SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Mediware Information Services, Inc.
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(Name of Issuer)
Common Stock, par value $.10
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(Title of Class of Securities)
584946107
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(CUSIP Number)
Lawrence Auriana
143 East 45th Street, 43rd Floor
New York, New York 10012
(212) 922-2999
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 17, 1996
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d- 1(b)(3) or (4), check the following: [ ]
Check the following box if a fee is being paid with this Statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 584946107 |
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lawrence Auriana
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
PF as to 138,462 shares; SC as to 25,500 shares; OO as to 117,120
shares
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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NUMBER OF SHARES 7. SOLE VOTING POWER
990,777
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BENEFICIALLY OWNED BY 8. SHARED VOTING POWER
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EACH PERSON WITH 9. SOLE DISPOSITIVE POWER
990,777
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10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
990,777
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT ON ROW (11)
17.5%
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14. TYPE OF REPORTING PERSON
IN
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Item 1. Security and Issuer
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This Statement amends and restates the Schedule 13D dated
August 6, 1991, relating to the Common Stock, $.10 par value (hereafter "Common
Stock"), of Mediware Information Systems, Inc. (the "Company") filed by Lawrence
Auriana. The Company has its principal executive offices at 1121 Old Walt
Whitman Road, Melville, New York 11747. Each of the Items listed below are
hereby amended and restated in their entirety.
Item 2. Identity and Background
-----------------------
(a) This Amended and Restated Schedule 13D is being filed on
behalf of Lawrence Auriana ("Reporting Person").
(b) The business address of the Reporting Person is c/o The
Kaufmann Fund, 140 East 45th Street, 43rd Floor, New
York, New York 10017.
(c) The Reporting Person is Chairman, a director and
Portfolio Co-Manager of The Kaufmann Fund, 140 East 45th
Street, 43rd Floor, New York, New York 10017.
(d) During the last five years, the Reporting Person has not
been convicted in a criminal proceeding.
(e) During the last five years, the Reporting Person has not
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result
of which he was or is subject to a judgment, decree or
final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with
respect to such laws.
(f) The Reporting Person is a citizen of the United States of
America.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
Of the 990,777 shares (the "Shares") of Common Stock
beneficially owned by the Reporting Person: 109,120 shares were acquired either
with personal funds of the Reporting Person or as consideration for services
rendered as a director of the Company; 8,000 shares were received as an
investment banking fee in connection with the acquisition of Digimedics
Corporation in May 1990; 25,500 shares were granted in consideration for
services rendered in fiscal years 1993, 1994 and 1996 as Chairman of the Board
of the Company; 35,000 shares may be acquired upon the exercise of options
granted in consideration for services
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rendered in fiscal years 1992 through 1996 as a director and Chairman of the
Board of the Company; 674,695 shares may be acquired upon the exercise of
warrants purchased in 1993, 1994 and 1995 with the Reporting Person's personal
funds; and 138,462 shares were acquired in June 1996 with the Reporting Person's
personal funds.
Item 4. Purpose of Transaction
----------------------
All of the Shares, including the options and warrants to
purchase shares of Common Stock, have been acquired for investment purposes. The
Reporting Person has no current plans to bring about the actions referred to in
Item 4 of the instructions to Schedule 13D.
Item 5. Interest in Securities of the Issuer
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(a) As of June 17, 1996, the Reporting Person
beneficially owned 990,777 shares of Common Stock of the Company
(computed as provided in Rule 13D-3(d)(1) and including 709,695 shares
which the Reporting Person has a right to acquire). On a percentage
basis, the Reporting Person's ownership of the Shares represents the
ownership of 17.5% of the outstanding shares of Common Stock of the
Company (computed as provided below). The percentage calculation herein
is based upon the number of shares of Common Stock outstanding as
reported in the Company's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1996, plus (i) share certificates which were
distributed to directors in consideration for services rendered in
fiscal year ended June 30, 1994; (ii) shares issued in May 1996 upon
the exercise of warrants; (iii) shares issued on June 17, 1996 in
connection with the Pharmakon Transaction (as defined and described
below); (iv) shares issued as a fee in connection with the Pharmakon
Transaction; (v) shares issued to directors on July 1, 1996 in
consideration for services rendered in fiscal year ended June 30, 1996;
and (vi) as provided in Rule 13D-3(d)(1), the number of shares not
outstanding which are subject to the option and warrant exercise
privileges of the Reporting Person.
(b) The Reporting Person has sole voting power and
sole disposition power over all of the Shares.
(c) On June 17, 1996, the Reporting Person acquired
138,462 shares of Common Stock from the Company at a price of $3.25 per
share in the private placement financing of the acquisition by a wholly
owned subsidiary of the Company of the Pharmakon division of
Continental Healthcare Systems, Inc.("Pharmakon Transaction"). On May
6, 1996, the Reporting Person received certificates for 7,500 shares of
Common Stock from the Company as confirmation of consideration for
services rendered in
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fiscal year ended June 30, 1994. On July 1, 1996, the Reporting Person
received 7,500 shares of Common Stock from the Company as consideration
for services rendered in fiscal year ended June 30, 1996. The Reporting
Person has not effected any other transactions with respect to the
Common Stock during the past sixty days.
(d) No person other than the Reporting Person has
the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
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Pursuant to eleven Warrant Agreements entered into between the
Company and the Reporting Person in 1993, 1994 and 1995, the Reporting Person
purchased (i) warrants to purchase 470,000 shares of Common Stock at a price of
$.50 per share; (ii) warrants to purchase 75,000 shares of Common Stock at a
price of $.50 per share; and (iii) warrants to purchase 129,695 shares of Common
Stock at a price of $1.25 per share. All of such warrants expire on September
30, 2004.
The Reporting Person received 8,000 shares as an investment
banking fee in connection with the acquisition of Digimedics Corporation in
May 1990, which was approved by the stockholders of the Company in April 1990.
Pursuant to a Stock Purchase Agreement between the Company and
the Reporting Person dated June 17, 1996, the Reporting Person has agreed that
he will not sell, assign, pledge, give, transfer or otherwise dispose of the
shares of Common Stock purchased thereunder except pursuant to a registration of
such shares under the Securities Act of 1933 and all applicable state securities
laws, or in an exempt transaction.
