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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) December 22, 1999
INFOCURE CORPORATION
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(exact name of registrant as specified in chapter)
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 500 Atlanta, GA 30339
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(Address of principal executive office) (zip code)
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
Item 5: Other Events...................................................... 3
Item 7: Financial Statements and Exhibits................................. 3
Signatures................................................................. 4
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Item 5. Other Events.
On December 15, 1999, InfoCure Corporation ("InfoCure") acquired
VitalWorks, Inc. for a combination of cash and stock. InfoCure paid $2.0
million and issued to the former shareholders of VitalWorks 300,000 shares of
InfoCure's common stock in connection with the acquisition. InfoCure acquired
VitalWorks as part of its strategy to deliver healthcare information technology
to physicians as an Application Service Provider, or "ASP." InfoCure plans to
form VitalWorks.com, which will operate as a wholly-owned subsidiary of InfoCure
and will contain the operations of VitalWorks. In addition, InfoCure will
contribute to VitalWorks.com the business of those specialty practices that are
most likely to adopt the ASP model. InfoCure intends to conduct an initial
public offering of up to 20% of the stock of VitalWorks.com during the first or
second quarter of 2000.
InfoCure has teamed with Hewlett-Packard Company and Qwest Communications
International, Inc. to enable InfoCure to offer its VitalWorks practice
management software as an ASP to physicians and healthcare practices.
Item 7. Financial Statements and Exhibits.
(b) Exhibits
The following exhibits are filed herewith:
Exhibit Description
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99.1 Press release dated December 22, 1999 announcing the acquisition of
VitalWorks to offer healthcare information technology as an
Application Service Provider via the Internet
99.2 Press release dated December 22, 1999 announcing the planned
formation of VitalWorks.com, an Application Service Provider
subsidiary, and a proposed initial public offering of the common
stock of VitalWorks.com
99.3 Press release dated December 22, 1999 announcing teaming with
Hewlett-Packard Company and Qwest Communications International, Inc.
99.4 Asset Purchase Agreement dated December 15, 1999
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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
(Registrant)
Date: December 22, 1999 by: /s/ Frederick L. Fine
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Frederick L. Fine
President/CEO
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EXHIBIT 99.1
InfoCure Acquires VitalWorks to Offer Healthcare
Information Technology As Application Service
Provider (ASP) via Internet
ATLANTA, Dec. 22 /PRNewswire/ -- InfoCure Corporation (Nasdaq: INCX -news)
announced today that it has acquired VitalWorks as a critical component of
InfoCure's strategy to deliver healthcare information technology to physicians
as an Application Service Provider. InfoCure believes it is one of the first
healthcare information services company to develop a strategy to deliver product
as an ASP. As an ASP, InfoCure will generate revenue by encouraging customers to
subscribe to its services which will give them online access to software
applications and expanded healthcare connectivity that will be hosted on a
central server. Under this ASP model, consumers will "rent versus buy"
InfoCure's software applications.
InfoCure will form VitalWorks.com, which will operate as a wholly owned
subsidiary of InfoCure, and contain the operations of VitalWorks. In addition,
InfoCure will contribute to VitalWorks.com the business of those specialty
practices that are most likely to adopt the ASP model. The formation of
VitalWorks.com will enable InfoCure to more effectively develop and design
products to operate in an ASP environment and to manage the delivery of this new
model to its customers. InfoCure also announced today that it is working with
Hewlett-Packard Company (NYSE: HWP) and Qwest Communications International, Inc.
(Nasdaq: QWST) to offer InfoCure's practice management software acquired from
VitalWorks, as an ASP.
Frederick L. Fine, InfoCure President and CEO stated, "The launching of
our ASP initiative, in combination with HP and Qwest Communications, gives
InfoCure a crucial first mover technological advantage. In addition, we will be
able to benefit from the opportunities that the Internet affords in the areas of
e-commerce and healthcare connectivity.
"Our desire to offer products acquired with VitalWorks will give us
the ability to focus on the burgeoning ASP market. With the latest in ASP
practice management applications, and an established infrastructure that can
deliver IT services and nationwide distribution, we believe we are in a unique
position to capitalize on this high growth opportunity."
Kurt Lawrence, InfoCure's Chief Technology Officer said, "VitalWorks'
contractual application utilizes ITS (Microsoft Internet Information Server),
MTS (Microsoft Transaction Server), thin client architecture as well as
Microsoft Internet Explorer version 4.0 or greater. Security is provided via
Microsoft's 128-bit encryption. Industrial strength high-speed data access is
implemented utilizing Oracle's database products.
"We believe this combination of leading edge Internet technology
differentiates our products substantially from other re-tooled legacy practice
management products applications presently being offered to medical practices in
an ASP environment, as well as providing us with a substantial competitive
advantage."
Russell Keene, VitalWorks President and CEO stated "InfoCure's track
record of successfully rationalizing the physicians practice management systems
market combines proven execution with technical leadership. During the last two
years, VitalWorks has developed its practice management software to operate in a
real ASP environment. We believe that the combination of VitalWorks
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technology and InfoCure's desktop franchise, distribution and service
infrastructure provides the necessary components to be the leader in the HCIS
ASP marketplace."
InfoCure is a leading national provider of healthcare practice management
software products and services to targeted healthcare practice specialties,
including anesthesiology, dermatology, dentistry, oral and maxillofacial
surgery, orthodontics, podiatry, radiology, ophthalmology and oncology, as well
as to larger general medical practices. The Company's wide range of practice
management software products automate the administrative, financial and clinical
information management functions of both office-based and hospital-based
healthcare practices. InfoCure provides its customers with ongoing software
support, training and electronic data interchange (EDI) services.
Certain statements in this release are forward-looking including statements
relating to InfoCure's ability to introduce its ASP business model and bring the
benefits of electronic commerce and Internet connectivity to its customer base.
A discussion of certain risk factors that may cause results to differ from any
forward-looking statements made herein can be found in filings made by the
Company with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-KSB for the period ending December 31, 1998 and the
Company's Registration Statement on Form S-3 on file with the Commission.
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EXHIBIT 99.2
InfoCure Announces Planned Formation of
VitalWorks.com, an Application Service Provider Subsidiary, and Initial
Public Offering of Its Common Stock
ATLANTA, Dec. 22 /PRNewswire/ -- InfoCure Corporation (Nasdaq: INCX -news)
announced today that the Company plans to form a new application service
provider subsidiary, VitalWorks.com, and to conduct an initial public offering
of its common stock. InfoCure expects that the new subsidiary will prepare a
registration statement to be filed with the Securities and Exchange Commission
and to offer up to 20% of its outstanding shares to the public. The exact timing
and terms of the offering are dependent on market conditions, and there can be
no assurance that an offering will be commenced, or if commenced, that the
offering will be successfully completed. The offering is expected to take place
during the first or second quarter of 2000.
