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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
AMONG AMERICAN MEDCARE CORPORATION
AND THE SHAREHOLDERS OF
▇▇▇▇▇▇▇-▇▇▇▇▇, INC.
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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..................................................................................3
2.2 Purchase Price..................................................................................3
2.3 Closing.........................................................................................4
2.4 Delivery of Purchase Price......................................................................4
2.5 Escrow..........................................................................................4
2.6 Net Worth Shortfall.............................................................................5
2.7 Post Closing Adjustment.........................................................................5
SECTION III.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.......................................................7
3.1 Corporate.......................................................................................7
3.2 Financial Statements............................................................................8
3.3 Customers.......................................................................................8
3.4 Absence of Certain Finance and Business Changes.................................................9
3.5 Guaranties/Liens................................................................................9
3.6 No Undisclosed Liabilities......................................................................9
3.7 Accounts Receivable.............................................................................9
3.8 Ownership of Intellectual Property.............................................................10
3.9 Property and Equipment.........................................................................12
3.10 License Agreements.............................................................................12
3.11 Consulting and Development Agreements..........................................................13
3.12 Maintenance/Commitments........................................................................13
3.13 All Intangible Assets Used in the Business.....................................................14
3.14 Employees/Consultants/Directors................................................................14
3.15 Assumed Agreements.............................................................................15
3.16 Litigation and Adverse Events..................................................................15
3.17 Compliance with Applicable Law.................................................................15
3.18 Taxes and Tax Returns..........................................................................15
3.19 Consents.......................................................................................16
3.20 Brokers and Finders............................................................................16
3.21 Related Transactions...........................................................................16
3.22 No Untrue Statements...........................................................................16
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PAGE
SECTION IV.
INVESTOR REPRESENTATIONS REGARDING THE SECURITIES.......................................................16
4.1 Investment Representations.....................................................................16
4.2 Ownership of Company Shares....................................................................18
SECTION V.
REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................18
5.1 Organization and Standing of Buyer.............................................................18
5.2 Authorization..................................................................................19
5.3 Brokers and Finders............................................................................19
5.4 No Untrue Statements...........................................................................19
5.5 Registration Statements........................................................................19
SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF BUYER..................................................................20
6.1 Representations and Warranties; Performance....................................................20
6.2 Third Party Consents...........................................................................20
6.3 Opinion of Counsel to the Shareholders.........................................................20
6.4 Authorization..................................................................................20
6.5 Update Disclosure Schedule.....................................................................20
6.6 Escrow Agreement...............................................................................20
6.7 Employment Agreement...........................................................................20
6.8 Public Offering................................................................................20
6.9 S4 Registration Statement......................................................................21
SECTION VII.
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS.......................................................21
7.1 Representations and Warranties; Performance....................................................21
7.2 Opinion of Counsel to Buyer....................................................................21
7.3 Common Stock of Buyer..........................................................................21
7.4 Authorization..................................................................................21
7.5 Escrow Agreement...............................................................................21
7.6 Public Offering................................................................................21
7.7 S4 Registration Statement......................................................................21
7.8 Repayment of Shareholder Loans.................................................................22
7.9 Third Party Consents...........................................................................22
7.10 Employment Agreement...........................................................................22
SECTION VIII.
OTHER COVENANTS.........................................................................................22
8.1 Conduct of Business............................................................................22
8.2 Standstill Agreement...........................................................................22
8.3 Covenants Relating to Taxes....................................................................23
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SECTION IX.
CONFIDENTIALITY AND SECURITY............................................................................23
9.1 Confidentiality................................................................................23
SECTION X.
INDEMNIFICATION.........................................................................................26
10.1 Indemnification by the Shareholders............................................................26
10.2 Indemnification by Buyer.......................................................................27
10.3 Reimbursement..................................................................................28
10.4 Claims.........................................................................................29
10.5 Resolution of Disputes.........................................................................29
SECTION XI.
COVENANT NOT TO COMPETE.................................................................................30
SECTION XII.
TERMINATION AND ABANDONMENT.............................................................................31
12.1 Termination and Abandonment....................................................................31
12.2 Rights and Obligations on Termination..........................................................31
SECTIIII.
MISCELLANEOUS PROVISIONS................................................................................32
13.1 Investigations; Survival of Warranties.........................................................32
13.2 Payment of Certain Indebtedness................................................................32
13.3 Headings.......................................................................................32
13.4 Further Assurances.............................................................................32
13.5 Force Majeure..................................................................................32
13.6 Cumulative Remedies............................................................................33
13.7 Entire Agreement...............................................................................33
13.8 Specific Performance...........................................................................33
13.9 Notices........................................................................................33
13.10 Non-Waiver of Default..........................................................................33
13.11 Partial Invalidity.............................................................................33
13.12 Duplicate Originals............................................................................34
13.13 Assignment.....................................................................................34
13.14 Fees and Expenses..............................................................................34
13.15 ▇▇▇▇▇▇▇-▇▇▇▇▇ Name.............................................................................34
13.16 Insurance Policies.............................................................................34
13.17 Governing Law..................................................................................34
13.18 Counterparts and Exhibits......................................................................35
13.19 Publicity......................................................................................35
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STOCK PURCHASE AGREEMENT
AMONG AMERICAN MEDCARE CORPORATION
AND THE SHAREHOLDERS
OF ▇▇▇▇▇▇▇-▇▇▇▇▇, INC.
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 11th day
of February, 1997 by and between American Medcare Corporation, a Delaware
corporation ("Buyer") and the undersigned shareholder ("Shareholders") of
▇▇▇▇▇▇▇-▇▇▇▇▇, Inc., a Florida corporation ("Company").
WHEREAS, Shareholders desire to sell, and Buyer desires to purchase,
all of the issued and outstanding shares ("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) "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.
(b) "Business" means the development, marketing and support of
the Software as currently conducted by Company.
(c) "Closing" is defined in Section 2.3.
(d) "Closing Date" means the date and time as of which the
Closing actually takes place.
(e) "Copyright" means all copyright ownership of the Software
and Documentation.
(f) "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(f) of the Disclosure
Schedule.
