SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
June 17, 1996
MEDIWARE INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 1-10768 11-2209324
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1121 OLD WALT WHITMAN ROAD, MELVILLE, NEW YORK 11747-3005
(Address of principal executive offices)
(516) 423-7800
Registrant's telephone number, including area code
No change since last report
Former Name or Former Address, if Changed Since Last Report
<PAGE>
ITEM 3. ACQUISITION OR DISPOSITION OF ASSETS
On June 17, 1996, Digimedics Corporation (the "Company"), a
wholly owned subsidiary of Mediware Information Systems, Inc.
("Mediware"), and Information Handling Services Group, Inc.
("IHSG") and its wholly owned subsidiary, Continental
Healthcare Systems, Inc. ("Continental"), entered into an
Asset Purchase Agreement whereby the Company purchased from
Continental its Pharmakon division ("Pharmakon"), the assets
of which included the business, furniture, fixtures, equipment
and machinery, inventories, goodwill, certain intellectual
property and certain accounts receivable. Pharmakon developed,
sold and supported computer software systems and provided
management information systems for hospital pharmacies in the
United States and other countries. The Company intends to
continue such use of the assets acquired.
Also on June 17, 1996, the Company and IHSG and Holland
America Investment Corporation entered into a Stock Purchase
Agreement whereby the Company purchased from Continental all
of the issued and outstanding capital stock of JAC Computer
Services Limited ("JAC").
The purchase price for both acquisitions in the aggregate was
$9,781,403 net, $3,781,403 of which was paid in cash and
$6,000,000 of which was paid pursuant to a secured promissory
note. The purchase price was negotiated by the parties based
upon their determination of the value of the assets being
acquired and the value of the Pharmakon customer base.
As collateral for the Company's obligations under the Secured
Promissory Note, the Company has granted Continental a first
security interest in all of the assets of the Company,
including the acquired assets, subject to an outstanding
senior security interest in accounts receivable. In addition,
the Company has granted Continental a security interest in 66%
of the acquired capital stock of JAC. Mediware has guaranteed
the Company's obligations under the Secured Promissory Note
and has pledged all of the shares of common stock of the
Company as collateral.
The financing for the cash portion of the acquisitions was
accomplished by a private placement by Mediware of 1,692,308
shares of its Common Stock, par value $.10 per share, at a
price of $3.25 per share, for a total amount of $5,500,002.
Mediware contributed all of such funds to the Company.
There is no material relationship between Continental and
IHSG, on the one hand, and Mediware or any of its affiliates,
any director or officer of Mediware, or any
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associate of any such director or officer of Mediware, on the
other hand.
On June 18, 1996, the Company released a press release
relating to the acquisitions, a copy of which is filed
herewith as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Businesses Acquired.
-------------------------------------------
Financial statements of Pharmakon and JAC are not
filed herewith but will be filed within 60 days of
this Report on Form 8-K.
(b) Pro Forma Financial Information.
-------------------------------
Pro forma financial information relative to Pharmakon
and JAC are not filed herewith but will be filed
within 60 days of this Report on Form 8- K.
(c) Exhibits.
--------
2(a) - Asset Purchase Agreement dated June 17,
1996 among Digimedics Corporation and
Continental Healthcare Systems, Inc. and
Information Handling Services Group, Inc.
2(b) - Stock Purchase Agreement dated June 17,
1996 among Digimedics Corporation and
Holland America Investment Corporation
and Information Handling Services Group,
Inc.
2(c) - Secured Promissory Note of Digimedics
Corporation dated June 17, 1996 in the
principal amount of $6,000,000 to
Continental Healthcare Systems, Inc.
2(d) - Pledge Agreement dated June 17, 1996
between Mediware and Continental
Healthcare Systems, Inc.
2(e) - Charge dated June 17, 1996 between
Digimedics Corporation and Continental
Healthcare Systems, Inc.
2(f) - General Security Agreement dated June 17,
1996 between Digimedics Corporation and
Continental Healthcare Systems, Inc.
2(g) - Guaranty dated June 17, 1996 by Mediware
in favor of Continental Healthcare
Systems, Inc.
99 - Press Release of Mediware Information
Systems, Inc., released June 18, 1996.
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<PAGE>
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.
MEDIWARE INFORMATION SYSTEMS, INC.
By: /s/ Lawrence Auriana
_____________________________
Chairman of the Board
Date: July 1, 1996
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<PAGE>
EXHIBIT INDEX
-------------
EXHIBITS
- --------
2(a) - Asset Purchase Agreement dated June 17, 1996 among Digimedics
Corporation and Continental Healthcare Systems, Inc. and Information
Handling Services Group, Inc.
2(b) - Stock Purchase Agreement dated June 17, 1996 among Digimedics
Corporation and Holland America Investment Corporation and Information
Handling Services Group, Inc.
2(c) - Secured Promissory Note of Digimedics Corporation dated June 17, 1996
in the principal amount of $6,000,000 to Continental Healthcare
Systems, Inc.
2(d) - Pledge Agreement dated June 17, 1996 between Mediware and Continental
Healthcare Systems, Inc.
2(e) - Charge dated June 17, 1996 between Digimedics Corporation and
Continental Healthcare Systems, Inc.
2(f) - General Security Agreement dated June 17, 1996 between Digimedics
Corporation and Continental Healthcare Systems, Inc.
2(g) - Guaranty dated June 17, 1996 by Mediware in favor of Continental
Healthcare Systems, Inc.
99 - Press Release of Mediware Information Systems, Inc., released
June 18, 1996.
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<PAGE>
Exhibit 2(a)
ASSET PURCHASE AGREEMENT
dated June 17, 1996
between
CONTINENTAL HEALTHCARE SYSTEMS, INC.,
INFORMATION HANDLING SERVICES GROUP, INC.
and
DIGIMEDICS CORP.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01 "Acquisition Documents".............................................. 1
1.02 "Action"............................................................. 2
1.03 "Affiliate".......................................................... 1
1.04 "Agreement" or "this Agreement"...................................... 1
1.05 "Assets"............................................................. 2
1.06 "Assumed Liabilities"................................................ 2
1.07 "Bill of Sale"....................................................... 2
1.08 "Business"........................................................... 2
1.09 "Business Day"....................................................... 2
1.10 "Closing"............................................................ 2
1.11 "Closing Date"....................................................... 2
1.13 "Commerce Plaza Facility"............................................ 2
1.14 "Continental"........................................................ 2
1.15 "Copyrights"......................................................... 2
1.16 "Disclosure Schedule"................................................ 2
1.17 "Encumbrance"........................................................ 2
1.18 "Environmental Laws"...... .......................................... 2
1.19 "Environmental Permits".. ........................................... 3
1.20 "ERISA".............................................................. 3
1.21 "Excluded Assets".................................................... 3
1.22 "Excluded Liabilities"............................................... 3
1.23 "Financial Statements"............................................... 3
1.24 "Governmental Authority"............................................. 3
1.25 "Governmental Order"................................................. 3
1.26 "IHSG"............................................................... 3
1.27 "Indemnified Party".................................................. 3
1.28 "Indemnifying Party"................................................. 3
1.29 "Intellectual Property".............................................. 3
1.30 "Inventories"........................................................ 3
1.31 "IRS"................................................................ 3
1.32 "JAC"..... .......................................................... 4
1.33 "Law"................................................................ 4
1.34 "Lease".............................................................. 4
1.35 "Liabilities"........................................................ 4
1.36 "Losses".............................................................. 4
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TABLE OF CONTENTS
Page
1.37 Material Adverse Effect"........................................... 4
1.38 "Material Contracts"................................................ 4
1.39 "Matkon"............................................................ 4
1.40 "Mediware".......................................................... 4
1.41 "Non-Competition Agreement"......................................... 4
1.42 "Note".............................................................. 4
1.43 "Patents"........................................................... 4
1.44 "Permits"........................................................... 5
1.45 "Permitted Encumbrances"............................................ 5
1.46 "Person"............................................................ 5
1.47 "Pharmakon"......................................................... 5
1.48 "Plans"............................................................. 5
1.49 "Pledge Agreement".................................................. 5
1.50 "Purchase Price".................................................... 5
1.51 "Purchaser"......................................................... 5
1.52 "Regulations"....................................................... 5
1.53 "Related Agreements"................................................ 5
1.54 "Security Agreement"................................................ 5
1.55 "Seller"............................................................ 5
1.56 "Stock Purchase Agreement".......................................... 6
1.57 "Sublease".......................................................... 6
1.58 "Tangible Personal Property"........................................ 6
1.59 "Tax" or "Taxes".................................................... 6
1.60 "Third Party Claims"................................................ 6
1.61 "Trademarks"........................................................ 6
1.62 "Trade Secrets"..................................................... 6
1.63 "U.S. GAAP"...... .................................................. 6
1.64 "Warehouse Lease"................................................... 6
ARTICLE II
PURCHASE AND SALE
2.01 Assets to Be Purchased and Sold....................................... 7
2.02 Assumption of Obligations............................................. 9
2.03 Exclusion of Liabilities.............................................. 10
2.04 Purchase Price; Allocation of Purchase Price.......................... 11
2.05 Closing Deliveries by Seller.......................................... 12
2.06 Closing Deliveries by Purchaser....................................... 12
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TABLE OF CONTENTS
Page
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
3.01 Organization and Authority of Continental............................. 13
3.02 Organization and Authority of IHSG.................................... 14
3.03 No Conflict..... ..................................................... 14
3.04 Consents and Approvals................................................ 15
3.05 Financial Information; Books and Records.............................. 15
3.06 No Undisclosed Liabilities............................................ 15
3.07 Inventories........................................................... 16
3.08 Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions....................................................... 16
3.09 Litigation............................................................ 17
3.10 Compliance with Laws.................................................. 17
3.11 Permits............................................................... 18
3.12 Material Contracts.................................................... 18
3.13 Intellectual Property................................................. 19
3.14 Tangible Personal Property............................................ 21
3.15 Assets................................................................ 21
3.16 Customers............................................................. 22
3.17 Employee Benefit Matters.............................................. 22
3.18 Labor Matters......................................................... 24
3.19 Employees............................................................. 24
3.20 Taxes................................................................. 25
3.21 Insurance............................................................. 25
3.22 Full Disclosure....................................................... 26
3.23 Brokers............................................................... 26
3.24 Accounts Receivables.................................................. 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
4.01 Organization and Authority of Purchaser............................... 26
4.02 No Conflict........................................................... 27
4.03 Consents and Approvals................................................ 27
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TABLE OF CONTENTS
Page
4.04 Litigation............................................................ 27
4.05 Brokers............................................................... 28
4.06 Full Disclosure....................................................... 28
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Facilities............................................................ 28
5.02 Employees............................................................. 28
5.03 Transition Services................................................... 29
5.04 Non-Competition....................................................... 29
5.05 Use of Name........................................................... 29
5.06 Shared Assets......................................................... 30
5.07 Access to Information................................................. 30
5.08 Confidentiality....................................................... 31
5.09 Use of Intellectual Property.......................................... 31
5.10 Taxes................................................................. 32
5.11 Bulk Transfer Laws.................................................... 32
5.12 Consents to Assignments............................................... 32
5.13 No Infringement...................................................... 32
5.14 Further Action........................................................ 33
5.15 Nondisclosure Assistance.............................................. 33
5.16 Mail.................................................................. 33
5.17 Communications Software Licenses...................................... 33
ARTICLE VI
INDEMNIFICATION
6.01 Survival of Representations and Warranties............................ 33
6.02 Indemnification by Continental and IHSG............................... 33
6.03 Indemnification by Purchaser.......................................... 34
6.04 Indemnification Procedures Involving Only Seller and Purchaser........ 34
6.05 Limitation on Indemnification......................................... 35
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TABLE OF CONTENTS
Page
ARTICLE VII
GENERAL PROVISIONS
7.01 Expenses.... ......................................................... 36
7.02 Notices. ............................................................. 36
7.03 Public Announcements.................................................. 37
7.04 Headings.............................................................. 37
7.05 Severability.......................................................... 38
7.06 Entire Agreement...................................................... 38
7.07 Assignment............................................................ 38
7.08 No Third Party Beneficiaries.......................................... 38
7.09 Amendment............................................................. 38
7.10 Governing Law; Consent to Jurisdiction................................ 38
7.11 Dispute Resolution.................................................... 39
7.12 Counterparts.......................................................... 39
7.13 Specific Performance.................................................. 39
7.14 Receipt of Money or Other Assets...................................... 40
7.15 Schedules and Exhibits................................................ 40
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<PAGE>
EXHIBITS
1.06 Form of Bill of Sale and Assignment 1.49 Form of Pledge Agreement
1.54 Form of Security Agreement 1.56 Form of Sublease 2.04(a) Form of
Secured Promissory Note 2.04(b)(i) Form of Charge 2.04(b)(ii) Form of
Mediware Guaranty 2.04(c) Allocation of Purchase Price 2.05(f) Form of
Opinion of Seller's Counsel 2.06(g) Form of Opinion of Purchaser's
Counsel 5.03(a) Form of Computer Services Agreement 5.04 Form of
Non-Competition Agreement
DISCLOSURE SCHEDULE
The Disclosure Schedule shall
include the following Sections
2.01(a)(ii) Furniture, Fixtures, Equipment and Machinery
2.01(a)(iii) Inventories
2.01(a)(ix) Contracts
2.01(a)(x) Permits
2.01(a)(xi) Accounts Receivable
2.01(b)(ii) Excluded Receivables
3.05 Financial Statements
3.08 Certain Changes
3.09 Litigation
3.10 Governmental Orders
3.12(a) Certain Contracts
3.12(b) Defaults
3.13(a) Intellectual Property
3.16 Customers
3.17(a) Employee Benefit Matters
3.18 Employee Discrimination Claims
3.19 Form of Employee Confidentiality Agreement
3.21(a) Insurance
5.02(a) Employees to be hired by Purchaser
5.02(c) Certain Employees
5.06 Matkon Assets
<PAGE>
ASSET PURCHASE AGREEMENT, dated June 17, 1996, among Information
Handling Services Group, Inc., a Delaware corporation ("IHSG"), Continental
Healthcare Systems, Inc., a Delaware corporation ("Continental" or "Seller"),
which is a wholly-owned subsidiary of IHSG, and Digimedics Corp., a California
corporation (the "Purchaser").
WITNESSETH:
WHEREAS, Continental is engaged in, among other things, the business of
developing, selling and supporting computer software systems and providing
management information systems for hospital pharmacies in the United States and
other countries through its Pharmakon division (the "Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all right, title and interest of Seller in and to certain
of Seller's assets relating to the Business, and in connection therewith
Purchaser is willing to assume certain liabilities of Seller relating thereto,
all upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, Continental, IHSG and Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.01 "Acquisition Documents" means this Agreement, the Related
Agreements, and any certificate, or other document delivered at the Closing
pursuant to this Agreement or the transactions contemplated hereby.
1.02 "Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
1.03 "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
1.04 "Agreement" or "this Agreement" means this Asset Purchase
Agreement, dated June 17, 1996, among Continental, IHSG and Purchaser (including
the Exhibits hereto and the Disclosure Schedule) and all amendments hereto made
in accordance with the provisions of Section 9.09.
<PAGE>
1.05 "Assets" has the meaning specified in Section 2.01(a).
1.06 "Assumed Liabilities" has the meaning specified in Section
2.02.
1.07 "Bill of Sale" means the Bill of Sale and Assignment to be
executed by Continental on the Closing Date substantially in the form of Exhibit
1.06 hereto.
1.08 "Business" has the meaning specified in the recitals to this
Agreement.
1.09 "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in New
York City, New York.
1.10 "Closing" means the closing of the transactions contemplated by
this Agreement, which shall occur simultaneous with the execution hereof.
1.11 "Closing Date" means the date of the Agreement.
1.12 "Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
1.13 "Commerce Plaza Facility" means the facility currently leased by
Continental located at Commerce Plaza I, 7300 West 10th Street, Overland Park,
Kansas, pursuant to the Lease.
1.14 "Continental" has the meaning specified in the first paragraph
of this Agreement.
1.15 "Copyrights" means all copyrights, domestic or foreign, whether
registered or unregistered, owned or controlled by Seller relating to the
Business, and all materials and matter (and if in writing, shall include
machine-readable forms) to which such copyrights relate.
1.16 "Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated as of the date hereof, and forming a part of this Agreement.
1.17 "Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim (with respect to title), preferential arrangement, or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.
1.18 "Environmental Laws" means any Law, now in effect and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980;
the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. ss.ss. 6901 et seq.; the Clean
Water Act, 33 U.S.C. ss.ss. 1231 et seq.; the Toxic Substances Control Act, 15
U.S.C. ss.ss. 2601 et seq.; the
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Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. ss.ss. 300f et seq.; the Atomic Energy Act, 42 U.S.C. ss.ss. 2011
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss.
136 et seq.; the Federal Food, Drug and Cosmetic Act, 21 U.S.C.
ss.ss. 301 et seq.; and the Solid Waste Disposal Act, 42 U.S.C. ss.6901 et seq.,
as amended.
1.19 "Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under any
applicable Environmental Law in connection with the operations of the Business
in the manner in which it is currently conducted.
1.20 "ERISA" has the meaning specified in Section 3.19(a).
1.21 "Excluded Assets" has the meaning specified in Section 2.01(b).
1.22 "Excluded Liabilities" has the meaning specified in Section 2.03.
1.23 "Financial Statements" has the meaning specified in Section 3.05.
1.24 "Governmental Authority" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
1.25 "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
1.26 "IHSG" has the meaning specified in the first paragraph of
this Agreement.
1.27 "Indemnified Party" has the meaning specified in Section 6.04(a).
1.28 "Indemnifying Party" has the meaning specified in Section 6.04(a).
1.29 "Intellectual Property" means all intellectual property rights
owned or licensed from a third party by Seller and used in the Business,
including all Copyrights, Patents, Trademarks, Trade Secrets, source codes,
object codes and all rights to sue and recover and retain damages and costs and
attorneys' fees for present and past infringement of any of the Intellectual
Property rights hereinabove set out, in the same manner and to the same extent
as Seller could do or could cause to be done if the transaction contemplated
hereby did not occur.
1.30 "Inventories" means all inventory (including inventory shipped on
consignment), merchandise, work in process, finished goods, and raw materials,
packaging, supplies and other personal property related to the Business,
maintained, held or stored by or for Seller on the Closing Date and any prepaid
deposits for purchases of any of the same.
1.31 "IRS" means the Internal Revenue Service of the United States.
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1.32 "JAC" means JAC Computer Services Ltd., a corporation organized in
the United Kingdom and a wholly owned subsidiary of Continental.
1.33 "Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order or requirement.
1.34 "Lease" means the Lease dated December 24, 1985 between
Continental and Commerce Plaza Partners I, L.P., as amended.
1.35 "Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law, Action or Governmental Order and those arising under any
contract, agreement, arrangement, commitment or undertaking.
1.36 "Losses" has the meaning specified in Section 6.02.
1.37 "Material Adverse Effect" means any circumstance, change in, or
effect on, the Business or Seller that, individually or in the aggregate with
any other circumstances, changes in, or effects on, Seller or the Business: (a)
is, or could reasonably be expected to be, materially adverse to the business,
operations, assets or liabilities (including, without limitation, contingent
liabilities), results of operations or the condition (financial or otherwise) of
the Business or (b) could materially adversely affect the continued operation or
conduct of the Business in the manner in which it is currently operated or
conducted by Seller.
1.38 "Material Contracts" has the meaning specified in Section
3.12(a).
1.39 "Matkon" means the division of Continental engaged in the business
of developing, selling and supporting computer software systems and providing
management information systems to hospitals for materials management, the assets
of which division was sold by Continental to Enterprise Systems, Inc. ("ESI") on
May 28, 1996.
1.40 "Mediware" means Mediware Information Systems, Inc., a New
York corporation.
1.41 "Non-Competition Agreement" means the Non-Competition Agreement to
be executed and delivered at closing among IHSG, Continental and Purchaser as
more fully described in Section 5.04 hereof.
1.42 "Note" has the meaning specified in Section 2.04.
1.43 "Patents" means all U.S. and foreign patents and patent
applications (and any patents issuing therefrom) owned by or licensed to Seller
relating to the Business, together with any extensions, reissues, renewals,
divisions, continuations or continuations-in-part thereof and any foreign
equivalents of any of the foregoing.
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1.44 "Permits" has the meaning specified in Section 3.11.
1.45 "Permitted Encumbrances" means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by Law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations
that (i) are not overdue for a period of more than 30 days and (ii) are not in
excess of $5,000 in the case of a single property or $15,000 in the aggregate at
any time; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations, and (d) other liens which are not material in amount and which do
not interfere in any material way with the operation of the Business.
1.46 "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
1.47 "Pharmakon" means the division of Continental which is engaged in
the business of developing, selling and supporting computer software systems and
providing management information systems for hospital pharmacies.
1.48 "Plans" has the meaning specified in Section 3.19(a).
1.49 "Pledge Agreement" means the Pledge Agreement dated the Closing
Date between Mediware and Seller substantially in the form of Exhibit 1.49
hereto.
1.50 "Purchase Price" has the meaning specified in Section 2.04.
1.51 "Purchaser" has the meaning specified in the first paragraph
to this Agreement.
1.52 "Regulations" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of the Treasury with
respect to the Code or other federal tax statutes.
1.53 "Related Agreements" means the Bill of Sale, the Non-Competition
Agreement, the Sublease, the Note, the Pledge Agreement, the Security Agreement,
the Guaranty, the Charge, the Stock Purchase Agreement and all instruments and
other agreements and documents to be executed and delivered at Closing by
Seller, Purchaser or their Affiliates.
1.54 "Security Agreement" means the General Security Agreement dated
the Closing Date among Purchaser and Seller substantially in the form of Exhibit
1.54 hereto.
1.55 "Seller" has the meaning specified in the first paragraph to
this Agreement.
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1.56 "Stock Purchase Agreement" means the Stock Purchase Agreement
between Purchaser and Seller of even date herewith regarding the sale of the
stock of JAC.
1.57 "Sublease" means the Sublease agreement to be executed by
Purchaser and Continental on the Closing Date substantially in the form of
Exhibit 1.56.
1.58 "Tangible Personal Property" has the meaning specified in
Section 3.14.
1.59 "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other tax charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
1.60 "Third Party Claims" has the meaning specified in Section
6.04(a).
1.61 "Trademarks" means all U.S. and foreign trademarks, tradenames or
service marks owned or licensed by Seller relating to the Business whether
registered, under application or under common law, or with respect to which an
Intent To Use filing has been made as of the Closing Date, including but not
limited to the trademark Pharmakon, and all good will therein.
1.62 "Trade Secrets" means any and all information developed by or for
Seller and/or owned or controlled by Seller at the Closing which relates to the
Business, including but not limited to any formula; data processing, engineering
or manufacturing techniques or methods; research or development information;
technology in process; patterns; devices; compilations; programs; methods;
ideas; inventions; discoveries; know-how; show-how; improvements; procedures;
results; drawings; designs; processes; parts of processes; product components or
composition; product quality protocols and specifications; production manuals;
files; records; plans; proposals; notebooks, production and quality control
data; books and publications, business information; computer programs and data.
1.63 "U.S. GAAP" means generally accepted accounting principles and
practices in effect in the United States from time to time applied consistently
throughout the periods involved.
1.64 "Warehouse Lease" means the lease between Continental and The
Realty Associates Fund III, L.P. for the warehouse located at 9243 Cody,
Overland Park, Kansas.
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ARTICLE II
PURCHASE AND SALE
2.01 Assets to Be Purchased and Sold.
(a) On the terms and subject to the conditions of this
Agreement, simultaneously with the execution of this Agreement by the parties,
Seller shall sell, assign, transfer, convey and deliver to Purchaser and
Purchaser shall purchase from Seller on the Closing Date, all the assets,
properties, goodwill, rights and business of every kind and description and
wherever located, whether tangible or intangible, real, personal or mixed,
directly or indirectly owned by Seller or to which it is directly or indirectly
entitled and, in any case, belonging to or used in the Business (regardless of
whether such assets, properties, goodwill and business are accounted for or
otherwise recorded as such in the books of account and other financial records
of Seller), other than the Excluded Assets (the assets to be purchased by
Purchaser being referred to as the "Assets"), including, without limitation, the
following:
(i) the Business as a going concern;
(ii) all furniture, fixtures, equipment, machinery and other
Tangible Personal Property used or held for use by Seller at the Closing Date in
the conduct of the Business at the locations at which the Business is conducted,
or otherwise owned or held by Seller at the Closing Date for use in the conduct
of the Business, all as listed on Section 2.01(a)(ii) of the Disclosure
Schedule;
(iii) all Inventories, including, but not limited, to the
equipment listed on Disclosure Schedule 2.01(a)(iii);
(iv) all personnel records with respect to employees of the
Business hired by Purchaser, invoices, shipping records, supplier lists,
correspondence and other documents, records and files and all computer software
and programs and any rights thereto owned, associated with or employed by Seller
and used in, or relating to, the Business at the Closing Date;
(v) the goodwill of Seller relating to the Business;
(vi) all Seller's right, title and interest in, to and
under the Intellectual Property;
(vii) all claims, causes of action, chooses in action, rights
of recovery and rights of set-off of any kind (including rights under and
pursuant to all warranties, representations and guarantees made by suppliers of
products, materials or equipment, or components thereof),
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pertaining to, arising out of, and enuring to the benefit of Seller in
connection with the Business (except with respect to the Excluded Assets);
(viii) all sales and promotional literature and other
sales-related materials (including sales literature, advertisements, advertising
copy, records and data) and all intangible assets, including all customer lists,
mailing lists, vendor lists owned, used, associated with or employed by Seller
in connection with the Business at the Closing Date;
(ix) all rights of Seller under all contracts, licenses,
sublicenses, leases, commitments, sales and purchase orders, supplier contracts,
distributorship or other marketing agreements, bids, offers, proposals, and
other agreements in effect as of the Closing Date, whether written or oral, all
as listed on Section 2.01(a)(ix) of the Disclosure Schedule; provided that any
such rights and interests which relate to any contract that Purchaser is not
assuming or agreeing to perform under this Agreement are excluded hereunder;
(x) all Permits held or used by Seller in connection with, or
required for, the Business, to the extent transferable, as listed on Section
2.01(a)(x) of the Disclosure Schedule;
(xi) accounts receivable listed on Disclosure Schedule
2.01(a)(xi);
(xii) all software codes used for the specific purpose of
interfacing Pharmakon to other hospital systems;
(xiii) all call tracking software; and
(xiv) except for the Excluded Assets, all Seller's right,
title and interest on the Closing Date in, to and under all other assets, rights
and claims of every kind and nature used in the operation of the Business.
(b) Anything in Section 2.01(a) to the contrary
notwithstanding, the Assets shall exclude the following assets owned by Seller,
and the Seller shall not sell, assign, transfer, convey or deliver to Purchaser
the following assets (the "Excluded Assets"):
(i) all cash, cash equivalents and marketable securities;
(ii) all billed and unbilled accounts receivable and contract
installments receivable of Seller (including the accounts receivable identified
in Section 2.01(b)(ii) of the Disclosure Schedule, except those identified in
Section 2.01(a)(xi) of the Disclosure Schedule);
(iii) the consideration delivered by Purchaser to Seller
pursuant to this Agreement;
(iv) Federal, state and local income and franchise tax
credits and tax refund claims, any amounts due under tax sharing agreements and
associated returns and records;
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(v) Seller's franchise to be a corporation, its certificate of
incorporation, corporate seal, stock books, minute books and other corporate
records relate to the Seller's corporate organization and capitalization of
Seller;
(vi) Any assets, properties, goodwill, rights and business
used in any other lines of business of Seller, other than the Business;
(vii) The mainframe computer used by Seller which is owned by
Seller's Affiliate and located in Englewood, Colorado;
(viii) All registered and unregistered U.S. and foreign
trademarks, trade names, service marks or corporate names with respect to the
names "Continental Healthcare Systems", "Continental", "Information Handling
Services", "IHS Group", "IHS" or any variation thereof or any name or mark
similar thereto;
(ix) All corporate accounting journals and corporate books
of account;
(x) All assets relating to employee benefit plans;
(xi) All insurance policies, rights to prepaid premiums and
claims against insurers under such policies;
(xii) All prepayments (other than prepayments under service
and maintenance contracts being assigned to and assumed by Purchaser to the
extent such prepayments relate to work to be performed after the Closing);
(xiii) Communications routines used by both the Business,
Matkon and other lines of business of Seller (the "Communications Software")
(except as set forth in Section 5.18); and
(xiv) all other assets of Seller other than the Assets.
2.02 Assumption of Obligations. From and after the Closing, Buyer shall
assume and thereafter perform and discharge all of Seller's Liabilities and
obligations of future performance to the extent such Liabilities and obligations
arise or become due after the Closing Date or remain to be performed after the
Closing Date under the contracts, open purchase orders, leases, licenses and
other agreements listed on Section 2.01(a)(ix) of the Disclosure Schedule
(collectively, the "Assumed Liabilities" or "Assumed Contracts") (but not (i)
Seller's obligations under any non-competition or non-disclosure agreement (ii)
Seller's obligations to pay for services or goods delivered to Seller prior to
the date hereof and (iii) Seller's obligations to perform work related to any of
the matters which have been designated by Seller as "Deferred Revenues").
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2.03 Exclusion of Liabilities. Except as set forth in Section 2.02 or
any other section of this Agreement, Purchaser is not, either directly or
indirectly, by implication or otherwise, assuming or agreeing to pay, perform or
discharge, as the case may be, any liability or obligation of Seller of any
nature whatsoever (including known, unknown, absolute, contingent or otherwise),
and whether or not arising out of, or relating directly or indirectly to, the
operations of the Business on or prior to the Closing Date (the "Excluded
Liabilities"), such Excluded Liabilities to include, without limitation:
(a) all Liabilities of Seller with respect to the Business,
whether or not reflected in the Financial Statements, except for those
obligations of Seller assumed by Purchaser pursuant to Section 2.02 above or any
other section of this Agreement;
(b) all Taxes now or hereafter owed by Seller or any of its
Affiliates, or attributable to the Assets or the Business, relating to any
period, or any portion of any period, ending on or prior to the Closing Date, or
incurred by Seller and its Affiliates as a consequence of the negotiation or
consummation of this Agreement and the Bill of Sale and transactions
contemplated hereby and thereby;
(c) all Liabilities of Seller relating to or arising out of
the Excluded Assets;
(d) all Liabilities of Seller to employees of Seller, whether
or not employed by Purchaser after the Closing Date, including but not limited
to (i) wages, salaries or other remuneration for services rendered prior to the
Closing Date, accrued vacation time and sick days, (ii) pension, profit sharing
or other employee benefits payable to such employees prior to the Closing Date,
whether or not such employees are offered employment or become employees of,
Purchaser, or (iii) employee claims or employer-related claims arising as a
result of Seller's termination of a Seller employee on or prior to the Closing
Date;
(e) all Liabilities of Seller arising or incurred in
connection with the negotiation, preparation and execution of this Agreement and
the transactions contemplated hereby, including, without limitation, fees and
expenses of Seller's counsel, accountants and other experts;
(f) all Liabilities of Seller relating to or arising out of
(i) any failure to comply with any applicable Environmental Law or any failure
to procure any required Environmental Permit or (ii) any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations, proceedings, consent
orders or consent agreements relating in any way to any Environmental Law or any
Environmental Permit;
(g) all liabilities under commercial bulk sales law; and
(h) all product liability matters (i.e., claims for injury to
any Person or damage to tangible property) that relate to products sold by
Seller prior to Closing, unless such
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injury or damage is proven to have been caused by the negligence of Purchaser in
servicing or updating the Products after the Closing Date.
2.04 Purchase Price; Allocation of Purchase Price.
(a) The purchase price for the Assets shall be Eight Million
Two Hundred Eighty One Thousand Four Hundred Three Dollars (US$8,281,403) (the
"Purchase Price"), of which One Hundred Thousand ($100,000) has previously been
paid to Seller. The Purchase Price will be payable as follows:
(i) Two Million One Hundred Eighty One Thousand
Four Hundred Three Dollars ($2,181,403) in cash at Closing (subject to
adjustment pursuant to Section 2.04(d)); and
(ii) Six Million Dollars ($6,000,000) pursuant to a
Secured Promissory Note substantially in the form of Exhibit 2.04(a) attached
hereto (the "Note").
