EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of this 6th day of May, 2002, by and among PROXYMED, INC., a Florida
corporation ("ProxyMed" or the "Acquiror"), with its principal business address
at 0000 Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000; KENCOM
COMMUNICATIONS & SERVICES, INC., a New Jersey corporation ("KenCom"), with its
principal business address at 000 Xxxxxxxxx Xxxxx, Xxxxx Xx. 0, Xxxxxxxxxx, XX
00000 and XXXXXXX X. XXXXXXX AND XXXXXXX XXXXXXXX-XXXXXX, the shareholders of
KenCom (individually, the "Seller" and collectively, the "Sellers"). KenCom and
Sellers are sometimes collectively referred to in the Agreement as "Selling
Parties". Acquiror and the Selling Parties are sometimes collectively referred
to in the Agreement as the "Parties".
WHEREAS, the Sellers own all of the issued and outstanding shares (the
"Shares") of capital stock of KenCom (the "Capital Stock"); and
WHEREAS, upon the terms and conditions of this Agreement, the Acquiror
desires to purchase from the Sellers and the Sellers desire to sell to the
Acquiror all of the Shares of Capital Stock; and
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in the Agreement, the Parties agree as
follows:
ARTICLE 1. STOCK PURCHASE
1.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and
conditions hereof, each of the Sellers hereby agrees to sell to the Acquiror,
and the Acquiror hereby agrees to purchase from each of the Sellers at the
Closing (as hereinafter defined), that number of Shares of Capital Stock
specified opposite such Seller's name on SCHEDULE 1.1. To effect the transfers
contemplated by this Section 1.1, at the Closing, each of the Sellers shall
deliver or cause to be delivered to the Acquiror, against payment therefor in
accordance with Section 2.1 hereof, a stock certificate or certificates
evidencing the Shares of Capital Stock, accompanied by stock powers duly
executed in blank and otherwise in form acceptable to the Acquiror for transfer
on the books of the Corporation.
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. In consideration for the transfer and
assignment by the Sellers of all the Shares of Capital Stock and in
consideration of the representations, warranties and covenants of Sellers set
forth herein, Acquiror on the conditions set forth herein shall pay THREE
MILLION EIGHT HUNDRED SEVENTY-FIVE THOUSAND DOLLARS (US$3,875,000) (the
"Purchase Price"), as set forth below. Acquiror:
(a) shall pay to the Sellers at the Closing THREE MILLION TWO
HUNDRED SEVENTY-FIVE THOUSAND DOLLARS (US$3,275,000) in cash as described in
Section 3.2 hereof and adjusted pursuant to Section 2.2, of which ONE HUNDRED
THOUSAND DOLLARS (US$100,000) shall be held back in accordance with the holdback
provisions set forth in Section 12.14 of this Agreement; and
(b) shall deliver to the Sellers, pro rata based on their
ownership of the Shares of Capital Stock as listed on SCHEDULE 1.1, or their
designee(s) within three (3) days after the Closing stock certificates
representing that number of shares of unregistered, Rule 144 restricted Common
Stock of Acquiror, $.001 par value, which equals SIX HUNDRED THOUSAND DOLLARS
(US$600,000) (the "Restricted Stock"), determined by dividing (i) US$600,000 by
(ii) the average closing price of a share of Common Stock of Acquiror as quoted
on the Nasdaq National Market for the five trading days immediately preceding
the Closing Date (rounded up to the nearest whole share).
2.2 PURCHASE PRICE ADJUSTMENTS. The Purchase Price shall be adjusted
dollar for dollar as follows:
(a) Increased for every dollar expended by KenCom for April
2002 printer purchases and material cost of ECP boxes placed at certain
customers under KenCom's current 36-month rental program with such
customers up to US$25,000.00; provided the cost of such printer
purchases and ECP boxes are paid out of KenCom's current cash reserves
and not with KenCom's Line of Credit (as defined below). Subject to the
foregoing proviso, Acquiror acknowledges that the Selling Parties has
acquired printers for such purpose during the month of April costing up
to twenty-five thousand (US$25,000) dollars and the Parties hereby
consent to increase the Purchase Price by that amount. Any additional
purchases of any kind will require prior written consent from the
Acquiror. Otherwise, such expense shall be the Sellers' sole
responsibility with no right of reimbursement from the Acquiror nor
KenCom.
ARTICLE 3. THE CLOSING
The closing of the transaction (the "Closing") shall take place at the
offices of Acquiror, no later than 5:00 p.m. EDT, or by facsimile, on May 6,
2002, or at such other place and/or time as the Parties may agree in writing,
but in no event later than May 10, 2002 (the "Closing Date"). In the event that
the conditions specified in the Agreement have not been fulfilled by such
Closing Date, Acquiror (if such failure of conditions is on the part of Selling
Parties) or KenCom (if such failure of conditions is on the part of the
Acquiror) may extend the Closing for a period or periods not exceeding an
aggregate of thirty (30) days by written notice, and the no-shop period
described in Section 8.3 shall likewise be automatically extended to such
Closing Date.
3.1 SELLING PARTIES' OBLIGATIONS AT THE CLOSING. At the Closing, the
Sellers shall deliver or cause to be delivered to Acquiror: Stock certificates
representing the Shares of Capital Stock, with stock powers attached, and such
other good and sufficient instruments of conveyance, assignment and transfer, in
form and substance reasonably satisfactory to Acquiror's counsel, so
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as to effectively vest in the Acquiror good title to the Capital Stock, together
with all documents, books and records required to be delivered to the Acquiror
under the provisions of the Agreement, free and clear of all liens and
encumbrances.
Each of the Sellers, at any time before or after the Closing,
shall execute, acknowledge and deliver any further deeds, assignments,
conveyances and other assurances, documents and instruments of transfer
reasonably requested by the Acquiror and shall take any other action consistent
with the terms of the Agreement that may reasonably be requested by the Acquiror
for the purpose of assigning, transferring, granting, conveying and confirming
to the Acquiror, or reducing to possession, the Capital Stock and assets of
KenCom. If requested by the Acquiror, Sellers agree to prosecute or otherwise
enforce in their own names for the benefit of the Acquiror any claims, rights or
benefits that are transferred to the Acquiror by this Agreement and that require
prosecution or enforcement in either of the Sellers' name. Any prosecution or
enforcement of claims, rights, or benefits under this Section shall be solely at
the Acquiror's expense, unless the prosecution or enforcement is made necessary
by a breach of the Agreement by the Selling Parties.
3.2 ACQUIROR'S OBLIGATIONS AT THE CLOSING. At the Closing, the Acquiror
shall deliver to the Sellers against delivery of the items specified in Section
3.1 a wire transfer of immediately available funds in the amount of THREE
MILLION ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS (US$3,175,000), subject to
adjustment as set forth in Section 2.2(a) hereof, payable to the Sellers and
execute instructions to the Acquiror's stock transfer agent to prepare
certificates for that number of shares of Restricted Stock of Acquiror as more
fully described in Section 2.1(b) hereof. The Restricted Stock issued shall come
with restricted legends and stop transfer instructions. Sellers shall be granted
registration rights as described in Section 12.9. Such Restricted Stock shall be
delivered to the Sellers, or its nominee, in the relative proportions as set
forth on SCHEDULE 1.1 within three (3) business days after the Closing.
ARTICLE 4. PAYMENT OF SELLERS' PERSONAL LIABILITIES
Sellers, jointly and severally, agree to indemnify and hold the
Acquiror harmless against all debts, claims, liabilities and obligations of the
Sellers in connection with Sellers' personal assets and to pay any and all
accounting and attorneys' fees and legal costs incurred by the Acquiror, its
successor and assigns in connection therewith up to and including the Closing.
ARTICLE 5. [INTENTIONALLY OMITTED.]
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, hereby represent and warrant to the
Acquiror that the following facts and circumstances are and, except as
contemplated hereby, at all times up to the Closing, will be true and correct,
and hereby acknowledge that such facts and circumstances constitute the basis
upon which the Acquiror is induced to enter into and perform the Agreement. Each
representation and warranty set forth in this Article 6 shall survive the
Closing subject to the limitations as set forth in Article 17.
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6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATIONS. KenCom is an S
corporation pursuant to Section 1361, ET SEQ. of the Internal Revenue Code
("Code"), and duly organized, validly existing, and in good standing under the
laws of the State of New Jersey, has all necessary corporate powers to own its
properties and to carry on its business as now owned and operated by it, and is
duly qualified to transact business and is in good standing as a foreign
corporation in those jurisdictions in which the failure to be so qualified would
have a material adverse effect on KenCom. SCHEDULE 6.1 lists all the states in
which KenCom is so qualified to do business.
6.2 FINANCIAL STATEMENTS. SCHEDULE 6.2 to the Agreement sets forth the
reviewed consolidated balance sheets of KenCom as of December 31, 2001 (the
"Last Fiscal Year End"), and as of December 31, 2000 (the "Prior Fiscal Year
End"), and the related statements of income and retained earnings for such
years. SCHEDULE 6.2 to the Agreement also includes unaudited, reviewed
consolidated balance sheets of KenCom for the interim period ending April 30,
2002 (the "Stub Period Date"), and the related unaudited, reviewed statements of
income and retained earnings for such periods, certified by the Chief Financial
Officer of KenCom. The financial statements in SCHEDULE 6.2 are referred to as
the "Financial Statements". The Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied by KenCom throughout the periods indicated, and fairly present the
financial position of KenCom as of the respective dates of the balance sheets
included in the Financial Statements and the results of their operations for the
respective periods indicated, including the Stub Period. KenCom has no
liabilities or obligations of any nature (known or unknown, absolute, accrued,
contingent or otherwise) of the type required to be reflected or disclosed in a
balance sheet (or the notes thereto) prepared in accordance with GAAP that were
not fully reflected or reserved against in the Financial Statements, except for
obligations that have arisen in the ordinary course of business since the date
of the Financial Statements and are not individually or in the aggregate
material to KenCom and in any case do not exceed $5,000.00 in the aggregate.
KenCom had independent certified public accountants review its Financial
Statements, whose unqualified opinions or review reports with respect to such
Financial Statements are included in SCHEDULE 6.2. SCHEDULE 6.2(b) sets forth a
detailed listing of KenCom's Accounts Receivable as of the Closing Date.
SCHEDULE 6.2(c) sets forth a detailed listing of KenCom's Accounts Payable as of
the Closing Date.
6.3 ABSENCE OF SPECIFIED CHANGES. Except as set forth on SCHEDULE 6.3
hereof, since December 31, 2001, there has not been any:
(a) Transaction by KenCom except in the ordinary course of
business;
(b) Capital expenditure or purchase commitments for such by
KenCom exceeding $25,000 which are not for resale or lease;
(c) Material adverse change in the financial condition,
liabilities, assets, business or prospects of KenCom;
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(d) Destruction, damage to, or loss of any assets of KenCom
(whether or not covered by insurance) that materially adversely affects the
financial condition, business or prospects of KenCom;
(e) Labor trouble or other event or condition of any character
materially adversely affecting the financial condition, business, assets or
prospects of KenCom;
(f) Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) by KenCom;
(g) Revaluation by KenCom of any of its Shares of Capital
Stock;
(h) Increase in the salary or other compensation payable or to
become payable by KenCom to any of its officers or directors, or the
declaration, payment or commitment or obligation of any kind for the payment by
KenCom of a bonus or other additional salary or compensation to any such person;
(i) Sale or transfer of any asset of KenCom, except in the
ordinary course of business;
(j) Execution, creation, amendment or termination of any
contract, agreement or license to which KenCom is a party, except in the
ordinary course of business;
(k) Loan by KenCom to any person or entity, or guaranty or
indemnification by KenCom of any loan;
(l) Waiver or release of any right or claim of KenCom, except
in the ordinary course of business;
(m) Mortgage, pledge or other encumbrance of any asset of
KenCom;
(n) Other event or condition of any character that has or
might reasonably have a material adverse effect on the financial condition,
business, prospects or Shares of Capital Stock;
(o) Any loss of customers or third party payers or providers
or trading partners, or change in the business relationships therewith,
resulting in or possibly resulting in a material adverse change in the volume of
transactions or revenues of KenCom; or
(p) Distributions to any Sellers or third parties other than
for the payments in an amount sufficient for each Seller to timely pay federal,
state, local or other applicable income taxes on such Sellers' distributive
share of KenCom's income or gains, or the payment of accrued profit sharing;
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(q) Agreement by KenCom to do any of the things described in
the preceding clauses (a) through (p).