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(g) "Distributor Software" means all software, object, source,
and executable code, licensed, sold or leased by Company as licensor or lessor
which is not owned by Company excluding Development Software. A list of the
Licensed Software is set forth in Section 1.1(g) of the Disclosure Schedule.
(h) "Distributorship Agreements" means all appointments of
Company to sell or license the Hardware or Distributor Software. A list of such
appointments is set forth in Section 1.1(h) of the Disclosure Schedule.
(i) "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.
(j) "Escrow Fund" is defined in Section 2.5.
(k) "Escrow Shares" are defined in Section 2.5.
(l) "GAAP" means generally accepted United States accounting
principles, consistently applied on an accrual basis.
(m) "Hardware" means all computers, components, peripherals,
and other equipment currently offered for sale by Company in the course of its
business. Section 1.1(m) of the Disclosure Schedule lists all Hardware currently
being sold by Company.
(n) "Intellectual Property" means all patents, patent pending,
copyrights, trade secrets, techniques, know-how, and other intangible assets
that are legally protectable or recognized as forms of property, whether or not
reduced to practice or a writing.
(o) "License Agreements" means those agreements entered into by
Company (or its predecessors) as licensor or lessor for the licensing of any
Software, Distributor Software and/or Intellectual Property.
(p) "Management of Company" means the current chief executive
officer, the chief operating officer, and the chief financial officer of
Company.
(q) "Public Offering" means the first public offering of common
stock of InfoCure Corporation, any entity into which Buyer intends to merge
prior to or upon consummation of the public offering, the net proceeds of which
paid to the issuer, after deducting the underwriter's discount, shall exceed $12
million.
(r) "Purchase Price" is defined in Section 2.2.
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(s) "Purchase Price Delivery Date" is defined in Section 2.4.
(t) "Shareholder" shall include holders of options or warrants
to purchase shares of common stock of Company.
(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 physicians, clinics, hospitals and medical groups which is owned by Company,
including the software marketed under the trade name "▇▇▇▇." A list of the
Software is set forth in Section 1.01(u) of the Disclosure Schedule.
(v) "Trademarks" mean the trademarks and trade names listed in
Section 1.1(v) of the Disclosure Schedule.
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, assign and transfer the
Company Shares to Buyer, and Buyer will purchase the Company Shares from the
Shareholders.
2.2 PURCHASE PRICE. The purchase price ("Purchase Price") for the
Company Shares will be: (a) the sum of One Million One Hundred Thousand and
No/100ths Dollars ($1,100,000.00) minus the Net Worth Shortfall (as hereinafter
defined), if any, and (b) 783,000 shares of common stock of Buyer. Upon the
proposed merger of Buyer into InfoCure Corporation ("InfoCure"), shares of
common stock of Buyer will be exchanged for shares of InfoCure. The final
exchange ratio ("Exchange Ratio") used to exchange the total number of
outstanding shares of Buyer immediately prior to the Public Offering to common
stock of InfoCure will be that set forth in the merger agreement pursuant to
which Buyer will merge into InfoCure and will be applicable to the exchange of
all shares of common stock of Buyer into shares of common stock of InfoCure. The
Exchange Rate has not been determined as of this date. It is currently estimated
at 0.0640072, which would result in a total of 50,117 shares of common stock of
InfoCure in exchange for 783,000 shares of common stock of Buyer. The Exchange
Ratio stated herein is an estimate only and is subject to change prior to the
Public Offering; provided however, that in no event shall the number of shares
of InfoCure issued pursuant to this paragraph 2.2 be less than the quotient of
$325,767 divided by the price to the public per share of common stock of
InfoCure offered pursuant to the SB Registration Statement.
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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,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP in Atlanta, Georgia at 9:00 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 common stock of InfoCure shall
be deemed to have commenced at the time, which is the latest of (i) the time the
InfoCure's Registration Statement on Form SB-2, No. 333-18923 (SB Registration
Statement) as filed with the Securities and Exchange Commission ("Commission")
becomes effective, or (ii) the time at which the underwriters have agreed to
purchase the shares of common stock of InfoCure pursuant to the Public Offering
or (iii) the time at which the Registration Statement on Form S-4, No. 333-
20571 ("S4 Registration Statement") registering the shares of common stock of
InfoCure to be issued pursuant to this Agreement and certain other acquisitions
and mergers becomes effective. The sale of the Company Shares shall be effective
on the date of Closing, 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 2.5), delivery of
the Escrow Shares to the Escrow Agent as described in paragraph 2.5, and payment
of the monetary portion of the Purchase Price 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,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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 is called the
"Purchase Price Delivery Date").
2.5 ESCROW. On or before the Closing Date, the parties shall enter into
an Escrow Agreement in a form acceptable to Buyer and Shareholders establishing
an escrow fund ("Escrow Fund") in an amount equal to:
(i) 10% of the cash portion of the Purchase Price and of
the value of 391,500 shares of common stock of Buyer;
and
(ii) 391,500 shares of the common stock of Buyer,
constituting a portion of the Purchase Price.
For purposes of calculating the Purchase Price and the number of shares to be
placed in the Escrow Fund only, the shares of Common Stock of Buyer will be
valued at the price to the public of the equivalent number of shares of common
stock of InfoCure offered in the Public Offering based upon the Exchange Ratio.
At the option of the Shareholders, the Escrow Fund to be established pursuant to
paragraph 2.5(i) shall consist of all stock, all cash or a combination thereof.
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2.6 NET WORTH SHORTFALL.
(a) If the consolidated stockholders' equity of the Company as
of the Closing Date determined in accordance with GAAP but consistent with the
basis on which the Financial Statements referred to in paragraph 3.2 were
prepared is less than $122,098 ("Net Worth Shortfall"), the stock portion of the
Purchase Price shall be decreased by the amount of the Net Worth Shortfall
(based on the price per share at the Public Offering); otherwise the Purchase
Price shall not be adjusted by this paragraph 2.6. 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.
(b) The parties shall use their best efforts to estimate the
amount of the adjustment on or prior to the Closing and the Purchase Price as of
the Closing will reflect such tentative adjustment which will be subject to
further adjustment pursuant to the provisions of paragraph 2.6(a). Any
adjustments shall be made by decreasing the stock portion of the Purchase Price
(based on the price per share at the Public Offering).
