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EXHIBIT 10.3
STOCK PURCHASE AGREEMENT
AMONG INFOCURE CORPORATION ("BUYER"),
AND THE SHAREHOLDERS ("SHAREHOLDERS") OF
ROVAK, INC. ("COMPANY")
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TABLE OF CONTENTS
PAGE
SECTION I.
DEFINITIONS........................................................................................... 1
1.1 CERTAIN DEFINITIONS................................................................. 1
SECTION II.
SALE AND TRANSFER OF COMPANY SHARES; CLOSING.......................................................... 3
2.1 COMPANY SHARES Subject to the terms and conditions of this Agreement,
at the Closing, Shareholders will sell and transfer the Company Shares to Buyer,
and Buyer will purchase the Company Shares from Shareholders........................ 3
SECTION III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS........................................................ 6
3.1 CORPORATE........................................................................... 6
3.2 FINANCIAL STATEMENTS................................................................ 7
3.3 CUSTOMERS........................................................................... 7
3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES..................................... 8
3.5 GUARANTIES/LIENS.................................................................... 8
3.6 NO UNDISCLOSED LIABILITIES.......................................................... 8
3.7 ACCOUNTS RECEIVABLE................................................................. 9
3.8 OWNERSHIP OF INTELLECTUAL PROPERTY.................................................. 9
3.9 PROPERTY AND EQUIPMENT.............................................................. 11
3.10 LICENSE AGREEMENTS.................................................................. 11
3.11 CONSULTING AND DEVELOPMENT AGREEMENTS............................................... 12
3.12 MAINTENANCE/COMMITMENTS............................................................. 12
3.13 ALL INTANGIBLE ASSETS USED IN THE BUSINESS.......................................... 12
3.14 EMPLOYEES/CONSULTANTS/DIRECTORS..................................................... 12
3.15 ASSUMED AGREEMENTS.................................................................. 13
3.16 LITIGATION AND ADVERSE EVENTS....................................................... 14
3.17 COMPLIANCE WITH APPLICABLE LAW...................................................... 14
3.18 TAXES AND TAX RETURNS............................................................... 14
3.19 CONSENTS............................................................................ 14
3.20 BROKERS AND FINDERS................................................................. 14
3.21 RELATED TRANSACTIONS................................................................ 15
3.22 NO UNTRUE STATEMENTS................................................................ 15
SECTION IV.
REPRESENTATIONS AND WARRANTIES OF BUYER............................................................... 16
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4.1 ORGANIZATION AND STANDING OF BUYER....................................................16
4.2 AUTHORIZATION.........................................................................16
4.3 CORPORATE.............................................................................17
4.4 BROKERS AND FINDERS...................................................................17
4.5 NO UNTRUE STATEMENTS..................................................................17
SECTION V.
CONDITIONS TO THE OBLIGATIONS OF BUYER..................................................................17
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE...........................................17
5.2 THIRD PARTY CONSENTS..................................................................18
5.3 OPINION OF COUNSEL TO THE SHAREHOLDERS................................................18
5.4 UPDATE DISCLOSURE SCHEDULE............................................................18
5.5 PUBLIC OFFERING.......................................................................18
5.6 ESCROW AGREEMENT. ...................................................................18
5.7 EMPLOYMENT AGREEMENT..................................................................18
5.8 EMPLOYMENT AGREEMENT..................................................................18
5.9 LEASE AGREEMENT.......................................................................18
5.10 NO MATERIAL ADVERSE CHANGE............................................................18
5.11 TERMINATION OF CERTAIN AGREEMENTS.....................................................18
5.12 S-4 REGISTRATION STATEMENT............................................................19
5.13 AGREEMENT OF CERTAIN SHAREHOLDERS. ..................................................19
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS.......................................................19
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE...........................................19
6.2 OPINION OF COUNSEL TO BUYER...........................................................19
6.3 PUBLIC OFFERING.......................................................................19
6.4 ESCROW AGREEMENT. ...................................................................19
SECTION VII.
OTHER COVENANTS.........................................................................................20
7.1 CONDUCT OF BUSINESS...................................................................20
SECTION VIII.
CONFIDENTIALITY AND SECURITY............................................................................20
8.1 CONFIDENTIALITY.......................................................................20
SECTION IX.
INDEMNIFICATION.........................................................................................23
9.1 INDEMNIFICATION BY THE SHAREHOLDERS...................................................23
9.2 INDEMNIFICATION BY BUYER..............................................................24
9.3 REIMBURSEMENT.........................................................................26
9.4 CLAIMS................................................................................26
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9.5 RESOLUTION OF DISPUTES................................................................26
SECTION X.
COVENANT NOT TO COMPETE.................................................................................27
SECTION XI.
TERMINATION AND ABANDONMENT.............................................................................28
11.1 TERMINATION AND ABANDONMENT...........................................................28
11.2 RIGHTS AND OBLIGATIONS ON TERMINATION.................................................28
SECTION XII.
MISCELLANEOUS PROVISIONS................................................................................29
12.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES................................................29
12.2 HEADINGS..............................................................................29
12.3 FURTHER ASSURANCES....................................................................29
12.4 FORCE MAJEURE.........................................................................29
12.5 CUMULATIVE REMEDIES...................................................................29
12.6 ENTIRE AGREEMENT......................................................................29
12.7 SPECIFIC PERFORMANCE..................................................................30
12.8 NOTICES...............................................................................30
12.9 NON-WAIVER OF DEFAULT.................................................................30
12.10 PARTIAL INVALIDITY....................................................................30
12.11 DUPLICATE ORIGINALS...................................................................30
12.12 ASSIGNMENT............................................................................31
12.13 FEES AND EXPENSES.....................................................................31
12.14 GOVERNING LAW.........................................................................31
12.15 COUNTERPARTS AND EXHIBITS.............................................................31
12.16 PUBLICITY.............................................................................31
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STOCK PURCHASE AGREEMENT
AMONG INFOCURE CORPORATION ("BUYER"),
AND THE SHAREHOLDERS ("SHAREHOLDERS") OF
ROVAK, INC. ("COMPANY")
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 1st day
of February, 1997 by and among INFOCURE CORPORATION, a Delaware corporation
("Buyer"), and the UNDERSIGNED SHAREHOLDERS ("Shareholders") of ROVAK, INC., a
Minnesota corporation ("Company").
WHEREAS, Shareholders desire to sell, and Buyer desires to purchase,
all of the issued and outstanding shares (the "Company Shares") of capital stock
of Company for the consideration and on the terms set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual promises herein made and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION I.
DEFINITIONS
1.1 CERTAIN DEFINITIONS
(a) "Adjustment Amount" is defined in Section 2.5.
(b) "Affiliate" means any person, corporation, or other
business entity (i) which, whether directly or indirectly through one or more
intermediaries, is controlled by the Shareholders (individually or as a group)
or (ii) in which Shareholders (individually or as a group) own, directly or
indirectly through one or more intermediaries, 5% or more of the voting power
for the election of the governing board.
(c) "Business" means the development, marketing and
support of the Software as currently conducted by Company.
(d) "Closing" is defined in Section 2.3.
(e) "Closing Date" means the date and time as of which
the Closing actually takes place.
(f) "Copyright" means all copyright ownership of the
Software and Documentation.
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(g) "Development Software" means all software, object, source,
and executable code licensed by Company as licensee which is used in the conduct
of the development, maintenance, and support of the Software. A list of the
Development Software is set forth in Section 1.1(g) of the Disclosure Schedule.
(h) "Distributor Software" means all software, object, source,
and executable code, sublicensed, sold, leased or distributed by Company as
licensor or lessor which is not owned by Company. The term excludes Development
Software. A list of the Distributor Software is set forth in Section 1.1(h) of
the Disclosure Schedule.
(i) "Distributorship Agreements" means all appointments of
Company to sell or license Hardware or Distributor Software. A list of such
appointments is set forth in Section 1.1(i) of the Disclosure Schedule.
(j) "Documentation" means all technical manuals and notes,
user manuals, and all other documents developed or in development relating to or
used in the development, maintenance, support, enhancement and use of the
Software, including pending improvements, fixes and enhancements regardless of
the media upon which the Documentation exists, which is owned by Company.
(k) "Escrow Fund" is defined in Section 2.7.
(l) "Escrow Shares" are defined in Section 2.7.
(m) "GAAP" means generally accepted United States accounting
principles, consistently applied on an accrual basis.
(n) "Hardware" means all computers, components, peripherals,
and other equipment currently offered for sale by Company in the course of its
business. Section 1.1(n) of the Disclosure Schedule lists all Hardware currently
being sold by Company.
(o) "Intellectual Property" means all patents, patent pending,
copyrights, trade secrets, techniques, know-how, and other intangible assets and
are legally protectable or recognized as forms of property, whether or not
reduced to practice or a writing.
(p) "License Agreements" means those agreements entered into
by Company (or its predecessors) as licensor for the licensing of any Software,
Distributor Software and/or Intellectual Property.
(q) "Management of Company" means the current chief executive
officer, the chief operating officer, and the chief financial officer of
Company.
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(r) "Public Offering" means the first public offering of
common stock of Buyer or any entity into which it merges prior to or upon
consummation of the public offering, the net proceeds of which paid to the
issuer shall exceed $12 million.
(s) "Purchase Price is defined in Section 2.2.
(t) "Purchase Price Delivery Date" is defined in Section 2.4.
(u) "Software" means all software, object, source and
executable code, licensed, sold or leased by Company as licensor or lessor, and
all fixes, updates, upgrades and enhancements heretofore developed or being
developed as well as other software developed or being developed for marketing
to dentists, dental practices, physicians, clinics, hospitals and medical groups
which is owned by Company. A list of the Software is set forth in Section 1.1(g)
of the Disclosure Schedule.
(v) "Trademarks" mean the trademarks listed in Section 3.8(c)
of the Disclosure Schedule.
(w) "Shareholder" shall include holders of warrants to
purchase shares of common stock of Company.
