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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
DATED AS OF THE 10th DAY OF September, 1997
BY AND AMONG
MEDICAL MANAGER MIDWEST, INC.
PROFESSIONAL MANAGEMENT SYSTEMS, INC.
AND
THE STOCKHOLDERS NAMED HEREIN
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is entered into as of
September 10, 1997, among Medical Manager Midwest, Inc., an Indiana corporation
("Medical Manager"); Professional Management Systems, Inc., an Illinois
corporation (the "Company"); and Xxxxxxx Xxxxxxxx, a resident of the State of
California, who is the majority shareholder of the Company (individually
referred to as the "Shareholder"). All of the shareholders of the Company are
collectively referred to herein as the "Shareholders". Certain other capitalized
terms used herein are defined in Article XI and throughout this Agreement.
RECITALS
The Company owns and operates a Medical Manager Dealership (the
"Business"). The parties desire to combine the Business with Medical Manager's
business operations on the terms and subject to the conditions set forth in this
Agreement.
TERMS OF AGREEMENT
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
1.1 PURCHASED ASSETS. The Company agrees to and will at Closing (as
defined in Section 1.9), sell, convey, transfer, assign and deliver to Medical
Manager, on the terms and subject to the conditions set forth in this Agreement,
all of its assets, properties and business of every kind and description,
whether real, personal or mixed, tangible or intangible, wherever located
(except those assets of the Company which are specifically excluded as provided
in Section 1.2 hereof) as shall exist on the Closing Date (as defined in Section
1.9), 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));
(b) all inventories of the Company;
(c) all receivables of the Company, including without
limitation, all trade accounts receivable, notes receivable and
receivables from manufacturers, insurance
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companies, service contract providers and any other vendors or
suppliers of the Company;
(d) all of the interest of and the rights and benefits
accruing to the Company as lessee under 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 the
Company under any franchise contracts, sales orders, sales contracts,
supply contracts, service agreements, purchase orders and purchase
commitments made by the Company in the ordinary course of business, all
other agreements to which the Company is a party or by which it is
bound and all choses in action, causes of action and other rights of
every kind of the Company;
(f) all operating data and records of the Company, including
without limitation, customer lists and records, financial, accounting
and credit records, computer data, correspondence, budgets and other
similar documents and records;
(g) all of the proprietary rights of the Company, including
without limitation all trademarks, trade names, patents, patent
applications, licenses thereof, trade secrets, technology, know-how,
formulae, designs and drawings, computer software, slogans, copyrights,
processes, operating rights, licenses and permits and other intangible
property and rights relating to the products or business of the
Company;
(h) all right, title and interest of the Company in and to the
corporate and trade names and all of the other intangibles of the
Company;
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth
in Section 1.1, the Purchased Assets shall exclude the following assets of the
Company: (i) the Purchase Price (as defined in Section 1.4) and other rights of
the Company under this Agreement; (ii) the shares of capital stock of the
Company which are owned and held by the Company as treasury shares; (iii) the
corporate minute books and stock records of the Company; (iv) all cash and cash
equivalents of the Company and (v) that certain note receivable payable to the
Company from Xxxxxx X. Xxxxxxxxx in the amount of $30,000.
1.3 ASSIGNMENT OF CONTRACTS. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall not constitute an assignment of any claim,
contract, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order, purchase commitment or other
right or benefit if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach thereof or in any way adversely
affect the rights of Medical Manager thereunder. If such consent is not
obtained, or if any attempt at an assignment thereof would be ineffective or
would affect the rights of the Company thereunder so
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that Medical Manager would not in fact receive all such rights, the Company
shall cooperate with Medical Manager to the extent necessary to provide for
Medical Manager the benefits under such claim, contract, license, franchise,
lease, commitment, sales order, sales contract, supply contract, service
agreement, purchase order, purchase commitment or other right or benefit,
including enforcement for the benefit of Medical Manager of any and all rights
of the Company against a third party thereto arising out of the breach or
cancellation by such third party or otherwise.
1.4 PURCHASE PRICE. As consideration for the Purchased Assets, Medical
Manager agrees, on the terms and subject to the conditions and limitations set
forth herein, to pay the company at Closing (as defined in Section 1.9) an
aggregate amount equal to One Million Four Hundred Ninety-Five Thousand Dollars
and no/100 ($1,495,000.00) (the "Purchase Price"). Medical Manager will pay Two
Hundred Ninety-Five Thousand Dollars and no/100 ($295,000.00) in cash and will
issue to the Company a number of shares (rounded to the nearest whole share) of
common stock, par value $ .01 per share, of Medical Manager Corporation (the
"Medical Manager Common Stock") equal to the number of shares determined by
dividing (a) One Million Two Hundred Thousand Dollars and 00/00 ($1,200,000.00)
by (b) the average closing sale price of a share of Medical Manager Common Stock
as quoted on the NASDAQ Stock Market ("NASDAQ") for the five consecutive trading
days which precede the third trading day which is immediately prior to the
Closing Date, as reported (absent manifest error in the printing thereof) by the
Wall Street Journal (Eastern Edition) (the "Average Closing Sale Price"). No
fractional shares of Medical Manager Common Stock will be issued.
1.5 ASSUMED LIABILITIES. Medical Manager 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 the Company set forth on the
Current Balance Sheet (as defined in Section 3.9) and all of the obligations,
duties and liabilities of the Company incurred after the date of the Current
Balance Sheet until 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 shall not assume or otherwise
become liable for any other obligation or liability of the Company, including,
with limitation, the following:
(a) any liability or obligation of the Company or any other
Person, absolute or contingent, known or unknown, not expressly agreed
to be assumed pursuant to the provisions of Section 1.6;
(b) any liability or obligation of the Company arising under
this Agreement;
(c) any liability or obligation of the Company with respect
to, or arising out of, any employee benefit plan or any other plans or
arrangements for the benefit of any employees of the Company;
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(d) any liability or obligation of the Company to any of the
Shareholders (including but not limited to that certain payable due
Xxxxxx X. Xxxxxxxxx in the amount of $200,000 and that certain payable
due the Shareholder in the amount of $99,000) or to any party claiming
to have a right to acquire any shares of capital stock or other
securities convertible into or exchangeable for any shares of capital
stock of the Company;
(e) any liability or obligation of the Company or Shareholders
for Taxes, whether arising out of this transaction or otherwise;
(f) any liability or obligation (i) with respect to the Leased
Premises or any other Contract, in the event Medical Manager does not
receive consents to the assignment of the Company's rights with respect
to such Contract or Leased Premises, or (ii) with respect to the Leased
Premises located at 000 X. Xxxxx Xxxxx, to the extent that the rent
payable on such lease exceeds fair market value based upon a survey of
comparable premises; and
(g) accrued payroll and related obligations of the Company,
whether or not appearing on the Current Balance Sheet.
