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Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
December 31, 1997, among Medical Manager Corporation, a Delaware corporation
("Medical Manager"); Blue Cross And Blue Shield of South Carolina, a South
Carolina mutual insurance company ("Blue Cross"); Companion Technologies
Corporation, a South Carolina corporation and wholly-owned subsidiary of Blue
Cross ("CTC" and together with Blue Cross, the "Shareholders"), and Companion
Technologies of Florida, Inc., a South Carolina corporation and wholly-owned
subsidiary of CTC (the "Company"). Certain other capitalized terms used herein
are defined in Article IX and throughout this Agreement.
RECITALS
The Company is a reseller of The Medical Manager(R) software, and
products and services related thereto (the "Business"). The parties desire to
combine the Business with Medical Manager's business operations on the terms and
subject to the conditions set forth in this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF
ASSETS; PURCHASE PRICE; CLOSING
1.1 PURCHASED ASSETS. The Company agrees to and will sell,
convey, transfer, assign and deliver to Medical Manager (or its designee) at the
Closing (as defined in Section 1.9), on the terms and subject to the conditions
set forth in this Agreement, all of its assets, properties and business of every
kind and description, whether real, personal or mixed, tangible or intangible,
wherever located (except those assets of the Company which are specifically
excluded as provided in Section 1.2 hereof) as shall exist on the Closing Date
(as defined in Section 1.9), whether or not appearing on the Current Balance
Sheet (as defined in Section 3.9) (collectively, the "Purchased Assets").
Without limiting the generality of the foregoing, the Purchased Assets shall
include the following:
(a) all tangible personal property, including, without limitation,
all machinery, equipment, tools, supplies, leasehold improvements, construction
in progress, furniture and fixtures located at or on the Leased Premises (as
defined in Section 3.14(b)) and all vehicles;
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(b) all inventories of the Company;
(c) all work in process and receivables of the Company, including
without limitation, all trade accounts receivable, notes receivable and
receivables from manufacturers, insurance companies, service contract providers
and any other vendors or suppliers of the Company;
(d) all of the interest of and the rights and benefits accruing to
the Company as lessee under the leases covering the Leased Premises and any
leases covering machinery, equipment, tools, furniture and fixtures and other
tangible assets;
(e) all of the interests, rights and benefits accruing to the Company
under any franchise contracts, sales orders, sales contracts, supply contracts,
service agreements, purchase orders and purchase commitments made by the Company
in the ordinary course of business, all other agreements to which the Company is
a party or by which it is bound and all choses in action, causes of action and
other rights of every kind of the Company;
(f) all operating data and records of the Company, including without
limitation, customer lists and records, financial, accounting and credit
records, computer data, correspondence, budgets and other similar documents and
records;
(g) all cash and cash equivalents and investments, whether short-term
or long-term, of the Company, including without limitation, bank accounts,
certificates of deposit, treasury bills and securities;
(h) all prepaid and deferred items of the Company, including without
limitation, prepaid rent, insurance and taxes;
(i) all insurance proceeds (and claims therefore) arising in
connection with damage or other casualty with respect to the Purchased Assets.
Upon request by the Company, Medical Manager shall allow the Company reasonable
access to the books and records necessary for the Company to (i) prepare and
file its tax returns for the periods prior to the Closing Date or otherwise
comply with the requirements of any other Governmental Authority and (ii)
defend any litigation or administrative proceeding (other than with respect to
any litigation or administrative proceeding to which Medical Manager or its
Affiliates are adverse parties or the result of which could have a Material
Adverse Effect upon Medical Manager or its Affiliates).
No patents, patent applications, inventions, know-how, proprietary formulas,
designs or processes, computer software, or similar intellectual property are
being conveyed by the Company to Medical Manager; provided, however, the
Company hereby grants to Medical Manager, its Affiliates, successors and
assigns at no additional charge a non-exclusive perpetual license to use all
program modules (including, without limitation, all source code and object code
relating thereto) created by
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the Company using the Data Merge programming language as enhancements to a
Medical Manager software product, and Medical Manager shall have the
unrestricted right to make enhancements and to otherwise modify such DataMerge
programming language.
1.2 EXCLUDED ASSETS Notwithstanding anything to the contrary set
forth in Section 1.1, the Purchased Assets shall exclude the following assets of
the Company: (i) the Purchase Price (as defined in Section 1.4) and other rights
of the Company under this Agreement; (ii) the shares of capital stock of the
Company which are owned and held by the Company as treasury shares; and (iii)
the corporate minute books and stock records of the Company and (iv) the name
"Companion Technologies."
1.3 ASSIGNMENT OF CONTRACTS. Notwithstanding anything in
this Agreement to the contrary, this Agreement shall not constitute an
assignment of any claim, contract, license, franchise, lease, commitment, sales
order, sales contract, supply contract, service agreement, purchase order,
purchase commitment or other right or benefit if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach thereof or in any way adversely affect the rights of Medical Manager
thereunder. If such consent is not obtained, or if any attempt at an
assignment thereof would be ineffective or would affect the rights of the
Company thereunder so that Medical Manager would not in fact receive all such
rights, the Company shall reasonably cooperate with Medical Manager to the
extent necessary to provide for Medical Manager the benefits under such claim,
contract, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order, purchase commitment or
other right or benefit, including enforcement for the benefit of Medical
Manager of any and all rights of the Company against a third party thereto
arising out of the breach or cancellation by such third party or otherwise.
1.4 PURCHASE PRICE. As consideration for the Purchased Assets,
Medical Manager agrees, on the terms and subject to the conditions and
limitations set forth herein, to pay to the Company an aggregate amount equal to
Four Million One Hundred Thousand Dollars ($4,100,000) (the "Purchase Price).
Payment of the Purchase Price will be made in the following installments in the
amounts set forth below on the specified dates, without interest:
(i) One Million Twenty-Five Thousand
Dollars ($1,025,000), at Closing;
(ii) One Million Twenty-Five Thousand
Dollars ($1,025,000), one hundred eighty (180) days after the Closing;
(iii) One Million Twenty-Five Thousand
Dollars ($1,025,000), on January 15, 1999; and
(iv) One Million Twenty-Five Thousand
Dollars ($1,025,000), on January 15, 2000.
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All payments will be made in immediately available funds by wire transfer to
the account designated from time to time by the Company.
1.5 ASSUMED LIABILITIES. Medical Manager agrees to and will at the
Closing assume and agree to pay, discharge and perform when lawfully required
(i) all of the obligations, duties and liabilities of the Company set forth on
the Current Balance Sheet (as defined in Section 3.9), except as provided in
Section 1.6(g),(ii) all of the obligations, duties and liabilities of the
Company incurred after the date of the Current Balance Sheet and on or prior to
the Closing Date in the ordinary course of business consistent with past
practice, (iii) all of the obligations, duties and liabilities of the Company
incurred in the ordinary course of business prior to the date of the Current
Balance Sheet which, in accordance with GAAP consistently applied, were not
required to be recorded on the Current Balance Sheet (and which in the aggregate
are not material) and (iv) all obligations and liabilities under the Contracts
with customers of the Company set forth on Schedule 3.25, and all obligations
and liabilities under the real estate leases set forth on Schedule 3.14 to the
extent that the applicable landlord's consent is obtained but only for those
obligations and liabilities which accrue after the Closing in the ordinary
course of business (collectively, the "Assumed Liabilities"). As a portion of
the Assumed Liabilities, Medical Manager shall pay to the Shareholders the
difference between (x) the amount "Due to Companion", minus (y) the amount "Due
from Companion" as of December 31, 1997 (determined in a manner consistent with
the calculation of such amounts as set forth on the Current Balance Sheet) (the
"Receivables Debt"). At Closing, Medical Manager shall pay to the Company One
Million Four Hundred Thousand Dollars ($1,400,000) as an estimate of the
Receivables Debt payment (the "Estimated Receivables Debt"). Based upon the
calculation of the Receivables Debt as determined in the audited financial
statements prepared by Coopers & Xxxxxxx, LLP of the Company's financial
statements for the year ending December 31, 1997 (the "Actual Receivables
Debt"), (i) if the Actual Receivables Debt exceeds the Estimated Receivables
Debt, then Medical Manager shall pay such excess to the Company, without
interest, within five (5) business days following completion of such audit, and
(ii) if the Estimated Receivables Debt exceeds the Actual Receivables Debt, then
the Company and the Shareholders shall repay such excess to Medical Manager,
without interest, within five (5) business days following receipt by the Company
of such audited financial statements. If Schedule 3.25 fails to identify a
Contract (an "Omitted Contract"), and Medical Manager elects in writing to
accept any benefits as assignee of the Company under such Omitted Contract (an
"Accepted Contract"), then Medical Manager shall be deemed to have agreed to
assume, pay, discharge and perform the Company's obligations and liabilities
under each such Accepted Contract accruing after Medical Manager's acceptance of
such Accepted Contract.
