ASSET PURCHASE AGREEMENT
by and among
VERSYSS INCORPORATED,
PHYSICIAN COMPUTER NETWORK, INC.
and
XXXXXXXX SYSTEMS, INC.
----------------------------
Dated as of April 26, 1999
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TABLE OF CONTENTS
Page
BACKGROUND........................................................................................................1
1. PURCHASE AND SALE OF ASSETS.................................................................................1
1.1. Sale of Assets..................................................................................1
1.2. Retained Assets.................................................................................3
1.3. Instruments of Transfer.........................................................................5
1.4. Delivery of Possession..........................................................................5
1.5. Consents to Assignment..........................................................................5
1.6. Collection of Accounts Receivable...............................................................6
1.7. Certain Software Rights.........................................................................6
1.7.1 XRTS............................................................................................6
1.7.2 Jointly Owned Software..........................................................................7
1.7.3. Infringement....................................................................................9
1.7.4. Assignability..................................................................................10
1.8. Additional Ownership Rights....................................................................10
2. PURCHASE PRICE.............................................................................................11
2.1. Consideration..................................................................................11
2.2. Allocations of Purchase Price..................................................................12
3. ASSUMPTION OF LIABILITIES..................................................................................12
3.1. Assumption.....................................................................................12
3.2. Limitations on Assumption......................................................................13
3.3. Right of Enforcement and Settlement............................................................14
4. CLOSING....................................................................................................14
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER...............................................................14
5.1. Existence and Authority........................................................................14
5.2. Authorization of Agreement.....................................................................15
5.3. Effect of Agreement, Etc.......................................................................15
5.4. Restrictions; Burdensome Agreements............................................................15
5.5. Governmental and Other Consents................................................................15
5.6. Statement of Net Assets; Revenues..............................................................16
5.7. Absence of Certain Changes or Events...........................................................16
5.8. Deferred Revenue Account.......................................................................16
5.9. Accounts Receivable............................................................................17
5.10. Accounts Payable...............................................................................17
5.11. Title to the Assets; Absence of Liens and Encumbrances, Etc....................................17
5.12. Contracts......................................................................................17
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5.13. End-Users......................................................................................19
5.14. Intellectual Property..........................................................................19
5.15. Real Estate Leases.............................................................................19
5.16. Compliance With Laws...........................................................................20
5.17. Litigation; Customer Complaints................................................................20
5.18. Labor Matters..................................................................................20
5.19. Taxes..........................................................................................21
5.20. Entire Business................................................................................21
5.21. Brokers........................................................................................21
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............................................................22
6.1. Organization, Etc..............................................................................22
6.2. Authorization of Agreement.....................................................................22
6.3. Effect of Agreement, Etc.......................................................................22
6.4. Governmental and Other Consents................................................................22
6.5. Restrictions; Burdensome Agreements............................................................23
6.6. Litigation.....................................................................................23
6.7. Brokers........................................................................................23
7. PRE-CLOSING COVENANTS OF THE SELLER........................................................................23
7.1. Conduct of Commercial Business Pending the Closing.............................................23
8. PRE-CLOSING COVENANTS OF THE PURCHASER AND THE SELLER......................................................24
8.1. Advice of Changes; Governmental Filings........................................................24
8.2. No Action......................................................................................24
8.3. Legal Conditions to Closing....................................................................24
8.4. Additional Agreements; Reasonable Efforts......................................................24
8.5. Confidentiality................................................................................24
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9. POST-CLOSING COVENANTS.....................................................................................25
9.1. Further Assurances.............................................................................25
9.2. Non-Competition; Non-Disclosure................................................................25
9.3. Employee Matters...............................................................................26
9.4. The Facilities.................................................................................27
9.5. Renewal of Support Agreements and Reseller Agreements..........................................28
9.6. Hardware Purchases.............................................................................29
9.7. Printed Product Sales..........................................................................29
9.8. Additional Agreements..........................................................................30
9.9. Sublease.......................................................................................31
9.10. Warranty Obligations...........................................................................31
9.11. Year 2000 Updates..............................................................................31
9.12. Acquired Inventory.............................................................................32
10. CLOSING CONDITIONS.........................................................................................32
10.1. Conditions to Obligation of Each Party to Effect the Closing...................................32
10.2. Additional Conditions to Obligations of Purchaser..............................................32
10.3. Additional Conditions to Obligation of the Seller..............................................34
11. OBLIGATIONS OF PCN AND VERSYSS.............................................................................35
12. INDEMNIFICATION............................................................................................35
12.1. Indemnification of the Purchaser...............................................................35
12.2. Indemnification of the Seller by the Purchaser.................................................36
12.3. Limitations on Indemnity.......................................................................36
12.4. Right to Defend, Etc...........................................................................38
12.5. Tax Effect.....................................................................................38
12.6. Settlement of Certain Claims...................................................................38
13. GENERAL....................................................................................................39
13.1. Expenses, Etc..................................................................................39
13.2. Survival of Representations and Warranties.....................................................39
13.3. Waivers........................................................................................39
13.4. Definition of Knowledge........................................................................40
13.5. Binding Effect; Benefits.......................................................................40
13.6. Notices........................................................................................40
13.7. Records; Assistance............................................................................41
13.8. Entire Agreement...............................................................................41
13.9. Headings.......................................................................................42
13.10. Counterparts...................................................................................42
13.11. Governing Law; Submission to Jurisdiction......................................................42
13.12. Third Party Beneficiaries......................................................................42
13.13. Severability...................................................................................42
13.14. Publicity......................................................................................42
13.15. Amendments.....................................................................................42
13.16. Drafting Conventions...........................................................................42
14. GLOSSARY...................................................................................................43
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ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of April 26, 1999, by and among VERSYSS
Incorporated, a Delaware corporation ("Versyss"), and Physician Computer
Network, Inc., a New Jersey corporation ("PCN"), jointly and severally (the
"Seller"), and Xxxxxxxx Systems, Inc., a Delaware corporation (the "Purchaser").
BACKGROUND
The Seller is engaged in the business of: (i) providing physicians,
hospitals, medical clinics and other facilities providing medical services with
practice management software systems and providing maintenance and support for
such systems (whether conducted by Versyss, PCN or any of their respective
Affiliates, the "Medical Business"); and (ii) selling or licensing software
packages which provide such applications as payroll, accounts payable
management, general ledger, billing, accounts receivable management, invoicing
and inventory management to the industries listed on Schedule A hereto and
providing maintenance and support for such businesses (the "Commercial
Business"). Versyss is a wholly-owned subsidiary of PCN. The Seller desires to
sell and the Purchaser desires to purchase certain assets of the Commercial
Business on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Sale of Assets. On the terms and subject to the conditions set
forth in this Agreement, the Seller agrees to sell, convey, transfer, deliver
and assign to the Purchaser, and the Purchaser agrees to purchase, on the
Closing Date (as hereinafter defined), all of the Seller's tangible and
intangible assets, rights, interests and properties of every kind, wherever
located and by whomever possessed, to the extent used by the Seller in and
material to the conduct of the Commercial Business (as currently and, with
respect to the current business lines of the Commercial Business, historically,
conducted), other than Retained Assets (as defined in Section 1.2 hereof), as
the same may exist on the Closing Date (the "Assets"). The Asset include,
without limitation, the following:
(a) the Commercial Business as a going concern and the
goodwill pertaining thereto;
(b) all customer lists to the extent utilized in the
Commercial Business;
(c) all rights of the Seller, its successors and assigns under
all license, sublicense, service, development, maintenance and support
agreements (whether related to
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computer software, hardware or both), between the
Seller and any licensee, sublicensee or user ("End-Users") of the products or
services of the Commercial Business (collectively, the "End- User Agreements");
(d) all rights of the Seller, its successors and assigns under
all distribution, resale, business partner and like agreements between the
Seller and any reseller or distributor ("Resellers") of the software products
sold, licensed or supported by the Commercial Business to the extent related to
the software products of the Commercial Business (collectively, "Reseller
Agreements");
(e) subject to Sections 1.7 and 1.8, all source-codes,
object-codes, manuals and other documentation and materials (whether or not in
written form) and all versions thereof, together with all other patents,
licenses, trademarks, service marks, tradenames (whether registered or
unregistered), copyrights, proprietary computer software, proprietary
inventions, proprietary technology, technical information, discoveries, designs,
proprietary rights and non-public information, whether or not patentable, in
each case, listed on Schedule 1.1(e) hereto (collectively, the "Intellectual
Property");
(f) all accounts and other receivables of the Commercial
Business (the "Accounts Receivable");
(g) all items of equipment (including, but not limited to, the
telephone handsets, conferencing units and telephone switch located and/or
installed at the premises located at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
(the "Telephone Equipment")), machinery, furniture or fixtures: (i) listed on
Schedule 1.1(g) hereto; and/or (ii) used solely or exclusively by the Seller in
connection with the operation of the Commercial Business (except for other
casual or de minimis uses) (collectively, the "Equipment");
(h) the Seller's rights under the equipment leases described
on Schedule 1.1(h) hereto (the "Equipment Leases");
(i) copies of all books of account, records, files, invoices,
customer lists, supplier lists, designs, drawings, business records and plans,
computer print-outs and software, plans and specifications, warranties, trade
correspondence, sales or promotional literature, operating data and other books
and records related to the Commercial Business as it is conducted on the Closing
Date (all of which are collectively referred to hereinafter as "Books and
Records");
(j) the right to receive mail and other communications
regarding the Commercial Business addressed to the Seller or any of its
Affiliates (including, without limitation, mail and communications from
End-Users, customers, suppliers, Resellers, distributors, agents and others);
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(k) all creative materials (including, without limitation,
films, art work, color separations and the like), advertising and promotional
materials and all other printed or written materials related primarily to the
Commercial Business, its products or services;
(l) all claims, refunds, causes of action, choses in action,
rights of recovery and rights of set-off of every kind and nature related to the
Commercial Business, except to the extent related to the Retained Liabilities;
(m) the items of inventory of computer hardware, operating
system software, parts and related equipment identified on Schedule 1.1(m)
hereto, all of which: (i) have been paid for by the Seller; and (ii) were
purchased by the Seller on account of a customer for which an Account Receivable
exists (all such items referred to herein as "Acquired Inventory"); and
(n) Subject to Section 1.8 hereto, the name "VERSYSS" and all
permutations thereof.
For purposes of this Agreement, the term "Affiliate" shall
mean any entity that directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with any other entity
or, in the case of an individual, any spouse or child sharing the same
residence. For purposes of this definition, "control" of a person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such person, whether by contract or otherwise.
1.2. Retained Assets. The following properties, assets, rights and
interests of the Seller (the "Retained Assets") are expressly excluded from the
purchase and sale contemplated hereby and, as such, are not included in the
Assets:
(a) all real property not identified or otherwise
described in Section 1.1;
(b) the Seller's rights under this Agreement;
(c) except for the assets described in, and subject to
the provisions of, Sections 1.7 and 1.8 hereof, all
assets of the Seller and its Affiliates used in or
relating to the Medical Business unless such use or
relationship is only casual or de minimus;
(d) all cash, cash equivalents and marketable securities
of the Seller its Affiliates, including, without
limitation, and subject to Section 9.7(a) hereof, any
and all security deposits;
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(e) any inventory of computer hardware, operating system
software, parts and related equipment (whether or not
useable in the Commercial Business) other than the
Acquired Inventory;
(f) any and all rights of the Seller and its Affiliates
in and to or in respect of any telephone systems
(other than the Telephone Equipment), support call
systems or accounting and other management
information systems (whether or not used or useable
in the Commercial Business);
(g) any and all rights of any one or more of the Seller
its Affiliates under or with respect to any original
equipment manufacturing or similar agreement (each an
"OEM Agreement"), including, without limitation, the
OEM Agreements between PCN and each of IBM and Xxxxx;
(h) any and all rights of the Seller under the Software
License and Support Agreement regarding the Datatrak
Publishers Management Software;
(i) any and all of the rights of the Seller under the
Reseller Agreements for VERSYSS Solution/RISC
products between any Reseller and the Seller (the
"Risc Agreements");
(j) any and all rights of the Seller with respect to any
of the assets and agreements referred to on Schedule
5.20 hereto and the assets and agreements (x) used in
providing or reasonably related to the services to be
provided by PCN to the Purchaser under the Transition
Services Agreement (as defined in Section 10.2(e)(i)
hereof) or (y) used in providing the services to be
provided under the Hardware Services Agreement (as
defined in Section 10.2(e)(ii) hereto);
(k) any and all rights to or arising under any license
agreement between the Seller and any third party
regarding the use by the Seller of any source- codes,
object-codes, copyrights, proprietary computer
software, proprietary inventions, proprietary
technology, technical information, and proprietary
rights other than those included in the definition of
Intellectual Property or materially related thereto;
(l) any assets used by the Seller in connection with any
one or more of the sale, distribution and maintenance
of any computer hardware or operating system software
products; and
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(m) any assets of the Seller, the use of or relationship
to the Commercial Business of which is only casual or
de minimus nature.
For purposes of Section 1.2(c) above, the Seller agrees that the items
listed in clauses (a) through (n) of Section 1.1 above shall be conclusively
deemed, for all purposes, not to be used in or related to the Medical Business.
1.3. Instruments of Transfer. On the Closing Date, the Seller will
deliver to the Purchaser, or will cause to be delivered to the Purchaser, duly
executed instruments of transfer and assignment in form and substance reasonably
satisfactory to the Purchaser and its counsel, sufficient to vest in the
Purchaser good and valid title to, and all of the Seller's right, title and
interest in and to, the Assets, including, without limitation, one or more of
each of the following:
(a) a xxxx of sale;
(b) an assumption agreement;
(c) an instrument of transfer and assignment of the
Intellectual Property;
(d) assignments by either Versyss or PCN, as the case may be,
of their rights under all End User Agreements, Reseller Agreements, Equipment
Leases, the Assumed Lease (as defined below) and any other contracts, licenses,
and similar instruments which are included in the Assets; and
(e) such other instruments of transfer and assignment as may
be reasonably necessary to transfer and assign the Assets to the Purchaser.