1.7 NO EXPANSION OF THIRD-PARTY RIGHTS. The assumption by Medical
Manager of the Assumed Liabilities, the transfer thereof by the Company, and the
limitations of such transfer shall in no way expand the rights or remedies of
any third party against Medical Manager or the Company as compared to the rights
and remedies which such third party would have had against the Company had
Medical Manager not assumed such liabilities. Without limiting the generality of
the preceding sentence, the assumption by Medical Manager of the Assumed
Liabilities shall not create any Third-Party beneficiary rights.
1.8 TAX RETURNS. Following the Closing Date, the Company and Medical
Manager agree that they will cooperate in providing information for the
preparation and filing of all federal, state and local income tax returns on
behalf of the Company or Medical Manager.
1.9 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 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."
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1.10 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that
the following shall occur:
(a) The Company shall have satisfied each of the conditions
set forth in Article VI and shall deliver to Medical Manager the
documents, certificates, opinions, consents and letters required by
Article VI.
(b) Medical Manager shall have satisfied each of the
conditions set forth in Article VII and shall deliver to the Company
the documents, certificates, opinions, consents and letters required by
Article VII.
(c) The Company shall deliver to Medical Manager or its
assignee such deeds, bills of sale, endorsements, assignments, releases
and other instruments, in such form as is reasonably satisfactory to
Medical Manager and as shall be sufficient to vest in Medical Manager
(or its assignee) good and marketable title to the Purchased Assets.
(d) (i) Medical Manager shall pay the cash portion of the
Purchase Price to the Company and (ii) upon receipt by Medical Manager
of an agreement in respect of the transaction described herein executed
by Xxxxxx X. Xxxxxxxxx in a form acceptable to Medical Manager, Medical
Manager shall issue to the Company the shares of Medical Manager Common
Stock issuable pursuant to Section 1.4, registered in the name of the
Company and shall deliver such shares in the following manner: (a)
Medical Manager shall set aside and hold in accordance with Section 8.3
stock certificates representing shares of Medical Manager Common Stock
having a value equal to ten (10%) percent of the Purchase Price (the
"Held Back Shares"), and (b) Medical Manager shall deliver stock
certificates representing the balance of the shares of Medical Manager
Common Stock issuable in accordance with Section 1.4 to the Company.
The shares of Medical Manager Common Stock issuable pursuant to Section
1.4, including the Held Back Shares, are referred to herein as the
"Medical Manager Shares."
(e) Medical Manager shall deliver to the Company instruments,
in such form as is reasonably satisfactory to the Company and as shall
be sufficient to effect the assumption by Medical Manager of the
Assumed Liabilities.
(f) The Company shall deliver to Medical Manager payoff and
estoppel letters in accordance with Section 5.16.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF MEDICAL MANAGER
As a material inducement to the Company and the Shareholder to enter
into this Agreement and to consummate the transactions contemplated hereby,
Medical Manager makes the following representations and warranties to the
Company and the Shareholder:
2.1 CORPORATE STATUS. Medical Manager is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana and
has the requisite power and authority to own or lease its properties and to
carry on its business as presently conducted.
2.2 CORPORATE POWER AND AUTHORITY. Medical Manager has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Medical Manager has taken all corporate action necessary to authorize its
execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by Medical Manager and constitutes a legal, valid and binding obligation of
Medical Manager, enforceable against Medical Manager in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
2.4 MEDICAL MANAGER COMMON STOCK. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the Medical Manager Shares to the Company, the Medical Manager Shares will be
validly issued, fully paid and non-assessable shares of Medical Manager Common
Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDERS
As a material inducement to Medical Manager to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
and the Shareholder, jointly and severally, make the following representations
and warranties to Medical Manager:
3.1 CORPORATE STATUS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois
and has the requisite power and authority to own or lease its properties and to
carry on its business as now being conducted. The Company
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is legally qualified to do business as a foreign corporation in each of the
jurisdictions where the nature of its properties and the conduct of its business
requires such qualification (all of which jurisdictions are set forth in
Schedule 3.1), and is in good standing in each of the jurisdictions in which it
is so qualified. The Company has fully complied with all of the requirements of
any statute governing the use and registration of fictitious names, and has the
legal right to use the names under which it operates its business. There is no
pending or threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of the Company. All names under which the Company does business
as of the date hereof are specified on Schedule 3.1. Except as otherwise
disclosed in Schedule 3.1, the Company has not changed its name or used any
assumed or fictitious name, or been the surviving entity in a merger, acquired
any business or changed its principal place of business or chief executive
office, within the past three years.
3.2 POWER AND AUTHORITY. The Company has the corporate power and
authority to execute and deliver this Agreement, to perform its respective
obligations hereunder and to consummate the transactions contemplated hereby.
The Company has taken all corporate action necessary to authorize the execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby. The Shareholder is an
individual residing in the State of California and has the requisite competence
and authority to execute and deliver this Agreement, to perform his obligations
hereunder and to consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by the Company 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(a) sets forth, with respect to the
Company, (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
the Company (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. Except as set
forth on Schedule 3.4(b), no preemptive rights, rights of first refusal or
similar rights exist with respect to the shares of capital stock of the Company
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 the Company 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 the Company. There are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock of
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the Company. The Company is not obligated to redeem or otherwise acquire any of
its outstanding shares of capital stock.
3.5 SHAREHOLDERS, OFFICERS AND DIRECTORS OF THE COMPANY. Schedule 3.5
sets forth, with respect to the Company, (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 the Company. The Shareholders constitute all of the holders of all issued and
outstanding shares of capital stock of the Company, and each of the Shareholders
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 the Company and the Shareholders,
the performance by the Company and the Shareholders of their obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Articles of Incorporation
or Bylaws of the Company, (b) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon or enforceable against the Company or any of the Shareholders,
(c) conflict with, result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right of payment or right to
terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Company or the
Shareholders, (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the properties or assets of the Company, (e) give
to any individual or entity a right or claim against the Company or the
Shareholders or (f) require the consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any SEC and other filings required to be
made by Medical Manager.
3.7 RECORDS OF THE COMPANY. The copies of the Articles of
Incorporation, Bylaws, and other documents and agreements of the Company which
were provided to Medical Manager are true, accurate and complete and reflect all
amendments made through the date of this Agreement. The minute books for the
Company made available to Medical Manager 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 the Company have been
duly authorized or ratified. Schedule 3.7 lists each account of the Company with
any bank, broker or other depository institution, and the names of all persons
authorized to withdraw funds from each such account.