1.6 EXCLUDED LIABILITIES. Except for the Assumed Liabilities, the
parties expressly agree that Medical Manager shall not assume or otherwise
become liable for any other obligation or liability of the Company (the
"Excluded Liabilities"), including, without limitation, the following:
(a) any liability or obligation of the Company or
any other Person, absolute or contingent, known or unknown, not expressly
agreed to be assumed pursuant to the provisions of Section 1.5;
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(b) any liability or obligation of the Company
arising under this Agreement;
(c) any liability or obligation of the Company
with respect to, or arising out of, any employee benefit plan, deferred
compensation plan or any other plans or arrangements for the benefit of any
employees or officers of the Company;
(d) any liability or obligation of the Company
under any incentive compensation agreement, consulting agreement, bonus
agreement or employment related settlement agreement;
(e) any obligations or liabilities arising from
or relating to the acquisition (by stock purchase, asset purchase, merger or
otherwise) by the Company or the Shareholders of any Person and all obligations
and liabilities relating thereto;
(f) any liability or obligation of the Company
relating to any default under any Assumed Liability to the extent such default
existed prior to the Closing; and
(g) other than the Receivables Debt, and
notwithstanding Section 1.5 to the contrary, any liability or obligation of the
Company to any of the Shareholders, or to any Affiliate of the Company or the
Shareholders, or to any party claiming to have a right to acquire any shares of
capital stock or other securities convertible into or exchangeable for any
shares of capital stock of the Company.
(h) any obligations or liabilities arising from
or relating to any of the matters set forth on Schedule 3.12.
1.7 NO EXPANSION OF THIRD-PARTY RIGHTS. The assumption by Medical
Manager of the Assumed Liabilities, the transfer thereof by the Company, and the
limitations of such transfer shall in no way expand the rights or remedies of
any third party against Medical Manager or the Company as compared to the rights
and remedies which such third party would have had against the Company had
Medical Manager not assumed such liabilities. Without limiting the generality
of the preceding sentence, the assumption by Medical Manager of the Assumed
Liabilities shall not create any third-party beneficiary rights.
1.8 ALLOCATION OF PURCHASE PRICE. The Company, Medical Manager and
the Shareholders agree that the Purchase Price will be allocated pursuant to the
allocations set forth on Schedule 1.8. In the event Schedule 1.8 is not
attached as of the Closing of this Agreement, the parties will work in good
faith to prepare such a schedule within thirty (30) business days after Closing.
Neither party will take a position contrary to the agreed allocation for state
or federal income tax purposes (or any other purposes) except to the extent
required by Section 1060 of the Code.
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1.9 TIME AND PLACE OF THE CLOSING. Subject to and after the
fulfillment or waiver of the conditions set forth in Articles VI and VII of this
Agreement, the closing of the sale of the Purchased Assets shall take place at
the offices of Medical Manager Corporation, 0000 X. Xxxxx Xxxxx Xxxxx Xxxx,
Xxxxx, Xxxxxxx 00000, on a date selected by Medical Manager within five (5)
business days following the fulfillment or waiver of such conditions, or such
other date, time and place as the parties may mutually agree. Throughout this
Agreement, such event is referred to as the "Closing" and such date and time are
referred to as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF MEDICAL MANAGER
As a material inducement to the Company and the Shareholders to enter
into this Agreement and to consummate the transactions contemplated hereby,
Medical Manager makes the following representations and warranties to the
Company and the Shareholders:
2.1 CORPORATE STATUS. Medical Manager is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority to own or lease its
properties and to carry on its business as presently conducted.
2.2 CORPORATE POWER AND AUTHORITY. Medical Manager has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Medical Manager has taken all corporate action necessary to authorize its
execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by Medical Manager and constitutes a legal, valid and binding
obligation of Medical Manager, enforceable against Medical Manager in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, public policy and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDERS
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As a material inducement to Medical Manager to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
and the Shareholders, jointly and severally, make the following representations
and warranties to Medical Manager:
3.1 CORPORATE STATUS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
Carolina and has the requisite power and authority to own or lease its
properties and to carry on its business as now being conducted. The Company is
legally qualified to do business as a foreign corporation in Florida, and is in
good standing in Florida. The Company has fully complied with all of the
requirements of any statute governing the use and registration of fictitious
names, and has the legal right to use the names under which it operates its
business, for which the failure to comply could cause Medical Manager to incur
or suffer any expenses, losses (including, without limitation, any loss,
reduction, impairment, encumbrance upon or other diminution of Medical Manager's
right, title, use, operation of or other interest in and to the Purchased
Assets), costs, deficiencies, liabilities or damages (including, without
limitation, counsel and paralegal costs and expenses). There is no pending or
threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of the Company. All names under which the Company does business
as of the date hereof are specified on Schedule 3.1. Except as otherwise
disclosed in Schedule 3.1, the Company has not changed its name or used any
assumed or fictitious name, or been the surviving entity in a merger, acquired
any business or changed its principal place of business or chief executive
office, within the past three years.
3.2 POWER AND AUTHORITY. Each of the Company and the Shareholders
has the corporate power and authority to execute and deliver this Agreement, to
perform its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Company and the Shareholders has taken all
corporate action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Company and each of the Shareholders, and constitutes the
legal, valid and binding obligation of each of the them, enforceable against
each of them in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally, public policy, and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
3.4 SHAREHOLDERS OF THE COMPANY. Blue Cross owns (of record and
beneficially) one hundred percent (100%) of the outstanding capital stock of
CTC. CTC owns (of record and beneficially) one hundred percent (100%) of the
outstanding capital stock of the Company.
3.5 NO VIOLATION; CONSENTS AND APPROVALS. Except for any approvals
or consents required under Contracts (as defined in Section 3.25) which are
expressly identified in Schedule 3.25 as requiring the approval or consent of
third parties, the execution and delivery of this Agreement by the Company and
the Shareholders, the performance by the Company and the Shareholders of
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their obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not (a) contravene any provision of the
Articles of Incorporation or Bylaws of the Company, (b) violate or conflict
with any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company
or any of the Shareholders, (c) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
of payment or right to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable against the
Company, (d) result in or require the creation or imposition of any Lien upon
or with respect to any of the Purchased Assets, (e) give to any individual or
entity a right or claim against the Company or the Shareholders or (f) require
the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person, except any SEC filings required to be made by Medical Manager.
3.6 RECORDS OF THE COMPANY. The copies of the Articles of
Incorporation, Bylaws, and other documents and agreements of the Company which
were provided to Medical Manager are true, accurate and complete and reflect all
amendments made through the date of this Agreement. The minute books for the
Company made available to Medical Manager for review were correct and complete
as of the date of such review, no further entries have been made through the
date of this Agreement and all corporate actions taken by the Company have been
duly authorized or ratified.
3.7 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 3.7 lists each
account of the Company with any bank, broker or other depository institution,
and the names of all persons authorized to withdraw funds from each such
account. As of the date hereof, the Company has no office or place of business
other than as identified on Schedule 3.14(b) and the Company's principal places
of business and chief executive offices are indicated on Schedule 3.14(b). All
locations where the equipment, inventory, chattel paper and books and records of
the Company are located as of the date hereof are fully identified on Schedule
3.14(b).
3.8 SUBSIDIARIES. The Company does not own, directly or indirectly,
any outstanding voting securities of or other interests in, or have any control
over, any other corporation, partnership, joint venture or other business
entity. All of the business and assets (tangible and intangible) of Dynatech
Computer Services, Inc. and Doctors Office Computer Systems, Inc. in existence
as of the date of the acquisition of such companies by the Company have been
transferred, assigned or otherwise conveyed to the Company prior to the
execution of this Agreement, free and clear of all Liens, and constitute
Purchased Assets hereunder.
3.9 FINANCIAL STATEMENTS. The Shareholders have delivered to Medical
Manager the internally prepared financial statements of the Company for the
fiscal year ended December 31, 1996, including the notes thereto, and the
internally prepared financial statements of the Company for the eleven (11)
months ended November 30, 1997, including the notes thereto (collectively, the
"Financial Statements"), copies of which are attached as Schedule 3.9 hereto.
The balance sheet of
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the Company, dated as of November 30, 1997, included in the Financial
Statements is referred to herein as the "Current Balance Sheet." The Financial
Statements fairly present the financial position of the Company at each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated. The books and records of the Company fully
and fairly reflect all of its transactions, properties, assets and liabilities.