SECTION II.
SALE AND TRANSFER OF COMPANY SHARES; CLOSING
2.1 COMPANY SHARES Subject to the terms and conditions of this
Agreement, at the Closing, Shareholders will sell and transfer the Company
Shares to Buyer, and Buyer will purchase the Company Shares from Shareholders.
2.2 PURCHASE PRICE The purchase price (the "Purchase Price") for the
Company Shares will be: (a) the sum of Two Million Eight Hundred Five Thousand
and No/100ths United States Dollars (US$2,805,000), plus or minus the Adjustment
Amount, and (b) a number of shares of common stock in Buyer equal to the
quotient of (i) One Million (1,000,000) divided by (ii) the price to the public
of a share of common stock of Buyer pursuant to the Public Offering, which
number of shares shall have a total value of $1,000,000 at the Public Offering
price. Notwithstanding anything in this Agreement to the contrary, Buyer
reserves the right to substitute up to $360,000 of cash for an equivalent value
of shares of common stock of Buyer based on the Public Offering price.
2.3 CLOSING. The closing ("Closing") of the sale of the Company Shares
as contemplated by this Agreement shall occur at the offices of Glass,
XxXxxxxxxx, Xxxxxxxx & Xxxxxxx, LLP in Atlanta, Georgia at 10:00 a.m. local time
on the day on which the Public Offering commences, or such other date or place
as the parties hereafter mutually agree in writing, subject to the conditions
set forth hereafter. The Public Offering of the Shares shall be deemed to have
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commenced at the time, which is the earlier of the time after (i) the Buyer's
Registration Statement as filed with the Securities and Exchange Commission
becomes effective, or (ii) the underwriters have agreed to purchase the shares
of Buyer pursuant to the Public Offering. The sale of Company Shares shall be
effective upon the commencement of business on the date of Closing ("Closing
Date"), notwithstanding subsequent delivery of the Purchase Price as set forth
in Paragraph 2.4 below.
2.4 DELIVERY OF PURCHASE PRICE. Delivery by the Buyer of the shares of
Buyer comprising the Purchase Price for the respective accounts of the
Shareholders (less the Escrow Shares described in paragraph 2.7), delivery of
the Escrow Shares and payment of the Escrow Fund to the escrow agent as
described in paragraph 2.7, and payment of the monetary portion of the Purchase
Price (less the Escrow Fund) by certified or official bank check or checks
payable in New York Clearing House (next day) funds or wire transfers or other
means of immediately available funds to the respective accounts of the
Shareholders, shall take place at the offices of Glass, XxXxxxxxxx, Xxxxxxxx &
Xxxxxxx, LLP in Atlanta, Georgia, or at such other location as Buyer may
designate by written notice to Shareholders, at 10:00 a.m., local time, one
business day after Buyer receives the proceeds of the Public Offering (such time
and date of delivery and payment are called the "Purchase Price Delivery Date").
2.5 ADJUSTMENT AMOUNT. The Adjustment Amount (which may be a positive
or negative number) will be equal to (a) the consolidated stockholders' equity
of the Company as of the Closing Date determined in accordance with GAAP
consistent with the basis on which the Financial Statements referred to in
paragraph 3.2 were prepared, minus (b) negative $161,000.00. If the Adjustment
Amount is positive, the Purchase Price shall be increased; if the Adjustment
Amount is negative, the Purchase Price shall be decreased. For periods during
which the Company pays income taxes on a cash basis, there shall be accrued a
deferred liability for taxes payable by reason of such election to be taxed on a
cash basis versus an accrual basis.
2.6 ADJUSTMENT PROCEDURE.
(a) Buyer shall cause, at its expense, a balance sheet to be
prepared as of the Closing Date of the Company. The balance sheet shall be
completed within sixty (60) days after the Closing Date. As soon as such
financial statement is available to Buyer, Buyer shall deliver to Shareholders
the financial statement. Shareholders shall have thirty (30) days to review and
object to the balance sheet. Any disagreements as to the amounts of any
adjustment to be made to the balance sheet, if not mutually resolved, shall be
resolved as provided in paragraph 9.5, except that the arbitrator(s) shall be
person(s) experienced in financial and accounting matters. Upon the final
resolution of the financial statement as of the Closing Date, a final adjustment
shall be made to the consideration paid at the Closing as provided in paragraph
2.5 and the amount of the final adjustment shall be immediately paid to the
appropriate parties from the Escrow Fund to the extent thereof, with any
shortfall immediately payable by the appropriate parties.
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(b) The parties shall use their best efforts to estimate the
amount of the adjustment on or prior to the Closing Date and the Purchase Price
as of the Closing Date will reflect such tentative adjustment which will be
subject to further adjustment pursuant to the provisions of paragraph 2.6(a).
All adjustments shall be made by increasing or decreasing the monetary portion
of the Purchase Price.
2.7 ESCROW. On or before the Closing Date, the parties shall enter into
an Escrow Agreement in substantially the form attached as Exhibit 2.7
establishing an escrow of (a) a number of shares of Buyer equal to the lesser of
(i) the number of shares of common stock in Buyer which comprise a portion of
the Purchase Price pursuant to paragraph 2.2, or (ii) the quotient of 815,000
divided by the per share price to the public of the common stock of Buyer in the
Public Offering (the "Escrow Shares"); and (b) an amount in cash equal to the
difference of $815,000 and the total value of the Escrow Shares based on the per
share price to the public in the Public Offering (the "Escrow Fund"). After
determination of the post-closing adjustment pursuant to paragraph 2.8 below,
the escrow shall be adjusted to an amount equal to ten percent (10%) of the
total Purchase Price.
2.8 POST-CLOSING ADJUSTMENT.
(a) The number of shares of Buyer comprising the Purchase Price shall
be subject to adjustment based on the actual net operating profit (net income
before interest and taxes) of Company or its successor for the year ended
December 31, 1997 as follows:
ACTUAL NET OPERATING PROFIT REDUCTION IN SHARES OF BUYER
$621,000 or less All of the Escrow Shares
Between $621,000 and $750,000 The product of the Escrow Shares times
the quotient of (i) $750,000 minus actual
net operating profit, divided by (ii)
$129,000
$750,000 or more No adjustment
(b) Buyer shall cause, at its expense, an income statement showing net
operating profit of the Company or its successor to be prepared as of December
31, 1997. The income statement sheet shall be completed within sixty (60) days
after December 31, 1997. As soon as such financial statement is available to
Buyer, Buyer shall deliver to Shareholders the financial statement. Shareholders
shall have thirty (30) days to review and object to the income statement. Any
disagreements as to the amounts of any adjustment to be made to the income
statement, if not mutually resolved, shall be resolved as provided in paragraph
9.5, except that the arbitrator(s) shall be person(s) experienced in financial
and accounting matters. Upon the final resolution of the financial statement as
of December 31, 1997, a final post-closing adjustment shall be made to the
consideration paid at the Closing as provided in paragraph 2.8(a) and the amount
of the xxxxx
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post-closing adjustment shall be immediately paid to the appropriate parties
from the Escrow Shares, subject to the amount to remain in escrow after the
post-closing adjustment as provided in paragraph 2.7 above.
(c) For purposes of this paragraph 2.8 only, net operating
profit shall not be reduced for any income taxes, interest, expenses related to
the Public Offering, allocations of corporate overhead by Buyer or its
subsidiaries (other than the Company), expenses related to corporate meetings
and other divisions, incentive compensation payable to Xxxx Xxxxxxx in excess
of the base salary stated in his employment agreement and extraordinary one
time charges; it being understood that interpretations consistent herewith,
allocations, credits, debits and adjusting transactions are subject to
quarterly review by Buyer and a single representative of the Shareholders.
SECTION III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to Buyer
on the date hereof as follows:
3.1 CORPORATE
(a) Company is a corporation duly organized, validly existing
and in good standing under the laws of Minnesota and is qualified to conduct
business in all other jurisdictions in which the character of its assets and the
nature of its business requires it to be qualified to do business and in which
the failure to be so qualified could have a materially adverse effect on its
business, operations, prospects, assets or financial condition.
(b) A true, correct and complete copy of the Articles of
Incorporation and bylaws of Company are as set forth in Section 3.1(b)(i) of the
Disclosure Schedule. There are 8,217 shares of common stock of Company issued
and outstanding and no warrants or options or other rights to acquire capital
stock of Company are outstanding.
(c) Company holds all licenses, permits, authorizations and
other approvals from all governmental authorities necessary for the conduct of
the Business of Company as currently conducted, which failure could have a
material adverse effect on its business, operations, prospects, assets or
financial condition of Company. A complete list of such licenses, permits,
authorizations and approvals are set forth in Section 3.1(c) of the Disclosure
Schedule.
(d) This Agreement constitutes the legal, valid, and
binding obligation of Shareholders, enforceable against Shareholders in
accordance with its terms. Upon the execution and delivery by Shareholders of
the Escrow Agreement, the Escrow Agreement will constitute the
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legal, valid, and binding obligation of Shareholders, enforceable against
Shareholders in accordance with its respective terms.
(e) Company has no subsidiaries.
(f) The shareholders of Company of record and beneficial
owners and the shares of common stock of Company owned by each shareholder and
the holders of all warrants, options, convertible securities and other rights to
acquire common stock of Company are set forth in Section 3.1(f) of the
Disclosure Schedule. Each Shareholder represents that the Company Shares
registered in the Shareholder's name are free and clear of any and all liens,
restrictions, claims, charges, options, rights of first refusal or encumbrances,
with no defects of title whatsoever. Each Shareholder has the exclusive right,
power and authority to vote and to transfer the shares of common stock
registered in the Shareholder's name.
3.2 FINANCIAL STATEMENTS. The audited balance sheets as of
September 30, 1996, and December 31, 1995 and the statements of income of
Company for the nine months ended September 30, 1996 and the year ended
December 31, 1995 have been prepared in accordance with GAAP and present fairly
the results of the operations of Company during those periods. Said financial
statements are sometimes collectively referred to as "Financial Statements." A
true, correct and complete copy of the Financial Statements are set forth in
Section 3.2 of the Disclosure Schedule.
