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Exhibit 2.1
STOCK FOR ASSET PURCHASE AGREEMENT
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This Stock for Asset Purchase Agreement (this "Agreement") is entered
into as of July 17, 1997, by and among Medical Manager Northeast, Inc., a New
York corporation ("Medical Manager Northeast"); The Computer Clinic, Inc., a New
York corporation ("Computer Clinic"); MedPlus of New York, Inc., a New York
corporation ("MedPlus"); Command Solutions, Inc., d/b/a Great Lakes Medical
Systems, an Ohio corporation ("Command Solutions") (Computer Clinic, MedPlus,
and Command Solutions are herein collectively referred to as the "Companies" and
individually referred to as the "Company"); and Xxxxxxx X. Xxxxxxx, a resident
of the State of New York, and who constitutes all of the shareholders of the
Companies (the "Shareholder"). Certain other capitalized terms used herein are
defined in ARTICLE XI and throughout this Agreement.
RECITALS
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The Companies own and operate a Medical Manager Dealership (the
"Business"). The parties desire to combine the Business with Medical Manager
Northeast'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 Each of the Companies agrees to and will at
Closing sell, convey, transfer, assign and deliver to Medical Manager Northeast
at the Closing (as defined in SECTION 1.11), 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 each of the
Companies which are specifically excluded as provided in SECTION 1.2 hereof) as
shall exist on the Closing Date (as defined in SECTION 1.11), 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 or on any parcel of the Leased Premises (as defined in SECTION
3.14(b));
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(b) all inventories of each of the Companies;
(c) all receivables of each of the Companies, including
without limitation, all trade accounts receivable, notes receivable and
receivables from manufacturers, insurance companies, service contract
providers and any other vendors or suppliers of each of the Companies;
(d) all of the interest of and the rights and benefits
accruing to each of the Companies as lessee under the leases covering
the Leased Premises and any leases covering machinery, equipment,
tools, furniture and fixtures and other tangible assets;
(e) all of the interests, rights and benefits accruing to each
of the Companies under any franchise contracts, sales orders, sales
contracts, supply contracts, service agreements, purchase orders and
purchase commitments made by each of the Companies in the ordinary
course of business, all other agreements to which each of the Companies
is a party or by which it is bound and all choses in action, causes of
action and other rights of every kind of each of the Companies;
(f) all operating data and records of each of the Companies,
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 each of the Companies,
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
each of the Companies;
(h) all cash and cash equivalents and investments, whether
short-term or long-term, of each of the Companies, including without
limitation, certificates of deposit, treasury bills and securities;
(i) all right, title and interest of each of the Companies in
and to the corporate and trade names and all of the other intangibles
of each of the Companies;
1.2. EXCLUDED ASSETS Notwithstanding anything to the contrary set forth
in SECTION 1.1, the Purchased Assets shall exclude the following assets of each
of the Companies: (i) the Purchase Price (as defined in SECTION 1.4) and other
rights of each of the Companies under this Agreement; (ii) the shares of capital
stock of each of the Companies which are owned and held by each of the Companies
as treasury shares; (iii) the corporate minute books and stock records of each
of the Companies; (iv) any and all insurance policies of each of the Companies
insuring the life of the Shareholder; and (v) any and all automobile leases of
the Companies.
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,
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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 Northeast thereunder. If such consent is not obtained, or if any attempt
at an assignment thereof would be ineffective or would affect the rights of each
of the Companies thereunder so that Medical Manager Northeast would not in fact
receive all such rights, each of the Companies shall cooperate with Medical
Manager Northeast and use reasonable best efforts to provide for Medical Manager
Northeast 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 Northeast of any and all rights
of each of the Companies against a third party thereto arising out of the breach
or cancellation by such third party or otherwise; provided, however, that the
Companies or the Shareholder will not be obligated to pay any consideration
therefor or to incur any obligation or liability in connection therewith, except
to the extent provided in Section 5.4 hereof.
1.4. PURCHASE PRICE As consideration for the Purchased Assets, Medical
Manager Northeast agrees, on the terms and subject to the conditions and
limitations set forth herein, to issue to each of the Companies, on a pro rata
basis, a number of shares (rounded to the nearest ten thousandth place) 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) Five Million Four Hundred Thousand Dollars ($5,400,000.00) (the
"Purchase Price"), 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 execution of this Agreement, 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.
1.5. ASSUMED LIABILITIES Medical Manager Northeast agrees to and will
at the Closing assume and agree to pay, discharge and perform when lawfully
required all of the obligations, duties and liabilities of each of the Companies
set forth on the Current Balance Sheet (as defined in SECTION 3.9) and all of
the obligations, duties and liabilities of each of the Companies incurred on or
prior to the Closing Date in the ordinary course of business consistent with
past practice (the "Assumed Liabilities").
1.6. EXCLUDED LIABILITIES Except for the Assumed Liabilities, the
parties expressly agree that Medical Manager Northeast shall not assume or
otherwise become liable for any other obligation or liability of each of the
Companies, including, with limitation, the following:
(a) any liability or obligation of each of the Companies or
any other Person, absolute or contingent, known or unknown, not
expressly agreed to be assumed pursuant to the provisions of SECTION
1.5;
(b) any liability or obligation of each of the Companies
arising under this Agreement;
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(c) any liability or obligation of each of the Companies with
respect to, or arising out of, any employee benefit plan or any other
plans or arrangements for the benefit of any employees of each of the
Companies; and
(d) any liability or obligation of each of the Companies to
the Shareholder 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 each of the Companies.
1.7. NO EXPANSION OF THIRD-PARTY RIGHTS The assumption by Medical
Manager Northeast of the Assumed Liabilities, the transfer thereof by each of
the Companies, and the limitations of such transfer shall in no way expand the
rights or remedies of any third party against Medical Manager Northeast or each
of the Companies as compared to the rights and remedies which such third party
would have had against each of the Companies had Medical Manager Northeast not
assumed such liabilities. Without limiting the generality of the preceding
sentence, the assumption by Medical Manager Northeast of the Assumed Liabilities
shall not create any third party beneficiary rights.
1.8. TAX RETURNS Following the Closing Date, Medical Manager Northeast
agrees that it will cooperate in the preparation and filing of all federal,
state and local income tax returns on behalf of each of the Companies, and at
the request of each Company.
1.9. TAX AND ACCOUNTING TREATMENT The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated for accounting
purposes as a pooling of interests business combination and for tax purposes as
a tax-free reorganization under Section 368(a)(1)(C) of the Code. The parties
agree that the Purchase Price will be allocated pursuant to the allocations set
forth on SCHEDULE 1.9. None of the parties will take a position contrary to the
agreed allocation for state or federal income tax 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 Northeast within
five (5) 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) Each of the Companies shall have satisfied each of the
conditions set forth in ARTICLE VI and shall deliver to Medical Manager
Northeast the documents, certificates, opinions, consents and letters
required by ARTICLE VI.
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(b) Medical Manager Northeast shall have satisfied each of the
conditions set forth in ARTICLE VII and shall deliver to each of the
Companies the documents, certificates, opinions, consents and letters
required by ARTICLE VII.
(c) Each of the Companies shall deliver to Medical Manager
Northeast or its assignee such deeds, bills of sale, endorsements,
assignments, releases and other instruments, in such form as is
reasonably satisfactory to Medical Manager Northeast and as shall be
sufficient to vest in Medical Manager Northeast (or its assignee) good
and marketable title to the Purchased Assets.
(d) Medical Manager Northeast shall issue to each of the
Companies the shares of Medical Manager Common Stock issuable pursuant
to SECTION 1.4, registered in the name of each of the Companies and
shall deliver such shares in the following manner: (i) Medical Manager
Northeast shall set aside and hold 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 Northeast shall deliver stock certificates representing
the balance of the shares of Medical Manager Common Stock issuable in
accordance with SECTION 1.4 to each of the Companies. 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 Northeast shall deliver to the Companies
and the Shareholder the Assignment and Assumption Agreement and such
other instruments, in such form as is reasonably satisfactory to each
of the Companies and as shall be sufficient to effect the assumption by
Medical Manager Northeast of the Assumed Liabilities.
(f) Each of the Companies shall deliver to Medical Manager
Northeast payoff and estoppel letters in accordance with SECTION 5.17.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF MEDICAL MANAGER NORTHEAST
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As a material inducement to each of the Companies and the Shareholder
to enter into this Agreement and to consummate the transactions contemplated
hereby, Medical Manager Northeast makes the following representations and
warranties to each of the Companies and the Shareholder:
2.1. CORPORATE STATUS Medical Manager Northeast is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the requisite power and authority to own or lease its
properties and to carry on its business as presently conducted. Medical Manager
Northeast 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, and is in good standing in each of the
jurisdictions in which
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it is so qualified. Medical Manager Northeast has fully complied with all of the
requirements of any statute governing the use 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 Medical Manager Northeast.