(b) As security for Purchaser's obligations under the Note,
Purchaser will grant to Seller a security interest in all of Purchaser's assets,
including the Assets acquired hereunder (subject to existing liens), pursuant to
the Security Agreement and will grant Seller a security interest in the shares
of JAC to be acquired by Purchaser pursuant to a Charge of even date herewith in
the form of Exhibit 2.04(b)(i) attached hereto (the "Charge"). In addition,
Mediware will guarantee Purchaser's obligations under the Note, through a pledge
all of the shares of Purchaser pursuant to the Pledge Agreement and the
execution and delivery of a Guaranty in favor of Seller in the form of Exhibit
2.04(b)(ii) (the "Guaranty").
(c) The Purchase Price shall be allocated among the Assets and
as consideration for the Non-Competition Agreement as of the Closing Date in
accordance with Exhibit 2.04(c). Any subsequent adjustments to the Purchase
Price shall be reflected in the allocation hereunder in a manner consistent with
Treasury Regulation ss. 1.1060-1T(f). Seller and Purchaser each shall file IRS
Form 8594 (Asset Acquisition Statement under I.R.C. Section 1060) and for all
Tax purposes, Purchaser and Seller agree to report the transactions contemplated
in this Agreement in a manner consistent with the terms of this Agreement,
including the allocation under Exhibit 2.04(c), and that none of them will take
any position inconsistent therewith in any Tax return, in any refund claim, in
any litigation, investigation or otherwise.
(d) The cash portion of the Purchase Price payable under
Section 2.04(a)(i) above shall be reduced (i) to the extent that Seller has
received any prepayments on customer service and maintenance contracts which
Purchaser assumes for services to be performed after the Closing. As an example
of the foregoing if a customer prepaid Seller One Thousand Dollars ($1,000) for
maintenance for the month of June, the Purchase Price shall be reduced by 13/30
of such amount ($433.33).
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2.05 Closing Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser:
(a) the Bill of Sale and such other instruments of sale,
conveyance, transfer and assignment, in form and substance satisfactory to
Purchaser, as may be requested by Purchaser to transfer the Assets to Purchaser,
evidence such transfer on the public records and vest in Purchase all of the
properties, assets and rights to be sold, assigned or transferred to Purchaser
hereunder;
(b) a receipt for the cash portion of the Purchase Price
being paid at Closing;
(c) all of the Related Agreements required to be executed and
delivered hereunder by Seller;
(d) a true and complete copy, certified by the Secretary or an
Assistant Secretary of each of Continental and IHSG, of the resolutions duly and
validly adopted by the Board of Directors of Continental and IHSG evidencing
their authorization of the execution and delivery of this Agreement and the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby;
(e) a certificate of the Secretary or an Assistant Secretary
of each of Continental and IHSG certifying the names and signatures of the
respective officers of Continental and IHSG authorized to sign this Agreement
and the Related Agreements and the other documents to be delivered hereunder and
thereunder;
(f) the legal opinion of Stephen Green, counsel to Continental
and IHSG, addressed to Purchaser, substantially in the form of Exhibit 2.05(f);
(g) full, actual and unimpeded possession of the Assets;
(h) a Sublease with respect to the Commerce Plaza Facility as
contemplated by Section 5.01 hereof; and
(i) consents to the assignment of the contracts identified in
Section 2.05(i) of the Disclosure Schedule.
2.06 Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller:
(a) a wire transfer to an account designated by Seller in the
amount of Two Million One Hundred Eighty One Thousand Four Hundred Three
($2,181,403) (less adjustments pursuant to Section 2.04(d)) representing the
portion of the Purchase Price to be paid in cash at the Closing;
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(b) the Note;
(c) all of the Related Agreements required to be executed and
delivered hereunder by Purchaser and its Affiliates; and
(d) such instruments in form satisfactory to Seller, as may
be reasonably requested by Seller to evidence the assumption of the Assumed
Liabilities.
(e) a true and complete copy, certified by the Secretary or an
Assistant Secretary of Purchaser, of the resolutions duly and validly adopted by
the Board of Directors of Purchaser evidencing its authorization of the
execution and delivery of this Agreement and the Related Agreements to which it
is a party and the consummation of the transactions contemplated hereby and
thereby;
(f) a certificate of the Secretary or an Assistant Secretary
of Purchaser certifying the names and signatures of the officers of Purchaser
authorized to sign this Agreement and the Related Agreements and the other
documents to be delivered hereunder and thereunder; and
(g) the legal opinion of Winthrop, Stimson, Putnam & Roberts,
addressed to Seller and dated the Closing Date, substantially in the form of
Exhibit 2.06(g))
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller and
IHSG jointly and severally hereby represents and warrants to Purchaser as
follows:
3.01 Organization and Authority of Continental. Continental is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly licensed or qualified to do business and is
in good standing in each jurisdiction in which the properties owned or leased by
it or the operation of the Business makes such licensing or qualification
necessary, except to the extent that the failure to be so licensed or qualified
would not adversely affect (i) the ability of Continental to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Related Agreements and (ii) the ability of Continental to
conduct the Business. Continental has all requisite corporate power and
authority to (i) conduct the Business as now conducted and to own or lease and
operate the assets and properties now owned or leased and operated by it and
(ii) enter into and carry out its obligations hereunder and under the Related
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Related Agreements by
Continental and the performance by Continental of its obligations
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hereunder and thereunder and the consummation by Continental of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of Continental. This Agreement has been, and upon its
execution the Related Agreements will be, duly executed and delivered by
Continental, and (assuming due authorization, execution and delivery by IHSG and
Purchaser) this Agreement constitutes, and upon its execution the Related
Agreements will constitute, legal, valid and binding obligations of Continental
enforceable against Continental in accordance with their respective terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors rights generally and (ii) the remedy of specific
performance and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
3.02 Organization and Authority of IHSG. IHSG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it
makes such licensing or qualification necessary, except to the extent that the
failure to be so licensed or qualified would not adversely affect the ability of
IHSG to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Related Agreements. IHSG has all
requisite corporate power and authority to (i) to own or lease and operate the
assets and properties now owned or leased and operated by it and (ii) carry out
its obligations hereunder and under the Related Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Related Agreements by IHSG and the performance by IHSG of its
obligations hereunder and thereunder and the consummation by IHSG of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of IHSG. This Agreement has been, and upon its
execution the Related Agreements will be, duly executed and delivered by IHSG,
and (assuming due authorization, execution and delivery by Continental and
Purchaser) this Agreement constitutes, and upon its execution the Related
Agreements will constitute, legal, valid and binding obligations of IHSG
enforceable against IHSG in accordance with their respective terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors rights generally and (ii) the remedy of specific performance and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
3.03 No Conflict.
(a) Assuming that all consents, approvals, authorizations,
orders, actions, filings and notifications required to assign any of the
contracts listed in Section 2.01(a)(ix) have been obtained, the execution,
delivery and performance by Seller of this Agreement and the Related Agreements
do not and will not (a) violate, conflict with or result in the breach of any
provision of the charter or by-laws (or similar organizational documents) of
either Continental or IHSG, (b) conflict with or violate (or cause an event
which could have a Material Adverse Effect as a result of) any Law or
Governmental Order applicable to Seller or any of its assets, properties
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or businesses or (c) conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
Assets pursuant to, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or arrangement
to which Seller is a party relating to or effecting the Business or by which any
of such Assets is bound or affected.
(b) Seller has not violated any applicable statute, order,
rule or regulation which would prevent the consummation of the transactions
contemplated herein.
3.04 Consents and Approvals.
(a) The execution, delivery and performance by Seller of this
Agreement and the Related Agreements do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority.
(b) The execution and delivery of this Agreement and the
Related Agreements by Seller do not, and the performance by Seller of this
Agreement and the Related Agreements will not, require any third-party consents,
approvals, authorizations or actions on the part of Seller, except (i) consents
required to assign any of the contracts listed on Schedule 2.01(a)(ix) or (ii)
where failure to obtain such consents, approvals, authorizations or actions
would not have a Material Adverse Effect.
3.05 Financial Information; Books and Records. True and complete copies
of (i) the audited financial statements of Pharmakon for each of the two fiscal
years ended November 30, 1994 and November 30, 1995, together with all related
notes and schedules thereto, accompanied by the reports thereon of Richard A.
Eisner and Company, LLP, (the "Audited Financial Statements") and (ii) the
unaudited financial information of Pharmakon for the five months ended April 30,
1996 (the "Unaudited Financial Information") (collectively, the "Financial
Statements"), are attached as Section 3.05 to the Disclosure Schedule. The
Audited Financial Statements (i) were prepared in accordance with the books of
account and other financial records of Pharmakon (ii) present fairly in all
material respects the financial condition and results of operations of Pharmakon
as of the dates thereof or for the period covered thereby and (iii) have been
prepared in accordance with U.S. GAAP applied on a consistent basis. The
Unaudited Financial Information was prepared on a basis consistent with the
Audited Financial Statements and include all adjustments (consisting only of
normal recurring accruals) that are necessary for a fair presentation of the
Unaudited Financial Information as of the date thereof.
3.06 No Undisclosed Liabilities. There are no Liabilities of Pharmakon
required to be reflected or reserved against in a balance sheet of Pharmakon
prepared in accordance with U.S. GAAP other than (i) Liabilities reflected or
reserved against on the balance sheet at April 30, 1996 included in the
Financial Statements, (ii) Liabilities reflected in the other Sections of the
Disclosure Schedule and (iii) Liabilities incurred since April 30, 1996 in the
ordinary course
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of the Business, which will not have a Material Adverse Effect. Reserves are
reflected on the Financial Statements against all Liabilities of Seller, other
than Liabilities relating to the Excluded Assets and Excluded Liabilities, in
amounts that have been established in accordance with U.S. GAAP.
3.07 Inventories.
(a) Seller presently has good and valid title to the
Inventories free and clear of all Encumbrances (except Permitted Encumbrances)
and at the Closing Seller will deliver to Purchaser good and marketable title to
the Inventories free and clear of all Encumbrances (except Permitted
Encumbrances and except for the lien of Seller contemplated by the Related
Agreements). The Inventories listed on the balance sheet at April 30, 1996
included in the Financial Statements do not include items that are obsolete,
damaged or slow-moving. The Inventories do not consist of any items held on
consignment.
(b) The Inventories listed on the balance sheet at April 30,
1996 included in the Financial Statements are in good and merchantable condition
in all material respects, are suitable and usable for the purposes for which
they are intended.
3.08 Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions. Except as set forth in Section 3.08 of the Disclosure Schedule,
since November 30, 1995, the Business has been conducted in the ordinary course
and consistent with past practice. As amplification and not limitation of the
foregoing, except such as would not have a Material Adverse Effect, since
November 30, 1995, Seller has not, with respect to the Business, and other than
in the ordinary course of the Business consistent with past practice;
(i) permitted or allowed any of the Assets (whether tangible or
intangible) to be subjected to any Encumbrance;
(ii) written up (or failed to write down in accordance with U.S.
GAAP consistent with past practice) the value of any Inventories or
revalued any assets of Seller;
(iii) made any change in any method of accounting or accounting
practice or policy used by Seller adversely affecting any of the
Assets, other than such changes required by U.S. GAAP;
(iv) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible
property), other than the sale of Inventories in the ordinary course
of the Business consistent with past practice;
(v) failed to pay any creditor of the Business any amount owed to
such creditor when due;
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(vi) disclosed any secret or confidential Intellectual
Property (except by way of issuance of a patent) or permitted to lapse
or go abandoned any of the Intellectual Property (or any registration
or grant thereof or any application relating thereto) to which, or
under which, Seller has any right, title, interest or license;
(vii) allowed any Permit that was issued or relates to Seller
or otherwise relates to the Business to lapse or terminate or failed to
renew any insurance policy or Permit that is scheduled to terminate or
expire on or prior to the Closing Date;
(viii) had knowledge of any labor trouble involving any union or
other group of employees connected with the Business;
(ix) increased the salaries, benefits or other compensations
of, made any advances or loan to, any of its officers or employees
connected with the Business, except for increases consistent with
Seller's past practices; or
(x) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.08 or granted any options to
purchase, rights of first refusal, rights of first offer or any other
similar rights with respect to any of the actions specified in this
Section 3.08, except as expressly contemplated by this Agreement and
the Related Agreements.
3.09 Litigation. Except as set forth in Section 3.09 of the Disclosure
Schedule, there are no Actions by or against Seller which affect any of the
Assets or the Business pending or, to the best knowledge of Seller, threatened,
which, if decided adversely against Seller or its Affiliates, would have a
Material Adverse Effect. Neither Seller nor any of the Assets is subject to any
Governmental Order relating to the Business or the Assets (nor, to the best
knowledge of Seller after due inquiry, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) or which would adversely
affect the ability of Seller to execute, deliver and carry out its obligations
under this Agreement and the Related Agreements. There are no Actions pending
or, to the best knowledge of Seller, threatened against Seller or IHSG before
any Governmental Authority which questions or challenges the validity of this
Agreement, any of the Related Agreements, or any of the actions to be taken
hereunder or thereunder.
3.10 Compliance with Laws. Seller has used the Assets and conducted and
continues to conduct the Business in all material respects in accordance with
all Laws and Governmental Orders applicable to Seller, any of the Assets, or the
Business, and Seller is not in material violation of any such Law or
Governmental Order. Section 3.10 of the Disclosure Schedule sets forth a brief
description of each Governmental Order currently directed towards Seller with
respect to the conduct of the Business or any of the Assets, and no such
Governmental Order will have or has had a Material Adverse Effect.
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3.11 Permits.
(a) Seller currently holds all material permits, licenses,
authorizations, certificates, exemptions, agreements, waivers and approvals of
Governmental Authorities, including, without limitation, all material health,
safety and Environmental Permits (collectively, "Permits"), necessary or proper
to own, lease, use and operate the Assets and for the conduct of the Business.
All such Permits are valid and in full force and effect, and no suspension,
cancellation or other limitation of any of the Permits is pending or to the best
knowledge of Seller, threatened. Seller has not received any notice from any
Governmental Authority revoking, canceling, rescinding, materially modifying or
refusing to renew any Permit or providing written notice of violations under any
Law. Seller is in all material respects in compliance with all Permits and all
applicable Laws.
(b) Seller has all authorizations from Governmental
Authorities, creditors and other third parties necessary for it to execute,
deliver, consummate and perform this Agreement and the Related Agreements.
3.12 Material Contracts.
(a) The contracts, agreements, licenses, leases and sales and
purchase orders listed in Section 2.01(a)(ix) of the Disclosure Schedule and
Section 3.12(a) of the Disclosure Schedule are all of the contracts, agreements,
licenses, leases and sales and purchase orders to which Seller is a party to or
by which Seller is bound applicable to the operation of the Assets and the
conduct of the Business (other than contracts which involve amounts of less than
$5,000), including, without limitation (i) any contract for the purchase, sale
or lease of real property; (ii) any contract for the lease or sublease of
Tangible Personal Property, under which Seller's undischarged obligations exceed
$5,000; (iii) any contract for the purchase or sale of raw materials,
commodities, merchandise, supplies, other materials or Tangible Personal
Property or for the furnishing or receipt of services which have not been
received by Seller and calls for performance over a period of more than thirty
(30) days and involves more than the sum of $5,000; (iv) any material
distributor, dealer, manufacturer's representative, sales, agency or advertising
contract; (v) any customer contract which involves more than the sum of $5,000;
and (vii) any other material contract to which Seller is a party to or by which
Seller is bound, whether or not made in the ordinary course of business, which
affects the Assets or the Business. Such contracts and agreements, together with
all agreements relating to Intellectual Property set forth in Section 3.13(a) of
the Disclosure Schedule, being "Material Contracts").
(b) Each Material Contract: (i) is valid and binding on the
respective parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement and the Related
Agreements, except to the extent that any required consents to assignment are
not obtained, shall continue in full force and effect without penalty or other
Material Adverse Effect. Except (i) as set forth in Section 3.12(b) of the
Disclosure Schedule and (ii) unfulfilled obligations of Seller which relate to
items designated by Seller as "Deferred Revenues", Seller is not in material
breach of, or default under, any Material
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Contract. To the best knowledge of Seller, no other party to any Material
Contract is in breach thereof or default thereunder. There is no contract,
agreement or other arrangement granting any Person any preferential right to
purchase any of the Assets.
(c) Seller has not received any written notice or, to the best
knowledge of the members of the Executive Management Committee of Seller, any
non-written notice, of cancellation or termination of any Material Contract. The
Executive Management Committee of Seller is comprised of the heads of each of
Seller's departments.
(d) The leases of real estate set forth on Disclosure Schedule
2.01(a)(ix) are all of the leases of real property to which Seller is a party
with respect to all of the premises used in Seller's operation of the Business.
All of such leases are in full force and effect and in good standing, valid and
enforceable by Seller in accordance with its terms. The leases and operation of
the Business as currently conducted are not in violation of any applicable
certificate of occupancy or zoning or in material violation of other laws,
local, state or federal. No event has occurred which, with notice or lapse of
time or both, would constitute a default by Seller under any such lease.
3.13 Intellectual Property.
(a) Section 3.13(a) of the Disclosure Schedule sets forth a
true and complete list and a brief description, including a complete
identification, of all Patents, Trademarks and Registered Copyrights owned or
licensed by Seller and used in the Business. In each registration or patent or
application for registration or patent listed in Section 3.13(a) of the
Disclosure Schedule held by assignment, the assignment has been recorded with
the state or national Trademark Office from which the original registration
issued or before which the application for registration is pending. The rights
of Seller in or to such Intellectual Property owned by Seller do not conflict
with or infringe on the rights of any other Person and Seller has not received
any written claim or notice from any Person to such effect. Seller is not
subject to any Governmental Order or agreement restricting its use of the
Intellectual Property, except for such restrictions contained in Intellectual
Property licensed from third parties, which licensed Intellectual Property
(other than "off the shelf" software such as word processing and spreadsheet
programs) is listed in Section 3.13(a) of the Disclosure Schedule.
(b) The Intellectual Property owned by Seller is free and
clear of any Encumbrance. No Actions have been made or asserted or are pending
or, to the best knowledge of Seller, threatened against Seller either (i) based
upon or challenging or seeking to deny or restrict the use by Seller of any of
the Intellectual Property or (ii) alleging that any services provided, or
products manufactured or sold by Seller in connection with the Business are
being provided, manufactured or sold in violation of any patents or trademarks,
or any other rights of any Person. To the best knowledge of Seller, no Person is
using any patents, copyrights, trademarks, service marks, trade names, trade
secrets or similar property that infringe upon the Intellectual Property owned
by Seller or upon the rights of Seller used in the Business. Seller has not
granted any license or other right to any other Person with respect to the
Intellectual
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Property except for licenses of software to customers. The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of any of the Intellectual Property owned by Seller.
(c) Seller has, or has caused to be, made available to
Purchaser correct and complete copies of all licenses and sublicenses for
Intellectual Property licensed from third parties set forth in Section 3.13(a)
of the Disclosure Schedule and any and all ancillary documents pertaining
thereto (including, but not limited to, all amendments, consents and evidence of
commencement dates and expiration dates). With respect to each of such licenses
and sublicenses:
(i) such license or sublicense, together with all ancillary
documents made available pursuant to the first sentence of this Section
3.13(c), is valid, binding, enforceable and in full force and effect
and represents the entire agreement between the respective licensor and
licensee with respect to the subject matter of such license or
sublicense;
(ii) subject to obtaining any necessary consent to assignment
from the licensor, such license or sublicense will not cease to be
valid, binding, enforceable and in full force and effect on the terms
currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of the
transactions contemplated by this Agreement constitute a breach or
default under such license or sublicense or otherwise give the licensor
or sublicensor a right to terminate such license or sublicense;
(iii) with respect to each such license or sublicense; (A)
Seller has not received any notice of cancellation or termination under
such license or sublicense and no licensor or sublicensor has any right
of termination or cancellation under such license or sublicense except
in connection with the default of Seller thereunder, (B) Seller has not
received any notice of a breach or default under such license or
sublicense, which breach or default has not been cured, and (C) Seller
has not granted to any other Person any rights, adverse or otherwise,
under such license or sublicense (except for licenses of software to
customers);
(iv) neither Seller nor to the best knowledge of Seller, any
other party to such license or sublicense, is in breach or default in
any material respect, and no event has occurred with respect to Seller,
or to the best knowledge of Seller, such other party, that, with notice
or lapse of time would constitute such a breach or default or permit
termination, modification or acceleration under such license or
sublicense;
(v) no Actions have been made or asserted or are pending or,
to the best knowledge of Seller, threatened against Seller either (A)
based upon or challenging or seeking to deny or restrict the use by
Seller of any of the licensed Intellectual Property
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or (B) alleging that any licensed Intellectual Property is being
licensed, sublicensed or used in violation of any patents or
trademarks, or any other rights of any Person; and
(vi) to the best knowledge of Seller, no Person is using any
patents, copyrights, trademarks, service marks, trade names, trade
secrets or similar property that infringe upon the Seller's use of the
licensed Intellectual Property or upon the rights of Seller therein.
(d) Seller is not aware of any reason that would prevent any
pending applications to register trademarks, service marks or copyrights or any
pending patent applications from being granted.
(e) All rights of Seller in each item of Intellectual Property
owned by Seller are transferable to Purchaser as herein contemplated. As a
result of the transactions contemplated hereby, upon the Closing, subject to
obtaining necessary consents to transfer licensed Intellectual Property,
Purchaser shall own or possess, or own or possess adequate and enforceable
licenses, sublicenses or other rights to use, all the Intellectual Property.
(f) Other than "off the shelf" software, the Intellectual
Property set forth in Sections 3.13(a) of the Disclosure Schedule constitutes
all the Intellectual Property used in or held by Seller to be used in, and
necessary in the conduct of, the Business as currently conducted and there are
no other items of Intellectual Property that are material to Seller or the
Business.
3.14 Tangible Personal Property. Section 2.01(a)(ii) of the Disclosure
Schedule lists each item or distinct group of machinery, equipment, tools,
supplies, furniture, fixtures, personalty, vehicles, rolling stock and other
tangible personal property (the "Tangible Personal Property") used in the
Business and owned by Seller.
3.15 Assets.
(a) Seller owns, leases or has the legal right to use all the
properties and assets, including, without limitation, the Intellectual Property
and the Tangible Personal Property, used in the conduct of the Business and,
with respect to contract rights, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements used by Seller in
or relating to the conduct of the Business. Seller has good and valid title to,
or, in the case of leased or subleased Assets, valid and subsisting leasehold
interests in, all the Assets, free and clear of all Encumbrances, except
Permitted Encumbrances.
(b) At all times since November 30, 1995, Seller has caused
the Assets to be maintained in accordance with good business practice, and all
items of the Tangible Personal Property are in good operating condition and
repair, subject to ordinary wear and tear, and are suitable for the purposes for
which they are used and intended.
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(c) Seller has the complete and unrestricted power and
unqualified right to sell, assign, transfer, convey and deliver the Assets to
Purchaser without penalty or other adverse consequences (subject to consents
necessary for assignment of contracts). Following the consummation of the
transactions contemplated by this Agreement and the execution of the instruments
of transfer contemplated by this Agreement, Purchaser will own, with good and
valid title, or lease, under valid and subsisting leases, or otherwise acquire
the interests of Seller in the Assets, free and clear of any Encumbrances, other
than Permitted Encumbrances, and without incurring any penalty or other adverse
consequence, including, without limitation, any increase in rentals, royalties,
or license or other fees imposed as a result of, or arising from, the
consummation of the transactions contemplated by this Agreement (subject to
consents necessary for assignment of contracts).
(d) The Assets, taken as a whole, are sufficient for the
continuation of the Business as now conducted by Seller, subject to replacement
by Purchaser of the Excluded Assets.
(e) There are no claims with insurers currently pending with
respect to any of the Assets.
3.16 Customers. Listed on Section 3.16 to the Disclosure Schedule are
the names of all current maintenance customers of the Business and the amount
each such customer is currently invoiced for support services and maintenance.
Except as set forth on Section 3.16 to the Disclosure Schedule, Seller has not
received any written notice or, to the best knowledge of the members of Seller's
Executive Committee, any non-written notice, that any material customer of
Seller has ceased, or intends to cease, to use the products, equipment, goods or
services of the Business.
3.17 Employee Benefit Matters.
(a) Plans and Material Documents. Section 3.17(a) of the
Disclosure Schedule lists all employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and all
employment, termination, severance or other contracts or agreements, whether
legally enforceable or not, to which Seller is a party, with respect to which
Seller has any obligation or which are maintained, contributed to or sponsored
by Seller for the benefit of any current or former employee, officer or director
of Seller (collectively, the "Plans"). Each Plan is in writing and Seller has
made available to Purchaser a complete and accurate copy of each Plan and all
other material documents prepared in connection with, or relating to legal
compliance or the material terms or funding of such Plans. Seller does not have
any express or implied commitment, whether legally enforceable or not, (i) to
create, incur liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into any contract or
agreement to provide compensation or benefits to any individual or (iii) to
modify, change or terminate any
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Plan, other than with respect to a modification, change or termination required
by ERISA or the Code.
(b) Absence of Certain Types of Plans. None of the Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
or a single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which Seller could incur liability under Section 4063 or 4064 of
ERISA. None of the Plans provides for the payment of separation, severance,
termination or similar-type benefits to any Person or obligates Seller to pay
separation, severance, termination or similar-type benefits solely as a result
of any transaction contemplated by this Agreement or as a result of a "change in
control", within the meaning of such term under Section 280G of the Code (other
than payment of severance benefits to certain employees of the Business who are
not offered employment by Purchaser). Each of the Plans is subject only to the
laws of the United States or a political subdivision thereof.
(c) Compliance with Applicable Law. Each Plan is now and
always has been operated in all respects in accordance with the requirements of
all applicable Law, including, without limitation, ERISA and the Code. Seller
has performed all obligations required to be performed by it under, is not in
any respect in default under or in violation of, and has no knowledge of any
default or violation by any party to, any Plan. No legal action, suit or claim
is pending, or to the best of Seller's knowledge, threatened with respect to any
Plan (other than claims for benefits in the ordinary course) and no fact or
event exists that could give rise to any such action, suit or claim.
(d) Absence of Certain Liabilities and Events. Seller has not
incurred. and no event, transaction or condition has occurred or exists that
could result in the occurrence of any liability to the Pension Benefit Guaranty
Corporation or any withdrawal liability within the meaning of Section 4201 of
ERISA, or the penalty, excise tax or joint and several liability provisions of
the Code relating to employee benefit plans, in any such case relative to any
Plan or any pension plan maintained by any company that would be treated as a
single employer with Seller under Section 4001 of ERISA or Section 414 of the
Code.
(e) Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Plan have been made
on or before their due dates as prescribed by any such Plan and applicable Law.
All such contributions have been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any government entity and no
fact or event exists which could give rise to any such challenge or
disallowance. As of the Closing Date, no Plan which is subject to Title IV of
ERISA will have an "unfunded benefit liability" (within the meaning of Section
4001(a)(18) of ERISA). The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits payable to or in respect of any employee of Seller with respect to the
Business.
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(f) Workers Adjustment and Retraining Notification Act. The
requirements of the Workers Adjustment and Retraining Notification Act do not
apply to the transactions contemplated by this Agreement.
3.18 Labor Matters. (a) Seller is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by Seller in the Business and currently there are no organizational
campaigns, petitions or other unionization activities seeking recognition of a
collective bargaining unit with respect to employees of Seller which could
affect the Business; (b) there are no strikes, slowdowns or work stoppages
pending or, to the best knowledge of Seller, threatened between Seller and any
of its employees, and Seller has not experienced any such strike, slowdown or
work stoppage within the past three years; (c) Seller has not breached or
otherwise failed to comply with the provisions of any collective bargaining or
union contract and there are no grievances outstanding against Seller under any
such agreement or contract that could have a Material Adverse Effect; (d) there
are no unfair labor practice complaints pending against Seller before the
National Labor Relations Board or any other Governmental Authority or any
current union representation questions involving employees of Seller; (e) Seller
is currently in compliance in all material respects with all applicable Laws
relating to the employment of labor, including those related to wages, hours,
collective bargaining and the payment and withholding of taxes and other sums as
required by the appropriate Governmental Authority and has withheld and paid to
the appropriate Governmental Authority or is holding for payment not yet due to
such Governmental Authority all amounts required to be withheld from employees
of Seller and is not liable for any arrears of wages, taxes, penalties or other
sums for failure to comply with any of the foregoing; (f) Seller has paid in
full to all its employees or adequately accrued for in accordance with U.S. GAAP
consistently applied all wages, salaries, commissions, bonuses, benefits and
other compensation due to or on behalf of such employees; (g) there is no claim
with respect to payment of wages, salary or over-time pay that has been asserted
or is now pending or, to the best knowledge of Seller, threatened before any
Governmental Authority with respect to any Persons currently or formerly
employed by Seller with respect to the Business; (h) Seller is not a party to,
or otherwise bound by, any consent decree with, or citation by, any Governmental
Authority relating to employees or employment practices; (i) there is no charge
or proceeding with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or, to the best knowledge of
Seller, threatened with respect to the Business; and (j) except as set forth in
Section 3.18 of the Disclosure Schedule, there is no charge of discrimination in
employment or employment practices by any employee of Seller with respect to the
Business, for any reason, including, without limitation, age, gender, race,
religion or other legally protected category, which has been asserted or is now
pending or, to the best knowledge of Seller, threatened before the United States
Equal Employment Opportunity Commission, or any other Governmental Authority in
any jurisdiction in which Seller has employed or currently employs any Person.
3.19 Employees. All directors, officers, management employees, and
technical and professional employees of Seller with respect to the Business have
executed employee confidentiality agreements substantially in the form attached
as Section 3.19 of the Disclosure Schedule, except as set forth in Section 3.19
of the Disclosure Schedule.
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3.20 Taxes.
(a)(i) All returns and reports in respect of Taxes required to
be filed with respect to Seller or the Business have been timely and properly
filed (or filing extensions applied for), except for filings in jurisdictions
where the failure to file would not have a Material Adverse Effect, or result in
the creation of any Encumbrance; (ii) all Taxes required to be shown on such
returns and reports or otherwise due have been timely paid; (iii) all such
returns and reports are true, correct and complete in all material respects;
(iv) there are no Tax liens on any assets of Seller or of the Business except
Permitted Encumbrances; (v) since November 30, 1995, Seller has not, nor have
any of its Affiliates, made, or caused or permitted to be made, any Tax election
that would affect the Business.
(b) On April 30, 1996, reserves and allowances have been
provided adequate to satisfy all Liabilities for Taxes relating to Business for
periods through the Closing Date (without regard to the materiality thereof).
(c) To the extent that any sales and use taxes that may be
levied or imposed by any state, county, city or other political subdivision in
respect of any sales made by Seller prior to the Closing have not been fully
paid, satisfied, and discharged by Seller at or prior to the Closing, then
Seller will pay, satisfy and discharge the same following the Closing as
required by applicable law.
3.21 Insurance.
(a) Through the Closing Date, the Assets and all material
risks of the Business and Seller are covered by valid and currently effective
insurance policies or binders of insurance (including, without limitation,
general liability insurance), issued in favor of Seller, in each case with
responsible insurance companies, in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in businesses and operations similar to those of Seller. Section 3.21(a)
of the Disclosure Schedule sets forth all such policies or binders held by or on
behalf of Seller currently in effect (specifying the insurer, the policy number
or covering note number with respect to binders, and describing each open claim
thereunder, and specifying the aggregate limits of liability thereunder). Each
such insurance policy and binder is legal, valid, binding and enforceable in
accordance with its terms and is in full force and effect. Neither Seller nor
any Person holding any such policy or binder is in breach or default with
respect to any provision contained in any such policy or binder, and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default or permit termination or modification under the policy, nor
has Seller or any such policyholder failed to give any notice of any claim under
any such policy or binder in due or timely fashion. Neither Seller nor any such
policyholder has cancelled or failed to renew any such policy or binder, has
knowledge of any material inaccuracy in any application for such policies or
binders, has failed to pay premiums when due, has knowledge of any similar state
of facts that might form the basis for termination of any such insurance, or
given notice of any such circumstance.
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(b) At the time of the Closing, all insurance policies
currently in effect will be outstanding and duly in force.