Pursuant to a Registration Rights Agreement between the
Company and the Reporting Person dated June 17, 1996, the Reporting Person has
agreed, in connection with any registration of the Company's securities, not to
sell or otherwise dispose of shares of Common Stock (other than those included
in the registration) without the prior written consent of the Company or the
underwriters of such registration, from the effective date of such registration
for a period of time of up to 180 days.
There are no other contracts, arrangements, understandings or
relationships (legal or otherwise) between the Reporting Person and any other
person with respect to any securities of the Company, including but not limited
to transfer, or voting of any of the securities, finder's fees, joint
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ventures, loans or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies. None of
the Shares are pledged or otherwise subject to a contingency, the occurrence of
which would give another person voting or investment power over the Shares.
Item 7. Material to be Filed as Exhibits
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7.1 Form of Warrant Agreement by and among the Company
and Reporting Person.
7.2 Stock Purchase Agreement dated June 17, 1996 by and
among the Company and certain shareholders of the
Company.
7.3 Registration Rights Agreement dated June 17, 1996 by
and among the Company and certain shareholders of the
Company.
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S I G N A T U R E
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
July 3, 1996
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Date
/s/ Lawrence Auriana
____________________
Signature
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<PAGE>
EXHIBIT INDEX
7.1 Form of Warrant Agreement by and among the Company and Lawrence Auriana.
7.2 Stock Purchase Agreement dated June 17, 1996 by and among the Company
and certain shareholders of the Company.
7.3 Registration Rights Agreement dated June 17, 1996 by and among the Company
and certain shareholders of the Company.
<PAGE>
EXHIBIT 7.1
DRAFT: 5/3/91
[FORM]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES
ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
HOWEVER, NEITHER THE WARRANTS NOR SUCH SHARES MAY BE OFFERED
OR SOLD EXCEPT PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO
SUCH REGISTRATION STATEMENT, (ii) A SEPARATE REGISTRATION
STATEMENT UNDER SUCH ACT, OR (iii) AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN.
MEDIWARE INFORMATION SYSTEMS, INC.
Warrant for the Purchase of Shares of Common Stock,
par value $[ ] per Share
No. 1 [ ] Shares
THIS CERTIFIES that, for receipt in hand of [$ ] and other value
received, COMMONWEALTH ASSOCIATES, One Exchange Plaza, New York, New York 10006
(the "Holder"), is entitled to subscribe for and purchase from MEDIWARE
INFORMATION SYSTEMS, INC., a New York corporation, (the "Company"), upon the
terms and conditions set forth herein, at any time or from time to time after
_________ __, 1992, and before 5:00 P.M. on May __, 1996, New York time (the
"Exercise Period"), [ ] shares of the Company's Common Stock, par value $[ ] per
share ("Common Stock"), at a price of $[ ] per share (the "Exercise Price").
This Warrant may not be sold, transferred, assigned or hypothecated until May
__, 1992 except that it may be transferred, in whole or in part, to (i) one or
more officers or partners of the Holder (or the officers or partners of any such
partner); (ii) any other underwriting firm or member of the selling group which
participated in the public offering of Common Stock which commenced on
___________ __, 1991 (or the officers or partners of any such firm); (iii) a
successor to the Holder, or the officers or partners of such successor; (iv) a
purchaser of substantially all of the assets of the Holder; or (v) by operation
of law; and the term the "Holder" as used herein shall include any transferee to
whom this Warrant has been transferred
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in accordance with the above. As used herein the term "this Warrant" shall mean
and include this Warrant and any Warrant or Warrants hereafter issued as a
consequence of the exercise or transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and the Exercise Price may be adjusted from time
to time as hereinafter set forth.
1. This Warrant may be exercised during the Exercise Period as to the
whole or any lesser number of whole Shares, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its office
at 1121 Old Walt Whitman Road, Melville, New York 11747, or such other place as
is designated in writing by the Company, together with a certified or bank
cashier's check payable to the order of the Company in an amount equal to the
Exercise Price multiplied by the number of Warrant Shares for which this warrant
is being exercised.
2. Upon each exercise of the Holder's rights to purchase the Warrant
Shares granted pursuant to this Warrant, as reissued from time to time, the
Holder shall be deemed to be the holder of record of the Warrant Shares issuable
upon such exercise notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Warrant Shares shall not then
have been actually delivered to the Holder. As soon as practicable after each
such exercise of this Warrant, the Company shall issue and deliver to the Holder
a certificate or certificates for the Warrant Shares, registered in the name of
the Holder or its designee. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Warrant Shares (or portions thereof) subject to purchase hereunder.
3. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant, the "Warrants") shall be numbered and shall
be registered in a Warrant Register as they are issued. The Company shall be
entitled to treat the registered holder of any Warrant on the Warrant Register
as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with the knowledge of such facts that its
participation therein amounts to bad faith. The Warrants shall be transferable
only on the books of the company upon delivery thereof duly endorsed by the
Holder or by his duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or
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authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof) upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations thereunder.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
this Warrant, such number of shares of Common Stock as shall, from time to time,
be sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the
purchase price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.
5. (a) In case the Company shall at any time after the date of this
Warrant (i) declare a dividend on the outstanding Common Stock in shares of its
capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Exercise
Price, and the number and kind of shares of Common Stock receivable upon
exercise of this Warrant, in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that the Holder after
such time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance of rights, options, or warrants to all holders of Common Stock
entitling them to subscribe for or purchase Common Stock (or securities
convertible into or exchangeable for Common Stock) at a price per share (or
having a
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conversion price per share, if a security convertible into or exchangeable for
Common Stock) less than the Current Market Price per share of Common Stock (as
defined in section 5(e) hereof) on such record date, then, in each case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock to be offered for subscription or purchase
(or into which the convertible or exchangeable securities so to be offered are
initially convertible or exchangeable). Such adjustment shall become effective
at the close of business on such record date; provided, however, that, to the
extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to Warrants exercised after such expiration), to the
Exercise Price which would then be in effect had the adjustments made upon the
issuance of such rights, options, or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into or exchangeable for shares of Common Stock) actually issued. In case any
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
(c) In case the Company shall distribute to all holders of Common Stock
(including any such distribution made to the shareholders of the Company in
connection with a consolidation or merger in which the Company is the continuing
corporation) evidences of its indebtedness or assets (other than cash dividends
or distributions and dividends payable in shares of Common Stock), or
subscription rights, options, or warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock (excluding those referred to in section 5(b) hereof), then, in each case,
the Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date for the determination of shareholders
entitled to receive such distribution by a fraction, the numerator of which
shall be the Current Market Price per share of Common Stock on such record date,
less the fair market value (as determined in good faith by the board of
directors of the Company, whose determination shall
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be conclusive absent manifest error) of the portion of the evidences of
indebtedness or assets so to be distributed, or of such subscription rights,
options, or warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock, applicable to one
share, and the denominator of which shall be such Current Market Price per share
of Common Stock. Such adjustment shall be made whenever any such distribution is
made, and shall become effective on the date of such distribution retroactive to
the record date for the determination of shareholders entitled to receive such
distribution.