1.4. Delivery of Possession. At the Closing, the Seller will deliver
possession to the Purchaser of the Assets, at the locations where, in the
ordinary course of business, such are usually and customarily located.
1.5. Consents to Assignment. Any other provision of this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign or otherwise sell, convey or transfer any concession, claim, contract,
license, lease, commitment, sales order, or purchase order, or any benefit
arising thereunder or resulting therefrom, if an attempted assignment thereof,
without the consent required or necessary for such assignment, would constitute
a breach thereof or in any way adversely affect the rights of the Purchaser or
the Seller thereunder. If such consent is not obtained, or if an attempted
assignment would be ineffective or would adversely affect the Seller's rights
thereunder so that the Purchaser would not in fact receive all such rights, the
Seller shall cooperate in any arrangement the Purchaser may at its option
reasonably request in writing to provide for the Purchaser the benefits under
any such concession, claim, contract, license, lease, commitment or order,
including enforcement for the benefit of the
5
Purchaser of any and all rights of the Seller with respect to the Commercial
Business against any other party thereto arising out of the breach or
cancellation thereof by such party or otherwise; provided, however, that nothing
contained in this Section 1.5 shall relieve the Seller of any obligation
provided for elsewhere in this Agreement to obtain any such consent or approval
or shall affect the liability, if any, of the Seller, and the rights, if any, of
the Purchaser, pursuant to this Agreement, for the failure of the Seller to have
disclosed the need for, and for having failed to obtain, any such consents or
approvals.
1.6. Collection of Accounts Receivable. From and after the Closing
Date, the Seller shall: (i) instruct all account debtors of any Accounts
Receivable or other accounts receivable created by the Purchaser following the
Closing with respect to the Commercial Business (together with the Accounts
Receivable, the "Purchaser Receivables") to forward all checks or other forms of
payment on account of any Purchaser Receivable (each a "Payment") directly to
the Purchaser; and (ii) promptly deliver to the Purchaser all Payments received
by the Seller.
1.7. Certain Software Rights.
1.7.1 XRTS. (a) Set forth on Schedule 1.7.1(a) hereto is a
description of the software programs generally referred to as "XRTS" (together
with all updates, enhancements and modifications made thereto, the "XRTS-Code").
The XRTS-Code is included in the Assets to be acquired by the Purchaser in
accordance with the terms of this Agreement, provided, however, that, from and
after the Closing, notwithstanding the transfer and assignment by the Seller of
all of its rights in and to the Assets to the Purchaser, the Seller shall
maintain with the Purchaser joint ownership in and to the source-codes for the
XRTS Code.
(b) For a period of three (3) years following the Closing
Date, the Seller shall deliver, or cause to be delivered, to the Purchaser any
updates, enhancements and modifications made by any one or more of the Seller
and its Affiliates to the XRTS-Code promptly following the first date on which
any such update, enhancement or modification is first made generally available
to customers of the Medical Business.
(c) For a period of three (3) years following the Closing
Date, the Purchaser shall deliver, or cause to be delivered, to PCN any updates,
enhancements and modifications made by any one or more of the Purchaser and its
Affiliates to the XRTS-Code promptly following the first date on which any such
update, enhancement or modification is first made generally available to
customers of the Commercial Business.
(d) The Purchaser shall have the right to use, sell, license,
relicense and sublicense the XRTS-Code in its discretion; provided, however,
that: (i) the Purchaser will only sell, license, relicense, sublicense and
distribute the XRTS-Code: (x) in conjunction with, and bundled as a part of,
application software products of (A) the Commercial Business as conducted by the
Purchaser following the Closing and (B) any other business lines established by
the
6
Purchaser after the Closing Date (such business lines, together with the
Commercial Business, the "Purchaser Business"); or (y) to then current end-users
(including, without limitation, End- Users) of the application software products
of the Purchaser Business as conducted by the Purchaser following the Closing;
and (ii) notwithstanding the foregoing, under no circumstances will the
Purchaser sell, license or sublicense any of the XRTS-Code to any person or
entity engaged in, or use the XRTS-Code in connection with, the Practice
Management System Business (as hereinafter defined) (whether conducted by PCN,
Versyss or any other person), including, without limitation, by licensing the
XRTS-Code to any physician or other healthcare provider or any publisher or
reseller of any physician practice management software products. As used herein,
the "Practice Management System Business" shall mean (A) the Medical Business
and (B) the business of providing physicians, hospitals, medical clinics and
other facilities providing medical services with practice management software
systems and/or clinical patient record systems and providing maintenance and
support for any such systems (whether such business is conducted by Versyss,
PCN, any of their respective Affiliates, successors or assigns, the Purchaser,
any of its Affiliates or any third party).
(e) The Seller agrees that, from and after the Closing, none
of the Seller nor any of its Affiliates or their respective successors or
assigns, will sell, license, relicense, sublicense or distribute the XRTS-Code,
including, without limitation, any enhancement, upgrade or modifications
thereto, either directly or indirectly, in source-code or object-code form, to
any Reseller (in connection with the Commercial Business), any End-User or any
other person, for use of any kind in connection or competition with the
Commercial Business.
(f) Subject to the provisions of Sections 1.7.1(a) through
(e), neither the Seller, on the one hand, nor the Purchaser, on the other hand,
shall have any obligation to account to the other for any use of the XRTS-Code,
including, without limitation, any revenues derived from the sale or license
thereof, or provide any enhancements or upgrades made with respect thereto.
(g) Except as specifically provided in Article V hereto, the
XRTS-Code, including, without limitation, any updates, modification or
enhancements thereto, are, and will in the future be, provided to the Purchaser
on an "AS IS" basis only. Accordingly, and without limiting the generality of
the foregoing, except as specifically provided in Article V hereto, the Seller
has not or does not make any representations or warranties of any kind, express
or implied, with respect to the XRTS-Code, including, without limitation,
representations or warranties of merchantability or of fitness for a particular
purpose.
(h) All updates, modification or enhancements to the XRTS-Code
provided by the Purchaser to PCN in accordance with the provisions of Section
1.7.1(c) above in the future be provided to the Purchaser on an "AS IS" basis
only.
1.7.2 Jointly Owned Software. (a) Set forth on Schedule 1.7.2(a) hereto
is a list of certain software programs used by Versyss and/or PCN in both the
Commercial Business and
7
the Medical Business (the "Jointly Owned Programs" and, together with the
XRTS-Code, the "Designated Software"). The Jointly Owned Programs are included
in the Assets to be acquired by the Purchaser in accordance with the terms of
this Agreement; provided, however, that, from and after the Closing,
notwithstanding the transfer and assignment by the Seller of all of its rights
in and to the Assets to the Purchaser, Versyss and/or PCN, as applicable, shall
maintain with the Purchaser joint ownership in and to the source-codes for the
Jointly Owned Programs.
(b) Subject to the provisions of this Section 1.7, from and
after the Closing, none of Versyss or PCN, their Affiliates or their respective
successors or assigns, on the one hand, nor the Purchaser, on the other hand,
shall have any obligation to account to the other for any use or ownership of
the Jointly Owned Programs, including, without limitation: (i) any revenues
derived from the sale, license or support thereof; or (ii) any enhancements or
upgrades made with respect thereto; provided, however, that, from and after the
Closing: (x) none of the Purchaser, its Affiliates or their respective
successors or assigns will sell, license, sublicense or distribute any of the
Jointly Owned Programs to any person or entity engaged in, or use the Jointly
Owned Programs in connection with, the Practice Management System Business
(whether conducted by PCN, Versyss or any other person), including, without
limitation, by licensing the Jointly Owned Program to any physician or other
healthcare provider or any publisher or reseller of any physician practice
management software products; and (ii) none of Versyss, PCN, their respective
Affiliates or any of their respective successors and assigns will sell, license,
sublicense or distribute the Jointly Owned Programs, including, without
limitation, any enhancement, upgrade or modifications thereto, either directly
or indirectly, in source-code or object-code form, to any Reseller (in
connection with the Commercial Business), any End- User or any other person in
connection with the Commercial Business.
(c) For a period of three (3) years following the Closing
Date, the Purchaser shall deliver, or cause to be delivered, to PCN any updates,
enhancements and modifications made by any one or more of the Purchaser and its
Affiliates to the Jointly Owned Programs promptly following the first date on
which any such update, enhancement or modification is first made generally
available to customers of the Commercial Business.
(d) For a period of three (3) years following the Closing
Date, the Seller shall deliver, or cause to be delivered, to the Purchaser any
updates, enhancements and modifications made by any one or more of the Seller
and its Affiliates to the Jointly Owned Programs promptly following the first
date on which any such update, enhancement or modification is first made
generally available to customers of the Medical Business.
(e) Except as specifically provided in Article V hereto, the
Jointly Owned Programs, including, without limitation, any updates, modification
or enhancements thereto, are, and will in the future be, provided to the
Purchaser on an "AS IS" basis only. Accordingly, and without limiting the
generality of the foregoing, except as specifically provided in Article V
hereto, the Seller has not and does not make any representations or warranties
of any
8
kind, express or implied, with respect to the Jointly Owned Programs, including,
without limitation, representations or warranties of merchantability or of
fitness for a particular purpose.
(f) All updates, modification or enhancements to the Jointly
Owned provided by the Purchaser to the Seller in accordance with the provisions
of Section 1.7.2(c) above in the future be provided to the Purchaser on an "AS
IS" basis only.
(g) During the Support Period (as defined below), so long as
the Purchaser is providing such services to any other person or entity
(including, without limitation, any customer of the Purchaser), the Purchaser
shall, for no fee, provide to the Seller the Second and Third Level Support
Services (as such terms are commonly defined in the computer software industry)
with respect to the use and operation of the Jointly Owned Programs identified
on Schedule 1.7.2(g). As used herein, the "Support Period" shall mean the period
commencing on the Closing Date and ending on the third anniversary of the
Closing Date; provided, however, that the Support Period shall automatically
renew for additional renewal terms of one year unless terminated by either party
on not less than 90 day prior written notice to the other party prior to the end
of the then current term.
(h) During the Support Period, so long as PCN is providing
such services to any other person or entity (including, without limitation, any
customer of the PCN), PCN shall, for no fee, provide to the Purchaser the Second
and Third Level Support Services (as such terms are commonly defined in the
computer software industry) with respect to the use and operation of the
XRTS-Code.
1.7.3. Infringement. (a) In the event that either the Seller or the
Purchaser becomes aware that any third party is infringing on the rights of the
Seller and/or the Purchaser with respect to any of the Designated Software, such
party shall promptly inform the other of such fact. Except to the extent covered
by Section 12 hereof, to the extent that any third party is infringing on the
rights of the Purchaser with respect to the Designated Software, the Purchaser
or its designee shall have the first right, but not the obligation, to institute
an infringement action against such third party. If the Purchaser does not
institute an infringement proceeding against the offending third party, the
Seller shall have the right, but not the obligation, to institute such an
action. Notwithstanding the foregoing, the Seller and the Purchaser shall have
equal rights to institute an infringement action against any third party who
either such party believes is infringing on any one or more of the Designated
Software. Except to the extent covered by Section 12 hereof: (i) the costs and
expenses of any such action (including, without limitation, the fees and
disbursements of counsel) shall be borne by the party instituting the action;
and (ii) any award paid by third parties as a result of such an infringement
action (whether by way of settlement or otherwise) shall be paid to the party
instituting and maintaining such action.
(b) In the event that either the Purchaser or the Seller
receives notice or otherwise becomes aware that the use of any of the Designated
Software infringes, or allegedly infringes, on the rights of any third party,
such party shall promptly notify the other party. Except
9
to the extent covered by Section 12 hereof, in the event that an action for
infringement is commenced against the Purchaser or any of its Affiliates as the
result of any development, sale, license or use by the Purchaser or any of its
Affiliates of all or any portion of the Designated Software (or against the
Seller or any of its Affiliates if such action relates, or could relate to any
development, sale, license or use by the Purchaser or any of its Affiliates at
such time or in the future) the Purchaser or its Affiliate, as the case may be,
shall have the right, but not the obligation, to defend such action at its own
cost and expense. In the event that the Purchaser elects not to defend any such
action, the Seller shall have the right, but not the obligation, to defend such
action at its own cost and expense; provided, however, that under no
circumstances shall either the Purchaser or the Seller settle or compromise any
such action in any manner which places any obligation of any kind on the other
or any of its Affiliates or in any way restricts the use of any of Designated
Software without the prior written consent of such party. Notwithstanding the
foregoing, each of the Seller and the Purchaser shall have an equal right to
defend any such action at its own cost and expense.
(c) The Seller shall render to the Purchaser all
reasonable assistance that may be required by the Purchaser in the enforcement
or defense of its permitted uses of the Designated Software. The Purchaser shall
render to the Seller all reasonable assistance that may be required by the
Seller in the enforcement or defense of its permitted uses of the Designated
Software.
(d) Nothing contained in this Section 1.7.3
shall in any way be deemed to limit or modify any of the representations or
warranties of the Seller contained in Article V hereto, including, without
limitation, the representations and warranties contained in Section 5.14 hereto.
1.7.4. Assignability. The rights granted to the Purchaser in
this Section 1.7 with respect to Designated Software shall be transferrable by
the Purchaser to any other person or entity so long as: (i) such person or
entity is not engaged in the Practice Management System Business; and (ii) prior
to any such transfer or assignment, the transferee thereof enters into a written
agreement pursuant to which, for the benefit of PCN and Versyss, such transferee
agrees to be bound by the terms and conditions of this Section 1.7.