The shares will be offered only by means of a prospectus. A registration
statement relating to these securities has not been filed with the Securities
and Exchange Commission. These shares may not be sold, and offers to buy may not
be accepted, before the registration statement is declared effective by the
Securities and Exchange Commission. This release does not constitute an offer to
sell, nor a solicitation of an offer to buy, any shares of VitalWorks.com.
The statements in this press release regarding the filing of a registration
statement, the timing of such filing and any other future aspect relating to the
proposed offering are forward-looking statements. Such statement involve risks
and uncertainties, including, but not limited to, market conditions, general
economic conditions and various factors that could affect the business of
InfoCure or its subsidiaries. Should one or more of these risks of uncertainties
materialize, actual outcomes may vary materially from those indicated.
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EXHIBIT 99.3
HP, Qwest Communications and InfoCure Team to
Build Application Service Provider E-Service for
Physicians and Healthcare Practices
PALO ALTO, Calif., DENVER and ATLANTA, Dec. 22 /PRNewswire/ --Hewlett-
Packard Company, Qwest Communications International Inc. and InfoCure
Corporation (Nasdaq: INCX) today announced they are working together to enable
InfoCure to offer its VitalWorks practice management software as an Application
Service Provider (ASP) to physicians and healthcare practices. The new
VitalWorks e-service will provide physicians and healthcare practice staff with
greater efficiencies; reduced costs; improved connectivity to insurance
companies, pharmacies and laboratories; as well as faster, more complete access
for authorized staff to secure patient records.
InfoCure, one of the world's first healthcare-practice management software
providers to offer a browser-based product over the Internet on an on-tap basis,
is leveraging Qwest's state-of-the-art CyberCenters throughout the United
States, as well as Qwest's nationwide Internet Protocol-based communications
network. HP is already a preferred provider of computing products to Qwest and
is a provider of products, services and financing to InfoCure and InfoCure's
customers.
Leveraging HP's financing services to offer subscription pricing, InfoCure
intends to sell and lease to its on-tap customers HP personal computers and
handheld devices with which they can access VitalWorks, and will continue to
provide consulting and full life-cycle support services.
By the end of March 2000, Qwest expects to provide InfoCure and its
customers with access to VitalWorks through its state-of-the art fiber-optic
network, with technical and engineering staff monitoring the application 24x7.
At Qwest's facilities, VitalWorks will run on HP NetServer systems running
Microsoft(R) Windows NT(R).
InfoCure will also sell Qwest's Internet Access to its customers and will
be supported through the Qwest Business Partner Program (QBPP), which recently
launched the industry's first ASP program, called Q.ASP, to help independent
software vendors and systems integrators who are initiating an ASP solution. The
QBPP, launched in July, offers resellers a complete range of Internet solutions,
including high-speed dedicated Internet access, Web- and application-hosting,
and Microsoft Windows(R) 2000-based virtual private networks.
"For the first time in our industry, a major Healthcare Information Systems
(HCIS) provider with a substantial customer franchise and distribution
capability has brought together the necessary elements to take advantage of the
Internet to improve services to customers," said Frederick L. Fine, president
and chief executive officer of InfoCure. "Both HP and Qwest provide InfoCure
with tremendous stability, scalability and leadership in both computing and
communications technology. We couldn't have better partners to help us build our
ASP offering."
InfoCure has more than 100,000 licensed doctors worldwide utilizing its
practice management software. InfoCure maintains a state-of-the-art service,
support and distribution infrastructure for its established ISV and technology
services business. It anticipates that the majority of its current and new
customers will opt for the VitalWorks e-service offering within the next few
years.
"With first-mover advantage and a great product, InfoCure is in a
tremendous position with its
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new ASP strategy," said Craig White, senior vice president and general manager
of HP Technology Finance. "The HCIS portion of the healthcare industry is a
large and important market, and InfoCure clearly understands how to take
advantage of the opportunities presented by this market, the Internet and the
rise of apps-on-tap."
"InfoCure's participation in the Q.ASP program confirms Qwest's leadership
in providing innovative solutions to independent software vendors that transform
their businesses into Internet business models," said Roger Attick, Qwest's
senior vice president of Alternate Channel Markets. "We are delighted that a
market-leading company such as InfoCure has selected Qwest's market-leading
broadband applications and services to gain entry to the very lucrative HCIS
space."
About Qwest
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in
reliable, scalable and secure broadband Internet-based data, voice and image
communications for businesses and consumers. The Qwest Macro Capacity(R) Fiber
Network, designed with the newest optical networking, spans more than 18,500
miles in the United States, with an additional 315-mile network to be completed
by the end of the year. In addition, KPNQwest (Nasdaq: KQIP - news), Qwest's
European joint venture with KPN, the Dutch telecommunications company, is
building and will operate a high-capacity European fiber optic, Internet-based
network that will span 9,150 miles when it is completed in 2001. Qwest also has
completed a 1,400-mile network in Mexico. For more information, please visit the
Qwest web site at www.qwest.com.
About InfoCure Corporation
InfoCure Corporation is a leading national provider of healthcare practice
management software products and services to targeted healthcare practice
specialties, including anesthesiology, dermatology, emergency medicine, oral and
maxillofacial surgery, orthodontics, dentistry, ophthalmology, pathology,
podiatry and radiology, as well as enterprise-wide medical entities. The
Company's wide range of practice management software products automates the
administrative, financial and clinical information management functions for
doctors and other healthcare providers. InfoCure provides its customers with
ongoing software support, training and electronic data interchange (EDI)
services. Visit InfoCure at www.infocure.com.
About HP
Hewlett-Packard Company -- a leading global provider of computing and
imaging solutions and services for business and home -- is focused on
capitalizing on the opportunities of the Internet and the proliferation of
electronic services.
HP plans to launch Agilent Technologies as an independent company by mid-
calendar 2000. Agilent consists of HP's test and measurement, semiconductor
products, chemical analysis and healthcare solutions businesses, and has leading
positions in multiple market segments.
HP has 83,200 employees worldwide and had total revenue from continuing
operations of $42.4 billion in its 1999 fiscal year. Information about HP, its
products and the company's Year 2000 program can be found on the World Wide Web
at http://www.hp.com.
Microsoft, Windows NT and Windows are U.S. registered trademarks of
Microsoft Corp.
