SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20519
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1931
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1931
For the transition period from to
Commission File No. 0-19666
PHYSICIAN COMPUTER NETWORK, INC.
New Jersey 22-2485688
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 The American Road
Morris Plains, N.J. 07950
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code:
(201) 490-3100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1931 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No___
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 105 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrants
<PAGE>
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
This aggregate market value of the voting stock (Common
Stock, $.01 par value) held by non-affiliates of the Registrant
was approximately $368,304,000 on May 23, 1996 based on the
closing sales price of the Common Stock on such date.
The aggregate number of outstanding shares of Common
Stock, $.01 par value, of Registrant was 52,016,925 on May 23,
1996.
Page 1 of 58 Pages
Index to Exhibits Page 3
<PAGE>
Item 14(a) of the Registrant's Report on Form 10-K for the
year ended December 31, 1995 is amended to read in its entirety
as follows:
EXHIBIT INDEX
Sequentially
Numbered
Exhibits Description Page
2.1 Stock Purchase Agreement dated September 23,
1993 by and among the Flagship Group Inc.,
Calyx Corporation, Registrant and Calyx
Acquisition Corporation. (Schedules to the
Stock Purchase Agreement have been omitted
and will be provided to the Securities and
Exchange Commission upon request) (Filed as
Exhibit 2.1 to Registrant's report on Form 8-
K dated October 7, 1993 and incorporated
herein by reference.)
2.2 Stock Purchase Agreement dated December 31,
1993 by and among Registrant, Wallaby
Software Corporation and the individuals
listed on Exhibit A to the Stock Purchase
Agreement. (Schedules to the Stock Purchase
Agreement have been omitted and will be
provided to the Commission upon request)
(Filed as Exhibit 2.1 to Registrant's report
on Form 8-K dated January 13, 1994.)
3.1 Amended and Restated Certificate of
Incorporation. (Filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-1
(Reg. No. 33-42935) (the "1991 S-1") and
incorporated herein by reference.)
3.1(a) Amendment to the Amended and Restated
Certificate of Incorporation of the Company
authorizing Series A Cumulative Convertible
Preferred Stock and Series B Cumulative
Convertible Preferred Stock. (Filed as
Exhibit 3.1(a) on the Company's report on
Form 10-K for the year ended December 31,
1992 (the "1992 10-K") and incorporated
herein by reference).
<PAGE>
3.1(b) Certificate of Amendment to the Restated
Certificate of Incorporation of the Company
amending the Series A Preferred Stock and
Series B Preferred Stock and authorizing
Series C Cumulative Preferred Stock and
Series D Cumulative Convertible Preferred
Stock. (Filed as Exhibit 2 to the Company's
report on Form 8-K dated March 3, 1993 and
incorporated herein by reference).
3.1(c) Amended and Restated Certificate of
Incorporation, dated as of March 27, 1995.
(Filed as Exhibit 3.1(c) to the Company's
report on Form 10-K for the year ended
December 31, 1995 (the "1995 10-K") and
incorporated herein by reference.)
3.1(d) Certificate of Amendment to the Amended and
Restated Certificate of Incorporation of the
Company, dated as of October 6, 1995,
authorizing new Series A Convertible
Preferred Stock. (Filed as Exhibit 3.1(d) to
the 1995 10-K and incorporated herein by
reference.)
3.1(e) Certificate of Amendment to the Amended and
Restated Certificate of Incorporation of the
Company, dated as of October 18, 1995,
amending the rights, preferences and
limitations of Series A Convertible Preferred
Stock. (Filed as Exhibit 3.1(e) to the 1995
10-K and incorporated herein by reference.)
3.2 Copy of By-Laws of the Company. (Filed as
Exhibit 3.2 to the 1992 10-K and incorporated
herein by reference).
4.1 Specimen Stock Certificate. (Filed as
Exhibit 4.1 to Registrant's Registration
statement on Form S-1 (Reg. No. 33-87174)
(the "1995 S-1") and incorporated herein by
reference.).
4.2 Form of Second Amended and Restated
Securities Purchase Agreement dated as of
December 15, 1992, by and between the Company
and Jeffry M. Picower. (Filed as Exhibit 1 to
the Company's report on Form 8-K dated
March 8, 1993 and incorporated herein by
reference.)
<PAGE>
4.3 Registration Rights Agreement dated as of
February 22, 1993 between the Company and
Jeffry M. Picower. (Filed as Exhibit 15 to
Amendment No. 7 to Schedule 13D by Jeffry M.
Picower).
4.4 Copy of Warrant Purchase Agreement between
the Company and IBM Credit Corporation and
Amendment thereto, together with copy of
warrant issued pursuant thereto. (Filed as
Exhibit 10.8 to the Form S-1 and incorporated
herein by reference.)
4.5 Copy of Second Amendment to Warrant Purchase
Agreement between the Company and IBM Credit
Corporation. (Filed as Exhibit 10.8(a) to the
1992 10-K and incorporated herein by
reference.)
4.6 Copy of Third Amendment to Warrant Purchase
Agreement and Limited Waiver between the
Company and IBM Credit Corporation. (Filed as
Exhibit 10.8(b) to the 1992 10-K and
incorporated herein by reference.)
4.7 Copy of Second Amended and Restated
Promissory Note between the Company and IBAX
Healthcare Systems (formerly known as
Spectrum Healthcare Solutions). (Filed as
Exhibit 10.9(a) to the 1992 10-K and
incorporated herein by reference.)
4.8 Copy of Warrant Purchase Agreement between
the Company and Jeffry M. Picower, together
with conformed copy of warrant to purchase
350,000 shares of Common Stock issued
pursuant thereto. (Filed as Exhibit 10.11 to
the S-1 and incorporated herein by
reference.)
4.9 Copy of Amended and Restated Warrant Purchase
Agreement dated as of February 22, 1993
between the Company and Jeffry M. Picower,
together with copy of Amended and Restated
Warrant to purchase 350,000 shares issued
pursuant thereto. (Filed as Exhibit 3 to the
Company's report on Form 8-K dated March 8,
1993 and incorporated herein by reference.)
<PAGE>
4.10 Copy of Amended and Restated Warrant Purchase
Agreement dated as of February 22, 1993
between the Company and Jeffry M. Picower,
together with copy of Amended and Restated
Warrant to purchase 633,462 shares issued
pursuant thereto. (Filed as Exhibit 4 to the
Company's report on Form 8-K dated March 8,
1993 and incorporated herein by reference.)
4.11 Copy of Second Amended and Restated Warrant
Purchase Agreement dated as of February 22,
1993 between the Company and Jeffry M.
Picower, together with copy of Amended and
Restated Warrant to purchase 436,538 shares
issued pursuant thereto. (Filed as Exhibit 5
to the Company's report on Form 8-K dated
March 8, 1993 and incorporated herein by
reference.)
4.12 Copy of First Amendment to Warrant Purchase
Agreement between the Company and Shearson
Lehman Brothers Holdings Inc. (Filed as
Exhibit 10.20(a) to the 1992 10-K and
incorporated herein by reference.)
4.13 Copy of Second Amendment to Warrant Purchase
Agreement between the Company and Shearson
Lehman Brothers Holdings Inc. (Filed as
Exhibit 10.20(b) to the 1992 10-K and
incorporated herein by reference.)
4.14 Copy of Third Amendment to Warrant Purchase
Agreement between the Company and Shearson
Lehman Brothers Holdings Inc. (Filed as
Exhibit 10.20(c) to the 1992 10-K and
incorporated herein by reference.)
4.15 Second Amended and Restated Securities
Purchase Agreement between the Company and
Jeffry M. Picower. (Filed as Exhibit 1 to the
Company's report on Form 8-K dated March 8,
1993 and incorporated herein by reference.)
<PAGE>
4.16 Form of Promissory Note dated September 23,
1993 from Calyx Acquisition Corp. to The
Flagship Group Inc. in the amount of
$1,950,000. (Filed as Exhibit 10.1 to the
Company's report on Form 8-K dated October 7,
1993 and incorporated herein by reference.)
4.17 Form of Promissory Note dated December 31,
1993 from the Company to the shareholders of
Wallaby "First Notes". (Filed as Exhibit 10.1
to the Company's report on Form 8-K dated
January 13, 1994 and incorporated herein by
reference.)
4.18 Form of Promissory Note dated December 31,
1993 from the Company to the shareholders of
Wallaby "Second Notes". (Filed as Exhibit
10.2 to the Company's report on Form 8-K
dated January 13, 1994 and incorporated
herein by reference.)
4.19 Promissory Note dated December 31, 1993 from
the Company to Jeffry M. Picower. (Filed as
Exhibit 10.8 to the Company's report on Form
8-K dated January 13, 1994 and incorporated
herein by reference.)
4.20 Form of Promissory Note dated November 15,
1994 from the Company to Sentient Systems,
Inc. and certain Key Individuals. (Filed as
Exhibit 10.1 to the Company's report on Form
8-K dated October 7, 1993 and incorporated
herein by reference.)
4.21 Form of Promissory Note dated January 3, 1995
from the Company to Jeffry M. Picower (filed
as Exhibit 1 to the Company's report on
Form 8-K dated January 5, 1995 and
incorporated herein by reference.)
4.22 Copy of Convertible Subordinated Note
Purchase Agreement, dated January 25, 1995,
between Equifax Inc. and the Company (filed
as Exhibit 2 to the Company's report on Form
8-K dated January 26, 1995 and incorporated
herein by reference).
<PAGE>
4.23 Form of Convertible Subordinated Promissory
Note, dated February 15, 1995 (Filed as
Exhibit 1 to the Company's report on Form 8-K
dated February 28, 1995 and incorporated
herein by reference.)
4.24 Form of Promissory Note, dated April 24,
1995, from PMSI Acquisition Corp. to Practice
Management Systems, Inc. in the amount of
$2,000,000. (Filed as Exhibit 2 to the
Company's report on Form 8-K dated May 1,
1995 and incorporated herein by reference.)
4.25 Copy of Common Stock Purchase Warrant, dated
September 13, 1995. (Filed as Exhibit 3 to
the Company's report on Form 8-K dated
September 18, 1995 and incorporated herein by
reference.)
4.26 Copy of Promissory Note, dated October 27,
1995, from VERSYSS Incorporated to VERSYSS
Liquidating Trust in the amount of
$11,750,000. (Filed as Exhibit 1 to the
Company's report on Form 8-K dated November
8, 1995 and incorporated herein by
reference.)
10.1 Copy of the Company's 1989 Stock Option Plan,
including forms of option agreements. (Filed
as Exhibit 10.1 to the 1991 Form S-1 and
incorporated herein by reference.)
10.2 Copy of the Company's 1990 Stock Option Plan,
including forms of option agreements. (Filed
as Exhibit 10.2 to the 1991 Form S-1 and
incorporated herein by reference.)
10.3 Copy of Employment Agreement between the
Company and Jerry Brager together with
Amendment No. 1 thereto. (Filed as Exhibit
10.3 to the 1991 S-1 and incorporated herein
by reference.)
<PAGE>
10.4 Copy of letter from the Company to Jerry
Brager relating to the deferred compensation
payable to Mr. Brager under his Employment
Agreement. (Filed as Exhibit 10.3(a) to the
1991 S-1 and incorporated herein by
reference.)
10.5 Copy of Employment Agreement between the
Company and Jerry Brager dated February 19,
1993. (Filed as Exhibit 10.3(b) to the 1992
10-K and incorporated herein by reference.)
