SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 31, 1996
MEDIC COMPUTER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation)
0-20183 56-1306083
(Commission file Number) (IRS Employer ID Number)
8601 Six Forks Road, Raleigh, North Carolina 27615
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919/ 847-8102
N/A
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
(a) Pursuant to an Agreement of Merger dated as of May 31, 1996 (the
"Merger Agreement"), by and among Medic Computer Systems, Inc., a North Carolina
corporation ("Medic"), CompuSystems Acquisition Corporation, a North Carolina
corporation and a wholly owned subsidiary of Medic ("Acquisition"),
CompuSystems, Inc., a South Carolina corporation ("CompuSystems"), Nexsen B.
Johnson and Eugene F. Gallogly (the "Exchanging Stockholders") and Sylvia
Johnson (together with Nexsen B. Johnson, the "Premises Stockholders"),
Acquisition was merged with and into CompuSystems (the "Merger") effective May
31, 1996 (the "Effective Time"). At the Effective Time, each of the 40,000
shares of common stock, $1.00 par value per share, of CompuSystems
("CompuSystems Common Stock") outstanding immediately prior to the Effective
Time was converted into the right to receive shares of the common stock, $.01
par value per share, of Medic ("Medic Common Stock"). In the Merger, each share
of CompuSystems Common Stock was converted into the right to receive 8.68055
shares of Medic Common Stock. At the time of the Merger, an aggregate of 347,222
shares of Medic Common Stock (the "Merger Shares") were issued to the Exchanging
Stockholders. Also pursuant to the Merger, Medic acquired from the Premises
Stockholders the land and building in which CompuSystems conducts its business
in South Carolina, for which the Premises Stockholders received an aggregate of
12,222 shares of Medic Common Stock (the "Premises Shares"), subject to
adjustment upon completion of an appraisal and survey of the property. Under the
terms of the Merger Agreement, 10% of the Merger Shares and Premises Shares (the
"Holdback Shares") are being held in trust by Medic for the Exchanging
Stockholders and the Premises Stockholders, respectively. Any obligation of the
Exchanging Stockholders or the Premises Stockholders under the Merger Agreement
to indemnify Medic against certain liabilities specified thereunder are to be
satisfied solely from the Holdback Shares.
At the Effective Time, Acquisition ceased to exist, and each share of
its capital stock outstanding was converted into one share of capital stock of
CompuSystems. CompuSystems was the surviving corporation of the Merger and is
now a wholly owned subsidiary of Medic.
Prior to the Merger, there were no material relationships between any
CompuSystems Stockholder and Medic or any of its affiliates or directors or
officers, or any associate of any such director or officer. As a result of the
Merger, Nexsen B. Johnson, who had been President of CompuSystems, became
Executive Manager and Vice President of CompuSystems and Eugene F. Gallogly, who
had been Sales Manager of CompuSystems, became Vice President, Sales, of
CompuSystems.
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The foregoing description of the Merger is qualified in its entirety by
reference to Exhibit 2.6 attached hereto and incorporated herein by reference.
(b) Pursuant to the Merger, Medic acquired all of the capital stock of
CompuSystems and CompuSystems became a wholly owned subsidiary of Medic. Like
Medic, CompuSystems develops, markets and supports physician practice management
systems. Both Medic and CompuSystems will continue to develop, market and
support physician practice management systems in their respective geographic
areas.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. At the time
of the filing of this Report, it is impracticable for
the Registrant to provide any of the financial
statements for the acquired business required by Item 7
of Form 8-K promulgated by the Commission under the
Securities Exchange Act of 1934, as amended (the
"Act"). Accordingly, the Registrant will file the
required financial statements as soon as practicable,
but not later than August 14, 1996, as required by such
Item 7.
(b) Pro Forma Financial Information. At the time of the
filing of this Report, it is impracticable for the
Registrant to provide any of the pro forma financial
information required by Item 7 of Form 8-K promulgated
by the Commission under the Act. Accordingly, the
Registrant will file the required pro forma financial
information as soon as practicable, but not later than
August 14, 1996, as required by such Item 7.
(c) Exhibits.
2.6 Agreement of Merger dated as of May 31, 1996, by and
among the Registrant, CompuSystems Acquisition
Corporation, CompuSystems, Inc., Nexsen B. Johnson,
Eugene F. Gallogly and Sylvia Johnson.
3.5, 4.6 Articles of Merger of CompuSystems Acquisition Corporation
into CompuSystems, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDIC COMPUTER SYSTEMS, INC.
Date: June 13, 1996 /s/ Luanne L. Roth
------------------
Luanne L. Roth
Vice President, Chief Financial
Officer, Secretary and Treasurer
(Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
Exhibit Page
Number Description Number
2.6 Agreement of Merger dated as of May 31,
1996, by and among the Registrant,
CompuSystems Acquisition Corporation,
CompuSystems, Inc., Nexsen B. Johnson,
Eugene F. Gallogly and Sylvia Johnson.
3.5, 4.6 Articles of Merger of CompuSystems
Acquisition Corporation into CompuSystems,
Inc.
AGREEMENT OF MERGER
among
MEDIC COMPUTER SYSTEMS, INC.,
COMPUSYSTEMS ACQUISITION CORPORATION,
COMPUSYSTEMS, INC.
and
THE COMPUSYSTEMS STOCKHOLDERS NAMED HEREIN
Dated as of May 31, 1996
CERTAIN PROVISIONS OF THIS AGREEMENT ARE
SUBJECT TO ARBITRATION.
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Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS.............................................. 2
1.1. Definitions................................................. 2
ARTICLE 2 BASIC TRANSACTION........................................ 7
2.1 The Merger............................................... 7
2.2 Effective Time........................................... 8
2.3 Medic Common Stock....................................... 8
2.4 Conversion and Exchange of Shares........................ 8
2.5 Fractional Shares........................................ 10
2.6 Articles of Incorporation................................ 10
2.7 Bylaws................................................... 10
2.8 Directors................................................ 10
2.9 Officers................................................. 10
2.10 Subsequent Actions....................................... 10
ARTICLE 3 CLOSING AND TERMINATION.............. 11
3.1 Closing.................................................. 11
3.2 Transactions on the Closing Date......................... 11
3.3 Termination.............................................. 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF EXCHANGING
STOCKHOLDERS.....................................13
4.1 Organization of CompuSystems; Authority...................13
4.2 Ability to Carry Out the Agreement........................13
4.3 Capitalization of CompuSystems; Ownership;
Investment...............................................14
4.4 Subsidiaries and Affiliates...............................15
4.5 Financial Statements; Liabilities.........................15
4.6 Conduct of Business Since Most Recent Fiscal Year
End; Absence of Material Adverse Change..................16
4.7 Title to Tangible Personal Properties; Absence of
Liens....................................................19
4.8 Litigation................................................19
4.9 Compliance with Law.......................................19
4.10 Contracts.................................................20
4.11 Brokers and Intermediaries................................21
4.12 Tax Matters...............................................22
4.13 Employee Benefits.........................................23
4.14 Articles of Incorporation and Bylaws......................25
4.15 Insurance.................................................25
4.16 Intellectual Property.....................................26
4.17 Bank Accounts.............................................29
4.18 Directors, Officers and Employees.........................29
4.19 Labor Relations; Employees................................29
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4.20 Transactions with Related Parties........................ 30
4.21 Copies of Documents...................................... 30
4.22 Real Property............................................ 30
4.23 Books and Records........................................ 31
4.24 Environmental Matters.................................... 31
4.25 Guaranties............................................... 33
4.26 Government Consents...................................... 33
4.27 Manufacturing Rights..................................... 33
4.28 HSR Act Filing........................................... 33
4.29 Disclosure............................................... 33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE
ACQUIRORS....................................... 34
5.1 Organization and Authority of the Acquirors.............. 34
5.2 Ability to Carry Out the Agreement....................... 34
5.3 Capitalization........................................... 35
5.4 Brokers and Intermediaries............................... 35
5.5 Securities Law Filings................................... 35
5.6 Purchase For Investment.................................. 35
ARTICLE 6 CERTAIN COVENANTS AND AGREEMENTS................ 36
6.1 Full Access.............................................. 36
6.2 Regulatory Filings; Consents............................. 36
6.3 Conduct of Business...................................... 37
6.4 Confidentiality.......................................... 38
6.5 Books and Records........................................ 38
6.6 Announcement............................................. 38
6.7 Best Efforts............................................. 39
6.8 Discussion With Others................................... 39
6.9 Cooperation in Tax Returns and Litigation................ 39
6.10 Fairness Hearing; Stock Transfer Restrictions............ 40
6.11 Pooling Treatment Covenant............................... 40
6.12 Medic SEC Documents...................................... 40
6.13 Notice By Acquirors...................................... 41
6.14 Confidentiality and Non-Disclosure Agreements............ 41
6.15 Dividend; Taxes.......................................... 41
ARTICLE 6A TRANSFER OF THE PREMISES................................. 42
6A.2 Adjustment to Premises Shares............................ 42
6A.3 Representations and Warranties of Premises
Stockholders............................................ 43
6A.3.1 Authority................................................ 43
6A.3.2 Ability to Carry Out the Agreement....................... 44
6A.3.3 Title; Absence of Liens.................................. 44
6A.3.4 Litigation............................................... 44
6A.3.5 Compliance with Law...................................... 45
6A.3.6 Brokers and Intermediaries............................... 45
6A.3.7 Copies of Documents...................................... 45
6A.3.8 Leases................................................... 45
6A.3.9 Environmental Matters.................................... 45
6A.3.10 Government Consents...................................... 46
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6A.3.11 Disclosure............................................... 47
6A.4 Release.................................................. 47
ARTICLE 7 CONDITIONS PRECEDENT OF TRANSFERORS AND
PREMISES STOCKHOLDERS........................... 47
7.1 Representations and Warranties........................... 47
7.2 Agreements............................................... 48
7.3 Performance Certificates................................. 48
7.4 No Injunction............................................ 48
7.5 No Violation............................................. 48
7.6 Consents................................................. 48
7.7 Opinion of the Acquirors' Counsel........................ 48
7.8 No Proceedings........................................... 48
7.9 Tax-Free Reorganization.................................. 49
7.10 Stockholder Approval..................................... 49
7.11 Employment Agreements.................................... 49
7.12 Fairness Hearing......................................... 49
7.13 Miscellaneous Closing Deliveries......................... 49
7.14 Good Faith............................................... 49
ARTICLE 8 CONDITIONS PRECEDENT OF THE ACQUIRORS........... 50
8.1 Representations and Warranties........................... 50
8.2 Agreements............................................... 50
8.3 Performance Certificates................................. 50
8.4 No Injunction............................................ 50
8.5 No Violation............................................. 50
8.6 Consents................................................. 50
8.7 Opinion of Transferors' and Premises Stockholders'
Counsel.................................................. 51
8.8 No Adverse Change........................................ 51
8.9 Resignations............................................. 51
8.10 No Proceedings........................................... 51
8.11 Employment Agreements.................................... 51
8.12 Pooling Letters.......................................... 51
8.13 Due Diligence............................................ 52
8.14 CompuSystems Common Stock................................ 52
8.15 Stockholder Approval..................................... 52
8.16 Premises Deliveries...................................... 52
8.18 Good Faith............................................... 52
ARTICLE 9 SURVIVAL OF REPRESENTATIONS,WARRANTIES AND
COVENANTS....................................... 53
9.1 Survival of Representations and Warranties............... 53
9.2 Survival of Covenants and Agreements..................... 53
ARTICLE 10 INDEMNIFICATION AND HOLDBACK............................. 53
10.1 Indemnification of Medic................................ 53
10.2 Indemnification of Exchanging Stockholders and
Premises Stockholders................................... 55
10.3 Remedies................................................ 57
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10.4 Survival................................................ 57
10.5 Holdback................................................ 57
10.6 Holdback Termination.................................... 58
10.7 Assertion of Claims Against ............................ 58
10.8 Resolution of Conflicts; Arbitration.................... 59
10.9 Beneficial Interest..................................... 60
10.10 Limitation on Liability................................. 60
10.11 Provisions of General Application....................... 61
ARTICLE 11 MISCELLANEOUS............................................ 63
11.1 Further Assurances...................................... 63
11.2 Expenses................................................ 63
11.3 Applicable Law.......................................... 63
11.4 Notices................................................. 63
11.5 Entire Agreement........................................ 64
11.6 Amendments.............................................. 65
11.7 Headings; References.................................... 65
11.8 Counterparts............................................ 65
11.9 Parties in Interest; Assignment......................... 65
11.10 Severability; Enforcement............................... 65
11.11 JURISDICTION............................................ 65
11.12 Waiver.................................................. 66
11.13 Incorporation of Exhibits............................... 66
11.14 Construction............................................ 66
</TABLE>
EXHIBITS
EXHIBIT A - CompuSystems Shares
EXHIBIT B - Form of Articles of Merger
EXHIBIT C - Schedule of Exceptions
EXHIBIT D - CompuSystems Financial Statements
EXHIBIT E - Form of Opinion of Wyrick, Robbins, Yates &
Ponton, L.L.P.
EXHIBIT F - Form of Johnson Employment Agreement
EXHIBIT G - Form of Gallogly Employment Agreement
EXHIBIT H - Form of Opinion of Nexsen Pruet Jacobs &
Pollard, L.L.P.
EXHIBIT I - Description of the Premises
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AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Agreement") is made and entered into as
of May __, 1996, by and among MEDIC COMPUTER SYSTEMS, INC., a North Carolina
corporation ("Medic"); COMPUSYSTEMS ACQUISITION CORPORATION, a North Carolina
corporation and a wholly owned subsidiary of Medic ("CompuSystems Acquisition");
COMPUSYSTEMS, INC., a South Carolina corporation ("CompuSystems"); and NEXSEN B.
JOHNSON and EUGENE F. GALLOGLY, the sole stockholders of CompuSystems
(collectively the "Exchanging Stockholders" and individually an "Exchanging
Stockholder"); and SYLVIA JOHNSON. (Medic and CompuSystems Acquisition shall
sometimes collectively be referred to as the "Acquirors" and individually as an
"Acquiror"; CompuSystems and the Exchanging Stockholders shall sometimes
collectively be referred to as the "Transferors" and individually as a
"Transferor"; and CompuSystems Acquisition and CompuSystems shall sometimes
collectively be referred to as the "Constituent Corporations" and individually
as a "Constituent Corporation".)
W I T N E S S E T H:
WHEREAS, CompuSystems is a South Carolina corporation with authorized
capital stock of 100,000 shares of CompuSystems Common Stock (as defined below),
of which 40,000 shares are actually issued and outstanding to the Exchanging
Stockholders set forth in Exhibit A (the "CompuSystems Shares"); and
WHEREAS, CompuSystems Acquisition is a North Carolina corporation with
authorized capital stock of 1,000 shares of Common Stock, $0.01 par value per
share, all of which immediately prior to the Effective Time (as defined below)
will be issued and outstanding and held by Medic;
WHEREAS, the parties intend that the transactions contemplated hereby
will qualify as a tax-free reverse triangular merger, under Sections 33-11-101
et seq. of the Corporations Act, of CompuSystems Acquisition with and into
CompuSystems in a reorganization pursuant to Code Sections 368(a)(1)(A) and
368(a)(2)(E) and will qualify for pooling of interests accounting treatment
pursuant to Accounting Principles Board Opinion No. 16, "Accounting for Business
Combinations";
WHEREAS, pursuant to the Merger (as defined below), the Exchanging
Stockholders and the Premises Stockholders shall receive Medic Common Stock (as
defined below); and
<PAGE>
WHEREAS, the parties expect that the Merger shall further certain of
their business objectives, including, without limitation, the expansion of the
combined companies' businesses and the utilization of the technologies of both
of Medic and CompuSystems;
NOW, THEREFORE, in reliance upon the premises, representations,
warranties and covenants made herein and in consideration of the mutual
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions. For purposes of this Agreement, the following terms
shall have the meaning set forth below:
"Acquiror" and "Acquirors" shall have the respective meanings set forth
in the first paragraph of this Agreement.
"Acquiror Indemnitee" and "Acquiror Indemnitees" shall have the
respective meanings set forth in Section 10.1.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control with
such other Person.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504.
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Articles of Merger" shall have the meaning set forth in Section 2.2.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any
specified consequence.
"Basket Deductible" shall have the meaning set forth in Section 10.12.
"CERCLA" shall have the meaning set forth in subsection 4.24(a).
"Claim Notice" shall have the meaning set forth in Section 10.7.
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"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"CompuSystems" shall have the meaning set forth in the first paragraph
of this Agreement.
"CompuSystems Acquisition" shall have the meaning set forth in the
first paragraph of this Agreement.
"CompuSystems Common Stock" means the Common Stock, $1.00 par value per
share, of CompuSystems.
"CompuSystems Shares" shall have the meaning set forth in the first
paragraph of the recitals.
"Confidential Information" shall have the meaning set forth in Section
6.4.
"Constituent Corporation" and "Constituent Corporations" shall have the
respective meanings set forth in the first paragraph of this Agreement.
"Contracts" shall have the meaning set forth in subsection 4.10(b).
"Control" (including, with correlative meanings, the terms "Controlled
by", "Controlling" and "under common Control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities, by contract or otherwise.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Conversion Number" means the quotient of (i) Three Hundred Forty-Seven
Thousand Two Hundred Twenty-Two (347,222) divided by (ii) the total number of
the CompuSystems Shares outstanding immediately prior to the Effective Time.
"Converted CompuSystems Stock" shall have the meaning set forth in
subsection 2.4(b).
"Corporations Act" means the South Carolina Business Corporations Act
of 1988, as amended.
"Dissenting Share" means any share of CompuSystems capital stock with
respect to which any CompuSystems stockholder has validly exercised his
dissenters' rights (or any equivalent thereof which would, subsequent to the
Closing, permit any
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CompuSystems stockholder to tender his shares of CompuSystems capital stock to
CompuSystems or Medic in exchange for cash) under Chapter 13 of the Corporations
Act.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Employee Benefit Plan" means any: (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (ii) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan; (iii) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan); and (iv) Employee Welfare Benefit Plan or
fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Encumbrances" means any and all restrictions on transfer, liens,
encumbrances, charges, pledges, security interests, taxes, claims, options,
warrants, purchase rights, contracts, commitments, equities, claims and demands.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchanging Stockholder" and "Exchanging Stockholders" shall have the
respective meanings set forth in the first paragraph of this Agreement.
"Exhibit" means any of the Exhibits to this Agreement, each of which is
incorporated by reference into this Agreement.
"Fairness Hearing" shall have the meaning set forth in Section 6.11.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" shall have the meaning set forth in subsection
4.5(a).
"GAAP" shall have the meaning set forth in subsection 4.5(a).
"Holdback Shares" shall have the meaning set forth in Section 10.5.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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"Intellectual Property" means: (i) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications and patent disclosures, together
with all reissuances, divisions, continuations, renewals, continuations-in-part,
revisions, extensions and reexaminations thereof; (ii) all trademarks, service
marks, certification marks, collective marks, trade dress, trade styles, logos,
trade names, company names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, recordings and
renewals in connection therewith; (iii) all copyrightable works, all copyrights,
rights and interests in copyrights and all applications, registrations,
recordings and renewals in connection therewith; (iv) all mask works and all
applications, registrations, recordings and renewals in connection therewith;
(v) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (vi) all computer software
(including data and related documentation); (vii) all other proprietary rights;
(viii) all copies and tangible embodiments thereof (in whatever form or medium);
(ix) all income, royalties, damages or payments now and hereafter due and/or
payable under any of the foregoing with respect to any of the foregoing and the
right to sue for past, present or future infringements of any of the foregoing;
(x) all licenses with respect to any of the foregoing; and (xi) all rights
corresponding to any of the foregoing throughout the world.
