SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
July 15, 1999 (July 9, 1999)
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Date of Report (Date of earliest event reported)
PHYSICIAN COMPUTER NETWORK, INC.
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(Exact name of registrant as specified in charter)
New Jersey
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(State or other jurisdiction of incorporation)
0-19666
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(Commission File Number)
22-2485688
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(IRS Employer Identification No.)
1200 The American Road
Morris Plains, New Jersey 07950
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(Address of principal executive offices)
(973) 490-3100
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(Registrant's telephone number, including area code)
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ITEM 2. Disposition of Assets.
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Pursuant to an asset purchase agreement (the "Asset Purchase
Agreement") dated as of July 2, effective July 9, 1999: (i) the Registrant's
wholly-owned subsidiary, Wismer*Martin, Inc. ("WM"), sold to Medical Manager
Northwest, Inc. (the "Purchaser"), a subsidiary of Medical Manager Corporation
("Medical Manager"), substantially all of its assets, which assets include the
business of publishing, licensing and supporting the Sm*rt Practice practice
management software product to office-based physician customers (the "Smart
Practice Business"), and (ii) the Registrant sold to the Purchaser certain of
its assets used in connection with the Smart Practice Business.
Contemporaneously with the execution and delivery of the Asset Purchase
Agreement, the Registrant and Medical Manager have entered into an Exclusive
Electronic Gateway and Network Services Agreement, dated July 2, 1999 (the
"Network Agreement"). Pursuant to the Network Agreement the Registrant has
granted to Medical Manager the right to, at such time as the services are made
available by Medical Manager, provide certain web-based physician portal
services and clinical e-commerce transaction services to the Registrant's
customers on an exclusive basis. None of these services are currently provided
by or available through PCN. The Network Agreement, has a term of approximately
11 months, and, under certain circumstances may be terminated early by the
Registrant. In consideration for the sale of the assets contemplated by the
Asset Purchase Agreement and for entering into the Network Agreement, the
Purchaser and Medical Manager paid to WM and the Registrant an aggregate of
$10,000,000 and assumed certain liabilities associated with the Smart Practice
Business. The Smart Practice product line is used by approximately 1,000 client
sites consisting primarily of 1-2 doctor practices. Registrant initiated and
elected to enter into the transactions described above in order to, among other
things, permit the Registrant to focus on the sale of its core medical
practice management software products to larger physician offices, as well
as obtain additional liquidity.
ITEM 5. Other Matters.
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On July 9, 1999, the Registrant entered into a Fourth
Forbearance and Amendment Agreement with the Registrant's senior lenders to,
among other things, so long as certain conditions are satisfied, extend the
maturity date of the Registrant's senior indebtedness until December 31, 1999.
In accordance with the agreements with the lenders, the Registrant used
$4,000,000 of the proceeds from the sale of the Smart Practice Business to repay
outstanding indebtedness to the lenders. After giving effect to such repayment,
the Registrant's outstanding indebtedness to its senior lenders has been reduced
to approximately $10,000,000.
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ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
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(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
At the time of the filing of this Current Report on Form 8-K,
it was impracticable for the Registrant to provide the required pro forma
financial statements relative to the disposed business. The Registrant will
file such required pro forma financial statements under cover of Form 8-K/A as
soon as practicable, but not later than 60 days following the date of this
Report.
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(c) Exhibits.
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Exhibit 1 -- Copy of Asset Purchase Agreement, dated
as of July 2, 1999, among the Registrant,
Wismer*Martin, Inc., Medical Manager
Corporation and Medical Manager
Northwest, Inc.
Exhibit 2 -- Copy of Fourth Forbearance and Amendment
Agreement, dated as of July 9, 1999,
among the Registrant, certain
subsidiaries of the Registrant, the
several banks and other financial
institutions or entities which are
parties thereto and Fleet Bank, N.A., as
administrative agent.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PHYSICIAN COMPUTER NETWORK, INC.
(REGISTRANT)
Date: July __, 1999 By: /s/Paul M. Antinori
Paul M. Antinori
Vice President
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EXHIBIT INDEX
Exhibit 1 -- Asset Purchase Agreement, dated as of July 2, 1999, among the
Registrant, Wismer*Martin, Inc., Medical Manager Corporation and
Medical Manager Northwest, Inc.
Exhibit 2 -- Copy of Fourth Forbearance and Amendment
Agreement, dated as of July 9, 1999, among the Registrant, certain
subsidiaries of the Registrant, the several banks and other financial
institutions or entities which are parties thereto and Fleet Bank,
N.A.,as administrative agent.
ASSET PURCHASE AGREEMENT
by and among
WISMER*MARTIN, INC.,
PHYSICIAN COMPUTER NETWORK, INC.,
MEDICAL MANAGER NORTHWEST, INC.
and
MEDICAL MANAGER CORPORATION
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Dated as of July 2, 1999
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TABLE OF CONTENTS
Page
BACKGROUND........................................................................................................1
1. PURCHASE AND SALE OF ASSETS.................................................................................1
1.1. Sale of Assets..............................................................................................1
1.2. Retained Assets.............................................................................................3
1.3. Instruments of Transfer.....................................................................................5
1.4. Delivery of Possession......................................................................................5
1.5. Consents to Assignment......................................................................................5
1.6. Collection of Accounts Receivable...........................................................................6
1.7. Additional Ownership Rights.................................................................................6
2. PURCHASE PRICE..............................................................................................6
2.1. Consideration...............................................................................................6
2.2. Set-off of Second Cash Payment..............................................................................6
2.3 Allocation of Purchase Price................................................................................7
3. ASSUMPTION OF LIABILITIES...................................................................................7
3.1. Assumption..................................................................................................7
3.2. Limitations on Assumption...................................................................................8
3.3. Right of Enforcement and Settlement........................................................................10
4. CLOSING....................................................................................................10
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER...............................................................10
5.1. Existence and Authority....................................................................................10
5.2. Authorization of Agreement.................................................................................11
5.3. Effect of Agreement, Etc...................................................................................12
5.4. Restrictions; BurdensomeAgreements.........................................................................12
5.5. Governmental and Other Consents............................................................................12
5.6. Statement of Net Assets; Revenues..........................................................................12
5.7. Absence of Certain Changes or Events.......................................................................12
5.8. Deferred Revenue Account...................................................................................13
5.9. Accounts Receivable........................................................................................13
5.10. Accounts Payable........................................................................................13
5.11. Title to the Assets; Absence of Liens and Encumbrances, Etc.............................................13
5.12. Contracts...............................................................................................14
5.13. End-Users...............................................................................................15
5.14. Intellectual Property...................................................................................15
5.15. Real Estate Leases......................................................................................16
5.16. Compliance With Laws....................................................................................17
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5.17. Litigation; Customer Complaints.........................................................................17
5.18. Labor Matters...........................................................................................17
5.19. Taxes...................................................................................................18
5.20. Entire Business.........................................................................................18
5.21. Brokers.................................................................................................18
5.22. Employee Benefit Plans..................................................................................18
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............................................................19
6.1. Organization, Etc..........................................................................................19
6.2. Authorization of Agreement.................................................................................20
6.3. Effect of Agreement, Etc...................................................................................20
6.4. Governmental and Other Consents............................................................................20
6.5. Restrictions; Burdensome Agreements........................................................................20
6.6. Litigation.................................................................................................20
6.7. Brokers....................................................................................................21
7. PRE-CLOSING COVENANTS OF THE SELLER........................................................................21
7.1. Conduct of Sm*rt Practice Business Pending the Closing.....................................................21
8. PRE-CLOSING COVENANTS OF THE PURCHASER AND THE SELLER......................................................21
8.1. Advice of Changes; Governmental Filings....................................................................21
8.2. No Action..................................................................................................21
8.3. Legal Conditions to Closing................................................................................21
8.4. Additional Agreements; Reasonable Efforts..................................................................21
8.5. Confidentiality............................................................................................21
9. POST-CLOSING COVENANTS.....................................................................................22
9.1. Further Assurances.........................................................................................22
9.2. Non-Competition; Non-Disclosure............................................................................22
9.3. Employee Matters...........................................................................................23
9.4. The Facility...............................................................................................24
9.5. Renewal of Support Agreements; Assignment of Service Agreement.............................................25
9.6. Olivetti Agreement.........................................................................................26
9.7. Purchased Hardware.........................................................................................26
9.8. Inactive Users.............................................................................................26
10. CLOSING CONDITIONS.........................................................................................27
10.1. Conditions to Obligation of Each Party to Effect the Closing............................................27
10.2. Additional Conditions to Obligations of Purchaser.......................................................28
10.3. Additional Conditions to Obligation of the Seller.......................................................29
11. [Intentionally Omitted]....................................................................................31
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12. INDEMNIFICATION............................................................................................31
12.1. Indemnification of the Purchaser........................................................................31
12.2. Indemnification of the Seller by the Purchaser..........................................................31
12.3. Limitations on Indemnity................................................................................32
12.4. Right to Defend, Etc....................................................................................33
12.5. Tax Effect..............................................................................................34
13. GENERAL....................................................................................................34
13.1 Arbitration.............................................................................................34
13.2. Expenses, Etc...........................................................................................35
13.3. Survival of Representations and Warranties..............................................................35
13.4. Waivers.................................................................................................36
13.5. Definition of Knowledge.................................................................................35
13.6. Binding Effect; Benefits................................................................................36
13.7. Notices.................................................................................................36
13.8. Records; Assistance.....................................................................................38
13.9. Entire Agreement........................................................................................38
13.10 Headings................................................................................................38
13.11. Counterparts............................................................................................39
13.12. Governing Law; Submission to Jurisdiction...............................................................39
13.13. Third Party Beneficiaries...............................................................................39
13.14. Severability............................................................................................39
13.15. Publicity...............................................................................................39
13.16. Amendments..............................................................................................39
13.17. Drafting Conventions....................................................................................39
13.18 Joint and Several Liability ............................................................................40
14. GLOSSARY...................................................................................................40
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ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of July 2, 1999, by and among Wismer*Martin, Inc.,
a Washington corporation ("WM"), Physician Computer Network, Inc., a New Jersey
corporation ("PCN" and, together with WM, the "Seller"), Medical Manager
Corporation, a Delaware corporation ("Medical Manager"), and Medical Manager
Northwest, Inc., a Washington corporation (the "Purchaser").
BACKGROUND
WM is engaged in the business of: (i) publishing the medical practice
management software product known as "Sm*rt Practice" (the "Sm*rt Practice
Software"); and (ii) together with PCN, providing physicians, hospitals, medical
clinics and other facilities providing medical services ("Health Care
Providers") with practice management software systems using the Sm*rt Practice
Software and providing maintenance and support for such systems (whether
conducted by WM, PCN or any of their respective Affiliates, the "Sm*rt Practice
Business"). WM is a wholly-owned subsidiary of PCN. WM and PCN desire to sell
and the Purchaser, a wholly-owned subsidiary of Medical Manager, desires to
purchase substantially all of the assets of the Sm*rt Practice Business on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Sale of Assets. On the terms and subject to the conditions set forth
in this Agreement, the Seller agrees to sell, convey, transfer, deliver and
assign to the Purchaser, and the Purchaser agrees to purchase, on the Closing
Date (as hereinafter defined), the following tangible and intangible assets,
rights, interests and properties of every kind, wherever located and by whomever
possessed as the same may exist on the Closing Date (the "Assets"):
(a) all of WM's tangible and intangible assets, rights,
interests and properties of every kind, wherever located (other than Retained
Assets (as defined in Section 1.2 hereof));
(b) the Sm*rt Practice Business as a going concern and
the goodwill pertaining thereto;
(c) all customer lists of users of the Sm*rt Practice
Software;
(d) all rights of the Seller, its successors and assigns under
all license, sublicense, service, development, maintenance and support
agreements (whether related to
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computer software, hardware or both), between the Seller and any licensee,
sublicensee or other permitted user ("End-Users") of the products or services of
the Sm*rt Practice Business (collectively, the "End-User Agreements");
(e) all source-codes, object-codes, manuals and other
documentation and materials (whether or not in written form) and all versions
thereof, together with all other patents, licenses, trademarks, service marks,
tradenames (whether registered or unregistered), domain names, copyrights,
proprietary computer software, proprietary inventions, proprietary technology,
technical information, discoveries, designs, proprietary rights and non-public
information, whether or not patentable, in each case: (i) relating to the Sm*rt
Practice Software (including, without limitation, all rights in any and all
derivative works based on the Sm*rt Practice Software and all versions of the
software); or (ii) listed on Schedule 1.1(e) hereto (collectively, the
"Intellectual Property");
(f) all accounts and other receivables of the Sm*rt Practice
Business (the "Accounts Receivable");
(g) all items of equipment (including, but not limited to, the
telephone handsets, conferencing units and the telephone switch (the "Telephone
Equipment") located and/or installed at the premises located at 1111 E. Westview
Court, Spokane, Washington (the "Spokane Facility")), machinery, furniture or
fixtures: (i) located in the Spokane Facility; and/or (ii) listed on Schedule
1.1(g) hereto (collectively, the "Equipment") (but not including any inventory
of computer hardware, operating system software, parts or related equipment
which is (x) located in any location other than the Spokane Facility and (y) is
owned by PCN or any of its Affiliates other than WM);
(h) the Seller's rights under: (i) the equipment leases
described on Schedule 1.1(h) hereto (the "Equipment Leases"); and (ii) the
Retained Agreement (as defined in Section 3.2(k));
(i) all items of inventory of the Seller relating to the Sm*rt
Practice Business, including, without limitation, all supplies (including, but
not limited to, packaging and shipping materials) used in connection with the
Sm*rt Practice Business, work-in-progress and finished goods;
(j) copies of all books of account, records, files, invoices,
customer lists, supplier lists, designs, drawings, business records and plans,
computer print-outs and software, plans and specifications, warranties, trade
correspondence, sales or promotional literature, operating data and other books
and records related to the Sm*rt Practice Business as it is conducted on the
Closing Date;
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(k) the right to receive mail and other communications
regarding the Sm*rt Practice Business addressed to the Seller or any of its
Affiliates (including, without limitation, mail and communications from
End-Users, customers, suppliers and others);
(l) all creative materials (including, without limitation,
films, art work, color separations and the like), advertising and promotional
materials and all other printed or written materials related primarily to the
Sm*rt Practice Business, its products or services;
(m) all claims, refunds, causes of action, choses in action,
rights of recovery and rights of set-off of every kind and nature related to the
Sm*rt Practice Business, except to the extent related to the Retained
Liabilities;
(n) the Seller's rights under the lease for the Spokane
Facility (the "Assumed Lease");
(o) the Seller's rights in and to the toll-free telephone
number used exclusively in connection with the operation of the Sm*art Practice
Business; and
(p) subject to Section 1.7 hereto, the name "Wismer*Martin"
and all permutations thereof.
For purposes of this Agreement, the term "Affiliate" shall
mean any entity that directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with any other entity
or, in the case of an individual, any spouse or child sharing the same
residence. For purposes of this definition, "control" of a person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such person, whether by contract or otherwise.
1.2. Retained Assets. The following properties, assets, rights and
interests of the Seller (the "Retained Assets") are expressly excluded from the
purchase and sale contemplated hereby and, as such, are not included in the
Assets:
(a) all real and personal property of PCN not identified
or otherwise described in Section 1.1;
(b) the Seller's rights under this Agreement;
(c) all assets of PCN and its Affiliates used in or relating
to the operation of any one or more of its businesses other than the Sm*rt
Practice Business, including, without limitation, the business of: (i)
publishing the medical practice management software products known as "PCN
Health Network" and "MENDS"; (ii) providing Health Care Providers with medical
practice management software systems using medical practice management
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software products other than the Sm*rt Practice Software; and (iii) providing
maintenance and support for such systems (collectively the "PCN Business");
(d) all cash, cash equivalents and marketable securities
of the Seller and its Affiliates;
(e) any and all rights of the Seller and its Affiliates in and
to or in respect of any telephone systems (other than the Telephone Equipment
and the equipment located in the Spokane Facility which is the subject of the
Equipment Leases), support call systems or accounting and other management
information systems (whether or not used or useable in the Sm*rt Practice
Business);
(f) any and all rights of any one or more of the Seller and
its Affiliates under or with respect to any original equipment manufacturing or
similar agreement (each an "OEM Agreement");
(g) the shares of capital stock of Integrated Health
Systems, Inc. owned by WM;
(h) any and all rights of the Seller with respect to any of
the assets and agreements referred to on Schedule 5.20 hereto and the assets and
agreements used in providing or reasonably related to the services to be
provided by PCN to the Purchaser under the Transition Services Agreement (as
defined in Section 10.2(e)(i) hereof);
(i) any and all rights to or arising under any license
agreement between the Seller and any third party regarding the use by the Seller
of any source-codes, object-codes, copyrights, proprietary computer software,
proprietary inventions, proprietary technology, technical information, and
proprietary rights other than those included in the definition of Intellectual
Property; and
(j) any assets used by the Seller in connection with any one
or more of the sale, distribution and maintenance of any computer hardware or
operating system software products;
(k) the assets described on Schedule 1.2(k) hereto; and
(l) all rights of the Seller, its successors and assigns under
all license, sublicense, service, development, maintenance and support
agreements (whether related to computer software, hardware or both) (the
"Inactive Agreements") (none of which shall be deemed to be End User Agreements
for purposes of this Agreement), between the Seller and any of the licensees
listed on Schedule 1.2(l) hereto (the "Inactive Users") (none of whom or which
shall be deemed to be End Users for purposes of this Agreement).
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1.3. Instruments of Transfer. On the Closing Date, the Seller will deliver
to the Purchaser, or will cause to be delivered to the Purchaser, duly executed
instruments of transfer and assignment in form and substance reasonably
satisfactory to the Purchaser and its counsel, sufficient to vest in the
Purchaser good and valid title to, and all of the Seller's right, title and
interest in and to, the Assets, including, without limitation, one or more of
each of the following:
(a) a bill of sale;
(b) an assumption agreement;
(c) an instrument of transfer and assignment of the
Intellectual Property;
(d) assignments by either WM or PCN, as the case may be, of
their rights under all End-User Agreements, Equipment Leases, the Assumed Lease
and any other contracts, licenses, and similar instruments which are included in
the Assets; and
(e) such other instruments of transfer and assignment as may
be reasonably necessary to transfer and assign the Assets to the Purchaser.