10.6 Sublease for the Company's headquarters in
Laurence Harbor, New Jersey. (Filed as
Exhibit 10.4 to the 1991 S-1 and incorporated
herein by reference.)
10.7 Copy of Amended and Restated Term Lease
Master Agreement between the Company and IBM
Credit Corporation, including exhibit and
schedules thereto. (Filed as Exhibit
10.5(b) to the 1992 10- K and incorporated
herein by reference.)
10.8 Copy of Letter Amendment No. 1 to Amended and
Restated Term Lease Master Agreement between
the Company and IBM Credit Corporation.
(Filed as Exhibit 10.5(c) to the 1992 10-K
and incorporated herein by reference.)
10.9 Copy of Marketing Services Agreement
Termination Letter between the Company and
Strategic Medical Communications, Inc. (Filed
as Exhibit 10.14(a) to the 1992 10-K and
incorporated herein by reference.)
10.10 Updated Form of Physician Member Agreement.
(Filed as Exhibit 10.16 to the 1992 10-K and
incorporated herein by reference.)
10.11 Copy of letter between the Company and
Voluntary Hospitals of America, Inc.
terminating the (i) Marketing Agreement
between the Company and VHA Physician
Services, Inc. and (ii) Warrant to Purchase
417,500 shares of Common Stock issued to
Voluntary Hospitals of America, Inc. (Filed
as Exhibit 10.17(a) to the 1992 10-K and
incorporated herein by reference.)
<PAGE>
10.12 Copy of Term Sheet between the Company and
Santa Cruz Operation, Inc. (Filed as Exhibit
10.21(a) to the 1992 10-K and incorporated
herein by reference.)
10.13 Copy of Amended and Restated Agreement
between the Company and Wallaby Software
Corporation, including exhibit and schedules
thereto. (Filed as Exhibit 10.23(a) to the
1992 10-K and incorporated herein by
reference.)
10.14 Copy of Employment Agreement between the
Company and Ronald P. Bernier. (Filed as
Exhibit 10.30 to the 1992 10-K and
incorporated herein by reference.)
10.15 Copy of Agreement of Separation of Employment
between the Company and Ronald P. Bernier,
together with Release and Agreement thereto.
(Filed as Exhibit 10.30(a) to the 1992 10-K
and incorporated herein by reference.)
10.16 Copy of Employment Letter between the Company
and John F. Mortell. (Filed as Exhibit 10.31
to the 1992 10-K and incorporated herein by
reference.)
10.17 Copy of Employment Letter between the Company
and Donald W. Hackett. (Filed as Exhibit
10.32 to the 1992 10-K and incorporated
herein by reference.)
10.18 Copy of Employment Letter between the Company
and Douglas J. Snelson. (Filed as Exhibit
10.33 to the 1992 10-K and incorporated
herein by reference.)
10.19 Copy of Agreement between the Company and
Damon Corporation. (Filed as Exhibit 10.35 to
the 1992 10-K and incorporated herein by
reference.)
<PAGE>
10.20 Copy of Letter Agreement between the Company
and Jeffry M. Picower dated April 14, 1993.
(Filed as Exhibit 10.38 to the 1992 10-K and
incorporated herein by reference.)
10.21 Asset Purchase Agreement between the Company
and IBAX Healthcare Systems, dated March 11,
1994. (Filed as Exhibit 10.53 to the
Company's report on Form 10-K for the year
ended December 31, 1993 and incorporated
herein by reference.)
10.22 Asset Purchase Agreement between the Company
and Sentient systems, Inc. dated as of
November 15, 1994. (Filed as Exhibit 1 to the
Company's report on Form 8-K dated November
22, 1994 and incorporated herein by
reference.)
10.23 Guaranty dated September 23, 1993, by the
Company to The Flagship Group Inc. (Filed as
Exhibit 10.2 to the Company's report on Form
8-K dated October 7, 1993 and incorporated
herein by reference.)
10.24 Employment Agreement dated December 31, 1993
between Wallaby Software Corporation and F.
Biamonte. (Filed as Exhibit 10.3 to the
Company's report on Form 8-K dated
January 13, 1994 and incorporated herein by
reference.)
10.25 Employment Agreement dated December 31, 1993
between Wallaby Software Corporation and S.
Kaminetsky. (Filed as Exhibit 10.4 to the
Company's report on Form 8-K dated
January 13, 1994 and incorporated herein by
reference.)
<PAGE>
10.26 Employment Agreement dated December 31, 1993
between Wallaby Software Corporation and A.
Grosz. (Filed as Exhibit 10.5 to the
Company's report on Form 8-K dated
January 13, 1994 and incorporated herein by
reference.)
10.27 Employment Agreement dated December 31, 1993
between Wallaby Software Corporation and M.
Epstein. (Filed as Exhibit 10.6 to the
Company's report on Form 8-K dated
January 13, 1994 and incorporated herein by
reference.)
10.28 Letter Agreement between the Company and
Jeffry M. Picower dated December 31, 1993.
(Filed as Exhibit 10.7 to the Company's
report on Form 8-K dated January 13, 1994 and
incorporated herein by reference.)
10.29 Agreement dated December 30, 1993 between the
Company and IBM Credit Corporation. (Filed as
Exhibit 10.9 to the Company's report on Form
8-K dated January 13, 1994 and incorporated
herein by reference.)
10.30 The Company's Amended and Restated 1993
Incentive and Non-Incentive Stock Option
Plan. (Filed as Exhibit 10.30 to the 1995 S-1
and incorporated herein by reference).
10.31 The Company's Amended and Restated 1993
Non-Employee Directors Non-Incentive Stock
Option Plan. (Filed as Exhibit 10.31 to the
1995 S-1 and incorporated herein by
reference).
10.32 Employment Letter dated April, 1994 between
the Company and James R. Bailey. (Filed as
Exhibit 10.32 to the 1995 S-1 and
incorporated herein by reference).
10.33 Employment Letter dated September 1, 1994,
between the Company and Steven E. Kelsky.
(Filed as Exhibit 10.33 to the 1995 S-1 and
incorporated herein by reference).
10.34 Lease Agreement for the Company's
headquarters in Morris Plains, New Jersey.
(Filed as Exhibit 10.34 to the 1995 S-1 and
incorporated herein by reference).
<PAGE>
10.35 Service and Development Agreement between the
Company and Sentient Systems, Inc. dated as
of November 15, 1994. (Filed as Exhibit 2 to
the Company's report on Form 8-K dated
November 22, 1994 and incorporated herein by
reference.)
10.36 Form of the Company's Value Added Reseller
Stock Option Plan. (Filed as Exhibit 10.35
to the 1995 S-1 and incorporated herein by
reference)
10.37 Exclusive Marketing Agreement, dated
January 25, 1995, by and between Equifax
Healthcare EDI Services, Inc. and the Company
(filed as Exhibit 1 to the Company's report
on Form 8-K dated January 26, 1995 and
incorporated herein by reference).
10.38 Amended and Restated Exclusive Marketing
Agreement, dated as of January 12, 1996, by
and between the Company and Equifax
Healthcare EDI Services, Inc. (Filed as
Exhibit 1 to the Company's report on Form 8-K
dated February 2, 1995 and incorporated
herein by reference.)
10.39 Guaranty, dated April 24, 1995, by the
Company to Practice Management Systems, Inc.
(Filed as Exhibit 3 to the Company's report
on Form 8-K dated May 1, 1995 and
incorporated herein by reference.)
10.40 Guaranty, dated October 27, 1995, by the
Company and V Holding Corp. to VERSYSS
Liquidating Trust. (Filed as Exhibit 2 to
the Company's report on Form 8-K dated
November 8, 1995 and incorporated herein by
reference.)
10.41 Pledge Agreement, dated October 27, 1995, by
and among the Company, V Holding Corp. and
VERSYSS Liquidating Trust. (Filed as
Exhibit 3 to the Company's report on Form 8-K
dated November 8, 1995 and incorporated
herein by reference.)
<PAGE>
10.42 Employment Letter, dated August 17, 1995
between VERSYSS and Kenneth W. Ernsting.
(Filed as Exhibit 10.42 to the 1995 10-K and
incorporated herein by reference.)
10.43 Employment Letter, dated August 17, 1995
between VERSYSS and William S. Edwards.
(Filed as Exhibit 10.43 to the 1995 10-K and
incorporated herein by reference.)
10.44 Partnership Agreement, dated as of January
25, 1996, between PCN HP Venture Corp. and
Intelligent Medical Systems, Inc. (Filed as
Exhibit 10.44 to the 1995 10-K and
incorporated herein by reference.)
10.45* Transaction Agreement, dated as of January
25, 1996, between the Company, Glaxo Wellcome
Inc., and HealthPoint G.P.
10.46 Copy of Physician Computer Network, Amended
and Restated Value Added Reseller Stock
Option Plan, dated as of January 1996.
(Filed as Exhibit 10.46 to the 1995 10-K and
incorporated herein by reference.)
10.47 Copy of Employment Agreement, dated as of
March 29, 1996 between the Company and John
Mortell. (Filed as Exhibit 10-47 to the 1995
10-K and incorporated herein by reference.)
10.48 Copy of Employment Agreement, dated as of
March 29, 1996 between the Company and Hank
Green. (Filed as Exhibit 10.48 to the 1995
10-K and incorporated herein by reference.)
11 Statement Regarding Computation of Earnings
Per Share. (Filed as Exhibit 11 to the 1995
10-K and incorporated herein by reference)
22 List of Subsidiaries of Registrant. (Filed
as Exhibit 22 to the 1995 10-K and
incorporated herein by reference.)
<PAGE>
24.1 Consent of KPMG Peat Marwick LLP. (Filed as
Exhibit 24.1 to the 1995 10-K and
incorporated herein by reference.)
________________________________
* Filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Physician Computer Network, Inc.
has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PHYSICIAN COMPUTER NETWORK, INC.
By: /s/ John F. Mortell
------------------------------
John F. Mortell, Executive
Vice President
Dated: May 23, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jeffry M. Picower Chairman of the Board May 23, 1996
- ------------------------ and Director
Jeffry M. Picower
/s/ Henry Green President, Chief May 23, 1996
- ------------------------ Executive Officer and Director
Henry Green (Principal Executive Officer)
/s/ John F. Mortell Executive Vice President May 23, 1996
- ------------------------ and Chief Operating Officer
John F. Mortell (Principal Financial Officer)
/s/ Thomas F. Wraback Vice President-Finance May 23, 1996
- ------------------------ (Principal Accounting Officer)
Thomas F. Wraback
/s/ Jerry Brager
- ------------------------ Director May 23, 1996
Jerry Brager
/s/ Frederick Frank
- ------------------------ Director May 23, 1996
Frederick Frank
/s/ Frederic Greenberg
- ------------------------ Director May 23, 1996
Frederic Greenberg
/s/ Richard B. Kelsky
- ------------------------ Director May 23, 1996
Richard B. Kelsky
EXECUTION
TRANSACTION AGREEMENT
among
GLAXO WELLCOME INC.,
PHYSICIAN COMPUTER NETWORK, INC.
and
HEALTHPOINT G.P.