"Knowledge" means actual knowledge after reasonable investigation. For
purposes of Article 4, the term "Knowledge of CompuSystems" and words of similar
import shall mean Knowledge by the executive officers, Board of Directors or
Exchanging Stockholders of CompuSystems.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including liability for Taxes.
"Litigation" shall have the meaning set forth in subsection 4.8(a).
"Medic" shall have the meaning set forth in the first paragraph of this
Agreement.
"Medic Common Stock" means the Common Stock, $.01 par value per share,
of Medic.
"Merger" shall have the meaning set forth in Section 2.1.
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"Merger Shares" means collectively the shares of Medic Common Stock
issued or issuable to Exchanging Stockholders in connection with the Merger in
exchange for the CompuSystems Shares.
"Most Recent Balance Sheet" shall have the meaning set forth in
subsection 4.7(a).
"Most Recent Financial Statements" shall have the meaning set forth in
subsection 4.5(a).
"Most Recent Fiscal Month End" shall have the meaning set forth in
subsection 4.5(a).
"Most Recent Fiscal Year End" shall have the meaning set forth in
subsection 4.5(a).
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"NationsBank Loan" means that certain loan from NationsBank, N.A. to
the Premises Stockholders made on or about, but not after, the Closing Date, a
copy of which has been provided to the Acquirors.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, trust, entity or unincorporated
organization, or a government or any agency or political subdivision thereof.
"Premises" means the land and building described in Exhibit I hereto.
"Premises Shares" means that number of shares of Medic Common Stock
calculated as the quotient of $2,287,500.00 less the aggregate principal amount
of the NationsBank Loan immediately prior to the Effective Time (approximately
$1,300,000.00) divided by $90.00; subject to adjustment as set forth in Section
6A.2 hereof.
"Premises Stockholders" shall have the meaning set forth in Section
6A.1 hereof.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
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"Proprietary Information" shall have the meaning set forth
in subsection 4.16(g).
"RCARA" has the meaning set forth in subsection 4.24(a).
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"SEC" means the United States Securities and Exchange Commission.
"Securities Division" shall have the meaning set forth in Section 6.11.
"Subsidiary" means any corporation with respect to which a specified
Person (or Subsidiary thereof) owns a majority of the capital stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.
"Tax" or "Taxes" means any federal, state, local, foreign or other
income, gross receipts, profits, franchise, license, transfer, sales, use,
payroll, withholding, occupation, property (real or personal), excise or similar
taxes, fees, duties, assessments, withholdings or governmental charges of any
nature (including interest, penalties or additions to such Taxes).
"Tax Returns" means all returns, reports, estimates, information
returns and statements of any nature with respect to Taxes.
"Termination Date" shall have the meaning set forth in subsection
3.3(b).
"Transferor" and "Transferors" shall have the respective meanings set
forth in the first paragraph of this Agreement.
ARTICLE 2
BASIC TRANSACTION
2.1 The Merger. On and subject to the terms and conditions of this
Agreement, at the Effective Time CompuSystems Acquisition shall be merged with
and into CompuSystems (the "Merger"), the separate corporate existence of
CompuSystems Acquisition shall thereupon cease, and CompuSystems shall be the
surviving corporation in the Merger (the "Surviving Corporation"). The Surviving
Corporation shall, from and after the Effective Time, possess all the rights,
privileges, powers and franchises of whatsoever nature and description, as well
as a public or private nature, and be subject to all the restrictions,
disabilities and
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duties of each of the Constituent Corporations; and all rights, privileges,
powers and franchises of each of the Constituent Corporations, and all property,
tangible and intangible, real, personal and mixed, and debts due to either of
the Constituent Corporations on whatever account as well for stock subscriptions
as all other things in action or belonging to each of the Constituent
Corporations shall be vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the several and respective Constituent Corporations, and the title
to any real estate vested by deed or otherwise in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
All rights of creditors and all liens upon the property of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by it. Any claim existing
or action or proceeding, whether civil, criminal or administrative, pending by
or against either Constituent Corporation may be prosecuted to judgment or
decree as if the Merger had not taken place, or the Surviving Corporation may be
substituted in such action or proceeding. The foregoing shall not limit the
effects of the Merger as set forth in Corporations Act Section 33-11-106.
2.2 Effective Time. At the time of the Closing, the Constituent
Corporations shall cause Articles of Merger substantially in the forms of
Exhibit B attached hereto (the "Articles of Merger") to be duly executed and
filed with the Departments of the Secretaries of State of the States of North
Carolina and South Carolina as provided under the North Carolina Business
Corporation Act and the Corporations Act, respectively. The Merger shall become
effective as soon as practicable after the Closing on the time and date
specified in the Articles of Merger, and in no event later than 3 days after the
Closing, and such time is hereinafter referred to as the "Effective Time".
2.3 Medic Common Stock. Medic shall make available to CompuSystems
Acquisition a sufficient number of shares of Medic Common Stock having such
characteristics as are necessary to effect the Merger as required herein.
2.4 Conversion and Exchange of Shares. The manner of converting and
exchanging shares of the corporations participating in the Merger shall be as
follows:
(a) Stock of CompuSystems Acquisition. Each share of capital
stock of CompuSystems Acquisition issued and outstanding immediately prior to
the Effective Time shall thereupon be converted into and become one (1) share of
Common Stock of the Surviving Corporation. Each share of such Common Stock
issued
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pursuant to this subsection shall be fully paid and nonassessable.
(b) Stock of CompuSystems. At and as of the Effective
Time each CompuSystems Share issued and outstanding immediately
prior to the Effective Time (excluding shares held by CompuSystems as treasury
stock, if any, which shares shall be cancelled and extinguished at the Effective
Time) shall by virtue of the Merger and without any action on the part of the
holder thereof, be exchanged for and converted into the right to receive from
Medic the number of shares of Medic Common Stock as is equal to the Conversion
Number. CompuSystems Shares exchanged and converted as provided in this
subsection 2.4(b) are herein sometimes referred to as "Converted CompuSystems
Stock".
(c) Exchange of Stock Certificates. Immediately after the
Effective Time, each holder of an outstanding certificate or certificates
theretofore representing shares of Converted CompuSystems Stock shall surrender
the same to an agent or agents designated by the Surviving Corporation, and
shall thereupon be entitled to receive promptly in exchange therefor one or more
certificates representing the number of shares of Medic Common Stock into which
the shares of Converted CompuSystems Stock represented by the certificate or
certificates so surrendered shall have been exchanged and converted pursuant to
subsection 2.4(b) above. The certificates representing Medic Common Stock issued
pursuant to this subsection shall be in such denominations reasonably requested
in writing in advance by the Exchanging Stockholders. Dividends payable after
the Effective Time to holders of record in respect of shares of Medic Common
Stock into which certificates for shares of Converted CompuSystems Stock shall
be exchangeable, shall not be paid to holders of such certificates until their
certificates are surrendered for exchange as aforesaid. Notwithstanding anything
to the contrary herein, a portion of the Merger Shares otherwise transferable to
the Exchanging Stockholders pursuant to this Article 2, will be held in trust by
Medic as described in and pursuant to the provisions of Section 10.5 of this
Agreement. Each share of Medic Common Stock issued pursuant to this subsection
shall be validly issued, fully paid, and non-assessable upon surrender of the
certificates for Converted CompuSystems Stock as required in this subsection.
(d) No Rights. At the Effective Time, the holders of
CompuSystems capital stock immediately prior to the Effective Time shall cease
to have any rights as stockholders of CompuSystems, except such rights as may be
available pursuant to this Agreement.
(e) No Further Transfers. At and after the Effective Time, no
transfer of the CompuSystems Shares outstanding prior to the Effective Time
shall be made on the stock transfer books of the Surviving Corporation or
otherwise. If, after the Effective Time, certificates for CompuSystems Shares
are presented to the
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Surviving Corporation, they shall be cancelled and exchanged for the Merger
Shares as provided above.
2.5 Fractional Shares. No fractional shares of Medic Common Stock shall
be issued to the Exchanging Stockholders in connection with the Merger. Any
Exchanging Stockholder who would otherwise be entitled to receive a fractional
share pursuant to the Merger shall receive cash for such fractional share at a
per share rate equal to the closing ask price of Medic Common Stock on the
NASDAQ National Market System on the day immediately preceding the Closing Date.
2.6 Articles of Incorporation. The Articles of Incorporation of
CompuSystems, as amended by the Articles of Merger, in effect immediately prior
to the Effective Time shall be and remain the Articles of Incorporation of the
Surviving Corporation, until duly amended in accordance with the terms thereof
and applicable state corporation law.
2.7 Bylaws. The Bylaws of CompuSystems in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with the terms thereof and applicable state corporation
law.
2.8 Directors. The directors of CompuSystems Acquisition shall become
the directors of the Surviving Corporation at and as of the Effective Time until
their successors shall have been duly elected or appointed and qualified in
accordance with the Surviving Corporation's Articles of Incorporation and
Bylaws. The directors of CompuSystems shall cease to be directors of any
Constituent Corporation immediately prior to the Effective Time.
2.9 Officers. The officers of CompuSystems Acquisition shall become the
officers of the Surviving Corporation at and as of the Effective Time (retaining
their respective positions and terms of office) until their successors have been
duly elected or appointed and qualified in accordance with the Surviving
Corporation's Bylaws. The officers of CompuSystems shall cease to be officers of
any Constituent Corporation immediately prior to the Effective Time.
2.10 Subsequent Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, affidavits of
corporate name change, bills of sale, assignments, assurances or any other
actions or things may be necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the
Constituent Corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation or Medic
shall be authorized to execute and deliver, in the name and on behalf of each of
the Constituent Corporations
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or otherwise, all such deeds, affidavits of corporate name change, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE 3
CLOSING AND TERMINATION
3.1 Closing. The closing of the transactions provided for herein (the
"Closing") shall take place at 10:00 a.m. (local time) on May 31, 1996 (the
"Closing Date") at the offices of Wyrick, Robbins, Yates & Ponton, L.L.P., 4101
Lake Boone Trail, Raleigh, North Carolina, unless another date or place is
agreed to in writing by the parties hereto.
3.2 Transactions on the Closing Date. (a) At the Closing
the Exchanging Stockholders, the Premises Stockholders and
CompuSystems, as the case may be, shall deliver to the Acquirors
the following:
(i) the executed Articles of Merger;
(ii) stock certificates, evidencing all of the CompuSystems Shares,
in each case endorsed in blank or with an executed blank stock power
attached, and with all necessary stock transfer tax stamps attached
thereto; and
(iii) each of the certificates, instruments and other documents and
agreements contemplated by Article 8 hereof.
(b) At the Closing the Acquirors shall deliver to the Exchanging
Stockholders, the Premises Stockholders and CompuSystems, as the case may be,
the following:
(i) the executed Articles of Merger;
(ii) an irrevocable instruction letter to Medic's
transfer agent, instructing it to issue stock certificates
evidencing the Merger Shares and the Premises Shares; and
(iii) each of the certificates, instruments and other
documents and agreements contemplated by Article 7 hereof.
3.3 Termination. Notwithstanding any other provision to the contrary
herein, this Agreement may be terminated at any time:
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(a) without liability on the part of any party hereto (unless
occasioned by reason of failure of one of the parties hereto to perform its
obligations hereunder), by mutual consent of all parties to this Agreement;
(b) without liability on the part of any party hereto (unless
occasioned by reason of failure of one of the parties hereto to perform its
obligations hereunder), by either Medic or CompuSystems, if the transactions
contemplated hereby are not consummated on or before May 31, 1996, or such later
date as may be agreed upon in writing by the parties hereto (the "Termination
Date");
(c) by Medic, if (i) CompuSystems, the Exchanging Stockholders or the
Premises Stockholders shall breach in any material respect any of their
respective representations, warranties or obligations hereunder, (ii) Medic
shall have notified CompuSystems, the Exchanging Stockholders and the Premises
Stockholders in writing of such breach, (iii) such breach shall not have been
cured in all material respects or waived, and (iv) CompuSystems, the Exchanging
Stockholders or the Premises Stockholders, as the case may be, shall not have
provided reasonable assurance that such breach shall be cured in all material
respects on or before the Closing Date, but only if such breach, singly or
together with all other such breaches, constitutes a failure of the conditions
contained in Sections 8.1 or 8.2 hereof as of the date of such termination;
(d) by CompuSystems, if (i) the Acquirors shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder, (ii) CompuSystems shall have notified the Acquirors in writing of
such breach, (iii) such breach shall not have been cured in all material
respects or waived, and (iv) the Acquirors shall not have provided reasonable
assurance that such breach shall be cured in all material respects on or before
the Closing Date, but only if such breach, singly or together with all other
such breaches, constitutes a failure of the conditions contained in Sections 7.1
or 7.2 hereof as of the date of such termination; or
(e) by CompuSystems, if prior to the Closing Date (i) the fair market
value, as reflected by an actual trade on the NASDAQ National Market System, of
a share of Medic Common Stock becomes less than $70.00, and (ii) CompuSystems,
within three (3) business days after such trade is reported in The Wall Street
Journal, gives Medic written notice thereof, accompanied by a certified or
cashier's check payable to Medic in the amount of $30,000.00, which the parties
deem to constitute reimbursement of Medic costs and expenses in connection
herewith.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EXCHANGING STOCKHOLDERS
Except as otherwise set forth in the Schedule of Exceptions attached
hereto as Exhibit C (the "Schedule of Exceptions"), the Exchanging Stockholders,
jointly and severally, represent and warrant to the Acquirors that the
representations and warranties contained in this Article 4 are true, correct and
complete as of the date of this Agreement.
4.1 Organization of CompuSystems; Authority. CompuSystems is a
corporation duly organized, validly existing and in good standing under the laws
of the State of South Carolina, with the corporate power and authority to enter
into this Agreement, the Employment Agreements and the other certificates and
instruments required on or prior to the Closing by this Agreement (collectively,
the "Ancillary Agreements") and to carry out and perform its obligations under
the terms of this Agreement and the Ancillary Agreements. CompuSystems has the
full and unrestricted corporate power and authority to own, operate and lease
its assets and properties and to carry on its business as currently conducted.
CompuSystems is qualified to do business and in good standing in the states
listed in Section 4.1 of the Schedule of Exceptions, which jurisdictions
constitute the only jurisdictions in which the nature of CompuSystems' business
requires it to be so qualified or in which the failure to be so qualified, if
required, would have a material adverse effect on CompuSystems' business taken
as a whole. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate or other action on
the part of CompuSystems and each of the Exchanging Stockholders. This Agreement
has been, and at the Closing the Ancillary Agreements shall be, duly executed
and delivered by CompuSystems and each of the Exchanging Stockholders and
constitutes the valid, binding and enforceable obligation of CompuSystems and
each of the Exchanging Stockholders, enforceable in accordance with its terms
and conditions, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from time to
time in effect and to general equitable principles.
4.2 Ability to Carry Out the Agreement. Neither
CompuSystems nor any of the Exchanging Stockholders is subject to
or bound by any provision of:
(i) any law, statute, rule, regulation, ordinance or
judicial or administrative decision;
(ii) any articles or certificate of incorporation or
bylaws;
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(iii) any mortgage, deed of trust, lease, note, stockholders'
agreement, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship or other restriction of any kind or
character whatsoever; or
(iv) any judgment, order, writ, injunction or decree of
any court, governmental body, administrative agency or
arbitrator;
that would prevent or be violated by, or would result in any penalty, forfeiture
or material contract termination as a result of, or under which there would be a
default as a result of, nor is the consent of any Person under any Contract
which has not been obtained required for, the execution, delivery and
performance by CompuSystems and each of the Exchanging Stockholders of this
Agreement and the transactions contemplated hereby (provided, however, that the
Exchanging Stockholders make no representation or warranty in this Section 4.2
as to application of the HSR Act, except consistent with and as provided in
Section 4.28 hereof).
4.3 Capitalization of CompuSystems; Ownership; Investment. (a) The
authorized capital stock of CompuSystems consists solely of One Hundred Thousand
(100,000) shares of CompuSystems Common Stock. The shares of capital stock and
other securities described in Exhibit A hereto are the only shares of capital
stock and other securities of CompuSystems which are issued and outstanding.
Immediately prior to the Closing, any such securities and any and all dividends
payable in connection therewith (irrespective of whether dividends have accrued)
shall, without any liability on the part of CompuSystems, be converted into
shares of CompuSystems Common Stock; provided, however, that cash dividends
approximating the sum of (1) the distributions made in January and April 1996
that were intended to cover the 1995 tax liability of the Exchanging
Stockholders plus (2) any shortfall in those distributions and the amount
actually paid to the IRS and State of South Carolina for 1995 taxes by Nexsen B.
Johnson divided by 0.9 plus (3) 90% of CompuSystems' earnings for the 3-month
period ended March 31, 1996 plus (4) 47% of CompuSystems' taxable earnings for
April 1, 1996 through the Effective Date minus (5) the sum of all distributions
made to the Exchanging Stockholders from January 1, 1996 through May 1, 1996,
shall be declared and paid to the Exchanging Stockholders in a manner and in
amounts consistent with past practice of CompuSystems. At the Closing the only
class, type or kind of capital stock or security of CompuSystems outstanding
shall be CompuSystems Common Stock. All shares of CompuSystems Common Stock are
duly authorized, validly issued, fully paid and nonassessable, were issued in
compliance with all applicable federal and state securities laws (or if not, the
statutes of limitations with respect thereto have expired), and are held of
record by the respective CompuSystems stockholders as set forth in Exhibit A
hereto. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights,
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conversion rights, exchange rights, rights of first refusal, preemptive rights
or other rights of any kind to acquire, directly or indirectly, any shares of
capital stock of CompuSystems or securities convertible into or exchangeable
for, or which otherwise confer on the holder thereof any right to acquire, any
such shares or securities, nor is CompuSystems committed to issue any such
option, warrant, right or security. Prior to the Closing, all securities of
CompuSystems, any and all notes and debts of CompuSystems to any of the
Exchanging Stockholders and their Affiliates, any advances made by the
Exchanging Stockholders to CompuSystems, any similar or related rights or
interests owed to the Exchanging Stockholders, and any and all interest or
dividends (except as provided above) payable with respect to any of the
foregoing shall, without any liability on the part of CompuSystems, be converted
into shares of CompuSystems Common Stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation or other similar rights
with respect to CompuSystems. There are no voting trusts, proxies or other
agreements, commitments, obligations or understandings with respect to the
voting of the capital stock of CompuSystems.
(b) Each Exchanging Stockholder has good, valid, and marketable title
to his CompuSystems Shares set forth opposite his name in Exhibit A hereto, free
and clear of any and all Encumbrances, with full right and lawful authority to
transfer, assign, deliver, convert and exchange his CompuSystems Shares pursuant
to this Agreement. None of the Exchanging Stockholders are parties to any
option, warrant, purchase right or other contract or commitment that could
require any Exchanging Stockholder to sell, transfer, or otherwise dispose of
any capital stock of CompuSystems.
4.4 Subsidiaries and Affiliates. CompuSystems has no Subsidiaries and
does not control, directly or indirectly, or have any direct or indirect equity
participation or any interest in any corporation, partnership, trust, venture,
business, enterprise, firm or other business association.