(d) In case the Company shall issue shares of Common Stock or rights,
options, warrants to subscribe for or purchase shares of Common Stock, or
convertible or exchangeable securities containing the right to subscribe for or
to convert into or purchase shares of Common Stock (excluding shares, rights,
options, warrants, or convertible or exchangeable securities issued or issuable
(i) in any of the transactions described in sections 5(a), 5(b), or 5(c) above,
or (ii) upon exercise of the Warrants), at a price per share (determined, in the
case of such rights, options, warrants, or convertible or exchangeable
securities, by dividing (x) the total amount received or receivable by the
Company in consideration of the sale and issuance of such rights, options,
warrants, or convertible or exchangeable securities, plus the minimum aggregate
consideration payable to the Company upon exercise, conversion, or exchange
thereof, by (y) the maximum number of shares covered by such rights, options,
warrants, or convertible or exchangeable securities) lower than the Current
Market Price per share of Common Stock in effect immediately prior to such
issuance, then the Exercise Price shall be reduced on the date of such issuance
to a price (calculated to the nearest cent) determined by dividing (i) an amount
equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance multiplied by the then existing Exercise
Price plus (B) the consideration received by the Company upon such issuance by
(ii) the total number of shares of Common Stock outstanding immediately after
such issuance. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of such
issuance, and the consideration received by the Company therefor shall be deemed
to be the consideration received by the Company for such rights, options,
warrants, or convertible or exchangeable securities, plus the minimum aggregate
consideration or premiums stated in such rights, options, warrants, or
convertible or exchangeable securities to be paid for the shares covered
thereby. No further adjustment of the Exercise Price shall be made as a result
of the actual issuance of shares of Common Stock on exercise of such rights,
options, or warrants or on conversion or exchange of such convertible or
exchangeable securities. On the expiration or the
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termination of such rights, options, or warrants, or the termination of such
right to convert or exchange, the Exercise Price shall be readjusted to such
Exercise Price as would have obtained had the adjustments made upon the issuance
of such rights, options, warrants, or convertible or exchangeable securities
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such rights, options, or warrants
or upon the conversion or exchange of any such securities; and on any change of
the number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, but not limited
to, a change resulting from the antidilution provisions thereof, the Exercise
Price, as then in effect, shall forthwith be readjusted to such Exercise Price
as would have been obtained had an adjustment been made upon the issuance of
such rights, options, or warrants not exercised prior to such change, or
securities not converted or exchanged prior to such change, on the basis of such
change. In case the company shall issue shares of Common Stock or rights,
options, warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of common Stock, for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this section 5(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this section 5,
the Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices for the 30 consecutive trading
days immediately preceding the date in question. The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the closing bid price regular way, in either case
on the principal national securities exchange (including, for purposes hereof,
the NASDAQ National Market System) on which the Common Stock is listed or
admitted to trading or, if the Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for the
Common Stock as furnished by the National Association of Securities Dealers,
Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information. If on any such date the Common Stock is not listed or admitted
to trading on any national securities exchange and is not quoted by NASDAQ or
any similar organization, the fair value of a share of Common Stock on such
date, as determined in good faith by the board of directors of the Company,
whose
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determination shall be conclusive absent manifest error, shall be used.
(f) No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments which by
reason of this section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
section 5 shall be made to the nearest cent or to the nearest one-thousandth of
a share, as the case may be.
(g) In any case in which this section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if such holder exercised after such record date,
the shares of Common Stock, if any, issuable upon such exercise over and above
the shares of Common Stock, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(h) Upon each adjustment of the Exercise Price as a result of the
calculations made in sections 5(a), 5(b), 5(c), or 5(d) hereof, each Warrant
outstanding prior to the making of the adjustment in the Exercise Price shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (A)
the product obtained by multiplying the number of shares purchasable upon
exercise of a Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
(i) Whenever there shall be an adjustment as provided in this section
5, the Company shall promptly cause written notice thereof to be sent by
registered mail, postage prepaid, to the Holder, at its principal office, which
notice shall be accompanied by an officer's certificate setting forth the number
of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment and the computation thereof, which officer's
certificate shall be conclusive evidence of the correctness of any such
adjustment absent manifest error.
(j) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise of the
Warrants. If any fraction of a share would be issuable on the exercise of any
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the
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Current Market Price of such share of Common Stock on the date of exercise of
the Warrant.
6. (a) In case of any consolidation with or merger of the Company with
or into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, such successor, leasing or purchasing
corporation, as the case may be, shall (i) execute with the Holder an agreement
providing that the Holder shall have the right thereafter to receive upon
exercise of this Warrant solely the kind and amount of shares of stock and other
securities, property, cash or any combination thereof receivable upon such
consolidation, merger, sale, lease or conveyance by a holder of the number of
shares of Common Stock for which this Warrant might have been exercised
immediately prior to such consolidation, merger, sale, lease or conveyance, and
(ii) make effective provision in its certificate of incorporation or otherwise,
if necessary, in order to effect such agreement. Such agreement shall provide
for adjustments which shall be as nearly equivalent as practicable to the
adjustments in section 5.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from no par value to a specified par value, or as
a result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of this Warrant solely the kind and amount
of shares of stock and other securities, property, cash or any combination
thereof receivable upon such reclassification, change, consolidation or merger
by a holder of the number of shares of Common Stock for which this Warrant might
have been exercised immediately prior to such reclassification, change,
consolidation or merger. Thereafter, appropriate provision shall be made for
adjustments which shall be as nearly equivalent as practicable to the
adjustments in section 5.
(c) The above provisions of this section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases or conveyances.