3.3 CUSTOMERS
(a) Company (or its predecessors) has granted over 1,100
licenses to use the Software to end users. Section 3.3(a)(i) of the Disclosure
Schedule contains the list of the licensed users of the Software who are
currently provided maintenance under an annual maintenance agreement with
Company. Section 3.3(a)(i) of the Disclosure Schedule shall be updated as of the
Closing. Section 3.3(a)(ii) of the Disclosure Schedule contains a list of the
licensed users of the Software who have contracted for maintenance and support
during the period October 1, 1995 through September 30, 1996 on a time and
materials basis. Section 3.3(a)(iii) of the Disclosure Schedule contains a list
of all customers of Company whose aggregate fees and other charges during the
twelve (12) month period ending September 30, 1996 exceeded $50,000.
(b) Except as set forth in Section 3.3(b) of the Disclosure
Schedule, Company has not received any notice or other communication (written
or, to the knowledge of the Management of Company, oral) from any customer
listed on Section 3.3(a)(i), (ii) or (iii) of the Disclosure Schedule
terminating or reducing in any material respect or setting forth an intention to
terminate or reduce in any material respect in the future the amount of business
conducted with Company. (The termination or reduction in any material respect or
notice of any intention to terminate or reduce in any material respect during
the next succeeding 12 months of the amount
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of business conducted with Company by any customer listed in Section 3.3(a)(iii)
of the Disclosure Schedule shall constitute a material adverse event and a
breach of this warranty and representation.) To the knowledge of the Management
of Company, the consummation of the transactions contemplated herein will not
have a material adverse effect on the business relationships with any of the
customers listed on Section 3.3(a)(iii) of the Disclosure Schedule.
(c) Section 3.3(c) of the Disclosure Schedule sets forth a
list of licensees of the Software for which Company has any warranty or other
unfulfilled obligation under the applicable License Agreement and a description
of the unfulfilled obligation and the agreement under which it arises. Company
is not in material breach of its obligations thereunder.
3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES
(a) Since December 31, 1995, there has not been any event or
events which will have a material adverse effect taken as a whole on the
financial condition of Company (including software and service revenues) except
as set forth in Section 3.4(a) of the Disclosure Schedule or the declaration or
payment of any dividend on the capital stock or the redemption of any shares of
capital stock of Company.
(b) Since December 31, 1995, no material loss, damage or
destruction of the assets has occurred, whether or not covered by insurance,
which may have a material adverse affect on the financial condition of Company
or on the Business.
(c) Since December 31, 1995, the Business has been conducted
substantially in the manner heretofore conducted consistent with past practices,
including with respect to the fees charged and the terms and conditions of the
License Agreements and maintenance agreements entered into, and no waiver or
release of any right was granted by Company except (i) of an immaterial value
and (ii) in the ordinary course of business consistent with past practices, and
no assets were sold except for the licensing of the Software in the ordinary
course of the Business.
3.5 GUARANTIES/LIENS. Company is not guaranteeing the obligations
of any person and has no commitment to guarantee any of the obligations of any
person and is not currently granting and Company has no commitment to grant to
anyone an interest in or liens on any of its assets to secure the obligations of
Company or another except as set forth in Section 3.5 of the Disclosure
Schedule.
3.6 NO UNDISCLOSED LIABILITIES.
(a) Section 3.6(a) of the Disclosure Schedule identifies the written
agreements and describes all oral agreements relating to all indebtedness of the
Company, including without limitation shareholder loans and capital leases.
Correct and complete copies of each such agreements have been furnished to
Buyer.
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(b) Company has no liabilities, absolute or contingent, known or
unknown, except those recorded on the Financial Statements as of December 31,
1995 and those incurred in the ordinary course of business of Company since
December 31, 1995, all of which are recorded on the financial books and records
of Company, are consistent with past practices and are not in the aggregate
materially adverse to the financial condition or prospects of Company.
3.7 ACCOUNTS RECEIVABLE. The accounts receivable of Company,
billed and unbilled, as of the Closing will be valid and enforceable
obligations of third parties and will be collectible in full, without offset or
fulfillment of any condition, within three (3) months of their due date without
the engagement of any collection agency or attorney or the commencement of any
action, except to the extent of any reserves for bad debts and doubtful
accounts established on its financial books and records as of the Closing,
which reserves have been established in a manner which is consistent with past
practices.
3.8 OWNERSHIP OF INTELLECTUAL PROPERTY
(a) Software. Except as set forth in Section 3.8 of the
Disclosure Schedule, Company is the sole and exclusive owner throughout the
United States of (i) the Software, including the software and software code
developed or being developed by or on behalf of or at the request of Company
(regardless of the state of the development of the software and whether it has
been released); and (ii) the Software constitutes all the software used and/or
licensed in the conduct of the Business of Company, except for the Distributor
Software and the Development Software. Company has not granted licenses to
others to use or to sublicense others to use the Software outside of the United
States and to the knowledge of the Management, the Software or derivatives
thereof are not being used or distributed outside of the United States.
(b) Other Intellectual Property Rights. Except as set
forth in Section 3.8(b) of the Disclosure Schedule, Company is the sole and
exclusive owner throughout the United States of (i) all Copyrights, whether or
not registered, including but not limited to the moral rights; (ii) all other
Intellectual Property rights, including, without limitation, trade secrets,
know-how, inventions (patented and unpatented), and discoveries, embodied in or
used in the development of the Software, or any part thereof, and the screen
displays generated by the Software; and (iii) all Documentation; in each case
except the Development Software used in the development of the Software and the
Distributor Software. The Copyrights, Trademarks, Software, Documentation, and
other Intellectual Property of Company are collectively hereinafter referred to
as "Company Intellectual Property". Section 3.8(b)(i) of the Disclosure Schedule
contains a correct and complete list of all registered Copyrights, the date of
registration and jurisdiction of such registrations. Company has not filed any
patent applications and does not hold any patents.
(c) Trademarks. Company is the sole and exclusive owner
of the Trademarks which include all identifying names and marks which are
associated with the Software or which are otherwise used in the Business
conducted by Company. A complete and correct list of all
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such Trademarks is set forth in Section 3.8(c) of the Disclosure Schedule, none
of which are registered or have any applications for registrations pending.
(d) Software Developers. Section 3.8(d) of the Disclosure
Schedule sets forth the list of all persons and entities (other than full time
employees of Company) that have assisted at any time, directly or indirectly, in
the design, development, correction, improvement, modification, and/or
enhancement of the Software, Copyrights and/or Trademarks. Section 3.8(d) of the
Disclosure Schedule also identifies the written agreements and describes all
oral agreements pursuant to which each such person or entity assigned or
licensed its rights in such intellectual property to Company or acknowledged
Company's ownership rights therein. Correct and complete copies of each such
agreement or assignment or license has been furnished to Buyer. The employees
and former employees of Company do not have any right, title or interest in the
Software, Copyrights, Trademarks, or other Company Intellectual Property.
Section 3.8(d) of the Disclosure Schedule sets forth the current form of
agreements with its employees regarding ownership of the Company Intellectual
Property.
(e) Rights of Licensees. The ownership rights of Company in
Company Intellectual Property are subject only to the non-exclusive licenses
granted (i) to end users and (ii) to distributors by Company as described in
Paragraph 3.10 of this Agreement.
(f) No Infringements. The Company Intellectual Property does
not, and did not at any time, violate or infringe any copyright, patent, trade
secrets, know-how, trademarks or other intellectual property rights of any third
party, is not in the public domain, has not been licensed by Company and/or
permitted to be duplicated by Company except as disclosed in this Agreement or
provided by law and, to the knowledge of the Management of Company, the Company
Intellectual Property (i) has not been duplicated except as permitted under the
applicable licenses and law, (ii) has not been reverse compiled or engineered
and (iii) there are no claims or actions pending or threatened or which have
been brought asserting such violation or infringement or that any Company
Intellectual Property is in the public domain.
(g) Distribution Software and Development Software. Section
3.8(g)of the Disclosure Schedule sets forth the complete and correct list of
license agreements pursuant to which Distribution Software and Development
Software is licensed to Company. Company does not license to others Distribution
Software or Development Software.
(h) Confidentiality. Company has taken reasonable commercial
efforts and has required its employees, consultants, and licensees to take
reasonable commercial efforts to maintain the confidentiality of the Company
Intellectual Property.
(i) Source Code Escrow Agreements. Section 3.8(i) of the
Disclosure Schedule contains a list of all source code escrow agreements entered
into by Company and all agreements licensing the source code or agreeing to
license the source code of the Software. Correct and complete copies of such
agreements have been heretofore provided to Buyer.
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3.9 PROPERTY AND EQUIPMENT
(a) Section 3.9 of the Disclosure Schedule lists the fixed
assets, including equipment, used in the Business as currently conducted which
are owned by Company and those which are leased by Company ("Leased Property").
Section 3.9 of the Disclosure Schedule contains a correct and complete copy of
the agreements for the lease of fixed assets not owned by Company. The fixed
assets and the Leased Property are generally in good operating condition and
repair, reasonable wear and tear excepted.
(b) Company is not in default in the payments due under the
leases of the Leased Property or any other obligation which would give the
lessor the right to terminate the lease for such Leased Property.
(c) Since December 31, 1995, Company has not sold or otherwise
disposed of any fixed assets, other than in the ordinary course of business.
3.10 LICENSE AGREEMENTS
(a) Company has not sold to others or leased or licensed
others to use the Company Intellectual Property, or any part thereof, except the
granting of written non-exclusive rights (i) to end users to use released
versions of the Software and Documentation in the ordinary course of the
Business pursuant to end user license agreements; and (ii) to distributors,
dealers, OEM's and other remarketers (collectively "Distributors") to use and
sublicense the Software and Documentation. Section 3.10(a) of the Disclosure
Schedule contains a correct and complete list of the Distributors. A correct and
complete copy of all written agreements with Distributors currently outstanding
has been previously furnished to Buyer. To the extent any agreement with a
Distributor is not in writing, a complete description of the understanding is
set forth in Section 3.10(a) of the Disclosure Schedule.