1.8. Additional Ownership Rights. (a) The name "VERSYSS" and
all permutations thereof are included in the Assets to be acquired by the
Purchaser in accordance with the terms of this Agreement; provided, however,
that, from and after the Closing, notwithstanding the transfer and assignment by
Versyss and PCN of all of their rights in and to the Assets to the Purchaser,
Versyss and/or PCN, as applicable, shall maintain with the Purchaser joint
ownership in and to the name VERSYSS and all permutations thereof; provided,
however, that Seller will not, and will not authorize any assignee or other
third party to, use the name "VERSYSS" in connection with the sale, marketing or
distribution or any product or services (other than those products and services
provided to customers of the Medical Business) of or in competition with the
Commercial Business. Anything contained in this Agreement to the contrary
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notwithstanding, from and after the Closing Date, until such time, if ever, as
the Seller relinquishes its rights in and to the name VERSYSS as provided below,
the Purchaser will only use such name as part of a corporate, brand or trade
name which clearly, and to the reasonable satisfaction of the Seller, relates to
the operation of Commercial Business, such as, by way of example only, the
"VERSYSS Commercial Business" except to the extent that such name (i) appears on
any written or printed document or instrument for the limited purpose of using
the Commercial Business' existing supply of such documents or instruments or
(ii) is incorporated into or used as a part of any software product used by any
End-User or Reseller on the Closing Date.
(b) If at any time after the Closing Date, none of PCN,
Versyss or their respective Affiliates use the name "VERSYSS" (whether alone or
in combination with other names or words) in a substantive way in connection
with the sale, licensing or marketing of any of their products for a period of
twelve consecutive months, PCN and Versyss shall be conclusively deemed to have
abandoned their joint ownership interest in such name and the Purchaser shall
thereupon without further action of any kind become the sole owner thereof. Upon
any such abandonment, PCN and Versyss shall cease all further use of the
"VERSYSS" name except for: (i) de minimis temporary uses such as exhausting
on-hand supplies of form documents or marketing materials that may contain a
reference to such name; (ii) use as part of any products of Versyss or PCN
distributed to customers or resellers prior to the date of such abandonment; or
(iii) any other temporary transitional use requested by PCN and consented to in
writing by the Purchaser, which consent shall not be unreasonably withheld.
Following any such abandonment, PCN and Versyss shall promptly execute any and
all documents or instruments reasonably requested by the Purchaser to evidence
the Purchaser's sole ownership of all rights, title and interest in and to the
name "VERSYSS". From and after the date of such abandonment, the Purchaser shall
be deemed to have granted to Versyss a perpetual, royalty-free license to use
the name "VERSYSS" as its corporate name and in connection with any contract,
agreement or document (including, without limitation, any UCC-1 Financing
Statement) in effect as of the date of such abandonment or any amendment or
modification thereto.
2. PURCHASE PRICE
2.1. Consideration. The aggregate purchase price to be
paid by the Purchaser in full consideration for the Assets shall be as follows
(collectively the "Purchase Price"):
(a) $3,600,000 in immediately available funds (the "Cash
Payment") which amount shall be payable by wire transfer at the Closing to an
account designated by the Seller prior to the Closing Date; and
(b) the assumption by the Purchaser at the Closing of the
Assumed Liabilities (as hereinafter defined) as provided in Section 3.1 hereof.
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2.2. Allocations of Purchase Price. Within thirty (30) days
following the Closing Date, the Purchaser shall prepare a schedule of the
allocation of the Purchase Price. Subject to the consent of the Seller, which
shall not be unreasonably withheld, the Seller and Purchaser shall use and cause
to be used such schedule of the allocation for all federal, state and local
income tax purposes, including, without limitation, the preparation and filing
of their respective counterparts of Form 8594 (or any other form hereafter
mandated by the Internal Revenue Service ("IRS")) as required by the regulations
under Section 1060 of the Internal Revenue Code of 1986, as amended ("Code").
3. ASSUMPTION OF LIABILITIES
3.1. Assumption. Upon transfer of the Assets on the Closing
Date, and subject to Section 3.2 hereof, the Purchaser will assume and
thereafter pay, perform and discharge, when due, to the extent not paid,
performed or discharged by the Seller on or before the Closing Date, the Assumed
Liabilities. As used herein the term "Assumed Liabilities" means, collectively:
(a) all liabilities and obligations of the Seller for the
accounts payable set forth on Schedule 3.1(a) (the "Accounts Payable"), the
total of which accounts payable set forth on said Schedule is $91,147.41;
(b) all liabilities and obligations of the Seller to provide
to End Users maintenance and support services for the application software
products of the Commercial Business to the extent such obligation is included as
a deferred software maintenance obligation on Schedule 3.1(b) hereto (which
schedule sets forth such deferred software maintenance obligations of
$1,386,735.30 as of April 23, 1999 (the "Schedule Date") as the same may exist
on the Closing Date and all such liabilities and obligations arising in the
ordinary course of business since the Schedule Date (the "Deferred Software
Maintenance Obligation");
(c) all liabilities and obligations of the Seller to provide
to End Users maintenance and support services for computer hardware, operating
system software, parts and related equipment to the extent such obligation is
included as a deferred hardware maintenance obligation on Schedule 3.1(c) hereto
(which schedule sets forth such deferred hardware maintenance obligations of
$604,670.81 as of the Schedule Date) as the same may exist on the Closing Date
and all such liabilities and obligations arising in the ordinary course of
business since the Schedule Date (the "Deferred Hardware Maintenance
Obligation"); and
(d) the liabilities and obligations arising under or with
respect to each End User Agreement, each Reseller Agreement, each Equipment
Lease Agreement and each of the other agreements referred to on Schedule 3.1(d)
hereto, in each case, on or after the Closing Date, including, without
limitation, any obligations of the Seller and its Affiliates under any End User
Agreement related to the sale, installation, training and service of the
products of the Commercial Business whether arising on, before or after the
Closing Date.
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Nothing contained in this Section 3.1 is intended to, or shall
be construed so as to create any third party beneficiaries of this Agreement or
otherwise confer any rights upon any person, firm or corporation that is not a
party hereto, including, without limitation, any employee or customer of the
Seller, the Purchaser or any of their respective Affiliates. Without in any way
limiting the foregoing, it is not the intention of either the Purchaser or the
Seller that the assumption by the Purchaser of the Assumed Liabilities shall in
any way enlarge the rights of third parties under contracts or arrangements with
the Purchaser or the Seller. Nothing contained herein shall prevent the
Purchaser from contesting in good faith any of the Assumed Liabilities with any
third party.
3.2. Limitations on Assumption. Any other provision of this
Agreement to the contrary notwithstanding, neither the Purchaser nor any of its
Affiliates will or does assume any liability or obligation of the Seller
(whether now existing or hereafter arising, whether known or unknown) not
expressly assumed pursuant to Section 3.1 hereto (all liabilities and
obligations not so assumed collectively referred to as the "Retained
Liabilities"). Without limiting the generality of the foregoing, Retained
Liabilities shall include, without limitation, the following:
(a) liabilities of or claims against the Seller
arising out of the actions, suits or proceedings listed on Schedule 3.2(a)
hereto;
(b) liabilities or obligations incurred as a
result of activities of the Seller, its Affiliates and their respective
successors and assigns after the Closing Date;
(c) all liabilities and obligations of the
Seller, its Affiliates to the extent not arising in connection with, incurred
by, or relating to, the operation of the Commercial Business or the use or
ownership of the Assets prior to the Closing;
(d) liabilities and obligations for or in
respect of indebtedness forborrowed money;
(e) the fees and expenses of Seller's counsel,
accountants and other experts in connection with the transactions contemplated
hereby;
(f) liabilities or obligations for any domestic
(federal, state or local) or foreign taxes due as the result of the operation of
the Commercial Business prior to the Closing Date or due on account of the
ownership or use of the properties and assets of the Commercial Business prior
to the Closing Date or interest or penalties relating thereto;
(g) all liabilities and obligations of the
Seller with respect to any real property leases other than to the extent
provided in the Sublease (as defined in Section 9.9 below);
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(h) all liabilities and obligations for the (i)
Stay Put Bonuses (as defined in Section 5.18(c)), (ii) any sales commissions
other than Assumed Commissions (as defined in Section 9.3(c)); and (iii) any
matching contributions required to be made to PCN's 401(k) plan on account of
any employee of the Commercial Business arising on or prior to the Closing Date
; or
(i) all liabilities and obligations arising
under the Risc Agreements.
3.3. Right of Enforcement and Settlement. From and after the
Closing Date, the Purchaser will have complete control over the payment,
settlement or other disposition of the Assumed Liabilities and the right to
commence, conduct and control all negotiations and proceedings with respect
thereto. The Seller will notify the Purchaser promptly of any claim made with
respect to any such Assumed Liabilities and will not, except with the
Purchaser's prior written consent, voluntarily make any payment of, settle or
offer to settle, or consent to any compromise or admit liability with respect to
any such Assumed Liabilities. The Seller will cooperate with the Purchaser in
any reasonable manner requested by the Purchaser in connection with any
negotiations or proceedings involving any Assumed Liabilities.
4. CLOSING
The closing of the transactions to be effected hereunder (the
"Closing") will take place as soon as practicable (but in no event later than
the second business day after the latest to occur of the conditions set forth in
Section 10 hereof having been fulfilled or having been waived in accordance with
this Agreement) (the "Closing Date"). The Closing shall take place at the
offices of Xxxxxx Xxxxxx Butowsky Xxxxxxx Shalov & Xxxx, 000 Xxxx 00xx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 or at such other place as the parties
hereto may agree.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to and agrees with
the Purchaser that the following are true and correct as of the date hereof and
as of the Closing Date:
5.1. Existence and Authority. (a) Versyss is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and PCN is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. Versyss and PCN are
authorized or licensed to do business in each jurisdiction in which the
character and location of its assets or the nature of its business makes such
qualification necessary, except to the extent that the failure to so qualify
would not have a material adverse effect on Versyss, PCN or the Commercial
Business. Each of Versyss and PCN has all requisite power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby and has all requisite power and authority, licenses, permits
and franchises to own or lease and operate its properties and carry on its
business as it is presently being conducted.
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(b) The principal executive offices of PCN and Versyss are
located at 0000 Xxx Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx. The principal
operating offices of Versyss are located at 00 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx. Since January 1, 1994, the name of Versyss has been "Versyss
Incorporated" and it has neither used nor done business under any other name in
any jurisdiction and the name of PCN has been "Physician Computer Network, Inc."
and it has neither used nor done business under any other name in any
jurisdiction.
5.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement and the Ancillary Documents (as hereinafter
defined) by Versyss and PCN, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action. This Agreement and the applicable Ancillary
Documents have been duly and validly executed and delivered by Versyss and PCN.
This Agreement and the applicable Ancillary Documents constitute valid and
binding obligations of Versyss and PCN, each enforceable in accordance with its
terms.
5.3. Effect of Agreement, Etc. Except as set forth on Schedule
5.3 hereto, the execution, delivery and performance of this Agreement and the
applicable Ancillary Documents by Versyss and PCN and consummation by Versyss
and PCN of the transactions contemplated hereby and thereby, will not, with or
without the giving of notice and the lapse of time, or both: (a) violate any
provision of law, statute, rule, regulation or executive order to which PCN,
Versyss, the Commercial Business or the Assets is subject; (b) violate any
judgment, order, writ or decree of any court to which PCN, Versyss, the
Commercial Business or the Assets is subject; or (c) result in the breach of or
conflict with any material term, covenant, condition or provision of, result in
or permit any other party to cause the modification or termination of,
constitute a default under, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the Assets pursuant to any
partnership agreement, corporate charter or by-laws, commitment, lease,
mortgage, contract or other agreement or instrument (including, without
limitation, any of the End-User Agreements) to which Versyss or PCN is a party
or by which any of the Assets are bound or affected.
5.4. Restrictions; Burdensome Agreements. Except as set forth
on Schedule 5.4 hereto, neither PCN nor Versyss is a party to any contract,
commitment or agreement, nor is PCN, Versyss or any of the Assets subject to, or
bound by, any order, judgment, decree, law, statute, ordinance, rule, regulation
or other restriction of any kind or character, which would prevent PCN or
Versyss from entering into this Agreement or from consummating the transactions
contemplated by this Agreement as it is written.
5.5. Governmental and Other Consents. No consent,
authorization or approval of, or exemption by or filing with, any foreign or
domestic governmental, public or self-regulatory body or authority is required
in connection with the execution, delivery and performance by PCN or Versyss of
this Agreement or the applicable Ancillary Documents or the taking of any action
herein or therein contemplated.
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5.6. Statement of Net Assets; Revenues. (a) The Seller has
delivered to the Purchaser, and attached hereto as Schedule 5.6(a), is a copy of
the unaudited statement of net assets of the Commercial Business at December 31,
1998 (the "Statement of Net Assets"). The Statement of Net Assets accurately
sets forth the assets and liabilities of the Commercial Business at December 31,
1998 in all material respects.
(b) Schedule 5.6(b) hereto accurately sets forth the total
revenues of the Commercial Business for the twelve month period ended December
31, 1998 in all material respects.
5.7. Absence of Certain Changes or Events. Except as set forth
on Schedule 5.7 hereto, since December 31, 1998 the Seller has not: (i) suffered
any material adverse change in, or the occurrence of any events which,
individually or in the aggregate, have had, or might reasonably be expected to
have, a material adverse effect on the Commercial Business' condition (financial
or otherwise), results of operations, properties or business or on the Assets;
(provided, however, that each of the Seller and the Purchaser acknowledges the
losses sustained by PCN for the year ended December 31, 1998, as well as the
disclosure of certain accounting improprieties with respect to PCN's financial
statements and agrees that, for purposes at this Section 5.7, such losses and
disclosure shall not constitute a material adverse change); (ii) incurred damage
to or destruction of any of the Assets by casualty, whether or not covered by
insurance, or suffered or became subject to any pending or threatened
condemnation of property; (iii) incurred any material obligations or liabilities
(fixed or contingent) with respect to the Commercial Business except (A) in the
ordinary course of business, none of which were entered into for an inadequate
consideration, (B) obligations and liabilities under the Commitments (as
hereinafter defined) to the extent required thereby, and (C) obligations and
liabilities under this Agreement; (iv) made any change in the nature of the
Commercial Business; (vi) mortgaged, pledged, assigned, hypothecated or
subjected to lien or any other encumbrance any of the Assets; (vii) sold,
transferred or leased any of the Assets, except in each case in the ordinary
course of business and consistent with past practice; (viii) sold, assigned,
transferred, or granted any rights under or with respect to, any of its
licenses, agreements, patents, inventions, trademarks, trade names, copyrights
or formulae or with respect to know-how or any other intangible asset in each
case to the extent related to the Commercial Business and, in each case, other
than in the ordinary course of business consistent with past practice; (ix)
amended or terminated any of its contracts, agreements, leases or arrangements
relating to the Commercial Business other than in the ordinary course of
business consistent with past practice; (x) waived or released any other rights
with respect to the Commercial Business having a value in excess of $50,000 in
the aggregate; (xi) had work performed which could give rise to mechanics liens
with respect to any of the Assets which has not been paid or which payment has
not been provided for; or (xii) entered into any other transaction with respect
to the Commercial Business not in the ordinary course of business.
