdown, picketing, work stoppage or employee
grievance process;
B. Any Proceeding against or affecting Company relating to the
alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable
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<PAGE>
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting any of Company or their premises; or
C. Any application for certification of a collective bargaining
agent.
No event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute. There is no lockout of any
employees by Company, and no such action is contemplated by Company. Company
has complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health and plant closing.
Company is not liable for the payment of any compensation, Damages, taxes,
fines, penalties, or other amounts, however, designated, for failure to comply
with any of the foregoing Legal Requirements.
16.22.INTELLECTUAL PROPERTY RIGHTS OF COMPANY.
---------------------------------------
A. DEFINITIONS. As used in this Agreement, and in addition to any
-----------
other terms defined in this Agreement, the following terms shall have the
following meanings.
(i) "Software" means any computer program, operating system,
--------
applications system, firmware or software of any nature, whether operational,
under development or inactive, including all object code, source code, technical
manuals, compilation procedures, execution procedures, flow charts, programmers
notes, user manuals and other documentation thereof, whether in machine-readable
form, programming language or any other language or symbols and whether stored,
encoded, recorded or written on disk, tape, film, memory device, paper or other
media of any nature.
(ii) "Owned Software" means all Software owned by Company,
--------------
whether purchased from a third party, developed by or on behalf of Company,
currently under development or otherwise.
(iii) "Customer Software" means all Software, other than the
-----------------
Owned Software, that is, directly or through Distributors, either (x) offered or
provided to customers of Company or (y) used by Company to provide information
or services to customers of Company for a fee.
(iv) "Company Software" means the Owned Software and the
----------------
Customer Software.
(v) "Other Software" means all Software, other than Company
--------------
Software, that is licensed by Company from third parties or otherwise used by
Company for any purpose whatsoever.
-26-
<PAGE>
(vi) "Distributor" means Company, any value added reseller,
-----------
original equipment manufacturer, distributor, or similar entity.
(vii) "Distributor Agreement" means a license agreement or other
---------------------
written or oral agreement or permission between Company and a Distributor.
(viii) "Customer License Agreement" means a license agreement or
--------------------------
other written or oral agreement or permission, other than a Distributor
Agreement, by which Company has granted to any third party any rights regarding
Company Software or any Intangibles thereof.
(ix) "Supplier License Agreement" means a license agreement or
--------------------------
other written or oral agreement or permission by which a third party has granted
to Company any rights regarding any Software or any Intangibles thereof.
(x) "Registration" means any governmental filing, whether
------------
federal, state, local, foreign or otherwise, related to Software or any
Intangible, including, without limitation, all registrations of patents,
copyrights, trademarks, service marks, trade names, and maskworks, and all re-
issues, divisions, continuations, renewals, extensions and continuations-in-part
thereof.
(xi) "Intangible" means:
----------
(1) Patents, patent applications, patent disclosures, all
re-issues, divisions, continuations, renewals, extensions and continuation-in-
parts thereof and improvements thereto;
(2) Trademarks, service marks, trade dress, logos, trade
names, and corporate names and registrations and applications for Registration
thereof and all goodwill associated therewith;
(3) Copyrights, Registrations thereof and applications
for Registration thereof;
(4) Maskworks, Registrations thereof and applications for
Registration thereof;
(5) Trade secrets and confidential business information
(including ideas, formulas, compositions, inventions, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, flow charts, processes, ideas, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information);
(6) Other proprietary rights;
-27-
<PAGE>
(7) All income, royalties, Damages and payments due at
Closing or thereafter with respect to the Owned Software, Customer Software,
Other Software, or other Intangibles and all other rights thereunder including,
without limitation, Damages and payments for past, present or future
infringements or misappropriations thereof, the right to sue and recover for
past, present or future infringements or misappropriations thereof;
(8) All rights to use all of the foregoing forever; and
(9) All other rights in, to, and under the foregoing in
all countries.
B. Identification.
--------------
(i) SCHEDULE 3.22(B)(I) of the Disclosure Schedule contains an
-------------------
accurate and complete list and description (including a name, product
description, the language in which it is written and the type of hardware
platform(s) on which it runs) of the following:
(1) All Owned Software.
(2) All Customer Software.
(3) All Other Software.
(ii) SCHEDULE 3.22(B)(II) to the Disclosure Schedule:
--------------------
(1) Contains a complete list of each Registration of
Company;
(2) Identifies each pending Registration of Company;
(3) Identifies each application for or Registration
regarding the Intangibles and Software of Company which have been withdrawn,
abandoned, or have lapsed or been denied; and
(4) Specifies any advice to Company with respect to each
such Registration or protectability of the Intangibles and Software, summarizing
such advice. SCHEDULE 3.22 indicates Company' ownership of such items or the
-------------
source of Company' right to use such items.
(iii) SCHEDULE 3.22(B)(III) to the Disclosure Schedule
---------------------
identifies each Customer License Agreement, together with the term thereof, and
each source code escrow agreement entered into by Company and relating to any
Intangibles and Software identified in such Customer License Agreement.
(iv) SCHEDULE 3.22(B)(IV) to the Disclosure Schedule identifies
--------------------
each Distributor Agreement, together with the term thereof, and each source code
escrow agreement entered into by Company and relating to any Intangibles and
Software identified in such Distributor Agreement.
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<PAGE>
(v) SCHEDULE 3.22(B)(V) to the Disclosure Schedule identifies
-------------------
each Supplier License Agreement, together with the term thereof, all royalties
or other amounts due thereon, and each source code escrow agreement entered into
by the provider or licensor thereof running to the benefit of Company and
relating to any Intangibles and Software identified in such Supplier License
Agreement.
