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EXHIBIT 10.16
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CRESCENT INTERNATIONAL LTD.
AND
PRACTICEWORKS, INC.
DATED AS OF JANUARY __, 2001
This STOCK PURCHASE AGREEMENT is entered into as of the __ day of
January, 2001 (this "Agreement"), by and between Crescent International Ltd.
(the "Investor"), an entity organized and existing under the laws of Bermuda,
and PracticeWorks, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase, up to $5,000,000 worth of the Preferred Stock
(as defined below); and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)"), Section 3(a)(9) ("Section 3(a)(9)") and
Regulation D ("Regulation D") of the U.S. Securities Act of 1933, as amended and
the rules and regulations promulgated thereunder (the "Securities Act"), and/or
upon such other exemption from the registration requirements of the Securities
Act as may be available with respect to any or all of the investments in Common
Stock to be made hereunder.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Affiliate" shall mean any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under direct or indirect common control with any other Person. For the
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the term "controls" and "controlled" have meanings correlative
to the foregoing.
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Section 1.2. "Capital Shares" shall mean the Common Stock and
Preferred Stock and any shares of any other class of common stock or preferred
stock whether now or hereafter authorized, having the right to participate in
the distribution of dividends (as and when declared) or assets (upon liquidation
of the Company).
Section 1.3. "Certificate of Designations" shall mean the Certificate
of Designations, Powers, Preferences and Rights of the Company, setting forth
the rights, preferences and limitations of the Preferred Stock, as filed by the
Company with the Secretary of State of the State of Delaware prior to the
Closing Date.
Section 1.4. "Closing" shall mean the closing of the purchase and sale
of the Preferred Stock pursuant to Section 2.1 hereof.
Section 1.5. "Closing Date" shall mean the date of the Closing which
shall take place on (a) the first Trading Day following the last to be fulfilled
or waived of the conditions set forth in Article VII, or (b) such other date as
the parties hereto may agree in writing.
Section 1.6. "Common Stock" shall mean the Company's common stock,
$0.01 par value per share.
Section 1.7. "Conversion Shares" shall mean all shares of Common Stock
into which the Preferred Stock may be converted.
Section 1.8. "Damages" shall mean any and all losses, claims, damages,
liabilities, costs and expenses (including, without limitation, any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any and all reasonable amounts paid in defense or settlement of, any action,
suit or proceeding between any indemnified party and any indemnifying party or
between any indemnified party and any third party, or otherwise, or any claim
asserted).
Section 1.9. "Distribution" shall mean the pro rata distribution to
holders of common stock, par value $0.001 per share, of InfoCure Corporation, a
Delaware corporation and the indirect parent of the Company, of all of the
Common Stock of the Company.
Section 1.10. "Effective Date" shall mean the date on which the SEC
has declared effective the Registration Statement registering resale of
Registrable Securities as set forth in the Registration Rights Agreement.
Section 1.11. "Exchange Act" shall mean the U.S. Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.12. "Legend" shall have the meaning specified in Section 8.1
of this Agreement.
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Section 1.13. "Material Adverse Effect" shall mean any effect on the
business, operations, properties, or financial condition of the Company that is
material and adverse to the Company or to the Company and such other entities
controlling or controlled by the Company, taken as a whole, and/or any
condition, circumstance, or situation that would prohibit or otherwise interfere
with the ability of the Company to enter into and perform its obligations under
any of this Agreement and the Registration Rights Agreement.
Section 1.14. "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.15. "Outstanding" when used with reference to Common Stock
or Capital Shares (collectively the "Shares"), shall mean, at any date as of
which the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not refer to any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.16. "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.17. "Preferred Stock" shall mean shares of Series C
Convertible Preferred Stock, par value $0.01 per share, of the Company.
Section 1.18. "Principal Market" shall mean the Nasdaq National
Market, the Nasdaq SmallCap Market, the American Stock Exchange, the Electronic
Bulletin Board or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.
Section 1.19. "Registrable Securities" shall mean the Conversion
Shares and any securities issued or issuable with respect to any of the
foregoing by way of exchange, stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (w) the
applicable Registration Statement has been declared effective by the SEC and all
such Registrable Securities have been disposed of pursuant to the applicable
Registration Statement, (x) all such Registrable Securities have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") are met,
(y) all such Registrable Securities have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (z) in the opinion of counsel to
the Company, which counsel shall be reasonably acceptable to the Investor, all
such Registrable Securities may be sold by the Investor
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without registration and without any time, volume or manner limitations pursuant
to Rule 144(k) (or any similar provision then in effect) under the Securities
Act.
Section 1.20. "Registration Rights Agreement" shall mean the
registration rights agreement by and between the Company and the Investor, in
the form of Exhibit A hereto.
Section 1.21. "Registration Statement" shall have the meaning set
forth in the Registration Rights Agreement.
Section 1.22. "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.23. "Representative" of a party shall mean any officer,
director, employee, agent, counsel, accountant, financial advisor, consultant or
other representative of such party.
Section 1.24. "SEC" shall mean the U.S. Securities and Exchange
Commission.
Section 1.25. "SEC Documents" shall mean all filings made with the SEC
pursuant to the Securities Act or the Exchange Act as of the time in question
until such time the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.
Section 1.26. "Section 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.27. "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.28. "Short Sale" shall have the meaning specified in Rule
3b-3 of the Exchange Act.
Section 1.29. "Strategic Investor" shall mean any Person (i) that
intends to participate in the corporate governance of the Company or in the
conduct of its business or (ii) as to whom the Company's Board of Directors has
made a determination in good faith that such Person will develop a material
strategic relationship with the Company, including without limitation an
acquisition of another entity or assets, in connection with and related to the
Company's present or future business.