7. In case at any time the Company shall propose
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<PAGE>
(a) to pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a
greater amount per share than the most recent such cash dividend) to
all holders of Common Stock; or
(b) to issue any rights, warrants or other securities to all
holders of Common Stock entitling them to purchase any additional
shares of Common Stock or any other rights, warrants or other
securities; or
(c) to effect any reclassification or change of
outstanding shares of Common Stock, or any consolidation,
merger, sale, lease or conveyance of property, described in
section 6; or
(d) to effect any liquidation, dissolution, or
winding-up of the Company; or
(e) to take any other action which would cause an
adjustment to the Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up; or (iii) the date of such action which would require
an adjustment to the Exercise Price.
8. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such
-9-
<PAGE>
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
9. (a) If, at any time during the six-year period commencing on
___________ __, 1992, the Company shall file a registration statement (other
than on Form S-4, Form S-8, or any successor form) with the Securities and
Exchange Commission (the "Commission") while Warrant Shares are available for
purchase upon exercise of this Warrant or while any Warrant Shares previously
purchased upon exercise of this Warrant (which have not been so registered and
actually sold) are outstanding, the Company shall give the Holder and all the
then holders of such Warrant Shares at least 45 days' prior written notice of
the filing of such registration statement. If requested by the Holder or by any
such holder in writing within 30 days after receipt of any such notice, the
Company shall, at the Company's sole expense (other than the fees and
disbursements of counsel for the Holder or such holder and the underwriting
discounts, if any, payable in respect of the Warrants and Warrant Shares sold by
the Holder or any such holder), register or qualify all of any portion of the
Warrants and Warrant Shares (collectively, the "Underwriters' Securities") of
the Holder or any such holders who shall have made such request concurrently
with the registration of such other securities, all to the extent requisite to
permit the public offering and sale of the Underwriters' Securities through the
facilities of all appropriate securities exchanges and the over-the-counter
market, and will use its best efforts through its officers, directors, auditors
and counsel to cause such registration statement to become effective as promptly
as practicable. Notwithstanding the foregoing, if the managing underwriter of
any such offering shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Underwriters' Securities requested to be
included in the registration concurrently with the securities being registered
by the Company would materially adversely affect the distribution of such
securities by the Company for its own account, then the Holder or any such
holder who shall have requested registration of his or its Underwriters'
Securities shall delay the offering and sale of such Underwriters' Securities
(or the portions thereof so designated by such managing underwriter) for such
period, not to exceed 90 days, as the managing underwriter shall request,
provided that no such delay shall be required as to any Underwriters' Securities
if any securities of the Company are included in such registration statement for
the account of any person other than the Company and the Holder or any such
holder unless the securities included in such registration statement for such
other person shall have been reduced pro rata to the reduction of the
Underwriters' Securities which were requested to be included in such
registration.
(b) If, at any time during the six-year period commencing _____________
__, 1992, the Company shall receive a written request from holders of
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<PAGE>
Underwriters' Securities, who in the aggregate own (or upon exercise of all
Warrants will own) a majority of the total number of shares of Common Stock
issued or issuable upon exercise of the Warrants, to register the sale of all or
part of such securities, the Company shall, as promptly as practicable, prepare
and file with the Commission a registration statement sufficient to permit the
public offering and sale of such Underwriters' Securities through the facilities
of all appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors and counsel
to cause such registration statement to become effective as promptly as
practicable; provided, however, that the Company shall only be obligated to file
one such registration statement for which all expenses incurred in connection
with such registration (other than the fees and disbursements of counsel for the
Holder or such holders and underwriting discounts, if any, payable in respect of
the Underwriters' Securities sold by the Holder or any such holder) shall be
borne by the Company and one additional such registration statement for which
all such expenses shall be paid by the Holder and such holders. Within three
days after receiving any request contemplated by this section 9(b), the Company
shall give written notice to all the other holders of Underwriters' Securities,
advising them that the Company is proceeding with such registration and offering
to include therein all or any portion of any such other holder's Underwriters'
Securities, provided that the Company receives a written request to do so from
such holder within 30 days after receipt by him or it of the Company's notice.
(c) In the event of a registration pursuant to the provisions of this
section 9, the Company shall use its best efforts to cause the Underwriters'
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder or such holders
may reasonably request; provided, however, that the Company shall not be
required to qualify to do business in any state by reason of this section 9(c)
in which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or qualification
contemplated by this section 9 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period of time as
shall be required to permit the Holder or such holders to complete the offer and
sale of the Underwriters' Securities covered thereby. The Company shall in no
event be required to keep any such registration or qualification in effect for a
period in excess of nine months from the date on which the Holder and such
holders are first free to sell such Underwriters' Securities; provided, however,
that if the Company is required to keep any such registration or qualification
in effect with respect to securities other than the Underwriters' Securities
beyond such period, the Company shall keep such registration or qualification
-11-
<PAGE>
in effect as it relates to the Underwriters' Securities for so long as such
registration or qualification remains or is required to remain in effect in
respect of such other securities.
(e) In the event of a registration pursuant to the provisions of this
section 9, the Company shall furnish to the Holder and to each such holder such
number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as the Holder or such holders
may reasonably request in order to facilitate the disposition of the
Underwriters' Securities included in such registration.
(f) In the event of a registration pursuant to the provisions this
section 9, the Company shall furnish the Holder and each holder of any
Underwriters' Securities so registered with an opinion of its counsel
(reasonably acceptable to the Holder) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use of
the registration statement, any preliminary prospectus, any final prospectus, or
any amendment or supplement thereto has been issued, nor has the Commission or
any securities or blue sky authority of any jurisdiction instituted or
threatened to institute any proceedings with respect to such an order, (ii) the
registration statement and each prospectus forming a part thereof (including
each preliminary prospectus), and any amendment or supplement thereto, complies
as to form, with the Act and the rules and regulations thereunder, and (iii)
such counsel has no knowledge or reason to know of any material misstatement or
omission in such registration statement or any prospectus, as amended or
supplemented. Such opinion shall also state the jurisdictions in which the
Underwriters' Securities have been registered or qualified for sale pursuant to
the provisions of section 9(c).
(g) In the event of a registration pursuant to the provision of this
section 9, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and each holder of Underwriters' Securities included in such registration
statement; and, if requested, enter into an underwriting agreement containing
conventional representations, warranties, allocation of expenses, and customary
closing conditions, including, but not limited to, opinions of counsel and
accountants' cold comfort letters, with any underwriter who acquires any
Underwriters' Securities.