This release may contain forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the
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documents filed by Qwest with the SEC, specifically the most recent reports
which identify important risk factors that could cause actual results to differ
from those contained in the forward-looking statements, including potential
fluctuations in quarterly results, dependence on new product development, rapid
technological and market change, failure to maintain rights of way, financial
risk management and future growth subject to risks, Qwest's ability to achieve
Year 2000 compliance, adverse changes in the regulatory or legislative
environment, and failure to complete the merger with U S WEST and achieve
projected synergies and financial results timely or at all. This release may
include analysts' estimates and other information prepared by third parties, for
which Qwest assumes no responsibility. Qwest undertakes no obligation to review
or confirm analysts' expectations or estimates or to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
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EXHIBIT 99.4
ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 15, 1999,
BY AND AMONG
INFOCURE SYSTEMS, INC.,
INFOCURE CORPORATION,
VITALWORKS, INC.,
RUSSELL S. KEENE AND HANK F. NELSON
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of the 15th day of December, 1999 (the "Effective Time"), by and among
VitalWorks, Inc., a Massachusetts corporation ("Seller"), Russell S. Keene, an
individual resident of the Commonwealth of Massachusetts ("Keene"), Hank F.
Nelson, an individual resident of the Commonwealth of Massachusetts ("Nelson",
who along with "Keene" are the sole shareholders of Seller), InfoCure Systems,
Inc., a Georgia corporation (the "Buyer") and InfoCure Corporation, a Delaware
corporation ("InfoCure"). Seller, Keene, Nelson, Buyer and InfoCure are
referred to collectively herein as the "Parties."
RECITALS:
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A. Seller is engaged, among other businesses, in that certain software
business known as "VitalWorks" (the "Acquired Business").
B. Keene and Nelson together own one hundred percent (100%) of the issued
and outstanding shares of the capital stock of Seller, consisting of a total of
ninety thousand (90,000) shares of no par value common stock.
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 Acquired Business, and Buyer
agrees to assume certain identified liabilities of Seller relating to the
Acquired 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.
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1.1. Purchased Assets.
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On the terms and subject to the conditions contained 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 4.6.
below. The term "Purchased Assets" shall mean all the 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
Acquired Business as of the Effective Time (the "Purchased Assets") including,
without limitation, all of the following assets (but excluding all "Excluded
Assets" as defined in Section 1.2.):
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1.1.1. All cash and cash equivalents on hand and in banks,
certificates of deposit, commercial paper, stocks, bonds and other liquid
investments;
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 Acquired 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 attached hereto;
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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 Effective Time;
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 Closing Date with respect to damage, non-conformances of or loss to
the Purchased Assets;
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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 depreciated or expensed), including,
without limitation, the assets which are set forth on Schedule 1.1.11 attached
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hereto;
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 and (ii) all
telephone numbers, facsimile numbers and web pages owned and used by Seller in
the Acquired Business).
1.2. Excluded Assets.
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Notwithstanding the foregoing, the following assets 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 1.2.4;
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and
1.2.5. Those contracts of Seller which are set forth on
Schedule 1.2.5.
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2. Purchase Price; Assumption of Liabilities.
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2.1. Amount of Purchase Price.
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In consideration for the purchase of the Purchased Assets, Buyer agrees to
assume the Assumed Liabilities and to pay Seller an amount equal to Two Million
and No/100 Dollars ($2,000,000.00) and three hundred thousand (300,000) shares
of InfoCure common stock ("Purchase Price").
2.2. Assumed Liabilities.
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Buyer agrees to and shall at the Closing assume and agree to pay, discharge
and perform when lawfully due only those liabilities, contracts, commitments and
other obligations of Seller that are listed on Schedule 2.2 hereto (the "Assumed
------------
Liabilities").
2.3. Excluded Liabilities.
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Except for the Assumed Liabilities set forth in 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
Acquired 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"). Seller shall
remain fully liable for the Excluded Liabilities.
2.4. Allocation of the Purchase Price.
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Within a reasonable time after the Closing, the parties shall execute the
Allocation Agreement in the form of Exhibit B hereto.
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3. Closing.
- -- --------
3.1. Time and Place of the Closing.
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The closing of the purchase and sale of the Purchased Assets shall take
place at Morris, Manning & Martin, L.L.P., Atlanta, Georgia, at 9:00 A.M., local
time, on Wednesday, December 15, 1999, the second (2nd) business day following
the date on which all conditions to Closing contained in Sections 8. and 9. 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 December 15, 1999, and, if that is done, then the
Purchased Assets will be deemed to have transferred, and the Assumed Liabilities
will be deemed to have been assumed, as of the beginning of business on December
15, 1999, but all documents shall be dated the actual date the Closing occurs
and all representations, warranties and covenants shall extend to that date.
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3.2. Procedure at the Closing.
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At the Closing, the parties agree to take 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 shall deliver to Buyer a Certificate in the form of
Exhibit C hereto, certifying that each of the conditions to the obligation of
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Buyer to purchase the Purchased Assets from Seller which is set forth in Section
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 conditions to the
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obligations of Seller to sell the Purchased Assets to Buyer which is set forth
in Section 9. in this Agreement has been satisfied.
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, as shall be sufficient to vest in Buyer
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good and marketable 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 2.1.1.) by wire transfer in accordance with the
Wire Transfer Instructions attached hereto as Exhibit F.
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3.2.5. Buyer shall deliver to Seller instruments, in the form of
Exhibit G 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, Keene and Nelson.
- -- -----------------------------------------------------------
In order to induce Buyer to enter into this Agreement and to consummate the
transactions contemplated hereunder, Seller, Keene, and Nelson, 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.
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Seller is a corporation duly organized and legally existing in good
standing under the laws of Massachusetts and has full corporate power and
authority to carry on the Acquired Business as it is now being conducted, to own
and lease the Purchased Assets, to enter into this Agreement and to carry out
the transactions and agreements contemplated hereby.
The amount and character of Seller's Acquired Business does not require
Seller to qualify to do business in any foreign jurisdiction.
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4.2. No Involvement of Subsidiaries and Affiliates.
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The Acquired Business is operated solely by Seller and Seller has 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 that performs services for, or conducts business with, the
Acquired Business.
4.3. Financial Statements of Seller.
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Seller has delivered to Buyer the following financial statements relating
to the Acquired Business, copies of which are attached as Schedule 4.3:
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4.3.1. Unaudited balance sheets at December 31, 1998;
4.3.2. Unaudited statement of income for the year ended
December 31, 1998;
4.3.3. Unaudited interim balance sheet at November 25, 1999; and
4.3.4. Unaudited interim statement of income from January 1, 1999,
to November 25, 1999.
The foregoing financial statements (collectively, the "Financial
Statements") were prepared in accordance with generally accepted accounting
principles which have been consistently applied through the respective periods
and present fairly the financial condition of the Acquired Business at each of
such balance sheet dates and the results of its operations for each of the
periods covered; provided, however, that the unaudited interim financial
statements are subject to normal year-end adjustments and are without footnotes
and other presentation items.