Section 1.30. "Subsidiary" shall mean any Person in which the Company,
directly or indirectly through Subsidiaries or otherwise, beneficially owns more
than 50% of either the equity interests in, or the voting control of, such
Person.
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Section 1.31. "Trading Day" shall mean any day during which the
Principal Market shall be open for business.
Section 1.32. "Underwriter" shall mean any underwriter participating
in any disposition of the Registrable Securities on behalf of the Investor
pursuant to a Registration Statement.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
Section 2.1. Investments. The Company shall issue and sell and the
Investor shall purchase, on the Closing Date, 100,000 shares of the Preferred
Stock for an investment amount of $5,000,000.
Section 2.2. Twenty Percent Limitation. Unless the Company obtains the
requisite approval of its shareholders in accordance with the corporate laws of
Delaware and the applicable rules of the Principal Market, no more than 19.9% of
the Outstanding shares of Common Stock may be issued and sold pursuant to the
conversion of the Preferred Stock, provided, that the Investor has the right to
require the Company to seek such shareholder approval, and upon the written
request of the Investor the Company shall as soon as practicable after such
request prepare and file with the SEC a proxy statement to be distributed to
shareholders of the Company for the purpose of soliciting proxies for use at an
annual or special meeting of shareholders of the Company at which such
shareholder approval is sought and in which proxy statement the Company will
recommend to its shareholders the foregoing approval.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1. Intent. The Investor is entering into this Agreement for
its own account, and the Investor has no view to the distribution of the
Registrable Securities or the Preferred Stock and has no present arrangement
(whether or not legally binding) at any time to sell, assign, transfer, pledge,
encumber, hypothecate or otherwise dispose of the Registrable Securities or the
Preferred Stock to or through any person or entity; provided, however, that by
making the representations herein, the Investor does not agree to hold the
Registrable Securities or the Preferred Stock for any minimum or other specific
term and reserves the right to dispose of the Registrable Securities or the
Preferred Stock at any time pursuant to the Registration Statement and in
accordance with federal and state securities laws applicable to such
disposition.
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Section 3.2. Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and the Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Common Stock and the Preferred
Stock. The Investor acknowledges that an investment in the Common Stock and the
Preferred Stock is speculative and involves a high degree of risk.
Section 3.3. Authority. Each of this Agreement and the Registration
Rights Agreement has been duly authorized by all necessary corporate action and
no further consent or authorization of the Investor, or its Board of Directors
or stockholders is required. Each of this Agreement and the Registration Rights
Agreement was validly executed and delivered by the Investor and each is a valid
and binding agreement of the Investor enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
Section 3.4. Not an Affiliate. The Investor is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of the Securities
Act) of the Company.
Section 3.5. Organization and Standing. The Investor is duly
organized, validly existing, and in good standing under the laws of Bermuda.
Section 3.6. Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated thereby, and compliance with the
requirements thereof, will not to the Investor's knowledge (a) violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
the Investor, (b) violate any provision of any indenture, instrument or
agreement to which the Investor is a party or is subject, or by which the
Investor or any of its assets is bound, (c) conflict with or constitute a
material default thereunder, (d) result in the creation or imposition of any
lien pursuant to the terms of any such indenture, instrument or agreement, or
constitute a breach of any fiduciary duty owed by the Investor to any third
party, or (e) require the approval of any third-party (that has not been
obtained) pursuant to any material contract to which the Investor is subject or
to which any of its assets, operations or management may be subject.
Section 3.7. Disclosure; Access to Information. The Investor has
received or had access to all documents, records, books and other information
pertaining to Investor's investment in the Company that have been requested by
Investor. The Investor has received and reviewed copies of the SEC Documents.
Section 3.8. Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of
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general solicitation or advertising. The Investor has had an existing business
relationship with the Company or its Affiliates since September 1998 and the
Investor did not become aware of the Company as a result of the Company filing a
Form S-1 or Form 10 with the SEC, pursuant to which the Company plans to effect
the Distribution.
Section 3.9. Resale Restrictions. Investor acknowledges that any
Registrable Securities and the Preferred Stock to be acquired by Investor have
not been registered under the federal securities laws or any applicable state
securities laws in reliance upon exemptions available for non-public or limited
offerings. Investor understands that it must bear the economic risk of the
investment in the Registrable Securities and the Preferred Stock because the
Registrable Securities and the Preferred Stock have not been so registered and
therefore are subject to restrictions upon transfer such that they may not be
sold or otherwise transferred unless registered under the applicable securities
laws or an exemption from such registration is available. The Investor will not
reoffer, sell, assign, transfer, pledge, encumber, hypothecate or otherwise
dispose of any Registrable Securities or the Preferred Stock in the absence of
an effective registration statement, qualification or authorization relating
thereto under federal and applicable state securities laws or an opinion of
qualified counsel satisfactory to the Company to the effect that the proposed
transaction in the Registrable Securities or the Preferred Stock will neither
constitute or result in any violation of the federal or state securities laws.
Subject to Section 8.1 of this Agreement, any certificate or other document that
may be issued representing any shares of Registrable Securities or the Preferred
Stock may be endorsed with a legend to this effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that except as set forth in
the schedules included in the Company Disclosure Schedule attached hereto:
Section 4.1. Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Except as set forth in the SEC Documents, the Company does not own more than 50%
of the outstanding capital stock of or control any other Person. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, other than those in which the
failure so to qualify would not have a Material Adverse Effect.