(c) Buyer shall cause, at its expense, a balance sheet of the
Company as of the Closing to be prepared and completed within ninety (90) days
after the Closing. 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, any adjustment shall be made to the stock portion of the Purchase
Price as provided in subparagraph 2.6(a) and the amount of any remaining Net
Worth Shortfall (after consideration of the estimate made pursuant to
subparagraph 2.6(b)) shall be immediately paid by the Shareholders to Buyer;
provided however, that any stock amounts withheld pursuant to subparagraph
2.6(b) in excess of Net Worth Shortfall shall be refunded promptly by Buyer.
2.7 POST CLOSING ADJUSTMENT.
(a) 195,750 shares of common stock of Buyer plus one-half of
the shares withheld from Shareholder pursuant to Paragraph 2.6(c) (collectively,
the "Adjustment Shares) shall be earned and payable to the Shareholders each
year (an aggregate of two times the number of Adjustment Shares) if either the
total revenues or operating profits of the Company and the Health Care Division,
Inc. ("HCD") combined equal or exceed the applicable amount set forth below for
each year:
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FISCAL YEAR TOTAL REVENUES OPERATING PROFITS
----------- -------------- -----------------
1997 $6,000,000 plus six times $1,000,000 plus one-
(one-half of the Net half of the Net Worth
Worth Shortfall) Shortfall
1998 $6,600,000 plus 5.3 times $1,250,000 plus one-
(one-half of the Net half the Net Worth
Worth Shortfall) Shortfall
If the operating profits for either year is less than 20% below the specified
operating profit for such year ("Minimum Amount"), the number of shares of
common stock of Buyer which shall be payable for such year shall be a fraction
of said Adjustment Shares, the numerator of which is the amount by which the
operating profits for such year exceeds the Minimum Amount, not to exceed the
difference between the operating profit set forth above and the Minimum Amount
("Difference") and the denominator of which is the Difference. The shares of
common stock of Buyer shall be converted into shares of InfoCure at the Exchange
Ratio pursuant to the offering to be made in accordance with the S4 Registration
Statement.
(b) Buyer shall cause, at its expense, an income statement
showing total revenues and net operating profit of the Company and HCD combined
to be prepared as of January 31, 1998 and January 31, 1999. The income statement
shall be completed within sixty (60) days after the end of the calendar year. 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
calculation of and amounts of any proposed 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 maters. Upon the final resolution of each financial statement,
the amount of the post-closing adjustment shall be immediately delivered 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 2.5 above and
the Escrow Agreement.
(c) For purposes of this paragraph 2.7 only, net operating
profits 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 and HCD), or expenses related to corporate
meetings and other divisions.
(d) The total revenues and net operating profits are to be
adjusted to reflect any acquisition or disposition of the businesses of the
Company or HCD, or any part thereof, as currently constituted as reasonably
agreed upon by the parties in good faith and in the event of any dispute, such
dispute shall be resolved as set forth in paragraph 10.5 hereof.
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SECTION III.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to Buyer
on the date hereof as follows:
3.1 CORPORATE
(a) Except as set forth in Section 3.1(a) of the Disclosure
Schedule, Company is a corporation duly organized, validly existing and in good
standing under the laws of Florida and is qualified to conduct business in
Georgia and 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) Except as set forth in Section 3.1(a) of the Disclosure
Schedule, 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 52,083 shares of common stock of Company issued and
outstanding and there are no warrants, options, convertible securities or other
rights to acquire capital stock outstanding.
(c) To the knowledge of the Management of Company, Company
holds all licenses, permits, authorizations and other approvals from all
governmental authorities necessary for the conduct of the Business of Company,
which failure could have a material adverse affect 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 the Shareholders, enforceable against the Shareholders in
accordance with its terms. Upon the execution and delivery by the Shareholders
of the Escrow Agreement, the Escrow Agreement will constitute the legal, valid
and binding obligation of the Shareholders, enforceable against the Shareholders
in accordance with its respective terms.
(e) Company has no subsidiaries.
(f) The shareholders of Company of record are the 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.
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3.2 FINANCIAL STATEMENTS.
(a) Except as disclosed in Section 3.2(a) of the Disclosure
Schedule, the audited balance sheets as of December 31, 1995 and September 30,
1996 and the statements of income of Company for the periods then ended compiled
by BDO ▇▇▇▇▇▇▇ present fairly in all material respects in the aggregate 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(a) of the Disclosure Schedule.
(b) Section 3.2(b) of the Disclosure Schedule contains a list
of the amounts outstanding under all indebtedness of the Company to financial
institutions and other lenders, including loans from Shareholders and capital
leases, and the principal amounts outstanding as of January 31, 1997. Correct
and complete copies of each such loan agreements, if any, have been furnished to
Buyer.
3.3 CUSTOMERS
(a) Company has granted more than 235 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 the 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
January 1, 1996 through December 31, 1996 on a time and material 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 December 31, 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 the amount of business conducted
with Company. 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.
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3.4 ABSENCE OF CERTAIN FINANCE AND BUSINESS CHANGES.
(a) Since September 30, 1996, there has not been any (i) event
or events due to actions or omissions of the Company and/or its employees which
will have a material adverse effect taken as a whole on the financial condition
or Business of Company (including software and service revenues) except as set
forth in Section 3.4(a) of the Disclosure Schedule or (ii) declaration or
payment of any dividend on the capital stock or the redemption of any shares of
capital stock of Company.
(b) Since September 30, 1996, no material loss, damage or
destruction of the tangible assets has occurred, whether or not covered by
insurance, which had a material adverse affect on the financial condition of
Company or on the Business.