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3.8 SUBSIDIARIES. The Company does not own, directly or indirectly, any
outstanding voting securities of or other interests in, or have any control
over, any other corporation, partnership, joint venture or other business
entity.
3.9 FINANCIAL STATEMENTS. The Shareholders have delivered to Medical
Manager the financial statements of the Company for the fiscal years ended
December 31, 1995, and December 31, 1996 and for the period ending July 31, 1997
(the "Financial Statements"), copies of which are attached as Schedule 3.9
hereto. The balance sheet of the Company dated as of the 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 Financial Statements
fairly present the financial position of the Company 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 the Company 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 Financial Statements and the balance sheets included in the
Financial Statements do not reflect any writeup or revaluation increasing the
book value of any assets, except as specifically disclosed in the notes thereto.
The Financial Statements reflect all adjustments necessary for a fair
presentation of the financial information contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as set forth
on Schedule 3.10, since the date of its Current Balance Sheet, the Company 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 the Company; (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 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,
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canceled, compromised or released any rights having a value in excess of
$10,000 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
Shareholders or any Affiliate of the Company or the Shareholders; (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 $10,000 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 $10,000 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 has or may reasonably be
expected to have a Material Adverse Effect on the Company; or (v) agreed to do
or authorized any of the foregoing.
3.11 LIABILITIES OF THE COMPANY. The Company does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected or taken into account in the Current Balance
Sheet and not heretofore paid or discharged, (b) liabilities incurred in the
ordinary course of business consistent with past 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. There is no action, suit or other legal or
administrative proceeding or governmental investigation pending, threatened,
anticipated or contemplated against, by or affecting the Company or
Shareholders, or the Company's properties or assets, or which questions 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 the Company is or was a party which have not been complied
with in full or which continue to impose any material obligations on the
Company.
3.13 ENVIRONMENTAL MATTERS.
(a) The Company and the Shareholders are and have at all times
been in full compliance with all Environmental Laws (as defined herein)governing
the Company and its business, operations, properties and assets.
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(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation
(collectively "Notices"), claims, suits, actions, judgments, penalties,
fines, or administrative or judicial investigations of any nature or
proceedings (collectively "Proceedings") pending or threatened against
or involving the Company, its business, operations, properties, or
assets with respect to any environmental laws or licenses, if any,
issued to the Company or the Shareholders.
(c) "Environmental Laws" means all federal, state, regional or
local statutes, laws rules, regulations, codes, orders, ordinances,
plans, injunctions, decrees, rulings, licenses, and changes thereto or
judicial or administrative interpretations thereof, or similar laws of
foreign jurisdictions where the Company or any of its subsidiaries
conducts business, whether currently in existence or hereafter enacted,
issued or promulgated, any of which govern, or purport to govern, or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste, petroleum or petroleum products or petroleum
products or occupational health and safety, as any of these terms are
or may be defined in such statutes, laws, rules, regulations, codes,
orders, ordinances, plans, injunctions, decrees, rulings, licenses and
changes thereto, or judicial or administrative interpretations thereof.
3.14 REAL ESTATE.
(a) The Company owns no 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 the Company 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), 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, and no party thereto is in default or
breach under any such Lease. No event has occurred which, 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. There is no breach or
anticipated breach by any other party to such Leases. With respect to
each such Leased Premises: (i) the Company has valid leasehold
interests in the Leased Premises, free and clear of any Liens,
covenants and easements or title defects of any nature whatsoever; (ii)
the portions of the buildings located on the Leased Premises
that are used in the business of the Company are each in good repair
and condition, normal wear and tear excepted, and are in the aggregate
sufficient to satisfy the Company's current and reasonably anticipated
normal business activities as conducted thereat; (iii) each of the
Leased Premises (a) has direct access to public
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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 the
Company's 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) neither the Company nor the Shareholders has received
notice of (a) any condemnation proceeding with respect to any portion
of the Leased Premises or any access thereto, and no such proceeding is
contemplated by any Governmental Authority; or (b) any special
assessment which may affect any of the Leased Premises, and no such
special assessment is contemplated by any Governmental Authority.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY.
(a) The Company has good and marketable title to all of its
Assets free and clear of any Liens. For purposes of this Agreement, the
term "Assets" means all of the properties and assets of the Company,
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 the Company are 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 the Company or set forth
on the Current Balance Sheet or acquired by the Company since the date
of the Current Balance Sheet.
(c) The inventories of the Company are carried on the books of
the Company and have been accounted for in accordance with generally
accepted accounting principles consistently applied. All such
inventories are in good and marketable condition and suitable for sale
to the Company's customers in the regular course of business at
currently prevailing market prices. None of the inventories is subject
to damage of any type that would materially and adversely affect their
marketability at currently prevailing market prices.
3.16 COMPLIANCE WITH LAWS. Each of the Company, the Shareholders and
any Affiliate of the Company is and has been in compliance with all laws,
regulations and orders applicable to it, its business and operations (as
conducted by it now and in the past), the Assets, the Leased Premises and any
other properties and assets (in each case owned or used by it now or in the
past). The Company has not 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 the Company, the Shareholders nor any of their respective
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14
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. The Company
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 the Company. The Company is not a party to or bound by any
collective bargaining agreement or any other agreement with a labor union, and
there has been no effort by any labor union during the 24 months prior to the
date hereof to organize any employees of the Company into one or more collective
bargaining units. There has never been any actual or, to the knowledge of the
Company or the Shareholders, threatened, labor dispute, strike or work stoppage
which affects or which may affect the business of the Company or which may
interfere with its continued operations. Neither the Company nor any agent,
representative or employee thereof has since the date of incorporation of the
Company 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 the
Company or Shareholders, threatened charge or complaint against the Company by
or with the National Labor Relations Board or any representative thereof. The
Company is not aware that any executive or key employee or group of employees
has any plans to terminate his, her or their employment with the Company as a
result of the transactions contemplated hereby or otherwise. The Company has
complied with applicable laws, rules and regulations relating to employment,
civil rights and equal employment opportunities, including but not limited to,
the Civil Rights Act of 1964, the Fair Labor Standards Act, and the Americans
with Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. Schedule 3.18 contains a list
setting forth each employee benefit plan or arrangement of the Company,
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 the Company 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).
