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
May 5, 1999 (April 26, 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") entered into on April 26, 1999, the Registrant's wholly-owned
subsidiary, Versyss Incorporated ("Versyss"), and the Registrant sold their
non-medical "Commercial Business" to Holbrook Systems, Inc. ("Purchaser") for
consideration consisting of $3,600,000 in cash and the assumption of certain
liabilities associated with the Commercial Business. The Commercial Business,
which was a part of Versyss' business since prior to its acquisition by the
Registrant in 1995, consists of the business of selling or licensing software
packages which provide such applications as payroll, accounts payable
management, general ledger, billing, accounts receivable management, invoicing
and inventory management to non-medical industries and providing maintenance and
support for such businesses (the "Commercial Business"). Registrant initiated
and elected to enter into the transactions contemplated by the Asset Purchase
Agreement in order to, among other things, permit the Registrant to focus on its
core medical practice management software business, as well as obtain additional
liquidity. As a part of the sale of the Commercial Business, the Registrant
entered into an agreement to provide hardware support to the users of the
Commercial Business' products on the Purchaser's behalf.
ITEM 5. Other Matters.
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On April 23, 1999, the Registrant entered into a Third
Forbearance and Amendment Agreement with the Registrant's senior lenders to,
among other things, so long as certain conditions occur, extend the maturity
date of the Registrant's senior indebtedness until August 15, 1999. In
accordance with the agreements with the lenders, the Registrant used fifty (50%)
of the proceeds from the sale of the Commercial Business, less specified
expenses, to repay outstanding indebtedness to the lenders. In addition, the
lenders applied against the Registrant's outstanding indebtedness $1,000,000
which had previously been placed in escrow with the lenders by the Registrant.
On April 16, 1999 the Registrant entered into a Memorandum of
Understanding ("MOU") to settle the claims asserted in the class action
shareholder lawsuits filed against the Registrant and certain of its current and
former officers and directors in March 1998 in the U.S. District Court for the
District of New Jersey, consolidated under the caption In re Physician Computer
Network, Inc. Securities Litigation, Civil Action No. 98- 981 (MTB). The terms
of the MOU do not settle claims asserted
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against certain non-settling defendants and certain potential defendants. The
settlement will provide for the payment of a minimum of $25.25 million in cash
(the "Settlement Amount") to members of the proposed settlement class and the
dismissal and release of all claims relating to the subject matter of the
lawsuits that were or could have been asserted against the Registrant, certain
of its former officers and current directors, and others. The settlement is
subject to certain conditions, including, but not limited to: the Registrant
either paying the Settlement Amount to the plaintiffs by August 10, 1999 or
under certain other circumstances upon the sale of the Company if one occurs;
the execution of a stipulation of settlement; notice to the class; and approval
by the court. In settling the case, the Registrant and the other settling
defendants continued to deny all of the allegations contained in the lawsuit.
The Registrant is entering into the settlement because it would eliminate the
burden and expense of further litigation, which the Registrant and the other
settling defendants believe is in the best interests of the Registrant and all
of its shareholders.
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 Corporation to provide the required pro forma
financial statements relative to the disposed business. The Corporation 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 April 26, 1999, among the
Registrant, Versyss Incorporated and
Holbrook Systems, Inc.
Exhibit 2 -- Copy of Third Forbearance and Amendment
Agreement, dated as of April 23, 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 thereunto duly authorized.
PHYSICIAN COMPUTER NETWORK, INC.
(REGISTRANT)
Date: May 5, 1999 By: /s/ Paul M. Antinori
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Paul M. Antinori
Vice President
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EXHIBIT INDEX
Exhibit 1 -- Asset Purchase Agreement, dated
as of April 26, 1999, among the
Registrant, Versyss Incorporated and
Holbrook systems, Inc.
Exhibit 2 -- Copy of Third Forbearance and Amendment
Agreement, dated as of April 23, 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
VERSYSS INCORPORATED,
PHYSICIAN COMPUTER NETWORK, INC.
and
HOLBROOK SYSTEMS, INC.
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Dated as of April 26, 1999
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TABLE OF CONTENTS
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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. Certain Software Rights.........................................................................6
1.7.1 XRTS............................................................................................6
1.7.2 Jointly Owned Software..........................................................................7
1.7.3. Infringement....................................................................................9
1.7.4. Assignability..................................................................................10
1.8. Additional Ownership Rights....................................................................10
2. PURCHASE PRICE.............................................................................................11
2.1. Consideration..................................................................................11
2.2. Allocations of Purchase Price..................................................................12
3. ASSUMPTION OF LIABILITIES..................................................................................12
3.1. Assumption.....................................................................................12
3.2. Limitations on Assumption......................................................................13
3.3. Right of Enforcement and Settlement............................................................14
4. CLOSING....................................................................................................14
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER...............................................................14
5.1. Existence and Authority........................................................................14
5.2. Authorization of Agreement.....................................................................15
5.3. Effect of Agreement, Etc.......................................................................15
5.4. Restrictions; Burdensome Agreements............................................................15
5.5. Governmental and Other Consents................................................................15
5.6. Statement of Net Assets; Revenues..............................................................16
5.7. Absence of Certain Changes or Events...........................................................16
5.8. Deferred Revenue Account.......................................................................16
5.9. Accounts Receivable............................................................................17
5.10. Accounts Payable...............................................................................17
5.11. Title to the Assets; Absence of Liens and Encumbrances, Etc....................................17
5.12. Contracts......................................................................................17
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5.13. End-Users......................................................................................19
5.14. Intellectual Property..........................................................................19
5.15. Real Estate Leases.............................................................................19
5.16. Compliance With Laws...........................................................................20
5.17. Litigation; Customer Complaints................................................................20
5.18. Labor Matters..................................................................................20
5.19. Taxes..........................................................................................21
5.20. Entire Business................................................................................21
5.21. Brokers........................................................................................21
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............................................................22
6.1. Organization, Etc..............................................................................22
6.2. Authorization of Agreement.....................................................................22
6.3. Effect of Agreement, Etc.......................................................................22
6.4. Governmental and Other Consents................................................................22
6.5. Restrictions; Burdensome Agreements............................................................23
6.6. Litigation.....................................................................................23
6.7. Brokers........................................................................................23
7. PRE-CLOSING COVENANTS OF THE SELLER........................................................................23
7.1. Conduct of Commercial Business Pending the Closing.............................................23
8. PRE-CLOSING COVENANTS OF THE PURCHASER AND THE SELLER......................................................24
8.1. Advice of Changes; Governmental Filings........................................................24
8.2. No Action......................................................................................24
8.3. Legal Conditions to Closing....................................................................24
8.4. Additional Agreements; Reasonable Efforts......................................................24
8.5. Confidentiality................................................................................24
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9. POST-CLOSING COVENANTS.....................................................................................25
9.1. Further Assurances.............................................................................25
9.2. Non-Competition; Non-Disclosure................................................................25
9.3. Employee Matters...............................................................................26
9.4. The Facilities.................................................................................27
9.5. Renewal of Support Agreements and Reseller Agreements..........................................28
9.6. Hardware Purchases.............................................................................29
9.7. Printed Product Sales..........................................................................29
9.8. Additional Agreements..........................................................................30
9.9. Sublease.......................................................................................31
9.10. Warranty Obligations...........................................................................31
9.11. Year 2000 Updates..............................................................................31
9.12. Acquired Inventory.............................................................................32
10. CLOSING CONDITIONS.........................................................................................32
10.1. Conditions to Obligation of Each Party to Effect the Closing...................................32
10.2. Additional Conditions to Obligations of Purchaser..............................................32
10.3. Additional Conditions to Obligation of the Seller..............................................34
11. OBLIGATIONS OF PCN AND VERSYSS.............................................................................35
12. INDEMNIFICATION............................................................................................35
12.1. Indemnification of the Purchaser...............................................................35
12.2. Indemnification of the Seller by the Purchaser.................................................36
12.3. Limitations on Indemnity.......................................................................36
12.4. Right to Defend, Etc...........................................................................38
12.5. Tax Effect.....................................................................................38
12.6. Settlement of Certain Claims...................................................................38
13. GENERAL....................................................................................................39
13.1. Expenses, Etc..................................................................................39
13.2. Survival of Representations and Warranties.....................................................39
13.3. Waivers........................................................................................39
13.4. Definition of Knowledge........................................................................40
13.5. Binding Effect; Benefits.......................................................................40
13.6. Notices........................................................................................40
13.7. Records; Assistance............................................................................41
13.8. Entire Agreement...............................................................................41
13.9. Headings.......................................................................................42
13.10. Counterparts...................................................................................42
13.11. Governing Law; Submission to Jurisdiction......................................................42
13.12. Third Party Beneficiaries......................................................................42
13.13. Severability...................................................................................42
13.14. Publicity......................................................................................42
13.15. Amendments.....................................................................................42
13.16. Drafting Conventions...........................................................................42
14. GLOSSARY...................................................................................................43
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ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of April 26, 1999, by and among VERSYSS
Incorporated, a Delaware corporation ("Versyss"), and Physician Computer
Network, Inc., a New Jersey corporation ("PCN"), jointly and severally (the
"Seller"), and Holbrook Systems, Inc., a Delaware corporation (the "Purchaser").