1.4. Delivery of Possession. At the Closing, the Seller will deliver
possession to the Purchaser of the Assets, at the locations where, in the
ordinary course of business, such are usually and customarily located.
1.5. Consents to Assignment. Any other provision of this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign or otherwise sell, convey or transfer any concession, claim, contract,
license, lease, commitment, sales order, or purchase order, or any benefit
arising thereunder or resulting therefrom, if an attempted assign ment thereof,
without the consent required or necessary for such assignment, would constitute
a breach thereof or in any way adversely affect the rights of the Purchaser or
the Seller thereunder. If such consent is not obtained, or if an attempted
assignment would be ineffective or would adversely affect the Seller's rights
thereunder so that the Purchaser would not in fact receive all such rights, the
Seller shall cooperate in any arrangement the Purchaser may at its option
reasonably request in writing to provide for the Purchaser the benefits under
any such concession, claim, contract, license, lease, commitment or order,
including enforcement for the benefit of the Purchaser of any and all rights of
the Seller with respect to the Sm*rt Practice Business against any other party
thereto arising out of the breach or cancellation thereof by such party or
otherwise; provided, however, that nothing contained in this Section 1.5 shall
relieve the Seller, or constitute a waiver by the Purchaser, of any obligation
of the Seller provided for elsewhere in this Agreement to obtain any such
consent or approval or shall affect the liability, if any, of the Seller, and
the rights, if any, of the Purchaser, pursuant to this Agreement, for the
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failure of the Seller to have disclosed the need for, and for having failed to
obtain, any such consents or approvals.
1.6. Collection of Accounts Receivable. From and after the Closing Date,
the Seller shall: (i) instruct all account debtors of any Accounts Receivable
and other accounts receivable created by the Purchaser following the Closing
with respect to the Sm*rt Practice Business (together with the Accounts
Receivable, the "Purchaser Receivables") to forward all checks or other forms of
payment on account of any Purchaser Receivable (each a "Payment") directly to
the Purchaser; and (ii) promptly (but in no event more than two (2) business
days following receipt) deliver to the Purchaser all Payments received by the
Seller.
1.7. Additional Ownership Rights. The name "Wismer*Martin" and all
permutations thereof are included in the Assets to be acquired by the Purchaser
in accordance with the terms of this Agreement; provided, however, that, from
and after the Closing, notwithstanding the transfer and assignment by WM and PCN
of all of their rights in and to the Assets to the Purchaser, WM and/or PCN, as
applicable, shall retain the right to and the Purchaser shall be deemed to have
granted to the Seller a one year, royalty-free license to use the name
"Wismer*Martin" as its corporate name and in connection with any contract,
agreement or document (including, without limitation, any UCC-1 Financing
Statement) in effect as of the Closing Date, provided that the name shall be
used in a manner which is not inconsistent with previous use.
2. PURCHASE PRICE
2.1. Consideration. The aggregate purchase price to be paid by the
Purchaser in full consideration for the Assets shall be as follows (collectively
the "Purchase Price"):
(a) $7,150,000 in immediately available funds (the "First Cash
Payment") which amount shall be payable by wire transfer at the Closing to an
account designated by PCN prior to the Closing Date;
(b) $350,000 in immediately available funds (the "Second Cash
Payment") which amount shall, subject to Section 2.2 below, be payable to PCN on
December 31, 1999 by wire transfer to an account designated by PCN prior to
December 31, 1999; and
(c) the assumption by: (i) the Purchaser at the Closing of the
Assumed Liabilities (as hereinafter defined) as provided in Section 3.1 hereof;
and (ii) Medical Manager of the Assumed Lease.
2.2. Set-off of Second Cash Payment. (a) The Purchaser shall be
entitled to deduct and set-off from the payment of the Second Cash Payment an
amount equal to any Asserted Amount (as hereinafter defined) unless and until
such time as, and to the extent that: (i) the
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Purchaser agrees that all or any portion of such amount is not due and owing by
the Seller; or (ii) the Arbitrator (as defined in Section 13.1 hereto) finally
determines that all or any portion of such amount is not due and owing by the
Seller to the Purchaser. Promptly (but in no event more than three (3) business
days) following any such agreement by the Purchaser or determination by the
Arbitrator, as the case may be, the Purchaser shall pay to the Seller an amount
equal to: (i) that portion of the Asserted Amount so agreed or determined, as
the case may be, not be due and owing by the Seller (the "Released Amount");
plus (ii) an amount equal to the interest which would have accrued on the
Released Amount from December 31, 1999 through and including the payment date
thereof calculated at a rate of 10% per annum. Such amounts shall be paid by the
Purchaser in immediately available funds by wire transfer to an account
designated by PCN.
(b) As used herein, "Asserted Amount" means the amount the Purchaser
has, in good faith and reasonably, asserted in a written notice (the "Indemnity
Notice") delivered to PCN on or prior to December 31, 1999, is due and owing the
Purchaser from the Seller pursuant to Section 12.1 of this Agreement; provided,
however, that, in order to be effective, the Indemnity Notice shall: (i) contain
such facts and information as are then reasonably available to the Purchaser and
the specific basis for the indemnification claim under Section 12.1; and (ii) if
such amount is (x) liquidated in amount, the Indemnity Notice shall state such
amount (which amount shall constitute the Asserted Amount with respect to such
claim) or (y) not liquidated in amount, the Indemnity Notice shall so state and
provide Purchaser's good faith, reasonable estimate of such amount (which
estimate shall constitute the Asserted Amount with respect to such claim).
2.3. Allocations of Purchase Price. The Purchase Price shall be allocated
in a manner reasonably agreed to by the Purchaser and the Seller, each acting
reasonably and in good faith. The Seller and Purchaser shall use and cause to be
used such allocation for all federal, state and local income tax purposes,
including, without limitation, the preparation and filing of their respective
counterparts of Form 8594 (or any other form hereafter mandated by the Internal
Revenue Service ("IRS")) as required by the regulations under Section 1060 of
the Internal Revenue Code of 1986, as amended ("Code").
3. ASSUMPTION OF LIABILITIES
3.1. Assumption. Upon transfer of the Assets on the Closing Date, and
subject to Section 3.2 hereof: (i) Medical Manager will assume and thereafter
pay, perform and discharge, when due, to the extent not paid, performed or
discharged by PCN on or prior to the Closing Date, the obligations of PCN
arising from and after the Closing Date under the Assumed Lease; and (ii) the
Purchaser will assume and thereafter pay, perform and discharge, when due, to
the extent not paid, performed or discharged by the Seller on or before the
Closing Date, the Assumed Liabilities. As used herein the term "Assumed
Liabilities" means, collectively:
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(a) all liabilities and obligations of the Seller for the
accounts payable set forth on Schedule 3.1(a) (the "Accounts Payable");
(b) all liabilities and obligations of the Seller to provide
to End-Users maintenance and support services for the application software
products of the Sm*rt Practice Business to the extent such obligation is
included as a deferred software maintenance obligation on Schedule 3.1(b) hereto
(which schedule sets forth such deferred software maintenance as of June 30,
1999 (the "Schedule Date") as the same may exist on the Closing Date and all
such liabilities and obligations arising in the ordinary course of business
since the Schedule Date (the "Deferred Software Maintenance Obligation");
(c) all liabilities and obligations of the Seller to provide
to End-Users maintenance and support services for computer hardware, operating
system software, parts and related equipment to the extent such obligation is:
(i) included as a deferred hardware maintenance obligation on Schedule 3.1(c)
hereto as the same may exist on the Closing Date and all such liabilities and
obligations arising in the ordinary course of business since the Schedule Date
(the "Deferred Hardware Maintenance Obligation"); or (ii) of the type which, but
for the fact that, as described in Section 9.6 hereof, Olivetti North America,
Inc. is providing such maintenance and support services on the Seller's behalf,
would be a Deferred Hardware Maintenance Obligation;
(d) the liabilities and obligations arising under or with
respect to each Equipment Lease Agreement, in each case, on or after the Closing
Date; and
(e) WM's and PCN's obligations, if any, for accrued vacation
days severance pay (as set forth on Schedule 5.18(a) hereof) of any Designated
Employee (as defined in Section 5.18(a)).
Nothing contained in this Section 3.1 is intended to, or shall
be construed so as to create any third party beneficiaries of this Agreement or
otherwise confer any rights upon any person, firm or corporation that is not a
party hereto, including, without limitation, any employee or customer of the
Seller, the Purchaser or any of their respective Affiliates. Without in any way
limiting the foregoing, it is not the intention of either the Purchaser or the
Seller that the assumption by the Purchaser of the Assumed Liabilities shall in
any way enlarge the rights of third parties under contracts or arrangements with
the Purchaser or the Seller. Nothing contained herein shall prevent the
Purchaser from contesting in good faith any of the Assumed Liabilities with any
third party.
3.2. Limitations on Assumption. Any other provision of this Agreement to
the contrary notwithstanding, neither the Purchaser nor any of its Affiliates
will or does assume any liability or obligation of the Seller (whether now
existing or hereafter arising, whether known or unknown) not expressly assumed
pursuant to Section 3.1 hereto (all liabilities and obligations not
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so assumed collectively referred to as the "Retained Liabilities"). Without
limiting the generality of the foregoing, Retained Liabilities shall include,
without limitation, the following:
(a) liabilities of or claims against any one or more of WM,
PCN or any of their Affiliates arising out of any pending actions, suits,
proceedings, arbitration, investigation or hearing;
(b) liabilities or obligations incurred as a result of
activities of the Seller, its Affiliates and their respective successors and
assigns after the Closing Date;
(c) all liabilities and obligations of the Seller and its
Affiliates to the extent not arising in connection with, incurred by, or
relating to, the operation of the Sm*rt Practice Business or the use or
ownership of the Assets prior to the Closing;
(d) liabilities and obligations for or in respect of
indebtedness for borrowedmoney or any guaranty thereof;
(e) the fees and expenses of Seller's counsel, accountants and
other experts in connection with the transactions contemplated hereby;
(f) liabilities or obligations for any domestic (federal,
state or local) or foreign taxes due as the result of the operation of the Sm*rt
Practice Business prior to the Closing Date or due on account of the ownership
or use of the properties and assets of the Sm*rt Practice Business prior to the
Closing Date or interest or penalties relating thereto; or
(g) all liabilities and obligations of the Seller with respect
to any real property leases other than the Assumed Lease;
(h) all liabilities and obligations for the (i) Stay Put
Bonuses (as defined in Section 5.18(c)), (ii) any sales commissions other than
Assumed Commissions (as defined in Section 9.3(c)); and (iii) any matching
contributions required to be made to PCN's 401(k) plan on account of any
employee of the Sm*rt Practice Business arising on or prior to the Closing Date;
(i) liabilities or obligations of the Seller or any of its
Affiliates under or pursuant to any of the Agreements listed on Schedule 5.20
hereto;
(j) any liability and obligations arising under any Equipment
Lease to the extent that: (x) the rights related to such liabilities are not
permitted to be assigned without the consent of the lessor thereunder; (y) such
consent is not obtained prior to the Closing; and (z) as a result of the failure
of the parties hereto to obtain such consent, the lessor thereunder reclaims the
equipment or other property which is the subject of such Equipment (provided,
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however, that, under no circumstances shall any such liability or obligation
constitute a Retained Liability pursuant to this subsection (j) if the Purchaser
or Medical Manager (A) offers or otherwise seeks to return any such equipment or
other property to the lessor or (B) otherwise take steps which reasonably could
be expected to cause the lessor to seek to so reclaim such equipment or
property);
(k) any liabilities or obligations under or pursuant to the
agreement described on Schedule 3.2(k) hereto (the "Retained Agreement"); or
(l) any liabilities or obligations to any Inactive User,
including, without limitation, any liabilities or obligations arising from or
relating to the failure of any hardware or software product used by such
Inactive User to be Y2K Compliant (as defined in Section 5.14 hereof).
3.3. Right of Enforcement and Settlement. From and after the Closing Date,
the Purchaser will have complete control over the payment, settlement or other
disposition of the Assumed Liabilities and the right to commence, conduct and
control all negotiations and proceedings with respect thereto. The Seller will
notify the Purchaser promptly of any claim made with respect to any such Assumed
Liabilities and will not, except with the Purchaser's prior written consent,
voluntarily make any payment of, settle or offer to settle, or consent to any
compromise or admit liability with respect to any such Assumed Liabilities. The
Seller will cooperate with the Purchaser in any reasonable manner requested by
the Purchaser in connection with any negotiations or proceedings involving any
Assumed Liabilities.
4. CLOSING
The closing of the transactions to be effected hereunder (the
"Closing") will take place as soon as practicable (but in no event later than
the second business day after the latest to occur of the conditions set forth in
Section 10 hereof having been fulfilled or having been waived in accordance with
this Agreement) (the "Closing Date"). The Closing shall take place at the
offices of Gordon Altman Butowsky Weitzen Shalov & Wein, 114 West 47th Street,
20th Floor, New York, New York 10036-1510 or at such other place as the parties
hereto may agree.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER
PCN and WM hereby represent and warrant to the Purchaser and Medical
Manager that the following are true and correct as of the date hereof:
5.1. Existence and Authority. (a) WM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and PCN is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey. Each of WM and PCN is authorized or licensed to do
business in each jurisdiction in which the character and location of its assets
or the nature of its business makes such qualification necessary, except to the
extent that the failure to so qualify would not have an adverse effect on WM,
PCN or the Sm*rt Practice Business. Each of WM and PCN has all requisite power
and authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby and has all requisite power and authority,
licenses, permits and franchises to own or lease and operate its properties and
carry on its business as it is presently being conducted.
(b) The principal executive offices of PCN and WM are located
at 1200 The American Road, Morris Plains, New Jersey. The principal operating
office of the Seller is located at 1111 E. Westview Court, Spokane, Washington.
Since January 1, 1994, the name of WM has been "Wismer*Martin, Inc." and it has
neither used nor done business under any other name in any jurisdiction and the
name of PCN has been "Physician Computer Network, Inc." and it has neither used
nor done business under any other name in any jurisdiction.
5.2. Authorization of Agreement. The execution, delivery and performance
of this Agreement and the Ancillary Documents (as hereinafter defined) by the
Seller, and the consum mation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate
action. This Agreement and the applicable Ancillary Documents have been duly and
validly executed and delivered by the Seller. This Agreement and the applicable
Ancillary Documents constitute valid and binding obligations of each of WM and
PCN, each enforceable in accordance with its terms.
5.3. Effect of Agreement, Etc. Except as set forth on Schedule 5.3 hereto,
the execution, delivery and performance of this Agreement and the applicable
Ancillary Documents by the Seller and consummation by the Seller of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice and the lapse of time, or both: (a) violate any provision of
law, statute, rule, regulation or executive order to which PCN, WM, the Sm*rt
Practice Business or the Assets is subject; (b) violate any judgment, order,
writ or decree of any court to which PCN, WM, the Sm*rt Practice Business or the
Assets is subject; or (c) result in the breach of or conflict with any term,
covenant, condition or provision of, result in or permit any other party to
cause the modification or termination of, constitute a default under, or result
in the creation or imposition of any lien, security interest, charge or
encumbrance upon any of the Assets pursuant to any partnership agreement,
corporate charter or by-laws, commitment, lease, mortgage, contract or other
agreement or instrument (including, without limitation, any of the End-User
Agreements) to which one or both of WM and PCN is a party or by which any of the
Assets are bound or affected.
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5.4. Restrictions; Burdensome Agreements. Except as set forth on Schedule
5.4 hereto, neither PCN nor WM is a party to any contract, commitment or
agreement, nor is PCN, WM or any of the Assets subject to, or bound by, any
order, judgment, decree, law, statute, ordi nance, rule, regulation or other
restriction of any kind or character, which would prevent PCN or WM from
entering into this Agreement or from consummating the transactions contemplated
by this Agreement as it is written.
5.5. Governmental and Other Consents. No consent, authorization or
approval of, or exemption by or filing with, any foreign or domestic
governmental, public or self-regulatory body or authority is required in
connection with the execution, delivery and performance by PCN or WM of this
Agreement or the applicable Ancillary Documents or the taking of any action
herein or therein contemplated.
5.6. Statement of Net Assets; Revenues. (a) The Seller has delivered to
the Purchaser, and attached hereto as Schedule 5.6(a), is a copy of the
unaudited statement of net assets of the Sm*rt Practice Business at May 31, 1999
(the "Statement of Net Assets"). The Statement of Net Assets fairly and
accurately sets forth the assets and liabilities of the Sm*rt Practice Business
at May 31, 1998.
(b) Schedule 5.6(b) hereto fairly and accurately sets forth
the total revenues of the Sm*rt Practice Business for the twelve month period
ended December 31, 1998 in all material respects.
5.7. Absence of Certain Changes or Events. Except as set forth on Schedule
5.7 hereto, since May 31, 1999 the Seller has not: (i) suffered any adverse
change in, or the occur rence of any events which, individually or in the
aggregate, have had, or might reasonably be expected to have, an adverse effect
on the Sm*rt Practice Business' condition (financial or otherwise), results of
operations, properties or business or on the Assets; (provided, however, that
each of the Seller and the Purchaser acknowledges the liquidity problems
suffered by the Seller, as well as the disclosure of certain accounting
improprieties with respect to PCN's financial statements and agrees that, for
purposes at this Section 5.7, such liquidity problems and disclosure shall not
constitute an adverse change); (ii) incurred damage to or destruction of any of
the Assets by casualty, whether or not covered by insurance, or suffered or
became subject to any pending or threatened condemnation of property; (iii)
incurred any obligations or liabilities (fixed or contingent) with respect to
the Sm*rt Practice Business except (A) in the ordinary course of business, none
of which were entered into for an inadequate consideration, (B) obligations and
liabilities under the Commitments (as hereinafter defined) to the extent
required thereby, and (C) obligations and liabilities under this Agreement; (iv)
made any change in the nature of the Sm*rt Practice Business; (vi) mortgaged,
pledged, assigned, hypothecated or sub jected to lien or any other encumbrance
any of the Assets; (vii) sold, transferred or leased any of the Assets, except
in each case in the ordinary course of business and consistent with past prac
tice; (viii) sold, assigned, transferred, or granted any rights under or with
respect to, any of its
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licenses, agreements, patents, inventions, trademarks, trade names, copyrights
or formulae or with respect to know-how or any other intangible asset in each
case to the extent related to the Sm*rt Practice Business and, in each case,
other than in the ordinary course of business consistent with past practice;
(ix) amended or terminated any of its contracts, agreements, leases or
arrangements relating to the Sm*rt Practice Business other than in the ordinary
course of business consistent with past practice; (x) waived or released any
other rights with respect to the Sm*rt Practice Business other than in the
ordinary course of business consistent with past practice; (xi) had work
performed which could give rise to mechanics liens with respect to any of the
Assets which has not been paid or which payment has not been provided for; or
(xii) entered into any other transaction with respect to the Sm*rt Practice
Business not in the ordinary course of business.