Dated as of January 25, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions. . . . . . . . . . . . 2
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . 2
ARTICLE II
GLAXO REPRESENTATIONS AND
WARRANTIES TO PCN . . . . . . . . . . 2
SECTION 2.1 Corporate Organization, etc.. . . . . . . . 2
SECTION 2.2 Authorization; Execution and Delivery,
etc . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Consents and Approvals of Governmental
Authorities . . . . . . . . . . . . . . . 2
SECTION 2.4 No Violation. . . . . . . . . . . . . . . . 3
SECTION 2.5 Legal Proceedings, etc. . . . . . . . . . . 3
SECTION 2.6 Brokerage . . . . . . . . . . . . . . . . . 3
ARTICLE III
PCN REPRESENTATIONS AND WARRANTIES
TO GLAXO. . . . . . . . . . . . . 3
SECTION 3.1 Corporate Organization, etc.. . . . . . . . 3
SECTION 3.2 Authorization; Execution and Delivery,
etc.. . . . . . . . . . . . . . . . . . . 3
SECTION 3.3 Consents and Approvals of Governmental
Authorities . . . . . . . . . . . . . . . 4
SECTION 3.4 No Violation. . . . . . . . . . . . . . . . 4
SECTION 3.5 Legal Proceedings, etc. . . . . . . . . . . 4
SECTION 3.6 Brokerage . . . . . . . . . . . . . . . . . 5
ARTICLE IV
SURVIVAL. . . . . . . . . . . . . 5
SECTION 4.1 Survival. . . . . . . . . . . . . . . . . . 5
ARTICLE V
CERTAIN AGREEMENTS . . . . . . . . . . 5
SECTION 5.1 Distribution of Partnership Products and
Services. . . . . . . . . . . . . . . . . 5
SECTION 5.2 Restrictions on Certain Activities;
Certain Other Agreements. . . . . . . . . 6
SECTION 5.3 PCN's Obligations . . . . . . . . . . . . . 10
SECTION 5.4 Glaxo's Obligations . . . . . . . . . . . . 11
SECTION 5.5 Data Access . . . . . . . . . . . . . . . . 12
SECTION 5.6 Communication Access/Disease Management . . 12
SECTION 5.7 Other Agreements. . . . . . . . . . . . . . 13
<PAGE>
ARTICLE VI
NOTICES. . . . . . . . . . . . . 15
SECTION 6.1 Notices. . . . . . . . . . . . . . . . . . . 15
ARTICLE VII
GENERAL. . . . . . . . . . . . . 16
SECTION 7.1 Expenses. . . . . . . . . . . . . . . . . . 16
SECTION 7.2 Assignment and Binding Effect . . . . . . . 16
SECTION 7.3 Governing Law; Jurisdiction; Consent to
Service of Process. . . . . . . . . . . . 16
SECTION 7.4 Parties in Interest . . . . . . . . . . . . 18
SECTION 7.5 Scope of Partnership Operations . . . . . . 18
SECTION 7.6 Press Releases. . . . . . . . . . . . . . . 18
SECTION 7.7 Headings. . . . . . . . . . . . . . . . . . 18
SECTION 7.8 Schedules, etc. . . . . . . . . . . . . . . 18
SECTION 7.9 Entire Agreement: Amendment; Severability . 19
SECTION 7.10 Waiver and Compliance. . . . . . . . . . . 19
SECTION 7.11 Confidentiality. . . . . . . . . . . . . . 19
SECTION 7.12 Specific Enforcement; Limitation on
Liability . . . . . . . . . . . . . . . . 20
SECTION 7.14 Counterparts . . . . . . . . . . . . . . . 20
SECTION 7.15 Compliance . . . . . . . . . . . . . . . . 20
SECTION 7.16 Securities Investment. . . . . . . . . . . 21
SCHEDULES
Schedule 1 -- Definitions
Schedule 5.4 -- License and Agreements Transferred
Schedule 5.5 -- Data
Schedule 5.6 -- Products Categories
Schedule 5.7 -- Other
<PAGE>
TRANSACTION AGREEMENT
TRANSACTION AGREEMENT dated January as of 25, 1996
among Glaxo Wellcome Inc., a North Carolina corporation,
Physician Computer Network, Inc., a New Jersey corporation, and
HealthPoint G.P., a New York general partnership.
WITNESSETH
WHEREAS, Glaxo has in development a computerized
clinical patient record system and certain related assets;
WHEREAS, PCN is in the business of providing practice
management software systems to physician offices;
WHEREAS, the Partnership was formed by wholly owned
subsidiaries of Glaxo and PCN for the purpose of establishing and
conducting a state-of-the-art, competitive (i) clinical
information system and related services (including required
interfaces) which will, among other things, enable physicians to
efficiently record and transmit clinical information from patient
encounters; (ii) electronic collection, support, management and
analysis of patient and provider data (including the maintenance
and preservation of the integrity thereof); and (iii) network
communication system to facilitate the delivery of such clinical
data, and analyses derived therefrom, and other related data and
information and services from and to physicians, managed care
organizations, plan sponsors and payors, suppliers, pharmacies,
clearinghouses, clinical laboratories and other health care
industry participants;
WHEREAS, Glaxo, subject to the terms and conditions set
forth herein, desires to cause its wholly owned subsidiary,
Intelligent Medical Systems, Inc., to make certain cash and non-
cash contributions to the Partnership and to enter into the
Partnership Agreement (as defined below) in connection therewith;
and
WHEREAS, PCN, subject to the terms and conditions set
forth herein, desires to cause its wholly owned subsidiary,
PCNSub, to make certain cash and non-cash contributions to the
Partnership and to enter into the Partnership Agreement in
connection therewith.
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants, agreements, representations
and warranties herein contained, and for other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound
hereby agree as follows:
<PAGE>
ARTICLE I
Definitions
SECTION 1.1. Definitions. Capitalized terms used
herein and not otherwise herein defined shall have the meanings
given to such terms in Schedule 1 hereto (such definitions to be
equally applicable to both the singular and plural forms of the
terms defined).
ARTICLE II
GLAXO REPRESENTATIONS AND
WARRANTIES TO PCN
Glaxo represents and warrants to PCN as of the date
hereof as follows:
SECTION 2.1 Corporate Organization, etc. Each Glaxo
Party is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and has full corporate power and authority to conduct its
business as presently conducted and contemplated to be conducted.
SECTION 2.2 Authorization; Execution and Delivery,
etc. Glaxo has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
IMS has full corporate power and authority to execute and deliver
the Partnership Agreement and to perform its obligations
thereunder. The execution and delivery of this Agreement by
Glaxo and the Partnership Agreement by IMS and the performance by
each of their respective obligations hereunder and thereunder
have been duly authorized by all necessary corporate action on
the part of such party. This Agreement and the Partnership
Agreement have been duly executed and delivered by Glaxo and IMS,
respectively. This Agreement and the Partnership Agreement
constitute the valid and binding agreement of Glaxo and IMS,
respectively, each enforceable against the Glaxo Party which is a
party thereto in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
SECTION 2.3 Consents and Approvals of Governmental
Authorities. No consent, approval or authorization of, or
declaration, filing or registration with or notice to, any
governmental or regulatory authority is required in connection
with or as a result of the execution and delivery by Glaxo of
this Agreement or by IMS of the Partnership Agreement or the
performance by either Glaxo Party of its obligations hereunder or
thereunder.
<PAGE>
SECTION 2.4 No Violation. The execution and delivery
of this Agreement by Glaxo and the Partnership Agreement by IMS
and the performance by Glaxo and IMS of their respective
obligations hereunder and thereunder do not and will not (a)
violate, constitute or result in a breach of any term, condition
or provision of, or constitute a default (or an event which, with
notice or the lapse of time, or both, has the potential of
constituting a default), under (i) the certificate of
incorporation or by-laws of either Glaxo Party, or (ii) any
material mortgage, indenture, loan or credit agreement or any
other material agreement or instrument to which any Glaxo Party
is a party, or pursuant to which any Glaxo Party is the direct or
indirect obligor, (b) violate any law, regulation, judgment,
injunction, order or decree binding upon Glaxo or IMS, (c) result
in the loss of any license, franchise, permit, legal privilege or
legal right enjoyed or possessed by any Glaxo Party, (d) give the
right of termination to any party to any agreement, lease,
license or other instrument, or (e) require the consent of any
third party.
SECTION 2.5 Legal Proceedings, etc. There is no
legal, administrative, arbitrative or other action or proceeding
or governmental investigation relating to the transactions
pursuant to this Agreement or the Partnership Agreement pending,
or, to the knowledge of any Glaxo Party, threatened against Glaxo
or IMS or any director, officer or employee thereof.
SECTION 2.6 Brokerage. No broker or finder has acted
directly or indirectly for any Glaxo Party in connection with
this Agreement or the Partnership Agreement or the transactions
contemplated hereby or thereby, and no broker or finder is
entitled to any brokerage or finder's fee or other commission in
respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of any Glaxo Party.
ARTICLE III
PCN REPRESENTATIONS AND WARRANTIES
TO GLAXO
PCN represents and warrants to Glaxo as of the date
hereof as follows:
SECTION 3.1 Corporate Organization, etc. Each PCN
Party is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and has full corporate power and authority to conduct its
business as presently conducted and contemplated to be conducted.
<PAGE>
SECTION 3.2 Authorization; Execution and Delivery,
etc. PCN has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
PCNSub has full corporate power and authority to execute and
deliver the Partnership Agreement and to perform its obligations
thereunder. The execution and delivery of this Agreement by PCN
and the Partnership Agreement by PCNSub and the performance by
each of their respective obligations hereunder and thereunder
have been duly authorized by all necessary corporate action on
the part of such party. This Agreement and the Partnership
Agreement have been duly executed and delivered by PCN and
PCNSub, respectively. This Agreement and the Partnership
Agreement constitute the valid and binding agreement of PCN and
PCNSub, respectively, each enforceable against the PCN Party a
party thereto in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
SECTION 3.3 Consents and Approvals of Governmental
Authorities. No consent, approval or authorization of, or
declaration, filing or registration with or notice to, any
governmental or regulatory authority is required in connection
with or as a result of the execution and delivery by PCN of this
Agreement or by PCNSub of the Partnership Agreement or the
performance by either PCN Party of its obligations hereunder or
thereunder.
SECTION 3.4 No Violation. The execution and delivery
of this Agreement by PCN and the Partnership Agreement by PCNSub
and the performance by PCN and PCNSub of their respective
obligations hereunder and thereunder do not and will not (a)
violate, constitute or result in a breach of any term, condition
or provision of, or constitute a default (or an event which, with
notice or the lapse of time, or both, has the potential of
constituting a default), under (i) the certificate of
incorporation or by-laws of either PCN Party, or (ii) any
material mortgage, indenture, loan or credit agreement or any
other material agreement or instrument to which any PCN Party is
a party, or pursuant to which any PCN Party is the direct or
indirect obligor, (b) violate any law, regulation, judgment,
injunction, order or decree binding upon PCN or PCNSub, (c)
result in the loss of any license, franchise, permit, legal
privilege or legal right enjoyed or possessed by any PCN Party,
(d) give the right of termination to any party to any agreement,
lease, license or other instrument, or (e) require the consent of
any third party.
<PAGE>
SECTION 3.5 Legal Proceedings, etc. There is no
legal, administrative, arbitrative or other action or proceeding
or governmental investigation relating to the transactions
pursuant to this Agreement or the Partnership Agreement pending,
or, to the knowledge of any PCN Party, threatened against PCN,
PCNSub or any director, officer or employee thereof.