BACKGROUND
The Seller is engaged in the business of: (i) providing physicians,
hospitals, medical clinics and other facilities providing medical services with
practice management software systems and providing maintenance and support for
such systems (whether conducted by Versyss, PCN or any of their respective
Affiliates, the "Medical Business"); and (ii) selling or licensing software
packages which provide such applications as payroll, accounts payable
management, general ledger, billing, accounts receivable management, invoicing
and inventory management to the industries listed on Schedule A hereto and
providing maintenance and support for such businesses (the "Commercial
Business"). Versyss is a wholly-owned subsidiary of PCN. The Seller desires to
sell and the Purchaser desires to purchase certain assets of the Commercial
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), all of the Seller's tangible and
intangible assets, rights, interests and properties of every kind, wherever
located and by whomever possessed, to the extent used by the Seller in and
material to the conduct of the Commercial Business (as currently and, with
respect to the current business lines of the Commercial Business, historically,
conducted), other than Retained Assets (as defined in Section 1.2 hereof), as
the same may exist on the Closing Date (the "Assets"). The Asset include,
without limitation, the following:
(a) the Commercial Business as a going concern and the
goodwill pertaining thereto;
(b) all customer lists to the extent utilized in the
Commercial Business;
(c) 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 user ("End-Users") of the products or
services of the Commercial Business (collectively, the "End- User Agreements");
(d) all rights of the Seller, its successors and assigns under
all distribution, resale, business partner and like agreements between the
Seller and any reseller or distributor ("Resellers") of the software products
sold, licensed or supported by the Commercial Business to the extent related to
the software products of the Commercial Business (collectively, "Reseller
Agreements");
(e) subject to Sections 1.7 and 1.8, 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), 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, listed on Schedule 1.1(e) hereto (collectively, the "Intellectual
Property");
(f) all accounts and other receivables of the Commercial
Business (the "Accounts Receivable");
(g) all items of equipment (including, but not limited to, the
telephone handsets, conferencing units and telephone switch located and/or
installed at the premises located at 140 Gould Street, Needham, Massachusetts
(the "Telephone Equipment")), machinery, furniture or fixtures: (i) listed on
Schedule 1.1(g) hereto; and/or (ii) used solely or exclusively by the Seller in
connection with the operation of the Commercial Business (except for other
casual or de minimis uses) (collectively, the "Equipment");
(h) the Seller's rights under the equipment leases described
on Schedule 1.1(h) hereto (the "Equipment Leases");
(i) 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 Commercial Business as it is conducted on the Closing
Date (all of which are collectively referred to hereinafter as "Books and
Records");
(j) the right to receive mail and other communications
regarding the Commercial Business addressed to the Seller or any of its
Affiliates (including, without limitation, mail and communications from
End-Users, customers, suppliers, Resellers, distributors, agents and others);
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(k) 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
Commercial Business, its products or services;
(l) 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
Commercial Business, except to the extent related to the Retained Liabilities;
(m) the items of inventory of computer hardware, operating
system software, parts and related equipment identified on Schedule 1.1(m)
hereto, 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 (all such items referred to herein as "Acquired Inventory"); and
(n) Subject to Section 1.8 hereto, the name "VERSYSS" 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 property not identified or otherwise
described in Section 1.1;
(b) the Seller's rights under this Agreement;
(c) except for the assets described in, and subject to
the provisions of, Sections 1.7 and 1.8 hereof, all
assets of the Seller and its Affiliates used in or
relating to the Medical Business unless such use or
relationship is only casual or de minimus;
(d) all cash, cash equivalents and marketable securities
of the Seller its Affiliates, including, without
limitation, and subject to Section 9.7(a) hereof, any
and all security deposits;
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(e) any inventory of computer hardware, operating system
software, parts and related equipment (whether or not
useable in the Commercial Business) other than the
Acquired Inventory;
(f) 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), support call
systems or accounting and other management
information systems (whether or not used or useable
in the Commercial Business);
(g) any and all rights of any one or more of the Seller
its Affiliates under or with respect to any original
equipment manufacturing or similar agreement (each an
"OEM Agreement"), including, without limitation, the
OEM Agreements between PCN and each of IBM and Esker;
(h) any and all rights of the Seller under the Software
License and Support Agreement regarding the Datatrak
Publishers Management Software;
(i) any and all of the rights of the Seller under the
Reseller Agreements for VERSYSS Solution/RISC
products between any Reseller and the Seller (the
"Risc Agreements");
(j) 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 (x) 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) or (y) used in providing the services to be
provided under the Hardware Services Agreement (as
defined in Section 10.2(e)(ii) hereto);
(k) 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 or materially related thereto;
(l) 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; and
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(m) any assets of the Seller, the use of or relationship
to the Commercial Business of which is only casual or
de minimus nature.
For purposes of Section 1.2(c) above, the Seller agrees that the items
listed in clauses (a) through (n) of Section 1.1 above shall be conclusively
deemed, for all purposes, not to be used in or related to the Medical Business.
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 Versyss or PCN, as the case may be,
of their rights under all End User Agreements, Reseller Agreements, Equipment
Leases, the Assumed Lease (as defined below) 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 assignment 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
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Purchaser of any and all rights of the Seller with respect to the Commercial
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 of any obligation
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 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 or other accounts receivable created by the Purchaser following the
Closing with respect to the Commercial 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 deliver to the Purchaser all Payments received
by the Seller.
1.7. Certain Software Rights.
1.7.1 XRTS. (a) Set forth on Schedule 1.7.1(a) hereto is a
description of the software programs generally referred to as "XRTS" (together
with all updates, enhancements and modifications made thereto, the "XRTS-Code").
The XRTS-Code is 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 the Seller of
all of its rights in and to the Assets to the Purchaser, the Seller shall
maintain with the Purchaser joint ownership in and to the source-codes for the
XRTS Code.
(b) For a period of three (3) years following the Closing
Date, the Seller shall deliver, or cause to be delivered, to the Purchaser any
updates, enhancements and modifications made by any one or more of the Seller
and its Affiliates to the XRTS-Code promptly following the first date on which
any such update, enhancement or modification is first made generally available
to customers of the Medical Business.
(c) For a period of three (3) years following the Closing
Date, the Purchaser shall deliver, or cause to be delivered, to PCN any updates,
enhancements and modifications made by any one or more of the Purchaser and its
Affiliates to the XRTS-Code promptly following the first date on which any such
update, enhancement or modification is first made generally available to
customers of the Commercial Business.
(d) The Purchaser shall have the right to use, sell, license,
relicense and sublicense the XRTS-Code in its discretion; provided, however,
that: (i) the Purchaser will only sell, license, relicense, sublicense and
distribute the XRTS-Code: (x) in conjunction with, and bundled as a part of,
application software products of (A) the Commercial Business as conducted by the
Purchaser following the Closing and (B) any other business lines established by
the
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Purchaser after the Closing Date (such business lines, together with the
Commercial Business, the "Purchaser Business"); or (y) to then current end-users
(including, without limitation, End- Users) of the application software products
of the Purchaser Business as conducted by the Purchaser following the Closing;
and (ii) notwithstanding the foregoing, under no circumstances will the
Purchaser sell, license or sublicense any of the XRTS-Code to any person or
entity engaged in, or use the XRTS-Code in connection with, the Practice
Management System Business (as hereinafter defined) (whether conducted by PCN,
Versyss or any other person), including, without limitation, by licensing the
XRTS-Code to any physician or other healthcare provider or any publisher or
reseller of any physician practice management software products. As used herein,
the "Practice Management System Business" shall mean (A) the Medical Business
and (B) the business of providing physicians, hospitals, medical clinics and
other facilities providing medical services with practice management software
systems and/or clinical patient record systems and providing maintenance and
support for any such systems (whether such business is conducted by Versyss,
PCN, any of their respective Affiliates, successors or assigns, the Purchaser,
any of its Affiliates or any third party).
(e) The Seller agrees that, from and after the Closing, none
of the Seller nor any of its Affiliates or their respective successors or
assigns, will sell, license, relicense, sublicense or distribute the XRTS-Code,
including, without limitation, any enhancement, upgrade or modifications
thereto, either directly or indirectly, in source-code or object-code form, to
any Reseller (in connection with the Commercial Business), any End-User or any
other person, for use of any kind in connection or competition with the
Commercial Business.
(f) Subject to the provisions of Sections 1.7.1(a) through
(e), neither the Seller, on the one hand, nor the Purchaser, on the other hand,
shall have any obligation to account to the other for any use of the XRTS-Code,
including, without limitation, any revenues derived from the sale or license
thereof, or provide any enhancements or upgrades made with respect thereto.
(g) Except as specifically provided in Article V hereto, the
XRTS-Code, including, without limitation, any updates, modification or
enhancements thereto, are, and will in the future be, provided to the Purchaser
on an "AS IS" basis only. Accordingly, and without limiting the generality of
the foregoing, except as specifically provided in Article V hereto, the Seller
has not or does not make any representations or warranties of any kind, express
or implied, with respect to the XRTS-Code, including, without limitation,
representations or warranties of merchantability or of fitness for a particular
purpose.
(h) All updates, modification or enhancements to the XRTS-Code
provided by the Purchaser to PCN in accordance with the provisions of Section
1.7.1(c) above in the future be provided to the Purchaser on an "AS IS" basis
only.
1.7.2 Jointly Owned Software. (a) Set forth on Schedule 1.7.2(a) hereto
is a list of certain software programs used by Versyss and/or PCN in both the
Commercial Business and
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the Medical Business (the "Jointly Owned Programs" and, together with the
XRTS-Code, the "Designated Software"). The Jointly Owned Programs 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 the Seller of all of its rights
in and to the Assets to the Purchaser, Versyss and/or PCN, as applicable, shall
maintain with the Purchaser joint ownership in and to the source-codes for the
Jointly Owned Programs.
(b) Subject to the provisions of this Section 1.7, from and
after the Closing, none of Versyss or PCN, their Affiliates or their respective
successors or assigns, on the one hand, nor the Purchaser, on the other hand,
shall have any obligation to account to the other for any use or ownership of
the Jointly Owned Programs, including, without limitation: (i) any revenues
derived from the sale, license or support thereof; or (ii) any enhancements or
upgrades made with respect thereto; provided, however, that, from and after the
Closing: (x) none of the Purchaser, its Affiliates or their respective
successors or assigns will sell, license, sublicense or distribute any of the
Jointly Owned Programs to any person or entity engaged in, or use the Jointly
Owned Programs in connection with, the Practice Management System Business
(whether conducted by PCN, Versyss or any other person), including, without
limitation, by licensing the Jointly Owned Program to any physician or other
healthcare provider or any publisher or reseller of any physician practice
management software products; and (ii) none of Versyss, PCN, their respective
Affiliates or any of their respective successors and assigns will sell, license,
sublicense or distribute the Jointly Owned Programs, including, without
limitation, any enhancement, upgrade or modifications thereto, either directly
or indirectly, in source-code or object-code form, to any Reseller (in
connection with the Commercial Business), any End- User or any other person in
connection with the Commercial Business.
(c) For a period of three (3) years following the Closing
Date, the Purchaser shall deliver, or cause to be delivered, to PCN any updates,
enhancements and modifications made by any one or more of the Purchaser and its
Affiliates to the Jointly Owned Programs promptly following the first date on
which any such update, enhancement or modification is first made generally
available to customers of the Commercial Business.
(d) For a period of three (3) years following the Closing
Date, the Seller shall deliver, or cause to be delivered, to the Purchaser any
updates, enhancements and modifications made by any one or more of the Seller
and its Affiliates to the Jointly Owned Programs promptly following the first
date on which any such update, enhancement or modification is first made
generally available to customers of the Medical Business.
(e) Except as specifically provided in Article V hereto, the
Jointly Owned Programs, including, without limitation, any updates, modification
or enhancements thereto, are, and will in the future be, provided to the
Purchaser on an "AS IS" basis only. Accordingly, and without limiting the
generality of the foregoing, except as specifically provided in Article V
hereto, the Seller has not and does not make any representations or warranties
of any
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kind, express or implied, with respect to the Jointly Owned Programs, including,
without limitation, representations or warranties of merchantability or of
fitness for a particular purpose.
(f) All updates, modification or enhancements to the Jointly
Owned provided by the Purchaser to the Seller in accordance with the provisions
of Section 1.7.2(c) above in the future be provided to the Purchaser on an "AS
IS" basis only.
(g) During the Support Period (as defined below), so long as
the Purchaser is providing such services to any other person or entity
(including, without limitation, any customer of the Purchaser), the Purchaser
shall, for no fee, provide to the Seller the Second and Third Level Support
Services (as such terms are commonly defined in the computer software industry)
with respect to the use and operation of the Jointly Owned Programs identified
on Schedule 1.7.2(g). As used herein, the "Support Period" shall mean the period
commencing on the Closing Date and ending on the third anniversary of the
Closing Date; provided, however, that the Support Period shall automatically
renew for additional renewal terms of one year unless terminated by either party
on not less than 90 day prior written notice to the other party prior to the end
of the then current term.
(h) During the Support Period, so long as PCN is providing
such services to any other person or entity (including, without limitation, any
customer of the PCN), PCN shall, for no fee, provide to the Purchaser the Second
and Third Level Support Services (as such terms are commonly defined in the
computer software industry) with respect to the use and operation of the
XRTS-Code.