C. Ownership and Right to License.
------------------------------
(i) Except as set forth in SCHEDULE 3.22(C) of the Disclosure
----------------
Schedule, Company has good and marketable title to the Owned Software and
Intangibles attributable to the Owned Software, and have the full right to use
all of the Customer Software and Other Software, and Intangibles attributable
thereto, as used or required to operate Company's businesses as currently
conducted and as contemplated in the future in accordance with Company's written
business plans, free and clear of any liens, claims, charges or encumbrances
which would affect the use of such Software in connection with the operation of
Company's business as currently conducted and as contemplated in the future in
accordance with Company's written business plans.
(ii) No rights of any third party not previously obtained are
necessary to market, license, sell, modify, update, and/or create derivative
works for any Software as to which Company take any such action in their
respective businesses as currently conducted and as contemplated in the future
in accordance with Company's written business plans.
(iii) None of the Software or Intangibles listed in SCHEDULE
--------
3.22, or their respective past or current uses by or through Company have
- ----
violated or infringed upon, or is violating or infringing upon, any Software,
patent, copyright, trade secret or other Intangible of any Person. Company have
adequately maintained all trade secrets and copyrights with respect to such
Software.
Company has performed all obligations imposed upon them with regard to the
Customer Software and Other Software which are required to be performed by them
on or prior to the date hereof, and Company nor, to the Knowledge of Sellers,
any other party, is in breach of or default thereunder in any respect, nor to
the Sellers' Knowledge or the Knowledge of Company, is there any event which
with notice or lapse of time or both would constitute a default thereunder.
(iv) To the Knowledge of Sellers and Company, no Person is
violating or infringing upon, or has violated or infringed upon at any time, any
of Company's rights to any of the Software or Intangibles listed in SCHEDULE
--------
3.22.
- ----
(v) None of the Software or Intangibles listed in SCHEDULE
--------
3.22 are owned by or registered in the name of Sellers, any current or former
- ----
owner, shareholder, partner, director, executive, officer, employee, salesman,
agent, customer, or contractor of Sellers or Company, nor does any such Person
have any interest therein or right thereto, including, but not limited to, the
right to royalty payments. Except as set forth in SCHEDULE 3.22, Company has not
-------------
granted any third party any exclusive rights related to any Owned Software.
-29-
<PAGE>
(vi) No litigation is pending and no claim has been made
against Company or, to the Knowledge of Sellers and Company, is threatened,
which contests the right of Company to sell or license to any Person or entity
or use any of the Owned Software, Customer Software or Other Software. No former
employer of any employee or consultant of Company has made a claim against
Company or, to the Knowledge of Sellers and Company against any other Person,
that Company or such employee or consultant is misappropriating or violating the
Intangibles of such former employer.
(vii) Company is not a party to nor bound by and, upon the
consummation of the Contemplated Transactions, Buyer will not be a party to or
bound by (as a result of any acts or agreements of Company), any license or
other agreement requiring the payment by Company or their assigns of any royalty
or license payment, excluding such agreements relating to the Customer Software
or Other Software to the extent such royalty or license payment is expressly set
forth in SCHEDULE 3.22.
-------------
(viii) Except as set forth in SCHEDULE 3.22(C), the Owned
----------------
Software, Customer Software, and Other Software and the information used by
Company, and the Intangibles thereunder, are fully transferable to Buyer.
(ix) No Software other than the Owned Software, Customer
Software and Other Software is required to operate the business of Company as
currently conducted and as contemplated in the future in accordance with the
written business plans of Company.
(x) Company has supplied Buyer with correct and complete
copies of all Customer License Agreements, Distributor Agreements and Supplier
License Agreements. Except as set forth in SCHEDULE 3.22(C), all Customer
----------------
License Agreements, Distributor Agreements and Supplier License Agreements may
be assigned to Buyer free of cost or expense without obtaining the consent or
approval of any other Person.
(xi) SCHEDULE 3.22(C) identifies all individuals compensated at
----------------
an annual rate in excess of Twenty-Five Thousand and No/100 Dollars ($25,000.00)
who have contributed to the development of the Owned Software.
D. Performance.
-----------
(i) Except as set forth in SCHEDULE 3.22(D)(I) of the Disclosure
-------------------
Schedule, Company Software:
(1) Performs in accordance with all published
specifications for Company Software;
(2) Complies with all other published documentation,
descriptions and literature with respect to Company Software; and
(3) Complies with all representations, warranties and other
requirements specified in all Customer License Agreements and Distributor
Agreements.
-30-
<PAGE>
Except as set forth in SCHEDULE 3.22(D)(I), no claim has been made or, to
-------------------
the Knowledge of Company and the Sellers, is Threatened, that Company Software
fails to perform as set forth in the immediately preceding sentence.
(ii) Except as set forth in SCHEDULE 3.22(D)(II), Company has
--------------------
complied with all Customer License Agreements, Distributor Agreements and
Supplier License Agreements, and to the Knowledge of Company and the Sellers,
except as set forth in SCHEDULE 3.22, all other parties to such agreements have
-------------
complied with all provisions thereof and no default or event of default exists
under any of the Customer License Agreements, Distributor Agreements and
Supplier License Agreements.
(iii) Except as set forth in SCHEDULE 3.22(D)(III), with respect
---------------------
to Company Software:
(1) Company maintain machine-readable master-reproducible
copies, reasonably complete technical documentation and/or user manuals for the
most current releases or versions thereof and for all earlier releases or
versions thereof currently being supported by Company.
(2) In each case, the machine-readable copy substantially
conforms to the corresponding source code listing.
(3) Such Company Software is written in the language set
forth in SCHEDULE 3.22, for use on the hardware set forth in SCHEDULE 3.22 with
------------- -------------
standard operating systems.
E. Such Company Software can be maintained and modified by
reasonable competent programmers familiar with such language, hardware and
operating systems.