4.5 Financial Statements; Liabilities. (a) Attached hereto as Exhibit D
are the following financial statements of CompuSystems (collectively the
"Financial Statements"): (i) the audited balance sheets as of December 31, 1995
and 1994 and audited statements of income, changes in stockholders' equity and
cash flows for the fiscal year ended December 31, 1995 (the "Most Recent Fiscal
Year End") as audited by Arthur Andersen LLP; (ii) the unaudited statements of
income, changes in stockholders' equity and cash flows for the fiscal year ended
December 31, 1994; and (iii) the unaudited balance sheet and statements of
income, changes in stockholders' equity and cash flow ("Most Recent Financial
Statements") as of and for the four (4) months ended April 30, 1996 ("Most
Recent Fiscal Month End"). The Financial Statements (including the notes
thereto) have been prepared in conformity with United States generally accepted
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accounting principles ("GAAP") applied on a consistent basis throughout the
periods covered thereby, are true, correct and complete, fairly present the
financial position of CompuSystems at the dates thereof and the results of
operations of CompuSystems for the periods covered thereby, and are consistent
with the books and records of CompuSystems (which books and records are
materially correct and complete), except that the Financial Statements for the
Most Recent Fiscal Month End are not accompanied by notes and are subject to
normal year end audit adjustments which are not material in the aggregate.
(b) There are no Liabilities of CompuSystems (and, to the Knowledge of
CompuSystems, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claims or demand against
CompuSystems giving rise to any Liability), except for those: (i) accrued or
reflected on the face of the Most Recent Financial Statements; or (ii) arising
after the Most Recent Fiscal Month End in the ordinary course of business and
not material, singly or in the aggregate, to CompuSystems (none of which results
from, arises out of, relates to, is in the nature of, or was caused by any
material breach of contract, breach of warranty, tort infringement or violation
of law).
(c) In determining whether a Financial Statement is true, correct, and
complete, and fairly presents the financial position at the date thereof: (i)
any understatement of a Liability or expense, etc. will be offset by any
understatement of any asset or revenue, etc., and vice versa; (ii) undisclosed
or understated Liabilities shall be offset by comparably undisclosed or
undervalued assets or revenues; (iii) the subject Financial Statement will be
considered as a whole; and (iv) changes in accounting policies or principles
made by the Acquirors will be disregarded.
4.6 Conduct of Business Since Most Recent Fiscal Year End; Absence of
Material Adverse Change. Since the Most Recent Fiscal Year End, there has been
no material adverse change in the business, operations, results of operations,
assets, properties or financial condition of CompuSystems. Since such date,
except as contemplated in this Agreement: (i) CompuSystems has conducted its
business in the manner theretofore conducted and only in the ordinary course
consistent with past practices; and (ii) without limiting the generality of the
foregoing, CompuSystems has not:
(a) incurred any loss of, or injury to, the assets or properties of
CompuSystems as the result of any fire, explosion, flood, windstorm, earthquake,
labor trouble, riot, accident, act of God, public enemy or armed forces, or
other casualty (whether or not covered by insurance payable to CompuSystems);
(b) issued, sold or otherwise disposed of, or committed to
issue, sell or otherwise dispose of (other than as contemplated
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in this Agreement), any capital stock, bonds or other securities of any kind or
nature, or granted any options, warrants or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;
(c) incurred, or become subject to, any obligation or Liability in
excess of $5,000, either individually or in the aggregate, except Liabilities
incurred in the ordinary course of business consistent with past practices and
obligations under the Contracts;
(d) discharged or satisfied any lien or Encumbrance or paid any
obligation or Liability other than Liabilities reflected in the Most Recent
Fiscal Year End balance sheet and Liabilities incurred since the Most Recent
Fiscal Year End in the ordinary course of business consistent with past
practices;
(e) for any reason, declared or made payment of, or set aside for
payment, any dividends or distributions of any assets of any kind whatsoever in
respect of any shares of the capital stock of CompuSystems (whether in cash or
in kind), or purchased, redeemed or otherwise acquired any of its capital stock,
any securities convertible into capital stock, or any other securities, except
as reflected in the Financial Statements or contemplated by Section 4.3 hereof;
(f) mortgaged, pledged or subjected to lien, charge, security interest
or any other Encumbrance any of its assets or properties with respect to any
obligations;
(g) sold, exchanged, transferred or otherwise disposed of any of its
assets or properties, tangible and intangible, or cancelled any debts or claims,
except in each case in the ordinary course of business consistent with past
practices;
(h) written down the value of any assets or properties or written off
as uncollectible any notes or accounts receivable, except write-downs and
write-offs in the ordinary course of business consistent with past practices;
(i) entered into any employment agreement (except for the hiring of
additional employees the need for whom was previously identified) or collective
bargaining agreement, written or oral; modified the terms of any such existing
agreement or contract; increased the rate of compensation payable, or to become
payable, by it to any of its officers, directors, employees, consultants, agents
or independent contractors, except in the ordinary course of business consistent
with past practices; adopted, amended, modified, terminated or made any
contributions to, or any commitments for any contributions to, any bonus, profit
sharing, incentive, severance, pension or other employee benefit plan, payment
or arrangement made to, for or with any of the foregoing; or made any other
change in employment terms for any of its officers, directors, employees,
consultants, agents or
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independent contractors outside of the ordinary course of business consistent
with past practices;
(j) made or permitted any amendment or termination of any contract,
agreement, lease or license to which it is a party or which it owns otherwise
than in the ordinary course of business consistent with past practice;
(k) through negotiation or otherwise made any commitment or incurred
any Liability to any labor organization;
(l) paid any severance or termination pay to any officer or employee in
excess of two weeks' salary;
(m) made any material change in any method of accounting or accounting
practice except where required by a change in GAAP or reflected in the Financial
Statements;
(n) made any charitable contributions or pledges outside of the
ordinary course of business consistent with past practices;
(o) waived or released any rights of material value other than in the
ordinary course of business consistent with past practices;
(p) effected any material reduction or increase of advertising,
administrative, or research and development expenses of CompuSystems other than
in the ordinary course of business consistent with past practices;
(q) made or committed to make capital expenditures (or series of
related capital expenditures) either in excess of $10,000 in the aggregate
(except as reflected in the Contracts) or outside of the ordinary course of
business consistent with past practices;
(r) made any accrual or arrangement for or payment of bonuses or
special compensation of any kind to any director, officer, consultant or
employee except in the ordinary course of business materially consistent with
past practices;
(s) made any investment in (capital or otherwise), any loan to, or any
acquisition of securities or assets of, any other Person (or series of related
investments, loans or acquisitions) except extensions of credit to customers in
the ordinary course of business consistent with past practices;
(t) made or authorized any change in the charter or bylaws of
CompuSystems;
(u) issued any note, bond, or other debt security, increased bank debt,
or created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capital lease obligations involving more than $50,000 in the aggregate;
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(v) made any loan to, or entered into any other transaction with, any
of its directors, officers or employees outside of the ordinary course of
business consistent with past practices; or
(w) agreed or committed, whether in writing or not, to do
any of the foregoing.
4.7 Title to Tangible Personal Properties; Absence of Liens. (a)
CompuSystems has good, valid and marketable title to, or valid and subsisting
leasehold interests in, all buildings, machinery, equipment and other tangible
personal properties and assets used in the business of CompuSystems, located on
its premises, or shown on the balance sheet of the Most Recent Financial
Statements (the "Most Recent Balance Sheet") or acquired after the date thereof,
free and clear of any and all Encumbrances, except for Encumbrances reflected in
the Most Recent Balance Sheet and easements, rights-of-way, restrictions and
covenants of record or as would be reflected by a current survey, which do not
unreasonably or materially interfere with the conduct of CompuSystems business
operations as currently conducted.
(b) The assets and properties owned or leased by CompuSystems
constitute all of the assets and properties necessary to conduct the business of
CompuSystems in the manner in which it has previously been conducted. All such
personal property is free from material defects, has been maintained in
accordance with normal industry practice, is in reasonably good operating
condition and repair, ordinary wear and tear excepted, and is suitable for the
purposes for which it presently is used.
4.8 Litigation. (a) There is no charge, complaint, action, suit,
arbitration, proceeding, hearing or investigation (collectively, "Litigation")
pending or, to the Knowledge of CompuSystems, threatened against CompuSystems
in, before or by any court or arbitrator or governmental agency or authority.
None of the Exchanging Stockholders and the directors and officers of
CompuSystems has, to their Knowledge, any Basis to believe that any Litigation
may be brought or threatened against CompuSystems. CompuSystems is not subject
to any outstanding injunction, judgment, order, decree, ruling or charge.
(b) CompuSystems has not breached, and is not in default of, any of its
legal obligations with respect to any of its material licensors, licensees,
collaborative and other partners, joint venturers, brokers, distributors,
business consultants, franchisees, franchisors, representatives or other
independent contractors.
4.9 Compliance with Law. Each of the Exchanging Stockholders and
CompuSystems and its predecessors and Affiliates have complied in all material
respects with all applicable statutes, laws, ordinances, regulations, rules,
orders, determinations, writs, injunctions, awards, judgments and decrees
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of every kind whatsoever of any and all governmental authorities applicable to
CompuSystems (including all agencies thereof) or to the material assets,
properties and business of CompuSystems, and no suit, action, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice has been
filed, commenced or threatened against CompuSystems alleging any failure to so
comply, or to their Knowledge, if not in such compliance, any such violation has
been cured or resolved. All governmental approvals, permits and licenses
required by CompuSystems in connection with the conduct of its business have
been obtained, are in full force and effect, and are being complied with in all
material respects. Neither CompuSystems nor, to the Knowledge of CompuSystems,
any of its employees, agents, distributors or representatives, have paid or
received any bribe or other unlawful payment of money or other thing of more
than nominal value, granted or accepted any unlawful extraordinary discount, or
furnished or been given any other unlawful inducement to or from any person,
business association or governmental entity in the United States or elsewhere in
connection with or in furtherance of the business of CompuSystems, and such
business is not in any manner dependent upon the making or receipt of such
payment, discounts or other inducements.
4.10 Contracts. (a) Section 4.10(a) of the Schedule of Exceptions sets
forth a list of each written and oral contract or agreement outstanding as of
the date hereof to which CompuSystems is a party (collectively the "Contracts"
or individually a "Contract"):
(i) which involves the lease of personal property from
or to third parties providing for lease payments in excess
of $10,000 per annum;
(ii) under which it has created, incurred, assumed or guaranteed
(or may create, incur, assume or guarantee) indebtedness for borrowed
money (including capitalized lease obligations) involving more than
$5,000;
(iii) which is in the nature of an employment, consulting or
severance agreement or collective bargaining agreement involving the
payment of more than $1,000 or not entered into in the ordinary course
of business except as referenced in Sections 4.13 and 4.18;
(iv) which is with any of the Exchanging Stockholders
or their Affiliates (other than CompuSystems);
(v) which concerns confidentiality, nondisclosure or
noncompetition other than customary restrictions in software
licenses from vendors therefor;
(vi) which is a profit sharing, stock option, stock
appreciation, deferred compensation, severance or other plan
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or arrangement for the benefit of its current or former
directors, officers and employees;
(vii) which by its terms is not terminable upon 90 or fewer days
notice without liability in excess of $5,000 and involves the payment
or receipt of $10,000 or more;
(viii) which the consequences of a default or termination could have
a materially adverse effect on the business, assets, financial
condition, operations or results of operations of CompuSystems taken as
a whole;
(ix) which is in the nature of a partnership, joint
venture or collaborative arrangement or relationship;
(x) which involves the purchase or sale of raw materials,
commodities, supplies, products or other personal property, or for the
furnishing or receipt of services, the performance of which shall
extend over a period of more than one (1) year, result in financial
loss to CompuSystems, or involves consideration in excess of $5,000
outside the ordinary course of business consistent with past practice;
or
(xi) which is outside of the ordinary course of business or
contains any provision requiring CompuSystems to indemnify any other
party thereto, except for indemnity agreements with customers,
certified testing laboratories and similar third parties in the
ordinary course of business consistent with industry practice.
(b) CompuSystems has delivered to Medic a correct and complete copy of
each written Contract and a written summary setting forth the terms and
conditions of each oral Contract. All of the Contracts are legal, valid, binding
and enforceable in accordance with their respective terms against CompuSystems
and, to the Knowledge of CompuSystems, any other parties thereto, and are in
full force and effect on identical terms following the consummation of the
transactions contemplated in this Agreement, except where consents are required
as reflected herein. There is not under any Contract: (i) any existing default,
breach or violation by CompuSystems or to the Knowledge of CompuSystems by any
other party thereto; (ii) an event which, after notice or lapse of time or both,
would constitute a default or breach by CompuSystems or to the Knowledge of
CompuSystems by any other party, or permit termination, modification or
acceleration, under the Contract; or (iii) any repudiation of any provision of
any Contract.
4.11 Brokers and Intermediaries. None of the Transferors has employed
any broker, finder, advisor or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's
or similar fee or
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commission in connection therewith or upon the consummation thereof for which
the Acquirors or CompuSystems will be liable.
4.12 Tax Matters. CompuSystems made an election to be taxed under the
provisions of Subchapter S of the Code on July 1, 1988, and has not, since such
date, been taxed under the provisions of Subchapter C of the Code. CompuSystems
currently utilizes the accrual method of accounting for income tax purposes, and
such method of accounting has not changed since the date of its Subchapter S
election. (a) CompuSystems has filed all Tax Returns that it has been required
to file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by CompuSystems (whether or not shown on any Tax
Return) have been paid. CompuSystems currently is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where CompuSystems does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no Encumbrances on any of the assets of CompuSystems that arose in connection
with any failure (or alleged failure) to pay any Tax, except for liens for
property taxes, if any, not yet due and payable.
(b) CompuSystems has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, stockholder or other third Person.
(c) No Transferor or director or officer (or employee responsible for
Tax matters) of CompuSystems expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There is no dispute
or claim concerning any Tax Liability of CompuSystems either: (i) claimed or
raised by any authority in writing; or (ii) as to which any of the Transferors
or the directors and officers (and employees responsible for Tax matters) of
CompuSystems has Knowledge based upon personal contact with any agent of such
authority. Section 4.12(c) of the Schedule of Exceptions lists the jurisdictions
for all federal, state, local and foreign income Tax Returns for which the
applicable statute of limitations has not expired filed with respect to
CompuSystems for taxable periods ended on or before December 31, 1995, indicates
those Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit, if any. The Transferors have delivered to
Medic correct and complete copies of all federal, state and local income Tax
Returns for which the applicable statute of limitations has not expired, and any
related examination reports and statements of deficiencies assessed against or
agreed to by CompuSystems.
(d) CompuSystems has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency, except as the consequence of filing extensions for tax returns.
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(e) CompuSystems has not filed a consent under Code Section 341(f)
concerning collapsible corporations. CompuSystems has not made any payments, is
not obligated to make any payments, and is not a party to any agreement that
could obligate it to make any payments that shall not be deductible under Code
Section 280G. CompuSystems has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). CompuSystems has disclosed on
its federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of Code
Section 6662. CompuSystems is not a party to any Tax allocation or sharing
agreement. CompuSystems is not a member of an Affiliated Group filing a
consolidated federal income Tax Return and has no Liability for the Taxes of any
Person (other than CompuSystems) under Treas. Reg. ss. 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
(f) Section 4.12(f) of the Schedule of Exceptions sets forth the
following information with respect to CompuSystems as of the most recent
practicable date: (i) the basis of CompuSystems in its assets; and (ii) the
amount of any net operating loss, net capital loss, unused investment and other
credit, unused foreign tax and excess charitable contribution.
(g) The unpaid Taxes of CompuSystems, if and as applicable: (i) did
not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth with specificity in
the Most Recent Balance Sheet; and (ii) do not exceed that reserve as adjusted
for the passage of time through the Closing Date materially in accordance with
the past custom and practice of CompuSystems in filing its Tax Returns.
4.13 Employee Benefits. (a) Section 4.13 of the Schedule of Exceptions
lists each Employee Benefit Plan that CompuSystems maintains or to which
CompuSystems contributes. Each such Employee Benefit Plan (and each related
trust, insurance contract or fund) complies in form and in operation in all
material respects with the applicable requirements of ERISA, the Code, and other
applicable laws.
(b) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports, PBGC-1's and Summary Plan Descriptions) have
been filed or distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Section 4980B have been met with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
(c) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have
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been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan, and all contributions for any period ending on or before the
Closing Date which are not yet due, have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of
CompuSystems. All premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(d) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code Section
401(a) and has received, within the last two (2) years, a favorable
determination letter from the Internal Revenue Service.
(e) The market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any Multiemployer Plan)
equals or exceeds the present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods, factors and assumptions
applicable to an Employee Pension Benefit Plan terminating on the date for
determination.
(f) The Transferors have delivered to Medic correct and complete copies
of the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most recent
Form 5500 Annual Report and all related trust agreements, insurance contracts
and other funding agreements which implement each such Employee Benefit Plan.
(g) With respect to each Employee Benefit Plan that CompuSystems and
the Controlled Group of Corporations, if any, which includes CompuSystems
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(i) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely or
partially terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been instituted or, to the
Knowledge of CompuSystems, threatened.
(ii) There have been no Prohibited Transactions with respect to any
such Employee Benefit Plan. No Fiduciary has any Liability for breach
of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing or
investigation with respect to the administration or the investment of
the assets of any such Employee Benefit Plan
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(other than routine claims for benefits) is pending or, to the
Knowledge of CompuSystems, threatened. None of the Exchanging
Stockholders or the directors or officers (or employees with
responsibility for employee benefits matters) of CompuSystems has
Knowledge of any Basis for any such action, suit, proceeding, hearing
or investigation.
(iii) CompuSystems has not incurred, and none of the Exchanging
Stockholders or the directors or officers (or employees with
responsibility for employee benefits matters) of CompuSystems has any
reason to expect that CompuSystems shall incur, any Liability to the
PBGC (other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(h) None of CompuSystems and the other members of the Controlled Group
of Corporations that includes CompuSystems, if any, contributes to ever has
contributed to, or ever has been required to contribute to any Multiemployer
Plan or has any Liability (including withdrawal Liability) under any
Multiemployer Plan.
(i) CompuSystems does not maintain or contribute, never has maintained
or contributed and never has been required to contribute to any Employee Welfare
Benefit Plan providing medical, health or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their spouses or
their dependents (other than in accordance with Code Section 4980B).
4.14 Articles of Incorporation and Bylaws. CompuSystems has delivered
to the Acquirors complete and correct copies of the Articles of Incorporation
and Bylaws of CompuSystems, as currently in effect. The Transferors have not
defaulted under or violated any provision of the Articles of Incorporation or
Bylaws of CompuSystems, or if such a default or violation has occurred, the same
has been cured or resolved.
4.15 Insurance. (a) Section 4.15 of the Schedule of Exceptions sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability or workers' compensation
coverage or bond or surety arrangements) or self-insurance arrangement to which
CompuSystems has been a party, a named insured, or otherwise the beneficiary of
coverage at any time since December 31, 1990:
(i) the name, address and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder and the name of each covered insured;
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(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was
on a claims made, occurrence or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate)
of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
(b) With respect to each such insurance policy: (i) the policy is
legal, valid, binding, enforceable and in full force and effect; (ii) the policy
shall continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the transactions
contemplated by this Agreement; (iii) CompuSystems is not nor is any other party
to the policy in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification or acceleration, under the policy; (iv) no party to
the policy has repudiated any provision thereof; and (v) no claims have been
made during the past five years. CompuSystems has been covered since the date of
its formation by insurance in scope and amount consistent with current coverage,
taking into account the growth of CompuSystems' business.