3.22 Full Disclosure.
(a) No representation or warranty of Seller in this Agreement,
any of the Related Agreements nor any statement or certificate furnished to
Purchaser on the date hereof pursuant to this Agreement, or furnished to
Purchaser on the date hereof in connection with the transactions contemplated by
this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
(b) Seller has made available to Purchaser true, correct and
complete copies of all documents, including all amendments, supplements or
modifications thereof or waivers currently in effect thereunder, described in
any Disclosure Schedule.
3.23 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 or the Related Agreements based upon
arrangements made by or on behalf of Seller, except obligations of Purchaser to
Quadrocom, which shall be paid by Purchaser.
3.24 Accounts Receivables. Section 2.01(a)(xi) of the Disclosure
Schedule sets forth a true and complete list of all of the accounts receivable
included in the Assets. All of such accounts receivable arose from the sale of
inventory or services to persons, corporations, partnerships or other entitles
not affiliated with Seller or IHSG and in the ordinary course of business
consistent with past practice. It is understood that Seller has written off such
accounts receivable and no representation is made regarding whether such
receivables are collectible.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
As an inducement to Seller and IHSG to enter into this
Agreement, Purchaser hereby represents and warrants to Seller and IHSG as
follows:
4.01 Organization and Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all necessary corporate power and authority
to enter into this Agreement and the Related Agreements, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements by Purchaser, the performance by Purchaser of its
obligations hereunder and thereunder and the consummation by Purchaser of the
transactions contemplated
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hereby and thereby have been duly authorized by all requisite action on the part
of Purchaser. This Agreement has been, and upon their execution the Related
Agreements will be, duly executed and delivered by Purchaser, and (assuming due
authorization, execution and delivery by Continental and IHSG) this Agreement
constitutes, and upon their execution the Related Agreements will constitute,
legal, valid and binding obligations of Purchaser, enforceable against Purchaser
in accordance with their respective terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors rights generally
and (ii) the remedy of specific performance and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
4.02 No Conflict. The execution, delivery and performance by Purchaser
of this Agreement and the Related Agreements do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation or by-laws of Purchaser, (b) conflict with or violate any Law or
Governmental Order applicable to Purchaser or (c) conflict with, or result in
any breach of, constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of Purchaser pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which Purchaser
is a party or by which any of such assets or properties is bound or affected,
which would have a material adverse effect on the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
4.03 Consents and Approvals.
(a) The execution, delivery and performance of this Agreement
and the Related Agreements to which it is a party by Purchaser do not and will
not require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority.
(b) The execution and delivery of this Agreement and the
Related Agreements by Purchaser do not, and the performance by Purchaser of this
Agreement and the Related Agreements will not, require any third-party consents,
approvals, authorizations or actions on the part of Purchaser.
4.04 Litigation. No Action by or against Purchaser is pending or, to
the best knowledge of Purchaser, threatened, which seeks to delay or prevent the
consummation of, or which would be reasonably likely to materially adversely
affect Purchaser's ability to consummate the transactions contemplated by this
Agreement and the Related Agreements.
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4.05 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 arrangements made by or
on behalf of Purchaser.
4.06 Full Disclosure. No representation or warranty of Purchaser in
this Agreement, any of the Related Agreements, nor any statement or certificate
furnished to Seller on the date hereof pursuant to this Agreement, or furnished
to Seller on the date hereof in connection with the transactions contemplated by
this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Facilities.
(a) At Closing, Purchaser and Seller shall enter into a
Sublease for a portion of the Commerce Plaza Facility. Seller shall exercise its
best efforts to obtain the consent of the landlord of the Commerce Plaza
Facility to such sublease and will promptly advise Purchaser of the status of
such negotiations upon Purchaser's request. Seller will take all actions
necessary to make the portion of the Commerce Plaza Facility which is to be
sublet to Purchaser operational and with all necessary permits and permissions.
Among other things, Seller will be responsible for engineering and architect
fees, moving costs, constructing walls, dividing utility services and the like
required to separate the portion of the premises subject to the Sublease from
the remainder of the premises leased by Seller, will obtain any necessary
consents and permits, and will absorb all other costs associated with the
division of the Commerce Plaza Facility. Seller will use its best efforts to
cause the Landlord to complete the installation of the dividing wall at the
Commerce Plaza Facility as promptly as practicable from the date hereof.
(b) At Closing, Purchaser shall assign or sublease to Seller
all of its rights under the Warehouse Lease and, if necessary, obtain the
consent of the landlord of such facility to such assignment. Such assignment
shall be subject to the agreement of Seller allowing ESI, without cost, until
June 27, 1996 to vacate the warehouse.
5.02 Employees.
(a) Purchaser will have the opportunity to recruit any of the
individuals presently working for Seller in the Business for employment with
Purchaser, although Purchaser shall have no express or implied obligation to
offer employment to any employee of Seller engaged in the Business, but may do
so in its sole discretion and option. Purchaser hereby undertakes to extend an
offer in a fashion consistent with its existing employment practices to each of
the employees it intends to hire. Seller and Purchaser will work together and
coordinate activities in this area.
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A list of those employees to whom Purchaser intends to offer employment is
attached as Section 5.02(a) of the Disclosure Schedule.
(b) Purchaser does not assume any liability or obligation of
Seller of any nature with respect to any of the employees of Seller or any
financial liability of Seller or any of its Affiliates for salary, wages, fringe
benefits or severance pay or other amounts due any such employee, if any, for
services performed for Seller or any of its Affiliates prior to the Closing Date
or for severance payments to any such employee of Seller or any of its
Affiliates not hired by Purchaser. Seller agrees to make all such payment due
such employees. Seller agrees to pay and Purchaser agrees to reimburse Seller
for Seller's obligations for accrued vacation pay in the aggregate amount of
$67,644 owed to the employees of Seller being hired by Purchaser.
(c) Certain of Seller's employees at the supervisory level and
above who are being hired by Purchaser identified on Section 5.02(c) of the
Disclosure Schedule have special bonus arrangements granted by Seller. Seller
will at its cost and expense pay all amounts due under such bonus arrangements
or reach other accommodations with respect thereto with the employees involved
subsequent to Closing.
5.03 Transition Services.
(a) Seller shall allow Purchaser to utilize its Affiliate's
mainframe computer located in Englewood, Colorado for the purpose of realtime
software programming, software compiling and the distribution of compiled
software pursuant to the agreement entered into by the parties attached as
Exhibit 5.03(a).
(b) Seller will provide payroll services for the employees for
a period of up to two months following the Closing Date at Purchaser's request.
In that respect, Seller will pay each of the employees of the Business hired by
Purchaser in accordance with Purchaser's instructions and Purchaser will
promptly reimburse Seller for all such payments.
(c) If required by Purchaser, Seller will make available to
Purchaser Seller's accounting and other computer systems for a reasonable
transition period on terms to be negotiated in good faith by the parties.
(d) Seller and IHSG will make available to Purchaser at no
cost the services of Darold Stagner for a period of three months following
Closing to assist Purchaser with transitional matters. Mr. Stagner will devote
to Purchaser all of his business time during the first month following the
Closing and half of his business time during the second and third months
following the Closing.
5.04 Non-Competition. At Closing Seller and IHSG shall execute and
deliver to Purchaser a Non-Competition Agreement substantially in the form of
Exhibit 5.04 attached hereto.
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5.05 Use of Name. Certain of Seller's inventory carries the name
"Continental Healthcare Systems" in such a fashion that it can be neither
obliterated nor covered over. Seller hereby grants Purchaser an irrevocable,
limited, royalty-free license to use such name on that inventory until the
inventory is sold. In addition, certain brochures, advertising material, price
lists and similar marketing materials may carry Continental's name or logo.
Seller and Purchaser will determine whether it is feasible and, if so, practical
and economic to change or cover over that name or logo, or whether it is
advisable for the existing material to be used up or used only until Purchaser
has replacement materials available. If it is not practical and economic to
change or cover over such materials, the license granted to Purchaser herein
shall be extended to cover such brochures, advertising material, price lists and
similar marketing materials until such materials are used up but in no event
later than six months after the Closing Date.
5.06 Shared Assets. The parties acknowledge that the assets listed on
Section 5.06 of the Disclosure Schedule have been used in the Business but were
sold to the purchaser of Seller's Matkon Division. To the extent any of such
assets are necessary for the operation of the Business as previously conducted
by Seller, Seller shall, promptly after the Closing, if it has not done so
previously, purchase for Purchaser replacements for such assets which shall be
in good working order and sufficient for Purchaser to operate the Business as
currently conducted..
5.07 Access to Information.
(a) In order to facilitate the resolution of any claims made
against or incurred by Seller with respect to the Business on or prior to the
Closing Date and for any other reasonable business purposes, for a period of
seven years after the Closing, Purchaser shall (i) retain the books and records
of Seller which are transferred to Purchaser pursuant to this Agreement relating
to periods on or prior to the Closing Date and (ii) upon reasonable notice,
afford the officers, employees and authorized agents and representatives of
Seller reasonable access (including the right to make, at Seller's expense,
photocopies), during normal business hours, to such books and records.
(b) In order to facilitate the resolution of any claims made
by or against or incurred by Purchaser after the Closing or for any other
reasonable purpose, for a period of seven years following the Closing, Seller
shall (i) retain all books and records of Seller which are not transferred to
Purchaser pursuant to this Agreement and which relate to the Business for
periods on or prior to the Closing Date and which shall not otherwise have been
delivered to Purchaser and (ii) upon reasonable notice, afford the officers,
employees and authorized agents and representatives of Purchaser reasonable
access (including the right to make, at Purchaser's expense, photocopies),
during normal business hours, to such books and records. Upon the reasonable
request of Purchaser in writing, Seller agrees, for a period of two years
following the Closing, to make available its employees and officers, and to the
extent possible, its attorneys, accountants, agents and other representatives,
for the purpose of giving testimony or such other reasonable assistance as
Purchaser may reasonably require for the preparation and defense or prosecution
of any claim, action or other proceeding against any third party relating
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to the Business or any of the Assets. Seller's reasonable costs and expenses in
connection therewith shall be reimbursed by Purchaser.
5.08 Confidentiality.
(a) Seller and IHSG agree to (i) treat and hold as
confidential (and not disclose or provide access to any Person to) all
Confidential Information relating to the Intellectual Property and any other
Confidential Information with respect to the Business, (ii) in the event that
Seller or any agent, representative, Affiliate, employee, officer or director of
Seller becomes legally compelled to disclose any such information, provide
Purchaser with prompt written notice of such requirement so that Purchaser may
seek a protective order or other remedy or waive compliance with this Section
5.08, (iii) in the event that such protective order or other remedy is not
obtained, or Purchaser waives compliance with this Section 5.08, furnish only
that portion of such confidential information which is legally required to be
provided and exercise its best efforts to obtain assurances that confidential
treatment will be accorded such Confidential Information, and (iv) promptly
furnish (prior to, at, or as soon as practicable following, the Closing) to
Purchaser any and all copies (in whatever form or medium) of all such
Confidential Information with respect to the Business then in the possession or
control of Seller or IHSG and destroy any and all additional copies then in the
possession or control of Seller or IHSG of such Confidential Information and of
any analyses, compilations, studies or other documents prepared, in whole or in
part, on the basis thereof; provided, however, that this sentence shall not
apply to any Confidential Information that, at the time of disclosure, is or
becomes available publicly and which Seller can prove by written evidence was
not disclosed in breach of this Agreement by Seller, or any of its agents,
representatives, Affiliates, employees, officers or directors. Seller and IHSG
agree and acknowledge that remedies at Law for any breach of its obligations
under this Section 5.08 are inadequate and that Purchaser will suffer
irreparable harm as the result of such breach. Accordingly, in addition to all
other remedies available to Purchaser, Purchaser shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach, without the necessity of demonstrating the inadequacy of
monetary damages and Seller and IHSG will not raise as a defense that Purchaser
has an adequate remedy at law. The provisions of this Section 5.08 shall survive
the execution of this Agreement and the Closing.
(b) For the purpose of this Agreement, Confidential
Information means all tangible forms of confidential information, including,
without limitation, product information, technical information, drawings,
blueprints, designs, parameters of design, monographs, specifications,
flowsheets, sketches, descriptions, technical data source codes, object codes,
customer lists, pricing data and other tangible material related thereto.
5.09 Use of Intellectual Property.
(a) From and after the Closing, Seller shall not use any of
the Intellectual Property owned by Seller that is included in the Assets.
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(b) As promptly as practicable following the Closing, Seller
shall remove or obliterate any Trademarks from letterheads and other materials
remaining in its possession or under its control, and Seller shall not use or
put into use after the Closing any materials that bear any trademark, service
mark, trade dress, logo, trade name or corporate name contained in the
Intellectual Property.
5.10 Taxes.
(a) Seller shall be liable for and shall hold Purchaser
harmless against any real property transfer or gains, sales, use, income,
transfer, and value added taxes, any transfer, recording, registration, and
other fees, and any similar Taxes which become payable in connection with the
actions contemplated by this Agreement. Purchaser shall execute and deliver all
instruments and certificates necessary to enable Seller to comply with the
foregoing.
(b) From and after the date of this Agreement, Seller shall
not without the prior written consent of Purchaser (which may, in its sole and
absolute discretion, withhold such consent) make, or cause to permit to be made,
any Tax election that would affect the Business or the Assets.
5.11 Bulk Transfer Laws. Purchaser waives compliance by Seller with the
requirements of all applicable bulk sale, bulk transfer or similar laws in all
jurisdictions. Pursuant to Article VI, Seller has agreed to indemnify Purchaser
against any and all liabilities which may be asserted by third parties against
Purchaser as a result of Seller's noncompliance with any such law.
5.12 Consents to Assignments. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not constitute an agreement to
assign or transfer any of the Assumed Contracts if any attempted assignment or
transfer thereof, without the consent of a third party thereto, would constitute
a breach thereof. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective, Continental and Purchaser (i) shall cooperate in
endeavoring to obtain such consent promptly at no cost to either party and (ii)
if any such consent is unobtainable, shall cooperate in any reasonable
arrangement designed to provide Purchaser the benefits under any such Assumed
Contract to the same extent as if it had been assigned to Purchaser and, subject
to reaching such accommodation, Purchaser shall perform the obligations under
the Assumed Contract.
5.13 No Infringement. Seller, on behalf of itself and its Affiliates,
covenants and agrees not to claim or contend hereafter at any time against
Purchaser and its successors that the Business as currently conducted infringes
in any respect any patent (or patent which may hereafter be issued on any
existing patent application or technology) which is owned or controlled by
Seller or its Affiliates as of the date of this Agreement and which is not
conveyed hereunder.
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5.14 Further Action. Each party shall use its best efforts to perform
or comply with, and to cause others to perform or comply with, all of the terms
and conditions set forth in this Agreement. Each of the parties hereto shall its
best efforts to take, or cause to be taken, all appropriate action, do or cause
to be done all things necessary, proper or advisable under applicable Laws, and
execute and deliver such documents and other papers, as may be required to carry
out the provisions of this Agreement and the Related Agreements and consummate
and make effective the transactions contemplated by this Agreement and the
Related Agreements.
5.15 Nondisclosure Assistance. Seller, at Purchaser's request and
expense, will enforce violations of any nondisclosure or confidentiality
obligations or covenants related to the Business, as may be contained in any
agreement made by any person with or in favor of Seller.
5.16 Mail. After the Closing Date and for a period of one year
thereafter, Purchaser shall remit to Seller all mail that does not relate to the
Business or the Assets and Seller shall remit to Purchaser all mail that relates
to the Business (other than the Excluded Assets), Assets and obligations of
Seller being assumed by Purchaser hereunder.
5.17 Communications Software License. Continental hereby grants to
Purchaser a nonexclusive, perpetual, royalty-free, transferable right and
license to use the Communications Software, with the right to grant sublicenses.
ARTICLE VI
INDEMNIFICATION
6.01 Survival of Representations and Warranties. All
representations and warranties shall survive the Closing for a period of two
years from the date hereof.
6.02 Indemnification by Continental and IHSG. Purchaser, its
Affiliates, and their respective stockholders, officers, directors, employees,
agents, successors and assigns shall be indemnified and held harmless by each of
Continental and IHSG, jointly and severally, for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments,
penalties, assessments, audits and investigations (including, without
limitation, attorneys', auditors' and consultants' fees and expenses) ("Losses")
actually suffered or incurred by them (including, without limitation, any Action
brought or otherwise initiated by any of them) arising out of or resulting from:
(i) the breach of any representation or warranty made by
Continental or IHSG contained in the Acquisition Documents;
(ii) the breach of any covenant or agreement by Continental or
IHSG contained in the Acquisition Documents;
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(iii) Liabilities arising from or relating to the ownership of
the Business by Seller or actions or inactions of Seller with respect
thereto or the conduct of the Business prior to the Closing (including,
but not limited to, (a) Liabilities resulting from claims of third
parties, (b) Liabilities arising from or related to any failure to
comply with Laws relating to bulk transfers or bulk sales with respect
to the transactions contemplated by this Agreement and (c) the Excluded
Liabilities), other than the Assumed Liabilities and Liabilities
assumed by Purchaser under the Related Agreements; and
(iv) Liabilities, whether arising before or after the Closing
Date, arising from or relating to any Environmental Law.
6.03 Indemnification by Purchaser. Each of Continental and IHSG and its
Affiliates and their respective stockholders, officers, directors, employees,
agents, successors and assigns shall be indemnified and held harmless by
Purchaser for any and all Losses arising out of or resulting from:
(i) the breach of any representation or warranty made by
Purchaser contained in the Acquisition Documents;
(ii) the breach of any covenant or agreement by Purchaser
contained in the Acquisition Documents; or
(iii) any and all Losses arising from or relating to the
ownership of the Business by Purchaser or actions or inactions of
Purchaser with respect thereto or the conduct of the Business after
the Closing, except any such Losses for which Seller is required to
indemnify Purchaser pursuant to Section 6.02
6.04 Indemnification Procedures Involving Only Seller and
Purchaser.
(a) Any Person seeking indemnification under this Article VI
(an "Indemnified Party") shall give prompt notice to the party or parties from
whom such indemnification is sought (the "Indemnifying Party"), stating the
amount of the Loss, if known, and method of computation thereof, and containing
a reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises. The obligations and Liabilities of the
Indemnifying Party under this Article VI with respect to Losses arising from
claims of any third party which are subject to the indemnification provided for
in this Article VI ("Third Party Claims") shall be governed by and contingent
upon the following additional terms and conditions: if an Indemnified Party
shall receive notice of any Third Party Claim, the Indemnified Party shall give
the Indemnifying Party notice of such Third Party Claim within 15 days of the
receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any
of its obligations under this Article VI except to the extent the Indemnifying
Party is materially prejudiced by such failure and shall not relieve the
Indemnifying Party from any other obligation or liability that it may have to
any Indemnified Party otherwise than under this Article VI. If the Indemnifying
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Party acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
the Indemnifying Party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice (subject
to the consent of the Indemnified Party to such counsel, such consent not to be
unreasonably withheld) if it gives notice of its intention to do so to the
Indemnified Party within five Business Days of the receipt of such notice from
the Indemnified Party; provided, however, that (i) if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate for the same counsel to represent both the Indemnified Party and
the Indemnifying Party, then the Indemnified Party shall be entitled to retain
its own counsel, in each jurisdiction for which the Indemnified Party determines
counsel is required, at the expense of the Indemnifying Party, (ii) the
Indemnifying Party shall not thereby permit to exist any lien, encumbrance or
other adverse charge upon any asset of the Indemnified Party or settle such
action without first obtaining the consent of the Indemnified Party, which
consent will not be unreasonably withheld, except for settlements solely
covering monetary matters for which the Indemnifying Party has acknowledged
responsibility for payment; (iii) the Indemnifying Party shall permit the
Indemnified Party (at the Indemnified Party's sole cost and expense) to
participate in such settlement or defense through counsel chosen by the
Indemnified Party and (iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any loss resulting from
such claim and all related expenses incurred by the Indemnified Party, except
for those costs expressly assumed by Indemnified Party hereunder. In the event
the Indemnifying Party exercises the right to undertake any such defense against
any such Third Party Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party.
(b) To the extent that the undertakings of the Indemnifying
Party set forth in this Article VI may be unenforceable, Continental, IHSG or
Purchaser, as the case may be, shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by Continental, IHSG or Purchaser, as the case may be.
(c) The provisions of Section 7.11 below shall govern any
dispute between the parties with respect to their respective rights and
obligations under this Article VI.
6.05 Limitation on Indemnification. Notwithstanding anything to
the contrary in Section 6.02, an Indemnifying Party shall not be required to
make any payment with respect to indemnification pursuant to Sections 6.02 or
6.03 for breach of warranty or misrepresentation
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until the Indemnified Party's aggregate amount of Losses for breaches of
warranty and misrepresentations exceeds on a cumulative basis Fifty Thousand
Dollars ($50,000). In such case, the Indemnifying Party will be responsible for
all Losses incurred by the Indemnified Party, including but not limited to the
first Fifty Thousand Dollars ($50,000) thereof.
ARTICLE VII
GENERAL PROVISIONS
7.01 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement, the Related Agreements and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses, whether or not the
Closing shall have occurred.
7.02 Notices. All notices, requests, waivers, claims, demands and other
communications which are required or permitted hereunder shall be in writing and
shall be given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by courier service for which a written receipt
is given, by cable, by telecopy (providing evidence of receipt and providing a
confirming copy is delivered by one of the other methods permitted by this
Section 7.02), by telegram, by telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 7.02):
(a) if to Seller or IHSG:
Information Handling Services Group, Inc.
15 Inverness Way East
Englewood, Colorado 80112
Telecopy No.: (303) 792-9034
Attention: President
with a copy to:
TBG Services, Inc.
565 Fifth Avenue
New York, NY 10017
Telecopy No.: (212) 850-8530
Attention: Stephen Green, Esq.
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(b) if to Purchaser:
Digimedics Corp.
1600 Green Hills Road
Scotts Valley, CA 95066
Telecopy No.: (408) 438-8422
Attention: Les Dace
with a copy to:
Mediware Information Systems, Inc.
1121 Old Walt Whitman Road
Melville, New York 11747-3005
Telecopy No.: (516) 423-0161
Attention: President
Hackmyer & Nordlicht
645 Fifth Avenue
New York, New York 10022
Telecopy No.: (212) 421-0499
Attention: Ira S. Nordlicht, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, N.Y. 10004
Telecopy No.: (212) 858-1500
Attention: Jonathan H. Churchill, Esq.
All such notices shall be deemed to have been given on the date
personally delivered, upon possession of a receipt establishing that a facsimile
transmission was received or five days after mailed in the manner provided
above. Any party may change its address for delivery of notice by providing
written notice to the other parties in the manner discussed above.
7.03 Public Announcements. No party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without prior consultation with the other party except as
required by applicable law. The parties shall cooperate as to the timing and
contents of any such press release or public announcement.
7.04 Headings. The descriptive headings contained in this Agreement and
the Exhibits and Schedules hereto are for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement.
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7.05 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
7.06 Entire Agreement. The Acquisition Documents constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
Continental, IHSG and Purchaser with respect to the subject matter hereof and
there have been and are no agreements, representations or warranties among
Continental, IHSG and Purchaser exceptions set forth in the Acquisition
Documents and any other documents executed at the Closing.
7.07 Assignment. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of Continental, IHSG and
Purchaser (which consent may be granted or withheld in the sole discretion of
Continental, IHSG and Purchaser);
7.08 No Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person, including, without limitation, any union or any employee
or former employee of Seller, any legal or equitable right, benefit or remedy of
any nature whatsoever, including, without limitation, any rights of employment
for any specified period, under or by reason of this Agreement.
7.09 Amendment. This Agreement may not be amended or modified except by
an instrument in writing signed by, or on behalf of, Continental, IHSG and
Purchaser. Any waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. the failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
7.10 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed entirely within that
state. Subject to Section 7.11, all actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any New York state
or federal court sitting in the City of New York. Any process or notice of
motion or other application to any of such courts may be served within or
without such court's jurisdiction by registered mail or by personal service,
provided a reasonable time for appearance is allowed. With respect to such
courts, Purchaser, Continental and IHSG hereby expressly waive any defense based
on doctrines of venue or forum non conveniens or similar rules or doctrines.
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7.11 Dispute Resolution.
(a) In the event of any controversy, claim or dispute, other
than disputes under Section 5.08 for which equitable relief is available, the
party initiating the controversy, claim or dispute shall provide to the other
party a written notice containing a brief and concise statement of the matter,
together with relevant supporting facts. During a period of thirty (30) days or
such longer period as mutually agreed, the parties shall attempt to settle the
matter by good faith negotiation. Such efforts shall include, but not be limited
to, full presentation by each party of its claims, with or without counsel, to
the President of the other party.
(b) If efforts under Section 7.11(a) are not successful, such
dispute shall be settled by binding arbitration in New York, New York, under the
Commercial Rules of the American Arbitration Association then in effect (except
as otherwise set forth in the Agreement). The failure to comply with Section
7.11(a) with respect to such dispute shall be an absolute bar to the institution
of arbitration proceedings with respect thereto. The arbitration shall be
conducted in the English language before a panel of three arbitrators, one of
whom is selected by Continental and IHSG jointly, one of whom is selected by
Purchaser, and one of whom is selected by Continental, IHSG and Purchaser
jointly (or by the other two arbitrators, if the parties cannot agree). The
parties will cooperate with each other in causing the arbitration to be held in
as efficient and expeditious a manner as practicable. If either party fails to
appoint an arbitrator in thirty days, the other party may request that the
American Arbitration Association make such appointment. The arbitrators will be
required to render a full and complete written report of their decision. The
decision of a majority of the arbitrators will constitute the arbitrators'
decision. Any award rendered by the arbitrators shall be binding upon the
parties hereto and shall be final, subject to review by a court of competent
jurisdiction under the statutory standard of review applicable to arbitrations.
Judgment on the award may be entered in any court of record having competent
jurisdiction. Each party shall pay its own expenses of arbitration and the
expenses of the arbitrators shall be equally shared except that if, in the
opinion of the arbitrators, any claim or position by a party hereto, or any
defense or objection thereto by another party was unreasonable or frivolous, the
arbitrators may in their discretion assess as part of their award all or any
part of the arbitration expenses of the other party or parties (including
reasonable attorneys' fees) and expenses of the arbitrators against such party.
Nothing herein shall prevent the parties from settling any dispute by mutual
agreement at any time. The law of the State of New York shall govern the
validity, scope and effect of this Section 7.11.
7.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
7.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof,
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in addition to any other remedy at Law or equity without the necessity of
demonstration the inadequacy of monetary damages.
7.14 Receipt of Money or Other Assets. If any money or other assets are
received by Seller or Purchaser to which the other party is entitled pursuant to
this Agreement, such party shall hold such money or assets in trust and shall
promptly notify and account therefore to the other within fifteen (15) days of
receipt.
7.15 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
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IN WITNESS WHEREOF, Continental, IHSG and Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
CONTINENTAL HEALTHCARE SYSTEMS, INC.
By: /s/ Stephen Green
___________________
Name: Stephen Green
Title: Vice President
INFORMATION HANDLING SERVICES GROUP, INC.
By: /s/ Stephen Green
__________________
Name: Stephen Green
Title: Vice President
DIGIMEDICS CORP.
By: /s/ Lawrence Auriana
______________________
Name: Lawrence Auriana
Title: Secretary
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Exhibit 2(b)
STOCK PURCHASE AGREEMENT
dated June 17 , 1996
among
HOLLAND AMERICA INVESTMENT CORPORATION,
INFORMATION HANDLING SERVICES GROUP, INC.
and
DIGIMEDICS CORP.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
1.01 "Acquisition Documents" ........................................... 1
1.02 "Action" .......................................................... 1
1.03 "Affiliate"........................................................ 1
1.04 "Agreement" or "this Agreement".................................... 1
1.05 "Asset Purchase Agreement"......................................... 2
1.06 "Assets"........................................................... 2
1.07 "Business Day"..................................................... 2
1.08 "Closing".......................................................... 2
1.09 "Closing Date"..................................................... 2
1.10 "Copyrights"....................................................... 2
1.11 "Disclosure Schedule".............................................. 2
1.12 "Encumbrance"...................................................... 2
1.13 "Environmental Laws"............................................... 2
1.14 "Environmental Permits"............................................ 2
1.15 "Financial Statements"............................................. 2
1.16 "Governmental Authority"........................................... 2
1.17 "Governmental Order"............................................... 3
1.18 "IHSG"............................................................. 3
1.19 "Indemnified Party"................................................ 3
1.20 "Indemnifying Party"............................................... 3
1.21 "Intellectual Property"............................................ 3
1.22 "Inventories"...................................................... 3
1.23 "JAC".............................................................. 3
1.24 "Law".............................................................. 3
1.25 "Liabilities"...................................................... 3
1.26 "Losses"........................................................... 3
1.27 "Material Adverse Effect".......................................... 3
1.28 "Material Contracts"............................................... 3
1.29 "Non-Competition Agreement"........................................ 4
1.30 "Patents".......................................................... 4
1.31 "Permits".......................................................... 4
1.32 "Permitted Encumbrances"........................................... 4
1.33 "Person"........................................................... 4
1.34 "Purchase Price"................................................... 4
1.35 "Purchaser"........................................................ 4
1.36 "Related Agreements"............................................... 4
1.37 "Seller"........................................................... 4
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1.38 "Shares"........................................................... 5
1.39 "Tangible Personal Property"....................................... 5
1.40 "Tax" or "Taxes"................................................... 5
1.41 "Third Party Claims"............................................... 5
1.42 "Trademarks"....................................................... 5
1.43 "Trade Secrets".................................................... 5
1.44 "U.S. GAAP"........................................................ 5
ARTICLE II
PURCHASE AND SALE OF SHARES
2.01 Shares to Be Purchased and Sold.................................... 5
2.02 Purchase Price..................................................... 5
2.03 Closing Deliveries by Seller....................................... 5
2.04 Closing Deliveries by Purchaser.................................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.01 Organization and Authority of JAC.................................. 7
3.02 apitalization of JAC............................................... 7
3.03 Ownership of Shares................................................ 7
3.04 Dividends.......................................................... 7
3.05 Subsidiaries....................................................... 8
3.06 Intentionally Omitted.............................................. 8
3.07 Organization and Authority of Seller and IHSG ..................... 8
3.08 No Conflict........................................................ 8
3.09 Consents and Approvals............................................. 9
3.10 Financial Information.............................................. 9
3.11 No Undisclosed Liabilities......................................... 9
3.12 Inventories........................................................ 9
3.13 Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions...................................10
3.14 Litigation.........................................................11
3.15 Compliance With Laws...............................................11
3.16 Permits............................................................11
3.17 Material Contracts.................................................12
3.18 Intellectual Property..............................................13
3.19 Assets.............................................................15
3.20 Employee Benefit Matters...........................................15
3.21 Labor Matters......................................................16
3.22 Taxes..............................................................17
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3.23 Insurance..........................................................17
3.24 Full Disclosure....................................................18
3.25 Brokers............................................................18
3.26 Accounts Receivable................................................18
3.27 Memorandum and Articles of Association.............................18
3.29 Returns............................................................18
3.30 Indebtedness.......................................................18
3.31 Insolvency.........................................................18
3.32 Trading............................................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.01 Organization and Authority of Purchaser............................19
4.02 No Conflict........................................................20
4.03 Consents and Approvals.............................................20
4.04 Litigation.........................................................20
4.05 Brokers............................................................20
4.06 Full Disclosure....................................................20
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Non-Competition....................................................21
5.02 Access to Information.............................................21
5.03 Confidentiality....................................................22
5.04 Use of Intellectual Property.......................................22
5.05 Taxes..............................................................23
5.06 No Infringement....................................................23
5.07 Further Action.....................................................23
5.08 Returns............................................................23
5.09 Mail...............................................................23
5.10 Communications Software License....................................23
ARTICLE VI
INDEMNIFICATION
6.01 Survival of Representations and Warranties.........................24
6.02 Indemnification by Seller..........................................24
6.03 Indemnification by Purchaser.......................................24
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6.04 Indemnification Procedures ........................................24
6.05 Limitation on Indemnification......................................26
ARTICLE VII
GENERAL PROVISIONS
7.01 Expenses...........................................................26
7.02 Notices............................................................26
7.03 Public Announcements...............................................27
7.04 Headings...........................................................27
7.05 Severability.......................................................27
7.06 Entire Agreement...................................................27
7.07 Assignment.........................................................27
7.08 No Third Party Beneficiaries.......................................27
7.09 Amendment..........................................................27
7.10 Governing Law; Consent to Jurisdiction.............................28
7.11 Dispute Resolution.................................................28
7.12 Counterparts.......................................................29
7.13 Specific Performance...............................................29
7.14 Receipt of Money or Other Assets...................................29
7.15 Schedules and Exhibits.............................................29
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EXHIBITS
2.06(f) Form of Legal Opinion of Counsel to Seller
2.07(e) Form of Legal Opinion of Counsel to Purchaser
3.22(b) Form of Tax Deed
5.01 Form of Non-Competition Agreement
DISCLOSURE SCHEDULE
The Disclosure Schedule shall
include the following Sections
3.04 Dividends
3.10 Financial Statements
3.11 Balance Sheet
3.15 Governmental Orders
3.17(a) Material Contracts
3.17(b) Defaults
3.17(c) Notice of Termination of Material Contracts
3.18(a) Intellectual Property
3.20(a) Employment Benefit Matters
3.23 Insurance
3.26 Accounts Receivable
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STOCK PURCHASE AGREEMENT, dated June 17, 1996, among Information
Handling Services Group, Inc., a Delaware corporation ("IHSG"), Holland America
Investment Corporation, a Delaware corporation ("Seller"), which is a
wholly-owned subsidiary of IHSG, and Digimedics Corp., a California corporation
("Purchaser").