F. Millennium Compliance. Except as set forth in SCHEDULE 3.22(E),
--------------------- ----------------
the Owned Software and to the Knowledge of Company and the Sellers, the Customer
Software and Other Software, are "Millennium Compliant." For the purposes of
this Agreement "Millennium Compliant" means:
(i) The functions, calculations, and other computing processes
of the Owned Software, Customer Software and Other Software (collectively,
"Processes") perform in an accurate manner regardless of the date in time on
which the Processes are actually performed and regardless of the date input to
the Owned Software, Customer Software, and Other Software, whether before, on,
or after January 1, 2000, and whether or not the dates are affected by leap
years;
(ii) The Owned Software, Customer Software, and Other Software
accept, store, sort, extract, sequence, and otherwise manipulate date inputs and
date values, and return and display date values, in an accurate manner
regardless of the dates used, whether before, on, or after January 1, 2000;
-31-
<PAGE>
(iii) The Owned Software, Customer Software, and Other Software
will function without interruptions caused by the date in time on which the
Processes are actually performed or by the date input to the Owned Software,
Customer Software, and Other Software, whether before, on, or after January 1,
2000;
(iv) The Owned Software, Customer Software, and Other Software
accept and respond to two (2) digit year and four (4) digit year date input in a
manner that resolves any ambiguities as to the century in a defined,
predetermined, and accurate manner;
(v) The Owned Software, Customer Software, and Other Software
display, print, and provide electronic output of date information in ways that
are unambiguous as to the determination of the century; and
(vi) The Owned Software, Customer Software, and Other Software
have been tested by Company to determine whether the Owned Software, Customer
Software, and Other Software are Millennium Compliant. Company shall deliver the
test plans and results of such tests upon written request from Buyer. Company
shall notify Buyer immediately of the results of any tests or any claim or other
information that indicates the Owned Software, Customer Software, and Other
Software are not Millennium Compliant.
G. Trade Secrets and Confidential Information. Without limiting any
------------------------------------------
of the foregoing representations and warranties contained in the preceding
subparagraphs of this Section 3.22., to the Knowledge of Company and the
Sellers, no current or former owner, shareholder, partner, director, executive,
officer, employee, salesman, agent, customer, or contractor of Company or the
Sellers has disclosed to (without proper obligation of confidentiality) or
otherwise used or utilized on behalf of any Person other than Company, any trade
secrets or proprietary information, including, without limitation, the source
codes for Company Software; provided, however, the trade secrets and proprietary
information listed on SCHEDULE 3.22(G) have been disclosed to Physician's Equity
----------------
Resources, Inc. ("PER").
All Customer License Agreements, Distributor Agreements, software
development agreements, and any other written agreement between Company and any
third party in which trade secrets or confidential information of Company,
Company's customers, agents, or suppliers are disclosed binds the recipient
thereof to take reasonable steps to protect the proprietary rights of Company
and their customers, agents, and suppliers in such trade secrets and
confidential information.
16.23. CERTAIN PAYMENTS. Since December 31, 1992, neither Company nor any
----------------
director, officer, agent, or employee of Company, nor to Sellers' Knowledge any
other Person associated with or acting for or on behalf of Company, has directly
or indirectly:
A. Made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business; (ii) to pay for favorable treatment for business
secured; (iii) to obtain special concessions or for special
-32-
<PAGE>
concessions already obtained, for or in respect of Company or any Affiliate of
Company or (iv) in violation of any Legal Requirement.
B. Established or maintained any fund or asset that has not been
recorded in the books and records of Company.
16.24. DISCLOSURE.
----------
A. No representation or warranty of Sellers in this Agreement and
no statement in the Disclosure Schedule omits to state a material fact necessary
to make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
B. No notice given pursuant to Section 5.5. will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
C. There is no fact known to either Seller that has specific
application to either Seller or Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as either Seller
can reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of Company (on a consolidated
basis) that has not been set forth in this Agreement or the Disclosure Schedule.
16.25. RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
----------------------------------
SCHEDULE 3.25 of the Disclosure Schedule, no Seller nor any Related Person of
Sellers nor of Company has, or since December 31, 1992, has had, any interest in
any property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to Company's businesses.
No Seller nor any Related Person of Sellers or of Company is, or since
December 31, 1992, has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has:
A. Had business dealings or a material financial interest in any
transaction with Company; or
B. Engaged in competition with Company with respect to any line of
the products or services of such Company (a "Competing Business") in any market
presently served by such Company except for less than one percent (1%) of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market.
Except as set forth in SCHEDULE 3.25 of the Disclosure Schedule, no Seller
-------------
or any Related Person of Sellers or of Company is a party to any Contract with,
or has any claim or right against, Company.
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<PAGE>
16.26. BROKERS OR FINDERS. Sellers and their agents have incurred no
------------------
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
16.27. SPECIAL REPRESENTATIVE REGARDING MSI INTEGRATED SERVICES, INC. To
-------------------------------------------------------------
the Knowledge of each Seller, MSI Integrated Services, Inc. ("MSIIS") does not
presently compete and has no intention to compete or engage in any business in
competition with the business of the Company. The Sellers have no direct or
indirect ownership interest in MSIIS, and MSIIS has never made any claim with
respect to the Owned Software or any of the Intangibles owned or used by the
Company.
17. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers as follows:
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<PAGE>
17.1. ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
------------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware.
17.2. AUTHORITY. This Agreement constitutes the legal, valid, and binding
---------
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Escrow Agreement, the
Restrictive Covenants Agreements and the Employment Agreements (collectively,
the "Buyer's Closing Documents"), the Buyer's Closing Documents will constitute
the legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
17.3. INVESTMENT INTENT. Buyer is acquiring the Shares for its own account
-----------------
and not with a view to their distribution within the meaning of Section 2(11) of
the Securities Act.