There are no special or non-recurring items of income or expense during the
periods covered by the Financial Statements and the balance sheets included in
the Financial Statements do not reflect any writeup or revaluation increasing
the book value of any assets, except as specifically disclosed in the notes
thereto. The Financial Statements reflect all adjustments necessary for a fair
presentation of the financial information contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Since the date of
the Current Balance Sheet, the Company has not (a) issued, sold, pledged,
disposed of, encumbered, or authorized the issuance, sale, pledge, disposition,
grant or encumbrance of any shares of its capital stock, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest of the Company;
(b) declared, set aside, made or paid any dividend or other distribution payable
in cash, stock, property or otherwise of or with respect to its capital stock,
or other securities, or reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock, or other securities; (c) paid any bonus to or increased the rate of
compensation of any of its officers, partners, or salaried employees, or amended
any other terms of employment or engagement of such persons; (d) sold, leased or
transferred any of its properties or assets or acquired any properties or assets
other than in the ordinary course of business consistent with past practice; (e)
made or obligated itself to make capital expenditures; (f) made any payment in
respect of its liabilities other than in the ordinary course of business
consistent with past practice; (g) except in the ordinary course of business
consistent with past practice, incurred any obligations or liabilities
(including, without limitation, any indebtedness for borrowed money, issuance of
any debt securities, or the assumption, guarantee, or endorsement of the
obligations of any Person); (h) suffered any theft, damage, destruction or
casualty loss not covered by insurance in excess of $10,000 in the aggregate;
(i) suffered any extraordinary losses (whether or not covered by insurance); (j)
waived, canceled, compromised or released any rights having a value in excess of
$10,000 in the aggregate; (k) made or adopted any change in its accounting
practice or policies; (l) made any adjustment to its books and records other
than in respect of the conduct of its business activities in the ordinary course
consistent with past practice; (m) entered into any transaction with, or made
any payment or distributed any assets to, the Shareholders, or any Affiliate of
the Company or any of the Shareholders, other than in the ordinary course of
business consistent with past practice; (n) entered into any employment
agreement that is not terminable at Closing without any liability or obligation;
(o) terminated, amended or modified any agreement involving an amount in excess
of $10,000 in the aggregate; (p) granted or permitted to exist any security
interest or other Lien on any of its assets; (q) delayed paying any account
payable beyond the date on which it is due and payable except to the extent
being contested in good faith; (r) made or pledged any charitable contributions;
(s) acquired (including, without limitation, for cash or shares of stock, by
merger, consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof or
any assets, or
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made any investment either by purchase of stock or securities, contributions of
property, or transfer of capital; (t) increased or decreased prices charged to
customers, or taken any actions which might reasonably result in any material
loss of customers; (u) entered into any transaction or been subject to any
event which has or may reasonably be expected to have a Material Adverse Effect
on the Company; or (v) agreed to do or authorized any of the foregoing.
3.11 LIABILITIES OF THE COMPANY. The Company does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise
which could cause Medical Manager to incur or suffer any expenses, losses
(including, without limitation, any loss, reduction, impairment, encumbrance
upon or other diminution of Medical Manager's right, title, use, operation of or
other interest in and to the Purchased Assets), costs, deficiencies, liabilities
or damages (including, without limitation, counsel and paralegal costs and
expenses), except (a) to the extent reflected or taken into account in the
Current Balance Sheet and not heretofore paid or discharged, (b) liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet (none of which relates to breach of
contract, breach of warranty, tort, infringement or violation of law, or which
arose out of any action, suit, claim, governmental investigation or arbitration
proceeding), (c) liabilities incurred in the ordinary course of business
consistent with past practice prior to the date of the Current Balance Sheet
which, in accordance with GAAP consistently applied, were not recorded thereon
and (d) obligations and liabilities under the Contracts set forth on Schedule
3.25, which obligations and liabilities accrue after the Closing in the ordinary
course of business. Schedule 3.11 lists all indebtedness owed by the Company
to a bank or any other Person, including, without limitation, indebtedness for
borrowed money (including principal and accrued but unpaid interest) and
remaining payments on capitalized leases.
3.12 LITIGATION. Except as set forth on Schedule 3.12, there is no
action, suit or other legal or administrative proceeding or governmental
investigation pending or, to the Company's and the Shareholders' knowledge,
threatened, anticipated or contemplated against, by or affecting the Company or
the Shareholders, or the Company's properties or assets, or which question the
validity or enforceability of this Agreement or the transactions contemplated
hereby, which could cause Medical Manager to incur or suffer any expenses,
losses (including, without limitation, any loss, reduction, impairment,
encumbrance upon or other diminution of Medical Manager's right, title, use,
operation of or other interest in and to the Purchased Assets), costs,
deficiencies, liabilities or damages (including, without limitation, counsel and
paralegal costs and expenses), and there is no basis for any of the foregoing.
There are no outstanding orders, decrees or stipulations issued by any
Governmental Authority in any proceeding to which the Company is or was a party
which have not been complied with in full or which continue to impose any
material obligations on the Company, and for which the failure to comply could
cause Medical Manager to incur or suffer any expenses, losses (including,
without limitation, any loss, reduction, impairment, encumbrance upon or other
diminution of Medical Manager's right, title, use, operation of or other
interest in and to the Purchased Assets), costs, deficiencies, liabilities or
damages (including, without limitation, counsel and paralegal costs and
expenses).
3.13 ENVIRONMENTAL MATTERS.
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(a) The Company and the Shareholders are and have
at all times been in compliance with all environmental laws governing the
Company and its business, operations, properties and assets, and for which the
failure to comply could cause Medical Manager to incur or suffer any expenses,
losses (including, without limitation, any loss, reduction, impairment,
encumbrance or other diminution of or upon Medical Manager's right, title, use,
operation of or other interest in and to the Purchased Assets), costs,
deficiencies, liabilities or damages (including, without limitation, counsel
and paralegal costs and expenses).
(b) There are no non-compliance orders, warning
letters, notices of violation (collectively "Notices"), claims, suits, actions,
judgments, penalties, fines, or administrative or judicial investigations of
any nature or proceedings (collectively "Proceedings") pending or, to the
Company's or Shareholders' knowledge, threatened against or involving the
Company, its business, operations, properties, or assets, issued by any
Governmental Authority or third party with respect to any environmental laws or
licenses issued to the Company or the Shareholders (but with respect to the
Shareholders only as it relates to the Company or the Shareholders' interest or
relationship with the Company), and for which the failure to comply could cause
Medical Manager to incur or suffer any expenses, losses (including, without
limitation, any loss, reduction, impairment, encumbrance or other diminution of
or upon Medical Manager's right, title, use, operation of or other interest in
and to the Purchased Assets), costs, deficiencies, liabilities or damages
(including, without limitation, counsel and paralegal costs and expenses).
3.14 REAL ESTATE.
(a) The Company owns no real property or any
right or interest therein, including, without limitation, any option or other
obligation to purchase any real property or any interest therein other than its
interest in the Leased Premises.
(b) Schedule 3.14(b) sets forth a list of all
leases, licenses or similar agreements ("Leases") to which the Company is a
party, which are for the use or occupancy of real estate owned by a third party
(copies of which have previously been furnished to Medical Manager), in each
case, setting forth (A) the lessor and lessee thereof and the commencement
date, term and renewal rights of each of the Leases, and (B) the street address
or legal description of each property covered thereby (the "Leased Premises").
The Leases are in full force and effect and have not been amended, and no
party thereto is in default or breach under any such Lease. No event has
occurred which, with the passage of time or the giving of notice or both, would
cause a breach of or default under any of such Leases. There is no breach or
anticipated breach by any other party to such Leases. With respect to each
such Leased Premises: (i) presuming adequate landlord's title in the Leased
Premises, the Company has valid leasehold interests in the Leased Premises,
free and clear of any Liens, covenants and easements or title defects of any
nature whatsoever; (ii) the portions of the buildings located on the Leased
Premises that are used in the business of the Company are each in good repair
and condition, normal wear and tear excepted, and are in the aggregate
sufficient to satisfy the Company's current and reasonably anticipated normal
business activities as conducted
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thereat; and (iii) the Company has not received notice of (a) any condemnation
proceeding with respect to any portion of the Leased Premises or any access
thereto, and no such proceeding is contemplated by any Governmental Authority;
or (b) any special assessment which may affect any of the Leased Premises, and
no such special assessment is contemplated by any Governmental Authority.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY. The Company
has good and marketable title to all of the Purchased Assets free and clear of
any Liens. All assets located at the business premises of the Company (except
for those assets otherwise excluded under this Agreement) are Purchased Assets.
The Tangible Assets currently in use or necessary for the business and
operations of the Company are in good operating condition, normal wear and tear
excepted, and have been maintained in accordance with all applicable
manufacturer's specifications and warranties. For purposes of this Agreement,
the term "Tangible Assets" means all vehicles, machinery, equipment, tools,
supplies, leasehold improvements, furniture and fixtures and other tangible
personal property used by or located on the premises of the Company or set forth
on the Current Balance Sheet or acquired by the Company since the date of the
Current Balance Sheet. The inventories of the Company are carried on the books
of the Company and have been accounted for in accordance with GAAP consistently
applied. Except to the extent of any reserve for obsolete or unsalable
inventory shown on the Current Balance Sheet, all such inventories are in good
and marketable condition and suitable for sale to the Company's customers in the
regular course of business at currently prevailing market prices.