WITNESSETH:
WHEREAS, Seller owns all of the issued and outstanding capital stock of
J.A.C. Computer Services Limited, a United Kingdom corporation ("JAC"),
consisting of 30,000 ordinary shares of (pound)1 each (the "Shares");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all right, title and interest of Seller in and to the
Shares and
WHEREAS, Seller and Purchaser desire to provide for an orderly
transition of JAC from Seller to Buyer, and for other arrangements ancillary to
the purchase and sale of the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.01 "Acquisition Documents" means this Agreement, the Related
Agreements, and any certificate, or other document delivered at the Closing
pursuant to this Agreement or the transactions contemplated hereby.
1.02 "Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
1.03 "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
1.04 "Agreement" or "this Agreement" means this Stock Purchase
Agreement, dated June 17, 1996, between Seller and Purchaser (including the
Exhibits hereto and the Disclosure Schedule) and all amendments hereto made in
accordance with the provisions of Section 7.09.
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1.05 "Asset Purchase Agreement" means the Asset Purchase Agreement
among Information Handling Systems Group, Inc., Continental Healthcare Systems,
Inc. and Purchaser and dated the date hereof.
1.06 "Assets" means all assets, properties, goodwill, rights and
business of every kind and description and wherever located, whether tangible or
intangible, real, personal or mixed, directly or indirectly owned by JAC or to
which it is directly or indirectly entitled, regardless of whether such assets,
properties, goodwill and business are accounted for or otherwise recorded as
such in the books of account and other financial records of JAC.
1.07 "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in New
York City, New York.
1.08 "Closing" means the closing of the transactions contemplated by
this Agreement, to occur simultaneous to the execution hereof.
1.09 "Closing Date" means the date of this Agreement.
1.10 "Copyrights" means all copyrights, domestic or foreign, whether
registered or unregistered, owned or controlled by JAC, and all materials and
matter (and if in writing, shall include machine-readable forms) to which such
copyrights relate.
1.11 "Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated as of the date hereof, and forming a part of this Agreement.
1.12 "Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim (with respect to title), preferential arrangement, or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.
1.13 "Environmental Laws" means any Law, now in effect, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or hazardous materials.
1.14 "Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under any
applicable Environmental Law in connection with the operations of JAC in the
manner in which it is currently conducted.
1.15 "Financial Statements" has the meaning specified in Section 3.10.
1.16 "Governmental Authority" means any national, state or local
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
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1.17 "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
1.18 "IHSG" has the meaning specified in the first paragraph of this
Agreement.
1.20 "Indemnified Party" has the meaning specified in Section 6.04(a).
1.21 "Indemnifying Party" has the meaning specified in Section
6.04(a).
1.22 "Intellectual Property" means all intellectual property rights
owned or licensed from a third party by JAC, including all Copyrights, Patents,
Trademarks, Trade Secrets source codes, object codes and all rights to sue and
recover and retain damages and costs and attorneys' fees for present and past
infringement of any of the Intellectual Property rights hereinabove set out.
1.22 "Inventories" means all inventory (including inventory shipped on
consignment), merchandise, work in process, finished goods, and raw materials,
packaging, supplies and other personal property related to the Business,
maintained, held or stored by or for JAC on the Closing Date and any prepaid
deposits for purchases of any of the same.
1.23 "JAC" has the meaning set forth in the preliminary statement to
this Agreement.
1.24 "Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order or requirement.
1.25 "Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law, Action or Governmental Order and those arising under any
contract, agreement, arrangement, commitment or undertaking.
1.26 "Losses" has the meaning specified in Section 6.02.
1.27 "Material Adverse Effect" means any circumstance, change in, or
effect on, the JAC or its business that, individually or in the aggregate with
any other circumstances, changes in, or effects on JAC or its business: (a) is,
or could reasonably be expected to be, materially adverse to the business,
operations, assets or liabilities (including, without limitation, contingent
liabilities), results of operations or the condition (financial or otherwise) of
JAC or (b) could materially adversely affect the continued operation or conduct
of the business of JAC in the manner in which it is currently conducted.
1.28 "Material Contracts" has the meaning specified in Section 3.17.
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1.29 "Non-Competition Agreement" means the Non-Competition Agreement to
be executed and delivered at closing between Seller and Purchaser as more fully
described in Section 5.01 hereof.
1.30 "Patents" means all patents and patent applications (and any
patents issuing therefrom) owned or licensed by JAC, together with any
extensions, reissues, renewals, divisions, continuations or
continuations-in-part thereof and any foreign equivalents of any of the
foregoing.
1.31 "Permits" has the meaning specified in Section 3.16.
1.32 "Permitted Encumbrances" means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by Law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations
that (i) are not overdue for a period of more than thirty (30) days and (ii) are
not in excess of $5,000 in the case of a single property or $25,000 in the
aggregate at any time; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations and (d) other liens which are not material in amount and
which do not interfere in any material way with the operation of JAC's business.
1.33 "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
1.34 "Purchase Price" has the meaning specified in Section 2.05.
1.35 "Purchaser" has the meaning specified in the first paragraph to
this Agreement.
1.36 "Related Agreements" means the Asset Purchase Agreement, the
Non-Competition Agreement and all instruments and other agreements and documents
to be executed and delivered at closing by Seller, Purchaser or their
Affiliates.
1.37 "Seller" has the meaning specified in the first paragraph to this
Agreement.
1.38 "Shares" has the meaning specified in the first paragraph.
1.39 "Tangible Personal Property" means machinery, equipment, tools,
supplies, furniture, fixtures, personalty, vehicles, rolling stock and other
tangible personal property.
1.40 "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other tax charges of any kind (together with any and all
interest, penalties, additions to tax
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and additional amounts imposed with respect thereto) imposed by any government
or taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs, and similar charges.
1.41 "Third Party Claims" has the meaning specified in Section 6.04.
1.42 "Trademarks" means all U.S. and foreign trademarks, tradenames or
service marks owned or licensed by JAC, whether registered, under application or
under common law, or with respect to which an Intent To Use filing has been made
as of the Closing Date.
1.43 "Trade Secrets" means any and all information developed by or for
JAC and/or owned or controlled by JAC at the Closing which relates to the
Business, including but not limited to any formula; data processing, engineering
or manufacturing techniques or methods; research or development information;
technology in process; patterns; devices; compilations; programs; methods;
ideas; inventions; discoveries; know-how; show-how; improvements; procedures;
results; drawings; designs; processes; parts of processes; product components or
composition; product quality protocols and specifications; production manuals;
files; records; plans; proposals; notebooks, production and quality control
data; books and publications, business information; computer programs and data.
1.44 "U.S. GAAP" means generally accepted accounting principles and
practices.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.01 Shares to Be Purchased and Sold. On the terms and subject to the
conditions of this Agreement, simultaneous with the execution of this Agreement
by the parties, Seller shall sell, assign, transfer, convey and deliver to
Purchaser with full title guarantee and Purchaser shall purchase from Seller all
of the Shares.
2.02 Purchase Price. The purchase price for the Shares shall be One
Million Five Hundred Thousand Dollars (US $1,500,000) (the "Purchase Price").
The Purchase Price is payable in cash at the Closing.
2.03 Closing Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser:
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(a) a stock certificate evidencing the Shares and such stock
powers and other instruments as are necessary and reasonable to vest in
Purchaser all right, title and interest in and to the Shares;
(b) a receipt for the Purchase Price;
(c) all of the Related Agreements required to be executed and
delivered hereunder by Seller;
(d) a true and complete copy, certified by the Secretary or an
Assistant Secretary or Director of Seller, of the resolutions duly and validly
adopted by the Board of Directors of Seller evidencing its authorization of the
execution and delivery of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby;
(e) a certificate of the Secretary or an Assistant Secretary
or Director of Seller certifying the names and signatures of the respective
officers of Seller authorized to sign this Agreement and the Related Agreements
and the other documents to be delivered hereunder and thereunder;
(f) a legal opinion from Stephen Green, counsel to Seller,
IHSG and JAC, addressed to Purchaser and dated the Closing Date, substantially
in the form of Exhibit 2.03(f);
(g) a list certified by an officer or Director of Seller
setting forth the names of all of the officers and directors of JAC, together
with the resignations of all of such directors as of the Closing Date.
2.04 Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller:
(a) A wire transfer to an account designated by Seller in the
amount of One Million Five Hundred Thousand Dollars (US $1,500,000) in payment
of the Purchase Price;
(b) All of the Related Agreements required to be executed and
delivered hereunder by Purchaser and its Affiliates; and
(c) a true and complete copy, certified by the Secretary or an
Assistant Secretary of Purchaser, of the resolutions duly and validly adopted by
the Board of Directors of Purchaser evidencing its authorization of the
execution and delivery of this Agreement and the Related Agreements to which it
is a party and the consummation of the transactions contemplated hereby and
thereby;
(d) a certificate of the Secretary or an Assistant Secretary
of Purchaser certifying the names and signatures of the officers of Purchaser
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authorized to sign this Agreement and the Related Agreements and the other
documents to be delivered hereunder and thereunder;
(e) a legal opinion from Winthrop, Stimson, Putnam & Roberts
addressed to Seller and dated the Closing Date, substantially in the form of
Exhibit 2.04(e);
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller and
IHSG jointly and severally hereby represent and warrant to Purchaser as follows:
3.01 Organization and Authority of JAC. JAC is a corporation duly
organized, validly existing and in good standing under the laws of the United
Kingdom and is duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the properties owned or leased by it or its
operations make such licensing or qualification necessary, except to the extent
that the failure to be so licensed or qualified would not adversely affect JAC.
JAC has all requisite corporate power and authority to conduct its business as
now conducted and to own or lease and operate the assets and properties now
owned or leased and operated by it.
3.02 Capitalization of JAC. The aggregate number of shares which JAC is
authorized to issue is 100,000 ordinary shares of (pound)1 each of which 30,000
shares are issued and presently outstanding, all of which are owned by Seller.
All of such issued shares have been validly issued and are fully paid and
non-assessable. JAC has no outstanding subscriptions, contracts, options,
warrants or other obligations (including conversion or preemptive rights) to
issue, sell or otherwise dispose of, or to purchase, redeem or otherwise acquire
any of its capital stock. The sales of the Shares to Purchaser will not give
rise to any rights of first refusal of any person or entity. No other Person
owns shares of JAC other than Seller.
3.03 Ownership of Shares. Seller owns all of the Shares free and clear
of any Encumbrance. Seller has the complete and unrestricted power and
unqualified authority to transfer the Shares to Purchaser without penalty or
other adverse consequence. Upon transfer of the Shares to Purchaser, Purchaser
shall receive title to the Shares free and clear of Encumbrances (subject to the
obligation of Purchaser to pledge the Shares to an Affiliate of Seller).
3.04 Dividends. JAC has not paid any dividends during the last three
years except as set forth on Section 3.04 of the Disclosure Schedule. All
dividends, if any, required to be paid by JAC pursuant to the charter, by-laws
or other organizational document of JAC, or pursuant to any agreement to which
JAC is a party, have been paid as of the date hereof.
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3.05 Subsidiaries. JAC has no subsidiaries, except Continental
Healthcare Systems UK Limited, a dormant company. Such subsidiary has no
Liabilities, contingent or otherwise.
3.06 Intentionally Omitted.
3.07 Organization and Authority of Seller and IHSG. Seller and IHSG are
each a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. Seller and IHSG each have all requisite
corporate power and authority to enter into and carry out their respective
obligations hereunder and under the Related Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Related Agreements by Seller and IHSG and the performance by
Seller and IHSG of their respective obligations hereunder and thereunder and the
consummation by Seller and IHSG of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action on the part of Seller
and IHSG. This Agreement has been, and upon their execution the Related
Agreements will be, duly executed and delivered by Seller and IHSG, and
(assuming due authorization, execution and delivery by Purchaser) this Agreement
constitutes, and upon its execution the Related Agreements will constitute,
legal, valid and binding obligations of Seller and IHSG enforceable against
Seller and IHSG in accordance with their respective terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors rights
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
3.08 No Conflict.
(a) Assuming that all consents, approvals, authorizations,
orders, actions, filings and notifications required to assign any of the
contracts of JAC have been obtained, the execution, delivery and performance by
Seller of this Agreement and the Related Agreements do not and will not (a)
violate, conflict with or result in the breach of any provision of the charter
or by-laws (or similar organizational documents) of either Seller, IHSG or JAC,
(b) conflict with or violate (or cause an event which could have a Material
Adverse Effect as a result of) any Law or Governmental Order applicable to
Seller, IHSG or JAC or any of their respective assets, properties or businesses
or (c) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on the Shares or any of the Assets
pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to which
Seller, IHSG or JAC is a party or which effect the Shares.
(b) Seller and JAC have not violated any applicable statute,
order, rule or regulation which would prevent the consummation of the
transactions contemplated herein.
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3.09 Consents and Approvals.
(a) The execution, delivery and performance by Seller of this
Agreement and the Related Agreements do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority.
(b) The execution and delivery of this Agreement and the
Related Agreements by Seller do not, and the performance by Seller of this
Agreement and the Related Agreements will not, require any third-party consents,
approvals, authorizations or actions on the part of Seller, except consents
required to assign any of the contracts of JAC or (ii) where failure to obtain
such consents, approvals, authorizations or actions would not have a Material
Adverse Effect.
3.10 Financial Information. True and complete copies of the audited
financial statements of JAC for the years ended November 30, 1995 and November
30, 1994, together with all related notes and schedules thereto, accompanied by
the reports thereon of Price Waterhouse (collectively, the "Financial
Statements"),are attached as Section 3.10 of the Disclosure Schedule. The
Financial Statements (i) were prepared in accordance with the books of account
and other financial records of JAC; (ii) present fairly in all material respects
the financial condition and results of operations of JAC as of the dates thereof
or for the periods covered thereby and (iii) have been converted into U.S. GAAP
on a basis consistent throughout the periods involved.
3.11 No Undisclosed Liabilities. There are no Liabilities of JAC
required to be reflected or reserved against in a balance sheet of JAC converted
into U.S. GAAP other than (i) Liabilities reflected or reserved against on the
unaudited balance sheet as at April 30, 1996 attached as Section 3.11 of the
Disclosure Schedule, (ii) Liabilities reflected in Section 3.11 or the other
Sections of the Disclosure Schedule or in this Agreement and (iii) Liabilities
incurred since April 30, 1996 in the ordinary course of business which will not
have a Material Adverse Effect. Liabilities are reflected on the Financial
Statements against all Liabilities of JAC in amounts that have been established
in accordance with U.S. GAAP.
3.12 Inventories.
(a) JAC presently has good and valid title to the Inventories
free and clear of all Encumbrances (except Permitted Encumbrances). The
Inventories reflected on the April 30, 1996 balance sheet of JAC does not
include items in excess of (pound)10,000 in the aggregate that are obsolete,
damaged or slow-moving. The Inventories listed on the balance sheet at April 30,
1996 do not consist of any items held on consignment.
(b) The Inventories reflected on the April 30, 1996 balance
sheet of JAC are in good and merchantable condition in all material respects,
are suitable and usable for the purposes for which they are intended, other than
items that do not exceed (pound)10,000 in the aggregate.
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3.13 Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions. Since November 30, 1995, the business of JAC has been conducted
in the ordinary course and consistent with past practice. As amplification and
not limitation of the foregoing, except such as would not have a Material
Adverse Effect, since November 30, 1995, JAC and Seller have not, with respect
to JAC, and other than in the ordinary course of the business consistent with
past practice;
(i) permitted or allowed any of the Assets (whether tangible
or intangible) to be subjected to any Encumbrance;
(ii) written up (or failed to write down in accordance with
U.S. GAAP consistent with past practice) the value of any Inventories or
revalued any Assets of JAC;
(iii) made any change in any method of accounting or
accounting practice or policy used by JAC adversely affecting any of the Assets,
other than such changes required by U.S. GAAP;
(iv) sold, transferred, leased, subleased, licensed or
otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible property),
other than the sale of Inventories in the ordinary course of the business of JAC
consistent with past practice;
(v) failed to pay any creditor of JAC any amount owed to such
creditor when due;
(vi) disclosed any secret or confidential Intellectual
Property (except by way of issuance of a patent) or permitted to lapse or go
abandoned any of the Intellectual Property (or any registration or grant thereof
or any application relating thereto) to which, or under which, Seller has any
right, title, interest or license;
(vii) allowed any Permit that was issued or relates to JAC to
lapse or terminate or failed to renew any insurance policy or Permit that is
scheduled to terminate or expire on or prior to the Closing Date;
(viii) had knowledge of any labor trouble involving any
union or other group of employees connected with JAC;
(ix) increased the salaries, benefits or other compensations
of, made any advances or loan to, any of its officers or employees connected
with JAC, except for increases consistent with JAC's past practices; or
(x) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.13 or granted any options to purchase,
rights of first refusal, rights
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of first offer or any other similar rights with respect to any of the actions
specified in this Section 3.13, except as expressly contemplated by this
Agreement and the Related Agreements.
3.14 Litigation. There are no Actions by or against Seller or JAC which
affect any of the Shares, the Assets or the business of JAC, pending or, to the
best knowledge of Seller threatened, which, if decided adversely against Seller
or JAC, would have a Material Adverse Effect. Neither Seller, JAC nor any of the
Assets is subject to any Governmental Order relating to JAC, the Shares or the
Assets (nor, to the best knowledge of Seller after due inquiry, are there any
such Governmental Orders threatened to be imposed by any Governmental Authority)
or which would adversely affect the ability of Seller or IHSG to execute,
deliver and carry out their respective obligations under this Agreement and the
Related Agreements. There are no Actions pending or, to the best knowledge of
Seller, threatened against Seller, IHSG or JAC before any Governmental Authority
which questions or challenges the validity of this Agreement, any of the Related
Agreements, or any of the actions to be taken hereunder or thereunder.
3.15 Compliance with Laws. JAC has used the Assets and conducted and
continues to conduct the Business in all material respects in accordance with
all Laws and Governmental Orders applicable to JAC, any of the Assets, or the
Business, and JAC is not in material violation of any such Law or Governmental
Order. There is no Governmental Order currently directed towards JAC, and no
such Governmental Order will have or has had a Material Adverse Effect.
3.16 Permits.
(a) JAC currently holds all material permits, licenses,
authorizations, certificates, exemptions, agreements, waivers and approvals of
Governmental Authorities, including, without limitation, all health, safety and
Environmental Permits (collectively, "Permits"), necessary or proper to own,
lease, use and operate the Assets and for the conduct of its business. All such
Permits are valid and in full force and effect, and no suspension, cancellation
or other limitation of any of the Permits is pending or, to the best knowledge
of Seller, threatened. JAC has not received any notice from any Governmental
Authority revoking, canceling, rescinding, materially modifying or refusing to
renew any Permit or providing written notice of violations under any Law. JAC is
in all material respects in compliance with all Permits and all applicable Laws.
(b) Seller has all authorizations from Governmental
Authorities, creditors and other third parties necessary for it to execute,
deliver, consummate and perform this Agreement and the Related Agreements.
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3.17 Material Contracts.
(a) The contracts, agreements, licenses, leases and sales and
purchase orders listed in Section 3.17(a) of the Disclosure Schedule are all of
the maintenance contracts in effect with JAC's customers and other contracts,
agreements, licenses, leases and sales and purchase orders applicable to the
operation of the Assets and the conduct of the business of JAC (other than
contracts which involve amounts of less than (pound)7,500), including, without
limitation (i) any contract for the purchase, sale or lease of real property;
(ii) any contract for the lease or sublease of tangible personal property, under
which JAC's undischarged obligations exceed (pound)7,500; (iii) any contract for
the purchase or sale of raw materials, commodities, merchandise, supplies, other
materials or tangible personal property or for the furnishing or receipt of
services which calls for performance over a period of more than thirty (30) days
and involves more than the sum of (pound)7,500; (iv) any material distributor,
dealer, manufacturer's representative, sales, agency or advertising contract;
(v) any customer contract which involves more than the sum of (pound)7,500; and
(vii) any other material contract, whether or not made in the ordinary course of
business, which affects the Assets or the business of JAC. Such contracts and
agreements, together with all agreements relating to Intellectual Property set
forth in Section 3.18(a) of the Disclosure Schedule, being "Material
Contracts").
(b) Each Material Contract: (i) is valid and binding on the
respective parties thereto and is in full force and effect, (ii) upon
consummation of the transactions contemplated by this Agreement and the Related
Agreements, except to the extent that any consents to assignment are not
obtained, shall continue in full force and effect without penalty or other
Material Adverse Effect. Except as set forth in Section 3.17(b) of the
Disclosure Schedule, JAC is not in material breach of, or default under, any
Material Contract. To the best knowledge of Seller, except as set forth in
Section 3.17(b) of the Disclosure Schedule, no other party to any Material
Contract is in breach thereof or default thereunder. There is no contract,
agreement or other arrangement granting any Person any preferential right to
purchase any of the Assets.
(c) JAC has not received any written notice, or to the best
knowledge of Seller, non-written notice, of cancellation or termination of any
Material Contract, except as set forth on Section 3.17(c) of the Disclosure
Schedule.
(d) The leases of real estate set forth on Section 3.17(a) of
the Disclosure Schedule are all of the leases of real property to which JAC is a
party and cover all of the premises used in JAC's operation of its business. All
of such leases are in full force and effect and in good standing, valid and
enforceable by JAC in accordance with its terms. The leases and operation of
JAC's business as currently conducted are not in violation of any applicable
certificate of occupancy or zoning or in material violation of other Laws. No
event has occurred which, with notice or lapse of time or both, would constitute
a default by JAC under any such lease.
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3.18 Intellectual Property.
(a) Section 3.18(a) of the Disclosure Schedule sets forth a
true and complete list and a brief description, including a complete
identification, of all Patents, Trademarks and Registered Copyrights owned or
licensed by JAC. In each registration or patent or application for registration
or patent listed in Section 3.18(a) of the Disclosure Schedule held by
assignment, the assignment has been recorded with the applicable Patent and
Trademark Office from which the original registration issued or before which the
application for registration is pending. The rights of JAC in or to such
Intellectual Property owned by JAC do not conflict with or infringe on the
rights of any other Person and neither Seller nor JAC have not received any
written claim or notice from any Person to such effect. JAC is not subject to
any Governmental Order or agreement restricting its use of the Intellectual
Property, except for such restrictions contained in Intellectual Property
licensed from third parties, which licensed Intellectual Property (other than
"off the shelf" software such as word processing and spreadsheet programs) is
listed in Section 3.18(a) of the Disclosure Schedule.
(b) The Intellectual Property owned by JAC is free and clear
of Encumbrances. No Actions have been made or asserted or are pending or, to the
best knowledge of Seller, threatened against JAC either (i) based upon or
challenging or seeking to deny or restrict the use by JAC of any of the
Intellectual Property or (ii) alleging that any services provided, or products
manufactured or sold by JAC are being provided, manufactured or sold in
violation of any patents or trademarks, or any other rights of any Person. To
the best knowledge of Seller, no Person is using any patents, copyrights,
trademarks, service marks, trade names, trade secrets or similar property or
that infringe upon the Intellectual Property or upon the rights of JAC. JAC has
not granted any license or other right to any other Person with respect to the
Intellectual Property, except for licenses of software to customers. The
consummation of the transactions contemplated by this Agreement will not result
in the termination or impairment of any of the Intellectual Property owned by
JAC.
(c) Seller has, or has caused to be, made available to
Purchaser correct and complete copies of all licenses and sublicenses for
Intellectual Property licensed from third parties set forth in Section 3.18(a)
of the Disclosure Schedule and any and all ancillary documents pertaining
thereto (including, but not limited to, all amendments, consents and evidence of
commencement dates and expiration dates). With respect to each of such licenses
and sublicenses:
(i) such license or sublicense, together with all
ancillary documents made available pursuant to the first sentence of this
Section 3.18(c), is valid, binding, enforceable and in full force and effect
and represents the entire agreement between the respective licensor and
licensee with respect to the subject matter of such license or sublicense;
(ii) subject to obtaining any necessary consent to
assignment from the licensor, such license or sublicense will not cease to
be valid, binding, enforceable and in full force and effect on the terms
currently in effect as a result of the consummation of the
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transactions contemplated by this Agreement, nor will the consummation of the
transactions contemplated by this Agreement constitute a breach or default under
such license or sublicense or otherwise give the licensor or sublicensor a right
to terminate such license or sublicense;
(iii) with respect to each such license or
sublicense; (A) JAC has not received any notice of cancellation or
termination under such license or sublicense and no licensor or
sublicensor has any right of termination or cancellation under such license
or sublicense except in connection with the default of Seller thereunder,
(B) JAC has not received any notice of a breach or default under such license or
ublicense, which breach or default has not been cured, and (C) JAC has not
granted to any other Person any rights, adverse or otherwise, under such
license or sublicense (except for licenses of software to customers);
(iv) neither JAC nor, to the best knowledge of
Seller, any other party to such license or sublicense, is in breach or default
in any material respect, and no event has occurred with respect to JAC, or
to the best knowledge of Seller, such other party, that, with notice or
lapse of time would constitute such a breach or default or permit termination,
modification or acceleration under such license or sublicense;
(v) no Actions have been made or asserted or are
pending or, to the best knowledge of Seller, threatened against JAC
either (A) based upon or challenging or seeking to deny or restrict the use by
JAC of any of the licensed Property or (B) alleging that any licensed
Intellectual Property is being licensed, sublicensed or used in violation of
any patents or trademarks, or any other rights of any Person; and
(vi) to the best knowledge of Seller, no Person
is using any patents, copyrights, trademarks, service marks, trade names,
trade secrets or similar property or that infringe upon JAC's use of the
licensed Intellectual Property or upon the rights of JAC therein.
(d) Neither Seller nor JAC is aware of any reason that would
prevent any pending applications to register Trademarks, Copyrights or any
pending Patent applications from being granted.
(e) Upon the Closing, JAC shall own or possess, or own or
possess adequate and enforceable licenses, sublicenses or other rights to use,
all the Intellectual Property.
(f) Other than "off the shelf" software, such as word
processing and spreadsheet software, the Intellectual Property set forth in
Section 3.18(a) of the Disclosure Schedule constitutes all the Intellectual
Property used in and necessary to the conduct of JAC's business, as currently
conducted, and there are no other items of Intellectual Property that are
material to JAC.
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3.19 Assets.
(a) JAC owns, leases or has the legal right to use all the
Assets, including, without limitation, the Intellectual Property and the
Tangible Personal Property, and, with respect to contract rights, is a party to
and enjoys the right to the benefits of all of the Material Contracts. JAC has
good and valid title to, or, in the case of leased or subleased Assets, valid
and subsisting leasehold interests in, all the Assets, free and clear of all
Encumbrances, except Permitted Encumbrances.
(b) At all times since April 30, 1995, JAC has caused the
Assets to be maintained in accordance with good business practice, and all items
of Tangible Personal Property are in good operating condition and repair,
subject to ordinary wear and tear, and are suitable for the purposes for which
they are used and intended.
3.20 Employee Benefit Matters.
(a) Plans and Material Documents. Section 3.20(a) of the
Disclosure Schedule lists all employee benefit plans, and all pension, bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements, whether legally
enforceable or not, to which Seller is a party, with respect to which JAC has
any obligation or which are maintained, contributed to or sponsored by JAC for
the benefit of any current or former employee, officer or director of JAC
(collectively, the "Plans"). Each Plan is in writing and Seller has furnished
Purchaser with a complete and accurate copy of each Plan. JAC does not have any
express or implied commitment, whether legally enforceable or not, (i) to
create, incur liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into any contract or
agreement to provide compensation or benefits to any individual or (iii) to
modify, change or terminate any Plan, other than with respect to a modification,
change or termination required by applicable Laws. Each Plan is an "Exempt
Approved Scheme" within Section 592(1) of the Income and Corporation Taxes Act
1988.
(b) Absence of Certain Types of Plans. None of the Plans
provides for the payment of separation, severance, termination or similar-type
benefits to any Person (other than pursuant to notice provisions in the
employment contracts with each of JAC's current employees or obligates Seller to
pay separation, severance, termination or similar-type benefits solely as a
result of any transaction contemplated by this Agreement or as a result of a
change in control of JAC. Each of the Plans is subject only to the laws of the
United Kingdom or a political subdivision thereof.
(c) Compliance with Applicable Law. Each Plan is now and
always has been operated in all respects in accordance with the requirements of
all applicable Law. JAC has performed all obligations required to be performed
by it under, is not in any respect in default under or in violation of, and has
no knowledge of any default or violation by any party to, any
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Plan. No legal action, suit or claim is pending or, to the best knowledge of
Seller, threatened with respect to any Plan (other than claims for benefits in
the ordinary course) and no fact or event exists that could give rise to any
such action, suit or claim.
(d) Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Plan have been made
on or before their due dates as prescribed by any such Plan and applicable Law.
All such contributions have been fully deducted for Tax purposes and no such
deduction has been challenged or disallowed by any Government Authority and no
fact or event exists which could give rise to any such challenge or
disallowance. The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation payable
to or in respect of any employee of JAC.
3.21 Labor Matters.
(a) JAC is not a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by JAC and
currently there are no organizational campaigns, petitions or other unionization
activities seeking recognition of a collective bargaining unit which could
affect JAC; (b) there are no strikes, slowdowns or work stoppages pending or, to
the best knowledge of Seller, threatened between JAC and any of its employees,
and JAC has not experienced any such strike, slowdown or work stoppage within
the past three years; (c) JAC has not breached or otherwise failed to comply
with the provisions of any collective bargaining or union contract and there are
no grievances outstanding against Seller under any such agreement or contract
that could have a Material Adverse Effect; (d) there are no unfair labor
practice complaints pending against JAC before any Governmental Authority or any
current union representation questions involving employees of JAC; (e) JAC is
currently and at all times has been in compliance in all material respects with
all applicable Laws relating to the employment of labor, including, without
limitation, the Employment Protection Consolidation Act 1978, the Wages Act
1986, the Sex Discrimination Act 1975, the Race Relations Act 1976, and those
related to wages, hours, collective bargaining and the payment and withholding
of taxes and other sums as required by the appropriate Governmental Authority
and has withheld and paid to the appropriate Governmental Authority or is
holding for payment not yet due to such Governmental Authority all amounts
required to be withheld from employees of JAC and is not liable for any arrears
of wages, taxes, penalties or other sums for failure to comply with any of the
foregoing; (f) JAC has paid in full to all its employees or adequately accrued
for in accordance with the Statement of Standard Accounting Practices
consistently applied all wages, salaries, commissions, bonuses, benefits and
other compensation due to or on behalf of such employees; (g) there is no claim
with respect to payment of wages, salary or over-time pay that has been asserted
or is now pending or, to the best knowledge of Seller, threatened before any
Governmental Authority with respect to any Persons currently or formerly
employed by JAC; (h) JAC is not a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to employees or
employment practices and (i) there is no charge or proceeding with respect to a
violation of any occupational safety or health standards that has
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been asserted or is now pending or, to the best knowledge of Seller, threatened
with respect to JAC.