17.4. CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
-------------------
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
17.5. BROKERS OR FINDERS. Buyer and its officers and agents have incurred
------------------
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Sellers harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
18. COVENANTS OF SELLERS PRIOR TO CLOSING DATE.
18.1. ACCESS AND INVESTIGATION. Between the date of this Agreement and
------------------------
the Closing Date, Sellers will, and will cause Company and its Representatives
to:
A. Afford Buyer and its Representatives and prospective lenders
and their Representatives (collectively, "Buyer's Advisors") full and free
access to Company's personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data;
B. Furnish Buyer and Buyer's Advisors with copies of all such
contracts, books and records, and other existing documents and data as Buyer may
reasonably request; and
C. Furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
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<PAGE>
18.2. OPERATION OF THE BUSINESS OF COMPANY. Between the date of this
------------------------------------
Agreement and the Closing Date, Sellers will, and will cause Company to:
A. Conduct the business of Company only in the Ordinary Course of
Business;
B. Use their Best Efforts to preserve intact the current business
organization of Company, keep available the services of the current officers,
employees, and agents of Company, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with Company;
C. Confer with Buyer concerning operational matters of a material
nature; and
D. Otherwise report periodically to Buyer concerning the status of
the business, operations, and finances of Company.
18.3. NEGATIVE COVENANT. Except as otherwise expressly permitted by this
-----------------
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause Company not to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
3.16. is likely to occur.
18.4. REQUIRED APPROVALS. As promptly as practicable after the date of
------------------
this Agreement, Sellers will, and will cause Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Sellers will, and will cause Company to:
A. Cooperate with Buyer with respect to all filings that Buyer
reasonably elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions; and
B. Cooperate with Buyer in obtaining all required Consents.
18.5. NOTIFICATION. Between the date of this Agreement and the Closing
------------
Date, each Seller will promptly notify Buyer in writing if such Seller or
Company becomes aware of any fact or condition that causes or constitutes a
Breach of any of Sellers' representations and warranties as of the date of this
Agreement, or if such Seller or Company becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition.
Should any such fact or condition require any change in the Disclosure
Schedule if the Disclosure Schedule were dated the date of the occurrence or
discovery of any such fact or
-36-
<PAGE>
condition, Sellers will promptly deliver to Buyer a supplement to the Disclosure
Schedule specifying such change. During the same period, each Seller will
promptly notify Buyer of the occurrence of any Breach of any covenant of Sellers
in this Section 5. or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7. impossible or unlikely.
18.6. PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
------------------------------------------
provided in this Agreement, Sellers will cause all indebtedness owed to Company
by either Seller or any Related Person of either Seller to be paid in full prior
to Closing.
18.7. NO NEGOTIATION. Until such time, if any, as this Agreement is
--------------
terminated pursuant to Section 9., Sellers will not, and will cause Company and
its Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of Company, or any of the capital stock of Company,
or any merger, consolidation, business combination, or similar transaction
involving Company.
19. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
19.1. APPROVALS OF GOVERNMENTAL BODIES/THIRD PARTY CONSENTS. As promptly
-----------------------------------------------------
as practicable after the date of this Agreement, Buyer will, and will cause each
of its Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and
will cause each Related Person to:
A. Cooperate with Sellers with respect to all filings that Sellers
are required by Legal Requirements to make in connection with the Contemplated
Transactions; and
B. Cooperate with Sellers in obtaining all consents identified in
SCHEDULE 3.2 of the Disclosure Schedule; provided that this Agreement will not
- ------------
require Buyer to dispose of or make any change in any portion of its business or
to incur any other burden to obtain a Governmental Authorization.
19.2. BEST EFFORTS. Except as set forth in Section 6.1., between the date
------------
of this Agreement and the Closing Date, Buyer will use its Best Efforts to cause
the conditions in Sections 7. and 8. to be satisfied.
20. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
-37-
<PAGE>
20.1. ACCURACY OF REPRESENTATIONS.
---------------------------
A. All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Schedule.
B. Each of Sellers' representations and warranties in Article 3.
must have been accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Disclosure
Schedule.
20.2. SELLERS' AND COMPANY'S PERFORMANCE.
----------------------------------
A. All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
B. Each document required to be delivered pursuant to Section 2.4.
must have been delivered, and each of the other covenants and obligations in
Sections 5.4. and 5.8. must have been performed and complied with in all
respects.
C. Company shall have generated One Million Two Hundred Thousand
and No/100 Dollars ($1,200,000.00) or more of Operating Income for the twelve
(12) month period ending December 31, 1997.
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20.3. CONSENTS. Each of the Consents identified in SCHEDULE 3.2 of the
-------- ------------
Disclosure Schedule must have been obtained and must be in full force and
effect.
20.4. ADDITIONAL DOCUMENTS. Seller shall deliver such other documents as
--------------------
Buyer may reasonably request for the purpose of (i) enabling its counsel to
provide the opinion referred to in Section 8.4.A.; (ii) evidencing the accuracy
of any of Sellers' representations and warranties; (iii) evidencing the
performance by either Seller of, or the compliance by either Seller with, any
covenant or obligation required to be performed or complied with by such Seller;
(iv) evidencing the satisfaction of any condition referred to in this Section 7.
or (v) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
20.5. NO PROCEEDINGS. Since the date of this Agreement, there must not
--------------
have been commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (i) involving any challenge to, or seeking
Damages or other relief in connection with, any of the Contemplated Transactions
or (ii) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
20.6. NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There must not
---------------------------------------------------
have been made or Threatened by any Person any claim asserting that such Person
(i) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, any of Company or (ii) is entitled to all or any portion
of the Purchase Price payable for the Shares.
20.7. NO PROHIBITION. Neither the consummation nor the performance of any
--------------
of the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (i) any applicable Legal
Requirement or Order or (ii) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
20.8. APPROVAL OF BUYER'S LENDER. FINOVA Capital Corporation or such
--------------------------
other institution that is acting as the senior lender to Buyer at the time the
Closing is scheduled shall have approved the Contemplated Transactions and shall
have loaned to the Buyer and its Affiliates sufficient money to fund the Cash
Purchase Price and shall have agreed to lend to the Buyer sufficient money to
fund the Earnout, subject to usual and customary conditions imposed on the Buyer
in order to draw-down funds on the Buyer's line of credit.