3.16 COMPLIANCE WITH LAWS. There is no failure of the Company, the
Shareholders or any Affiliate of the Company to comply with all laws,
regulations and orders applicable to it, its business and operations (as
conducted by it now and in the past), the Purchased Assets, and the Leased
Premises and any other properties and assets (in each case owned or used by it
now or in the past), the failure of which could cause Medical Manager to incur
or suffer any expenses, losses (including, without limitation, any loss,
reduction, impairment, encumbrance upon or other diminution of Medical Manager's
right, title, use, operation of or other interest in and to the Purchased
Assets), costs, deficiencies, liabilities or damages (including, without
limitation, counsel and paralegal costs and expenses). The Company has not been
cited, fined or otherwise notified of any asserted past or present failure to
comply with any laws, regulations or orders and no proceeding with respect to
any such violation is pending or, to the Company's or the Shareholders'
knowledge, threatened, the failure of which could cause Medical Manager to incur
or suffer any expenses, losses (including, without limitation, any loss,
reduction, impairment, encumbrance upon or other diminution of Medical Manager's
right, title, use, operation of or other interest in and to the Purchase
Assets), costs, deficiencies, liabilities or damages (including, without
limitation, counsel and paralegal costs and expenses). Neither the Company, the
Shareholders, their Affiliates, nor any of their respective employees or agents,
has made any payment of funds in connection with their business which is
prohibited by law, and no funds have been set aside to be used in connection
with their business for any payment prohibited by law, the payment or set aside
of which could cause Medical Manager to incur or suffer any expenses, losses
(including, without limitation, any loss, reduction, impairment, encumbrance or
other diminution of or upon Medical Manager's right, title,
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use, operation of or other interest in and to the Purchased Assets), costs,
deficiencies, liabilities or damages (including, without limitation, counsel
and paralegal costs and expenses). The Company is not subject to any Contract
(other than with Medical Manager or its Affiliates), decree or injunction which
restricts the continued operation of any business or the expansion thereof to
other geographical areas, customers and suppliers or lines of business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of each
of the employees of the Company. The Company is not a party to or bound by any
collective bargaining agreement or any other agreement with a labor union, and
there has been no effort by any labor union during the 24 months prior to the
date hereof to organize any employees of the Company into one or more collective
bargaining units. There is no pending or, to the Company's or the Shareholders'
knowledge, threatened labor dispute, strike or work stoppage which affects or
which may affect the business of the Company or which may interfere with its
continued operations. Neither the Company nor any agent, representative or
employee thereof has within the last 24 months committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and there
is no pending or threatened charge or complaint against the Company by or with
the National Labor Relations Board or any representative thereof. There has
been no strike, walkout or work stoppage involving any of the employees of the
Company during the 24 months prior to the date hereof. Schedule 3.17 contains
detailed information about each contract, agreement or plan of the following
nature, whether formal or informal, and whether or not in writing, to which the
Company is a party or under which it has an obligation: (i) employment
agreements, including, without limitation, severance compensation agreements,
incentive compensation agreements, bonus agreements and the like, (ii) employee
handbooks, policy statements, and similar plans, (iii) noncompetition agreements
and (iv) consulting agreements. Except for the employees subject to the
employment agreements referenced on Schedule 3.17, all of the Company's
employees are employees at-will. The Company has complied with applicable laws,
rules and regulations relating to employment, civil rights and equal employment
opportunities, including but not limited to, the Civil Rights Act of 1964, the
Fair Labor Standards Act, and the Americans with Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18
contains a list setting forth each employee benefit plan or arrangement of the
Company, including but not limited to employee pension benefit plans, as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), multiemployer plans, as defined in Section 3(37) of
ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus plans, stock purchase
plans, hospitalization, disability and other insurance plans, severance or
termination pay plans and policies, whether or not described in Section 3(3) of
ERISA, in which employees, their spouses or dependents, of the Company
participate ("Employee Benefit Plans") (true and accurate copies of which,
together with the most recent annual reports on Form 5500 and summary plan
descriptions with respect thereto, were furnished to Medical Manager).
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(b) Compliance with Law. With respect to each
Employee Benefit Plan (i) each has been administered in all material respects
in compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) no actions, suits, claims or disputes are pending, or threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are
pending with any governmental or regulatory agency; (iv) there are no facts
which could give rise to any material liability in the event of any such
investigation, claim, action, suit, audit, review, or other proceeding; (v) all
material reports, returns, and similar documents required to be filed with any
governmental agency or distributed to any plan participant have been duly or
timely filed or distributed; and (vi) no "prohibited transaction" has occurred
within the meaning of the applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each
Employee Benefit Plan intended to qualify under Code Section 401(a) or 403(a)
(i) the Internal Revenue Service has issued a favorable determination letter,
true and correct copies of which have been furnished to Medical Manager, that
such plans are qualified and exempt from federal income taxes; (ii) no such
determination letter has been revoked nor has revocation been threatened, nor
has any amendment or other action or omission occurred with respect to any such
plan since the date of its most recent determination letter or application
therefor in any respect which would adversely affect its qualification or
materially increase its costs; (iii) no such plan has been amended in a manner
that would require security to be provided in accordance with Section
401(a)(29) of the Code; (iv) no reportable event (within the meaning of Section
4043 of ERISA) has occurred, other than one for which the 30-day notice
requirement has been waived; (v) as of the Effective Date, the present value of
all liabilities that would be "benefit liabilities" under Section 4001(a)(16)
of ERISA if benefits described in Code Section 411(d)(6)(B) were included will
not exceed the then current fair market value of the assets of such plan
(determined using the actuarial assumptions used for the most recent actuarial
valuation for such plan); (vi) all contributions to, and payments from and with
respect to such plans, which may have been required to be made in accordance
with such plans and, when applicable, Section 302 of ERISA or Section 412 of
the Code, have been timely made; and (vii) all such contributions to the plans,
and all payments under the plans (except those to be made from a trust
qualified under Section 401(a) of the Code) and all payments with respect to
the plans (including, without limitation, PBGC (as defined below) and insurance
premiums) for any period ending before the Closing Date that are not yet, but
will be, required to be made are properly accrued and reflected on the Current
Balance Sheet.
(d) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan")
(i) all contributions required to be made with respect to employees of the
Company have been timely paid; (ii) the Company has not incurred, and is not
expected to incur, directly or indirectly, any withdrawal liability under ERISA
with respect to any such plan (whether by reason of the transactions
contemplated by the Agreement or otherwise); (iii) Schedule 3.18 sets forth (A)
the withdrawal liability under ERISA to each MPPA Plan, (B) the date as of
which such amount was calculated, and (C) the method for determining the
withdrawal liability; and (iv) no such plan is (or is expected to be) insolvent
or in reorganization and
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no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists or is expected to exist
with respect to any such plan.
(e) Welfare Plans. (i) The Company is not
obligated under any employee welfare benefit plan as described in Section 3(1)
of ERISA ("Welfare Plan") to provide medical or death benefits with respect to
any employee or former employee of the Company or its predecessors after
termination of employment; (ii) the Company has complied with the notice and
continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Welfare Plan that is, or was during
any taxable year for which the statute of limitations on the assessment of
federal income taxes remains, open, by consent or otherwise, a group health
plan within the meaning of Section 5000(b)(1) of the Code; and (iii) there are
no reserves, assets, surplus or prepaid premiums under any Welfare Plan which
is an Employee Benefit Plan. The consummation of the transactions contemplated
by this Agreement will not entitle any individual to severance pay, and, will
not accelerate the time of payment or vesting, or increase the amount of
compensation, due to any individual.
(f) Controlled Group Liability. Neither the
Company, nor any entity that would be aggregated with it under Code Section
414(b), (c), (m) or (o): (i) has ever terminated or withdrawn from an employee
benefit plan under circumstances resulting (or expected to result) in liability
to the Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the
employee benefit plan is funded, or any employee or beneficiary for whose
benefit the plan is or was maintained (other than routine claims for benefits);
(ii) has any assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has failed to pay premiums to
the PBGC when due; (iv) is subject to (or expected to be subject to) an excise
tax under Code Section 4971; (v) has engaged in any transaction which would
give rise to liability under Section 4069 or Section 4212(c) of ERISA; or (vi)
has violated Code Section 4980B or Section 601 through 608 of ERISA.
(g) Other Liabilities. (i) None of the Employee
Benefit Plans obligates the Company to pay separation, severance, termination
or similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code); (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions,
reimbursements, or accruals for all periods ending prior to or as of the
Effective Date shall have been made or properly accrued on the Current Balance
Sheet or will be properly accrued on the books and records of the Company as of
the Closing Date; and (iii) none of the Employee Benefit Plans has any unfunded
liabilities which are not reflected on the Current Balance Sheet or the books
and records of the Company.