2.2. CORPORATE POWER AND AUTHORITY Medical Manager Northeast has the
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. Medical Manager Northeast 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 Northeast and constitutes a legal, valid and binding
obligation of Medical Manager Northeast, enforceable against Medical Manager
Northeast in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally 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 each of the Companies, the Medical Manager Shares
will be validly issued, fully paid and non-assessable shares of Medical Manager
Common Stock, and will have been issued in compliance with all applicable state
and federal securities laws and will not have been issued in violation of any
preemptive rights, rights of first refusal or similar rights. Subject to Section
9.1 hereof, the Medical Manager Shares are freely transferable. No preemptive
rights, rights of first refusal or similar rights exist with respect to the
shares of capital stock of Medical Manager Northeast and no such rights arise by
virtue of or in connection with the transactions contemplated hereby. There are
no outstanding or authorized rights, options, warrants, convertible securities,
subscription rights, conversion rights, exchange rights or other agreements or
commitments of any kind that could require Medical Manager Northeast or Medical
Manager Corporation to issue or sell any shares of its capital stock (or
securities convertible into or exchangeable for shares of its capital stock),
except with respect to employee stock option plans. There are no outstanding
stock appreciation, phantom stock, profit participation or other similar rights
with respect to Medical Manager Northeast or Medical Manager Corporation. There
are no proxies, voting rights, or other agreements or understandings with
respect to the voting or transfer of the capital stock of Medical Manager
Northeast or Medical Manager Corporation. Medical Manager Corporation is not
obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
2.5. NO VIOLATION; CONSENTS AND APPROVALS The execution and delivery of
this Agreement by Medical Manager Northeast, the performance of its obligations
hereunder and the consummation of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Articles of Incorporation
or Bylaws of Medical Manager Northeast, (b) violate
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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 Northeast, (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 a right to terminate, amend, modify, abandon or accelerate
any contract which is applicable to, binding upon or enforceable against Medical
Manager Northeast, (d) result in or require the imposition of any Lien upon or
with respect to any of the properties or assets of Medical Manager Northeast,
(e) give to any individual or entity a right or claim against Medical Manager
Northeast or Medical Manager Corporation, or (f) require the consent, approval,
authorization and permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other person, except any SEC and other
filings required to be made by Medical Manager Corporation.
2.6. CHANGES SINCE LATEST FORM 10-Q Since the date of Medical Manager
Corporation's latest Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission, it has not experienced any event which would result in a
Material Adverse Effect on Medical Manager Corporation, its operations,
financial condition, business or industry.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
EACH OF THE COMPANIES AND THE SHAREHOLDER
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As a material inducement to Medical Manager Northeast to enter into
this Agreement and to consummate the transactions contemplated hereby, each of
the Companies and the Shareholder, jointly and severally, make the following
representations and warranties to Medical Manager Northeast:
3.1. CORPORATE STATUS Computer Clinic is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has the requisite power and authority to own or lease its properties and to
carry on its business as now being conducted. MedPlus is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the requisite power and authority to own or lease its
properties and to carry on its business as now being conducted. Command
Solutions is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio and has the requisite power and authority to
own or lease its properties and to carry on its business as now being conducted.
Each of the Companies 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), except where such failure to
qualify would not have a Material Adverse Effect on the business of the
Companies taken as a whole or where the estimated expenses involved in making
such qualifications of the Companies have been adequately reflected on the
Current Balance Sheet. Each of the Companies 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
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under which it operates its business, except where such failure to comply would
not have a Material Adverse Effect on the business of the Companies taken as a
whole. There is no pending or threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of each of the Companies. All names
under which each of the Companies does business as of the date hereof are
specified on SCHEDULE 3.1. Except as otherwise disclosed in SCHEDULE 3.1, each
of the Companies has not changed its name or used any assumed or fictitious
name, or been the surviving entity in a merger, acquired any business or changed
its principal place of business or chief executive office, within the past three
years.
3.2. POWER AND AUTHORITY Each of the Companies has the corporate power
and authority to execute and deliver this Agreement, to perform its respective
obligations hereunder and to consummate the transactions contemplated hereby.
Each of the Companies 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. The
Shareholder is an individual residing in the State of New York and has the
requisite competence and authority to execute and deliver this Agreement, to
perform his respective obligations hereunder and to consummate the transactions
contemplated hereby.
3.3. ENFORCEABILITY This Agreement has been duly executed and delivered
by each of the Companies and the Shareholder, and constitutes the legal, valid
and binding obligation of each of them, enforceable against each of them in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4. CAPITALIZATION SCHEDULE 3.4 sets forth, with respect to each of
the Companies, (a) the number of authorized shares of each class of its capital
stock, (b) the number of issued and outstanding shares of each class of its
capital stock, and (c) the number of shares of each class of its capital stock
which are held in treasury. All of the issued and outstanding shares of capital
stock of each of the Companies (i) have been duly authorized and validly issued
and are fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, and (iii) were not issued in
violation of any preemptive rights, rights of first refusal or similar rights.
No preemptive rights, rights of first refusal or similar rights exist with
respect to the shares of capital stock of each of the Companies and no such
rights arise by virtue of or in connection with the transactions contemplated
hereby. There are no outstanding or authorized rights, options, warrants,
convertible securities, subscription rights, conversion rights, exchange rights
or other agreements or commitments of any kind that could require each of the
Companies to issue or sell any shares of its capital stock (or securities
convertible into or exchangeable for shares of its capital stock). There are no
outstanding stock appreciation, phantom stock, profit participation or other
similar rights with respect to each of the Companies. There are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock of each of the Companies. Each of the Companies
is not obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
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3.5. SHAREHOLDERS, OFFICERS AND DIRECTORS OF EACH OF THE COMPANIES
SCHEDULE 3.5 sets forth, with respect to each of the Companies, (a) the name,
address and federal taxpayer identification number of, and the number of
outstanding shares of each class of its capital stock owned by, each shareholder
of record as of the close of business on the date of this Agreement; (b) the
name, address and federal taxpayer identification number of, and number of
shares of each class of its capital stock beneficially owned by, each beneficial
owner of outstanding shares of capital stock (to the extent that record and
beneficial ownership of any such shares are different); and, (c) the name and
title of each officer and director of each of the Companies. The Shareholder
constitute all of the holders of all issued and outstanding shares of capital
stock of each of the Companies, and the Shareholder owns such shares as is set
forth on SCHEDULE 3.5, free and clear of all Liens, restrictions and claims of
any kind.
3.6. NO VIOLATION; CONSENTS AND APPROVALS Except for any approvals or
consents required under Material Contracts (as defined in SECTION 3.25),
identified in SCHEDULE 3.25 as requiring the consent of third parties, the
execution and delivery of this Agreement by each of the Companies and the
Shareholder, the performance by each of the Companies and the Shareholder 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 each of the Companies, (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 each of the Companies or the Shareholder, (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 each of the Companies or the Shareholder, (d) result in or
require the creation or imposition of any Lien upon or with respect to any of
the properties or assets of each of the Companies, (e) give to any individual or
entity a right or claim against each of the Companies or the Shareholder 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.
3.7. RECORDS OF EACH OF THE COMPANIES The copies of the articles of
incorporation, bylaws, and other documents and agreements of each of the
Companies which were provided to Medical Manager Northeast are true, accurate
and complete and reflect all amendments made through the date of this Agreement.
The minute books for each of the Companies made available to Medical Manager
Northeast for review were correct and complete as of the date of such review, no
further entries have been made through the date of this Agreement and all
corporate actions taken by each of the Companies have been duly authorized or
ratified. SCHEDULE 3.7 lists each account of each of the Companies with any
bank, broker or other depository institution, and the names of all persons
authorized to withdraw funds from each such account.
3.8. SUBSIDIARIES Each of the Companies 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.
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3.9. FINANCIAL STATEMENTS The Shareholder has delivered to Medical
Manager Northeast the financial statements of each of the Companies for the
fiscal years ended December 31, 1995, and December 31, 1996, including the notes
thereto, audited by Coopers & Xxxxxxx, LLP (the "Audited Financial Statements"),
and the financial statements of each of the Companies for the most recent
month-end close prior to the date of this Agreement, including the notes thereto
(the "Interim Financial Statements," and together with the Audited Financial
Statements, the "Financial Statements"), copies of which are attached as
SCHEDULE 3.9 hereto. The balance sheet of each of the Companies dated as of most
recent month-end close prior to the date of this Agreement, included in the
Financial Statements, is referred to herein as the "Current Balance Sheet." The
Audited Financial Statements fairly present the financial position of each of
the Companies at each of the balance sheet dates and the results of operations
for the periods covered thereby, and have been prepared in accordance with GAAP
consistently applied throughout the periods indicated. The books and records of
each of the Companies fully and fairly reflect all of its transactions,
properties, assets and liabilities. There are no material special or
non-recurring items of income or expense during the periods covered by the
Audited Financial Statements and the balance sheets included in the Audited
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 Audited Financial Statements reflect all adjustments necessary for a fair
presentation of the financial information contained therein. The Interim
Financial Statements of the Companies were prepared from the books and records
of the Companies. The Interim Financial Statements fairly and accurately
represent the transactions referenced therein, subject to any adjustments which
may be determined to be required during the course of an audit.