1.7.3. Infringement. (a) In the event that either the Seller or the
Purchaser becomes aware that any third party is infringing on the rights of the
Seller and/or the Purchaser with respect to any of the Designated Software, such
party shall promptly inform the other of such fact. Except to the extent covered
by Section 12 hereof, to the extent that any third party is infringing on the
rights of the Purchaser with respect to the Designated Software, the Purchaser
or its designee shall have the first right, but not the obligation, to institute
an infringement action against such third party. If the Purchaser does not
institute an infringement proceeding against the offending third party, the
Seller shall have the right, but not the obligation, to institute such an
action. Notwithstanding the foregoing, the Seller and the Purchaser shall have
equal rights to institute an infringement action against any third party who
either such party believes is infringing on any one or more of the Designated
Software. Except to the extent covered by Section 12 hereof: (i) the costs and
expenses of any such action (including, without limitation, the fees and
disbursements of counsel) shall be borne by the party instituting the action;
and (ii) any award paid by third parties as a result of such an infringement
action (whether by way of settlement or otherwise) shall be paid to the party
instituting and maintaining such action.
(b) In the event that either the Purchaser or the Seller
receives notice or otherwise becomes aware that the use of any of the Designated
Software infringes, or allegedly infringes, on the rights of any third party,
such party shall promptly notify the other party. Except
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to the extent covered by Section 12 hereof, in the event that an action for
infringement is commenced against the Purchaser or any of its Affiliates as the
result of any development, sale, license or use by the Purchaser or any of its
Affiliates of all or any portion of the Designated Software (or against the
Seller or any of its Affiliates if such action relates, or could relate to any
development, sale, license or use by the Purchaser or any of its Affiliates at
such time or in the future) the Purchaser or its Affiliate, as the case may be,
shall have the right, but not the obligation, to defend such action at its own
cost and expense. In the event that the Purchaser elects not to defend any such
action, the Seller shall have the right, but not the obligation, to defend such
action at its own cost and expense; provided, however, that under no
circumstances shall either the Purchaser or the Seller settle or compromise any
such action in any manner which places any obligation of any kind on the other
or any of its Affiliates or in any way restricts the use of any of Designated
Software without the prior written consent of such party. Notwithstanding the
foregoing, each of the Seller and the Purchaser shall have an equal right to
defend any such action at its own cost and expense.
(c) The Seller shall render to the Purchaser all
reasonable assistance that may be required by the Purchaser in the enforcement
or defense of its permitted uses of the Designated Software. The Purchaser shall
render to the Seller all reasonable assistance that may be required by the
Seller in the enforcement or defense of its permitted uses of the Designated
Software.
(d) Nothing contained in this Section 1.7.3
shall in any way be deemed to limit or modify any of the representations or
warranties of the Seller contained in Article V hereto, including, without
limitation, the representations and warranties contained in Section 5.14 hereto.
1.7.4. Assignability. The rights granted to the Purchaser in
this Section 1.7 with respect to Designated Software shall be transferrable by
the Purchaser to any other person or entity so long as: (i) such person or
entity is not engaged in the Practice Management System Business; and (ii) prior
to any such transfer or assignment, the transferee thereof enters into a written
agreement pursuant to which, for the benefit of PCN and Versyss, such transferee
agrees to be bound by the terms and conditions of this Section 1.7.
1.8. Additional Ownership Rights. (a) The name "VERSYSS" 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
Versyss and PCN of all of their rights in and to the Assets to the Purchaser,
Versyss and/or PCN, as applicable, shall maintain with the Purchaser joint
ownership in and to the name VERSYSS and all permutations thereof; provided,
however, that Seller will not, and will not authorize any assignee or other
third party to, use the name "VERSYSS" in connection with the sale, marketing or
distribution or any product or services (other than those products and services
provided to customers of the Medical Business) of or in competition with the
Commercial Business. Anything contained in this Agreement to the contrary
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notwithstanding, from and after the Closing Date, until such time, if ever, as
the Seller relinquishes its rights in and to the name VERSYSS as provided below,
the Purchaser will only use such name as part of a corporate, brand or trade
name which clearly, and to the reasonable satisfaction of the Seller, relates to
the operation of Commercial Business, such as, by way of example only, the
"VERSYSS Commercial Business" except to the extent that such name (i) appears on
any written or printed document or instrument for the limited purpose of using
the Commercial Business' existing supply of such documents or instruments or
(ii) is incorporated into or used as a part of any software product used by any
End-User or Reseller on the Closing Date.
(b) If at any time after the Closing Date, none of PCN,
Versyss or their respective Affiliates use the name "VERSYSS" (whether alone or
in combination with other names or words) in a substantive way in connection
with the sale, licensing or marketing of any of their products for a period of
twelve consecutive months, PCN and Versyss shall be conclusively deemed to have
abandoned their joint ownership interest in such name and the Purchaser shall
thereupon without further action of any kind become the sole owner thereof. Upon
any such abandonment, PCN and Versyss shall cease all further use of the
"VERSYSS" name except for: (i) de minimis temporary uses such as exhausting
on-hand supplies of form documents or marketing materials that may contain a
reference to such name; (ii) use as part of any products of Versyss or PCN
distributed to customers or resellers prior to the date of such abandonment; or
(iii) any other temporary transitional use requested by PCN and consented to in
writing by the Purchaser, which consent shall not be unreasonably withheld.
Following any such abandonment, PCN and Versyss shall promptly execute any and
all documents or instruments reasonably requested by the Purchaser to evidence
the Purchaser's sole ownership of all rights, title and interest in and to the
name "VERSYSS". From and after the date of such abandonment, the Purchaser shall
be deemed to have granted to Versyss a perpetual, royalty-free license to use
the name "VERSYSS" 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 date of such abandonment or any amendment or
modification thereto.
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) $3,600,000 in immediately available funds (the "Cash
Payment") which amount shall be payable by wire transfer at the Closing to an
account designated by the Seller prior to the Closing Date; and
(b) the assumption by the Purchaser at the Closing of the
Assumed Liabilities (as hereinafter defined) as provided in Section 3.1 hereof.
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2.2. Allocations of Purchase Price. Within thirty (30) days
following the Closing Date, the Purchaser shall prepare a schedule of the
allocation of the Purchase Price. Subject to the consent of the Seller, which
shall not be unreasonably withheld, the Seller and Purchaser shall use and cause
to be used such schedule of the 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, 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:
(a) all liabilities and obligations of the Seller for the
accounts payable set forth on Schedule 3.1(a) (the "Accounts Payable"), the
total of which accounts payable set forth on said Schedule is $91,147.41;
(b) all liabilities and obligations of the Seller to provide
to End Users maintenance and support services for the application software
products of the Commercial 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 obligations of
$1,386,735.30 as of April 23, 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
included as a deferred hardware maintenance obligation on Schedule 3.1(c) hereto
(which schedule sets forth such deferred hardware maintenance obligations of
$604,670.81 as of 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 Hardware Maintenance
Obligation"); and
(d) the liabilities and obligations arising under or with
respect to each End User Agreement, each Reseller Agreement, each Equipment
Lease Agreement and each of the other agreements referred to on Schedule 3.1(d)
hereto, in each case, on or after the Closing Date, including, without
limitation, any obligations of the Seller and its Affiliates under any End User
Agreement related to the sale, installation, training and service of the
products of the Commercial Business whether arising on, before or after the
Closing Date.
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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 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 the Seller
arising out of the actions, suits or proceedings listed on Schedule 3.2(a)
hereto;
(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, its Affiliates to the extent not arising in connection with, incurred
by, or relating to, the operation of the Commercial Business or the use or
ownership of the Assets prior to the Closing;
(d) liabilities and obligations for or in
respect of indebtedness forborrowed money;
(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 Commercial Business prior to the Closing Date or due on account of the
ownership or use of the properties and assets of the Commercial Business prior
to the Closing Date or interest or penalties relating thereto;
(g) all liabilities and obligations of the
Seller with respect to any real property leases other than to the extent
provided in the Sublease (as defined in Section 9.9 below);
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(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 Commercial Business arising on or prior to the Closing Date
; or
(i) all liabilities and obligations arising
under the Risc Agreements.
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
The Seller hereby represents and warrants to and agrees with
the Purchaser that the following are true and correct as of the date hereof and
as of the Closing Date:
5.1. Existence and Authority. (a) Versyss is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and PCN is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. Versyss and PCN are
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 a material adverse effect on Versyss, PCN or the Commercial
Business. Each of Versyss 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.
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(b) The principal executive offices of PCN and Versyss are
located at 1200 The American Road, Morris Plains, New Jersey. The principal
operating offices of Versyss are located at 15 Crawford Street, Needham,
Massachusetts. Since January 1, 1994, the name of Versyss has been "Versyss
Incorporated" 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 Versyss and PCN, and the consummation 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 Versyss and PCN.
This Agreement and the applicable Ancillary Documents constitute valid and
binding obligations of Versyss 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 Versyss and PCN and consummation by Versyss
and PCN 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,
Versyss, the Commercial Business or the Assets is subject; (b) violate any
judgment, order, writ or decree of any court to which PCN, Versyss, the
Commercial Business or the Assets is subject; or (c) result in the breach of or
conflict with any material 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 Versyss or PCN is a party
or by which any of the Assets are bound or affected.
5.4. Restrictions; Burdensome Agreements. Except as set forth
on Schedule 5.4 hereto, neither PCN nor Versyss is a party to any contract,
commitment or agreement, nor is PCN, Versyss or any of the Assets 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 PCN or
Versyss 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 Versyss of
this Agreement or the applicable Ancillary Documents or the taking of any action
herein or therein contemplated.
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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 Commercial Business at December 31,
1998 (the "Statement of Net Assets"). The Statement of Net Assets accurately
sets forth the assets and liabilities of the Commercial Business at December 31,
1998 in all material respects.
(b) Schedule 5.6(b) hereto accurately sets forth the total
revenues of the Commercial 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 December 31, 1998 the Seller has not: (i) suffered
any material adverse change in, or the occurrence of any events which,
individually or in the aggregate, have had, or might reasonably be expected to
have, a material adverse effect on the Commercial 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
losses sustained by PCN for the year ended December 31, 1998, 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 losses and
disclosure shall not constitute a material 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 material obligations or liabilities
(fixed or contingent) with respect to the Commercial 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
Commercial Business; (vi) mortgaged, pledged, assigned, hypothecated or
subjected 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 practice; (viii) sold, assigned,
transferred, or granted any rights under or with respect to, any of its
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 Commercial 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 Commercial Business other than in the ordinary course of
business consistent with past practice; (x) waived or released any other rights
with respect to the Commercial Business having a value in excess of $50,000 in
the aggregate; (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 Commercial 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
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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 April 23, 1999; and (ii)
the aging thereof. The Accounts Receivable listed on the Accounts Receivable
Schedule have arisen only from bona fide transactions in the ordinary course of
business and are properly recorded in the Seller's books and records.
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 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 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. Set forth on Schedule 5.12.1 is a true and complete
list of all of the Reseller Agreements.
5.12.2. Except as set forth on Schedule 5.12.2(a) each of the
End-User Agreements are substantially 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 5.12.2(b), without any
material modification thereto.