4.4. Liabilities of Seller.
---- ------------------------
Except as set forth in Schedule 4.4, Seller has no liabilities, debts,
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commitments or obligations relating to the Acquired Business (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 November 25, 1999.
4.5. Tax Matters.
---- ------------
4.5.1. Except as set forth on Schedule 4.5.1, Seller has timely filed
--------------
all tax returns and reports required to be filed by it, including, without
limitation, all federal, state and
6
<PAGE>
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 Seller's Acquired 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 4.5.1, none of Seller, Keene,
--------------
or Nelson has any knowledge of any tax deficiency proposed or threatened against
Seller. There are no tax liens upon the Acquired Business or the Purchased
Assets.
4.5.2. Except as set forth on Schedule 4.5.2, 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. Under its contracts with its customers for sales or licenses
of Seller Software, to the knowledge of Seller, Keene and Nelson, 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 Property.
---- --------------
4.6.1. Seller does not own any real property used by the Acquired
Business.
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 Acquired
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,
Keene, and Nelson, 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, Keene, and Nelson, no lessor under any such lease is in default under
any of such leases.
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.
------------
4.7. Good Title to and Condition of Purchased Assets.
---- ------------------------------------------------
4.7.1. Seller has good and assignable 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), 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
7
<PAGE>
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 4.7.1.
--------------
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
Acquired 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 15, 1999, including accounts receivable, notes
receivable and insurance proceeds receivable, which lists is attached hereto as
Schedule 4.8. Except for any reserve for bad debts shown on the Acquired
- ------------
Business' unaudited balance sheet as of November 25, 1999, 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 setoff or adjustment.
------------
4.9. Intellectual Property Rights of Seller.
---- ---------------------------------------
4.9.1. Schedule 4.9.1 (i) contains a complete list of each
--------------
governmental filing, whether federal, state, local, foreign or otherwise,
related to patents, copyrights, trademarks, service marks, trade names,
maskworks, other Intangibles and Software (collectively, "Registrations") of
Seller that are related to the Acquired 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 Acquired 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 respect to such Registration or
protectability of the Intangibles and Software which are related to the Acquired
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 Acquired
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 Acquired Business (the "Third Party License
Agreement"), together with the term
8
<PAGE>
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, Keene's and Nelson's 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, whether purchased from a third
party, developed by or on behalf of Seller, currently under development or
otherwise ("Owned Software").
(ii) All Software, other than the Owned Software, related to the
Acquired Business and that is either (x) offered or provided by Seller, directly
or through Distributors, to customers of Seller or (y) used by Seller to provide
information or services to customers of Seller for a fee (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
Acquired 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 Acquired Business to or
from third parties, used or under development by Seller related to the Acquired
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 Acquired Business as currently
conducted and
9
<PAGE>
as contemplated by existing Seller Software product and service plans. Schedule
--------
4.9.2 identifies all individuals who have contributed to the development of the
- -----
Owned Software.
D. Except as explained on Schedule 4.9.2, Seller owns and 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 Acquired Business as currently conducted and as contemplated in
the future in accordance with Seller'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 Seller's Acquired Business as
currently conducted and as contemplated in the future in accordance with
Seller's written business plans.
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 Acquired 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 Acquired 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. None 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.
Seller has adequately maintained all trade secrets and copyrights with respect
to the Software. Seller has performed all obligations imposed upon it with
regard to the Customer Software and Other Software which are required to be
performed by it on or prior
10
<PAGE>
to the date hereof, and neither Seller nor, to the knowledge of Seller, Keene,
and Nelson, any other party, is in breach of or default thereunder in any
respect, nor to Seller's knowledge, is there any event which with notice or
lapse of time or both would constitute a default thereunder.
H. To the knowledge of Seller, Keene and Nelson, 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 any of Seller's
- --------------
shareholders, any current or former owner or shareholder, partner, director,
executive, officer, employee, salesperson, agent, customer, contractor of Seller
or its 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, Keene or Nelson, is threatened, which contests
the right of Seller 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 Seller has made a claim against Seller or, to the
knowledge of Seller, Keene or Nelson, 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" means any computer
program, operating system, applications system, microcode, 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,
11
<PAGE>
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:
(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);
(vii) Other proprietary rights;
(viii) All rights necessary to prevent claims of invasion of
privacy, right of publicity, defamation, infringement of moral rights, or any
other causes of action arising out of the use, adaptation, modification,
reproduction, distribution, sale, or exhibition of the Software;
(ix) 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;
12
<PAGE>
(x) All rights to use all of the foregoing forever;
(xi) All other rights in, to, and under the foregoing in all
countries; and
(xii) "Distributor" means Seller and any other person or entity
that has been authorized by Seller to sell, license or offer to sell or license
any Seller Software, other than an employee of Seller. Distributors may include,
without limitation, value added resellers, original equipment manufacturers,
dealers, sales agents, and distributors.
4.9.3. Except as noted in Schedule 4.9.3, the Owned Software and to
--------------
the best knowledge of Seller, Keene and Nelson, the Customer Software and Other
Software are "Millennium Compliant." For the purposes of this Agreement
"Millennium Compliant" means:
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;
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; and
F. The Owned Software, Customer Software, and Other Software have
been tested by Seller to determine whether the Owned Software, Customer
Software, and Other Software are Millennium Compliant. Seller shall deliver the
test plans and results of
13
<PAGE>
such tests upon written request from Buyer. Seller 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 Complaint.
4.9.4. Without limiting any of the foregoing, to the best knowledge
of Seller, Keene and Nelson, none of Seller's current or former officers,
executives, directors, partners, shareholders, employees, salespersons,
customers, 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.
All License Agreements, Third Party License Agreements, software
development agreements, and any other written agreement between Seller and any
third party in which trade secrets or confidential information of Seller,
Seller's customers, agents, or suppliers are disclosed binds the recipient
thereof to take reasonable steps to protect the proprietary rights of Seller and
its customers, agents, and suppliers in such trade secrets and confidential
information.
Schedule 4.9.4 identifies all individuals compensated at an annual
--------------
rate in excess of Thirty Thousand and No/100 Dollars ($30,000.00) who have
contributed to the development of the Owned Software.
4.9.5. Seller Software:
A. Performs in accordance with all published specifications for
such Software;
B. Complies with all other published documentation, descriptions
and literature with respect to such Software; and
C. Complies with all representations, warranties and other
requirements specified in all of Seller's License Agreements.
4.9.6. Except as set forth on Schedule 4.9.6, none of Seller's
--------------
shareholders have an ownership right or other interest in any Software or
Intangibles related to the Acquired Business, and no claims have been made or,
to the knowledge of Seller, Keene or Nelson, is threatened, that the Software
substantially fails to perform as set forth in Section 4.9.5.