5.8. Deferred Revenue Account. (a) Schedule 3.1(b) hereto
contains a true and correct schedule and calculation of the Deferred Software
Maintenance Obligation as of the
16
Schedule Date. All Deferred Software Maintenance Obligations arising since the
Schedule Date have arisen in the ordinary course of business consistent with
past practice.
(b) Schedule 3.1(c) hereto contains a true and
correct schedule and calculation of the Deferred Hardware Maintenance Obligation
as of the Schedule Date. All Deferred Hardware Maintenance Obligations arising
since the Schedule Date have arisen in the ordinary course of business
consistent with past practice.
5.9. Accounts Receivable. Set forth on Schedule 5.9 hereto is
a true, correct and complete schedule (the "Account Receivable Schedule")
setting forth: (i) all of the Accounts Receivable as of April 23, 1999; and (ii)
the aging thereof. The Accounts Receivable listed on the Accounts Receivable
Schedule have arisen only from bona fide transactions in the ordinary course of
business and are properly recorded in the Seller's books and records.
5.10. Accounts Payable. Schedule 3.1(a) contains a true and
complete list of all Accounts Payable as of the Closing Date. All Accounts
Payable set forth on Schedule 3.1(a) have arisen in the ordinary course of
business consistent with past practice.
5.11. Title to the Assets; Absence of Liens and Encumbrances,
Etc. Except for liens which will be released on or prior to the Closing or as
set forth on Schedule 5.11 hereto: (a) the Seller has good and valid title to,
and owns outright, the Assets, free and clear of all mortgages, claims, liens,
charges, leases, subleases, encumbrances, security interests, restrictions on
use or transfer or other defects of any nature, whether or not recorded; and (b)
the sale and delivery of the Assets pursuant hereto will vest in the Purchaser
good and valid title to the Assets free and clear of all mortgages, claims,
liens, charges, encumbrances, leases, subleases, security interests,
restrictions on use or transfer, or other defects of any nature.
5.12. Contracts.
5.12.1. Set forth on Schedule 5.12.1 is a true and complete
list of all of the Reseller Agreements.
5.12.2. Except as set forth on Schedule 5.12.2(a) each of the
End-User Agreements are substantially in the forms of the form of license
agreement, form of software support agreement and/or form of hardware service
agreement attached to and made a part of Schedule 5.12.2(b), without any
material modification thereto.
5.12.3. Set forth on Schedule 1.1(h) is a true and complete
list of all Equipment Leases.
5.12.4. Except as set forth on Schedule 5.12.4, with respect
to the Commercial Business, except for the End-User Agreements, the Reseller
Agreements, the Equipment Leases
17
and the lease underlying the Sublease (the "Assumed Lease"), neither Versyss nor
PCN is a party to and none of the Assets are bound by any:
(a) lease of real property or personal property
requiring payments of more than $50,000 on an annualized basis;
(b) employment, consulting agreement, severance
agreements, other agreement with any employee of the Commercial Business;
(c) agreement with any value-added reseller,
business partner, distributor, dealer, sales agent or representative with
respect to the sale or licensing of the Commercial Business's products or
services;
(d) OEM Agreement;
(e) joint venture or partnership agreement;
(f) agreement for the borrowing or lending of
money;
(g) agreement granting to any person a lien,
security interest or mortgage on any of the Asset, including, without
limitation, any factoring agreement or agreement for the assignment of accounts
receivable or inventory;
(h) source-code escrow agreement; or
(i) agreement not otherwise described above
relating to the Assumed Liabilities, not entered into in the ordinary course of
business and which, in the aggregate involves any obligation or liability on the
part of the Seller of more than $20,000.
Correct and complete copies of all: (i) such agreements,
leases and other instruments and written amendments thereto (or, where they are
oral, true and complete written summaries thereof) required to be shown on
Schedule 5.12.4 (together with each End-User Agreement, each Reseller Agreement,
each Equipment Lease and the Assumed Lease, such agreements, leases and
instruments are collectively referred to herein as the "Commitments"), have been
provided or otherwise made available to the Purchaser on or prior to the date
hereof.
5.12.5. Except as set forth on Schedule 5.12.5(a) hereto, each
of the Commitments is valid, in full force and effect and enforceable by Versyss
or PCN in accordance with its terms. Except as set forth on Schedule 5.12.5(b)
hereto, all of the Commitments which are included in the Assets or as part of
the Assumed Liabilities are assignable by Versyss or PCN, as applicable, to the
Purchaser without the consent of any other party thereto.
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5.12.6. Except as set forth on Schedule 5.12.6, the Seller has
fulfilled, or have taken all action reasonably necessary to have been taken to
date to enable each of them to fulfill when due, all of their respective
material obligations under the Commitments. Except as indicated on Schedule
5.12.6, there has not occurred any material default by Versyss or PCN or any
event which, with the giving of notice or the lapse of time or both, and/or the
election of any person other than Versyss or PCN will become such a default by
Versyss or PCN, nor, to the knowledge of Versyss and PCN, has there occurred any
default by others or any event which, with the lapse of time and/or the election
of PCN or Versyss, will become such a default under any of the Commitments
(including, without limitations, the End-User Agreements). Neither Versyss or
PCN nor any other party is in arrears in respect of the performance or
satisfaction of any material term or condition to be performed or satisfied by
it under any of the Commitments, and, to the best knowledge of Versyss and PCN,
no waiver or indulgence has been granted by any of the parties thereto.
5.13. End-Users. Set forth on Schedule 5.13, is a true
and correct list of all End-Users.
5.14. Intellectual Property. (a) Schedules 1.1(e), 1.7.1(a)
and 1.7.2(b) hereto set forth a true and correct description of all of the
Intellectual Property used in and material to the operation of the Commercial
Business (other than off-the-shelf software products that can be purchased for
$5,000 or less per single user license). The Intellectual Property included in
the Assets and the XRTS-Code does not violate or infringe on the rights of any
other person. To the best knowledge of the Seller, the other software utilized
by the Seller in the operation of the Commercial Business neither violates nor
infringes on the rights of any other person. The Seller has not received any
notice of or alleging any violation of the asserted rights of others with
respect to the Intellectual Property. The Seller is not aware of any third party
that is infringing or violating any of the rights of the Seller with respect to
the Intellectual Property.
(b) The current versions of the software
products set forth on Schedule 5.14(b) are Millennium Compliant. As used herein,
"Millennium Compliant" shall mean the ability of a software program to provide
the following functions:(i) consistently handle date information before, during
and after January 1, 2000, including, but not limited to, accepting date input,
providing the date output, and performing calculations on dates or portions of
dates; (ii) function accurately in accordance with the software documentation
and without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century; (iii)
respond to two-digit date input in a way that resolves any ambiguity as to
century in a disclosed, defined and predetermined manner; and (iv) store and
provide output of date information in ways that are unambiguous as to century.
5.15. Real Estate Leases. (a) The leasehold estates listed in
Schedule 5.15(a) are all of the leasehold estates under which Versyss or PCN is
a lessee or sublessee of any real property or interest therein used in
connection with the operation of the Commercial Business or where any of the
Assets are located (collectively, the "Real Property Leases").
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(b) Neither Versyss nor PCN is in material or
monetary default or has received any notice of any material or monetary default,
or failed to take any action that could result in a material or monetary
default, under the Real Property Leases. To the Seller's knowledge, no other
party to any such lease is in material or monetary default thereunder.
5.16. Compliance With Laws. (a) Except as set forth on
Schedule 5.16 hereto, Versyss and PCN have complied and are in compliance with
all applicable laws and rules and regulations of foreign, federal, state and
local governments and all agencies thereof and other regulatory bodies which
affect the Commercial Business or the Assets the failure to comply with which
has or would result in liability to Versyss or PCN of $20,000 or more with
respect to each such failure (a "Section 5.16(a) Occurrence"), and there are no
pending claims which have been filed against Versyss, PCN or any Affiliate
(relating to the operation of the Commercial Business or the ownership of the
Assets) alleging a violation of any such law or regulation. No notice has been
received by Versyss or PCN with respect to any such violation of any such legal
requirements.
(b) All Section 5.16(a) Occurrences, whether or
not any such occurrence, individually, results in liability to the Seller of
$20,000 or less, collectively, do not result in liability in excess of $60,000
in the aggregate.
5.17. Litigation; Customer Complaints. (a) Except as set forth
on Schedule 5.17(a) hereto, there are no claims, actions, suits, proceedings,
arbitrations, investigations or hearings or notices of hearing pending or, to
the best knowledge of the Seller, threatened, before any court or governmental
or administrative authority or private arbitration tribunal against or relating
to either: (i) the transactions contemplated hereby; or (ii) Versyss or PCN with
respect to the Commercial Business or any of the Assets (including, without
limitation, any End-User Agreement), nor, to the best knowledge of the Seller,
which are reasonably likely to give rise to any such claim, action, suit,
proceeding, arbitration, investigation or hearing.
(b) Set forth on Schedule 5.17(b) is a true and
correct description of all unresolved written complaints made by any End-User
with respect to any obligations of the Seller arising under the End-User
Agreement. Except as set forth on Schedules 5.17(a) and 5.17(b), following the
Closing, the Purchaser will not have any obligation or liability to any
End User arising out of any action taken or omission made by the Seller prior
to the Closing Date related to any one or more of the installation, support and
service of and training with respect to any of the products or services of the
Commercial Business.
5.18. Labor Matters. (a) Schedule 5.18(a) hereto contains a
true and correct schedule of: (i) the names, job descriptions, benefits (and a
description thereof) and current annual salary rates of all present officers,
employees and agents of Versyss or PCN with respect to the Commercial Business;
(ii) the amount of severance payable to each such employee (assuming for such
purpose that the Closing Date was the date on which such person's employment
with Versyss or PCN, as the case may be, was terminated); (iii) the dollar value
of all accrued vacation
20
days of each such employee and a description of the manner in which such amount
was calculated; and (iv) all written and oral employment or compensation
agreements with each employee of Versyss or PCN who principally performs
services with respect to the Commercial Business.
(b) No employee of Versyss or PCN is represented by
any union or collective bargaining agent, and, to the best knowledge of the
Seller, there has been no union organizational efforts in respect of the
employees of Versyss or PCN.
(c) Schedule 5.18(c) hereto contains a true and
correct list and description of all agreements between the Seller, on the one
hand, and any employee of the Commercial Business, on the other hand, regarding
any bonus or other compensation payable by the Seller to any such employee upon
or as a result of the occurrence of: (i) the sale of the Commercial Business; or
(ii) such employee remaining employed by Versyss and/or PCN beyond a specified
date (collectively, the "Stay-Put Bonuses").
(d) Schedule 5.18(d) hereto contains a true and
correct description of all of the Assumed Commissions (as defined in Section
9.3(c) below).
5.19. Taxes. Each of Versyss and PCN have filed all tax and
information returns and reports relating to the Commercial Business and the
Assets required to be filed, and all taxes, fees, assessments or other
governmental charges, withholdings of any nature, including franchise taxes, use
and occupancy taxes and sales taxes, have been paid (except those being
contested in good faith), or adequate provision for the payment thereof has been
made, in each case as of the date hereof, in all taxing jurisdictions in which
the conduct of the Commercial Business or the ownership of the Assets subjects
Versyss or PCN to any taxes, fees, assessments or other governmental charges.
5.20. Entire Business. Except: (i) for the services set forth
in the Transition Services Agreement (as hereinafter defined) and the Hardware
Support Agreement (as hereinafter defined) and the assets related thereto; or
(ii) as set forth on Schedule 5.20, the Assets constitute all of the assets
reasonably necessary to, immediately following the Closing Date, operate the
Commercial Business in a manner consistent with past practices, assuming for
such purposes only, that, immediately following the Closing Date, the Purchaser,
itself was to: (i) employ all of the employees (including management personnel)
currently employed by the Seller in connection with the Commercial Business
immediately prior to the Closing Date; and (ii) assume all of the liabilities
with respect to all of the facilities and all equipment leases used in such
facilities to the same extent currently used by the Seller in the operation of
the Commercial Business. No portion of the Commercial Business is conducted by
any person or entity other than Versyss or PCN.
5.21. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangement made
by or on behalf of the Seller.
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6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to and agrees
with PCN and Versyss that the following are true and correct as of the date
hereof and as of the Closing Date:
6.1. Organization, Etc. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. The Purchaser has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The Purchaser is authorized or licensed to do business in
each jurisdiction in which the character and location of its assets or the
nature of its business makes such qualification necessary, except to the extent
that the failure to so qualify would not have a material adverse effect on the
Purchaser or, following the Closing, the Commercial Business. The Purchaser has
all requisite power and authority to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby and has all requisite
power and authority, licenses, permits and franchises to own or lease and
operate its properties and carry on its business as it is presently being
conducted.
6.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement and the Ancillary Documents by the Purchaser and
the consummation of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action, including
approval by the Purchaser's Board of Directors. This Agreement and the
applicable Ancillary Documents have been duly and validly executed and delivered
by the Purchaser. This Agreement and the applicable Ancillary Documents
constitute valid and binding obligations of the Purchaser, each enforceable in
accordance with its terms.
6.3. Effect of Agreement, Etc. The execution, delivery and
performance of this Agreement by the Purchaser and consummation by the Purchaser
of the transactions contemplated hereby, will not, with or without the giving of
notice and the lapse of time, or both: (a) violate any provision of law,
statute, rule, regulation or executive order to which the Purchaser is subject;
(b) violate any judgment, order, writ or decree of any court to which the
Purchaser is subject; (c) result in the breach or conflict with any term,
covenant, condition or provision, result in or permit any other party to cause
the modifications or terminations of, constitute a default under, or result in
the creation or imposition of any lien, security interest, charge or encumbrance
upon any of the Purchaser's assets pursuant to any partnership agreement,
corporate charter or by-laws, or any commitments, contract or other agreement or
instrument to which the Purchaser is bound.