Section 4.2. Authority. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and the Registration
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Rights Agreement and to issue the Conversion Shares and the Preferred Stock;
(ii) the execution and delivery of this Agreement and the Registration Rights
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors or stockholders is required; and (iii) each of this Agreement
and the Registration Rights Agreement has been duly executed and delivered by
the Company and constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
Section 4.3. Corporate Documents. The Company has furnished or made
available to the Investor true and correct copies of the Company's Certificate
of Incorporation, as amended and in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as amended and in effect on the date
hereof (the "By-Laws").
Section 4.4. Books and Records. The minute books and other similar
records of the Company and its subsidiaries as made available to Investor prior
to the execution of this Agreement contain a true and complete record, in all
material respects, of all action taken at all meetings and by all written
consents in lieu of meetings of the stockholders, the boards of directors and
committees of the boards of directors of the Company and the subsidiaries. The
stock transfer ledgers and other similar records of the Company and the
subsidiaries as made available to Investor prior to the execution of this
Agreement accurately reflect all record transfers prior to the execution of this
Agreement in the capital stock of the Company and the subsidiaries. Neither the
Company nor any subsidiary has any of such minute books, stock transfer ledgers
and other similar records recorded, stored, maintained, operated or otherwise
wholly or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company or a subsidiary.
Section 4.5. Capitalization. As of the date of this Agreement, the
authorized capital stock of the Company consists of 100,000,000 shares of Common
Stock, of which 100 shares are issued and outstanding. There are no options,
warrants, or rights to subscribe to, securities, rights or obligations
convertible into or exchangeable for or giving any right to subscribe for any
shares of capital stock of the Company. All of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued and are
fully paid and nonassessable. On the Closing Date, the outstanding capital stock
of the Company will be as set forth on Schedule 4.5, which shall be delivered to
the Investor two Trading Days prior to the Closing Date, provided that on the
Closing Date, the Company shall have outstanding (i) no more than 32,000 shares
of Series A Convertible Preferred Stock, (ii) no more than 1,000,000 shares of
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Series B Convertible Preferred Stock, (iii) no other shares of preferred stock
and (iv) except as set forth on such Schedule 4.5, no options, warrants or
rights to subscribe to, securities, rights or obligations convertible into or
exchangeable for or giving any right to subscribe for any shares of preferred
stock of the Company.
Section 4.6. Registration and Listing of Common Stock. The Company has
registered its Common Stock pursuant to Section 12(b) or 12(g) of the Exchange
Act and is in full compliance with all reporting requirements of the Exchange
Act, and the Company has applied for the listing or quotation of its Common
Stock, and upon official notice to the Principal Market of the consummation of
the Distribution, such Common Stock will be listed or quoted on the Principal
Market.
Section 4.7. Financial Statements. Prior to the execution of this
Agreement, the Company has delivered to the Investor true and complete copies of
the following financial statements, which reflect the Company's operations as a
divisions of Infocure Corporation, a Delaware corporation and the indirect
parent of the Company:
(a) the audited balance sheets of the Company and its
consolidated subsidiaries as of December 31, 1999 and 1998 and the
related audited consolidated statements of operations, stockholders'
equity and cash flows for each of the fiscal years then ended and the
eleven months ended December 31, 1997, together with a true and correct
copy of the report on such audited information by BDO Xxxxxxx LLP, and
all letters from such accountants with respect to the results of such
audits; and
(b) the unaudited balance sheets of the Company and its
consolidated subsidiaries as of September 30, 2000 and the related
unaudited consolidated statements of operations and stockholders'
equity for the portion of the fiscal year then ended.
The financial statements of the Company delivered to the Investor have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 4.8. SEC Documents. The Company has delivered or made
available to the Investor true and complete copies of the SEC Documents
(including, without limitation, proxy information and solicitation materials).
The Company has not provided to the Investor any information that, according to
applicable law, rule or regulation, should have been disclosed publicly prior to
the date hereof by the Company, but which has not been so disclosed. As of
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their respective dates, the SEC Documents complied as to form and substance in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and other federal, state and local laws, rules
and regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may include summary notes and may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
Section 4.9. Exemption from Registration; Valid Issuances; New
Issuances. The sale and issuance of the Preferred Stock and the Conversion
Shares in accordance with the terms and on the basis of the representations and
warranties set forth in this Agreement, may and will be properly issued pursuant
to Section 4(2), Section 3(a)(9), Regulation D and/or any applicable state law.
When issued and paid for as provided herein, the Preferred Stock and the
Conversion Shares will be duly and validly issued, fully paid, and
nonassessable. Neither the sales of the Preferred Stock or the Conversion Shares
pursuant to, nor the Company's performance of its obligations under, this
Agreement or the Registration Rights Agreement will (i) result in the creation
or imposition of any liens, charges, claims or other encumbrances upon the
Preferred Stock, the Conversion Shares, or any of the assets of the Company, or
(ii) entitle the holders of Outstanding Capital Shares to preemptive or other
rights to subscribe to or acquire the Capital Shares or other securities of the
Company. The Preferred Stock and the Conversion Shares will not subject the
Investor to personal liability by reason of the ownership thereof. The Preferred
Stock and the Conversion Shares have been duly authorized by the Company, but
have not been issued (whether or not subsequently repurchased by the Company) to
any Person, and when issued to the Investor in accordance with this Agreement
will not have been issued (whether or not subsequently repurchased by the
Company) to any Person other than the Investor.