4.9.7. All Seller's contracts with customers in the Acquired 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.
14
<PAGE>
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 Purchased Assets.
----- -------------------------------
The Purchased Assets constitute, in the aggregate, all of the property
necessary for the conduct of the Acquired Business in the manner in which and to
the extent to which it is currently being conducted.
4.11. Contracts; Insurance; Customers.
----- --------------------------------
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 (solely for
purposes of this Section 4.11., a contract shall be "material" if (i) the
contract is not cancelable on thirty (30) days or less notice without payment of
a penalty in excess of One Thousand and No/100 Dollars ($1,000.00) or (ii)
include the committed future expenditure by Seller in any twelve (12) month
period of at least Five Thousand and No/100 Dollars ($5,000.00)) to the
Purchased Assets or the Acquired Business (the "Material Contracts").
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 agreement, contract or commitment listed in Schedule 4.11. There has
-------------
not been any default in any obligation to be performed by Seller, nor to the
best knowledge of Seller, Keene and Nelson, any other party, under any such
agreement, contract or commitment. 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, Keene and Nelson, 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.
15
<PAGE>
4.11.2. Seller carries insurance, which is customary in scope and
reasonable in character and amount, with reputable insurers, covering all of the
assets and properties relating to the Acquired 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 Acquired Business customers (defined as having received products or
services from Seller within the last three (3) years).
4.12. Litigation Involving Seller.
----- ------------------------------
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, Keene and Nelson, threatened against or affecting Seller or
any of its assets or properties with respect to or relating to (i) the Acquired
Business; (ii) the ownership or operation of the Purchased Assets or (iii) the
transactions contemplated by this Agreement, and, to the best of the knowledge
of Seller, Keene, and Nelson, 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 and which relates to (i) the Acquired Business; (ii)
the ownership or operation of the Purchased Assets or (iii) the transactions
contemplated by this Agreement.
4.13. No Adverse Change.
----- --------------------
Since November 25, 1999, all changes in the business or properties relating
to the Acquired Business, or in its 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 the Acquired Business. There is not, to the
best knowledge of Seller, Keene and Nelson, any threatened or prospective event
or
16
<PAGE>
condition of any character whatsoever which could adversely affect the
assets, properties, business, financial condition or results of operations of
the Acquired Business.
4.14. Absence of Certain Acts or Events.
----- ------------------------------------
Except as disclosed in Schedule 4.14, since the November 25, 1999, with
-------------
respect to the Acquired 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 Ten Thousand and No/100 Dollars ($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; or
D. Suffered any theft, damage, destruction or casualty loss in excess
of Five Thousand and No/ 100 Dollars ($5,000.00).
4.15. Compliance With Laws by Seller.
----- ---------------------------------
Seller is in compliance with all laws, regulations and orders applicable to
the Purchased Assets or the Acquired Business. Seller has not received
notification of any asserted past or present failure to comply with any such
laws, regulations and orders, and to the best knowledge of Seller, Keene, and
Nelson, no proceeding with respect to any such failure is contemplated.
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 Acquired 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
Seller, Keene, and Nelson, plans to refuse employment with Buyer after the
Closing Date.
A. Prior to the Closing Date, Buyer may offer employment to commence
on the Closing Date to any or all of the employees of Seller related to the
Acquired Business as it may determine. Buyer shall have full and absolute
discretion in determining the terms, conditions and benefits relating to such
employment. Nothing in this Agreement shall obligate Buyer or InfoCure to employ
after the Closing Date any employee of Seller or to offer employment to any
employee of Seller on the same terms or conditions or with the same benefits
offered by Seller. Nothing in this Agreement shall create any claim or right on
the part of any employee of Seller and no such employee shall be entitled to
assert any claim or right hereunder. Seller and Buyer agree to reasonably
cooperate regarding any written communications made to
17
<PAGE>
the employees of Seller during the period from the date hereof until the Closing
Date which relate to the transactions contemplated by this Agreement.
B. Seller shall remain liable for all "Seller Employee Liabilities,"
regardless of when or how such liability arose, and regardless of whether such
liability may result in or has resulted in a claim upon the Purchased Assets.
For purposes of the preceding sentence, the term "Seller Employee Liabilities"
shall mean any claims, liabilities, costs, expenses or compensation which exist,
which arise by reason of, or which are in any way connected with or based on (i)
an employee's employment relationship with Seller and/or the termination of such
relationship; (ii) foreign, federal, state, county or municipal fair employment
practices act and/or any law, ordinance or regulation promulgated by any
foreign, federal, state, county, municipality or other state subdivision as
applied to employees of Seller; (iii) interference with and/or breach of
contract with employees of Seller; (iv) retaliatory or wrongful discharge of any
employee of Seller; (v) intentional or negligent infliction of emotional
distress or mental anguish upon employees of Seller; (vi) outrageous conduct
with respect to employees of Seller; (vii) interference with business
relationships, contractual relationships or employment relationships involving
employees of Seller and any third party; (viii) breach of duty, fraud,
fraudulent inducement to contract, breach of right of privacy, libel, slander,
or tortious conduct of any kind with respect to employees of Seller; (ix)
violations of Title VII of the Civil Rights Act of 1964 and/or the Civil Rights
Act of 1991 and/or 42 U.S.C. (S) 1981 with respect to employees of Seller; (x)
violations of the Age Discrimination in Employment Act of 1967, the Age
Discrimination Claims Assistance Act of 1988 and/or the Older Workers' Benefit
Protection Act with respect to employees of Seller; (xi) violations of state or
federal handicap or disability discrimination laws or acts, including, but not
limited to, the Rehabilitation Act of 1973 and the Americans with Disabilities
Act with respect to employees of Seller; (xii) discriminatory or wrongful acts
against employees of Seller; (xiii) violations of ERISA or the Family and
Medical Leave Act with respect to employees of Seller; (xiv) violations of the
workers' compensation laws of any state or other jurisdiction; (xv) violations
of any other federal, state, county or municipal law or regulation with respect
to employees of Seller.
4.16.2. To the best knowledge of Seller, Keene and Nelson, 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, Keene, and Nelson, 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).