3.10. CHANGES SINCE THE CURRENT BALANCE SHEET DATE Since the date of
its Current Balance Sheet included in the Financial Statements, each of the
Companies has not (a) issued, sold, pledged, disposed of, encumbered, or
authorized the issuance, sale, pledge, disposition, grant or encumbrance of any
shares of its capital stock, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest of each of the Companies; (b) declared, set aside, made
or paid any dividend or other distribution payable in cash, stock, property or
otherwise of or with respect to its capital stock, or other securities, or
reclassified, combined, split, subdivided or redeemed, purchased or otherwise
acquired, directly or indirectly, any of its capital stock, or other securities,
except for dividends or distributions paid in the ordinary course of business
consistent with past practice; (c) paid any bonus to or increased the rate of
compensation of any of its officers, partners, or salaried employees, or amended
any other terms of employment or engagement of such persons 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 practice; (d)
sold, leased or transferred any of its properties or assets or acquired any
properties or assets other than in the ordinary course of business consistent
with past practice; (e) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice; (f) made
any payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (g) except in the ordinary course of
business, 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
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of any Person) or entered into any transaction or series of transactions
contemplated hereby; (h) 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; (i) suffered any
extraordinary losses (whether or not covered by insurance); (j) waived,
canceled, compromised or released any rights having a value in excess of $25,000
in the aggregate; (k) made or adopted any change in its accounting practice or
policies; (l) made any adjustment to its books and records other than in respect
of the conduct of its business activities in the ordinary course consistent with
past practice; (m) entered into any transaction with the Shareholder; (n)
entered into any employment agreement that is not terminable at Closing without
any liability or obligation; (o) terminated, amended or modified any agreement
involving an amount in excess of $25,000 in the aggregate; (p) imposed any
security interest or other Lien on any of its assets other than in the ordinary
course of business consistent with past practice; (q) 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; (r) made or pledged any charitable
contributions in excess of $25,000 in the aggregate; (s) acquired (including,
without limitation, for cash or shares of stock, by merger, consolidation, or
acquisition of stock or assets) any interest in any corporation, partnership or
other business organization or division thereof or any assets, or 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; (t)
increased or decreased prices charged to customers, except in the ordinary
course of business consistent with past practice; or taken any actions which
might reasonably result in any material loss of customers; (u) entered into any
other transaction or been subject to any event which at the time such
transaction was entered into had or may reasonably be expected to have a
Material Adverse Effect on each of the Companies; or (v) agreed to do or
authorized any of the foregoing.
3.11. LIABILITIES OF EACH OF THE COMPANIES Each of the Companies does
not have any liabilities or obligations, whether accrued, absolute, contingent
or otherwise, except as disclosed on SCHEDULE 3.11, and except (a) to the extent
reflected or taken into account in the Current Balance Sheet and not heretofore
paid or discharged, (b) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Current Balance Sheet (none
of which relates to breach of contract, breach of warranty, tort, infringement
or violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), 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.
3.12. LITIGATION Except as disclosed in SCHEDULE 3.12, there is no
action, suit or other legal or administrative proceeding or governmental
investigation pending, threatened, anticipated or contemplated against, by or
affecting each of the Companies or Shareholders, or each of the Companies'
properties or assets, or which question the validity or enforceability of this
Agreement or the transactions contemplated hereby, and there is no basis for any
of the foregoing. There are no outstanding orders, decrees or stipulations
issued by any Governmental Authority in any proceeding to which each of the
Companies is or was a party which have not been complied with in full or which
continue to impose any material obligations on each of the Companies.
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3.13. ENVIRONMENTAL MATTERS
(a) Each of the Companies and the Shareholder are and have at
all times been in substantial compliance with all environmental laws
governing each of the Companies and its business, operations,
properties and assets.
(b) There are no (and there is no known 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 each of the Companies, its business, operations,
properties, or assets with respect to any environmental laws or
licenses, if any, issued to each of the Companies or the Shareholder.
3.14. REAL ESTATE
(a) None of the Companies owns real property or any interest
therein.
(b) SCHEDULE 3.14(b) sets forth a list of all leases, licenses
or similar agreements ("Leases") to which each of the Companies is a
party, which are for the use or occupancy of real estate owned by a
third party (copies of which have previously been furnished to Medical
Manager Northeast), in each case, setting forth (A) the lessor and
lessee thereof and the commencement date, term and renewal rights of
each of the Leases, and (B) the street address or legal description of
each property covered thereby (the "Leased Premises"). The Leases are
in full force and effect and have not been amended. No event has
occurred which, to the knowledge of the Companies, with the passage of
time or the giving of notice or both, would cause a material breach of
or default under any of such Leases. Except as disclosed on SCHEDULE
3.14(B), with respect to such Leased Premises: (i) each of the
Companies has valid leasehold interests in the Leased Premises, free
and clear of Liens, covenants and easements or title defects; (ii) the
portions of the buildings located on the Leased Premises that are used
in the business of each of the Companies are each in good repair and
condition, normal wear and tear excepted, and are in the aggregate
sufficient to satisfy each of the Companies' current normal business
activities as conducted thereat; (iii) each of the Leased Premises (a)
has direct access to public roads or access to public roads by means of
a perpetual access easement, such access being sufficient to satisfy
the current and reasonably anticipated normal transportation
requirements of each of the Companies' business as presently conducted
at such parcel; and (b) is served by all utilities in such quantity and
quality as are sufficient to satisfy the current normal business
activities as conducted at such parcel; and (iv) each of the Companies
has not received notice of (a) any condemnation proceeding with respect
to any portion of the Leased Premises or any access thereto, and
neither any of the Companies nor the Shareholder has any knowledge that
such proceeding is contemplated by any Governmental Authority; or (b)
any special assessment which may affect any of the Leased Premises, and
neither any of the Companies nor the Shareholder has any knowledge that
such special assessment is contemplated by any Governmental Authority.
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3.15. GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY
(a) Each of the Companies has good and marketable title to all
of its Assets free and clear of any Liens, except as set forth in
SCHEDULE 3.15(A). For purposes of this Agreement, the term "Assets"
means all of the properties and assets of each of the Companies, other
than the Leased Premises, whether personal or mixed, tangible or
intangible, wherever located.
(b) The Fixed Assets currently in use or necessary for the
business and operations of each of the Companies are, in the opinion of
the Companies, in good 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 each of the Companies or set forth on the
Current Balance Sheet or acquired by each of the Companies since the
date of the Current Balance Sheet.
(c) The inventories of each of the Companies are carried on
the books of each of the Companies and have been accounted for in
accordance with generally accepted accounting principles consistently
applied. All such inventories are valued at the lesser of cost or
market value. None of the inventories are subject to damage not covered
by insurance.
3.16. COMPLIANCE WITH LAWS Each of the Companies, the Shareholder and
any Affiliate of each of the Companies is and has been in compliance with all
laws, regulations and orders material to it, its business and operations (as
conducted by it now and in the past), the Assets and the Leased Premises and any
other properties and assets (in each case owned or used by it now or in the
past). None of the Companies have been cited, fined or otherwise notified of any
asserted past or present failure to comply with any laws, regulations or orders
and no proceeding with respect to any such violation is pending or threatened.
Neither each of the Companies, the Shareholder nor any of their respective
employees or agents, has made any payment of funds in connection with their
business which is prohibited by law, and no funds have been set aside to be used
in connection with their business for any payment prohibited by law. Each of the
Companies is not subject to any Contract, 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.
3.17. LABOR AND EMPLOYMENT MATTERS SCHEDULE 3.17 sets forth the name,
address, social security number and current rate of compensation of each of the
employees of each of the Companies. Each of the Companies 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 each of the Companies into
one or more collective bargaining units. There has never been any actual or, to
the knowledge of each of the Companies or the Shareholder, threatened, labor
dispute, strike or
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work stoppage which affects or which may affect the business of each of the
Companies or which may interfere with its continued operations. Neither each of
the Companies nor any agent, representative or employee thereof has since the
date of incorporation of each of the Companies committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and there
is no pending or, to the knowledge of each of the Companies or the Shareholder,
threatened charge or complaint against each of the Companies by or with the
National Labor Relations Board or any representative thereof. Each of the
Companies is not aware that any executive or key employee or group of employees
has any plans to terminate his, her or their employment with each of the
Companies as a result of the transactions contemplated hereby or otherwise. Each
of the Companies 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, except as
set forth on Schedule 3.17 hereto.
3.18. EMPLOYEE BENEFIT PLANS
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 3.18 contains a list
setting forth each employee benefit plan or arrangement of each of the
Companies, including but not limited to employee pension benefit plans,
as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), multiemployer plans, as defined in
Section 3(37) of ERISA, employee welfare benefit plans, as defined in
Section 3(1) of ERISA, deferred compensation plans, stock option plans,
bonus plans, stock purchase plans, hospitalization, disability and
other insurance plans, severance or termination pay plans and policies,
whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents, of each of the Companies participate
("Employee Benefit Plans") (true and accurate copies of which, together
with the most recent annual reports on Form 5500 and summary plan
descriptions with respect thereto, were furnished to Medical Manager
Northeast).
(b) COMPLIANCE WITH LAW. With respect to each Employee Benefit
Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but
not limited to, ERISA and the Internal Revenue Code of 1986, as amended
(the "Code"); (ii) no actions, suits, claims or disputes are pending,
or threatened; (iii) no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any governmental or regulatory
agency; (iv) there are no facts which could give rise to any material
liability in the event of any such investigation, claim, action, suit,
audit, review, or other proceeding; (v) all material reports, returns,
and similar documents required to be filed with any governmental agency
or distributed to any plan participant have been duly or timely filed
or distributed; and (vi) no "prohibited transaction" has occurred
within the meaning of the applicable provisions of ERISA or the Code.