3.22 Taxes.
(a)(i) All returns and reports in respect of Taxes required to
be filed (or filing extensions applied for) with respect to JAC have been timely
and properly filed, except for filings in jurisdictions where the failure to
file would not have a Material Adverse Effect or result in the creation of any
Encumbrance on the Shares or the Assets; (ii) all Taxes required to be shown on
such returns and reports or otherwise due have been timely paid ; (iii) all such
returns and reports are true, correct and complete in all material respects;
(iv) there are no Tax liens on any of the Assets except Permitted Encumbrances;
and (v) since November 30, 1995, JAC has not, nor have any of its Affiliates,
made, or caused or permitted to be made, any Tax election that effects JAC.
(b) Simultaneous with the execution of this Agreement, Seller
is executing and delivering the Tax Deed in the form attached as Exhibit
3.22(b).
3.23 Insurance.
(a) The Assets and all material risks of JAC are covered by
valid and currently effective insurance policies or binders of insurance
(including, without limitation, general liability insurance), issued in favor of
JAC, in each case with responsible insurance companies, in such types and
amounts and covering such risks as are consistent with customary practices and
standards of companies engaged in businesses and operations similar to those of
JAC. Section 3.23(a) of the Disclosure Schedule sets forth all such policies or
binders held by or on behalf of Seller currently in effect (specifying the
insurer, the policy number or covering note number with respect to binders, and
describing each open claim thereunder, setting forth the aggregate amounts paid
out under each such policy and specifying the aggregate limits of liability
thereunder). Each such insurance policy and binder is legal, valid, binding and
enforceable in accordance with its terms and is in full force and effect.
Neither Seller nor any Person holding any such policy or binder is in breach or
default with respect to any provision contained in any such policy or binder,
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination or modification under
the policy, nor has Seller or any such policyholder failed to give any notice of
any claim under any such policy or binder in due or timely fashion. Neither
Seller nor any such policyholder has cancelled or failed to renew any such
policy or binder, has knowledge of any material inaccuracy in any application
for such policies or binders, has failed to pay premiums when due, has knowledge
of any similar state of facts that might form the basis for termination of any
such insurance, or given notice of any such circumstance.
(b) At the time of the Closing, all insurance policies
currently in effect will be outstanding and duly in force.
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3.24 Full Disclosure. No representation or warranty of Seller in this
Agreement, any of the Related Agreements nor any statement or certificate
furnished to Purchaser on the date hereof pursuant to this Agreement, or
furnished to Purchaser on the date hereof in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
3.25 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 or the Related Agreements based upon
arrangements made by or on behalf of Seller.
3.26 Accounts Receivables. Section 3.26 of the Disclosure Schedule sets
forth a true and complete list of all of the accounts receivable of JAC. All of
such accounts receivable arose from the sale of inventory or services to
persons, corporations, partnerships or other entitles not affiliated with JAC,
Seller or IHSG and in the ordinary course of business consistent with past
practice.
3.27 Memorandum and Articles of Association. The copy of the Memorandum
and Articles of Association of JAC made available to Purchaser is true and
complete and sets out if full the rights and restrictions attaching to each
class of JAC's share capital.
3.28 Returns. All returns, particulars, resolutions and other documents
required under the UK Companies Act 1985 to be delivered on behalf of JAC to the
Registrar of Companies have been duly and properly made and delivered.
3.29 Indebtedness. JAC has no borrowings or other indebtedness for
borrowed money, and has not agreed to create any borrowings, from its bankers or
any other source.
3.30 Insolvency.
(a) No order has been made and no resolution has been passed
for the winding up of JAC or for a provisional liquidator to be appointed in
respect of JAC and no petition has been presented and no meeting has been
convened for the purpose of winding up JAC.
(b) No administration order has been made and no petition for
such an order has been presented in respect of JAC.
(c) No receiver (including, but not limited to, an
administrative receiver) has been appointed in respect of JAC or all or any of
the Assets.
(d) JAC is not insolvent or unable to pay its debts within the
meaning of Section 123 UK Insolvency Act 1986 nor has it stopped paying its
debts as they fall due.
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(e) No voluntary arrangement has been proposed under Section 1
UK Insolvency Act 1986 in respect of JAC.
(f) JAC has not been party to any transaction at an undervalue
as defined in Section 238 UK Insolvency Act 1986 nor has it given or received
any preference as defined in Section 239 UK Insolvency Act 1986, in either case
within the period of two years ending on the date of this Agreement.
(g) No unsatisfied judgment is outstanding against JAC.
(h) No guaranty, loan capital, borrowed money or interest
is overdue for payment.
3.31 Trading. There currently is no agreement, practice or arrangement
carried on by JAC or to which JAC is a party which infringes in any material
respect any competition, restrictive trade practice, anti-trust or consumer
protection law or legislation applicable in the United Kingdom or any other
country in which JAC does business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
As an inducement to Seller and IHSG enter into this Agreement,
Purchaser hereby represents and warrants and Seller as follows:
4.01 Organization and Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all necessary corporate power and authority
to enter into this Agreement and the Related Agreements, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements by Purchaser, the performance by Purchaser of its
obligations hereunder and thereunder and the consummation by Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Purchaser. This Agreement has been, and upon
their execution the Related Agreements will be, duly executed and delivered by
Purchaser, and (assuming due authorization, execution and delivery by Seller)
this Agreement constitutes, and upon their execution the Related Agreements will
constitute, legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors rights generally and (ii) the remedy of specific performance and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
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4.02 No Conflict. Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.03, and that all consents, authorizations, orders, actions, filings
and notifications required to be obtained or made by Seller have been obtained
or made, the execution, delivery and performance by Purchaser of this Agreement
and the Related Agreements do not and will not (a) violate, conflict with or
result in the breach of any provision of the certificate of incorporation or
by-laws of Purchaser, (b) conflict with or violate any Law or Governmental Order
applicable to Purchaser or (c) conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of Purchaser pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which Purchaser is a party or by
which any of such assets or properties is bound or affected, which would have a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated by this Agreement.
4.03 Consents and Approvals.
(a) The execution, delivery and performance of this Agreement
and the Related Agreements to which it is a party by Purchaser do not and will
not require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority.
(b) The execution and delivery of this Agreement and the
Related Agreements by Purchaser do not, and the performance by Purchaser of this
Agreement and the Related Agreements will not, require any third-party consents,
approvals, authorizations or actions on the part of Purchaser.
4.04 Litigation. No Action by or against Purchaser is pending or, to
the best knowledge of Purchaser, threatened, which seeks to delay or prevent the
consummation of, or which would be reasonably likely to materially adversely
affect Purchaser's ability to consummate the transactions contemplated by this
Agreement and the Related Agreements.
4.05 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 arrangements made by or
on behalf of Purchaser, except for Purchaser's obligation to Quadrocom which
will be paid by Purchaser.
4.06 Full Disclosure. No representation or warranty of Purchaser in
this Agreement, nor any statement or certificate furnished to Seller on the date
hereof pursuant to this Agreement, or furnished to Seller on the date hereof in
connection with the transactions contemplated by this Agreement, contains or
will contain any untrue statement of a material fact,
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or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Non-Competition. At Closing, Seller and IHSG shall execute and
deliver to Purchaser a Non-Competition Agreement substantially in the form of
Exhibit 5.03 attached hereto.
5.02 Access to Information.
(a) In order to facilitate the resolution of any claims made
against or incurred by Seller with respect to JAC on or prior to the Closing
Date, for a period of seven years after the Closing, Purchaser shall cause JAC
to (i) retain the books and records of JAC relating to periods on or prior to
the Closing Date and (ii) upon reasonable notice, afford the officers, employees
and authorized agents and representatives of Seller reasonable access (including
the right to make, at Seller's expense, photocopies), during normal business
hours, to such books and records.
(b) In order to facilitate the resolution of any claims made
by or against or incurred by Purchaser or JAC after the Closing or for any other
reasonable purpose, for a period of seven years following the Closing, Seller
shall (i) retain all books and records of Seller which are not transferred to
Purchaser pursuant to this Agreement or the related Agreements or retained by
JAC and which relate to JAC for periods on or prior to the Closing Date and
which shall not otherwise have been delivered to Purchaser or retained by JAC
and (ii) upon reasonable notice, afford the officers, employees and authorized
agents and representatives of Purchaser reasonable access (including the right
to make, at Purchaser's expense, photocopies), during normal business hours, to
such books and records. Upon the reasonable request of Purchaser in writing,
Seller agrees, for a period of two years following the Closing, to make
available its employees and officers, and to the extent possible, its attorneys,
accountants, agents and other representatives, for the purpose of giving
testimony or such other reasonable assistance as Purchaser may reasonably
require for the preparation and defense or prosecution of any claim, action or
other proceeding against any third party relating to JAC. Seller's reasonable
costs and expenses in connection therewith shall be reimbursed by Purchaser.
5.03 Confidentiality.
(a) Seller and IHSG agree to: (i) treat and hold as
confidential (and not disclose or provide access to any Person to all
Confidential Information relating to the Intellectual Property and any other
Confidential Information with respect to JAC, (ii) in the
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event that Seller or any agent, representative, Affiliate, employee, officer or
director becomes legally compelled to disclose any such information, provide
Purchaser with prompt written notice of such requirement so that Purchaser may
seek a protective order or other remedy or waive compliance with this Section
5.03, (iii) in the event that such protective order or other remedy is not
obtained, or Purchaser waives compliance with this Section 5.03, furnish only
that portion of such confidential information which is legally required to be
provided and exercise its best efforts to obtain assurances that confidential
treatment will be accorded such Confidential Information, and (iv) promptly
furnish (prior to, at, or as soon as practicable following, the Closing) to
Purchaser any and all copies (in whatever form or medium) of all such
Confidential Information then in the possession or control of Seller or IHSG and
destroy any and all additional copies then in the possession or control of
Seller or IHSG and of any analyses, compilations, studies or other documents
prepared, in whole or in part, on the basis thereof; provided, however, that
this sentence shall not apply to any information that, at the time of
disclosure, is or becomes available publicly and which Seller can prove by
written evidence was not disclosed in breach of this Agreement by Seller, or any
of its agents, representatives, Affiliates, employees, officers or directors.
Seller and IHSG agree and acknowledge that remedies at Law for any breach of its
obligations under this Section 5.03 are inadequate and that Purchaser will
suffer irreparable harm as the result of such breach. Accordingly, in addition
to all other remedies available to Purchaser, Purchaser shall be entitled to
seek equitable relief, including injunction and specific performance, in the
event of any such breach, without the necessity of demonstrating the inadequacy
of monetary damages and Seller and IHSG will not raise as a defense that
Purchaser has an adequate remedy at law. The provisions of this Section 5.03
shall survive the execution of this Agreement and the Closing.
(b) For the purpose of this Agreement, Confidential
Information means all tangible forms of confidential information, including,
without limitation, product information, technical information, drawings,
blueprints, designs, parameters of design, monographs, specifications,
flowsheets, sketches, descriptions, technical data source codes, object codes,
customer lists, pricing data and other tangible material related thereto.
5.04 Use of Intellectual Property.
(a) From and after the Closing, Seller shall not use any of
the Intellectual Property.
(b) As promptly as practicable following the Closing, Seller
shall remove or obliterate any Trademarks from letterheads and other materials
remaining in its possession or under its control, and Seller shall not use or
put into use after the Closing any materials that bear any trademark, service
mark, trade dress, logo, trade name or corporate name contained in the
Intellectual Property.
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5.05 Taxes.
(a) Purchaser shall pay the stamp duty in connection with the
sale of the Shares. Purchaser shall execute and deliver all instruments and
certificates necessary to enable Seller to comply with the foregoing.
(b) From and after the date of this Agreement, Seller shall
not without the prior written consent of Purchaser (which may, in its sole and
absolute discretion, withhold such consent) make, or cause to permit to be made,
any Tax election that would affect JAC or the Assets.
5.06 No Infringement. Seller, on behalf of itself and its Affiliates,
covenants and agrees not to claim or contend hereafter at any time against
Purchaser and its successors that the business of JAC as currently conducted
infringes in any respect any patent (or patent which may hereafter be issued on
any existing patent application or technology) which is owned or controlled by
Seller or its Affiliates as of the date of this Agreement and which is not
conveyed to Seller under this Agreement or the Asset Purchase Agreement.
5.07 Further Action. Each party shall use its best efforts to perform
or comply with, and to cause others to perform or comply with, all of the terms
and conditions set forth in this Agreement. Each of the parties hereto shall its
best efforts to take, or cause to be taken, all appropriate action, do or cause
to be done all things necessary, proper or advisable under applicable Laws, and
execute and deliver such documents and other papers, as may be required to carry
out the provisions of this Agreement and the Related Agreements and consummate
and make effective the transactions contemplated by this Agreement and the
Related Agreements.
5.09 Mail. After the Closing Date and for a period of one year
thereafter Seller shall remit to Purchaser all mail that relates to JAC and the
Assets.
5.10 Communications Software License. Seller hereby grants to JAC
a nonexclusive perpetual, royalty-free, transferable right and license to use
the Communications Software, with the right to grant sublicenses.
ARTICLE VI
INDEMNIFICATION
6.01 Survival of Representations and Warranties. All
representations and warranties shall survive the Closing for a period of two
years from the date hereof.
6.02 Indemnification by Seller and IHSG. Purchaser, its Affiliates, and
their respective stockholders, officers, directors, employees, agents,
successors and assigns shall be indemnified and held harmless by Seller and
IHSG, jointly and severally, for any and all Liabilities, losses,
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damages, claims, costs and expenses, interest, awards, judgments, penalties,
assessments, audits and investigations (including, without limitation,
attorneys', auditors' and consultants' fees and expenses) ("Losses") actually
suffered or incurred by them (including, without limitation, any Action brought
or otherwise initiated by any of them) arising out of or resulting from:
(i) the breach of any representation or warranty made by
Seller contained in the Acquisition Documents and
(ii) the breach of any covenant or agreement by Seller
contained in the Acquisition Documents.
6.03 Indemnification by Purchaser. Each of Seller, IHSG, its
Affiliates, and their respective stockholders, officers, directors, employees,
agents, successors and assigns shall be indemnified and held harmless by
Purchaser for any and all Losses arising out of or resulting from:
(i) the breach of any representation or warranty made by
Purchaser contained in the Acquisition Documents or
(ii) the breach of any covenant or agreement by Purchaser
contained in the Acquisition Documents.
6.04 Indemnification Procedures.
(a) Any Person seeking indemnification under this Article VI
(an "Indemnified Party") shall give prompt notice to the party or parties from
whom such indemnification is sought (the "Indemnifying Party"), stating the
amount of the Loss, if known, and method of computation thereof, and containing
a reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises. The obligations and Liabilities of the
Indemnifying Party under this Article VI with respect to Losses arising from
claims of any third party which are subject to the indemnification provided for
in this Article VI ("Third Party Claims") shall be governed by and contingent
upon the following additional terms and conditions: if an Indemnified Party
shall receive notice of any Third Party Claim, the Indemnified Party shall give
the Indemnifying Party notice of such Third Party Claim within 15 days of the
receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any
of its obligations under this Article VI except to the extent the Indemnifying
Party is materially prejudiced by such failure and shall not relieve the
Indemnifying Party from any other obligation or liability that it may have to
any Indemnified Party otherwise than under this Article VI. If the Indemnifying
Party acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
the Indemnifying Party shall be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice (subject
to the consent of the Indemnified Party to such counsel, such consent not to be
unreasonably withheld) if it gives notice of its intention to do so to the
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Indemnified Party within five Business Days of the receipt of such notice from
the Indemnified Party; provided, however, that (i) if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate for the same counsel to represent both the Indemnified Party and
the Indemnifying Party, then the Indemnified Party shall be entitled to retain
its own counsel, in each jurisdiction for which the Indemnified Party determines
counsel is required, at the expense of the Indemnifying Party, (ii) the
Indemnifying Party shall not thereby permit to exist any lien, encumbrance or
other adverse charge upon any asset of the Indemnified Party or settle such
action without first obtaining the consent of the Indemnified Party, which
consent will not be unreasonably withheld, except for settlements solely
covering monetary matters for which the Indemnifying Party has acknowledged
responsibility for payment; (iii) the Indemnifying Party shall permit the
Indemnified Party (at the Indemnified Party's sole cost and expense) to
participate in such settlement or defense through counsel chosen by the
Indemnified Party and (iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any loss resulting from
such claim and all related expenses incurred by the Indemnified Party, except
for those costs expressly assumed by Indemnified Party hereunder. In the event
the Indemnifying Party exercises the right to undertake any such defense against
any such Third Party Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party.
(b) To the extent that the undertakings of the Indemnifying
Party set forth in this Article VI may be unenforceable, Seller or Purchaser, as
the case may be, shall contribute the maximum amount that it is permitted to
contribute under applicable Law to the payment and satisfaction of all Losses
incurred by Seller or Purchaser, as the case may be.
(c) The provisions of Section 7.11 below shall govern any
dispute between the parties with respect to their respective rights and
obligations under this Article VI.
6.05 Limitation on Indemnification. Notwithstanding anything to the
contrary in Sections 6.02 and 6.03, an Indemnifying Party shall not be required
to make any payment with respect to indemnification pursuant to Section 6.02 or
Section 6.03 for breach of warranty or misrepresentation until the aggregate
amount of Losses for breaches of warranty and misrepresentations (including
those under the Asset Purchase Agreement) exceeds on a cumulative basis $50,000.
In such case, the Indemnifying Party will be responsible for all Losses incurred
by Indemnified Party, including but not limited to the first $50,000 thereof.
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ARTICLE VII
GENERAL PROVISIONS
7.01 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement, the Related Agreements and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses, whether or not the
Closing shall have occurred.
7.02 Notices. All notices, requests, waivers, claims, demands and other
communications which are required or permitted hereunder shall be in writing and
shall be given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by courier service for which a written receipt
is given, by cable, by telecopy (providing evidence of receipt and providing a
confirming copy is delivered by one or the other methods permitted by this
Section 7.02), by telegram, by telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 7.02):
(a) if to Seller:
Holland America Investments Corporation.
c/o TBG Services, Inc.
565 Fifth Avenue
New York, New York 10017
Telecopy No.: (212) 850-8530
Attention: Stephen Green, Esq.
and
Information Handling Services Group, Inc.
15 Inverness Way East
Englewood, Colorado 80112
Telecopy No.: (303) 792-9034
Attention: President
with a copy to:
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TBG Services, Inc.
565 Fifth Avenue
New York, New York 10017
Telecopy No.: (212) 850-8530
Attention: Stephen Green, Esq.
(b) if to Purchaser:
Digimedics Corp.
1600 Green Hills Road
Scotts Valley, California 95066
Telecopy No.:(408) 438-8422
Attention: Les Dace
with a copy to:
Mediware Information Systems, Inc.
1121 Old Walt Whitman Road
Melville, New York 11747-3005
Telecopy No.: (516) 423-0161
Attention: President
Hackmyer & Nordlicht
645 Fifth Avenue
New York, New York 10022
Telecopy No.: (212) 421-0499
Attention: Ira S. Nordlicht, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004
Telecopy No.: (212) 858-1500
Attention: Jonathan H. Churchill, Esq.
All such notices shall be deemed to have been given on the date
personally delivered, upon possession of a receipt establishing that a facsimile
transmission was received or five days after mailed in the manner provided
above. Any party may change its address for delivery of notice by providing
written notice to the other parties in the manner discussed above.
7.03 Public Announcements. No party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without prior consultation with the other party except as
required by applicable law. The parties shall cooperate as to the timing and
contents of any such press release or public announcement.
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7.04 Headings. The descriptive headings contained in this Agreement and
the Exhibits and Schedules hereto are for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement.
7.05 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
7.06 Entire Agreement. The Acquisition Documents constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
Seller and Purchaser with respect to the subject matter hereof and there have
been and are no agreements, representations or warranties among Continental,
IHSG and Purchaser exceptions set forth in the Acquisition Documents and any
other documents executed at the Closing..
7.07 Assignment. This Agreement may not be assigned by operation of Law
or otherwise without the express written consent of Seller, IHSG and Purchaser
(which consent may be granted or withheld in the sole discretion of Seller, IHSG
and Purchaser).
7.08 No Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person, including, without limitation, any union or any employee
or former employee of Seller, any legal or equitable right, benefit or remedy of
any nature whatsoever, including, without limitation, any rights of employment
for any specified period, under or by reason of this Agreement.
7.09 Amendment. This Agreement may not be amended or modified except
(a) by an instrument in writing signed by, or on behalf of, Seller, IHSG and
Purchaser. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. the
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
7.10 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed entirely within that
state. Subject to Section 7.11, all actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any New York state
or federal court sitting in the City of New York. Any process or notice of
motion or other application to any of such courts may be served within or
without such court's jurisdiction by registered mail or by personal service,
provided a reasonable time for appearance
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is allowed. With respect to such courts, Purchaser, Seller hereby expressly
waive any defense based on doctrines of venue or forum non conveniens or similar
rules or doctrines.
7.11 Dispute Resolution.
(a) In the event of any controversy, claim or dispute, other
than disputes under Section 5.03 for which equitable relief is available, the
party initiating the controversy, claim or dispute shall provide to the other
party a written notice containing a brief and concise statement of the matter,
together with relevant supporting facts. During a period of thirty (30) days or
such longer period as mutually agreed, the parties shall attempt to settle the
matter by good faith negotiation. Such efforts shall include, but not be limited
to, full presentation by each party of its claims, with or without counsel, to
the President of the other party.
(b) If efforts under Section 7.11(a) are not successful, such
dispute shall be settled by binding arbitration in New York, New York, under the
Commercial Rules of the American Arbitration Association then in effect (except
as otherwise set forth in the Agreement). The failure to comply with Section
7.11(a) with respect to such dispute shall be an absolute bar to the institution
of arbitration proceedings with respect thereto. The arbitration shall be
conducted in the English language before a panel of three arbitrators, one of
whom is selected by Seller and IHSG jointly, one of whom is selected by
Purchaser, and one of whom is selected by Seller, IHSG and Purchaser jointly (or
by the other two arbitrators, if the parties cannot agree). The parties will
cooperate with each other in causing the arbitration to be held in as efficient
and expeditious a manner as practicable. If either party fails to appoint an
arbitrator in thirty days, the other party may request that the American
Arbitration Association make such appointment. The arbitrators will be required
to render a full and complete written report of their decision. The decision of
a majority of the arbitrators will constitute the arbitrators' decision. Any
award rendered by the arbitrators shall be binding upon the parties hereto and
shall be final, subject to review by a court of competent jurisdiction under the
statutory standard of review applicable to arbitrations. Judgment on the award
may be entered in any court of record having competent jurisdiction. Each party
shall pay its own expenses of arbitration and the expenses of the arbitrators
shall be equally shared except that if, in the opinion of the arbitrators, any
claim or position by a party hereto, or any defense or objection thereto by
another party was unreasonable or frivolous, the arbitrators may in their
discretion assess as part of their award all or any part of the arbitration
expenses of the other party or parties (including reasonable attorneys' fees)
and expenses of the arbitrators against such party. Nothing herein shall prevent
the parties from settling any dispute by mutual agreement at any time. The law
of the State of New York shall govern the validity, scope and effect of this
Section 7.11.
7.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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7.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or equity without the necessity of demonstration the inadequacy of
monetary damages.
7.14 Receipt of Money or Other Assets. If any money or other assets are
received by Seller or Purchaser to which the other party is entitled pursuant to
this Agreement, such party shall hold such money or assets in trust and shall
promptly notify and account therefore to the other within fifteen (15) days of
receipt.
7.15 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
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IN WITNESS WHEREOF, Seller and Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HOLLAND AMERICA INVESTMENT CORPORATION
By: /s/ Stephen Green
_____________________
Name: Stephen Green
Title: Vice President
INFORMATION HANDLING SERVICES GROUP, INC.
By: /s/ Stephen Green
______________________
Name: Stephen Green
Title: Vice President
DIGIMEDICS CORP.
By: /s/ Lawrence Auriana
_______________________
Name: Lawrence Auriana
Title: Secretary
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Exhibit 2(c)
SECURED PROMISSORY NOTE
$6,000,000 New York, New York
June 17, 1996
FOR VALUE RECEIVED, DIGIMEDICS CORPORATION , a California corporation
(the "Debtor"), promises to pay to the order of CONTINENTAL HEALTHCARE SYSTEMS,
INC. (the "Payee"), c/o Information Handling Services Group, Inc., 15 Inverness
Way East, Englewood, Colorado, or at such other place as the Payee or any holder
hereof may from time to time designate in writing, the principal sum of Six
Million Dollars and 00/100 cents ($6,000,000) in lawful money of the United
States, on the earlier to occur of (i) November 30, 1996 and (ii) the date of
the Refinancing (as hereinafter defined). The Debtor promises also to pay
interest on the unpaid principal amount hereof in like money at said office or
place from the date hereof until maturity (whether by passage of time,
acceleration or otherwise) at a rate equal to the rate of interest publicly
announced from time to time by Citibank, N.A. at its principal office in New
York City as its base rate. Any change in the rate of interest due to a change
in the aforementioned base rate shall become effective as of the opening of
business on the day on which such change in the base rate shall be announced.
Such interest shall be payable in arrears on the last day of each month,
commencing July 31, 1996, and at maturity. After maturity (whether by
declaration, acceleration or otherwise), interest on overdue principal and
accrued interest shall be payable on demand at a rate ("Default Rate") equal to
four percent (4%) in excess of the rate set forth above. Interest shall be
calculated on the basis of a 360-day year and actual days elapsed. In no event
shall the interest payable hereunder exceed the maximum amount permitted under
applicable law.
SECTION 1. TERMS OF PAYMENT; PURPOSE OF LOAN
ss.1.1. Optional Prepayments. The Debtor may, at its option, at any
time and from time to time, prepay all or any part of the principal balance of
this Note, without penalty or premium, in multiples of $100,000, provided that
concurrently with each such prepayment the Debtor shall pay accrued interest on
the principal so prepaid to the date of such prepayment.
ss.1.2. Day of Payment. Whenever any payment to be made hereunder shall
become due and payable on a day which is not a Business Day (as defined below),
such payment may be made on the next succeeding Business Day and, in the case of
any payment of principal, such extension of time shall in such case be included
in computing interest on such payment. As used herein, "Business Day" shall mean
<PAGE>
any day which is not a Saturday or Sunday and on which banks in the State of New
York are not authorized or required to close. Interest on past due principal and
accrued interest thereon shall be calculated as follows: The amount of principal
and interest past due multiplied by the Default Rate and multiplied by a
fraction, the numerator of which is the number of days such principal and
interest is past due and the denominator of which is 360.
ss.1.3. Use of Proceeds. This Note is the "Note" referred to in Section
2.04 of the Asset Purchase Agreement dated the date hereof (as amended, modified
or supplemented in accordance with its terms, the "Purchase Agreement") among
the Debtor, the Payee and Information Handling Services Group, Inc. and
evidences part of the "Purchase Price" as therein defined.
ss.1.4. Obligation to Pay. The Debtor shall make all payments hereunder
in full without offset, reduction or deduction of any kind or amount or for any
reason, including, without limitation, setoff by any amounts which Debtor may
claim or be entitled to claim under Section 6.02 of the Purchase Agreement.
SECTION 2. COLLATERAL
ss.2.1. Security Documents. This Note is secured by the following
(collectively, the "Security Documents") and is entitled to the benefits
thereof: (i) General Security Agreement dated today's date by Debtor in favor of
the Payee (as amended, modified or supplemented from time to time, the "Security
Agreement") covering all of the asset of Debtor therein described and (ii)
Charge dated today's date by Debtor in favor of the Payee (as amended, modified
or supplemented from time to time, the "Charge") with respect to certain shares
of JAC. The Debtor shall duly execute and deliver the Security Documents, all
consents of third parties necessary to permit the effective granting of the
Liens created in such agreements, financing statements pursuant to the Uniform
Commercial Code and other documents, all in form and substance satisfactory to
the Payee, as may be reasonably required by the Payee to grant to the Payee a
valid, perfected and enforceable first priority Lien on and security interest in
the Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Debtor represents and warrants (which representations and
warranties shall survive the execution and delivery of this Note) to the Payee
that:
ss.3.1. Organization; Corporate Power. The Debtor is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
organization,
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has the requisite power and authority to own its property and assets and to
carry on its business as now conducted and is qualified to do business in every
jurisdiction where such qualification is required except where the failure to
obtain such qualification would not have a Material Adverse Effect. The Debtor
has the power to execute, deliver and perform its obligations under this Note
and the other Loan Documents to which it is party.
ss.3.2. Authorization. The execution, delivery and performance by the
Debtor of this Note and the other Loan Documents to which it is party and the
grant of security interests in the Collateral created by the Security Documents
(a) have been duly authorized by all requisite action and (b) will not (i)
violate (A) any provision of law, statute, rule or regulation in any material
respect or the articles or certificate of incorporation of the Debtor, (B) any
order or decree of any court, or any rule, regulation or order of any other
agency of government, binding upon the Debtor, (C) any material provisions of
any indenture, agreement or other instrument to which the Debtor or any of its
properties or assets is or may be bound, (ii) be in material conflict with,
result in a breach of or constitute a default under any indenture, agreement or
other instrument referred to in (b)(i)(C) above or (iii) result in the creation
or imposition of any Lien (other than in favor of the Payee) upon any property
or assets of the Debtor.
ss.3.3. Governmental Approvals. No registration or filing with, or
consent or approval of, or other action by, any Federal, state or other
governmental agency, authority or regulatory body is or will be required on the
part of the Debtor in connection with the transactions contemplated hereby,
other than any which have been made or obtained.
ss.3.4. Binding Effect. This Note and the other Loan Documents when
duly executed and delivered will constitute legal, valid and binding obligations
of the Debtor enforceable in accordance with their respective terms except (i)
that enforceability may be subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of creditors
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and the discretion of any
court before which any proceeding therefor may be brought.
ss.3.5. Litigation; Compliance with Laws; etc. (a) There are not any
actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now pending
or, to the knowledge of the Debtor, threatened against or affecting the Debtor
and which, if adversely determined, would have a Material Adverse Effect.
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(b) The Debtor is not in violation of any law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, which violation or default
would have a Material Adverse Effect.
ss.3.6. Federal Reserve Regulations. The Debtor is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock (as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System
of the United States).
ss.3.7. Taxes. The Debtor has filed or caused to be filed (or filed or
caused to be filed extensions therefor) all Federal, state, local and foreign
tax returns which are required to be filed by it on or prior to the date hereof,
except tax returns in jurisdictions where the failure to file such returns would
not have a Material Adverse Effect. The Debtor has paid or caused to be paid all
taxes shown to be due and payable on such filed returns or on any assessments
received by it other than taxes that in the aggregate are not material and which
would not, if unpaid, result in the imposition of any Lien on any property or
assets of the Debtor.
ss.3.8. No Material Misstatements. Neither the most recent 10-K or 10-Q
reports of the Guarantor furnished by the Debtor to the Payee contains any
material misstatement of fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
ss.3.9. Investment Company Act; Public Utility Holding Company Act. The
Debtor is not an "investment company" as defined in, or is otherwise subject to
regulation under, the Investment Company Act of 1940. The Debtor is not a
"holding company" as that term is defined in or is otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935.
ss.3.10. Security Interest. The Security Documents create and grant to
the Payee a legal, valid and, upon filing of UCC financing statements in the
appropriate jurisdictions and the taking of the other actions contemplated by
the Security Documents and taking all other actions, if any, required by
applicable law, perfected first priority security interest in the Collateral,
subject only to Permitted Liens.
ss.3.11. Subsidiaries. The Debtor has no Subsidiaries other than JAC.
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ss.3.12. Title to Properties. The Debtor has good and valid title to
all of its properties and assets, free and clear of any pledge, security
interest, Lien or other encumbrance or claim of any kind, except in favor of the
Payee and except Permitted Liens.