5.8. Deferred Revenue Account. (a) Schedule 3.1(b) hereto contains a true
and correct schedule and calculation of the Deferred Software Maintenance
Obligation as of the Schedule Date. All Deferred Software Maintenance
Obligations arising since the Schedule Date have arisen in the ordinary course
of business consistent with past practice.
(b) Schedule 3.1(c) hereto contains a true and correct
schedule and calculation of the Deferred Hardware Maintenance Obligation as of
the Schedule Date. All Deferred Hardware Maintenance Obligations arising since
the Schedule Date have arisen in the ordinary course of business consistent with
past practice.
5.9. Accounts Receivable. Set forth on Schedule 5.9 hereto is a true,
correct and complete schedule (the "Account Receivable Schedule") setting forth:
(i) all of the Accounts Receivable as of June 30, 1999; and (ii) the aging
thereof. The Accounts Receivable listed on the Accounts Receivable Schedule are
valid and genuine, have arisen only from bona fide transactions in the ordinary
course of business and are properly recorded in the Seller's books and records.
The Seller does not have any knowledge or any reason to believe that, subject to
the reserve listed on Schedule 5.9, such receivables are not collectible in the
ordinary course of business, consistent with the Seller's past collection
practice.
5.10. Accounts Payable. Schedule 3.1(a) contains a true and complete list
of all Accounts Payable as of the Closing Date. All Accounts Payable set forth
on Schedule 3.1(a) have arisen in the ordinary course of business consistent
with past practice.
5.11. Title to the Assets; Absence of Liens and Encumbrances, Etc.
Except for liens which will be released on or prior to the Closing or as set
forth on Schedule 5.11 hereto: (a) the Seller has good and valid title to, and
owns outright, the Assets, free and clear of all mortgages, claims, liens,
charges, leases, subleases, encumbrances, security interests, restrictions on
use or transfer or other material defects of any nature, whether or not
recorded; and (b) the sale and delivery of the Assets pursuant hereto will vest
in the Purchaser good and valid title to the Assets
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free and clear of all mortgages, claims, liens, charges, encumbrances, leases,
subleases, security interests, restrictions on use or transfer, or other defects
of any nature.
5.12. Contracts.
5.12.1. Except as set forth on Schedule 5.12.1 each of the
End-User Agreements are in the forms of the form of license agreement, form of
software support agreement and/or form of hardware service agreement attached to
and made a part of Schedule 5.12.1, without any material modification thereto.
5.12.2. Set forth on Schedule 1.1(h) is a true and
complete list of all Equipment Leases.
5.12.3. Except as set forth on Schedule 5.12.3, with respect
to the Sm*rt Practice Business, except for the End-User Agreements, the Inactive
Agreements, the Equipment Leases and the Assumed Lease, neither the Seller nor
PCN is a party to and none of the Assets are bound by any:
(a) lease of real property or personal property;
(b) employment, consulting agreement, severance
agreements, other agreement with any employee of the Sm*rt Practice Business;
(c) agreement with any value-added reseller,
business partner, distributor, dealer, sales agent or representative with
respect to the sale or licensing of the Sm*rt Practice Business's products or
services;
(d) OEM Agreement;
(e) joint venture or partnership agreement;
(f) agreement for the borrowing or lending of
money;
(g) agreement granting to any person a lien,
security interest or mortgage on any of the Assets, including, without
limitation, any factoring agreement or agreement for the assignment of accounts
receivable or inventory;
(h) source-code escrow agreement; or
(i) agreement not otherwise described above
relating to the Assumed Liabilities and entered into outside of the ordinary
course of business.
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Correct and complete copies of all: (i) such agreements,
leases and other instruments and written amendments thereto (or, where they are
oral, true and complete written summaries thereof) required to be shown on
Schedule 5.12.3 (together with each End-User Agreement, each Equipment Lease and
the Assumed Lease, such agreements, leases and instruments are collectively
referred to herein as the "Commitments"), have been provided or otherwise made
available to the Purchaser on or prior to the date hereof.
5.12.4. Except as set forth on Schedule 5.12.4(a) hereto, each
of the Commitments is valid, in full force and effect and enforceable by WM or
PCN in accordance with its terms. Except as set forth on Schedule 5.12.4(b)
hereto, all of the Commitments which are included in the Assets or as part of
the Assumed Liabilities are assignable by WM or PCN, as applicable, to the
Purchaser without the consent of any other party thereto.
5.12.5. Except as set forth on Schedule 5.12.5, WM and PCN
have fulfilled, or have taken all action reasonably necessary to have been taken
to date to enable each of them to fulfill when due, all of their respective
obligations under the Commitments. Except as indicated on Schedule 5.12.5, there
has not occurred any default by WM or PCN or any event which, with the giving of
notice or the lapse of time or both, and/or the election of any person other
than WM or PCN will become such a default by WM or PCN, nor, to the knowledge of
WM and PCN, has there occurred any default by others or any event which, with
the lapse of time and/or the election of PCN or WM, will become such a default
under any of the Commitments (including, without limitations, the End-User
Agreements). Neither WM or PCN nor, to the best of Seller's knowledge, any other
party is in arrears in respect of the performance or satisfaction of any
non-monetary term or condition to be performed or satisfied by it under any of
the Commitments, and no waiver or indulgence has been granted by either WM or
PCN thereunder. Neither WM or PCN nor any other party is in arrears in respect
of the performance or satisfaction of any monetary term or condition to be
performed or satisfied by it under any of the Commitments, and no waiver or
indulgence has been granted by either WM or PCN thereunder.
5.13. End-Users. Set forth on Schedule 5.13 is a true and correct
list of all End- Users who or which, as the case may be, are parties to End User
Agreements.
5.14. Intellectual Property. (a) Schedule 1.1(e) hereto set forth a
true and correct description of all of the Intellectual Property used in and
material to the operation of the Sm*rt Practice Business (other than
off-the-shelf software products that can be purchased for $5,000 or less per
single user license). The Intellectual Property included in the Assets does not
violate or infringe on the rights of any other person. To the best knowledge of
the Seller, the other software utilized by the Seller in the operation of the
Sm*rt Practice Business neither violates nor infringes on the rights of any
other person. The Seller has not received any notice of or alleging any
violation of the asserted rights of others with respect to the Intellectual
Property. The Seller is not aware of any third party that is infringing or
violating any of the rights of the Seller with respect to the Intellectual
Property. Except as provided for in the license agreements referred to
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on Schedule 1.1(e) hereof, no royalties, license fees or other similar payments
are required for the continued use by Purchaser of the Intellectual Property
used in and material to the operation of the Sm*rt Practice Business. None of
the Intellectual Property has ever been declared invalid or unenforceable.
(b) Schedule 5.14(b)(i) hereto sets forth, with
respect to each End-User who or which, as the case may be, is a party to a
currently effective software support agreement with the Seller, the version of
the Sm*rt Practice Software used by such End-User. Schedule 5.14(b)(ii) hereto
sets forth, with respect to each End-User who or which, as the case may be, is
not a party under a currentlyeffective software support agreement with the
Seller, the version of the Sm*rt Practice Software used by such End-User.
Versions 5.2 and 6.2 of the Sm*rt Practice Software (the "Y2K Versions") will
operate prior to, during, and after the calendar year 2000 A.D., both on a
stand-alone basis and when interacting or inter-operating with third-party
hardware, in a manner consistent with the software and systems without error and
without human intervention, other than original date entry. The Y2K Versions of
the Sm*rt Practice Software will accept, process, display, and report all
century-based data consistently and accurately to the extent that the
third-party hardware and software used in combination with that Sm*rt Practice
Software properly exchanges date data, including century-based, data with it.
Neither the occurrence of any date nor the change of century will adversely
affect the processing, calculating, comparing, sequencing, or other use of data
by the Y2K Versions of the Sm*rt Practice Software including, without limitation
causing (i) any error relating to or resulting from century-based data, (ii) any
abnormal ending or provision of invalid or incorrect results as a result of any
century-based data, and (iii) any error relating to the century recognition or
calculations accommodating century-based data, values or formulae to the extent
that the third-party hardware and software used in combination with the Y2K
Versions of the Sm*rt Practice Software properly exchanges date data, including
century-based data, with it. (As used in this Agreement, software which performs
and operates in the manner provided for in the third, fourth and fifth sentences
of this Section 5.14(b) shall be deemed to be "Y2K Compliant").
(c) Prior to the date hereof, the Seller has delivered to each
End User a software disk containing a Y2K Version of the Sm*rt Practice Software
(the "Patch") which, if installed on Y2K Compliant hardware with Y2K Compliant
software will make the Sm*rt Practice Software Y2K Compliant. The Patch is
capable of being installed by any End User without the assistance of the Seller,
the Purchaser or any other third party provider of computer hardware or software
services.
5.15. Real Estate Leases. Neither WM nor PCN is in default or has
received any notice of any default, or failed to take any action that could
result in a material or monetary default, under the Assumed Lease. To the
Seller's knowledge, no other party to any such lease is in default thereunder.
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5.16. Compliance With Laws. Except as set forth on Schedule 5.16
hereto, WM and PCN have complied and are in compliance with all applicable laws
and rules and regulations of foreign, federal, state and local governments and
all agencies thereof and other regulatory bodies related to the operation of the
Sm*rt Practice Business or ownership of the Assets the failure to comply with
which has or reasonable would have an adverse effect on the Sm*rt Practice
Business or the Assets, and there are no pending claims which have been filed
against WM, PCN or any Affiliate (relating to the operation of the Sm*rt
Practice Business or the ownership of the Assets) alleging a violation of any
such law or regulation. No notice has been received by WM or PCN with respect to
any such violation of any such legal requirements.
5.17. Litigation. Except as set forth on Schedule 5.17 hereto, there
are no claims, actions, suits, proceedings, arbitrations, investigations or
hearings or notices of hearing pending or, to the best knowledge of the Seller,
threatened, before any court or governmental or administrative authority or
private arbitration tribunal against or relating to either: (i) the transac
tions contemplated hereby; or (ii) WM or PCN with respect to the Sm*rt Practice
Business or any of the Assets (including, without limitation, any End-User
Agreement).
5.18. Labor Matters. (a) Schedule 5.18(a) hereto contains a true and
correct schedule of: (i) the names, job descriptions and current annual salary
rates of all present employees of WM or PCN whose primary job functions relate
to the operation of the Sm*rt Practice Business (the "Designated Employees");
(ii) the amount of severance payable to each such employee (assuming for such
purpose that the Closing Date was the date on which such person's employment
with WM or PCN, as the case may be, was terminated); (iii) the dollar value of
all accrued vacation days of each such employee; and (iv) all written and oral
employment or compensation agreements with each employee of WM or PCN who
principally performs services with respect to the Sm*rt Practice Business.
(b) No employee of the Seller is represented by any
union or collective bargaining agent, and, to the best knowledge of the Seller,
there has been no union organizational efforts in respect of the employees of
the Seller.
(c) Schedule 5.18(a) hereto also contains a true and
correct list and description of all agreements between the Seller, on the one
hand, and any employee of the Sm*rt Practice Business, on the other hand,
regarding any bonus or other compensation payable by the Seller to any such
employee upon or as a result of the occurrence of: (i) the sale of the Sm*rt
Practice Business; or (ii) such employee remaining employed by WM and/or PCN
beyond a specified date (collectively, the "Stay-Put Bonuses").
(d) Schedule 5.18(d) hereto contains a true and
correct description of all of the Assumed Commissions (as defined in Section
9.3(c) below).
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5.19. Taxes. Each of WM and PCN have filed all tax and information
returns and reports relating to the Sm*rt Practice Business and the Assets
required to be filed, and all taxes, fees, assessments or other governmental
charges, withholdings of any nature, including franchise taxes, use and
occupancy taxes and sales taxes, have been paid (except those being contested in
good faith), or adequate provision for the payment thereof has been made, in
each case as of the date hereof, in all taxing jurisdictions in which the
conduct of the Sm*rt Practice Business or the ownership of the Assets subjects
WM or PCN to any taxes, fees, assessments or other govern mental charges.
5.20. Entire Business. Except: (i) for the services set forth in the
Transition Services Agreement (as hereinafter defined) and the assets related
thereto; or (ii) as set forth on Schedule 5.20, the Assets constitute all of the
assets reasonably necessary to, immediately following the Closing Date, operate
the Sm*rt Practice Business in a manner consistent with past practices, assuming
for such purposes only, that, immediately following the Closing Date, the
Purchaser, itself was to: (i) employ all of the employees (including management
personnel) currently employed by the Seller in connection with the Sm*rt
Practice Business immediately prior to the Closing Date; and (ii) assume all of
the liabilities with respect to all of the facilities and all equipment leases
used in such facilities to the same extent currently used by the Seller in the
operation of the Sm*rt Practice Business. No portion of the Sm*rt Practice
Business is conducted by any person or entity other than WM or PCN.
5.21. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon any arrangement made by
or on behalf of the Seller.
5.22. Employee Benefit Plans. (a) Except as set forth on Schedule
5.22(a) hereto, neither WM nor PCN has any employee benefit plans or
arrangements, including but not limited to employee pension benefit plans, as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), multiemployer plans, as defined in Section 3(37) of ERISA,
employee welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans, severance or termination
pay plans and policies, whether or not described in Section 3(3) of ERISA, in
which (i) any employees of WM or (ii) employees of PCN who are Designated
Employees, their spouses or dependents participate ("Employee Benefit Plans").
(b) Controlled Group Liability. Neither WM nor PCN, nor any
entity that would be aggregated with either under Code Section 414(b), (c), (m)
or (o): (i) has ever terminated or withdrawn from an employee benefit plan under
circumstances resulting (or expected to result) in liability under Title IV of
ERISA; (ii) has any assets subject to (or expected to be subject to) a lien for
unpaid contributions to any employee benefit plan; (iii) has failed to pay
premiums to the Pension Benefit Guaranty Corporation (the "PBGC") when due; (iv)
is
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subject to (or expected to be subject to) an excise tax under Code Section 4971;
(v) has engaged in any transaction which would give rise to liability under
Section 4069 or Section 4212(c) of ERISA; (vi) has violated Code Section 4980B
or Section 601 through 608 of ERISA; or (vi) has failed to comply with the
Health Insurance Portability and Accountability Act of 1996 ("HIPAA") with
respect to any group health plan within the meaning of Section 5000(b)(1) of the
Code.
(c) Other Liabilities. (i) Except for the Stay-put Bonuses or
as expressly set forth on Schedule 5.22(c), WM is not under any obligation to
pay separation, severance, termination or similar benefits solely as a result of
any transaction contemplated by this Agreement or solely as a result of a
"change of control" (as such term is defined in Section 280G of the Code) and
(ii) all required or discretionary (in accordance with historical practices)
payments, premiums, contributions, reimbursements, or accruals under the
Employee Benefit Plans for all periods ending prior to or as of the date hereof
for the Designated Employees have been paid or are disclosed on Schedule 5.22
and will be paid by the Seller at the Closing.
(d) Compliance. Each employee benefit plan covering any
Designated Employee is in compliance with all applicable laws and regulations
and has been operated in accordance with its terms and provisions. With respect
to each employee benefit plan covering any Designated Employee there are no
actions, claims or disputes pending by any third party and no audits,
proceedings, claims or demands pending by any governmental authority. All
amendments required to bring any such employee benefit plan into conformity with
any applicable provisions of ERISA and the code have been duly adopted.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser and Medical Manager hereby represent and warrant
to PCN and WM that the following are true and correct as of the date hereof:
6.1. Organization, Etc. Medical Manager is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the state of Washington. Each of the Purchaser
and Medical Manager has all requisite power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby. Each of the Purchaser and Medical Manager is authorized or licensed to
do business in each jurisdiction in which the character and location of its
assets or the nature of its business makes such qualification necessary, except
to the extent that the failure to so qualify would not have an adverse effect on
the Purchaser, Medical Manager or, following the Closing, the Sm*rt Practice
Business. Each of the Purchaser and Medical Manager has all requisite power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby and has all requisite power and authority,
licenses, permits and franchises to
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own or lease and operate its properties and carry on its business as it is
presently being conducted.
6.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement and the Ancillary Documents by the Purchaser and
Medical Manager and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate
action, including approval by the Purchaser's and Medical Manager's respective
Boards of Directors. This Agreement and the applicable Ancillary Documents have
been duly and validly executed and delivered by each of the Purchaser and
Medical Manager. This Agreement and the applicable Ancillary Documents
constitute valid and binding obligations of each of the Purchaser and Medical
Manager, each enforceable in accordance with its terms.
6.3. Effect of Agreement, Etc. The execution, delivery and performance
of this Agreement by each of the Purchaser and Medical Manager and consummation
by each of the Purchaser and Medical Manager of the transactions contemplated
hereby, will not, with or without the giving of notice and the lapse of time, or
both: (a) violate any provision of law, statute, rule, regulation or executive
order to which either one or both of the Purchaser and Medical Manager is
subject; (b) violate any judgment, order, writ or decree of any court to which
either one or both of the Purchaser and Medical Manager is subject; (c) result
in the breach or conflict with any term, covenant, condition or provision,
result in or permit any other party to cause the modifications or terminations
of, constitute a default under, or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any of the Purchaser's or
Medical Manager's assets pursuant to any partnership agreement, corporate
charter or by-laws, or any commitments, contract or other agreement or
instrument to which either one or both of the Purchaser and Medical Manager is
bound.