(c) Since September 30, 1996, 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 and support agreements entered into, and no
waiver or release of any right was granted by the 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,
sale of the Hardware and sale of Third Party 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 lien 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. Except as set forth in Section 3.6 of
the Disclosure Schedule, Company has no liabilities, absolute or contingent,
known or unknown, except those recorded on the Financial Statements as of
September 30, 1996 and those incurred in the ordinary course of business of
Company since September 30, 1996, 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. Except as set forth in Section 3.7 of the
Disclosure Schedule, the accounts receivable of Company, billed and unbilled, as
of the Merger will be valid and enforceable obligations of third parties and
will be collectible in full, without offset or fulfillment of any condition,
within six (6) months of their due date without the engagement of any collection
agency or attorney or the commencement of any action, except to the extent 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. In the event that any such receivables
are not collected within said six months, in
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determining amounts to be indemnified pursuant to Article X, any subsequent
recovery net of the cost of recovery shall be deducted from the amounts to be
indemnified for all purposes.
3.8 OWNERSHIP OF INTELLECTUAL PROPERTY
(a) Software. Except as set forth in Section 3.8(a) of the
Disclosure Schedule, Company is the sole and exclusive owner (including as
copyright 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. Except as set
forth in Section 3.8(a) of the Disclosure Schedule, Company has not granted
licenses to others to use or to sublicense others to use the Software outside
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)(i) of the Disclosure Schedule, Company is the sole and exclusive
owner throughout the United States of (i) all Copyrights, whether or not
registered; (ii) all other Intellectual Property rights, including, without
limitation, trade secrets, know-how, inventions (patented and unpatented), and
discoveries, including those 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 are collectively hereinafter referred to as "Company Intellectual
Property". Section 3.8(b)(ii) 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 the Trademarks is set forth in
Section 1.1(v) of the Disclosure Schedule. Section 1.1(v) of the Disclosure
Schedule also lists the date of registration, registration number, and
jurisdiction of the registration of each Trademark or the date of application if
the trademark application is pending.
(d) Software Developers. Section 3.8(d) of the Disclosure
Schedule sets forth the list of all persons and entities (other than past or
present full-time employees of Company) that have been engaged by the Company at
any time, directly or indirectly, in the design, development, correction,
improvement, modification, and/or enhancement of the Software, Documentation,
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
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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 to end users and to distributors of the 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 and/or permitted to be
duplicated except as disclosed in this Agreement or provided by law and, to the
knowledge of the Management of Company, The Company Intellectual Property has
not been duplicated except as permitted under the applicable licenses and law,
has not been reverse compiled or engineered and 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(b)(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 the actions described in
Section 3.8(h) of the Disclosure Schedule with respect to maintaining 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.
(j) Clear Title. Except for taxes not yet due, the right,
title and ownership of Company in the Company Intellectual Property, and all
other assets of Company are free and clear of all mortgages, liens, restrictions
as to its use or right to license its use, security interests and ownership
rights of others except as set forth in Section 3.8 (j) of the Disclosure
Schedule.
(k) Year 2000. Except as set forth in Section 3.8(k) of the
Disclosure Schedule, the design and performance capabilities of the Software
insures year 2000 capabilities
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including calculations which accommodate same century and multi-century formulas
and date values.
3.9 PROPERTY AND EQUIPMENT
(a) Section 3.9 of the Disclosure Schedule lists the fixed
assets, including equipment, used in the Business of Company as currently
conducted which are owned by Company and those which are leased by the Company
("Leased Property"). Section 3.9 of the Disclosure Schedule contains a correct
and complete copy of the agreements for the Leased Property. The fixed assets
owned by the Company and the Leased Property are generally in good operating
condition and repair, reasonable wear and tear excepted and constitute all of
the fixed assets used in the Business.
(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 the Leased Property.
(c) Since December 31, 1996, Company has not sold or otherwise
disposed of any fixed assets except as set forth in Section 3.9 of the
Disclosure Schedule.
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 CMA. 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 used by
Company since December 31, 1995 to license the Software is contained 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, which Company has not completed its performance
thereunder, except for ongoing warranty and maintenance and support undertakings
therein, which list shall be updated as of the Closing.
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(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. To the knowledge of Management
all such obligations can be fulfilled in the ordinary course of providing
support and maintenance services.
(e) The Company is not in material default of its obligations
under any License Agreement.
(f) Section 3.10(b) of the Disclosure Schedule includes all
unfilled commitments to sell, lease or license any Company Intellectual Property
hereafter.
(g) Distributor Software is licensed by the Company as set
forth in Section 3.10(g) of the Disclosure Schedule.
3.11 CONSULTING AND DEVELOPMENT AGREEMENTS. Except as described in
Section 3.11 of the Disclosure Schedule, there are no consulting and software
development agreements, written and oral, entered into by Company pursuant to
which others performed or are performing services 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 support and/or maintenance services for any customer, 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 for any
customer or to port any software for any customer not otherwise disclosed
pursuant to this Agreement ("Development Agreements"). A correct and complete
copy of the written agreements has been furnished to Buyer and a description of
all oral agreements is set forth in Section 3.12(b) of the Disclosure Schedule.
To the extent any such agreement or commitment, whether legally binding or not,
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
accrued to date under the Maintenance Agreements and Development Agreements and
there is no default by Company arising under the Maintenance Agreements or
Development Agreements which could give the other party the right to terminate
the agreement or to demand money damages.
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3.13 ALL INTANGIBLE ASSETS USED IN THE BUSINESS. The Company
Intellectual Property, the Distributor Software and the Development Software
constitute all of the intangible assets used in the conduct of the Business as
conducted since September 30, 1996 and as currently being conducted.
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 December 31, 1996 and their compensation. Section 3.14(a) of
the Disclosure Schedule will be updated as of the Closing;
(b) The employees of the Company are not represented by any
collective bargaining representative 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 (excluding COBRA);
(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 substantial compliance and has been in substantial compliance with all
applicable laws and regulations regarding the establishment, maintenance and
operation of the 401(k) Plan and the assets held pursuant thereto all
contributions by Company have been paid or properly accrued on its financial
books and all reports have been timely filed; and
(f) Company has no employment contracts or agreements with any
of its employees except agreements as to inventions, discoveries and copyright
ownership, a copy of which has been previously provided to Buyer. Schedule
3.14(f) of the Disclosure Schedule contains a copy of the most recent employee
benefit brochure provided or made available to the employees of the Company.
Except as set forth in Section 3.14(f) of the Disclosure Schedule, all employees
are "at will" employees of Company.