4.16 Intellectual Property. (a) CompuSystems owns or has the legal
right to use pursuant to license, sublicense, agreement or permission all
Intellectual Property necessary for the operation of the businesses of
CompuSystems as currently conducted and proposed to be conducted. Each item of
Intellectual Property owned or used by CompuSystems immediately prior to the
Closing hereunder shall be owned or used by CompuSystems on, and subject to
compliance by CompuSystems after the Effective Date with, identical terms and
conditions subsequent to the Effective Date. CompuSystems has taken all
necessary action to reasonably maintain and protect each material item of
Intellectual Property that it owns or uses.
(b) CompuSystems has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of third Persons, and none of the Transferors or the directors or
officers of CompuSystems has ever received any charge, complaint, claim, demand
or notice alleging any such interference, infringement, misappropriation or
violation (including any claim that CompuSystems must license or refrain from
using any Intellectual Property rights of any third party). To the Knowledge of
any of the Transferors or the directors or officers of CompuSystems, no third
Person has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of CompuSystems.
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(c) CompuSystems has not and shall not utilize any inventions of any of
its employees (or people it currently intends to hire, if any) made prior to
their employment by CompuSystems, unless such inventions have been duly licensed
or otherwise transferred to CompuSystems. CompuSystems has reasonably, in a
manner consistent with industry practice, documented the record of conception of
all of its Intellectual Property to a point in time during its corporate
existence by its employees under and subject to the Non-Disclosure Agreements.
Section 4.16(c) of the Schedule of Exceptions identifies each patent or
registration which has been issued to CompuSystems with respect to any of its
Intellectual Property, identifies each pending patent application or application
for registration which CompuSystems has made with respect to any of its
Intellectual Property, identifies and documents the record of conception for any
of the material Intellectual Property of CompuSystems which is either a trade
secret or claimed as proprietary and not subject to a patent or pending patent
application, and identifies or describes by category any material license,
agreement or other permission which CompuSystems has granted to any third Person
with respect to any of its Intellectual Property (together with any exceptions).
CompuSystems has delivered to Medic correct and complete copies of all such
patents, registrations, applications, and material licenses, agreements and
permissions (as amended to date) and have made available to the Acquirors
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section 4.16(c) of
the Schedule of Exceptions also identifies each material trade name or
unregistered trademark used by CompuSystems in connection with its business.
With respect to each material item of Intellectual Property required to be
identified in Section 4.16(c) of the Schedule of Exceptions:
(i) CompuSystems possesses all right, title and
interest in and to the item, free and clear of any
Encumbrance, license or other restriction;
(ii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the Knowledge of
CompuSystems, is threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and
(iv) CompuSystems is not currently subject to an agreement to
indemnify any Person for or against any interference, infringement,
misappropriation or other conflict with respect to the item, except for
indemnity agreements with customers and vendors in the ordinary course
of business.
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(d) Section 4.16(d) of the Schedule of Exceptions identifies each
material item of Intellectual Property that any third Person owns and that
CompuSystems uses pursuant to license, sublicense, agreement or permission
(except as pertains to off-the-shelf software and similar consumer products).
CompuSystems has delivered to Medic correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 4.16(d) of the Schedule of Exceptions:
(i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and
in full force and effect;
(ii) the license, sublicense, agreement or permission shall
continue to be legal, valid, binding, enforceable and in full force and
effect on, and subject to compliance by CompuSystems after the
Effective Time, with identical terms following the Effective Time;
(iii) CompuSystems is not, and, to the Knowledge of CompuSystems, no
other party to the license, sublicense, agreement or permission is, in
breach or default, and, to the Knowledge of CompuSystems, no event has
occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification or acceleration,
thereunder;
(iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(v) with respect to each sublicense, the representations and
warranties set forth in clauses (i) through (iv) above are true and
correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is
not subject to any outstanding injunction, judgment, order,
decree, ruling or charge;
(vii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the Knowledge of
CompuSystems, is threatened which challenges the legality, validity or
enforceability of the underlying item of Intellectual Property; and
(viii) CompuSystems has not granted any sublicense or similar right
with respect to the license, sublicense, agreement or permission except
to customers in the ordinary course of business.
(e) Subject to the terms and conditions of the subject license or
agreement, CompuSystems' ownership and/or right to the
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use of its material Intellectual Property shall not interfere with, infringe
upon, misappropriate or otherwise come into conflict with any Intellectual
Property rights of third Persons as a result of the continued operation of its
business as currently conducted.
(f) None of the Transferors or the directors or officers (or employees
with responsibility for Intellectual Property matters) of CompuSystems has taken
any unlawful or unethical action to compromise the secrecy, confidentiality or
value of any of its material trade secrets, know-how, inventions, prototypes,
designs, processes or technical data (collectively "Proprietary Information")
required to conduct its business as now conducted. CompuSystems has taken
reasonable security measures to protect the secrecy, confidentiality and value
of its Proprietary Information necessary to the conduct of its business,
including requiring each employee and consultant newly employed or engaged after
August 1986 to execute an agreement substantially in the form(s) attached to the
Schedule of Exceptions as Appendix 4.16(f).
(g) None of the Transferors or the directors or officers (or employees
with responsibility for Intellectual Property matters) of CompuSystems has any
Knowledge that any of CompuSystems' employees, officers or consultants is in
violation of his or her respective noncompetition, confidentiality or
non-disclosure agreement.
4.17 Bank Accounts. Section 4.17 of the Schedule of Exceptions sets
forth a true and complete list of all bank accounts of CompuSystems and all
authorized signatories to each such account.
4.18 Directors, Officers and Employees. Section 4.18 of the Schedule of
Exceptions containing a correct and complete listing as of the date hereof all
of the directors, officers and employees of CompuSystems, showing their names,
positions and current wage or salary and rights to bonuses.
4.19 Labor Relations; Employees. (a) CompuSystems has no collective
bargaining agreements with any of its employees; there is no labor union
organizing activity pending or, to the Knowledge of CompuSystems, threatened
with respect to CompuSystems; and CompuSystems has not experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. CompuSystems has not committed any unfair labor practices. To the
Knowledge of CompuSystems, no executive, key employee or group of employees has
any plans to terminate employment with CompuSystems. Copies of all personnel
brochures or handbooks, if any, delivered to employees or in effect since the
formation of CompuSystems have been delivered to Medic.
(b) There is no pending claim nor, to the Knowledge of CompuSystems,
any Basis or grounds for any claim by any Person or
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party (including, but not limited to, governmental agencies of any kind) against
CompuSystems arising out of any federal, state, county, local or foreign
statute, ordinance or regulation relating to discrimination against employees or
any other employee practices, including without limitation retirement or labor
relations, or occupational, safety and/or health standards, sexual harassment or
intentional infliction of emotional distress.
4.20 Transactions with Related Parties. None of the Exchanging
Stockholders or any present or former officer, director or stockholder of
CompuSystems, and no Affiliate of the Exchanging stockholders or of such
officer, director or stockholder: (i) has been involved in any business
(excluding relationships and payments arising from the employment or retention
by CompuSystems of any such persons in the ordinary course of business)
arrangement or relationship with CompuSystems, including, without limitation,
any contract, agreement or other arrangement providing for the employment of,
furnishing of services, by, rental of real or personal property from or
otherwise requiring payment to any such officer, director, stockholder or
Affiliate; or (ii) owns any asset, tangible or intangible, which is used in the
business of CompuSystems as currently conducted.
4.21 Copies of Documents. True, correct and complete copies of all
documents listed in the Schedule of Exceptions with respect to the
representations and warranties contained in this Article 4 have been heretofore
delivered to Medic.
4.22 Real Property. (a) CompuSystems owns no real
property.
(b) Section 4.22(b) of the Schedule of Exceptions lists and describes
briefly all real property leased or subleased to or by CompuSystems.
CompuSystems has delivered to Medic correct and complete copies of the leases
and subleases (as amended to date)listed in Section 4.22(b) of the Schedule of
Exceptions.
With respect to each such lease and sublease:
(i) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect;
(ii) the lease or sublease shall continue to be legal, valid,
binding, enforceable and in full force and effect on, and subject to
compliance by CompuSystems after the Effective Date with, identical
terms following the consummation of the transactions contemplated
hereby;
(iii) CompuSystems is not, and, to CompuSystems' Knowledge, no other
party to the lease or sublease is, in breach or default, and, to the
Knowledge of CompuSystems, no event has occurred which, with notice or
lapse of time,
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would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v) there are no disputes, oral agreements or
forbearance programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in clauses (i) through (v) above are true and
correct with respect to the underlying lease;
(vii) CompuSystems has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws, rules
and regulations, as set forth in, and subject to Section 4.9;
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities; and
(x) to the Knowledge of CompuSystems, the owner of the
facility leased or subleased has good and marketable title to the
parcel of real property, free and clear of any Encumbrance, easement,
covenant or other restriction, except for installments of special
easements not yet delinquent and recorded easements, covenants and
other restrictions which do not unreasonably interfere with
CompuSystems' current use of the property.
4.23 Books and Records. The stock records of CompuSystems are in all
material respects complete and accurate, and the minute books of CompuSystems
accurately reflect the actions taken at stockholder and director meetings or by
unanimous written consent and are in all material respects correct, complete and
accurate.
4.24 Environmental Matters. (a) In all material respects, CompuSystems
has complied and is in compliance with all local, state and federal statutes,
ordinances, and regulations dealing with the protection of the environment or
public health and safety, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act (codified as amended, 42
U.S.C. ss.ss. 9601 et seq.) ("CERCLA") and the Resource Conservation and
Recovery Act (codified as amended, 42 U.S.C. ss.ss. 6901 et seq.) ("RCARA").
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(b) CompuSystems has obtained all required local, state and federal
permits, licenses, certificates and approvals, if any, relating to: (i) air
emissions; (ii) discharges to surface water or groundwater; (iii) noise
emissions; (iv) solid or liquid waste disposal; (v) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or wastes
(intended hereby and hereafter to include any and all such materials listed in
any local, state or federal statute, ordinance or regulation); (vi) the use,
storage, transportation or disposal of petroleum or petroleum products; or (vii)
other environmental, health and safety matters.
(c) CompuSystems has not caused, suffered, permitted or sustained any
emission, spill, release or discharge of any toxic or hazardous substances or
wastes, or any petroleum products, into or upon: (i) the air; (ii) soils or any
improvements located thereon, whether on CompuSystems' property or elsewhere;
(iii) surface water or groundwater; or (iv) a sewer, septic system or waste
treatment, storage or disposal system except in accordance with applicable law
or a valid government permit, license, certificate or approval.
(d) None of the Transferors or the officers or directors (including
employees responsible for environmental matters) of CompuSystems has received
written notice of any actual or potential claims, orders, directives, citations
or causes of action based on actual or alleged violations of any local, state,
or federal statutes, ordinances or regulations dealing with the protection of
the environment or public health and safety, including, but not limited to,
CERCLA or RCARA, or oral or written notice of any actual or potential common law
claims or causes of action based upon CompuSystems' actual or alleged
involvement with or use of any substance regulated by local, state or federal
statutes, ordinances or regulations dealing with the protection of the
environment or public health and safety.
(e) None of the Transferors or the officers or directors (including
employees responsible for environmental matters) of CompuSystems has received
oral or written notice of any actual or potential claims, orders, directives,
citations or causes of action under any local, state or federal statutes,
ordinances or regulations dealing with the protection of the environment or
public health and safety, including, but not limited to, CERCLA and RCARA, based
upon or arising out of its actual or alleged disposal of hazardous wastes or
substances, whether on or off real property being operated by CompuSystems.
(f) None of the Transferors or the officers or directors (including
employees responsible for environmental matters) of CompuSystems has any
Knowledge of any condition on any of the real property owned or leased by
CompuSystems which may reasonably be expected to give rise to any claim, order,
directive, citation or cause of action based on any local, state or federal
statute, ordinance or regulation dealing with
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protection of the environment or public health and safety, including, but not
limited to, CERCLA or RCARA.
4.25 Guaranties. CompuSystems is not a guarantor or otherwise liable
for any Liability or obligation of any Person other than itself (including
indebtedness of any other Person).
4.26 Government Consents. No consent, approval or authorization of or
designation, declaration or filing with any state, federal or foreign
governmental authority on the part of any of the Exchanging Stockholders because
of any special characteristic of such Exchanging Stockholder is required in
connection with the valid execution and delivery of this Agreement and the
consummation by the Exchanging Stockholders of the transactions contemplated
hereby.
4.27 Manufacturing Rights. CompuSystems has not granted rights to
manufacture or sell its products, processes or technology to any other Person,
except (if at all) for the exclusive benefit of CompuSystems.
4.28 HSR Act Filing. Compusystems did not derive annual sales or
revenues in excess of $1,000,000 in 1995 from CompuSystems' manufacture of
products within industries 2000-3999 as coded in the Standard Industrial
Classification Manual (1972 edition) for purposes of the HSR Act. The
consolidated total assets of Compusystems and the Transferors (pursuant to the
provisions of the HSR Act and the Rules promulgated thereunder) which must be
taken into account for purposes of Section A(a)(2) of the HSR Act (18 U.S.C.
18a) are less than $10,000,000.00 at the date of the last regularly prepared
balance sheet of CompuSystems prior to the Closing.
4.29 Disclosure. Nothing disclosed in the Schedule of Exceptions as an
exception to a representation or warranty of the Exchanging Stockholders shall
be deemed adequate to disclose an exception to a representation or warranty made
herein unless it refers to an agreement delivered to Medic or unless it
identifies the exception with reasonable particularity and includes a brief
description of the facts or obligation. To the Knowledge of CompuSystems, no
information about CompuSystems contained in this Agreement, the Ancillary
Agreements, the Financial Statements or any written statement furnished by or on
behalf of the Transferors pursuant to the terms of this Agreement contains any
untrue statement of material fact or omits to state any material fact necessary
in order to make the statements and information contained herein or therein not
misleading in light of the circumstances under which made.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE ACQUIRORS
The Acquirors jointly and severally represent and warrant to
CompuSystems, the Exchanging Stockholders and the Premises Stockholders that:
5.1 Organization and Authority of the Acquirors. Medic and CompuSystems
Acquisition are corporations duly incorporated, validly existing and in good
standing under the laws of the State of North Carolina with the corporate power
and authority to enter into this Agreement and the Ancillary Agreements and to
perform their respective obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of each of the Acquirors. This
Agreement has been, and at the Closing the Ancillary Agreements shall be, duly
executed and delivered by each of the Acquirors and constitutes the valid,
binding and enforceable obligation of each of the Acquirors, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles.
5.2 Ability to Carry Out the Agreement. Neither of the Acquirors is
subject to or bound by any provision of:
(i) any law, statute, rule, regulation, ordinance or
judicial or administrative decision;
(ii) any articles or certificate of incorporation or
bylaws;
(iii) any mortgage, deed of trust, lease, note, shareholders'
agreement, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship other restriction of any kind or character
whatsoever; or
(iv) any judgment, order, writ, injunction or decree of
any court, governmental body, administrative agency or
arbitrator;
that would prevent or be violated by or would result in any penalty, forfeiture
or contract termination as a result of, or under which there would be a default
as a result of, nor is the consent of any Person under any material agreement
which has not been obtained required for, the execution, delivery and
performance by each of the Acquirors of this Agreement and the transactions
contemplated hereby, other than violations, penalties, forfeitures, contract
terminations, defaults or failure to obtain consents which, singly or in the
aggregate,
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shall not have a material adverse effect on the enforceability or validity of
this Agreement or the ability of the Acquirors to perform their obligations
hereunder.
5.3 Capitalization. Medic is authorized to issue: (i) Twenty Million
(20,000,000) shares of Medic Common Stock of which 11,808,221 shares were issued
and outstanding as of May 10, 1996; and (ii) Five Million (5,000,000) shares of
Preferred Stock, $0.01 par value per share, none of which is issued and
outstanding. Medic also has reserved: 980,000 shares of Medic Common Stock for
issuance pursuant to its Amended and Restated Stock Plan and has granted options
to purchase 646,223 shares thereunder; and 25,000 shares for issuance pursuant
to its Employee Stock Purchase Plan, none of which have been issued. All of the
Merger Shares and the Premises Shares to be issued in the Merger have been duly
authorized and are reserved for issuance pursuant to this Agreement, and, upon
the consummation of the transactions contemplated hereby, shall be validly
issued, fully paid, nonassessable and not subject to preemptive rights.
5.4 Brokers and Intermediaries. None of the Acquirors has employed any
broker, finder, advisor or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's
or similar fee or commission in connection therewith or upon the consummation
thereof.
5.5 Securities Law Filings. Medic has previously furnished to
CompuSystems, the Exchanging Stockholders and the Premises Stockholders copies
of: (i) its Annual Report on Form 10-K for the year ended December 31, 1995, as
filed with the SEC on April 1, 1996; and (ii) its Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996, as filed with the SEC on May 3, 1996. Such
Reports, as of the date of the filing thereof with the SEC, complied as to form
in all material respects with the provisions of the 1934 Act and the rules and
regulations promulgated thereunder and, to the Knowledge of the Acquirors, no
information about the Acquirors contained in this Agreement, the Ancillary
Agreements or any written statement furnished by the Acquirors pursuant to this
Agreement, and no information contained in the foregoing securities law filings,
contained, as of the date thereof, any untrue statement of material fact or
omits to state any material fact necessary in order to make the statements and
information contained herein and therein not misleading in light of the
circumstances under which made.
5.6 Purchase For Investment. The CompuSystems Shares to be acquired by
the Acquirors pursuant to the Merger will be acquired for the Acquirors' own
account for investment purposes only and without any present intention to
resell, transfer or otherwise dispose of the CompuSystems Shares. Acquirors do
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person, or to any third persons,
with respect to any of the CompuSystems Shares
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to be acquired hereunder. Acquirors understand that the CompuSystems Shares are
not registered under the 1933 Act or any applicable state securities laws and
that any sale, transfer or other disposition of the shares must be made only
pursuant to any effective registration under applicable federal and state
securities laws or any available exemption therefrom. Acquirors collectively
have total assets in excess of $5,000,000, and have such knowledge and
experience in financial, business, and investment matters that they are capable
of evaluating the risks and merits of acquiring the CompuSystems Shares. No
compensation or consideration to be paid by Acquirors to the Exchanging
Stockholders, CompuSystems or its Affiliates, or any other person shall, as
among the parties hereto, constitute a commission or other remuneration in
connection with procuring the sale or purchase of the CompuSystems Shares or the
soliciting of any prospective buyer or seller for such shares. The CompuSystems
Shares to be acquired hereunder were not offered to Acquirors by, and Acquirors
are not otherwise aware of, any general advertising or general solicitation in
connection with the sale of the CompuSystems Shares or the business which is the
subject hereof.
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
6.1 Full Access. From the date hereof until the earlier of the Closing
or the termination of this Agreement pursuant to Section 3.3 above, CompuSystems
shall permit representatives of the Acquirors to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of CompuSystems, to all premises, customers, employees,
properties, books, records, contracts, tax records, and documents of or
pertaining to CompuSystems. From the date hereof until the earlier of the
Closing or the termination of this Agreement pursuant to Section 3.3 above,
Medic shall permit representatives of the Transferors and the Premises
Stockholders to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of Medic, to all premises,
customers, employees, properties, books, records, contracts, tax records and
documents of or pertaining to Medic.