6.4. Governmental and Other Consents. No consent, authorization or
approval of, or exemption by or filing with, any governmental, public or
self-regulatory body or authority is required in connection with the execution,
delivery and performance by either the Purchaser or Medical Manager of this
Agreement or any of the instruments or agreements herein referred to, or the
taking of any action herein contemplated.
6.5. Restrictions; Burdensome Agreements. Neither the Purchaser nor
Medical Manager is a party to any contract, commitment or agreement, nor is
either one or both of the Purchaser and Medical Manager subject to, or bound by,
any order, judgment, decree, law, statute, ordinance, rule, regulation or other
restriction of any kind or character, which would prevent either one or both of
the Purchaser and Medical Manager from entering into this Agreement or from
consummating the transactions contemplated this Agreement as it is written.
6.6. Litigation. There are no claims, actions, suits, proceedings,
arbitrations, investigations or hearings or notices of hearings pending or, to
the best knowledge of the
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Purchaser and Medical Manager, threatened, before any court or governmental or
administrative authority or private arbitration tribunal against or relating to
the transaction contemplated hereby.
6.7. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon any arrangement made by
and on behalf of the Purchaser or Medical Manager.
7. PRE-CLOSING COVENANTS OF THE SELLER
7.1. Conduct of Sm*rt Practice Business Pending the Closing. During the
period from the date of this Agreement to the Closing, the Seller agrees that
with respect to the Sm*rt Practice Business and the Assets (except as
contemplated or expressly permitted by this Agreement or to the extent that
Medical Manager shall otherwise agree in writing):
(a) The Sm*rt Practice Business shall be conducted
only in the ordinary course of business, in a manner consistent with past
practice and in compliance in all material respects with all applicable laws,
rules and regulations.
(b) The Seller shall use its reasonable commercial
efforts to: (i) preserve intact WM's business organization; (ii) keep available
the services of its present officers, employees and consultants; and (iii)
preserve its present relationships with customers, suppliers and other persons
with which it has a significant business relationship.
(c) The Seller shall not, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease (whether such lease is an
operating or capital lease), encumber or otherwise dispose of any portion of the
Assets, other than in the ordinary course consistent with past practice.
(d) The Seller will promptly notify Medical Manager
in the event that it fails to operate its business in accordance with this
Section 7.1.
8. PRE-CLOSING COVENANTS OF THE PURCHASER, MEDICAL MANAGER
AND THE SELLER
8.1. Advice of Changes; Governmental Filings. Each party shall confer
on a regular and frequent basis with the other, report on operational matters
and promptly advise the other orally and in writing of any event which occurs
after the date hereof that would under this Agreement have been required to be
disclosed on the date of the execution and delivery of this
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Agreement had such event occurred on or prior to the date hereof or would have
resulted in a breach of any representation, warranty covenant or agreement
contained herein.
8.2. No Action. Except as contemplated by this Agreement, no party
hereto will take or agree or commit to take any action that is reasonably likely
to make any of its representations or warranties hereunder inaccurate in any
material respect at the date made (to the extent so limited) or as of the
Closing Date.
8.3. Legal Conditions to Closing. Each of the Seller, the Purchaser and
Medical Manager will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on itself with respect to the
Closing and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them in connection
with the Closing.
8.4. Additional Agreements; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use all
reasonable commercial efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using its reasonable commercial efforts to obtain all necessary waivers,
consents and approvals and to cause the conditions set forth in Section 10 to be
satisfied as promptly as practicable. Without limiting the foregoing, the
parties hereto will execute and deliver, or cause to be executed and delivered,
all such documents and instruments, in addition to those specifically required
by the provisions of this Agreement, in form and substance reasonably
satisfactory to the parties hereto, as may be reasonably necessary or desirable
to carry out and implement the provisions of this Agreement.
8.5. Confidentiality. All information heretofore or hereafter obtained
by the Purchaser and Medical Manager, on the one hand, and PCN and WM or such
party's advisers about the other shall be held in strict confidence and the
information so obtained shall be used solely for the purpose of evaluating the
purchase of the Sm*rt Practice Business contemplated by this Agreement, except
as otherwise required by law or by rule or regulation or any listing agreement;
provided, that, prior to such disclosure, the disclosing party notifies the
other party in order to give such other party an opportunity to take all
appropriate action to avoid or limit any such disclosure to the extent
consistent with legal obligations. Each party hereto agrees to return to the
other, promptly, all such information provided in written form, as well as all
copies thereof. Either party may enforce this provision by suit for specific
performance or other equitable relief.
9. POST-CLOSING COVENANTS
9.1. Further Assurances. The Seller, on the one hand, and the Purchaser
and Medical Manager, on the other hand, at the request of the other, at or after
the Closing, will execute and
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deliver, or cause to be executed and delivered, to the other such documents and
instruments, in addition to those specifically required by the provisions of
this Agreement, in form and substance reasonably satisfactory to the other, as
may reasonably be necessary or desirable to carry out or implement any provision
of this Agreement.
9.2. Non-Competition; Non-Disclosure.
9.2.1. The Seller agrees that for a period of two (2) years
from and after the Closing Date, neither of PCN nor WM nor any entity controlled
by either of them will, directly or indirectly, individually or on behalf of
other persons, endeavor to solicit the business or sell, license or provide any
products or services competitive with those provided by Medical Manager (either
currently or currently contemplated to be provided) to any End User; provided,
however, that the restrictions contained in this Section 9.2.1. shall not apply
to: (i) general advertisements not specifically directed to End Users; (ii) any
person or entity which acquires PCN or all or substantially all of PCN's assets
(provided that any such person not use the Customer List); or (iii) the
provision by PCN, WM or their Affiliates of any of the services contemplated by
the Transition Services Agreement (as defined in Section 10.2(e) hereto) to the
extent contemplated therein.
9.2.2. The Seller agrees that all information pertaining to
the Sm*rt Practice Business and the Assets and to the prior, current or
contemplated operation or use thereof (excluding (i) publicly available
information (in substantially the form in which it is publicly available) unless
such information is publicly available by reason of unauthorized disclosure and
(ii) information of a general nature not pertaining exclusively to the Sm*rt
Practice Business or the Assets which is generally available) are valuable and
confidential assets of the Sm*rt Practice Business. Such information shall
include, without limitation, information relating to the Intellectual Property,
trade secrets, customer lists of End Users (the "Customer List"), vendor lists,
bidding procedures, financing techniques and services and financial information
concerning the Sm*rt Practice Business and its customers, and shall specifically
exclude information concerning Inactive Users. The Seller agrees that, from and
after the Closing Date, neither WM, PCN or any Affiliate of WM or PCN or any
current or officer, director, of any of them, will disclose or use, and WM and
PCN shall use their reasonable business efforts to prevent any employee, agent,
former officer or director from disclosing, any such information, other than to
the Purchaser or Medical Manager. Without limiting the foregoing, the Seller
agrees that, from and after the Closing Date, neither the Seller nor any of its
Affiliates will provide or disclose the Customer List, or any part thereof, to
any third party, including, without limitation, any person or entity which
acquires all or substantially all of PCN's assets, except as required by
applicable law or legal process. In the event that the Seller receives a request
to disclose all or any part of the Customer List under the terms of a valid and
effective subpoena or order issued by a court of competent jurisdiction or by a
governmental body, the Seller agrees to: (i) immediately notify Medical Manager
of the existence, terms and circumstances surrounding such a request, (ii)
consult with Medical Manager on the advisability of taking legally available
steps to resist or
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narrow such request, and (iii) if disclosure of such information is required,
exercise its reasonable best efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such portion of the
disclosed information which Medical Manager so designates, provided that Medical
Manager will bear the reasonable expenses thereof.
9.2.3. The parties hereto acknowledge that it is impossible to
measure in money the damages that will accrue to the Purchaser and Medical
Manager in the event that WM, PCN or their Affiliates breach any of the
covenants in Sections 9.2.1 or 9.2.2 and, if the Purchaser or Medical Manager
shall institute any action or proceeding to enforce those covenants, WM and PCN
hereby waive and agree not to assert the claim or defense that the Purchaser or
Medical Manager has an adequate remedy at law or for damages. The foregoing
shall not prejudice the Purchaser's or Medical Manager's right to seek money
damages from WM or PCN with respect to any such breach.
9.3. Employee Matters. (a) The Seller agrees that on or following the
Closing Date, either Medical Manager or the Purchaser shall offer employment to
the Designated Employees. The Purchaser or Medical Manager, as the case may be,
agrees to credit to any Designated Employee who becomes employed by the
Purchaser or Medical Manager, as applicable, following the Closing Date all
unused vacation time such Designated Employee has accrued with WM or PCN, as
applicable, as of the Closing Date as set forth on Schedule 5.18(a), for the
benefit of such Designated Employee subject to and in accordance with the
Purchaser's and Medical Manager's vacation policy in effect from time to time.
Except as provided in the immediately preceding sentence, nothing contained in
this Section 9.3 shall in any way limit the Purchaser's and Medical Manager's
right or ability to, in its sole discretion, deal with any such employee in any
manner it determines, including, without limitation, the right to terminate or
sever any such employee, change or alter the nature of the Sm*rt Practice
Business, or change or alter the organizational structure of the Sm*rt Practice
Business.
(b) The Purchaser and Medical Manager agree that,
following the Closing, it shall be responsible for the payment of, and the
Purchaser or Medical Manager, as applicable, shall, in accordance with the
Seller's payment practices, pay, all Assumed Commissions (as hereinafter
defined) up to the amounts indicated on Schedule 5.18(d) hereto. As used herein,
"Assumed Commissions" shall mean the obligations of WM or PCN to pay sales
commissions to any sales person, sales representatives or sales agent of one or
both of WM and PCN (whether or not such person is a Designated Employee (as
defined in Section 9.3(a) above) or is offered or accepts employment with the
Purchaser or Medical Manager following the Closing) on account of any sale of
the products of the Sm*rt Practice Business made: (i) prior to the Closing and
for which an account receivable (x) exists and is properly recorded on the books
and records of the Sm*rt Practice Business on the Closing Date and (y) is
collected by the Purchaser following on or following the Closing Date; or (ii)
from and after the Closing.
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(c) At the Closing, the Purchaser shall reimburse to
PCN all amounts paid by the Seller to each Designated Employee who accepts
employment with the Purchaser following the Closing on account of the period
commencing on the day following the Closing Date and ending on and including
June 30, 1999, which amounts have already been paid by the Seller to such
employees. The daily rate for all employees of the Sm*rt Practice Business is
set forth on Schedule 5.18(a) hereto.
9.4. The Facility. (a) The Purchaser and Medical Manager agree that,
with respect to the Spokane Facility, during the period (a "Facility Transition
Period") commencing on the Closing Date and ending on the first to occur of: (x)
the date on which PCN moves all of its employees out of the Spokane Facility (a
"Facility Termination Date"); and (y) the date on which Medical Manager has
terminated its lease for the Spokane Facility (each a "Lease Termination Date"),
the Purchaser and Medical Manager shall permit PCN to utilize the Spokane
Facility and utilize the computer hardware and other equipment and telephone
lines, numbers and services located therein in connection with PCN's operation
of the PCN Business to substantially the same extent PCN utilized the Spokane
Facility and such equipment prior to the Closing Date in connection with the
operation of the PCN Business (provided, however, that PCN shall be permitted to
have a maximum of 10 employees utilize the Spokane Facility and such equipment).
In consideration for providing PCN with the use of the Spokane Facility, during
the Facility Transition Period, PCN shall pay to Medical Manager the facility
fee calculated in accordance with the schedule of fees set forth on Schedule
9.4(a) hereto (the "Facility Fee"), or a proportionate amount thereof, which
fees shall be paid, in advance, on or before the fifth (5th) day of each
calendar month. Anything contained in this Section 9.4 to the contrary
notwithstanding: (i) PCN shall provide Medical Manager with at least thirty (30)
days written notice prior to any Facility Termination Date; and (ii) Medical
Manager shall provide PCN with at least sixty (60) days' written notice prior to
a Lease Termination Date so long as such date is prior to April 30, 2004. Unless
otherwise agreed to by Medical Manager, PCN shall vacate the Spokane Facility no
later than five (5) days prior to a Lease Termination Date. At the Closing,
Medical Manager and PCN shall execute and deliver to one another a license to
use the Facility substantially in the form attached to Schedule 9.4 hereto (the
"Facility License").
(b) The Purchaser and Medical Manager agree that, so long as
the employee referred to on Schedule 9.4(b) hereto (the "Specified Employee")
becomes an employee of either the Purchaser or Medical Manager in accordance
with the provisions of Section 9.3 above, until the first to occur of (the "End
Date") (w) December 31, 1999, (x) the last day of the Facility Transition
Period, (y) the day on which the Specified Employee's employment with the
Purchaser is terminated and (z) the thirtieth (30th) day following written
notice by PCN to Medical Manager that PCN no longer requires the services of the
Specified Employee, the Specified Employee shall be permitted to, on PCN's
behalf, perform such functions as are reasonably consistent with the functions
performed by the Specified Employee on PCN's behalf immediately prior to the
Closing Date; provided, however, that, in no event shall such functions utilize,
on average, more than 20% of the Specified Employee's working time. In
consideration
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of the Purchaser and Medical Manager permitting the Specified Employee to
perform services on PCN's behalf in accordance with the immediately preceding
sentence, PCN shall pay to Medical Manager within five (5) business days
following the end of each calendar month occurring prior to the End Date, the
amount specified on Schedule 9.4(b).
9.5. Renewal of Support Agreements; Assignment of Service Agreement.
(a) Following the Closing, the Purchaser shall use all reasonable commercial
efforts to cause any Support Agreement (as hereinafter defined) which expires or
terminates after the Closing Date to be terminated and not automatically renewed
and, in lieu thereof, in the Purchaser's or Medical Manager's name, enter into a
new agreement directly with the End-User with respect to the matters covered by
the applicable Support Agreement. As used herein, the term "Support Agreement"
means each End-User Agreement between the Seller and any End-User to the extent
related to the on-going support, maintenance and training to be provided by the
Sm*rt Practice Business to any End-User with respect to any one or more of
software, hardware or system maintenance or support and training used by the
End-User.
(b) Each of the Purchaser and the Seller agree that, without
limiting any of the obligations of the Purchaser under Section 3.1 and 9.5(a)
hereof, in the event that it is determined, or otherwise asserted by an End User
who is a party thereto, that any Support Agreement between PCN and any End User
which is in the form of the Standard Services Agreement included as part of
Schedule 5.12.1 hereto is not assignable by PCN to the Purchaser in accordance
with its terms, during the remainder of the current term of such Standard
Services Agreement, the Purchaser shall be deemed to be a "Service Provider
Designated Provider" as provided by Section 9 of each such Standard Services
Agreement.
9.6. Olivetti Agreement. The Purchaser and Medical Manager acknowledge
that certain of the End Users who are parties to Support Agreements with the PCN
regarding maintenance and support services ("Hardware Support Services") for
computer hardware, operating system software, parts and related equipment used
by such End Users (each a "Hardware Service Agreement") receive such services
from Olivetti North America, Inc. ("Olivetti"), on the PCN's behalf, pursuant to
the terms of a Equipment Support Agreement between Olivetti and PCN, effective
September 4, 1997 (the "Olivetti Agreement"). Without limiting any of the
obligations of the Purchaser under Section 9.5(a) hereof, PCN agrees that,
during the remainder of the current term of each such Hardware Service
Agreement, PCN shall provide the Purchaser with the benefit of the Olivetti
Agreement so that, until the end of such current term, each such End User will
continue to receive Hardware Support Services under their Hardware Support
Agreement from Olivetti as provided for in the Olivetti Agreement.
9.7. Purchased Hardware. Following the Closing, within five (5) days
following the collection by the Purchaser of any Current Account Receivable (as
hereinafter defined) which relates to any item of Purchased Hardware (as
hereinafter defined), the Purchaser shall pay to PCN an amount equal to the
amount paid by the Seller for such item of Purchased Hardware set
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forth as Schedule 9.7 hereto (which schedule shows the Purchased Hardware which
relates to Current Accounts Receivable) (each an "Purchased Hardware Payment").
Any payments by any End User to the Purchaser which are not specifically
identifiable to a Current Account Receivable related to Purchased Hardware shall
not be deemed to constitute the collection of a Current Receivable for purposes
of this Section 9.7.
As used in this Section 9.7, "Current Account Receivable"
shall mean any Account Receivable which less than 91 days old as of the Closing
Date. As used in this Section 9.7, "Purchased Hardware" means the items of
computer hardware, operating system software, parts and related equipment
identified on Schedule 9.7, all of which: (i) have been paid for by the Seller;
and (ii) were purchased by the Seller on account of a customer for which an
Account Receivable exists.
9.8. Inactive Users. (a) Following the Closing, PCN shall use its
reasonable commercial efforts to: (i) locate and identify the current address of
each Inactive User; and (ii) deliver to each such Inactive User a letter (in
form and substance reasonably satisfactory to Medical Manager) in which PCN,
among other things, informs such Inactive User that: (x) the Purchaser has
acquired the Sm*rt Practice Business (but not the agreements with such Inactive
User); and (y) if such Inactive User wishes to obtain a Y2K Version of the Sm*rt
Practice Software, or otherwise obtain support with respect to the Sm*rt
Practice Software, to contact PCN (or, in Medical Manager's discretion, the
Purchaser) to obtain such version or such support.
(b) In the event that any of PCN, WM, Medical Manager or the
Purchaser is contacted by any Inactive User regarding obtaining a Y2K Version of
or support for the Sm*rt Practice Software, the Purchaser agrees to use its
reasonable commercial effort to provide service and/or support to such Inactive
User, including, without limitation, if applicable, by delivering a Y2K Version
of the Sm*rt Practice Software to such Inactive User; provided, however, that
the foregoing shall in no way be deemed to limit the provisions Section 3.2(l)
hereof.
10. CLOSING CONDITIONS
10.1. Conditions to Obligation of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment at or prior to the Closing Date of the following condition:
(a) No Injunction. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction prohibiting the consummation of the transactions
contemplated hereby shall be in effect; provided, however, that prior to
invoking this condition, each party shall use all reasonable efforts to have any
such decree, ruling, injunction or order vacated, except as otherwise
contemplated by this Agreement.