Section 4.10. No General Solicitation or Advertising. In regard to the
transactions contemplated hereby, neither the Company nor any of its Affiliates
nor any distributor or any person acting on its or their behalf (i) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of Regulation D) or general advertising with respect to any of the
Preferred Stock or the Conversion Shares, or (ii) made any offers or sales of
any security or
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solicited any offers to buy any security under any circumstances that would
require registration of the Preferred Stock or the Conversion Shares under the
Securities Act.
Section 4.11. No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Preferred Stock and the Conversion Shares do not and will not (i) result in
a violation of the Certificate or By-Laws or (ii) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal, state, local or foreign law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or by which any property or asset of the Company is bound or
affected nor is the Company otherwise in violation of, conflict with or in
default under any of the foregoing (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect);
provided, however, that for purposes of the Company's representations and
warranties as to violations of foreign law, rule or regulation referenced in
clause (iii), such representations and warranties are made only to the best of
the Company's knowledge insofar as the execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby are or may be affected by the status of the
Investor under or pursuant to any such foreign law, rule or regulation. The
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Preferred Stock or the Conversion Shares in
accordance with the terms hereof (other than any SEC, NASD or state securities
filings that may be required to be made by the Company subsequent to the
Closing, any registration statement that may be filed pursuant hereto, and any
shareholder approval required by the rules applicable to companies whose common
stock trades on the Principal Market); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investor
herein.
Section 4.12. No Material Adverse Change. Except as set forth in the
SEC Documents, since December 31, 1999, no event has occurred that would have a
Material Adverse Effect on the Company.
Section 4.13. No Undisclosed Liabilities. Except as set forth in the
SEC Documents, the Company has no liabilities or obligations that are material,
individually or in the aggregate, other
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than those incurred in the ordinary course of the Company's businesses since
December 31, 1999 and which, individually or in the aggregate, do not or would
not have a Material Adverse Effect on the Company.
Section 4.14. No Undisclosed Events or Circumstances. Since December
31, 1999, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly disclosed or announced.
Section 4.15. No Integrated Offering. Neither the Company, nor any of
its Affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Preferred Stock or the Conversion Shares under the Securities Act.
Section 4.16. Litigation and Other Proceedings. Except as set forth in
the SEC Documents, there are no lawsuits or proceedings pending or to the best
knowledge of the Company threatened, against the Company, nor has the Company
received any written or oral notice of any such action, suit, proceeding or
investigation, which have had or might have a Material Adverse Effect. Except as
set forth in the SEC Documents, no judgment, order, writ, injunction or decree
or award has been issued by or, so far as is known by the Company, requested of
any court, arbitrator or governmental agency which has resulted in or might
result in a Material Adverse Effect.
Section 4.17. No Misleading or Untrue Communication. The Company, any
Person representing the Company and, to the knowledge of the Company, any other
Person selling or offering to sell the Preferred Stock or the Conversion Shares
in connection with the transactions contemplated by this Agreement, have not
made, at any time, any communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 4.18. Material Non-Public Information. The Company is not in
possession of, nor has the Company or its agents disclosed to the Investor, any
material non-public information that (i) if disclosed, would, or could
reasonably be expected to have, a an effect on the price of the Common Stock and
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
ARTICLE V
COVENANTS OF THE INVESTOR
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Section 5.1. Compliance. The Investor's trading activities with
respect to shares of the Company's Preferred Stock and Conversion Shares will be
in compliance with all applicable state and federal securities laws, rules and
regulations and the rules and regulations of the Principal Market on which the
Company's Common Stock is listed.
Section 5.2. Short Sale. Neither the Investor nor any of its
Affiliates will directly or indirectly engage in any Short Sale of the Preferred
Stock or the Conversion Shares.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect, and the
Company shall comply in all respects with the terms thereof.
Section 6.2. Reservation of Common Stock. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligation to issue the Conversion Shares,
such amount of shares of Common Stock to be reserved shall be calculated based
upon the conversion price of the Preferred Stock set forth in the Certificate of
Designations. The number of shares so reserved from time to time, as theretofore
increased or reduced as hereinafter provided, may be reduced by the number of
shares actually delivered.
Section 6.3. Listing of Common Stock. The Company shall use its best
efforts to maintain the listing or quotation of the Common Stock on a Principal
Market, and as soon as practicable will cause the Conversion Shares to be listed
on the Principal Market. The Company further shall, if the Company applies to
have the Common Stock traded on any other Principal Market, include in such
application the Conversion Shares, and shall take such other action as is
necessary or desirable in the opinion of the Investor to cause the Common Stock
to be listed on such other Principal Market as promptly as possible. The Company
shall use its best efforts to continue the listing and trading of its Common
Stock on the Principal Market (including, without limitation, maintaining
sufficient net tangible assets) and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the NASD and the Principal Market.
Section 6.4. Exchange Act Registration. The Company shall comply with
all applicable requirements set forth in the Registration Rights Agreement,
including without limitation its obligation to file the Registration Statement
with the SEC within the time period set forth in the Registration Rights
Agreement. After the Registration Statement becomes effective, the Company shall
use its best efforts to cause the Common Stock covered by such Registration
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Statement to continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will use its best efforts not to take
any action or file any document (whether or not permitted by the Exchange Act or
the rules thereunder) to terminate or suspend such registration or to terminate
or suspend its reporting and filing obligations under the Exchange Act.
Section 6.5. Legends. The certificates evidencing the Conversion Shares
shall be free of legends, except as provided for in Article VIII.