6.4 TAX MATTERS.
(a) Except as set forth on SCHEDULE 6.4, which shall list any
tax returns that are late, pending, or for which an extension has been filed,
all federal, state and local tax returns for all periods ending on or before the
Closing that are or were required to be filed by or with respect to KenCom and
Sellers have been filed on a timely basis, and in accordance with the laws,
regulations and administrative requirements of any applicable taxing authority.
All such tax returns that have been filed on or before the Closing were, when
filed, and continue to be, true, correct and complete in all material respects.
(b) KenCom has been a valid subchapter S corporation in good
standing since 1987, pursuant to Section 1361, ET SEQ., of the Code. To the best
knowledge of the Sellers, no such election has been revoked, and that no events
of any nature have occurred prior to Closing that would cause KenCom to fail to
qualify as an S corporation from the time of election to Closing.
(c) Selling Parties have paid, or made provision for the
payment of, all federal, state and local taxes of any kind or nature that have
or may become due of KenCom for all periods ending on or before the Closing,
including, without limitation, all taxes reflected on the tax returns referred
to in this Section 6.4, or in any assessment, proposed assessment, or notice,
received by or any such liabilities assumed by any of the Selling Parties,
except such taxes, if any, as are set forth in SCHEDULE 6.4(c) that are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP consistently applied) have been provided. Any shortages in
such accrual or reserves for contested assessments over the actual, final
assessed amount shall be fully paid by the Sellers and shall be treated by the
Acquiror as an adjustment to the Purchase Price and shall be subject to the
Selling Parties' indemnification obligations and chargeable against the holdback
balance pursuant to Section 12.14. The Sellers' payment obligation hereunder
shall not be subject to the $100,000 limit of Section 12.14. The charges,
accruals and reserves with respect to taxes on the books of KenCom are
determined in accordance with GAAP consistently applied. All taxes that KenCom
is or was required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the appropriate taxing
authority, except for taxes withheld or collected for the Stub Period. There are
no liens with respect to taxes upon any of the properties or assets, real or
personal, tangible or intangible, of KenCom (except for taxes not yet due).
(d) There are no closing agreements, requests for rulings or
requests for technical advice with respect to any taxes, pending between KenCom
and any taxing authority.
(e) All elections with respect to taxes affecting KenCom as of
the date hereof are set forth in SCHEDULE 6.4(e).
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(f) There is no existing tax sharing agreement that may or
will require that any payment be made by or to KenCom on or after the Closing,
except as disclosed on SCHEDULE 6.4(f).
(g) KenCom has not agreed to and is not required to make any
adjustment pursuant to Section 481(a) of the Internal Revenue Code, nor has the
Internal Revenue Service proposed any such adjustment or change in accounting
method with respect to KenCom. KenCom does not have any application pending with
any taxing authority requesting permission for any change in accounting method.
(h) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, as a consequence of this
transaction could give rise to the payment of any amount that would not be
deductible by the Acquiror or KenCom by reason of Section 280G of the Internal
Revenue Service Code.
(i) Except as provided for in SCHEDULE 6.4(i), KenCom does not
own an interest in any (i) domestic international sales corporation, (ii)
foreign sales corporation, (iii) controlled foreign corporation, or (iv) passive
foreign investment company.
(j) The Sellers acknowledge that as a result of the
consummation of the transactions contemplated by this Agreement, KenCom's S
corporation status will terminate as of the Closing Date. The Sellers agree that
the Sellers will file any required S corporation federal, state and local tax
returns for KenCom for all relevant periods through the Closing Date, and all
applicable taxes and preparation fees therefore for such periods shall be paid
by the Sellers. However, the Acquiror shall reimburse the Sellers for Sellers'
tax liability for the Stub Period only.
6.5 LEASED PROPERTY. SCHEDULE 6.5 to the Agreement is a complete and
accurate description of each parcel of real property leased to KenCom and a list
of the policies of leasehold title insurance, if any, issued to KenCom for these
properties. True, correct and complete copies of the leased property have been
delivered to Acquiror. All real property leases are valid and in full force, and
there does not exist any default or event that with notice or lapse of time or
both would constitute a default under any of these leases.
6.6 ZONING. To the best knowledge of Sellers, the zoning of each leased
property described in SCHEDULE 6.5 permits the presently existing improvements
and the continuation of the business presently being conducted on such parcel.
6.7 INVENTORIES. The inventories described in SCHEDULE 6.7 consist of
items of quality and quantity useable, salable or rentable in the ordinary
course of business by KenCom except for obsolete or slow moving items and items
below standard quality, which are set forth on KenCom's books and records in
accordance with KenCom's practices and procedures consistent with the method of
treating such items in prior periods. All items included in the inventories are
the property of KenCom, except for sales made in the ordinary course of
business. For each of these items either KenCom has made full payment or
KenCom's liability to make payment is
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reflected in the Financial Statements of KenCom. As of the Closing, no items
included in the inventories will be pledged as collateral or held by KenCom on
consignment from others.
6.8 CONTRACTS AND AGREEMENTS. The contracts described in SCHEDULE 6.8
consist of all written and oral contracts, licenses and agreements, and any
other commitments or understandings entered into by KenCom in the ordinary
course of business with its customers, clients and other third parties calling
for consideration of more than $20,000 other than those specifically listed in a
Schedule to this Agreement. Except as set forth on SCHEDULE 6.8, all such
contracts and agreements are valid and in full force, and there does not exist
any default or threat of default or event caused by KenCom that with notice or
lapse of time, or both, would constitute default under any of these contracts
and agreements that would either give rise to a right to terminate such contract
or would result in additional liability to KenCom in excess of $20,000
individually or $50,000 in the aggregate, including product warranty claims.
There have been no claims or defaults, and to the best knowledge of KenCom,
there are no facts or conditions that if continued, or unnoticed, will result in
a default under these contracts or agreements.
Except as set forth in SCHEDULE 6.8, KenCom is not a party to,
nor is the Capital Stock bound by, any other agreement not entered into in the
ordinary course of business, any indenture, mortgage, deed of trust, lease or
any other agreement that is unusual in nature, duration or amount. KenCom is not
a party to, nor are the Sellers bound by, any agreement that is materially
adverse to the business, property, or financial condition or Capital Stock or
assets of KenCom.
6.9 OTHER TANGIBLE PERSONAL PROPERTY. The tangible personal property
described in the books and records of KenCom constitutes all the items of
tangible personal property owned by, in the possession of, or used by KenCom in
connection with its business, including all furniture, fixtures, equipment,
computer hardware and vehicles, whether or not located on or within any leased
property of KenCom or elsewhere. Except as stated in SCHEDULE 6.9, no tangible
personal property used by KenCom in connection with its business is held under
any lease, security agreement, conditional sales contract, or other title
retention or security arrangement, or is in the possession of anyone other than
an employee of KenCom.
6.10 TRADE NAMES, TRADEMARKS, COPYRIGHTS, ETC. SCHEDULE 6.10 sets forth
the list of any trademark, trademark registrations or applications, trade names,
service marks, copyrights, copyright registrations or applications or brand
names, telephone and facsimile numbers or domain names that KenCom owns or uses
in its business. To the best knowledge of the Sellers, no person (other than
KenCom) owns any of the trademarks, trademark registrations or applications,
service marks, trade names, copyrights, copyright registrations or applications,
or brand names listed on SCHEDULE 6.10. To the best knowledge of the Sellers,
KenCom has the right and authority to use such trade names, trademarks,
copyrights, telephone and facsimile numbers and domain names as are necessary to
enable it to conduct and to continue to conduct its business, and such use does
not and will not conflict with, infringe or violate any intellectual or
proprietary rights of others.
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6.11 PATENTS AND PATENT RIGHTS. SCHEDULE 6.11 to the Agreement is a
complete schedule of all patents, inventions, industrial models, processes,
designs, formulas and applications for patents ("Intellectual Properties") owned
by KenCom or in which KenCom has any rights or licenses or which are used in the
business of KenCom. The patents and applications for patents listed in SCHEDULE
6.11 are valid and in full force and effect and are not subject to any taxes,
maintenance fees or actions falling due within ninety (90) days after the
Closing. Except as set forth in SCHEDULE 6.11 or 6.20, there have not been any
administrative, judicial, arbitration, or other adversary proceedings concerning
the Intellectual Properties listed in SCHEDULE 6.11. Each patent application is
awaiting action by its respective patent office except as otherwise indicated in
SCHEDULE 6.11. To the best knowledge of the Selling Parties, the manufacture,
use or sale of the inventions, models, designs and systems covered by the
Intellectual Properties listed in SCHEDULE 6.11 do not violate or infringe on
any patent or any proprietary or personal right of any person, firm or
corporation, and KenCom has not infringed and is not now infringing on any
patent or other right belonging to any person, firm or corporation. Except as
set forth in SCHEDULE 6.11, KenCom is not a party to any license, agreement or
arrangement, whether as licensee, licensor or otherwise, with respect to any
patent, application for patent, invention, design, model, process, trade secret
or formula. KenCom has the right and authority to use such inventions, trade
secrets, processes, models, designs and formulas as are necessary to enable it
to conduct and to continue to conduct all phases of its business in the manner
presently conducted, and such use does not and will not conflict with, infringe
or violate any patent or other rights of others.
6.12 CONFIDENTIAL INFORMATION. The confidential information used by
KenCom in the operation of its business, including all processes, know-how and
other technical data, is accurate and sufficient. KenCom is the sole owner of
each of the confidential information, free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others, except as specifically
stated in SCHEDULE 6.12. KenCom has taken all reasonable security measures to
protect the secrecy, confidentiality and value of the confidential information;
any of its employees and any other persons, who, either along or in concert with
others, developed, invented, discovered, derived, programmed or designed these
secrets, or who have knowledge of or access to information relating to them,
have been put on notice and have entered into appropriate agreements that
KenCom's confidential information is proprietary to KenCom only, and is not to
be divulged or misused. All the confidential information is presently valid and
protectable, and is not part of the public knowledge or literature, nor to
Sellers' knowledge have they been used, divulged or appropriated for the benefit
of any past or present employees or other persons, or to the detriment of
KenCom. The term confidential information shall include KenCom's proprietary
software programs (exclusive of any third party software).
6.13 SOFTWARE PROGRAMS, CONTRACTS AND OTHER INTANGIBLE PROPERTY.
SCHEDULE 6.13 to the Agreement is a true and complete list of all software
programs, contracts and all other intangible assets significant to the operation
of the business (other than those specifically referred to elsewhere in the
Agreement), including, without limitation, all of KenCom's right, title and
interest in owned and leased software programs, databases, and all other
agreement, contracts, licenses and other commitments, oral or written, with any
person or entity respecting the ownership, license, acquisition, design,
development, distribution, marketing, use or maintenance
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of software programs, source and object codes, related technical or user
documentation manuals relating to KenCom's business. To the best of knowledge of
the Sellers, KenCom has the right and authority to use such software programs,
including without limitation off-the-shelf software, databases and other
intangible property as are necessary to enable KenCom to continue to conduct its
business, and such use does not infringe nor violate, and will not conflict
with, any intellectual or proprietary rights of others. Except as set forth in
SCHEDULE 6.13, to the best of knowledge of the Sellers, KenCom has a license for
each copy of such software programs, including without limitation off-the-shelf
software, in its possession and has no "Unlicensed Software", i.e., software
used, transferred or duplicated in violation of any applicable license
agreements.