3.19 TAX MATTERS. All Tax Returns required to be filed prior to the
date hereof with respect to the Company or any of its income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all respects. All Taxes due and payable
for the periods expiring on or prior to December 31, 1997 by or with respect to
the Company have
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been paid or are accrued on the Current Balance Sheet or will be accrued on the
Company's books and records as of the Closing. Except as set forth in Schedule
3.19 hereto: (i) with respect to each taxable period of the Company, either
such taxable period has been audited by the relevant taxing authority or the
time for assessing or collecting Taxes with respect to each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authority; (ii) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Taxes has been asserted or
assessed by any taxing authority against the Company; (iii) the Company has not
consented to extend the time in which any Taxes may be assessed or collected by
any taxing authority; (iv) the Company has not requested or been granted an
extension of the time for filing any Tax Return to a date later than the
Closing; (v) there is no action, suit, taxing authority proceeding, or audit or
claim for refund now in progress, pending or threatened against or with respect
to the Company regarding Taxes; (vi) the Company has not made an election or
filed a consent under Section 341(f) of the Code (or any corresponding
provision of state, local or foreign law) on or prior to the Closing; (vii)
there are no Liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of the Company; (viii) the Company will not be
required (A) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing, to include any adjustment under
Section 481(c) of the Code (or any corresponding provision of state, local or
foreign law) in taxable income for any taxable period (or portion thereof)
beginning after the Closing or (B) as a result of any "closing agreement,"as
described in Section 7121 of the Code (or any corresponding provision of state,
local or foreign law), to include any item of income or exclude any item of
deduction from any taxable period (or portion thereof) beginning after the
Closing; (ix) the Company has not been a member of an affiliated group (as
defined in Section 1504 of the Code) or filed or been included in a combined,
consolidated or unitary income Tax Return; (x) the Company is not a party to or
bound by any tax allocation or tax sharing agreement and has no current or
potential contractual obligation to indemnify any other Person with respect to
Taxes; (xi) no taxing authority will claim or assess any additional Taxes
against the Company for any period for which Tax Returns have been filed; (xii)
the Company has not made any payments, and is not nor will it become obligated
(under any contract entered into on or before the Closing) to make any
payments, that will be non-deductible under Section 280G of the Code (or any
corresponding provision of state, local or foreign law); (xiii) the Company has
not been a United States real property holding corporation within the meaning
of Section 897(c)(2) of the Code (or any corresponding provision of state,
local or foreign law) during the applicable period specified in Section
897(c)(1)(a)(ii) of the Code (or any corresponding provision of state, local or
foreign law); (xiv) no claim has ever been made by a taxing authority in a
jurisdiction where the Company does not file Tax Returns that the Company is or
may be subject to Taxes assessed by such jurisdiction; (xv) the Company does
not have any permanent establishment in any foreign country, as defined in the
relevant tax treaty between the United States of America and such foreign
country; (xvi) true, correct and complete copies of all income and sales Tax
Returns filed by or with respect to the Company for the past three years have
been furnished or made available to Medical Manager; (xvii) the Company will
not be subject to any Taxes for the period ending at the Closing for any period
for which a Tax Return has not been filed imposed pursuant to Section 1374 or
Section 1375 of the Code (or any corresponding provision of state, local or
foreign law); and, (xviii) no sales or use tax, non-recurring intangibles tax,
documentary stamp tax or other excise tax (or comparable tax imposed
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by any governmental entity) will be payable by the Company or Medical Manager
by virtue of the transactions contemplated in this Agreement.
3.20 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by reputable insurers covering
its properties, assets and businesses against risks of the nature normally
insured against by corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations (the
"Insurance Policies"). Such Insurance Policies are in full force and effect,
and all premiums due thereon have been paid. Through the Closing Date, each of
the Insurance Policies will be in full force and effect. The Company has
complied with the provisions of such Insurance Policies. Schedule 3.20 contains
(i) a complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to Medical Manager) and (ii)
a detailed description of each pending claim under any of the Insurance Policies
that relates to loss or damage to the properties, assets or businesses of the
Company. The Company has not failed to give, in a timely manner, any notice
required under any of the Insurance Policies to preserve its rights thereunder.
3.21 RECEIVABLES. All of the Receivables are valid and legally
binding, represent bona fide transactions and arose in the ordinary course of
business of the Company. All of the Receivables are good and collectible
receivables, and will be collected in full in accordance with the terms of such
receivables (and in any event within 90 days following the Closing, except for
the leased systems receivables and the financed systems receivables which shall
be collected in full in accordance with the terms thereof), without set off or
counterclaims, subject to the allowance for doubtful accounts, if any, set forth
on the Current Balance Sheet as reasonably adjusted since the date of the
Current Balance Sheet in the ordinary course of business consistent with past
practice. For purposes of this Agreement, the term "Receivables" means all
receivables of the Company, including, without limitation, all leased systems
receivables, financed systems receivables, all manufacturer's warranty
receivables, all accounts receivable arising from the provision of goods and/or
services, notes receivable, and insurance proceeds receivable.
3.22 LICENSES AND PERMITS. The Company possesses all licenses,
approvals, permits or authorizations from governmental authorities for its
business and operations, for which the failure to possess could cause Medical
Manager to incur or suffer any expenses, losses (including, without limitation,
any loss, reduction, impairment, encumbrance upon or other diminution of Medical
Manager's right, title, use, operation of or other interest in and to the
Purchased Assets), costs, deficiencies, liabilities or damages (including,
without limitation, counsel and paralegal costs and expenses) (collectively, the
"Permits"). All such Permits are valid and in full force and effect, the
Company is in compliance with the respective requirements thereof, and no
proceeding is pending or, to the Company's or the Shareholders' knowledge,
threatened to revoke or amend any of them. None of such Permits is or will be
impaired or in any way affected by the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
3.23 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS; AFFILIATED
TRANSACTIONS. No current supplier (other than those which can be replaced in a
commercially reasonable manner and on
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substantially the same terms as currently in place) to the Company has
threatened to terminate its business relationship with the Company for any
reason. Neither the Company nor any of the Shareholders, nor any Affiliate of
the Company or any of the Shareholders, have any direct or indirect interest in
any customer or supplier of the Company, or in any person from whom or to whom
the Company leases real or personal property. No Shareholder, or Affiliate of
the Company or any Shareholder, is a party to any Contract or transaction with
the Company or has any interest in any property used by the Company.
3.24 INTELLECTUAL PROPERTY. The Company has full legal right, title
and interest in and to all trademarks, service marks, trade names, copyrights,
licenses (including licenses for the use of computer software programs), used in
the conduct of its business, as set forth on Schedule 3.24 (the "Intellectual
Property") and has no other Intellectual Property other than the retained
software modules licensed pursuant to the last paragraph of Section 1.1. The
conduct of the business of the Company as presently conducted, and the
unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property, does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property. None of the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending threatened action for
opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a list of each Contract
(including any amendments and modifications thereto, whether written or oral),
of whatsoever kind or nature, to which the Company is a party or by which the
Company is bound, true, correct and complete copies of which (or, with respect
to oral Contracts, written summaries of the material terms hereof) have been
provided to Medical Manager. Except as specifically identified on Schedule
3.25, none of the Contracts require the consents or approval of third parties to
the transactions contemplated hereby. The copy of each Contract furnished to
Medical Manager is a true, correct and complete copy of the document it purports
to represent and reflects all amendments thereto made through the date of this
Agreement. The Company has not violated any of the terms or conditions of any
Contract or any term or condition which would permit termination or modification
of any Contract, all of the covenants to be performed by any other party thereto
have been fully performed, and there are no claims for breach or indemnification
or notice of default or termination under any Contract. No event has occurred
which constitutes, or after notice or the passage of time, or both, would
constitute, a default by the Company or any other party under any Contract. The
Company is not subject to any liability or payment obligation resulting from
renegotiation of amounts paid under any Contract.
3.26 ACCURACY OF INFORMATION FURNISHED. No representation, statement
or information made or provided by the Company or the Shareholders contained in
this Agreement (including, without limitation, the various Schedules and
Exhibits attached hereto) or any agreement executed in connection herewith or in
any certificate delivered pursuant hereto or thereto, contains or shall contain
any untrue statement of a material fact or omits or shall omit any fact
necessary to make the
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information contained therein not materially misleading. The Company has
provided Medical Manager with true, accurate and complete copies of all
documents listed or described in the various Schedules attached hereto.
3.27 MEDICAL MANAGER LICENSES. Every copy of The Medical Manager(R)
software sold by the Company has been fully paid for and each copy of the
software sold is subject to an existing license between the Company's customer
and Medical Manager or its Affiliates. All software (including, without
limitation, the operating systems and application software), other than The
Medical Manager(R) brand software, sold by the Company to end users has been
duly licensed by the owner of such software.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. The
Company and the Shareholders, jointly and severally, covenant and agree that,
between the date of this Agreement and the Closing Date, the business of the
Company shall be conducted only in, and the Company shall not take any action
except in, the ordinary course of business consistent with past practice. The
Company shall use its reasonable best efforts to preserve intact its business
organization, to keep available the services of its current officers, employees
and consultants, and to preserve its present relationships with customers,
suppliers and other Persons with which it has significant business relations. By
way of amplification and not limitation, the Company shall not, between the date
of this Agreement and the Closing Date, directly or indirectly, do or propose or
agree to do any of the following without the prior written consent of Medical
Manager:
(a) amend or otherwise change its Articles of
Incorporation or Bylaws;
(b) issue, sell, pledge, dispose of, encumber,
or, authorize the issuance, sale, pledge, disposition, grant or encumbrance of
(i) any shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest of the Company or (ii) any
of its assets, tangible or intangible, except in the ordinary course of
business consistent with past practice;
(c) declare, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) acquire (including, without limitation, for
cash or shares of stock, by merger, consolidation or acquisition of stock or
assets) any interest in any corporation, partnership or other
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business organization or division thereof or make any investment either by
purchase of stock or securities, contributions of capital or property transfer,
or, except in the ordinary course of business, consistent with past practice,
purchase any property or assets of any other Person;
(f) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person, or make
any loans or advances;
(g) modify (except as contemplated pursuant to
Section 5.16), terminate or enter into any Contract other than in the ordinary
course of business, consistent with past practice;
(h) increase the compensation payable or to
become payable to its officers or employees, or grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any of its directors, officers or other employees, or establish, adopt, enter
into or amend or take any action to accelerate any rights or benefits under any
collective bargaining, bonus, profit sharing, trust, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(i) take any action with respect to accounting
policies or procedures other than in the ordinary course of business and in a
manner consistent with past practice;
(j) pay, discharge or satisfy any existing
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of due and
payable liabilities reflected or reserved against in its financial statements,
as appropriate, or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practice;
(k) increase or decrease prices charged to its
customers, or take any action which might reasonably result in any loss of
customers;
(l) enter into any transaction with, or make any
payment or distribute any assets to any Shareholder or Affiliates thereof; or
(m) agree, in writing or otherwise, to take or
authorize any of the foregoing actions or any action which would make any
representation or warranty in Article III untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
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5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. The
Shareholders covenant and agree that, with respect to any real estate leases
listed on Schedule 3.14 for which the tenant is not the Company, within 30 days
following the Closing, they will execute and deliver such additional instruments
and other documents and shall take such further actions as may be necessary to
assign such leases to Medical Manager and to cause the landlords thereof to
consent to such assignments and to the transactions contemplated under this
Agreement.