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<PAGE>
(h) The Company agrees that until all the Underwriters' Securities have
been sold under a registration statement or pursuant to Rule 144 under the Act,
it shall keep current in filing all reports, statements and other materials
required to be filed with the Commission to permit holders of the Underwriters'
Securities to sell such securities under Rule 144.
10. (a) Subject to the conditions set forth below, the Company agrees
to indemnify and hold harmless the Holder, any holder of any of the
Underwriters' Securities, their officers, directors, partners, employees, agents
and counsel, and each person, if any, who controls any such person within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), from and against any and all loss,
liability, charge, claim, damage and expense whatsoever (which shall include,
for all purposes of this Section 10, but not be limited to, attorneys' fees and
any and all expense whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
registration statement, preliminary prospectus or final prospectus (as from time
to time amended and supplemented), or any amendment or supplement thereto,
relating to the sale of any of the Underwriters' Securities, or (B) in any
application or other document or communication (in this Section 10 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Underwriters' Securities
under the securities or blue sky laws thereof or filed with the Commission or
any securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect to
the Holder or any holder of any of the Underwriters' Securities by or on behalf
of such person expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant or agreement of the Company contained in this
Warrant. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Warrant.
If any action is brought against the Holder or any holder of any of the
Underwriters' Securities or any of its officers, directors, partners, employees,
agents or counsel, or any controlling persons of such person (an "indemnified
party") in respect of which indemnity may be sought against the Company pursuant
to the foregoing paragraph, such indemnified party or
-13-
<PAGE>
parties shall promptly notify the Company in writing of the institution of such
action (but the failure so to notify shall not relieve the Company from any
liability except to the extent it may have been prejudiced in any material
respect by such failure, or from any liability it may have other than pursuant
to this section 10(a)) and the Company shall promptly assume the defense of such
action, including the employment of counsel (reasonably satisfactory to such
indemnified party or parties) and payment of expenses. Such indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall be
borne by the Company and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties. Anything
in this section to the contrary notwithstanding, the Company shall not be liable
for any settlement of any such claim or action effected without its written
consent.
(b) The Holder agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
registration statement covering Underwriters' Securities held by the Holder,
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from the
Company to the Holder in section 10(a), but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to the
Holder by or on behalf of the Holder expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this section 10(b), the Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
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<PAGE>
rights and duties given to the indemnified parties, by the provisions of section
10(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to section 10(a) or
10(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Holder and any holder of any of the
Underwriters' Securities included in such registration in the aggregate
(including for this purpose any contribution by or on behalf of an indemnified
party), as a second entity, shall contribute to the losses, liabilities, claims,
damages and expenses whatsoever to which any of them may be subject, on the
basis of relevant equitable considerations such as the relative fault of the
Company and the Holder or any such holder in connection with the facts which
resulted in such losses, liabilities, claims, damages and expenses. The relative
fault, in the case of an untrue statement, alleged untrue statement, omission or
alleged omission, shall be determined by, among other things, whether such
statement, alleged statement, omission or alleged omission relates to
information supplied by the Company, by the Holder or by any holder of
Underwriters' Securities included in such registration, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, alleged statement, omission or alleged omission. The
Company and the Holder agree that it would be unjust and inequitable if the
respective obligations of the Company and the Holder for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses (even if the Holder and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this section 10(c). No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this section 10(c), each person, if any, who
controls the Holder or any holder of any of the Underwriters' Securities within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee, agent and counsel of each such
person, shall have the same rights to contribution as such person and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, each officer of the Company who shall
have signed any such
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<PAGE>
registration statement, each director of the Company, and its or their
respective counsel, shall have the same rights to contribution as the Company,
subject in each case to the provisions of this section 10(c). Anything in this
section 10(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This section 10(c) is intended to supersede any
right to contribution under the Act, the Exchange Act or otherwise.
11. Unless registered pursuant to the provisions of section 9 hereof,
the Warrant Shares issued upon exercise of the Warrants shall be subject to a
stop transfer order and the certificate or certificates evidencing such Warrant
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
PURSUANT TO A REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. HOWEVER, SUCH SHARES MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) A POST-EFFECTIVE
AMENDMENT TO SUCH REGISTRATION STATEMENT, (ii) A SEPARATE
REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii) AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT."
12. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses, the Company shall execute and deliver to the Holder thereof
a new Warrant of like date, tenor and denomination.
13. The Holder of any Warrant shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
14. This Warrant shall be construed in accordance with the laws of the
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State of New York applicable to contracts made and performed within such State,
without regard to principles of conflicts of law.
Dated: __________ __, 1991
MEDIWARE INFORMATION SYSTEMS, INC.
By:________________________________
Colin Shanks, President
[Seal]
- -----------------------------
Secretary
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<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _______________________ hereby sells,
assigns and transfers unto _______________________ a Warrant to purchase
____________ Shares of Mediware Information Systems, Inc. (the "Company"),
together with all,right, title and interest therein, and does hereby irrevocably
constitute and appoint _______________________ attorney to transfer such Warrant
on the books of the Company, with full power of substitution.
Dated:_____________________
Signature____________________________
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to
the name as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
To: MEDIWARE INFORMATION SYSTEMS, INC.
1121 Old Walt Whitman Road
Melville, New York 11747
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase
_________ Warrant Shares covered by the within Warrant and tenders payment
herewith in the amount of $__________ in accordance with the terms thereof, and
requests that certificates for such securities be issued in the name of, and
delivered to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: ------------------------- Name---------------------------
(Print)
Address:------------------------------------------------------------------------
-----------------------------
(Signature)
<PAGE>
Exhibit 7.2
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
i
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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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<PAGE>
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 7.3
REGISTRATION RIGHTS AGREEMENT
Agreement made and entered into this 17th day of June, 1996,
by and between Mediware Information Services, Inc., a New York corporation,
whose address is 1121 Walt Whitman Road, Melville, New York 11747-3005 (the
"Company"), and the stockholders listed on the Annex attached hereto (the
"Stockholders").