(b) The standard form of end user license agreement currently
used by Company to license the Software is listed in Section 3.10(b) of the
Disclosure Schedule.
(c) Section 3.10(c) of the Disclosure Schedule contains a list
of all License Agreements under which Company has not completed its performance
thereunder, except for ongoing warranty and maintenance and support undertakings
contained therein, which list shall be updated as of the Closing.
(d) Unfulfilled warranty obligations under the License
Agreements are described in Section 3.10(d) of the Disclosure Schedule, which
description shall be updated as of the Closing.
(e) Company is not in default of its obligations under any
License Agreement.
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(f) Section 3.10(c) of the Disclosure Schedule also includes
all outstanding commitments to sell, lease or license any Company Intellectual
Property hereafter.
(g) Company does not license or sublicense any
Distributor Software and is not a distributor of any software developed by
others.
3.11 CONSULTING AND DEVELOPMENT AGREEMENTS. There are no
consulting and software development agreements, written or oral, entered into
by Company pursuant to which others are performing services to Company as a
consultant or in a similar capacity or are developing software (regardless of
the party who is to hold title to the software) for Company for use or license
by Company.
3.12 MAINTENANCE/COMMITMENTS
(a) Section 3.12(a) of the Disclosure Schedule sets forth a
correct and complete description of all commitments of Company outstanding to
provide services, or support and/or maintenance services, including to provide
patches, corrections, improvements, modifications and enhancements of the
Software, ("Maintenance Agreements"). A copy of all written Maintenance
Agreements has been made available to Buyer and, to the extent the Maintenance
Agreements are not in writing, a complete description of the understanding is
set forth in Section 3.12(a) of the Disclosure Schedule. The current standard
form of Maintenance Agreement is set forth in Section 3.12(a) of the Disclosure
Schedule.
(b) Section 3.12(b) of the Disclosure Schedule sets forth all
commitments of Company to develop any special feature or function or to port any
software not otherwise disclosed pursuant to this Agreement ("Development
Agreements"). A correct and complete copy of the Development Agreements have
been furnished to Buyer. To the extent any such agreement or commitment, where
legally binding, is oral, a summary thereof is set forth in Section 3.12(b) of
the Disclosure Schedule.
(c) Company has substantially complied with its obligations
under the Maintenance Agreements and Development Agreements and there is no
basis for any claim against or default by Company by any party arising under the
Maintenance Agreements or Development Agreements.
3.13 ALL INTANGIBLE ASSETS USED IN THE BUSINESS. The Company
Intellectual Property and the Development Software constitute all of the
intangible assets used in the conduct of the Business as currently being
conducted by Company.
3.14 EMPLOYEES/CONSULTANTS/DIRECTORS
(a) Section 3.14(a) of the Disclosure Schedule sets forth a
list of all current employees and consultants engaged by Company or serving in
such capacity as of October 31,
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1996 and their compensation. Section 3.14(a) of the Disclosure Schedule will
be updated as of the Closing;
(b) The employees of Company are not represented by any
collective bargaining agreement or otherwise organized;
(c) Section 3.14(c) of the Disclosure Schedule lists all
employee benefit plans which are currently in effect or as to which Company has
any ongoing obligation or liability. The term "employee benefit plan" means any
employment or consulting contract, deferred compensation, profit sharing,
pension, bonus, stock option, stock purchase or other fringe benefit or
compensation arrangement or commitment, written or oral, including each welfare
plan (as defined in Section 3(1) of the Employment Retirement Income Security
Act of 1974, as amended ("ERISA"), which Company has established or maintained
or in which any of its employees participate or have participated or under which
Company has an obligation to make contributions or to pay benefits. Company has
no obligations to provide any benefits to any retired or former employees,
including medical and hospital benefits;
(d) Company has no ERISA affiliate and never had an
ERISA affiliate;
(e) The 401(k) Plan made available to employees of Company is
in full compliance and has been in full compliance with all applicable laws and
regulations regarding the establishment, maintenance and operation of the 401(k)
Plan and all contributions by Company have been paid or properly accrued on its
financial books; and
(f) Company has no contracts or agreements with any of its
employees except agreements as to inventions, discoveries and copyright
ownership, a copy of which have been previously provided to Buyer. Schedule
3.14(f) of the Disclosure Schedule contains a copy of the employee benefit
brochure provided or made available to the employees. All employees are "at
will" employees of Company.
3.15 ASSUMED AGREEMENTS
(a) Sections 3.10(b) and (d), 3.12(a), 3.12(b), and 3.15(a) of
the Disclosure Schedule lists all unfilled commitments of Company as of October
31, 1996 not otherwise disclosed in the Disclosure Schedule. Section 3.15(a)
shall be updated as of the Closing. Such commitments represent all of the then
outstanding obligations of the Business and, to the knowledge of the Management
of Company, all of the commitments of Company, can in the ordinary course of
business be fulfilled without a financial loss to Company and in a timely
manner.
(b) Company is not in default of any term or condition under
any unfilled agreement listed on Sections 3.10(b) and (d), 3.12(a), 3.12(b), and
3.15(a) of the Disclosure Schedule and there are no basis for any claim against
or default by Company by any party arising
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under any such agreement, and no event has occurred which under any such
agreement could constitute a default which would give the other party the right
to terminate the contract or to demand money damages.
(c) Company has not waived any of its rights under any of such
agreements listed on Section 3.10(b) and (d), 3.12(a), 3.12(b), or Section
3.15(a) of the Disclosure Schedule nor is the other party to such agreement in
default in any respect under any such agreement.
(d) Correct and complete copies of the agreements listed in
Section 3.15(a) of the Disclosure Agreement have been made available to Buyer.
3.16 LITIGATION AND ADVERSE EVENTS. There are no investigations,
suits, actions, administrative, arbitration or other proceedings or
other occurrences pending, or, to the knowledge of the Management of Company,
threatened against Company arising out of the conduct of the Business.
3.17 COMPLIANCE WITH APPLICABLE LAW. Company, in the conduct of the
Business, is in substantial compliance with all applicable laws, statutes,
ordinances, permits and regulations, including all such laws, statutes,
ordinances and regulations relating to wages, tax withholdings, hours, equal
pay, equal opportunity, and pollution of the environment, and there are no
violations which, if enforced, would materially adversely affect the Business or
prospects of the Business after the Closing or the value of the Business; and no
proceeding alleging any such violation is pending or, to the knowledge of the
Management of Company, threatened.
3.18 TAXES AND TAX RETURNS
(a) Company has timely filed with the appropriate governmental
agencies all tax returns and reports required to be filed by it (or obtained
extensions in which to file). Company has paid or accrued all taxes and
withholdings of any kind now due and payable.
(b) Company has provided Buyer with correct and complete
copies of all tax returns, including income, property and sales tax returns
filed since its incorporation to date. No returns are currently being audited by
any governmental authority.
3.19 CONSENTS. No consents or approvals are required to effect
the transactions contemplated herein, except as set forth in Section 3.19 of the
Disclosure Schedule.
3.20 BROKERS AND FINDERS. None of the Shareholders, the Company,
nor any of its officers, directors, employees or agents have employed
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
by this Agreement which is payable directly or indirectly, by Buyer or Company
or the Shareholders.
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3.21 RELATED TRANSACTIONS. Section 3.21 of the Disclosure
Schedule contains a complete and correct list of all transactions since
January 1, 1996 between Company and any Shareholder or Affiliate of any
Shareholder.
3.22 NO UNTRUE STATEMENTS. No statements (including
representations and warranties) contained in this Agreement (including
in the Disclosure Schedule hereto and documents described as having been
provided to Buyer herein and therein), contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein contained not misleading.
3.23 INVESTMENT REPRESENTATIONS.
(a) Each Shareholder is acquiring the common stock of Buyer for
his/her own account (and not for others) and for investment purposes
only and not with a view to distribution, as such is defined by the Securities
Act of 1933, as amended ("Act"), or any rule or regulation thereunder
("Rules"), in violation of the Act or any of said Rules.
(b) Each Shareholder has such knowledge and experience in
financial and business matters that he/she is capable of evaluating the
merits and economic risks of this particular investment and that an investment
in the common stock of Buyer involves numerous risks, including the risks set
forth in Buyer's Registration Statement on Form SB-2, No. 333-18923 ("SB
Registration Statement").
(c) Each Shareholder agrees that the certificate or certificates
representing the common stock of Buyer shall be inscribed with the legend that
such stock may not be transferred in the absence of an effective registration
statement under the Act covering the stock or an opinion of counsel satisfactory
to Buyer that registration is not required, and such stock may not be
transferred except as permitted under the provisions of the standstill agreement
set forth in paragraph 7.2 hereof and the Act and Rules.
(d) In making this decision to acquire the common stock of Buyer,
each Shareholder has been given the opportunity to discuss the business,
management and financial affairs of Buyer with officers of Buyer and
has had the opportunity to ask questions of, and receive answers from, such
officers and to obtain additional information necessary to verify the accuracy
of the information received and to evaluate Buyer and an investment in the
common stock of Buyer and the Shareholders desire no further information for
such evaluation. Each Shareholder acknowledges receipt of a copy of the SB
Registration Statement as filed with the Securities and Exchange Commission on
December 27, 1996.
(e) Each Shareholder acknowledges that no representations were
made by Buyer to the Shareholders with respect to the business,
management or financial affairs of Buyer except as set forth in Section IV of
this Agreement, and except that Buyer is negotiating with several companies the
purchase or merger of their businesses by or into Buyer or an affiliated
company
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("Acquisitions") and the financing of such purchases in part through the Public
Offering by Buyer, all as more fully described in the SB Registration Statement.