6.2 Regulatory Filings; Consents. From the date hereof until the
earlier of the Closing or the termination of this Agreement pursuant to Section
3.3 above, each of the parties hereto shall: (i) take any additional action that
is necessary, proper or advisable in connection with any notices to, filings
with, and authorizations, consents and approvals of governments and governmental
agencies that it is required to give, make or obtain in order to effect the
transactions contemplated hereunder; and (ii) furnish to the other party or
parties hereto, as the case may be, such necessary information and reasonable
assistance as such other party or parties may reasonably request
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in connection with its or their preparation of necessary filings or submissions
to any governmental agency. CompuSystems shall give any notices to third
Persons, and shall use its best efforts to obtain any third Person consents,
that Medic may request in connection with the matters referred to in Section 4.2
above.
6.3 Conduct of Business. From the date hereof until the earlier of the
Closing or the termination of this Agreement pursuant to Section 3.3 above, and
except as otherwise contemplated by this Agreement or consented to or approved
by Medic in writing, CompuSystems shall not engage in any practice, take an
action, embark on any course of action, or enter into any transaction outside
the ordinary course of business consistent with past practices. Without limiting
the generality of the foregoing, CompuSystems shall, during the period specified
in the first sentence of this Section 6.3:
(i) not take any action, engage in any practice or enter into
any transaction of the nature or sort referred to in subsections (a)
through (w) of Section 4.6, except as permitted therein;
(ii) cause the business conducted by CompuSystems to be operated in
all respects in the ordinary and usual course and use its best efforts
to keep and preserve its business and properties intact, including its
present operations, physical facilities, working conditions and
relationships with employees, clients, suppliers, customers, lessors
and licensors of such business;
(iii) not effect or authorize any change or amendment to
the Articles of Incorporation or Bylaws of CompuSystems;
(iv) maintain in full force and effect all of CompuSystems'
existing casualty, liability and other insurance until the Closing Date
in amounts not less than those in effect on the date hereof;
(v) provide Medic with unaudited monthly CompuSystems balance
sheets, statements of income and expenses, changes in stockholders'
equity and cash flows within fifteen (15) days of the end of each such
month;
(vi) not declare, set aside or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase or
otherwise acquire any of its capital stock except as set forth in
Section 4.3 or in the ordinary course of business for an "S"
corporation consistent with past practice; and
(vii) promptly notify the Acquirors in writing of: (i)
any actions, suits or proceedings instituted or overtly
threatened against CompuSystems at law or in equity or
admiralty, before or by any court or governmental authority;
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(ii) any material changes in CompuSystems personnel; and (iii) any
adverse development causing a breach of any of the representations and
warranties contained in Article 4 above. No disclosure by CompuSystems
pursuant to this subsection 6.3(vii) shall be deemed to amend or
supplement the disclosures contained in any Schedule or to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant.
6.4 Confidentiality. The parties agree that until the Effective Date,
without Transferor's consent, the availability of CompuSystems for sale, the
existence of this Agreement and the negotiation and pursuit of the transactions
contemplated herein (including the Letter of Intent dated April 26, 1996) shall
be confidential and shall not be made public or used competitively or otherwise,
and shall not be disclosed (except to the extent required by Section 6.6 hereof,
applicable law or stock exchange or market regulation, or compelled by court
order or discovery process). In addition, each party to this Agreement agrees
that all information concerning the business, operations, plans, prospects,
employees, customers, financial status and offices of the other parties to the
Agreement that is not generally available to the public ("Confidential
Information") and obtained from such other party shall be deemed confidential
and shall not be disclosed to any Person for any reason or purpose whatsoever,
except in connection with this Agreement, to the parties and their
representatives involved in this transaction, or as may by required by law or
stock exchange or market regulation, or compelled by court order or discovery
process; and in no event shall such Confidential Information be used
competitively by the recipient or its Affiliates prior to the Effective Date. In
the event this Agreement is terminated, all such Confidential Information shall,
upon request, be returned to the appropriate parties, together with any and all
copies made thereof.
6.5 Books and Records. Medic shall retain all books, records and other
documents pertaining to the business of CompuSystems in existence on the Closing
Date for a period of at least seven years from the Closing Date and shall make
the same reasonably available after the Closing Date for such seven-year period
for inspection and copying by the Exchanging Stockholders and the Premises
Stockholders at their expense during the normal business hours of Medic, upon
reasonable request and upon reasonable notice.
6.6 Announcement. At the earlier of (a) 14 days after the execution of
this Agreement, or (b) promptly, but no sooner than one (1) business day, after
the Effective Time, Medic shall make a public statement approved by Medic and
the Exchanging Stockholders with respect to this Agreement and the transactions
contemplated hereby; provided however, that if this Agreement is terminated
before the Effective Date, Medic shall not make such public statement, unless
required by applicably law or stock exchange or market regulation. Otherwise,
prior to the Closing,
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no party to this Agreement shall issue any press release or public statement or
otherwise publicize information with respect to this Agreement and the
transactions contemplated hereby without the prior consent of the other parties
to this Agreement (which consent shall not be unreasonably withheld), except as
may be required by applicable law or stock exchange regulation.
6.7 Best Efforts. Without limiting the specific obligations of any
party hereto under any agreement or covenant hereunder, each of the parties
hereto shall use its respective best efforts to take all action and do such acts
and things necessary in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
conditions to Closing set forth in Articles 7 and 8 below).
6.8 Discussion With Others. From the date hereof until the earlier of
the Closing or the termination of this Agreement pursuant to Section 3.3 above,
none of the Transferors or the Premises Stockholders shall: (i) negotiate,
pursue, solicit, initiate or knowingly encourage the submission of any proposal
or offer from any third Person concerning the sale or acquisition of any capital
stock or other voting securities, or all or substantially all assets of,
CompuSystems (including any acquisition structured as a merger, consolidation or
share exchange) or the Premises; or (ii) engage or participate in any
discussions or negotiations regarding, enter into any agreement with respect to,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any third Person to do or seek any
of the foregoing. The Transferors and the Premises Stockholders shall
immediately notify Medic if any third Person makes any proposal, offer, inquiry
or contact with respect to any of the foregoing.
6.9 Cooperation in Tax Returns and Litigation. Each party hereto shall
fully cooperate with the other in the preparation of tax returns and the defense
or prosecution of any litigation or proceeding already instituted or which may
be instituted hereafter against or by such party relating to or arising out of
the conduct of the business of CompuSystems prior to or after the Closing Date
(other than litigation arising out of the transactions contemplated by this
Agreement). The party requesting such cooperation shall pay the out-of-pocket
expenses (including legal fees and disbursements) of the party providing such
cooperation and of its officers, directors, employees and agents reasonably
incurred in connection with providing such cooperation, but shall not be
responsible to reimburse the party providing such cooperation for such party's
time spent in such cooperation or the salaries or costs of fringe benefits or
similar expenses paid by the party providing such cooperation to its officers,
directors, employees and agents while assisting in the defense or prosecution of
any such litigation or proceeding.
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6.10 Fairness Hearing; Stock Transfer Restrictions. (a) Medic and the
Transferors and the Premises Stockholders shall cooperate and exercise their
respective best efforts to participate in a fairness hearing (a "Fairness
Hearing") with the Securities Division of the Department of the Secretary of
State of North Carolina (the "Securities Division"), pursuant to Section 78A-30
of the North Carolina Securities Act and Section 3(a)(10) of the 1933 Act, in
order to secure an exemption from registration under the 1933 Act for the Merger
Shares and the Premises Shares. The parties agree to pursue confidential
treatment of the application and submission for, and the conduct and results of,
such hearing pursuant to Section 78A-49(g) of the North Carolina Securities Act.
(b) Each of the Exchanging Stockholders and the Premises Stockholders
acknowledges, represents, warrants and covenants as follows:
(i) The resale of the Merger Shares and the Premises Shares shall
be subject to the current public information, volume, manner of sale and
brokers' transactions limitations contained in paragraphs (c), (e), (f) and (g)
of Rule 144 promulgated under the 1933 Act by virtue of the restrictions
contained in Rule 145(d)(1) promulgated under the 1933 Act and the status of the
Exchanging Stockholders as "affiliates" of CompuSystems within the meaning of
Rule 145(c) promulgated under the 1933 Act but shall not be subject to the
holding period restrictions of paragraph (d) of Rule 144 promulgated under the
1933 Act; and
(ii) Medic may put "stop transfer" orders in place with its transfer
agent to ensure compliance with the provisions of Sections 6.10 and 6.11.
6.11 Pooling Treatment Covenant. Each of the Exchanging Stockholders
and the Premises Stockholders shall not (a) dispose of any of his respective
Merger Shares or the Premises Shares in a manner, (b) take any action within
their control, or (c) fail to take any action, that would disqualify the Merger
from pooling of interests accounting treatment pursuant to Accounting Principles
Board Opinion No. 16, "Accounting for Business Combinations" or any other
applicable rules, regulations or interpretations, including but not limited to
those promulgated by the Securities and Exchange Commission.
6.12 Medic SEC Documents. Prior to the Closing, Medic shall furnish to
CompuSystems true and complete copies of any filings made by Medic with the SEC
under the 1933 Act or the 1934 Act since the date of this Agreement. Medic shall
publicly release its earnings report including the first 30 days of consolidated
earnings of Medic and CompuSystems on or before the third Wednesday of the month
after the calendar month-end first occurring after the Closing (provided that
Medic receives CompuSystems' final results of operations for such period on or
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before the sixth business day of such month, for which Medic shall exercise good
faith and use its best efforts in assisting CompuSystems), and shall provide a
copy of same to the Exchanging Stockholders and the Premises Stockholders
promptly after issuing such release. Medic also shall use its best efforts to,
for a period of at least 2 years after the Closing, timely comply with all
requirements for periodic filings and other reporting set forth in Rule 144(c)
promulgated under the 1933 Act.
6.13 Notice By Acquirors. Acquirors agree that should they acquire
Knowledge prior to Closing, as a result of their investigation of CompuSystems
pursuant to this Agreement or otherwise, of any breach of the representations
and warranties contained in Article 4 above, Acquirors will notify the
Exchanging Stockholders of such breach in writing prior to Closing; provided
such notice shall not constitute a waiver of any Acquirors' rights and
CompuSystems shall have opportunity to cure such violation prior to Closing.
6.14 Confidentiality and Non-Disclosure Agreements. After the Closing
the parties shall use their respective best efforts to get each of the
employees, officers and consultants of CompuSystems to enter into and deliver a
confidentiality and non-disclosure agreement with CompuSystems in Medic's
standard form.
6.15 Dividend; Taxes. To the extent that the provisions hereof will not
disqualify the transactions contemplated hereby from pooling of interests
accounting treatment:
(a) Medic and the Exchanging Stockholders agree that in the
event that subsequent to the Effective Date they collectively determine that the
cash dividend paid pursuant to Section 4.3(a) was made in an incorrect amount,
then if such dividend was underpaid CompuSystems shall promptly pay the
Exchanging Stockholders the amount of the difference, and if overpaid the
Exchanging Stockholders shall promptly pay CompuSystems the difference; and
(b) The Exchanging Stockholders will prepare and file (or have
prepared and filed), after review by Arthur Andersen LLP and Coopers & Lybrand
L.L.P., CompuSystems' and the Exchanging Stockholders' tax returns for the
taxable period ending on the Effective Date, on a basis consistent with prior
returns. In the event that Medic actually receives a deduction on its
consolidated tax return(s) as a result of the Exchanging Stockholders' tax
returns having been audited by the relevant taxing authority and such audit
resulting in the imposition of additional tax being required to be paid by the
Exchanging Stockholders, Medic shall pay the Exchanging Stockholder, pro rata,
the lesser of the amount of the tax benefit to Medic attributable to such
additional tax or the amount of such additional tax actually paid by the
Exchanging Stockholders.
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ARTICLE 6A
TRANSFER OF THE PREMISES
6A.1 Transfer and Mechanics.
(a) Transfer. At the Effective Time, the Nexsen B. Johnson and
Sylvia Johnson (collectively, the "Premises Stockholders") shall transfer to
CompuSystems Acquisition full right, title and interest in and to the Premises
in exchange for the Premises Shares, which shall be issued to the Premises
Stockholders in equal amounts.
(b) Issuance of Stock Certificates. As promptly as practicable
after the recording of the deed necessary to effect the transfer of the Premises
as set forth in Section 6A.1(a) above, Medic or its transfer agent shall deliver
to the Premises Stockholders one or more certificates representing the Premises
Shares to which they are entitled. The certificates representing Medic Common
Stock issued pursuant to this subsection shall be in such denominations
reasonably requested in writing in advance by the Premises Stockholders.
Notwithstanding anything to the contrary herein, a portion of the Premises
Shares otherwise transferable to the Premises Stockholders pursuant to this
Article 6A, will be held in trust by Medic as described in and pursuant to the
provisions of Section 10.5 of this Agreement. Each share of Medic Common Stock
issued pursuant to this subsection shall be validly issued, fully paid, and
non-assessable upon transfer of the Premises as contemplated by this Section.
(c) Fractional Shares. No fractional shares of Medic Common
Stock shall be issued to the Premises Stockholders in connection herewith. Any
Premises Stockholder who would otherwise be entitled to receive a fractional
share pursuant hereto shall receive cash for such fractional share at a per
share rate equal to the closing ask price of Medic Common Stock on the NASDAQ
National Market System on the day immediately preceding the Closing Date.
6A.2 Adjustment to Premises Shares.
(a) Appraisal of Premises. Medic and the Premises Stockholders
agree that as promptly as practicable after the Effective Date, the appraised
value of the Premises (the "Appraised Value") shall be determined in the
following manner: Each party shall choose a professional appraiser who shall
separately appraise the value of the Premises. If there is a discrepancy between
the value of the Premises as separately appraised by the two appraisers and the
amount of such discrepancy is less than $100,000.00, then the Appraised Value
shall be the average of the two appraisals; if there is a discrepancy equal to
or greater than $100,000.00, then the two appraisers shall select a third
professional appraiser, who shall
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separately appraise the value of the Premises, and the Appraised Value shall be
the median of the three appraisals.
(b) Survey of Premises. Medic and the Premises Stockholders
agree that as promptly as practicable after the Effective Date, Medic, at its
sole cost and expense, shall obtain an as-built survey of the Premises from a
Registered Land Surveyor. Promptly after the survey has been completed, Medic
and the Premises Stockholders shall cooperate to resolve or remove all
encroachments, discrepancies, problems and violations under the Permitted
Exceptions (as defined in the deed necessary to effect the transfer of the
Premises as set forth in Section 6A.1 above) and revealed by the survey. All
reasonable costs and expenses incurred in resolving or removing such
encroachments, discrepancies, problems and violations shall be subtracted from
the Appraised Value (as determined in accordance with subsection (a) of this
Section 6A.2).
(c) Adjustment to Premises Shares. Promptly after the
Appraised Value has been determined and adjusted as described in subsections (a)
and (b) of this Section 6A.2, (1) the number of Premises Shares shall be
adjusted to reflect the difference, if any, between the Appraised Value and
$2,287,500.00, such that the number of Premises Shares shall thereafter be that
number of shares of Medic Common Stock calculated as the quotient of the
Appraised Value less the aggregate principal amount of the NationsBank Loan as
of immediately prior to the Effective Time (approximately $1,300,000.00) divided
by $90.00; (2) a proportionate adjustment, if necessary, shall be made to the
number of Holdback Shares; and (3) either Medic or the Premises Stockholders
shall deliver stock certificates to the other, as necessary, in order to reflect
any adjustment in the number of Premises Shares and Holdback Shares.
6A.3 Representations and Warranties of Premises Stockholders. Except as
otherwise set forth in the Schedule of Exceptions attached hereto as Exhibit C
(the "Schedule of Exceptions"), the Premises Stockholders, jointly and
severally, represent and warrant to the Acquirors that the representations and
warranties contained in this Section 6A.3 are true, correct and complete as of
the date of this Agreement; provided, however, that Sylvia Johnson makes all of
the following representations and warranties only to her Knowledge.
6A.3.1 Authority. The execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action on the part
of each of the Premises Stockholders. This Agreement has been, and at the
Closing the Ancillary Agreements shall be, duly executed and delivered by each
of the Premises Stockholders and constitutes the valid, binding and enforceable
obligation of each of the Premises Stockholders, enforceable in accordance with
its terms and conditions, subject to applicable bankruptcy, reorganization,
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insolvency, moratorium and other laws affecting creditors' rights generally from
time to time in effect and to general equitable principles.
6A.3.2 Ability to Carry Out the Agreement. Neither of the
Premises Stockholders is subject to or bound by any provision of:
(i) any law, statute, rule, regulation, ordinance or
judicial or administrative decision;
(ii) any articles or certificate of incorporation or
bylaws;
(iii) any mortgage, deed of trust, lease, note, stockholders'
agreement, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship or other restriction of any kind or
character whatsoever; or
(iv) any judgment, order, writ, injunction or decree of
any court, governmental body, administrative agency or
arbitrator;
that would prevent or be violated by, or would result in any penalty, forfeiture
or material contract termination as a result of, or under which there would be a
default as a result of, nor is the consent of any Person under any contract
which has not been obtained required for, the execution, delivery and
performance by each of the Premises Stockholders of this Agreement and the
transactions contemplated hereby (provided, however, that the Premises
Stockholders make no representation or warranty in this Section 6A.3. as to
application of the HSR Act).
6A.3.3 Title; Absence of Liens. (a) The Premises Stockholders have
good, valid and marketable fee-simple title to the Premises, free and clear of
any and all Encumbrances, except for the NationsBank Loan and easements,
rights-of-way, restrictions and covenants of record or as would be reflected by
a current survey, which do not unreasonably or materially interfere with the
ownership and lawful operation of the Premises by the Premises Stockholders and
the conduct of CompuSystems business operations as currently conducted. All
assessments due for the Premises under the covenants, conditions and
restrictions of the Carolina Research Park have been paid and are current.
(b) The Premises, including, without limitation, the electrical,
plumbing and HVAC systems therein, are structurally sound, free from material
defects, has been maintained in accordance with normal industry practice, is in
reasonably good operating condition and repair, ordinary wear and tear excepted,
and is suitable for the purposes for which presently used.
6A.3.4 Litigation. (a) There is no Litigation pending or, to the
Knowledge of the Premises Stockholders, threatened against
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the Premises Stockholders or the Premises in, before or by any court or
arbitrator or governmental agency or authority. None of the Premises
Stockholders has, to their Knowledge, any Basis to believe that any Litigation
may be brought or threatened against them or the Premises. Neither the Premises
nor the Premises Stockholders is subject to any outstanding injunction,
judgment, order, decree, ruling or charge.
(b) Neither of the Premises Stockholders has breached, and is in
default of, any of its legal obligations with respect to or affecting the
Premises.
6A.3.5 Compliance with Law. Each of the Premises Stockholders and its
Affiliates and the Premises have complied in all material respects with all
applicable statutes, laws, ordinances, regulations, rules, orders,
determinations, writs, injunctions, awards, judgments and decrees of every kind
whatsoever of any and all governmental authorities applicable to the Premises,
and no suit, action, proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed, commenced or threatened alleging any
failure to so comply, or to their Knowledge, if not in such compliance, any such
violation has been cured or resolved. All governmental approvals, permits and
licenses required by or for the Premises have been obtained, are in full force
and effect, and are being complied with in all material respects.