SECTION 4. CONDITIONS OF LENDING
ss.4.1. Conditions Precedent. The obligation of the Payee to make the
loan evidenced by this Note shall be subject to the following conditions
precedent: The Payee shall have received
(a) the written opinion of Winthrop, Stimpson, Putnam & Roberts,
counsel to the Debtor and the Guarantor, in form and substance satisfactory to
Payee;
(b) (i) copies of the certificate of incorporation and by-laws of the
Loan Parties, certified as to such certificate as of a recent date by the
Secretary of State or other appropriate official of the state of its
organization, and (ii) such other charter documents and certificates as the
Payee may reasonably request;
(c) the Security Documents and such instruments and other documents as
shall be required thereunder (including, without limitation, Uniform Commercial
Code financing statements), and Uniform Commercial Code searches of each of the
Loan Parties;
(d) the Guaranty, in form and substance satisfactory to it, from the
Guarantor;
(e) copies of the Director Notes and the Subordination Agreement;
(f) evidence of compliance with the insurance provisions of the
Security Documents;
(g) executed original of the Purchase Agreement and of the Stock
Purchase Agreement dated the date hereof among the parties to the Purchase
Agreement, and each of the documents and instruments executed and delivered in
connection therewith; and
(h) evidence that all required third party consents, if any, to this
Note and the other Loan Documents have been obtained.
SECTION 5. AFFIRMATIVE COVENANTS
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The Debtor covenants and agrees with the Payee that, so long as this
Note shall remain in effect, or the principal of or interest of this Note or any
fee, expense or amount payable hereunder or with respect to this Note shall be
unpaid, it will:
ss.5.1. Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence.
ss.5.2. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default unless the validity or amount thereof is being
contested in good faith by appropriate proceedings and the Debtor has maintained
adequate reserves with respect thereto in accordance with generally accepted
accounting principals.
ss.5.3. Litigation and Other Notices. Upon knowledge by the Debtor,
give the Payee prompt written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having the
effect of prohibiting, the making of the loan hereunder, or invalidating, or
having the effect of invalidating, any provision of this Note or any of other
Loan Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Debtor or any other Loan Party, whether at law or in equity or by or
before any court or any Federal, state, municipal or other governmental agency
or authority, which is brought by or on behalf of any governmental agency or
authority, or in which injunctive or other equitable relief is sought and such
relief, if obtained, would materially impair the right or ability of any Loan
Party to perform its obligations under this Note or the other Loan Documents;
and
(c) any Event of Default (as hereinafter defined) or event or condition
which, with the giving of notice or lapse of time or both, would constitute an
Event of Default, specifying the nature and extent thereof and the action (if
any) which is proposed to be taken with respect thereto.
ss.5.4. Other Information. Deliver to the Payee (a) promptly upon (i)
the filing thereof with the Securities and Exchange Commission, a copy of each
report, notice or other filing (including, without limitation 10Q and 10K
filings), with respect to the
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Debtor and the Guarantor and (ii) receipt thereof, all written communications
received by Debtor or Guarantor from the Securities and Exchange Commission; and
(b) such other information as the Payee shall reasonably request.
SECTION 6. NEGATIVE COVENANTS
The Debtor covenants and agrees with the Payee that, so long as this
Note shall remain in effect or the principal of or interest on this Note, any
fee, expense or amount payable hereunder or with respect to this Note shall be
unpaid, it will not:
ss.6.1. Liens. Incur, create, assume or permit to exist any Lien or
other encumbrance of any kind or nature on any of its property or assets
including, without limitation, the Collateral, whether owned at the date hereof
or hereafter acquired, except Liens created in favor of the Payee as
contemplated by this Note and the Security Documents and Permitted Liens.
ss.6.2. Indebtedness. Incur, create, assume or permit to exist any
indebtedness for borrowed money other than (i) indebtedness incurred hereunder,
(ii) indebtedness to trade creditors incurred in the ordinary course of
business, (iii) Indebtedness pursuant to a Refinancing, (iv) unsecured
indebtedness subordinated on terms reasonably acceptable to Payee the proceeds
of which are used to repay the obligations under this Note, (v) purchase money
indebtedness secured by Liens permitted under clause (e) of the definition
Permitted Liens and (vi) indebtedness in existence of the date hereof and listed
on Schedule II hereto.
ss.6.3. Dividends and Distributions. Declare or pay, directly and
indirectly, any cash dividends or make any other distribution, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value (or permit
any Subsidiary to purchase or acquire) any shares of any class of its capital
stock or set aside any amount for any such purpose or make any principal payment
or prepayment on account of, or purchase, redeem or defease any indebtedness for
borrowed money or make any payment of interest thereon (other than prepayments
and payments permitted or required hereunder), or agree to do any of the
foregoing, or permit any Subsidiary to do any of the foregoing or agree to do
any of the foregoing.
ss.6.4. Consolidations, Mergers and Sales of Assets. Consolidate with
or merge into any other person, or sell, lease, transfer or assign to any
persons or otherwise dispose of (whether in one transaction or a series of
transactions) all or any part of its properties or assets (whether now owned or
hereafter acquired) other
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than inventory sold in the ordinary course of business, or permit another person
to merge into it, or acquire any stock or assets of any other person (except
pursuant to the Purchase Agreement and Stock Purchase Agreement), except that
any Subsidiary of the Debtor may merge with and into Debtor with Debtor as the
surviving corporation.
ss.6.5. Investments. Own, purchase or acquire any stock, obligations,
assets or securities of, or any interest in, or make any capital contribution or
loan or advance of money, credit or property to, any other person, or make any
other investments whatsoever, in excess of $100,000 in the aggregate for all of
the foregoing during the term of this Note, except that Debtor may purchase (a)
certificates of deposit in dollars of any commercial banks registered to do
business in any state of the United States (i) having capital and surplus in
excess of $1,000,000,000 and (ii) whose long-term debt rating is at least
investment grade as determined by either Standard & Poor's Corporation or
Moody's Investor Service, Inc., (b) readily marketable direct obligations of the
United States government or any agency thereof which are backed by the full
faith and credit of the United States, (c) investments in money market mutual
funds having assets in excess of $2,500,000,000, (d) commercial paper at the
time of acquisition having the highest rating obtainable from either Standard &
Poor's Corporation or Moody's Investor Service, Inc. and (e) federally tax
exempt securities rated A or better by either Standard & Poor's Corporation or
Moody's Investor Service, Inc.
ss.6.6. Guarantees. Guarantee, endorse, become surety for, or otherwise
in any way become or be responsible for the obligations of any other person,
except the indorsement for collection or collections for deposit and other
guarantees issued in the ordinary course of business.
ss.6.7. Subsidiaries. Create any Subsidiaries which have a net worth at
any time in excess of $5,000.
SECTION 7. EVENTS OF DEFAULT; REMEDIES
ss.7.1. Defaults. If any one or more of the following events ("Events
of Default") shall occur:
(a) If the Debtor shall default in the payment of any of the principal
of or interest on this Note when due and, in the case of interest, such default
shall continue for two (2) or more Business Days; or
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(b) If any Loan Party shall default in the observance or performance of
any covenants or agreements contained in this Note or the other Loan Documents
other than those specified in clause (a) above, and such default shall continue
for 15 or more days; or
(c) If any representation or warranty made by or on behalf of any Loan
Party in this Note or any other Loan Document or in connection with any of the
transactions contemplated herein shall prove to have been false or incorrect in
any material respect when made; or
(d) If any Loan Party shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, or shall file any answer admitting or not contesting the
material allegations of a petition filed against it in any such proceeding, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of any Loan Party of all or any substantial part of the
properties of any Loan Party; or
(e) If, within sixty (60) days after the commencement of an action
against any Loan Party seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such action shall not have been dismissed or
stayed or if, within sixty (60) days after the appointment, without the consent
or acquiescence of any Loan Party, of any trustee, receiver, or liquidator of
any Loan Party or any substantial part of any Loan Parties' properties, such
appointment shall not have been vacated; or
(f) If any order, judgment, or decree shall be entered in any
proceeding against any Loan Party requiring such Loan Party to divest itself of
a substantial part of its assets, or awarding a money judgment or judgments
against any Loan Party aggregating more than $100,000, and if, within thirty
(30) days after entry thereof, such order, judgment or decree shall not have
been discharged or execution thereof stayed pending appeal; or if, within thirty
(30) days after the expiration of any such stay, such judgment, order or decree
shall not have been discharged; or
(g) Default shall be made with respect to any indebtedness for borrowed
money of any Loan Party in excess of $100,000 if the effect of any such default
shall be to accelerate or permit the acceleration of the maturity of such
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indebtedness; or any amount of principal or interest in respect of such
indebtedness shall not be paid when and as due (after giving effect to any
period of grace specified for such payment in the instrument evidencing or
governing the same); provided, however that with respect to capitalized leases,
default of amounts of more than $100,000 but less than $250,000 shall not
constitute a default hereunder so long as the Debtor is contesting the default
under the capitalized lease in good faith and has set aside reserves therefore
in accordance with generally accepted accounting principles;
(h) This Note or any other Loan Document shall for any reason cease to
be, or shall be asserted by any Loan Party not to be, a legal, valid and binding
obligation of any Loan Party, enforceable in accordance with its terms, or the
security interest or Lien purported to be created by any of the Security
Documents shall for any reason cease to be, or be asserted by any Loan Party not
to be, a valid, first priority perfected security interest in any Collateral
(except to the extent otherwise permitted under this Agreement or any of the
Security Documents);
then in the case of an Event of Default described in Section 3.1(d) or 3.1(e)
above, the unpaid balance of this Note and all interest accrued hereon shall
automatically (without any action on the part of the Payee and without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived) forthwith become due and payable, and in the case of any other
Event of Default, then and in any such event, and at any time thereafter, if
such or any other Event of Default shall then be continuing, the Payee may, at
its option, declare this Note to be due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding. The Payee shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code of the State of New York, under the Uniform Commercial Code of any other
state in which any Collateral may be situated and, additionally, all of the
rights and remedies set forth in this Note and the other Loan Documents and in
any instrument or document referred to herein or therein, and under any other
applicable law relating to this Note or the Collateral.
ss.7.2. Rights and Remedies Cumulative. No right or remedy herein
conferred upon the Payee is intended to be exclusive of any other right or
remedy contained herein or in any instrument or document delivered in connection
with or pursuant to this Note or the other Loan Documents, and every such right
or remedy shall be cumulative and shall be in addition to every other such right
or remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
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ss.7.3. Rights and Remedies Not Waived. No course of dealing between
the Debtor and the Payee or any failure or delay on the part of the Payee in
exercising any rights or remedies of the Payee and no single or partial exercise
of any rights or remedies hereunder or under the other Loan Documents shall
operate as a waiver or preclude the exercise of any other rights or remedies
hereunder.
SECTION 8. CERTAIN DEFINITIONS
"Collateral" shall mean the collateral described in the
Security Documents.
"Director Notes" shall mean the 12% Secured Notes of Mediware
Information Systems, Inc. made to the order of each of Lawrence Auriana, Joseph
Delario and Peter Lerner, respectively, in each case as in effect on the date
hereof, as more specifically described on Schedule I to the Guaranty.
"Guarantor" shall mean Mediware Information Systems, Inc., a
New York corporation.
"Guaranty" shall mean the Guaranty dated the date hereof by
Guarantor in favor of Payee.
"JAC" shall mean JAC Computer Services Ltd., a corporation
organized in the United Kingdom.
"Lien" shall mean, with respect to any asset, (i) any
mortgage, lien, pledge, encumbrance, charge or security interest in or on such
asset, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset, (iii) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities or (iv) any other right
of or arrangement with any creditor to have such creditor's claim satisfied out
of such assets, or the proceeds therefrom, prior to the general creditors of the
owner thereof.
Loan Documents" shall mean this Note and any other instrument,
document or agreement executed and delivered at any time and from time to time
in connection herewith.
"Loan Party" shall mean the Debtor and its Subsidiaries and
the Guarantor and its Subsidiaries.
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"Material Adverse Effect" shall mean a material adverse effect
on (i) the businesses, assets, operations or financial or other condition of any
Loan Party, (ii) the ability of any Loan Party to perform or pay its respective
obligations under this Note or under the other Loan Documents, (iii) the rights
of, or benefits available to, the Payee under this Note or any of the other Loan
Documents or (iv) the Payee's Lien on any portion of the Collateral.
"Permitted Liens" shall mean such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments, governmental charges and
levies not yet due and payable; (b) Liens imposed by any Federal, state, local
or foreign statute, law, ordinance, regulation, rule, code, order or
requirement, such a materialmen's, mechanics', carriers', workmen's and
repairmen's Liens and other similar Liens arising in the ordinary course of
business that (i) are not overdue for a period of 30 or more days and (ii) are
not in excess of the cost of the assets to which such Lien relates; (c) pledges
or deposits to secure obligations under workers' compensation laws or similar
legislation to secure public or statutory obligations, (d) Liens in existence on
the date hereof and listed on Schedule I hereto and (e) Liens upon any equipment
acquired through the purchase or lease by Debtor which are created directly in
connection with such acquisition to secure or provide for the payment of any
part of the purchase price of, or lease payments on, such equipment (but no
other amounts and not in excess of the purchase price or lease payments),
providing, that such Lien shall not apply to any other property of the Debtor.
"Refinancing" shall mean the closing of a financing by
Guarantor and/or Debtor which yields not less than $6,000,000 in proceeds net of
fees and expenses.
"Subordination Agreement" shall mean the Subordination
Agreement dated the date hereof among the Payee and Lawrence Auriana, Peter
Lerner and Joseph Delario, each a holder of a Director Note.
"Subsidiary" shall mean with respect to any person, the parent
of such person, any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled, directly or indirectly, by the parent or one or more
subsidiaries of the parent.
SECTION 9. MISCELLANEOUS
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ss.9.1. Collection Costs. In the event the Payee or any holder of this
Note shall refer this Note to an attorney for collection, the Debtor agrees to
pay, in addition to unpaid principal and interest, all the costs and expenses
incurred in attempting or effecting collection hereunder, including reasonable
attorneys' fees, whether or not suit is instituted.
ss.9.2. Waivers. Presentment, demand, protest or other notice of any
kind, except as may be otherwise specifically provided herein, are all hereby
waived with respect to this Note.
ss.9.3. Modification. No modification or waiver of any provision of
this Note and no consent by the Payee to any departure therefrom by the Debtor
shall be effective unless such modification or waiver shall be in writing and
signed by the Payee, and the same shall then be effective only for the period
and on the conditions and for the specific instances and purposes specified in
such writing. No notice to or demand on the Debtor in any case shall entitle the
Debtor to any other or further notice or demand in similar or other
circumstances.
ss.9.4. Expenses; Indemnity. (a) The Debtor agrees to pay all
reasonable out-of-pocket expenses incurred by the Payee in connection with any
amendments, modifications or waivers of the provisions hereof or of the other
Loan Documents or incurred by the Payee in connection with the enforcement or
protection of its rights in connection with this Note or the other Loan
Documents or in connection with any pending or threatening action, proceeding,
or investigation relating to the foregoing, in each case including but not
limited to the reasonable fees and disbursements of counsel for the Payee. The
Debtor further agrees that it shall indemnify the Payee from and hold it
harmless against any documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of this Note, but
not against any income or other tax attributable to the interest payable to the
Payee hereunder.
(b) The Debtor agrees to indemnify the Payee and its
respective directors, officers, employees and agents against, and to hold the
Payee and each such person harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against the Payee or any such person arising
out of, in any way connected with, or as a result of (i) this Note or the other
Loan Documents, the performance by the parties hereto and thereto of their
respective obligations hereunder and thereunder (including but not limited to
the making of the loan hereunder) and consummation of the transactions
contemplated hereby and thereby, or (ii) any claim, litigation, investigation or
proceedings relating to any of the foregoing,
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whether or not the Payee or any such person is a party thereto; provided that
such indemnity shall not, as to the Payee and its respective directors,
officers, employees and agents, apply to any such losses, claims, damages,
liabilities or related expenses to the extent that they result from the gross
negligence or willful misconduct of the Payee; and, provided further, that in no
event shall the Debtor be liable for any special, exemplary, punitive or
consequential damages or any damages other than or in addition to actual
damages.
(c) The provisions of this Section 9.4 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Note, the consummation of the transactions contemplated hereby, the repayment of
the loan evidenced by this Note, the invalidity or unenforceability of any term
or provision of this Note, or any investigation made by or on behalf of the
Payee. All amounts due under this Section 9.4 shall be payable on written demand
therefor.
ss.9.5. Entire Agreement; Waiver of Jury Trial, etc. (a) This Note, the
Security Documents and the Guaranty constitute the entire contract between the
parties relative to the subject matter hereof. Any previous agreement among the
parties with respect to the transactions contemplated herein is superseded by
this Note and the other Loan Documents. Except as expressly provided herein or
in the other Loan Documents, nothing in this Note or the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Note or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby
waives any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this Note or
the other Loan Documents.
(c) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover in any litigation referred to
in paragraph (b) of this Section 9.5 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that neither any
representative, agent or attorney of the Payee has represented, expressly or
otherwise, that the Payee would not, in the event of litigation, seek to enforce
the foregoing waivers and (ii) acknowledges that it has been induced to enter
into this Note or the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
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ss.9.6. Consent of Jurisdiction. The Debtor hereby irrevocably consents
to the jurisdiction of the Courts of the State of New York and of any Federal
Court located in such State in connection with any action or proceeding arising
out of or relating to this Note.
ss.9.7. Benefit of Agreement. This Note shall be binding upon the
successors and assigns of the Debtor and inure to the benefit of the Payee and
its successors, endorsees and assigns.
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ss.9.8. Notices. Notices, consents and other communications provided
for herein shall be in writing and shall be delivered or mailed (or in the case
of telegraphic communication, delivered by telex, graphic scanning or other
telegraphic communications equipment, with receipt confirmed) addressed,
(a) if to the Debtor, to Digimedics Corp., 1600 Green Hills
Road, Scotts Valley, California 95066, Telecopy No. 408-438-8422, Attention: Mr.
Les Dace, with a copy to (i) Mediware Information Systems, Inc., 1121 Old Walt
Whitman Road, Melville, New York 11747-3005, Telecopy No. 516-423-0161,
Attention: President, (ii) Hackmyer & Nordlicht, Olympic Tower, 645 Fifth
Avenue, New York, NY 10022, Telecopy No. 212-42100499, Attention: Ira Nordlicht,
Esq. and (iii) Winthrop, Stimpson, Putnam & Roberts, One Battery Park Plaza, New
York, NY 10004-1490, Telecopy No. 212-858-1500, Jonathan M. Churchill, Esq.; and
(b) if to Payee, c/o TBG Services, Inc., at 565 Fifth Avenue,
New York, New York 10117, Attention: Stephen Green, Esq.
All notices and other communications given to any party hereto
in accordance with the provisions of this Note shall be deemed to have been
given on the date of receipt if hand delivered or three days after being sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail, or upon receipt if by any telegraphic or telex communications equipment,
in each case addressed to such party as provided in this Section 9.8 or in
accordance with the latest unrevoked direction from such party.
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ss.9.9. New York Law. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LOCAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED IN SUCH STATE.
DIGIMEDICS CORPORATION.
By: /s/ Lawrence Auriana
_______________________
Name: Lawrence Auriana
Title: Secretary
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Exhibit 2(d)
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated June 17, 1996, between MEDIWARE
INFORMATION SYSTEMS, INC., a New York corporation (herein called the "Pledgor"),
and CONTINENTAL HEALTHCARE SYSTEMS, INC., a Delaware corporation (herein called
"Secured Party").
It is agreed as follows:
1. Grant of Security Interest. As collateral security for the
payment, performance and observance of all indebtedness, obligations,
liabilities and agreements of any kind of the Pledgor to the Secured Party, now
existing or hereafter arising, under the Guaranty dated the date hereof by
Pledgor in favor of Secured Party (as amended, modified or supplemented from
time to time in accordance with its terms, the "Guaranty"), and all agreements,
documents and instruments evidencing any of the foregoing obligations or under
which any of the foregoing obligations may have been issued, created, assumed or
guaranteed (collectively, the "Obligations"), the Pledgor pledges to the Secured
Party and grants the Secured Party a security interest in the following property
(collectively, the "Pledged Securities"):
(a) the shares of stock and/or obligations and the
certificates or other instruments or documents evidencing same more particularly
described in Schedule A annexed hereto (the "Initial Pledged Securities");
(b) any additional shares of stock and/or obligations of the
issuer of the Initial Pledged Securities which may at any time hereafter be
acquired by the Pledgor and the certificates or other instruments or documents
evidencing same;
(c) any additional shares of stock and/or obligations and the
certificates or other instruments or documents evidencing same which may at any
time hereafter be delivered by the Pledgor to the Secured Party to be held
pursuant to this Agreement;
(d) all dividends, distributions and moneys paid or
distributed in respect of or in exchange for any or all of the foregoing;
(e) all rights of Pledgor in and to all dividends and
distributions declared in respect of any or all of the foregoing; and
(f) all proceeds and profits of any or all of the foregoing.
2. Delivery of Certificates and Instruments. The Pledgor shall
deliver to the Secured Party: (a) the original certificates or other instruments
or documents evidencing the Initial Pledged Securities concurrently with the
execution and delivery of
<PAGE>
this Agreement, and (b) the original certificates or other instruments or
documents evidencing all other Pledged Securities (except for Pledged Securities
which this Agreement specifically permits the Pledgor to retain) within ten days
after the Pledgor's receipt thereof. All Pledged Securities which are
certificated securities shall be in bearer form or, if in registered form, shall
be issued in the name of the Secured Party or endorsed to the Secured Party or
in blank.
3. Representations, Warranties and Covenants. The Pledgor
represents, warrants and covenants that:
(a) the Initial Pledged Securities are, and all other Pledged
Securities hereafter delivered to the Secured Party will be, owned by the
Pledgor free and clear of all claims, mortgages, pledges, liens, encumbrances
and security interests of every nature whatsoever, except in favor of the
Secured Party;
(b) the Pledgor will not sell, transfer, assign, pledge or
grant a security interest in the Pledged Securities to any person other than the
Secured Party;
(c) the Pledged Securities consisting of shares of stock
constitute, and until payment in full of the Obligations will continue to
constitute, 100% of the outstanding shares of the issuer thereof;
(d) the Pledged Securities are all of the shares and/or
obligations of the issuer thereof owned by the Pledgor;
(e) the Pledged Securities consisting of shares of stock are
fully paid and non-assessable and are not subject to any options to purchase or
similar rights of any person;
(f) if the Pledged Securities include securities which are of
the same class as securities which have been registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, then either (i) such Pledged
Securities are not "restricted securities" within the meaning of Rule 144 issued
pursuant to the Securities Act of 1933, as amended, and the Pledgor is not an
"affiliate" of the issuer of such Pledged Securities within the meaning of such
Rule 144, or (ii) the Pledgor shall have executed and delivered to the Secured
Party, concurrently with the execution and delivery of this Agreement, a Rule
144 Supplementary Agreement in form and substance satisfactory to the Secured
Party;
(g) if the Pledged Securities include any "margin stock" as
defined in Regulations U or G of the Federal Reserve Board, none of the proceeds
of any loans or advances which are part of the Obligations will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of maintaining,
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reducing or retiring any indebtedness of the Pledgor which was originally
incurred to purchase any securities which are currently margin stock;
(h) the Pledgor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its properties
and to transact the business in which it is engaged;
(i) the Pledgor has the corporate power and authority to
execute and deliver, and to perform its obligations under, this Agreement, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement;
(j) this Agreement constitutes the legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its terms except (i)
that enforceability may be subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of creditors
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and the discretion of any
court before which any proceeding therefor may be brought;
(k) the execution, delivery and performance of this Agreement
will not violate any law or regulation in any material respect, or any order or
decree of any court or governmental instrumentality, or any provision of the
charter or by-laws of, or any securities issued by, the Pledgor, and will not
conflict in any material respect with, or result in the material breach of, or
constitute a default under, any indenture, mortgage, deed of trust, agreement or
other instrument to which the Pledgor is a party or by which it is bound, and
will not result in the creation or imposition of any lien, charge or encumbrance
upon any of the property of the Pledgor pursuant to the provisions of any of the
foregoing; and
(l) no consent of any other person (including, without
limitation, stockholders and creditors of the Pledgor) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental instrumentality is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
4. Registration. Upon an Event of Default (such term is used
herein as defined in the Secured Promissory Note dated the date hereof by
Digimedics Corporation ("Digimedics"), a wholly-owned subsidiary of the Pledgor
(as amended, modified or supplemented from time to time, the "Note")), the
Secured Party may cause all or any of the Pledged Securities to be transferred
to or registered in its name or the name of its nominee or nominees.
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5. Voting Rights and Certain Payments Prior to Default. So
long as there shall exist no condition, event or act which constitutes, or with
notice or lapse of time or both would constitute, an Event of Default the
Pledgor shall be entitled:
(a) To exercise, as it shall think fit, but in a manner not
inconsistent with the terms hereof or of the Obligations, the voting power with
respect to the Pledged Securities, and for that purpose the Secured Party shall
(if the Pledged Securities shall be registered in the name of the Secured Party
or its nominee) execute or cause to be executed from time to time, at the
expense of the Pledgor, such proxies or other instruments in favor of the
Pledgor or its nominee, in such form and for such purposes as shall be
reasonably required by the Pledgor and shall be specified in a written request
therefor of its President or a Vice-President, to enable it to exercise such
voting power with respect to the Pledged Securities; and
(b) to receive and retain for its own account any and all
dividends (other than stock or liquidating dividends) and interest at any time
and from time to time declared or paid upon any of the Pledged Securities.
6. Extraordinary Payments and Distributions. In case, upon the
dissolution or liquidation (in whole or in part) of the issuer of any of the
Pledged Securities, any sum shall be paid as a liquidating dividend or otherwise
upon or with respect to any of the Pledged Securities, such sum shall be paid
over to the Secured Party promptly, and in any event within ten days after
receipt thereof, to be held by the Secured Party as additional collateral
hereunder. In case any stock dividend shall be declared on any of the Pledged
Securities, or any shares of stock or fractions thereof shall be issued pursuant
to any stock split involving any of the Pledged Securities, or any distribution
of capital shall be made on any of the Pledged Securities, or any shares,
obligations or other property shall be distributed upon or with respect to the
Pledged Securities pursuant to a recapitalization or reclassification of the
capital of the issuer thereof, or pursuant to the dissolution, liquidation (in
whole or in part), bankruptcy or reorganization of such issuer, or to the merger
or consolidation of such issuer with or into another corporation, the shares,
obligations or other property so distributed shall be delivered to the Secured
Party promptly, and in any event within ten days after receipt thereof, to be
held by the Secured Party as additional collateral hereunder, and all of the
same (other than cash) shall constitute Pledged Securities for all purposes
hereof.
7. Voting Rights and Certain Payments After Default. So long
as there shall exist an Event of Default, the Secured Party shall be entitled to
exercise all voting power with respect to the Pledged Securities and to receive
and retain, as additional collateral hereunder, any and all dividends and
interest at any time and from time to time declared or paid upon any of the
Pledged Securities.
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8. Application of Cash Collateral. Any cash received and
retained by the Secured Party as additional collateral hereunder pursuant to the
foregoing provisions may at any time and from time to time after the occurrence
of an Event of Default be applied (in whole or in part) by the Secured Party, at
its option, to the payment of interest on and/or principal of the Obligations
(in such order of maturity as the Secured Party shall in its sole discretion
determine).
9. Remedies Upon Default.
(a) If an Event of Default shall occur and be continuing, the
Secured Party, without obligation to resort to other security, shall have the
right at any time and from time to time to sell, resell, assign and deliver, in
its discretion, all or any of the Pledged Securities, in one or more parcels at
the same or different times, and all right, title and interest, claim and demand
therein and right of redemption thereof, on any securities exchange on which the
Pledged Securities or any of them may be listed, or at public or private sale,
for cash, upon credit or for future delivery, and in connection therewith the
Secured Party may grant options, the Pledgor hereby waiving and releasing any
and all equity or right of redemption. If any of the Pledged Securities are sold
by the Secured Party upon credit or for future delivery, the Secured Party shall
not be liable for the failure of the purchaser to purchase or pay for the same
and, in the event of any such failure, the Secured Party may resell such Pledged
Securities. In no event shall the Pledgor be credited with any part of the
proceeds of sale of any Pledged Securities until cash payment thereof has
actually been received by the Secured Party.
(b) No demand, advertisement or notice, all of which are
hereby expressly waived, shall be required in connection with any sale or other
disposition of any part of the Pledged Securities which threatens to decline
speedily in value or which is of a type customarily sold on a recognized market;
otherwise the Secured Party shall give the Pledgor at least ten days' prior
notice of the time and place of any public sale and of the time after which any
private sale or other disposition is to be made, which notice the Pledgor agrees
is reasonable, all other demands, advertisements and notices being hereby
waived. The Secured Party shall not be obligated to make any sale of Pledged
Securities if it shall determine not to do so, regardless of the fact that
notice of sale may have been given. The Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. Upon each private sale of Pledged Securities
of a type customarily sold in a recognized market and upon each public sale, the
Secured Party or any holder of the Obligations may purchase all or any of the
Pledged Securities being sold, free from any equity or right of redemption,
which is hereby waived and released, and may make payment therefor by release or
discharge of Obligations in lieu of cash payment. In the
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case of all sales of Pledged Securities, public or private, the Secured Party
may deduct from the proceeds of sale all costs and expenses of every kind for
sale or delivery, including brokers' and attorneys' fees, and the Secured Party
shall apply any balance of the proceeds of sale to the payment of the
Obligations. The Pledgor shall remain liable for any deficiency. If any proceeds
of sale remain after payment in full of such costs and expenses and all of the
Obligations, they shall be paid to the Pledgor, subject to any duty of the
Secured Party imposed by law to the holder of any subordinate security interest
in the Pledged Securities known to the Secured Party.
(c) The Pledgor recognizes that the Secured Party may be
unable to effect a public sale of all or a part of the Pledged Securities by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, as now or hereafter in effect, or in applicable Blue Sky or other state
securities laws, as now or hereafter in effect, but may be compelled to resort
to one or more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Pledged Securities for
their own account, for investment and not with a view to the distribution or
resale thereof. The Pledgor agrees that private sales so made may be at prices
and other terms less favorable to the seller than if such Pledged Securities
were sold at public sales, and that the Secured Party has no obligation to delay
sale of any such Pledged Securities for the period of time necessary to permit
the issuer of such Pledged Securities, even if such issuer would agree, to
register such Pledged Securities for public sale under such applicable
securities laws. The Pledgor agrees that private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(d) The remedies provided herein in favor of the Secured Party
shall not be deemed exclusive, but shall be cumulative, and shall be in addition
to all other remedies in favor of the Secured Party existing at law or in
equity.
10. Care of Pledged Securities. The Secured Party shall have
no duty as to the collection or protection of the Pledged Securities or any
income thereon or as to the preservation of any rights pertaining thereto,
beyond the safe custody of any thereof actually in its possession. With respect
to any maturities, calls, conversions, exchanges, redemptions, offers, tenders
or similar matters relating to any of the Pledged Securities (herein called
"events"), the Secured Party's duty shall be fully satisfied if (i) the Secured
Party exercises reasonable care to ascertain the occurrence and to give
reasonable written notice to the Pledgor of any events applicable to any Pledged
Securities which are registered and held in the name of the Secured Party or its
nominee, (ii) the Secured Party gives the Pledgor reasonable written notice of
the occurrence of any events, of which the Secured Party has received actual
knowledge, as to any securities which are in bearer form or are not registered
and held in the name of the Secured Party or its nominee (the Pledgor agreeing
to give the Secured Party reasonable written notice of the occurrence of any
events applicable to any securities
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in the possession of the Secured Party of which the Pledgor has received
knowledge), and (iii) (a) the Secured Party endeavors to take such action with
respect to any of the events as the Pledgor may reasonably and specifically
request in writing in sufficient time for such action to be taken or (b) if the
Secured Party in good faith reasonably determines that the action requested
might adversely affect the value of the Pledged Securities as collateral, the
collection of the Obligations, or otherwise prejudice the interests of the
Secured Party, the Secured Party gives reasonable written notice to the Pledgor
that any such requested action will not be taken and if the Secured Party makes
such determination or if the Pledgor fails to make such timely request, the
Secured Party takes such other action as it deems advisable in the
circumstances. Except as hereinabove specifically set forth, the Secured Party
shall have no further obligation to ascertain the occurrence of, or to notify
the Pledgor with respect to, any events and shall not be deemed to assume any
such further obligation as a result of the establishment by the Secured Party of
any internal procedures with respect to any securities in its possession. Except
for any claims, causes of action or demands arising out of the Secured Party's
failure to perform its agreements set forth in this Section, the Pledgor
releases the Secured Party from any claims, causes of action and demands at any
time arising out of or with respect to this Agreement, the Pledged Securities
and/or any actions taken or omitted to be taken by the Secured Party with
respect thereto, and the Pledgor hereby agrees to hold the Secured Party
harmless from and with respect to any and all such claims, causes of action and
demands.