Section 6.6. Corporate Existence. The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.7. Additional SEC Documents. Until all Registrable Securities
issued or issuable to the Investor pursuant to this Agreement may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act, the Company shall, as and when the originals thereof are
submitted to the SEC for filing, notify the Investor in writing of any SEC
Documents furnished or submitted to the SEC, and upon the request of the
Investor the Company shall deliver to the Investor copies of all SEC Documents
so furnished or submitted to the SEC.
Section 6.8. Notice of Certain Events Affecting Registration. The
Company shall immediately notify the Investor, but in no event later than two
business days by facsimile and by overnight courier, upon the occurrence of any
of the following events in respect of a Registration Statement or related
prospectus in respect of an offering of Registrable Securities: (i) receipt of
any request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the related prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; (v) the declaration by the SEC of
the effectiveness of a Registration Statement; and (vi) the Company's reasonable
determination
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that a post-effective amendment to the Registration Statement would be
appropriate, and the Company shall promptly make available to the Investor any
such supplement or amendment to the related prospectus.
Section 6.9. Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to the Investor
such shares of stock and/or securities as the Investor is entitled to receive
pursuant to this Agreement.
Section 6.10. Issuance of Conversion Shares. The sale of the Preferred
Stock and the issuance of the Conversion Shares pursuant to conversion of the
Preferred Stock shall be made in accordance with the provisions and requirements
of Section 4(2), Section 3(a)(9), Regulation D and/or any applicable state law.
Section 6.11. Legal Opinion. The Company's independent counsel shall
deliver to the Investor on the Closing Date an opinion in the form of Exhibit B.
Section 6.12. No Similar Arrangement; Right of First Refusal. The
Company shall refrain from entering into any other agreements, arrangements or
understandings granting to the Company the right to sell shares of its
securities to one or more investors, other than a Strategic Investor, in
placements exempt from registration under the Securities Act until 180 calendar
days after the Registration Statement has been declared effective by the SEC
(the "Exclusivity Period"). If the Company, for the purpose of obtaining any
additional financing, wishes to sell shares of its securities in placements
exempt from registration under the Securities Act during the Exclusivity Period
(a "Sale") to a party other than a Strategic Investor and other than the
Investor (the "Third Party"), the Company shall first offer (the "Offer") to the
Investor, in writing, the right to purchase such shares (the "Offered Shares")
at the bona fide price offered by the Third Party (the "Offer Price"). The Offer
shall grant the Investor the right during the five Trading Days immediately
following the date of the Offer to elect to purchase any or all of the Offered
Shares. The Company, in connection with such a Sale, shall refrain from
circumventing or attempting to circumvent the Investor's right of first refusal
by way of making such a Sale to any of its Affiliates without first making an
Offer to the Investor. If the Investor fails to exercise its right to purchase
any or all of the Offered Shares, then during the 60 calendar days immediately
following the expiration of such right, the Company shall be free to sell any or
all of the Offered Shares to a purchaser for a purchase price not lower than the
Offer Price payable on terms and conditions that are not more favorable to such
purchaser than those contained in the Offer.
Section 6.13. Public Announcements. The Company, its Representatives
and legal advisors, and the Investor will not issue or make any reports,
statements or releases to the public or to any third party with respect to this
Agreement or the transactions contemplated hereby
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without the consent of both the Company and the Investor, which consent shall
not be unreasonably withheld. The Company, its Representatives and legal
advisers, and the Investor also will obtain the other party's prior approval of
any press release to be issued announcing the consummation of the transactions
contemplated by this Agreement or in any way referring to the other party or
affiliates of the other party. If either party is unable to obtain the approval
of its public report, statement, or press or other release from the other party
and such report, statement, or press or other release is, in the advice of legal
counsel to such party, required by applicable law or by any rule or regulation
of the Principal Market, in order to discharge such party's disclosure
obligations, then such party may make or issue the legally required report,
statement, or press or other release and promptly furnish the other party with a
copy thereof.
ARTICLE VII
CONDITIONS TO CLOSING; TERMINATION
Section 7.1. Conditions to Obligation of the Investor. The obligation
of the Investor to consummate the transactions set forth in this Agreement is
subject to the satisfaction at and as of the Closing of each of the following
conditions:
(a) Certificate of Designations. The Company shall have duly
filed the Certificate of Designations with, and the Certificate of
Designations shall have been accepted by, the Secretary of State of the
State of Delaware.
(b) Delivery of Agreements. The Company shall have executed
and delivered the Registration Rights Agreement.
(c) Consummation of Distribution. The Distribution shall have
been consummated in accordance with the terms set forth in the
Company's SEC Documents, the Common Stock shall have been listed or
quoted on the Principal Market, and the Company shall have maintained
all requirements for the continued listing or quotation of the Common
Stock on the Principal Market.
(d) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct as of the Closing as though such representations and warranties
were made on and as of the Closing, except for those representations
and warranties which address matters only as of a particular date
(which shall be true and correct only as of such date).
(e) Performance of Covenants. The Company shall have performed
or complied in all material respects with all obligations, conditions
and covenants required to be performed and complied with by it under
this Agreement at or prior to the Closing.
(f) Opinion of Counsel. The Investor shall have received an
opinion of the
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Company's legal counsel in the form of Exhibit B.
Section 7.2. Conditions to Obligation of the Company. The obligation of
the Company to consummate the transactions set forth in this Agreement is
subject to the satisfaction at and as of the Closing of each of the following
conditions:
(a) Delivery of Agreements. The Investor shall have executed
and delivered the Registration Rights Agreement.
(b) Consummation of Distribution. The Distribution shall have
been consummated in accordance with the terms set forth in the
Company's SEC Documents.
