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Exhibit 2.2
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PURCHASE AGREEMENT
Dated as of the 11th day of September, 1997
by and among
MEDICAL MANAGER SOUTHEAST, INC.
NATIONAL DATA CORPORATION
CIS TECHNOLOGIES, INC.
AMSC, INC.
and
AMSC MIDWEST, INC.
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ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (this "Agreement") is entered into as of
September 11, 1997, among Medical Manager Southeast, Inc., a Florida corporation
("Medical Manager"); National Data Corporation, a Delaware corporation ("NDC");
CIS Technologies, Inc., an Oklahoma corporation and wholly-owned subsidiary of
NDC ("CIS" and together with NDC, the "Shareholders"); AMSC, Inc., a Florida
corporation and wholly-owned subsidiary of the Shareholders ("AMSC"); and AMSC
Midwest, Inc., a Florida corporation and wholly-owned subsidiary of AMSC
("Midwest" and together with AMSC, the "Company"). Certain other capitalized
terms used herein are defined in ARTICLE XI and throughout this Agreement.
RECITALS
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The Company owns and operates a Medical Manager Dealership (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
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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
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1.1 PURCHASED ASSETS The Company agrees to and will at Closing sell,
convey, transfer, assign and deliver to Medical Manager, 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 1.10), 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 machinery, equipment, tools, supplies, leasehold
improvements, construction in progress, furniture and fixtures located
at any of the Leased Premises (as defined in SECTION 3.13(B));
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(b) all inventories of the Company;
(c) all receivables of the Company, including without
limitation, all trade accounts receivable, notes receivable and
receivables from customers, 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 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, leases, 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 of the proprietary rights of the Company, including
without limitation all trademarks, trade names, patents, patent
applications, licenses thereof, trade secrets, technology, know-how,
formulae, designs and drawings, computer software, slogans, copyrights,
processes, operating rights, licenses and permits and other intangible
property and rights relating to the products or business of the
Company;
(h) all cash and cash equivalents and investments, whether
short-term or long-term, of the Company, including without limitation,
certificates of deposit, treasury bills and securities; and
(i) all right, title and interest of the Company in and to the
corporate and trade names and all of the other intangibles of the
Company;
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; (iii) the
corporate minute books and stock records of the Company; (iv) the outstanding
capital stock of ClinLab, Inc.; (v) any receivables relating to the business of
ClinLab, Inc.; (vi) the lease relating to
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the Company's office space located at 000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000 (the "Excluded Lease"); (vii) any insurance policies of
the Company, and rights thereunder, (viii) any receivable from the other Company
or any of the Shareholders or any Affiliate of either Shareholder or Company;
and (ix) rights under agreements or contracts not entered into in the ordinary
course of business which are not listed on Schedule 3.25 hereof.
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 cooperate with Medical
Manager to the extent reasonably practicable to provide for Medical Manager, at
Medical Manager's sole expense, 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 at the closing (as defined in SECTION 1.10)
an aggregate amount equal to Three Million Five Hundred Thousand Dollars and
no/100 ($3,500,000.00) (the "Purchase Price"). Medical Manager will pay One
Million Dollars and no/100 ($1,000,000.00) in cash, by wire transfer or other
immediately available funds, to the Company, and will issue to the Company a
stock certificate representing a number of shares (rounded to the nearest whole
share) of common stock, par value $ .01 per share, of Medical Manager
Corporation (the "Medical Manager Common Stock") equal to the number of shares
determined by dividing (a) Two Million Five Hundred Thousand Dollars and no/100
($2,500,000.00) MINUS the amount, if any, by which the Company's Net Assets (as
defined below), as of the Closing Date, is less than One Million Two Hundred
Thousand Dollars and no/100 ($1,200,000.00) (the "Purchase Price Adjustment");
by (b) the average closing sale price of a share of Medical Manager Common Stock
as quoted on the NASDAQ Stock Market ("NASDAQ") for the five consecutive trading
days which precede the third trading day which is immediately prior to the
Closing Date, as reported (absent manifest error in the printing thereof) by THE
WALL STREET JOURNAL (Eastern Edition) (the "Average Closing Sale Price"). No
fractional shares of Medical Manager Common Stock will be issued. For purposes
of determining the Purchase Price Adjustment, "Net Assets" shall mean the amount
of the Purchased Assets of the Company, the value of which shall be determined
in accordance with GAAP, minus the Assumed Liabilities (defined in Section 1.6
below) of the Company.
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1.5 PURCHASE PRICE ADJUSTMENT Within 90 days after the Closing Date,
Medical Manager shall prepare and deliver to the Company (in accordance with
SECTION 12.1) a determination (the "Determination") of the actual amount of the
Purchase Price Adjustment as of the Closing Date. If, within 30 days after the
date on which a Determination is delivered to the Company, the Company shall not
have given written notice to Medical Manager setting forth in detail any
objection of the Company to such Determination, then such Determination shall be
final and binding on the parties hereto and shall be payable by the Company and
the Shareholders to Medical Manager. In the event the Company gives written
notice of any objection to such Determination within the 30-day period, Medical
Manager and the Company shall use all reasonable efforts to resolve the dispute
within the 30-day period following the delivery of the written notice. If the
parties are unable to reach an agreement within such 30-day period, the matter
shall be submitted to a firm of independent certified public accountants (which
company shall constitute one of the "Big Six" accounting firms excluding Coopers
& Xxxxxxx, LLP), for determination of the Purchase Price Adjustment which shall
be final and binding upon Medical Manager and the Company. All costs (including
fees and expenses charged by the accounting firm) incurred in connection with
the resolution of any such dispute shall be paid as determined by such firm of
independent accountants. Medical Manager shall be entitled to set off against
the Held Back Shares (as defined in SECTION 1.11(D)) the amount of the Purchase
Price Adjustment (assuming a value per share for purposes of such calculation
equal to the Average Closing Sale Price). The amount of the Purchase Price
Adjustment shall be deemed to be Indemnifiable Damages under ARTICLE VIII
hereof, but shall not be subject to the limitations of Section 8.2(a) hereof).
1.6 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 any Excluded
Liabilities (defined below), (ii) all of the obligations, duties and liabilities
of the Company incurred on or prior to the Closing Date in the ordinary course
of business consistent with past practices (including without limitation, those
arising under any contracts, agreements, sales orders, purchase orders and
purchase commitments incurred in the ordinary course of business), except any
Excluded Liabilities, and (iii) all obligations, liabilities and duties of the
Company arising under any franchise contract, sales order, sales contract,
supply contract, service agreement, lease, purchase order, and purchase
commitment constituting a Purchased Asset to which the Company is a party and
which is specifically disclosed on any of the Schedules attached hereto, except
any Excluded Liabilities (the "Assumed Liabilities").