20.9. DUE DILIGENCE. Buyer shall have completed to its complete and sole
-------------
satisfaction a detailed investigation of the business of the Company and all
assets and agreements relating thereto, and shall be satisfied with the results
of such investigation.
21. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE.
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
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<PAGE>
21.1. ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
---------------------------
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
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21.2. BUYER'S PERFORMANCE.
-------------------
A. All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
B. Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4. and must have made the cash payment
required to be made by Buyer pursuant to Sections 2.2.
21.3. CONSENTS. Each of the Consents identified in SCHEDULE 3.2 of the
-------- ------------
Disclosure Schedule must have been obtained and must be in full force and
effect.
21.4. ADDITIONAL DOCUMENTS. Buyer must have caused the following
--------------------
documents to be delivered to Sellers such other documents as Sellers may
reasonably request for the purpose of (i) enabling their counsel to provide the
opinion referred to in Section 2.4.A.(ii); (ii) evidencing the accuracy of any
representation or warranty of Buyer; (iii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer; (iv) evidencing the satisfaction of any
condition referred to in this Section 8. or (v) otherwise facilitating the
consummation of any of the Contemplated Transactions.
21.5. NO INJUNCTION. There must not be in effect any Legal Requirement or
-------------
any injunction or other Order that (i) prohibits the sale of the Shares by
Sellers to Buyer and (ii) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
22. TERMINATION.
22.1. TERMINATION EVENTS.
------------------
This Agreement may, by notice given prior to or at the Closing, be
terminated:
A. By either Buyer or Sellers if a material Breach of any provision
of this Agreement has been committed by the other party and such Breach has not
been waived;
B. (i) By Buyer if any of the conditions in Section 7. has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date;
(ii) By Sellers, if any of the conditions in Section 8. has not
been satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers to comply with
their obligations under this Agreement) and Sellers have not waived such
condition on or before the Closing Date; or
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C. By mutual consent of Buyer and Sellers; or
D. By either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before Monday,
March 2, 1998, or such later date as the parties may agree upon.
22.2. EFFECT OF TERMINATION. Each party's right of termination under
---------------------
Section 9.1. is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1., all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.1. and 11.3. will survive; provided,
however, that if this Agreement is terminated by a party because of the Breach
of the Agreement by the other party or because one (1) or more of the conditions
to the terminating party's obligations under this Agreement is not satisfied as
a result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
23. INDEMNIFICATION; REMEDIES.
23.1. AGREEMENT BY SELLERS TO INDEMNIFY. Sellers, jointly and severally
---------------------------------
(the "Seller Indemnifying Parties"), agree that they will indemnify and hold
Buyer harmless in respect of the aggregate of all indemnifiable Damages of
Buyer.
For this purpose, "indemnifiable Damages" of Buyer means the aggregate of
all Damages incurred or suffered by Buyer resulting from:
A. Any inaccurate representation or warranty made by Sellers in or
pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Sellers in this Agreement; or
C. The failure of any Seller to pay, discharge or perform any
liability or obligation of Sellers or of Company resulting from the operation of
Company's business prior to the Closing Date.
D. Any Damages arising from any relationship with any customer of
Company relating to the license, support, maintenance, or upgrade of the Company
Software or any services provided or to be provided by Company to such customer,
whether the final element of any cause of action giving rise to such Damages
arises before or after the Closing Date under the following situations: (1) the
indemnification set forth in this subparagraph D. for software license
agreements in existence as of the Closing Date shall only be for Damages in
excess of the license fees paid under such license agreement (except as set
forth in item (3) below), (2) the indemnification set forth in this subparagraph
D. for software maintenance or support agreements in existence as of the Closing
Date shall only be for Damages in excess of the maintenance or
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support fees paid under such agreement for the 12 month period prior to the date
such claim was made (except as set forth in item (3) below), and (3) the
indemnification set forth in this subparagraph D. for software maintenance
obligations that are not terminable as a matter of contract right by the Company
shall not be so limited; however, the Company shall take reasonable effort to
supersede such agreements at the time annual renewal fees are due. The right of
indemnification set forth in this subparagraph D. is conditioned on the
Company's good faith efforts to perform its obligations under its existing
agreements with customers. With respect to each agreement with each customer of
the Company, the obligations of indemnification under this subparagraph D. shall
expire for claims that have not arisen by the earlier of the date that the
Company has a contractual right to terminate such agreement, the date that such
agreement actually terminates, or the date such agreement is superseded.
E. Any losses or claims of loss occurring as a result of a customer
or such customer's employees or agents selling, licensing, or otherwise
distributing or using the Company Software other than for the internal use of
such customer; provided however, the indemnification set forth in this
subparagraph E. for any particular customer shall not be effective after such
customer executes Buyer's standard form of software license agreement and
software maintenance agreement, as designated by Buyer from time to time or as
otherwise approved by Buyer in writing.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable Damages", Buyer shall have the right to be put in
the same financial position as it would have been had each of the
representations and warranties of Sellers been true and correct and had each of
the covenants of Sellers been performed in full.
The amount of any indemnifiable Damages otherwise payable to Buyer
hereunder shall be reduced if the indemnifiable Damages incurred by Buyer will
provide Buyer with income tax deductions or credits. The amount of the
reduction shall be the amount of the actual cash tax savings realized by Buyer
as a result of such deductions or credits, discounted to its present value as of
the date of the payment of the indemnifiable Damages from the date such
indemnifiable Damages were incurred by Buyer at the rate of interest charged on
such date by the Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Seller Indemnifying Parties to indemnify Buyer
shall be subject to each of the following principles or qualifications:
23.1.1. Each of the representations and warranties made by Sellers in
this Agreement or pursuant hereto, shall survive for a period of five (5) years
at the Closing; provided, however, that the representations and warranties made
by Sellers to the extent they relate to Sellers' title to the Shares shall
survive forever and that the representations and warranties made by Seller and
Shareholder in Section 4.5. hereof ("Tax Matters") shall in each case survive
until the first (1st) anniversary of the later of:
A. The date on which applicable period of limitation on
assessment or refund of tax has expired; or
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B. The date on which the applicable taxable year (or portion
thereof) has been closed.