11. Power of Attorney. The Pledgor hereby appoints the Secured
Party as the Pledgor's attorney-in-fact for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which the Secured Party may deem necessary or advisable to accomplish the
purposes hereof. Without limiting the generality of the foregoing, the Secured
Party shall have the right and power after the occurrence of an Event of Default
to (a) receive, endorse and collect all checks and other orders for the payment
of money made payable to the Pledgor representing any interest or dividend or
other distribution payable in respect of the Pledged Securities or any part
thereof and to give full discharge for the same, and (b) to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to all or any of the Pledged Securities.
12. Further Assurances. The Pledgor shall, upon request of the
Secured Party, duly execute and deliver, or cause to be duly executed and
delivered, to the Secured Party such further instruments and take and cause to
be taken such further actions as may be necessary or proper in the reasonable
opinion of the Secured Party to carry out more effectually the provisions and
purposes of this Agreement.
13. No Waiver. No delay on the part of the Secured Party or of
any holder of the Obligations in exercising any of its options, powers or
rights, or partial or single exercise thereof, shall constitute a waiver
thereof.
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14. Return of Pledged Securities. Upon payment in full of all
Obligations, the Pledgor shall be entitled to the return of all of the Pledged
Securities and all other cash held as additional collateral hereunder which have
not been used or applied toward the payment of the Obligations. The assignment
by the Secured Party to the Pledgor of such Pledged Securities and other
property shall be without representation or warranty of any nature whatsoever
and wholly without recourse.
15. Notices. All notices and other communications to any party
hereunder shall be in writing and shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service requiring a signed receipt upon delivery, or by prepaid
telex or telecopy requiring a confirmation receipt, and shall be given to the
telecopier number or address for such party set forth in Section 9.8 of the
Note, or to such other telex or telecopier number or address as such party may
hereafter specify by notice to the other party. Each such notice or other
communication shall be effective (a) if given by telex or telecopier, when such
telex or telecopy is transmitted to the telex or telecopier number specified by
this Section and the appropriate answerback or confirmation is received, (b) if
given by certified mail, 72 hours after such communication is deposited with the
post office, addressed as aforesaid or (c) if given by any other means
(including, without limitation, by courier), when delivered at the address
specified by this Section.
16. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by the Secured Party and the Pledgor.
17. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE SECURED PARTY AND THE PLEDGOR HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
18. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to this
Agreement may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Pledgor hereby accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Pledgor hereby irrevocably waives, in connection with any
such action or proceeding, (i) trial by jury, (ii) any objection, including,
without limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens, which it may now or hereafter have to the
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bringing of any such action or proceeding in such respective jurisdictions and
(iii) the right to interpose any setoff, counterclaim or cross-claim.
(b) The Pledgor irrevocably consents to the service of process
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by certified mail, postage prepaid, to the Pledgor at
its address determined pursuant to Section 15 hereof.
(c) Nothing herein shall affect the right of the Secured Party
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Pledgor in any other jurisdiction.
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19. Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Pledgor and the Secured Party and their
respective successors and assigns, and all subsequent holders of the
Obligations.
20. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original and all of
which shall together constitute one and the same agreement.
21. Captions. The captions of the sections of this Agreement
have been inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
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IN WITNESS WHEREOF, the Pledgor and the Secured Party have
caused this Agreement to be duly executed by their respective officers duly
authorized as of the day and year first above written.
MEDIWARE INFORMATION SYSTEMS, INC., as Pledgor
By /s/ Lawrence Auriana
_______________________________
Name: Lawrence Auriana
Title: Secretary
Address: 1121 Old Walt Whitman Road
Melville, New York 11747-0161
CONTINENTAL HEALTHCARE SYSTEMS,
INC., as Secured Party
By /s/ Stephen Green
_______________________________
Name: Stephen Green
Title: Vice President
Address: c/o TBG Services, Inc.
565 Fifth Avenue
New York, New York 10017
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Schedule A to Pledge Agreement
------------------------------
Description of Stock:
Class of Certificate Number of
Stock Issuer Stock Number Shares
- ------------ -------- ----------- ---------
Digimedics Corporation Common 1 1,000
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Exhibit 2(e)
CHARGE
THIS CHARGE, dated June 17, 1996, between DIGIMEDICS
CORPORATION, a California corporation (herein called the "Chargor"), and
CONTINENTAL HEALTHCARE SYSTEMS, INC., a Delaware corporation (herein called
"Chargee").
It is agreed as follows:
1. Grant of Security Interest. As collateral security for the
payment, performance and observance of all indebtedness, obligations,
liabilities and agreements of any kind of the Chargor to the Chargee, now
existing or hereafter arising, under the loan made by Secured Party to Chargor
evidenced by the Secured Promissory Note dated the date hereof in the face
principal amount of $6,000,000 (as amended, modified or supplemented from time
to time in accordance with its terms, the "Note"; defined terms used and not
otherwise defined herein shall have the meanings attributed thereto in the
Note), and all agreements, documents and instruments evidencing any of the
foregoing obligations or under which any of the foregoing obligations may have
been issued, created, assumed or guaranteed (collectively, the "Obligations"),
the Chargor charges to the Chargee and grants the Chargee a security interest in
the following property (collectively, the "Charged Securities"):
(a) the shares of stock and/or obligations and the
certificates or other instruments or documents evidencing same more particularly
described in Schedule A annexed hereto (the "Initial Charged Securities");
(b) any additional shares of stock and/or obligations of the
issuer of the Initial Charged Securities which may at any time hereafter be
acquired by the Chargor and the certificates or other instruments or documents
evidencing same;
(c) any additional shares of stock and/or obligations and the
certificates or other instruments or documents evidencing same which may at any
time hereafter be delivered by the Chargor to the Chargee to be held pursuant to
this Charge;
(d) all dividends, distributions and moneys paid or
distributed in respect of or in exchange for any or all of the foregoing;
(e) all rights of Chargor in and to all dividends and
distributions declared in respect of any or all of the foregoing; and
(f) all proceeds and profits of any or all of the foregoing.
2. Delivery of Certificates and Instruments. The Chargor shall
deliver to the Chargee: (a) the original certificates or other instruments or
documents evidencing
<PAGE>
the Initial Charged Securities concurrently with the execution and delivery of
this Charge, and (b) the original certificates or other instruments or documents
evidencing all other Charged Securities (except for Charged Securities which
this Charge specifically permits the Chargor to retain) within ten days after
the Chargor's receipt thereof. All Charged Securities which are certificated
securities shall be in bearer form or, if in registered form, shall be issued in
the name of the Chargee or endorsed to the Chargee or in blank.
3. Representations, Warranties and Covenants. The Chargor
represents, warrants and covenants that:
(a) the Initial Charged Securities are, and all other Charged
Securities hereafter delivered to the Chargee will be, owned by the Chargor free
and clear of all claims, mortgages, pledges, liens, encumbrances and security
interests of every nature whatsoever, except in favor of the Chargee, with the
intent that the charge granted hereunder shall be a first fixed equitable
charge;
(b) the Chargor will not sell, transfer, assign, pledge or
grant a security interest in the Charged Securities to any person other than the
Chargee;
(c) the Charged Securities consisting of shares of stock
constitute, and until payment in full of the Obligations will continue to
constitute, 66% (and in all events less than two-thirds) of the outstanding
shares of the issuer thereof; it is the intent of the parties hereto that not
more than 66% of the outstanding issued share capital of JAC Computer Services
Ltd. ("JAC") be charge pursuant to this Charge and, accordingly, it because of
the retirement of director qualifying shares or other reasons, the outstanding
issued share capital of JAC is reduced, the Chargee shall, upon the request of
Chargor, return the share certificates relating to the shares charges hereunder
in exchange for a certificate representing not more than 66% of the then
outstanding shares of JAC;
(d) the Charged Securities are all of the shares and/or
obligations of the issuer thereof owned by the Chargor;
(e) the Charged Securities consisting of shares of stock are
fully paid and non-assessable and are not subject to any options to purchase or
similar rights of any person;
(f) the Chargor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its properties
and to transact the business in which it is engaged;
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(g) the Chargor has the corporate power and authority to
execute and deliver, and to perform its obligations under, this Charge, and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Charge;
(h) this Charge constitutes the legal, valid and binding
obligation of the Chargor, enforceable in accordance with its terms except (i)
that enforceability may be subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of creditors
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and the discretion of any
court before which any proceeding therefor may be brought;
(i) the execution, delivery and performance of this Charge
will not violate any law or regulation in any material respect, or any order or
decree of any court or governmental instrumentality, or any provision of the
charter or by-laws of, or any securities issued by, the Chargor, and will not
conflict in any material respect with, or result in the material breach of, or
constitute a default under, any indenture, mortgage, deed of trust, agreement or
other instrument to which the Chargor is a party or by which it is bound, and
will not result in the creation or imposition of any lien, charge or encumbrance
upon any of the property of the Chargor pursuant to the provisions of any of the
foregoing; and
(j) no consent of any other person (including, without
limitation, stockholders and creditors of the Chargor) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental instrumentality is
required in connection with the execution, delivery, performance, validity or
enforceability of this Charge.
4. Registration. At any time and from time to time after the
occurrence of an Event of Default, the Chargee may cause all or any of the
Charged Securities to be transferred to or registered in its name or the name of
its nominee or nominees.
5. Voting Rights and Certain Payments Prior to Default. So
long as no Event of Default shall have occurred, the Chargor shall be entitled:
(a) To exercise, as it shall think fit, but in a manner not
inconsistent with the terms hereof or of the Obligations, the voting power with
respect to the Charged Securities, and for that purpose the Chargee shall (if
the Charged Securities shall be registered in the name of the Chargee or its
nominee) execute or cause to be executed from time to time, at the expense of
the Chargor, such proxies or other instruments in favor of the Chargor or its
nominee, in such form and for such purposes as shall be reasonably required by
the Chargor and shall be specified in a written request therefor of its
President or a Vice-President, to enable it to exercise such voting power with
respect to the Charged Securities; and
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(b) to receive and retain for its own account any and all
dividends (other than stock or liquidating dividends) and interest at any time
and from time to time declared or paid upon any of the Charged Securities.
6. Extraordinary Payments and Distributions. In case, upon the
dissolution or liquidation (in whole or in part) of the issuer of any of the
Charged Securities, any sum shall be paid as a liquidating dividend or otherwise
upon or with respect to any of the Charged Securities, such sum shall be paid
over to the Chargee promptly, and in any event within ten days after receipt
thereof, to be held by the Chargee as additional collateral hereunder. In case
any stock dividend shall be declared on any of the Charged Securities, or any
shares of stock or fractions thereof shall be issued pursuant to any stock split
involving any of the Charged Securities, or any distribution of capital shall be
made on any of the Charged Securities, or any shares, obligations or other
property shall be distributed upon or with respect to the Charged Securities
pursuant to a recapitalization or reclassification of the capital of the issuer
thereof, or pursuant to the dissolution, liquidation (in whole or in part),
bankruptcy or reorganization of such issuer, or to the merger or consolidation
of such issuer with or into another corporation, the shares, obligations or
other property so distributed shall be delivered to the Chargee promptly, and in
any event within ten days after receipt thereof, to be held by the Chargee as
additional collateral hereunder, and all of the same (other than cash) shall
constitute Charged Securities for all purposes hereof.
7. Voting Rights and Certain Payments After Default. So long
as there shall exist an Event of Default, the Chargee shall be entitled to
exercise all voting power with respect to the Charged Securities and to receive
and retain, as additional collateral hereunder, any and all dividends and
interest at any time and from time to time declared or paid upon any of the
Charged Securities.
8. Application of Cash Collateral. Any cash received and
retained by the Chargee as additional collateral hereunder pursuant to the
foregoing provisions may at any time and from time to time be applied (in whole
or in part) by the Chargee, at its option, to the payment of interest on and/or
principal of the Obligations (in such order of maturity as the Chargee shall in
its sole discretion determine).
9. Remedies Upon Default.
(a) If an Event of Default shall occur and be continuing, the
Chargee, without obligation to resort to other security, shall have the right at
any time and from time to time to sell, resell, assign and deliver, in its
discretion, all or any of the Charged Securities, in one or more parcels at the
same or different times, and all right, title and interest, claim and demand
therein and right of redemption thereof, on any securities exchange on which the
Charged Securities or any of them may be listed, or at public or
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<PAGE>
private sale, for cash, upon credit or for future delivery, and in connection
therewith the Chargee may grant options, the Chargor hereby waiving and
releasing any and all equity or right of redemption. If any of the Charged
Securities are sold by the Chargee upon credit or for future delivery, the
Chargee shall not be liable for the failure of the purchaser to purchase or pay
for the same and, in the event of any such failure, the Chargee may resell such
Charged Securities. In no event shall the Chargor be credited with any part of
the proceeds of sale of any Charged Securities until cash payment thereof has
actually been received by the Chargee.
(b) No demand, advertisement or notice, all of which are
hereby expressly waived, shall be required in connection with any sale or other
disposition of any part of the Charged Securities which threatens to decline
speedily in value or which is of a type customarily sold on a recognized market;
otherwise the Chargee shall give the Chargor at least ten days' prior notice of
the time and place of any public sale and of the time after which any private
sale or other disposition is to be made, which notice the Chargor agrees is
reasonable, all other demands, advertisements and notices being hereby waived.
The Chargee shall not be obligated to make any sale of Charged Securities if it
shall determine not to do so, regardless of the fact that notice of sale may
have been given. The Chargee may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of Charged Securities of a type customarily
sold in a recognized market and upon each public sale, the Chargee or any holder
of the Obligations may purchase all or any of the Charged Securities being sold,
free from any equity or right of redemption, which is hereby waived and
released, and may make payment therefor by release or discharge of Obligations
in lieu of cash payment. In the case of all sales of Charged Securities, public
or private, the Chargee may deduct from the proceeds of sale all costs and
expenses of every kind for sale or delivery, including brokers' and attorneys'
fees, and the Chargee shall apply any balance of the proceeds of sale to the
payment of the Obligations. The Chargor shall remain liable for any deficiency.
If any proceeds of sale remain after payment in full of such costs and expenses
and all of the Obligations, they shall be paid to the Chargor, subject to any
duty of the Chargee imposed by law to the holder of any subordinate security
interest in the Charged Securities known to the Chargee.
(c) The Chargor recognizes that the Chargee may be unable to
effect a public sale of all or a part of the Charged Securities by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, as now
or hereafter in effect, or in applicable Blue Sky or other state securities
laws, or laws of other applicable jurisdictions, as now or hereafter in effect,
but may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to acquire
such Charged Securities for their own account, for
5
<PAGE>
investment and not with a view to the distribution or resale thereof. The
Chargor agrees that private sales so made may be at prices and other terms less
favorable to the seller than if such Charged Securities were sold at public
sales, and that the Chargee has no obligation to delay sale of any such Charged
Securities for the period of time necessary to permit the issuer of such Charged
Securities, even if such issuer would agree, to register such Charged Securities
for public sale under such applicable securities laws. The Chargor agrees that
private sales made under the foregoing circumstances shall be deemed to have
been made in a commercially reasonable manner.
(d) The remedies provided herein in favor of the Chargee shall
not be deemed exclusive, but shall be cumulative, and shall be in addition to
all other remedies in favor of the Chargee existing at law or in equity.
10. Care of Charged Securities. The Chargee shall have no duty
as to the collection or protection of the Charged Securities or any income
thereon or as to the preservation of any rights pertaining thereto, beyond the
safe custody of any thereof actually in its possession. With respect to any
maturities, calls, conversions, exchanges, redemptions, offers, tenders or
similar matters relating to any of the Charged Securities (herein called
"events"), the Chargee's duty shall be fully satisfied if (i) the Chargee
exercises reasonable care to ascertain the occurrence and to give reasonable
written notice to the Chargor of any events applicable to any Charged Securities
which are registered and held in the name of the Chargee or its nominee, (ii)
the Chargee gives the Chargor reasonable written notice of the occurrence of any
events, of which the Chargee has received actual knowledge, as to any securities
which are in bearer form or are not registered and held in the name of the
Chargee or its nominee (the Chargor agreeing to give the Chargee reasonable
written notice of the occurrence of any events applicable to any securities in
the possession of the Chargee of which the Chargor has received knowledge), and
(iii) (a) the Chargee endeavors to take such action with respect to any of the
events as the Chargor may reasonably and specifically request in writing in
sufficient time for such action to be taken or (b) if the Chargee in good faith
reasonably determines that the action requested might adversely affect the value
of the Charged Securities as collateral, the collection of the Obligations, or
otherwise prejudice the interests of the Chargee, the Chargee gives reasonable
written notice to the Chargor that any such requested action will not be taken
and if the Chargee makes such determination or if the Chargor fails to make such
timely request, the Chargee takes such other action as it deems advisable in the
circumstances. Except as hereinabove specifically set forth, the Chargee shall
have no further obligation to ascertain the occurrence of, or to notify the
Chargor with respect to, any events and shall not be deemed to assume any such
further obligation as a result of the establishment by the Chargee of any
internal procedures with respect to any securities in its possession. Except for
any claims, causes of action or demands arising out of the Chargee's failure to
perform its agreements set forth in this Section,
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the Chargor releases the Chargee from any claims, causes of action and demands
at any time arising out of or with respect to this Charge, the Charged
Securities and/or any actions taken or omitted to be taken by the Chargee with
respect thereto, and the Chargor hereby agrees to hold the Chargee harmless from
and with respect to any and all such claims, causes of action and demands.
11. Power of Attorney. The Chargor hereby appoints the Chargee
as the Chargor's attorney-in-fact for the purpose of carrying out the provisions
of this Charge and taking any action and executing any instrument which the
Chargee may deem necessary or advisable to accomplish the purposes hereof.
Without limiting the generality of the foregoing, the Chargee shall have the
right and power after the occurrence of an Event of Default to (a) receive,
endorse and collect all checks and other orders for the payment of money made
payable to the Chargor representing any interest or dividend or other
distribution payable in respect of the Charged Securities or any part thereof
and to give full discharge for the same, and (b) to execute endorsements,
assignments or other instruments of conveyance or transfer with respect to all
or any of the Charged Securities.
12. Further Assurances. The Chargor shall, upon request of the
Chargee, duly execute and deliver, or cause to be duly executed and delivered,
to the Chargee such further instruments and take and cause to be taken such
further actions as may be necessary or proper in the reasonable opinion of the
Chargee to carry out more effectually the provisions and purposes of this
Charge.
13. No Waiver. No delay on the part of the Chargee or of any
holder of the Obligations in exercising any of its options, powers or rights, or
partial or single exercise thereof, shall constitute a waiver thereof.
14. Return of Charged Securities. Upon payment in full of all
Obligations, the Chargor shall be entitled to the return of all of the Charged
Securities and all other cash held as additional collateral hereunder which have
not been used or applied toward the payment of the Obligations. The assignment
by the Chargee to the Chargor of such Charged Securities and other property
shall be without representation or warranty of any nature whatsoever and wholly
without recourse.
15. Notices. All notices and other communications to any party
hereunder shall be in writing and shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service requiring an executed receipt confirming delivery or by
prepaid telex or telecopy and shall be given to the address or telecopier number
for such party set forth in Section 9.8 of the Note, or to such other address or
telex or telecopier number as such party may hereafter specify by notice to the
other party. Each such notice or other communication shall be effective (a) if
given by telex or telecopier, when such telex or
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telecopy is transmitted to the telex or telecopier number specified by this
Section and the appropriate answerback or confirmation is received, (b) if given
by certified mail, 72 hours after such communication is deposited with the post
office, addressed as aforesaid or (c) if given by any other means (including,
without limitation, by courier), when delivered at the address specified by this
Section.
16. Amendments and Waivers. No amendment or waiver of any
provision of this Charge shall in any event be effective unless the same shall
be in writing and signed by the Chargee and the Chargor.
17. Governing Law. THIS CHARGE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), PROVIDED THAT IF SUCH LAWS
RESULT IN THE CHARGE GRANTED HEREUNDER BEING UNENFORCEABLE, THE LAWS OF ENGLAND
SHALL APPLY. THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA, SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE NONEXCLUSIVE JURISDICTION TO
DEAL WITH ANY DISPUTES ARISING OUT OF OR IN CONNECTION HEREWITH AND THE CHARGOR
HEREBY SUBMITS TO THE JURISDICTION OF SUCH COURTS.
18. Enforcement.
(a) Section 93 of the United Kingdom Law of Property Act 1925
(the "Act") shall not apply to the security created by this Charge.
(b) The Chargee may exercise the power of sale conferred on
mortgagees by the Act (as varied and extended by this Charge) free from the
restrictions imposed by Section 103 thereof.
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19. Benefit of Agreement. This Charge shall be binding upon
and inure to the benefit of the Chargor and the Chargee and their respective
successors and assigns, and all subsequent holders of the Obligations.
20. Counterparts. This Charge may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original and all of which
shall together constitute one and the same agreement.
21. Captions. The captions of the sections of this Charge have
been inserted for convenience only and shall not in any way affect the meaning
or construction of any provision of this Charge.
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<PAGE>
IN WITNESS WHEREOF, the Chargor and the Chargee have caused
this Charge to be duly executed by their respective officers duly authorized as
of the day and year first above written.
DIGIMEDICS CORPORATION
By /s/ Lawrence Auriana
______________________________
Name: Lawrence Auriana
Title: Secretary
Address: 1600 Green Hill Road
Scotts Valley, CA 95066
CONTINENTAL HEALTHCARE SYSTEMS,
INC., as Chargee
By /s/ Stephen Green
______________________________
Name: Stephen Green
Title: Vice President
Address: c/o TBG Services, Inc.
565 Fifth Avenue
New York, New York 10017
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<PAGE>
Schedule A to Charge
--------------------
Description of Stock:
Class of Certificate Number of
Stock Issuer Stock Number Shares
- ------------ -------- ----------- ---------
JAC Computer Services
Ltd.
11
<PAGE>
Exhibit 2(f)
GENERAL SECURITY AGREEMENT
GENERAL SECURITY AGREEMENT, dated June 17, 1996, between
DIGIMEDICS CORPORATION, a California corporation (herein called "Debtor") and
CONTINENTAL HEALTHCARE SYSTEMS, INC., a Delaware corporation (herein called
"Secured Party").
It is agreed as follows:
1. Grant of Security Interest. As collateral security for the
payment, performance and observance of all indebtedness, obligations,
liabilities and agreements of any kind of the Debtor to the Secured Party, now
existing or hereafter arising, under the loan made by Secured Party to Debtor
evidenced by the Secured Promissory Note dated the date hereof in the face
principal amount of $6,000,000 (as amended, modified or supplemented from time
to time in accordance with its terms, the "Note"; defined terms used and not
otherwise defined herein shall have the meanings attributed thereto in the Note)
and all agreements, documents and instruments evidencing any of the foregoing
obligations or under which any of the foregoing obligations may have been
issued, created, assumed or guaranteed (all of the foregoing being herein
referred to collectively as the "Obligations"), Debtor hereby grants to Secured
Party a security interest in and a right of setoff against the following
property (the "Collateral"):
(a) (i) all raw materials, work in process, finished
goods and inventory of whatsoever kind or nature and all wrapping, packaging,
advertising and shipping materials, and any documents relating thereto, and all
labels and other devices, names and marks affixed or to be affixed thereto for
purposes of selling or of identifying the same or the seller or manufacturer
thereof, and all right, title and interest of Debtor therein and thereto,
wherever located, whether now owned or hereafter acquired by Debtor; (ii) all
equipment, machinery, vehicles, tools, dies, jigs, furniture and fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and all substitutions and replacements thereof, wherever
located, whether now owned or hereafter acquired by Debtor; and (iii) all books,
records and other property relating to the foregoing;
(b) (i) all of Debtor's present and future accounts,
contract rights, general intangibles (including, without limitation, all
computer software), chattel paper, documents and instruments, as such terms are
defined in the Uniform Commercial Code ("UCC"), including (without limitation)
all present and future choses in action and reversionary interests in property
rights of Debtor, and all obligations for the payment of money arising out of
Debtor's sale of goods or rendition of services (all of the foregoing,
collectively, "Accounts"); (ii) all of Debtor's rights, remedies, security and
liens in, to and in respect of the Accounts, including, without limitation,
rights of
<PAGE>
stoppage in transit, replevin, repossession and reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, guaranties or other
contracts of suretyship with respect to the Accounts, deposits or other security
for the obligation of any debtor or obligor in any way obligated on or in
connection with any Account, and credit and other insurance; (iii) all of
Debtor's right, title, and interest in, to and in respect of all goods relating
to, or which by sale have resulted in, Accounts, including, without limitation,
all goods described in invoices or other documents or instruments with respect
to, or otherwise representing or evidencing, any Account, and all returned,
reclaimed or repossessed goods; (iv) all of Debtor's deposit accounts, as such
term is defined in the UCC; (v) all books, records, ledger cards, computer
programs and other property and general intangibles at any time evidencing or
relating to the Accounts; and (vi) all of Debtor's other general intangibles of
every kind and description, whether now existing or hereafter arising, including
(without limitation) trademarks, tradenames, tradestyles, service marks,
patents, copyrights and Federal, State and local tax refund claims of all kinds;
(c) any and all moneys, securities, drafts, notes,
items and other property of Debtor and the proceeds thereof, now or hereafter
held or received by, or in transit to, Secured Party from or for Debtor, whether
for safekeeping, custody, pledge, transmission or otherwise, and any and all
balances, sums, proceeds and credits of Debtor with, and any and all claims of
Debtor against Secured Party, at any time existing; and
(d) any and all products and proceeds of any of the
foregoing, in any form (including, without limitation, any insurance proceeds or
claims by Debtor against third parties for loss or damage to or destruction of
any or all of the foregoing property, and any claims by Debtor against third
parties for infringement of trademarks, patents or copyrights).
2. Representations, Warranties and Covenants. Debtor
represents, warrants and covenants that:
(a) the chief executive office of Debtor and the
office where Debtor keeps its books and records relating to the Collateral, and
all locations of Collateral are at the addresses set forth on Schedule A hereto
and, except as otherwise specified on Schedule A (except with respect to the
assets purchased pursuant to the Purchase Agreement), have been located at such
addresses at all times during the four-month period prior to the date hereof;
(b) Debtor will not change its chief executive
office, office where its books and records are kept or any locations of
Collateral, or merge or consolidate with any person, without 30 days prior
written notice to Secured Party;
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(c) the Collateral is free and clear of all Liens and
Debtor will not create or suffer to exist any Lien on any of the Collateral,
except for Liens in favor of Secured Party and the Permitted Liens set forth on
Schedule A hereto;
(d) Debtor will not assign, transfer, sell, lease or
otherwise dispose of or abandon any Collateral, nor will Debtor suffer or permit
any of the same to occur with respect to any Collateral, without prior written
notice to and consent of Secured Party, except for the sale or lease from time
to time in the ordinary course of business of such items of the Collateral as
may constitute inventory, and the inclusion of "proceeds" of the Collateral
under the security interest granted herein shall not be deemed a consent by
Secured Party to any sale or other disposition of any Collateral except as
expressly permitted herein;
(e) the Collateral is being used, and will continue
to be used, in Debtor's business and not for personal, family, household or
farming use;
(f) Debtor will use the Collateral for lawful
purposes only, with all reasonable care and caution and in conformity in all
material respects with all applicable laws, ordinances and regulations;
(g) the Collateral is now and shall remain personal
property, and Debtor will not permit any Collateral to become a fixture without
prior written notice to and consent of Secured Party and without first making
all arrangements, and delivering, or causing to be delivered, to Secured Party
all instruments and documents, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees, requested by and
satisfactory to Secured Party to preserve and protect the security interest
granted herein, and to effectuate or maintain the priority thereof, against all
persons;
(h) Debtor, at its sole cost and expense, will insure
the Collateral in the name of and with loss or damage payable solely to Secured
Party, as its interest may appear, against such risks, with such companies as
Debtor shall select, subject to Secured Party's approval, not to be unreasonably
withheld, and in such amounts as may be required by Secured Party from time to
time (all such policies providing 30 days minimum written notice to Secured
Party of cancellation), and Debtor will deliver to Secured Party the original or
duplicate policies, or certificates or other evidence satisfactory to Secured
Party attesting thereto, and Debtor will promptly notify Secured Party of any
loss or damage to any Collateral in excess of $25,000. If an Event of Default
shall have occurred and be continuing, all proceeds of insurance in any amount
shall be applied by Secured Party in its reasonable discretion either to repair
or replacement of the damaged Collateral and/or to payment of the Obligations,
whether or not due, in any order Secured Party may determine, any surplus after
payment of all Obligations including, without limitation, costs, reasonable
attorneys' fees and
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<PAGE>
disbursements, to be remitted to Debtor. So long as an Event of Default has not
occurred and is not continuing, (i) Debtor may apply any insurance monies
received of less than $250,000 to the cost of repairs to or replacements for the
Collateral and (ii) with respect to insurance proceeds of $250,000 or more,
Debtor may apply such insurance monies to the cost of repairs to or replacements
for the Collateral with the consent of the Secured Party which consent shall not
be unreasonably withheld, with any monies not being so applied to the repair or
replacement of the Collateral in accordance with either clause (i) or (ii) to be
applied to payment of the Obligations in such order as Secured Party may
determine, any surplus remaining after payment of all Obligations including,
without limitation, costs, reasonable attorneys' fees and disbursements, to be
remitted to Debtor.