18
<PAGE>
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 sets forth a complete and accurate listing
---------------
and description of all plans, agreements, arrangements, commitments, policies or
understandings of any kind (whether written or oral) related to the Acquired
Business (i) which relate to present or former employees, retirees, or
independent contractors (or their beneficiaries, dependents or spouses) of
Seller and of the Acquired Business and (ii) which are currently, were within
the last seven (7) years, or are expected to be, adopted, maintained by,
sponsored by, or contributed to by, Seller, any of its predecessors in interest
or any ERISA Affiliate of Seller, or as to which Seller, any of its predecessors
in interest or any ERISA Affiliate of Seller has any ongoing liability or
obligation whatsoever, including, but not limited to, all employee benefit plans
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), deferred compensation, early retirement, incentive,
profit-sharing, thrift, stock ownership, stock appreciation, bonus, stock
option, stock purchase, welfare, nonqualified benefit, and fringe benefit plans
as defined in Section 6039D of the Internal Revenue Code of 1986, as amended
(the "Code") (hereinafter, such plans, agreements, etc., are referred to as the
"Plan" or "Plans"). For purposes of this Agreement, the term ERISA Affiliate of
Seller shall mean any other entity or person whose employees would, along with
the employees of Seller, be treated as employed by a single employer under Code
(S)(S) 414(b), (c), (m) or (o), and/or under Sections 210 and/or 4001 of ERISA.
Seller has provided to Buyer true, correct and complete copies of all documents
relating to the Plans which it has requested, with all amendments, modifications
and supplements thereto, including, without limitation, all plan texts (and
amendments thereto), all trust agreements (if any), all insurance and annuity
contracts (if any), all summary plan descriptions and annual reports (if any)
for the most recent three (3) years, and all correspondence with the IRS or the
U.S. Department of Labor concerning such Plans.
A. Seller, its predecessors in interest and all ERISA Affiliates of
Seller have complied in all respects with all of their respective obligations
under applicable law (including the Code and ERISA) with respect to the Plans,
and have maintained the Plans in compliance with all applicable laws and
regulations.
B. Neither Seller nor any ERISA Affiliate of Seller contributes to,
ever has contributed to, or ever has been required to contribute to any pension
plan (as defined in ERISA (S) 3(35)), any pension plan (as defined in ERISA (S)
3(2) subject to the minimum funding standards of Code (S) 412 and/or any multi-
employer plan (as defined in ERISA (S) 3(37)(A)), and neither Seller nor any
ERISA Affiliate of Seller has any liability (including withdrawal liability)
under or with respect to any pension plan and/or multi-employer plan.
19
<PAGE>
C. There is no liability of Seller or any ERISA Affiliate of Seller
with respect to any Plan which could result in the imposition of any liability
being imposed upon Buyer or InfoCure after the Closing of the transactions
contemplated by this Agreement, including, but not limited to, any minimum
funding liability under ERISA (S) 302 or Code (S) 412, any plan termination
liability under ERISA (S)(S) 4041, 4042, 4062, 4068 and/or 4069, multi-employer
plan liabilities under ERISA (S)(S) 4201-4205 or 4212, COBRA liability under
Code (S) 4980B or ERISA (S)(S) 601 through 608.
D. The parties hereto agree that InfoCure and Buyer shall have no
liability with respect to any Plan.
4.17.2. 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 best knowledge of Seller, Keene, and Nelson, 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 and on the Closing Date 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 date hereof and to the Closing Date,
or the Closing Date Balance Sheet contains adequate reserves or paid-up
insurance has been provided, therefor.
E. 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.
4.17.3. The parties hereto agree that Buyer and InfoCure shall have
no liability with respect to any "Seller Controlled Group Plan." The preceding
sentence applies to any liability (herein "Seller Controlled Group Plan
Liabilities") with respect to a "Seller Controlled Group Plan," regardless of
when or how such liability arose, regardless of whether such liability
20
<PAGE>
involves employees of the Acquired Business, and regardless of whether such
liability may result in or has resulted in a claim upon the assets purchased
under this Agreement. For purposes of this Agreement, the term "Seller
Controlled Group Plan" shall mean each and every plan, agreement, arrangement,
commitment, policy or understanding of any kind (whether written or oral) (i)
which relate to present or former employees, directors, retirees, or independent
contractors (or their beneficiaries, dependents or spouses) of the Seller or
(ii) which are currently, were, or are expected to be, adopted, maintained by,
sponsored by, or contributed to by, the Seller, any of its predecessors in
interest or any ERISA Affiliate of the Seller, or as to which the Seller, any of
its predecessors in interest or any ERISA Affiliate of the Seller has any
ongoing liability or obligation whatsoever, including, but not limited to,
employee benefit plans as defined in ERISA (S) 3(3), deferred compensation,
early retirement, incentive, profit-sharing, thrift, stock ownership, stock
appreciation, bonus, stock option, stock purchase, welfare, nonqualified
benefit, and fringe benefit plans as defined in Code (S) 6039D.
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 is a valid and binding obligation of Seller,
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
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 the assets and properties of Seller.
Without limiting the generality of the foregoing, Seller is not a party to
any continuing agreement or understanding, made by it or on its behalf, which
limits in any way the ability of:
A. Seller to enter into this Agreement and perform its 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 breached any such agreement, or any prior agreement,
which breach would entitle the other party thereto to any equitable or monetary
remedies.
21
<PAGE>
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 of this Agreement or the
consummation of the transactions contemplated hereby or thereby or for the
continuation by Buyer of the Acquired Business of Seller after the Closing in
the same manner as presently conducted or proposed to be conducted.
4.20. Accuracy of Information Furnished by Seller.
----- ----------------------------------------------
No representation, statement or information in writing made or furnished by
Seller 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.
4.21. 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.
5. Representations and Warranties of Buyer.
- -- ----------------------------------------
In order to induce Seller to enter into this Agreement and consummate the
transactions contemplated hereunder, Buyer 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 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:
22
<PAGE>
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.
6. Additional Covenants of Seller.
- -- -------------------------------
6.1. Best Efforts.
---- ---------------
Seller will 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 8. to the obligation of Buyer to purchase the Purchased Assets.
6.2. Conduct of Acquired 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 the Acquired Business and its
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 Acquired
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 Acquired Business' 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
23
<PAGE>
Seller's premises sufficient to enable Buyer to inspect the assets and
properties of the Acquired Business, 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 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. Securities and Exchange Commission Compliance.
---- ------------------------------------------------
Seller has filed all forms, reports and documents, if any, required to be
filed with the Securities and Exchange Commission (the "SEC") as of the Closing
Date which relate to the Acquired Business.
7. Additional Covenants of Buyer and InfoCure.
- -- -------------------------------------------
7.1. Best Efforts.
---- ---------------
Each of Buyer and InfoCure will 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 Seller to sell the
Purchased Assets pursuant to this Agreement.
8. 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:
8.1. Accuracy of Representations and Warranties and Compliance With
---- --------------------------------------------------------------
Obligations.
--------------
The representations and warranties of Seller, Keene and Nelson 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.
Seller shall have performed and complied with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date.
Seller shall have delivered to Buyer a Certificate in the form of Exhibit C
---------
hereto, certifying that each of the conditions to the obligations of Buyer to
purchase the Purchased Assets from Seller which is set forth in Section 8. of
this Agreement has been satisfied.