6.4. Governmental and Other Consents. No consent,
authorization or approval of, or exemption by or filing with, any governmental,
public or self-regulatory body or authority is required in connection with the
execution, delivery and performance by the Purchaser of this Agreement or any of
the instruments or agreements herein referred to, or the taking of any action
herein contemplated.
22
6.5. Restrictions; Burdensome Agreements. Except as set forth
on Schedule 6.5 hereto, the Purchaser is not a party to any contract, commitment
or agreement, nor is the Purchaser subject to, or bound by, any order, judgment,
decree, law, statute, ordinance, rule, regulation or other restriction of any
kind or character, which would prevent the Purchaser from entering into this
Agreement or from consummating the transactions contemplated this Agreement as
it is written.
6.6. Litigation. Except as set forth on Schedule 6.6 hereto,
there are no claims, actions, suits, proceedings, arbitrations, investigations
or hearings or notices of hearings pending or, to the best knowledge of the
Purchaser, threatened, before any court or governmental or administrative
authority or private arbitration tribunal against or relating to the transaction
contemplated hereby.
6.7. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon any arrangement
made by and on behalf of the Purchaser.
7. PRE-CLOSING COVENANTS OF THE SELLER
7.1. Conduct of Commercial Business Pending the Closing.
During the period from the date of this Agreement to the Closing, the Seller
agrees that with respect to the Commercial Business and the Assets (except as
contemplated or expressly permitted by this Agreement or to the extent that the
Purchaser shall otherwise agree in writing):
(a) The Commercial Business shall be conducted only
in the ordinary course of business, in a manner consistent with past practice
and in compliance in all material respects with all applicable laws, rules and
regulations.
(b) The Seller shall use its reasonable commercial
efforts to: (i) preserve, intact its business organization; (ii) keep available
the services of its present officers, employees and consultants; and (iii)
preserve its present relationships with customers, resellers, suppliers and
other persons with which it has a significant business relationship.
(c) The Seller shall not, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease (whether such lease is an
operating or capital lease), encumber or otherwise dispose of any portion of the
Assets, other than in the ordinary course consistent with past practice.
(d) The Seller will promptly notify the Purchaser in
the event that it fails to operate its business in accordance with this Section
7.1.
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8. PRE-CLOSING COVENANTS OF THE PURCHASER AND THE SELLER
8.1. Advice of Changes; Governmental Filings. Each party shall
confer on a regular and frequent basis with the other, report on operational
matters and promptly advise the other orally and in writing of any event which
occurs after the date hereof that would under this Agreement have been required
to be disclosed on the date of the execution and delivery of this Agreement had
such event occurred on or prior to the date hereof or would have resulted in a
breach of any representation, warranty covenant or agreement contained herein.
8.2. No Action. Except as contemplated by this Agreement, no
party hereto will take or agree or commit to take any action that is reasonably
likely to make any of its representations or warranties hereunder inaccurate in
any material respect at the date made (to the extent so limited) or as of the
Closing Date.
8.3. Legal Conditions to Closing. Each of the Seller and the
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on itself with respect to the Closing
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them in connection
with the Closing.
8.4. Additional Agreements; Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each of the parties hereto agrees to use
all reasonable business efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using its reasonable best efforts to obtain all necessary waivers, consents and
approvals Act and to cause the conditions set forth in Section 10 to be
satisfied as promptly as practicable. Without limiting the foregoing, the
parties hereto will execute and deliver, or cause to be executed and delivered,
all such documents and instruments, in addition to those specifically required
by the provisions of this Agreement, in form and substance reasonably
satisfactory to the parties hereto, as may be reasonably necessary or desirable
to carry out and implement the provisions of this Agreement.
8.5. Confidentiality. All information heretofore or hereafter
obtained by the Purchaser or the Seller or such party's advisers about the other
shall be held in strict confidence and the information so obtained shall be used
solely for the purpose of evaluating the purchase of the Commercial Business
contemplated by this Agreement, except as otherwise required by law; provided,
that, prior to such disclosure, the disclosing party notifies the other party in
order to give such other party an opportunity to take all appropriate action to
avoid or limit any such disclosure to the extent consistent with legal
obligations. Each party hereto agrees to return to the other, promptly, all such
information provided in written form, as well as all copies thereof. Either
party may enforce this provision by suit for specific performance or other
equitable relief.
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9. POST-CLOSING COVENANTS
9.1. Further Assurances. The Seller, on the one hand, and the
Purchaser, on the other hand, at the request of the other, at or after the
Closing, will execute and deliver, or cause to be executed and delivered, to the
other such documents and instruments, in addition to those specifically required
by the provisions of this Agreement, in form and substance reasonably
satisfactory to the other, as may reasonably be necessary or desirable to carry
out or implement any provision of this Agreement.
9.2. Non-Competition; Non-Disclosure.
9.2.1. The Seller agrees that for a period of three
(3) years from and after the Closing Date, neither of PCN nor Versyss nor any
entity controlled by either of them will, directly or indirectly (including,
without limitation, by selling, licensing or providing any product to any third
party), individually or on behalf of other persons, endeavor to solicit the
business or sell, license or provide any products or services constituting parts
of the Commercial Business to any of then current end users (including, without
limitation, End Users) of the Commercial Business; provided, however, that the
restrictions contained in this Section 9.2.1. shall not apply to: (i) general
advertisements not specifically directed to End-Users; (ii) the provision by
PCN, Versyss or their Affiliates of support and maintenance services to the
extent contemplated by the Hardware Service Agreement (as defined in Section
10.2(e) hereto); or (iii) the provision by PCN, Versyss or their Affiliates of
any of the services contemplated by the Transition Services Agreement (as
defined in Section 10.2(e) hereto) to the extent contemplated therein.
9.2.2. The Seller agrees that all information
pertaining to the Commercial Business and the Assets and to the prior, current
or contemplated operation or use thereof (excluding (i) publicly available
information (in substantially the form in which it is publicly available) unless
such information is publicly available by reason of unauthorized disclosure and
(ii) information of a general nature not pertaining exclusively to the
Commercial Business or the Assets which is generally available) are valuable and
confidential assets of the Commercial Business. Such information shall include,
without limitation, information relating to the Intellectual Property, trade
secrets, customer lists, vendor lists, bidding procedures, financing techniques
and services and financial information concerning the Commercial Business and
its customers. The Seller agrees that, from and after the Closing Date, neither
Versyss, PCN or any Affiliate of Versyss or PCN or any current or officer,
director, of any of them, will disclose or use, and Versyss and PCN shall use
their reasonable business efforts to prevent any employee, agent, former officer
or director from disclosing, any such information, other than to the Purchaser.
9.2.3. The parties hereto acknowledge that it is
impossible to measure in money the damages that will accrue to the Purchaser in
the event that the Seller or its Affiliates breach any of the covenants in
Sections 9.2.1 or 9.2.2 and, if the Purchaser shall institute any action or
proceeding to enforce those covenants, the Seller hereby waives and agrees not
to assert
25
the claim or defense that the Purchaser has an adequate remedy at law or for
damages. The foregoing shall not prejudice the Purchaser's right to seek money
damages from the Seller with respect to any such breach.
9.3. Employee Matters. (a) The Seller agrees that on
or following the Closing Date, the Purchaser may offer employment to the
employees listed on Schedule 9.3(a) hereto (the "Designated Employees"). The
Purchaser agrees to credit to any Designated Employee who becomes employed by
the Purchaser following the Closing Date all unused vacation time such
Designated Employee has accrued with Versyss or PCN, as applicable, as of the
Closing Date as set forth on Schedule 5.18(a), for the benefit of such
Designated Employee subject to and in accordance with the Purchaser's vacation
policy in effect from time to time. Except as provided in the immediately
preceding sentence, nothing contained in this Section 9.3 shall in any way limit
the Purchaser's right or ability to, in its sole discretion, deal with any such
employee in any manner it determines, including, without limitation, the right
to terminate or sever any such employee, change or alter the nature of the
Commercial Business, or change or alter the organizational structure of the
Commercial Business.
(b) The Purchaser agrees that, in the event that,
within 180 days following the Closing Date, the Purchaser hires any Designated
Employee who (x) did not receive or did not accept an offer of employment from
the Purchaser on or immediately following the Closing and (y) within such 180
day period, was severed by Versyss or PCN, the Purchaser shall, with respect to
each such employee, pay to PCN an amount equal to the actual, documented amount
paid by any of Versyss or PCN to such employee as severance and with respect to
accrued and unused vacation at the time such employee's employment with Versyss
or PCN was terminated (collectively, a "Severance Payment"), provided, however,
that: (i) the amount payable by the Purchaser under this Section 9.3(b) with
respect to any Designated Employee shall not exceed the amount of severance and
accrued vacation and sick days shown with respect to such Designated Employee on
Schedule 9.3(a); and (ii) the Purchaser shall not have any obligation under this
Section 9.3(b) for any Stay-Put Bonus.
(c) The Purchaser agrees that, following the Closing,
it shall be responsible for the payment of, and the Purchaser shall, in
accordance with the Seller's payment practices, pay, all Assumed Commissions (as
hereinafter defined) up to the amounts indicated on Schedule 5.18(d) hereto. As
used herein, "Assumed Commissions" shall mean the obligations of Versyss or PCN
to pay sales commissions to any sales person, sales representatives or sales
agent of Versyss or PCN (whether or not such person is a Designated Employee (as
defined in Section 9.3(a) above) or is offered or accepts employment with the
Purchaser following the Closing) on account of any sale of the products of the
Commercial Business made: (i) prior to the Closing and for which an account
receivable exists and is properly recorded on the books and records of the
Commercial Business on the Closing Date; or (ii) from and after the Closing.
26
(d) The Purchaser shall enter into confidentiality
agreements in the form reasonably satisfactory to each of the Purchaser and PCN,
for the benefit of the Seller, with respect to the XRTS-Code.
(e) In the event that, prior to the Closing Date, the
Purchaser enters into an agreement with the employee identified on Schedule
9.3(e) pursuant to which, as a result of such employee agreeing to become an
employee of the Purchaser following the Closing Date, the Purchaser will pay to
such employee a stay-put or similar bonus, PCN will, promptly following the
payment of such bonus to such employee, reimburse the Purchaser an amount equal
to the lesser of: (i) the amount of such bonus paid by the Purchaser to such
employee; or (ii) $15,000.
(f) Following the Closing, at the request of the
Purchaser, the Seller shall permit any Designated Employee who accepts
employment with the Purchaser following the Closing to obtain COBRA coverage
under the Seller's medical insurance plan in effect from time to time following
the Closing (the "Seller's Plan"), in each case: (i) to the extent any such
Designated Employee is eligible to obtain such COBRA coverage under the terms of
the Seller's Plan and under applicable law; and (ii) up to the maximum period
during which any such Designated Employee is entitled to maintain such coverage
under applicable law. The Purchaser agrees that the Purchaser shall, for so long
as the Designated Employee remains eligible for and actually obtains such COBRA
coverage from the Seller, on behalf of such Designated Employees, reimburse the
Seller for the costs incurred by the Seller in providing such coverage
(exclusive of any administrative charges that the Seller is permitted to impose
under applicable law). The Purchaser agrees to use its reasonable commercial
efforts to establish its own medical insurance plan and permit the Designated
Employees to cease requiring COBRA coverage from the Seller as soon as
practicable following the Closing.
(g) Contemporaneously with the payment of the
Purchaser's first payroll (but in no event later than May 15, 1999), the
Purchaser shall reimburse to PCN all amounts paid by the Seller to each
Designated Employee who accepts employment with the Purchaser following the
Closing on account of the period commencing on the day following the Closing
Date and ending on April 30, 1999, which amounts have already been paid by the
Seller to such employees. The daily rate for all employees of the Commercial
Business is set forth on Schedule 5.18(a) hereto.
9.4. The Facilities. Set forth on Schedule 9.4 is a list of
each facility utilized by one or more of PCN and Versyss in connection with the
operation of the Commercial Business and in which the Purchaser wishes to locate
employees of the Commercial Business following the Closing (each a "Facility"
and, together, the "Facilities"). The Seller agrees that, with respect to each
Facility, during the period (with respect to each Facility, a "Facility
Transition Period"), commencing on the Closing Date and ending on the first to
occur of: (x) the 180th day following the Closing; (y) the date on which the
Purchaser moves all of its employees out of the Facility (each a "Facility
Termination Date"); and (z) the date on which the Seller or its Affiliates, as
the
27
case may be, has terminated its lease for the Facility (each a "Lease
Termination Date") (provided, however, that, with respect to the Facility
located in Flint, Michigan, the Lease Termination Date shall not occur prior to
the 90th day following the Closing Date), the Seller shall maintain, and during
the applicable Facility Transition Period shall use reasonable commercial
efforts to not modify or alter the applicable Facility or any of the computer
hardware and other equipment and telephone lines, numbers and service (including
toll free telephone lines, numbers and service) used or usable in the Commercial
Business, in each case, whether owned or leased by the Seller (collectively,
"Facility Equipment"), in substantially the same manner and condition as such
Facility and the Facility Equipment located therein was maintained by the Seller
in the ordinary course of business prior to the Closing. During the applicable
Facility Transition Period, the Seller shall permit the Purchaser to utilize the
applicable Facility and the Facility Equipment located therein in connection
with the Purchaser's operation of the Commercial Business during the applicable
Facility Transition Period to the same extent the Seller utilized the such
Facility and the Facility Equipment. In consideration for providing the
Purchaser with the use of the Facilities, during the applicable Facility
Transition Period, the Purchaser shall pay to the Seller the facilities fees
calculated in accordance with the schedule of fees for that Facility set forth
on Schedule 9.4(a) hereto (the "Facility Fee"), or a proportionate amount
thereof, which fees shall be paid, in advance, on or before the fifth (5th) day
of each calendar month. Anything contained in this Section 9.4 to the contrary
notwithstanding: (i) the Purchaser shall provide the Seller with at least thirty
(30) days written notice prior to any Facility Termination Date; and (ii) PCN
shall provide the Purchaser with at least thirty (30) days' written notice prior
to a Lease Termination Date. Unless otherwise agreed to by PCN, the Purchaser
shall vacate the Facility no later than 7 days prior to a Lease Termination Date
for such Facility. With respect to each Facility, at the Closing, the Purchaser
and PCN or Versyss, as applicable, shall execute and deliver to one another a
license to use the Facility substantially in the form attached to Schedule 9.4
hereto (the "Facility Licenses")
9.5. Renewal of Support Agreements and Reseller Agreements.
(a) Prior to the 120th day following the Closing Date (the "Support Transition
Date"), the Purchaser may permit each Support Agreement (as hereinafter defined)
which expires or terminates on or before the Support Transition Date to be
automatically renewed in accordance with the terms of any such Support
Agreement. Following the Support Transition Date, the Purchaser shall cause any
Support Agreement which expires or terminates after the Support Transition Date
to be terminated and not automatically renewed and, in lieu thereof, the
Purchaser shall, in the Purchaser's name, enter into a new agreement directly
with the End-User with respect to the matters covered by the applicable Support
Agreement. As used herein, the term "Support Agreement" means each End-User
Agreement between the Seller and any End-User to the extent related to the
on-going support, maintenance and training to be provided by the Commercial
Business to any End-User with respect to any one or more of software, hardware
of system maintenance or support and training used by the End-User.