6.14 TITLE TO ASSETS. Except as set forth in SCHEDULE 6.14, the books
and records and Financial Statements of KenCom disclose all the assets of
KenCom. KenCom has good, marketable and unencumbered title to all of its assets,
whether real or personal, mixed, tangible and intangible, which constitute all
the shares and interest in assets that are used in the business of KenCom. All
the assets are free and clear of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants, conditions
or restrictions, except for (i) those disclosed in KenCom's balance sheets
included in the Financial Statements or in the Schedules to the Agreement; (ii)
the lien of current taxes not yet due and payable; and (iii) possible minor
matters that, in the aggregate, are not substantial in amount and do not
materially detract from or interfere with the present or intended use of any of
the assets or materially impair business operations. All the assets are in good
operating condition and repair, ordinary wear and tear excepted. Except as set
forth on this SCHEDULE 6.14, neither any officer, nor any director or employee
of KenCom, nor any spouse, child or other relative of Sellers, owns or has any
interest, directly or indirectly, in any of the real or personal property owned
by or leased to KenCom, or in any copyrights, patents, trademarks, trade names
or trade secrets licensed by KenCom. SCHEDULE 6.14 sets forth KenCom's fixed
assets.
6.15 CUSTOMERS AND TRANSACTIONS. SCHEDULE 6.15 to the Agreement is a
correct and current list of all customers, vendors and clients of KenCom
generating revenues from or payments to over $20,000 during the Last Fiscal Year
End and up to the date of this Agreement. Except as indicated in Schedule 6.15,
the Sellers have no information and are not aware of any facts indicating that
any of these customers, vendors and clients intend to cease doing business with
KenCom or materially alter the amount of business that they are presently doing
with KenCom.
6.16 EXISTING EMPLOYMENT ARRANGEMENTS. SCHEDULE 6.16 to the Agreement
is a list of all employment contracts and collective bargaining agreements, and
all pension, bonus, profit-sharing, deferred compensation, stock option, or
other agreements or arrangements providing for employee or outside consultant
remuneration or benefits to which KenCom is a party or by which KenCom is
obligated, whether in writing or in the nature of informal, oral understandings.
All these contracts and arrangements are in full force and effect, and the
Sellers have no knowledge that any party is in default under them or that there
are any threats of default. There have been no claims of defaults and, to the
best knowledge of the Sellers, there are no facts or conditions which if
continued, or on notice, will result in a default under these contracts or
arrangements. There is
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no pending or, to the best knowledge of the Sellers, threatened labor dispute,
strike or work stoppage affecting KenCom's business.
6.17 INSURANCE POLICIES. SCHEDULE 6.17 to the Agreement is a
description of all insurance policies held by KenCom concerning its assets. All
these policies are in the respective principal amounts set forth in SCHEDULE
6.17. KenCom has maintained since its incorporation and now maintains (i)
insurance on all its assets of a type customarily insured, covering property
damage and loss of income by fire or other casualty; and (ii) adequate insurance
protection against all liabilities, claims and risks against which it is
customary to insure, including without limitation, errors and omissions
coverage.
6.18 UNREGISTERED SECURITIES. The Sellers (i) understand that the
shares of Restricted Stock to be issued pursuant to Section 2.1 of the Agreement
are not registered under the Securities Act of 1933, as amended, (the "Act") or
under any state securities laws, and that they are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering; (ii) are acquiring the Restricted Stock solely for their own
account for investment purposes and not with a view to the "distribution"
thereof (as such term is defined in judicial and administrative interpretations
under Section 2(11) of the Act); (iii) have had access to certain information
concerning Acquiror, including without limitation the Reports referred to in
Section 7.2 and have had the opportunity to obtain additional information as
desired in order to evaluate the merits of purchasing and holding said
Restricted Stock; (iv) are able to bear the economic risk and lack of liquidity
inherit in holding the Restricted Stock until such time as the Restricted Stock
is registered or may be sold pursuant to Rule 144 and in accordance with the
terms and conditions of this Agreement; (v) have sufficient knowledge and
experience in financial and business matters that they are capable of evaluating
the merits and risk of an investment in Acquiror; and (vi) understand that the
certificates representing said Restricted Stock will be stamped or otherwise
imprinted with the legend in substantially the following form:
The shares of Common Stock represented by this certificate
have not been registered under the Securities Act of 1933, as
amended, or the securities laws of any other jurisdiction,
including without limitation, Florida or New Jersey, and may
not be sold transferred, pledged, hypothecated or otherwise
disposed of in any manner unless they are registered under
such Act and any securities laws of any applicable
jurisdiction or unless exemptions from such registrations are
available and that an opinion of counsel, satisfactory to
ProxyMed to that affect is delivered to ProxyMed.
6.19 COMPLIANCE WITH LAWS. To the best of Sellers' knowledge, KenCom
has complied with, and is not in violation in any material respect of applicable
federal, state or local statutes, laws and regulations (including, without
limitation, any applicable environmental, health, building, zoning or other law,
ordinance or regulation) affecting its properties (including the leased
property) or the operation of its business, except as set forth in SCHEDULE
6.19.
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6.20 LITIGATION. Except as set forth in SCHEDULE 6.20, there is no
suit, action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending or, to the best knowledge of Sellers,
threatened against or affecting KenCom, or its business, Capital Stock or
financial condition. The matters set forth in SCHEDULE 6.20 if decided adversely
to KenCom will not result in a material adverse change in the business, assets,
Capital Stock or financial condition of KenCom. Sellers have furnished or made
available to Acquiror copies of all court papers and other documents relating to
the matters set forth in SCHEDULE 6.20. KenCom is not in default with respect to
any order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality. Except as set forth in SCHEDULE
6.20, KenCom is not presently engaged in any legal action to recover moneys due
to it or damages sustained by it in excess of $5,000.
6.21 ASSETS SUFFICIENT FOR CONDUCT OF BUSINESS. The assets, including
without limitation, all accounts receivable, prepaid expenses, equipment,
inventories, intangibles, goodwill, books and records, agreements, contracts,
licenses, and all other properties of every kind, character and description
owned or held for use in connection with KenCom's business, wherever located,
inclusive of sufficient working capital as may be needed from time to time, (the
"Assets"), constitute all of the assets required for Acquiror to conduct the
business of KenCom substantially as it is presently conducted.
6.22 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Other than any
transactions for which a written waiver shall have been received, neither the
entry into the Agreement nor the consummation of the transactions contemplated
hereby will, to the best knowledge of Sellers, result in or constitute any of
the following: (i) a breach of any term or provision of the Agreement; (ii) a
default or an event that, with notice or lapse of time or both, would be a
default, breach or violation of the Articles of Incorporation or Bylaws of
KenCom or any lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust or other agreement, instrument or
arrangement to which KenCom is a party or by which KenCom or the shares are
bound; (iii) an event that would permit any party to terminate any agreement or
to accelerate the maturity of any indebtedness or other obligation; (iv) the
creation or imposition of any lien, charge or encumbrance on any of the assets
of KenCom or the Capital Stock; or (v) the violation of any law, regulation,
ordinance, judgment, order or decree applicable to or affecting KenCom or the
Capital Stock.
6.23 AUTHORITY AND CONSENTS. Except as set forth in SCHEDULE 6.23,
Sellers have the right, power, legal capacity and authority to enter into, and
perform their obligations under the Agreement, and no approvals, consents or
permits of any persons or governmental agency other than Sellers or filings,
registrations or approvals as may be required under applicable federal and state
securities laws are necessary in connection with it. The Agreement constitutes a
legal, valid and binding obligation of the Sellers enforceable in accordance
with its terms except as limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally.
6.24 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as set
forth in SCHEDULE 6.24, neither KenCom nor any officer, director or, to the best
knowledge of the Sellers, any employee of KenCom, nor any spouse or child of any
of them has any direct or
12
indirect interest in any competitor, supplier, customer or client of KenCom or
in any person with whom KenCom is doing business.
6.25 PERSONNEL IDENTIFICATION AND COMPENSATION. Before the Closing,
Sellers shall disclose to Acquiror in SCHEDULE 6.25 a list of the names and
addresses of all officers, directors, employees, agents and consultants of
KenCom, stating the rates of compensation payable to each and setting forth all
vacation time, sick leave and other paid time off accrued for each of them
through the Closing, and the date and amounts of each person's last salary
increase. Except as set forth on SCHEDULE 6.25, no other person, except
accountants, auditors and attorneys, regularly performs compensable services for
KenCom.
6.26 BANK ACCOUNTS, ETC. SCHEDULE 6.26 lists (i) the names and
addresses of all persons holding a power of attorney on behalf of KenCom; and
(ii) the names and addresses of all banks or other financial institutions in
which KenCom has cash or cash equivalent account, investment, deposit or
safe-deposit box, with the names of all persons authorized to draw on these
accounts, investments and deposits or who have access to these boxes and their
respective account numbers.
6.27 MILLENNIUM COMPLIANCE. The proprietary hardware and software of
KenCom, when used prior to, during and after the turn-of-the-century, is either
programmed to process turn-of-the-century dates or is subject to correction or
modification without material cost or adverse effect on the business and
operations of KenCom. This capability includes, without limitation, date formats
that have century recognition, calculations that accommodate same-century and
multi-century formulas and date values, date interface values that reflect the
century and calculations that accommodate the occurrence of leap year.
6.28 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of the Sellers, except as set forth
in SCHEDULE 6.28, KenCom has obtained all permits, licenses and other
authorizations which are required in connection with the conduct of the business
under regulations relating to pollution or protection of the environment,
including regulations relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, hazardous substances or wastes
into the environment (including without limitation ambient air, surface water,
ground water or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, hazardous substances or wastes.
(b) To the best knowledge of the Sellers, except as set forth
in SCHEDULE 6.28, KenCom is in full compliance in the conduct of the business
with all terms and conditions of the required permits, licenses and
authorizations, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
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(c) Except as set forth in SCHEDULE 6.28, the Sellers are not
aware of, nor has KenCom received notice of, any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent compliance or continued compliance with
those laws or any regulations, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder, or
which may give rise to any common law or legal liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical or hazardous substance or waste.
(d) Except as set forth in SCHEDULE 6.28, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice or
demand letter, notice of violation, investigation or proceeding pending or
threatened against KenCom in connection with the conduct of the business
relating in any way to those laws or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
6.29 LABOR MATTERS. Except as set forth on SCHEDULE 6.29, KenCom is in
compliance in all material respects with all currently applicable federal, state
and local laws and regulations respecting employing, discrimination,
discrimination in employment, disability, terms and conditions of employment,
wages and hours, occupational safety and health and employment practices except
for such failures to comply as would not reasonably be expected to have a
material adverse effect, either individually or in the aggregate, on KenCom. As
of the date hereof, KenCom has received no notice from any governmental entity
and, as of the date hereof, there has not been asserted before any governmental
entity any claim, action or proceeding to which KenCom is a party, and there is
not any investigation or hearing pending or threatened concerning KenCom,
arising out of or based upon any such laws, regulations or practices.
6.30 DOCUMENTS DELIVERED. Each copy or original of any agreement,
contract or other instrument which is identified in any exhibit delivered by
Sellers or their counsel to Acquiror (or its counsel or representatives),
whether before or after the execution hereof, is in fact what is purported to be
by Sellers and has not been amended, canceled or otherwise modified.
6.31 FULL DISCLOSURE. None of the representations and warranties made
by Sellers or made in any letter, certificate or memorandum furnished or to be
furnished by Sellers, or on their behalf, contains or will contain any untrue
statement of a material fact, or omits any material fact the omission of which
would make any statements made herein, in light of the circumstances under which
they were made, not misleading. There is no fact known to Sellers that
materially adversely affects, or in the future may (so far as Sellers can now
reasonably foresee) materially adversely affect the assets, Capital Stock,
liabilities, business, operations or prospects of KenCom that has not been set
forth herein or heretofore communicated to the Acquiror in writing.