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3.15 ASSUMED AGREEMENTS.
(a) Sections 3.2(b), 3.10(b) and (d), 3.12(a), 3.12(b), and
3.15(a) of the Disclosure Schedule list all agreements of Company as of December
31, 1996 under which the Company has not performed all of its obligations not
otherwise disclosed in the Disclosure Schedule (i) for amounts payable to it in
excess of $5,000 or (ii) which are not to be fulfilled within six (6) months of
the Closing other than Maintenance Agreements ("Material Contracts"). Section
3.15(b) shall be updated as of the Closing. Such commitments represent all of
the then outstanding Material Contracts and, to the knowledge of the Management
of Company, all of the Material Contracts can be performed by the Company in the
ordinary course of business without a financial loss to Company.
(b) Company is not in default of any term or condition under
any Material Contract and no default by Company has occurred which under any
such Material Contract could constitute a default which would give the other
party the right to terminate the Material Contract or to demand money damages.
(c) Company has not waived any of its material rights under any
Material Contract nor is the other party to such Material Contract in default in
any material respect thereunder.
(d) Correct and complete copies of the Material Contracts
listed in Section 3.15(a) of the Disclosure Schedule have been made available to
Buyer.
3.16 LITIGATION AND ADVERSE EVENTS. There are no investigations,
suits, actions, administrative, arbitration or other proceedings pending, or, to
the knowledge of the Management of Company, threatened against Company.
3.17 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in Section
3.17 of the Disclosure Schedule, Company 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) Except as set forth in Section 3.18 of the Disclosure
Schedule, 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). Except as set forth in Section 3.18 of the Disclosure
Schedule, Company has timely paid or accrued all taxes and tax withholdings.
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(b) Company has provided Buyer with correct and complete copies
of all tax returns, including income, property and sales tax returns filed for
the years 1992 to date. No tax returns of the Company are currently being
audited by any governmental authority.
3.19 CONSENTS. No consents or approvals are required to effect the
transactions contemplated herein by the Company and the Shareholders, except as
set forth in Section 3.19 of the Disclosure Schedule.
3.20 BROKERS AND FINDERS. None of the Shareholders or 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.
3.21 RELATED TRANSACTIONS. Section 3.21 of the Disclosure Schedule
contains a complete and correct list of all transactions since September 30,
1996 or currently in effect between Company and any Shareholder or Affiliate of
any Shareholder except employment and related benefits arising therefrom and
other transactions otherwise disclosed as between the Company and any
Shareholder or affiliate of any Shareholder in the Disclosure Schedule.
3.22 NO UNTRUE STATEMENTS. No statements (including representations
and warranties) contained in this Agreement (including in the Disclosure
Schedule and documents described as having been provided to Buyer in this
Agreement or in the Disclosure Schedule), contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein and in the Disclosure Schedule not misleading.
SECTION IV.
INVESTOR REPRESENTATIONS REGARDING THE SECURITIES
4.1 INVESTMENT REPRESENTATIONS.
Each Shareholder represents to Buyer as follows:
(a) The Shareholder is acquiring the common stock of Buyer for
the account of the Shareholder (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 promulgated
thereunder ("Rules"), in violation of the Act or any of the Rules;
(b) The Shareholder has such knowledge and experience in
financial and business matters that the Shareholder is capable of evaluating the
merit and economic risks of this particular investment and acknowledges that an
investment in the common stock of Buyer involves risks, including the risks set
forth in the S4 Registration Statement.
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(c) The 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. In addition, such stock may not be
transferred except as permitted under the provisions of the standstill agreement
set forth in paragraph 8.2 hereof and the Acts and Rules.
(d) In making this decision to acquire the common stock of
Buyer, the Shareholder has been given the opportunity to discuss the business,
management and financial affairs of Buyer and their subsidiaries with officers
of Buyer and has had the opportunity to ask questions of, and to 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 Shareholder desire no further information for
such evaluation. The Shareholder acknowledges receipt of a copy of the SB
Registration Statement as filed with the Commission on December 27, 1996 and the
S4 Registration Statement as filed with the Commission on January 28, 1997.
(e) The Shareholder acknowledges that no representations were
made by Buyer to the Shareholder with respect to the business, management or
financial affairs of Buyer except as set forth in Section V of this Agreement
and except that Buyer and InfoCure are negotiating with several companies the
purchase or merge of their businesses by or into Buyer or InfoCure or a
subsidiary thereof ("Acquisitions") and the financing of the cash payments for
such Acquisitions through the Public Offering by InfoCure into which Buyer
intends to merge ("Merger") upon the effective dates of the SB and S4
Registration Statements, all as more fully described in the SB Registration
Statement. The Shareholder acknowledges that there can be no assurances that the
Acquisitions will be effected or that the Public Offering will occur or the net
proceeds of the Public Offering will be sufficient to meet the obligations of
InfoCure including working capital requirements or that the companies after the
Acquisition will be profitable. The Shareholder acknowledges that no
representations are made by Buyer as to the definitive Exchange Ratio.
(f) The Shareholder acknowledges that no representations are or
were made by Buyer with respect to the business or financial condition of Buyer
except as set forth herein and in the S4 and SB Registration Statements (subject
to subsequent amendments hereto and thereto) and no representations are made
with respect to any business plan or projections of Buyer or InfoCure.
(g) The Shareholder understands and agrees that the common
stock of the Buyer to be acquired by the Shareholder as herein provided, if it
is not issued pursuant to an effective registration statement filed with the
Commission, shall be inscribed with a legend to the effect that the common stock
of Buyer may not be transferred in the absence of an effective registration
statement under the Act covering the common stock of Buyer or an opinion of
counsel satisfactory to Buyer, that registration is not required under the Act.
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(h) The Shareholder acknowledges that no registration statement
relating to common stock of Buyer to be delivered pursuant to this Agreement has
been filed at this time under the Act or under the laws of any state and that
the common stock of Buyer must be held by the Shareholder for an indefinite
period of time (at least two years under current rules) unless the common stock
of Buyer, before the expiration of that period, is registered under the Act and
any applicable state law or unless an exemption from such registrations is
available. The Shareholder realizes that there is no existing market for the
common stock of Buyer which is not freely tradeable. The Shareholder further
acknowledges that Buyer is under no obligation to register the shares of common
stock of Buyer owned by the Shareholder or to aid the Shareholder in obtaining
any exemption from the registration requirements or permits to sell the
securities.