(b) Promptly following the Closing, and in no event
later than the later of (x) the 180th day following the Closing Date and (y) the
first date following the Closing Date
28
on which the Reseller Agreement in question may be terminated, the Purchaser
shall cause each Reseller Agreement to be terminated and shall, in the
Purchaser's own name, enter into a new reseller or distribution agreement with
each Reseller regarding the resale and distribution of the products of the
Commercial Business.
9.6. Hardware Purchases. For so long as PCN is providing
hardware service for the Purchaser in accordance with terms of the Hardware
Services Agreement (as defined in Section 10.2(e) hereto) (the "Purchase
Period"), the Purchaser agrees to purchase from PCN or any one or more
Affiliates of PCN designated by PCN, any computer hardware, parts, operating
system software, peripherals and related equipment (collectively "System
Products") to be provided by the Purchaser to any of its customers, in each
case, so long as the price charged by PCN for such System Product is not more
than the lowest price otherwise obtainable by the Purchaser. If the Purchaser
contends that it can obtain such System Products at a lower price, it shall
provide PCN with a written price quote for such System Products from an
independent supplier (the "Price Quote"). PCN shall then have the right, but not
the obligation, to supply the System Product specified in the Price Quote at the
prices set forth therein. PCN shall notify the Purchaser within two (2) business
days after receipt of the Price Quote whether or not it will exercise the right
to so supply the applicable System Product. All purchases of System Products by
the Purchaser shall be made in accordance with the terms and provisions of the
Reseller
Agreement (as defined in Section 10.2(e) hereto). Anything contained in this
Section 9.6 or in the Reseller Agreement to the contrary notwithstanding, the
prices charged by PCN to the Purchaser with respect to any System Product shall
not be greater than the prices charged by PCN for any such System Product to any
independent reseller or distributor of PCN's products who or which is purchasing
or has purchased the same quantity or volume of such System Product.
9.7. Printed Product Sales. (a) During the Exclusivity Period
(as hereinafter defined), the Purchaser and its successors and assigns
(including, without limitation, any person or entity who or which acquires the
Purchaser's Business) shall: (i) promote, offer and identify the services of PCN
or the PCN Designee (as hereinafter defined), as the case may be, as the
exclusive provider of Printed Products (as hereinafter defined) to the customers
of the Purchaser's business, including, without limitation, the End Users; (ii)
not itself offer, sell, distribute or market, appoint any other person or entity
to offer, sell, distribute or market, or accept a fee from any other person or
entity (other than PCN or the PCN Designee, as the case may be) with respect to
the offering, sale, distribution or marketing of, any Printed Products other
than the Printed Products offered by PCN or the PCN Designee, as the case may
be; (iii) refer all inquiries regarding any Printed Products to PCN or the PCN
Designee; and (iv) use its reasonable commercial efforts to advertise and
promote the sale of Printed Products to its customers.
(b) In consideration of agreement of the Purchaser contained
in Section 9.7(a) above, during the Exclusivity Period, PCN or the PCN Designee,
as the case may be, shall pay to Purchaser the commissions described on Schedule
9.7(b) hereto (the "Commissions"). The Commissions shall be payable by PCN or
the PCN
29
Designee, as applicable, on or before the thirtieth (30th) day following the end
of any calendar month during which PCN or the PCN Designee, as applicable, has
been paid by an Applicable Customer (as hereinafter defined) for any Printed
Products sold by PCN or the PCN Designee to such Applicable Customer. Along with
the payment of the Commissions, PCN or the PCN Designee, as the case may be,
shall provide to the Purchaser a report, along with appropriate documentation
(x) identifying each Applicable Customer who or which, during the preceding
calendar month purchased and paid for Printed Products from PCN or the PCN
Designee and (y) the calculation of the Commissions paid with respect to such
month.
(c) As used in this Section 9.7:
(i) "Applicable Customer" shall mean any
person or entity whom or which (x) licenses or otherwise used any products sold,
distributed or marketed by the Purchaser's Business and (y) receives maintenance
or support regarding the use and operation of such products directly from the
Purchaser.
(ii) "Exclusivity Period" shall mean
period commencing on the date hereof and ending on Exclusivity Termination Date.
(iii) "Exclusivity Termination Date" shall
mean the 90th day following written from one party to the other that such party
wishes to terminate the Exclusivity Period.
(iv) "PCN Designee" shall mean any person
or entity, including, without limitation, PCN's subsidiary, Solion Corp., to
which PCN assigns its rights under this Section 9.7 by providing the Purchaser
with written notice of such assignment.
(v) "Printed Products" shall mean the
products described on Schedule 9.7(c) hereto.
(d) In the event that PCN designated a PCN Designee, such PCN
Designee shall be deemed to have assumed all of PCN's obligations to the
Purchaser under this Section 9.7 and PCN shall have not further obligations to
the Purchaser under or pursuant to this Section 9.7.
(e) The Purchaser shall provide PCN not less than 30 days
prior written notice that the Purchaser intends to enter into a Third Party
Agreement.
9.8. Additional Agreements. Without limiting any of the
representations or warranties of the Seller contained herein, in the event that
(x) either Versyss or PCN are party to any agreement with any third party the
subject matter of which is related solely or exclusively to the business or
operation of the Commercial Business (other than exceptions of a de minimis or
casual nature); (y) such agreement (an "Excluded Agreement") is not specifically
listed as part of the Assets or included in the Assumed Liabilities; and (z)
such Excluded Agreement is identified following the Closing Date, upon
identification the Purchaser may, at its option, elect to both (x)
30
assume the obligation Versyss or PCN's obligations under such Excluded Agreement
and, as a result, such Excluded Agreement shall be deemed to constitute an
Assumed Liability as if it were listed as such as of the Closing and (y) without
any increase in Cash Payment, succeed to the benefits of Versyss and PCN under
such Excluded Agreement and, as a result, such Excluded Agreement shall be
deemed to constitute an Asset as if it were listed as such as of the Closing.
9.9. Sublease. At the Closing, each of the Purchaser and PCN shall execute a
sublease for a portion of the premises leased by PCN at 000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx in the form attached hereto as Schedule 9.9 (the
"Sublease"). Following the Closing, each of PCN and the Purchaser shall use
their reasonable commercial efforts and cooperate with one another in order to
cause the landlord under the Assumed Lease (the "Landlord") to, as promptly as
practicable following the Closing, either (x) permit the assignment to and
assumption by the Purchaser of the Assumed Lease and release PCN from its
obligations thereunder or (y) terminate the Assumed Lease and enter into a new
lease directly with the Purchaser for the premises demised under the Assumed
Lease, which new lease shall be on terms substantially similar to the terms of
the Assumed Lease. In the event that, at any time prior to the termination of
the Sublease, the Landlord agrees to enter into a new direct lease with the
Purchaser for the premises demised under the Sublease, PCN will agree to
guaranty the Purchaser's obligations under such lease to the extent that the
obligations so guarantied are not greater and can not be expanded beyond those
arising under the portion of the Assumed Lease demised under the Sublease.
9.10. Warranty Obligations. From and after the Closing, in the
event that any person contacts or otherwise asserts a claim against the
Purchaser with respect to any warranty or service liability obligations of the
Seller incurred in the conduct of the Commercial Business on or prior to the
Closing Date (including, without limitation, any obligations relating to the
sale or installation or training with respect to the products of the Commercial
Business) and such obligation does not constitute an Assumed Liability, the
Purchaser shall take such remedial action (including, without limitation,
providing alternative or additional software, hardware or services or paying
money) as the Purchaser, in its business judgment deems appropriate (and, in
such regard, shall use its reasonable commercial efforts to deal with and
resolve such claim in a manner consistent with the manner in which is treats
customer claims or complaints which otherwise are the responsibility of the
Purchaser) until such time as, in accordance with Article XII hereof, the
Purchaser has the right to be indemnified by the Seller (i.e. the Minimum
Indemnity Amount (as defined in Section 12.3 below) has been satisfied) as a
result of a breach by the Seller of the representation and warranty contained in
Section 5.17(b) hereof. For purposes of this Section 9.10, costs of taking
remedial action shall be calculated in the same manner as the costs of Remedial
Services are calculated in Section 12.6 hereof.
9.11. Year 2000 Updates. To the extent that the Seller
develops or obtains any upgrade or "patch" to any operating system software
product used by any of the End Users designed to make any such operation system
Millennium Compliant (any such upgrade or patch being referred to herein as a
"Patch"): (i) the Seller shall make such Patch available to the
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Purchaser; (ii) to the extent such Patch is distributed by the Seller to any
customers of the Medical Business by mail, via modem or via the Internet, the
Seller shall coordinate with the Purchaser so that the Seller may similarly
distribute the Patch to End Users; and (iii) to the extent that the installation
of the Patch requires the type of installation customarily provided by the
Seller to customers under the terms of any Hardware Support Agreement (as
defined in the Hardware Services Agreement) or any software maintenance and
support agreement to which the Seller is a party on the Closing Date, the Seller
shall, on the Purchaser's behalf, install the Patch with any End User with
respect to whom the Seller is providing Hardware Support Services (as defined in
the Hardware Services Agreement) under the terms of the Hardware Services
Agreement.
9.12. Acquired Inventory. Following the Closing, within five
(5) days following the collection by the Purchaser of any Current Account
Receivable (as hereinafter defined) which relates to any item of Acquired
Inventory, the Purchaser shall pay to PCN an amount equal to the amount paid by
the Seller for such item of Acquired Inventory set forth as Schedule 1.1(m)
hereto (which schedule shows the Acquired Inventory which relates to Current
Accounts Receivable (an aggregate of $91,147.41)) (each an "Acquired Inventory
Payment"); provided, however, that the Purchaser shall not be required to pay to
PCN the first $27,000 of Acquired Inventory Payments. With respect to any items
of Acquired Inventory which relate to any Account Receivable which is not a
Current Account Receivable, within thirty (30) days following the end of each
calendar month during the year following the Closing Date, the Purchaser shall
provide PCN with a report regarding any such Account Receivable collected by the
Purchaser. Following receipt by PCN of such report, PCN shall provide to the
Purchaser a calculation of the amount paid by the Seller for any item of
Acquired Inventory which relates to the Account Receivable shown on the report
and, within thirty (30) days following receipt of such calculation, the
Purchaser shall pay PCN such amount.
As used in this Section 9.12, "Current Account Receivable"
shall mean any Account Receivable which less than 91 days old as of the Closing
Date.
10. CLOSING CONDITIONS
10.1. Conditions to Obligation of Each Party to Effect the
Closing. The respective obligations of each party to effect the Closing shall be
subject to the fulfillment at or prior to the Closing Date of the following
condition:
(a) No Injunction. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction prohibiting the consummation of the transactions
contemplated hereby shall be in effect; provided, however, that prior to
invoking this condition, each party shall use all reasonable efforts to have any
such decree, ruling, injunction or order vacated, except as otherwise
contemplated by this Agreement.
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10.2. Additional Conditions to Obligations of Purchaser. The
obligations of Purchaser to effect the Closing are also subject to the following
conditions (any one or more of which may be waived by Purchaser, but only in a
writing signed by Purchaser):
(a) Representations and Warranties. Each of the
representations and warranties of the Seller contained in this Agreement or in
any document or instrument delivered by either one or both of PCN and Versyss in
connection herewith, shall be true and correct, individually and in the
aggregate, in all material respects (except that any specific representation or
warranty that is qualified as to materiality must be true as written) on and as
of the Closing Date, except for changes contemplated by this Agreement, with the
same force and effect as if made on and as of the Closing Date, except that any
such representations or warranties made as of a specified date shall have been
true on and as of such date.
(b) Agreements and Covenants. The Seller shall have
performed or complied in all material respects with all of its agreements and
covenants contained in this Agreement to be performed or complied with by the
Seller at or prior to the Closing Date (except that any specific agreement or
covenant that is qualified as to materiality must have been performed as
written).
(c) No Material Adverse Change. There shall have been
no change in the business, results of operations, properties (including
intangible properties), financial condition, assets or liabilities of the
Commercial Business since December 31, 1998 to the Closing Date which,
individually or in the aggregate, has a material adverse effect on the condition
(financial or otherwise), results of operations, business or assets of the
Commercial Business.
(d) Third Party Consents. The Seller shall have
obtained, and Purchaser shall have received copies of, all of the approvals,
waivers, consents and releases of third parties listed on Schedule 10.2(d)
hereto, none of which shall have been withdrawn, revoked or modified as of the
Closing Date.