5.12.3. Set forth on Schedule 1.1(h) is a true and complete
list of all Equipment Leases.
5.12.4. Except as set forth on Schedule 5.12.4, with respect
to the Commercial Business, except for the End-User Agreements, the Reseller
Agreements, the Equipment Leases
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and the lease underlying the Sublease (the "Assumed Lease"), neither Versyss nor
PCN is a party to and none of the Assets are bound by any:
(a) lease of real property or personal property
requiring payments of more than $50,000 on an annualized basis;
(b) employment, consulting agreement, severance
agreements, other agreement with any employee of the Commercial 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 Commercial 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 Asset, 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, not entered into in the ordinary course of
business and which, in the aggregate involves any obligation or liability on the
part of the Seller of more than $20,000.
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 5.12.4 (together with each End-User Agreement, each Reseller 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.
5.12.5. Except as set forth on Schedule 5.12.5(a) hereto, each
of the Commitments is valid, in full force and effect and enforceable by Versyss
or PCN in accordance with its terms. Except as set forth on Schedule 5.12.5(b)
hereto, all of the Commitments which are included in the Assets or as part of
the Assumed Liabilities are assignable by Versyss or PCN, as applicable, to the
Purchaser without the consent of any other party thereto.
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5.12.6. Except as set forth on Schedule 5.12.6, the Seller has
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
material obligations under the Commitments. Except as indicated on Schedule
5.12.6, there has not occurred any material default by Versyss 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 Versyss or PCN will become such a default by
Versyss or PCN, nor, to the knowledge of Versyss 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 Versyss, will become such a default under any of the Commitments
(including, without limitations, the End-User Agreements). Neither Versyss or
PCN nor any other party is in arrears in respect of the performance or
satisfaction of any material term or condition to be performed or satisfied by
it under any of the Commitments, and, to the best knowledge of Versyss and PCN,
no waiver or indulgence has been granted by any of the parties thereto.
5.13. End-Users. Set forth on Schedule 5.13, is a true
and correct list of all End-Users.
5.14. Intellectual Property. (a) Schedules 1.1(e), 1.7.1(a)
and 1.7.2(b) hereto set forth a true and correct description of all of the
Intellectual Property used in and material to the operation of the Commercial
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 and the XRTS-Code 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 Commercial 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.
(b) The current versions of the software
products set forth on Schedule 5.14(b) are Millennium Compliant. As used herein,
"Millennium Compliant" shall mean the ability of a software program to provide
the following functions:(i) consistently handle date information before, during
and after January 1, 2000, including, but not limited to, accepting date input,
providing the date output, and performing calculations on dates or portions of
dates; (ii) function accurately in accordance with the software documentation
and without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century; (iii)
respond to two-digit date input in a way that resolves any ambiguity as to
century in a disclosed, defined and predetermined manner; and (iv) store and
provide output of date information in ways that are unambiguous as to century.
5.15. Real Estate Leases. (a) The leasehold estates listed in
Schedule 5.15(a) are all of the leasehold estates under which Versyss or PCN is
a lessee or sublessee of any real property or interest therein used in
connection with the operation of the Commercial Business or where any of the
Assets are located (collectively, the "Real Property Leases").
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(b) Neither Versyss nor PCN is in material or
monetary default or has received any notice of any material or monetary default,
or failed to take any action that could result in a material or monetary
default, under the Real Property Leases. To the Seller's knowledge, no other
party to any such lease is in material or monetary default thereunder.
5.16. Compliance With Laws. (a) Except as set forth on
Schedule 5.16 hereto, Versyss 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 which
affect the Commercial Business or the Assets the failure to comply with which
has or would result in liability to Versyss or PCN of $20,000 or more with
respect to each such failure (a "Section 5.16(a) Occurrence"), and there are no
pending claims which have been filed against Versyss, PCN or any Affiliate
(relating to the operation of the Commercial Business or the ownership of the
Assets) alleging a violation of any such law or regulation. No notice has been
received by Versyss or PCN with respect to any such violation of any such legal
requirements.
(b) All Section 5.16(a) Occurrences, whether or
not any such occurrence, individually, results in liability to the Seller of
$20,000 or less, collectively, do not result in liability in excess of $60,000
in the aggregate.
5.17. Litigation; Customer Complaints. (a) Except as set forth
on Schedule 5.17(a) 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 transactions contemplated hereby; or (ii) Versyss or PCN with
respect to the Commercial Business or any of the Assets (including, without
limitation, any End-User Agreement), nor, to the best knowledge of the Seller,
which are reasonably likely to give rise to any such claim, action, suit,
proceeding, arbitration, investigation or hearing.
(b) Set forth on Schedule 5.17(b) is a true and
correct description of all unresolved written complaints made by any End-User
with respect to any obligations of the Seller arising under the End-User
Agreement. Except as set forth on Schedules 5.17(a) and 5.17(b), following the
Closing, the Purchaser will not have any obligation or liability to any
End User arising out of any action taken or omission made by the Seller prior
to the Closing Date related to any one or more of the installation, support and
service of and training with respect to any of the products or services of the
Commercial Business.
5.18. Labor Matters. (a) Schedule 5.18(a) hereto contains a
true and correct schedule of: (i) the names, job descriptions, benefits (and a
description thereof) and current annual salary rates of all present officers,
employees and agents of Versyss or PCN with respect to the Commercial Business;
(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 Versyss or PCN, as the case may be, was terminated); (iii) the dollar value
of all accrued vacation
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days of each such employee and a description of the manner in which such amount
was calculated; and (iv) all written and oral employment or compensation
agreements with each employee of Versyss or PCN who principally performs
services with respect to the Commercial Business.
(b) No employee of Versyss or PCN 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 Versyss or PCN.
(c) Schedule 5.18(c) hereto contains a true and
correct list and description of all agreements between the Seller, on the one
hand, and any employee of the Commercial 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 Commercial Business; or
(ii) such employee remaining employed by Versyss 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).
5.19. Taxes. Each of Versyss and PCN have filed all tax and
information returns and reports relating to the Commercial 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 Commercial Business or the ownership of the Assets subjects
Versyss or PCN to any taxes, fees, assessments or other governmental charges.
5.20. Entire Business. Except: (i) for the services set forth
in the Transition Services Agreement (as hereinafter defined) and the Hardware
Support 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
Commercial 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 Commercial 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 Commercial Business. No portion of the Commercial Business is conducted by
any person or entity other than Versyss 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 arrangement made
by or on behalf of the Seller.
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6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to and agrees
with PCN and Versyss that the following are true and correct as of the date
hereof and as of the Closing Date:
6.1. Organization, Etc. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. The Purchaser has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The Purchaser 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 a material adverse effect on the
Purchaser or, following the Closing, the Commercial Business. The Purchaser 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.
6.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement and the Ancillary Documents by the Purchaser 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 Board of Directors. This Agreement and the
applicable Ancillary Documents have been duly and validly executed and delivered
by the Purchaser. This Agreement and the applicable Ancillary Documents
constitute valid and binding obligations of the Purchaser, each enforceable in
accordance with its terms.
6.3. Effect of Agreement, Etc. The execution, delivery and
performance of this Agreement by the Purchaser and consummation by the Purchaser
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 the Purchaser is subject;
(b) violate any judgment, order, writ or decree of any court to which the
Purchaser 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 assets pursuant to any partnership agreement,
corporate charter or by-laws, or any commitments, contract or other agreement or
instrument to which the Purchaser 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 the Purchaser of this Agreement or any of
the instruments or agreements herein referred to, or the taking of any action
herein contemplated.
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6.5. Restrictions; Burdensome Agreements. Except as set forth
on Schedule 6.5 hereto, the Purchaser is not a party to any contract, commitment
or agreement, nor is the Purchaser 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 the Purchaser from entering into this
Agreement or from consummating the transactions contemplated this Agreement as
it is written.
6.6. Litigation. Except as set forth on Schedule 6.6 hereto,
there are no claims, actions, suits, proceedings, arbitrations, investigations
or hearings or notices of hearings pending or, to the best knowledge of the
Purchaser, 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.
7. PRE-CLOSING COVENANTS OF THE SELLER
7.1. Conduct of Commercial Business Pending the Closing.
During the period from the date of this Agreement to the Closing, the Seller
agrees that with respect to the Commercial Business and the Assets (except as
contemplated or expressly permitted by this Agreement or to the extent that the
Purchaser shall otherwise agree in writing):
(a) The Commercial 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 its business organization; (ii) keep available
the services of its present officers, employees and consultants; and (iii)
preserve its present relationships with customers, resellers, 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 the Purchaser in
the event that it fails to operate its business in accordance with this Section
7.1.
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8. PRE-CLOSING COVENANTS OF THE PURCHASER 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 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 and the
Purchaser 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 business 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 best efforts to obtain all necessary waivers, consents and
approvals Act 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 or the Seller 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 Commercial Business
contemplated by this Agreement, except as otherwise required by law; 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.
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9. POST-CLOSING COVENANTS
9.1. Further Assurances. The Seller, on the one hand, and the
Purchaser, on the other hand, at the request of the other, at or after the
Closing, will execute and 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 three
(3) years from and after the Closing Date, neither of PCN nor Versyss nor any
entity controlled by either of them will, directly or indirectly (including,
without limitation, by selling, licensing or providing any product to any third
party), individually or on behalf of other persons, endeavor to solicit the
business or sell, license or provide any products or services constituting parts
of the Commercial Business to any of then current end users (including, without
limitation, End Users) of the Commercial Business; 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) the provision by
PCN, Versyss or their Affiliates of support and maintenance services to the
extent contemplated by the Hardware Service Agreement (as defined in Section
10.2(e) hereto); or (iii) the provision by PCN, Versyss 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 Commercial 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
Commercial Business or the Assets which is generally available) are valuable and
confidential assets of the Commercial Business. Such information shall include,
without limitation, information relating to the Intellectual Property, trade
secrets, customer lists, vendor lists, bidding procedures, financing techniques
and services and financial information concerning the Commercial Business and
its customers. The Seller agrees that, from and after the Closing Date, neither
Versyss, PCN or any Affiliate of Versyss or PCN or any current or officer,
director, of any of them, will disclose or use, and Versyss 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.
9.2.3. The parties hereto acknowledge that it is
impossible to measure in money the damages that will accrue to the Purchaser in
the event that the Seller or its Affiliates breach any of the covenants in
Sections 9.2.1 or 9.2.2 and, if the Purchaser shall institute any action or
proceeding to enforce those covenants, the Seller hereby waives and agrees not
to assert
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the claim or defense that the Purchaser has an adequate remedy at law or for
damages. The foregoing shall not prejudice the Purchaser's right to seek money
damages from the Seller with respect to any such breach.
9.3. Employee Matters. (a) The Seller agrees that on
or following the Closing Date, the Purchaser may offer employment to the
employees listed on Schedule 9.3(a) hereto (the "Designated Employees"). The
Purchaser agrees to credit to any Designated Employee who becomes employed by
the Purchaser following the Closing Date all unused vacation time such
Designated Employee has accrued with Versyss 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 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 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
Commercial Business, or change or alter the organizational structure of the
Commercial Business.