6A.3.6 Brokers and Intermediaries. None of the Premises Stockholders
has employed any broker, finder, advisor or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to a
broker's, finder's or similar fee or commission in connection therewith or upon
the consummation thereof for which the Acquirors or CompuSystems will be liable.
6A.3.7 Copies of Documents. True, correct and complete copies of all
documents listed in the Schedule of Exceptions with respect to the
representations and warranties contained in this Section 6A.3 have been
heretofore delivered to Medic.
6A.3.8 Leases. There are no leases of the Premises other than to
CompuSystems, a copy of which has been delivered to Medic.
6A.3.9 Environmental Matters. (a) In all material respects, the
Premises has complied and is in compliance with all local, state and federal
statutes, ordinances, and regulations dealing with the protection of the
environment or public health and safety, including, but not limited to, the
CERCLA and RCARA.
(b) The Premises Stockholders or its tenant(s) have obtained and are in
material compliance with all required local, state and federal permits,
licenses, certificates and approvals,
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if any, relating to: (i) air emissions; (ii) discharges to surface water or
groundwater; (iii) noise emissions; (iv) solid or liquid waste disposal; (v) the
use, generation, storage, transportation or disposal of toxic or hazardous
substances or wastes (intended hereby and hereafter to include any and all such
materials listed in any local, state or federal statute, ordinance or
regulation); (vi) the use, storage, transportation or disposal of petroleum or
petroleum products; or (vii) other environmental, health and safety matters.
(c) With respect to the Premises, the Premises Stockholders have not
caused, suffered, permitted or sustained any emission, spill, release or
discharge of any toxic or hazardous substances or wastes, or any petroleum
products, into or upon: (i) the air; (ii) soils or any improvements located
thereon; (iii) surface water or groundwater; or (iv) a sewer, septic system or
waste treatment, storage or disposal system except in accordance with applicable
law or a valid government permit, license, certificate or approval.
(d) None of the Premises Stockholders has received written notice of
any actual or potential claims, orders, directives, citations or causes of
action based on actual or alleged violations of any local, state, or federal
statutes, ordinances or regulations dealing with the protection of the
environment or public health and safety, including, but not limited to, CERCLA
or RCARA, or oral or written notice of any actual or potential common law claims
or causes of action based upon actual or alleged involvement with or use of any
substance regulated by local, state or federal statutes, ordinances or
regulations dealing with the protection of the environment or public health and
safety on the Premises.
(e) None of the Premises Stockholders has received oral or written
notice of any actual or potential claims, orders, directives, citations or
causes of action under any local, state or federal statutes, ordinances or
regulations dealing with the protection of the environment or public health and
safety, including, but not limited to, CERCLA and RCARA, based upon or arising
out of its actual or alleged disposal of hazardous wastes or substances, whether
on or off the Premises.
(f) None of the Premises Stockholders has any Knowledge of any
condition on the Premises which may reasonably be expected to give rise to any
claim, order, directive, citation or cause of action based on any local, state
or federal statute, ordinance or regulation dealing with protection of the
environment or public health and safety, including, but not limited to, CERCLA
or RCARA.
6A.3.10 Government Consents. No consent, approval or authorization of
or designation, declaration or filing with any state, federal or foreign
governmental authority on the part of any of the Premises Stockholders because
of any special
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characteristic of such Premises Stockholder is required in connection with the
valid execution and delivery of this Agreement and the consummation by the
Premises Stockholders of the transactions contemplated hereby.
6A.3.11 Disclosure. Nothing disclosed in the Schedule of Exceptions as
an exception to a representation or warranty of the Premises Stockholders shall
be deemed adequate to disclose an exception to a representation or warranty made
herein unless it refers to an agreement delivered to Medic or unless it
identifies the exception with reasonable particularity and includes a brief
description of the facts or obligation. To the Knowledge of the Premises
Stockholders, no information about the Premises contained in this Agreement, the
Ancillary Agreements or any written statement furnished by or on behalf of the
Premises Stockholders pursuant to the terms of this Agreement contains any
untrue statement of material fact or omits to state any material fact necessary
in order to make the statements and information contained herein or therein not
misleading in light of the circumstances under which made.
6A.4 Release. The Acquirors shall timely pay all debts and other
obligations under the NationsBank Loan and shall take all action and do such
acts and things necessary in order to release the Premise Stockholders from any
Liabilities under the NationsBank Loan (except to the extent any such debts,
obligations or liabilities arise out of or are based upon intentional
misrepresentations or other fraudulent conduct of the Premises Stockholders with
respect to the NationsBank Loan), including the release of any collateral of the
Premises Stockholders with respect to the NationsBank Loan, other than the
Premises.
ARTICLE 7
CONDITIONS PRECEDENT OF TRANSFERORS AND PREMISES STOCKHOLDERS
The obligation of the Transferors and the Premises Stockholders to
consummate the transactions to be performed by them in connection with the
Closing is subject to the satisfaction of each of the following conditions prior
to or at the Closing:
7.1 Representations and Warranties. The representations and warranties
of the Acquirors made hereunder shall be true in all material respects at and as
of the Closing Date, with the same force and effect as though made at and as of
the Closing Date, except for changes permitted or contemplated by this Agreement
and except to the extent that any representation or warranty is made as of a
specified date, in which case such representation or warranty shall be true in
all material respects as of such date.
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7.2 Agreements. The Acquirors shall have performed and complied in all
material respects with all their respective undertakings, covenants and
agreements required by this Agreement to be performed or complied with by the
Acquirors prior to or at the Closing.
7.3 Performance Certificates. CompuSystems shall have been furnished
with a certificate of a proper officer of Medic and a certificate of a proper
officer of CompuSystems Acquisition, both dated as of the Closing Date, each
certifying to the effect that each of the conditions contained in Sections 7.1
and 7.2 above has been satisfied in all respects.
7.4 No Injunction. No injunction, restraining order or decree of any
nature of any court or governmental or regulatory authority shall exist against
the Acquirors, the Transferors, the Premises Stockholders or any of their
respective Affiliates, or any of the principals, officers or directors of any of
them, that restrains, prevents or materially changes the transactions
contemplated hereby.
7.5 No Violation. The consummation of the transactions contemplated
hereunder shall not be in violation of any material applicable law, statute,
rule or regulation for which a waiver has not been obtained and where such
violation would make illegal or otherwise prevent the consummation of the
Merger.
7.6 Consents. All material consents, approvals and authorizations of
governmental and regulatory authorities, and all material filings with and
notifications of governmental authorities and regulatory agencies or other
entities which regulate the business of CompuSystems or the Acquirors, necessary
on the part of CompuSystems or Acquirors, or their respective Affiliates, to the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, shall have been obtained or effected (and all
applicable waiting periods, if any, including any extensions thereof, under any
applicable law, statute, regulation or rule shall have expired or terminated, as
applicable). CompuSystems shall have received the written consents or approvals
of any and all third Persons required under the terms of the Contracts to the
consummation of the transactions contemplated hereunder.
7.7 Opinion of the Acquirors' Counsel. The Exchanging Stockholders and
the Premises Stockholders shall have received an opinion of Wyrick, Robbins,
Yates & Ponton L.L.P., counsel for the Acquirors, dated as of the Closing Date,
addressed to the Exchanging Stockholders and the Premises Stockholders, to the
effect and substantially in the form of Exhibit E.
7.8 No Proceedings. No claim, suit, action or other proceeding shall be
pending or threatened in writing before or by any court, governmental agency or
other entity against any of the
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parties to this Agreement with respect to the transactions contemplated by this
Agreement.
7.9 Tax-Free Reorganization. The Merger shall constitute a
tax-free reorganization under the provisions of Code Section 368.
7.10 Stockholder Approval. This Agreement and the Merger shall have
been duly approved by the stockholders of CompuSystems in accordance with the
applicable provisions of the South Carolina Business Corporation Act and
CompuSystems' Articles of Incorporation and Bylaws, each as amended to date.
7.11 Employment Agreements. All relevant parties shall have entered
into and delivered the employment, non-disclosure and noncompetition agreements
in form and substance as set forth in Exhibits F and G, respectively, and the
same shall be in full force and effect.
7.12 Fairness Hearing. Within 5 business days after the Fairness
Hearing, the Securities Division shall have issued an order approving the
issuance of shares pursuant to Section 78A-30 of the North Carolina Securities
Act and no stop order suspending the effectiveness thereof shall be issued or in
effect and no other proceeding for that purpose shall have been instituted.
7.13 Miscellaneous Closing Deliveries. CompuSystems shall have received
each of the following:
(a) all documents, instruments and other closing deliveries specified
in subsection 3.2(b) above;
(b) a fully executed election under Code Section 1377(a)(2); and
(c) such evidence as CompuSystems may reasonably request in order to
establish: (i) the power and authority of each of the Acquirors to consummate
the transactions contemplated by this Agreement; (ii) compliance with the
conditions of Closing set forth herein; and (iii) satisfactory completion of all
corporate proceedings to be taken in connection with the transactions
contemplated by this Agreement together with certified copies of necessary
resolutions duly adopted by the stockholders and directors of the Acquirors (to
the extent required by law) approving the Merger and the execution and delivery
of this Agreement and all other corporate action necessary to enable the
Acquirors to comply with the terms of this Agreement.
7.14 Good Faith. In order for any condition precedent in this Article
7, the accomplishment of which is within the control of Transferors or the
Premises Stockholders, to be effective for the benefit of Transferors or the
Premises Stockholders, Transferors and the Premises Stockholders shall have
exercised their good faith and best efforts toward the accomplishing of same.
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The Transferors and the Premises Stockholders may waive any condition specified
in this Article 7 if each of them executes a writing so stating at or prior to
the Closing.
ARTICLE 8
CONDITIONS PRECEDENT OF THE ACQUIRORS
The obligation of the Acquirors to consummate the transactions to be
performed by them in connection with the Closing is subject to the satisfaction
of each of the following conditions prior to or at the Closing:
8.1 Representations and Warranties. The representations and warranties
of the Exchanging Stockholders and the Premises Stockholders made hereunder
shall be true in all respects at and as of the Closing Date, with the same force
and effect as though made at and as of the Closing Date, except for changes
permitted or contemplated by this Agreement and except to the extent that any
representation or warranty is made as of a specified date, in which case such
representation or warranty shall be true in all respects as of such date.
8.2 Agreements. The Transferors and the Premises Stockholders shall
have performed and complied in all respects with all of their respective
undertakings and agreements required by this Agreement to be performed or
complied with by them prior to or at the Closing.
8.3 Performance Certificates. The Acquirors shall have been furnished
with a certificate of CompuSystems and each of the Exchanging Stockholders and
Premises Stockholders, dated as of the Closing Date, certifying that the
conditions contained in Sections 8.1, 8.2 and (with respect to the Exchanging
Stockholders only) 8.14 hereof have been satisfied in all respects.
8.4 No Injunction. No injunction, restraining order or decree of any
nature of any court or governmental or regulatory authority shall exist against
the Acquirors, the Transferors, the Premises Stockholders or any of their
respective Affiliates, or any of the principals, officers or directors of any of
them, that restrains, prevents or materially changes the transactions
contemplated hereby.
8.5 No Violation. The consummation of the transactions contemplated
hereunder shall not be in violation of any applicable law, statute, rule or
regulation for which a waiver has not been obtained and where such violation
would make illegal or otherwise prevent the consummation of the Merger.
8.6 Consents. All material consents, approvals and authorizations of
governmental and regulatory authorities, and
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all material filings with and notifications of governmental authorities and
regulatory agencies or other entities which regulate the business of
CompuSystems or Acquirors, necessary on the part of CompuSystems or Acquirors,
or their respective Affiliates, to the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, shall have been
obtained or effected (and all applicable waiting periods, if any, including any
extensions thereof, under any applicable law, statute, regulation or rule,
including but not limited to the HSR Act, if applicable, shall have expired or
terminated, as applicable). Medic shall have received the written consents or
approvals of any and all third Persons required under the terms of the Contracts
to the consummation of the transactions contemplated hereunder.
8.7 Opinion of Transferors' and Premises Stockholders' Counsel. Medic
shall have received an opinion of Nexsen Pruet Jacobs & Pollard, L.L.P., counsel
of the Transferors and the Premises Stockholders, dated as of the Closing Date,
addressed to Medic to the effect and substantially in the form of Exhibit H.
8.8 No Adverse Change. Since the Most Recent Fiscal Year End, there
shall have been no material adverse change in the assets, business, operations,
results of operations or financial condition of CompuSystems, except events or
changes contemplated by this Agreement, changes consented to in writing by Medic
and changes in the ordinary course of business which are not, either
individually or in the aggregate, materially adverse.
8.9 Resignations. The Acquirors shall have received resignations,
effective as of the Closing, of each officer and director of CompuSystems other
than those whom Medic shall have specified in writing prior to the Closing.
8.10 No Proceedings. No claim, suit, action or other proceeding shall
be pending or threatened in writing before or by any court, governmental agency
or other entity against any of the parties to this Agreement with respect to the
transactions contemplated by this Agreement or which materially adversely affect
the assets, property, operations, results of operations or financial condition
of CompuSystems.
8.11 Employment Agreements. The relevant parties shall have entered
into the employment agreements in form and substance as set forth in Exhibits F
and G, respectively, and the same shall be in full force and effect.
8.12 Pooling Letters. Medic shall have received letters, satisfactory
to Medic, of Coopers & Lybrand L.L.P. and Arthur Andersen LLP, dated as of the
Closing Date, addressed to Medic with respect to whether CompuSystems qualifies
as an entity that may be a party to a business combination for which the
pooling-of-interest method of accounting would be available.
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8.13 Due Diligence. The completion of a due diligence investigation of
CompuSystems by Medic satisfactory to Medic.
8.14 CompuSystems Common Stock. All shares of the capital stock of
CompuSystems owned by the Exchanging Stockholders shall be free and clear of any
and all Encumbrances (other than transfer restrictions under applicable
securities laws).
8.15 Stockholder Approval. This Agreement and the Merger shall have
been approved by the affirmative vote of holders of not less than one hundred
percent (100%) of the CompuSystems Common Stock on a fully-diluted and
as-converted basis (including the holders of any convertible security of
CompuSystems) in favor of this Agreement and the Merger. In connection with such
approval, there shall exist no Dissenting Shares.
8.16 Premises Deliveries. The Acquirors shall have received from the
Premises Stockholders, at the latter's cost, a title insurance commitment,
insuring as to matters of title, in the amount of at least $2,287,500.00, in
form and substance acceptable to the Acquirors, as well as copies of all title
exceptions with respect to the Premises. The Acquirors shall pay the premium for
the title insurance policy.
8.17 Miscellaneous Closing Deliveries. The Acquirors shall have
received each of the following:
(a) all documents, instruments and other closing deliveries specified
in Section 3.2(a) above;
(b) a fully executed election under Code Section 1377(a)(2); and
(b) such evidence as the Acquirors may reasonably request in order to
establish: (i) the power and authority of the Transferors and the Premises
Stockholders to consummate the transactions contemplated by this Agreement; (ii)
compliance with the conditions of Closing set forth herein; and (iii)
satisfactory completion of all corporate and stockholder proceedings to be taken
in connection with the transactions contemplated by this Agreement, together
with certified copies of resolutions duly adopted by the stockholders and
directors of CompuSystems approving the Merger and the execution and delivery of
this Agreement and all other corporate action necessary to enable the
Transferors and the Premises Stockholders to comply with the terms of this
Agreement.
8.18 Good Faith. In order for any condition precedent in this Article
8, the accomplishment of which is within the control of Acquirors, to be
effective for the benefit of Acquirors, Acquirors shall have exercised their
good faith and best efforts toward the accomplishing of same.
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Medic may waive any condition specified in this Article 8 if it executes a
writing so stating at or prior to the Closing.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
9.1 Survival of Representations and Warranties. All of the
representations and warranties of the parties hereto contained in the Agreement
shall survive the Closing (even if the damaged party knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing, but not
if the same is disclosed on the Schedule of Exceptions) and continue in full
force and effect for twelve (12) months following the Closing Date, as of which
time they will expire. Any claims with respect to the foregoing sentence under
Sections 10.1 and 10.2 below must be asserted in writing with reasonable
particularity by the party making such claim prior to the end of the 12-month
period referenced above, and the obligations of the indemnifying party under
Sections 10.1 and 10.2 below with respect to such claims shall continue until
such claims have been resolved.
9.2 Survival of Covenants and Agreements. The respective covenants and
agreements of the parties contained in this Agreement shall survive the Closing
to the extent contemplated by such covenant or agreement. Any claims as to a
breach of a covenant or agreement under Sections 10.1 and 10.2 below must be
asserted in writing with reasonable particularity by the party making such
claims.
ARTICLE 10
INDEMNIFICATION AND HOLDBACK
10.1 Indemnification of Medic. The Exchanging Stockholders and the
Premises Stockholders, jointly and severally, agree to defend, indemnify and
hold harmless Medic and its successors and assigns (individually an "Acquiror
Indemnitee", and collectively the "Acquiror Indemnitees") from, against, and in
respect of the following:
(a) any and all losses, damages, deficiencies or liabilities
caused by, resulting or arising from, or otherwise relating to: (i) any
breach of the representations and warranties of the Exchanging
Stockholders or the Premises Stockholders contained in this Agreement;
(ii) any failure by any of the Transferors or the Premises Stockholders
to perform or otherwise fulfill or comply with (X) if this Agreement
shall have been terminated, Sections 6.4, 6.7 and 6.8 or any other
covenant, undertaking, agreement or obligation to be performed,
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fulfilled or complied with by the Exchanging Stockholders, the Premises
Stockholders or CompuSystems prior to or in connection with the
Closing; or (Y) if the Closing shall occur, any undertaking or other
agreement or obligation hereunder to be performed, fulfilled or
otherwise complied with by the Exchanging Stockholders or the Premises
Stockholders after the Closing; (iii) any unknown or undisclosed
Liabilities of CompuSystems arising out of or related to the conduct or
operation of CompuSystems' business prior to the Closing (other than
Liabilities incurred in the ordinary course of business subsequent to
the execution of this Agreement); and (iv) any and all legal,
investment banking, accounting, auditing and other professional fees
and expenses of CompuSystems related to this Agreement and the
transactions contemplated hereby in excess of Seventy-Five Thousand
Dollars ($75,000.00) (it being understood by the parties hereto that
legal, accounting, auditing and investment banking fees and expenses
incurred or paid prior to December 31, 1995 are not, for purposes of
this indemnity, related to this Agreement), and other professional fees
and expenses of CompuSystems unrelated to the this Agreement and the
consummation of the transactions contemplated hereby that have not been
approved in advance by Medic which are incurred after March 31, 1996;
and
(b) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, interest, penalties,
costs and expenses, including reasonable attorneys' fees incurred by
the Acquiror Indemnitees in connection with investigating, defending,
settling or prosecuting any action, suit, proceeding or claim against
any of the Acquiror Indemnitors hereunder, incident to such
indemnification;
provided that in no event shall Sylvia Johnson be liable for a representation,
warranty or covenant owed by the Exchanging Stockholders and in no event shall
Eugene F. Gallogly be liable for a representation, warranty or covenant owed by
the Premises Stockholders; and provided further, that if any action, suit,
proceeding, claim, liability, demand or assessment shall be asserted against any
Acquiror Indemnitee in respect of which such Acquiror Indemnitee proposes to
demand indemnification, such Acquiror Indemnitee shall notify the Exchanging
Stockholders and the Premises Stockholders thereof promptly and within a
reasonable period of time after assertion thereof, and such notice shall include
copies of all suit, service and claim documents, all other relevant documents in
the possession of the Acquiror Indemnitee, and an explanation of the Acquiror
Indemnitee's contentions and defenses with as much specificity and particularity
as the circumstances permit, provided that the failure of the Acquiror
Indemnitee to give such notice shall not relieve the Exchanging Stockholders or
the Premises Stockholders of their obligations under this Section 10.1, if the
Acquiror
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Indemnitee shall have demonstrated that: (i) it acted in good faith and without
unreasonable delay; and (ii) the Exchanging Stockholders and the Premises
Stockholders shall not have been prejudiced thereby. Subject to rights of or
duties to any insurer or other third Person having liability therefor, the
Exchanging Stockholders and the Premises Stockholders shall have the right
within ten (10) days after receipt of such notice to assume the control of the
defense, compromise or settlement of any such action, suit, proceeding, claim,
liability, demand or assessment, including, at its own expense, employment of
counsel; provided further, however, that if the Exchanging Stockholders and the
Premises Stockholders shall have exercised their right to assume such control,
the Acquiror Indemnitee: (X) may, in its sole discretion and expense, employ
counsel to represent it (in addition to counsel employed by the Exchanging
Stockholders and the Premises Stockholders) in any such matter, and in such
event counsel selected by the Exchanging Stockholders and the Premises
Stockholders shall be required to cooperate with such counsel of the Acquiror
Indemnitee in such defense, compromise or settlement for the purpose of
informing and sharing information with such Acquiror Indemnitee; and (Y) shall,
at its own expense, make available to the Exchanging Stockholders and the
Premises Stockholders those employees of the Acquiror Indemnitees whose
assistance, testimony or presence is reasonably deemed by the Exchanging
Stockholders and the Premises Stockholders necessary or beneficial to assist
them in evaluating and in defending any such action, suit, proceeding, claim,
liability, demand or assessment; provided further, however, that any such access
shall be conducted in such a manner as not to interfere unreasonably with the
operations of the businesses of the Acquiror Indemnitees.
