FOURTH AMENDMENT TO AGREEMENT AND PLAN OF MERGER
Exhibit 99.1
FOURTH AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
THIS FOURTH AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the “Amendment”), dated as of
March 30, 2011, is made by and among Quality Systems, Inc., a California corporation
(“Parent”); Opus Healthcare Solutions, LLC, a Texas limited liability company and successor
by merger to OHS Merger Sub, Inc. (the “Company”); Xxxx X. Xxxx, an individual
(“Xxxx”); Xxx X. Xxxxxx, an individual (“Xxxxxx”); Xxxxx X. Xxxxxxxxx, an
individual (“Ackermann”); and Xxxxxx Xxxxxxxx-Zeu, an individual (“Xxxxxxxx-Zeu”
and collectively with Xxxx, Xxxxxx and Xxxxxxxxx, the “Shareholders”).
R E C I T A L S
A. Parent, OHS Merger Sub, Inc., the Company and the Shareholders are parties to that certain
Agreement and Plan of Merger, dated as of February 10, 2010 (the “Merger Agreement”).
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in
the Merger Agreement.
B. The Parties desire to amend Sections 1.8 and 1.9 of the Merger Agreement to modify the
terms of the Earnout and the Escrow.
A G R E E M E N T
NOW, THEREFORE, in consideration of the facts recited above, and the terms, conditions and
covenants contained in the Merger Agreement and this Amendment, the undersigned agree as follows:
1. Amendments.
1.1 Earnout. Section 1.8 of the Merger Agreement is hereby amended and restated in
its entirety to read as follows:
1.8. Earnout. Within three (3) business days following execution of
this Amendment by the parties hereto, Parent shall pay $12,250,000 (the “Earnout
Payment”) to the Shareholders and to the holders of the Options terminated prior
to the Closing set forth on Part II of Exhibit B (the “Option
Holders”) as follows:
(a) Until Total Consideration equals or exceeds the Option Holder Threshold,
the Earnout Payment shall be payable to the Shareholders in accordance with the
percentages set forth in Part I of Exhibit B. When Total Consideration is
greater than the Option Holder Threshold, to the extent the Earnout Payment causes
Total Consideration to be greater than the Option Holder Threshold, the amount of
the Earnout Payment in excess of the Option Holder Threshold shall be payable to the
Shareholders and Option Holders in accordance with the percentages set forth in Part
II of Exhibit B. For the avoidance of doubt, the parties acknowledge and
agree that the Earnout Payment shall be payable in accordance with Schedule
I to this Amendment.
(b) All payments due to the Shareholders pursuant to Sections 1.8(a) and
(b) shall be made by the issuance to each Shareholder of a number of Parent
Shares (the “Earnout Shares”) equal in value to the amount due to such
Shareholder (valuing the Parent Shares, for purposes of this Section 1.8,
using the No Collar Share Valuation Method on March 29, 2011). Parent shall pay any
amount due to the Option Holders under Section 1.8(b) by delivery of cash or
check for good funds, subject to any applicable withholding.
(c) Healthcare Growth Partners, LLC shall be entitled to receive an amount (the
“Broker Fee”) equal to $200,000. Parent shall pay the amount due to
Healthcare Growth Partners, LLC by wire transfer of immediately available funds to
an account designated by Healthcare Growth Partners, LLC. For the avoidance of
doubt, the Broker Fee shall be paid by Parent and shall not be deducted from the
Earnout Payment.
(d) For purposes of this Amendment, “No Collar Share Valuation Method”
shall mean the valuation of the Parent Shares based upon the average closing price
of Parent’s common stock as reported by the NASDAQ Global Select Market over the
forty-five (45) trading days ending on the close of the trading day immediately
prior to the date of this Amendment.
1.2 Escrow. Section 1.9 of the Merger Agreement is hereby amended and restated in its
entirety to read as follows:
1.9. Escrow.
(a) Escrow Fund to Secure Obligations. On the Closing Date, Parent
deposited with the Escrow Agent 41,202 Parent Shares (the “Escrowed
Shares”). The Escrowed Shares shall represent a source of value to secure the
Shareholders’ obligations hereunder to the extent the Escrowed Shares have not been
surrendered by operation of Article VII, Article VIII or in
accordance with the Escrow Agreement. The Escrowed Shares shall be held by the
Escrow Agent under the Escrow Agreement pursuant to the terms thereof. The Escrowed
Shares shall be held until the Escrow Termination Date as a trust fund and shall not
be subject to any lien, attachment trustee process or any other judicial process of
any creditor of any party, and shall be held and disbursed solely for the purposes
and in accordance with the terms of the Escrow Agreement.