(c) QUALIFIED PLANS. With respect to each Employee Benefit
Plan intended to qualify under Code Section 401(a) or 403(a) (i) the
Internal Revenue Service has issued a favorable determination letter,
true and correct copies of which have been furnished to
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Medical Manager Northeast, that such plans are qualified and exempt
from federal income taxes; (ii) no such determination letter has been
revoked nor has revocation been threatened, nor has any amendment or
other action or omission occurred with respect to any such plan since
the date of its most recent determination letter or application
therefor in any respect which would adversely affect its qualification
or materially increase its costs; (iii) no such plan has been amended
in a manner that would require security to be provided in accordance
with Section 401(a)(29) of the Code; (iv) no reportable event (within
the meaning of Section 4043 of ERISA) has occurred, other than one for
which the 30-day notice requirement has been waived; (v) as of the
Closing Date, the present value of all liabilities that would be
"benefit liabilities" under Section 4001(a)(16) of ERISA if benefits
described in Code Section 411(d)(6)(B) were included will not exceed
the then current fair market value of the assets of such plan
(determined using the actuarial assumptions used for the most recent
actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been
required to be made in accordance with such plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely made;
and (vii) all such contributions to the plans, and all payments under
the plans (except those to be made from a trust qualified under Section
401(a) of the Code) and all payments with respect to the plans
(including, without limitation, PBGC (as defined below) and insurance
premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and
reflected on the Current Balance Sheet.
(d) MULTIEMPLOYER PLANS. With respect to any multiemployer
plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan") (i) all
contributions required to be made with respect to employees of each of
the Companies have been timely paid; (ii) each of the Companies has not
incurred, and is not expected to incur, directly or indirectly, any
withdrawal liability under ERISA with respect to any such plan (whether
by reason of the transactions contemplated by the Agreement or
otherwise); (iii) SCHEDULE 3.18 sets forth (A) the withdrawal liability
under ERISA to each MPPA Plan, (B) the date as of which such amount was
calculated, and (C) the method for determining the withdrawal
liability; and (iv) no such plan is (or is expected to be) insolvent or
in reorganization and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists or is expected to exist with respect to any such plan.
(e) WELFARE PLANS. (i) Each of the Companies is not obligated
under any employee welfare benefit plan as described in Section 3(1) of
ERISA ("Welfare Plan") to provide medical or death benefits with
respect to any employee or former employee of each of the Companies or
its predecessors after termination of employment except as required by
the continuation coverage requirements of Section 601-609 of ERISA or
any similar state law; (ii) each of the Companies has complied with the
notice and continuation coverage requirements of Section 4980B of the
Code and the regulations thereunder with respect to each Welfare Plan
that is, or was during any taxable year for which the statute of
limitations on the assessment of federal income taxes remains, open, by
consent or otherwise, a group health plan within the meaning of Section
5000(b)(1) of
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the Code; and (iii) there are no reserves, assets, surplus or prepaid
premiums under any Welfare Plan which is an Employee Benefit Plan. The
consummation of the transactions contemplated by this Agreement will
not entitle any individual to severance pay, and, will not accelerate
the time of payment or vesting, or increase the amount of compensation,
due to any individual.
(f) CONTROLLED GROUP LIABILITY. Neither each of the Companies,
nor any entity that would be aggregated with it under Code Section
414(b), (c), (m) or (o): (i) has ever terminated or withdrawn from an
employee benefit plan under circumstances resulting (or expected to
result) in liability to the Pension Benefit Guaranty Corporation
("PBGC"), the fund by which the employee benefit plan is funded, or any
employee or beneficiary for whose benefit the plan is or was maintained
(other than routine claims for benefits); (ii) has any assets subject
to (or expected to be subject to) a lien for unpaid contributions to
any employee benefit plan; (iii) has failed to pay premiums to the PBGC
when due; (iv) is subject to (or expected to be subject to) an excise
tax under Code Section 4971; (v) has engaged in any transaction which
would give rise to liability under Section 4069 or Section 4212(c) of
ERISA; or (vi) has violated Code Section 4980B or Section 601 through
608 of ERISA.
(g) OTHER LIABILITIES. (i) None of the Employee Benefit Plans
obligates any of the Companies to pay separation, severance,
termination or similar benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change of
control" (as such term is defined in Section 280G of the Code); (ii)
all required or discretionary (in accordance with historical practices)
payments, premiums, contributions, reimbursements, or accruals for all
periods ending prior to or as of the Closing Date shall have been made
or properly accrued on the Current Balance Sheet or will be properly
accrued on the books and records of each of the Companies as of the
Closing Date; and (iii) none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current Balance
Sheet or the books and records of each of the Companies.
(h) SUCCESSOR EMPLOYER. Medical Manager Northeast shall (i)
constitute a successor employer to the Companies for purposes of the
continuation coverage requirements of Sections 601-609 of ERISA and
Section 4980B of the Code and the regulations thereunder and (ii) hold
harmless the Companies and the Shareholders from all claims (including
attorneys' fees) with respect to continuation coverage.
(i) ADOPTION OF MEDICAL PLAN. Medical Manager Northeast shall
(i) adopt the Companies' Oxford Group Enrollment Agreement--New York
with Oxford Health Plans (NY), Inc. ("Medical Plan") as of the Closing
Date, (ii) be responsible for all reporting requirements with respect
to the Medical Plan subsequent to the Closing Date and (iii) hold
harmless the Companies and the Shareholders from all claims (including
attorneys' fees) with respect to the Medical Plan in connection with
events occurring after the Closing Date.
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3.19. TAX MATTERS All Tax Returns required to be filed prior to the
date hereof with respect to each of the Companies have been timely filed, each
such Tax Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true and accurate in all respects. All
Taxes due and payable by or with respect to each of the Companies have been paid
or are accrued on the Current Balance Sheet or will be accrued on each of the
Companies' books and records as of the Closing. Except as set forth in SCHEDULE
3.19 hereto: (i) with respect to each taxable period of each of the Companies,
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 each of the Companies; (iii) each of
the Companies has not consented to extend the time in which any Taxes may be
assessed or collected by any taxing authority; (iv) each of the Companies 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 each of the Companies regarding Taxes; (vi) each of
the Companies 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 each of the Companies;
(viii) each of the Companies will not be required (A) as a result of a change in
method of accounting for a taxable period ending on or prior to the Closing, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Closing or (B) as a result of
any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign law), to include any item of
income or exclude any item of deduction from any taxable period (or portion
thereof) beginning after the Closing; (ix) each of the Companies has not been a
member of an affiliated group (as defined in Section 1504 of the Code) or filed
or been included in any combined, consolidated or unitary income Tax Return; (x)
each of the Companies 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 has
claimed or assessed any additional Taxes against each of the Companies for any
period for which Tax Returns have been filed previously and no basis exists for
any such claim or assessment not adequately reflected on the Current Balance
Sheet; (xii) each of the Companies has not made any payments, 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) each of the
Companies 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 each of the Companies does not file Tax Returns that each of
the Companies is or may be subject to Taxes assessed by such jurisdiction; (xv)
each of the Companies 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
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country; (xvi) true, correct and complete copies of all income and applicable
sales and use Tax Returns filed by or with respect to each of the Companies for
the past three years have been furnished or made available to Medical Manager
Northeast; (xvii) each of the Companies will not be subject to any Taxes for the
period ending at the Closing 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 each of the Companies or Medical Manager Northeast by virtue
of the transactions contemplated in this Agreement; and (xix) each of the
Companies has duly and validly filed an election for S corporation status under
the Code, and under applicable state and local tax law for all tax years
beginning after December 31, 1986, and no such S election has been revoked or
terminated, and none of the Companies nor the Shareholder have taken any action
which would cause a termination of such S election.
3.20. INSURANCE Each of the Companies is covered by valid, outstanding
and enforceable policies of insurance issued to it by reputable insurers
covering its properties, assets and businesses against risks of the nature
normally insured against by corporations in the same or similar lines of
business and in coverage amounts typically and reasonably carried by such
corporations (the "Insurance Policies"). Such Insurance Policies are in full
force and effect, and all premiums due thereon have been paid. Through the
Closing Date, each of the Insurance Policies will be in full force and effect.
Each of the Companies has complied with the provisions of such Insurance
Policies. SCHEDULE 3.20 contains (i) a complete and correct list of all
Insurance Policies and all amendments and riders thereto (copies of which have
been provided to Medical Manager Northeast) 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 each of the Companies. None of the Companies have failed to give,
in a timely manner, any notice required under any of the Insurance Policies to
preserve its rights thereunder.
3.21. RECEIVABLES All of the Receivables are valid and legally binding,
represent bona fide transactions and arose in the ordinary course of business of
each of the Companies. All of the Receivables are good and collectible
receivables, and will be collected in full in accordance with the terms of such
receivables (and in any event within six months following the Closing), without
set off or counterclaims, subject to the allowance for doubtful accounts, if
any, set forth on the Current Balance Sheet as reasonably adjusted since the
date of the Current Balance Sheet in the ordinary course of business consistent
with past practice. For purposes of this Agreement, the term "Receivables" means
all receivables of each of the Companies, 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.
3.22. LICENSES AND PERMITS To the knowledge of the Companies and the
Shareholder, each of the Companies possesses all licenses, approvals, permits or
authorizations from governmental authorities that are material to the operation
of the business of the Companies taken as a whole (collectively, the "Permits"),
including with respect to the operation of the
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Leased Premises, and SCHEDULE 3.22 sets forth a true, complete and accurate list
of all such Permits, and all applications for Permits. To the knowledge of the
Companies and the Shareholder, all such Permits are valid and in full force and
effect, each of the Companies is in 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 or the consummation of the transactions
contemplated hereby.
3.23. ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS The Purchased Assets and Leased Premises
constitute, in the aggregate, all of the assets and properties currently used
for the conduct of the business of the Companies taken as a whole in the manner
in which and to the extent to which such business is currently being conducted.