SECTION 3.6 Brokerage. No broker or finder has acted
directly or indirectly for either PCN Party in connection with
this Agreement or the Partnership Agreement or the transactions
contemplated hereby or thereby, and no broker or finder is
entitled to any brokerage or finder's fee or other commission in
respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of either PCN Party.
SECTION 3.7 Equifax Agreement. It has provided Glaxo
with a true and correct copy of the Equifax Agreement.
ARTICLE IV
SURVIVAL
SECTION 4.1 Survival. All representations and
warranties made in this Agreement shall survive the Closing Date
and shall not be extinguished by the Closing or any investigation
made by or on behalf of any party hereto.
ARTICLE V
CERTAIN AGREEMENTS
SECTION 5.1 Distribution of Partnership Products and
Services. (a) PCN acknowledges that the Partnership shall have
overall responsibility for the distribution of the Partnership's
products and services, including marketing strategy and policy,
pricing, determining which (existing or potential) Partnership
customers and Partnership VARs to pursue and the recruitment,
training and certification of such VARS.
(b) Subject to the Partnership's rights set forth in
paragraph (a) above (which rights shall not be exercised in a
manner inconsistent with this paragraph (b)), PCN (either
directly or through any other PCN Entity), as agent on behalf of
the Partnership, shall have exclusive marketing rights to
promote, market, license (or sublicense, as the case may be) and
sell the System, the CPR, the Partnership Network and the
Clinical Transaction Services provided by the Partnership from
time to time, through PCN VARs. Further, except where the
Partnership determines in its reasonable judgment that it is not
competitively practicable, PCN shall be the Partnership's
preferred provider of hardware, configuration services, support,
training and services (so long as it has the capability to
provide such products and services and provides them at
competitive rates and quality) to Class B VARs; provided that
PCN's preferred provider status shall not in any way restrict the
right of the Partnership to itself provide such hardware,
services, support and training or obligate the Partnership to
purchase any such hardware, service, support or training from, or
otherwise make any payment therefor to, PCN. In the event: (i)
that any Person (other than PCN or any wholly owned subsidiary of
PCN) owns all or part of the Partnership interest initially
issued to PCNSub pursuant to the Partnership Agreement; or (ii)
of the termination or sale of all or substantially all of the
assets of the Partnership, the provisions of this Section 5.1(b)
shall lapse and cease to apply.
(c) Notwithstanding paragraph (a) above, so long as
Section 5.1(b) is applicable, the Partnership will not grant to
any Class A VAR the right to distribute, market, license,
sublicense or sell, or provide support with respect to, the
Partnership's products or services to any Class B VAR (other than
a Class B VAR who or which, as the case may be, is also selling,
licensing or sublicensing the practice management software
products of that Class A VAR at the time that it sells the
Partnership's products or services) and any written agreement
entered into between the Partnership and any Class A VAR shall
provide that during the term of such agreement, such Class A VAR
may not so market, license, sublicense or sell, or provide
support with respect to, the Partnership's products or services.
<PAGE>
SECTION 5.2 Restrictions on Certain Activities;
Certain Other Agreements. (a) Except as set forth below in this
Section 5.2, PCN shall not, directly or indirectly (including
pursuant to any agreement or arrangement with any third party but
excluding the Partnership) develop, market or provide in the
United States (including its territories and possessions):
(i) any Clinical Transaction Service (other than
Restricted Clinical Transaction Services, which are covered
separately below and other than Clinical Transaction
Services involving laboratories), at any time prior to the
Capability Time unless PCN shall have first requested that
the Partnership provide such service and the Partnership is
unable or unwilling to do so within a commercially
reasonable period of time and on commercially reasonable
terms;
(ii) any Clinical Transaction Service (other than
Restricted Clinical Transaction Services, which are covered
separately below), including those involving laboratories,
at any time after the Capability Time, so long as such
Clinical Transaction Services as provided by the Partnership
after the Capability Time are so provided on commercially
reasonable terms;
(iii) any Restricted Clinical Transaction Service; or
(iv) any clinical patient record product or any analyses
of Clinical Data contained therein, except to the extent
that such data is of the type that is contemplated to be
transmitted and/or received pursuant to the provision of
"EDI Services" under the Equifax Agreement and is not
obtained through the use or operation of the CPR, EMR or the
Partnership Network.
(b) PCN agrees that, except as set forth below in this
Section 5.2:
(i) no products or services competitive with any one or
more of the System, the CPR, the Partnership Network and any
Clinical Transaction Service will be permitted to be linked
to any PCN Practice Management System (except to the extent
that, with respect to contracts entered into prior to the
date hereof or with respect to contractual requirements
binding upon businesses subsequently acquired by any PCN
Entity at the time of such acquisition, such PCN Entity does
not have the contractual right to prevent such linkage;
provided, that PCN shall use its Best Efforts to modify such
contracts to provide such PCN Entity with such right);
(ii) it will not write any interfaces to permit the
foregoing and it will cause any third party with whom it may
contract or with whom it may otherwise become engaged from
and after the Closing Date to agree not to write any such
interfaces (and shall use its Best Efforts to enforce such
agreements);
(iii) it will include provisions in its software license
agreements with respect to all PCN Practice Management
Systems directly licensed by any PCN Entity entered into or
renewed on any date after the date hereof to give effect to
the foregoing and will require provisions to the same effect
to be included in any sublicenses under such direct licenses
(and shall use its Best Efforts to enforce all such
provisions);
(iv) except to the extent prohibited by PCN's existing
agreements (which PCN shall use its Best Efforts to modify
to eliminate any such prohibition), it will require PCN VARs
to agree (and shall use its Best Efforts to enforce such
agreements) that the System, the CPR, the Partnership
Network and the Clinical Transaction Services provided by
the Partnership to PCN Customers will be the exclusive
clinical patient record products and Clinical Transaction
Services sold with PCN's practice management software
systems;
<PAGE>
(v) after the date hereof it will not enter into any
agreement or arrangement with any third party relating to
the provision by any PCN Entity of Clinical Transaction
Services (other than Restricted Clinical Transaction
Services, which are covered separately below, and other than
with respect to contractual requirements binding upon
businesses acquired by any PCN Entity at the time of such
acquisitions but only to the extent so binding at such time
and which requirements PCN shall use its Best Efforts to
eliminate) unless (i) such agreement or arrangement can be
terminated by such PCN Entity upon 90 days prior notice to
such third party (without the consent of such third party
and at no cost to the Partnership) or (ii) both of the
following apply: (A) such PCN Entity's rights and
obligations under such agreement or arrangement can, by its
terms, be assigned and transferred by such PCN Entity to the
Partnership, at no cost to the Partnership, and (B) the
Partnership consents in advance to such agreement or
arrangement (such consent not to be withheld, unless the
Partnership reasonably concludes that the terms of such
agreement or arrangement are not commercially reasonable);
(vi) after the date hereof it will not enter into any
agreement or arrangement with any third party relating to
the provision by any PCN Entity of any Restricted Clinical
Transaction Services without the consent of the Partnership;
and
(vii) after the date hereof, it will not enter into any
agreements or arrangements inconsistent with the foregoing.
PCN will promptly notify the Partnership, in advance, of any
agreements or arrangements it may enter into after the date
hereof described in clause (v) above (whether or not consent is
required). On or at any time after the Capability Time, PCN
shall, upon the Partnership's request, terminate or cause to be
terminated any agreement or arrangement described in clause
(v)(i) above.
(c) In circumstances where a PCN Customer or potential
PCN Customer indicates that it is unwilling to utilize the CPR
(whether or not the CPR is then available) or the Partnership
Network and such PCN Customer requires comparable
products/services to be provided as a condition to purchasing,
licensing or otherwise acquiring or maintaining a PCN Practice
Management System, PCN Entities will be permitted on a case-by-
case basis at such PCN Customer's (or potential PCN Customer's,
as the case may be) request to provide such comparable
products/services and an interface to the applicable PCN Practice
Management System (but not through the CPR, the Partnership
Network or the EMR (as hereinafter defined)) but only so long as
50% (100%, in any case where the comparable products/services are
or include a computerized clinical patient record system and the
CPR is then available) of all revenues (after deducting therefrom
all direct variable costs incurred by any PCN Entity with respect
thereto), if any, derived by any PCN Entity therefrom are paid by
such PCN Entity to the Partnership. PCN shall promptly notify
the Partnership in writing of any such PCN Customers unwilling to
utilize the CPR or the Partnership Network and shall, prior to
being permitted to provide comparable products/services pursuant
to the foregoing, make all reasonable efforts to cooperate with
the Partnership in order to provide the Partnership (directly and
not through any non-PCN VARs) with a fair opportunity to persuade
such customers to adopt, license and use the Partnership's
products and services. This paragraph shall not apply to the
provision by any PCN Entity of Clinical Transaction Services to
any Person. The provision of such services by any PCN Entity to
any such Person is covered elsewhere in this Agreement.
(d) PCN hereby agrees that any data collected by the
applicable PCN Entity from any PCN Customer in connection with
providing competitive products/services in accordance with this
Section 5.2 shall, with such PCN customer's permission (to the
extent necessary) and to the extent permitted by applicable law,
be provided to the Partnership.
(e) Following the Closing Date, PCN shall not improve,
enhance, further develop or license its current "computerized
clinical patient record system" product ("EMR"); provided that
PCN shall be permitted to continue to license (without
enhancement or further development) such product as an integrated
part of the PCN Health Network but only (i) until such time as
the Partnership can, at its own cost and expense, provide an
equivalent or better product on an integrated basis (the
"Availability Date"); and (ii) to any PCN Customer (up to a total
of 1,500 PCN Customers), but only if prior to the Closing Date,
PCN agreed to provide the EMR to such PCN Customer. Except as
provided in clause (ii) above, from and after the Availability
Date, PCN shall cease providing the EMR product and shall instead
provide the Partnership's equivalent or better product. Nothing
shall prohibit PCN from using, improving or providing to any PCN
Customer the screen builder functionality for financial and
administrative purposes. PCN hereby grants the Partnership a
fully paid-up, non-exclusive license to use, modify and create
derivative works from the EMR in object code and in source code
form. Upon the Closing Date PCN shall provide copies of the
object code and source code for the EMR in order to assist in and
advance the development of the System and shall cooperate with
and assist Partnership personnel in understanding and using the
object code and source code for the foregoing purposes.
<PAGE>
(f) Except as set forth herein, neither Glaxo nor any
of its controlled Affiliates, shall directly or indirectly
(including pursuant to any agreement or arrangement with any
third party but excluding the Partnership) use the Partnership's
products or services in a manner which is competitive with the
Partnership in the United States (including its territories and
possessions) (i.e., shall not use such products or services for
the primary purpose of profiting solely through the sale or
resale thereof as opposed to aiding or promoting the sale of its
other products or services or any disease management products and
services through the sale or resale thereof to other persons).
(g) In the event of any termination of the Partnership
(other than, in the case of Sections 5.2(a)-(e) only, by reason
of a bankruptcy of PCNSub or a breach of the Partnership
Agreement or this Agreement by PCNSub or PCN) or, prior to any
such termination, the sale of all or substantially all of the
assets of the Partnership, the provisions of this Section 5.2
shall lapse and cease to apply.