WHEREAS, the Company desires to enter into a Stock Purchase
Agreement dated June 17, 1996, among the Company and the Stockholders, pursuant
to which the Stockholders will receive an aggregate of one million, six hundred
ninety two thousand, three hundred seven (1,692,307) shares of the common stock,
$.10 par value, of the Company (the "Shares"), which will be newly-issued by the
Company;
WHEREAS, the Stockholders will acquire the Shares for
investment, and not with a view to reselling or distributing any of the Shares,
and have no present intention of reselling or otherwise disposing of any of the
Shares, except to the extent that the Shares are registered under the Securities
Act of 1933 (the "Act") and appropriate state securities laws, or exempt from
such laws; and
WHEREAS, as a condition to their willingness to purchase the
Shares, the Stockholders desire that the Shares be registered, and the Company
is willing to provide for the registration of the Shares upon the terms and
conditions herein contained;
NOW, THEREFORE, in consideration of the foregoing, and of the
mutual covenants, agreements, undertakings, representations, and warranties
contained herein, the Company and the Stockholders agree as follows:
1. Definitions. As used herein, the term "Stockholders" means
and includes the Stockholders executing this Agreement, the successors of a
Stockholder, any parties to whom any Shares may be transferred other than in a
bona fide public offering or under Rule 144(k) under the Act, and the successors
and assigns of any of such persons. Any successor, transferee, pledgee, or
assignee, upon the transfer to it of record of any of the Shares shall give the
Company written notice of its name and address. However, if any successor,
transferee, pledgee, or assignee, directly or indirectly, would not be deemed an
"Underwriter" for the purpose of the Act in connection with any public offering
by such party of any of the Shares, that person will no longer be deemed a
Stockholder hereunder.
<PAGE>
2. Opinion of Counsel. If any Stockholder, notwithstanding its
present intention to hold the Shares for investment, decides to dispose of any
of the Shares by gift, private placement, or in a public offering claimed to be
exempt under Section 4(2) of the Act, such Stockholder shall not do so unless
there is issued an opinion of counsel to the effect that no registration under
the Act is required for the transaction. The opinion may be issued either by
counsel for the Company, or by any counsel selected by such Stockholder and
approved by the Company. The following counsel are approved by the Company for
this purpose:
WINTHROP, STIMSON, PUTNAM & ROBERTS
One Battery Park Plaza
New York, New York 10004-1490
O'SULLIVAN GRAEV & KARABELL, L.L.P.
30 Rockefeller Plaza
41st Floor
New York, New York 10112
If an opinion is issued by such Stockholder's counsel, a copy
thereof shall be delivered promptly to the Company. If the opinion is requested
from the Company's counsel, such Stockholder shall promptly furnish such
counsel, upon request, with whatever information that may be necessary or proper
for the expression of the opinion. In such event, the Company shall cause its
counsel to render the opinion, at the Company's expense, within one week after
it is requested. Any opinion shall be of the scope reasonably required by
transfer agents, registrars and selling brokers in connection with similar
transactions.
3. Registration Statement. (a) Notwithstanding the
Stockholders' present intention to acquire Shares for the purpose of investment,
the Company shall use diligent efforts to cause to be filed, on or before
October 31, 1996, a registration statement under the Act, on a shelf
registration or delayed offering basis under Rule 415 of the Act, providing for
the sale by the Stockholders of all of the Shares then owned by such
Stockholders which is the number of shares listed on the Annex next to the name
of such Stockholder (or such other number that may result from stock splits,
recaps or similar transactions). The Company shall use diligent efforts to make
the registration statement effective as promptly as practicable. The Company
agrees to use diligent efforts to keep the registration statement continuously
effective until all Shares may be sold under Rule 144(k) of the Act, but no less
than the second anniversary of the date such registration statement is declared
effective by the Commission, or such shorter period which will terminate when
all of the Shares covered by the registration statement have been sold pursuant
to the registration statement. The Company may include additional shares of
Common Stock in such registration statement besides shares owned by
Stockholders.
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(b) In connection with the registration statement, the
Company shall:
(i) promptly prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to comply
with the provisions of the Act, and to keep such registration statement
effective for that period of time specified in Section 3(a)(i) above;
(ii) furnish a copy of the registration statement and
such number of prospectuses and other documents incident thereto as a
Stockholder from time to time may reasonably request;
(iii) use diligent efforts to obtain the withdrawal
of any order suspending the effectiveness of a registration statement,
or the lifting of any suspension of the qualification of any of the
Shares for sale in any jurisdiction, at the earliest possible moment;
(iv) register or qualify such Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as any
Stockholder or underwriter reasonably requires, and keep such
registration or qualification effective during the period set forth in
Section 3(b)(i) above, except in states in which the Company would be
required to execute a general consent to service of process in
effecting such registration;
(v) on or prior to date of effectiveness of
Registration Statement cause all Shares covered by such registration to
be listed on each securities exchange, including NASDAQ, on which
similar securities issued by the Company are then listed;
(vi) notify the Stockholders as soon as practicable
after notice thereof is received by the Company (i) when the
registration statement or any amendment thereto has been filed or
becomes effective or the prospectus or any amendment or supplement
thereto has been filed, (ii) of any request by the Commission or any
other federal or state governmental authority for amendments or
supplements to the registration statement or the prospectus or for
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the registration statement
or any order preventing or suspending the use of any preliminary
prospectus or prospectus or the initiation or threatening of any
proceedings for such purposes and (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Shares for offering or sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;
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(vii) promptly notify the Shareholders when the
Company becomes aware of the happening of any event as a result of
which the registration statement or the prospectus included therein or
any supplement to the prospectus (as then in effect) contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein (in the case of the prospectus
and any preliminary prospectus, in light of the circumstances under
which they were made) not misleading and, as promptly as practicable
thereafter, prepare and file with the Commission and furnish without
charge to the Shareholders a supplement or amendment to such
registration statement or prospectus which will correct such statement
or omission;
(viii) cooperate with the Shareholders to facilitate
the timely preparation and delivery of certificates representing Shares
to be sold and not bearing any restrictive legends;
(ix) use diligent efforts to cause the Shares covered
by the registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of
such Shares;
(x) make such representations and warranties to the
holders of Shares being registered in form, substance and scope as are
customarily made by issuers in primary or secondary underwritten public
offerings;
(xi) obtain for delivery to the Company, with copies
to the holders of Shares being registered, a comfort letter from the
Company's independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters as the
holders of at least a majority of the Shares being sold reasonably
request, dated the effective date of the registration statement and
brought down to the closing;
(xii) cooperate with each seller of Shares in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc.;
(xiii) use diligent efforts to comply with all
applicable rules and regulations of the Commission and make generally
available to its security holders, as soon as reasonably practicable
(but not more than fifteen months) after the effective date of the
registration statement, and earnings statement satisfying the
provisions of Section 11(a) of the Act and the rules and regulations
promulgated thereunder; and
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(xiv) as promptly as practicable after filing with
the Commission of any documents which is incorporated by reference into
the registration statement or the prospectus, provide copies of such
document to counsel for the Shareholders.