(c) Representations and Warranties. The representations and
warranties of the Investor set forth in this Agreement shall be true
and correct as of the Closing as though such representations and
warranties were made on and as of the Closing, except for those
representations and warranties which address matters only as of a
particular date (which shall be true and correct only as of such date).
(d) Performance of Covenants. The Investor shall have
performed or complied in all material respects with all obligations,
conditions and covenants required to be performed and complied with by
it under this Agreement at or prior to the Closing.
Section 7.3. Termination. Notwithstanding anything to the contrary in
this Agreement, this Agreement may be terminated by either party hereto and the
transactions contemplated hereby abandoned if the Closing does not occur on or
prior to March 30, 2001.
ARTICLE VIII
LEGENDS
Section 8.1. Legends. The Preferred Stock and, unless otherwise
provided below, each certificate representing Registrable Securities will bear
the following legend (the "Legend"):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
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UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY
SET FORTH IN A STOCK PURCHASE AGREEMENT, DATED AS OF JANUARY __, 2001,
BETWEEN PRACTICEWORKS, INC. AND CRESCENT INTERNATIONAL LTD. A COPY OF
THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY
BE OBTAINED FROM PRACTICEWORKS, INC.'S EXECUTIVE OFFICES."
At the Closing, the Company shall issue to the transfer agent for its
Common Stock (and to any substitute or replacement transfer agent for its Common
Stock upon the Company's appointment of any such substitute or replacement
transfer agent) instructions in substantially the form of Exhibit C hereto, with
a copy to the Investor. Other than as required as a result of change in law,
such instructions shall be irrevocable by the Company from and after the date
hereof or from and after the issuance thereof to any such substitute or
replacement transfer agent, as the case may be, except as otherwise expressly
provided in the Registration Rights Agreement. It is the intent and purpose of
such instructions, as provided therein, to require the transfer agent for the
Common Stock from time to time upon transfer of Registrable Securities by the
Investor to issue certificates evidencing such Registrable Securities free of
the Legend during the following periods and under the following circumstances
and without consultation by the transfer agent with the Company or its counsel
and without the need for any further advice or instruction or documentation to
the transfer agent by or from the Company or its counsel or the Investor:
(a) At any time after the applicable Effective Date, upon
surrender of one or more certificates evidencing Preferred Stock or
Common Stock that bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the Legend
to replace those surrendered; provided that (i) the applicable
Registration Statement shall then be effective and (ii) if reasonably
requested by the transfer agent the Investor confirms to the transfer
agent that the Investor has transferred the Registrable Securities
pursuant to such Registration Statement and has complied with the
prospectus delivery requirement.
(b) At any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates
free of the Legend to replace those surrendered and containing
representations that the Investor is permitted to dispose of such
Registrable Securities without limitation as to amount or manner of
sale pursuant to Rule 144(k) under the Securities Act.
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Section 8.2. No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Preferred Stock and Registrable Securities,
and no instructions or "stop transfer orders," so called, "stock transfer
restrictions," or other restrictions have been or shall be given to the
Company's transfer agent with respect thereto other than as expressly set forth
in this Article VIII.
Section 8.3. Investor's Compliance. Nothing in this Article VIII shall
affect in any way the Investor's obligations to comply with all applicable
securities laws.
ARTICLE IX
INDEMNIFICATION; ARBITRATION
Section 9.1. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Investor, its Affiliates, officers, directors, employees, and duly
authorized agents, and each Person or entity, if any, who controls the
Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, together with its controlling persons
from and against any Damages, joint or several, and any action in
respect thereof to which the Investor, its Affiliates, officers,
directors, employees, and duly authorized agents, and any such
controlling person becomes subject to, resulting from, arising out of
or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on
the part of the Company contained in this Agreement, as such Damages
are incurred, unless such Damages result primarily from the Investor's
gross negligence, recklessness or bad faith in performing its
obligations under this Agreement; provided, however, that the maximum
aggregate liability of the Company shall be limited to the amount
actually invested by the Investor under this Agreement, and provided,
further, that in no event shall this provision be deemed to limit any
rights to indemnification arising under the Registration Rights
Agreement.
(b) The Investor agrees to indemnify and hold harmless the
Company, its partners, Affiliates, officers, directors, employees, and
duly authorized agents, and each Person or entity, if any, who controls
the Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, together with its controlling persons
from and against any Damages, joint or several, and any action in
respect thereof to which the Company, its partners, Affiliates,
officers, directors, employees, and duly authorized agents, and any
such controlling person becomes subject to, resulting from, arising out
of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on
the part of the Investor contained in this Agreement, as such Damages
are incurred, unless such Damages result primarily
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from the Company's gross negligence, recklessness or bad faith in
performing its obligations under this Agreement; provided, however,
that the maximum aggregate liability of the Investor shall be limited
to the amount by which the total price at which the Registrable
Securities of the Investor were sold to the public exceeds the amount
actually paid by the Investor under this Agreement for such Registrable
Securities sold to the public, and provided, further, that in no event
shall this provision be deemed to limit any rights to indemnification
arising under the Registration Rights Agreement.