(i) The Shareholder agrees that the shares of common stock of
Buyer may not be transferred without compliance with applicable federal and
state laws.
(j) The Shareholder acknowledges that there are no assurances
that the underwriters will proceed with the Public Offering or that the Public
Offering will become effective.
4.2 OWNERSHIP OF COMPANY SHARES. Each Shareholder represents to
Buyer that the Shareholder is the sole and exclusive record and beneficial owner
of all shares of Company Shares registered in the Shareholder's name as set
forth in Section 3.1(f) of the Disclosure Schedule. Section 3.1(f) of the
Disclosure Schedule contains the principal residence or domicile of the
Shareholder. Each Shareholder represents that the shares of 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 Company Shares registered in the
Shareholder's name. Each Shareholder represents that the Shareholder's right,
title and interest in the Company Shares were acquired on or before January 1,
1990 and no other person has any right, title or interest therein.
SECTION V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders on the date
hereof as follows:
5.1 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, as contemplated by this Agreement.
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5.2 AUTHORIZATION
(a) The execution, delivery and performance of this Agreement,
including the issuance of the common stock of Buyer, have been duly authorized
by all requisite corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer enforceable against it 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 agreement Buyer in accordance with its terms.
(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 is a party or by which it is bound.
(c) The common stock of Buyer to be issued and delivered to
Company will be validly issued, fully paid and non-assessable securities and
will not be subject to any outstanding warrants, options, preemptive rights or
other restrictions except those arising under applicable federal and state
securities laws.
5.3 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.
5.4 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.
5.5 REGISTRATION STATEMENTS. The S4 and SB Registration Statements
do not contain any untrue statement of a material fact or omit to state therein
such facts required to be stated therein or necessary to make such statements
therein not misleading. The foregoing representa tion does not include any
statement in the S4 and SB Registration Statements furnished to the Buyer or
InfoCure Corporation by any Shareholder for use in connection with the
preparation of the S4 and SB Registration Statements or any omission by any
Shareholder to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
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SECTION VI.
CONDITIONS TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be performed
on or prior to the Closing Date shall be subject to the satisfaction on or prior
to the Closing Date 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.
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties made by the Shareholders herein as of the date of
this Agreement shall be true and correct in all material respects on the Closing
Date with the same effect as though made on the Closing Date; the 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 the Shareholders shall have delivered to Buyer a certificate
of the Shareholders dated the Closing, certifying as to the fulfillment of the
foregoing conditions.
6.2 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.
6.3 OPINION OF COUNSEL TO THE SHAREHOLDERS. An opinion of counsel
to the Shareholders dated the Closing Date and addressed to Buyer reasonably
satisfactory in all respects to Buyer.
6.4 AUTHORIZATION. Evidence that all actions required to be taken
by the Shareholders or Company pursuant to this Agreement, including the
execution and delivery thereof, has been taken to authorize and consummate the
transactions contemplated herein.
6.5 UPDATE DISCLOSURE SCHEDULE. The Shareholders shall have
updated the Disclosure Schedule as herein provided.
6.6 ESCROW AGREEMENT. The Shareholders have executed the Escrow
Agreement.
6.7 EMPLOYMENT AGREEMENT. Buyers and M. ▇▇▇▇▇ ▇▇▇▇▇▇ shall have
entered into an employment agreement in form and substance satisfactory to
Buyer.
6.8 PUBLIC OFFERING. The Public Offering shall have commenced.
6.9 S4 REGISTRATION STATEMENT. S4 Registration Statement, which
includes the shares of common stock of InfoCure to be issued pursuant to the
Merger of Buyer into InfoCure, has been declared effective by the Commission.
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SECTION VII.
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:
7.1 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 Date
with the same effect as though made on the Closing Date; Buyer shall 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 Date; and Buyer shall have delivered to the Shareholders a certificate
of an officer of Buyer, certifying as to the fulfillment of the foregoing
conditions.
7.2 OPINION OF COUNSEL TO BUYER. An opinion of Glass, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel to Buyer, dated the Closing reasonably
satisfactory in all respects to the Shareholders.
7.3 COMMON STOCK OF BUYER. The Common Stock of Buyer is delivered
by Buyer to the Shareholders.
7.4 AUTHORIZATION. Evidence that all actions required to be taken
by Buyer pursuant to this Agreement have been taken, including instructions to
the transfers agent to issue the common stock of Buyer and deliver the
certificates to the Shareholder and/or Escrow Agent and delivery of copies of
the articles of incorporation, bylaws, and board resolutions certified by the
secretary or assistant secretary of Buyer evidencing the authorization of the
issuance of the common stock of Buyer.
7.5 ESCROW AGREEMENT. The parties have entered into the Escrow
Agreement.
7.6 PUBLIC OFFERING. The Public Offering shall have commenced.
7.7 S4 REGISTRATION STATEMENT. The S4 Registration Statement which
includes the shares of common stock of InfoCure to be issued pursuant to the
Merger of Buyer into InfoCure, has been declared effective by the Commission.
7.8 REPAYMENT OF SHAREHOLDER LOANS. All indebtedness of the
Company for loans from Shareholders shall be paid in full.
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7.9 THIRD PARTY CONSENTS. All consents, approvals or authorizations
from third parties or governmental agencies to consummate the transactions
contemplated hereby and contemplated by this Agreement have been received.
7.10 EMPLOYMENT AGREEMENT. M. ▇▇▇▇▇ ▇▇▇▇▇▇ and Buyer shall have
entered into an Employment Agreement in form and substance satisfactory to M.
▇▇▇▇▇ ▇▇▇▇▇▇.
SECTION VIII.
OTHER COVENANTS
8.1 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; (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 in the ordinary course of its business;
and (iv) not appoint new distributors without the prior written consent of
Buyer.
(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 8.1(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.