(b) The Purchaser agrees that, in the event that,
within 180 days following the Closing Date, the Purchaser hires any Designated
Employee who (x) did not receive or did not accept an offer of employment from
the Purchaser on or immediately following the Closing and (y) within such 180
day period, was severed by Versyss or PCN, the Purchaser shall, with respect to
each such employee, pay to PCN an amount equal to the actual, documented amount
paid by any of Versyss or PCN to such employee as severance and with respect to
accrued and unused vacation at the time such employee's employment with Versyss
or PCN was terminated (collectively, a "Severance Payment"), provided, however,
that: (i) the amount payable by the Purchaser under this Section 9.3(b) with
respect to any Designated Employee shall not exceed the amount of severance and
accrued vacation and sick days shown with respect to such Designated Employee on
Schedule 9.3(a); and (ii) the Purchaser shall not have any obligation under this
Section 9.3(b) for any Stay-Put Bonus.
(c) The Purchaser agrees that, following the Closing,
it shall be responsible for the payment of, and the Purchaser 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 Versyss or PCN
to pay sales commissions to any sales person, sales representatives or sales
agent of Versyss or 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 following the Closing) on account of any sale of the products of the
Commercial Business made: (i) prior to the Closing and for which an account
receivable exists and is properly recorded on the books and records of the
Commercial Business on the Closing Date; or (ii) from and after the Closing.
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(d) The Purchaser shall enter into confidentiality
agreements in the form reasonably satisfactory to each of the Purchaser and PCN,
for the benefit of the Seller, with respect to the XRTS-Code.
(e) In the event that, prior to the Closing Date, the
Purchaser enters into an agreement with the employee identified on Schedule
9.3(e) pursuant to which, as a result of such employee agreeing to become an
employee of the Purchaser following the Closing Date, the Purchaser will pay to
such employee a stay-put or similar bonus, PCN will, promptly following the
payment of such bonus to such employee, reimburse the Purchaser an amount equal
to the lesser of: (i) the amount of such bonus paid by the Purchaser to such
employee; or (ii) $15,000.
(f) Following the Closing, at the request of the
Purchaser, the Seller shall permit any Designated Employee who accepts
employment with the Purchaser following the Closing to obtain COBRA coverage
under the Seller's medical insurance plan in effect from time to time following
the Closing (the "Seller's Plan"), in each case: (i) to the extent any such
Designated Employee is eligible to obtain such COBRA coverage under the terms of
the Seller's Plan and under applicable law; and (ii) up to the maximum period
during which any such Designated Employee is entitled to maintain such coverage
under applicable law. The Purchaser agrees that the Purchaser shall, for so long
as the Designated Employee remains eligible for and actually obtains such COBRA
coverage from the Seller, on behalf of such Designated Employees, reimburse the
Seller for the costs incurred by the Seller in providing such coverage
(exclusive of any administrative charges that the Seller is permitted to impose
under applicable law). The Purchaser agrees to use its reasonable commercial
efforts to establish its own medical insurance plan and permit the Designated
Employees to cease requiring COBRA coverage from the Seller as soon as
practicable following the Closing.
(g) Contemporaneously with the payment of the
Purchaser's first payroll (but in no event later than May 15, 1999), 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 April 30, 1999, which amounts have already been paid by the
Seller to such employees. The daily rate for all employees of the Commercial
Business is set forth on Schedule 5.18(a) hereto.
9.4. The Facilities. Set forth on Schedule 9.4 is a list of
each facility utilized by one or more of PCN and Versyss in connection with the
operation of the Commercial Business and in which the Purchaser wishes to locate
employees of the Commercial Business following the Closing (each a "Facility"
and, together, the "Facilities"). The Seller agrees that, with respect to each
Facility, during the period (with respect to each Facility, a "Facility
Transition Period"), commencing on the Closing Date and ending on the first to
occur of: (x) the 180th day following the Closing; (y) the date on which the
Purchaser moves all of its employees out of the Facility (each a "Facility
Termination Date"); and (z) the date on which the Seller or its Affiliates, as
the
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case may be, has terminated its lease for the Facility (each a "Lease
Termination Date") (provided, however, that, with respect to the Facility
located in Flint, Michigan, the Lease Termination Date shall not occur prior to
the 90th day following the Closing Date), the Seller shall maintain, and during
the applicable Facility Transition Period shall use reasonable commercial
efforts to not modify or alter the applicable Facility or any of the computer
hardware and other equipment and telephone lines, numbers and service (including
toll free telephone lines, numbers and service) used or usable in the Commercial
Business, in each case, whether owned or leased by the Seller (collectively,
"Facility Equipment"), in substantially the same manner and condition as such
Facility and the Facility Equipment located therein was maintained by the Seller
in the ordinary course of business prior to the Closing. During the applicable
Facility Transition Period, the Seller shall permit the Purchaser to utilize the
applicable Facility and the Facility Equipment located therein in connection
with the Purchaser's operation of the Commercial Business during the applicable
Facility Transition Period to the same extent the Seller utilized the such
Facility and the Facility Equipment. In consideration for providing the
Purchaser with the use of the Facilities, during the applicable Facility
Transition Period, the Purchaser shall pay to the Seller the facilities fees
calculated in accordance with the schedule of fees for that Facility 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) the Purchaser shall provide the Seller with at least thirty
(30) days written notice prior to any Facility Termination Date; and (ii) PCN
shall provide the Purchaser with at least thirty (30) days' written notice prior
to a Lease Termination Date. Unless otherwise agreed to by PCN, the Purchaser
shall vacate the Facility no later than 7 days prior to a Lease Termination Date
for such Facility. With respect to each Facility, at the Closing, the Purchaser
and PCN or Versyss, as applicable, 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 Licenses")
9.5. Renewal of Support Agreements and Reseller Agreements.
(a) Prior to the 120th day following the Closing Date (the "Support Transition
Date"), the Purchaser may permit each Support Agreement (as hereinafter defined)
which expires or terminates on or before the Support Transition Date to be
automatically renewed in accordance with the terms of any such Support
Agreement. Following the Support Transition Date, the Purchaser shall cause any
Support Agreement which expires or terminates after the Support Transition Date
to be terminated and not automatically renewed and, in lieu thereof, the
Purchaser shall, in the Purchaser'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 Commercial
Business to any End-User with respect to any one or more of software, hardware
of system maintenance or support and training used by the End-User.
(b) Promptly following the Closing, and in no event
later than the later of (x) the 180th day following the Closing Date and (y) the
first date following the Closing Date
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on which the Reseller Agreement in question may be terminated, the Purchaser
shall cause each Reseller Agreement to be terminated and shall, in the
Purchaser's own name, enter into a new reseller or distribution agreement with
each Reseller regarding the resale and distribution of the products of the
Commercial Business.
9.6. Hardware Purchases. For so long as PCN is providing
hardware service for the Purchaser in accordance with terms of the Hardware
Services Agreement (as defined in Section 10.2(e) hereto) (the "Purchase
Period"), the Purchaser agrees to purchase from PCN or any one or more
Affiliates of PCN designated by PCN, any computer hardware, parts, operating
system software, peripherals and related equipment (collectively "System
Products") to be provided by the Purchaser to any of its customers, in each
case, so long as the price charged by PCN for such System Product is not more
than the lowest price otherwise obtainable by the Purchaser. If the Purchaser
contends that it can obtain such System Products at a lower price, it shall
provide PCN with a written price quote for such System Products from an
independent supplier (the "Price Quote"). PCN shall then have the right, but not
the obligation, to supply the System Product specified in the Price Quote at the
prices set forth therein. PCN shall notify the Purchaser within two (2) business
days after receipt of the Price Quote whether or not it will exercise the right
to so supply the applicable System Product. All purchases of System Products by
the Purchaser shall be made in accordance with the terms and provisions of the
Reseller
Agreement (as defined in Section 10.2(e) hereto). Anything contained in this
Section 9.6 or in the Reseller Agreement to the contrary notwithstanding, the
prices charged by PCN to the Purchaser with respect to any System Product shall
not be greater than the prices charged by PCN for any such System Product to any
independent reseller or distributor of PCN's products who or which is purchasing
or has purchased the same quantity or volume of such System Product.
9.7. Printed Product Sales. (a) During the Exclusivity Period
(as hereinafter defined), the Purchaser and its successors and assigns
(including, without limitation, any person or entity who or which acquires the
Purchaser's Business) shall: (i) promote, offer and identify the services of PCN
or the PCN Designee (as hereinafter defined), as the case may be, as the
exclusive provider of Printed Products (as hereinafter defined) to the customers
of the Purchaser's business, including, without limitation, the End Users; (ii)
not itself offer, sell, distribute or market, appoint any other person or entity
to offer, sell, distribute or market, or accept a fee from any other person or
entity (other than PCN or the PCN Designee, as the case may be) with respect to
the offering, sale, distribution or marketing of, any Printed Products other
than the Printed Products offered by PCN or the PCN Designee, as the case may
be; (iii) refer all inquiries regarding any Printed Products to PCN or the PCN
Designee; and (iv) use its reasonable commercial efforts to advertise and
promote the sale of Printed Products to its customers.
(b) In consideration of agreement of the Purchaser contained
in Section 9.7(a) above, during the Exclusivity Period, PCN or the PCN Designee,
as the case may be, shall pay to Purchaser the commissions described on Schedule
9.7(b) hereto (the "Commissions"). The Commissions shall be payable by PCN or
the PCN
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Designee, as applicable, on or before the thirtieth (30th) day following the end
of any calendar month during which PCN or the PCN Designee, as applicable, has
been paid by an Applicable Customer (as hereinafter defined) for any Printed
Products sold by PCN or the PCN Designee to such Applicable Customer. Along with
the payment of the Commissions, PCN or the PCN Designee, as the case may be,
shall provide to the Purchaser a report, along with appropriate documentation
(x) identifying each Applicable Customer who or which, during the preceding
calendar month purchased and paid for Printed Products from PCN or the PCN
Designee and (y) the calculation of the Commissions paid with respect to such
month.
(c) As used in this Section 9.7:
(i) "Applicable Customer" shall mean any
person or entity whom or which (x) licenses or otherwise used any products sold,
distributed or marketed by the Purchaser's Business and (y) receives maintenance
or support regarding the use and operation of such products directly from the
Purchaser.
(ii) "Exclusivity Period" shall mean
period commencing on the date hereof and ending on Exclusivity Termination Date.
(iii) "Exclusivity Termination Date" shall
mean the 90th day following written from one party to the other that such party
wishes to terminate the Exclusivity Period.
(iv) "PCN Designee" shall mean any person
or entity, including, without limitation, PCN's subsidiary, Solion Corp., to
which PCN assigns its rights under this Section 9.7 by providing the Purchaser
with written notice of such assignment.
(v) "Printed Products" shall mean the
products described on Schedule 9.7(c) hereto.
(d) In the event that PCN designated a PCN Designee, such PCN
Designee shall be deemed to have assumed all of PCN's obligations to the
Purchaser under this Section 9.7 and PCN shall have not further obligations to
the Purchaser under or pursuant to this Section 9.7.
(e) The Purchaser shall provide PCN not less than 30 days
prior written notice that the Purchaser intends to enter into a Third Party
Agreement.