(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
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15
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 Medical
Manager, 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 Effective 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 the
Company have been timely paid; (ii) the Company 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
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XXXX Xxxx, (X) 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) The Company 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 the Company or its predecessors
after termination of employment; (ii) the Company 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 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 the Company, 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 the Company 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 Effective Date shall have been made or
properly accrued on the Current Balance Sheet or will be properly
accrued on the books and records of the Company as of the Closing Date;
and (iii) none of the Employee Benefit Plans has any
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17
unfunded liabilities which are not reflected on the Current Balance
Sheet or the books and records of the Company.
3.19 TAX MATTERS. All Tax Returns required to be filed prior to the
date hereof with respect to the Company or any of its income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in 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 the Company have been paid or are accrued on the Current
Balance Sheet or will be accrued on the Company's books and records as of the
Closing. Except as set forth in Schedule 3.19 hereto: (i) with respect to each
taxable period of the Company, either such taxable period has been audited by
the relevant taxing authority or the time for assessing or collecting Taxes with
respect to each such taxable period has closed and such taxable period is not
subject to review by any relevant taxing authority; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
the Company; (iii) the Company has not consented to extend the time in which any
Taxes may be assessed or collected by any taxing authority; (iv) the Company has
not requested or been granted an extension of the time for filing any Tax Return
to a date later than the Closing; (v) there is no action, suit, taxing authority
proceeding, or audit or claim for refund now in progress, pending or threatened
against or with respect to the Company regarding Taxes; (vi) the Company has not
made an election or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law) on or prior to the
Closing; (vii) there are no Liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of the Company; (viii) the Company will not
be required (A) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing, to include any adjustment under
Section 481(c) of the Code (or any corresponding provision of state, local or
foreign law) in taxable income for any taxable period (or portion thereof)
beginning after the Closing or (B) as a result of any "closing agreement,"as
described in Section 7121 of the Code (or any corresponding provision of state,
local or foreign law), to include any item of income or exclude any item of
deduction from any taxable period (or portion thereof) beginning after the
Closing; (ix) the Company has not been a member of an affiliated group (as
defined in Section 1504 of the Code) or filed or been included in a combined,
consolidated or unitary income Tax Return; (x) the Company is not a party to or
bound by any tax allocation or tax sharing agreement and has no current or
potential contractual obligation to indemnify any other Person with respect to
Taxes; (xi) no taxing authority will claim or assess any additional Taxes
against the Company for any period for which Tax Returns have been filed; (xii)
the Company has not made any payments, and is not nor will it become obligated
(under any contract entered into on or before the Closing) to make any payments,
that will be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign law); (xiii) the Company has not been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code (or any corresponding provision of state, local or foreign
law) during the applicable period specified in Section 897(c)(1)(a)(ii) of the
Code (or any corresponding provision of state, local or foreign law); (xiv) no
claim has ever been made by a taxing authority in a jurisdiction where the
Company does not file Tax Returns that the Company is or may be subject to Taxes
assessed by such jurisdiction; (xv) the Company does not have any permanent
establishment in any foreign country, as defined in the relevant tax treaty
between the United States
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of America and such foreign country; (xvi) true, correct and complete copies of
all income and sales Tax Returns filed by or with respect to the Company for the
past three years have been furnished or made available to Medical Manager;
(xvii) the Company will not be subject to any Taxes for the period ending at the
Closing for any period for which a Tax Return has not been filed imposed
pursuant to Section 1374 or Section 1375 of the Code (or any corresponding
provision of state, local or foreign law); (xviii) no sales or use tax,
non-recurring intangibles tax, documentary stamp tax or other excise tax (or
comparable tax imposed by any governmental entity) will be payable by the
Company or Medical Manager by virtue of the transactions contemplated in this
Agreement; and (xix) the Company 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 neither the Company nor any of the Shareholders
have taken any action which would cause a termination of such S election.
3.20 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by reputable insurers covering
its properties, assets and businesses against risks of the nature normally
insured against by corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations (the
"Insurance Policies"). Such Insurance Policies are in full force and effect, and
all premiums due thereon have been paid. Through the Closing Date, each of the
Insurance Policies will be in full force and effect. None of the Insurance
Policies will lapse or terminate as a result of the transactions contemplated by
this Agreement. The Company 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) and (ii) a detailed description of each
pending claim under any of the Insurance Policies for an amount in excess of
$10,000 that relates to loss or damage to the properties, assets or businesses
of the Company. The Company has not 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
the Company. 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 the Company, including, without limitation, all manufacturer's
warranty receivables, all trade account receivables arising from the provision
of goods and/or services, sale of inventory, notes receivable, and insurance
proceeds receivable.
3.22 LICENSES AND PERMITS. The Company possesses all licenses,
approvals, permits or authorizations from governmental authorities
(collectively, the "Permits") for its business and operations, including with
respect to the operation of each of the Leased Premises, and Schedule 3.22 sets
forth a true, complete and accurate list of all such Permits, and all
applications for Permits. All such Permits are valid and in full force and
effect, the Company is in compliance with the
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19
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 Assets and Leased Premises constitute,
in the aggregate, all of the assets and properties necessary for the conduct of
the business of the Company in the manner in which and to the extent to which
such business is currently being conducted. No current supplier to the Company
of items material to the conduct of its business has threatened to terminate its
business relationship with the Company for any reason. Except for the interest
of the Shareholder as a director and shareholder in Medical Manager Corporation,
neither the Company nor any of the Shareholders has any direct or indirect
interest in any customer, supplier or competitor of the Company, or in any
Person from whom or to whom the Company leases real or personal property. No
officer, director or shareholder of the Company, nor any person related by blood
or marriage to any such person, nor any entity in which any such person owns any
beneficial interest, is a party to any Contract or transaction with the Company
or has any interest in any property used by the Company.
3.24 INTELLECTUAL PROPERTY. The Company has full legal right, title and
interest in and to all trademarks, service marks, trade names, copyrights,
know-how, patents, trade secrets, licenses (including licenses for the use of
computer software programs), and other intellectual property used in the conduct
of its business, as set forth on Schedule 3.24 (the "Intellectual Property").