(b) Release of Escrowed Shares. The Escrowed Shares will be released
on the date of this Amendment (the “Escrow Termination Date”). Parent and
the Shareholder Representative shall on the date hereof deliver a “Joint
Instruction” to the Escrow Agent under the Escrow Agreement, instructing the Escrow
Agent to release the Escrowed Shares to the Shareholders in accordance with the
Payment Information Certificate described in subsection (c) below.
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(c) Payment Information Certificate. Concurrently with the execution
of this Amendment, the Shareholder Representative shall provide to Parent, certified
in writing by the Shareholder Representative (“Payment Information
Certificate”), a schedule specifying the name, address and taxpayer
identification number for each such Shareholder and the exact number of Escrowed
Shares to be disbursed to each such Shareholder (“Payment Information”).
2. Registration of Earnout Shares. Parent will use its best efforts to effect a
registration on Form S-3 with the Securities and Exchange Commission of the Earnout Shares as soon
as practicable after execution of this Amendment. Without limiting the generality of the
foregoing, Parent shall submit the Form S-3 filing to the Securities and Exchange Commission not
later than 30 days after the date hereof.
3. Termination of Employment Agreements. Each of the Employment Agreements
(collectively, the “Employment Agreements”) by and between the Company, on the one hand,
and each of Xxxx and Xxxxxx, on the other hand, is hereby terminated by mutual agreement and
without liability to the Company, Xxxx or Xxxxxx and shall be of no further force and effect;
provided, however, that the obligations of Xxxx and Xxxxxx set forth in Section 8
of the Employment Agreements shall survive. As severance for termination of the Employment
Agreements, the Company shall pay to each of Xxxx and Xxxxxx $25,000 in cash upon execution of this
Amendment. Concurrently with the execution of this Amendment, each of Xxxx and Xxxxxx shall
deliver the termination certificate required to be delivered pursuant to Section 8(k) of the
Employment Agreements.
4. Shareholder Releases.
4.1 Effective as of the date of this Amendment, each Shareholder agrees not to xxx and fully
releases and discharges the Company and its shareholders, directors, officers, employees, assigns
and successors, past and present (collectively, “Company Releasees”), with respect to and
from any and all claims, issuances of the Company’s stock, notes or other securities, any demands,
rights, liens, contracts, covenants, proceedings, causes of action, obligations, debts, and losses
of whatever kind or nature in law, equity or otherwise, whether now known or unknown, and whether
or not concealed or hidden, all of which each Shareholder now owns or holds or has at any time
owned or held against Company Releasees connected with or relating to any matter occurring on or
prior to the date of this Amendment, including but not limited any claim Xxxx or Xxxxxx may have
with respect to the Employment Agreements; provided, however, that nothing in this
Section 4.1 will be deemed to constitute a release by any Shareholder of (i) any right of
such Shareholder under this Amendment or the Merger Agreement, (ii) any right to receive
compensation or benefits under employee benefit plans (including, without limitation, salary)
attributable to the periods prior to the date of this Amendment or (iii) any right to
indemnification under the certificate of formation or bylaws of the Company or under applicable law
with respect to acts or omissions prior to the Closing Date.
4.2 It is the intention of each Shareholder that such release be effective as a bar to each
and every claim, demand and cause of action specified in Section 4.1.
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4.3 Each Shareholder acknowledges and intends that the Company Releasees are being released
from unknown and unforeseen claims to the fullest extent permitted by law and each Shareholder
waives any defenses based thereon. Each Shareholder acknowledges that such Shareholder has been
advised by his attorneys with respect to this release and is familiar with the provisions of
California Civil Code Section 1542. Each Shareholder expressly waives and relinquishes all rights
and benefits he or she may have under any statute or other applicable law comparable to Section
1542 of the California Civil Code, which Section 1542 is intended to protect against an inadvertent
release of unknown or unsuspected claims, and reads as follows:
“Section 1542. [General Release; extent.] A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor at
the time of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”
5. No Further Changes. Except as set forth in this Amendment, no further changes are
hereby made to the Merger Agreement, which shall remain in full force and effect.
6. Counterparts. This Amendment may be executed in any number of counterparts, each
of which shall be enforceable, and all of which together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date
first set forth above.
| PARENT: | Quality Systems, Inc. |
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| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Xxxxxxx X. Xxxxx, | ||||
| President and Chief Strategy Officer | ||||
| THE COMPANY: | Opus Healthcare Solutions, LLC |
|||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Xxxxxxx X. Xxxxx, | ||||
| President | ||||
| SHAREHOLDERS: | /s/ Xxxx X. Xxxx | |||
| Xxxx X. Xxxx | ||||
| /s/ Xxx X. Xxxxxx | ||||
| Xxx X. Xxxxxx | ||||
| /s/ Xxxxx X. Xxxxxxxxx | ||||
| Xxxxx X. Xxxxxxxxx | ||||
| /s/ Xxxxxx Xxxxxxxx-Zeu | ||||
| Xxxxxx Xxxxxxxx-Zeu | ||||
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