1.7 EXCLUDED LIABILITIES The parties expressly agree that Medical
Manager shall not assume or otherwise become liable for:
(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 1.6;
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(b) any liability or obligation of the Company arising under
this Agreement;
(c) any liability or obligation arising from installations of
the Company's software products which occur before the Closing Date (as
defined in SECTION 1.10), but excluding normal maintenance and support
to be provided after the Closing Date;
(d) any liability or obligation under any lease relating to
the Company's office space located at 000 X Xxxxxxxxx Xxxxx, Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000;
(e) any liability or obligation for borrowed money of the
Company;
(f) any liability or obligation of the Company with respect
to, or arising out of, any employee benefit plan or any other plans or
arrangements for the benefit of any employees of the Company, any
liability or obligation listed on the Current Balance Sheet (as defined
in Section 3.8) of the Company for accrued vacation in respect of any
employee of the Company not hired by Medical Manager, and any liability
or obligation listed on the Current Balance Sheet of the Company for
accrued vacation over 40 hours in respect of any employee of the
Company hired by Medical Manager;
(g) any liability or obligation of the Company to any of the
Shareholders, including, without limitation, in respect of their shares
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 liability or obligation of the Company to Xxxxxxx Xxx
or Xxxxx X. Xxxxx or any other affiliate, whether pursuant to written
agreement or otherwise;
(i) any liability or obligation of the Company under any
shareholder's agreement, employment agreement, consulting agreement,
severance compensation or incentive bonus agreements or settlement
agreement;
(j) any liability or obligation of either Company to: (i) the
other Company, (ii) any of the Shareholders, or (iii) any Affiliates of
any of the Shareholders or of either Company (including, but not
limited to ClinLab);
(k) any liability or obligation of the Company in respect of
the "Accounts Payable" as set forth on the Current Balance Sheet of the
Company; and
(l) any liability or obligation of the Company to [North
Alabama Bone and Joint].
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1.8 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.
1.9 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 1.9. In the event SCHEDULE 1.9 is not attached
as of the Closing of this Agreement, the parties will work in good faith to
prepare such a schedule within fifteen (15) 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.
1.10 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 and the Company 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."
1.11 PROCEDURE AT THE CLOSING At the Closing, the parties agree that
the following shall occur:
(a) The Company shall have satisfied each of the conditions
set forth in ARTICLE VI and shall deliver to Medical Manager the
documents, certificates, opinions, consents and letters required by
ARTICLE VI.
(b) Medical Manager shall have satisfied each of the
conditions set forth in ARTICLE VII and shall deliver to the Company
the documents, certificates, opinions, consents and letters required by
ARTICLE VII.
(c) The Company shall deliver to Medical Manager or its
assignee such deeds, bills of sale, endorsements, assignments, releases
and other instruments, in such form as is reasonably satisfactory to
Medical Manager and as shall be sufficient to vest in Medical Manager
(or its assignee) good and marketable title to the Purchased Assets.
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(d) Medical Manager shall issue to NDC (on behalf of the
Company) the shares of Medical Manager Common Stock issuable pursuant
to SECTION 1.4, registered in the name of NDC and shall deliver such
shares in the following manner: (i) Medical Manager shall set aside and
hold in accordance with SECTION 8.3 stock certificates representing
shares of Medical Manager Common Stock having a value equal to ten
(10%) percent of the Purchase Price (the "Held Back Shares"), and (ii)
Medical Manager shall deliver stock certificates representing the
balance of the shares of Medical Manager Common Stock issuable in
accordance with SECTION 1.4 to the Company. The shares of Medical
Manager Common Stock issuable pursuant to SECTION 1.4, including the
Held Back Shares, are referred to herein as the "Medical Manager
Shares."
(e) Medical Manager shall deliver to the Company instruments
in such form as is reasonably satisfactory to the Company and as shall
be sufficient to effect the assumption by Medical Manager of the
Assumed Liabilities.
(f) The Company shall deliver to Medical Manager estoppel
letters in accordance with SECTION 5.14.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF MEDICAL MANAGER
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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 Florida 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.
Subject to the satisfaction of the condition set forth in SECTION 6.9, 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
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applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.4 MEDICAL MANAGER COMMON STOCK Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the Medical Manager Shares to the Company, the Medical Manager Shares will be
validly issued, fully paid and non-assessable shares of Medical Manager Common
Stock. Except as set forth in Sections 8.3, 9.2 and 9.3 hereof, none of the
Medical Manager Shares are subject to any liens or other rights, and there are
no options, warrants, purchase agreements, put agreements, call agreements or
other agreements to which Medical Manager is a party which relates to or affects
the transfer of the Medical Manager Shares.
2.5 NO VIOLATION, CONSENTS AND APPROVALS The execution and delivery of
this Agreement by Medical Manager, the performance by Medical Manager of its
obligations hereunder and the consummation by it of the transactions
contemplated by this Agreement will not (i) contravene any provision of the
Articles of Incorporation or Bylaws of Medical Manager; (ii) 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 Medical
Manager; (iii) 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 Medical Manager; (iv) result
in or require the creation or imposition of any Lien upon or with respect to any
of the properties or assets of Medical Manager; (v) give to any individual or
entity a right or claim against Medical Manager, or; (vi) 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
applicable filings required under any SEC rule or regulation which shall be
filed when due.
2.6 NO COMMISSIONS Medical Manager has not incurred any obligation for
any finder's or broker's or agent's fees or commissions or similar compensation
in connection with the transactions contemplated hereby.
2.7 ACCURACY OF INFORMATION FURNISHED No representation, statement or
information made or provided by Medical Manager contained in this Agreement 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 material fact necessary to make the
information contained therein not misleading.
2.8 SEC REPORTS Medical Manager has delivered to the Company copies of
its most recent Annual Report on Form 10-K (the "Form 10-K"), the Annual Report
to Shareholders, all quarterly reports filed since the filing of the Form 10-K,
and its Proxy Statement for its most recent
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Annual Meeting of Shareholders (collectively, the "Medical Manager Reports"). As
of their respective dates, none of the Medical Manager Reports contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading.
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, which shall apply independently with respect
to each company:
3.1 CORPORATE STATUS The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida 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 each of the jurisdictions where the
nature of its properties and the conduct of its business requires such
qualification (all of which jurisdictions are set forth in SCHEDULE 3.1), and is
in good standing in each of the jurisdictions in which it is so qualified. 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. 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 The Company 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.
The Company 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. Each of the
Shareholders has the requisite corporate power and authority to execute and
deliver this Agreement, to perform its respective obligations hereunder and to
consummate 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
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may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
3.4 SHAREHOLDERS, OFFICERS AND DIRECTORS OF THE COMPANY CIS
Technologies, Inc. Owns 100% of the outstanding capital stock of AMSC, Inc.