The conduct of the business of the Company as presently conducted, and the
unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property, does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. 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, including, without limitation, all franchise,
sales and service, dealer and other agreements or undertakings. Schedule 3.25
identifies certain Material Contracts that require the Consents of third parties
to the transactions contemplated hereby. The copy of each Material Contract
furnished to Medical Manager is a true, correct and complete copy of the
document it purports to represent and reflects all amendments thereto made
through the date of this Agreement. Each Material Contract is in full force and
effect and the Company has not violated any of the terms or conditions of any
Material Contract or any term or condition which would permit termination or
material modification of any Material Contract, all of the covenants to be
performed by any other party thereto have been fully performed, and there are no
claims for breach or indemnification or notice of default or termination under
any Material Contract. No event has occurred which constitutes, or after notice
or the passage of time, or both, would constitute, a default by the Company or
any other party under any Material Contract. The Company is not subject to any
liability or payment resulting from renegotiation of amounts paid under any
Material Contract. As used in this Section 3.25 "Material
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Contracts" shall mean formal or informal, written or oral, (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale
or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or obligating to any other Person, or letters of intent or
commitment letters with respect to same; (b) contracts obligating the Company to
provide or obtain products or services; (c) leases of real property; (d) leases
of personal property; (e) distribution, sales agency or franchise or similar
agreements; (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 the Company; (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 the Company; (j)
non-competition agreements restricting the Company or any Shareholder in any
manner, (k) any contracts obligating the Company 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 the Company, or its
business, assets or properties, irrespective of subject matter and whether or
not in writing.
3.26 INVESTMENT INTENT; SECURITIES DOCUMENTS. Each of the Shareholders
has had the opportunity to discuss the transactions contemplated hereby with
Medical Manager and has had the opportunity to obtain such information
pertaining to the Medical Manager Companies as has been requested, including but
not limited to filings made by Medical Manager with the SEC under the Exchange
Act. Each Shareholder acknowledges receiving a prospectus which forms a part of
Medical Manager's Registration Statement on Form S-1 (No. 33-25215) and the
supplements thereto (the "Prospectus"), prior to the date hereof, in accordance
with the requirements of the Securities Act.
3.27 NO COMMISSIONS. Neither the Company nor any of the Shareholders
have incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
3.28 NAMES; PRIOR ACQUISITIONS. All names under which the Company does
business as of the date hereof are specified on Schedule 3.28. The Company has
not changed its name or used any assumed or fictitious name nor 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.
3.29 ACCURACY OF INFORMATION FURNISHED. No representation, statement or
information made or provided by the Company 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. The Company has
provided Medical Manager with true, accurate and complete copies of all
documents listed or described in the various Schedules attached hereto.
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3.30 MEDICAL MANAGER LICENSES. Each and every Medical Manager system
sold by the Company has been fully paid for and duly licensed. All software
(including the operating system and application software) sold by the Company to
end users has been duly licensed by the owner of such software.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. The Company
and the Shareholder, jointly and severally, covenant and agree that, between the
date of this Agreement and the Closing Date, the business of the Company shall
be conducted only in, and the Company shall not take any action except in, the
ordinary course of business consistent with past practice. The Company shall use
its reasonable best efforts to preserve intact its business organization, to
keep available the services of its current officers, employees and consultants,
and to preserve its present relationships with customers, suppliers and other
persons with which it has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, the
Company shall not, between the date of this Agreement and the Closing Date,
directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of Medical Manager:
(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 the
Company or (ii) any of its assets, tangible or intangible, except in
the ordinary course of business consistent with past practice;
(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
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22
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.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or
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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 cause the Company
to comply with all of the covenants of the Company under this Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with the
others in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation in connection with the transactions contemplated by this
Agreement and to use their respective best efforts to agree jointly on a method
to overcome any objections by any Governmental Authority to any such
transactions.
5.4 OTHER ACTIONS. Each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all appropriate actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated herein, including, without limitation, using its reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to Contracts
with the Company as are necessary for the consummation of the transactions
contemplated hereby. Each of parties shall make on a prompt and timely basis all
governmental or regulatory notifications and filings required to be made by it
for the consummation of the transactions contemplated hereby. The parties also
agree to use reasonable best efforts to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
5.5 ACCESS TO INFORMATION. From the date hereof to the Closing Date,
the Company and the Shareholder shall, and shall cause its directors, officers,
employees, auditors, counsel and agents to, afford Medical Manager and Medical
Manager's officers, employees, auditors, counsel and agents reasonable access at
all reasonable times to its properties, offices and other facilities, to its
officers and employees and to all books and records, and shall furnish such
persons with all financial, operating and other data and information as may be
requested. No information provided to or obtained by Medical Manager shall
affect any representation or warranty in this Agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS. The Shareholder shall give prompt
notice to Medical Manager 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 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,
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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
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 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 will consult with the Company prior to making such disclosure).
5.8 NO OTHER DISCUSSIONS. The Company and the Shareholders and their
respective Affiliates, employees, agents and representatives will not (a)
initiate or encourage the initiation by others of discussions or negotiations
with third parties, or respond to solicitations by third persons, relating to
any merger, sale or other disposition of any substantial part of the assets,
capital stock (or derivatives thereof), business or properties of the Company
(whether by merger, consolidation, sale of stock or otherwise), or (b) enter
into any agreement or commitment (whether or not binding) with respect to any of
the foregoing transactions. The Company and the Shareholders will immediately
notify Medical Manager if any third party attempts to initiate any solicitation,
discussion or negotiation with respect to any of the foregoing transactions and
shall provide Medical Manager with the name of such third party and the
substance of any communications and terms of any offers.
5.9 RESTRICTIVE COVENANTS. The Company agrees with Medical Manager that
it will not:
(a) for a period of one year 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, as
such business now exists or as it may exist at the time of termination,
anywhere in the United States; 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 one year from the Closing Date, directly
or indirectly (i) induce any Person which is a customer of the Company,
Medical Manager or any Affiliate of the Company or Medical Manager to
patronize any business directly or indirectly in competition with
business conducted by the Company, Medical Manager or any Affiliate of
the Company or Medical Manager; (ii) canvass, solicit or accept from
any Person which is a customer of the Company, Medical Manager or any
Affiliate of the Company or Medical Manager, any such competitive
business;
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or (iii) request or advise any Person which is a customer or supplier
of the Company, Medical Manager or any Affiliate of the Company or
Medical Manager, to withdraw, curtail or cancel any such customer's or
supplier's business with the Company, Medical Manager or any Affiliate
of the Company or Medical Manager, or its or their successors;
(c) for a period of one year 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 the Company, Medical Manager or any Affiliate of the
Company or Medical Manager at or within the prior six months, or in any
manner seek to induce any such person to leave his or her employment;
(d) at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in
his possession any of the Company's proprietary rights or records,
including, but not limited to, any of its customer lists.