9.8. Additional Agreements. Without limiting any of the
representations or warranties of the Seller contained herein, in the event that
(x) either Versyss or PCN are party to any agreement with any third party the
subject matter of which is related solely or exclusively to the business or
operation of the Commercial Business (other than exceptions of a de minimis or
casual nature); (y) such agreement (an "Excluded Agreement") is not specifically
listed as part of the Assets or included in the Assumed Liabilities; and (z)
such Excluded Agreement is identified following the Closing Date, upon
identification the Purchaser may, at its option, elect to both (x)
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assume the obligation Versyss or PCN's obligations under such Excluded Agreement
and, as a result, such Excluded Agreement shall be deemed to constitute an
Assumed Liability as if it were listed as such as of the Closing and (y) without
any increase in Cash Payment, succeed to the benefits of Versyss and PCN under
such Excluded Agreement and, as a result, such Excluded Agreement shall be
deemed to constitute an Asset as if it were listed as such as of the Closing.
9.9. Sublease. At the Closing, each of the Purchaser and PCN shall execute a
sublease for a portion of the premises leased by PCN at 140 Gould Street,
Needham, Massachusetts in the form attached hereto as Schedule 9.9 (the
"Sublease"). Following the Closing, each of PCN and the Purchaser shall use
their reasonable commercial efforts and cooperate with one another in order to
cause the landlord under the Assumed Lease (the "Landlord") to, as promptly as
practicable following the Closing, either (x) permit the assignment to and
assumption by the Purchaser of the Assumed Lease and release PCN from its
obligations thereunder or (y) terminate the Assumed Lease and enter into a new
lease directly with the Purchaser for the premises demised under the Assumed
Lease, which new lease shall be on terms substantially similar to the terms of
the Assumed Lease. In the event that, at any time prior to the termination of
the Sublease, the Landlord agrees to enter into a new direct lease with the
Purchaser for the premises demised under the Sublease, PCN will agree to
guaranty the Purchaser's obligations under such lease to the extent that the
obligations so guarantied are not greater and can not be expanded beyond those
arising under the portion of the Assumed Lease demised under the Sublease.
9.10. Warranty Obligations. From and after the Closing, in the
event that any person contacts or otherwise asserts a claim against the
Purchaser with respect to any warranty or service liability obligations of the
Seller incurred in the conduct of the Commercial Business on or prior to the
Closing Date (including, without limitation, any obligations relating to the
sale or installation or training with respect to the products of the Commercial
Business) and such obligation does not constitute an Assumed Liability, the
Purchaser shall take such remedial action (including, without limitation,
providing alternative or additional software, hardware or services or paying
money) as the Purchaser, in its business judgment deems appropriate (and, in
such regard, shall use its reasonable commercial efforts to deal with and
resolve such claim in a manner consistent with the manner in which is treats
customer claims or complaints which otherwise are the responsibility of the
Purchaser) until such time as, in accordance with Article XII hereof, the
Purchaser has the right to be indemnified by the Seller (i.e. the Minimum
Indemnity Amount (as defined in Section 12.3 below) has been satisfied) as a
result of a breach by the Seller of the representation and warranty contained in
Section 5.17(b) hereof. For purposes of this Section 9.10, costs of taking
remedial action shall be calculated in the same manner as the costs of Remedial
Services are calculated in Section 12.6 hereof.
9.11. Year 2000 Updates. To the extent that the Seller
develops or obtains any upgrade or "patch" to any operating system software
product used by any of the End Users designed to make any such operation system
Millennium Compliant (any such upgrade or patch being referred to herein as a
"Patch"): (i) the Seller shall make such Patch available to the
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Purchaser; (ii) to the extent such Patch is distributed by the Seller to any
customers of the Medical Business by mail, via modem or via the Internet, the
Seller shall coordinate with the Purchaser so that the Seller may similarly
distribute the Patch to End Users; and (iii) to the extent that the installation
of the Patch requires the type of installation customarily provided by the
Seller to customers under the terms of any Hardware Support Agreement (as
defined in the Hardware Services Agreement) or any software maintenance and
support agreement to which the Seller is a party on the Closing Date, the Seller
shall, on the Purchaser's behalf, install the Patch with any End User with
respect to whom the Seller is providing Hardware Support Services (as defined in
the Hardware Services Agreement) under the terms of the Hardware Services
Agreement.
9.12. Acquired Inventory. 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 Acquired
Inventory, the Purchaser shall pay to PCN an amount equal to the amount paid by
the Seller for such item of Acquired Inventory set forth as Schedule 1.1(m)
hereto (which schedule shows the Acquired Inventory which relates to Current
Accounts Receivable (an aggregate of $91,147.41)) (each an "Acquired Inventory
Payment"); provided, however, that the Purchaser shall not be required to pay to
PCN the first $27,000 of Acquired Inventory Payments. With respect to any items
of Acquired Inventory which relate to any Account Receivable which is not a
Current Account Receivable, within thirty (30) days following the end of each
calendar month during the year following the Closing Date, the Purchaser shall
provide PCN with a report regarding any such Account Receivable collected by the
Purchaser. Following receipt by PCN of such report, PCN shall provide to the
Purchaser a calculation of the amount paid by the Seller for any item of
Acquired Inventory which relates to the Account Receivable shown on the report
and, within thirty (30) days following receipt of such calculation, the
Purchaser shall pay PCN such amount.
As used in this Section 9.12, "Current Account Receivable"
shall mean any Account Receivable which less than 91 days old as of the Closing
Date.
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 Purchaser to effect the Closing are also subject to the following
conditions (any one or more of which may be waived by Purchaser, but only in a
writing signed by Purchaser):
(a) Representations and Warranties. Each of the
representations and warranties of the Seller contained in this Agreement or in
any document or instrument delivered by either one or both of PCN and Versyss 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. The Seller 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 the
Seller 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
Commercial 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
Commercial 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 Versyss, 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;
(ii) A hardware service agreement
substantially in the form of the agreement attached hereto as Exhibit B (the
"Hardware Services Agreement")
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regarding, among other things, the terms and provision upon which PCN will
provide hardware maintenance and support services to End-Users on the
Purchaser's behalf;
(iii) An independent reseller agreement
substantially in the form of the agreement attached hereto as Exhibit C (the
"Reseller Agreement") regarding, among other things, the terms and provisions
upon which the Purchaser may purchase from PCN and distribute and sell to the
Purchaser's customers certain System Products;
(iv) The Facility Licenses;
(v) The agreements and instruments
referred to in Section 1.3 hereto to which either one or both of PCN and Versyss
are parties;
(vi) Such certificates to evidence
compliance with the conditions set forth in this Agreement as may be reasonably
requested by the Purchaser, including, without limitation, certificates of the
secretary of PCN and the secretary of Versyss as to corporate resolutions and
incumbency;
(vii) Letters addressed to the Purchaser 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
Versyss, advising the Purchaser 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;
(viii) an opinion of legal counsel for
PCN and Versyss in form and substance reasonably satisfactory to the Purchaser;
and
(ix) the Sublease.
(f) The Seller shall have obtained, and Purchaser
shall have received copies of: (i) a certificate of the Secretary of State of
the State of Delaware as to the due incorporation and good standing of Versyss;
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 contained in this Agreement or in
any document or instrument delivered by Purchaser 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
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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.
(b) Agreements and Covenants. Purchaser 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 Purchaser
which has a material adverse effect on the condition (financial or otherwise),
results of operations, business or assets of the Purchaser.
(d) Third Party Consents. 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 shall have
executed and delivered to the Purchaser the following instruments, documents and
agreements:
(i) The Transition Services Agreement;
(ii) The Hardware Service Agreement;
(iii) The Reseller Agreement;
(iv) The Facility Licenses;
(v) The agreements and instruments referred
to in Section 1.3 hereto to which the Purchaser is a party;
(vi) 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;
(viii) an opinion of legal counsel for the
Purchaser inform and substance reasonably satisfactory to PCN; and
(ix) the Sublease.
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(f) The Purchaser shall have obtained, and PCN shall
have received copies of: (i) a certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Purchaser.
(g) Contemporaneously with the payment of the Cash
Payment at the Closing, the Purchaser shall pay to PCN an amount equal to: (i)
the amount paid by the Seller for the Acquired Inventory set forth as Schedule
10.3(g) hereto; less (ii) $24,000.
11. OBLIGATIONS OF PCN AND VERSYSS
All representations, covenants, agreements and obligations of
PCN, Versyss and the Seller under this Agreement shall be deemed to have been
made or incurred jointly and severally by each of PCN and Versyss.
12. INDEMNIFICATION
12.1. Indemnification of the Purchaser. The Seller hereby
covenants and agrees with the Purchaser that the Seller shall indemnify the
Purchaser, its 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 or the Purchaser), which are Retained
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 the Seller 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. The
Purchaser hereby covenants and agrees with the Seller that the Purchaser shall
indemnify Versyss, 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:
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(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 the Purchaser 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 12.2.
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 $100,000 (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 $4,250,000.
(ii) The Purchaser shall only be liable to the Seller
Indemnified Parties, and the Seller Indemnified Parties shall only be entitled
to indemnification from the Purchaser, 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 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
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the Minimum Indemnity Amount. The foregoing limitation shall not affect the
right of any Seller 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 Seller Indemnified Party to obtain credit against the Minimum
Indemnity Amount which would otherwise be due but for such limitation.
(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 Section 12.3(a))
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, 5.17(b), the second sentence of Section
5.14 to the extent it relates to title to the Intellectual Property and the last
sentence of Section 5.20 hereof (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 in any
Ancillary Documents; or (iii) incurred by any Seller Indemnified Party as a
result of a breach by the Purchaser of the covenants of the Purchaser. 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 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 and
entitled (without prejudice to the right of any Indemnified Party to participate
at its expense through counsel of its own choosing) to defend or prosecute such
claim at its expense and through counsel of its own choosing if it gives written
notice of its intention to do so no later than the 15th day following receipt of
such notice of such claim; provided, however, that if: (i) the defendants in any
action shall include both a Indemnifying Party and an Indemnified Party and the
Indemnified Party shall have been advised by its counsel that the counsel
selected by the Indemnifying Party has a conflict of interest because of the
availability of different or additional defenses to the Indemnified Party; or
(ii) the Indemnifying Party is not, in all reasonably respects, diligently and
competently defending the claim, the Indemnified Party shall have the right to
select separate counsel to participate in the defense of such action on its
behalf, at the expense of the Indemnifying Party. The failure so to notify an
Indemnifying Party shall not relieve the Indemnifying Party of any liability
which it may have to any Indemnified Party. The Indemnified Party shall
cooperate fully in the defense of such claim and shall make available to the
Indemnifying Party pertinent information
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under its control relating thereto, but shall be entitled to be reimbursed, as
provided in this Article 12, for all out-of-pocket costs and expenses payable to
third parties incurred by it in connection therewith. Payment by an Indemnifying
Party to an Indemnified Party shall be made within 10 days after demand, unless
there is a claim or demand by a third party in which event payment shall be made
within 10 days after final judgment, settlement or comprise, as the case may be.
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), the time value of money (calculated on the
basis of the prime rate as published in the Wall Street Journal from time to
time) 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.