AMSC, Inc. owns 100% of the outstanding capital stock of AMSC Midwest, Inc. Each
of CIS Technologies and AMSC, Inc. owns the foregoing shares free and clear of
all Liens, restrictions and claims of any kind.
3.5 NO VIOLATION; CONSENTS AND APPROVALS Except for any approvals or
consents required under Material Contracts (as defined in SECTION 3.24),
identified in SCHEDULE 3.24 as requiring the 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 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 Material Contract which is
applicable to, binding upon or enforceable against the Company or the
Shareholders, (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the properties or assets of the Company, (e) give
to any individual or entity a right or claim against the Company or the
Shareholders (only as such right or claim against the Shareholders relates to
the Company or the Shareholders' interest or relationship with the Company) 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 and or other 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. SCHEDULE 3.6 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.
3.7 SUBSIDIARIES Except as set forth on SCHEDULE 3.7, 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.
3.8 FINANCIAL STATEMENTS The Shareholders have delivered to Medical
Manager the financial statements of the Company for the month-end close July 31,
1997 (the "Financial Statements"), a copy of which is attached as SCHEDULE 3.8
hereto. The balance sheet of the Company
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dated as of July 31, 1997, is referred to herein as the "Current Balance Sheet."
The Financial Statements fairly present the financial position of the Company at
the balance sheet date and the results of operations for the period covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the period indicated. The books and records of the Company fully and
fairly reflect all of its material transactions, properties, assets and
liabilities. There are no material special or non-recurring items of income or
expense during the periods covered by the Financial Statements and the balance
sheet 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.
3.9 CHANGES SINCE THE CURRENT BALANCE SHEET DATE Since the date of its
Current Balance Sheet including the Financial Statements, the Company has not
(a) 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, except for dividends or distributions paid in the
ordinary course of business consistent with past practices; (b) 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 except for increases in the rate of compensation of salaried
employees, which bonuses and increases are in the ordinary course of business
and in accordance with past practices; (c) 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 practices; (d) made or
obligated itself to make capital expenditures out of the ordinary course of
business consistent with past practices; (e) made any payment in respect of its
liabilities other than in the ordinary course of business consistent with past
practices; (f) except in the ordinary course of business, 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) or entered into any transaction
or series of transactions contemplated hereby; (g) suffered any theft, damage,
destruction or casualty loss not covered by insurance in excess of $10,000 in
the aggregate, and in excess of $50,000 in the aggregate if covered by
insurance; (h) suffered any extraordinary losses (whether or not covered by
insurance); (i) waived, canceled, compromised or released any rights having a
value in excess of $10,000 in the aggregate; (j) made or adopted any change in
its accounting practice or policies; (k) 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 practices; (l) entered into any transaction
with the Shareholders or any Affiliate of the Company or the Shareholders; (m)
entered into any employment agreement that is not terminable at Closing without
any liability or obligation; (n) terminated, amended or modified any agreement
involving an amount in excess of $10,000 in the aggregate; (o) other than liens
imposed by statute, imposed any security interest or other Lien on any of its
assets; (p) delayed paying any account payable beyond 45 days following the date
on which it is due and payable except to the extent being contested in good
faith; (q) made or pledged any charitable contributions in excess of $10,000 in
the aggregate; (r) acquired (including, without limitation, for cash or shares
of stock, by merger, consolidation, or acquisition of stock or assets) any
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interest in any corporation, partnership or other business organization or
division thereof or any assets, or made any investment either by purchase of
stock or securities, contributions or property transfer of capital other than as
permitted or provided in this Agreement; (s) increased or decreased prices
charged to customers, except in the ordinary course of business consistent with
past practices; or taken any actions which might reasonably result in any
material loss of customers; (t) entered into any other transaction or been
subject to any event which has or may reasonably be expected to have a Material
Adverse Effect on the Company; or (u) agreed to do or authorized any of the
foregoing.
3.10 LIABILITIES OF THE COMPANY To the knowledge of the Company and the
Shareholders, the Company does not have any liabilities or obligations, whether
accrued, absolute, contingent or otherwise, 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 practices 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), and (c) liabilities 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 recorded thereon.
3.11 LITIGATION Except as set forth on SCHEDULE 3.11, there is no
action, suit or other legal or administrative proceeding or governmental
investigation pending, or, to the knowledge of the Company or the Shareholders,
threatened, anticipated or contemplated against, by or affecting the Company or
Shareholders (but with respect to the Shareholders only as it relates to the
Company or the Shareholder's interest or relationship with the Company), or the
Company's properties or assets, or which question the validity or enforceability
of this Agreement or the transactions contemplated hereby, and, to the knowledge
of the Company or the Shareholders, there is no reasonably likely 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.
3.12 ENVIRONMENTAL MATTERS
(a) To the knowledge of the Company and the Shareholders, the
Company and the Shareholder are and have at all times been in material
compliance with all environmental laws governing the Company and its
business, operations, properties and assets.
(b) There are no (and to the knowledge of the Company and the
Shareholders, there is no basis for any) 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 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
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the Company or the Shareholder (but with respect to the Shareholders
only as it relates to the Company or the Shareholder's interest or
relationship with the Company).
3.13 REAL ESTATE
(a) The Company owns no real property or any interest therein,
including, without limitation, any option or other right or obligation
to purchase any real property or any interest therein other than its
leasehold interest in the Leased Premises and the premises leased
pursuant to the Excluded Lease (defined below).
(b) The Lease dated October 27, 1995 between Xxxxx X.
Xxxxxxxxx Living Trust and CIS, Inc. ("Topeka Lease") and the Lease
Agreement dated as of February 22, 1993 between Xxxxxxx-Omega
Management, Inc. ("WOM") and Abacus Healthcare Systems, Inc., as
amended by First Amendment to Lease Agreement dated March 27, 1996
between WOM and AMSC, Inc., and as further amended by letter dated
April 23, 1997 from AMSC, Inc. to WOM ("Wichita Lease") are in full
force and effect and have not been amended, and neither the Company,
and, to the knowledge of the Companies and the Shareholders, any other
party, is in default under either the foregoing leases. True and
correct copies of the Topeka Lease and the Wichita Lease have been
provided by the Company and Medical Manager. Not event has occurred
which, with the passage of time or the giving of notice or both, would
come a material breach or default by the Company, or to the knowledge
of the Company and the Shareholders, any other party under either of
the foregoing leases. The premises subject to the Topeka Lease and the
Wichita Lease are referred to herein as the "Leased Premises."