No current supplier material to the business of the Companies taken as a whole
has provided notice that it will terminate its business relationship with the
Companies. Neither each of the Companies nor the Shareholder have any direct or
indirect interest in any customer, supplier or competitor of each of the
Companies, or in any person from whom or to whom each of the Companies leases
real or personal property. No officer, director or shareholder of each of the
Companies, 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 each of the Companies or has any interest in
any property used by each of the Companies.
3.24. INTELLECTUAL PROPERTY SCHEDULE 3.24 sets forth all of the
trademarks, service marks, copyrights, know-how, patents, trade secrets,
licenses (including licenses for the use of computer software programs), and
other intellectual property material to the conduct of the business of the
Companies as a whole (the "Intellectual Property"). Each of the Companies has
full legal right, title and interest in and to the Intellectual Property. The
conduct of the business as presently conducted as it relates to Intellectual
Property owned (and not licensed) by the Companies does not infringe upon or
misappropriate any rights held or asserted by any Person, and to the best
knowledge of the Companies and the Shareholder, no Person is infringing on the
Intellectual Property. Except as set forth in SCHEDULE 3.24, no payments are
required for the continued use of the Intellectual Property. None of the
Intellectual Property has ever been declared invalid or unenforceable, or is the
subject of any pending threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding.
3.25. CONTRACTS SCHEDULE 3.25 sets forth a list of each Material
Contract (as defined below), true, correct and complete copies of which have
been provided to Medical Manager Northeast, including, without limitation, all
franchise, sales and service, dealer and other agreements or undertakings.
SCHEDULE 3.25 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 Northeast 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. Each of
the Companies has not violated any of the terms or conditions of any Material
Contract or any term or condition which would permit termination or material
modification of any material Contract, all of the covenants to be performed by
any other
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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 each of the Companies or any other party
under any material Contract. Each of the Companies is not subject to any
liability or payment resulting from renegotiation of amounts paid under any
Material Contract. As used in this Section 3.25, "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
obligations to any other Person, or letters of intent or commitment letters with
respect to same, in excess of $10,000; (b) contracts obligating Computer Clinic,
Inc., MedPlus of New York, or Command Solutions, Inc. to provide or obtain
products or services, in excess of $10,000; (c) leases of real property; (d)
leases of personal property, in excess of $10,000; (e) distribution, sales
agency or franchise or similar agreements, in excess of $10,000; (f) agreements
providing for an independent contractor's services; (g) 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 each
of the Companies; (h) 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; (i) contracts
relating to pending capital expenditures by each of the Companies, in excess of
$10,000; (j) non-competition agreements restricting each of the Companies or the
Shareholder in any manner, (k) any contracts obligating any of the Companies to
make payments in excess of $10,000, in the aggregate, over the remaining term of
such contract; and (l) all other Contracts or understandings which are material
to each of the Companies, or its business, assets or properties.
3.26. INVESTMENT INTENT; SECURITIES DOCUMENTS The Companies are
acquiring the Medical Manager Shares hereunder for each of their own accounts
for investment and not with a view to, or for the sale in connection with, any
distribution of any of the Medical Manager Shares, except in compliance with
applicable state and federal securities laws. The foregoing notwithstanding,
nothing in this Section 3.26 is intended to prohibit the Companies from
liquidating and distributing the Medical Manager Shares to the Shareholder. The
Shareholder has had the opportunity to discuss the transactions contemplated
hereby with Medical Manager Corporation and has had the 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. The Shareholder hereby
represents that he can bear the economic risk of losing his investment in the
Medical Manager Shares and has adequate means for providing for his current
financial needs and contingencies. The Shareholder acknowledges receiving a
prospectus and the supplements thereto which form a part of Medical Manager
Corporation's Registration Statement on Form S-1 (No. 33-25215) (the
"Prospectus"), prior to the date hereof, in accordance with the requirements of
the Securities Act.
3.27. NO COMMISSIONS Neither any of the Companies nor the Shareholder
has 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.
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3.28. CERTAIN ACCOUNTING MATTERS None of the Companies nor the
Shareholder has taken or agreed to take any action that (without regard to any
action taken or agreed to be taken by Medical Manager Northeast or Medical
Manager Corporation) would prevent Medical Manager Corporation from accounting
for the transactions contemplated hereby as a pooling of interests business
combination.
3.29. ACCURACY OF INFORMATION FURNISHED No representation, statement or
information made by each of the Companies and/or the Shareholder 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, or which would have a
Material Adverse Effect on the viability of the Companies or their business
taken as a whole.
3.30. MEDICAL MANAGER LICENSES Each and every Medical Manager system
sold by each of the Companies has been fully paid for and duly licensed. All
software (including the operating system and application software) sold by each
of the Companies to end users has been duly licensed to the Companies,
respectively, by the owner thereof.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE CLOSING
---------------------------------------
4.1. CONDUCT OF BUSINESS BY EACH OF THE COMPANIES PENDING THE CLOSING
Each of the Companies and the Shareholder, jointly and severally, covenant and
agree that, between the date of this Agreement and the Closing Date, the
business of each of the Companies shall be conducted only in, and each of the
Companies shall not take any action except in, the ordinary course of business
consistent with past practice. Each of the Companies 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, each of the Companies shall not,
between the date of this Agreement and the Closing Date, directly or indirectly,
do or agree to do any of the following without the prior written consent of
Medical Manager Northeast:
(a) amend or otherwise change its Articles of Incorporation or
Bylaws;
(b) issue, sell, pledge, dispose of, encumber, or, authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i)
any shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest of each
of the Companies or (ii) any of its assets, tangible or intangible,
except in the ordinary course of business consistent with past
practice;
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(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 practice, purchase any property or assets of any other
Person, (ii) 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 practice;
(f) increase the compensation payable or to become payable to
its officers or employees, 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 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 practice;
(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 with past practice of due
and payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date
thereof in the ordinary course of business and consistent with past
practice;
(i) 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;
(j) enter into any transaction with any Shareholder or
Affiliates thereof; or
(k) 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.
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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 reasonably 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 Shareholder shall direct each of the
Companies to comply with all of the covenants of each of the Companies 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. Each of the Companies and the Shareholder agree to cooperate with
Medical Manager Northeast or its assignee (a) in connection with any and all
proceedings which Medical Manager Northeast may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Purchased
Assets as provided for in this Agreement; (b) in defending or compromising any
and all actions, suits or proceedings in respect of any of the Purchased Assets,
and in doing all such acts and things in relation thereto as Medical Manager
Northeast shall deem advisable; and (c) in taking all action which Medical
Manager Northeast may reasonably deem proper in order to provide for Medical
Manager Northeast the benefits under any of the Purchased Assets where any
required consent of another party to the sale or assignment thereof to Medical
Manager Northeast pursuant to this Agreement shall not have been obtained. From
and after the Closing, upon the reasonable request of Medical Manager Northeast,
each of the Companies and the Shareholder shall execute, acknowledge and deliver
all such further deeds, bills of sale, assignments, transfers, conveyances,
powers of attorney and assurances as may be reasonably required or appropriate
to convey and transfer to and vest in Medical Manager Northeast and protect its
right, title and interest in all of the Purchased Assets and to carry out the
transactions contemplated by this Agreement.
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 each of the Companies as are necessary for the consummation of the
transactions contemplated hereby; provided, however, that nothing contained in
this Section 5.4 or Section 1.3 above shall require the Companies or the
Shareholder to pay any consideration therefor or to incur any obligation or
liability in connection therewith in excess of $1,000 in the aggregate. 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
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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,
each of the Companies and the Shareholder shall, and shall cause its directors,
officers, employees, auditors, counsel and agents to, afford Medical Manager
Northeast and Medical Manager Northeast's officers, employees, auditors, counsel
and agents reasonable access at all reasonable times to its properties, offices
and other facilities, to its officers and employees and to all books and
records, and shall furnish such persons with all financial, operating and other
data and information as may be requested. Such examination shall be conducted
without disrupting the business of the Companies. Any information which is
discovered by Medical Manager Northeast during the course of its investigation
and examination pursuant to this Section 5.5 that gives rise to a potential
claim for indemnification against the Companies or the Shareholder pursuant to
Section 8.1 ("Potential Claim"), and which is known by Medical Manager Northeast
to be such, shall be brought to the attention of the Companies and the
Shareholder immediately upon discovery. Any Potential Claim which if discovered,
but not brought to the attention of the Companies and the Shareholder, shall be
deemed waived for all purposes. Subject to the foregoing, no information
provided to or obtained by Medical Manager Northeast shall affect any
representation or warranty in this Agreement.
5.6. NOTIFICATION OF CERTAIN MATTERS The Shareholder shall give prompt
notice to Medical Manager Northeast 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. TAX AND ACCOUNTING TREATMENT Medical Manager Northeast, each of
the Companies and the Shareholder will use their respective reasonable efforts
to cause this transaction to qualify as a reorganization under the provisions of
Section 368(a) of the Code. Each of the Companies, Medical Manager Northeast,
Medical Manager Corporation and the Shareholder will not take any action after
the date hereof to cause the transactions contemplated hereby not to be
accountable as a pooling of interests business combination.
5.8. CONFIDENTIALITY; PUBLICITY Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement, the subject matter or terms hereof or any
confidential information or other proprietary knowledge concerning the business
or affairs of the other party which it may have acquired from such party in the
course of pursuing the transactions contemplated by this Agreement without the
prior consent of the other party hereto; PROVIDED, that any information that is
otherwise publicly
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available, or has been obtained from a third party, without breach of this
provision, shall not be deemed confidential information. No press release or
other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that Medical Manager Corporation may make
such public disclosure which it believes in good faith to be required by law or
by the terms of any listing agreement with or requirements of NASDAQ (in which
case Medical Manager Northeast will consult with each of the Companies prior to
making such disclosure).