6.32 CAPITALIZATION OF KENCOM AND OWNERSHIP OF CAPITAL STOCK. Sellers
are the sole and exclusive lawful record and beneficial owner of all of the
Capital Stock of KenCom and all of
14
the number and class of issued and outstanding shares of the stock of KenCom as
set forth opposite Sellers' names on SCHEDULE 1.1 hereto, including, without
limitation, all options, warrants and any other rights in or to any of the
Capital Stock of KenCom. Upon the Closing, each share of the Capital Stock will
be free and clear of any claims, pledges, security interest, liens or
encumbrances or other restrictions of limitations of any kind. Each share of the
Capital Stock of KenCom is validly issued, fully paid and non-assessable and
upon consummation of the transaction contemplated hereby, the Acquiror will
acquire good and valid title to the Shares of Capital Stock, free and clear of
all pledges, security interest, liens, claims, encumbrances, agreements and
options of any nature whatsoever. The authorized shares of KenCom consists
solely of two thousand five hundred (2,500) shares of common stock, no par
value, of which one thousand (1,000) shares are issued and outstanding. No
shares will be held in KenCom's treasury on the Closing. Except as set forth on
SCHEDULE 6.32, there are no outstanding subscriptions, options, warrants,
preemptive or preferential rights, stockholder agreements, convertible
securities or other agreements or contracts of any character (contractual or
otherwise) for the issuance, sale or transfer to any person or entity of shares
of stock of KenCom, and none of the shares of stock have been issued in
violation of any preemptive rights.
6.33 ABSENCE OF UNDISCLOSED LIABILITIES. KenCom does not have and will
not have as of the Closing, except as to the extent reflected or reserved
against on its Financial Statements reflected in SCHEDULES 6.2 hereto, any
debts, liabilities or obligations (whether absolute, accrued, contingent or
otherwise), including, without limitation, any liabilities for environmental
pollution, any foreign or domestic tax liabilities or deferred tax liabilities
incurred in respect of or measured by KenCom's income, or any other material
debts, liabilities or obligations relating to or arising out of any act,
omission, transaction, circumstance, sale of goods or services, stated facts or
other condition, except for obligations not required under GAAP to be disclosed
or reflected on the Financial Statements which are obligations that are not
individually or in the aggregate material to KenCom.
6.34 EMPLOYEE BENEFIT PLANS.
I. PLAN OPERATIONS. Sellers hereby represent and warrant that:
(a) PLANS LISTED. Except as listed on SCHEDULE 6.34, KenCom
does not maintain, is not a party to, does not contribute to and is not
obligated to contribute to any Employee Plan as defined in Section
6.34(I)(a)(i).
(i) EMPLOYEE PLAN. For purposes of the Agreement, the
term "Employee Plan" includes all pension, retirement, disability, medical,
dental or other health insurance plans, life insurance or other death benefit
plans, profit sharing, deferred compensation, stock option, bonus or other
incentive plans, vacation benefit plans, severance plans or other employee
benefit plans or arrangements including, without limitation, any employee
pension benefit plan as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA") and any employee welfare benefit plan as
defined in Section 3(1) of ERISA, whether or not funded, covering any current or
former employees of KenCom (the "Subject Employees") or to which KenCom is a
party or bound or makes or has made any contribution or by which
15
KenCom may have any liability to any Subject Employees (including any such plan
formerly maintained by or in connection with which KenCom may have any liability
to any Subject Employees, and any such plan which is a multi-employer plan as
defined in Section 3(37)(A) of ERISA).
(b) DEFINED BENEFIT PLANS. KenCom does not maintain, is not a
party to, does not contribute to and is not obligated to contribute to any
Defined Benefit Plan as defined in Section 3(35) of ERISA.
(c) PLAN DOCUMENTS. With respect to any Employee Plans of
KenCom, KenCom has provided to Acquiror complete, accurate and current copies of
each of the following:
(i) The text (including amendments) of each of the
Employee Plans, to the extent reduced to writing;
(ii) A description of all material elements of each
of the Employee Plans, to the extent not previously reduced to writing;
(iii) With respect to each Employee Plan that is an
employee benefit plan (as defined in section 3(3) of ERISA), the following:
(A) The most recent summary plan
description, as described in section 102 of ERISA;
(B) Any summary of material modifications
that has been distributed to participants or filed with the U.S. Department of
Labor but that has not been incorporated in an updated summary plan description
furnished under Subparagraph (A) above; and
(C) The annual reports, as described in
section 103 of ERISA, for the most recent three plan-years for which an annual
report has been prepared (including all schedules and attachments).
(iv) With respect to each Employee Plan that is
intended to qualify under section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), the most recent determination letter concerning the
plan's qualification under section 401(a) of the Code, as issued by the Internal
Revenue Service, and
(v) Any handbook, manual, policy statement or similar
written guidelines furnished to employees of KenCom, excluding any such items
that has been superseded by any subsequent handbook, manual, policy statement or
similar written guidelines.
(d) OPERATIONS IN GENERAL. Each Employee Plan and the
Administrators and Fiduciaries of each Employee Plan and KenCom have at all
times complied with all applicable
16
requirements of ERISA, the Code and of any other applicable law (including
regulations and rulings thereunder) governing each Employee Plan, and each
Employee Plan has at all times been properly administered in accordance with all
such requirements of law and in accordance with its terms to the extent
consistent with all such requirements of law.
(e) PBGC, ETC. No "reportable event" (as defined in ERISA) has
occurred with respect to any Employee Plan. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred, or is expected by KenCom to be
incurred, by KenCom with respect to any Employee Plan. There has been no event
or condition which presents a risk of termination of any Employee Plan by the
PBGC. No Employee Plan is a multi-employer plan as defined in ERISA or a
multiple employer plan except as shown on SCHEDULE 6.34. With respect to any
such multi-employer plan or multiple employer plan, there has been no withdrawal
of a "substantial employer" as defined by ERISA and KenCom does not expect such
a withdrawal to occur.
(f) EXCISE TAXES, ETC. No Employee Plan, administrator or
fiduciary of any Employee Plan or KenCom has taken any action, or failed to take
any action, that could subject it or any other person to any liability for any
excise tax or for breach of fiduciary duty with respect to or in connection with
any Employee Plan.
(g) COMMUNICATION, ETC. No Employee Plan, administrator or
fiduciary of any Employee Plan or KenCom has any liability under any provision
of ERISA, the Code, or any other applicable law by reason of any communication
with any Employee Plan, or any filing or failure to file with any government
entity.
(h) PAYMENTS, ETC. No Employee Plan, administrator or
fiduciary of any Employee Plan or KenCom has any liability to any plan
participant, beneficiary or other person under any provision of ERISA, the Code
or any other applicable law by reason of any payment of benefits or other
amounts or failure to pay benefits with respect to or in connection with any
Employee Plan. KenCom is not delinquent or in arrears on other amounts owed to
or with respect to any contributions under any Employee Plan.
II. PLAN LIABILITIES AND COSTS. Sellers represent and warrant that the
annual cost for the year ending the Last Fiscal Year End of each Employee Plan
is set forth in SCHEDULE 6.34.
III. TAXES AND TRUSTS. Sellers represent and warrant that
(a) TAXES. Each funded Employee Plan that is a "employee
pension benefit plan" as defined in Section 3(2) of ERISA is qualified under
Section 401(a) of the Code and the trust maintained in connection with such
Employee Plan is exempt from taxation under Section 501(a) of the Code.
(b) SEPARATE TRUSTS. The assets of each Employee Plan are
invested in a separate trust or under a trust with one or more other such plans
where the assets of each plan are separately accounted for and available only to
provide benefits to employees and beneficiaries
17
covered under that Plan and to pay allocable administrative expenses. Each
Employee Plan is maintained by KenCom under a plan document, which does not
provide for other participating employers. No Employee Plan provides credit with
respect to service other than with KenCom, and neither KenCom nor any such
Employee Plan has liability or responsibility with respect to any such credit.
This Section 6.34(III)(b) does not apply to any plan which is a multi-employer
plan (as defined in ERISA) as set forth in SCHEDULE 6.34.
IV. AMENDMENTS. Sellers shall notify Acquiror of any amendment to any
Employee Plan required or requested by any government agency after the Closing
and, to the extent that any amendment would affect KenCom's obligations in any
manner following the Closing, shall give Acquiror an opportunity to participate,
at KenCom's expense, in any discussions or negotiations concerning such
amendment, and neither party will take any action with respect to such amendment
without the approval of the other.
V. PAYMENT OF CONTRIBUTIONS. KenCom shall pay in full prior to the
Closing all contributions and other amounts due under each Employee Plan for any
period ending on or before the Closing. The amount to be paid under this Section
6.34(V) shall be as set forth in SCHEDULE 6.34. No Employee Plan or other person
has sought, or will seek prior to the Closing, a waiver of any funding
requirements with respect to any Employee Plan.
VI. OTHER LIABILITIES. Sellers hereby represent that no liability to
any employee, beneficiary or other person or entity has been incurred prior to
and including the Closing in connection with any Employee Plan (including,
without limitation, any matching fund liabilities to KenCom's 401(k) plan), by
reason of any action or inaction by the Selling Parties or any person affiliated
with KenCom, or any plan administrator or fiduciary, or any other person other
than liabilities undertaken by them under the terms of the Employee Plan. The
Selling Parties hereby agree that no liability to any employee, beneficiary or
other person or entity shall be incurred following the Closing in connection
with any Employee Plan, by reason of any action or inaction by the Selling
Parties or any person affiliated with KenCom, or any plan administrator or
fiduciary, or any other person other than liabilities undertaken by them under
the terms of the Employee Plan.
VII. INFORMATION. All Subject Employees and their beneficiaries and
dependents, and all other participants and beneficiaries of any Employee Plan,
and all available data and benefits applicable to each of them under the terms
of each Employee Plan (including, without limitation, complete pertinent pay
history and all administrative records), shall be correctly identified and set
forth in records delivered, at the election of Acquiror, prior to the Closing by
KenCom to Acquiror. Any such records not delivered by the Closing and requested
by Acquiror shall be delivered as promptly as practicable thereafter.
6.35 KNOWLEDGE, ETC. Certain of the representations and warranties of
the Sellers are made "to the best knowledge", "to the knowledge of" or words of
similar import. The Parties hereto agree that the meaning of such expressions
shall in all cases be understood as comprising matters which the person, or in
the case of an entity, an officer, director, shareholder or employee
18
of such entity, actually knows or, by virtue of his/her position, should have
known after due inquiry.
ARTICLE 7. ACQUIROR'S REPRESENTATIONS AND WARRANTIES.
Acquiror hereby represents and warrants to Sellers that the following
representations are true and correct and, except as contemplated hereby, at all
times up to the Closing will be true and correct, and hereby acknowledges that
such representations constitute the basis upon which the Sellers are induced to
enter into and perform the Agreement. Each warranty set forth in this Article 7
shall survive the Closing.
7.1 AUTHORITY AND CONSENTS. Acquiror represents and warrants that
Acquiror is a corporation duly organized, existing and in good standing under
the laws of Florida. Acquiror has the right, power, legal capacity and authority
to enter into and perform its obligations under the Agreement, and no approvals
or consents of any persons, other than its Board of Directors are necessary in
connection with it. The execution and delivery of the Agreement and the
consummation of this transaction by Acquiror have been, or prior to the Closing
will have been, duly authorized by all necessary corporate action of Acquiror.
The Agreement constitutes a legal, valid and binding obligation of KenCom
enforceable in accordance with its terms, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors generally.