12.6. Settlement of Certain Claims. Without limiting anything
contained in this Article 12 or in Section 9.10 hereof, with respect to any
claims asserted by any End User which, in accordance with the terms of this
Agreement, are the responsibility of the Seller (whether such claim constitutes
or may constitute a breach by the Seller of the representation and warranty
contained in Section 5.17(b) hereof (each an "Asserted End-User Claim"), a
Retained Liability of the type referred to in 3.2(a) hereto (each a "Retained
Claim") or otherwise (together with the Retained Claim and the Asserted End-User
Claims, the "End User Claims")), the Purchaser shall, at the request and on
behalf of the Seller, provide such services (including providing additional or
alternate hardware or software) to the End-User asserting End User Claim
reasonably requested by PCN (in each case consistent with the Purchaser's
customary business practices with respect to End Users and subject to the
Purchaser's available resources) in order to remedy and settle such End User
Claim ("Remedial Services"). With respect to any Remedial Services performed by
the Purchaser in satisfaction of the End User Claim, the Seller shall pay to the
Purchaser an amount equal to: (i) all actual direct costs incurred by the
Purchaser in providing such services (including, without limitation, (A) the
cost to the Purchaser of any equipment, supplies or other items (including the
costs of the shipping and handling thereof) provided by the Purchaser to the
End-User in connection therewith, (B) travel costs incurred by the Purchaser in
connection therewith, and (C) to the extent the Purchaser is required to utilize
third party contractors to perform any of the services, the amounts payable by
the Purchaser to third party contractors for providing such services); and (ii)
the amount reasonably necessary to reimburse the Purchaser for the amount of
time devoted by the Purchaser's employees to perform such services, which amount
referred to in this clause (ii) shall be calculated at a rate equal to 80% of
the Purchaser's then published hourly rates for software support services,
hardware support and services, training,
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programming and the like (the amounts referred to in clauses (i) and (ii) above
are referred to collectively hereinafter as the "Remedial Costs").
13. GENERAL
13.1. Expenses, Etc. 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.
13.2. 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
Party prior to the expiration of the survival period of any representation and
warranty shall survive the expiration of such survival period.
13.3. 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.
13.4. 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.
13.5. 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.
13.6. 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
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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):
If to the Purchaser, to:
Holbrook Systems, Inc.
30 Blue Sky Drive
Westfield, MA 01085
Attention: Henry W. Holbrook
[Fax #]
With copies to:
Nexsen Pruet Jacobs & Pollard, LLP
1441 Main Street, Suite 1500
Columbia, South Carolina 29202
Attention: Mark Bender, Esq.
Facsimile No.: (803) 253-8277
If to Versyss, to:
VERSYSS Incorporated
15 Crawford Street
Needham, Massachusetts 02194
Attention: President
Facsimile No.: (617) 433-0995
If to PCN, to:
Physician Computer Network, Inc
1200 The American Road
Morris Plains, NJ 07950
Attention: President
Facsimile No.: (973) 490-3103
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With copies (in the case of a notice delivered to Versyss, 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
13.7. 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 Commercial
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.
13.8. 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.
13.9. 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.
13.10. 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.
13.11. 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 New York, without
giving effect to the conflicts of law principles thereof. Each of the Purchaser,
Versyss and PCN hereby irrevocably: (i) in any legal proceeding brought in
connection with this Agreement or any of the Ancillary Documents or the
transactions contemplated hereby or thereby, submits to exclusive in personam
jurisdiction of any State of New York or United States court of competent
jurisdiction sitting in the State of New York; and (ii) waives any objections
that it may now or hereafter have to the venue of such proceeding in any such
court or that such proceeding was brought in an inconvenient court.
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13.12. 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 or Reseller.
13.13. 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.
13.14. 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 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
acknowledges that PCN is a public company and, as such, is 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.
13.15. 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.
13.16. 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.
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 Receivable" is defined in Section 1.1(f) of the
Agreement.
"Accounts Payable" is defined in Section 3.1(a) of the
Agreement.
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"Acquired Inventory" is defined in Section 1.1(m) 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.
"Applicable Customer" is defined in Section 9.7(c)(i) of the
Agreement.
"Asserted End-User Claim" is defined in Section 12.6 of the
Agreement.
"Assets" is defined in Section 1.1 of the Agreement.
"Assumed Lease" is defined in Section 5.12 of the Agreement.
"Assumed Liabilities" is defined in Section 3.1 of the
Agreement.
"Assumed Commissions" is defined in Section 9.3(c) of the
Agreement.
"Books and Records" is defined in Section 1.1(i) of the
Agreement.
"Cash Payment" is defined in Section 2.1(a) of the Agreement.
"Closing Date" is defined in Section 4 of the Agreement.
"Closing" is defined in Section 4 of the Agreement.
"Code" shall mean the Internal Revenue Code of 1986.
"Commercial Business" is defined in the Background section to
the Agreement.
"Commissions" is defined in Section 9.7(b) of the Agreement.
"Commitments" is defined in Section 5.12.4 of the Agreement.
"Deferred Software Maintenance Obligation" is defined in
Section 3.1(b) of the Agreement.
"Deferred Hardware Maintenance Obligation" is defined in
Section 3.1(c) of the Agreement.
"Designated Employees" is defined in Section 9.3(a) of the
Agreement.
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"Designated Software" is defined in Section 1.7.1(b) of the
Agreement.
"End Users Agreements" is defined in Section 1.1(c) of the
Agreement.
"End-Users" is defined in Section 1.1(c) of the Agreement.
"Equipment Leases" is defined in Section 1.1(h) of the
Agreement.
"Equipment" is defined in Section 1.1(g) of the Agreement.
"Esker" means Esker, Inc.
"Excluded Provisions" is defined in Section 12.3(b) of the
Agreement.
"Excluded Agreement" is defined in Section 9.8 of the
Agreement.
"Exclusivity Period" is defined in Section 9.7(c)(ii) of the
Agreement.
"Exclusivity Termination Date" is defined in Section
9.7(c)(iii) of the Agreement.
"Facility Transition Period" is defined in Section 9.4 of the
Agreement.
"Facility Termination Date" is defined in Section 9.4 of the
Agreement.
"Facility Equipment" is defined in Section 9.4 of the
Agreement.
"Facility Licenses" is defined in Section 9.4 of the
Agreement.
"Facility Fee" is defined in Section 9.4 of the Agreement.
"Facility" and "Facilities" are defined in Section 9.4 of the
Agreement.
"Hardware Support Agreement" is defined in Section 10.2(e)(ii)
of the
Agreement.
"IBM" means International Business Machines Corporation.
"Indemnified Party" is defined in Section 12.4 of the
Agreement.
"Intellectual Property" is defined in Section 1.1(e) of the
Agreement.
"IRS" shall mean the Internal Revenue Service.
"Jointly Owned Software" is defined in Section 1.7.2(a) of the
Agreement.
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"Lease Termination Date" is defined in Section 9.4 of the
Agreement.
"Lenders" is defined in Section 10.2(e)(vii) of the Agreement.
"Losses" is defined in Section 12.1 of the Agreement.
"Medical Business" is defined in the Background section to the
Agreement.
"Millennium Compliant" is defined in Section 5.14(b) of the
Agreement.
"Minimum Indemnity Amount" is defined in Section 12.3(a) of
the Agreement.
"OEM Agreement" is defined in Section 1.2(g) of the Agreement.
"Patch" is defined in Section 9.11 of the Agreement.
"Payment" is defined in Section 1.6 of the Agreement.
"PCN" is defined in the preamble to this Agreement.
"PCN Designee" is defined in Section 9.7(c)(iv) of the
Agreement.
"Practice Management System Business" is defined in Section
1.7.1(d) of the Agreement.
"Price Quote" is defined in Section 9.6 of the Agreement.
"Printed Products" is defined in Section 9.7(c)(v) of the
Agreement.
"Purchase Period" is defined in Section 9.6 of the Agreement.
"Purchase Price" is defined in Section 2.1 of the Agreement.
"Purchaser Receivables" is defined in Section 1.6 of the
Agreement.
"Purchaser Business" is defined in Section 1.7.1(d) of the
Agreement.
"Purchaser Indemnified Parties" is defined in Section 12.1 of
the Agreement.
"Purchaser" is defined in the preamble to the Agreement.
"Real Property Leases" is defined in Section 5.15(a) of the
Agreement.
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"Remedial Costs" is defined in Section 12.6 of the Agreement.
"Remedial Services" is defined in Section 12.6 of the
Agreement.
"Reseller Agreement" is defined in Section 10.2(e)(iii) of the
Agreement.
"Reseller Agreements" is defined in Section 1.1(d) of the
Agreement.
"Resellers" is defined in Section 1.1(d) of the Agreement.
"Retained Liabilities" is defined in Section 3.2 of the
Agreement.
"Retained Assets" is defined in Section 1.2 of the Agreement.
"Retained Claim" is defined in Section 12.6 of the Agreement.
"Risc Agreements" is defined in Section 1.2 of the Agreement.
"Schedule Date" is defined in Section 3.1(b) of the Agreement.
"Second Level Support Service" is defined in Section 1.7.2(g)
of the Agreement.
"Section 5.16(a) Occurrence" is defined in Section 5.16(a) of
the Agreement.
"Seller Indemnified Parties" is defined in Section 12.1 of the
Agreement.
"Seller" is defined in the preamble to the Agreement.
"Severance Payment" is defined in Section 9.3(b) 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.
"Sublease" is defined in Section 9.9 of the Agreement.
"Suggested Remedial Services" is defined in Section 12.6 of
the Agreement.
"Support Period" is defined in Section 1.7.2(g) of the
Agreement.
"Support Transition Date" is defined in Section 9.5(a) of the
Agreement.
"Support Agreement" is defined in Section 9.5(a) of the
Agreement.
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"System Product" is defined in Section 9.6 of the Agreement.
"Telephone Equipment" is defined in Section 1.1(g) of the
Agreement.
"Third Level Support Service" is defined in Section 1.7.2(g)
of the Agreement.
"Transition Services Agreement" is defined in Section
10.2(e)(i) of the Agreement.
"Versyss" is defined in the preamble to the Agreement.
"XRTS" is defined in Section 1.7.1(a) of the Agreement.
"XRTS-Code" is defined in Section 1.7.1(a) of the Agreement.
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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, VERSYSS INCORPORATED
INC.
By:____________________________ By:_____________________________
HOLBROOK SYSTEMS, INC.
By:_____________________________
49
THIRD 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 April 23, 1999
<PAGE>
THIRD FORBEARANCE AND AMENDMENT AGREEMENT
THIRD FORBEARANCE AND AMENDMENT AGREEMENT, dated as of April 1, 1999,
(this "Agreement" or the "Third 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 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.
<PAGE>
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 is 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 Borrower and its subsidiary, Versyss, Incorporated have entered
into negotiations to sell the Commercial Business to Holbrook Systems, Inc. (the
"Commercial Business Purchaser") for a purchase price of approximately
$3,600,000 minus deductions for closing costs, legal fees, accounting fees and
stay bonuses of approximately $600,000 and minus payments not to exceed $640,000
to Mission Vacaville Limited Partnership which claims a prior security interest
in certain of the assets of the Commercial Business (the "Commercial Business
Proceeds").
XII. The Borrower and the Guarantors have now requested that the
Administrative Agent and the Lenders (a) agree to extend to April 30, 1999 the
date by which PCN must deliver the audited financial statements, (b) release
their security interests in the Commercial Business, (c) agree to a sharing of
the Commercial Business Proceeds, (d) agree, conditionally, to a limited
reinstatement of the Commitment, and (e) agree to extend the Maturity Date and
to forbear from pursuing their remedies for a period to and including August 15,
1999.