SECTION 5.3 PCN's Obligations. (a) PCN shall (and
shall cause each of the other PCN Entities to) use its Best
Efforts to cause PCN Customers (including PCN Customers referred
to in Section 5.2(c)) to adopt, license and use the Partnership's
products and services from and after such time as such products
and services are commercially available; provided, however, that
(A) the use by PCN of its Best Efforts shall not require PCN to
sell, offer, license or sublicense any products or services
through any particular PCN VAR so long as: (i) PCN provides the
Partnership with prior written notice that it does not intend to
sell, offer, license or sublicense any products or services
through such particular PCN VAR; and (ii) PCN otherwise uses its
Best Efforts to cause PCN Customers associated with such PCN VAR
to adopt, license or use such products or services; and (B)
following receipt of such notice, the Partnership may, at its
option, sell, offer, license or sublicense such products or
services to such PCN Customers through such PCN VAR, provided,
further, that PCN shall not be required to make any Conversion
unless (i) such Conversion is requested by the Partnership and
(ii) the Partnership agrees to reimburse PCN for any Conversion
Costs incurred by any PCN Entity in connection therewith. At the
time of any requested Conversion described in clause (i) above (a
"Conversion Request"), PCN shall identify in reasonable detail
the related Conversion Costs, and upon receipt of the
Partnership's agreement to reimburse PCN for such costs, PCN
shall be obligated to use its Best Efforts as contemplated above
with respect to such Conversion. In lieu of agreeing to
reimburse PCN for any Conversion Costs with respect to any
particular Conversion, the Partnership may itself or through
third parties (other than Class A VARs or Class B VARs) make the
Conversion directly. PCN shall make its resources (including
technical resources and software) and personnel reasonably
available at such times as may be reasonably requested by the
Partnership (but without interfering with PCN's business
operations) in order to facilitate the development of the System
and the ability to deliver Clinical Transaction Services. This
will include, in the case of personnel, executives of PCN working
jointly with Partnership management on a coordinated basis to
develop relationships between the Partnership and third party
service providers, such as laboratories, with which PCN has
existing relationships. The foregoing Best Efforts obligations
of PCN shall not apply with respect to any product or service of
the Partnership if such product or service could not have been
provided by the Partnership consistent with the initial purposes
of the Partnership set forth in Section 3.4 of the Partnership
Agreement or any amended purposes of the Partnership approved by
PCNSub.
(b) To the extent PCN has assets (including rights
under contracts with third parties, such as test order contracts
with clinical laboratories and any current agreements with PCN
customers to provide a computerized clinical patient record
system, and related revenues), if any, relating solely to the
conduct of any Clinical Transaction Service, PCN will, upon a
Conversion Request with respect to such Clinical Transaction
Service, to the extent practicable (and, if applicable, permitted
by the terms of any such contracts), contribute such assets
(including contractual rights) to the Partnership or cooperate to
assist the Partnership in obtaining comparable assets (including
contractual rights).
(c) From and after the date six months following the
date of any Conversion Request, PCN shall be required to pay to
the Partnership 50% of any PCN revenues (after deducting
therefrom all direct variable costs incurred by any PCN Entity
with respect thereto) thereafter derived by any PCN Entity, from
any Unconverted Clinical Transaction Service, but only if, and
then only to the extent that, such Unconverted Clinical
Transaction Service is provided by the Partnership on
commercially reasonable terms.
<PAGE>
(d) (i) PCN will not, at any time while it or any of
its Affiliates is a partner of the Partnership, directly or
indirectly engage in the manufacture, distribution or sale of
pharmaceutical products or the disease management businesses in
the United States (including its territories and possessions),
and (ii) Glaxo will not, at any time while it or any of its
Affiliates is a partner of the Partnership, directly or
indirectly, engage in the practice management software business
in the United States (including its territories and possessions).
(e) In the event of any termination (other than, in
the case of Sections 5.3(a)-(c) and (d)(i) only, by reason of a
bankruptcy of PCNSub or a breach of the Partnership Agreement or
this Agreement by PCNSub or PCN) of the Partnership or, prior to
any such termination, the sale of all or substantially all of the
assets of the Partnership under circumstances in which the Person
acquiring such assets does not agree to assume, directly or
indirectly, the Partnership's obligations to PCN hereunder, the
provisions of this Section 5.3 shall lapse and cease to apply;
provided, that following any such event, so long as such
termination is not the result of a breach by Glaxo of this
Agreement, or by IMS of the Partnership Agreement or the
bankruptcy of IMS, PCN shall not take any action to limit or
impede the ability of the Partnership (or any successor business
of the Partnership) to have access to and to market Partnership
products and services to the PCN Customer base; provided,
however, that the selling, licensing, marketing or other
provision of any product or service, including, without
limitation, any product or service which is competitive with the
Partnership's products or services, to any Person, shall not
constitute action taken to limit or impede the ability of the
Partnership (or any successor business of the Partnership) to
have access to and market the Partnership's products and services
to any customer.
SECTION 5.4 Glaxo's Obligations. As part of its Non-
Cash Capital Contribution on the Closing Date pursuant to the
Partnership Agreement, Glaxo will license to the Partnership the
use of its US Health Information Network, including US Health
Information Network's CPR and related technology and United
States rights with respect thereto and any related rights under
contracts with third parties, such as agreements with VARs,
licenses relating to the information used in the CPR and
agreements with subcontractors, all as set forth in Schedule 5.4
hereto. Nothing contained in this Agreement or in the
Partnership Agreement shall be construed as an attempt to assign
any agreement to the Partnership that is not assignable without
the consent of any other party or parties thereto unless the
consent of such other party or parties is obtained. With respect
to any agreement not assigned to the Partnership by reason of the
foregoing, Glaxo shall use commercially reasonable efforts to
cause the parties thereto other than Glaxo (or its Affiliates) to
provide those consents necessary to permit such assignment. In
addition, (i) Glaxo shall (to the extent practicable) keep such
agreement in effect and shall give the Partnership the benefits
of such agreement and (ii) the Partnership shall perform the
obligations under such agreement, in each case to the same extent
as if such agreement had been assigned to the Partnership.
<PAGE>
SECTION 5.5 Data Access. (a) PCN and the Partnership
agree that an interface (comprised of the PCN Interface and the
Partnership Interface) shall be developed between each Qualifying
PCN Practice Management System and the System. The PCN Interface
and the Partnership Interface shall be designed to provide the
System with full access to the data within such systems needed
for the CPR and for the development of analytical services by the
Partnership, in each case, to the extent permitted by applicable
law and under applicable agreements to which the PCN Customers
are parties. To the extent such applicable agreements prohibit
the provision to the System of full access to such data, PCN
shall use its Best Efforts to modify such agreements so as to
eliminate such prohibitions.
(b) Neither party shall have access to data generated
or collected by the Partnership other than (i) pursuant to
Schedule 5.5 hereto and (ii) in any and all events, subject to
and in accordance with applicable law.
(c) The Partnership shall not, directly or indirectly,
sell, transfer, license, sublicense or otherwise dispose of any
data generated or otherwise collected through the use of the CPR,
the System or the Partnership Network unless: (i) such sale,
transfer or other disposition is made in accordance with
applicable law; and (ii) the Management Committee has determined
to permit such sale, transfer or other disposal.
SECTION 5.6 Communication Access/Disease Management.
(a) During the Prior Access Rights Period, Glaxo will have Prior
Access Rights with respect to the delivery and/or receipt of
information through the Partnership Network to and from
participating Partnership customers within the Exclusive Rights
Products Category and the Non-Exclusive Rights Products Category.
(b) Glaxo will also have non-exclusive access rights
with respect to the product categories specified on Schedule 5.6
hereto under the heading "Future Products" for a period of time
commencing on the date of FDA approval of such Glaxo products and
continuing until June 1, 1998.
(c) The Partnership shall in good faith cooperate with
Glaxo to develop and support Glaxo's disease management effort in
the therapeutic areas of interest to Glaxo specified by Glaxo and
agreed to by the Partnership on such terms and at such prices and
conditions as may be mutually acceptable to the parties from time
to time (including by providing communications access to the
Partnership Network with respect to such therapeutic areas on
terms comparable to and consistent with (e.g., exclusive or non-
exclusive) those available for Glaxo's products categories for a
period of time with respect to each category specified on
Schedule 5.6 hereto under the heading "Disease Management
Categories"; provided, however, that so long as the Partnership
complies with the provisions of this paragraph (c), the foregoing
will not restrict or prohibit the Partnership from entering into
any agreement or arrangement with any other Person with respect
to the development and support of such Person's disease
management efforts in any therapeutic area so long as: (i) such
agreement or arrangement does not materially impair the value of
Prior Access Rights granted to Glaxo in Section 5.6(a) or the
non-exclusive access rights granted to Glaxo in Section 5.6(b)
and (ii) such agreement or arrangement does not restrict the
Partnership's ability to satisfy its obligations to Glaxo under
this Section 5.6(c).
<PAGE>
(d) Glaxo will have the right to develop software to
support its disease management program and may require an
interface with the CPR in connection therewith on terms and on
prices reasonably acceptable to the Partnership.
(e) In the event that any competitor of Glaxo or its
Affiliates (including a Specified Competitor) controls PCNSub or
PCN, Glaxo shall have the right to double the term of any
exclusive communications access agreement then in effect between
Glaxo or any Affiliate of Glaxo and the Partnership.
SECTION 5.7 Other Agreements. (a) Glaxo and PCN
shall, during and after the term of this Agreement, be permitted
to (1) purchase and (2) market and distribute (including, in the
case of PCN, through PCN VARs) the Partnership products and
services for sale, license or sublicense, as the case may be, by
the Partnership to managed care customers of Glaxo and to PCN
Customers, respectively, in the case of each of clause (1) and
(2) at a price to be paid to the Partnership (whether paid by
Glaxo, PCN, PCN VARs or the customer directly to the Partnership)
and otherwise on terms and conditions (other than any marketing,
development and other incentives approved by the Management
Committee) no less favorable than the prices, terms and
conditions (other than any marketing, development and other
incentives approved by the Management Committee) then available
to Partnership customers (except as set forth on Schedule 5.7
hereto) purchasing, licensing or sublicensing, as the case may
be, in accordance with the Partnership's then applicable
practices, a similar amount of such products or services, as the
case may be, from the Partnership.
(b) Nothing contained herein or in the Partnership
Agreement shall:
<PAGE>
(i) permit the Partnership, directly or indirectly, to
use the name "Glaxo" or "Glaxo Wellcome" or any product
name, brand name, tradename, trademark, or service mark of
Glaxo or any derivative of any thereof or other name or mark
misleadingly similar thereto in any marketing materials of
the Partnership or otherwise in connection with the
marketing of Partnership goods or services, without the
prior written consent of Glaxo, except that the Partnership
may, without obtaining the prior consent of Glaxo, inform
Persons that Glaxo is the parent company of a partner in the
Partnership and refer to the Partnership as a joint venture
of Glaxo and PCN;
(ii) permit Glaxo, directly or indirectly, to have the
prior right to control and determine the content of data
analysis products of the Partnership from time to time
(whether by initially determining such content, through
review and edit of such products, or otherwise); provided
that the foregoing shall not in any way prohibit or restrict
in any way IMS or any other Glaxo Party which may be a
Partner pursuant to the Partnership Agreement from time to
time from exercising its rights ("Management Rights") to
participate in the management of the Partnership through (i)
the designation of Committee Persons to (or the actions by
such Persons as members of) the Management Committee and
(ii) the exercise (or non-exercise) of consent rights with
respect to Partner Consent Matters, in each case pursuant to
ARTICLE IV of the Partnership Agreement;
(iii) permit Glaxo, directly or indirectly, to have the
prior right to control and determine the kind and nature of
content with respect to other pharmaceutical manufacturers
which is made available by the Partnership on the System
from time to time; provided that the foregoing shall not in
any way prohibit or restrict in any way (i) the exercise by
IMS or any other Glaxo Party which may be a Partner pursuant
to the Partnership Agreement from time to time from
exercising Management Rights or (ii) the exercise by Glaxo
of its rights set forth in Section 5.6 of this Agreement;
and
(iv) permit the Partnership, directly or indirectly, to
use the name "Physician Computer Network" or "PCN" or any
product name, brand name, tradename, trademark, or service
mark of PCN or any other PCN Entity, or any derivative of
any thereof or other name or mark misleadingly similar
thereto or in any marketing materials of the Partnership or
otherwise in connection with the marketing of Partnership
goods or services, without the prior written consent of PCN
(not to be withheld or delayed unreasonably), except that
the Partnership may, without the prior written consent of
PCN, inform Persons that PCN is the parent company of a
partner in the Partnership and refer to the Partnership as a
joint venture of Glaxo and PCN.