10.2 Indemnification of Exchanging Stockholders and Premises
Stockholders. Medic agrees to defend, indemnify and hold harmless the Exchanging
Stockholders, the Premises Stockholders and their respective successors and
assigns (individually a "Transferor Indemnitee", and collectively the
"Transferor Indemnitees") from, against and in respect of:
(a) any and all losses, damages, deficiencies or liabilities
caused by, resulting or arising from or otherwise relating to: (i) any
breach of the representations and warranties of the Acquirors contained
in this Agreement; (ii) any failure by the Acquirors to perform or
otherwise fulfill or comply with (X) if this Agreement shall have been
terminated, Sections 6.4 or 6.7 or any other covenant, undertaking,
agreement or obligation to be performed, fulfilled or complied with by
the Acquirors prior to or in connection with the Closing (in which case
CompuSystems shall also be entitled to this indemnity); or (Y) if the
Closing shall occur, any undertaking or other agreement or obligation
hereunder to be performed, fulfilled or otherwise complied with by the
Acquirors after the Closing; (iii) any and all legal, investment
banking,
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accounting, auditing and other professional fees and expenses of
CompuSystems related to this Agreement and the transactions
contemplated hereby up to Seventy-Five Thousand Dollars ($75,000.00),
and other professional fees and expenses of CompuSystems unrelated to
this Agreement and the transaction contemplated hereby that have been
approved in advance by Medic; (iv) any Liabilities of CompuSystems
which either exist at Closing without breach of Sections 4.5 or 4.6, or
are incurred after Closing, whether or not personally guaranteed by the
Exchanging Stockholder or the Premises Stockholder; and (v) any
Liabilities of the Premises Stockholders under the NationsBank Loan,
except to the extent any such liabilities arise out of or are based
upon intentional misrepresentions or other fraudulent conduct of the
Premises Stockholders with respect to the NationsBank Loan.
(b) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, interest, penalties,
costs and expenses, including reasonable attorneys' fees (whether or
not incurred by the Transferor Indemnitees in connection with
investigating, defending, settling or prosecuting any action, suit,
proceeding or claim against Medic hereunder), incident to any of the
items referred to herein or such indemnification;
provided, however, that if any action, suit, proceeding, claim, liability,
demand or assessment shall be asserted against any Transferor Indemnitee in
respect of which such Transferor Indemnitee proposes to demand indemnification,
such Transferor Indemnitee shall notify Medic thereof promptly and within a
reasonable period of time after assertion thereof, and such notice shall include
copies of all suit, service and claim documents, all other relevant documents in
the possession of the Transferor Indemnitees and an explanation of the
Transferor Indemnitees' contentions and defenses with as much specificity and
particularity as the circumstances permit, provided that the failure of the
Transferor Indemnitee to give such notice shall not relieve Medic of its
obligations under this Section 10.2 if the Transferor Indemnitee shall have
demonstrated that: (i) it acted in good faith and without unreasonable delay;
and (ii) Medic shall not have been prejudiced thereby. Subject to rights of or
duties to any insurer or other third Person having liability therefor, Medic
shall have the right within ten (10) days after receipt of such notice to assume
the control of the defense, compromise or settlement of any such action, suit,
proceeding, claim, liability, demand or assessment, including, at its own
expense, employment of counsel; provided further, however, that if Medic shall
have exercised its right to assume such control, the Transferor Indemnitees: (X)
may, in their sole discretion and expense, employ one (1) counsel to represent
them (in addition to counsel employed by Medic) in any such matter, and in such
event counsel selected by Medic shall be required to cooperate with such counsel
of the Transferor Indemnitees in such
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defense, compromise or settlement for the purpose of informing and sharing
information with such Transferor Indemnitees; and (Y) shall, at its own expense,
make available to Medic those employees of Transferor Indemnities or any
Affiliate of Transferor Indemnifies whose assistance, testimony or presence is
reasonably deemed by Medic necessary or beneficial to assist Medic in evaluating
and in defending any such action, suit, proceedings, claim, liability, demand or
assessment; provided further, however, that any such access shall be conducted
in such a manner as not to interfere unreasonably with the operations of the
business of Medic or any of its Affiliates.
10.3 Remedies. Notwithstanding any provision to the contrary in this
Agreement, the indemnification rights set forth in this Article 10, all of which
are subject to the terms, limitations and restrictions of this Article 10, shall
be the exclusive remedy after Closing for monetary damages sustained as a result
of a breach of a representation, warranty, covenant or agreement under this
Agreement or certificates to be delivered at Closing hereunder. Such limitations
set forth in this Section 10.3 shall not impair the rights of any of the
parties: (a) to seek non-monetary equitable relief, including (without
limitation) specific performance or injunctive relief to redress any default or
breach of this Agreement; or (b) to seek enforcement, collection, damages or
such non-monetary equitable relief to redress any default or breach of any
employment agreement, deed, bill of sale, assignment, other transfer document,
assumption, consent or agreement to be delivered at Closing hereunder. In
connection with the seeking of any non-monetary equitable relief, each of the
parties acknowledges and agrees that the other parties hereto would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties hereto agrees the other parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any competent court having jurisdiction over the parties
(subject to the provisions of Section 11.11 below), in addition to any other
remedy to which they may be entitled, at law or in equity.
10.4 Survival. Notwithstanding anything herein to the contrary, this
Article 10 shall survive termination of this Agreement without limitation;
provided however, that this survival shall not extend a liability otherwise
limited by Article 9; and no indemnifying party shall be liable for any claim
for indemnification asserted by an indemnified party pursuant to any provision
of this Agreement after the first (1st) anniversary date of the Closing.
10.5 Holdback. At the Effective Time, the Transferors and the Premises
Stockholders shall be deemed to have directed Medic to withhold from issuance to
the Exchanging Stockholders and the
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Premises Stockholders on a pro rata basis, a number of Merger Shares equal to
ten percent (10%) of the Merger Shares and the Premises Shares, in the
aggregate.
The Merger Shares and the Premises Shares withheld are herein
referred to as the "Holdback Shares." The Holdback Shares shall be issued to the
Exchanging Stockholders or the Premises Stockholders but held in trust in
reserve by Medic subject to the terms and conditions hereinafter set forth. The
liability of the Exchanging Stockholders and the Premises Stockholders under the
indemnification provisions of this Article 10 shall be recovered first from the
Holdback Shares, and only after such Holdback Shares have been exhausted by
claims of Acquiror Indemnitees shall they be entitled to seek recovery from
sources other than the Holdback Shares, subject to the limitations prescribed by
Section 10.10 hereof.
10.6 Holdback Termination. On the Closing Date, the Holdback Shares
shall be withheld by Medic in trust. The Holdback Shares shall be distributed to
the Exchanging Stockholders and the Premises Stockholders, pro rata, as follows.
(a) On the date which is the earlier of (i) one year after the
Closing Date or (ii) the release of Medic's audited year-end financial
statements for fiscal 1996, that portion of the Holdback Shares having a value
as of such date most nearly equal to 100% of the amounts of all claims of
Acquiror Indemnitees and expenses related thereto as to which a Claim Notice
shall have previously been delivered to the Transferors and the Premises
Stockholders, shall be withheld. The value of such claims and expenses shall be
determined by the Board of Directors of Medic in a reasonable manner as of such
date. The balance of the Holdback Shares not so withheld shall be promptly
distributed to the Exchanging Stockholders and the Premises Stockholders.
(b) The Holdback Shares not so distributed pursuant to
subsection 10.6(a) shall be retained by Medic in trust until such pending claims
are resolved; provided, however, that upon the disposition of any such claim
prior to the disposition of all such claims, Medic shall distribute to the
Exchanging Stockholders and the Premises Stockholders that amount of the
Holdback Shares having a value as of such date in excess of 100% of the
aggregate amounts of the remaining claims and expenses as determined above.
10.7 Assertion of Claims Against Holdback. Subject to the minimum
claims requirements set forth below, if any Acquiror Indemnitee shall have any
claim of indemnification pursuant to Article 10 hereof, it shall promptly give
written notice thereof to the Exchanging Stockholders and the Premises
Stockholders, including in such notice a brief description of the facts upon
which such claim or adjustment is based and the amount thereof (the "Claim
Notice"). Unless the Exchanging Stockholders and the
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Premises Stockholders shall give written notice, within twenty (20) days after
receipt of the Claim Notice, to Medic objecting to the forfeiture of any
Holdback Shares for application to such claims, the lesser of (a) that number of
the Holdback Shares that is equal in value to the sum of the amount of claim or
claims to be satisfied, or (b) all the Holdback Shares, shall be forfeited to
Medic. Such claim or claims shall be deemed satisfied to the extent of such
forfeiture.
10.8 Resolution of Conflicts; Arbitration.
(a) If the Exchanging Stockholders and the Premises
Stockholders give such written objection to Medic, Medic shall continue to hold
in reserve the Holdback Shares in trust until the rights of the Exchanging
Stockholders and the Premises Stockholders, on the one hand, and Medic, on the
other hand, with respect thereto have been agreed upon between the Exchanging
Stockholders, the Premises Stockholders and Medic or until such rights are
settled by arbitration.
(b) In case the Exchanging Stockholders and the Premises
Stockholders shall give such written objection to Medic, the Exchanging
Stockholders, the Premises Stockholders and Medic shall attempt promptly and in
good faith for a period of 30 days to agree upon the rights of the parties with
respect to each of such claims. If the Exchanging Stockholders, the Premises
Stockholders and Medic should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and the Holdback Shares
shall be distributed or forfeited in accordance with the terms thereof.
(c) If no such agreement can be reached after such period of
good faith negotiation, either Medic or the Exchanging Stockholders and the
Premises Stockholders may demand arbitration of the matter unless the amount of
the damage or loss is at issue in pending litigation with a third party, in
which event arbitration shall not be commenced until such amount is ascertained
or both parties agree to arbitration; and in any such event the matter shall be
settled by arbitration conducted by three arbitrators. Medic shall each select
one arbitrator and the Exchanging Stockholders and the Premises Stockholders
shall select another arbitrator, and the two arbitrators so selected shall
select a third arbitrator. The decision of the arbitrators so selected as to the
validity and amount of any claim in such Claim Notice shall be binding and
conclusive upon the parties to this Agreement, and Medic shall be entitled to
act in accordance with such decision and make distributions of the Holdback
Shares in accordance therewith. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in Wake County, North Carolina, if demand for
arbitration is made by the Exchanging Stockholders or the Premises Stockholders.
Any such arbitration shall be held in Columbia, South Carolina, if demand for
arbitration is made by Medic. Any such arbitration shall be conducted under the
rules
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then in effect of the American Arbitration Association, and shall be based on
the provisions and limitations of this Article 10.
10.9 Beneficial Interest. Subject to the rights of Medic hereunder, all
beneficial interest in the Holdback Shares shall be the property of the
Exchanging Stockholders and the Premises Stockholders from and after the
Effective Date and Medic shall have no interest therein. Any cash or stock
dividends or other distributions with respect to the Holdback Shares shall be
deemed to be added to the Holdback Shares and all such distributions shall
accrue to the benefit of the parties in proportion to the amounts of the
Holdback Shares distributed to such parties. The Exchanging Stockholders and the
Premises Stockholders shall have voting rights with respect to Holdback Shares
until such time, if any, as the Holdback Shares are lawfully forfeited to Medic.
10.10 Limitation on Liability. Notwithstanding any provision to the
contrary in this Agreement, all claims for indemnification shall be limited as
follows:
(a) No claim, either individually or in the aggregate, for
indemnification hereunder, shall be valid and assertable unless such claims in
the aggregate are equal to or greater than Fifty Thousand Dollars ($50,000) (the
"Basket Deductible"), in which case, subject to the limitations set forth in
Sections 10.10(b), (c) and (d) the indemnifying party shall be liable for
amounts relating back to the first dollar; provided, however, that the Basket
Deductible shall not apply with respect to claims made pursuant to: clause (iii)
or (iv) of subsection 10.1(a) above; Section 4.8(a), 4.12 or 4.24; Section 6.15;
clause (iii), (iv) or (v) of subsection 10.2(a) above; or Section 6A.4.
(b) In no event shall the aggregate liability of the Exchanging
Stockholders and the Premises Stockholders, collectively, for indemnification
hereunder or otherwise arising out of or relating to this Agreement exceed in
the aggregate 10% of the aggregate market value of the Merger Shares and the
Premises Shares as of the Closing Date. In no event shall the aggregate
liability of Medic and CompuSystems Acquisition for indemnification hereunder or
otherwise arising out of or relating to this Agreement exceed in the aggregate
10% of the aggregate market value of the Merger Shares and the Premises Shares
as of the Closing Date.
(c) Claims of Acquiror Indemnitees hereunder shall be satisfied only by
forfeiture of Holdback Shares; provided, however, that the limitation set forth
in this subsection (c) shall not apply in the event that an Exchanging
Stockholders' or a Premises Stockholders' liability is based upon intentional
misrepresentations or other fraudulent conduct.
(d) The parties agree that, prior to submitting any claim for
indemnification under this Article 10, they shall use reasonable efforts to
determine the amount, if any, by which
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their losses would be offset by recovery of insurance proceeds and to provide
the indemnitor notice of and a description of such determination.
(e) The Acquiror Indemnitees agree that: (i) the Exchanging
Stockholders' and the Premises Stockholders' liability for indemnification, if
any, shall be reduced to the extent that a claim or loss by a third party could
have been mitigated and the Acquiror Indemnitees failed to act reasonably and in
good faith to do so; (ii) the Exchanging Stockholders and the Premises
Stockholders shall be entitled to meaningfully participate in and jointly direct
such mitigation by the Acquirors; and (iii) in any event, the Exchanging
Stockholders and the Premises Stockholders shall have no liability to the extent
a claim or loss is sustained or exacerbated by a change in the management of
CompuSystems' customer relations, complaints, products, pricing, service or
accounts by the Acquirors after the Closing.
10.11 Provisions of General Application. The following provisions shall
apply with respect to any right of indemnification arising under this Agreement:
(a) Settlement. No settlement of a claim to which
indemnification rights apply shall be made without the prior written consent of
the indemnifying party, which consent shall not be unreasonably withheld;
provided however, that anything in this Agreement to the contrary
notwithstanding, (i) if there is a reasonable probability that a claim may
materially and adversely affect the indemnifying party other than as a result of
monetary damages or other monetary payments, the indemnifying party shall have
the right, at its own cost and expense, to compromise or settle such claim in
any reasonable matter, but (ii) the indemnifying party shall not, without prior
written consent of the indemnified party, settle or compromise any claim or
consent to the entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the indemnified
party a release from all liability in respect of such claim. In any event, all
parties shall retain the right to participate in defense of any such claim as
provided in Sections 10.1 and 10.2 above, and the indemnifying party shall act
reasonably and in accordance with good faith business judgment giving due
recognition to the interests of the indemnified party.
(b) Cooperation. The parties agree to cooperate fully with each other
in connection with the mitigation, defense, negotiation or settlement of any
such legal proceeding, claim or demand, and in any event, all parties shall
retain the right to participate in the defense of any such legal proceeding,
claim or demand, all subject to the provisions of Sections 10.1 and 102.
above.
(c) Insurance. Prior to enforcing any claim for indemnification against
the indemnifying party under this
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Agreement, the indemnified party shall administratively file in good faith with
any insurers all forms and submissions required by applicably policies for the
proceeds or other benefits of insurance coverage, if any, applicably to the
claim or event from which such indemnify right arose. In the event that
insurance proceeds are paid to the indemnified party respecting an event to
which an indemnification right applies hereunder, such indemnification right
shall apply only to the extent that the amount of damages indemnified against
exceeds such insurance proceeds actually paid to the indemnified party; provided
however, that: (a) such insurance proceeds shall not affect or be applied
towards the maximum liability established in Section 10.10(b); and (b)
collection by judicial or legal process of such insurance proceeds shall not be
a condition precedent to asserting or collecting such indemnification claim
under this Agreement. If the indemnifying party pays indemnity damages under
this Agreement, and the indemnified party subsequently receives insurance
proceeds for the same claim or event, then the indemnified party shall refund
such indemnify payments to the indemnifying party from such insurance proceeds
to the extent that the indemnified party has received benefits from both sources
(i.e., payments of indemnify damages from the indemnifying party and such
insurance proceed) in excess of the amount of indemnify damages incurred by or
asserted against the indemnified party.
(d) Assignment. To the extent that the indemnifying party shall have
actually paid indemnity damages to or on behalf of the indemnified party, the
indemnified party shall make a non-exclusive assignment to the indemnifying
party (as their interest may appear) of the remedies, rights and claims, if any,
of the indemnified party against any and all third parties for the same
liability, including, but not limited to, remedies, rights and claims against
(i) liability insurers and other insurance companies and (ii) any other person
which has indemnified the indemnified party for the full amount of such
liability. The parties shall cooperate reasonably in the pursuit of any such
remedies, rights and claims.
(e) No Implications. Neither the rights of any party to indemnification
from another party nor the obligations of any party to indemnify another party,
under this Agreement shall in any way imply or create, and each party
specifically disclaims, any responsibility whatsoever by such party for any
other party's liabilities (except as expressly provided herein to the contrary
as among the parties only) to any other person or entity or governmental body.
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ARTICLE 11
MISCELLANEOUS
11.1 Further Assurances. From time to time at or after the Closing,
each of the parties agrees to take, or cause to be taken, such further actions,
to execute, deliver and file, or cause to be executed, delivered and filed, such
further documents and instruments, and to obtain consents, as may be necessary
or reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement.