(c) As of the date hereof, the Company does not have any
office or business other than in Altamonte Springs, Florida, Topeka,
Kansas and Wichita, Kansas.
3.14 GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY
(a) The Company has good title to all of its Assets free and
clear of any Liens.
(b) The Fixed Assets currently in use or necessary for the
business and operations of the Company are in reasonable operating
condition, normal wear and tear excepted, and have been maintained
substantially in accordance with all applicable manufacturer's
specifications and warranties. For purposes of this Agreement, the term
"Fixed 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 which constitute
the Purchased Assets.
(c) The inventories of the Company are carried on the books of
the Company and have been accounted for in accordance with GAAP
consistently applied. Subject to normal allowances under GAAP as
reflected on the Current Balance Sheet, all such inventories are
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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. Subject to normal allowances under GAAP as reflected on
the Current Balance Sheet, none of the inventories are subject to
damage of any type that would materially and adversely affect their
marketability at currently prevailing market prices.
3.15 COMPLIANCE WITH LAWS To the knowledge of the Company and the
Shareholders, each of the Company, the Shareholders and any Affiliate of the
Company is and has been in compliance with all laws, regulations and orders
applicable to them, their respective business and operations (as conducted by
them now and in the past), and their properties and assets (in each case owned
or used by it now or in the past). Neither the Company, the Shareholders nor any
of its respective employees or agents, has made any payment of funds in
connection with its business which is prohibited by law, and no funds have been
set aside to be used in connection with its business for any payment prohibited
by law. The Company is not subject to any decree or injunction in which it is a
party which restricts the continued operation of any business or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business.
3.16 LABOR AND EMPLOYMENT MATTERS SCHEDULE 3.16 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 has never been any actual or, to the knowledge of the
Company or the Shareholders, 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, since November 3, 1994, committed any
unfair labor practices as defined in the National Labor Relations Act, as
amended, and there is no pending or, to the knowledge of the Company or
Shareholders, threatened charge or complaint against the Company by or with the
National Labor Relations Board or any representative thereof. The Company is not
aware that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with the Company as a result of the
transactions contemplated hereby or otherwise. To the knowledge of the Company
and the Shareholders, 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.
3.17 EMPLOYEE BENEFIT PLANS.
(a) Each group health plan (within the meaning of either
Section 5000(b)(1) of the Internal Revenue Code of 1986, as amended
(the "Code") or Section 607(l) of the Employee Retirement Income
Security Act of 1974 ("ERISA") maintained or contributed to, currently
or in the past, by the Company is and at all times has been operated in
material compliance with the
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continuation coverage requirements of Part 6, Subtitle B of Title I of
ERISA and Section 4980B of the Code.
(b) There is no lien upon any property of the Company
outstanding including, without limitation, any lien pursuant to Section
412(n) of the Code, in favor of any Company "employee benefit plan"
within the meaning of Section 3(3) of ERISA or in favor of any
participant in such plan or in favor of the Pension Benefit Guaranty
Corporation pursuant to Section 4068 of ERISA and no assets of the
Company have been provided as security to any Company plan that is or
was subject to Title IV of ERISA.
(c) The Company has never had any past, present or future
obligation or liability to contribute to any "multiemployer plan," as
defined in Section 3(37) of ERISA.
(d) For purposes of this Section 3.17, the term "Company"
shall be deemed to include any other corporation, trade, business or
other entity, other than the Company, which would, together with the
Company, now or in the past constitute a single employer within the
meaning of Section 414 of the Code.
3.18 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
material compliance with all applicable laws and regulations, and all such Tax
Returns are true and accurate in all material respects. All Taxes due and
payable by or with respect to the Company have 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 3.18 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
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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); (xviii) no sales or use tax, non-recurring intangibles tax,
documentary stamp tax or other excise tax (or comparable tax imposed by any
governmental entity) will be payable by the Company or Medical Manager by virtue
of the transactions contemplated in this Agreement.
3.19 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 SCHEDULE 3.19 contains (i) a complete
and correct list of all current 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
for an amount in excess of $10,000 that relates to loss or damage to the
properties, assets or businesses of the Company.
3.20 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. Promptly following that date which is One Hundred Eighty (180) days
from the Closing Date, Medical Manager will calculate the total amount of Net
Assets acquired at Closing, consistent with the Purchase Price Adjustment
calculations set forth in Section 1.5 hereof, but substituting the amount
collected with respect to the Receivables through One Hundred Eighty (180) days
from the Closing Date. If the total Net Assets is less than $1.2 million, then
the Shareholders shall pay to Medical Manager the
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difference between $1.2 million and the total amount of Net Assets ("Receivables
Shortfall"). Medical Manager shall have the option of setting off against the
Held Back Shares the Receivables Shortfall. Upon payment of the Receivables
Shortfall, Medical Manager shall reassign to the Company the uncollected
Receivables that formed the basis for the Receivables Shortfall. For purposes of
this Agreement, the term "Receivables" means all receivables of the Company,
including, without limitation, all manufacturer's warranty receivables, all
trade account receivables arising from the provision of goods and/or services,
sale of inventory, notes receivable, and insurance proceeds receivable. The
Receivables Shortfall shall be deemed to be Indemnifiable Damages under Article
VIII hereof but shall not be subject to the limitations of Section 8.2(a)
hereof. Medical Manager shall have no obligation to collect any of the
Receivables in a manner other than consistent with the historical collection
practices of the Company that would otherwise be deemed in the normal course of
good business practice.
3.21 LICENSES AND PERMITS The Company possesses all material licenses,
approvals, permits or authorizations from governmental authorities
(collectively, the "Permits") for its business and operations, including with
respect to the operation of each of the premises leased by the Company, and
SCHEDULE 3.21 sets forth a true, complete and accurate list of all such Permits,
and all applications for Permits. All such Permits are valid and in full force
and effect, the Company is in material compliance with the respective
requirements thereof, and no proceeding is pending or 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.
3.22 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS The Purchased Assets constitute, in the
aggregate, all of the assets and properties used by the Company for the conduct
of the business of the Company in the manner in which and to the extent to which
such business is currently being conducted. No current supplier to the Company
of items material to the conduct of its business has threatened to terminate its
business relationship with the Company for any reason. Neither the Company nor
any of the Shareholders have any direct or indirect equity interest in any
customer, supplier or competitor of the Company, or in any person from whom or
to whom the Company leases real or personal property. No officer, director or
shareholder of the Company, nor any person related by blood or marriage to any
such person, nor any entity in which any such person owns any beneficial
interest, is a party to any Contract or transaction with the Company or has any
interest in any property used by the Company.