<PAGE>
(c) The Partnership shall in good faith (and without
limiting PCN's obligations under Section 5.2) cooperate with PCN
to further develop and support PCN's practice management software
business on such terms and at such prices and conditions as may
be mutually acceptable to the parties from time to time;
provided, however, that so long as the Partnership complies with
the provisions of this paragraph (c), the foregoing will not
restrict or prohibit the Partnership from entering into any
agreement or arrangement with any other Person with respect to
the development and support of such Person's practice management
software business so long as such agreement or arrangement does
not restrict the Partnership's ability to satisfy its obligations
to PCN under this Section 5.7(c).
ARTICLE VI
NOTICES
SECTION 6.1 Notices. All notices, demands, requests
and other communications required or permitted to be given
hereunder shall be in writing and deemed duly given on the date
delivered by hand, mailed by registered or certified mail,
postage prepaid, or by overnight courier or by facsimile
transmission the receipt of which is confirmed by telephone, to
the respective parties at the following addresses (or at such
other address as shall be specified by like notice):
if to the Partnership:
at such address as the Partnership hereinafter
notifies to the paries hereto.
with copies to Glaxo, IMS, PCN and PCNSub.
if to Glaxo or IMS:
Glaxo Wellcome Inc.
Five Moore Drive
Research Triangle Park, North Carolina 27709
Attn: Corporate Secretary
Facsimile: (919) 483-0265
<PAGE>
if to PCN:
Physician Computer Network, Inc.
1200 The American Road
Morris Plains, New Jersey 07950
Attn: President
Facsimile: (201) 490-3103
if to PCNSub:
PCN HP Venture Corp.
c/o Physician Computer Network, Inc.
Attn: President
Facsimile: (201) 490-3103
with copies to PCN,
and, in the case of PCN and PCNSub:
with copies to:
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
Attn: Barry D. Shalov
Facsimile: (212) 626-0799
ARTICLE VII
GENERAL
SECTION 7.1 Expenses. Each party hereto shall bear
its own expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby and
preparation therefor.
SECTION 7.2 Assignment and Binding Effect. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and
assigns. This Agreement may not be assigned by any of the
parties hereto without the prior written consent of the other
parties hereto.
SECTION 7.3 Governing Law; Jurisdiction; Consent to
Service of Process. (a) This Agreement shall be governed,
construed and enforced in accordance with the law of the State of
New York.
<PAGE>
(b) Each of the parties hereby irrevocably and
unconditionally submits, for itself and its property, to the
jurisdiction of any New York State court sitting in New York or
any Federal court of the United States sitting in the Borough of
Manhattan in the City of New York, and any appellate court from
any such court, in any suit, action or proceeding arising out of
or relating to this Agreement or the Partnership Agreement, or
for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such suit, action or proceeding may
be heard and determined in such New York State court or, to the
extent permitted by law, by removal or otherwise, in such Federal
court. It shall be a condition precedent to each party's right
to bring any such suit, action or proceeding that such suit,
action or proceeding, in the first instance, be brought in such
New York State court or, to the extent permitted by law, by
removal or otherwise, in such Federal court (unless such suit,
action or proceeding is brought solely to obtain discovery or to
enforce a judgment), and if each of such New York state court and
such Federal court refuses to accept jurisdiction with respect
thereto, such suit, action or proceeding may be brought in any
other court with jurisdiction. No party may move to (i) transfer
any such suit, action or proceeding from such New York State
court or Federal court to another jurisdiction, (ii) consolidate
any such suit, action or proceeding brought in such New York
State court or Federal court with a suit, action or proceeding in
another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York State court or Federal court
for the purpose of bringing the same in another jurisdiction.
Each party agrees that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner
provided by law.
(c) Each of the parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York
State court sitting in New York or any Federal court sitting in
the Borough of Manhattan in the City of New York. Each party
hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of
such suit, action or proceeding in any such court and further
waives the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such
party.
(d) Each party to this Agreement irrevocably consents
to service of process on it or any agent for service appointed
from time to time in the manner provided for notices in Section
6.1. Nothing in this Agreement shall affect the right of any
party to serve process in any other manner permitted by law.
<PAGE>
(e) Each party irrevocably waives any right it may
have to trial by jury in any court or jurisdiction, including
without limitation those referred to above, in respect of any
matter arising out of or relating to this Agreement or the
Partnership Agreement.
SECTION 7.4 Parties in Interest. Nothing in this
Agreement, express or implied, is intended or shall be construed
to confer upon or give to any Person other than the parties
hereto any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, all of which shall be for
the sole and exclusive benefit of the parties hereto.
SECTION 7.5 Scope of Partnership Operations. Glaxo
and PCN agree that the geographic scope of the Partnership's
operations shall be limited to the United States (including its
territories and possessions), unless otherwise agreed by the
Partners. PCN and the Partnership agree that nothing in this
Agreement or in the Partnership Agreement, however, shall
prohibit Glaxo from providing, and Glaxo shall be permitted to
provide, to its international Affiliates the CPR in the form
developed as of the Closing Date for uses outside of the United
States (including its territories and possessions) to be
determined in the discretion of such Affiliates. In addition,
after the Closing Date, such international Affiliates of Glaxo
shall have the right of access to and the use of the CPR
(including with the improvements thereto (the "Improvements")
developed by the Partnership) at a price equal to a reasonable
share of the cost of such Improvements for such use.
SECTION 7.6 Press Releases. All press releases or
other public communication relating to the terms of this
Agreement and the transactions in connection herewith (other than
announcements, summaries or reports of previously disclosed
information) shall be subject, except as otherwise required by
law (in which case the relevant party shall, if practicable,
allow the other party an opportunity to review a draft thereof
prior to release), to the prior approval of both Glaxo and PCN.
which approval shall not be unreasonably withheld.
SECTION 7.7 Headings. The headings of the Sections
and Articles of this Agreement are inserted as a matter of
convenience and for reference purposes only, and are of no
binding effect.
SECTION 7.8 Schedules, etc. All schedules delivered
pursuant to this Agreement shall be deemed part of this Agreement
and incorporated herein, where applicable, as if fully set forth
herein. All statements contained in any exhibit or schedule
delivered by or on behalf of the parties hereto, or in connection
with the transactions contemplated hereby, are an integral part
of this Agreement. Matters specifically disclosed by any party
pursuant to any Section or Schedule of this Agreement shall be
deemed to be disclosed with respect to all Sections of and
Schedules to this Agreement to the extent this Agreement requires
such disclosure.
<PAGE>
SECTION 7.9 Entire Agreement: Amendment; Severability.
(a) As of the Closing Date, this Agreement and the Partnership
Agreement represent the entire understanding and agreement
between the parties hereto with respect to the subject matter
hereof. This Agreement may be amended, modified, supplemented,
extended, terminated discharged or changed only by an agreement
in writing that is signed by each of the parties hereto.
(b) If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this
Agreement to be invalid or unenforceable, such holding shall not
affect the validity of the remainder of this Agreement.
SECTION 7.10 Waiver and Compliance. Any failure of
Glaxo or PCN to comply with any obligation, covenant, agreement
or condition herein contained may be expressly waived, in writing
only, by the other parties hereto and such waiver shall be
effective only in the specific instance and for the specific
purpose for which made or given.
SECTION 7.11 Confidentiality. (a) No party to this
Agreement shall, or shall permit its Affiliates to, disclose to
any Person other than its Affiliates which shall have agreed to
be bound by the provisions of this Section 7.11 to the same
extent applicable to such party, any information (except
information publicly available or otherwise generally known other
than as a result of a breach of the provisions of this Agreement
and information made available by a third party that is not in
breach of an obligation of confidentiality):
(i) regarding the terms of this Agreement or the other
Transaction Agreement; or
(ii) obtained by such party or any of its Affiliates
pursuant to or in connection with the negotiation, delivery
or performance of this Agreement or the Partnership
Agreement to any Person (other than its Affiliates which
have agreed to be bound by the provisions hereof as set
forth above);
except in each case:
(u) where such party is in possession of such
information prior to the disclosure thereof to such party;
<PAGE>
(v) if such party independently develops or obtains
such information;
(w) with the prior written consent of the other
party hereto;
(x) to the extent necessary to comply with any law or
legal process, in which event the party making such
disclosure shall so notify the other parties hereto as
promptly as practicable (and, if possible, prior to making
such disclosure) and shall seek confidential treatment of
such information;
(y) in connection with enforcement of such party's
rights hereunder; or
(z) to a professional advisor to such party or its
Affiliates in connection with the performance by such party
or its Affiliates of its obligations hereunder or
thereunder.
SECTION 7.12 Specific Enforcement; Limitation on
Liability. Each of Glaxo and PCN acknowledges and agrees that
the other parties hereto would be irreparably damaged in the
event any of the provisions of this Agreement were not performed
by it in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that each of such parties
shall be entitled to an injunction or injunctions to prevent
breaches of such provisions and specifically to enforce such
provisions, in addition to any other remedy to which such party
may be entitled, at law or in equity.
SECTION 7.13 Indemnification. Each of PCN and Glaxo
hereby agrees, without limiting any other remedies under law or
under equity, to indemnify the other parties hereto
(collectively, the "Indemnified Parties") against, and to
protect, save and keep harmless the Indemnified Parties from, and
to assume liability for, payment of all liabilities, losses,
damages, penalties, claims, actions, suits, judgments,
settlements, costs, expenses and disbursements (including
reasonable costs of investigation, and reasonable attorneys',
accountants' and expert witnesses' fees) of whatever kind and
nature (collectively, the "Losses"), that may be imposed on or
incurred by the Indemnified Parties as a consequence of any
inaccuracy in any representation or warranty made by PCN or
Glaxo, as the case may be, pursuant to Article II or Article III,
respectively. The term "Losses" as used herein is not limited to
matters asserted by third parties against an Indemnified Party
but includes Losses incurred or sustained by an Indemnified Party
in the absence of third party claims.
<PAGE>
SECTION 7.14 Counterparts. This Agreement may be
executed in counterparts, and by different parties on separate or
the same counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument.