11.2 Expenses. Each of the parties hereto shall bear its respective
legal, investment banking, accounting, audit, and other costs and expenses
associated with this Agreement and the consummation of the transactions
contemplated hereby; provided, however, that such costs and expenses of
CompuSystems shall not exceed Seventy-Five Thousand Dollars ($75,000.00) if the
Closing shall occur (in which case, CompuSystems shall pay (or reimburse the
Exchanging Stockholders and the Premises Stockholders) for same, whether or not
incurred or invoiced before or after the Closing), and the Exchanging
Stockholders and the Premises Stockholders shall, as provided in Section 10.1,
indemnify the Acquiror Indemnitees for any such costs and expenses of
CompuSystems in excess of Seventy-Five Thousand Dollars ($75,000.00), and any of
the following expenses not approved in advance by Medic. All of CompuSystems'
legal, investment banking, accounting, and other professional fees and expenses
unrelated to this Agreement and the transactions contemplated hereby must be
approved in advance by Medic to the extent same are incurred or invoiced after
the Most Recent Fiscal Month End.
11.3 Applicable Law. Except as otherwise expressly provided herein,
this Agreement shall be governed by, and construed in accordance with, the law
of the State of North Carolina without reference to any choice or conflict of
law principle, provision or rule, including all matters of construction,
validity and performance.
11.4 Notices. All notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (i) upon personal delivery or receipt of a telecopy transmission,
(ii) two (2) days after being sent by registered or certified United States
mail, return receipt requested, or (iii) one (1) day after being transmitted by
a nationally recognized overnight courier service, properly addressed and
postage prepaid to the intended recipient as follows:
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If to the Exchanging Stockholders to
Nexsen B. Johnson
5206 Pine Straw Road
Columbia, South Carolina 29206
Telephone No.: (803) 738-9283
Telecopy No.: (803) 787-8366
Eugene F. Gallogly
109 Cricket Hill Road
Columbia, South Carolina 29206
or to the Premises Stockholder to
Nexsen B. Johnson
Sylvia Johnson
5206 Pine Straw Road
Columbia, South Carolina 29206
Telephone No.: (803) 738-9283
Telecopy No.: (803) 787-8366
in each case with a copy to:
Mark Bender, Esq.
Nexsen Pruet Jacobs & Pollard, L.L.P.
1441 Main Street, 15th Floor
Columbia, South Carolina 29201
Telephone No.: (803) 253-8212
Telecopy No.: (803) 253-8277
If to the Acquirors, to:
John P. McConnell, President
Medic Computer Systems, Inc.
8601 Six Forks Road, Suite 300
Raleigh, North Carolina 27615
Telephone No.: (919) 847-8102
Telecopy No.: (919) 846-1555
with a copy to:
Larry E. Robbins, Esq.
Wyrick, Robbins, Yates & Ponton L.L.P.
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Telephone No.: (919) 781-4000
Telecopy No.: (919) 781-4865
Notice of any change of address shall be effective if given in the manner
provided above.
11.5 Entire Agreement. This Agreement (including the
Exhibits attached hereto and the documents referred to herein,
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all of which are a part hereof) constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter contained
herein, supersedes and cancels all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter (including, without limitation, the letter of
intent dated April 26, 1996, which is hereby terminated). There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto with respect to the transactions under this Agreement other
than those set forth herein or made hereunder.
11.6 Amendments. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
11.7 Headings; References. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All references
herein to "Articles", "Sections" or "Exhibits" shall be deemed to be references
to Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
Terms such as "herein", "hereof", "hereunder", "above", "below" and words of
similar import, shall be deemed to be references to this Agreement in its
entirety, under the context otherwise clearly indicated.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original.
11.9 Parties in Interest; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, heirs and personal representatives. Nothing in this Agreement,
express or implied, is intended to confer upon any Person not a party to this
Agreement any rights or remedies under or by reason of this Agreement. No party
to this Agreement may assign or delegate all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
consent of the other parties to this Agreement.
11.10 Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
11.11 JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
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JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE CITY OF RALEIGH,
NORTH CAROLINA AND COLUMBIA, SOUTH CAROLINA FOR ANY ACTIONS, SUITS, OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY; PROVIDED HOWEVER, THAT (A) IN THE EVENT THAT LITIGATION IS
INSTITUTED AGAINST THE ACQUIRORS, SUCH LITIGATION SHALL ONLY BE INSTITUTED IN
THE COURTS LOCATED IN RALEIGH, NORTH CAROLINA; AND (B) IN THE EVENT THAT
LITIGATION IS INSTITUTED AGAINST THE TRANSFERORS OR THE PREMISES STOCKHOLDERS,
SUCH LITIGATION SHALL ONLY BE INSTITUTED IN THE COURTS LOCATED IN COLUMBIA,
SOUTH CAROLINA; AND PROVIDED FURTHER HOWEVER, THAT ONCE LITIGATION IS COMMENCED
AS SET FORTH ABOVE, COUNTER CLAIMS OR CROSS-CLAIMS MAY BE INSTITUTED, AT THE
OPTION OF THE COUNTER CLAIMANT OR CROSS-CLAIMANT, IN THE COURT IN WHICH SUCH
LITIGATION IS PENDING. EACH PARTY HERETO AGREES NOT TO COMMENCE ANY ACTION, SUIT
OR PROCEEDING RELATING THERETO EXCEPT IN SUCH COURTS, AND FURTHER AGREES THAT
SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, TO THE RESPECTIVE PARTY'S ADDRESS SET
FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS OF ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST ANY OF ACQUIRORS IN ANY SUCH COURT. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO
THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN SUCH STATE OR FEDERAL
COURTS AS AFORESAID AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11.12 Waiver. Any of the conditions to Closing set forth in this
Agreement may be waived at any time prior to or at the Closing hereunder by the
party entitled to the benefit thereof. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of such party
thereafter to enforce each and every such provision. No waiver of any breach of
or non-compliance with this Agreement shall be held to be a waiver of any other
or subsequent breach or non-compliance.
11.13 Incorporation of Exhibits. All of the Exhibits identified in this
Agreement are incorporated by reference into this Agreement and made a part
hereof.
11.14 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event of any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of the
authorship of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement of Merger to be legally binding and effective as of the date first
above written.
MEDIC:
MEDIC COMPUTER SYSTEMS, INC.
By: /s/ Luanne L. Roth
Luanne L. Roth, Vice President
COMPUSYSTEMS ACQUISITION:
COMPUSYSTEMS ACQUISITION CORPORATION
By: /s/ Luanne L. Roth
Luanne L. Roth, Vice President
COMPUSYSTEMS:
COMPUSYSTEMS, INC.
By: /s/ Nexsen B. Johnson
Nexsen B. Johnson, President
EXCHANGING AND PREMISES STOCKHOLDERS:
/s/ Nexsen B. Johnson
Nexsen B. Johnson
/s/ Sylvia Johnson
Sylvia Johnson
/s/ Eugene F. Gallogly
Eugene F. Gallogly
ARTICLES OF MERGER OF FOREIGN AND DOMESTIC CORPORATIONS
OF
COMPUSYSTEMS ACQUISITION CORPORATION
INTO
COMPUSYSTEMS, INC.
Pursuant to s.33-11-101 and 33-11-107 of the South Carolina
Business Corporations Act of 1988, as amended, and Sections 55-11-01,
55-11-05 and 55-11-07 of the North Carolina Business Corporation Act,
the undersigned domestic and foreign corporations adopt the following
articles of merger for the purpose of merging into a single corporation:
1. The names of the undersigned corporations and the states under the
laws of which each is organized are:
Name of Corporation State of Incorporation
CompuSystems, Inc. South Carolina
CompuSystems Acquisition Corporation North Carolina
2. The laws of the state under which each corporation is organized
permit such a merger.
3. The name of the surviving corporation is CompuSystems, Inc, and it
is to be governed by the laws of the State of South Carolina.
4. The filing of these Articles of Merger shall merge CompuSystems
Acquisition Corporation into CompuSystems, Inc., and convert the
outstanding shares of the capital stock of CompuSystems, Inc. and
the outstanding shares of the capital stock of CompuSystems
Acquisition Corporation, all in accordance with the Plan of Merger,
which was duly adopted by the respective Board of Directors of
CompuSystems, Inc. and CompuSystems Acquisition Corporation, a copy
of which is attached hereto as Exhibit A and made a part hereof
(the "Plan of Merger").
5. The Plan of Merger was duly approved by the shareholders of
CompuSystems, Inc. in the manner prescribed by the laws of the
State of South Carolina as follows:
Number of Number of Number of
Number of Votes Represented Undisputed
Voting Outstanding Entitled to at the Shares Voted
Group Shares Be Cast Meeting For Against
Common 40,000 40,000 40,000 40,000 0
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6. The Plan of Merger was duly approved by the sole shareholder of
CompuSystems Acquisition Corporation in the manner prescribed by
the laws of the State of North Carolina as follows:
Number of Number of Number of
Number of Votes Represented Undisputed
Voting Outstanding Entitled to at the Shares Voted
Group Shares Be Cast Meeting For Against
Common 1,000 1,000 1,000 1,000 0
7. The Plan of Merger and the transactions contemplated therein
were approved by the shareholders of both the surviving
corporation and the merging corporation as required by Chapter
55 of the North Carolina General Statutes and the South Carolina
Business Corporation Act of 1988, as amended.
8. These Articles of Merger shall be effective at 5:00 p.m. local
time on the day filed with the Offices of the Secretary of State
of North Carolina and South Carolina.
DATE: May 31, 1996 COMPUSYSTEMS, INC.
By: /s/ Nexsen B. Johnson
Its: President
COMPUSYSTEMS ACQUISITION
CORPORATION
By: /s/ Luanne L. Roth
Its: Vice President
2
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EXHIBIT A
Plan of Merger
See Attached.
3
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PLAN OF MERGER
OF
COMPUSYSTEMS ACQUISITION CORPORATION
INTO
COMPUSYSTEMS, INC.
May 31, 1996
This document constitutes the plan of merger (this "Plan") for a
merger (the "Merger") between CompuSystems Acquisition Corporation, a
North Carolina corporation ("CompuSystems Acquisition"), and
CompuSystems, Inc., a South Carolina corporation ("CompuSystems").
CompuSystems Acquisition and CompuSystems are sometimes hereinafter
collectively referred to as the "Merging Companies" or the "Constituent
Corporations."
BACKGROUND
A. CompuSystems is a corporation duly organized and existing
under the laws of the State of South Carolina with authorized capital of
100,000 shares of common stock ("CompuSystems Common Stock"), of which
40,000 shares of CompuSystems Common Stock are issued and outstanding.
B. CompuSystems Acquisition is a corporation duly organized and
existing under the laws of the State of North Carolina with authorized
capital of 1,000 shares of common stock, all of which are issued and
outstanding. CompuSystems Acquisition is a wholly-owned subsidiary of
Medic Computer Systems, Inc. ("Medic"), a corporation duly organized and
existing under the laws of the State of North Carolina.
C. This Plan shall be part of that certain definitive Agreement
of Merger, dated May 31, 1996, by and among CompuSystems, CompuSystems
Acquisition, Medic and the shareholders of CompuSystems (the "Merger
Agreement"), setting forth the respective rights and obligations of such
parties in connection with the adoption and implementation of this Plan.
This Plan is made, executed and delivered pursuant to the Merger
Agreement, and is subject to all the terms, provisions and conditions
thereof. To the extent of any conflict between the terms hereof and
thereof, the terms of the Merger Agreement shall be controlling. All
capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement unless the context clearly
requires otherwise.
D. The Merger shall be implemented as provided herein upon the
approval of the Board of Directors of each Merging Company and Medic,
and the owners of record of at least two-thirds of the outstanding
shares of each Merging Company.
E. The parties intend that the transactions contemplated hereby
will qualify as a tax-free reverse triangular merger of CompuSystems
Acquisition with and into CompuSystems in a reorganization pursuant to
Code Sections 368(a)(1)(A) and 368(a)(2)(E), and will qualify for
<PAGE>
pooling for interests accounting treatment pursuant to Accounting
Principles Board Opinion NO. 16, "Accounting for Business Combinations".
TERMS OF MERGER
1. The Merger. On and subject to the terms and conditions of the
Merger Agreement, at the Effective Time CompuSystems Acquisition shall
be merged with and into CompuSystems (the "Merger"), the separate
corporate existence of CompuSystems Acquisition shall thereupon cease,
and CompuSystems shall be the surviving corporation in the Merger (the
"Surviving Corporation"). The Surviving Corporation shall, from and
after the Effective Time, possess all the rights, privileges, powers and
franchises of whatsoever nature and description, as well as a public or
private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all rights,
privileges, powers and franchises of each of the Constituent
Corporations, and all property, tangible and intangible, real, personal
and mixed, and debts due to either of the Constituent Corporations on
whatever account as well for stock subscriptions as all other things in
action or belonging to each of the Constituent Corporations shall be
vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interests
shall be thereafter as effectually the property of the Surviving
Corporation as they were of the several and respective Constituent
Corporations, and the title to any real estate vested by deed or
otherwise in any of the Constituent Corporations shall not revert or be
in any way impaired by reason of the Merger. All rights of creditors
and all liens upon the property of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by
it. Any claim existing or action or proceeding, whether civil, criminal
or administrative, pending by or against either Constituent Corporation
may be prosecuted to judgment or decree as if the Merger had not taken
place, or the Surviving Corporation may be substituted in such action or
proceeding. The foregoing shall not limit the effects of the Merger as
set forth in Section 33-11-106 of the South Carolina Business
Corporations Act of 1988, as amended (the "Corporations Act").
2. Effective Time. At the time of the Closing, the Constituent
Corporations shall cause Articles of Merger (the "Articles of Merger")
to be duly executed and filed with the Secretary of State of the State
of South Carolina as provided under the Corporations Act and with the
Secretary of State of the State of North Carolina as provided under the
North Carolina Business Corporation Act. The Merger shall become
effective as soon as practicable after the Closing on the time and date
specified in the Articles of Merger, and in no event later than 3 days
after the Closing, and such time is hereinafter referred to as the
"Effective Time".
3. Medic Common Stock. Medic shall make available to
CompuSystems Acquisition a sufficient number of shares of Medic Common
Stock having such characteristics as are necessary to effect the Merger
as required herein.
4. Conversion and Exchange of Shares. The manner of converting
and exchanging shares of the corporations participating in the Merger
shall be as follows:
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(a) Stock of CompuSystems Acquisition. Each share of capital
stock of CompuSystems Acquisition issued and outstanding immediately
prior to the Effective Time shall thereupon be converted into and become
one (1) share of Common Stock of the Surviving Corporation. Each share
of such Common Stock issued pursuant to this subsection shall be fully
paid and nonassessable.
(b) Stock of CompuSystems. At and as of the Effective Time
each CompuSystems Share issued and outstanding immediately prior to the
Effective Time (excluding shares held by CompuSystems as treasury stock,
if any, which shares shall be cancelled and extinguished at the
Effective Time) shall by virtue of the Merger and without any action on
the part of the holder thereof, be exchanged for and converted into the
right to receive from Medic 8.68055 shares of the $.01 par value common
stock of Medic (the "Medic Common Stock"). CompuSystems Shares
exchanged and converted as provided in this subsection 4(b) are herein
sometime referred to as "Converted CompuSystems Stock".
(c) Exchange of Stock Certificates. Immediately after the
Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Converted CompuSystems
Stock shall surrender the same to an agent or agents designated by the
Surviving Corporation, and shall thereupon be entitled to receive
promptly in exchange therefor one or more certificates representing the
number of shares of Medic Common Stock into which the shares of
Converted CompuSystems Stock represented by the certificate or
certificates so surrendered shall have been exchanged and converted
pursuant to subsection 4(b) above. The certificates representing Medic
Common Stock issued pursuant to this subsection shall be in such
denominations reasonably requested in writing in advance by the intended
recipients thereof. Dividends payable after the Effective Time to
holders of record in respect of shares of Medic Common Stock into which
certificates for shares of Converted CompuSystems Stock shall be
exchangeable, shall not be paid to holders of such certificates until
their certificates are surrendered for exchange as aforesaid.
Notwithstanding anything to the contrary herein, a portion of the Merger
Shares otherwise transferable to the Exchanging Stockholders pursuant to
this Article 4, will be held in trust by Medic as described in and
pursuant to the provisions of Section 10.5 of the Merger Agreement.
Each share of Medic Common Stock issued pursuant to this subsection
shall be validly issued, fully paid, and non-assessable upon surrender
of the certificates for Converted CompuSystems Stock as required in this
subsection.
(d) No Rights. At the Effective Time, the holders of
CompuSystems capital stock immediately prior to the Effective Time shall
cease to have any rights as stockholders of CompuSystems, except such
rights as may be available pursuant to this Agreement.
(e) No Further Transfers. At and after the Effective Time,
no transfer of the CompuSystems Shares outstanding prior to the
Effective Time shall be made on the stock transfer books of the
Surviving Corporation or otherwise. If, after the Effective Time,
certificates for CompuSystems Shares are presented to the Surviving
Corporation, they shall be cancelled and exchanged for the Merger Shares
as provided above.
5. Fractional Shares. No fractional shares of Medic Common Stock
shall be issued to the Exchanging Stockholders in connection with the
Merger. Any Exchanging Stockholder who would otherwise be entitled to
receive a fractional share pursuant to the Merger shall
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receive cash for such fractional share at a per share rate equal to the
closing ask price of Medic Common Stock on the NASDAQ National Market
System on the day immediately preceding the Closing Date.
6. Articles of Incorporation. The Articles of Incorporation of
CompuSystems Acquisition, as amended by the Articles of Merger, in
effect immediately prior to the Effective Time shall be and remain the
Articles of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and applicable state
corporation law.
7. Bylaws. The Bylaws of CompuSystems Acquisition in effect
immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation, until duly amended in accordance with the terms
thereof and applicable state corporation law.
8. Directors. The directors of CompuSystems Acquisition shall
become the directors of the Surviving Corporation at and as of the
Effective Time until their successors shall have been duly elected or
appointed and qualified in accordance with the Surviving Corporation's
Articles of Incorporation and Bylaws. The directors of CompuSystems
shall cease to be directors of any Constituent Corporation immediately
prior to the Effective Time.
9. Officers. The officers of CompuSystems Acquisition shall
become the officers of the Surviving Corporation at and as of the
Effective Time (retaining their respective positions and terms of
office) until their successors have been duly elected or appointed and
qualified in accordance with the Surviving Corporation's Bylaws. The
officers of CompuSystems shall cease to be officers of any Constituent
Corporation immediately prior to the Effective Time.
10. Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds,
affidavits of corporate name change, bills of sale, assignments,
assurances or any other actions or things may be necessary or desirable
to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations
acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation or
Medic shall be authorized to execute and deliver, in the name and on
behalf of each of the Constituent Corporations or otherwise, all such
deeds, affidavits of corporate name change, bills of sale, assignments
and assurances and to take and do, in the name and on behalf of each of
the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry
out this Agreement.
[SIGNATURE PAGE ATTACHED]
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IN WITNESS WHEREOF, the Constituent Corporations have executed this
Plan of Merger as the parties hereto to be effective as of the 31st day
of May, 1996.
COMPUSYSTEMS, INC.
By: /s/ Nexsen B. Johnson
Its: President
COMPUSYSTEMS ACQUISITION
CORPORATION
By: /s/ Luanne L. Roth
Its: Vice President
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