(c) If for any reason less than all of the Shares are included
in the registration statement when it becomes effective, or if Shares included
in the registration statement are subsequently de-registered as required by the
Commission, the Company shall file whatever additional registration statements
and comply with all ancillary duties and obligations described in paragraphs (a)
and (b) of this Section, that may be necessary for the public offering of such
other or additional Shares at any time and from time to time; provided, however,
that the Company shall not be required to file a new registration statement
unless requested by Stockholders holding at least 250,000 Shares.
(d) It is the intention of the parties that, at all times
during the periods referring to in subdivision (b) of this paragraph, all of the
Shares at the time outstanding and held by persons who would be deemed
"underwriters" for the purposes of the Act in connection with any public
offering of the Shares shall be covered by an effective registration statement,
and there shall be available for delivery whatever supplemented or amended
prospectuses as may be necessary to meet the requirements of Sections 10(a)(3)
and 17(a) of the Act, and any Commission regulations in connection with the
public offering of any of the Shares in ordinary brokerage transactions. If any
person whose sale of any of the Shares then covered by an effective registration
statement is subject to the prospectus delivery requirements of Section 5(b) of
the Act desires to make a public offering of the Shares in any other manner, the
Company shall, on request, make any necessary filings under the Act and Rule
145, as amended, as promptly as practicable.
(e) If, under the applicable rules, regulations or policies of
the Commission, it is not possible for the Company to take all steps provided
for in the preceding paragraphs of this Section, the Company shall take such
steps to the extent reasonably practicable. In addition, the Company shall, at
any time and from time to time, use diligent efforts to make, as promptly as
practicable, whatever amendatory filings under the Act that may be necessary to
permit the public offering with a reasonable minimum of delay under then
applicable provisions of the Act, and the rules, regulations and policies of the
Commission.
(f) Notwithstanding anything contained in the foregoing
paragraphs of this Section, the Company shall not be required to make any
Substantial Filing under this or any similar agreements bearing even date with a
frequency that yields an interval of less than six months between the effective
dates of successive Substantial Filings. For the purposes of this
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paragraph, a Substantial Filing consists of (i) any registration statement filed
by the Company, under which the Shares could be registered for sale to the
public, whether filed under this or any similar agreement, or otherwise, and
(ii) any supplemented or amended prospectus or any post-effective amendment that
involves a greater burden on the Company than preparing, printing and filing a
one page sticker to a current prospectus. As soon as possible after the Company
commences the preparation of any Substantial Filing, the Company shall notify
all Stockholders at their addresses as shown on the Company's records that the
filing shall be made. At the written request of any Stockholder, the Company
shall include in the Substantial Filing, to the extent then permissible, any
Shares then held by any Stockholder.
(g) All expenses of every kind incurred in connection with all
registrations shall be paid by the Company, including all costs and expenses,
and all registration, filing and qualification fees, except Blue Sky expenses,
ordinarily incurred in connection with the public offering of securities,
including, without limitation, printing costs and fees and expenses of counsel
and accountants for the Company. However, the expenses payable by the Company
shall not include fees and expenses of counsel for Stockholders or underwriting
fees, discounts, commissions or expenses.
(h) If a registration statement with respect to the Shares
held by a Stockholder shall not have been filed as contemplated herein on or
before November 10, 1996, then commencing on such date and at the end of each
week thereafter, the Company shall pay to such Shareholder an amount, as
liquidated damages, determined by multiplying $.05 per $1,000 of Shares held by
such Stockholder at such time. Such liquidated damages shall cease to accrue on
the date such registration statement has been filed.
4. Piggyback registration. (a) If at any time or from time to
time, the Company decides to file a registration statement to register for
public offering any of its securities for its own account or the account of any
of its shareholders, other than a registration relating solely to employee
benefit plans, a registration relating solely to a SEC Rule 145 transaction or a
transaction relating solely to the sale of debt or convertible debt instruments
or a registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Shares, the Company shall notify the Stockholders and each
other stockholder of the Company at their addresses as shown on the Company's
records. At the request of any Stockholder, the Company shall include, to the
extent permissible under the Act and the rules and regulations of the
Commission, any of the Shares owned by such Stockholder in the registration.
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(b) If the registration under this Section 4 is for a
registered public offering involving an underwriting, the Company shall so
advise the Stockholders as a part of the written notice. In such event, the
right of any Stockholder to registration pursuant to this Section shall be
conditioned upon such Stockholder's participation in such underwriting and the
inclusion of such Stockholder's Shares in the underwriting to the extent
provided herein. All Stockholders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company and reasonably satisfactory to the
holders. Notwithstanding any other provision of this Section, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Shares to be included in the registration and underwriting. The Company shall so
advise all Stockholders and the other holders distributing their securities
through such underwriting pursuant to piggyback registration rights similar to
this Section, and the number of Shares and other securities that may be included
in the registration and underwriting shall be allocated among all Stockholders
and other holders in proportion, as nearly as practicable, to the respective
amounts of Shares held by such Stockholders and other securities held by other
holders at the time of filing the registration statement. If any Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. If, by
the withdrawal of such Shares, a greater number of Shares held by other
Stockholders may be included in such registration (up to the limit imposed by
the underwriters), the Company shall offer to all Stockholders who have included
Shares in the registration the right to include additional Shares. Any Shares
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
(c) The Company agrees that, in connection with any
registration statement, it shall prepare and file whatever pre-effective and
post-effective amendments and whatever supplements or revised prospectuses that
the Commission may require and that it shall furnish a reasonable number of
preliminary, final, supplemental, and revised prospectuses required under the
Act and the rules and regulations of the Commission.
5. Indemnification. (a) In the event of a registration of any
of the Shares under the Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Stockholder of such Shares thereunder, each
underwriter of such Shares thereunder and each other person, if any, who
controls such Stockholder or underwriter within the meaning of the Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Stockholder, underwriter or controlling person may become subject under the Act
or otherwise, insofar as
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such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
Shares were registered under the Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Act or any state securities law applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, and will reimburse each such Stockholder,
each of its officers, directors and partners, and each person controlling such
Stockholder, each such underwriter and each person who controls any such
underwriter, for any reasonable legal and any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage or liability arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by such
Stockholder or underwriter specifically for use therein.