3.23 INTELLECTUAL PROPERTY The Company has the legal right, title and
interest in and to, or the right to use under license, all trademarks, service
marks, trade names, copyrights, know-how, patents, trade secrets, licenses
(including licenses for the use of computer software programs), and other
intellectual property used in the conduct of its business, as set forth on
SCHEDULE 3.24 (the "Intellectual Property"). The conduct of the business of the
Company as presently conducted, and the use and exploitation of the Intellectual
Property in connection therewith, does not infringe or misappropriate any rights
held or asserted by any Person, and, to the knowledge of the Company and the
Shareholders, no Person is infringing on the Intellectual Property. No payments
are required for the continued use of the Intellectual Property, except
royalties under licenses constituting the
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Purchased Assets. None of the Intellectual Property has ever been declared
invalid or unenforceable, or is the subject of any pending, or, to the knowledge
of the Company and the Shareholders, threatened, action for opposition,
cancellation, declaration, infringement, or invalidity, unenforceability or
misappropriation or like claim, action or proceeding.
3.24 CONTRACTS SCHEDULE 3.24 sets forth a list of each Material
Contract (as defined below), true, correct and complete copies of which have
been provided to Medical Manager, including, without limitation, all sales and
service, dealer and other agreements or undertakings. SCHEDULE 3.24 identifies
certain Material Contracts identified therein that require the Consents of third
parties to the transactions contemplated hereby. The copy of each Material
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 Material Contract or any term or condition which
would permit termination or modification of any Material Contract, and, to the
knowledge of the Company and the Shareholders, 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 Material 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,
to the knowledge of the Company and the Shareholders, any other party under any
Material Contract. The Company is not subject to any liability or payment
resulting from renegotiation of amounts paid under any Material Contract. As
used in this SECTION 3.24 "Material Contracts" shall mean formal or informal,
written or oral, (a) loan agreements, indentures, mortgages, pledges,
hypothecations, deeds of trust, conditional sale or title retention agreements,
security agreements, equipment financing obligations or guaranties, or other
sources of contingent liability in respect of any indebtedness or obligating to
any other Person, or letters of intent or commitment letters with respect to
same in excess of $10,000.00; (b) contracts obligating the Company to obtain
products or services in excess of $10,000.00; (c) contracts obligating the
Company to provide products or services; (d) leases of real property; (e) leases
of personal property in excess of $10,000.00; (f) distribution, sales agency,
franchise, dealer, or similar agreements in excess of $10,000.00; (g) agreements
providing for an independent contractor's services; (h) employment agreements,
management service agreements, consulting agreements, confidentiality
agreements, non-competition agreements, employee handbooks, policy statements
and any other agreements relating to any employee, officer or director of the
Company; (i) licenses, assignments or transfers of trademarks, trade names,
service marks, patents, copyrights, trade secrets or know how, or other
agreements regarding proprietary rights or intellectual property; (j) contracts
relating to pending capital expenditures by the Company in excess of $10,000.00;
(k) non-competition agreements restricting the Company in any manner, (l) any
contracts obligating the Company to make payments in excess of $10,000, in the
aggregate, over the remaining term of such contract; and (m) all other Contracts
or understandings which are material to the Company, or its business, assets or
properties, irrespective of subject matter and whether or not in writing.
3.25 INVESTMENT INTENT; SECURITIES DOCUMENTS Each of the Shareholders
has had the opportunity to discuss the transactions contemplated hereby with
Medical Manager and has had the
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opportunity to obtain such information pertaining to Medical Manager Corporation
as has been requested, including but not limited to filings made by Medical
Manager Corporation with the SEC under the Exchange Act. Each of the
Shareholders hereby represents that it can bear the economic risk of losing its
investment in the Medical Manager Shares and has adequate means for providing
for its current financial needs and contingencies. Each Shareholder acknowledges
receiving a prospectus which forms a part of Medical Manager Corporation's
Registration Statement on Form S-1 and the supplements thereto (the
"Prospectus"), prior to the date hereof, in accordance with the requirements of
the Securities Act.
3.26 NO COMMISSIONS Except for the bonus payment, payable by the
Shareholders, to Xxxx Xxxxxxx, neither the Company nor any of the Shareholders
have incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
3.27 NAMES All names under which the Company does business as of the
date hereof are specified on SCHEDULE 3.27.
3.28 ACCURACY OF INFORMATION FURNISHED No representation, statement or
information made or provided by the Company and/or the Shareholders contained in
this Agreement (including, without limitation, the various Schedules 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 material fact necessary
to make the information contained therein not 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.
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 practices. 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, except as contemplated by this
Agreement, 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:
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(a) amend or otherwise change its Articles of Incorporation or
Bylaws;
(b) issue, sell, pledge, dispose of, encumber, or, authorize
the issuance, any of its assets, tangible or intangible, except in the
ordinary course of business consistent with past practices;
(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) (i) 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 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 practices, purchase any property or assets of any other
Person, (ii) except for trade debt incurred by the Company in the
ordinary course of business, consistent with past practices, 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, or (iii) modify, terminate or enter into any Contract other
than in the ordinary course of business, consistent with past
practices;
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases for non-executive
employees in the ordinary course of business and consistent with past
practices, or, except as presently bound to do, 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, except for
amendments or actions required by applicable law, 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;
(g) 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 practices;
(h) 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
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with past practices 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 practices;
(i) reschedule any installations of the Company's software
products except in the ordinary course of business consistent with past
practices;
(j) increase or decrease prices charged to its customers,
except in the ordinary course of business consistent with past
practices, or take any other action which might reasonably result in
any loss of customers;
(k) enter into any transaction with any Shareholder or
Affiliates thereof; or
(l) 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
---------------------
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.
5.2 COMPLIANCE WITH COVENANTS The Shareholders shall cause the Company
to comply with all of the covenants of the Company under this Agreement.
5.3 COOPERATION Each of the parties agrees to cooperate with the others
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation in connection with the transactions contemplated by this
Agreement and to use their respective best efforts to agree jointly on a method
to overcome any objections by any Governmental Authority to any such
transactions.
5.4 OTHER ACTIONS Each of the parties hereto shall use its reasonable
best 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 Contracts
with the Company as are necessary for the
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consummation of the transactions contemplated hereby. Each of parties 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 best 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.
5.5 ACCESS TO INFORMATION From the date hereof to the Closing Date, the
Company and the Shareholders shall, and 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 during normal business or other reasonably requested hours
with prior notice 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
requested. No information provided to or obtained by any party shall affect any
representation or warranty in this Agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS Each party shall give prompt notice
to the other of the occurrence or non-occurrence of any 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 effect the representations,
warranties and covenants made by any party in or pursuant to this Agreement).