5.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause the
Company, and Blue Cross shall cause CTC, to comply with all of their respective
covenants under this Agreement.
5.3 OTHER ACTIONS. Each of the parties hereto, at its own expense,
shall use its reasonable efforts to take, or cause to be taken, all appropriate
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated herein, including, without limitation, using its
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Authority and
parties to the Contracts to which the Company is a party or by which it is bound
as are necessary for the consummation of the transactions contemplated hereby.
Each of parties, at its own expense, shall make on a prompt and timely basis all
governmental or regulatory notifications and filings required to be made by it
for the consummation of the transactions contemplated hereby. The parties also
agree to use reasonable efforts to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
5.4 ACCESS TO INFORMATION. From the date hereof to the Closing Date,
the Company and the Shareholders shall, and each shall cause its directors,
officers, employees, auditors, counsel and agents to, afford Medical Manager and
Medical Manager's officers, employees, auditors, counsel and agents reasonable
access at all reasonable times to its properties, offices and other facilities,
to its officers and employees and to all books and records, and shall furnish
such persons with all financial, operating and other data and information as may
be reasonably requested. No information provided to or obtained by Medical
Manager shall affect any representation or warranty in this Agreement.
5.5 NOTIFICATION OF CERTAIN MATTERS. The Company and the
Shareholders shall give prompt notice to Medical Manager of the occurrence or
non-occurrence of any pre-Closing event which would likely cause any
representation or warranty contained herein to be untrue or inaccurate, or any
covenant, condition or agreement contained herein not to be complied with or
satisfied (provided that any such disclosure shall not, in any way, be deemed to
amend, modify, or in any way
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22
effect the representations, warranties and covenants made by any party in or
pursuant to this Agreement).
5.6 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or
as otherwise permitted or expressly contemplated herein, no party hereto or
their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement, the subject matter or terms hereof
or any confidential information or other proprietary knowledge concerning the
business or affairs of the other party which it may have acquired from such
party in the course of pursuing the transactions contemplated by this Agreement
without the prior consent of the other party hereto; provided, that any
information that is otherwise publicly available, or has been obtained from a
third party, without breach of this provision, shall not be deemed confidential
information. No press release or other public announcement related to this
Agreement or the transactions contemplated hereby shall be issued by the
Company, the Shareholders or their Affiliates without the prior written approval
of Medical Manager. Notwithstanding the foregoing, Medical Manager may make
such public disclosure required by law or by the terms of any listing agreement
with or requirements of NASDAQ or which it otherwise deems necessary or
desirable.
5.7 NO OTHER DISCUSSIONS. The Company and the Shareholders and their
Affiliates, employees, agents and representatives will not (a) initiate or
encourage the initiation by others of discussions or negotiations with third
parties, or respond to solicitations by third persons, relating to any merger,
sale or other disposition of any substantial part of the assets, capital stock
(or derivatives thereof), business or properties of the Company (whether by
merger, consolidation, sale of stock, sale of assets or otherwise), or (b) enter
into any agreement or commitment (whether or not binding) with respect to any of
the foregoing transactions. The Company and the Shareholders will immediately
notify Medical Manager if any third party attempts to initiate any solicitation,
discussion or negotiation with respect to any of the foregoing transactions and
shall provide Medical Manager with the name of such third party and the
substance of any communications and terms of any offers.
5.8 RESTRICTIVE COVENANTS. In order to assure that Medical Manager
will realize the benefits of this transaction, the Company and each of the
Shareholders agree with Medical Manager that they and their Affiliates will not:
(a) for a period of three (3) years from the
Closing Date, directly or indirectly, alone or as a partner, joint venturer,
officer, director, member, employee, consultant, agent, independent contractor
or shareholder of, or lender to, any company or business, engage in any
Competitive Activity. As used herein "Competitive Activity" shall consist of
the sale, solicitation for sale, marketing (but excluding solicitations for
sale and marketing consisting of trade shows, trade publications, mass
industry mailings and other solicitations and marketing efforts which are not
solely or principally targeted to the Persons or licensees described in
subparagraphs (A) and (B) below), licensing, servicing, distributing of, or
other business activity of whatsoever kind or nature relating to, any software,
or products and services related thereto, and all improvements, enhancements
and versions thereof, which competes, directly or indirectly, with the
business,
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software, products or services of Medical Manager and its Affiliates, to (A)
any Person who is both a licensee of The Medical Manager(R) and engaged in
business, in whole or in part, in the States of Florida or Texas, or (B) any
licensee of The Medical Manager(R) software, wherever located, whose accounts
are being acquired by Medical Manager pursuant to this Agreement; provided,
however, that the foregoing restrictions shall not restrict the Company and the
Shareholders from providing claims processing services with respect to CHAMPUS
and Palmetto Government Benefit Administrators.
(b) for a period of three (3) years from the
Closing Date, directly or indirectly request or advise any Person which is a
supplier of the Company, Medical Manager or any Affiliate of the Company or
Medical Manager, to withdraw, curtail or cancel any such supplier's business
with the Company, Medical Manager or any Affiliate of the Company or Medical
Manager, or its or their successors and assigns;
(c) for a period of three (3) years from the
Closing Date, directly or indirectly employ, or permit any Affiliate to employ,
within the States of Florida, Texas, Colorado, Iowa, Wyoming, Kansas or
Nebraska (or anywhere if such employment would cause a breach of any covenant
not to compete or similar obligation on the part of the employee) any person
who was employed by the Company, Medical Manager or any Affiliate of the
Company or Medical Manager at or within the then prior six months, or in any
manner solicit for employment any employee of the Company, Medical Manager or
any Affiliate of the Company or Medical Manager wherever employed, or in any
manner seek to induce any such person to leave his or her employment with the
Company, Medical Manager or any Affiliate of the Company or Medical Manager
wherever employed;
(d) except as permitted pursuant to the last
paragraph of Section 1.1, at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in its
possession any of the Company's proprietary rights or records, including, but
not limited to, any of its customer lists.
The Company and the Shareholders agree and acknowledge that the restrictions
contained in this Section 5.8 are reasonable in scope and duration and are
necessary to protect Medical Manager after the Closing Date. If any provision
of this Section 5.8 as applied to any party or to any circumstance is adjudged
by a court to be invalid or unenforceable, the same will in no way affect any
other circumstance or the validity or enforceability of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because of the
duration of such provision, scope of activities restricted, or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration, scope of activities restricted and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. The
parties agree and acknowledge that the breach of this Section 5.8 may cause
irreparable damage to Medical Manager and upon breach of any provision of this
Section 5.8, Medical Manager shall be entitled to injunctive relief, specific
performance or
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other equitable relief; provided, however, that, this shall in no way limit any
other remedies which Medical Manager may have (including, without limitation,
the right to seek monetary damages).
5.9 MEDICAL MANAGER NON-SOLICITATION For a period of three (3)
years from the Closing Date, Medical Manager and its Affiliates will not,
directly or indirectly, employ, or permit any Affiliate to employ, within the
Marketing Territory (as defined in the Authorized Reseller Agreement) (or
anywhere if such employment would cause a breach of any covenant not to compete
or similar obligation on the part of the employee) any person who was employed
by the Shareholders or any Affiliate of the Shareholders (other than employees
of the Company) at or within the then prior six months, or in any manner solicit
for employment any employee of the Shareholders or any Affiliate of the
Shareholders (other than employees of the Company) wherever employed, or in any
manner seek to induce any such person to leave his or her employment with the
Shareholders or any Affiliate of the Shareholders (other than employees of the
Company) wherever employed.
5.10 DUE DILIGENCE REVIEW. Medical Manager shall be entitled to
conduct prior to Closing a due diligence review of the assets, properties,
financial information, books and records of the Company. If the due diligence
review is not satisfactory to Medical Manager in its sole discretion, then
Medical Manager may elect not to close the transactions contemplated by this
Agreement in which case this Agreement shall be terminated and the parties shall
be released from any and all obligations hereunder; provided, however, that no
party shall be relieved from any liability for the wilful breach of any of its
representations, warranties, covenants and agreements set forth in this
Agreement.
5.11 TRADING IN MEDICAL MANAGER COMMON STOCK. Except as otherwise
expressly consented to, in writing, by Medical Manager, from the date of this
Agreement until the Closing Date, neither the Company, the Shareholders nor any
of their Affiliates will directly or indirectly purchase or sell (including
short sales) any shares of the capital stock of Medical Manager or its
Affiliates in any transactions effected on NASDAQ or otherwise.