(b) Each Stockholder will, if Shares held by or issuable to
such Stockholder are included in the securities as to which such registration is
being effected, indemnify and hold harmless the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company and each
underwriter within the meaning of the Act, and each other such Stockholder, each
of its officers, directors and partners and each person controlling such
Stockholder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) arising out of or based upon any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Stockholders, such directors, officers,
partners, persons or underwriters for any reasonable legal or any other expenses
incurred in connection with investigating, defending or settling any such claim,
loss, damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Stockholder specifically for use therein; provided, however, the total amount
for which any Stockholder,
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its officers, directors and partners, and any person controlling such
Stockholder, shall be liable under this Section 5(b) shall not in any event
exceed the aggregate proceeds received by such Stockholder from the sale of
Shares sold by such Stockholder in such registration.
(c) Each party entitled to indemnification under this Section
5 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claims as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
(d) Notwithstanding the foregoing, to the extent that the
provisions on indemnification contained in the underwriting agreements entered
into among the selling Stockholders, the Company and the underwriters in
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall be
controlling as to the Shares included in the public offering; provided, however,
that if, as a result of this Section 5, any Stockholder, its officers,
directors, and partners and any person controlling such Stockholder is held
liable for an amount which exceeds the aggregate proceeds received by such
Stockholder from the sale of Shares included in a registration, as provided in
Section 5 above, pursuant to such underwriting agreement (the "Excess
Liability"), the Company shall reimburse any such Stockholder for such Excess
Liability.
(e) If the indemnification provided for in this Section 5 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one
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<PAGE>
hand and of the indemnified party on the other hand in connection with the
statements or omissions which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The relevant
fault of the indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Notwithstanding the foregoing,
the amount any Stockholder shall be obligated to contribute pursuant to this
Section 5(e) shall be limited to an amount equal to the proceeds to such
Stockholder of the Shares sold pursuant to the registration statement which
gives rise to such obligation to contribute (less the aggregate amount of any
damages which the Stockholder has otherwise been required to pay in respect of
such loss, claim, damage, liability or action or any substantially similar loss,
claim, damage, liability or action arising from the sale of such Shares).
(f) Survival of Indemnity. The indemnification provided by
this Section 5 shall be a continuing right to indemnification and shall survive
the registration and sale of any securities by any Person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
6. Restrictions on Transferability; Restrictive legend. (a)
The Shares shall not be sold, assigned, transferred or pledged except as
specified herein, so as to ensure compliance with the Act. Each Stockholder will
cause any proposed purchaser, assignee, transferee, or pledgee of the Shares
held by it to agree to take and hold such securities subject to the provisions
and upon the conditions specified in this Agreement.
(b) Each Stockholder will comply with the provisions of
Section 6.4 of the Stock Purchase Agreement.
7. Lock-up Agreement. In consideration for the Company
agreeing to its obligations under this Agreement, each Stockholder agrees in
connection with any registration of the Company's securities (whether or not
such Stockholder is participating in such registration) upon the request of the
Company and the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Shares (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time from the effective
date of such registration as the Company and the underwriters may specify up to
180 days, so long as all Stockholders or stockholders holding more than 5% of
the outstanding common stock and all officers and directors of the Company are
bound by a comparable obligation; provided, however,
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that nothing herein shall prevent any Stockholder that is a partnership or
corporation from making a distribution of Shares to the partners or shareholders
or affiliates thereof that is otherwise in compliance with applicable securities
laws; provided that prior to any such distribution, such Stockholder delivers to
the Company a legal opinion acceptable in form and substance to the Company that
such distribution is in compliance with applicable securities laws and such
distributees deliver to the Company an undertaking to be bound by provisions of
this Agreement.
8. Miscellaneous. (a) Amendments. This Agreement may be
amended only by a writing signed by the Stockholders of more than fifty percent
(50%) of the Shares, as constituted from time to time. For purposes of this
Section, Shares held by the Company or beneficially owned by any officer or
employee of the Company shall be disregarded and deemed not to be outstanding.
(b) Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall constitute a single instrument.
(c) Notices. All notices and other communications required or
permitted hereunder shall be in writing and may be sent initially by facsimile
transmission and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to a
Stockholder, at such Stockholder's address set forth on the books of the
Company, or at such other address as such Stockholder shall have furnished to
the Company in writing, or (b) if to any other holder of any Shares, at such
address as such holder shall have furnished the Company in writing, or, until
any such holder so furnishes an address to the Company, then to and at the
address of the last holder of such securities who has so furnished an address to
the Company, or (c) if to the Company, one copy should be sent to the Company's
current address at 1121 Walt Whitman Road, Melville, NY 11747-3005, or at such
other address as the Company shall have furnished to the Stockholders. Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered personally, or, if sent
by first class, postage prepaid mail, at the earlier of its receipt or
seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
(d) Nonpublic Information. Any other provisions of this
agreement to the contrary notwithstanding, the Company's obligation to file a
registration statement, or cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 30 days (and for
periods not exceeding, in the aggregate, 60 days in any 24-month period) if
there exists at the time material non-public information relating
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to the Company which, in the reasonable opinion of the Company, should not be
disclosed.
(e) Severability. If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(f) Dilution. If, and as often as, there is any change in the
Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
(g) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of New York without regard to principles
of conflict of law.
(h) Entire Agreement. This Agreement constitutes the entire
agreement, the parties hereto with respect to the subject matter hereof and
supersedes all prior oral and written agreements among the parties hereto with
respect to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day, month and year first above written.
MEDIWARE INFORMATION SERVICES, INC.
By ______________________________
Name:
Title:
_______________________________
Stockholder
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Annex
Name Shares of Common Stock
- ------------------------- ----------------------
Oracle Partners, L.P. 575,000
Oracle Institutional Partners, 93,000
L.P.
GSAM Oracle Fund, Inc. 449,736
Medcap I Corp. 123,077
Promed Partners L.P. 30,769
Lawrence Auriana 138,462
Peter Lerner 15,385
The Travelers Insurance Company 236,110
Soditic Asset Management, S.A. 30,769
TOTAL 1,692,308
<PAGE>
