SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
This SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT is made the 10th day of
December, 1997, with an effective date as described below, by and between
UNIVERSAL DOCUMENT MANAGEMENT SYSTEMS, INC. (formerly "MedPlus Acquisition
Corp.") (the "Purchaser"), an Ohio corporation and a wholly-owned subsidiary
of MedPlus, Inc. ("MedPlus"), with its principal offices located at 0000
Xxxxxxxx'x Xxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000, XXX AND XXXX XXXXXXXXX,
individuals residing at 000 Xxxxxx Xx., Xxxxxxxxxx, Xxxx 00000 ("Hilnbrand")
and XXXXXX X. XXXXX, an individual residing at 0000 Xxxxxx, Xxxxxxxxxx, XX
00000 ("Xxxxx") (Hilnbrand and Xxxxx are collectively referred to as the
"Sellers").
W I T N E S S E T H:
WHEREAS, the Purchaser and the Sellers entered into a Stock Purchase Agreement
dated December 29th, 1995 (the "Initial Agreement") pursuant to which the
Sellers sold to the Purchaser and the Purchaser purchased from the Sellers all
of the common stock of HWB, Inc. owned by the Sellers (the "HWB Stock"); and
WHEREAS, the consideration for the HWB Stock, which the parties agree was a
capital asset, was to be paid to the Sellers over a period of three years in
the form of MedPlus common stock and/or cash and was to be calculated based on
the revenues of the Purchaser during such three year period (the "Earn-Out
Consideration"); and
WHEREAS, the Purchaser planned to combine with certain CAD resellers and
conduct an initial public offering of its common stock (the "IPO") with an
effective date on or before December 31, 1997 and as such Purchaser and
Sellers executed the Amendment to Stock Purchase Agreement; and
WHEREAS, due to delays in the IPO process, the Purchaser now plans to combine
with certain CAD resellers and conduct an initial public offering of its
common stock (the "IPO") with an effective date on or before December 31, 1998
(the "IPO Date") and as such Purchaser and Sellers have agreed to amend the
Initial Agreement a second time to extend the IPO Date accordingly; and
WHEREAS, if the IPO occurs, then following the IPO, MedPlus will no longer be
the sole shareholder of the Purchaser; and
WHEREAS, if the IPO occurs, then as a result of the change in ownership and
structure of the Purchaser following the IPO, the Purchaser and the Sellers
desire to amend the Initial Agreement with respect to the Earn-Out
Consideration to clarify the revenues as to which it applies and to provide
for additional time during which the Earn-Out Consideration may be paid to the
Sellers and to allow a portion of such consideration to be paid in the form of
the Purchaser's common stock instead of MedPlus' common stock; and
WHEREAS, the Purchaser and Sellers agree that this Amendment to Stock Purchase
Agreement shall only become effective in the event of the IPO and on the IPO
Date, if any.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements set
forth herein, the parties, intending to be legally bound, agree as follows:
On the IPO Date, Schedule 2 to the Initial Agreement shall be amended to read
in its entirety as follows:
"Schedule 2
Stock Purchase Consideration
On the IPO Date, the Purchaser shall pay to the Sellers $390,000 (of which
$311,922 shall be paid to Hilnbrand and $78,078 shall be paid to Xxxxx). So
long as each of Xxx Xxxxxxxxx and Xxxxxx X. Xxxxx remains employed by the
Purchaser until at least December 31, 1998, the following consideration shall
be payable to Sellers no later than March 31, 1999, 2000 and 2001,
respectively, as follows (the 'Earn-Out Consideration'):
If, during any of the three periods described below (the 'Earn-Out Periods'),
the Audited Net Revenue (as defined below) of the Purchaser exceeds a certain
amount, as listed below, with respect to that Earn-Out Period (the 'Earn-Out
Threshold'), then Purchaser shall pay to the Sellers an aggregate amount equal
to 99.9% of the 'Payment Amount' listed below (the 'Annual Payment'). In no
event shall the cumulative aggregate of the Earn-Out Consideration for all
three Earn-Out Periods exceed $2,610,000.
Earn-Out Period Earn-Out Threshold Payment Amount
_________________ __________________ ________________
January 31, 1998 through December 31, 1998 $1,525,000* $1.00 for
each dollar of
Audited Net
Revenue over
$1.525 million
January 1, 1999 through December 31, 1999 2,750,000 $1.00 for
each dollar of
Audited Net
Revenue over
$2.75 million
January 1, 2000 through December 31, 2000 3,750,000 $1.00 for
each dollar of
Audited Net
Revenue over
$3.75 million
*If the IPO does not occur on or before January 31, 1998, then for each month
or partial month following January, 1998 in which the IPO does not occur, the
Earn-Out Threshold for the first Earn-Out Period will be reduced by an amount
equal to the "Forecasted Revenue" for that month. "Forecasted Revenue" for
any month shall be calculated by dividing by three the forecast for the
quarter in which such months falls.
For purposes hereof, 'Audited Net Revenue' of the Purchaser shall mean all the
gross revenues related to the Purchaser's Step2000 software product
(including, but not limited to, licensing and maintenance fees and consulting
and application building fees with respect to Step2000), minus returns and
allowances related to the Purchaser's Step2000 software product and minus the
amount of accounts receivable written off as uncollectible during the period
in question which are related to the Purchaser's Step2000 software product and
which are either over 180 days old or are owed by a debtor which has declared
bankruptcy or has otherwise admitted its insolvency in a public filing. In
the event that the amount of any fees charged by Purchaser to any person who
is an affiliate of Purchaser or MedPlus are less than the ordinary rates
charged for customers who are not affiliates in arms-length transactions, then
the amount of Audited Net Revenues for purposes of calculating the Earn-Out
Consideration shall be increased by the amount by which the ordinary rates
exceed the actual rates charged. All payments of the Earn-Out Consideration
shall be made in cash or, at the election of the Purchaser, in a combination
of cash and the Purchaser's common stock, provided that the common stock
component of any payment of the Earn-Out Consideration shall not exceed 50%.
To the extent the Purchaser's common stock is used to make any payment, each
share so issued shall be deemed to have a value equal to the average of the
closing price per share of the Purchaser's common stock on the Nasdaq National
Market for each of the 20 trading days preceding the payment date.
Notwithstanding the foregoing, payments may only be made in the form of the
Purchaser's common stock if at the time of issuance thereof there is a
registration statement effective under the Securities Act of 1933 covering a
resale of such shares by Sellers, the cost of which shall not be the
responsibility of Sellers. The term 'Purchaser's common stock' shall not
include any securities of the Purchaser other than its common stock, or any
securities of any successor of the Purchaser.
The percentage of each Annual Payment of Earn-Out Consideration to which each
Seller is entitled is set forth as follows: Hilnbrand, 79.98%; Xxxxx 20.02%."
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Stock
Purchase Agreement to be executed as of the day and year first above written.
UNIVERSAL DOCUMENT /s/ Xxx Xxxxxxxxx
MANAGEMENT SYSTEMS, INC.
/s/ Xxxx Xxxxxxxxx
By: /s/ Xxxxxx X. Present II,
Vice Chairman /s/ Xxxxxx X. Xxxxx
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