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10.2. Additional Conditions to Obligations of Purchaser. The
obligations of the Purchaser and Medical Manager to effect the Closing are also
subject to the following conditions (any one or more of which may be waived by
Medical Manager, but only in a writing signed by Medical Manager):
(a) Representations and Warranties. Each of the
representations and warranties of WM and PCN contained in this Agreement or in
any document or instrument delivered by either one or both of PCN and WM in
connection herewith, shall be true and correct, individually and in the
aggregate, in all material respects (except that any specific representation or
warranty that is qualified as to materiality must be true as written) on and as
of the Closing Date, except for changes contemplated by this Agreement, with the
same force and effect as if made on and as of the Closing Date, except that any
such representations or warranties made as of a specified date shall have been
true on and as of such date.
(b) Agreements and Covenants. WM and PCN shall have
performed or complied in all material respects with all of its agreements and
covenants contained in this Agreement to be performed or complied with by WM and
PCN at or prior to the Closing Date (except that any specific agreement or
covenant that is qualified as to materiality must have been performed as
written).
(c) No Material Adverse Change. There shall have been
no change in the business, results of operations, properties (including
intangible properties), financial condition, assets or liabilities of the Sm*rt
Practice Business since December 31, 1998 to the Closing Date which,
individually or in the aggregate, has a material adverse effect on the condition
(financial or otherwise), results of operations, business or assets of the Sm*rt
Practice Business.
(d) Third Party Consents. The Seller shall have
obtained, and Purchaser shall have received copies of, all of the approvals,
waivers, consents and releases of third parties listed on Schedule 10.2(d)
hereto, none of which shall have been withdrawn, revoked or modified as of the
Closing Date.
(e) Closing Deliveries. PCN and WM, as applicable,
shall have executed and delivered to the Purchaser the following instruments,
documents and agreements (such instruments, documents and agreements being
referred to herein as the "Ancillary Documents"):
(i) A transition services agreement
substantially in the form of the agreement attached hereto as Exhibit A (the
"Transition Services Agreement") regarding, among other things, the terms and
provisions upon which PCN shall provide certain administrative and telephone
support services to or on behalf of the Purchaser;
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(ii) The Facility License;
(iii) The agreements and instruments referred to
in Section 1.3 hereto to which either one or both of PCN and WM are parties;
(iv) Such certificates to evidence compliance
with the conditions set forth in this Agreement as may be reasonably requested
by Medical Manager, including, without limitation, certificates of the secretary
of PCN and the secretary of WM as to corporate resolutions and incumbency;
(v) Letters addressed to Medical Manager from
each of: (i) the agent bank for PCN's senior lenders (the "Lenders"); and (ii)
Alvarez & Marsal, Inc. ("A&M"), the holder of a security interest in the assets
of PCN and WM, advising Medical Manager that all liens on and security interests
in the Assets held by the Lenders and A&M, respectively, have been released
effective as of the Closing;
(vi) An opinion of legal counsel for PCN and WM
in form and substance reasonably satisfactory to the Purchaser; and
(vii) An Exclusive Electronic Gateway and
Network Services Agreement in the form attached hereto as Exhibit B (the "Web
Agreement").
(f) The Seller shall have obtained, Medical Manager
shall have received copies of: (i) a certificate of the Secretary of State of
the State of Washington as to the due incorporation and good standing of WM; and
(ii) a certificate of the Secretary of State of the State of New Jersey as to
the due incorporation and good standing of PCN.
10.3. Additional Conditions to Obligation of the Seller. The obligation
of the Seller to effect the Closing are also subject to the following conditions
(any one or more of which may be waived by PCN, but only in a writing signed by
PCN):
(a) Representations and Warranties. Each of the
representations and warranties of Purchaser and Medical Manager contained in
this Agreement or in any document or instrument delivered by either one or both
of the Purchaser and Medical Manager in connection herewith, shall be true and
correct, individually and in the aggregate, in all material respects (except
that any specific representation or warranty that is qualified as to materiality
must be true as written) on and as of the Closing Date, except for changes
contemplated by this Agreement, with the same force and effect as if made on and
as of the Closing, except that any such representations or warranties made as of
a specified date shall have been true on and as of such date.
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(b) Agreements and Covenants. The Purchaser and
Medical Manager shall have performed or complied in all material respects with
all of its agreements and covenants contained in this Agreement to be performed
or complied with by it at or prior to the Closing Date (except that any specific
agreement or covenant that is qualified as to materiality must have been
performed as written).
(c) No Material Adverse Change. There shall have been
no change in the business, results of operations, properties (including
intangible properties), financial condition, assets or liabilities of either
Medical Manager or the Purchaser which has a material adverse effect on the
condition (financial or otherwise), results of operations, business or assets of
Medical Manager or the Purchaser.
(d) Third Party Consents. Medical Manager and the
Purchaser shall have obtained, and PCN shall have received copies of, all of the
approvals, waivers, consents and releases of third parties listed on Schedule
10.3(d) hereto, none of which shall have been withdrawn, revoked or modified as
of the Closing Date.
(e) Closing Deliveries. The Purchaser and Medical
Manager, as applicable, shall have executed and delivered to PCN the following
instruments, documents and agreements:
(i) The Transition Services Agreement;
(ii) The Facility License;
(iii) The agreements and instruments
referred to in Section 1.3 hereto to which the Purchaser is a party;
(iv) Such certificates to evidence
compliance with the conditions set forth in this Agreement as may be
reasonably requested by PCN, including, without limitation, certificates of the
secretary of the Purchaser as to corporate resolutions and incumbency;
(v) An opinion of legal counsel for the
Purchaser in form and substance reasonably satisfactory to PCN; and
(vi) The Web Agreement.
(f) The Purchaser shall have obtained, and PCN shall
have received copies of a certificate of the Secretary of State of the State of
Delaware as to the due incorporation and good standing of the Purchaser.
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11. [Intentionally Omitted]
12. INDEMNIFICATION
12.1. Indemnification of the Purchaser and Medical Manager. Each of PCN
and WM, jointly and severally, hereby covenants and agrees with Medical Manager
and the Purchaser that it shall indemnify Medical Manager, the Purchaser, their
respective Affiliates and their respective directors and officers and
shareholders, and each of their successors and assigns (individually a
"Purchaser Indemnified Party") and hold them harmless from, against and in
respect of any and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including court costs and reasonable fees and
disbursements of counsel) (collectively "Losses") resulting from or arising out
of:
(a) all liabilities, debts, obligations and
commitments of any nature, whether accrued, absolute, contingent or otherwise
(whether known or unknown to the Seller, Medical Manager or the Purchaser),
which are not Assumed Liabilities and any claim or demand by a third party
(whether or not successful) to cause or require a Purchaser Indemnified Party to
pay, perform or discharge any debt, obligation, liability or commitment referred
to in this clause (a);
(b) any breach of any of the representations,
warranties, covenants or agreements made by either one or both of PCN and WM in
this Agreement or any Ancillary Document; or
(c) any action, suit, proceeding, compromise,
settlement, assessment or judgment arising out of or incident to any of the
matters indemnified against in this Section 12.1.
12.2. Indemnification of the Seller by the Purchaser and Medical
Manager. Each of Medical Manager and the Purchaser, jointly and severally,
hereby covenants and agrees with the Seller that it shall indemnify WM, PCN and
their respective Affiliates and their respective directors and officers and
shareholders, and each of their successors and assigns (individually a "Seller
Indemnified Party") and hold them harmless from, against and in respect of any
and all Losses resulting from or arising out of:
(a) the Assumed Liabilities, and any claim or demand
by a third party (whether or not successful) to cause or require a Seller
Indemnified Party to pay, perform or discharge any debt, obligation, liability
or commitment referred to in this clause (a);
(b) any breach of any of the representations,
warranties, covenants or agreements made by either one or both of Medical
Manager or the Purchaser in this Agreement or any Ancillary Document; or
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(c) any action, suit, proceeding, compromise,
settlement, assessment or judgment arising out of or incident to any of the
matters indemnified against in this Section 12.2.
12.3. Limitations on Indemnity
(a) Subject to Section 12.3(b) hereof, on and after
the Closing:
(i) The Seller shall be liable to the Purchaser
Indemnified Parties, and the Purchaser Indemnified Parties shall only be
entitled to indemnification from the Seller, for the matters covered by Sections
12.1(b) hereof and Section 12.1(c) hereof (to the extent, and only to the extent
that, Section 12.1(c) applies to Section 12.1(b)), in each case so far as such
matters arise from breaches by the Seller of any representation or warranty
contained herein, to the extent, and only to the extent, the aggregate amount of
Losses suffered by Purchaser Indemnified Parties (without regard to the
limitation on liability set forth in this Section 12.3(a)(i)), exceeds $150,000
(the "Minimum Indemnity Amount"), in which event the Purchaser Indemnified
Parties shall thereafter be entitled, from time to time, to seek indemnification
in respect to all Losses in respect of which it is entitled to be indemnified
pursuant to such provisions of Section 12.1 in excess of the Minimum Indemnity
Amount. The foregoing limitation shall not affect the right of any Purchaser
Indemnified Party to make a claim for indemnification, and shall not alter or
negate the procedures with respect to the timely notice and disposition of such
claim provided for in Section 12.4 hereof, in order to enable the Purchaser
Indemnified Party to obtain credit against the Minimum Indemnity Amount which
would otherwise be due but for such limitation. The maximum aggregate liability
of the Seller to all Purchaser Indemnified Parties with respect to all matters
covered by Sections 12.1(b) hereof and Section 12.1(c) hereof (to the extent,
and only to the extent that, Section 12.1(c) applies to Section 12.1(b)) shall
be $10,000,000 plus the amount, if any, by which the Assumed Liabilities exceed
the book value of the Assets on the Closing Date.
(ii) The Purchaser and Medical Manager shall
only be liable to the Seller Indemnified Parties, and the Seller Indemnified
Parties shall only be entitled to indemnification from the Purchaser and Medical
Manager, for the matters covered by Section 12.2(b) hereof and Section 12.2(c)
hereof (to the extent, and only to the extent that, Section 12.1(c) applies to
Section 12.2(b)), in each case so far as such matters arise from breaches by one
or both of Medical Manager and the Purchaser of any representation or warranty
contained herein, to the extent, and only to the extent, the aggregate amount of
Losses suffered by Seller Indemnified Parties (without regard to the limitation
on liability set forth in this Section 12.3(a)(ii)), exceeds the Minimum
Indemnity Amount, in which event each of the Seller Indemnified Parties shall
thereafter be entitled, from time to time, to seek indemnification in respect to
all Losses in respect of which it is entitled to be indemnified pursuant to such
provisions of Section 12.2 in excess of the Minimum Indemnity Amount. The
foregoing limitation shall not affect the right of any Seller Indemnified Party
to make a claim for
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indemnification, and shall not alter or negate the procedures with respect to
the timely notice and disposition of such claim provided for in Section 12.4
hereof, in order to enable the Seller Indemnified Party to obtain credit against
the Minimum Indemnity Amount which would otherwise be due but for such
limitation. The maximum aggregate liability of the Purchaser and Medical
Manager, together, to all Seller Indemnified Parties with respect to all matters
covered by Sections 12.2(b) hereof and Section 12.2(c) hereof (to the extent,
and only to the extent that, Section 12.2(c) applies to Section 12.2(b)) shall
be $10,000,000
(b) Anything contained in this Section 12.3 to the
contrary notwithstanding, the limitation on indemnification contained in Section
12.3(a) (including, without limitation, the Minimum Indemnity Amount) (but not
including the limitation set forth in the last sentence of each of Section
12.3(a)(i) and (ii)) shall not apply to any Loss: (i) incurred by any Purchaser
Indemnified Party as a result of a breach by the Seller of the representations
and warranties contained in Section 5.8, 5.10, 5.11, 5.12.6 and the second
sentence of Section 5.14 to the extent it relates to title to the Intellectual
Property (collectively, the "Excluded Provisions"); (ii) incurred by any
Purchaser Indemnified Party as a result of a breach by the Seller of the
covenants of the Seller contained in this Agreement; or (iii) incurred by any
Seller Indemnified Party as a result of a breach by one or both of Medical
Manager and the Purchaser of the covenants of either one or both of Medical
Manager and the Purchaser contained in this Agreement. No amount paid by the
Seller as a result of a breach by the Seller of any one or more of the Excluded
Provisions or of any covenant contained in this Agreement or in any Ancillary
Document shall count towards or against the Minimum Indemnity Amount.
(c) The provisions of this Section 12 shall be the
exclusive remedy available to the parties to this Agreement in the event any of
them shall have a claim against the other party or parties with respect to the
subject matters contained in this Agreement.
12.4. Right to Defend, Etc. If the facts giving rise to any such
indemnification pursuant to this Article 12 shall involve any actual claim or
demand by any third party (a "Third Party Claim") against a Purchaser
Indemnified Party or a Seller Indemnified Party, as the case may be (an
"Indemnified Party") the party required to indemnify such Indemnified Party
pursuant to Sections 12.1 or 12.2, as the case may be (the "Indemnifying Party")
shall be entitled to notice of such claim. At such time as the remedy sought in
the Third Party Claim is solely money damages or if Medical Manager otherwise
permits, then Seller, at its sole cost and expense, may assume the defense of
the Third Party Claim. If Seller assumes the defense of a Third Party Claim,
then Seller shall select counsel reasonably satisfactory to Medical Manager to
conduct the defense. Seller shall not consent to a settlement of, or the entry
of any judgment arising from, any Third Party Claim, unless (i) the settlement
or judgment is solely for money damages and Seller admits in writing its
liability to hold Medical Manager and the Purchaser harmless from and against
any losses, damages, expenses and liabilities arising out of such settlement or
judgment or (ii) Medical Manager reasonably consents thereto. Seller shall
provide Medical Manager with ten (10) days prior written notice before it
consents to a settlement of, or the entry
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of a judgment arising from, any Third Party Claim. Medical Manager and the
Purchaser shall be entitled to participate, at their own expense, in the defense
of any Third Party Claim, the defense of which is assumed by Seller with its own
counsel. With respect to Third Party Claims in which, and for so long as, the
remedy sought is not money damages and Medical Manager does not permit Seller to
assume the defense, Seller shall, upon notice to Medical Manager within fifteen
(15) days after Seller receives notices of the Third Party Claim, be entitled to
participate in the defense with his own counsel at its own expense. In such
instance, or if Seller does not assume or participate in the defense of any
Third Party Claim in accordance with the terms of this Section, Seller shall be
bound by the results obtained by Medical Manager with respect to the Third Party
Claim. Medical Manager shall provide Seller with ten (10) days prior written
notice before it consents to a settlement of, or the entry of a judgment arising
from, any such Third Party Claim.
12.5. Tax Effect. The amount of any indemnification due to an
Indemnified Party pursuant to Section 12.1 or 12.2, as the case may be, shall be
calculated after taking into account the amount of all insurance, cash or other
direct financial benefits payable to such Indemnified Party (including any such
benefits payable by third parties) and after taking into account the United
States federal, state and local and foreign national, provincial and local tax
benefits or detriments to the Indemnified Party, as the case may be, calculated
assuming the Indemnified Party were a taxpayer subject to tax at the highest
marginal rate in effect when the payment is made, of the payments made in
respect of such loss, claim, demand, cost or expense giving rise to the
indemnification and the payments, including indemnification payments made in
respect thereto.
13. GENERAL
13.1. Arbitration.
(a) Disputes that arise under or with respect to this
Agreement will be resolved as follows:
(i) except as set forth in Section 13.1(c),
no party shall bring a civil action arising under or with respect to this
Agreement;
(ii) at any time any party may demand any
dispute arising under or with respect to this Agreement be submitted to binding
arbitration by delivering written notice of the thereof to: (i) the other
parties and (ii) an office of JAMS/Endispute located in Newark, New Jersey (or,
if none then the office of JAMS/Endispute located closest to Newark, New
Jersey); and
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(iii) any such arbitration shall be
conducted at an office of JAMS/Endispute located in Newark, New Jersey (or, if
none, then the office of JAMS/Endispute located closest to Newark, New Jersey)
according to JAMS/Endispute's Arbitration Rules for binding arbitration (and not
mediation) then in effect applicable to disputes of the type submitted to
arbitration and the results of such arbitration shall be final and binding on
the parties.
(b) In the event that JAMS/Endispute is not available
to provide such arbitration services with respect to any such dispute, then that
dispute shall be resolved by final, binding arbitration in Newark, New Jersey by
three arbitrators pursuant to the rules then prevailing of the American
Arbitration Association applicable to disputes of the type submitted to
arbitration. Judgment on the award rendered by any of the above referenced
arbitrators may be confirmed and entered in and by any court having
jurisdiction. The person or persons appointed to service as an arbitrator in
accordance with this Section 13.1 (whether by JAMS/Endispute or the American
Arbitration Association) are referred to in this Agreement collectively as the
"Arbitrator."
(c) Notwithstanding the foregoing, each party
specifically reserves the right: (i) to seek equitable remedies in a court of
competent jurisdiction following arbitration of the underlying matter, if
practicable and (ii) to bring a third party action against any other party in
any proceeding to which such person (the "Initiating Person") is a party under
circumstances in which the basis of the claim by the Initiating Person against
the other party is that such other party is liable (under the Agreement or
otherwise), in whole or in part, for or in respect of any claim or counterclaim
being asserted against the Initiating Person in such proceeding.
(d) The costs and expenses incurred by the parties in
connection with any claim that has been finally determined by arbitration
pursuant to this Section 13.1 shall promptly be paid by (i) the claimant in
proportion to the amount of its claim determined to by JAMS/Endispute to be
invalid and (ii) the defendants in proportion to the amount of the claim
determined by JAMS/Endispute to be valid (including, for purposes of both (i)
and (ii) of this Section 13.1(d), reasonable fees and disbursements of counsel.
Notwithstanding the foregoing, the costs and expenses incurred by the prevailing
parties (as determined by JAMS/Endispute) in connection with any non-monetary
claim that has been finally determined by arbitration pursuant thereto shall
promptly be paid by the other parties.
13.2. Expenses, Etc. Except as otherwise specifically provided herein,
the parties hereto shall pay their own respective taxes, expenses, costs and
fees, including, without limitation, the fees and expenses of their respective
counsel and accountants and other experts.