8.2 STANDSTILL AGREEMENT. Each Shareholder agrees to execute the
standstill agreement in the form attached hereto as Exhibit 8.2. Buyer
represents that the form of the standstill agreement is identical to those being
executed by the directors and executive officers of Buyer.
8.3 COVENANTS RELATING TO TAXES. Following Closing, in the event
that the Company receives notice of any audit of any tax return for the Company
for any taxable period, through and including the Closing Date by any taxing
authority, the Company shall promptly notify the Shareholders, individually, of
the commencement of any such audit or examination and the Shareholders may
participate in such audit or examination and shall be kept fully apprised of the
progress of such audit or examination. The Company shall keep the Shareholders
fully apprised
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of the progress of such audit examination and the Shareholders may participate
in such audit or examination. The Company agrees that it will not agree to any
audit or revision that would result in taxable income to the Shareholders,
without the Shareholders' approval.
SECTION IX.
CONFIDENTIALITY AND SECURITY
9.1 CONFIDENTIALITY
(a) The parties acknowledge that information, documents and
materials have hereafter been exchanged under a confidentiality understanding.
The provisions of this Section IX reflect the understanding with respect to, and
shall govern, all such exchanges 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 hereto hereby agrees
that all information, documents and materials the party ("Recipient") received
heretofore and receives hereafter from any other party or its Affiliate
("Owner") shall be considered valuable assets of such Owner and shall at all
times to be treated by the Recipient and the officers, directors, employees and
agents of the Recipients 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 Owners. 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.
(b) Each party hereto as Recipient shall take all commercially
reasonable actions necessary or desirable, including with respect to its
officers, directors, employees and consultants having access to the confidential
information or trade secrets, 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
IX 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 to restrain any breach or
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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 shall not be disclosed 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 and other person's
compliance with the confidentiality obligation of this Section IX.
(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 which shall be so protected 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 right to disclose it, without accompanying markings or disclosure
restrictions;
(B) is independently developed by Recipient by
personnel 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 date of disclosure by Owner; or
(E) is approved for release in writing by the
President of the Owner;
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is not entitled to the protection provided in this Section IX, except for
patents, trademarks and copyrights 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 the confidential
information and trade secrets of Buyer have been and will be used by the
Shareholders only in furtherance of the transactions contemplated herein and in
the S4 Registration Statement.
(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 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 and the merger of Buyer into InfoCure.
(h) Upon the Closing, all trade secrets and confidential
information owned by Company shall be deemed to be owned by Buyer or its
subsidiary as of the Closing for purposes of this Agreement, including this
Section IX.
(i) Notwithstanding the foregoing, nothing in this Section IX
shall restrict the disclosure of any confidential information in any
registration statement filed with the Commission in contemplation of the Public
Offering, including the prospectus which is a part thereof and the public
distribution of the prospectus, including the preliminary prospectus and
registration statement.
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SECTION X.
INDEMNIFICATION
10.1 INDEMNIFICATION BY THE SHAREHOLDERS.
(a) The Shareholders hereby agree, jointly and severally, to
indemnify and hold Buyer and Company, including the successor of the Business
(collectively "Buyer" for purposes of this Section X only) harmless at all times
from and after the Closing Date, 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 or of any condition precedent (except for the third party
consents) as set forth in this Agreement.
(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 10.1 are collectively referred to as "Buyer
Losses".
(b) The period during which Buyer must give notice in writing
to the Shareholders of claims for indemnification hereunder shall expire on the
second anniversary of the Closing except that such period shall be extended to
the applicable statute of limitations (i) plus thirty (30) days with respect to
claims for unpaid taxes and failure to file required tax reports, including
related interest, penalties and fines ("Tax Claims"); (ii) with respect to
claims regarding the ownership of Company (including warrants, options and
convertible securities) or regarding the ownership by the Shareholders of the
Company Shares; (iii) for breaches of any covenant or obligation which first
arises after the Closing; or (iv) for breaches of Section IX.
(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 a 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 Purchase Price 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
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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 Buyer Losses 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 Buyer Losses from the Shareholders shall be promptly
reimbursed to the Shareholders.
10.2 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:
(i) All losses, liabilities, costs and damages, including
without limitation, interest, penalties and fines, resulting from (a) any breach
of a representation or warranty of Buyer set forth herein, (b) any
non-fulfillment of any agreement or covenant, on the part of Buyer set forth
herein, (c) guarantees of any of the Shareholders not released pursuant to
paragraph 13.2 hereof, (d) operation of the Company after the Closing except to
the extent resulting from negligent acts or omissions of the applicable
Shareholder after the Closing Date, or (e) claims relating to the merger of
Buyer and InfoCure Corporation.
(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 10.2 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 the
second anniversary of the Closing except that such period shall be extended to
the applicable statute of limitations (i) for breaches of Section IX, (ii) for
breaches of any covenant or obligation which first arises after the Closing or
(iii) plus thirty (30) days with respect to claims for unpaid taxes and failure
to file required tax reports, including related interest, penalties and fines.
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(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 X 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 expenses 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 Shareholder in writing promptly of the intention of
Buyer to do so, the Shareholders shall cooperate with Buyer and its counsel on
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); provided however, that
the foregoing shall not be applicable to the Shareholders Loss arising out of a
breach of paragraph 13.2.
(g) The amount of any Shareholder Losses shall be reduced by
amounts received by the Shareholder under any policy of insurance. Amounts
received from any such policy of insurance after the receipt of payment of any
Shareholder Losses from Buyer shall be promptly reimbursed to Buyer.
10.3 REIMBURSEMENT. Buyer or Shareholders, as the case may be,
shall be reimbursed promptly for any Buyer Losses or Shareholder Losses for
which it is to be indemnified under paragraphs 10.1 and 10.2. Buyer and the
Shareholders shall have the right to set off and deduct any Buyer Losses or
Shareholder Losses, 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 any amount or the amount of the Buyer or
Shareholder Losses, the dispute shall be resolved as provided in paragraph
10.5. 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.