5.9. NO OTHER DISCUSSIONS Each of the Companies and the Shareholder 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 each of the
Companies (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. Each of the Companies and the Shareholder
will immediately notify Medical Manager Northeast 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 Northeast with the name
of such third party and the substance of any communications and terms of any
offers.
5.10. RESTRICTIVE COVENANTS In order to assure that Medical Manager
Northeast will realize the benefits of this transaction, the Shareholder agrees
with Medical Manager Northeast that he will not:
(a) for a period of five years from the Closing Date, directly
or indirectly, alone or as a partner, joint venturer, officer,
director, member, employee, consultant, agent, independent contractor
or shareholder of, or lender to, any company or business, engage in any
business in direct competition with the business of Medical Manager
Northeast, as such business now exists or as it may exist at the time
of termination, anywhere in the States of New York, Pennsylvania, Ohio,
New Jersey, Connecticut, Vermont, New Hampshire or Maine; PROVIDED,
HOWEVER, that, the beneficial ownership of less than five percent (5%)
of the shares of stock of any other corporation having a class of
equity securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to
violate the prohibitions of this Section;
(b) for a period of five years from the Closing Date, directly
or indirectly (i) induce any Person which is a customer of any of the
Companies, Medical Manager Northeast or any Affiliate of any of the
Companies or Medical Manager Northeast to patronize any business
directly or indirectly in competition with business conducted by any of
the Companies, Medical Manager Northeast or any Affiliate of the
Company or Medical Manager Northeast; (ii) canvass, solicit or accept
from any Person which is a customer of any of the Companies, Medical
Manager Northeast or any Affiliate of any of the Companies or Medical
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Manager Northeast, any such competitive business; or (iii) request or
advise any Person which is a customer or supplier of any of the
Companies, Medical Manager Northeast or any Affiliate of any of the
Companies or Medical Manager Northeast, to withdraw, curtail or cancel
any such customer's or supplier's business with any of the Companies,
Medical Manager Northeast or any Affiliate of any of the Companies or
Medical Manager Northeast, or its or their successors;
(c) for a period of five years from the Closing Date, directly
or indirectly employ, or knowingly permit any company or business
directly or indirectly controlled by him, to employ, any person who was
employed by any of the Companies, Medical Manager Northeast or any
Affiliate of any of the Companies or Medical Manager Northeast at or
within the prior six months, or in any manner seek to induce any such
person to leave his or her employment;
(d) at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in
his possession any Companies' proprietary rights or records, including,
but not limited to, any of its customer lists.
Each of the Companies and the Shareholder agree and acknowledge that
the restrictions contained in this SECTION 5.10 are reasonable in scope and
duration and are necessary to protect Medical Manager Northeast after the
Closing Date. If any provision of this SECTION 5.10 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 upon breach of any provision of this SECTION 5.10, Medical
Manager Northeast shall be entitled to seek injunctive relief, specific
performance or other equitable relief; PROVIDED, HOWEVER, that, this shall in no
way limit any other remedies which Medical Manager Northeast may have
(including, without limitation, the right to seek monetary damages).
5.11. DUE DILIGENCE REVIEW Medical Manager Northeast shall be entitled
to conduct prior to signing this Agreement, a due diligence review of the
assets, properties, books and records of each of the Companies (the "Due
Diligence"). The Due Diligence shall be conducted and completed prior to the
signing of this Agreement.
5.12. TRADING IN MEDICAL MANAGER COMMON STOCK Except as otherwise
expressly consented to, in writing, by Medical Manager Northeast, from the date
of this Agreement until the Closing Date, neither the Companies, the Shareholder
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.
5.13. DELIVERY OF PROPERTY RECEIVED BY EACH OF THE COMPANIES AFTER
CLOSING From and after the Closing, Medical Manager Northeast shall have the
right and authority to collect, for the account of Medical Manager Northeast,
all receivables and other items which shall be transferred or are intended to be
transferred to Medical Manager Northeast as part of the
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Purchased Assets as provided in this Agreement, and to endorse with the name of
the appropriate Company any checks or drafts received on account of any such
receivables or other items of the Purchased Assets. All checks or drafts
received on account of the receivables shall be applied to the oldest
outstanding receivables of the account debtor. Each of the Companies and the
Shareholder agree that they will transfer or deliver to Medical Manager
Northeast, promptly after the receipt thereof, any cash or other property which
each of the Companies and the Shareholder 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 Northeast as part of the Purchased
Assets under this Agreement.
5.14. EMPLOYMENT OF SHAREHOLDER The Shareholder shall enter into an
employment agreement in the form attached hereto as SCHEDULE 5.14.
5.15. PAYOFF AND ESTOPPEL LETTERS Prior to Closing, each of the
Companies shall request payoff and estoppel letters with respect to any
indebtedness being assumed by Medical Manager Northeast which Medical Manager
Northeast, in its sole discretion, elects to payoff on or after the Closing
Date, which letters shall contain payoff amounts, per diems, wire transfer
instructions and an agreement to deliver, upon full payment, UCC-3 termination
statements, satisfactions of mortgage or other appropriate releases and any
original promissory notes or other evidences of indebtedness marked canceled.
5.16. POST-CLOSING ACTIONS OF EACH OF THE COMPANIES Following the
Closing, each of the Companies shall take no actions, and incur no liabilities,
other than in connection with the orderly liquidation of each of the Companies
and distribution of the Medical Manager Shares to the Shareholder.
5.17. SHAREHOLDER AND DIRECTOR VOTE The Shareholder, in executing this
Agreement, consents as a director and/or shareholder (as applicable) of each of
the Companies to the transactions contemplated herein, and waives notice of any
meeting in connection therewith.
5.18. FAILURE TO TAKE ACTION Each of the parties agrees that he or it
will not take any action or omit to take any action to intentionally cause a
breach of this Agreement.
5.19. REGISTRATION OF MEDICAL MANAGER SHARES Medical Manager
Corporation agrees to execute, deliver and file any and all amendments to the
shelf registration statement covering the Medical Manager Shares and any other
instruments or documents necessary to keep the registration of the Medical
Manager Shares in effect.
5.20. POOLING REPRESENTATIONS AND WARRANTIES The Shareholder agrees
that he will not sell, transfer or pledge, dispose of or otherwise part with any
interest in or with respect to, or in any other manner reduce his investment
risk with respect to, (i) any shares of capital stock of the Companies at any
time prior to the Closing Date and (ii) any Medical Manager Shares received by
him pursuant to this Agreement or otherwise until the earlier of (A) such time
as Medical Manager Corporation publishes financial results (within the meaning
of ASR 135 and SAB 65) covering at least 30 days of combined operations of
Medical Manager Corporation and
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the Companies; or (B) such time as Medical Manager Corporation files with the
Securities and Exchange Commission its Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997. The Shareholder further understands and agrees
that Medical Manager Corporation will instruct its stock transfer agent not to
effect any transfer of the shares of Common Stock received by the Shareholder
pursuant to this Agreement unless such transfer is made in compliance with the
foregoing restrictions. The Shareholder hereby acknowledges and agrees that any
breach of this Agreement may result in special damage and injury to Medical
Manager Corporation not readily recoverable as money damages and, therefore, the
Shareholder consents to, and covenants that he will not oppose, any application
by Medical Manager Corporation, for equitable relief from any such breach by way
of injunction or decree of specific performance on the basis that Medical
Manager Corporation has an adequate remedy at law.
ARTICLE VI.
CONDITIONS TO THE OBLIGATIONS
OF MEDICAL MANAGER NORTHEAST
-----------------------------
The obligations of Medical Manager Northeast to effect the transactions
contemplated hereby shall be subject to the fulfillment in all material respects
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 Medical Manager Northeast:
6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS The representations and warranties of each of the Companies and the
Shareholder 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. Each of the Companies and the Shareholder 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. Each of the
Companies and the Shareholder shall have delivered to Medical Manager Northeast
a certificate, dated as of the Closing Date, (which in case of each of the
Companies 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.
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 each of the Companies, (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 each of the Companies 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 each
of the Companies and the Shareholder shall have delivered to Medical Manager
Northeast a certificate, dated as of the Closing Date, to that effect.
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6.3. CORPORATE CERTIFICATE The Shareholder shall have delivered to the
Medical Manager Companies (i) copies of the Articles of Incorporation and Bylaws
of each of the Companies as in effect immediately prior to the Closing Date,
(ii) copies of resolutions adopted by the Board of Directors and the Shareholder
of each of the Companies authorizing the transactions contemplated by this
Agreement, and (iii) a certificate of good standing of each of the Companies
issued by the Departments of State of their respective states of incorporation,
and each other state in which they are 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 each of the Companies as being true,
correct and complete.