Section 9.2. Method of Asserting Indemnification Claims. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section 9.1 (an
"Indemnified Party") might seek indemnity under Section 9.1 is asserted
against or sought to be collected from such Indemnified Party by a
person other than the Company, the Investor or any Affiliate of the
Company (a "Third Party Claim"), the Indemnified Party shall deliver a
written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and
for the Indemnified Party's claim for indemnification that is being
asserted under any provision of Section 9.1 against any person (the
"Indemnifying Party"), together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good
faith, of such Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to
provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the
Indemnifying Party shall not be obligated to indemnify the Indemnified
Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced
by such failure of the Indemnified Party. The Indemnifying Party shall
notify the Indemnified Party as soon as practicable within the period
ending 30 calendar days following receipt by the Indemnifying Party of
either a Claim Notice or an Indemnity Notice (as defined below) (the
"Dispute Period") whether the Indemnifying Party disputes its liability
or the amount of its liability to the Indemnified Party under Section
9.1 and whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party
Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified Party
with respect to the Third Party Claim pursuant to this Section
9.2(a), then the Indemnifying Party shall have the right to
defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings shall be vigorously prosecuted
by the Indemnifying Party to a final
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conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the
Indemnified Party, in the case of any settlement that provides
for any relief other than the payment of monetary damages or
that provides for the payment of monetary damages as to which
the Indemnified Party shall not be indemnified in full
pursuant to Section 9.1). The Indemnifying Party shall have
full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the
Indemnified Party may, at the sole cost and expense of the
Indemnified Party, at any time prior to the Indemnifying
Party's delivery of the notice referred to in the first
sentence of this clause (i), file any motion, answer or other
pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect
its interests; and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third
Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this clause (i), and except
as provided in the preceding sentence, the Indemnified Party
shall bear its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the Indemnified
Party may take over the control of the defense or settlement
of a Third Party Claim at any time if it irrevocably waives
its right to indemnity under Section 9.1 with respect to such
Third Party Claim.
(ii) If the Indemnifying Party fails to notify
the Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party Claim
pursuant to Section 9.2(a), or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently
or settle the Third Party Claim, or if the Indemnifying Party
fails to give any other notice required to be given within the
Dispute Period, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or
will be settled at the discretion of the Indemnified Party
(with the consent of the Indemnifying Party, which consent
will not be unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings, including
any compromise or settlement thereof; provided, however, that
if requested by the Indemnified Party, the Indemnifying Party
will, at the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified Party and
its counsel in contesting any Third Party Claim which the
Indemnified Party is contesting. Notwithstanding the foregoing
provisions of this clause (ii), if the Indemnifying Party has
notified the Indemnified Party within the Dispute Period that
the Indemnifying Party disputes its liability or the amount of
its liability
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hereunder to the Indemnified Party with respect to such Third
Party Claim, and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii)
below, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant
to this clause (ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and
the Indemnified Party shall reimburse the Indemnifying Party
in full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party
pursuant to this clause (ii), and the Indemnifying Party shall
bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability or
the amount of its liability to the Indemnified Party with
respect to the Third Party Claim under Section 9.1 or fails to
notify the Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or the amount of
its liability to the Indemnified Party with respect to such
Third Party Claim, the Damages in the amount specified in the
Claim Notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
period of 30 calendar days immediately following the Dispute
Period, such dispute shall be resolved by arbitration in
accordance with Section 9.3.
(b) In the event any Indemnified Party should have a claim
under Section 9.1 against the Indemnifying Party that does not involve
a Third Party Claim, the Indemnified Party shall deliver a written
notification of a claim for indemnity under Section 9.1 specifying the
nature of and basis for such claim, together with the amount or, if not
then reasonably ascertainable, the estimated amount, determined in good
faith, of such claim (an "Indemnity Notice") with reasonable promptness
to the Indemnifying Party. The failure by any Indemnified Party to give
the Indemnity Notice shall not impair such party's rights hereunder
except to the extent that the Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim or
the amount of the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim or the amount of the claim
described in such Indemnity Notice, the Damages in the amount specified
in the Indemnity Notice will be conclusively deemed a liability of the
Indemnifying Party under
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Section 9.1 and the Indemnifying Party shall pay the amount of such
Damages to the Indemnified Party on demand. If the Indemnifying Party
has timely disputed its liability or the amount of its liability with
respect to such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such dispute,
and if not resolved through negotiations within the period of 30
calendar days immediately following the Dispute Period, such dispute
shall be resolved by arbitration in accordance with Section 9.3.
Section 9.3. Arbitration. Any controversy, claim or dispute arising out
of or in connection with this Agreement or the Registration Rights Agreement,
including any question regarding its existence, validity, interpretation,
breach, or termination, shall be referred to and finally resolved in accordance
with the International Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitral tribunal may
be entered by any court having jurisdiction thereof or having jurisdiction over
any party or any party's assets.
(a) The tribunal shall consist of three arbitrators, two of
whom shall be appointed by the respective parties and the third, who
shall be the chairperson of the tribunal, by the two party-appointed
arbitrators within 30 days of the last of their appointments. Save
that, if either party should fail to appoint an arbitrator within 30
days of receiving written notice of the appointment of an arbitrator by
the other party, the second arbitrator shall, at the written request of
the party which has already made an appointment, be appointed forthwith
by the American Arbitration Association. Likewise, if the
party-appointed arbitrators fail to make an agreed appointment for the
chairperson within 30 days of the last of their appointments, the
chairperson shall, at the written request of either party, be appointed
forthwith by the American Arbitration Association.
(b) The place of arbitration shall be New York, New York.
(c) This arbitration clause and the conduct of the arbitral
proceedings shall be governed by the Federal Arbitration Act, 9
U.S.C.A. sec. 1 et seq.
(d) The language of the arbitration shall be English.
(e) Nothing in these dispute resolution provisions shall be
construed as preventing either party from seeking conservatory or
similar interim relief in any court of competent jurisdiction.