SECTION 7.15 Compliance. Each of Glaxo and PCN agrees
to cause its respective Affiliates that are a party to the
Partnership Agreement to comply with its respective obligations
and duties thereunder and not to take, and to cause its
respective Affiliates not to take, any action which would result
in a breach or contravention of the Partnership Agreement by such
Affiliates. Without limiting the generality of the foregoing:
(i) Glaxo hereby absolutely and unconditionally guarantees to PCN
and PCN Sub the payment and performance of IMS of its obligations
to make the capital contributions to the Partnership required by
Section 3.5 of the Partnership Agreement; and (ii) PCN hereby
absolutely and unconditionally guarantees to Glaxo and IMS the
payment and performance by PCNSub of its obligations to make the
capital contributions to the Partnership required by Section 3.5
of the Partnership Agreement; provided, however, that the
foregoing shall not in any way be construed to mean that either
Glaxo or PCN is or intends to be a partner of the Partnership.
SECTION 7.16 Securities Investment. Glaxo agrees that
if, upon a liquidation of the Partnership in the circumstances
contemplated in Section 5.2(d) of the Partnership Agreement, the
amount of Net Income (excluding any Carved-Out Net Income)
allocated to PCNSub pursuant to such Section 5.2(d) is not
sufficient to equal the difference between the Capital Account
balances of the Partners (determined as provided for in such
Section) referred to therein, Glaxo shall be required to make the
PCN Investment (as defined below) in an amount equal to the
product of (i) PCNSub's Percentage Interest at the time of such
liquidation and (ii) the lesser of (1) the amount of any
remaining difference and (2) the excess of the amount received by
the Partner which is an Affiliate of Glaxo in connection with
such liquidation pursuant to Section 7.3(iii) of the Partnership
Agreement over the amount received by the other Partner in
connection with such liquidation. The "PCN Investment" shall
mean an investment in securities of PCN designated by PCN, having
a fair market value (without regard to restrictions on transfer
imposed by applicable securities law) determined reasonably and
in good faith by PCN at the time of such liquidation. The
parties agree that the terms of the securities shall not include
any restrictions of the transfer thereof (other than applicable
securities laws restrictions) or any requirement that PCN
register such securities or the issuance thereof pursuant to the
Securities Act of 1933.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be duly executed in its name and on its
behalf, all on the date first above written.
GLAXO WELLCOME INC.
By:
-----------------------------
Name:
Title:
PHYSICIAN COMPUTER NETWORK, INC.
By:
-----------------------------
Name:
Title:
HEALTHPOINT G.P.
By:
-----------------------------
On behalf of HealthPoint
G.P., by order of the
Management Committee
<PAGE>
Schedule 1
DEFINED TERMS FOR PARTNERSHIP
AGREEMENT AND TRANSACTION AGREEMENT
"Accountants" shall mean the certified public
accountants selected by the Management Committee as accountants
for the Partnership.
"Additional Available Capital" shall have the meaning
set forth in Section 3.5(d) of the Partnership Agreement.
"Additional Available Cash Call Conditions" shall mean,
with respect to any call for Additional Available Capital
pursuant to Section 3.5(d) of the Partnership Agreement, that at
the time of such call: (i) the business of the Partnership shall
not have changed in any material respect; and (ii) it is not then
reasonable to conclude that the Partnership will, for the
remainder of the Additional Available Cash Call Period, have
positive cash flow, from operations and (if applicable) any
remaining amount of Required Capital Contributions to be funded,
sufficient to meet the cash flow requirements of the Partnership
contemplated by the then-existing Business Plan (not including
cash flow requirements, if any, contemplated by such Business
Plan applicable to periods following the Additional Available
Cash Call Period).
"Additional Available Cash Call Period" shall have the
meaning set forth in Section 3.5(d) of the Partnership Agreement.
"Adjusted Capital Account Deficit" With respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments:
(a) decrease such deficit by any amounts which such
Partner is obligated to restore pursuant to the Partnership
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentence of each of Regulations Sections
1.704-2(i)(5) and 1.704-2(g); and
(b) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
<PAGE>
"Affiliate" with respect to any Person, shall mean any
other Person controlled by, controlling or under common control
with, such Person. For purposes of the Partnership Agreement and
the Transaction Agreement, the Partnership shall not be deemed to
be an Affiliate of either Glaxo or PCN or their respective
Affiliates.
"Agreement" shall mean the Partnership Agreement, when
used therein, and the Transaction Agreement, when used therein.
"Annual Budget" shall mean the budget (which shall be
consistent with the then-existing Business Plan) with respect to
each Fiscal Year of the Partnership's operations, which shall be
adopted, reviewed and revised by the Management Committee from
time to time in accordance with Section 4.3 of the Partnership
Agreement.
"Best Efforts" shall mean, as to any entity, those
efforts that would be made by such entity if its sole asset
consisted of 100% ownership of the Partnership.
"Business Plan" shall mean the three-year business plan
of the Partnership, as adopted by the Management Committee during
each year of the Partnership with respect to the following three
Fiscal Years.
"Capability Time" shall mean, with respect to a
Clinical Transaction Service, such time as the Partnership has
the capability of providing functionality equivalent to such
Clinical Transaction Service on a Superior Basis through the
Partnership Network. For purposes of this definition, a
"Superior Basis" shall mean a Clinical Transaction Service with
capabilities exceeding (such as by capturing more content or
providing greater functionality from the customer's standpoint,
etc.) those of such Clinical Transaction Service provided by any
PCN Entity as of the following times: (i) with respect to
Clinical Transaction Services involving laboratories offered by
any PCN Entity on the Closing Date, at the Closing Date; and (ii)
with respect to all Clinical Transaction Services other than
those referred to in (i) above, at such time as PCN first
requested that the Partnership provide such service.
"Capital Account" shall mean the capital account that
is established and maintained for each Partner pursuant to
Section 5.1 of the Partnership Agreement.
"CEO" shall mean the chief executive officer of the
Partnership from time to time.
<PAGE>
"Class A VAR" shall mean any VAR or publisher of one or
more medical practice management software products, in each case
having more than 5,000 physician customers.
"Class B VAR" shall mean any VAR having 5,000 or fewer
physician customers.
"Clinical Data" shall mean and include all clinical
patient records and all data generated by, in connection with or
related to the provision of Clinical Transaction Services or
analytical services by the Partnership.
"Clinical Transaction Services" shall mean network
services related to those electronic transactions which contain
or generate information regarding medical encounters or
associated procedures, tests, diagnosis and treatments, other
than information used for or generated thereby which relate
exclusively to billing or other administrative purposes.
Clinical Transaction Services (i) may or may not contain
demographic, billing or other information used for financial or
non-clinical purposes and (ii) do not include any service which
constitutes an "EDI Service" under the Equifax Agreement.
Without limiting the generality of the foregoing definition,
Clinical Transaction Services include:
Communication Access:
Managed Care (MCO's, PBM's)
_ Formularies
_ Referral Lists*
Pharmaceutical Firms:
_ Product Information
_ Patient Education
_ Treatment Guidelines (Short Lists)
System Housekeeping/Support:
_ Knowledge Base for CPR
_ Software Updates for CPR
_ Structured Searches (and resulting retrieval) for
Data Analysis of information contained in the CPR
Patient Specific Information:
_ Labs - orders; results
_ Pharmacy Transactions - Prescriptions; Compliance;
Refill/Substitutions
<PAGE>
_ Payer - Eligibility*; Referrals (in and out)*;
Patient Records (as part of Encounter Reports*)
_ Hospitals - Laboratory test orders and results*
_ Home Health Care - Service Directory*
* These transactions are Clinical Transaction Services
but may also be used by financial and other non-
clinical applications.
The following non-clinical transactions shall not constitute
Clinical Transaction Services:
(Non-clinical transactions include, without limitation:
<PAGE>
Payer:
_ Fee for Service Claims and Remittance
_ Fee for Service Eligibility Checks
Labs:
_ Requisition Demographic and Insurance Information
Printing
_ Terminal Emulation
_ Results printing
Hospitals:
_ UB-92 Claims Submission
_ Demographic, Scheduling, Billing and other
administrative systems
Administrative:
_ Credit Cards
_ Check Guarantees
_ Other Financial Services)
"Closing" shall have the meaning set forth in Section
2.1 of the Partnership Agreement.
"Closing Date" shall mean the date of the Partnership
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
"Committee Person" shall have the meaning set forth in
Section 4.1(a) of the Partnership Agreement.
"control" (including the terms "controlling",
"controlled by" and "under common control with") shall (unless
the context otherwise requires) mean the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person whether through the ownership
of voting securities or otherwise.
"Conversion" shall mean the conversion of a PCN
Customer from the use of a PCN-Provided Clinical Transaction
Service to a Partnership-Provided Clinical Transaction Service
other than in connection with a sale to such customer of the CPR.
<PAGE>
"Conversion Costs" shall mean reasonable costs incurred
by a PCN Entity in connection with a Conversion and not
reimbursed (directly or indirectly) by other parties.
"Conversion Request" shall have the meaning set forth
in Section 5.3 of the Transaction Agreement.
"CPR" shall mean the computerized clinical patient
record system to be contributed to the Partnership by IMS and
developed by the Partnership.
"Deadlock" shall mean a failure of the Management
Committee to agree, by majority vote, on the adoption of any
Business Plan or Annual Budget with respect to any Fiscal Year
after the third year following the Closing Date, following
reasonable and good faith effort to resolve any material dispute
between the Partners concerning such Business Plan or Annual
Budget, which reasonable and good faith effort shall include, if
such failure continues for a period of forty five (45) days, a
review of the items in dispute by the chief executive officer of
Glaxo or another executive officer of Glaxo designated by him and
the chief executive officer of PCN followed by good faith efforts
for a period of forty five (45) days by each of such individuals,
on behalf of the Partners, to resolve such disputed items. If
such individuals are unable to resolve such disputed items within
thirty days, then either Partner shall thereafter have the right
to terminate the Partnership pursuant to Section 7.1(a)(iv) of
the Partnership Agreement.
"Delivering Partner" shall have the meaning set forth
in Section 7.2(b) of the Partnership Agreement.
"Depreciation" shall mean, for each Fiscal Year or
other period, an amount equal to the depreciation, amortization
or other cost recovery deduction allowable with respect to an
asset for such Fiscal Year or other period, except that if the
Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the
same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization or other cost recovery
deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income
tax depreciation, amortization or other cost recovery deduction
for such year is zero, depreciation shall be determined with
reference to such beginning Gross Asset Value using any
reasonable method selected by the Partners.
"Electing Partner" shall have the meaning set forth in
Section 3.5(e) of the Partnership Agreement.
<PAGE>
"Equifax Agreement" shall mean the Amended and Restated
Exclusive Marketing Agreement among PCN, Equifax Inc. and Equifax
Healthcare EDI Services, Inc. dated January 12, 1996, as in
effect on the date hereof, as such agreement may be amended from
time to time with the written consent of the Partnership.
"Exclusive Rights Products Category" shall mean those
therapeutic categories identified in Schedule 5.6 to the
Transaction Agreement under the heading "Exclusive Rights
Products Categories".
"Fair Market Value": shall mean, except with respect to
Sections 4.1(a), 7.2(b) and 9.1 of the Partnership Agreement, as
to any property, the price at which a willing seller would sell
and a willing purchaser would purchase such property having full
knowledge of the facts that are relevant to the purchase and sale
of such property, and assuming that each party acts on an arms-
length basis with the expectation of concluding such purchase and
sale within a reasonable time. "Fair Market Value" for purposes
of such Sections 4.1(a), 7.2(b) and 9.1 shall mean, as of any
date for determination, with respect to a Partner's interest in
the Partnership, the fair market value that would be obtained for
such interest if the entire Partnership were sold in its entirety
as a going concern on that date to an unaffiliated third party
with neither the purchaser or seller under any compulsion to act.