(e) Closing Deliveries. PCN and Versyss, as
applicable, shall have executed and delivered to the Purchaser the following
instruments, documents and agreements (such instruments, documents and
agreements being referred to herein as the "Ancillary Documents") :
(i) A transition services agreement
substantially in the form of the agreement attached hereto as Exhibit A (the
"Transition Services Agreement") regarding, among other things, the terms and
provisions upon which PCN shall provide certain administrative and telephone
support services to or on behalf of the Purchaser;
(ii) A hardware service agreement
substantially in the form of the agreement attached hereto as Exhibit B (the
"Hardware Services Agreement")
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regarding, among other things, the terms and provision upon which PCN will
provide hardware maintenance and support services to End-Users on the
Purchaser's behalf;
(iii) An independent reseller agreement
substantially in the form of the agreement attached hereto as Exhibit C (the
"Reseller Agreement") regarding, among other things, the terms and provisions
upon which the Purchaser may purchase from PCN and distribute and sell to the
Purchaser's customers certain System Products;
(iv) The Facility Licenses;
(v) The agreements and instruments
referred to in Section 1.3 hereto to which either one or both of PCN and Versyss
are parties;
(vi) Such certificates to evidence
compliance with the conditions set forth in this Agreement as may be reasonably
requested by the Purchaser, including, without limitation, certificates of the
secretary of PCN and the secretary of Versyss as to corporate resolutions and
incumbency;
(vii) Letters addressed to the Purchaser from each of: (i)
the agent bank for PCN's senior lenders (the "Lenders"); and (ii) Xxxxxxx &
Marsal, Inc. ("A&M"), the holder of a security interest in the assets of PCN and
Versyss, advising the Purchaser that all liens on and security interests in the
Assets held by the Lenders and A&M, respectively, have been released effective
as of the Closing;
(viii) an opinion of legal counsel for
PCN and Versyss in form and substance reasonably satisfactory to the Purchaser;
and
(ix) the Sublease.
(f) The Seller shall have obtained, and Purchaser
shall have received copies of: (i) a certificate of the Secretary of State of
the State of Delaware as to the due incorporation and good standing of Versyss;
and (ii) a certificate of the Secretary of State of the State of New Jersey as
to the due incorporation and good standing of PCN.
10.3. Additional Conditions to Obligation of the Seller. The
obligation of the Seller to effect the Closing are also subject to the following
conditions (any one or more of which may be waived by PCN, but only in a writing
signed by PCN):
(a) Representations and Warranties. Each of the
representations and warranties of Purchaser contained in this Agreement or in
any document or instrument delivered by Purchaser in connection herewith, shall
be true and correct, individually and in the aggregate, in all material respects
(except that any specific representation or warranty that is qualified as to
materiality must be true as written) on and as of the Closing Date, except for
changes
34
contemplated by this Agreement, with the same force and effect as if made on and
as of the Closing, except that any such representations or warranties made as of
a specified date shall have been true on and as of such date.
(b) Agreements and Covenants. Purchaser shall have
performed or complied in all material respects with all of its agreements and
covenants contained in this Agreement to be performed or complied with by it at
or prior to the Closing Date (except that any specific agreement or covenant
that is qualified as to materiality must have been performed as written).
(c) No Material Adverse Change. There shall have
been no change in the business, results of operations, properties (including
intangible properties), financial condition, assets or liabilities of Purchaser
which has a material adverse effect on the condition (financial or otherwise),
results of operations, business or assets of the Purchaser.
(d) Third Party Consents. The Purchaser shall have
obtained, and PCN shall have received copies of, all of the approvals, waivers,
consents and releases of third parties listed on Schedule 10.3(d) hereto, none
of which shall have been withdrawn, revoked or modified as of the Closing Date.
(e) Closing Deliveries. The Purchaser shall have
executed and delivered to the Purchaser the following instruments, documents and
agreements:
(i) The Transition Services Agreement;
(ii) The Hardware Service Agreement;
(iii) The Reseller Agreement;
(iv) The Facility Licenses;
(v) The agreements and instruments referred
to in Section 1.3 hereto to which the Purchaser is a party;
(vi) Such certificates to evidence compliance
with the conditions set forth in this Agreement as may be reasonably requested
by PCN, including, without limitation, certificates of the secretary of the
Purchaser as to corporate resolutions and incumbency;
(viii) an opinion of legal counsel for the
Purchaser inform and substance reasonably satisfactory to PCN; and
(ix) the Sublease.
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(f) The Purchaser shall have obtained, and PCN shall
have received copies of: (i) a certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Purchaser.
(g) Contemporaneously with the payment of the Cash
Payment at the Closing, the Purchaser shall pay to PCN an amount equal to: (i)
the amount paid by the Seller for the Acquired Inventory set forth as Schedule
10.3(g) hereto; less (ii) $24,000.
11. OBLIGATIONS OF PCN AND VERSYSS
All representations, covenants, agreements and obligations of
PCN, Versyss and the Seller under this Agreement shall be deemed to have been
made or incurred jointly and severally by each of PCN and Versyss.
12. INDEMNIFICATION
12.1. Indemnification of the Purchaser. The Seller hereby
covenants and agrees with the Purchaser that the Seller shall indemnify the
Purchaser, its Affiliates and their respective directors and officers and
shareholders, and each of their successors and assigns (individually a
"Purchaser Indemnified Party") and hold them harmless from, against and in
respect of any and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including court costs and reasonable fees and
disbursements of counsel) (collectively "Losses") resulting from or arising out
of:
(a) all liabilities, debts, obligations and
commitments of any nature, whether accrued, absolute, contingent or otherwise
(whether known or unknown to the Seller or the Purchaser), which are Retained
Liabilities and any claim or demand by a third party (whether or not successful)
to cause or require a Purchaser Indemnified Party to pay, perform or discharge
any debt, obligation, liability or commitment referred to in this clause (a);
(b) any breach of any of the representations,
warranties, covenants or agreements made by the Seller in this Agreement or any
Ancillary Document; or
(c) any action, suit, proceeding, compromise,
settlement, assessment or judgment arising out of or incident to any of the
matters indemnified against in this Section 12.1.
12.2. Indemnification of the Seller by the Purchaser. The
Purchaser hereby covenants and agrees with the Seller that the Purchaser shall
indemnify Versyss, PCN and their respective Affiliates and their respective
directors and officers and shareholders, and each of their successors and
assigns (individually a "Seller Indemnified Party") and hold them harmless from,
against and in respect of any and all Losses resulting from or arising out of:
36
(a) The Assumed Liabilities, and any claim or demand
by a third party (whether or not successful) to cause or require a Seller
Indemnified Party to pay, perform or discharge any debt, obligation, liability
or commitment referred to in this clause (a);
(b) any breach of any of the representations,
warranties, covenants or agreements made by the Purchaser in this Agreement or
any Ancillary Document; or
(c) any action, suit, proceeding, compromise,
settlement, assessment or judgment arising out of or incident to any of the
matters indemnified against in this Section 12.2.
12.3. Limitations on Indemnity
(a) Subject to Section 12.3(b) hereof, on and after
the Closing:
(i) The Seller shall be liable to the Purchaser Indemnified
Parties, and the Purchaser Indemnified Parties shall only be entitled to
indemnification from the Seller, for the matters covered by Sections 12.1(b)
hereof and Section 12.1(c) hereof (to the extent, and only to the extent that,
Section 12.1(c) applies to Section 12.1(b)), in each case so far as such matters
arise from breaches by the Seller of any representation or warranty contained
herein, to the extent, and only to the extent, the aggregate amount of Losses
suffered by Purchaser Indemnified Parties (without regard to the limitation on
liability set forth in this Section 12.3(a)(i)), exceeds $100,000 (the "Minimum
Indemnity Amount"), in which event the Purchaser Indemnified Parties shall
thereafter be entitled, from time to time, to seek indemnification in respect to
all Losses in respect of which it is entitled to be indemnified pursuant to such
provisions of Section 12.1 in excess of the Minimum Indemnity Amount. The
foregoing limitation shall not affect the right of any Purchaser Indemnified
Party to make a claim for indemnification, and shall not alter or negate the
procedures with respect to the timely notice and disposition of such claim
provided for in Section 12.4 hereof, in order to enable the Purchaser
Indemnified Party to obtain credit against the Minimum Indemnity Amount which
would otherwise be due but for such limitation. The maximum aggregate liability
of the Seller to all Purchaser Indemnified Parties with respect to all matters
covered by Sections 12.1(b) hereof and Section 12.1(c) hereof (to the extent,
and only to the extent that, Section 12.1(c) applies to Section 12.1(b)) shall
be $4,250,000.
(ii) The Purchaser shall only be liable to the Seller
Indemnified Parties, and the Seller Indemnified Parties shall only be entitled
to indemnification from the Purchaser, for the matters covered by Section
12.2(b) hereof and Section 12.2(c) hereof (to the extent, and only to the extent
that, Section 12.1(c) applies to Section 12.2(b)), in each case so far as such
matters arise from breaches by the Purchaser of any representation or warranty
contained herein, to the extent, and only to the extent, the aggregate amount of
Losses suffered by Seller Indemnified Parties (without regard to the limitation
on liability set forth in this Section 12.3(a)(ii)), exceeds the Minimum
Indemnity Amount, in which event each of the Seller Indemnified Parties shall
thereafter be entitled, from time to time, to seek indemnification in respect to
all Losses in respect of which it is entitled to be indemnified pursuant to such
provisions of Section 12.2 in excess of
37
the Minimum Indemnity Amount. The foregoing limitation shall not affect the
right of any Seller Indemnified Party to make a claim for indemnification, and
shall not alter or negate the procedures with respect to the timely notice and
disposition of such claim provided for in Section 12.4 hereof, in order to
enable the Seller Indemnified Party to obtain credit against the Minimum
Indemnity Amount which would otherwise be due but for such limitation.
(b) Anything contained in this Section 12.3 to the
contrary notwithstanding, the limitation on indemnification contained in Section
12.3(a) (including, without limitation, the Minimum Indemnity Amount) (but not
including the limitation set forth in the last sentence of Section 12.3(a))
shall not apply to any Loss: (i) incurred by any Purchaser Indemnified Party as
a result of a breach by the Seller of the representations and warranties
contained in Section 5.8, 5.10, 5.11, 5.17(b), the second sentence of Section
5.14 to the extent it relates to title to the Intellectual Property and the last
sentence of Section 5.20 hereof (collectively, the "Excluded Provisions"); (ii)
incurred by any Purchaser Indemnified Party as a result of a breach by the
Seller of the covenants of the Seller contained in this Agreement or in any
Ancillary Documents; or (iii) incurred by any Seller Indemnified Party as a
result of a breach by the Purchaser of the covenants of the Purchaser. No amount
paid by the Seller as a result of a breach by the Seller of any one or more of
the Excluded Provisions or of any covenant contained in this Agreement or in any
Ancillary Document shall count towards or against the Minimum Indemnity Amount.
(c) The provisions of this Section 12 shall be the
exclusive remedy available to the parties to this Agreement in the event any of
them shall have a claim against the other party or parties with respect to the
subject matters contained in this Agreement.
12.4. Right to Defend, Etc. If the facts giving rise to any
such indemnification pursuant to this Article 12 shall involve any actual claim
or demand by any third party against a Purchaser Indemnified Party or a Seller
Indemnified Party, as the case may be (an "Indemnified Party") the party
required to indemnify such Indemnified Party pursuant to Sections 12.1 or 12.2,
as the case may be (the "Indemnifying Party") shall be entitled to notice of and
entitled (without prejudice to the right of any Indemnified Party to participate
at its expense through counsel of its own choosing) to defend or prosecute such
claim at its expense and through counsel of its own choosing if it gives written
notice of its intention to do so no later than the 15th day following receipt of
such notice of such claim; provided, however, that if: (i) the defendants in any
action shall include both a Indemnifying Party and an Indemnified Party and the
Indemnified Party shall have been advised by its counsel that the counsel
selected by the Indemnifying Party has a conflict of interest because of the
availability of different or additional defenses to the Indemnified Party; or
(ii) the Indemnifying Party is not, in all reasonably respects, diligently and
competently defending the claim, the Indemnified Party shall have the right to
select separate counsel to participate in the defense of such action on its
behalf, at the expense of the Indemnifying Party. The failure so to notify an
Indemnifying Party shall not relieve the Indemnifying Party of any liability
which it may have to any Indemnified Party. The Indemnified Party shall
cooperate fully in the defense of such claim and shall make available to the
Indemnifying Party pertinent information
38
under its control relating thereto, but shall be entitled to be reimbursed, as
provided in this Article 12, for all out-of-pocket costs and expenses payable to
third parties incurred by it in connection therewith. Payment by an Indemnifying
Party to an Indemnified Party shall be made within 10 days after demand, unless
there is a claim or demand by a third party in which event payment shall be made
within 10 days after final judgment, settlement or comprise, as the case may be.
12.5. Tax Effect. The amount of any indemnification due to an
Indemnified Party pursuant to Section 12.1 or 12.2, as the case may be, shall be
calculated after taking into account the amount of all insurance, cash or other
direct financial benefits payable to such Indemnified Party (including any such
benefits payable by third parties), the time value of money (calculated on the
basis of the prime rate as published in the Wall Street Journal from time to
time) and after taking into account the United States federal, state and local
and foreign national, provincial and local tax benefits or detriments to the
Indemnified Party, as the case may be, calculated assuming the Indemnified Party
were a taxpayer subject to tax at the highest marginal rate in effect when the
payment is made, of the payments made in respect of such loss, claim, demand,
cost or expense giving rise to the indemnification and the payments, including
indemnification payments made in respect thereto.