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10.4 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 paragraphs 10.1(e) or 10.2(e), the party to be indemnified, on
not less than fifteen (15) days' notice to the other party, may make settlement
of such claim, and such settlement shall be binding on the indemnifying party
for the purposes of this Section X; provided, however, that if within said
fifteen (15) day period the indemnifying party shall have requested the other
party to contest any such claim at the expense of the indemnifying party and has
provided reasonable assurances of the ability of the indemnifying party to pay
such expenses and other losses which may occur, the indemnified party will
promptly comply and the indemnifying party shall have the right to defend on its
own behalf with counsel of its own choosing at its 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
X. Failure to give notice shall not constitute a defense, in whole or in part,
to any claim by the indemnified party except and only to the extent that such
failure to do so shall result in material prejudice to the indemnifying party.
10.5 RESOLUTION OF DISPUTES. In the event of any dispute between
Buyer and the Shareholders over any claim for indemnification under this Section
X 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 ($200,000), 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 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 software
distribution. All decisions 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.
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SECTION XI.
COVENANT NOT TO COMPETE
(a) For a period of five (5) years following the Closing Date,
each Shareholder agrees that the Shareholder 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 conducted by Company on the Closing Date in the United
States. The Shareholders and Buyer agree that the Business is conducted
throughout the United States and the Business is the development, marketing,
training, implementing, and/or supporting of computer software or hardware to
physician practice management computer systems, but is not, for example,
physician service bureau systems, medical records systems, third party
administration systems or reimbursement consulting services..
(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 will not suggest, urge or persuade any user of the
Software not to purchase or license or not to do business with Company 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.
(e) Each Shareholder agrees that in addition to any other
rights and remedies available to Buyer and Company for any breach by a
Shareholder of his obligations under this Section XI, Buyer or Company 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 or Company has an adequate remedy at law.
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SECTION XII.
TERMINATION AND ABANDONMENT
12.1 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 warrants, representations, and covenants set
forth in this Agreement which are within the control of the defaulting or
non-performing party (the effectiveness of the SB Registration Statement and the
S4 Registration Statement shall be deemed as not being in the control of Buyer),
under the following circumstances:
(a) The mutual written agreement of Buyer 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 VI;
(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 VII; 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.
12.2 RIGHTS AND OBLIGATIONS ON TERMINATION. If this Agreement is
terminated and abandoned as provided in this Section XII, 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, provided,
however, that Section IX shall not apply to any document, work paper, material,
or any other information which is published in any publication for public
distribution or filed as public information, including in the SB and S4
Registration Statements, with any governmental authority or is otherwise in the
public domain.
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SECTION XIII.
MISCELLANEOUS PROVISIONS
13.1 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 X hereof, shall survive the Closing and remain operative in
full force and effect as provided in Section X. The updating of the Disclosure
Schedule on or before the Closing is for information purposes only and shall not
modify in any way the warranties and representations set forth herein and in the
Disclosure Schedule delivered at the time of the execution of this Agreement.
13.2 PAYMENT OF CERTAIN INDEBTEDNESS. Within thirty (30) days of the
Closing, Buyer (or its successor) shall discharge in full certain indebtedness
of the Company theretofore guaranteed by the Shareholders or any Shareholder and
obtain a release of all such Shareholder's guarantees of such indebtedness
provided that such indebtedness can be discharged without a penalty or other
similar special charge. Buyer (or its successor) shall use reasonable commercial
efforts to obtain the release of the Shareholders from any other guarantees of
obligations of the Company as disclosed in the Disclosure Schedule.
13.3 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.
13.4 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.
13.5 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, 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.
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13.6 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.
13.7 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties hereto regarding the acquisition of the Company Shares and
related matters. No represen tations or agreements, whether written or oral,
other than 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.
13.8 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.
13.9 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be given in writing to the 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 a copy sent postage prepaid
registered or certified mail return receipt requested) 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.
13.10 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.
13.11 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
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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.
13.12 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.
13.13 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 Shares; provided, however, Buyer
shall remain liable to the Shareholders for any breach of Buyers warranties,
representations and covenants contained herein.
13.14 FEES AND EXPENSES. Each party hereto shall pay all expenses the
party has incurred, including attorneys' and accountants' fees, in connection
with this Agreement and the transactions contemplated hereby, except that any
expenses of the Shareholders paid by the Company shall be deducted from the net
worth calculation as of the closing without reduction or offset, except as
otherwise agreed in writing by the parties.
13.15 ▇▇▇▇▇▇▇-▇▇▇▇▇ NAME. The parties recognize that the name of the
Company is named after one of the Shareholders, M. ▇▇▇▇▇ ▇▇▇▇▇▇. Should the
Company (or any successor) cease using the name "▇▇▇▇▇▇▇-▇▇▇▇▇" or any
combination or variation thereof as its corporate name, the Buyer agrees that it
will license the use by the Shareholder of a corporate name using ▇▇▇▇▇▇▇-▇▇▇▇▇
or any combination or variation thereof for a company which does not conduct any
business in the health care industry in the United States.
13.16 INSURANCE POLICIES. The Company holds life insurance policies
on the life of M. ▇▇▇▇▇ ▇▇▇▇▇▇, a Shareholder, as set forth in Section 13.16 of
the Disclosure Schedule. Prior to Closing, M. Wayne ▇▇▇▇▇▇ ▇▇▇ purchase those
policies and assume all of the current loans, including accrued interest, which
are borrowed against such policies as set forth in Section 13.16 of the
Disclosure Schedule. M. ▇▇▇▇▇ ▇▇▇▇▇▇ shall present evidence of the discharge of
the Company from any liability for such loans.
13.17 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.
13.18 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.
34
39
13.19 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 or InfoCure will be required or may deem it desirable to make and, as
part of the proposed public offerings, will make public disclosure of the
execution of this Agreement and the terms and conditions hereof, including in
the SB and S4 Registration Statements. 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
13.16.
SHAREHOLDERS:
-----------------------------------
Name: M. ▇▇▇▇▇ ▇▇▇▇▇▇
ADDRESS FOR NOTICE:
Address:
---------------------------
Telecopy No.:
----------------------
Attention:
------------------------
AMERICAN MEDCARE CORPORATION
By:
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Executive
Vice President
ADDRESS FOR NOTICE:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. Fine,
Chief Executive Officer
35