7.2 REPORTS. Acquiror has delivered to legal counsel for KenCom and
Sellers copies of its reports on Forms 00-X, 00-X, 0-X, and any amendments
thereto, containing financial exhibits, filed with the Securities and Exchange
Commission since January 1, 2002 (the "Reports"). The Reports were timely filed
and did not, at the time they were filed, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. There has not been any material or adverse
change in the business, Restricted Stock or liabilities of Acquiror that has
occurred since the date of the last report, and which has not been disclosed to
KenCom and Sellers. There is no fact known to Acquiror which materially
adversely affects its condition, assets, liabilities, business, operations or
prospects that has not been set forth in its Reports.
7.3 SHARES OF COMMON STOCK. The shares of Acquiror's Restricted Stock
delivered to the Sellers at the Closing pursuant to Section 2.1 will be Rule 144
restricted stock, validly and legally issued, and will be fully paid and
non-assessable, with registration rights as described in Section 12.9.
7.4 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the entry
into the Agreement nor the consummation of the transactions contemplated hereby
will result in or constitute any of the following: (i) a breach of any term or
provisions of the Agreement; (ii) a default or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the Articles
of Incorporation or Bylaws of Acquiror or, to the knowledge of Acquiror, any
lease, license, promissory note, conditional sales contract, commitment,
indenture,
19
mortgage, deed of trust or other agreement, instrument or arrangement to which
Acquiror is a party or by which Acquiror is bound; (iii) to the knowledge of
Acquiror, an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation; or (iv) to the
knowledge of Acquiror, the violation of any law, regulation, ordinance,
judgment, order or decree applicable to or affecting Acquiror.
7.5 AUTHORIZED COMMON STOCK OF ACQUIROR. The authorized, issued and
outstanding Common Stock of Acquiror as of April 30, 2002 is 13,333,333
authorized shares and 6,711,184 issued and outstanding shares.
ARTICLE 8. SELLERS' OBLIGATIONS BEFORE CLOSING.
Sellers covenant that, except as otherwise agreed in writing by
Acquiror, from the date of the Agreement until the Closing:
8.1 ACQUIROR'S ACCESS TO PREMISES AND INFORMATION. Acquiror and its
counsel, accountants and other representatives shall be entitled to have full
access during normal business hours to all KenCom's properties, books, accounts,
records, contracts and documents of or relating to the Capital Stock, but shall
not disrupt nor inhibit KenCom's normal business operations. Sellers shall
furnish or cause to be furnished to Acquiror and its representatives all data
and information concerning the business, finances and properties of KenCom that
may reasonably be requested.
8.2 CONDUCT OF BUSINESS IN NORMAL COURSE. Sellers shall carry on
KenCom's business and activities diligently and in substantially the same manner
as they previously have been carried on, and shall not make or institute any
unusual or novel methods of management, accounting or operation that will vary
materially from the methods used by KenCom as of the date of the Agreement.
Sellers shall use their best efforts, without making any commitments on behalf
of Acquiror, to preserve its business organization intact, to keep available to
KenCom its present officers and employees, and to preserve its present
relationships with suppliers, customers and others having business relationships
with it.
8.3 NO-SHOP. Sellers and Acquiror hereby ratify and confirm that they
have entered into a legally binding agreement dated April 25, 2002 (the "LOI"),
which is incorporated herein by reference, whereby Sellers have agreed among
other things not to offer or solicit for sale or sell KenCom except to Acquiror
for a period of time. The Parties hereby agree that upon the execution of this
Agreement, the "no-shop" period shall be extended to the date of Closing unless
otherwise terminated pursuant to said LOI.
8.4 MAINTENANCE OF INSURANCE. The Selling Parties shall continue to
carry KenCom's existing insurance policies, subject to variations in amounts
required by the ordinary operations of its business. At the request of Acquiror
and at Acquiror's sole expense, the amount of insurance against fire and other
casualties which, at the date of the Agreement, KenCom carries on any of
20
the assets or in respect of its operations shall be increased by such amount or
amounts as Acquiror shall specify.
8.5 EMPLOYEES AND COMPENSATION. Except in the ordinary course of
business, the Selling Parties shall not do, or agree to do, any of the following
acts: (i) grant any increase in salaries payable or to become payable to any
officer, employee, sales agent or representative or consultant; or (ii) increase
benefits payable to any officer, employee, sales agent or representative or
consultant under any bonus or pension plan or other contract or commitment to be
funded with KenCom assets, except as set forth in SCHEDULE 8.5.
8.6 NEW TRANSACTIONS. The Selling Parties shall not do or agree to do
any of the following acts:
(a) Enter into any contract, commitment or transaction not in
the usual and ordinary course of its business; or
(b) Make any capital expenditures or commitments in excess of
$5,000 for any single item or $5,000 in the aggregate, or enter into any leases
of capital equipment or property under which the annual lease charge is in
excess of $5,000; or
(c) Sell or dispose of any capital assets with a net book
value in excess of $5,000 individually, or $5,000 in the aggregate not in the
usual and ordinary course of business; or
(d) Declare any dividends or make any distributions other than
as described in Section 6.3(p).
8.7 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS. Other than in the
usual and ordinary course of business, the Selling Parties shall not do, or
agree to do, any of the following acts: (i) pay any obligation or liability,
fixed or contingent, other than current liabilities; (ii) waive or compromise
any right or claim; or (iii) cancel, without full payment, any note, loan or
other obligation owing to KenCom.
8.8 EXISTING AGREEMENTS. Other than in the usual and ordinary course of
business, the Selling Parties shall not modify, amend, cancel or terminate any
of its existing contracts or agreements, or agree to do any of those acts.
8.9 ESTOPPEL CERTIFICATES. The Selling Parties shall obtain estoppel
certificates to any leased premises in form and substance satisfactory to
Acquiror and will furnish to Acquiror executed copies of those estoppel
certificates obtained by them.
8.10 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Sellers shall
assure that all representations and warranties of the Selling Parties set forth
in the Agreement, any SCHEDULE, and in any written statements delivered to
Acquiror by the Selling Parties under the Agreement will also be true and
correct as of the Closing as if made on that date and that all conditions
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precedent to the Closing shall have been met. Sellers shall promptly disclose to
Acquiror any information contained in the Schedules to the Agreement which,
because of an event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the Closing.
ARTICLE 9. CONDITIONS PRECEDENT TO ACQUIROR'S PERFORMANCE
The obligations of Acquiror to pay the Purchase Price under the
Agreement is subject to the satisfaction, at or before the Closing, of all the
conditions set out below in this Article 9. Acquiror may waive any or all of
these conditions in accordance with Section 14.2 hereof; provided, however, that
no such waiver of a condition shall constitute a waiver by Acquiror of any of
its other rights or remedies, at law or in equity, if Sellers shall be in
default of any of their representations, warranties or covenants under the
Agreement.
9.1 STOCK CERTIFICATES. Sellers shall have delivered to Acquiror at or
prior to Closing (a) certificates evidencing the Shares of Capital Stock,
together with stock powers and instruments of conveyance and transfer; (b)
written resignation of all directors of KenCom; and (c) corporate minute books,
corporate seal, and stock ledger and transfer books of KenCom.
9.2 ACCURACY'S OF SELLERS' REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Sellers in the Agreement, any Schedule, or in
any written statement that shall be delivered to Acquiror by Sellers under the
Agreement shall be true and correct in all material respects on and as of the
Closing as though made at that time.
9.3 ABSENCE OF LIENS. At or prior to the Closing, Acquiror shall have
received a Uniform Commercial Code ("UCC") search report dated as of a date not
more than ten (10) days before the Closing issued by the New Jersey Secretary of
State and any other applicable governmental authority or by a title company or
other company reasonably satisfactory to counsel for Acquiror indicating that
there are no UCC filings with such Secretary of State and any other applicable
governmental authority which name any of Sellers as debtor or otherwise
indicating any lien on the assets of KenCom or the Capital Stock, except for the
liens otherwise disclosed in Schedules hereto or that shall be released at or
prior to the Closing.
9.4 SELLING PARTIES' PERFORMANCE. Sellers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Agreement to be performed or complied with by the
Selling Parties on or before the Closing.
9.5 CERTIFICATION BY SELLING PARTIES. Acquiror shall have received a
certificate, dated the Closing, signed by the Sellers certifying, in such detail
as Acquiror and its counsel may reasonably request, that the conditions
specified in Sections 9.2 and 9.4 have been fulfilled.
9.6 OPINION OF SELLERS' COUNSEL. Acquiror shall have received from
Xxxxxxx Xxxxxxxx, Esquire, counsel for Sellers, an opinion dated as of the
Closing, in form and substance reasonably satisfactory to Acquiror and its
counsel, to the effect that:
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(a) KenCom is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey and has all
requisite corporate power to perform its obligations under the Agreement;
(b) All corporate proceedings required by law or by the
provisions of the Agreement to be taken by KenCom on or before the Closing, in
connection with the execution and delivery of the Agreement and the consummation
of the transactions contemplated by the Agreement, have been duly and validly
taken;
(c) Sellers have the requisite power and authority to deliver
and transfer the Capital Stock of KenCom for the consideration set forth in
Section 2.1 of the Agreement;
(d) Every consent, approval, authorization or order of any
court or governmental agency or body that is required for the consummation by
KenCom of the transactions contemplated by the Agreement has been obtained or
has been waived by Acquiror and will be in effect on the Closing Date;
(e) The consummation of the transaction contemplated by the
Agreement does not violate or contravene any of the provisions of the Articles
of Incorporation, Bylaws of KenCom or any indenture, agreement, statute,
judgment or order to which KenCom is a party or by which KenCom is bound; and
(f) The Agreement has been duly and validly authorized and,
when executed and delivered by the Sellers, will be valid and binding on the
Sellers and enforceable in accordance with its terms, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally.
(g) Each Seller has valid title to the Shares of Capital Stock
to be sold by such Seller under this Agreement free of all restrictions on
transfer, liens, encumbrances, security interests, equities and claims
whatsoever. Upon delivery of and payment for the Shares of Capital Stock, good
and clear title to such Shares of Capital Stock will pass to the Acquiror, free
of all restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever.
9.7 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by the Agreement or to its consummation, shall have been instituted
or threatened on or before the Closing.
9.8 CORPORATE APPROVAL. The execution and delivery of the Agreement by
KenCom, and the performance of its covenants and obligations under it, shall
have been duly authorized by all necessary corporate action, and Acquiror has
received copies of all resolutions pertaining to that authorization, certified
by the secretary of KenCom.
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9.9 ESTOPPEL CERTIFICATES. Acquiror shall have received from KenCom
estoppel certificates and consents relating to any leased property in a form
reasonably satisfactory to Acquiror's counsel.
9.10 CONSENTS. All necessary agreements and consents which KenCom is
obligated to obtain so as to consummate the transaction contemplated by the
Agreement, or otherwise pertaining to the matters covered by it, shall have been
obtained by KenCom and delivered to Acquiror.
9.11 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to Acquiror
under the Agreement shall be satisfactory in all reasonable respects, to
Acquiror and its counsel.
9.12 EMPLOYMENT AGREEMENT. Acquiror's wholly owned subsidiary, Key
Communications Service, Inc. ("Key") and the Sellers shall have entered into
employment agreements with those individuals set forth on SCHEDULE 9.13, which
employment agreements shall supersede and render void and unenforceable the
employment agreements of the Sellers in effect immediately prior to the Closing.
9.13 CONTINUITY OF EMPLOYMENT FOR CERTAIN INDIVIDUALS. Acquiror shall
have made arrangements suitable to it for the employment by Key of sufficient
KenCom employees to continue the operation of the business being transferred
without disruption thereto. SCHEDULE 9.13 sets forth the KenCom employees to
whom the Acquiror will extend offers of employment in its sole discretion.