(i) Debtor will, at its sole cost and expense,
perform all acts and execute all documents requested by Secured Party from time
to time to evidence, perfect, maintain or enforce Secured Party's security
interest granted herein, and to effectuate or maintain the priority thereof, or
otherwise to carry out the provisions and purposes of this Agreement including,
without limitation, the execution and delivery of financing statements pursuant
to the Uniform Commercial Code ("UCC") and applications for certificates of
title, and Debtor hereby authorizes Secured Party to execute and file at any
time and from time to time one or more financing statements or copies thereof or
of this Agreement with respect to the Collateral signed only by Secured Party;
(j) in its discretion, Secured Party may, at any time
and from time to time after the occurrence and during the continuance of an
Event of Default, in its name or Debtor's or otherwise, notify any account
debtor or obligor of any Account included in the Collateral to make payment to
Secured Party;
(k) in its discretion, Secured Party may, at any time
and from time to time after the occurrence and during the continuance of an
Event of Default, demand, sue for, collect or receive any money or property at
any time payable or receivable on account of or in exchange for, or make any
compromise or settlement deemed desirable by Secured Party with respect to, any
Collateral, and/or extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any Collateral or
Obligations, all without consent by Debtor and without otherwise discharging or
affecting the Obligations, the Collateral or the security interest granted
herein, providing that Secured Party shall endeavor to give notice to Debtor
prior to taking any of the foregoing actions, but the failure to give such
notice shall in no manner whatsoever affect the rights granted to Secured Party
hereby;
(l) in its discretion, Secured Party may, at any time
and from time to time, for the account of Debtor, pay any amount or do any act
required of Debtor hereunder and which Debtor fails to do or pay, and any such
payment shall be deemed
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<PAGE>
an Obligation payable on demand together with interest at the highest rate then
payable on any of the Obligations;
(m) except for the tradenames, if any, set forth on
Schedule A hereto, Debtor has not during the five-year period prior to the date
hereof been known by or used any tradename, fictitious name or any corporate
name other than Debtor's name as set forth next to its signature below, and all
invoices in connection with Accounts are billed under such corporate name;
(n) Debtor will not change its corporate name without
at least twenty days' prior written notice to Secured Party;
(o) Debtor will not permit any of the Collateral
consisting of inventory to be located in a public warehouse or in a warehouse
where similar goods owned by other persons are also located;
(p) if any of the Collateral at any time consists of
instruments, documents, chattel paper or letters of credit, Debtor shall,
immediately upon receipt or creation of such Collateral, deliver such Collateral
in its original form to Secured Party, duly endorsed to Secured Party or in
blank or accompanied by appropriate stock or bond powers;
(q) if any proceeds of Collateral (other than
proceeds of inventory sold in the ordinary course of business) are received by
Debtor, Debtor shall not commingle such proceeds with any of its other property,
shall hold such proceeds in trust for Secured Party and shall immediately
deliver the same to Secured Party in the form received, duly endorsed in blank
where appropriate to effectuate the provisions hereof, the same to be held by
Secured Party as additional Collateral hereunder or, at Secured Party's option,
to be applied to payment of the Obligations, whether or not due and in any
order;
(r) Debtor will pay Secured Party for any sums,
costs, and expenses which Secured Party may pay or incur in perfecting,
amending, defending, protecting or enforcing this Agreement or the security
interest granted herein or in enforcing payment of the Obligations including but
not limited to court costs, collection charges, travel expenses, and reasonable
attorneys' fees, all of which, together with interest at the highest rate then
payable on any of the Obligations, shall be part of the Obligations and be
payable on demand;
(s) in its discretion, Secured Party may, at any time
and from time to time, assign, transfer or deliver to any transferee of any
Obligations, any Collateral, whereupon Secured Party shall be fully discharged
from all responsibility and the transferee shall be vested with all powers and
rights of Secured Party hereunder with
5
<PAGE>
respect thereto, but Secured Party shall retain all rights and powers with
respect to any Collateral not assigned, transferred or delivered;
(t) Debtor will keep the Collateral in good repair,
working order and condition, subject to normal wear and tear, and from time to
time make all repairs, renewals, replacements, additions and improvements
thereto as reasonably required in order for the business carried on by Debtor to
be conducted substantially in the manner conducted on the date hereof;
(u) Debtor has made, and will continue to make,
payment or deposit, or otherwise has provided and will provide for the payment,
when due, of all taxes, assessments or contributions or other public or private
charges, in each case in accordance with the Note;
(v) Secured Party shall at all times during normal
business hours and upon reasonable advance notice, have free access to and right
of inspection of the Collateral and any records pertaining thereto (and the
right to make extracts from and to receive from Debtor originals or true copies
of such records and any papers and instruments relating to any Collateral upon
request therefor);
(w) if and to the extent the Collateral includes
inventory located in California, Debtor is not a retail merchant whose sales of
goods for personal, family or household purposes exceeded 75 percent in dollar
volume of its total sales of all goods during the 12 months preceding the date
of this Agreement and, therefore, the provisions of California Commercial Code
Section 9102(5) are not applicable;
(x) Debtor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its properties
and to transact the business in which it is engaged;
(y) Debtor has the corporate power and authority to
execute and deliver, and to perform its obligations under, this Agreement, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement;
(z) this Agreement constitutes the legal, valid and
binding obligation of Debtor, enforceable in accordance with its terms except
(i) that enforceability may be subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of creditors
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and the discretion of any
court before which any proceeding therefor may be brought;
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(aa) the execution, delivery and performance of this
Agreement will not violate any law or regulation in any material respect, or any
order or decree of any court or governmental instrumentality, or any provision
of the charter or by-laws of, or any securities issued by Debtor, and will not
conflict in any material respect with, or result in the material breach of, or
constitute a default under, any indenture, mortgage, deed of trust, agreement or
other instrument to which Debtor is a party or by which it is bound, and will
not result in the creation or imposition of any lien, charge or encumbrance upon
any of the property of Debtor pursuant to the provisions of any of the
foregoing; and
(bb) no consent of any other person (including,
without limitation, stockholders and creditors of Debtor) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental
instrumentality is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except for the filing
of financing statements pursuant to the UCC.
3. Omitted.
4. Remedies Upon Default. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may, without notice to or
demand upon Debtor, declare any Obligations immediately due and payable and
Secured Party shall have the following rights and remedies (to the extent
permitted by applicable law), in addition to all rights and remedies of a
secured party under the UCC, all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively or concurrently:
(a) Secured Party may at any time and from time to
time, with or without judicial process or the aid and assistance of others,
enter upon any premises in which any Collateral may be located and, without
resistance or interference by Debtor, take possession of the Collateral, and/or
dispose of any Collateral on any such premises, and/or require Debtor to
assemble and make available to Secured Party at the expense of Debtor any
Collateral at any place and time designated by Secured Party which is reasonably
convenient to both parties, and/or remove any Collateral from any such premises
for the purpose of effecting sale or other disposition thereof (and if any of
the Collateral consists of motor vehicles, Secured Party may use Debtor's
license plates), and/or sell, resell, lease, assign and deliver, grant options
for or otherwise dispose of any Collateral in its then condition or following
any commercially reasonable preparation or processing, at public or private sale
or proceedings or otherwise, by one or more contracts, in one or more parcels,
at the same or different times, with or without having the Collateral at the
place of sale or other disposition, for cash and/or credit, and upon any terms,
at such place(s) and time(s) and to such person(s) as Secured Party deems best,
all without demand, notice or advertisement
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<PAGE>
whatsoever in the case of Collateral which threatens to decline speedily in
value or which is of a type customarily sold on a recognized market; otherwise,
except where an applicable statute requires reasonable notice of sale or other
disposition, Debtor hereby agrees that the sending of ten days' notice as
provided in Section 10 hereof shall be deemed reasonable notice thereof. If any
Collateral is sold by Secured Party upon credit or for future delivery, Secured
Party shall not be liable for the failure of the purchaser to pay for same and
in such event Secured Party may resell such Collateral. Secured Party may buy
any Collateral at any public sale and, if any Collateral is of a type
customarily sold in a recognized market or is of the type which is the subject
of widely distributed standard price quotations, Secured Party may buy such
Collateral at private sale and in each case may make payment therefor by any
means.
(b) Secured Party may apply the cash proceeds
actually received from any sale or other disposition of Collateral to the
reasonable expenses of retaking, holding, preparing for sale, selling, leasing
and the like, to reasonable attorneys' fees and all legal, travel and other
expenses which may be incurred by Secured Party in attempting to collect the
Obligations or enforce this Agreement or in the prosecution or defense of any
action or proceeding related to the subject matter of this Agreement; and then
to the Obligations in such order and as to principal or interest as Secured
Party may desire; and Debtor shall remain liable and will pay Secured Party on
demand any deficiency remaining after the application of such cash proceeds,
together with interest thereon at the highest rate then payable on the
Obligations, and the balance of any expenses unpaid, with any surplus to be paid
to Debtor, subject to any duty of Secured Party imposed by law to the holder of
any subordinate security interest in the Collateral known to Secured Party.
(c) Secured Party may appropriate, set off and apply
to the payment of the Obligations, any Collateral in or coming into the
possession of Secured Party or its agents, without notice to Debtor and in such
manner as Secured Party may in its discretion determine.
5. Power of Attorney. To effectuate the terms and provisions
hereof, Debtor hereby designates and appoints Secured Party and each of its
designees or agents as attorney-in-fact of Debtor, irrevocably and with power of
substitution, with authority upon the occurrence of an Event of Default to: (i)
endorse the name of Debtor on any notes, acceptances, checks, drafts, money
orders, instruments or other evidences of Collateral that may come into Secured
Party's possession; (ii) sign the name of Debtor on any invoices, documents,
drafts against and notices to account debtors or obligors of Debtor, assignments
and requests for verification of accounts; (iii) execute proofs of claim and
loss; (iv) execute endorsements, assignments or other instruments of conveyance
or transfer; (v) adjust and compromise any claims under insurance policies or
otherwise; (vi) execute releases; (vii) receive, open and dispose of all mail
addressed to Debtor and notify the Post Office authorities to change the
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address for delivery of mail addressed to Debtor to such address as Secured
Party may designate; and (viii) do all other acts and things necessary or
advisable in the sole discretion of Secured Party to carry out and enforce this
Agreement or the Obligations. All acts done under the foregoing authorization
are hereby ratified and approved and neither Secured Party nor any designee or
agent thereof shall be liable for any acts of commission or omission, for any
error of judgment or for any mistake of fact or law. This power of attorney
being coupled with an interest is irrevocable while any Obligations shall remain
unpaid.
6. Care of Collateral. Secured Party shall have the duty to
exercise reasonable care in the custody and preservation of any Collateral in
its possession, which duty shall be fully satisfied if Secured Party accords
such Collateral treatment substantially the same as that which it accords
similar property owned by it. Except for any claims, causes of action or demands
arising out of Secured Party's failure to perform its agreements set forth in
the preceding sentence, Debtor releases Secured Party from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement,
the Obligations, the Collateral and its use and/or any actions taken or omitted
to be taken by Secured Party with respect thereto, and Debtor hereby agrees to
hold Secured Party harmless from and with respect to any and all such claims,
causes of action and demands. Secured Party's prior recourse to any Collateral
shall not constitute a condition of any demand, suit or proceeding for payment
or collection of the Obligations.
7. Waivers. No act, omission or delay by Secured Party shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by Secured Party of any Event of Default or right or remedy
which it may have shall operate as a waiver of any other Event of Default, right
or remedy or of the same Event of Default, right or remedy on a future occasion.
Debtor hereby waives presentment, notice of dishonor and protest of all
instruments included in or evidencing any Obligations or Collateral, and all
other notices and demands whatsoever (except as expressly provided herein).
8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
9. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to
this Agreement may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, Debtor hereby accepts for itself and
in respect of its property, generally
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and unconditionally, the jurisdiction of the aforesaid courts. Debtor hereby
irrevocably waives, in connection with any such action or proceeding, (i) trial
by jury, (ii) any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions and (iii) the right to interpose any setoff,
counterclaim or cross-claim.
(b) Debtor irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by certified mail, postage prepaid, to Debtor at
its address determined pursuant to Section 10 hereof.
(c) Nothing herein shall affect the right of Secured
Party to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Debtor in any other jurisdiction.
10. Notices. All notices and other communications to any party
hereunder shall be in writing and shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service requiring a signed receipt upon delivery, or by prepaid
telex or telecopy requiring a confirmation receipt, and shall be given to the
telecopier number or address for such party set forth for such party in Section
9.8 of the Note, or to such other telex or telecopier number or address as such
party may hereafter specify by notice to the other party. Each such notice or
other communication shall be effective (a) if given by telex or telecopier, when
such telex or telecopy is transmitted to the telex or telecopier number
specified by this Section and the appropriate answerback or confirmation is
received, (b) if given by certified mail, 72 hours after such communication is
deposited with the post office, addressed as aforesaid or (c) if given by any
other means (including, without limitation, by courier), when delivered at the
address specified by this Section.
11. Amendments and Waivers; Partial Invalidity; Acknowledgment
of Receipt. No provision hereof shall be modified, altered or limited except by
a written instrument expressly referring to this Agreement and to such
provision, and executed by the party to be charged. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby. Debtor acknowledges
receipt of a copy of this Agreement.
12. Benefit of Agreement; Continuing Security Interest. This
Agreement and all Obligations shall be binding upon the administrators,
successors and assigns of Debtor and shall, together with the rights and
remedies of Secured Party hereunder, inure to the benefit of Secured Party, its
successors, endorsees and assigns. This
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Agreement shall create a continuing security interest in the Collateral which
shall remain in full force and effect until payment in full of the Obligations.
13. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original and all of
which shall together constitute one and the same agreement.
14. Captions. The captions of the sections of this Agreement
have been inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed or caused
this Agreement to be executed in the State of New York as of the date first
above set forth.
DIGIMEDICS CORPORATION
By /s/ Lawrence Auriana
______________________________
Name: Lawrence Auriana
Title: Secretary
Address: 1600 Green Hill Road
Scotts Valley, CA 95066
CONTINENTAL HEALTHCARE SYSTEMS,
INC., as Secured Party
By /s/ Stephen Green
______________________________
Name: Stephen Green
Title: Vice President
Address: c/o TBG Services, Inc.
565 Fifth Avenue
New York, New York 10017
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Schedule A to General Security Agreement
----------------------------------------
Chief Executive Office:
1600 Green Hill Road
Scotts Valley, CA 95066
Location of Books and Records relating to the Collateral:
1600 Green Hill Road
Scotts Valley, CA 95066
All locations of Collateral:
1600 Green Hill Road
Scotts Valley, CA 95066
7300 West 110th Street
Overland Park, KS 66210
Existing Liens on the Collateral:
Liens against Accounts filed jointly by:
Mr. Bruce Brewster
Mr. Steve Gardos
Mr. Joseph Delario
Mr. Lawrence Auriana
Mr. Peter Lerner
Mr. Morton Cohen
Chandra and Sushila Pachmia
Tradenames:
Digimedics
<PAGE>
Exhibit 2(g)
GUARANTY
GUARANTY dated as of June 17, 1996, by MEDIWARE INFORMATION
SYSTEMS, INC., a New York corporation (the "Guarantor"), in favor of CONTINENTAL
HEALTHCARE SYSTEMS, INC., a Delaware corporation, as payee ("Continental") under
the Secured Promissory Note dated the date hereof by DIGIMEDICS CORPORATION, a
California corporation wholly-owned by Guarantor (the "Debtor"), to the order of
Continental in the face principal amount of $6,000,000 (as amended, modified or
supplemented from time to time in accordance with its terms the "Note").
Capitalized terms used and not otherwise defined herein have the meanings
attributed thereto in the Note.
WHEREAS, Continental, Information Handling Services Group,
Inc. and Debtor are parties to an Asset Purchase Agreement dated the date hereof
which contemplates the issuance by Debtor of the Note as partial payment of the
Purchase Price;
WHEREAS, it is a condition precedent to the effectiveness of
the Purchase Agreement that Guarantor issue a Guaranty in the form hereof; and
WHEREAS, Guarantor shall also on the date hereof pledge all of
the issued and outstanding stock of Debtor to Continental pursuant to a Pledge
Agreement in order to secure Guarantor's obligations hereunder.
NOW THEREFORE, in consideration of the premises and in order
to induce Continental to accept the Note as partial payment of the Purchase
Price, the Guarantor hereby agrees as follows:
Section 1. Guaranty. The Guarantor hereby irrevocably and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, acceleration or otherwise, and the punctual performance, of all
present and future obligations of the Debtor under the Note and the other Loan
Documents and all obligations of the Guarantor at any time and from time to time
under the Pledge Agreement and the other Loan Documents (the foregoing being
herein referred to as the "Guaranteed Obligations"); provided, however, that
anything to the contrary notwithstanding, the maximum liability of the Guarantor
hereunder and under the other Loan Documents shall not exceed an amount equal to
the largest amount that would not render the Guarantor's obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any equivalent provision of the law of any state.
<PAGE>
Section 2. Waiver. The Guarantor hereby absolutely,
unconditionally and irrevocably waives, to the fullest extent permitted by law,
(i) promptness, diligence, notice of acceptance and any other notice with
respect to this Guaranty, (ii) presentment, demand of payment, protest, notice
of dishonor or nonpayment and any other notice with respect to the Guaranteed
Obligations, (iii) any requirement that Continental protect, secure, perfect or
insure any security interest or Lien or any property subject thereto or exhaust
any right or take any action against the Debtor or any other person or any
Collateral, and (iv) any other action, event or precondition to the enforcement
of this Guaranty or the performance by the Guarantor of the obligations
hereunder.
Section 3. Guaranty Absolute. (a) The Guarantor guarantees
that, to the fullest extent permitted by law, the Guaranteed Obligations will be
paid or performed strictly in accordance with their terms, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Continental with respect thereto.
(b) No invalidity, irregularity, voidability, voidness or
unenforceability of the Note or any other Loan Document or any other agreement
or instrument relating thereto, or of all or any part of the Guaranteed
Obligations or of any security therefor shall affect, impair or be a defense to
this Guaranty.
(c) This Guaranty is one of payment and performance, not
collection, and the obligations of the Guarantor under this Guaranty are
independent of the obligations of the Debtor, and a separate action or actions
may be brought and prosecuted against the Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Debtor or whether the
Debtor is joined in any such action or actions.
(d) The liability of the Guarantor under this Guaranty shall
be absolute and unconditional irrespective of:
(i) any change in the manner, place or terms of
payment or performance, and/or any change or extension of the time of
payment or performance of, renewal or alteration of, any obligation of
Debtor, any security therefor, or any liability incurred directly or
indirectly in respect thereof, or any other amendment or waiver of or
any consent to departure from the Note or any other Loan Document,
including any increase in the Guaranteed Obligations resulting from the
extension of additional credit to the Debtor or any of its Subsidiaries
or otherwise;
(ii) any sale, exchange, release, surrender,
realization upon any property by whomsoever at any time pledged
(including, without limitation, pursuant to the Pledge Agreement) or
mortgaged to secure, or howsoever securing, all or
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<PAGE>
any of the Guaranteed Obligations, and/or any offset thereagainst, or
failure to perfect, or continue the perfection of, any Lien in any such
property, or delay in the perfection of any such Lien, or any amendment
or waiver of or consent to departure from any other guaranty for all or
any of the Guaranteed Obligations;
(iii) any exercise or failure to exercise any rights
against the Debtor or others (including the Guarantor);
(iv) any settlement or compromise of any obligation
of any Loan Party under any Loan Document, any security therefor or any
liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and any subordination of the
payment of all or any part thereof to the payment of any obligation
(whether due or not) of the Debtor to creditors of the Debtor other
than the Guarantor;
(v) any manner of application of Collateral, or
proceeds thereof, to all or any of the Guaranteed Obligations, or any
manner of sale or other disposition of any Collateral for all or any of
the Guaranteed Obligations or any other assets of the Debtor or any of
its Subsidiaries;
(vi) any change, restructuring or termination of the
existence of the Debtor or any of its Subsidiaries; or
(vii) any other agreements or circumstance of any
nature whatsoever which might otherwise constitute a defense available
to, or a discharge of, this Guaranty and/or obligations of the
Guarantor hereunder, or a defense to, or discharge of, the Debtor or
any other person or party relating to this Guaranty or the obligations
of the Guarantor hereunder or otherwise with respect to the Note or
other financial accommodations to the Debtor.
(e) Continental may at any time and from time to time (whether
or not after revocation or termination of this Guaranty) without the consent of,
or notice (except as shall be required by applicable statute and cannot be
waived) to, the Guarantor, and without incurring responsibility to the Guarantor
or impairing or releasing the obligations of the Guarantor hereunder, apply any
sums by whomsoever paid or howsoever realized to any Guaranteed Obligation
regardless of what Guaranteed Obligations remain unpaid.
(f) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if claim is ever made upon Continental for
repayment or recovery of any amount or amounts received by Continental in
payment or on account of any of the
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Guaranteed Obligations and Continental repays all or part of said amount by
reason of any judgment, decree or order of any court or administrative body
having jurisdiction over Continental or the respective property of each, or any
settlement or compromise of any such claim effected by Continental with any such
claimant (including the Debtor), then and in such event the Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
upon the Guarantor, notwithstanding any revocation hereof or the cancellation of
any note (including the Note) or other instrument evidencing any Obligation, and
the Guarantor shall be and remain liable to Continental hereunder for the amount
so repaid or recovered to the same extent as if such amount had never originally
been received by Continental.
Section 4. Continuing Guaranty. This Guaranty is a continuing
one and shall (i) remain in full force and effect until the indefeasible payment
and satisfaction in full of the Guaranteed Obligations, (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, Continental and its successors and assigns and any person to
whom Continental may transfer the Note and its rights hereunder. All obligations
to which this Guaranty applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon.
Section 5. Representations, Warranties and Covenants.
I. The Guarantor hereby represents and warrants to Continental
that:
(a) The Guarantor has the corporate power to execute and
deliver this Guaranty and to incur and perform its obligations
hereunder;
(b) The Guarantor has duly taken all necessary corporate
action to authorize the execution, delivery and performance of this
Guaranty and to incur and perform its obligations hereunder;
(c) No consent, approval, authorization or other action by,
and no notice to or of, or declaration or filing with, any governmental
or other public body, or any other Person, is required for the due
authorization, execution, delivery and performance by the Guarantor of
this Guaranty or the consummation of the transactions contemplated
hereby;
(d) The execution, delivery and performance by the Guarantor
of this Guaranty do not and will not violate or otherwise conflict with
any material term or provision of any material agreement, instrument,
judgment, decree, order or any statute, rule or governmental regulation
applicable to the Guarantor or result
4
<PAGE>
in the creation of any Lien upon any of its properties or assets
pursuant thereto;
(e) This Guaranty has been duly authorized, executed and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor, and is enforceable against the Guarantor
in accordance with its terms, except as enforcement thereof may be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally, and general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law); and
(f) No proceeding referred to in Section 7.1 (d) or (e) of the
Note is pending against the Guarantor and no other event referred to in
such Section 7.1 has occurred and is continuing, and the property of
the Guarantor is not subject to any assignment for the benefit of
creditors;
II. Guarantor covenants and agrees with Continental that, so
long as this Guaranty shall remain in effect and any Guaranteed Obligation shall
be unpaid, it will:
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence;
(b) Pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or in respect of its property before the same shall become delinquent or in
default unless the validity or amount thereof is being contested in good faith
by appropriate proceedings and the Guarantor has maintained adequate reserves
with respect thereto in accordance with generally accepted accounting
principals;
(c) Upon knowledge by Guarantor, give prompt written notice of
the following:
(i) the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of the
loan under the Note, or invalidating, or having the effect of
invalidating, any provision of the Note or any of other Loan Documents,
or the initiation of any litigation or similar proceeding seeking any
such injunction, order, decision or other restraint;
(ii) the filing or commencement of any action, suit or
proceeding against the Guarantor or any other Loan Party, whether at
law or in equity or by or before any court or any Federal, state,
municipal or other governmental
5
<PAGE>
agency or authority, which is brought by or on behalf of any
governmental agency or authority, or in which injunctive or other
equitable relief is sought and such relief, if obtained, would
materially impair the right or ability of any Loan Party to perform its
obligations under this Guaranty or the other Loan Documents; and
(iii) any Event of Default or event or condition which, with
the giving of notice or lapse of time or both, would constitute an
Event of Default, specifying the nature and extent thereof and the
action (if any) which is proposed to be taken with respect thereto; and
(d) Cause to be delivered to Continental the information
required under Section 5.4 of the Note.
III. Guarantor covenants and agrees with Continental that, so
long as this Guaranty shall remain in effect and any Guaranteed Obligation shall
be unpaid, it will not:
(a) Incur, create, assume or permit to exist any Lien or other
encumbrance of any kind or nature on any of its property or assets including,
without limitation, the Collateral, whether owned at the date hereof or
hereafter acquired, or assign or convey any rights to or security interests in
any future revenues, except (i) Liens and encumbrances created in favor of
Continental as contemplated by the Note and the Security Documents, and (ii)
Permitted Liens;
(b) Incur, create, assume or permit to exist any indebtedness
for borrowed money other than (i) indebtedness incurred hereunder, (ii)
indebtedness to trade creditors incurred in the ordinary course of business,
(iii) indebtedness pursuant to a Refinancing, (iv) unsecured indebtedness
subordinated on terms reasonably acceptable to Continental the proceeds of which
are used to repay the obligations under the Note, (v) unsecured indebtedness for
working capital not to exceed $1,000,000 at any time outstanding, (vii)
unsecured indebtedness in addition to that specified in clause (v) not less than
50 percent of which is used to immediately repay amounts outstanding under the
Note and (vii) indebtedness listed on Schedule I hereto;
(c) (i) Declare or pay, directly and indirectly, any cash
dividends or make any other distribution, whether in cash, property, securities
or a combination thereof, with respect to (whether by reduction of capital or
otherwise) any shares of its capital stock, (ii) directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Subsidiary to
purchase or acquire) any shares of any class of its capital stock or set aside
any amount for any such purpose, (iii) or make any principal
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<PAGE>
payment or prepayment on account of, or purchase, redeem or defease any
indebtedness for borrowed money or make any payment of interest thereon other
than (a) prepayments and payments permitted or required hereunder and (b)
payments to certain holders of promissory notes listed on Schedule I hereto
(other than any such holder who is party to the Subordination Agreement of even
date herewith with Continental, who at any time becomes party to a subordination
or other agreement with Continental or who otherwise agrees to extend the time
for payment under such promissory note until after the Note is repaid), or (iv)
agree to do any of the foregoing, or permit any Subsidiary to do any of the
foregoing or agree to do any of the foregoing;
(d) Consolidate with or merge into any other person, or sell,
lease, transfer or assign to any persons or otherwise dispose of (whether in one
transaction or a series of transactions) all or any part of its properties or
assets (whether now owned or hereafter acquired) other than inventory in the
ordinary course of business or permit another person to merge into it, or
acquire any stock or assets of any other person;
(e) Own, purchase or acquire any stock, obligations, assets or
securities of, or any interest in, or make any capital contribution or loan or
advance of money, credit or property to, any other person, or make any other
investments whatsoever in excess of $100,000 in the aggregate for all of the
foregoing during the term of this Guaranty, except that the Guarantor may make
capital contributions, loans, advances and other investments in and to the
Debtor and may purchase (a) certificates of deposit in dollars of any commercial
banks registered to do business in any state of the United States (i) having
capital and surplus in excess of $1,000,000,000 and (ii) whose long-term debt
rating is at least investment grade as determined by either Standard & Poor's
Corporation or Moody's Investor Service, Inc., (b) readily marketable direct
obligations of the United States government or any agency thereof which are
backed by the full faith and credit of the United States, (c) investments in
money market mutual funds having assets in excess of $2,500,000,000, (d)
commercial paper at the time of acquisition having the highest rating obtainable
from either Standard & Poor's Corporation or Moody's Investor Service, Inc. (e)
federally tax exempt securities rated A or better by either Standard & Poor's
Corporation or Moody's Investor Service, Inc., and (f) assets with the stock of
the Guarantor;
(f) Guarantee, endorse, become surety for, or otherwise in any
way become or be responsible for the obligations of any other person, except the
indorsement for collection or collections for deposit and other guarantees
issued in the ordinary course of business; or
(g) Create any Subsidiaries which have a net worth at any time
in excess of $5,000.
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<PAGE>
Section 6. Expenses. The Guarantor will upon demand reimburse
Continental for any sums, costs, and expenses which Continental may pay or incur
in defending, protecting or enforcing this Guaranty or in enforcing payment of
the Guaranteed Obligations or otherwise in connection with the provisions
hereof, including court costs, collection charges, travel expenses, and
reasonable attorneys' fees, together with interest thereon as specified in
Section 12 hereof.
Section 7. Terms. (a) All terms defined in the UCC and used
herein shall have the meanings as defined in the UCC, unless the context
otherwise requires.
(b) The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation".
(c) All references herein to Sections and subsections shall be
deemed to be references to Sections and subsections of this Guaranty unless the
context shall otherwise require.
Section 8. Amendments and Modification. No provision hereof
shall be modified, altered or limited except by written instrument expressly
referring to this Guaranty and to such provision, and executed by the party to
be charged.
Section 9. Waiver of Subrogation Rights. The Guarantor hereby
waives and releases any and all rights and claims it may now or hereafter have
or acquire against the Debtor that would constitute it a "creditor" of the
Debtor for purposes of the Federal Bankruptcy Code, including all rights of
subrogation against the Debtor and its property and all rights of
indemnification, contribution and reimbursement from the Debtor and its
property, regardless of whether such rights arise in connection with this
Guaranty, by operation of law, pursuant to contract or otherwise.
Section 10. Remedies Upon Default; Right of Set-Off. Upon the
occurrence and during the continuance of any Event of Default, Continental may,
without notice to or demand upon the Debtor or the Guarantor, declare any
Guaranteed Obligations immediately due and payable, and shall be entitled to
enforce the obligations of the Guarantor hereunder.
Section 11. Statute of Limitations. Any acknowledgment or new
promise, whether by payment of principal or interest or otherwise and whether by
the Debtor or others (including the Guarantor), with respect to any of the
Guaranteed Obligations shall, if the statute of limitations in favor of the
Guarantor against Continental shall
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<PAGE>
have commenced to run, toll the running of such statute of limitations and, if
the period of such statute of limitations shall have expired, prevent the
operation of such statute of limitations.
Section 12. Interest. All amounts payable from time to time by
the Guarantor hereunder shall bear interest at the Default Rate.
Section 13. Rights and Remedies Not Waived. No act, omission
or delay by Continental shall constitute a waiver of its rights and remedies
hereunder or otherwise. No single or partial waiver by Continental of any
default hereunder or right or remedy which it may have shall operate as a waiver
of any other default, right or remedy or of the same default, right or remedy on
a future occasion.
Section 14. Admissibility of Guaranty. The Guarantor agrees
that any copy of this Guaranty signed by the Guarantor and transmitted by
telecopier for delivery to Continental shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
Section 15. Notices. All notices, requests and demands to or
upon Continental or the Guarantor under this Guaranty shall be in writing and
given as provided in the Note (with respect to the Guarantor, to the address of
the Debtor as set forth in the Note).
Section 16. Counterparts. This Guaranty may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
and all of which shall together constitute one and the same agreement.
Section 17. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL;
ETC. (a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS GUARANTY, THE GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, IN CONNECTION WITH
ANY SUCH ACTION OR PROCEEDING, (i) TRIAL BY JURY, (ii) TO THE EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
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ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (iii) THE
RIGHT TO INTERPOSE ANY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM (UNLESS SUCH
SET-OFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE
FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER
ACTION).
(b) The Guarantor irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by certified mail, postage prepaid, to the
Guarantor at its address determined pursuant to Section 15 hereof.
(c) Nothing herein shall affect the right of Continental to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Guarantor in any other
jurisdiction.
(d) The Guarantor hereby waives presentment, notice of
dishonor and protests of all instruments included in or evidencing any of the
Guaranteed Obligations, and any and all other notices and demands whatsoever
(except as expressly provided herein).
Section 18. GOVERNING LAW. THIS GUARANTY AND THE GUARANTEED
OBLIGATIONS SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
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Section 19. Captions; Separability. (a) The captions of the
Sections and subsections of this Guaranty have been inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Guaranty.
(b) If any term of this Guaranty shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby.
Section 20. Acknowledgment of Receipt. The Guarantor
acknowledges receipt of a copy of this Guaranty and each of the Loan Documents.
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IN WITNESS WHEREOF, the Guarantor has duly executed or caused
this Guaranty to be duly executed in the State of New York as of the date first
above set forth.
MEDIWARE INFORMATION SYSTEMS, INC.
By: /s/ Lawrence Auriana
_____________________________
Name: Lawrence Auriana
Title: Secretary
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EXHIBIT 99
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Healthcare/ General Healthcare Topics/ Medical Information Systems
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MEDIWARE ACQUIRES DIVISION OF
CONTINENTAL HEALTHCARE
Source: PR Newswire
NEW YORK, June 18/PRNewswire/via Individual Inc.--Mediware Information Systems,
Inc. (Nasdaq: MEDW) acquired the assets and the UK subsidiary of the Pharmakon
division of Continental Healthcare Systems, Inc. for approximately $10 million.
The purchase was financed by the private placement of approximately 1.7 million
shares of Mediware common stock for $3.25 a share and the issuance of a note to
the seller. Smith Barney, Inc. was placement agent for the common stock.
Pharmakon provides pharmacy management systems and service to approximately 250
hospitals in the US and another 180 in the UK, increasing Mediware's installed
base to more than 800 systems in the US, Canada and Europe.
Les Dace, president and chief executive officer of Mediware, said the company
will maintain Pharmakon's headquarters in Overland Park, KN and its UK sales,
service and administrative offices.
"We will support and maintain the Pharmakon product line and build on its
well-earned franchise," he added.
Mediware said its new Windows '95 client server clinical pharmacy product will
be introduced to Mediware and Pharmakon customers later this year.
Mediware provides stand alone, UNIX-based, open system, clinical information
systems for use in hospital blood banks, pharmacies, and surgical suites.
/CONTACT: Thomas Redington of Redington, Inc., for Mediware, 203-
222-7399, or 212-926-1733 (MEDW)
[06-18-96 at 14:23 EDT, PR Newswire]
This story is found in the following NewsPage topics:
o Pharmacy Benefits Management (Healthcare/U.S.
Distribution (Drugs & Supplies))
o Medical Information Systems (Healthcare/General
Healthcare Topics)
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