(f) To the extent practicable, the arbitral tribunal shall
render its award no more than 60 calendar days from the date that the
three member tribunal is constituted. The arbitral tribunal shall not
lose jurisdiction over the matter based on a failure to render an award
within this time period.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Closing Fees and Transaction Costs. In connection with
the execution of this agreement the following Closing Fees and Transaction Costs
(as defined below) are payable by the Company. The Investor is authorized by the
Company to retain and to pay, on behalf of the Company, the Closing Fees and
Transaction Costs to the payee entities in accordance with Schedule 10.1, and
may deduct such amounts from any sums due to the Company on the Closing Date.
(a) Closing Fees. The Company shall pay certain fees (the
"Closing Fees") to the payee entities in accordance with Schedule 10.1.
(b) Transaction Costs. The fees, expenses and disbursements of
the Investor's counsel (the "Investor Legal Fees") shall be paid as
follows: (i) the Investor shall pay the initial $10,000 of Investor
Legal Fees and (ii) the Company shall pay all Investor Legal Fees in
excess of $10,000, provided that the Company's share of Investor Legal
Fees shall not exceed $50,000. The Company shall pay the Investor due
diligence costs in connection with the consummation of this Agreement
and the transactions contemplated hereby (the "Due Diligence Costs,"
and together with the Investor Legal Fees, the "Transaction Costs"), up
to a maximum amount of $5,000. The Company shall pay to the Investor
the Company's share of the Transaction Costs on the Closing Date, to
the extent such share of the Transaction Costs can be determined on the
Closing Date. The Company shall pay its share of the remaining
Transaction Costs to the Investor not later than ten days after receipt
of notice from the Investor that such amount is due. The Company agrees
to pay its own expenses incident to the performance of its obligations
hereunder.
Section 10.2. Brokerage. Except as disclosed in Section 10.1, each of
the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker which would impose a legal obligation
to pay any fee or commission. The Company on the one hand, and the Investor, on
the other hand, agree to indemnify the other against and hold the other harmless
from any and all liabilities to any persons claiming brokerage commissions or
finder's fees on account of services purported to have been rendered on behalf
of the indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 10.3. Conversion Notice. Any conversion of the Preferred Stock
shall be effected in accordance with the Certificate of Designations of the
Company. Any
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conversion notice delivered to the Company by the Investor shall be in the form
of Exhibit D hereto. Any conversion notice delivered to the Investor by the
Company shall be in the form of Exhibit E hereto.
Section 10.4. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the third business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company:
PracticeWorks, Inc.
0000 Xxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
00, xx Xxxxx-Xxxxx
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Attention: Xxx Xxxx/Maxi Brezzi
Telephone: x00 00 000 00 00
Facsimile: x00 00 000 00 00
with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto from time to time may change its address or facsimile
number for notices under this Section by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the
other party hereto.
Section 10.5. Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
Person. Notwithstanding the foregoing, the Investor's interest in this Agreement
may be assigned at any time, in whole or in part, to any Affiliate of the
Investor upon the prior written consent of the Company, which consent shall not
to be unreasonably withheld provided, however, that any such assignment or
transfer shall relieve the Investor of its duties under this Agreement only upon
performance thereof by any such assignee or transferee.
Section 10.6. Amendment; No Waiver. No party shall be liable or bound
to any other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement. Except as expressly provided
in this Agreement, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
both parties hereto. The failure of the either party to insist on strict
compliance with this Agreement, or to exercise any right or remedy under this
Agreement, shall not constitute a waiver of any rights provided under this
Agreement, nor estop the parties from thereafter demanding full and complete
compliance nor prevent the parties from exercising such a right or remedy in the
future.
Section 10.7. Annexes and Exhibits; Entire Agreement. All annexes and
exhibits to this Agreement are incorporated herein by reference and shall
constitute part of this Agreement. This
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Agreement and the Registration Rights Agreement set forth the entire agreement
and understanding of the parties relating to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written, relating to the
subject matter hereof.
Section 10.8. Survival. The provisions of Articles VI, VIII, IX and X
shall survive the Closing.
Section 10.9. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10. Title and Subtitles. The titles and subtitles used in
this Agreement are used for the convenience of reference and are not to be
considered in construing or interpreting this Agreement.
Section 10.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 10.12. Choice of Law. This Agreement shall be construed under
the laws of the State of New York.
Section 10.13. Other Expenses. In the event that a dispute between the
parties is not determined by a Board of Arbitration, the non-prevailing party in
any action, suit or proceeding shall bear all investigative, legal and other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
CRESCENT INTERNATIONAL LTD.
By:
------------------------------------
Name:
Title:
PRACTICEWORKS, INC.
By:
------------------------------------
Name:
Title:
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SCHEDULE 10.1
The Company shall pay to the payee entities set forth below the following
Closing Fees and Transaction Costs under Section 10.1, which the Investor shall
then allocate as follows:
EVENTS TRIGGERING THE FEES/TRANSACTION AMOUNT ON WHICH THE FEE IS PAYEE ENTITY AMOUNT
PAYMENT COSTS CALCULATED
----------------------------------------------------------------------------------------------------------------------------
Closing Date Closing Fee Investment Amount GreenLight (Switzerland) S.A. $100,000
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Closing Date Legal Fees Investor Legal Fees with a Crescent International Ltd. Investor Legal
maximum amount so payable of Fees less
$50,000 $10,000 (with
a maximum
amount so
payable of
$50,000)
----------------------------------------------------------------------------------------------------------------------------
Closing Date Due Diligence Costs Due Diligence Costs with a GreenLight (Switzerland) S.A. 100% (with a
maximum amount so payable of maximum amount
$5,000 so payable of
$5,000)