13.3. Survival of Representations and Warranties. The representations
and warranties, and the indemnities in connection with any breach of any such
representations or warranties contained in this Agreement and in any Ancillary
Document shall survive the Closing for two (2) years. Any claim made in
reasonable detail and specificity by written notice to an Indemnified
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Party prior to the expiration of the survival period of any representation and
warranty shall survive the expiration of such survival period.
13.4. Waivers. Any breach of any obligation, covenant, agreement or
condition contained herein shall be deemed waived by the non-breaching party
only by a writing, setting forth with particularity the breach being waived and
the scope of the waiver, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or breach. No waiver shall be implied
from any conduct or action of the non-breaching party. No failure or delay by
any party in exercising any right, power or privilege hereunder or under any
Ancillary Document, and no course of dealing by any party, shall operate as a
waiver of any right, power or privilege hereunder or under any Ancillary
Document, nor shall any single or partial exercise of any other right, power or
privilege.
13.5. Definition of Knowledge. As used in this Agreement, the term
"knowledge" means knowledge which supervisory, managerial, and executive
employees have after making due inquiry and exercising due diligence with
respect thereto.
13.6. Binding Effect; Benefits. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties hereto
except that no such consent shall be required for assignment to a party
acquiring all or substantially all of either party's stock or assets provided
that such party assumes all of the seller's obligations hereunder. Except as
otherwise set forth herein, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement.
13.7. Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person, or
transmitted by facsimile, or upon receipt after dispatch by certified or
registered first class mail, postage prepaid, return receipt requested, to the
party to whom the same is so given or made, at the following addresses or
facsimile numbers (or such others as shall be provided in writing hereinafter):
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If to Medical Manager, to:
Medical Manager Corporation
3001 North Rocky Point Drive East
Suite 100
Tampa, Florida 33607
Attention: General Counsel
Facsimile No.: (813) 289-6420
If to the Purchaser, to:
Medical Manager Northwest, Inc.
c/o Medical Manager Corporation
3001 North Rocky Point Drive East
Suite 100
Tampa, Florida 33607
Attention: General Counsel
Facsimile No.: (813) 289-6420
With copies (in the case of a notice to Medical Manager, the
Purchaser or both) to:
Akerman Senterfitt & Eidson
Sun Trust International Center
One Southeast Third Avenue
28th Floor
Miami, Florida 33131
Attention: Luis J. Perez, Esq.
Facsimile No.: (305) 374-5095
If to the Seller, to:
Wismer*Martin, Inc.
c/o Physician Computer Network, Inc.
1200 The American Road
Morris Plains, NJ 07950
Attention: President
Facsimile No.: (973) 490-3103
If to PCN, to:
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Physician Computer Network, Inc
1200 The American Road
Morris Plains, NJ 07950
Attention: President
Facsimile No.: (973) 490-3103
With copies (in the case of a notice delivered to the Seller,
PCN or both) to:
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
21st Floor
New York, New York 10036-1510
Attention: Jonathan Klein, Esq.
Facsimile No.: (212) 626-0799
13.8. Records; Assistance. Each party hereto shall, on the request of
the other party, make available to such other party from time to time on a
reasonable basis records and other documents relating to the Sm*rt Practice
Business and to periods prior to the Closing Date. Such records and other
documents shall be held by the party in possession of such documents for a
period not less than the applicable statutes of limitation for tax purposes, but
in no event less than 5 years, after the Closing Date and copies shall be
delivered to the other party upon such other party's request at any time and at
such other party's expense. If at the end of such period the party in possession
wishes to dispose of such documents, such party shall offer the other party such
documents at such other party's expense. In addition, at PCN's cost, the
Purchaser and Medical Manager shall make available to PCN the reasonable
assistance of Designated Employees with respect to any regulatory or litigation
matter involving the operation of the Sm*rt Practice Business prior to the
Closing; provided, however, that such assistance shall be provided in such a
manner so as to not materially interfere with the operation of the Sm*rt
Practice Business or any business of Medical Manager, the Purchaser and their
Affiliates following the Closing.
13.9. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the Ancillary Documents constitute the entire agreement and
supersede all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
13.10. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to affect the meaning or interpretation of this Agreement.
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13.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
13.12. Governing Law; Submission to Jurisdiction. This Agreement shall
be construed as to both validity and performance and enforced in accordance with
and governed by the laws of the State of Florida, without giving effect to the
conflicts of law principles thereof.
13.13. Third Party Beneficiaries. Nothing in this Agreement or any
Ancillary Document is intended to, or shall be construed so as to create any
third party beneficiary to this Agreement or otherwise confer any rights upon
any person, firm or corporation that is not a party hereto, including, without
limitation, any End-User.
13.14. Severability. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of the Agreement shall be
valid and enforced to the fullest extent permitted by law.
13.15. Publicity. Except as otherwise agreed to by the parties hereto
in writing, the parties hereto each agree to hold all information heretofore or
hereafter obtained from the others or such party's advisers about the others
(including, without limitation, the financial terms of this Agreement) in
confidence and to use the information so obtained only for the purpose of
effectuating the transactions contemplated hereby, except as may be otherwise
required by law. Notwithstanding the foregoing, the Purchaser and PCN
acknowledge that they are both public companies and, as such, are required to
make certain public disclosure, including, without limitation, the filing of
reports with the Securities and Exchange Commission and the issuance of a press
release with respect to the execution by the parties hereto of this Agreement.
Further, notwithstanding the foregoing, the Seller acknowledges that Medical
Manager and the Purchaser may disclose such confidential information to Synetic,
Inc. and Care Insite, Inc. (so long as Synetic, Inc. or Care Insite, Inc., as
the case may be, agrees to be bound by the terms and provisions of this Section
13.15).
13.16. Amendments. This Agreement may not be modified or changed except
by an instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought.
13.17. Drafting Conventions. Any use herein of the phrase "and/or"
shall be deemed to mean both "and" and "or". Any use herein of the phrase
"including" shall be deemed to mean "including, without limitation". The
masculine gender used herein shall be deemed to include the feminine and neuter
genders, and vice-versa, and the singular or plural shall be deemed to include
the plural or singular, as the case may be, when required by context. All terms
defined herein shall be deemed to include the past tense of such terms.
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13.18. Joint and Several Liability. (a) All representations, covenants,
agreements and obligations of either one or both of PCN and WM under this
Agreement shall be deemed to have been made or incurred jointly and severally by
each of PCN and WM.
(b) All representations, covenants, agreements and obligations
of either one or both of the Purchaser and Medical Manager under this Agreement
shall be deemed to have been made or incurred jointly and severally by each of
the Purchaser and Medical Manager. Without limiting the foregoing, Medical
Manager hereby unconditionally guaranties the obligations of the Purchaser
hereunder and under the Ancillary Documents, including, without limitation, the
obligation to, subject to Section 2.2 hereof, pay the Second Cash Payment.
14. GLOSSARY
For purposes of this Agreement, the following terms shall have
the definitions ascribed to them in this Agreement.
"A&M" shall mean Alvarez & Marsal, Inc.
"Account Receivable Schedule" is defined in Section 5.9 of the
Agreement.
"Accounts Payable" is defined in Section 3.1(a) of the Agreement.
"Accounts Receivable" is defined in Section 1.1(f) of the Agreement.
"Affiliate" is defined in Section 1.1 of the Agreement.
"Agreement" shall mean this Asset Purchase Agreement.
"Ancillary Documents" is defined in Section 10.2(e) of the Agreement.
"Arbitrator" is defined in Section 13.1(b) of the Agreement.
"Asserted Amount" is defined in Section 2.2(b) of the Agreement.
"Assets" is defined in Section 1.1 of the Agreement.
"Assumed Commissions" is defined in Section 9.3(b) of the Agreement.
"Assumed Lease" is defined in Section 1.1(n) of the Agreement.
"Assumed Liabilities" is defined in Section 3.1 of the Agreement.
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"Closing" is defined in Section 4 of the Agreement.
"Closing Date" is defined in Section 4 of the Agreement.
"Code" shall mean the Internal Revenue Code of 1986.
"Commitments" is defined in Section 5.12.3 of the Agreement.
"Current Account Receivable" is defined in Section 9.7 of the
Agreement.
"Customer List" is defined in Section 9.2.2 hereof.
"Deferred Hardware Maintenance Obligation" is defined in Section 3.1(c)
of the Agreement.
"Deferred Software Maintenance Obligation" is defined in Section 3.1(b)
of the Agreement.
"Designated Employees" is defined in Section 5.18(a) of the Agreement.
"End Date" is defined in Section 9.4(b) of the Agreement.
"End-User Agreements" is defined in Section 1.1(d) of the Agreement.
"End-Users" is defined in Section 1.1(d) of the Agreement.
"Equipment" is defined in Section 1.1(g) of the Agreement.
"Equipment Leases" is defined in Section 1.1(h) of the Agreement.
"ERISA" is defined in Section 5.22 of the Agreement.
"Excluded Provisions" is defined in Section 12.3(b) of the Agreement.
"Facility Fee" is defined in Section 9.4(a) of the Agreement.
"Facility License" is defined in Section 9.4(a) of the Agreement.
"Facility Termination Date" is defined in Section 9.4(a) of the
Agreement.
"Facility Transition Period" is defined in Section 9.4(a) of the
Agreement.
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"First Cash Payment" is defined in Section 2.1(a) of the Agreement
"Hardware Service Agreement" is defined in Section 9.6 of the
Agreement.
"Hardware Support Services" is defined in Section 9.6 of the Agreement.
"Health Care Providers" is defined in the Background section to the
Agreement.
"Indemnified Party" is defined in Section 12.4 of the Agreement.
"Indemnifying Party" is defined in Section 12.4 of the Agreement.
"Indemnity Notice" is defined in Section 2.2(b) of the Agreement.
"Initiating Person" is defined in Section 13.1(c) of the Agreement.
"Intellectual Property" is defined in Section 1.1(e) of the Agreement.
"IRS" shall mean the Internal Revenue Service.
"Lease Termination Date" is defined in Section 9.4(a) of the Agreement.
"Lenders" is defined in Section 10.2(e)(v) of the Agreement.
"Losses" is defined in Section 12.1 of the Agreement.
"Medical Manager" is defined in the preamble of the Agreement.
"Minimum Indemnity Amount" is defined in Section 12.3(a)(i) of the
Agreement.
"OEM Agreement" is defined in Section 1.2(f) of the Agreement.
"Olivetti" is defined in Section 9.6 of the Agreement.
"Olivetti Agreement" is defined in Section 9.6 of the Agreement.
"Payment" is defined in Section 1.6 of the Agreement.
"PBGC" is defined in Section 5.22(b) of the Agreement.
"PCN" is defined in the preamble to this Agreement.
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"PCN Business" is defined in Section 1.2(c) of the Agreement
"Purchase Price" is defined in Section 2.1 of the Agreement.
"Purchased Hardware" is defined in Section 9.7 of the Agreement.
"Purchased Hardware Payment" is defined in Section 9.7 of the
Agreement.
"Purchaser" is defined in the preamble to the Agreement.
"Purchaser Indemnified Party" is defined in Section 12.1 of the
Agreement.
"Purchaser Receivables" is defined in Section 1.6 of the Agreement.
"Released Amount" is defined in Section 2.2(a) of the Agreement.
"Retained Agreement" is defined in Section 3.2(k) of the Agreement.
"Retained Assets" is defined in Section 1.2 of the Agreement.
"Retained Liabilities" is defined in Section 3.2 of the Agreement.
"Schedule Date" is defined in Section 3.1(b) of the Agreement.
"Second Cash Payment" is defined in Section 2.1(b) of the Agreement.
"Seller" is defined in the preamble to the Agreement.
"Seller Indemnified Party" is defined in Section 12.2 of the Agreement.
"Sm*rt Practice Business" is defined in the Background section to the
Agreement.
"Sm*rt Practice Software" is defined in the Background section to the
Agreement.
"Specified Employee" is defined in Section 9.4(b) of the Agreement.
"Spokane Facility" is defined in Section 1.1(g) of the Agreement.
"Statement of Net Assets" is defined in Section 5.6(a) of the
Agreement.
"Stay-Put Bonuses" is defined in Section 5.18(c) of the Agreement.
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"Support Agreement" is defined in Section 9.5 of the Agreement.
"Telephone Equipment" is defined in Section 1.1(g) of the Agreement.
"Third Party Claim" is defined in Section 12.4 of the Agreement.
"Transition Services Agreement" is defined in Section 10.2(e)(i) of the
Agreement.
"Web Agreement" is defined in Section 10.2(e).
"WM" is defined in the preamble to this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in their respective names by an officer thereunto duly
authorized on the date first above written.
PHYSICIAN COMPUTER NETWORK, INC.
By: /s/ Paul M. Antinori
MEDICAL MANAGER CORPORATION
By: /s/ John Kang
WISMER*MARTIN, INC.
By: /s/ Paul M. Antinori
MEDICAL MANAGER NORTHWEST, INC.
By: /s/ John Kang
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FOURTH FORBEARANCE AND AMENDMENT AGREEMENT
Among
PHYSICIAN COMPUTER NETWORK, INC.,
THE SUBSIDIARIES PARTY HERETO,
FLEET BANK, N.A., AS ADMINISTRATIVE AGENT,
and
THE LENDERS PARTY HERETO
Dated as of July 9, 1999
<PAGE>
FOURTH FORBEARANCE AND AMENDMENT AGREEMENT
FOURTH FORBEARANCE AND AMENDMENT AGREEMENT, dated as of July 9, 1999,
(this "Agreement" or the "Fourth Forbearance Agreement") among PHYSICIAN
COMPUTER NETWORK, INC., a New Jersey corporation (the "Borrower"), the several
subsidiaries of the Borrower which are parties hereto (the "Subsidiaries"), the
several banks and other financial institutions or entities which are parties
hereto (the "Lenders"), and FLEET BANK, N.A., as Administrative Agent (in such
capacity, the "Administrative Agent").
R E C I T A L S:
I. The Administrative Agent, Lehman Brothers Commercial Paper,
Inc., as arranger and as a Lender, the Lenders and the Borrower entered into a
Credit Agreement, dated as of September 10, 1997 (the "Credit Agreement").
II. The Administrative Agent, the Lenders, the Borrower and certain
Subsidiaries of the Borrower (the "Guarantors") also entered into a Guarantee
and Collateral Agreement, dated as of September 10, 1997 (the "Guarantee and
Collateral Agreement").
III. On March 3, 1998, the Borrower issued a Securities and Exchange
Commission Form 8-K and a press release pursuant to which the Borrower disclosed
the existence of certain accounting matters.
IV. On April 2, 1998, the Borrower issued another press release
disclosing, among other things, additional accounting matters and announcing
that the Borrower's auditors had withdrawn their opinion with respect to the
Borrower's 1996 financial statements. A description of the nature of the
disclosures, facts and events described in Recitals III and IV was set forth as
Exhibit A annexed to a First Forbearance Agreement (hereinafter defined) and the
disclosures, facts and events described in Exhibit A are collectively referred
to herein as the "Accounting Matters."
V. The Accounting Matters have resulted in one or more Events of
Default under the Credit Agreement (the "Specified Events of Default").
VI. As a result of the occurrence of the Specified Events of Default,
the Borrower and the Guarantors requested that the Administrative Agent and the
other Lenders agree to forbear from pursuing their remedies under, and to amend
certain sections of, the Credit Agreement.
VII. The Administrative Agent, the Required Lenders, the Borrower and
the Guarantors entered into a Forbearance and Amendment Agreement, dated as of
April 22, 1998, pursuant to and subject to the terms and conditions of which the
Administrative Agent
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and the Required Lenders agreed to forbear from pursuing their remedies until
September 30, 1998 (the "First Forbearance Agreement").
VIII. Under the terms of the Credit Agreement and First Forbearance
Agreement, the Loans matured on September 30, 1998.
IX. The Administrative Agent, the Lenders, the Borrowers and the
Guarantors then entered into a Second Forbearance and Amendment Agreement, dated
as of September 30, 1998, pursuant to which, among other things, the Borrower
agreed to deliver to the Administrative Agent and the Lenders (a) by March 31,
1999, audited financial statements of the Borrower and its Subsidiaries for the
fiscal years ending December 31, 1996, 1997 and 1998 and (b) by April 30, 1999,
an Acceptable Loan Commitment or an Acceptable Purchase Agreement (as defined
therein) (the "Second Forbearance Agreement").
X. The Borrower was in default under the Second Forbearance Agreement
as a result of its failure to deliver the audited financial statements on or
before March 31, 1999.
XI. The Administrative Agent, the Lender, the Borrower and the
Guarantors then entered into a Third Forbearance and Amendment Agreement
pursuant to which, among other things, the Administrative Agent and the Lenders
(a) agreed to extend to April 30, 1999 the date by which the Borrower was
required to deliver the audited financial statements, (b) agreed to release
their security interests in the Commercial Business, (c) agreed to a sharing of
the Commercial Business Proceeds, (d) agreed, conditionally, to a limited
reinstatement of the Commitment, and (e) agreed to extend the Maturity Date and
to forbear from pursuing their remedies for a period to and including August 15,
1999 on the terms set forth therein (the "Third Forbearance Agreement").
XII. The Borrower was (a) in default under the Third
Forbearance Agreement as a result of its failure to deliver an Acceptable
Purchase Agreement or an Acceptable Loan Commitment to the Lenders on or before
June 30, 1999 and (b) unable to qualify for the limited reinstatement of the
Commitment under the Third Forbearance Agreement.
XIII. The Borrower and Medical Manager Corp. ("Medical Manager") have
entered into (a) an agreement (the "Purchase Agreement") pursuant to which,
inter alia, the Borrower and its subsidiary, Wismer-Martin, Inc.
("Wismer-Martin"), have agreed to sell all or substantially all of the assets of
Wismer-Martin to Medical Manager for a purchase price of $7,500,000 (the
"Wismer-Martin Proceeds"), and (b) an Exclusive Electronic Gateway and Network
Services Agreement, pursuant to which the Borrower, inter alia, will receive an
initial fee of $2,500,000 (the " Exclusive Gateway Agreement").
XIV. The Borrower has requested that the Administrative Agent and
Lenders (a) consent to the sale of Wismer-Martin Assets, (b) release their
security interests in the
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Wismer-Martin Assets, subject to the receipt of a principal payment in the Loans
in the amount of $4,000,000 from the Wismer-Martin Proceeds, and (c) agree to
extend the maturity date of the loans to September 30, 1999, subject to
extension on the terms and conditions set forth herein.