5.7 NO OTHER DISCUSSIONS The Company and the Shareholders and their
respective 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 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 Shareholders agree jointly and
severally with Medical Manager that they will not:
(a) for a period of three years from the Closing Date, solicit
in any manner, directly or indirectly, with respect to medical practice
management software, any customers of the Company;
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(b) for a period of two years from the Closing Date, directly
or indirectly, solicit for employment any person who was employed by
Medical Manager or any Affiliate of Medical Medical Manager at or
within the prior six months, or in any manner seek to induce any such
person to leave his or her employment. The publication of employment
advertisements and use of professional recruiting agencies shall not be
deemed solicitation of such persons under this Section 5.8(b); and
(c) at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in
its or their possession Medical Manager's or any Medical Manager
Affiliates' proprietary rights or records, including, but not limited
to, any of its or their 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 or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
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
will 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 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 DUE DILIGENCE REVIEW Medical Manager shall be entitled to conduct
prior to Closing a due diligence review of the assets, properties, 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.
5.10 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 or termination of this Agreement, neither the
Company, the Shareholders nor any of their Affiliates will directly or
indirectly purchase or sell (including short sales) any shares of Medical
Manager Common Stock in any transactions effected on NASDAQ or otherwise.
5.11 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
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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.
5.12 EXECUTION OF FURTHER DOCUMENTS From and after the Closing, upon
the reasonable request of Medical Manager, the Company and the Shareholders
shall promptly 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 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.
5.13 PAYOFF AND ESTOPPEL LETTERS (a) Within ten (10) business days of
Closing, the Company shall request, and thereafter shall use best efforts to
deliver, to Medical Manager estoppel letters, in form reasonably acceptable to
Medical Manager, with respect to any leases being assumed by Medical Manager.
(b) Notwithstanding, the foregoing, the Company shall, within ten (10)
business days of Closing, deliver UCC-3 termination statements from The Kaw
Valley State Bank, SunTrust Bank and Xxxxx Financial Corporation in respect of
the UCC-1 Financing Statements filed against the Company.
5.14 POST-CLOSING ACTIONS OF THE COMPANY Following the Closing, the
Company shall take no actions, and incur no liabilities, other than in
connection with the orderly liquidation of the Company and distribution of the
cash component of the Purchase Price and the Medical Manager Shares to the
Shareholders.
5.15 SHAREHOLDER AND DIRECTOR VOTE Each of the Shareholders, in
executing this Agreement, consents as a shareholder of the Company to the
transactions contemplated herein, and waives notice of any meeting in connection
therewith.
5.16 COBRA. With respect to employees of the Company who are hired by
Medical Manager as of the Closing Date and dependents of such employees, Medical
Manager acknowledges that it is a "successor" of the Company, within the meaning
of Proposed Treasury Regulations Section 1.162-26, Q & A 5, and, consequently,
Medical Manager agrees to provide to the extent required by applicable law,
"continuation coverage" under its group health plan to each "qualified
beneficiary" who incurs a "qualifying event" on or after the Closing Date, as
those terms are defined in Section 4980B of the Code and Section 602 of ERISA,
provided such individual was a beneficiary
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under the group health plan of the Company immediately prior to the Closing
Date. The Company shall provide such "continuation coverage" as required by law
for all other "qualifying events" with respect to a beneficiary under the group
health plan(s) of the Company.
5.17 EMPLOYEES. Medical Manager agrees to hire all employees of the
Company listed on SCHEDULE 3.16 that are expressly noted as to be hired. With
respect to those employees who will be hired, Medical Manager will carry forward
through December 31, 1997 not more than 40 hours of vacation time accrued by the
employee and expensed by the Company as specifically set forth on
Schedule 3.16 hereof ("Assumed Accrued Vacation"). If such vacation time is not
used by December 31, 1997, such vacation time will automatically be forfeited by
the employee; provided that Medical Manager allows all employees to use the
Assumed Accrued Vacation prior to such date.
5.18 BENEFIT PLAN. Medical Manager agrees to give all former employees
of the Company which it hires service credit for service rendered by such
employee for the Company for purposes of any eligibility and vesting
requirements under any employee benefits plans, programs or practices maintained
or sponsored, or contributed to, by Medical Manager. Any medical and dental
benefits maintained by Medical Manager for its employees shall provide credit
for coverage under the Company's comparable plan towards coverage requirements
under the Medical Manager medical and dental plans for purposes of any exclusion
of coverage for pre-existing conditions of the former employees of the Company
which are hired by 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
writing, in whole or in part 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, (which in case of the Company shall be duly signed by its
Chief Executive Officer and Chief Financial Officer) certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
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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 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 Shareholders shall have delivered to the
Medical Manager Companies (i) copies of the Articles of Incorporation and Bylaws
of the Company as in effect immediately prior to the Closing Date, (ii) copies
of resolutions adopted by the Board of Directors and shareholders of the Company
authorizing the transactions contemplated by this Agreement, and (iii) a
certificate of good standing of the Company issued by the Department of State of
Florida 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, certified in each case
as of the Closing Date by the Secretary of the Company as being true, correct
and complete.
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
in form and substance reasonably acceptable to Medical Manager.
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 Material Contract.
6.6 RELEASES At the Closing, the Company and each of the Shareholders,
and such of their Affiliates as may be designated by Medical Manager, shall
deliver to Medical Manager a release (collectively, the "Releases") in the form
attached hereto as Exhibit 6.6, releasing all claims of any nature against
Medical Manager.
6.7 [RESERVED]
6.8 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.
6.9 BOARD APPROVAL The Board of Directors of Medical Manager shall have
authorized and approved this Agreement, and transactions contemplated hereby.
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6.10 DUE DILIGENCE REVIEW Medical Manager shall be satisfied with the
results of its due diligence review pursuant to SECTION 5.10.
6.11 EDI AGREEMENT NDC shall have executed and delivered the EDI
services contract substantially in the form of Exhibit 6.11, attached hereto
(the "EDI Contract").
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 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, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
7.2 MEDICAL MANAGER SHARES At the Closing, Medical Manager shall have
issued all of the Medical Manager Shares and shall have delivered to the Company
(a) certificates representing the Medical Manager Shares issued to them
hereunder, other than the Held Back Shares, and (b) copies of certificates
representing the Held Back Shares issued to the Company.
7.3 NO ORDER OR INJUNCTION There shall not be pending by or before any
court or other governmental body an order or injunction restraining or
prohibiting the transactions contemplated hereby.
7.4 CORPORATE CERTIFICATE. Medical Manager shall have delivered to the
Company (i) copies of the Articles of Incorporation and Bylaws of Medical
Manager as in effect immediately prior to the Closing Date, (ii) copies of
resolutions adopted by the Board of Directors and shareholders of Medical
Manager authorizing the transactions contemplated by this Agreement, and (iii) a
certificate of good standing of the Company issued by the Department of State of
Florida as
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of a date not more than thirty days prior to the Closing Date, certified in each
case as of the Closing Date by the Secretary of Medical Manager as being true,
correct and complete.