The Company agrees and acknowledges that the restrictions contained in this
Section 5.9 are reasonable in scope and duration and are necessary to protect
Medical Manager after the Closing Date. If any provision of this Section 5.9 as
applied to any party or to any circumstance is adjudged by a court to be invalid
or unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of this Agreement. If any such provision, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced. The parties
agree and acknowledge that the breach of this Section 5.9 will cause irreparable
damage to Medical Manager and upon breach of any provision of this Section 5.9,
Medical Manager shall be entitled to injunctive relief, specific performance or
other equitable relief; provided, however, that, this shall in no way limit any
other remedies which Medical Manager may have (including, without limitation,
the right to seek monetary damages).
5.10 DUE DILIGENCE REVIEW. Medical Manager shall be entitled to conduct
prior to Closing a due diligence review of the assets, properties, books and
records of the Company.
5.11 TRADING IN MEDICAL MANAGER COMMON STOCK. Except as otherwise
expressly consented to, in writing, by Medical Manager, from the date of this
Agreement until the Closing Date, neither the Company, the Shareholders nor any
of their Affiliates will directly or indirectly purchase or sell (including
short sales) any shares of Medical Manager Common Stock in any transactions
effected on Nasdaq or otherwise.
5.12 DELIVERY OF PROPERTY RECEIVED BY THE COMPANY AFTER CLOSING. From
and after the Closing, Medical Manager shall have the right and authority to
collect, for the account of
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Medical Manager, all receivables and other items which shall be transferred or
are intended to be transferred to Medical Manager as part of the Purchased
Assets as provided in this Agreement, and to endorse with the name of the
Company any checks or drafts received on account of any such receivables or
other items of the Purchased Assets. The Company and the Shareholders agree that
they will transfer or deliver to Medical Manager, promptly after the receipt
thereof, any cash or other property which the Company and the Shareholders
receive after the Closing Date in respect of any claims, contracts, licenses,
leases, commitments, sales orders, purchase orders, receivables of any character
or any other items transferred or intended to be transferred to Medical Manager
as part of the Purchased Assets under this Agreement.
5.13 MEDICAL MANAGER APPOINTED ATTORNEY FOR THE COMPANY. Effective at
the Closing Date, the Company hereby constitutes and appoints Medical Manager,
and Medical Manager's successors and assigns, its true and lawful attorney, in
the name of either Medical Manager or the Company (as Medical Manager shall
determine in its sole discretion) but for the benefit and at the expense of
Medical Manager (except as otherwise herein provided), (a) to institute and
prosecute all proceedings which Medical Manager 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) to defend or compromise
any and all actions, suits or proceedings in respect of any of the Purchased
Assets, and to do all such acts and things in relation thereto as Medical
Manager shall deem advisable; and (c) to take all action which Medical Manager
may reasonably deem proper in order to provide for Medical Manager the benefits
under any of the Purchased Assets where any required consent of another party to
the sale or assignment thereof to Medical Manager pursuant to this Agreement
shall not have been obtained. The Company acknowledges that the foregoing powers
are coupled with an interest and shall be irrevocable. Medical Manager shall be
entitled to retain for its own account any amounts collected pursuant to the
foregoing powers, including any amounts payable as interest in respect thereof.
5.14 EXECUTION OF FURTHER DOCUMENTS. From and after the Closing, upon
the reasonable request of Medical Manager, the Company 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
required or appropriate to convey and transfer to and vest in Medical
Manager and protect its right, title and interest in all of the Purchased Assets
and to carry out the transactions contemplated by this Agreement.
5.15 POST-CLOSING ACTIONS OF THE COMPANY. Following the Closing, the
Company shall take no actions, and incur no liabilities, other than in
connection with the orderly liquidation of the Company and distribution of the
Medical Manager Shares to the Shareholders.
5.16 SHAREHOLDER AND DIRECTOR VOTE. The Shareholder, in executing this
Agreement, consents as a director and/or shareholder (as applicable) of the
Company to the transactions contemplated herein, and waives notice of any
meeting in connection therewith.
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF MEDICAL MANAGER
The obligations of Medical Manager to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
whole or in part by Medical Manager:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
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. The Company and each of the Shareholders shall have performed and complied
with all of their obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. The Company and the Shareholder
shall have delivered to Medical Manager a certificate, dated as of the Closing
Date, (which in case of the Company shall be duly signed by its Chief Executive
Officer and Chief Financial Officer) certifying that such representations and
warranties are true and correct and that all such obligations have been
performed and complied with.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (a) there shall have been no Material Adverse
Change to the Company, (b) there shall have been no adverse federal, state or
local legislative or regulatory change affecting in any material respect the
services, products or business of the Company and (c) none of the Purchased
Assets shall have been damaged by fire, flood, casualty, act of God or the
public enemy or other cause (regardless of insurance coverage for such damage)
which damages may have a Material Adverse Effect thereon, and the Company and
the Shareholder shall have delivered to Medical Manager a certificate, dated as
of the Closing Date, to that effect.
6.3 CORPORATE CERTIFICATE. The Company shall have delivered to Medical
Manager (i) copies of the Articles of Incorporation and Bylaws of the Company as
in effect immediately prior to the Closing Date, (ii) copies of resolutions
adopted by the Board of Directors and Shareholders of the Company authorizing
the transactions contemplated by this Agreement, and (iii) a certificate of good
standing of the Company issued by the Department of State of Illinois and each
other state in which it is qualified to do business as of a date not more than
thirty days prior to the Closing Date, certified in each case as of the Closing
Date by the Secretary of the Company as being true, correct and complete.
6.4 OPINION OF COUNSEL. Medical Manager shall have received an opinion,
dated as of the Closing Date, from counsel for the Company and the Shareholder
acceptable to Medical Manager, in form and substance acceptable to Medical
Manager, to the effect that:
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(a) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Illinois
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) the Company is duly qualified to do business and is in
good standing in each jurisdiction where the character of its
properties owned or held under lease or held under lease or the nature
of its activities make such qualification necessary;
(c) the Company 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 the
Company are duly authorized, validly issued, fully paid and
nonassessable;
(e) such counsel does not know of any litigation, proceeding
or investigation pending or threatened which could reasonably be
expected to have Material Adverse Effect on the Company, or which
questions the validity of this Agreement;
(f) such counsel does not know of any event that has occurred
or state of facts that exists which would constitute a breach of any of
the representations and warranties made by the Company and the
Shareholder pursuant to Article III of this Agreement;
(g) this Agreement is a valid and binding obligation of the
Company and the Shareholder, enforceable against each of them in
accordance with its terms, 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
(h) to the knowledge of such counsel, the execution and
delivery of this Agreement by the Company and the Shareholder, the
performance by the Company 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 the Company, (b) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or
enforceable against the Company or the Shareholders, (c) conflict with,
result in any breach of, or constitute a default (or an event which
would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right of payment or
right to terminate, amend, modify, abandon or accelerate, any Contract
which is applicable to, binding
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29
upon or enforceable against the Company or the Shareholders, (d) result
in or require the creation or imposition of any Lien upon or with
respect to any of the properties or assets of the Company, (e) give to
any individual or entity a right or claim against the Company or the
Shareholders or (f) require the consent, approval, authorization or
permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except any SEC
and other filings required to be made by Medical Manager.