6.4. OPINION OF COUNSEL Medical Manager Northeast shall have received
an opinion, dated as of the Closing Date, from counsel for each of the Companies
and the Shareholder acceptable to Medical Manager Northeast, in form and
substance acceptable to Medical Manager Northeast, to the effect that:
(a) each of the Companies is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
its incorporation and is authorized to carry on the business now
conducted by it and to own or lease the properties now owned or leased
by it;
(b) each of the Companies is in good standing in each
jurisdiction where it is qualified to do business;
(c) each of the Companies has obtained all necessary
authorizations and consents of its Board of Directors and shareholders
to effect the transactions contemplated hereby;
(d) all issued and outstanding shares of capital stock of each
of the Companies are duly authorized, validly issued, fully paid and
nonassessable;
(e) such counsel does not know of any pending or threatened
litigation, proceeding or investigation which questions the validity of
this Agreement;
(f) this Agreement is a valid and binding obligation of each
of the Companies and the Shareholder, enforceable against each of them
in accordance with its terms, except that no opinion is rendered as to
the enforceability of any restrictive covenant contained in Section
5.10 and except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or general equitable
principles; and
(g) to the knowledge of such counsel, the execution and
delivery of this Agreement by each of the Companies and the
Shareholder, the performance by each of the Companies and the
Shareholder 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
each of the Companies, (b) violate or conflict with any law, statute,
ordinance, rule or regulation, (c) conflict with, result in
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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 each of the
Companies or the Shareholder, (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties or
assets of each of the Companies, (e) give to any individual or entity a
right or claim against each of the Companies or the Shareholder or (f)
require the consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, any court or
tribunal by the Companies.
For purposes of the foregoing opinion from counsel for each of
the Companies and the Shareholder, such counsel shall be entitled to
rely solely upon certificates executed by the appropriate officers of
the Companies and the Shareholder.
6.5. CONSENTS Each of the Companies and Medical Manager Northeast shall
have received consents to the transactions contemplated hereby and waivers of
rights to terminate or modify any material rights or obligations of each of the
Companies from any Person from whom such consent or waiver is required under any
Material Contract necessary to operate the business of the Companies taken as a
whole.
6.6. SECURITIES LAWS Medical Manager Northeast shall have received all
necessary consents and otherwise complied with any state Blue Sky or securities
laws applicable to the issuance of the Medical Manager Shares in connection with
the transactions contemplated hereby.
6.7. POOLING LETTERS The Companies shall have received from the
Companies' accounting firm a letter, dated the Closing Date, confirming that to
their knowledge after due and diligent inquiry of management, there have been no
transactions or events with respect to the Companies which would, and the
ownership structure and attributes of the Companies and the Shareholder would
not, prohibit the transactions contemplated hereby, if consummated, from being
accounted for as a pooling of interests business combination in accordance with
GAAP and the criteria of Accounting Principles Board Opinion No. 16 and the
regulations of the SEC. Medical Manager Northeast shall have received from
Coopers & Xxxxxxx LLP a letter, dated as of the Closing Date, confirming that
the transactions contemplated hereby, if consummated, can properly be accounted
for as pooling of interests business combination in accordance with GAAP and the
criteria of Accounting Principles Board Opinion No. 16 and the regulations of
the SEC.
6.8. RELEASES At the Closing, each of the Companies and the
Shareholder, and such of their Affiliates as may be designated by Medical
Manager Northeast, shall deliver to Medical Manager Northeast a release
(collectively, the "Releases") in such form as is satisfactory to Medical
Manager Northeast, releasing all claims of any nature against the Medical
Manager Companies and each of the Companies, except for claims and obligations
set forth in the express terms of this Agreement.
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6.9. STOCK POWERS At the Closing, each of the Companies shall have
delivered to Medical Manager Northeast, for use in connection with the Held Back
Shares, ten stock powers executed in blank, with signatures medallion
guaranteed.
6.10. 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 Northeast, makes it inadvisable to proceed with the transactions
contemplated hereby.
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDER AND EACH OF THE COMPANIES
-----------------------------------------
The obligations of the Shareholder and each of the Companies to effect
the transactions contemplated hereby shall be subject to the fulfillment in all
material respects 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 Shareholder and
each of the Companies:
7.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS The representations and warranties of Medical Manager Northeast
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 Northeast 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 Northeast shall have delivered to
each of the Companies 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 Northeast
shall have issued all of the Medical Manager Shares and shall have delivered to
each of the Companies (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 each of the Companies.
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. 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 Medical Manager Northeast or Medical Manager Corporation, or their
respective business, financial
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condition, assets, operations, or industry, (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 Medical Manager Northeast
or Medical Manager Corporation. Medical Manager Northeast shall have delivered
to each of the Companies and the Shareholder a certificate, dated the Closing
Date, to that effect.
7.5. CORPORATE CERTIFICATE Medical Manager Northeast shall have
delivered to each of the Companies and the Shareholder (i) copies of the
Articles of Incorporation and Bylaws of Medical Manager Northeast and Medical
Manager Corporation as in effect immediately prior to the Closing Date,
certified as of the Closing Date by the Secretary of Medical Manager Northeast
and Medical Manager Corporation, respectively, as being true, correct and
complete, (ii) copies of resolutions adopted by the Board of Directors and the
shareholders of Medical Manager Northeast and Medical Manager Corporation,
respectively, authorizing the transactions contemplated by this Agreement
(including, in the case of Medical Manager Corporation, its guaranty of the
obligations of Medical Manager Northeast), certified as of the Closing Date by
the Secretary of Medical Manager Northeast and Medical Manager Corporation,
respectively, as being true, correct and complete, and (iii) a certificate of
good standing of Medical Manager Northeast and Medical Manager Corporation
issued by the Departments of State of their respective states of incorporation,
and each other state in which they are qualified to do business as of a date not
more than thirty days prior to the Closing Date.
7.6. OPINION OF COUNSEL TO MEDICAL MANAGER NORTHEAST The Companies and
the Shareholder shall have received an opinion, dated as of the Closing Date,
from counsel for Medical Manager Northeast, in form and substance acceptable to
the Companies and the Shareholder, to the effect that:
(a) Medical Manager Northeast is a corporation duly organized,
validly existing and in good standing under the laws of the State of
New York and has the requisite power and authority to own or lease its
properties and to carry on its business as presently conducted. Medical
Manager Northeast 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,
and is in good standing in each of the jurisdictions in which it is so
qualified. Medical Manager Northeast has fully complied with all of the
requirements of any statute governing the use 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 Medical
Manager Northeast;
(b) Medical Manager Northeast has the corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. Medical Manager Northeast 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;
(c) This Agreement has been duly executed and delivered by
Medical Manager Northeast and constitutes a legal, valid and binding
obligation of Medical Manager Northeast,
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enforceable against Medical Manager Northeast in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity;
(d) Upon consummation of the transactions contemplated hereby
and the issuance and delivery of certificates representing the Medical
Manager Shares to each of the Companies, the Medical Manager Shares
will be validly issued, fully paid and non-assessable shares of Medical
Manager Common Stock, and will have been issued in compliance with all
applicable state and federal securities laws and will not have been
issued in violation of any preemptive rights, rights of first refusal
or similar rights; and
(e) The execution and delivery of this Agreement by Medical
Manager Northeast, the performance of its obligations hereunder and the
consummation of the transactions contemplated by this Agreement will
not (a) contravene any provision of the Articles of Incorporation or
Bylaws of Medical Manager Northeast, (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 Medical Manager Northeast, (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 a right to terminate,
amend, modify, abandon or accelerate any contract which is applicable
to, binding upon or enforceable against Medical Manager Northeast, (d)
result in or require the imposition of any Lien upon or with respect to
any of the properties or assets of Medical Manager Northeast, (e) give
to any individual or entity a right or claim against Medical Manager
Northeast or Medical Manager Corporation, or (f) require the consent,
approval, authorization and permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other
person, except any SEC and other filings required to be made by Medical
Manager Corporation.
7.7. SECURITIES LAWS Medical Manager Northeast and Medical Manager
Corporation shall have received all necessary consents and otherwise complied
with any state Blue Sky or other securities laws applicable to the issuance of
the Medical Manager Shares in connection with the transactions contemplated
hereby.
7.8. RELEASES At the Closing, Medical Manager Northeast shall deliver
to each of the Companies and the Shareholder releases in such form as is
satisfactory to the Companies and the Shareholder, releasing all claims of any
nature against the Companies or the Shareholder, except for claims and
obligations set forth in the express terms of this Agreement.
7.9. NO ADVERSE LITIGATION There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby and which, in the sole judgment of the
Companies and the Shareholder, makes it inadvisable to proceed with the
transactions contemplated hereby.
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7.10 GUARANTY OF MEDICAL MANAGER CORPORATION Medical Manager
Corporation shall execute and deliver the guaranty on the signature page of this
Agreement, pursuant to which Medical Manager agrees to guarantee the obligations
of Medical Manager Northeast under this Agreement or otherwise contemplated
hereby, and agrees that it shall be deemed a party to this Agreement with
respect to Sections 2.4, 2.6, 5.8, 5.19, 5.20, 7.10 and 9.1 of this Agreement.
ARTICLE VIII.
INDEMNIFICATION
---------------
8.1. AGREEMENT BY EACH OF THE COMPANIES AND THE SHAREHOLDER FOR
INDEMNIFICATION Each of the Companies and the Shareholder jointly and severally
agree to indemnify and hold Medical Manager Northeast and its stockholders,
directors, officers, employees, attorneys and Affiliates harmless from and
against, and, at Medical Manager Northeast's election, in its sole discretion,
Medical Manager Northeast 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 Northeast arising out of or resulting from (i) any
breach of a representation or warranty made by each of the Companies or the
Shareholder in or pursuant to this Agreement, (ii) any breach of the covenants
or agreements made by each of the Companies or the Shareholder in or pursuant to
this Agreement or (iii) any inaccuracy in any certificate, instrument or other
document delivered by each of the Companies or the Shareholder as required by
this Agreement and (iv) any transfer taxes that may be due and owing to any
Governmental Authority (collectively, "Indemnifiable Damages"). Without limiting
the generality of the foregoing, with respect to the measurement of
Indemnifiable Damages, Medical Manager Northeast 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 each of the Companies and the
Shareholder hereunder been true and correct and had the agreements of each of
the Companies and the Shareholder hereunder been performed in full.