Each Shareholder acknowledges there can be no assurances that such Acquisitions
will be effected or that the Public Offering will occur or that the financing
obtained in the Public Offering will be sufficient to meet the obligations of
Buyer , including working capital requirements, or that Buyer will be
profitable.
(f) Each Shareholder acknowledges that (i) Buyer may acquire American
Medcare Corporation and subsidiaries ("AMC") as part of the Acquisitions; (ii)
he/she has heretofore been furnished with recent financial statements of AMC as
part of the SB Registration Statement; (iii) he/she has been advised that AMC
continues to operate at a loss and has and is incurring expenses in its efforts
to acquire several businesses; (iv) no representations are or were made by Buyer
with respect to the business or financial affairs of AMC except as set forth in
the financial and other statements of AMC as referenced in the preceding clause;
and (v) no representations are made with respect to any business plan,
projections or acquisitions by AMC or Buyer.
(g) Each Shareholder acknowledges that Buyer has relied on the
representations contained in this Agreement in determining that an exemption
from registration under the Act for this Agreement is available and that but for
such representations, this Agreement would not be offered to the Shareholders.
SECTION IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders on the date
hereof as follows:
4.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; has full corporate power and authority to conduct the business of
developing, distributing and marketing software, including through its
subsidiaries, and has full right, power and authority to issue the shares of
common stock as part of the Purchase Price contemplated by this Agreement.
4.2 AUTHORIZATION
(a) The execution, delivery and performance of this Agreement
has been duly authorized by all requisite corporate action on the part of Buyer.
A duly certified copy of the resolutions of the Board of Directors of Buyer has
been delivered to Company. This Agreement has been duly executed and delivered
by Buyer and constitutes the legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms. Upon the execution and
delivery by Buyer of the Escrow Agreement, the Escrow Agreement will constitute
the legal, valid, and binding obligation of Buyer, enforceable against Buyer in
accordance with its respective terms.
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(b) The execution and delivery of this Agreement, and the
consummation by Buyer of the transactions contemplated herein on the Closing,
will not (with or without the giving of notice, lapse of time or both) violate,
conflict with, or result in a default under, any of the provisions of the
certificate of incorporation or by-laws of Buyer, any mortgage, indenture,
contract, agreement, license, permit, instrument, judgment, decree, order,
statute, regulation or ruling of any court or governmental authority to which
Buyer or any subsidiary is a party or by which it is bound.
4.3 CORPORATE. Buyer was formed in November 1996 and Buyer and AMC are
incurring considerable expenses in its efforts to acquire several businesses and
effect the Public Offering to raise funds to effect certain of the acquisitions
and for general corporate purposes. No representations are or were made by Buyer
to the Shareholders with respect to the business or financial affairs of Buyer
and its subsidiaries or the companies after such acquisitions.
4.4 BROKERS AND FINDERS. Neither Buyer nor any of its officers,
directors, employees or agents have employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement which is payable directly
or indirectly by the Shareholders.
4.5 NO UNTRUE STATEMENTS. No statements (including representations) by
Buyer contained in this Agreement, and no written statements furnished by Buyer
to the Shareholders pursuant to this Agreement, contain any untrue statement of
a material fact, or omit to state a material fact necessary in order to make the
statements therein contained not misleading.
SECTION V.
CONDITIONS TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be performed
on or prior to the Closing shall be subject to the satisfaction on or prior to
the Closing of each of the following conditions, any of which condition may be
waived in writing by Buyer, but such waiver shall not waive any representation,
warranty or covenant of the Shareholders.
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties made by any Shareholder herein as of the date of this Agreement
shall be true and correct in all material respects on the Closing with the same
effect as though made on the Closing; Shareholders shall have performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by them prior to or on the Closing;
and Shareholders shall have delivered to Buyer a certificate of the Shareholders
in substantially the form attached hereto as Exhibit 5.1, dated the Closing,
certifying as to the fulfillment of the foregoing conditions.
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5.2 THIRD PARTY CONSENTS. All consents, approvals or authorizations
from third parties or government agencies required to consummate the
transactions contemplated hereby and contemplated by this Agreement, including
the consents set forth pursuant to paragraph 3.19.
5.3 OPINION OF COUNSEL TO THE SHAREHOLDERS. An opinion of counsel to
the Shareholders dated the Closing and addressed to Buyer reasonably
satisfactory in all respects to Buyer in substantially the form attached hereto
as Exhibit 5.3.
5.4 UPDATE DISCLOSURE SCHEDULE. The Shareholders shall have
updated the Disclosure Schedule as herein provided.
5.5 PUBLIC OFFERING. The Public Offering shall have commenced.
5.6 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement in the form attached as Exhibit 2.7.
5.7 EMPLOYMENT AGREEMENT. Buyer and Xxxx Xxxxxxx shall have
entered into an employment and incentive compensation agreement in form and
substance satisfactory to Buyer.
5.8 EMPLOYMENT AGREEMENT. Buyer and Xxx Xxxxx shall have entered
into an employment agreement in form and substance satisfactory to Buyer.
5.9 LEASE AGREEMENT. Buyer and the appropriate landlords shall have
entered into lease agreements for the continued use of Company's office and
warehouse space in form and substance satisfactory to Buyer on the same economic
terms currently in effect.
5.10 NO MATERIAL ADVERSE CHANGE. There shall be no material
adverse change to the favorable outlook and prospects of Company or to its
projected operating profit of $750,000 for the period ending December 31, 1997.
5.11 TERMINATION OF CERTAIN AGREEMENTS. The salary obligation between
Company and Xxxxxxx shall be terminated in a manner satisfactory to Buyer. In
the event commissions and royalty payments due to Xxxx Xxxxxxx and PCM are
terminated, the costs of said terminations paid and to be paid to Xxxx Xxxxxxx
and PCM during calendar 1997 in excess of the commissions and royalties due Xxxx
Xxxxxxx and PCM under the current agreements (calculated as if such agreements
had not been terminated) based on the 1997 revenues shall be considered an
extraordinary one time charge as contemplated in paragraph 2.8(c) hereinabove
and such excess payments shall not be used in the computation of the paragraph
2.5 adjustment amount except as set forth below.
The monies paid and to be paid Xxxxxxx to terminate his salary
obligation shall be the responsibility of the Company and shall be
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accrued as an expense prior to the Closing Date and applied in the computation
of the shareholders' equity as of the Closing Date pursuant to paragraph 2.5.
5.12 S-4 REGISTRATION STATEMENT. The Registration Statement on Form S-4
registering the shares of common stock of Buyer to be issued pursuant to this
Agreement and certain other acquisitions and mergers becomes effective.
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
Each and every obligation of the Shareholders under this Agreement to
be performed on or prior to the Closing shall be subject to the satisfaction on
or prior to the Closing of each of the following conditions, any of which
conditions may be waived in writing by the Shareholders, but such waiver shall
not waive any representation, warranty, or covenant of Buyer:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties made by Buyer herein as of the date of this Agreement shall be
true and correct in all material respects on the Closing with the same effect as
though made on the Closing; Buyer shall each have performed and complied with
all agreements, covenants and conditions required by this Agreement to be
performed and complied with by it on or prior to the Closing; and Buyer shall
have delivered to the Shareholders a certificate of an officer of Buyer in
substantially the form attached hereto as Exhibit 6.1, dated the Closing,
certifying as to the fulfillment of the foregoing conditions.
6.2 OPINION OF COUNSEL TO BUYER. An opinion of Glass, XxXxxxxxxx,
Xxxxxxxx & Xxxxxxx LLP, counsel to Buyer, dated the Closing, reasonably
satisfactory in all respects to the Shareholders substantially in the form
attached as Exhibit 6.2.
6.3 PUBLIC OFFERING. The Public Offering shall have commenced.
6.4 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement in the form attached as Exhibit 2.7.
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SECTION VII.
OTHER COVENANTS
7.1 CONDUCT OF BUSINESS. From the date hereof to the Closing, except as
otherwise consented to or approved by Buyer in writing, the Shareholders hereby
covenant and agree that they shall cause Company:
(a) Maintain Corporate Existence, Etc. (i) to conduct the
Business in a diligent manner, consistent with past management practices,
including maintaining adequate personnel to maintain, develop, enhance, support
and market the Software; (ii) to market and license the Software and Distributor
Software and Hardware to end users, and with the written consent of Buyer, to
distributors; and (iii) grant non-exclusive licenses of the Software and
Distributor Software to end users pursuant to its standard end user license
agreement at its standard fees.
(b) Disposition of Assets. Not to sell or otherwise
dispose of any asset except for the granting of non-exclusive licenses as
permitted pursuant to paragraph 7.1(a).
(c) Full Access. To afford to Buyer, and to its counsel,
accountants and other authorized representatives, full access to the facilities,
contracts, books, records, Software, key personnel and public accountants of
Company during normal business hours upon reasonable prior notice; and to cause
its officers and employees to promptly furnish such additional financial and
operating data and other information as Buyer or its authorized representatives
shall from time to time reasonably request.
7.2 STANDSTILL AGREEMENT. Each Shareholder agrees not to sell or
otherwise dispose of any shares of common stock of Buyer acquired pursuant to
this Agreement for a period of six (6) months following the Public Offering
without the prior written consent of Buyer and its underwriters and, for the
eighteen (18) month period thereafter, not to sell any such shares except in
accordance with the volume limitations set forth in Rule 144 applicable to
Restricted Securities, as defined in Rule 144. The agreement contained in this
paragraph 7.2 is intended to benefit Buyer and its underwriters and may be
enforced by any of them.
SECTION VIII.