12.6. Settlement of Certain Claims. Without limiting anything
contained in this Article 12 or in Section 9.10 hereof, with respect to any
claims asserted by any End User which, in accordance with the terms of this
Agreement, are the responsibility of the Seller (whether such claim constitutes
or may constitute a breach by the Seller of the representation and warranty
contained in Section 5.17(b) hereof (each an "Asserted End-User Claim"), a
Retained Liability of the type referred to in 3.2(a) hereto (each a "Retained
Claim") or otherwise (together with the Retained Claim and the Asserted End-User
Claims, the "End User Claims")), the Purchaser shall, at the request and on
behalf of the Seller, provide such services (including providing additional or
alternate hardware or software) to the End-User asserting End User Claim
reasonably requested by PCN (in each case consistent with the Purchaser's
customary business practices with respect to End Users and subject to the
Purchaser's available resources) in order to remedy and settle such End User
Claim ("Remedial Services"). With respect to any Remedial Services performed by
the Purchaser in satisfaction of the End User Claim, the Seller shall pay to the
Purchaser an amount equal to: (i) all actual direct costs incurred by the
Purchaser in providing such services (including, without limitation, (A) the
cost to the Purchaser of any equipment, supplies or other items (including the
costs of the shipping and handling thereof) provided by the Purchaser to the
End-User in connection therewith, (B) travel costs incurred by the Purchaser in
connection therewith, and (C) to the extent the Purchaser is required to utilize
third party contractors to perform any of the services, the amounts payable by
the Purchaser to third party contractors for providing such services); and (ii)
the amount reasonably necessary to reimburse the Purchaser for the amount of
time devoted by the Purchaser's employees to perform such services, which amount
referred to in this clause (ii) shall be calculated at a rate equal to 80% of
the Purchaser's then published hourly rates for software support services,
hardware support and services, training,
39
programming and the like (the amounts referred to in clauses (i) and (ii) above
are referred to collectively hereinafter as the "Remedial Costs").
13. GENERAL
13.1. Expenses, Etc. The parties hereto shall pay their own
respective taxes, expenses, costs and fees, including, without limitation, the
fees and expenses of their respective counsel and accountants and other experts.
13.2. Survival of Representations and Warranties. The
representations and warranties, and the indemnities in connection with any
breach of any such representations or warranties contained in this Agreement and
in any Ancillary Document shall survive the Closing for two (2) years. Any claim
made in reasonable detail and specificity by written notice to an Indemnified
Party prior to the expiration of the survival period of any representation and
warranty shall survive the expiration of such survival period.
13.3. Waivers. Any breach of any obligation, covenant,
agreement or condition contained herein shall be deemed waived by the
non-breaching party only by a writing, setting forth with particularity the
breach being waived and the scope of the waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent or breach.
No waiver shall be implied from any conduct or action of the non-breaching
party. No failure or delay by any party in exercising any right, power or
privilege hereunder or under any Ancillary Document, and no course of dealing by
any party, shall operate as a waiver of any right, power or privilege hereunder
or under any Ancillary Document, nor shall any single or partial exercise of any
other right, power or privilege.
13.4. Definition of Knowledge. As used in this Agreement, the
term "knowledge" means knowledge which supervisory, managerial, and executive
employees have after making due inquiry and exercising due diligence with
respect thereto.
13.5. Binding Effect; Benefits. This Agreement shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and permitted assigns. This Agreement may not be assigned
by any party hereto without the prior written consent of the other parties
hereto except that no such consent shall be required for assignment to a party
acquiring all or substantially all of either party's stock or assets provided
that such party assumes all of the seller's obligations hereunder. Except as
otherwise set forth herein, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement.
13.6. Notices. All notices, requests, demands and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
in person, or transmitted by facsimile, or upon receipt
40
after dispatch by certified or registered first class mail, postage prepaid,
return receipt requested, to the party to whom the same is so given or made, at
the following addresses or facsimile numbers (or such others as shall be
provided in writing hereinafter):
If to the Purchaser, to:
Xxxxxxxx Systems, Inc.
00 Xxxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
[Fax #]
With copies to:
Xxxxxx Xxxxx Xxxxxx & Xxxxxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Versyss, to:
VERSYSS Incorporated
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
If to PCN, to:
Physician Computer Network, Inc
0000 Xxx Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
41
With copies (in the case of a notice delivered to Versyss, PCN
or both) to:
Xxxxxx Xxxxxx Butowsky Xxxxxxx Shalov & Xxxx
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
13.7. Records; Assistance. Each party hereto shall, on the
request of the other party, make available to such other party from time to time
on a reasonable basis records and other documents relating to the Commercial
Business and to periods prior to the Closing Date. Such records and other
documents shall be held by the party in possession of such documents for a
period not less than the applicable statutes of limitation for tax purposes, but
in no event less than 5 years, after the Closing Date and copies shall be
delivered to the other party upon such other party's request at any time and at
such other party's expense. If at the end of such period the party in possession
wishes to dispose of such documents, such party shall offer the other party such
documents at such other party's expense.
13.8. Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) and the Ancillary Documents constitute the entire
agreement and supersede all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
13.9. Headings. The section and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
13.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
13.11. Governing Law; Submission to Jurisdiction. This
Agreement shall be construed as to both validity and performance and enforced in
accordance with and governed by the laws of the State of New York, without
giving effect to the conflicts of law principles thereof. Each of the Purchaser,
Versyss and PCN hereby irrevocably: (i) in any legal proceeding brought in
connection with this Agreement or any of the Ancillary Documents or the
transactions contemplated hereby or thereby, submits to exclusive in personam
jurisdiction of any State of New York or United States court of competent
jurisdiction sitting in the State of New York; and (ii) waives any objections
that it may now or hereafter have to the venue of such proceeding in any such
court or that such proceeding was brought in an inconvenient court.
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13.12. Third Party Beneficiaries. Nothing in this Agreement or
any Ancillary Document is intended to, or shall be construed so as to create any
third party beneficiary to this Agreement or otherwise confer any rights upon
any person, firm or corporation that is not a party hereto, including, without
limitation, any End User or Reseller.
13.13. Severability. If any term or provision of this
Agreement shall to any extent be invalid or unenforceable, the remainder of this
Agreement shall not be affected thereby, and each term and provision of the
Agreement shall be valid and enforced to the fullest extent permitted by law.
13.14. Publicity. Except as otherwise agreed to by the parties
hereto in writing, the parties hereto each agree to hold all information
heretofore or hereafter obtained from the others or such party's advisers about
the others in confidence and to use the information so obtained only for the
purpose of effectuating the transactions contemplated hereby, except as may be
otherwise required by law. Notwithstanding the foregoing, the Purchaser
acknowledges that PCN is a public company and, as such, is required to make
certain public disclosure, including, without limitation, the filing of reports
with the Securities and Exchange Commission and the issuance of a press release
with respect to the execution by the parties hereto of this Agreement.
13.15. Amendments. This Agreement may not be modified or
changed except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought.
13.16. Drafting Conventions. Any use herein of the phrase
"and/or" shall be deemed to mean both "and" and "or". Any use herein of the
phrase "including" shall be deemed to mean "including, without limitation". The
masculine gender used herein shall be deemed to include the feminine and neuter
genders, and vice-versa, and the singular or plural shall be deemed to include
the plural or singular, as the case may be, when required by context. All terms
defined herein shall be deemed to include the past tense of such terms.
14. GLOSSARY
For purposes of this Agreement, the following terms shall have
the definitions ascribed to them in this Agreement.
"A&M" shall mean Xxxxxxx & Marsal, Inc.
"Account Receivable Schedule" is defined in Section 5.9 of the
Agreement.
"Accounts Receivable" is defined in Section 1.1(f) of the
Agreement.
"Accounts Payable" is defined in Section 3.1(a) of the
Agreement.
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"Acquired Inventory" is defined in Section 1.1(m) of the
Agreement.
"Affiliate" is defined in Section 1.1 of the Agreement.
"Agreement" shall mean this Asset Purchase Agreement.
"Ancillary Documents" is defined in Section 10.2(e) of the
Agreement.
"Applicable Customer" is defined in Section 9.7(c)(i) of the
Agreement.
"Asserted End-User Claim" is defined in Section 12.6 of the
Agreement.
"Assets" is defined in Section 1.1 of the Agreement.
"Assumed Lease" is defined in Section 5.12 of the Agreement.
"Assumed Liabilities" is defined in Section 3.1 of the
Agreement.
"Assumed Commissions" is defined in Section 9.3(c) of the
Agreement.
"Books and Records" is defined in Section 1.1(i) of the
Agreement.
"Cash Payment" is defined in Section 2.1(a) of the Agreement.
"Closing Date" is defined in Section 4 of the Agreement.
"Closing" is defined in Section 4 of the Agreement.
"Code" shall mean the Internal Revenue Code of 1986.
"Commercial Business" is defined in the Background section to
the Agreement.
"Commissions" is defined in Section 9.7(b) of the Agreement.
"Commitments" is defined in Section 5.12.4 of the Agreement.
"Deferred Software Maintenance Obligation" is defined in
Section 3.1(b) of the Agreement.
"Deferred Hardware Maintenance Obligation" is defined in
Section 3.1(c) of the Agreement.
"Designated Employees" is defined in Section 9.3(a) of the
Agreement.
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"Designated Software" is defined in Section 1.7.1(b) of the
Agreement.
"End Users Agreements" is defined in Section 1.1(c) of the
Agreement.
"End-Users" is defined in Section 1.1(c) of the Agreement.
"Equipment Leases" is defined in Section 1.1(h) of the
Agreement.
"Equipment" is defined in Section 1.1(g) of the Agreement.
"Xxxxx" means Xxxxx, Inc.
"Excluded Provisions" is defined in Section 12.3(b) of the
Agreement.
"Excluded Agreement" is defined in Section 9.8 of the
Agreement.
"Exclusivity Period" is defined in Section 9.7(c)(ii) of the
Agreement.
"Exclusivity Termination Date" is defined in Section
9.7(c)(iii) of the Agreement.
"Facility Transition Period" is defined in Section 9.4 of the
Agreement.
"Facility Termination Date" is defined in Section 9.4 of the
Agreement.
"Facility Equipment" is defined in Section 9.4 of the
Agreement.
"Facility Licenses" is defined in Section 9.4 of the
Agreement.
"Facility Fee" is defined in Section 9.4 of the Agreement.
"Facility" and "Facilities" are defined in Section 9.4 of the
Agreement.
"Hardware Support Agreement" is defined in Section 10.2(e)(ii)
of the
Agreement.
"IBM" means International Business Machines Corporation.
"Indemnified Party" is defined in Section 12.4 of the
Agreement.
"Intellectual Property" is defined in Section 1.1(e) of the
Agreement.
"IRS" shall mean the Internal Revenue Service.
"Jointly Owned Software" is defined in Section 1.7.2(a) of the
Agreement.
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"Lease Termination Date" is defined in Section 9.4 of the
Agreement.
"Lenders" is defined in Section 10.2(e)(vii) of the Agreement.
"Losses" is defined in Section 12.1 of the Agreement.
"Medical Business" is defined in the Background section to the
Agreement.
"Millennium Compliant" is defined in Section 5.14(b) of the
Agreement.
"Minimum Indemnity Amount" is defined in Section 12.3(a) of
the Agreement.
"OEM Agreement" is defined in Section 1.2(g) of the Agreement.
"Patch" is defined in Section 9.11 of the Agreement.
"Payment" is defined in Section 1.6 of the Agreement.
"PCN" is defined in the preamble to this Agreement.
"PCN Designee" is defined in Section 9.7(c)(iv) of the
Agreement.
"Practice Management System Business" is defined in Section
1.7.1(d) of the Agreement.
"Price Quote" is defined in Section 9.6 of the Agreement.
"Printed Products" is defined in Section 9.7(c)(v) of the
Agreement.
"Purchase Period" is defined in Section 9.6 of the Agreement.
"Purchase Price" is defined in Section 2.1 of the Agreement.
"Purchaser Receivables" is defined in Section 1.6 of the
Agreement.
"Purchaser Business" is defined in Section 1.7.1(d) of the
Agreement.
"Purchaser Indemnified Parties" is defined in Section 12.1 of
the Agreement.
"Purchaser" is defined in the preamble to the Agreement.
"Real Property Leases" is defined in Section 5.15(a) of the
Agreement.
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"Remedial Costs" is defined in Section 12.6 of the Agreement.
"Remedial Services" is defined in Section 12.6 of the
Agreement.
"Reseller Agreement" is defined in Section 10.2(e)(iii) of the
Agreement.
"Reseller Agreements" is defined in Section 1.1(d) of the
Agreement.
"Resellers" is defined in Section 1.1(d) of the Agreement.
"Retained Liabilities" is defined in Section 3.2 of the
Agreement.
"Retained Assets" is defined in Section 1.2 of the Agreement.
"Retained Claim" is defined in Section 12.6 of the Agreement.
"Risc Agreements" is defined in Section 1.2 of the Agreement.
"Schedule Date" is defined in Section 3.1(b) of the Agreement.
"Second Level Support Service" is defined in Section 1.7.2(g)
of the Agreement.
"Section 5.16(a) Occurrence" is defined in Section 5.16(a) of
the Agreement.
"Seller Indemnified Parties" is defined in Section 12.1 of the
Agreement.
"Seller" is defined in the preamble to the Agreement.
"Severance Payment" is defined in Section 9.3(b) of the
Agreement.
"Statement of Net Assets" is defined in Section 5.6(a) of the
Agreement.
"Stay-Put Bonuses" is defined in Section 5.18(c) of the
Agreement.
"Sublease" is defined in Section 9.9 of the Agreement.
"Suggested Remedial Services" is defined in Section 12.6 of
the Agreement.
"Support Period" is defined in Section 1.7.2(g) of the
Agreement.
"Support Transition Date" is defined in Section 9.5(a) of the
Agreement.
"Support Agreement" is defined in Section 9.5(a) of the
Agreement.
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"System Product" is defined in Section 9.6 of the Agreement.
"Telephone Equipment" is defined in Section 1.1(g) of the
Agreement.
"Third Level Support Service" is defined in Section 1.7.2(g)
of the Agreement.
"Transition Services Agreement" is defined in Section
10.2(e)(i) of the Agreement.
"Versyss" is defined in the preamble to the Agreement.
"XRTS" is defined in Section 1.7.1(a) of the Agreement.
"XRTS-Code" is defined in Section 1.7.1(a) of the Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in their respective names by an officer thereunto duly
authorized on the date first above written.
PHYSICIAN COMPUTER NETWORK, VERSYSS INCORPORATED
INC.
By:____________________________ By:_____________________________
XXXXXXXX SYSTEMS, INC.
By:_____________________________
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