5.12 DELIVERY OF PROPERTY RECEIVED BY THE COMPANY AFTER CLOSING.
From and after the Closing, Medical Manager shall have the right and authority
to collect, for the account of Medical Manager, all receivables and other items
which shall be transferred or are intended to be transferred to Medical Manager
as part of the Purchased Assets as provided in this Agreement, and to endorse
with the name of the Company any checks or drafts received on account of any
such receivables or other items of the Purchased Assets. The Company and the
Shareholders agree that they will transfer or deliver to Medical Manager,
promptly after the receipt thereof, any cash or other property which the Company
and the Shareholders receive after the Closing Date in respect of any claims,
contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items transferred or intended to be
transferred to Medical Manager as part of the Purchased Assets under this
Agreement.
5.13 MEDICAL MANAGER APPOINTED ATTORNEY FOR THE COMPANY. Effective
at the Closing Date, the Company hereby constitutes and appoints Medical
Manager, and Medical Manager's
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successors and assigns, its true and lawful attorney, in the name of either
Medical Manager or the Company (as Medical Manager shall determine in its sole
discretion) but for the benefit and at the expense of Medical Manager (except
as otherwise herein provided), (a) to institute and prosecute all proceedings
which Medical Manager may deem proper in order to collect, assert or enforce
any claim, right or title of any kind in or to the Purchased Assets as provided
for in this Agreement, and shall provide reasonable notice to the Company of
any action taken hereunder (provided, however, that the failure to provide such
notice shall not impair Medical Manager's rights hereunder to the extent that
the Company is not prejudiced by such failure); (b) to defend or compromise any
and all actions, suits or proceedings in respect of any of the Purchased
Assets, and to do all such acts and things in relation thereto as Medical
Manager shall deem advisable, and shall provide reasonable notice to the
Company of any action taken hereunder (provided, however, that the failure to
provide such notice shall not impair Medical Manager's rights hereunder to the
extent that the Company is not prejudiced by such failure); and (c) to take all
action which Medical Manager may reasonably deem proper in order to provide for
Medical Manager the benefits under any of the Purchased Assets where any
required consent of another party to the sale or assignment thereof to Medical
Manager pursuant to this Agreement shall not have been obtained. The Company
acknowledges that the foregoing powers are coupled with an interest and shall
be irrevocable. Medical Manager shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof. Medical Manager covenants and
agrees that (i) any and all actions of any kind that it takes as the Company's
attorney-in-fact or otherwise on behalf of the Company hereunder shall be in
strict compliance with all applicable laws, rules and regulations, and shall
not constitute a breach or violation of any legal right of any other person or
entity, for which such non-compliance, breach or violation causes the Company
to incur any expenses, losses, costs, deficiencies, liabilities or damages
(including, without limitation, counsel and paralegal costs and expenses), and
(ii) in no event shall Medical Manager enter into any settlement, compromise or
other agreement of any kind on the Company's behalf that creates any liability
or obligation of any kind for the Company.
5.14 EXECUTION OF FURTHER DOCUMENTS. From and after the Closing,
upon the reasonable request of Medical Manager, the Company and the Shareholders
shall execute, acknowledge and deliver all such further deeds, bills of sale,
assignments, transfers, conveyances, powers of attorney and assurances as may be
required or appropriate, in form reasonably acceptable to Medical Manager, to
convey and transfer to and vest in Medical Manager and protect its right, title
and interest in all of the Purchased Assets and to carry out the transactions
contemplated by this Agreement.
5.15 PAYOFF AND ESTOPPEL LETTERS. Prior to Closing, the Company and
the Shareholders shall obtain and deliver to Medical Manager payoff and estoppel
letters with respect to any indebtedness being assumed by Medical Manager, which
letters shall contain payoff amounts, per diems, wire transfer instructions and
an agreement to deliver, upon full payment, UCC-3 termination statements,
satisfactions of mortgage or other appropriate releases and any original
promissory notes or other evidences of indebtedness marked canceled.
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5.16 SHAREHOLDER VOTE. Each of the Shareholders, in executing this
Agreement, consents to the transactions contemplated herein, and waives notice
of any meeting in connection therewith.
5.17 AMENDMENT OF EMPLOYMENT AGREEMENT. Prior to Closing, the
Company and the Shareholders shall have amended the terms and conditions of the
Employment Agreement and any related compensation arrangements of Xxxxxxxx
Xxxxxx, on terms acceptable
to Medical Manager.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS
OF MEDICAL MANAGER
The obligations of Medical Manager to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
whole or in part in writing by Medical Manager:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct at and as of
the Closing Date with the same force and effect as though made at and as of that
time except (a) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (b) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Company and each of the Shareholders shall have performed and
complied with all of their obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date. The Company and
each of the Shareholders shall have delivered to Medical Manager a certificate,
dated as of the Closing Date, duly signed by an executive officer and its Chief
Financial Officer in their corporate capacity and not personally, certifying
that such representations and warranties are true and correct and that all such
obligations have been performed and complied with.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between
the date hereof and the Closing Date, (a) there shall have been no Material
Adverse Change to the Company, (b) there shall have been no adverse federal,
state or local legislative or regulatory change affecting in any material
respect the services, products or business of the Company and (c) none of the
Purchased Assets shall have been damaged by fire, flood, casualty, act of God or
the public enemy or other cause (regardless of insurance coverage for such
damage) which damages may have a Material
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Adverse Effect thereon, and the Company and the Shareholders shall have
delivered to Medical Manager a certificate, dated as of the Closing Date, to
that effect.
6.3 CORPORATE CERTIFICATE. The Company shall have delivered to
Medical Manager (a) copies of the Articles of Incorporation and Bylaws of the
Company as in effect immediately prior to the Closing Date, and (b) copies of
resolutions adopted by the Board of Directors and Shareholders of the Company
authorizing the transactions contemplated by this Agreement, certified in each
case as of the Closing Date by the Secretary of the Company as being true,
correct and complete. The Company shall have delivered to Medical Manager a
certificate of good standing (or equivalent) of the Company issued by the
Secretary of State of South Carolina and each other state in which it is
qualified to do business as of a date not more than thirty days prior to the
Closing Date.
6.4 OPINION OF COUNSEL. Medical Manager shall have received an
opinion, dated as of the Closing Date, from counsel for the Company and the
Shareholders acceptable to Medical Manager, in form and substance as set forth
as Exhibit 6.4.
6.5 CONSENTS. The Company and Medical Manager shall have received
consents to the transactions contemplated hereby and waivers of rights to
terminate or modify any material rights or obligations of the Company from any
Person from whom such consent or waiver is required under any Contract.
6.6 TERMINATION AND RELEASE. At the Closing, the Company and each of
the Shareholders, and such of their Affiliates as may be designated by Medical
Manager, shall have delivered to Medical Manager a termination of all existing
agreements among Medical Manager and its Affiliates on the one hand, and the
Company, the Shareholders and their Affiliates on the other hand, including a
mutual release (the "Termination and Release") in the form set forth as Exhibit
6.6.
6.7 NO ADVERSE LITIGATION. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the sole judgment of Medical
Manager, makes it inadvisable to proceed with the transactions contemplated
hereby.
6.8 MEDICAL MANAGER BOARD APPROVAL. The Board of Directors of
Medical Manager shall have authorized and approved this Agreement and the
transactions contemplated hereby.
6.9 DUE DILIGENCE REVIEW. Medical Manager shall be satisfied with
the results of its due diligence review pursuant to Section 5.10.
6.10 PHYMATRIX CONSENT. The Company shall have delivered to Medical
Manager the consent of PhyMatrix Management Company, Inc. (in form acceptable to
Medical Manager) to the assignment to Medical Manager of the Hardware and
Software Purchase, License and Service
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Agreement dated September 26, 1996 between PhyMatrix Management Company, Inc.
and Companion Technologies Corporation of Florida, Inc.
6.11 AUTHORIZED RESELLER AGREEMENT. CTC shall have executed and
delivered the Authorized Reseller Agreement in the form set forth as Exhibit
6.11 attached hereto (the "Authorized Reseller Agreement").
6.12 CONSUMMATION OF STOCK PURCHASE. Companion Technologies
Corporation of Texas (CTT"), Blue Cross, and CTC shall have consummated
concurrently with the Closing the transactions contemplated pursuant to the
Stock Purchase Agreement among Medical Manager, CTT and the Shareholders of even
date herewith.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS AND COMPANY
The obligations of the Shareholders and the Company to effect the
transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, any or all of which may
be waived in whole or in part in writing by the Shareholders and the Company:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Medical Manager contained in
this Agreement shall be true and correct at and as of the Closing Date with the
same force and effect as though made at and as of that time except (a) for
changes specifically permitted by or disclosed pursuant to this Agreement, and
(b) that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Medical Manager
shall have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
Medical Manager shall have delivered to the Company a certificate, dated as of
the Closing Date, and signed by an executive officer in his corporate capacity
and not personally, certifying that such representations and warranties are true
and correct and that all such obligations have been performed and complied with.
7.2 NO ADVERSE LITIGATION. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the sole judgment of the
Company, makes it inadvisable to proceed with the transactions contemplated
hereby.