XV. The Administrative Agent and the Lenders have advised the Borrower
and Guarantors that they are willing to agree to the requests of the Borrower
and Guarantors on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS AND REFERENCES.
1.1 Other Definitions.
Any capitalized terms used herein that are not defined herein shall
have the meanings ascribed to them in the Credit Agreement, the First
Forbearance Agreement and the Second Forbearance Agreement and the Third
Forbearance Agreement.
1.2 Amendments of Definitions.
The following defined terms in the Credit Agreement, the First
Forbearance Agreement, the Second Forbearance Agreement, the Third Forbearance
Agreement and this Agreement are hereby amended in their entirety as follows:
"Acceptable Loan Commitment" means a definitive written commitment
which, in the sole judgment of all of the Lenders, is from a financially
responsible lending institution to provide to the Borrower a loan or loans in
amounts sufficient to enable the Borrower to pay all of its obligations to the
Lenders (including principal, interest, fees, including the Extension Fee, and
expenses) in full on or before December 31, 1999, which, in the reasonable
judgment of all of the Lenders, shall be unconditional except with respect to
(a) matters that are not within the direct control of the applicable lending
institution and (b) the execution and delivery of closing documentation
contemplated by the commitment and necessary for the consummation of a loan
transaction, which are within the power and control of the respective parties to
execute and deliver without further approvals and consents.
"Acceptable Purchase Agreement" means a definitive written agreement
which, in the sole judgment of all of the Lenders, is from a financially
responsible purchaser to purchase assets or stock of the Borrower for a price
that will yield to the Borrower sufficient net, available proceeds to enable the
Borrower to pay all of its obligations to the Lenders (including principal,
interest, fees, including the Extension Fee, and expenses) in full on or before
December 31, 1999, which, in the reasonable judgment of all of the Lenders,
shall be
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<PAGE>
unconditional except with respect to (a) matters that are not within the direct
control of the applicable purchaser and (b) the execution and delivery of
closing documentation contemplated by the agreement and necessary for the
consummation of an asset or stock purchase and sale transaction, which are
within the power and control of the respective parties to execute and deliver
without further approvals and consents.
"Additional Loan Documents" means all of the documents executed and
delivered to the Administrative Agent pursuant to the First Forbearance
Agreement, the Second Forbearance Agreement, the Third Forbearance Agreement and
pursuant to Section 4 of the Fourth Forbearance Agreement.
"Maturity Date" means September 30, 1999, subject to extension in
accordance with Section 2.3(n) of the Credit Agreement.
1.3 Additional Definitions
The following defined terms shall have the following meanings in the
Credit Agreement and this Agreement:
"Fourth Forbearance Effective Date" means the date on which the Fourth
Forbearance Agreement is executed by all parties and all of the payments and
documents listed in Section 4 of the Fourth Forbearance Agreement have been
received by the Administrative Agent.
1.4 References to Credit Agreement and Certain Defined Terms.
----------------------------------------------------------------------
From and after the Fourth Forbearance Effective Date (a) all references
herein and in any other Loan Document to the "Credit Agreement" shall be deemed
to be a reference to the Credit Agreement as amended pursuant to the First
Forbearance Agreement, the Second Forbearance, the Third Forbearance Agreement
and this Agreement, (b) all references in the Credit Agreement, the Loan
Documents or the Additional Loan Documents to the term "Revolving Credit
Termination Date" shall be deemed to be a reference to the term "Maturity Date",
and (c) all references to the term "Notes" in this Agreement, the Credit
Agreement, the Loan Documents and the Additional Loan Documents shall be deemed
to be a reference to the amended and restated notes delivered to the Lenders
pursuant to the First Forbearance Agreement, as amended pursuant to the Second
Forbearance Agreement, pursuant to the Third Forbearance Agreement and pursuant
to this Agreement.
SECTION 2. ACKNOWLEDGMENTS.
2.1 Acknowledgment of Debt
(a) The Borrower hereby acknowledges, confirms and declares that,
as of the date
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<PAGE>
hereof, (i) the outstanding principal balance of the Loans is $13,085,413.15
(ii) the Extension Fee which Borrower agreed to pay and agreed was earned on the
Second Forbearance Date is $1,000,000 (iii) the Additional Extension Fee that
the Borrower has agreed to pay and has been earned pursuant to the Fourth
Forbearance Agreement is $500,000 and (iv) such principal amount, such Extension
Fee, such Additional Extension Fee and all other amounts due to the Lenders
under the Credit Agreement are unconditionally owed to the Lenders without any
setoff, recoupment, deduction, counterclaim, or defense of any kind or nature to
the payment thereof.
(b) Each of the Guarantors hereby acknowledges, confirms and declares
that the amounts owed by the Borrower to the Lenders and described in Section
2.1(a) hereof are owed by each of the Guarantors to the Lenders in accordance
with the terms of the Guarantee and Collateral Agreement without any setoff,
recoupment, deduction, counterclaim or defense of any kind or nature to the
payment thereof.
(c) The Borrower and the Guarantors hereby acknowledge, confirm and
declare that all of their obligations to the Administrative Agent and the
Lenders, including, without limitation, the obligations described in Section 2.1
hereof are and shall continue to be secured by the security interests granted
pursuant to the Guarantee and Collateral Agreement.
2.2 Acknowledgment of Recitals and Defaults.
(a) The Borrower and each of the Guarantors acknowledges that the
Recitals are true and correct in all material respects.
(b) The Borrower and each of the Guarantors acknowledge (i) the
Specified Events of Default and the results and the effects thereof constitute
and, notwithstanding the execution of this Agreement, will continue to
constitute one or more Events of Default under the Credit Agreement, (ii) the
failure of the Borrower and the Guarantors to pay the Loans on September 30,
1998 constituted an Event of Default (the "Maturity Default") (iii) the failure
of the Borrower to deliver the Financial Statements by March 31, 1999
constituted a Default and Termination Event (the "Financial Statements Default")
and (iv) the failure of the Borrower to deliver an Acceptable Purchase Agreement
or an Acceptable Loan Commitment to the Lenders by June 30, 1999 constituted an
Event of Default and Termination Event (the "Commitment Default") (the Specified
Events of Defaults, the Maturity Default, the Financial Statements Default and
the Commitment Default are collectively referred to as the "Existing Defaults").
2.3 Acknowledgment of Termination of Commitments.
(a) The Borrower acknowledges and agrees that, as a result of and as of
the occurrence of the Existing Events of Default, the Revolving Credit
Commitments contained in Section 2.1 of the Credit Agreement and the L/C
Commitment contained in Section 3.1
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<PAGE>
of the Credit Agreement were and remain irrevocably terminated.
(b) The Borrower acknowledges and agrees that (i) upon the Lenders'
receipt of any payment of principal from and after the date hereof, the
Revolving Credit Commitments shall be further reduced and irrevocably terminated
by the amount of principal repaid and (ii) the Borrower shall not have any right
to borrow and the Lenders shall not have any obligation to re-lend any amount
repaid.
2.4 Acknowledgment of Reservation of Rights.
The Borrower and the Guarantors acknowledge and agree that nothing
contained in this Agreement is or shall be deemed to be (i) a waiver by the
Administrative Agent or any of the Lenders of any of the Existing Defaults (ii)
a waiver of any of the Lenders' rights and remedies arising from the occurrence
of the Existing Defaults, or (iii) a release or waiver by the Administrative
Agent or any of the Lenders of any claim, right, or cause of action arising out
of, relating to or in connection with the Accounting Matters or the Existing
Defaults, all of which are hereby reserved by the Administrative Agent and the
Lenders.
2.5 Acknowledgment of Advice of Counsel and Other Matters.
-------------------------------------------------------------------
The Borrower and the Guarantors hereby acknowledge that:
(a) they have been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Additional Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or the Guarantors arising out of or in
connection with this Agreement or any of the Additional Loan Documents, and the
relationship between the Administrative Agent and Lenders, on the one hand, and
the Borrower and its Subsidiaries, on the other hand, in connection herewith or
therewith is solely that of creditor and debtor; and
(c) no joint venture is created by this Agreement, the First
Forbearance Agreement, the Second Forbearance Agreement, the Third Forbearance
Agreement, the Credit Agreement or by the Additional Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or
among the Borrower and its Subsidiaries and the Lenders.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into this
Agreement, the Borrower hereby represents and warrants to the Administrative
Agent and each Lender that:
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3.1 Corporate Existence; Compliance with Law.
Each of the Borrower and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
3.2 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal
right, to make, deliver and perform this Agreement and the Additional Loan
Documents. Each Loan Party has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement and the Additional
Loan Documents. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the Additional Loan Documents. This
Agreement and the Additional Loan Documents have been duly executed and
delivered on behalf of each Loan Party thereto. This Agreement and the
Additional Loan Documents constitute, and each other Additional Loan Document
upon execution will constitute, a legal, valid and binding obligation of each
Loan Party thereto, enforceable against each such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.3 No Legal Bar.
The execution, delivery and performance of this Agreement and the
Additional Loan Documents, will not violate any Requirement of Law or any
Contractual Obligation of the Borrower or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
3.4 Accuracy of Information, etc.
No statement or information contained in this Agreement or other
document, certificate or statement furnished to the Administrative Agent or the
Lenders or any of them, by or on behalf of any Loan Party for use in connection
with the transactions contemplated by this Agreement, contained as of the date
any such statement, information, document or certificate was so furnished, any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
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<PAGE>
3.5 Encumbered Assets
Neither the Borrower nor any Subsidiary owns or has rights in or to any
Property (a) that is not subject to the security interests granted to the
Administrative Agent and the Lenders or (b) that is in Canada, the United
Kingdom or any country other than the United States.
3.6 Software Protection
The Borrower and its Subsidiaries have (a) obtained or, where
appropriate, continued copyright registrations under applicable law for any and
all intellectual property owned by the Borrower and its Subsidiaries that is
subject to registration and (b) assigned to the Administrative Agent and granted
to the Administrative Agent a security interest in all of such copyright
registrations.
3.7 Credit Agreement, First Forbearance Agreement, Second
Forbearance Agreement and Third Forbearance Agreement Representations.
The representations and warranties contained in Sections 4.8, 4.9,
4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.19, 4.20 and 4.21 of the Credit
Agreement, in Section 3.4, 3.6, 3.7 and 3.8 of the First Forbearance Agreement,
in Sections 3.5, 3.6 and 3.7 of the Second Forbearance Agreement and in Section
4 of the Guarantee and Collateral Agreement are true and correct in all material
respects as of the date of this Agreement, except that with respect to the
representations and warranties in (a) Section 4.8 of the Credit Agreement and
Section 4.2 of the Guarantee and Collateral Agreement, the Borrower and
Subsidiaries have granted security interests to Alvarez & Marsal, Inc., subject
to and in accordance with the A&M Intercreditor Agreement and to International
Business Machines pursuant to the First Forbearance Agreement and (b) Section
4.15 of the Credit Agreement and Section 3.7 of the First Forbearance Agreement,
Solion Corp. and Medical Network Systems, Corp., are, as of the date hereof,
also each a Subsidiary of the Borrower, and V Holding Corp. has been merged into
Versyss Incorporated.
SECTION 4. CLOSING CONDITIONS
This Agreement shall become effective and binding upon the Lenders upon
the Administrative Agent's receipt of the following (which, in the case of
documents, agreements, certificates and opinions, must be satisfactory in form
and substance to the Administrative Agent and its counsel):
(a) Principal and Interest Payment. A principal payment in the amount
of $4,000,000 from the Wismer-Martin Proceeds and the interest payment in the
amount of $101,396.96 due on June 30, 1999.
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<PAGE>
(b) Legal Opinions. Legal opinions of
(i) Gordon Altman Butowsky Weitzen Shalov and Wein,
counsel to the Borrower and its Subsidiaries.
(ii) local counsel in New Jersey to the Borrower.
(c) Secretary's Certificate. A certificate of the Secretary of the
Borrower and its Subsidiaries certifying (i) that attached thereto are true and
complete copies of the resolutions, adopted by the Board of Directors of the
Borrower and its Subsidiaries and all other necessary corporate action
evidencing approval of the transactions contemplated by this Agreement and (ii)
as to the incumbency and specimen signature of each officer of the Borrower and
its Subsidiaries executing the Agreement.
(d) Reaffirmations. An agreement from Picower unconditionally
reaffirming his obligations under the Picower Guarantee and an agreement from
Picower and JA Special Limited Partnership reaffirming their obligations under
the Picower Agreement.
(e) Third Amendment to Guarantee and Collateral Agreement and
Authorization Letter. (i) A Third Amendment to Guarantee and Collateral
Agreement in form and substance satisfactory to the Administrative Agent and its
counsel, which shall, among other things, confirm that the obligation of the
Borrower to pay the Additional Extension Fee is guaranteed and secured pursuant
to the Guarantee and Collateral Agreement.
(f) Wismer-Martin Purchase Agreement. A copy of executed Purchase
Agreement and Exclusive Gateway Agreement certified to be true, complete and
current by an officer of the Borrower.
(g) Professional Fees. Payment of the fees and expenses of Emmet,
Marvin & Martin, LLP and Ernst & Young, LLP, the fees and expenses of counsel of
the Lenders and the allocated costs of in-house counsel of the Administrative
Agent and the Lenders.
SECTION 5. AMENDMENTS OF THE CREDIT AGREEMENT
5.1 Amendments - Existing Sections
-------------------------------------------
(a) The Credit Agreement is amended by adding the following Sections
(j), (k), (l) and (m) and (n) to Section 2.3 of the Credit Agreement:
"(j) In consideration of and in order to induce the Lenders to
enter into the Fourth Forbearance Agreement, the Borrower agrees to pay
to the Lenders, a fee of $500,000 (the "Additional Extension Fee").
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(k) The Borrower acknowledges and agrees that (i) the
Additional Extension Fee has been earned in full upon execution of the
Fourth Forbearance Agreement, (ii) the Additional Extension Fee shall
be due and payable in full on the earlier to occur of (1) the Maturity
Date (or such earlier date on which the Loans become due and payable
under Section 8(e) through (l) of the Credit Agreement or Section 7 of
the Fourth Forbearance Agreement) or (2) the occurrence of a Business
Combination, and (iii) the obligation of the Borrower to pay the
Additional Extension Fee is secured and guaranteed pursuant to the
Guarantee and Collateral Agreement.
(l) The Additional Extension Fee payable by the Borrower
pursuant to Sections 2.3(j) shall be retained by the Lenders as a fee
and not as a payment of interest, principal or expenses on the Loans.
(m) Upon the occurrence of a Business Combination the entire
principal balance of the Loans and all other amounts due under the
Credit Agreement (including without limitation, the Extension Fee and
the Additional Extension Fee), shall be immediately due and payable."
(n) The Administrative Agent and the Lenders agree that the
Maturity Date shall be extended from September 30, 1999 to December 31,
1999 and the obligations of the Borrower to pay the Additional
Extension Fee shall be waived provided:
(i) no Termination Event shall have occurred on
or before September 30, 1999; and
(ii) the Administrative Agent and the Lenders shall
have received an Acceptable Purchase Agreement or Acceptable
Loan Commitment on or before September 30, 1999."
(b) The Credit Agreement is amended by deleting the text of Section
6.19 and by substituting therefor the following:
"6.19 Delivery of an Acceptable Loan Commitment or Acceptable
Purchase Agreement. Deliver to Administrative Agent and each of the Lenders on
or before September 30, 1999 either an Acceptable Loan Commitment or an
Acceptable Purchase Agreement."
5.2 Amendments - Additional Covenants.
-----------------------------------------------
The Credit Agreement is amended by adding the following Section 6.22:
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"6.22 Use of Wismer-Martin Proceeds. The Borrower will (a) authorize
and direct Medical Manager to remit directly to the Administrative Agent, for
the benefit of the Lenders, the sum of $4,000,000 from the Wismer-Martin
Proceeds and (b) use the proceeds it receives from the sale of the Wismer-Martin
Assets and from the Exclusive Gateway Agreement exclusively for working capital
and general corporate purposes of the Borrower and its Subsidiaries and not for
any purpose that would violate the Credit Agreement."
SECTION 6. [INTENTIONALLY DELETED]
SECTION 7. FORBEARANCE
The Administrative Agent and the Lenders hereby agree, from and after
the date hereof to and including the earlier of the Maturity Date or the
occurrence of a Termination Event, that the Lenders shall forbear from directing
the Administrative Agent to:
(a) declare the Loans to be due and payable as a result of the
occurrence of (i) the Existing Default or (ii) any existing or future violations
of the covenants contained in
Section 7.1 of the Credit Agreement,
(b) institute any judicial or non-judicial action or proceeding to
enforce or obtain payment of the Loans or to enforce the Lenders' security
interests as a result of (i) the Existing Events of Default or (ii) any existing
or future violation of the covenants contained in Section 7.1 of the Credit
Agreement.
SECTION 8. TERMINATION EVENTS
Each of the following shall constitute a "Termination Event" under this
Agreement:
(a) a Termination Event as defined in the First Forbearance Agreement
and the Second Forbearance Agreement, other than events of the kind described in
Sections 7(i) and 7(j) of the First Forbearance Agreement.
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any Additional Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such Additional Loan
Document shall prove to have been inaccurate in any material respect on or as of
the date made or deemed made.
(c) the Borrower shall fail to comply with the covenants contained in
Section 6.19 of the Credit Agreement by the dates specified therein and such
default shall continue uncured for a period of 5 days, with time being of the
essence at the expiration of any such five (5) day period.
(d) the Borrower shall fail to comply with the covenant contained in
Section 6.22
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of the Credit Agreement.
(e) the occurrence of an Event of Default specified in Sections 8(e)
through (l) of the Credit Agreement.
SECTION 9. REMEDIES; CONSENT TO RELIEF FROM STAY AND OTHER
REMEDIES.
9.1 Remedies.
Upon one (1) business day's written notice of the occurrence of a
Termination Event of the kind described in Section 7(e) of the First Forbearance
Agreement (which notice shall describe in reasonable detail the events and
circumstances resulting in a Revised Material Adverse Effect) and immediately
upon the occurrence of any other Termination Event, with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall:
(a) terminate the forbearance agreements contained in Section 7
hereof.