7.5 OPINION OF COUNSEL. Medical Manager shall cause to be delivered to
the Company an opinion of counsel in form and substance reasonably acceptable to
the Company.
7.6 EDI CONTRACT. Medical Manager shall have delivered the EDI
Contract.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 AGREEMENT BY THE COMPANY AND THE SHAREHOLDERS FOR INDEMNIFICATION
The Company and the Shareholders jointly and severally agree to indemnify and
hold Medical Manager and its stockholders, directors, officers, employees,
attorneys and Affiliates harmless from and against, and, at Medical Manager's
election, in its sole discretion, Medical Manager shall be entitled to recover
by set off against the Held Back Shares in accordance with SECTION 8.3, 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 Medical Manager arising out of or resulting from (i) any
breach of a representation or warranty made by the Company or the Shareholders
in or pursuant to this Agreement, (ii) any breach of the covenants or agreements
made by the Company or the Shareholders in or pursuant to this Agreement or
(iii) any inaccuracy in any certificate, instrument or other document delivered
by the Company or the Shareholders as required by this Agreement; (iv) one-half
of any transfer taxes (which term shall not include any income taxes) that may
be due and owing to any Governmental Authority; (v) any liability or obligation
of the Company not described in clause (a), (b) or (c) of Section 3.10 hereof,
whether or not the Shareholders or the Company had knowledge of such liability;
(vi) any action, suit, legal or administrative proceeding, governmental
investigation, order, decree or stipulation described in Section 3.11 hereof,
whether or not the Shareholders or the Company had knowledge of any such action,
suit, legal or administrative proceeding, governmental investigation, order,
decree or stipulation; and (vii) any non-compliance by the Company, the
Shareholders or any affiliate of the Company with any laws (including, but not
limited to any environmental laws), regulations and orders applicable to them,
their respective businesses and operations (as conducted by them now and in the
past) and their properties and assets (in each case owned or used by it now and
in the past), whether or not known to the Company or the Shareholders
(collectively, "Indemnifiable Damages"). Without limiting the generality of the
foregoing, with respect to the measurement of Indemnifiable Damages, Medical
Manager 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 agreements of the Company and the Shareholders hereunder been
performed in full.
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8.2 INDEMNIFIABLE DAMAGES LIMITATIONS; SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.
(a) Notwithstanding anything to the contrary contained herein,
Medical Manager shall not be entitled to make a claim for Indemnifiable
Damages arising under Section 8.1 above unless the claim is with
respect to any single fact or circumstance resulting in Indemnifiable
Damages exceeding $500.00. Medical Manager shall not be entitled to any
Indemnifiable Damages arising under Section 8.1 unless the aggregate of
all claims for Indemnifiable Damages exceeds $50,000, in which case
Medical Manager shall be entitled to the full amount of Indemnifiable
Damages. The foregoing limitations shall not be applicable in respect
of any claim of fraud or any statutory violation in the nature of
fraud, or in respect of any breach of Sections 3.13(b) or 5.13(b)
hereof, or in respect of the payment of the Purchase Price Adjustment
under Section 1.5 or any claim for uncollected Receivables under
Section 3.20 hereof. Any claims falling within the categories
enumerated in the immediately preceding sentence shall not count
against the $50,000 Indemnification Threshold. In no event shall the
aggregate amount of Indemnifiable Damages payable by the Company and
the Shareholders exceed $1,323,672.00.
(b) Each of the representations and warranties made by the
Company and the Shareholders and Medical Manager in this Agreement or
pursuant hereto shall survive for a period of two years after the
Closing Date. No claim for the recovery of Indemnifiable Damages may be
asserted by any party after such representations and warranties shall
thus expire; PROVIDED, HOWEVER, that claims for Indemnifiable Damages
first asserted within the applicable period shall not thereafter be
barred. 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.
8.3 SECURITY FOR INDEMNIFICATION OBLIGATION As security for the
indemnification obligations contained in this ARTICLE VIII, at the Closing,
Medical Manager shall set aside and hold, and the Company and the Shareholders
hereby grant a security interest in the shares represented by, the certificates
representing the Held Back Shares issued pursuant to this Agreement. Medical
Manager may set off against the Held Back Shares any loss, damage, cost or
expense for which the Company or the Shareholders may be responsible pursuant to
this Agreement (including without limitation, any Indemnifiable Damages) whether
or not indemnified pursuant to this ARTICLE VIII, subject, however, to the
following terms and conditions:
(a) Medical Manager shall give written notice to the Company
of any claim for Indemnifiable Damages or any other damages hereunder,
which notice shall set forth (i) the amount of Indemnifiable Damages or
other loss, damage, cost or
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expense which Medical Manager claims to have sustained by reason
thereof, and (ii) the basis of such claim;
(b) Such set off shall be effected on the later to occur on
the expiration of 10 days from the date of such notice (the "Notice of
Contest Period") or, if such claim is contested, the date the dispute
is resolved, and such set off shall be charged proportionally against
the shares set aside;
(c) After any restrictions on the sale of the Held Back Shares
imposed under the Securities Act or otherwise are terminated, the
Company may, not more than once during any calendar year, instruct
Medical Manager to sell some or all of the Held Back Shares and the net
proceeds thereof shall be substituted for such Held Back Shares in any
set off to be made by Medical Manager pursuant to any claim hereunder
subject to continued compliance with any applicable SEC and other
regulations; and
(d) For purposes of any set off against the Held Back Shares
pursuant to this ARTICLE VIII, the shares of Medical Manager Common
Stock not sold as provided in clause (c) of this Section shall be
valued at the Average Closing Sale Price.
8.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES Except with respect
to shares transferred pursuant to the foregoing right of set off (and in the
case of such shares, until the same are transferred), all Held Back Shares shall
be deemed to be owned by the Company and the Company shall be entitled to vote
the Held Back Shares; PROVIDED, HOWEVER, that, there shall also be deposited
with Medical Manager subject to the terms of this ARTICLE VIII, all shares of
Medical Manager Common Stock issued to the Company as a result of any stock
dividend or stock split and all cash issuable to the Company as a result of any
cash dividend, with respect to the Held Back Shares. All stock and cash issued
or paid upon Held Back Shares shall be distributed to the person or entity
entitled to receive such Held Back Shares together with such Held Back Shares.
8.5 [RESERVED]
8.6 ADJUSTMENT TO PURCHASE PRICE All payments for Indemnifiable Damages
made pursuant to this ARTICLE VIII shall be treated as adjustments to the
Purchase Price.