CONFIDENTIALITY AND SECURITY
8.1 CONFIDENTIALITY
(a) The parties acknowledge that information, documents and
materials regarding each other have been exchanged under a confidentiality
understanding. The provisions of this Section VIII reflect the understanding
with respect to, and shall govern, all such exchanges
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and the permitted use and disclosure by a party or its Affiliate hereafter of
any confidential information and trade secrets of the other party, regardless of
when acquired. Each party heretohereby agrees that all information, documents
and materials the party ("Recipient") received heretofore and receives or
obtains hereafter from any other party or its Affiliate ("Owner") shall be
considered valuable assets of the Owner and shall at all times be treated by the
Recipient and the officers, directors, employees and agents of the Recipient as
confidential information or trade secrets of the Owner if so identified as such
or which under the circumstances surrounding disclosure ought to be treated as
confidential information or trade secrets of the Owner. Each party hereto, as a
Recipient, hereby agrees that it shall not hereafter (and shall use commercially
reasonable efforts to ensure that its Affiliates, officers, directors, employees
and consultants do not) in any manner, directly or indirectly (i) transmit,
disclose or otherwise communicate or make available any such confidential
information or trade secrets to any third party, or (ii) use the same for its
own account or for the benefit of any third party, other than as permitted by
this Agreement; or (iii) make any copies of any such confidential information or
trade secrets except as is necessary to perform its obligations or exercise its
rights hereunder. The parties each agree not to reverse engineer or reverse
compile the computer software of any other party hereto.
(b) Each party hereto, as a Recipient, hereby shall take all
commercially reasonable actions necessary or desirable, including with respect
to its officers, directors, employees and all other authorized persons having
access to the confidential information or trade secrets of the Owner, to satisfy
its obligations to protect and maintain the confidentiality and security of such
confidential information or trade secrets, including the source code of the
Software.
(c) It is recognized and acknowledged between the parties
hereto that the covenants respecting confidentiality set forth in this Section
VIII hereof are essential elements of this Agreement and shall continue after
the Closing or the termination of this Agreement for any reason. Each party
further acknowledges that the Owner of the confidential information and trade
secrets may have no adequate remedy at law if the Recipient shall violate the
terms thereof. In such event, the Owner shall have the right, in addition to any
other rights and remedies it may have, to obtain in any court of competent
jurisdiction injunctive relief or other equitable relief with regard to any
breach or threatened breach thereof or otherwise specifically enforce the
provisions of this Agreement without proof of actual damages.
(d) The parties each agree as follows:
(i) Confidential information or trade secret of the
Owner that is disclosed to Recipient or to which Recipient obtains access shall
not be disclosed by Recipient to others, except to directors, officers,
employees and consultants of the Recipient having a need to know in connection
with the consideration and/or consummation of the transactions contemplated
herein and Recipient shall be responsible for such other person's compliance
with the confidentiality obligations of this Section VIII.
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(ii) The Recipient, when receiving such
confidential information or trade secrets from the Owner, shall protect such
confidential information and trade secrets with the same degree of care that
Recipient regularly employs to safeguard its own confidential information or
trade secret of like importance from unauthorized use or disclosure.
(iii) The rights and obligations of the parties
with respect to all such confidential information and trade secrets of the Owner
that is disclosed and subject to this Agreement shall survive termination of
this Agreement and shall remain in effect for a period of five (5) years from
the date of this Agreement; provided, however, that the expiration of the above
five (5) years shall not affect any rights of the parties with respect to
patents, trademarks, copyrights and trade secrets and trade secrets shall be
protected by this Section VIII as long as they may be legally protected or
constitute a trade secret.
(iv) Any portion of such Owner's confidential
information or trade secret that:
(A) is rightfully received from a third
party who has a lawful right to disclose it without accompanying markings or
disclosure restrictions;
(B) is independently developed by
employees of the Recipient who have not had access to such confidential
information or trade secret;
(C) is or becomes publicly available
through no wrongful act of the Recipient;
(D) is already known by the Recipient
as evidenced by documentation bearing a date prior to the first date of
disclosure by the Owner; or
(E) is approved for release in writing
by the President of the Owner;
is not entitled to the protection provided in this Section VIII, except for
patent, trademark and copyright protection as provided by law.
(e) Confidential information and trade secrets of Company have
been and will be used by Buyer only in connection with its evaluation of Company
and the decision to acquire the capital stock of Company and confidential
information and trade secrets of Buyer have been and will be used by them and
the Shareholder only in furtherance of the Merger as contemplated herein.
(f) Notwithstanding the foregoing, nothing herein shall
restrict the right of either party to disclose such confidential information or
trade secret that is disclosed pursuant to a judicial or administrative order,
but only to the extent so ordered, provided, however, that
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the party receiving such order shall notify the other party of such order in
sufficient time to permit such other party to intervene in response to such
order.
(g) All such confidential information and trade secrets and
copies thereof of Owner shall remain the property of the Owner. All such written
confidential information and trade secrets, and any copies thereof, shall be
promptly returned to the Owner upon written request, or destroyed at the Owner's
options. All reports and other documents prepared by a Recipient containing any
such confidential information or trade secrets shall be destroyed at the Owner's
written request and the Recipient shall so certify to Owner upon Owner's request
that it has been destroyed. The restrictions on disclosure and use shall survive
the return and destruction of such written confidential information and trade
secrets, reports and other documents and the Closing of the transactions
contemplated by this Agreement.
(h) Upon the Closing, all trade secrets and confidential
information owned by Company shall be deemed to be owned by Buyer as of the
Closing for purposes of this Agreement, including this Section VIII.
(i) Notwithstanding the foregoing, nothing in this Section
VIII shall restrict the disclosure of any confidential information in any
registration statement filed with the Securities and Exchange Commission in
contemplation of the Public Offering, including the prospectus which is a part
thereof, and the public distribution of the prospectus, including preliminary
prospectuses and registration statement.
SECTION IX.
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE SHAREHOLDERS.
(a) The Shareholders hereby agree, jointly and severally, to
indemnify and hold Buyer, and its successors (collectively "Buyer" for purposes
of this Section IX only) harmless at all times from and after the Closing,
against and in respect of the following:
(i) All losses, liabilities, costs and damages,
including without limitation, interest, penalties and fines, resulting from any
(a) breach of a representation or warranty of the Shareholders set forth herein
or (b) non-fulfillment of any agreement or covenant, on the part of the
Shareholders set forth herein.
(ii) All expenses, including reasonable attorney fees,
arising from or incurred in connection with suits, proceedings, decrees or
judgments incident to any of the foregoing.
All losses, liabilities, costs, damages and expenses for which indemnification
is provided in this paragraph 9.1 are collectively referred to as "Buyer
Losses".
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(b) The period during which Buyer must give notice in writing
to the Shareholders of claims for indemnification hereunder shall expire on June
30, 1998 except that such period shall be extended to the applicable statute of
limitations plus thirty (30) days with respect to claims (i) for unpaid taxes
and failure to file required tax reports, including related interest, penalties
and fines ("Tax Claims"), (ii) for breaches of Section VIII, and (iii) for
breaches of any covenant or obligation which first arises after the Closing.
(c) Interest at the prime rate as quoted in The Wall Street
Journal shall accrue on all amounts to be indemnified from the date of the
Closing to the date of payment by the Shareholders, or if payment of an Buyer
Loss is made after the Closing by Buyer, from the date of such payment by Buyer
to the date of indemnification by the Shareholders.
(d) The total liability of the Shareholders under this Section
IX shall not exceed the consideration received or to be received by the
Shareholders pursuant to Section II.
(e) In the event that any third party asserts an action or
claim as to which Buyer is entitled to indemnification hereunder, Buyer shall
notify the Shareholders in writing of any such asserted liability with
reasonable promptness, and the Shareholders shall have a right to compromise or
defend any such matter involving such asserted liability, through counsel of its
own choosing who shall be subject to the approval of the Buyer, which approval
will not be unreasonably withheld, at the expense of the Shareholders; provided,
however, that the Shareholders shall indemnify Buyer against any costs and
damages resulting from the failure of the Shareholders to defend or pay such
claims. In the event the Shareholders shall notify Buyer in writing promptly of
the intention of the Shareholders to do so, Buyer shall cooperate with the
Shareholders and their counsel in the compromising of or the defending against
any such liabilities or claims, at the expense of the Shareholders and provide
the Shareholders with reasonable access to the books and records of Company to
the extent necessary for the compliance with any document request and the
reasonable defense of such claim.
(f) Buyer shall be entitled to payment hereunder only if and
to the extent the aggregate Buyer Losses under this Agreement exceed Thirty Five
Thousand Dollars ($35,000).
(g) The amount of any Loss shall be reduced by amounts
received by the Buyer under any policy of insurance maintained by Company prior
to the Closing. Amounts received from any such policy of insurance after the
receipt of payment of any Loss from the Shareholders shall be promptly
reimbursed to the Shareholders.
9.2 INDEMNIFICATION BY BUYER
(a) Buyer hereby agrees to indemnify and hold the Shareholders
harmless at all times from and after the Closing, against and in respect of the
following:
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(i) All losses, liabilities, costs and damages,
including without limitation, interest, penalties and fines, resulting from any
(a) breach of a representation or warranty of Buyer set forth herein or (b)
non-fulfillment of any agreement or covenant, on the part of Buyer set forth
herein.
(ii) All expenses, including reasonable attorney fees,
arising from or incurred in connection with suits, proceedings, decrees or
judgments incident to any of the foregoing.
All losses, liabilities, costs, damages and expenses for which indemnification
is provided in this paragraph 9.2 are collectively referred to as "Shareholder
Losses".
(b) The period during which the Shareholders must give notice
in writing to Buyer of claims for indemnification hereunder shall expire on June
30, 1998 except that such period shall be extended to the applicable statute of
limitations for breaches of Section VIII and for breaches of any covenant or
obligation which first arises after the Closing.
(c) Interest at the prime rate as quoted in The Wall Street
Journal shall accrue on all amounts to be indemnified from the date of the
Closing to the date of payment by Buyer, or if payment of a Shareholder Loss is
made after the Closing by the Shareholder, from the date of such payment by any
Shareholder to the date of indemnification by Buyer.
(d) The total liability of Buyer under this Section IX shall
not exceed the consideration received or to be received by the Shareholders
pursuant to Section II.