8.2. Opinion of Counsel.
---- ---------------------
Buyer shall have received an opinion dated the Closing Date from Dimento &
Sullivan, counsel for Seller, substantially in form and substance as set forth
on Exhibit H attached hereto.
---------
24
<PAGE>
8.3. 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.
8.4. 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.
8.5. Reserved.
---- ---------
8.6. Restrictive Covenant Agreements.
---- --------------------------------
Seller shall have entered into a restrictive covenant agreement (the
"Restrictive Covenant Agreement") with Buyer, substantially in the form of
Exhibit J hereto.
- ---------
8.7. Directors 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 of Seller (and Seller's shareholders if required by
Seller's organizational documents) approving the execution, delivery and
performance by Seller of this Agreement and all the other transactions to be
taken by Seller contemplated herein.
8.8. Reserved.
---- ---------
8.9. Assignment of Intellectual Property.
---- ------------------------------------
At or prior to Closing, the employees and shareholders of Seller shall
assign to Buyer any rights that they may have in or to the Software and
Intangibles.
8.10. Buyer's Lender's Approval.
----- ----------------------------
On or before the Closing, Buyer shall have obtained the approval of Buyer's
lender, Finova Capital Corporation ("Finova"), to the transaction contemplated
herein.
8.11. Tax Clearance Certificates.
----- -----------------------------
Seller shall deliver to Buyer a certificate of Good Standing and Waiver of
Corporate Excise Tax Lien Certificate from the Commissioner's office at the
Massachusetts Department of Revenue, dated not more than ten (10) days prior to
the Closing Date.
9. Conditions to Obligation of Seller.
- -- -----------------------------------
25
<PAGE>
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 any one (1) or more of
which may be waived by Seller:
9.1. 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.
Buyer and InfoCure shall each deliver to Seller a Certificate in the form
of Exhibit D hereto, certifying that each of the conditions to the obligations
---------
of Seller to sell the Purchased Assets to Buyer which is set forth in Section 9.
of this Agreement has been satisfied.
9.2. 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 L attached hereto.
---------
9.3. 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.
10. Additional Agreements.
- --- ----------------------
10.1. Execution of Further Documents.
----- ---------------------------------
From and after the Closing, upon the reasonable request of Buyer, Seller
shall 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.
10.2. 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
26
<PAGE>
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
8.3. 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.
10.3. Enforcement of Confidentiality Agreements.
----- --------------------------------------------
From and after the Closing Date, Seller shall enforce, on behalf of Buyer,
any confidentiality agreements which cannot be assigned to Buyer pursuant to
this Agreement.
10.4. 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.
10.5. Sales Taxes on Acquisition.
----- -----------------------------
Notwithstanding anything to the contrary elsewhere in this Agreement, all
transfer, documentary, sales, use, stamp, registration and other such taxes and
fees (including penalties and interest) incurred in connection with this
Agreement (including the acquisition by Buyer of the Acquired Business and the
Purchased Assets) shall be paid by the Seller when due, and will, at its own
expense, file all necessary tax returns and other documentation with respect to
such transfer, documentary, sales, use, stamp, registration and other taxes and
fees.
10.6. Disclosure.
----- -------------
Seller, Keene, Nelson, Buyer and InfoCure each agree not to issue any press
release or make any public announcement or other disclosure to competitors,
customers, employees or any other person (except to employees and agents on a
need-to-know basis in order to complete the transactions contemplated by this
Agreement and who agree to maintain the confidentiality of the
27
<PAGE>
disclosed information) concerning this Agreement except as required by law or
with the advance written approval of the other parties, which approval will not
be unreasonably withheld.
11. Indemnification.
- --- ----------------
11.1. Agreement by Seller to Indemnify.
----- -----------------------------------
Seller, Keene, and Nelson jointly and severally, agree to 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 Acquired Business or any of the Seller Indemnified Parties.
For this purpose, "indemnifiable damages" caused to the Acquired 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 Acquired Business
or any of the Seller Indemnified Parties resulting from:
A. Any inaccurate representation or warranty made by Seller, Keene or
Nelson in or pursuant to this Agreement ;
B. Any default in the performance of any of the covenants or
agreements made by Seller, Keene or Nelson in this Agreement;
C. The failure of Seller to pay, discharge or perform any liability
or obligation of Seller which is not an Assumed Liability;
D. Any actions, claims, proceedings, demands, grievances or disputes
brought or initiated by third parties against the Acquired Business or any of
the Seller Indemnified Parties in connection with an Excluded Liability;
E. The conduct of the Acquired Business by Seller through and
including the Closing Date; or
F. Any actions, claims, proceedings, demands, grievances or dispute
brought or initiated by third parties against the Acquired Business or any of
the Seller Indemnified Parties in connection with any Plan (as defined in
Section 4.17.1.) or any Seller Employee Liabilities (as defined in Section
4.16.1.B.).
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, Keene and Nelson been
true and correct and had each of the covenants of Seller, Keene and Nelson been
performed in full.
The foregoing obligation of Seller, Keene and Nelson to indemnify the
Seller Indemnified Parties shall be subject to each of the following principles
or qualifications:
28
<PAGE>
11.1.1. Each of the representations and warranties made by Seller,
Keene and Nelson in this Agreement or pursuant hereto, shall survive for a
period of three (3) 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, Keene
and Nelson to the extent they relate to Seller's title to the Purchased Assets
shall survive forever; the representations and warranties made by Seller to the
extent they relate to any Plan or Seller Employee Liabilities shall survive
until no possible liability with respect thereto can be asserted; and that the
representations and warranties made by Seller in Section 4.4. 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 any
of the Seller Indemnified Parties against Seller 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. In addition, the Seller shall have no liability
with respect to indemnifiable damages until the total of all such damages
exceeds Seventy-Five Thousand and No/100 Dollars ($75,000.00) in which event
Seller, Keene and Nelson 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 Seller, Keene and Nelson under this
Section 11. exceed the Purchase Price.