No claim for the recovery of indemnifiable Damages may be asserted by Buyer
against Seller Indemnifying Parties or their successors in interest after such
representations and warranties shall be thus extinguished; provided, however,
that claims first asserted in writing within the applicable period shall not
thereafter be barred. In addition, the Seller Indemnifying Parties shall have no
liability with respect to indemnifiable Damages until the total of all such
Damages exceeds $20,000.00 in which event the Seller Indemnifying Parties shall
be obligated to indemnify Buyer as provided herein for all such Damages.
Notwithstanding the foregoing, in no event shall the aggregate liability of the
Seller Indemnifying Parties under this Section 10. exceed the Purchase Price.
23.2. AGREEMENTS BY BUYER TO INDEMNIFY. Buyer (the "Buyer Indemnifying
--------------------------------
Party"), agrees to indemnify and hold Seller and Shareholder (the "Seller
Indemnified Parties") harmless in respect of the aggregate of all indemnifiable
Damages of any of Seller Indemnified Parties.
For this purpose, "indemnifiable Damages" of any of Seller Indemnified
Parties means the aggregate of all Damages incurred or suffered by any of Seller
Indemnified Parties resulting from:
A. Any inaccurate representation or warranty made by Buyer or
pursuant to this Agreement; or
B. Any default in the performance of any of the covenants or
agreements made by Buyer in this Agreement.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable Damages", each of Seller Indemnified Parties shall
have the right to be put in the same financial position as they would have been
had each of the representations and warranties of Buyer Indemnifying Parties
been true and correct and had each of the covenants of Buyer Indemnifying
Parties been performed in full.
The amount of any indemnifiable Damages otherwise payable to any Seller
Indemnified Party hereunder shall be reduced if the indemnifiable Damages
incurred by Seller Indemnified Party will provide such Party with income tax
deductions or credits. The amount of the reduction shall be the amount of the
actual cash tax savings realized by Seller Indemnified Party as a result of such
deductions or credits discounted to its present value as of the date of the
payment of the indemnifiable Damages from the date such indemnifiable Damages
were incurred by Seller Indemnified Party at the rate of interest charged on
such date by the Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Buyer Indemnifying Parties to indemnify Seller
Indemnified Parties shall be subject to each of the following principles or
qualifications:
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23.2.1. Each of the representations and warranties made by Buyer in
Article 3 of this Agreement shall survive for a period of three (3) years after
the Closing Date, and thereafter all such representations and warranties shall
be extinguished.
No claim for the recovery of indemnifiable Damages pursuant to clause (i)
of Section 10.2. may be asserted by Seller Indemnified Parties against Buyer
Indemnifying Parties or its successors in interest after such representations
and warranties shall be thus extinguished; provided, however, that claims first
asserted in writing within the applicable period shall not thereafter be barred.
23.3. MATTERS INVOLVING THIRD PARTIES. If any third party shall notify
-------------------------------
Buyer or Seller (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 10. then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent that) the Indemnifying Party thereby is
Damaged.
If any Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then:
A. The Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice satisfactory to the Indemnified Party;
B. The Indemnified Party may retain separate co-counsel at its sole
cost and expense (except that the Indemnifying Party will be responsible for the
fees and expenses of the separate co-counsel to the extent the Indemnified Party
concludes that the counsel the Indemnifying Party has selected has a conflict of
interest);
C. The Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably); and
D. The Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any settlement which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld or delayed unreasonably).
If no Indemnifying Party notifies the Indemnified Party within fifteen (15)
days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it may deem appropriate.
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23.4. OTHER AGREEMENTS. Any indemnity obligations which Seller may have to
----------------
Buyer can be discharged by the Escrow Agent from the funds held in escrow
pursuant to Section 2.4.A.(vii). above.
24. GENERAL PROVISIONS.
24.1. EXPENSES. Except as otherwise expressly provided in this Agreement,
--------
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.
Sellers will cause Company not to incur any out-of-pocket expenses in
connection with the Contemplated Transactions. In the event of termination of
this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
24.2. PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
--------------------
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by Legal Requirements, prior to the Closing
Sellers shall, and shall cause Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Sellers and Buyer will consult with each other concerning the means by
which Company's employees, customers, and suppliers and others having dealings
with Company will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
24.3. CONFIDENTIALITY. Between the date of this Agreement and the Closing
---------------
Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and Company to
maintain in confidence, and not use to the detriment of another party or an
Company any written, oral, or other information obtained in confidence from
another party or an Company in connection with this Agreement or the
Contemplated Transactions, unless:
A. Such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party;
B. The use of such information is necessary or appropriate in making
any filing or obtaining any consent or approval required for the consummation of
the Contemplated Transactions; or
C. The furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
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If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Sellers waive, and
will upon Buyer's request cause Company to waive, any cause of action, right, or
claim arising out of the access of Buyer or its representatives to any trade
secrets or other confidential information of Company except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information.
24.4. NOTICES. All notices, consents, waivers, and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand (with written confirmation of receipt); (ii)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested or (iii) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Kurt I. Lawrence
4666 Jefferson Township Lane
Marietta, Georgia 30066
Telephone: (770) 594-7866
Telecopy: (770) 973-1692
Karen A. Lawrence
4666 Jefferson Township Lane
Marietta, Georgia 30066
Telephone: (770) 594-7866
Telecopy: (770) 973-1692
Philip E. Warenik
1421 Chardin Drive
Marietta, Georgia 30062
Telephone: (770) 579-6212
Telecopy: (770) 973-1692
With a copy to: Manko & Hogan
332 Lawrence Street, N.E.
Marietta, Georgia 30060
Attention: J. Stephen Manko, Esq.
James D. Hogan, Jr., Esq.