9.14 CONDITION OF ASSETS. The Assets shall not have been materially or
adversely affected in any way as a result of any fire, accident, storm or other
casualty or labor or civil disturbance or act of God or the public enemy.
9.15 EXCHANGE OF CAPITAL STOCK. Sellers shall have delivered and
transferred to the Acquiror the Shares of Capital Stock in exchange for the
Purchase Price at Closing as specified in Section 2.1.
9.16 [INTENTIONALLY DELETED.]
9.17 CUSTOMER REFERENCE. Acquiror shall receive from certain selected
KenCom customers references satisfactory to Acquiror as determined in its sole
and reasonable discretion.
9.18 MINIMUM FINANCIAL CRITERIA. Notwithstanding anything to the
contrary, including Section 12.4, on the Closing Date (as determined forty-five
days therefrom) KenCom must have Working Capital of at least THREE HUNDRED
THOUSAND DOLLARS (US$300,000). The definition of Working Capital shall include
adequate reserves for those accounts receivable that have been uncollected for
more than sixty (60) days from their invoice dates, with the exception of those
Accounts Receivable listed on SCHEDULE 12.3 for which Sellers shall
unconditionally guarantee collection as per Section 12.3 hereof. The test for
"Working Capital" shall be the sum
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of KenCom's current assets minus KenCom's current liabilities (other than
Accrued Vacation and any Acquiror pre-approved payables incurred for printers
specified in Section 2.2 in excess of $25,000), as reflected on KenCom's balance
sheet as of the Closing Date. If on the Closing Date KenCom's minimum Working
Capital is not at US$300,000, then Sellers shall pay Acquiror within ten (10)
days after delivery of the Final Report (as defined herein) any amounts
necessary to bring the Working Capital up to US$300,000. The determination of
KenCom's Working Capital shall be made pursuant to a balance sheet as of the
Closing Date prepared (under practices, procedures and standards consistent with
GAAP) by Sellers' independent auditors as promptly as practicable after the
Closing, but in no event later than forty-five (45) days after the Closing,
which balance sheet shall be delivered to the Parties by the Sellers'
independent auditors in the form of a "Draft Report". For a period of ten (10)
days after receipt of the Draft Report, each party shall have the right to
discuss the Draft Report with the Sellers' independent auditors. Upon expiration
of said 10-day period, subject to any extensions that the Sellers' independent
auditors may request in its sole discretion, the Sellers' independent auditors
shall issue its "Final Report", which shall be conclusive and binding upon the
Parties for the purposes of this Section 9.18 only. All costs incurred by the
Sellers' independent auditors pursuant to this Section shall be equally borne by
the Parties. The obligations of Sellers described in this Section 9.18 are
absolute and unconditional in all respects, and shall be valid and enforceable
irrespective of any other agreements or circumstances which might otherwise
constitute a defense to such obligations including, without limitation, any
liabilities of Sellers to Acquiror pursuant to Section 12.4 of the Agreement.
Sellers absolutely, unconditionally and irrevocably waive any and all right to
assert any defense, set-off, counterclaim or cross-claim of any nature
whatsoever with respect to such obligations in any action or proceeding brought
by Acquiror to collect the indebtedness described in this Section.
ARTICLE 10. CONDITIONS PRECEDENT TO SELLERS' PERFORMANCE.
The obligation of the Sellers to exchange the Capital Stock under the
Agreement is subject to the satisfaction, at or before the Closing, of all the
following conditions set out below in this Article 10. Sellers may waive any or
all of these conditions in accordance with Section 14.2 hereof; provided,
however, that no such waiver of a condition shall constitute a waiver by the
Sellers of any of its other rights or remedies, at law or in equity, if Acquiror
shall be in default of any of their representations, warranties or covenants
under the Agreement.
10.1 ACCURACY OF ACQUIROR'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Acquiror contained in the Agreement or in any
written statement delivered by Acquiror under the Agreement, including but not
limited to the Reports delivered to Sellers pursuant to Section 7.2 hereof,
shall be true on and as of the Closing as though such representations and
warranties were made on and as of that date.
10.2 ACQUIROR'S PERFORMANCE. Acquiror shall have performed, satisfied
and complied in all material respect with all covenants, agreements and
conditions that it is required by the Agreement to perform, comply with, or
satisfy, before or at the Closing.
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10.3 OPINION OF ACQUIROR'S COUNSEL. Acquiror shall have furnished the
Sellers with an opinion, dated as of the Closing, of Xxxxxx X. Xxxxxxxxx, Esq.,
counsel for Acquiror, in form and substance satisfactory to the Sellers and its
counsel, to the effect that:
(a) Acquiror is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has all
requisite corporate power to perform its obligations under the Agreement;
(b) All corporate proceedings required by law or by the
provisions of the Agreement to be taken by Acquiror on or before the Closing, in
connection with the execution and delivery of the Agreement and the consummation
of the transactions contemplated by the Agreement, have been duly and validly
taken;
(c) Acquiror has the corporate power and authority to acquire
the Capital Stock for the consideration set forth in Section 2.1 of the
Agreement;
(d) Every consent, approval, authorization or order of any
court or governmental agency or body that is required for the consummation by
Acquiror of the transactions contemplated by the Agreement has been obtained or
has been waived by KenCom and will be in effect on the Closing Date;
(e) The consummation of the transaction contemplated by the
Agreement does not violate or contravene any of the provisions of the Articles
of Incorporation and Bylaws, both as amended, of Acquiror or any indenture,
agreement, statute, judgment or order to which Acquiror is a party or by which
Acquiror is bound;
(f) The Agreement has been duly and validly authorized and,
when executed and delivered by Acquiror, will be valid and binding on Acquiror
and enforceable in accordance with its terms, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of creditors
generally; and
(g) The shares of Acquiror's Restricted Stock issued to the
Sellers at Closing will be validly and legally issued and will be fully paid and
non-assessable.
10.4 ACQUIROR'S CORPORATE APPROVAL. Acquiror shall have received
corporate authorization and approval from its Board of Directors for the
execution and delivery of the Agreement, and all corporate action necessary or
proper to fulfill the obligations of the Sellers to be performed under the
Agreement on or before the Closing.
10.5 CERTIFICATION BY ACQUIROR. Sellers shall have received a
certificate, dated as of the Closing, signed by an executive officer of Acquiror
certifying, in such detail as Sellers and its counsel may reasonably request,
that the conditions specified in Section 10.1 and 10.2 have been fulfilled.
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10.6 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by the Agreement or to its consummation, shall have been instituted
or threatened on or before the Closing.
10.7 CONSENTS. All necessary agreements and consents of any third
parties to the consummation of the transaction contemplated by the Agreement, or
otherwise pertaining to the matters covered by it, including, without
limitation, the consent of Commerce Bank and the release of each Seller from
their personal guarantees relating to KenCom's line of credit shall have been
obtained on or before or contemporaneously with the Closing.
10.8 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered to the Sellers
under the Agreement shall be satisfactory in all reasonable respects, to Sellers
and its counsel.
10.9 EMPLOYMENT AGREEMENT. Acquiror shall have entered into an
employment agreement with each of the Sellers and Xx. Xxxxxx on terms and
conditions to be negotiated by the respective parties.
10.10 EXCHANGE OF STOCK. Acquiror shall have delivered the Purchase
Price for the Shares of Capital Stock at Closing as specified in Section 2.1.
10.11 PERSONAL AUTOMOBILES. Acquiror will allow Sellers to retain the
personal automobiles that are on the Company's books provided Sellers fully
assume any and all related liabilities for these automobiles. The Acquiror
acknowledges that there is a Chevrolet Corvette and Pontiac Bonneville listed as
assets with a related loan payable for the Pontiac Bonneville. The Buyers also
acknowledge that there is also an off balance sheet Lexus leased by the Company.
10.12 LINE OF CREDIT. At Closing, or as soon thereafter as practicable,
the Acquiror shall pay off and cancel the notes payable issued pursuant to the
Commerce Bank Line of Credit.
ARTICLE 11. [MOVED TO SECTION 6.34 OF THIS AGREEMENT.]
ARTICLE 12. PARTIES' OBLIGATIONS AFTER THE CLOSING
A. SELLERS' OBLIGATIONS.
12.1 PRESERVATION OF GOODWILL. Following the Closing, Sellers will
conduct their activities so that Acquiror's reasonable expectations with respect
to the goodwill, business reputation, employee relations and prospects connected
with KenCom's business will not be materially impaired.
12.2 TRADE NAMES. If requested by Acquiror, Sellers agree that after
the Closing Date they shall not use or employ in any manner not authorized by
Acquiror directly or indirectly the name or any trade or service marks of KenCom
or any variation thereof.
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12.3 GUARANTEE OF ACCOUNTS RECEIVABLE. The Sellers guarantee to the
Acquiror that the unpaid balance of the Accounts Receivable of KenCom listed on
SCHEDULE 12.3 will be paid within ninety (90) days of the date of Closing.
Within ten (10) days after delivery to the Sellers of written notice of any such
Accounts Receivable not being paid within such ninety (90) day period, the
Sellers will pay to the Acquiror the full amount of such unpaid receivable in
cash. The Acquiror shall provide full access and all reasonable assistance to
collect such receivable. Any receivable not collected, but paid for by the
Sellers, shall be assigned to the Sellers.
12.4 SELLERS' INDEMNITIES.
(A) GENERAL INDEMNITIES. Sellers shall jointly and severally
indemnify, defend and hold harmless the Acquiror, its affiliates, officers,
directors, employees, agents and representatives (the "Acquiror Indemnified
Party") against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees ("Losses"), subject
to Section 12.14, that the Acquiror Indemnified Party shall incur or suffer,
which arise, result from or relate to any breach of, or failure by Sellers to
perform, any of their representations, warranties, covenants or agreements in
the Agreement or in any Schedule, certificate, exhibit or other instrument
furnished or to be furnished by Sellers under the Agreement, or from the
operation of KenCom prior to the Closing, including without limitation, Losses
for employment causes of action or proceedings instituted by any of the Severed
Employees (as defined in Section 12.10(b)) against KenCom or the Acquiror
post-Closing, which cause of action arose or resulted from acts or omissions of
KenCom or Sellers pre-Closing ("Sellers' Employment Losses").
(B) ERRORS & OMISSIONS INDEMNITIES. Sellers shall jointly and
severally indemnify, defend and hold harmless the Acquiror, its affiliates,
officers, directors, employees, agents and representatives against and in
respect of any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest, penalties
and reasonable attorneys' fees ("Losses"), subject to Section 12.14(iii), that
the Acquiror Indemnified Party shall incur or suffer, which arise, result from
or relate to Losses for any Errors and Omissions (also known as Professional
Liability) related claims that are filed post-Closing but that originated from
the operation of KenCom prior to Closing (the "E&O Claims"). (Hereinafter the
Losses for E&O Claims shall be known as the "E&O Claims Losses.") For purposes
of this Section 12.4(B), the definition of Errors and Omissions shall be defined
as any Losses that would have been insurable under the Acquiror's E&O Liability
Policy, subject to any E&O exclusions under that same policy.
(C) CONFIDENTIAL INFORMATION INDEMNITIES. Sellers shall
jointly and severally indemnify, defend and hold harmless the Acquiror
Indemnified Party from and against any Losses suffered by the Acquiror
Indemnified Party as a result of any breach by KenCom of Section 6.12,
specifically as it relates to the development by a third party of works derived
from KenCom's proprietary software programs, and the development of such work
was facilitated by KenCom's breach of Section 6.12. The foregoing specifically
excludes third party works derived independently of such proprietary software
programs.
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12.5 SELLERS' PAYMENT OF SEPARATION PAY. Sellers shall coordinate with
the Acquiror as to the time Sellers will pay those employees severed pursuant to
Section 9.17 and shall absolutely not pay any Separation Pay to a severed
employee until at least the eight (8th) day after the execution by such severed
employee of the general release form (the "Rescission Period"); provided such
severed employee has not revoked his or her acceptance of and assent to the
general release during the Rescission Period.