8.2. AGREEMENT BY MEDICAL MANAGER NORTHEAST FOR INDEMNIFICATION Medical
Manager Northeast agrees to indemnify and hold each of the Companies, and its
stockholders, directors, officers, employees, attorneys and affiliates harmless
from and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, reasonable related
counsel and paralegal fees and expenses) incurred or suffered by the Companies
or the Shareholder arising out of or resulting from (i) any breach of any
representation or warranty made by Medical Manager Northeast in or pursuant to
this Agreement, (ii) any material breach of the covenants or agreements made by
Medical Manager Northeast in or pursuant to this Agreement, (iii) any material
inaccuracy in any certificate, instrument or other document delivered by Medical
Manager Northeast as required by this Agreement and (iv) any transfer taxes that
may be due and owing to any Governmental Authority (collectively, the
"Indemnifiable Damages").
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8.3. LIMITATIONS Anything to the contrary contained in this Agreement
notwithstanding, no indemnification under this Article 8 shall be made against
the Companies and/or the Shareholder in favor of Medical Manager Northeast or
Medical Manager Corporation unless all claims for such indemnification exceed in
the aggregate $25,000 and the obligation of Companies and/or Shareholder to
indemnify Medical Manager Northeast or Medical Manager Corporation under this
Article 8 shall be extinguished upon the payment of an amount in the aggregate
equal to the Purchase Price. The amount of any indemnification required to be
paid by the Companies and/or the Shareholder to Medical Manager Northeast or
Medical Manager Corporation hereunder shall be net of any insurance proceeds
received by Medical Manager Northeast or Medical Manager Corporation in
connection with the facts giving rise to the right to indemnification.
8.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES Each of the
representations and warranties made by each of the Companies, the Shareholder
and Medical Manager Northeast in this Agreement or pursuant hereto shall survive
for a period of one year 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. Each of the
representations and warranties of Medical Manager Northeast shall expire on the
Closing Date.
8.5. SECURITY FOR INDEMNIFICATION OBLIGATION As security for the
indemnification obligations contained in this ARTICLE VIII, at the Closing,
Medical Manager Northeast shall set aside and hold, and each of the Companies
and the Shareholder hereby grant a security interest in the shares represented
by, the certificates representing the Held Back Shares issued pursuant to this
Agreement. Medical Manager Northeast may set off against the Held Back Shares
any loss, damage, cost or expense for which each of the Companies or the
Shareholder 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 Northeast shall give written notice to
each of the Companies 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 expense which
Medical Manager Northeast 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
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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 sale of the Held Back Shares
imposed under the Securities Act or otherwise are terminated, each of
the Companies may, not more than once during any calendar year,
instruct Medical Manager Northeast 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 Northeast
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.
8.6. 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 each of the Companies and each of the Companies
shall be entitled to vote the Held Back Shares; PROVIDED, HOWEVER, that, there
shall also be deposited with Medical Manager Northeast subject to the terms of
this ARTICLE VIII, all shares of Medical Manager Common Stock issued to each of
the Companies as a result of any stock dividend or stock split and all cash
issuable to each of the Companies 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.
8.7. DELIVERY OF HELD BACK SHARES Medical Manager Northeast agrees to
deliver to each of the Companies no later than one year after the Closing Date
any Held Back Shares then held by it (or proceeds from the Held Back Shares)
unless there then remains unresolved any claim for Indemnifiable Damages or
other damages hereunder as to which notice has been given, in which event any
Held Back Shares remaining on deposit (or proceeds from the sale of Held Back
Shares) after such claim shall have been satisfied shall be returned to each of
the Companies promptly after the time of satisfaction.
8.8. ADJUSTMENT TO PURCHASE PRICE All payments for Indemnifiable
Damages made pursuant to this ARTICLE VIII shall be treated as adjustments to
the Purchase Price.
8.9. NO BAR If the Held Back Shares are insufficient to set off any
claim for Indemnifiable Damages made hereunder (or have been delivered to each
of the Companies prior to the making or resolution of such claim), then Medical
Manager Northeast may take any action or exercise any remedy available to it by
appropriate legal proceedings to collect the Indemnifiable Damages.
8.10. REMEDIES CUMULATIVE The remedies provided herein shall be
cumulative and shall not preclude Medical Manager Northeast from asserting any
other right, or seeking any other remedies against the Shareholder or each of
the Companies.
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ARTICLE IX.
SECURITIES LAW MATTERS
----------------------
The parties agree as follows with respect to the sale or other
disposition after Closing Date of the Medical Manager Shares:
9.1. DISPOSITION OF SHARES
(a) The Shareholder acknowledges that he may be deemed to be
an "affiliate" of the Company for purposes of qualifying the
transactions contemplated hereby as a pooling of interests business
combination under applicable accounting and SEC rules and regulations.
The Shareholder agrees that from the date of this Agreement until the
earlier of (i) such time as Medical Manager Corporation publishes
financial results of operations of Medical Manager Corporation,
covering at least thirty (30) days of combined operations of Medical
Manager Corporation and the Companies, or (ii) such time as Medical
Manager Corporation files with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q for the quarter ended September 30,
1997, none of the Companies, the Shareholder, nor any of their
respective Affiliates will, directly or indirectly, purchase or sell
(including short sales) any shares of Medical Manager Common Stock in
any transaction, or sell, transfer, pledge, dispose of or otherwise
part with any interest in or with respect to or in any manner reduce
their investment risk with respect to any shares of Medical Manager
Common Stock received or to be received pursuant to this Agreement.
(b) The Shareholder represents and warrants that the shares of
Medical Manager Common Stock being acquired by him hereunder are being
acquired and will be acquired for his 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
Corporation with the SEC under the Securities Act. To the extent
Medical Manager Corporation or the Shareholder complies with the
provisions of Rule 145(d) under the Securities Act in effecting sales
of the Medical Manager Shares, Medical Manager Corporation agrees to
provide its transfer agent with appropriate instructions and/or
opinions of counsel in order for him 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 UNDER THE ACT, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT
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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, AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE SECURITIES AND EXCHANGE
COMMISSION'S ACCOUNTING SERIES RELEASES 130 AND 135.
Medical Manager Corporation 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.
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.
"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 from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, but not limited to, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing
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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 financial condition, properties, assets, liabilities, rights, obligations,
operations, or business which change (or effect) individually or in the
aggregate, is materially adverse to such financial condition, properties,
assets, liabilities, rights, obligations, operations, or business of the
Companies taken as a whole, or of Medical Manager Corporation or any of its
subsidiaries taken as a whole, as the case may be.
"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.
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible, payroll,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
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.
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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 Northeast in the event of a material
breach by each of the Companies or the Shareholder of any provision of
this Agreement; or
(c) by each of the Companies in the event of a material breach
by Medical Manager Northeast of any provision of this Agreement; or
(d) by either Medical Manager Northeast or each of the
Companies, if the Closing shall not have occurred by July 31, 1997.
11.2. EFFECT OF TERMINATION In the event of termination of this
Agreement pursuant to SECTION 11.1, 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 pursuant to Section 5.20 hereof.
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 NORTHEAST 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
(B) IF TO ANY OF THE COMPANIES TO:
Xxxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
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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 each of the Companies shall pay all
sales, transfer or similar taxes required to be paid by reason of the sale by
each of the Companies to Medical Manager Northeast 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 each of the Companies without the
prior written consent of Medical Manager Northeast. Medical Manager Northeast
may assign all or any portion of its rights hereunder to one or more of its
wholly owned subsidiaries.
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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 each of the
Companies or the Shareholder 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 Hillsborough County, Florida, or in the
U.S. District Court for the Middle District of Florida, as Medical
Manager Northeast (in its sole discretion) may elect, and each of the
Companies and the Shareholder 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 each of the Companies and the
Shareholder 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 Hillsborough County, Florida, or the U.S. District
Court for the Middle District of Florida, as selected by Medical
Manager Northeast, 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.
(c) Notwithstanding anything contained in (a) and (b) of this
Section 12.9, any suit, action or proceeding against any of the
Companies or the Shareholder arising out of, or with respect to,
Section 5.10 of this Agreement shall be brought in the Courts in New
York, New York.
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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.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
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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 NORTHEAST, INC.,
a New York corporation
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
COMPUTER CLINIC, INC.,
a New York corporation
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
MEDPLUS OF NEW YORK, INC.,
a New York corporation
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
COMMAND SOLUTIONS, INC.,
an Ohio corporation
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
---------------------------------------
XXXXXXX XXXXXXX, individually
48
45
GUARANTY OF MEDICAL MANAGER CORPORATION:
By its signature below, the undersigned agrees to guarantee the
obligations of Medical Manager Northeast contained in this Stock for Asset
Purchase Agreement, the Assignment and Assumption Agreement and any other
agreement, instrument or document executed and delivered by Medical Manager
Northeast pursuant to this Agreement or the transactions contemplated herein. In
addition, by its signature below, the undersigned acknowledges and agrees that
for the limited purposes of Sections 2.4, 2.6, 5.8, 5.19, 5.20, 7.10 and 9.1, it
is deemed a party to this Agreement.
MEDICAL MANAGER CORPORATION
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
49