(e) In the event that any third party asserts an action or
claim as to which the Shareholders are entitled to indemnification hereunder,
the Shareholders shall notify Buyer in writing of any such asserted liability
with reasonable promptness, and Buyer shall have a right to compromise or defend
any such matter involving such asserted liability, through counsel of its own
choosing who shall be subject to the approval of the Shareholders, which
approval will not be unreasonably withheld, at the expense of Buyer; provided,
however, that Buyer shall indemnify the Shareholders against any costs and
damages resulting from the failure of Buyer to defend or pay such claims. In the
event Buyer shall notify the Shareholders in writing promptly of the intention
of Buyer to do so, the Shareholders shall cooperate with Buyer and its counsel
in the compromising of or the defending against any such liabilities or claims,
at the expense of Buyer and provide Buyer with reasonable access to the books
and records of the Company to the extent necessary for the compliance with any
document request and the reasonable defense of such claim.
(f) The Shareholders shall be entitled to payment hereunder
only if and to the extent the aggregate of Shareholder Losses under this
Agreement exceed Thirty Five Thousand Dollars ($35,000).
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(g) The amount of any Shareholder Loss shall be reduced by
amounts received by the Shareholders under any policy of insurance. Amounts
received from any such policy of insurance after the receipt of payment of any
Shareholder Loss from Buyer shall be promptly reimbursed to Buyer.
9.3 REIMBURSEMENT. Buyer or Shareholders, as the case may be, shall be
reimbursed promptly for any Shareholder Loss or Buyer Loss for which it is to be
indemnified under paragraph 9.1 or 9.2. Buyer and the Shareholders shall have
the right to set off and deduct any Buyer Loss or Shareholder Loss, as the case
may be, against the amount of any obligation of such person however arising to
the other person. In the event of any dispute as to the right to set off or
deduction of any amount or the amount of the Buyer or Shareholder Loss, the
dispute shall be resolved as provided in paragraph 9.5. If Shareholder
reimburses Buyer for a breach of the warranties and representations set forth in
paragraph 3.7, Buyer shall assign all such uncollected receivables to the
Shareholders without further consideration.
9.4 CLAIMS. Should any claim be made by a person not a party to this
Agreement with respect to any matter to which the foregoing indemnity relates
for which the indemnifying party has not elected to compromise or defend as set
forth in paragraph 9.1(e) or 9.2(e), the party to be indemnified, on not less
than fifteen (15) days' notice to the other, may make settlement of such claim,
and such settlement shall be binding on the Shareholders and Buyer for the
purposes of this Section IX; provided, however, that if within said fifteen (15)
day period the Shareholders shall have requested the other party to contest any
such claim at the expense of the Shareholders and has provided reasonable
assurances of the ability of the parties to pay such expenses and other losses
should such occur, the indemnified party will promptly comply and the
indemnifying party shall have the right to defend on their own behalf with
counsel of their own choosing at their expense. Any payment or settlement
resulting from such contest, together with the total expense thereof, shall be
binding on the Shareholders and Buyer for the purposes of this Section IX.
Failure to give notice shall not constitute a defense, in whole or in part, to
any claim by the Buyer except and only to the extent that such failure to do so
shall result in material prejudice to the Shareholders.
9.5 RESOLUTION OF DISPUTES. In the event of any dispute between Buyer
and the Shareholders over any claim by or on behalf of Buyer or the Shareholders
for indemnification under this Section IX and the parties are unable to resolve
such dispute, either party may submit the dispute to binding arbitration as
hereinafter provided. The arbitration shall be in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") then in
effect. The arbitration shall be held before three arbitrators, unless the
amount in dispute is less than One Hundred Thousand Dollars ($100,000), in which
event the arbitration shall be held before one arbitrator. In the event the
arbitration is to be held before three arbitrators, the Shareholders and Buyer
shall each appoint one arbitrator within thirty (30) days of the receipt of
notice by the party commencing the arbitration which includes a copy of the
petition filed with the AAA. The arbitrators shall select the third arbitrator.
In the event the two arbitrators fail to do so within fifteen (15) days of their
appointment or in the event a party hereto fails to designate an
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arbitrator or in the event only one arbitrator is to be appointed, such
arbitrator(s) shall be appointed by the AAA. The arbitrator(s) shall be
knowledgeable in the business of softwaredistribution. All decisions by the
arbitrators shall be by majority vote of the arbitrators. The award of the
arbitrator(s) shall be binding on the parties hereto and such awards may be
entered in any applicable court. The arbitration and all hearings in connection
therewith shall be held in Georgia. The arbitrator(s) shall have no authority to
award punitive damages or any other awards other than as herein contemplated.
Notwithstanding the foregoing, the parties hereto may seek in a court proceeding
a restraining order, or a preliminary or permanent injunction as permitted by
law or equity whenever applicable to enjoin the unauthorized use of the
confidential information or trade secret of a party hereto or as otherwise
provided herein. All parties hereto agree to service by mail in any such
proceedings.
SECTION X.
COVENANT NOT TO COMPETE
(a) For a period of five (5) years following the Closing, each
of Xxx Xxxxx and Xxxx Xxxxxxx agrees that he will not, directly or indirectly,
including through an Affiliate, own, manage, operate, control, be engaged in, or
participate in the ownership, management, operation, or control of or be
connected in any manner or have any other direct or indirect financial interest
in any business, firm, person, partnership, corporation, or concern which is
engaged in any business of the type and character which is competitive with the
Business which is being acquired by Buyer in the United States. The Shareholders
acknowledge that the Business is conducted throughout the United States.
(b) Notwithstanding the covenants contained in subparagraph
(a), the Shareholders shall not be prohibited from owning less than 5% of any
class of equity securities of a company which is listed on a recognized stock
exchange or for which prices are quoted on the National Association of
Securities Dealers Automated Quotation System.
(c) During the non-compete period set forth in subparagraph
(a), each Shareholder in any capacity will not suggest, urge or persuade any
user of the Software not to purchase or not to do business with Buyer or the
successor of the Business or solicit the employment of any employee of Company
or its successor.
(d) Each state of the United States and each month of time
covered by this covenant not to compete shall be deemed a severable unit, and
should any court determine that the inclusion of all such states or months would
render any such undertaking unreasonable or unenforceable for any reason, those
units which are necessary in the judgment of the court to be deleted in order to
render such undertaking reasonable and enforceable shall be deemed free of such
non-compete undertaking but such undertaking shall remain in full force and
effect as to each other unit of territory or time.
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(e) Each Shareholder agrees that in addition to any other
rights and remedies available to Buyer for any breach by a Shareholder of his
obligations under this Section X, Buyer shall be entitled to enforcement of such
obligations hereunder by court injunction or other equitable remedy and the
Shareholders in such proceeding will not urge that Buyer has an adequate remedy
at law.
SECTION XI.
TERMINATION AND ABANDONMENT
11.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated
at any time and the acquisition of the Company Shares as herein contemplated
abandoned at any time prior to the Closing without liability of any party to any
other party, except for breaches of warranties, representations, and covenants
set forth in this Agreement which are within the control of the defaulting or
non-performing party, under the following circumstances:
(a) The mutual written agreement of Buyer, Company, and the
Shareholders;
(b) By Buyer if the Closing has not occurred before March 30,
1997 because all conditions to the obligations of Buyer have not been satisfied
or waived or because the Shareholders have not made all required deliveries
pursuant to Section V;
(c) By the Shareholders if the Closing has not occurred before
March 30, 1997 because all conditions to the obligations of the Shareholders
have not been satisfied or waived or because Buyer has not made all required
deliveries pursuant to Section VI; and
(d) Any party may terminate by written notice to the other if
any action or proceeding shall have been instituted before any court or other
governmental body or, to the knowledge of the party giving such notice, shall
have been threatened formally in writing by any public authority with requisite
jurisdiction, to restrain or prohibit the transactions contemplated by this
Agreement or to subject one or more of the parties or their directors or their
officers to liability on the grounds that it or they have breached any law or
regulation or otherwise acted improperly in connection with such proposed
transactions ("Governmental Objection"), and such action or proceeding shall not
have been dismissed or such written threat shall not have been withdrawn or
rescinded before March 30, 1997.
11.2 RIGHTS AND OBLIGATIONS ON TERMINATION. If this Agreement is
terminated and abandoned as provided in this Section XI, each party will, at the
request of the other, return all documents, work papers, and other material of
the requesting party, including all copies thereof, relating to the transactions
contemplated by this Agreement, whether so obtained before or after the
execution of this Agreement, to the party furnishing the same, and all
information received by any party to this Agreement with respect to the business
of any other party shall not be governed by the confidentiality obligations of
Section VIII and shall at any time be used for the advantage of, or disclosed to
third parties by, such party to the detriment of the party furnishing such
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information except as may be required by law; provided, however, that this shall
not apply to any document, work paper, material, or any other information which
is a matter published in any publication for public distribution or filed as
public information with any governmental authority or is otherwise in the public
domain.
SECTION XII.
MISCELLANEOUS PROVISIONS
12.1 INVESTIGATIONS; SURVIVAL OF WARRANTIES. The respective
representations, warranties and covenants of the Shareholders and Buyer
contained herein or in any certificates or other documents delivered prior to or
on the Closing shall not be deemed waived or otherwise affected by any
investigations made by any party hereto. Each and every representation, warranty
and covenant of the Shareholders and Buyer, and the indemnification provisions
set forth in Section IX hereof, shall survive the Closing and remain operative
in full force and effect as provided in Section IX.
12.2 HEADINGS. The paragraph captions and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be
part of this Agreement or to affect its meaning or interpretation.
12.3 FURTHER ASSURANCES. The parties hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as the other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement, including requests
made after the Closing.