(b) declare all amounts due under the Credit Agreement, this Agreement,
under the other Loan Documents and under the Additional Loan Documents, under
the Guarantee and Collateral Agreement, and under the Picower Guarantee to be
due and payable forthwith, whereupon the same shall be immediately due and
payable.
(c) take any action which the Administrative Agent and the Required
Lenders deem necessary or appropriate to collect the Loans and to enforce the
rights and remedies under this Agreement, the Credit Agreement, the Guarantee
and the Collateral Agreement, the Picower Guarantee, the other Loan Documents,
the Additional Loan Documents and under applicable law.
9.2 Consent to Relief from Stay and Other Remedies
-----------------------------------------------------------
(a) AS MATERIAL CONSIDERATION FOR THE EXECUTION OF THIS AGREEMENT BY
THE ADMINISTRATIVE AGENT AND THE LENDERS AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED,
(WITHOUT SUCH MATERIAL CONSIDERATION THE ADMINISTRATIVE AGENT AND THE LENDERS
WOULD NOT HAVE ENTERED INTO THIS AGREEMENT), THE BORROWER AND ITS SUBSIDIARIES
HEREBY AGREE THAT IN THE EVENT THAT THE BORROWER AND/OR ITS SUBSIDIARIES SHALL
(i) FILE WITH ANY BANKRUPTCY COURT OR BE THE SUBJECT OF ANY PETITION UNDER TITLE
11 OF THE U.S. CODE, AS IT MAY BE AMENDED FROM TIME TO TIME ("CODE"), (ii) BE
THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER SUCH TITLE 11
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OF THE CODE, AS IT MAY BE AMENDED FROM TIME TO TIME, (iii) FILE OR BE THE
SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR
FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER
RELIEF FOR DEBTORS, (iv) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE
APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR, (v) BE THE
SUBJECT OF ANY ORDER, JUDGMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT
JURISDICTION APPROVING A PETITION FILED AGAINST SUCH PARTY FOR ANY
REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR RELIEF FOR DEBTORS, WHETHER
VOLUNTARY OR INVOLUNTARY, THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL
THEREUPON BE ENTITLED TO IMMEDIATE RELIEF FROM ANY AUTOMATIC STAY IMPOSED BY
SECTION 362 OF TITLE 11 OF THE CODE, AS MAY BE AMENDED FROM TIME TO TIME, OR
IMPOSED BY ANY SUCH OTHER PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING
TO BANKRUPTCY, INSOLVENCY, OR RELIEF FOR DEBTORS, ON OR AGAINST THE EXERCISE OF
THE RIGHTS AND REMEDIES OTHERWISE AVAILABLE TO ADMINISTRATIVE AGENT AND THE
LENDERS AS PROVIDED IN THE CREDIT AGREEMENT, THIS AGREEMENT, THE SECURITY
DOCUMENTS OR AS OTHERWISE PROVIDED BY LAW.
(b) THE BORROWERS AND EACH OF THE SUBSIDIARIES FURTHER AGREE THAT UPON
THE OCCURRENCE OF ANY TERMINATION EVENT AND WHETHER OR NOT ANY OF THE EVENTS SET
FORTH ABOVE IN SECTION 9.2(A) HAVE OCCURRED, THE BORROWER AND SUBSIDIARIES SHALL
TAKE, OR CAUSE TO BE TAKEN, ANY AND ALL ACTIONS NECESSARY: (I) TO PERMIT THE
ADMINISTRATIVE AGENT AND THE LENDERS TO PROCEED WITH ANY AND ALL ENFORCEMENT
ACTIONS UNDER THIS AGREEMENT, THE CREDIT AGREEMENT, SECURITY DOCUMENTS AND THE
ADDITIONAL LOAN DOCUMENTS; AND (II) TO PERMIT THE ADMINISTRATIVE AGENT AND THE
LENDERS TO INITIATE AND/OR PROCEED WITH ANY AND ALL FORECLOSURES ON (WHETHER
JUDICIAL OR NON-JUDICIAL), AND REALIZATION OF, ANY AND ALL PROPERTY HELD AS
SECURITY FOR THE LOANS.
SECTION 10. RELEASES
AS MATERIAL CONSIDERATION FOR THE EXECUTION OF THIS
AGREEMENT BY THE ADMINISTRATIVE AGENT AND THE LENDERS AND FOR
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
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SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, (WITHOUT SUCH MATERIAL
CONSIDERATION ADMINISTRATIVE AGENT WOULD NOT HAVE ENTERED INTO THIS AGREEMENT),
BORROWER AND EACH SUBSIDIARY, AND ON BEHALF OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE "RELEASORS") HEREBY FOREVER WAIVES, RELEASES, REMISES,
ACQUITS AND DISCHARGES THE ADMINISTRATIVE AGENT AND EACH LENDER, AND ANY OF
ADMINISTRATIVE AGENT'S OR LENDER'S RESPECTIVE PARENTS, AFFILIATES, DIRECTORS,
OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, SHAREHOLDERS, SUBSIDIARIES AND
AFFILIATE CORPORATIONS, CONSTITUENT PARTNERS, ATTORNEYS, ACCOUNTANTS,
CONSULTANTS, ADVISORS, SUCCESSORS, HEIRS, ASSIGNS AND BENEFICIARIES, AND EACH OF
THEM (COLLECTIVELY, THE "RELEASEES"), OF AND FROM ANY AND ALL CONTROVERSIES,
PROMISES, DAMAGES, COSTS, LOSSES, EXPENSES, OBLIGATIONS, INDEBTEDNESS, DEBTS,
SUMS OF MONEY, ACCOUNTS, COMPENSATIONS, CONTRACTS, LIABILITIES, BREACHES OF
CONTRACTS, BREACHES OF DUTY OF ANY RELATIONSHIP, ACTS, OMISSIONS, MISFEASANCE,
MALFEASANCE, RIGHTS, CAUSES OF ACTION, SUITS, JUDGMENTS, CLAIMS, RECOUPMENTS,
COUNTERCLAIMS OR DEMANDS, OF EVERY TYPE, KIND, NATURE, DESCRIPTION OR CHARACTER,
AND IRRESPECTIVE OF HOW, WHY, OR BY REASON OF WHAT FACTS, WHETHER NOW EXISTING
OR THAT COULD, MIGHT, OR MAY BE CLAIMED TO EXIST, OF WHATEVER KIND OR NAME,
WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, LIQUIDATED OR UNLIQUIDATED,
FIXED OR CONTINGENT, FORESEEABLE OR UNFORESEEABLE, EACH AS THOUGH FULLY SET
FORTH HEREIN AT LENGTH, IN LAW, ADMIRALTY OR EQUITY (ANY OF THE FOREGOING, A
"CLAIM"), WHICH ANY OF THE RELEASORS PREVIOUSLY HAD FROM THE BEGINNING OF THE
WORLD OR NOW HAVE AGAINST ANY OF THE RELEASEES THROUGH THE DATE HEREOF, RELATED
TO OR CONNECTED WITH (A) THIS AGREEMENT, THE ADDITIONAL LOAN DOCUMENTS, THE
CREDIT AGREEMENT, THE LOANS OR ANY OF THEM OR THE TRANSACTIONS CONTEMPLATED BY
ANY OF THE FOREGOING, OR (B) ANY DISCUSSIONS OR ALLEGED ORAL AGREEMENTS AMONG
THE RELEASEES AND THE RELEASORS, OR ANY OF THEM, RELATING TO THE LOANS OR ANY
OTHER MATTER, WHICH DISCUSSIONS OR ORAL AGREEMENTS ARE NOT EMBODIED IN A WRITTEN
AGREEMENT EXECUTED BY A PARTIES INTENDED TO BE BOUND BY SUCH AGREEMENT AND
EXPRESSLY STATED TO BE AN AGREEMENT AMONG ALL OF SUCH PARTIES. THE BORROWER, THE
SUBSIDIARIES, THE ADMINISTRATIVE AGENT AND THE REQUIRED LENDERS INTEND THAT THIS
WAIVER, RELEASE AND DISCHARGE APPLIES TO ALL SUCH CLAIMS THAT ARE BASED ON FACTS
OR CIRCUMSTANCES THAT EXISTED PRIOR TO, OR CAME INTO EXISTENCE CONCURRENTLY
WITH, OR THAT COME INTO EXISTENCE PRIOR, THE EXECUTION AND DELIVERY OF THIS
AGREEMENT BUT WHICH DO
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NOT RIPEN INTO A RIGHT, CAUSE OF ACTION, CLAIM OR DEMAND UNTIL AFTER THE
EXECUTION AND DELIVERY OF THIS AGREEMENT. BORROWER AND EACH OF THE SUBSIDIARIES
HEREBY AGREES AND ACKNOWLEDGES THAT FACTS OR CIRCUMSTANCES NOW UNKNOWN TO THE
BORROWER AND THE SUBSIDIARIES, AS THE CASE MAY BE, THAT EXISTED PRIOR TO, OR
CAME INTO EXISTENCE CONCURRENTLY WITH, THE EXECUTION AND DELIVERY OF THIS
AGREEMENT MAY HAVE GIVEN RISE TO CLAIMS THAT ARE PRESENTLY UNKNOWN,
UNANTICIPATED AND UNSUSPECTED, AND THE BORROWER AND EACH SUBSIDIARY FURTHER
AGREES THAT THIS SECTION 10 HAS BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT
ACKNOWLEDGMENT AND THAT THE BORROWER AND EACH SUBSIDIARY, AS THE CASE MAY BE,
NEVERTHELESS HEREBY INTENDS IRREVOCABLY TO WAIVE, RELEASE, REMISE, ACQUIT AND
DISCHARGE THE RELEASEES OF AND FROM ANY SUCH UNKNOWN CLAIMS AS AFORESAID,
RELATED TO ANY OF THE TRANSACTIONS OR CIRCUMSTANCES DESCRIBED IN THIS SECTION.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers.
None of the terms as provisions of this Agreement may be waived,
amended, supplemented or otherwise modified, except in accordance with Section
10.1 of the Credit Agreement.
11.2 Agreements and Acknowledgments of the Administrative Agent and
Lenders.
The Administrative Agent and the Lenders:
(a) (i) acknowledge that the Borrower did not deliver the audited
financial statements (without qualification) required under Section 6.1(a) (for
the fiscal year ending December 31, 1997) of the Credit Agreement and (ii) agree
that the Borrower's failure to deliver such audited financial statements does
not and will not constitute a Termination Event.
(b) (i) acknowledge that certain of the reports required under Sections
6.2(c) and (d) of the Credit Agreement may be included in the reports required
under Section 6.10 of the Credit Agreement and (ii) agree that the Borrower
shall not be obligated to provide duplicative reports to the Administrative
Agent, provided however, in the event of any conflicts or inconsistencies
between the requirements of Section 6.2 and Section 6.10, the requirements of
Section 6.10 shall control.
(c) the definitions of Acceptable Loan Commitment and Acceptable
Purchase
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Agreement can be amended or modified, and the provisions of Sections 3.2 (b),
(d) and (e) hereof can be amended, modified or waived, only with consent and
approval of all of the Lenders.
11.3 Further Assurances.
At any time and from time to time, promptly after any request by the
Administrative Agent, the Borrower and the Subsidiaries will make, execute and
deliver, or cause to be made, executed and delivered, and, where appropriate,
cause to be recorded and/or filed and from time to time thereafter to be
re-recorded and/or refiled at such time and in such offices and places as the
Administrative Agent shall deem necessary any and all such other and further
financing statements, continuation statements, certificates, documents,
instruments, documents to correct any technical or inadvertent errors or
omissions in legal descriptions, and other items as the Administrative Agent,
may deem necessary or desirable in order to effectuate and to implement this
Agreement and to effectuate, complete or perfect, or to continue and preserve
the Liens and security interests granted or intended to be granted under this
Agreement, the Credit Agreement, the Security Documents and the Additional Loan
Documents.
11.4 Notices.
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered in accordance with Section 10.4 of the First Forbearance
Agreement.
11.5 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of
either the Administrative Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
11.6 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement.
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11.7 Payment of Expenses.
The Borrower agrees (a) to pay or reimburse the Administrative Agent
for all of its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, this Agreement
and any amendment, supplement or modification to, this Agreement and the other
Additional Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
fees and disbursements of counsel and other advisors to the Administrative
Agent, and to each of the Lenders (including the allocated fees and expenses of
in-house counsel) (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to each Lender and of counsel to the Administrative Agent, (c) to pay,
indemnify, and hold the Administrative Agent and each Lender harmless from, any
and all recording and filing fees or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the
Additional Loan Documents and any such other documents, and (d) to pay,
indemnify, and hold the Administrative Agent and each Lender and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the Additional Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use of
proceeds of the Loans and the Third Party Contribution or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower any of its Subsidiaries or any of the Properties (all
the foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided, that the Borrower shall have no obligation hereunder to any indemnitee
with respect to indemnified liabilities to the extent such indemnified
liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such indemnitee. The agreements in this Section 10.7 shall survive
repayment of the Loans and all other amounts payable hereunder.
11.8 Integration.
This Agreement and the other Additional Loan Documents represent the
entire agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
Additional Loan Documents.
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11.9 GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OR CONFLICTS
OF LAW.
11.10 SUBMISSION TO JURISDICTION; WAIVERS.
THE BORROWER AND EACH OF THE SUBSIDIARIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT
IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 10.4 OF THE FIRST FORBEARANCE
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE
BEEN NOTIFIED PURSUANT THERETO;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
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LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
REFERRED TO IN THIS SECTION 11.10 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
11.11 WAIVERS OF JURY TRIAL.
THE BORROWER, THE SUBSIDIARIES, THE ADMINISTRATIVE AGENT AND THE OTHER
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER ADDITIONAL DOCUMENT
AND FOR ANY COUNTERCLAIM OR THIRD PARTY CLAIM THEREIN.
11.12 Credit Agreement.
Except as amended or modified by this Agreement, the First Forbearance
Agreement, the Second Forbearance Agreement, the Third Forbearance Agreement,
the Credit Agreement shall remain in full force and effect in accordance with
its original terms, provided, however, in the event that there is any
inconsistency between this Agreement and any of the Additional Loan Documents
and the Credit Agreement, the provisions of this Agreement and the Additional
Loan Documents shall control.
11.13 Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
11.14 Enforceability; Usury.
In no event shall any provision of this Agreement, the Credit
Agreement, the Notes, or any other instrument evidencing or securing the
indebtedness of the Borrower hereunder ever obligate the Borrower to pay or
allow any Lender to collect interest on the Notes or any other indebtedness of
the Borrower hereunder at a rate greater than the maximum non-usurious rate
permitted by applicable law (herein referred to as the "Highest Lawful Rate"),
or obligate the Borrower to pay any taxes, assessments, charges, insurance
premiums or other amounts to the extent that such payments, when added to the
interest payable on the Notes, would be held to constitute the payment by the
Borrower of interest at a rate greater than the Highest Lawful Rate; and this
provision shall control over any provision to the contrary.
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Without limiting the generality of the foregoing, in the event the
maturity of all or any part of the principal amount of the indebtedness of the
Borrower hereunder shall be accelerated for any reason, then such principal
amount so accelerated shall be credited with any interest theretofore paid
thereon in advance and remaining unearned at the time of such acceleration. If,
pursuant to the terms of this Agreement, the Credit Agreement or the Notes, any
funds are applied to the payment of any part of the principal amount of the
indebtedness of the Borrower hereunder prior to the maturity thereof, then (a)
any interest which would otherwise thereafter accrue on the principal amount so
paid by such application shall be canceled, and (b) the indebtedness of the
Borrower hereunder remaining unpaid after such application shall be credited
with the amount of all interest, if any, theretofore collected on the principal
amount so paid by such application and remaining unearned at the date of said
application; and if the funds so applied shall be sufficient to pay in full all
the indebtedness of the Borrower hereunder, then the Lenders shall refund to the
Borrower all interest theretofore paid thereon in advance and remaining unearned
at the time of such acceleration. Regardless of any other provision in this
Agreement, the Credit Agreement or in any of the written evidences of the
indebtedness of the Borrower hereunder, the Borrower shall never be required to
pay any unearned interest on such indebtedness or any portion thereof, and shall
never be required to pay interest thereon at a rate in excess of the Highest
Lawful Rate construed by courts having competent jurisdiction thereof.
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date and year first above written.
PHYSICIAN COMPUTER NETWORK, INC.
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
VERSYSS INCORPORATED
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
SOLION CORPORATION
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
WISMER-MARTIN, INC.
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
INTEGRATED HEALTH SYSTEMS, INC.
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
PCN HP VENTURE CORP.
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
PCN SERVICES CORP.
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: Vice President
<PAGE>
MEDICAL NETWORK SYSTEMS, CORP.
By: /s/ Paul M. Antinori
Name: Paul M. Antinori
Title: President
FLEET BANK, N.A., as Administrative
Agent and as a Lender
By: /s/ Donald S. Nicholson
Name: Donald R. Nicholson
Title: Senior Vice President
LEHMAN COMMERCIAL PAPER, INC.
By: /s/ Christopher Ryan
Name: Christopher Ryan
Title: Managing Director
BANK OF MONTREAL
By: /s/ Thomas E. McGraw
Name: Thomas E. McGraw
Title: Director
SKANDINAVISKA ENSKILDA BANKEN
AB (PUBLIC) NEW YORK BRANCH
By: /s/ P. Montemurro
Name: P. Montemurro
Title: Vice President
By: /s/ Jeffrey Baskin
Name: Jeffrey Baskin
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By: /s/ Joseph H. Towell
Name: Joseph H. Towell
Title: Senior Vice President
<PAGE>
IMPERIAL BANK, A CALIFORNIA
BANKING CORPORATION
By: /s/ Ray Vadalma
Name: Ray Vadalma
Title: Senior Vice President
SOCIETE GENERALE
By: /s/ Daniel P. Kelly
Name: Daniel P. Kelly
Title: Vice President
SUMMIT BANK
By: /s/ Martin N. Feig
Name: Martin N. Feig
Title: Vice President-Regional Manager
HCM OFFSHORE TRUST
By: /s/ Michael E. Lewitt
Name: Michael E. Lewitt
Title: Authorized Signatory