Notwithstanding any prior provision of this Agreement to the contrary, to
the extent that there exists, or there shall arise, any "Seller Controlled Group
Plan Liability", as that term is defined in Section 4.16.2. of this Agreement,
the Seller shall indemnify and hold harmless InfoCure, Buyer and their
subsidiaries, any successors or assigns thereto, and all employees, officers,
directors, agents, independent contractors and other persons affiliated with
InfoCure, Buyer and/or their subsidiaries or their successors and assigns
(herein the "Indemnitees") from and against any and all such liabilities, and
any losses, damages, claims, liabilities, actions, suits, proceedings and costs
and expenses of defense thereof, including reasonable attorneys' fees, and the
Seller shall take any action reasonably requested by InfoCure to prevent the
imposition of such liability. Notwithstanding any provision of this Agreement
to the contrary, to the extent that there exists, or there shall arise, any
Seller Employee Liabilities (as defined in Section 4.15.1.B.) as or and from and
after the Closing Date, the Seller shall indemnify and hold harmless the
Indemnitees from and against any and all such liabilities, and any losses,
damages, claims, liabilities, actions, suits, proceedings and costs and expenses
of defense thereof, including reasonable attorneys' fees, and the Seller shall
take any action reasonably requested by InfoCure to prevent the imposition of
such liability. Notwithstanding any provision of this
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Agreement to the contrary, the indemnification of the preceding two sentences
shall survive the Closing Date and shall remain in effect until no Seller
Controlled Group Plan Liability and no Seller employee Liability could possibly
be asserted against any of the Indemnitees.
11.2. Agreements by Buyer and InfoCure to Indemnify.
----- ------------------------------------------------
Buyer and InfoCure (the "Buyer Indemnifying Parties"), jointly and
severally, agree to indemnify and hold Seller harmless in respect of the
aggregate of all indemnifiable damages of Seller.
For this purpose, "indemnifiable damages" of Seller means the aggregate of
all expenses, losses, costs, deficiencies, liabilities and damages (including
related counsel fees and expenses) incurred or suffered by Seller from:
A. Any inaccurate representation or warranty made by Buyer pursuant
to this Agreement; or
B. Any default in the performance of any of the covenants or
agreements made by Buyer or InfoCure in this Agreement.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable damages", Seller 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 Buyer Indemnifying Parties been true and
correct and had each of the covenants of Buyer Indemnifying Parties been
performed in full.
The foregoing obligation of Buyer Indemnifying Parties to indemnify Seller
shall be subject to each of the following principles or qualifications:
11.2.1. Each of the representations and warranties made by Buyer in
Section 5. 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 11.2. may be asserted by Seller against Buyer 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.
11.3. 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 11. 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
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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.
11.4. Other Agreements.
----- -------------------
Any indemnity obligations which Seller, Keene or Nelson may have to Buyer
can be discharged by the Escrow Agent from the funds held in escrow pursuant to
Section 2.1.1. above.
12. Miscellaneous.
- --- --------------
12.1. Brokers' Commission.
----- ----------------------
Buyer will indemnify and hold harmless Seller 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 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 to bring about, or to
represent them in the transactions contemplated hereby.
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12.2. 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.
12.3. Termination.
----- ------------
12.3.1. Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned:
12.3.1.1. By the mutual written consent of all of the Parties hereto
at any time prior to the Closing Date;
12.3.1.2. Unless terminated pursuant to Section 12.3.1.1. 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
12.3.1.3. Unless terminated pursuant to Section 12.3.1.1., by any
Party hereto if the Closing has not taken place by January 15, 2000.
If this Agreement is terminated pursuant to clause 12.3.1.1. of this
Section 12.3.1., 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 12.3.1.2. or 12.3.1.3. of this Section 12.3.1.
shall be without prejudice to any other rights or remedies of the respective
parties.
12.3.2. 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:
12.3.2.1. To terminate this Agreement, without liability to any party
thereto; or
12.3.2.2. 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.
12.4. 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
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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.
12.5. 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.
12.6. Headings.
----- -----------
The descriptive headings in this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
12.7. 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.
12.8. 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, addressed to:
VitalWorks, Inc.
1500 Providence Highway
Suite 22-A
Norwood, Massachusetts 02062
Attention: Russell S. Keene
With a copy to:
Dimento & Sullivan
7 Faneuil Hall Marketplace
Third Floor
Boston, Massachusetts 02109
Attention: Vincent J. Dimento, Esq.
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If to Keene, addressed to:
190 Partridge Drive
Westwood, Massachusetts 02090
Attention: Russell S. Keene
With a copy to:
Dimento & Sullivan
7 Faneuil Hall Marketplace
Third Floor
Boston, Massachusetts 02109
Attention: Vincent J. Dimento, Esq.
If to Nelson, addressed to:
38 Oriole Road
Bedfield, Massachusetts 02052
Attention: Hank F. Nelson
With a copy to:
Dimento & Sullivan
7 Faneuil Hall Marketplace
Third Floor
Boston, Massachusetts 02109
Attention: Vincent J. Dimento, Esq.
If to Buyer or InfoCure, addressed to:
InfoCure Corporation
1765 The Exchange
Suite 450
Atlanta, Georgia 30339
Attention: James K. Price
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.
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12.9. 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.
12.10. Governing Law/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. With respect to any dispute, controversy or claim arising out of,
relating to or in connection with, this Agreement, or the breach, termination or
validity hereof, the parties shall first attempt to resolve the matter in good
faith for a period of fourteen (14) days, thereafter, any such dispute,
controversy or claim 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 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.
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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:
InfoCure Systems, Inc.
By: /s/ Richard E. Perlman
---------------------------------------------
Name: Richard E. Perlman
-------------------------------------------
Title: Chairman
------------------------------------------
INFOCURE:
InfoCure Corporation
By: /s/ Richard E. Perlman
---------------------------------------------
Name: Richard E. Perlman
-------------------------------------------
Title: Chairman
------------------------------------------
SELLER:
VitalWorks, Inc.
By: /s/ Russell S. Keene
---------------------------------------------
Name: Russell S. Keene
-------------------------------------------
Title: President and CEO
------------------------------------------
KEENE:
/s/ Russell S. Keene
------------------------------------------------
Russell S. Keene, individually and on behalf
VitalWorks, Inc.
NELSON:
/s/ Hank F. Nelson
------------------------------------------------
Hank F. Nelson, individually and on behalf
VitalWorks, Inc.
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<PAGE>
EXHIBITS
--------
Exhibit A Registration Rights Agreement
Exhibit B Form of Allocation Agreement
Exhibit C Certificate of Seller
Exhibit D Certificates of Buyer and InfoCure
Exhibit E Bill of Sale
Exhibit F Wire Transfer Instructions
Exhibit G Assignment and Assumption Agreement
Exhibit H Opinion of Seller's Counsel
Exhibit I Reserved
Exhibit J Restrictive Covenant Agreement
Exhibit K Reserved.
Exhibit L Opinion of Buyer's Counsel
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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 2.2 Assumed Liabilities
Schedule 4.3 Financial Statements
Schedule 4.4 Liabilities of Seller
Schedule 4.5 Tax Matters
Schedule 4.6 Real Property
Schedule 4.7.1 Liens and Encumbrances
Schedule 4.8 Receivables and List of Non-Collectibles of
Seller
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 Contracts; Insurance; Customers
Schedule 4.11.2 Insurance Matters
Schedule 4.11.3 Customer List
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
38