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7.3 TERMINATION AND RELEASE. At the Closing, Medical Manager and
such of its Affiliates as may be designated by the Company shall have delivered
to the Company the Termination and Release.
7.4 COMPANY AND SHAREHOLDERS BOARD APPROVAL. The respective Boards
of Directors of the Company and the Shareholders shall have authorized and
approved this Agreement and the transactions contemplated hereby.
7.5 AUTHORIZED RESELLER AGREEMENT. Medical Manager's Affiliate shall
have executed and delivered the Authorized Reseller Agreement.
7.6 CONSUMMATION OF STOCK PURCHASE. Medical Manager shall have
consummated concurrently with the Closing the transactions contemplated pursuant
to the Stock Purchase Agreement among Medical Manager, Companion Technologies
Corporation of Texas and the Shareholders of even date herewith.
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT BY THE SHAREHOLDERS TO INDEMNIFY. The Shareholders and
the Company agree, jointly and severally, to indemnify and hold Medical Manager,
its Affiliates and their respective stockholders, directors, officers,
employees, attorneys, agents, successors and assigns (the "Indemnified Parties")
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by the Indemnified
Parties, arising out of or resulting from (i) any breach of a representation or
warranty made by the Company or any Shareholder in or pursuant to this
Agreement, (ii) any breach of the covenants or agreements made by the Company or
any Shareholder in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate, instrument or other document delivered by the Company or any
Shareholder pursuant to this Agreement or (iv) any Excluded Liabilities of the
Company and its Affiliates which the Indemnified Parties are required to pay,
(v) any matter identified on Schedule 3.12, (vi) the failure to obtain the
consent of any landlord to the assignment of the real estate leases set forth on
Schedule 3.14, if such consent is required pursuant to the terms of such leases,
and (vii) any breach by CTT or the Shareholders of any representation, warranty,
covenant or agreement under or made pursuant to the Stock Purchase Agreement
(collectively, "Indemnifiable Damages"). Without limiting the generality of the
foregoing, with respect to the measurement of Indemnifiable Damages, the
Indemnified Parties shall have the right to be put in the same pre-tax
consolidated financial position as it would have been in had each of the
representations and warranties of the Company and the Shareholders hereunder
been true and correct and had the covenants and agreements of the Company and
the Shareholders hereunder been performed in full. Notwithstanding the
foregoing provisions, no claim for
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Indemnifiable Damages (except for claims under clauses (ii), (iv), (v) and (vi)
of this Section 8.1, and except for claims for breach of Section 5.8), shall be
asserted by the Indemnified Parties until the aggregate of all Indemnifiable
Damages (i.e. the Indemnifiable Damages, in the aggregate, under both this
Agreement and under the Stock Purchase Agreement) exceeds the sum of Fifty
Thousand Dollars ($50,000) (the "Indemnification Threshold"), in which case the
Indemnified Parties shall be entitled to the full amount of Indemnifiable
Damages in excess of $50,000. Notwithstanding the foregoing or any other
provision of this Agreement, the parties agree that the aggregate Indemnifiable
Damages that may be paid by the Shareholders and the Company, other than for
claims under Section 5.8, shall not exceed the sum of the Purchase Price and
the Receivables Debt. If any indemnity payment is made hereunder by the
Company or by either Shareholder, then the Shareholders and the Company shall
each be subrogated to any rights which Medical Manager would have had against
third parties in the absence of such indemnity.
8.2 SOFTWARE INDEMNITY. In addition to, and not in derogation of,
any and all other rights and remedies available to the Company and the
Shareholders at law or in equity, Medical Manager agrees to indemnify, defend
and hold the Company, the Shareholders, their Affiliates and their respective
stockholders, directors, officers, employees, attorneys, agents, successors and
assigns harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by such parties
arising out of or related to any claim by any of the licensees of The Medical
Manager(R) identified on Schedule 3.25 arising from or relating to the inability
of any pre-version 9.0 release of The Medical Manager(R) software to recognize a
four digit date field (i.e. the "Year 2000"), excluding from such
indemnification obligation any expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation related counsel and
paralegal fees and expenses) which are caused by the fraudulent or negligent
representation made by CTT, the Company, the Shareholders, their Affiliates or
any of their respective employees or agents, with regard to the Year 2000
compliance of such pre-version 9.0 releases of The Medical Manager(R) software,
unless such negligent representation was made in reasonable reliance upon
information obtained from Medical Manager.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties (including, without limitation, and as qualified
in, the matters set forth on any Exhibit hereto) made by the parties in this
Agreement or pursuant hereto shall survive the Closing Date. Notwithstanding
any knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the parties contained
in this Agreement is independent of each other representation, warranty,
covenant and agreement.
8.4 NO BAR. The Indemnified Parties may take any action or exercise
any remedy available to it by appropriate legal proceedings to collect the
Indemnifiable Damages, all of which remedies shall be cumulative.
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8.5 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude any party from asserting any other right, or
seeking any other remedies, against the other parties hereto.
ARTICLE IX
DEFINITIONS
9.1 DEFINED TERMS. As used herein, the following terms shall have
the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract or other agreement between two or more
Persons which creates an obligation to do or not to do something, whether
written or oral, express or implied, including without limitation, any
agreement, lease, note, mortgage, indenture, loan agreement, franchise
agreement, covenant, employment agreement, license, instrument, purchase and
sales order, commitment, undertaking or other obligation.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional sale
or other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in connection with such
mortgage, pledge, security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)"means a change (or effect), in
the condition (financial or otherwise), properties, assets, prospects,
liabilities, rights, obligations, operations, or business which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations, operations, or
business.
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"Person" means an individual, partnership, corporation, business
trust, joint stock Company, estate, trust, unincorporated association, joint
venture, Governmental Authority or other entity, of whatever nature.
"SEC" means the Securities and Exchange Commission.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Tax.
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible, payroll,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
9.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall
have the defined meanings when used in any certificates, reports or other
documents made or delivered pursuant hereto or thereto, unless the context
otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in
connection with this Agreement and the transactions contemplated hereby shall
be determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also
denote the masculine and feminine, and the masculine gender shall also denote
the neuter and feminine, where the context so permits.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated upon written
notice at any time prior to the Closing Date:
(a) by mutual consent of all of the parties
hereto at any time prior to the Closing; or
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(b) by Medical Manager in the event of a material
breach by the Company or any of the Shareholders of any provision of this
Agreement; or
(c) by the Company in the event of a material
breach by Medical Manager of any provision of this Agreement; or
(d) by either Medical Manager or the Company, if
the Closing shall not have occurred by December 31, 1997.
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and facsimile numbers
(or to such other addresses or facsimile numbers which such party shall
designate in writing to the other party):
(a) if to Medical Manager to:
Medical Manager Corporation
0000 X Xxxxx Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Xxxxxxxx X. Xxxxxxx, Associate General Counsel
Facsimile Number (000) 000-0000
with a copy to:
Akerman, Senterfitt & Xxxxxx, PA
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile Number (000) 000-0000
(b) if to the Company to:
Companion Technologies of Florida, Inc.
I-20 at Xxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
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34
Attn: Xxxxxx XxXxxxxx, Esq.
Facsimile Number: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx Xxxxxx & Xxxxxxx, LLP
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
11.2 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits attached hereto) and other documents delivered at the Closing pursuant
hereto, contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter. The
Schedules and Exhibits constitute a part hereof as though set forth in full
above.
11.3 EXPENSES; SALES TAX. Except as otherwise provided herein, the
parties shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby. The parties agree that the party required to make such payment under
applicable law shall pay when due such sales, transfer or similar taxes required
to be paid by reason of the sale by the Company to Medical Manager of the
Purchased Assets pursuant to this Agreement.
11.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
11.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by the Company or any Shareholders
without the prior written consent of Medical Manager. Medical Manager may
assign all or any portion of its rights, and delegate all
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or any of its obligations, hereunder to one or more of its Affiliates, provided
that Medical Manager shall thereafter remain fully obligated hereunder.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
11.7 INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include,""includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
11.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
11.9 JURISDICTION.
(a) Any suit, action or proceeding against the
Company or the Shareholders arising out of, or with respect to, this Agreement
or any judgment entered by any court in respect thereof may be brought in the
U.S. District Court for the Middle District of Florida, and the Company and
the Shareholders hereby irrevocably accept and consent to the nonexclusive
personal jurisdiction of those courts for the purpose of any suit, action or
proceeding.
(b) In addition, each of the Company and the
Shareholders hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
judgment entered by any court in respect thereof brought in the U.S. District
Court for the Middle District of Florida, and hereby further irrevocably waives
any claim that any suit, action or proceedings brought in such District Court
has been brought in an inconvenient forum.
11.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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[Signatures on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
MEDICAL MANAGER CORPORATION,
a Delaware corporation
By: /s/ Xxxx Xxxx
--------------------------------
Name: Xxxx Xxxx
Title: President
BLUE CROSS AND BLUE SHIELD
OF SOUTH CAROLINA,
a South Carolina mutual
insurance company
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: CFO, Senior Vice President,
Treasurer
COMPANION TECHNOLOGIES
OF FLORIDA, INC.,
a South Carolina corporation
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Treasurer
COMPANION TECHNOLOGIES CORPORATION,
a South Carolina corporation
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Treasurer
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