12.6 NON-SOLICITATION OF EMPLOYEES. Neither of the Sellers shall, for
three years from the date of the Closing, solicit any employee of Acquiror or of
any direct or indirect subsidiary of Acquiror to leave such employment.
12.7 DEPOSIT OF CHECKS. Sellers shall cooperate with Acquiror in making
all necessary or desirable arrangements so that checks and other payments on
accounts receivable of KenCom may be deposited following the Closing into
Acquiror's bank accounts without endorsement by the Sellers.
12.8 S CORPORATION RETURN. The Sellers agree that KenCom will timely
prepare and file any required S Corporation federal, state and local tax returns
for KenCom for any required periods through the date of the Closing, and the
appropriate taxpayer will timely and fully pay all applicable taxes for that
period as more particularly described in Section 6.4(j). The Sellers agree to
pay all costs of preparational filing for such returns.
B. ACQUIROR'S/KENCOM'S OBLIGATIONS.
12.9 REGISTRATION RIGHTS. The Sellers and Acquiror shall execute a
Registration Rights Agreement in the form attached hereto as SCHEDULE 12.9.
12.10 PAYMENT OF S CORPORATION TAXES; SEVERED EMPLOYEES AND ACCRUED
VACATION.
(a) Acquiror will allow a distribution to Sellers for Federal
and New Jersey state tax expense incurred as a direct result of KenCom's taxable
earnings for the stub period from January 1, 2002 to the Closing Date (as may be
extended). The Parties will work together to minimize any such taxes. The
distribution will be paid directly by Acquiror to the Sellers upon submission of
KenCom's stub period Form 1120S and its related K-1 schedules. Acquiror may
accept other documentation as basis for distribution at its sole discretion.
(b) REASSIGNED EMPLOYEES; SEVERANCE. Post-Closing, KenCom
shall sever the employment relationship with all of its employees with the
exception of those employees listed on SCHEDULE 9.13, who are being reassigned
to Key, (the "Severed Employees") and shall use best efforts to obtain from each
severed employee an executed general release.
(c) After Closing, on the effective date of termination of
each Severed Employee, KenCom shall pay for any and all accrued vacation due and
owing to the Severed Employees, less any applicable, federal, state and local
taxes.
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12.11 ACCESS TO RECORDS. From and after the Closing, the Acquiror shall
allow Sellers, and their counsel, accountants and other representatives, such
access to records of KenCom, which after the Closing are in the custody or
control of the Acquiror as Sellers reasonably require in order to comply with
their respective obligations under the law or under contracts assumed by
Acquiror pursuant to the Agreement.
12.12 ACQUIROR'S INDEMNITIES. Acquiror shall indemnify, defend and hold
harmless Sellers against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees ("Losses"), that
Sellers shall incur or suffer, which arise, result from or relate to any breach
of, or failure by Acquiror to perform, any of its representations, warranties,
covenants or agreements in the Agreement or in any Schedule, certificate,
exhibit or other instrument furnished or to be furnished by Acquiror under the
Agreement, prior to the Closing; provided, however, that Acquiror shall only be
obligated to indemnify Sellers hereunder for Losses in excess of $100,000 in the
aggregate. In addition, the Acquiror shall indemnify the Sellers from any Losses
for employment causes of action or proceedings instituted by any of the Severed
Employees against KenCom, which cause of action arose or resulted from acts or
omissions of KenCom post-Closing ("Acquirors' Employment Losses").
C. ASSERTION OF CLAIMS.
12.13 ASSERTION OF CLAIMS. All claims for indemnification by either of
the Sellers pursuant to Section 12.12 hereof or an Acquiror Indemnified Party
pursuant to Section 12.4 hereof, or any other provision of the Agreement except
Section 12.3, shall be asserted and resolved as follows:
(a) Any person claiming indemnification hereunder is
hereinafter referred to as the "Indemnified Party" and any person against whom
such claims are asserted hereunder is hereinafter referred to as the
"Indemnifying Party." In the event that any Losses are asserted against or
sought to be collected from an Indemnified Disclosing Party a third party, said
Indemnified Party shall with reasonable promptness notify the Indemnifying Party
of the Losses, specifying the nature and specific basis for such Losses and the
indemnity claim and the amount or the estimated amount thereof to the extent
then feasible and enclosing a copy of all papers (if any) served with respect to
the claim (the "Claim Notice"). The Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to any such Losses if the
Indemnified Party fails to notify the Indemnifying Party thereof in accordance
with the provisions of the Agreement in reasonably sufficient time so that the
Indemnifying Party's ability to defend against the Losses is not prejudiced, but
only to the extent such notification within such time period is practicable. The
Indemnifying Party shall have thirty (30) days from the date the Claim Notice is
given in accordance with the notice provisions hereof (the "Notice Period") to
notify the Indemnified Party (x) whether it disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
Losses; and (y) whether it desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Recipient against such Losses;
which election to defend may be made without prejudicing the Indemnifying
Recipients to its
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liability hereunder, other than with respect to the costs of defense.
Notwithstanding the foregoing, the Indemnified Party is hereby authorized prior
to and during the Notice Period to file any motion, answer or other pleading
that it shall deem necessary or appropriate to protect its interests or those of
the Indemnifying Party (and of which it shall have given notice and opportunity
to comment to the Indemnifying Party) and that is not prejudicial to the
Indemnifying Party.
(A) In the event that the Indemnifying Party notifies
the Indemnified Party within the Notice Period that it desires to defend the
Indemnified Recipient against such Losses and except as hereinafter provided,
the Indemnifying Party shall have the right to defend by all appropriate
proceedings, and with counsel of its own choosing, which proceedings shall be
promptly settled or prosecuted by them to a final conclusion. If the Indemnified
Party desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense. If requested by the
Indemnifying Party, the Indemnified Recipient agrees to cooperate with the
Indemnifying Recipient and its counsel in contesting any Losses that the
Indemnifying Party elects to contest, or, if appropriate and related to the
claim in question, in making any counterclaim against the person asserting the
third party Losses, or any cross-complaint against any person. No claim with
respect to which the Indemnifying Party has admitted its liability may be
settled or otherwise compromised without the prior written consent of the
Indemnified Party. Any party settling or compromising a claim in violation of
the preceding sentence shall be solely liable for the amount of the settlement
or compromise.
(B) If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days after the receipt of a Claim Notice
that it elects to undertake the defense thereof, the Indemnified Party shall
have the right to defend at the expense of the Indemnifying Party the claim with
counsel of its choosing reasonably satisfactory to the Indemnifying Party,
subject to the right of the Indemnifying Party to assume the defense of any
claim at any time prior to settlement or final determination thereof. Any such
defense shall be prosecuted promptly and vigorously by the Indemnified Party.
In the case of either (A) or (B), if the Indemnifying
Party has not admitted its liability for a claim, the Indemnified Party shall
send a written notice to the Indemnifying Party of any proposed settlement of
any claim received by the Indemnified Party. The Indemnifying Party shall have
an option for thirty (30) days following receipt of such notice to (i) admit
liability for the claim if it has not already done so and (ii) if liability has
been admitted, reject, in its reasonably judgment, the proposed settlement.
Failure to reject such settlement within such 30-day period shall be deemed an
acceptance of such settlement. If the Indemnified Party settles any such claim
over the objection of the Indemnifying Party, the Indemnified Party shall
thereby waive any right to indemnify therefor, unless the Indemnifying Party has
prior to the time of settlement admitted liability for such claim.
Notwithstanding any provisions hereof to the contrary, the Indemnifying Party
may defend any claim in the manner described herein under a reservation of
rights as to liability for such claim.
(b) In the event any Indemnified Party should have a claim for
Losses against any Indemnifying Party hereunder that does not involve a Loss
being asserted against or sought to
31
be collected from it by a third party (for example, but without limitation, a
Loss resulting from a breach of a representation, warranty or covenant), the
Indemnified Party shall send a Claim Notice (including an explanation, in
reasonable detail, of the basis for such claim, the particular representation,
warranty or covenant claimed to be breached by the Indemnifying Party, and the
manner in which the amount claimed to be due was computed, together with all
documents in the possession of the Indemnified Party relating to such claim for
Losses) with respect to such claim to the Indemnifying Party. If the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
from the date the Claim Notice is given that it disputes such claim for Losses,
the amount of such Losses shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
D. LIMITATION ON LOSSES.
12.14 LIMITATION OF SELLERS' LIABILITY. Subject to the provisions of
Section 12.15, Sellers shall only be obligated to indemnify the Acquiror
Indemnified Party hereunder (i) for Losses in excess of TWENTY-FIVE THOUSAND
DOLLARS (US$25,000) in the aggregate (the "Indemnification Basket"), (ii) for
Losses not in excess of ONE HUNDRED THOUSAND DOLLARS (US$100,000) over the
Indemnification Basket and (iii) for Seller's E&O Claims Losses not in excess of
one hundred percent (100%) of the value of the shares of Restricted Stock to be
delivered hereunder, which E&O Claims Losses shall not be subject to the
Indemnification Basket. For purposes of this Sections 12.14(i) and (ii) only,
the defined term "Losses" shall not include Employment Losses.
(A) HOLDBACK. Sellers hereby authorize the Acquiror to holdback ONE
HUNDRED THOUSAND DOLLARS (US$100,000) (the "Holdback") as per Section 2.1(a) of
this Agreement for a period of six (6) months from the Closing Date (the
"Holdback Period"), unless the Indemnified Acquiror Party makes a claim for
liability under the Agreement, in which case the Parties will exercise best
efforts and promptly negotiate the resolution of such claim in good faith
according to the Agreement. If the resolution of such claim involves payment by
the Sellers by transferring to the Acquiror the applicable amount of the
Holdback, Sellers hereby authorize the Acquiror to do all things necessary to
affect such transfers. Sellers hereby agree to indemnify the Acquiror from
exercising its rights under this Section 12.14(A); provided, however, that
Sellers shall not indemnify the Acquiror from its gross negligence or willful
misconduct in connection with the Holdback. After the expiration of Holdback
Period, the Acquiror shall distribute the remaining cash balance of the Holdback
in proportionate amounts to each of the Sellers ("Holdback Release Date"),
subject to any amounts which are then subject to a claim made by an Acquiror
Indemnified Party, which amounts shall continue to be held back until the final
resolution of such claim.
12.15 EXCEPTIONS TO LIMITATION ON LOSSES. None of the limitations on
Sellers' obligations to indemnify the Acquiror Indemnified Party nor the
Indemnification Basket set forth in Section 12.14 shall apply to any (x) any
deficiency resulting from Section 9.18 of the Agreement nor (y) Losses incurred
by the Acquiror Indemnified Party that relate, directly or indirectly, to: (i)
any (intentional) fraudulent acts committed by KenCom or any Seller (including
without limitation, fraud in connection with the transactions contemplated
hereby and any fraudulent acts by any
32
officer, director, employee, agent or equity holder of KenCom); (ii) any
indemnification obligation under Article 4 and 12.4(C); (iii) the Sellers'
obligations set forth in Section 12.3 and 13.2 to pay certain expenses; and (iv)
any breach of a representation or warranty contained in Sections 6.4, 6.12,
6.13, 6.32, or 13.1.
ARTICLE 13. COSTS
13.1 FINDER'S OR BROKER'S FEES. Each of the Sellers and Acquiror
represent and warrant that it has dealt with no broker or finder in connection
with any of the transactions contemplated by the Agreement, and, insofar as it
knows, no broker or other person is entitled to any commission or finder's fee
in connection with any of these transactions.
13.2 EXPENSES. Each of the Parties shall pay its own and expenses,
including, but not limited to attorneys' and accounting fees, incurred or to be
incurred by it in negotiating and preparing the Agreement and in closing and
carrying out the transactions contemplated by the Agreement ("Transaction
Expenses"). The Parties acknowledge and agree that in no event shall KenCom be
liable for any Transaction Expenses.