Telecopy No.: (770) 422-7730
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Buyer: InfoCure Corporation
1765 The Exchange
Suite 450
Atlanta, Georgia 30339
Attention: James K. Price
Telecopy No.: (770) 857-1300
With a copy to: Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326-1044
Attention: Richard L. Haury, Jr., Esq.
Telecopy No.: (404) 365-9532
24.5. JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
--------------------------------
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Georgia, County of DeKalb, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Georgia, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
24.6. FURTHER ASSURANCES. The parties agree (i) to furnish upon request to
------------------
each other such further information; (ii) to execute and deliver to each other
such other documents and (iii) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
24.7. WAIVER. The rights and remedies of the parties to this Agreement are
------
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege.
To the maximum extent permitted by applicable law:
A. No claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one (1) party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party;
B. No waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and
C. No notice to or demand on one (1) party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take
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further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
24.8. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
---------------------------------
prior agreements between the parties with respect to its subject matter
(including the Letter of Intent between Buyer and Sellers dated November 20,
1997) and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
24.9. DISCLOSURE SCHEDULE.
-------------------
A. The disclosures in the Disclosure Schedule, and those in any
Supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
B. In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
24.10. ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS. Neither party
-------------------------------------------------
may assign any of its rights under this Agreement without the prior consent of
the other parties, which will not be unreasonably withheld, except that Buyer
may assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
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24.11. SEVERABILITY. If any provision of this Agreement is held invalid or
------------
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
24.12. SECTION HEADINGS; CONSTRUCTION. The headings of Sections in this
------------------------------
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
24.13. TIME OF ESSENCE. With regard to all dates and time periods set
---------------
forth or referred to in this Agreement, time is of the essence.
24.14. GOVERNING LAW. This Agreement will be governed by the laws of the
-------------
State of Georgia without regard to conflicts of laws principles.
24.15. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER: SELLERS:
InfoCure Corporation
By:/s/ James K. Price /s/ Kurt I. Lawrence (SEAL)
--------------------------------- ---------------------------------------
Kurt I. Lawrence
Title:Executive Vice President
------------------------------
Date:_______________________________ Date:__________________________________
/s/ Karen A. Lawrence (SEAL)
---------------------------------------
Karen A. Lawrence
Date:
/s/ Philip E. Warenik (SEAL)
---------------------------------------
Philip E. Warenik
Date:__________________________________
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SCHEDULES
---------
SCHEDULE 2.4 Employees Signing Covenants Agreements
- ------------
SCHEDULE 3.1 Incorporation, Capitalization and Foreign Qualifications
- ------------
of Company
SCHEDULE 3.2 Violations/Required Third Party Consents
- ------------
SCHEDULE 3.4 Financial Statements
- ------------
SCHEDULE 3.6 Real Property, Leaseholds and Other Interests Owned by
- ------------
Any Acquired Company (Including, Without Limitation,
Properties and Asset Purchased Subsequent to the Date
of the Balance Sheet)
SCHEDULE 3.8 Aged Accounts, Receivable as of January 1, 1998
- ------------
SCHEDULE 3.10 Liabilities of Acquired Companies
- -------------
SCHEDULE 3.11 Delinquent Tax Returns, Disputed Assessments,
- -------------
Deficiencies and Adjustments, Audits, Extensions, Target
Affiliates and Related Matters
Schedule 3.13.1 Company Plans, Company Other Benefit Obligations,
- ---------------
Participants in plans other than current and former
employees of company
SCHEDULE 3.14 Non-Compliance With Legal Requirements; Governmental
- -------------
Authorizations
SCHEDULE 3.15 Legal Proceedings; Orders
- -------------
SCHEDULE 3.16 Changes and Events Outside of Ordinary Course of
- -------------
Business
SCHEDULE 3.17(A) Material Contracts
- ----------------
SCHEDULE 3.17(C) Related Person Contracts
- ----------------
SCHEDULE 3.17(D) Exceptions to Enforceability of Material Contracts
- ----------------
SCHEDULE 3.17(E) Exceptions to Compliance With Material Contracts
- ----------------
SCHEDULE 3.18(B) Exceptions to Adequacy, Enforceability of Insurance
- ----------------
SCHEDULE 3.19 Environmental Matters
- -------------
SCHEDULE 3.20 Employees and Directors of Acquired Companies Including
- -------------
Information Regarding Retired Employees or Directors
SCHEDULE 3.22 Intellectual Property Rights; Company Software
- -------------
SCHEDULE 3.22(B)(I) List of All Owned Software, Customer Software, Other
- -------------------
Software
SCHEDULE 3.22(B)(II) Registrations of the Acquired Companies
- --------------------
SCHEDULE 3.22(B)(III) Customer License Agreements
- ---------------------
SCHEDULE 3.22(B)(IV) Distributor Agreements
- --------------------
SCHEDULE 3.22(B)(V) Supplier License Agreements
- -------------------
SCHEDULE 3.22(C) Exceptions to Ownership and Right to License Owned
- ----------------
Software and Intangibles and List of All Individuals
Compensated at an Annual Rate in Excess of $25,000.00
Who Have Contributed to the Development of Owned
Software
SCHEDULE 3.22(D)(I) Exceptions to Performance of Acquired Companies
- -------------------
Software
SCHEDULE 3.22(D)(II) Exceptions to Compliance With Customer License
- --------------------
Agreements, Distributor Agreements and Supplier License
Agreements
SCHEDULE 3.22(D)(III) Exceptions to Readability/Reproducibility of Acquired
- ---------------------
Companies Software
SCHEDULE 3.22(E) Millennium Compliance
- ----------------
-52-
<PAGE>
SCHEDULE 3.22(G)
- ----------------
SCHEDULE 3.25 Related Party Contracts, Claims or Rights Against
- -------------
Acquired Companies
-53-
<PAGE>
EXHIBITS
--------
EXHIBIT A Opinion of Sellers' Counsel
---------
EXHIBIT B Restrictive Covenant Agreement
---------
EXHIBIT C Employment Agreement - Kurt I. Lawrence
---------
EXHIBIT D Employment Agreement - Philip E. Warenik
---------
EXHIBIT E Covenants Agreements
---------
EXHIBIT F Escrow Agreement
---------
EXHIBIT G Certificate of Sellers
---------
EXHIBIT H Wire Transfer Instructions
---------
EXHIBIT I Registration Rights Agreement
---------
EXHIBIT J Certificate of Buyer
---------
EXHIBIT K Opinion of Buyer's Counsel
---------
EXHIBIT L PER Agreement
---------
EXHIBIT M Subscription Agreements
---------
EXHIBIT N Termination of Shareholders Agreement
---------
EXHIBIT O Termination of Steve Avery's Employment
---------
Agreement
EXHIBIT P Assignment and Assumption of Lease; Assumption
---------
Agreement
-54-
<PAGE>
PR NEWSWIRE INVESTORFAX
InfoCure Corporation Acquires Micro-Designs Software
ATLANTA. Feb. 23 /PRNewswire/ -- InfoCure Corporation (Amex: INC) announced
today that it has signed a definitive agreement to acquire Micro-Designs
Software Corporation of Ridgefield, Connecticut for a combination of cash and
InfoCure stock. Under terms of the agreement Joseph M. Walsh, president of
Micro-Designs, will become president of InfoCure's Oral Surgery Division. The
acquisition is expected to be closed during the week of February 23, 1998.