8.7 NO BAR If the Held Back Shares are insufficient to set off any
claim for Indemnifiable Damages made hereunder (or have been delivered to the
Company prior to the making or resolution of such claim), then Medical Manager
may take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages.
8.8 REMEDIES CUMULATIVE The remedies provided herein shall be
cumulative and shall not preclude Medical Manager from asserting any other
right, or seeking any other remedies against the Shareholders or the Company.
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8.9 MEDICAL MANAGER INDEMNITY. Medical Manager agrees to indemnify and
hold the Company and the Shareholders (for purposes of this Section 8.9 only
("Indemnitees")) 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 Indemnitee arising out of or resulting from (i) any breach of a
representation or warranty made by Medical Manager in or pursuant to this
Agreement, (ii) any breach of the covenants or agreements made by Medical
Manager in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate, instrument or other document delivered by Medical Manager as
required by this Agreement and (iv) one-half of any transfer taxes (which term
shall not include any income taxes) that may be due and owing to any
Governmental Authority in respect of the transactions contemplated by this
Agreement.
ARTICLE IX
SECURITIES LAW MATTERS
----------------------
The parties agree as follows with respect to the sale or other
disposition after Effective Time of the Medical Manager Shares:
9.1 DISPOSITION OF SHARES
(a) The Shareholders represent and warrant that the shares of
Medical Manager Common Stock being acquired by them hereunder are being
acquired and will be acquired for their own respective accounts and
will not be sold or otherwise disposed of, except pursuant to (i) an
exemption from the registration requirements under the Securities Act,
(ii) in accordance with Rule 145(d) under the Securities Act, or (iii)
an effective registration statement filed by Medical Manager with the
SEC under the Securities Act. To the extent Medical Manager or the
Shareholders complies with the provisions of Rule 145(d) under the
Securities Act in effecting sales of the Medical Manager Shares,
Medical Manager agrees to provide its transfer agent with appropriate
instructions and/or opinions of counsel in order for them to sell,
transfer and/or dispose of the Medical Manager Shares in accordance
with Rule 145(d).
9.2 LEGEND The certificates representing the Medical Manager Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED
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UNDER THE ACT, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY
STATE WITH RESPECT THERETO, (B) IN ACCORDANCE WITH RULE 145(D) UNDER
THE ACT, OR (C) IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS CONTAINED IN THAT CERTAIN
PURCHASE AGREEMENT DATED SEPTEMBER 11, 1997 BETWEEN MEDICAL MANAGER
SOUTHEAST, INC., NATIONAL DATA CORPORATION, CIS TECHNOLOGIES, INC.,
AMSC, INC. AND AMSC MIDWEST.
Medical Manager may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
9.3 LOCK-UP AGREEMENT For a period of one (1) year after the Closing
Date with respect to all of the Medical Manager Shares delivered hereunder, and
for a period of two (2) years after the Closing Date with respect to one-half of
the Medical Manager Shares delivered hereunder, NDC agrees not to, directly or
indirectly, offer, sell, contract to sell, grant any option to purchase, or
otherwise dispose of such shares or in any manner transfer all or a portion of
the economic rights or benefits associated with the ownership of such shares
without the prior written consent of Medical Manager. Notwithstanding the
foregoing, during such periods such shares may be pledged as security for the
obligation of the holder thereof; provided that the pledgees shall agree in
writing to be bound by the terms and conditions of the preceding sentence. NDC
agrees that Medical Manager may, with respect to any shares of Medical Manager
Common Stock deliver hereunder, cause the transfer agent for Medical Manager to
note stop transfer instructions with respect to such shareholder's shares of
Medical Manager Common Stock on the transfer books and records of Medical
Manager.
ARTICLE X
DEFINITIONS
-----------
10.1 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.
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"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment agreement,
license, instrument, purchase and sales order, commitment, undertaking,
obligation, whether written or oral, express or implied.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America as of the date hereof, applied consistently with the
past practices of the Company.
"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.
"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.
"Register", "registered" and "registration" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of the effectiveness of such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Tax.
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"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 Governmental
Authority.
10.2 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 XI
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
11.1 TERMINATION This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(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 which is not cured to Medical Manager's satisfaction after
five (5) business days written notice of such breach; 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 September 30, 1997.
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11.2 EFFECT OF TERMINATION Except for the provisions of ARTICLE VIII
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to SECTION 12.1, this Agreement shall
forthwith become void and of no further force and effect, and the parties shall
be released from any and all obligations hereunder; PROVIDED, HOWEVER, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE XII
GENERAL PROVISIONS
------------------
12.1 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 telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(a) IF TO MEDICAL MANAGER TO:
Xxxxxxxx X. Xxxxxxx, Associate General Counsel
Medical Manager Corporation
0000 X Xxxxx Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
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, Esquire
Facsimile Number (000) 000-0000
(b) IF TO THE COMPANY TO:
National Data Corporation
Xxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Facsimile Number: (000) 000-0000
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WITH A COPY TO:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, XX
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. XxXxxxx, Esquire
Facsimile Number: (000) 000-0000
12.2 ENTIRE AGREEMENT This Agreement (including the Schedules 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 constitute
a part hereof as though set forth in full above.
12.3 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 at Closing the Company and Medical Manager shall
each pay one-half of all sales, transfer or similar taxes (exclusive of any
income taxes) required to be paid by reason of the sale by the Company to
Medical Manager of the Purchased Assets pursuant to this Agreement.
12.4 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.
12.5 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 without the prior
written consent of Medical Manager. Medical Manager may assign all or any
portion of its rights hereunder to one or more of its sister corporations.
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12.6 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.
12.7 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.
12.8 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.
12.9 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
courts of Seminole County, Florida, or in the U.S. District Court for
the Middle District of Florida, as Medical Manager (in its sole
discretion) may elect, and the Company and the Shareholders hereby
irrevocably accepts and consents 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 Seminole County, Florida, or the U.S. District Court for the
Middle District of Florida, as selected by Medical Manager, and hereby
further irrevocably waives any claim that any suit, action or
proceedings brought in Hillsborough County, Florida, or in such
District Court has been brought in an inconvenient forum.
12.10 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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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 SOUTHEAST, INC.,
a Florida Corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
--------------------------------
Title: Secretary
-------------------------------
NATIONAL DATA CORPORATION
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------
Title: Senior Vice President
-------------------------------
CIS TECHNOLOGIES, INC.,
an Oklahoma corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------
Title: President
-------------------------------
AMSC, INC., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------
Title: Assistant Secretary
-------------------------------
AMSC MIDWEST, INC., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------
Title: Assistant Secretary
-------------------------------
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