"Fiscal Year" shall have the meaning set forth in
Section 6.1 of the Partnership Agreement.
"GAAP" shall mean generally accepted accounting
principles in the United States.
"Glaxo" shall mean Glaxo Wellcome Inc., a North
Carolina corporation.
"Glaxo Party" shall mean Glaxo and IMS.
"Gross Asset Value" shall mean, with respect to any
asset, the asset's adjusted basis for federal income tax
purposes, except as follows:
(a) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
Fair Market Value of such asset, as reasonably determined by the
Partners.
(b) The Gross Asset Values of all Partnership assets
shall be adjusted to equal their respective gross Fair Market
Values, as reasonably determined by the Partners using such
reasonable method of valuation as they may adopt, as of the
following times:
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(i) the acquisition of an additional interest in the
Partnership by a new or existing Partner in
exchange for more than a de minimis capital
contribution if the Management Committee
reasonably determines that such adjustment is
necessary or appropriate to reflect the relative
economic interest of the Partners in the
Partnership;
(ii) the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership
property as consideration for an interest in the
Partnership if the Management Committee reasonably
determines that such adjustment is necessary or
appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(iii) the liquidation of the Partnership within the
meaning of Regulations Section 1.7041(b)(2)(ii)(g)
and 1.704-2; and
(iv) at such other times as the Management Committee
shall reasonably determine necessary or advisable
in order to comply with Regulations Sections
1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be adjusted to equal the gross
Fair Market Value of such asset on the date of distribution as
reasonably determined by the Management Committee.
(d) The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to
the adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and
paragraph (f) of the definition of Net Income or Net Loss hereof;
provided, however, that Gross Asset Values shall not be adjusted
pursuant to this paragraph (d) to the extent that the Management
Committee reasonably determines that an adjustment pursuant to
paragraph (b) of this definition of Gross Asset Value is
necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this
paragraph (d).
(e) If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to paragraph (a), (b) or
(d) of this definition of Gross Asset Value, such Gross Asset
Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Net
Income and Net Loss.
<PAGE>
"IMS" shall mean Intelligent Medical Systems, Inc., an
Illinois corporation and a wholly owned subsidiary of Glaxo.
"Independent Financial Expert" shall mean a nationally
recognized investment banking firm that does not (and whose
Affiliates do not) have a direct or indirect financial interest
in the Partnership or in the selling Partner referred to in
Section 7.2(b)(ii) of the Partnership Agreement, is not a
Committee Person or a promoter, director or officer of the
Partnership, such Partner or any of their respective Affiliates,
and that has not provided any advice or opinions to the
Partnership or such Partner or their Affiliates during the two
years prior to the date it is called upon to serve as Independent
Financial Expert except as an Independent Financial Expert
pursuant hereto.
"Lien" shall mean any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind.
"Management Committee" shall have the meaning set forth
in Section 4.1(a) of the Partnership Agreement.
"Mends" shall mean the PCN Practice Management System
known as "Mends.X".
"Net Income" or "Net Loss" shall mean, for each Fiscal
Year of the Partnership, an amount equal to the Partnership's
taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included
in taxable income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from
federal income tax or is not otherwise taken into account in
computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss, shall be added to such taxable income or
loss;
(b) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-
1(b)(2)(iv)(i), and not otherwise taken into account in computing
Net Income or Net Loss pursuant to this definition of Net Income
or Net Loss shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to paragraph (b) or
paragraph (c) of the definition of Gross Asset Value, the amount
of such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing Net
Income or Net Loss;
<PAGE>
(d) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Gross Asset Value;
(e) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year;
(f) To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a Partner's interest in the Partnership, the
amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition
of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this
definition of Net Income or Net Loss, any items which are
specially allocated pursuant to Section 5.3 of the Partnership
Agreement shall not be taken into account in computing Net Income
or Net Loss. The amounts of the items of Partnership income,
gain, loss, or deduction available to be specially allocated
pursuant to Section 5.3 of the Partnership Agreement shall be
determined by applying rules analogous to those set forth in
paragraphs (a) through (f) of this definition of Net Income or
Net Loss.
"Non-Cash Capital Contribution" with respect IMS, shall
mean the non-cash property contributed or licensed to the
Partnership by IMS on the Closing Date, as agreed by the
Partners, which shall include those assets listed in item 1 of
Schedule 5.4 hereof.
"Non-Electing Partner" shall have the meaning set forth
in Section 3.5(e) of the Partnership Agreement.
"Non-Exclusive Rights Products Category" shall mean
those therapeutic categories identified in Schedule 5.6 to the
Transaction Agreement under the heading "Non-Exclusive Rights
Products Categories".
<PAGE>
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse
Deductions for a Fiscal Year shall be determined in accordance
with the rules of Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning as set forth in
Regulations Section 1.752-1(a)(2) or 1.704-2(b)(3).
"Partner" shall mean IMS or PCNSub, as the case may be,
and any permitted successors or assigns thereof.
"Partner Consent Matter" shall have the meaning set
forth in Section 4.2 of the Partnership Agreement.
"Partner Minimum Gain" shall mean, with respect to each
Partner Nonrecourse Debt, an amount equal to the Partnership
Minimum Gain that would result if such Partner Nonrecourse Debt
were treated as a Nonrecourse Liability, determined in accordance
with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set
forth in Regulations Section 1.704-2(i)(2), and the amount of
Partner Nonrecourse Deductions with respect to a Partner
Nonrecourse Debt for a Fiscal Year shall be determined in
accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" shall have the meaning set forth in
Section 3.1 of the Partnership Agreement.
"Partnership Agreement" shall mean the Partnership
Agreement, dated as of the date hereof, between IMS and PCNSub,
as the same may hereafter be amended from time to time in
accordance with the terms thereof.
"Partnership Interface" shall mean that portion of the
interface between each Qualifying PCN Practice Management System
and the System to be developed by the Partnership at its cost and
expense, as agreed by PCN and the Partnership.
"Partnership Minimum Gain" shall have the meaning set
forth in Regulations Section 1.704-2(b)(2), and the amount of
Partnership Minimum Gain, as well as any net increase or decrease
in Partnership Minimum Gain, for a Fiscal Year shall be
determined in accordance with the rules of Regulations Section
1.704-2(d).
<PAGE>
"Partnership Network" shall have the meaning set forth
in Section 3.4 of the Partnership Agreement.
"Partnership-Provided Clinical Transaction Service"
shall mean any Clinical Transaction Service as to which the
Capability Time has occurred.
"PCN" shall mean Physician Computer Network, Inc., a
New Jersey corporation.
"PCN Customer" shall mean each Person who or which, as
the case may be, licenses or otherwise has a right to use a PCN
Practice Management System, to the extent that such Person uses a
PCN Practice Management System; provided that, for purposes of
PCN's obligations set forth in Section 5.3(a) of the Transaction
Agreement, the term "PCN Customer" shall mean each Person who or
which, as the case may be, licenses or otherwise has a right to
use a PCN Practice Management System, irrespective of whether
such Person uses a PCN Practice Management System.
"PCN Entity" shall mean PCN and, at the time of
determination, each of PCN's controlled Affiliates.
"PCN Health Network" shall mean the PCN Practice
Management System known as "PCN Health Network Information
System".
"PCN Interface" shall mean that portion of the
interface between each Qualifying PCN Practice Management System
and the System to be developed by PCN at its cost and expense, as
agreed by PCN and the Partnership.
"PCN Party" shall mean PCN and PCNSub.
"PCN Practice Management System" shall mean any
practice management software product published or otherwise
provided by any PCN Entity.
"PCN-Provided Clinical Transaction Service" shall mean
any Clinical Transaction Service provided by a PCN Entity to a
PCN Customer at the Capability Time with respect to such Clinical
Transaction Service.
"PCN Sub" shall mean PCN HP Venture Corp.
"PCN VAR" shall mean each VAR who or which, as the case
may be, is a party to any distribution or reseller agreement with
any PCN Entity regarding any PCN Practice Management System and
such system is the primary product distributed or sold by such
VAR.
<PAGE>
"Percentage Interest" of each partner shall initially
be 50%, subject to adjustment from time to time following the
third anniversary of the Closing Date, as described in Section
3.5(e) of the Partnership Agreement.
"Person" shall mean any individual, partnership,
corporation or other entity.
"Prior Access Rights" shall mean that, during the Prior
Access Rights Period, Glaxo may elect to exercise the exclusive
right to negotiate with the Partnership for the purchase at
negotiated market rates of: (i) exclusive or, at Glaxo's option,
non-exclusive, communications access to the Partnership Network
for the delivery and/or receipt of information in the Exclusive
Rights Products Category; and (ii) non-exclusive communications
access to the Partnership Network for the delivery and/or receipt
of information in the Non-Exclusive Rights Products Category.
"Prior Access Rights Period" shall mean, with respect
to a Glaxo product within the Exclusive Rights Products Category
or the Non-Exclusive Rights Products Category, as the case may
be, the period commencing at such time as communications access
through the Partnership Network is available and ending on the
earlier to occur of (i) the date one year following such
commencement and (ii) June 1, 1997.
"Purchase Election" shall have the meaning set forth in
Section 7.2(b) of the Partnership Agreement.
"Purchase Price" shall have the meaning set forth in
Section 7.2(b) of the Partnership Agreement.
"Qualifying PCN Practice Management System" shall mean
(i) any PCN Practice Management System developed or acquired by
any PCN Entity from and after the Closing Date and having 5,000
or more physician customers, (ii) PCN Health Network, (iii) Mends
and (iv) any PCN Practice Management System other than PCN Health
Network and Mends existing on the date hereof which, following
the Closing Date, becomes one of the principal PCN Practice
Management Systems published or provided by the PCN Entities as a
whole.
"Receiving Partner" shall have the meaning set forth in
Section 7.2(b) of the Partnership Agreement.
"Regulation" shall mean the income tax regulations,
including temporary regulations, promulgated under the Code, as
such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
<PAGE>
"Required Capital Contribution" shall mean
contributions of cash by the Partners required pursuant to
Section 3.5 (other than paragraph (d) thereof) of the Partnership
Agreement, in the aggregate amount of up to $50 million.
"Restricted Clinical Transaction Services" shall mean
all Clinical Transaction Services other than those provided by a
PCN Entity as of the Closing Date but only for a period of six
months following the Closing Date. Following the expiration of
such six month period, Restricted Clinical Transaction Services
shall be Clinical Transaction Services, fully subject to the
terms hereunder and under the Transaction Agreement applicable to
Clinical Transaction Services.
"Specified Competitor" shall mean SmithKline Beecham
Corp. and Schering-Plough Corp.
"System" shall mean the CPR and related systems
contemplated in clauses (i) and (ii) of the third recital to the
Transaction Agreement, together with the Partnership Network.
"Termination Event" has the meaning set forth in
Section 7.2 of the Partnership Agreement.
"Transaction Agreement" shall mean the Transaction
Agreement, dated the date hereof, among Glaxo, PCN and the
Partnership.
"Unconverted Clinical Transaction Service" shall mean
any Clinical Transaction Service as to which a Conversion Request
has been made which has not been Converted within six months
following the date of such Conversion Request.
"VAR" shall mean a value-added reseller of a medical
practice management software product.