Micro-Designs is a leading provider of computerized medical office
information systems for oral and maxillofacial surgeons. Chief among its
products is WinOMS, a 32-bit software application for the Microsoft Windows95
and WindowsNT operating platforms.
"InfoCure is a natural opportunity for Micro-Designs because of its
existing presence in the oral surgery market." Walsh said, "Micro-Designs will
enable InfoCure to expand its presence in this vital healthcare market."
The addition of Micro-Designs gives InfoCure a client roster of more than
1,500 oral surgery practices nationwide which represents about 60% of those
currently using automated management systems.
"Our goal is to provide healthcare providers with systems to make their
business operations more profitable in a marketplace increasingly affected by
managed care," said Frederick L. Fine, president and CEO of InfoCure.
"InfoCure Corporation is committed to its acquisition strategy which
focuses on leading companies in specific healthcare markets."
InfoCure Corporation develops, markets and supports practice management
software products and related services for healthcare practices of varying size
and specialty, including multi-provider Management Service Organizations (MSOs)
Independent Physician Alliances (IPAs) and solo practitioners. InfoCure has an
installed customer base of over 24,000 healthcare providers that practice in all
50 states.
Certain statements in this release, including statements related to the
popularity of WinOMS software, are forward-looking. Although InfoCure believes
that its expectations are based on reasonable assumptions within the boundaries
of its knowledge of its business, there can be no assurance that actual results
will not differ materially from its expectations. A discussion of certain risk
factors that may cause results to differ from these forward-looking statements
can be found in the Registration Statement for InfoCure on file with the SEC.
For additional information, visit InfoCure's web site at
http://www.infocure.com.
SOURCE InfoCure Corporation
-0- 02/23/98
/CONTACT: Frederick L. Fine, InfoCure Corporation. 770-221-9990/
/Web site: http://www.infocure.com/
(INC)
-1-
<PAGE>
PR NEWSWIRE INVESTORFAX
Infocure Corporation Acquires Medical Software Integrators, Inc.
ATLANTA, March 3 /PRNewswire/ -- InfoCure Corporation (Amex: INC) announced
today that it has completed the acquisition of Medical Software Integrators,
Inc. ("MSI") for a combination of cash and stock.
Headquartered in Marietta, Georgia, MSI is the largest supplier of practice
management systems and decision support tools to the anesthesia community. MSI's
Office 2000 Product Suite, which includes the "Micro*Star" Anesthesia Practice
Management System and a Decision Support System, anchored by the MSI developed
Data Warehouse/Data Mining tool, delivers advanced technologies to the
anesthesia marketplace. MSI's products operate in a Windows-based, client/server
environment utilizing Microsoft's NT platform. The system is sold nationally and
targets independent anesthesiology practices, billing services and MSOs.
"MSI is extremely pleased at becoming part of InfoCure's rapidly growing
practice management team," said Kurt Lawerence, founder of MSI. "I believe that
MSI, its employees, clients and InfoCure will all benefit from this strategic
merger."
"Our goal is to provide healthcare providers with systems to make their
business operations more profitable in a marketplace increasingly affected by
managed care," said Frederick L. Fine, president and CEO of InfoCure. "InfoCure
is committed to its acquisition strategy which focuses on leading companies in
specific healthcare markets."
"With the completion of the MSI acquisition, InfoCure is now one of the
largest providers of anesthesiology practice management systems in the HCIS
industry. We believe InfoCure is demonstrating its ability to execute its
business strategy," said James K. Price, Executive Vice President of InfoCure.
InfoCure Corporation develops, markets and supports practice management
software products and related services for healthcare practices of varying size
and specialty, including multi-provider Management Service Organizations (MSOs),
Independent Physician Alliances (IPAs) and solo practitioners. InfoCure has an
installed customer base of over 24,000 healthcare providers that practice in all
50 states.
Certain statements in this release, including statements related to MSI's
anesthesiology practice management systems and the Company's future goals, are
forward-looking. Although InfoCure believes that its expectations are based on
reasonable assumptions within the boundaries of its knowledge of its business,
there can be no assurance that actual results will not differ materially from
its expectations. A discussion of certain risk factors that may cause results to
differ from these forward-looking statements can be found in the Registration
Statement for InfoCure on file with the SEC.
For additional information, visit InfoCure's web site at
http://www.infocure.com.
SOURCE InfoCure Corporation
-0- 03/03/98
/CONTACT: Susan M. Gustafson, InfoCure Corporation, 770-221-9990/
/Web site: http://www.infocure.com/
(INC)
-1-