6.5 CONSENTS. The Company and Medical Manager shall have received
consents to the transactions contemplated hereby and waivers of rights to
terminate or modify any material rights or obligations of the Company from any
Person from whom such consent or waiver is required under any Material Contract.
6.6 SECURITIES LAWS. Medical Manager 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 RELEASES. At the Closing, the Company and the Shareholder, and such
of their Affiliates as may be designated by Medical Manager, shall deliver to
Medical Manager a release (collectively, the "Releases") in such form as is
satisfactory to Medical Manager, releasing all claims of any nature against
Medical Manager including, without limitation, any claims arising out of the
transactions contemplated by this Agreement, except for claims and obligations
set forth in the express terms of this Agreement.
6.8 STOCK POWERS. At the Closing, the Company shall have delivered to
Medical Manager, for use in connection with the Held Back Shares, ten stock
powers executed in blank, with signatures medallion guaranteed.
6.9 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 Medical
Manager, makes it inadvisable to proceed with the transactions contemplated
hereby.
6.10 BOARD APPROVAL. The Board of Directors of Medical Manager shall
have authorized and approved this Agreement, and transactions contemplated
hereby.
6.11 DUE DILIGENCE REVIEW. Medical Manager shall be satisfied with the
results of its due diligence review pursuant to Section 5.10 including but not
limited to the review and acceptance of all items in the schedules to be
attached, pursuant to the terms hereof.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS AND COMPANY
The obligations of the Shareholder and the Company to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by the Shareholder and the Company:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Medical Manager contained in
this Agreement shall be true and correct at and as of the Closing Date with the
same force and effect as though made at and as of that time except (a) for
changes specifically permitted by or disclosed pursuant to this Agreement, and
(b) that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Medical Manager
shall have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
Medical Manager shall have delivered to the Company a certificate, dated as of
the Closing Date, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
7.2 MEDICAL MANAGER SHARES AND CASH CONSIDERATION. At the Closing, (i)
Medical Manager shall have issued all of the Medical Manager Shares and shall
have delivered to the Company (a) certificates representing the Medical Manager
Shares issued to them hereunder, other than the Held Back Shares, and (b) copies
of certificates representing the Held Back Shares issued to the Company and (ii)
Medical Manager shall have delivered the cash portion of the Purchase Price to
the Company.
7.3 NO ORDER OR INJUNCTION. There shall not be pending by or before any
court or other governmental body an order or injunction restraining or
prohibiting the transactions contemplated hereby.
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT BY THE COMPANY AND THE SHAREHOLDER FOR INDEMNIFICATION.
The Company and the Shareholder jointly and severally agree to indemnify and
hold Medical Manager and its stockholders, directors, officers, employees,
attorneys and Affiliates harmless from and against, and, at Medical Manager's
election, in its sole discretion, Medical Manager shall be entitled to recover
by set off against the Held Back Shares in accordance with Section 8.3, the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Medical Manager arising out of or resulting from (i) any
breach of a representation or warranty made by the Company or the
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Shareholder in or pursuant to this Agreement, (ii) any breach of the covenants
or agreements made by the Company or the Shareholder in or pursuant to this
Agreement or (iii) any inaccuracy in any certificate, instrument or other
document delivered by the Company 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 shall have the right to be put in the
same pre-tax consolidated financial position as it would have been in had each
of the representations and warranties of the Company and the Shareholder
hereunder been true and correct and had the agreements of the Company and the
Shareholder hereunder been performed in full. Notwithstanding anything to the
contrary contained herein, Indemnifiable Damages shall not exceed the Purchase
Price.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Company and the Shareholder 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 shall expire on the Closing Date.
8.3 SECURITY FOR INDEMNIFICATION OBLIGATION. As security for the
indemnification obligations contained in this Article VIII, at the Closing,
Medical Manager shall set aside and hold, and the Company and the 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 may set off against the Held Back Shares any loss, damage, cost or
expense for which the Company 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 shall give written notice to the Company
of any claim for Indemnifiable Damages or any other damages hereunder,
which notice shall set forth (i) the amount of Indemnifiable Damages or
other loss, damage, cost or expense which Medical Manager claims to
have sustained by reason thereof, and (ii) the basis of such claim;
(b) Such set off shall be effected on the later to occur on
the expiration of 10 days from the date of such notice (the "Notice of
Contest Period") or, if such claim is contested, the date the dispute
is resolved, and such set off shall be charged proportionally against
the shares set aside;
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(c) After any restrictions on sale imposed under the
Securities Act or otherwise are terminated, the Company may, not more
than once during any calendar year, instruct Medical Manager to sell
some or all of the Held Back Shares and the net proceeds thereof shall
be substituted for such Held Back Shares in any set off to be made by
Medical Manager pursuant to any claim hereunder subject to continued
compliance with any applicable SEC and other regulations; and
(d) For purposes of any set off against the Held Back Shares
pursuant to this Article VIII, the shares of Medical Manager Common
Stock not sold as provided in clause (c) of this Section shall be
valued at the Average Closing Sale Price.
8.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES. Except with
respect to shares transferred pursuant to the foregoing right of set off (and in
the case of such shares, until the same are transferred), all Held Back Shares
shall be deemed to be owned by the Company and the Company shall be entitled to
vote the Held Back Shares; provided, however, that, there shall also be
deposited with Medical Manager subject to the terms of this Article VIII, all
shares of Medical Manager Common Stock issued to the Company as a result of any
stock dividend or stock split and all cash issuable to the Company as a result
of any cash dividend, with respect to the Held Back Shares. All stock and cash
issued or paid upon Held Back Shares shall be distributed to the person or
entity entitled to receive such Held Back Shares together with such Held Back
Shares.
8.5 DELIVERY OF HELD BACK SHARES. Medical Manager agrees to deliver to
the Company 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 the Company promptly after the time of satisfaction.
8.6 ADJUSTMENT TO PURCHASE PRICE. All payments for Indemnifiable
Damages made pursuant to this Article VIII shall be treated as adjustments to
the Purchase Price.
8.7 NO BAR. If the Held Back Shares are insufficient to set off any
claim for Indemnifiable Damages made hereunder (or have been delivered to the
Company prior to the making or resolution of such claim), then Medical Manager
may take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages.