12.4 FORCE MAJEURE. A party hereto shall not be liable for failure or
delay in performing any of the party's obligations hereunder if such failure or
delay is occasioned by compliance with any governmental regulation, request or
order, or by circumstances beyond the reasonable control of the party so failing
or delaying, including, but not limited to, Acts of God, war, insurrection,
fire, flood, accident, earthquakes, labor strikes, or inability to obtain
materials, supplies, power or equipment necessary to enable such party to
perform its obligations hereunder. Each party shall (a) promptly notify the
other in writing of any such event of force majeure, the expected duration
thereof and its anticipated effect on the ability of such party to perform its
obligations hereunder, and (b) make reasonable efforts to remedy any such event
of force majeure.
12.5 CUMULATIVE REMEDIES. Except as herein provided and subject to
any applicable limitation herein provided, the parties shall have all remedies
for breaches of this Agreement available to them provided by law or equity.
12.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties hereto regarding the acquisition of the Company Stock by
Buyer and related matters as set forth in this Agreement. No representations or
agreements, whether written or oral, other than
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those contained or referenced herein, shall be binding on the parties. This
Agreement may not be amended or modified except in a writing signed by all of
the parties hereto.
12.7 SPECIFIC PERFORMANCE. This Agreement may be specifically
enforceable in accordance with applicable principles of law and equity. The
parties hereby acknowledge that it is impossible to measure the monetary damages
which would result from a party's failure to perform any obligation imposed upon
such party by this Agreement. Therefore, if any party hereto should institute an
action or proceeding to enforce the provisions hereof, any other party against
whom such action or proceeding is thereby brought hereby waives the claim or
defense that such party has an adequate remedy at law, and such person shall not
urge in any action or proceeding the claim or defense that an adequate remedy at
law exists.
12.8 NOTICES. All notices or other communications required or permitted
to be given hereunder shall be given in writing to the address of the party set
forth below their signature to this Agreement or to such other last authorized
address/telecopier number of the intended recipient provided in writing to the
party giving such notice, and shall be deemed to have been duly given on (i) the
date of receipt if personally delivered or delivered by overnight courier, (ii)
five (5) business days after posting if transmitted by postage prepaid
registered or certified mail (return receipt requested), or (iii) the date of
transmission if transmitted by telecopy (with postage prepaid registered or
certified mail confirmation) to the party to whom such notice or communication
is being given. Any party hereto may change such party's address or the person
to whom notice is given for purposes hereof by written notice to the other
parties. Such notices are effective only upon receipt.
12.9 NON-WAIVER OF DEFAULT. Any failure by any party hereto at any time
or from time to time to enforce and/or require strict compliance with any term
or condition of this Agreement shall not constitute a waiver of such term or
condition. All waivers hereunder must be in writing executed by the party
waiving the right. The consummation of the transactions with knowledge of a
breach of a warranty, representation or covenant shall not constitute a waiver
of any such warranty, representation or covenant.
12.10 PARTIAL INVALIDITY. If any term or provision of this Agreement,
not essential to the basic purposes of the transactions contemplated herein,
shall be held to be illegal, invalid or unenforceable by a court or arbitrator
of competent jurisdiction, it is the intention of the parties hereto that (i)
the remaining terms hereof shall constitute the agreement with respect to the
subject matter hereof, (ii) all such remaining terms shall remain in full force
and effect and shall be deemed to constitute the entirety of this Agreement as
though such illegal, invalid or unenforceable provision had never been part
hereof, and (iii) such illegal, invalid, or unenforceable provision shall be
construed as closely as possible to the parties' original intent in order to
render such provision legal, valid, or enforceable, as applicable.
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12.11 DUPLICATE ORIGINALS. For the convenience of the parties
hereto, any number of counterparts hereof may be executed, and such
counterparts, taken together, shall be deemed one and the same original.
12.12 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Shareholders and Buyer and their
successors and assigns. Buyer may on or prior to the Closing designate a
subsidiary as the party to acquire the Company Stock; provided, however, Buyer
shall remain liable to the Shareholders for any breach of Buyer's warranties,
representations and covenants contained herein.
12.13 FEES AND EXPENSES. Each party hereto shall pay all expenses which
that party has incurred, including attorneys' and accountants' fees, in
connection with this Agreement and the transactions contemplated hereby.
12.14 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Georgia (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect and performance.
12.15 COUNTERPARTS AND EXHIBITS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The Disclosure
Schedule is made a part of this Agreement.
12.16 PUBLICITY. The Shareholders shall make no public announcement of
the entering into of this Agreement or the terms and conditions hereof without
the prior written consent of Buyer thereto. The Shareholders acknowledge that
Buyer may be required or deem it desirable to make and as part of the proposed
Public Offering may make such public disclosure of the execution of this
Agreement and the terms and conditions hereof at any time hereafter. With
respect to any disclosure prior to the Closing, Buyer shall provide the
Shareholders with a copy of any such disclosure promptly after it is made and,
to the extent practical, will review any proposed press release with Company
before it is released. After the Closing, the parties shall have no obligations
to the other under this paragraph 12.16.
12.17 SHAREHOLDERS' REPRESENTATIVE. By the execution and delivery of
the Agreement by the Shareholders, including counterparts thereof, each
Shareholder irrevocably constitutes and appoints Xxxx Xxxxxxx as the true and
lawful agent and attorney-in-fact of such Shareholder ("Shareholders'
Representative") with full powers of substitution to act in the name, place and
stead of such Shareholder with the following powers:
(a) To receive, hold and deliver to Buyer the certificates or
instruments evidencing the common stock of Company owned by Shareholders,
accompanied by executed stock powers, signature guarantees, and any other
documents relating thereto on behalf of the Shareholders, including the power to
endorse and present any such certificate or stock power or instruments on behalf
of the Shareholders;
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(b) To execute and deliver all ancillary agreements,
certificates, and documents which the Shareholders' Representative deems
necessary or appropriate in connection with the consummation of the transactions
contemplated by the terms and provisions of this Agreement;
(c) To receive and provide instructions for all payments
and other deliveries made pursuant to this Agreement and other funds payable for
and on behalf of the Shareholders;
(d) To act for the Shareholders with regard to all
indemnification matters referred to in this Agreement including, without
limitation, the power to consent to settlement of claims and the power to
compromise any claim on behalf of each such Shareholder;
(e) To enter into the Escrow Agreement and to serve as the
agent of the Shareholders with respect to all matters thereunder, and to
terminate, amend or waive any provision of the Escrow Agreement and to pay any
expenses reasonably incurred by the Escrow Agent or Shareholders' Representative
in connection with the Escrow Agreement or matters arising thereunder;
(f) To negotiate, terminate, amend or waive any provision of
this Agreement and to incur expenses (including fees of attorneys and
accountants) in any way relating to this transaction or any indemnification
proceedings relating thereto and deduct such expenses from amounts otherwise
payable to the Shareholders; and
(g) To do or refrain from doing any further act or deed on
behalf of the Shareholders which the Shareholders' Representative deems
necessary or appropriate in their sole discretion relating to the subject matter
of this Agreement as fully and completely as any Shareholder could do if
personally present.
The appointment of the Shareholders' Representative shall be deemed coupled with
an interest and shall be irrevocable and the Buyer may conclusively and
absolutely rely, without inquiry, upon any actions of the Shareholders'
Representative evidenced by a writing as the act of the Shareholder in all
matters referred to in this Agreement and the Escrow Agreement. With respect to
each Shareholder who is a natural person, the authority conferred by such
Shareholder shall not be revoked by such Shareholder's death or physical or
mental disability. In the event Shareholders' Representative refuses to serve as
Shareholders' Representative or service in such capacity is terminated for any
reason, a successor Shareholders' Representative may be designated by a writing
executed by the Shareholders who held a majority of the common stock of Company
listed on Exhibit 3.01(f) of the Disclosure Schedule. The Shareholders'
Representative shall not be responsible to the Shareholders for any loss or
damage the Shareholders may suffer by reason of the performance of the
Shareholders' Representative of his duties under this Agreement, other than loss
or damage arising from willful violation of law or gross negligence in the
performance of his duties under this Agreement.
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BUYER:
INFOCURE CORPORATION
By:
--------------------------------------------
Name:----------------------------------
Title:---------------------------------
ADDRESS FOR NOTICE:
Address: 0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xxxxxxxxx X. Fine,
Chief Executive Officer
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SHAREHOLDERS:
---------------------------------------------------
Xxxxxx X. Xxxxx
ADDRESS FOR NOTICE: 0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
---------------------------------------------------
Xxxxxx X. Xxxxx
ADDRESS FOR NOTICE: 0000 Xxxxxxxxx Xxxx
Xxxxxxxx XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxx X. Xxxxxxx
ADDRESS FOR NOTICE: 0000 Xxxx Xxxx Xxxxx Xxxxx
Xxxx Xxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxxxx X. Xxxxxxxxx
ADDRESS FOR NOTICE: 000 Xxxx Xxxxx Xxxx
Xxxxxx, XX 00000
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Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxxxx X. (Passa) Xxxxxxx
ADDRESS FOR NOTICE: 0000 Xxxx Xxxx Xxxxx Xxxxx
Xxxx Xxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxx X. Xxxxxxxxx
ADDRESS FOR NOTICE: 0000 XX Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxxxxx Xxxxxxxx
ADDRESS FOR NOTICE: 0 Xxxxxxx
Xxxxxxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxxxxx Xxxxxx
ADDRESS FOR NOTICE: 000 Xxxx Xxxx Xxxxxx #000
Xxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
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---------------------------------------------------
Xxxx X. Xxxxx
ADDRESS FOR NOTICE: 0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxx Xxxxxxxxx
ADDRESS FOR NOTICE: 000 - 00xx Xxxxxx, Xxxx
Xxxxx, XX 00000
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxx Xxxxx
ADDRESS FOR NOTICE:
--------------------------------
Telecopy:
---------------------
Tax ID No.:
---------------------
---------------------------------------------------
Xxxxxx Xxxxxxxx
ADDRESS FOR NOTICE:
--------------------------------
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Telecopy:
---------------------
Tax ID No.:
---------------------
37