XIII. 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.
1.2 Amendments of Definitions.
The following defined terms in the Credit Agreement, the First
Forbearance
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Agreement and the Second Forbearance 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 August 15, 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
August 15, 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 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 and pursuant to Section 4 of the
Third Forbearance Agreement.
"Maturity Date" means August 15, 1999.
1.3 Additional Definitions
The following defined terms shall have the following meanings in the
Credit Agreement and this Agreement:
"Third Forbearance Effective Date" means the date on which the Third
Forbearance Agreement is executed by all parties and all of the payments and
documents listed in Section 4 of the Third Forbearance Agreement have been
received by the Administrative Agent.
"Securities Litigation" means the class action lawsuit entitled "In Re
Physician Computer Network, Inc. Securities Litigation" pending in the United
States District Court, District of New Jersey.
1.4 References to Credit Agreement and Certain Defined Terms.
From and after the Third Forbearance Effective Date (a) all references
herein and in
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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 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 and this Agreement.
SECTION 2. ACKNOWLEDGMENTS.
2.1 Acknowledgment of Debt
(a) The Borrower hereby acknowledges, confirms and declares that, as of
the date hereof, the outstanding principal balance of the Loans is
$15,398,115.89 and that the Extension Fee which Borrower agreed to pay and
agreed was earned on the Second Forbearance Date is $1,000,000 and such
principal amount, such 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 and any additional loans that may be made pursuant to Section 3 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.
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(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") and (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")
(the Specified Events of Defaults, the Maturity Default and the Financial
Statements 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 Specified 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 of the Credit Agreement were and, except as
set forth in Section 3 hereof remain, irrevocably terminated.
(b) The Borrower acknowledges and agrees that (i) except as provided in
Section 3 hereof, 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 Application of Cash Collateral Deposit from HealthMatics Proceeds.
The Borrower and Guarantors acknowledge that the Lenders have applied
to the repayment of the Loans the Cash Collateral Deposit of $1,000,000, which
was received by the Borrower and its Subsidiary from the sale of the
HealthMatics Partnership Interest and which was proceeds of the Lenders'
Collateral.
2.6 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
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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 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. CONDITIONAL AND LIMITED REINSTATEMENT OF COMMITMENTS.
3.1 Limited Reinstatement of Commitment.
Each Lender severally agrees, subject to the conditions set forth in
Section 3.2 hereof, to reinstate its Commitment and to make additional loans to
the Borrower in an amount not to exceed each Lender's (1) pro rata share of the
Cash Collateral Deposit and (2) share of the Commercial Business Proceeds
actually received by such Lender.
3.2 Conditions Precedent to Limited Reinstatement.
Each Lender's conditional agreement to reinstate its pro rata share of
the Commitment to the limited extent set forth in Section 3.1 is subject to the
conditions that:
(a) the Borrower shall have satisfied and complied with the covenants
in Sections 6.18, 6.19 and 6.20 of the Credit Agreement on or before the dates
specified therein or after the expiration of the five day grace period;
(b) each Lender shall have approved, in its sole discretion, either an
Acceptable Loan Commitment or an Acceptable Purchase Agreement;
(c) no Event of Default (other than the Existing Defaults) or
Termination Event shall have occurred under the Credit Agreement, the First
Forbearance Agreement, the Second Forbearance Agreement or this Agreement;
(d) each Lender shall have received from the Borrower (i) a
satisfactory cash flow projection for the period from the date of the delivery
of the Acceptable Loan Commitment or the Acceptable Purchase Agreement to the
anticipated closing date thereunder which demonstrates that the Borrower will
have sufficient available cash (including the proceeds of the additional loans
to be made pursuant to and subject to the terms of this Agreement) to pay the
anticipated and projected expenses of the Borrower through such anticipated
closing date, and (ii) if such cash flow projection should indicate that the
Borrower does not or will not have sufficient cash to pay such anticipated and
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projected expenses, commitments or other assurances from a financially
responsible person or entity to provide the funds necessary to cover the
projected deficiency between projected cash and anticipated and projected
expenses; and
(e) each of the Lenders shall have received satisfactory confirmation
either that: (i) the proceeds to be received by the Borrower from the Acceptable
Loan Commitment or the Acceptable Purchase Agreement will be sufficient to
enable the Borrower to consummate a settlement of the Securities Litigation and
to pay other obligations of the Borrower that must be paid to consummate a
closing under the Acceptable Loan Commitment or the Acceptable Purchase
Agreement or (ii) Picower and JA Special Limited Partnership have consented to,
and the lead plaintiff and its counsel in the Securities Litigation have
consented to or have recommended that the class of plaintiffs in the Securities
Litigation consent to, the closing of the Acceptable Loan Commitment and
Acceptable Purchase Agreement and to the immediate payment of all obligations of
the Borrower to the Lenders from the proceeds thereof.
3.3 Repayment of Loans.
The Borrower shall repay all Loans, including any additional Loans made
pursuant to this Agreement, on the Maturity Date.
3.4 Terms of Loans.
Each Loan made by a Lender pursuant to this Agreement shall be (a) a
Base Rate Loan, (b) evidenced by the Amended and Restated Notes delivered
pursuant to the First Forbearance Agreement (c) advanced and be payable in
accordance with the provisions of Sections 2.9 through 2.16 (inclusive) of the
Credit Agreement and (d) shall have the benefit of all Guarantees of the Loans
and of all Collateral securing the Loans and the Guarantees.
3.5 Reborrowing.
The Borrower agrees that in the event any Loans are made by the Lenders
pursuant to this Agreement and such Loans are repaid, any amounts repaid shall
not be available for re-borrowing.
SECTION 4. 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:
4.1 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.
4.2 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
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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).
4.3 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).
4.4 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.
4.5 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.
4.6 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.
4.7 Credit Agreement, First Forbearance Agreement and Second
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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.
4.8 Commercial Business Relationship.
(a) Neither the Borrower nor any of its subsidiaries has any
relationships with Commercial Business Purchaser or any of its affiliates, and
(b) Neither Commercial Business Purchaser nor any of its affiliates owe
any monies to the Borrower or any of its Subsidiaries.
SECTION 5. 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) 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.
(b) 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.
(c) Financial Statements. A report from the Auditors with respect to
the status of the financial statements of the Borrower.
(d) Securities Litigations. A report from the Borrower's attorneys with
respect to the status of the settlement of the Securities Litigation.
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(e) Litigation. A schedule of any pleadings filed in any legal actions
commenced against the Borrower and any of its Subsidiaries since September 30,
1998, and a copy of any such pleadings requested by the Administrative Agent.
(f) 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.
(g) Second Amendment to Guarantee and Collateral Agreement. A Second
Amendment to Guarantee and Collateral Agreement in form and substance
satisfactory to the Administrative Agent and its counsel.
(h) 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 6. AMENDMENTS OF THE CREDIT AGREEMENT
6.1 Amendments - Existing Sections
The Credit Agreement is amended by deleting the text of Sections 6.18
and 6.19 and by substituting therefor the following:
"6.18 Delivery of Audited Financial Statements. Deliver to the
Administrative Agent and each of the Lenders on or before April 30, 1999 the
audited financial statements of the Borrower and its Subsidiaries for the years
ended December 31, 1996, December 31, 1997, and December 31, 1998."
"6.19 Delivery of an Acceptable Loan Commitment or Acceptable
Purchase Agreement. Deliver to Administrative Agent and each of the Lenders on
or before May 31, 1999 either an Acceptable Loan Commitment or an Acceptable
Purchase Agreement."
6.2 Amendments - Additional Covenants.
The Credit Agreement is amended by adding the following Sections 6.20
and 6.21:
"6.20 Bids. Deliver to the Administrative Agent and each Lender on or
before April 26, 1999 a list of all parties that have submitted bids to purchase
the assets of the Borrower and the terms of such bids, including, without
limitation, the purchase price, the closing date and conditions, if any, to
closing.
"6.21 Use of Proceeds of Commercial Business. The Borrower will use (a)
50% of the Commercial Business Proceeds to reduce the principal balance of the
Loans, and (b) 50% of the Commercial Business Proceeds 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 7. FORBEARANCE
The Administrative Agent and the Lenders hereby agree, from and after
the date
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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 6.18, Section 6.19 or Section 6.20 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 6.21 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:
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(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 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
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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 8.2(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 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
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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 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:
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(a) (i) acknowledge that the Borrower has not delivered the audited
financial statements required under Section 6.1(a) (for the fiscal year ending
December 31, 1997) and under Section 6.1(b) (for fiscal year ending December 31,
1998) 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, provided the Borrower delivers such financial statements and
the other financial statements required under Section 6.18 of the Credit
Agreement to the Administrative Agent and the other Lenders on or before the
earlier of (i) five (5) days after such audited financial statements are issued
and (ii) April 30, 1999.
(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) agree, subject to the satisfaction of the conditions set forth in
Section 5 hereof and of Section 6.21 of the Credit Agreement, to release their
security interests in the assets of the Commercial Business.
(d) the definitions of Acceptable Loan Commitment and Acceptable
Purchase 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.
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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.
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 11.7 shall survive
repayment of the Loans
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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.
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
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BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY 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, and the Second 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.
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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.
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: ________________________________
Name: ___________________________
Title: ____________________________
VERSYSS INCORPORATED
By: ________________________________
Name: Paul M. Antinori
Title: Vice President
SOLION CORPORATION
By: _______________________________
Name: Paul M. Antinori
Title: Vice President
WISMER-MARTIN, INC.
By: _______________________________
Name: Paul M. Antinori
Title: Vice President
INTEGRATED HEALTH SYSTEMS, INC.
By: ________________________________
Name: Paul M. Antinori
Title: Vice President
PCN HP VENTURE CORP.
By: ________________________________
Name: Paul M. Antinori
<PAGE>
Title: Vice President
PCN SERVICES CORP.
By: ________________________________
Name: Paul M. Antinori
Title: Vice President
MEDICAL NETWORK SYSTEMS, CORP.
By: ________________________________
Name: Paul M. Antinori
Title: President
FLEET BANK, N.A., as Administrative
Agent and as a Lender
By: ________________________________
Name: ___________________________
Title: ____________________________
LEHMAN COMMERCIAL PAPER, INC.,
By: ________________________________
Name: ___________________________
Title: ____________________________
BANK OF MONTREAL
By: ________________________________
Name: ___________________________
Title: ____________________________
SKANDINAVISKA ENSKILDA BANKEN AB
(PUBLIC) NEW YORK BRANCH
By: ________________________________
Name: ___________________________
Title: ____________________________
<PAGE>
By: ________________________________
Name: ___________________________
Title: ____________________________
FIRST UNION NATIONAL BANK
By: ________________________________
Name: ___________________________
Title: ____________________________
IMPERIAL BANK, A CALIFORNIA
BANKING CORPORATION
By: ________________________________
Name: ___________________________
Title: ____________________________
SOCIETE GENERALE
By: ________________________________
Name: ___________________________
Title: ____________________________
SUMMIT BANK
By: ________________________________
Name: ___________________________
Title: ____________________________
HCM OFFSHORE TRUST
By: ________________________________
Name: ___________________________
Title: ____________________________