8.8 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude Medical Manager from asserting any other
right, or seeking any other remedies against the Shareholders or the Company.
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ARTICLE IX
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition of the Medical Manager Shares following the Closing:
9.1 DISPOSITION OF SHARES.
(a) The Shareholder represents and warrants that the shares of
Medical Manager Common Stock being acquired by him (upon distribution
from the Company) hereunder are being acquired and will be acquired for
his own account and will not be sold or otherwise disposed of, except
pursuant to (i) an exemption from the registration requirements under
the Securities Act, (ii) in accordance with Rule 145(d) under the
Securities Act, or (iii) an effective registration statement filed by
Medical Manager with the SEC under the Securities Act. To the extent
Medical Manager or the Shareholder complies with the provisions of Rule
145(d) under the Securities Act in effecting sales of the Medical
Manager Shares, Medical Manager agrees to provide its transfer agent
with appropriate instructions and/or opinions of counsel in order for
them to sell, transfer and/or dispose of the Medical Manager Shares in
accordance with Rule 145(d).
9.2 LEGEND. The certificates representing the Medical Manager Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE
HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE ACT, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH
RESPECT THERETO, (B) IN ACCORDANCE WITH RULE 145(D) UNDER THE ACT. THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TRANSFER
RESTRICTIONS CONTAINED IN THAT CERTAIN ASSET PURCHASE AGREEMENT DATED SEPTEMBER
10, 1997 BY AND AMONG MEDICAL MANAGER MIDWEST, INC., PROFESSIONAL MANAGEMENT
SYSTEMS, INC. AND XXXXXXX XXXXXXXX.
Medical Manager may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
9.3 LOCK-UP AGREEMENT. Until December 1, 1997, the Company, and the
Shareholders agree not to, directly or indirectly, offer, sell, contract to
sell, grant any option to purchase, or
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otherwise dispose of any Medical Manager Common Stock or any securities
convertible into or exercisable or exchangeable for such Medical Manager Common
Stock or in any manner transfer all or a portion of the economic rights or
benefits associated with the ownership of Medical Manager Corporation without
the prior written consent of Medical Manager Corporation. Notwithstanding the
foregoing, during such period the shares of Medical Manager Common Stock may be
pledged as security for the obligation of the holder thereof; provided that the
pledgees shall agree in writing to be bound by the terms and conditions of the
preceding sentence. The Company and the Shareholder agree that Medical Manager
Corporation may, with respect to any shares of Medical Manager Common Stock for
which the Company or the Shareholders are the record holder, cause the transfer
agent for Medical Manager Corporation to note stop transfer instructions with
respect to such Shareholder's shares of Medical Manager Common Stock on the
transfer books and records of Medical Manager Corporation.
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 statement under the
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Uniform Commercial Code or comparable law or any jurisdiction in connection with
such mortgage, pledge, security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)"means a change (or effect), in the
condition (financial or otherwise), properties, assets, prospects, liabilities,
rights, obligations, operations, or business which change (or effect)
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, or business.
"Person" means an individual, partnership, corporation, business trust,
joint stock Company, estate, trust, unincorporated association, joint venture,
Governmental Authority or other entity, of whatever nature.
"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 in the event of a material breach by
the Company or the Shareholder of any provision of this Agreement; or
(c) by the Company in the event of a material breach by
Medical Manager of any provision of this Agreement; or
(d) by either Medical Manager or the Company, if the Closing
shall not have occurred by October 31, 1997.
11.2 EFFECT OF TERMINATION. Except for the provisions of Article VIII
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to Section 12.1, this Agreement shall
forthwith become void and of no further force and effect, and the parties shall
be released from any and all obligations hereunder; provided, however, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(a) if to Medical Manager to:
Xxxxxxxx X. Xxxxxxx, Associate General Counsel
Medical Manager Corporation
0000 X Xxxxx Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Facsimile Number (000) 000-0000
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with a copy to:
Akerman, Senterfitt & Xxxxxx, PA
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esquire
Facsimile Number (000) 000-0000
(b) if to the Company to:
----------------------
000 Xxxx Xxxxx Xxxxx
Timbers Professional Cntr.
Xx. Xxxxxxx, Xxxxxxxx 00000
Facsimile Number (000) 000-0000
with a copy to:
Xx. Xxx Xxxxxx
-------------------------
-------------------------
-------------------------
Attn:
--------------------
Facsimile Number:
--------
12.2 ENTIRE AGREEMENT. This Agreement (including the Schedules attached
hereto) and other documents delivered at the Closing pursuant hereto, contains
the entire understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings (oral or written) between or
among the parties with respect to such subject matter. The Schedules constitute
a part hereof as though set forth in full above.
12.3 EXPENSES; SALES TAX. Except as otherwise provided herein, the
parties shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby. The parties agree that at Closing the Company shall pay all sales,
transfer or similar taxes required to be paid by reason of the sale by the
Company to Medical Manager of the Purchased Assets pursuant to this Agreement.
12.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or
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any other provision, nor shall any waiver be implied from any course of dealing
between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other.
12.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by the Company without the prior
written consent of Medical Manager. Medical Manager may assign all or any
portion of its rights hereunder to one or more of its wholly owned subsidiaries.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include,""includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."Time shall be of the essence in this Agreement.
12.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State.
12.9 JURISDICTION.
(a) Any suit, action or proceeding against the Company or the
Shareholders arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof may be brought in the
courts of Hillsborough County, Florida, or in the U.S. District Court
for the Middle District of Florida, as Medical Manager (in its sole
discretion) may elect, and the Company and the Shareholder hereby
irrevocably accept and consent to the nonexclusive personal
jurisdiction of those courts for the purpose of any suit, action or
proceeding.
(b) In addition, each of the Company and the 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
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thereof brought in Hillsborough County, Florida, or the U.S. District
Court for the Middle District of Florida, as selected by Medical
Manager, and hereby further irrevocably waives any claim that any suit,
action or proceedings brought in Hillsborough County, Florida, or in
such District Court has been brought in an inconvenient forum.
12.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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 MIDWEST, INC., an
Indiana corporation
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxxx Xxxxxxx
---------------------------------
Title: Secretary
-------------------------------
PROFESSIONAL MANAGEMENT SYSTEMS,
INC., an Illinois corporation
By: /s/ Xxxx Xxxx
--------------------------------------
Name: Xxxx Xxxx
---------------------------------
Title: President
--------------------------------
/s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
XXXXXXX XXXXXXXX, individually
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