ARTICLE 14. FORM OF AGREEMENT
14.1 HEADINGS. The subject headings of the Articles and Sections of the
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
14.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER. The Agreement constitutes
the entire agreement between the Parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the Parties. No supplement, modification
or amendment of the Agreement shall be binding unless executed in writing by all
the Parties. No waiver of any of the provisions of the Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
14.3 COUNTERPARTS; FACSIMILE. The Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. In addition, execution of the Agreement and the Schedules attached
hereto may be transmitted by one party to the other via facsimile.
ARTICLE 15. PARTIES
15.1 PARTIES IN INTEREST. Nothing in the Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of the
Agreement on any persons
33
other than the Parties to it and their respective successors and assigns, nor is
anything in the Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to the Agreement, nor shall any
provision give any third persons any right of subrogation or action over against
any party to the Agreement.
15.2 ASSIGNMENT. The Parties may not assign or delegate any of its
rights or obligations under the Agreement or any part hereof without the prior
written consent of each other party, except for any assignment permitted in
Section 20.7. The Agreement shall be binding on and shall inure to the benefit
of the Parties to it and their respective heirs, legal representatives,
successors and assigns.
ARTICLE 16. REMEDIES
16.1 RECOVERY OF LITIGATION COSTS. If any legal action or any
arbitration or other preceding is brought for the enforcement of the Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of the Agreement, the respective Parties
shall bear their own costs and expenses.
16.2 CONDITIONS PERMITTING TERMINATION. Subject to the provisions of
Article 3 relating to the postponement of the date of Closing, either party may
terminate the Agreement by written notice to the other, without liability to the
other, if any bona fide action or proceeding shall be pending against either
party that could result in an unfavorable judgment, decree or order that would
prevent or make unlawful the carrying out of the Agreement.
16.3 DEFAULTS PERMITTING TERMINATION. If prior to Closing either
Acquiror or either of the Selling Parties materially defaults in the due and
timely performance of any of its representations, warranties, covenants or
agreements under the Agreement, the non-defaulting party or parties may give
notice of termination of the Agreement, in the manner provided in Article 18.
The notice shall specify with particularity the default or defaults on which the
notice is based. The termination shall be effective ten (10) business days (and
if the ten (10) days are prior to the scheduled date of Closing, such Closing
shall be extended for the same time to enable the defaulting party to cure the
specified default or defaults on or before this effective date for termination).
Subject to Section 16.4, such termination shall not waive, release or discharge
the non-defaulting parties' rights to seek legal and equitable relief.
16.4 BREACH OF WARRANTIES. Notwithstanding any provision of the
Agreement to the contrary, if, upon execution of the Agreement and upon the
Closing, the warranties and representations made by either party pursuant to
Sections 6, 7 or 11 of the Agreement are not true and correct, and either party
notifies the other party of such fact in writing, then the rights and
obligations of the Parties shall be as follows:
(a) If the applicable warranty or representation was untrue as
of the date made, then except in cases of fraud or neglect, the sole and
exclusive remedy of the non-warranting party shall be either of the following,
as the non-warranting party may elect in writing:
34
(i) To waive the breach in writing and continue with
the Closing, in which case the non-warranting party shall have no further
recourse with respect to such breach or falsity pursuant to Section 12.4 or
12.14 or otherwise; or
(ii) To terminate the Agreement by written notice, in
which case neither party shall have any further obligations nor liabilities to
the other party hereunder, except as set forth in Sections 16.4 and 20.2.
(b) If the applicable warranty or representation was true when
made, but became untrue thereafter for reasons other than a breach by the
warranting party of its other covenants and obligations under the Agreement,
then:
(i) If the breach or falsity would adversely and
materially affect the non-breaching party's rights and obligations under the
Agreement, the remedies of the non-warranting party shall be as elected under
Section 16.4(a) above; and
(ii) If the breach or falsity would not adversely and
materially affect the non-breaching party's rights and obligations under the
Agreement, the sole and exclusive remedy of the non-warranting party shall be
limited to those set forth elsewhere in this Agreement, and the non-warranting
party shall have no right to terminate the Agreement on account of such breach
or falsity.
ARTICLE 17. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties in any instrument, certificate,
opinion or other writing provided for in it, shall survive the Closing and will
remain in effect until and will expire upon the Holdback Release Date, except
for representations and warranties set forth in Sections 6.4, 6.12, 6.13, 6.32
or 13.1, which will expire after the end of the third (3) year after Closing.
ARTICLE 18. NOTICES
Except as otherwise specifically provided herein, any notice required
or permitted to be sent by the Agreement will be in writing and will be (i)
delivered by hand; (ii) sent by fax (if the receiving machine confirms receipt
through answerback and the sending machine prints a paper copy of the answerback
message); or (iii) mailed by registered, certified or other prepaid, receipted
delivery service, return receipt requested, to the address or fax number
provided by the Agreement. Complying notices will be effective (a) when
delivered by hand; (b) the next business day after sent by fax; (c) five
business days after deposited in the mail in the manner required above, with
proper postage prepaid; or (d) one business day after deposited with the
delivery service. Notices will be addressed as follows or as from time to time
directed in writing by any of the Parties' notice given hereunder:
35
KENCOM: KenCom Communications and Services, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx Xx. 0
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
Attn.: Xxxxxxx X. Xxxxxxx, President
with copy to: Xxxxxxx, Xxxxxx & Xxxxxxxx, L.L.P.
000 Xxxxx 00 Xxxx
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn.: Xxxxxxx X. Xxxxxxxx, Esq.
SELLERS: Xxxxxxx X. Xxxxxxx
0000 Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
000-000-0000
Cell: 000-000-0000
Xxxxxxx Xxxxxxxx-Xxxxxx 000
Xxxxxxxx Xxxx Xxxxxxxxxx,
XX 00000 856-222-9115
Cell: 000-000-0000
ACQUIROR: ProxyMed, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn.: Chief Executive Officer
with copy to: ProxyMed, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn.: In-House Counsel
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
ARTICLE 19. GOVERNING LAW
The Agreement shall be construed in accordance with, and governed by,
the laws of the State of Florida, without regard to its conflict of law
provisions.
36
ARTICLE 20. MISCELLANEOUS
20.1 ANNOUNCEMENTS. Except as and to the extent required by any
applicable law, regulation or order, including Securities and Exchange
Commission regulations, no party to the Agreement shall, and each shall direct
its representatives not to, directly or indirectly, make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
disclosure of the existence of negotiations regarding a proposed transaction
between the Parties or any of the terms, conditions or other aspects of a
proposed transaction without prior written consent of the other party. In the
event any party is required by applicable law, regulation or order to make any
such disclosure, such party shall provide prior notice of such required
disclosure to the other party. Acquiror agrees to deliver to the Sellers a copy
of the proposed public announcement relating to this transaction prior to the
publication thereof in order to give the Sellers an opportunity to make
recommendations with respect thereto, which recommendation shall in no way be
binding on Acquiror.
20.2 CONFIDENTIALITY. All Parties hereto hereby agree that until the
Closing (or, if the Closing fails to occur, until the expiration of two years
from the date hereof):
(a) To treat all Confidential Information as confidential and
preserve its confidentiality during the time in which such information is in its
possession or under its control and thereafter until such time, if any, that the
Confidential Information shall become part of the public domain through no fault
of theirs;
(b) To disclose the Confidential Information only to those
employees and agents (including its investment brokers, independent auditors,
counsel and other professional advisors) who require access to such information.
Each party ("Recipient") will advise each of the persons to whom it provides
access to Confidential Information that such persons are strictly prohibited
from making use of, duplicating, publishing or otherwise disclosing to others,
or permitting others to use for their benefit or to the detriment of the other
party ("Disclosing Party") any of the Confidential Information;
(c) If Recipient is required to produce the Confidential
Information pursuant to a court order, legal process or governmental action, to
first give the Disclosing Party notice thereof and an opportunity to consider
whether there is appropriate grounds to object to such production and, if so,
appear before the requesting entity to object to its production;
(d) Upon the earlier of the request of the Disclosing Party or
the termination of the Agreement, to promptly return, (or if requested certify
to the destruction) all Confidential Information, including any copies thereof,
to the Disclosing Party; and
(e) Not to use, or permit others to use, the Confidential
Information for any purpose other than the evaluation of the feasibility of
Recipient's consummating an acquisition of substantially all of the Disclosing
Party's assets, or an acquisition of 100% of Disclosing Party's capital stock,
or a merger or similar form of taxable transaction with the Disclosing Party (a
"Contemplated Transaction").
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As used herein, "Confidential Information" includes, without
limitation, the following confidential and proprietary information of the
Disclosing Party as evidenced by its then existing written records, regardless
of whether same was disclosed by the Disclosing Party to Recipient prior to the
Closing: (i) all books, data, statements and compilations of information, in
whatever form, relating to the sales, assets, liabilities, profits, losses and
other financial matters of the Disclosing Party or its providers, customers or
suppliers; (ii) all customer lists, provider lists and other information
relating to the Disclosing Party existing and prospective providers, customers
and suppliers; and (iii) all other information, matters or things which
constitute trade secrets of the Disclosing Party under applicable law or under
Section 6.12 hereunder.
Information disclosed by Disclosing Party to Recipient shall
not be deemed to be Confidential Information if (i) as evidenced by its then
existing written records, it was in Recipient's lawful possession at the time of
disclosure to Recipient; (ii) at the time of disclosure, it is in the public
domain; (iii) after disclosure, it becomes, through no act or omission on
Recipient's part, in the public domain; or (iv) it is or was lawfully and
independently developed by Recipient or obtained from a third party who is or
was not under an obligation of confidentiality to Disclosing Party or any of its
affiliates either by law or under an express agreement.
20.3 [INTENTIONALLY DELETED.]
20.4 FURTHER ACTIONS. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be requested by the other parties in order to consummate or implement
the transactions contemplated by the Agreement.
20.5 SEVERABLE COVENANTS. In the event that any provision contained
herein is declared invalid or illegal, the other provisions hereof shall not be
affected or impaired thereby and shall remain valid and enforceable.
20.6 SPECIFIC PERFORMANCE. In the event of a breach or threatened
breach by any party hereto of the provisions of the Agreement, any other party
hereto shall be entitled to specific performance. Nothing herein shall be
construed as prohibiting any party hereto from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages.
20.7 NOMINEE. In the event Acquiror elects to assign the Agreement to a
wholly owned subsidiary of Acquiror other than Key, Sellers hereby consent to
any such assignment so long as Acquiror unconditionally and irrevocably
guarantees the obligations of such subsidiary hereunder and any stock issued
pursuant to Section 2.1 is that of Acquiror. The foregoing notwithstanding
Sellers hereby agree that the Acquiror may assign the Agreement to Key without
Sellers' consent.
20.8 COUNTERPARTS. The Agreement and the Schedules attached hereto may
be signed in two or more counterparts, any one of which need not contain the
signatures of more that one party, but all such counterparts taken together will
constitute one and the same instrument. In addition, execution of the Agreement
and the Schedules attached hereto may be transmitted by one party to the other
via facsimile.
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IN WITNESS WHEREOF, the Parties to the Agreement have duly executed it as of the
day and year first above written.
PROXYMED PROXYMED, INC.
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------ ----------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary Xxxxxx X. Xxxxxx,
Chief Financial Officer
KENCOM: KENCOM COMMUNICATIONS & SERVICES, INC.
ATTEST:
/s/ Xxxxxxx Xxxxxxxx-Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------ ----------------------------------
Secretary Xxxxxxx X. Xxxxxxx, President
SELLERS: By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx, Seller
By: /s/ Xxxxxxx Xxxxxxxx-Xxxxxx
----------------------------------
Xxxxxxx Xxxxxxxx-Xxxxxx, Seller
39
