AMENDMENT TO STOCK PURCHASE AGREEMENT
This AMENDMENT TO STOCK PURCHASE AGREEMENT is made the 12th day of
August, 1997, with an effective date as described below, by and
between UNIVERSAL DOCUMENT MANAGEMENT SYSTEMS, INC. (formerly
"MedPlus Acquisition Corp.") (the "Purchaser"), an Ohio
corporation and a wholly-owned subsidiary of MedPlus, Inc.
("MedPlus"), with its principal offices located at 0000 Xxxxxxxx'x
Xxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000, XXX AND XXXX XXXXXXXXX,
individuals residing at 000 Xxxxxx Xx., Xxxxxxxxxx, Xxxx 00000
("Hilnbrand") and XXXXXX X. XXXXX, an individual residing at 0000
Xxxxxx, Xxxxxxxxxx, XX 00000 ("Xxxxx") (Hilnbrand and Xxxxx are
collectively referred to as the "Sellers").
W I T N E S S E T H:
WHEREAS, the Purchaser and the Sellers entered into a Stock
Purchase Agreement dated December 29th, 1995 (the "Initial
Agreement") pursuant to which the Sellers sold to the Purchaser
and the Purchaser purchased from the Sellers all of the common
stock of HWB, Inc. owned by the Sellers (the "HWB Stock"); and
WHEREAS, the consideration for the HWB Stock, which the parties
agree was a capital asset, was to be paid to the Sellers over a
period of three years in the form of MedPlus common stock and/or
cash and was to be calculated based on the revenues of the
Purchaser during such three year period (the "Earn-Out
Consideration"); and
WHEREAS, the Purchaser is planning to combine with certain CAD
resellers and conduct an initial public offering of its common
stock (the "IPO") with an effective date which is on or before
December 31, 1997 (the "IPO Date");and
WHEREAS, if the IPO occurs, then following the IPO, MedPlus will
no longer be the sole shareholder of the Purchaser; and
WHEREAS, if the IPO occurs, then as a result of the change in
ownership and structure of the Purchaser following the IPO, the
Purchaser and the Sellers desire to amend the Initial Agreement
with respect to the Earn-Out Consideration to clarify the revenues
as to which it applies and to provide for additional time during
which the Earn-Out Consideration may be paid to the Sellers and to
allow a portion of such consideration to be paid in the form of
the Purchaser's common stock instead of MedPlus' common stock; and
WHEREAS, the Purchaser and Sellers agree that this Amendment to
Stock Purchase Agreement shall only become effective in the event
of the IPO and on the IPO Date, if any.
NOW THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, the parties, intending to be legally
bound, agree as follows:
On the IPO Date, Schedule 2 to the Initial Agreement shall be
amended to read in its entirety as follows:
"Schedule 2
Stock Purchase Consideration
On January 1, 1998, the Purchaser shall pay to the Sellers
$390,000 (of which $311,922 shall be paid to Hilnbrand and $78,078
shall be paid to Xxxxx). So long as each of Xxx Xxxxxxxxx and
Xxxxxx X. Xxxxx remains employed by the Purchaser until at least
December 31, 1998, the following consideration shall be payable to
Sellers no later than March 31, 1999, 2000 and 2001, respectively,
as follows (the `Earn-Out Consideration'):
If, during any of the three periods described below (the `Earn-Out
Periods'), the Audited Net Revenue (as defined below) of the
Purchaser exceeds a certain amount, as listed below, with respect
to that Earn-Out Period (the `Earn-Out Threshold'), then Purchaser
shall pay to the Sellers an aggregate amount equal to 99.9% of the
`Payment Amount' listed below (the `Annual Payment'). In no event
shall the cumulative aggregate of the Earn-Out Consideration for
all three Earn-Out Periods exceed $2,610,000.
Earn-Out Period Earn-Out Payment Amount*
Threshold
_________________ ________________ _________________
The IPO Date through
December 31, 1998 $1,750,000 $1.00 for each
dollar of Audited
Net Revenue over
$1.75 million
January 1, 1999 through
December 31, 1999 2,750,000 $1.00 for each
dollar of Audited
Net Revenue over
$2.75 million
January 1, 2000 through
December 31, 20003 3,750,000 $1.00 for each
dollar of Audited
Net Revenue over
$3.75 million
For purposes hereof, `Audited Net Revenue' of the Purchaser shall
mean all the gross revenues related to the Purchaser's Step2000
software product (including, but not limited to, licensing and
maintenance fees and consulting and application building fees with
respect to Step2000), minus returns and allowances related to the
Purchaser's Step2000 software product and minus the amount of
accounts receivable written off as uncollectible during the period
in question which are related to the Purchaser's Step2000 software
product and which are either over 180 days old or are owed by a
debtor which has declared bankruptcy or has otherwise admitted its
insolvency in a public filing. In the event that the amount of
any fees charged by Purchaser to any person who is an affiliate of
Purchaser or MedPlus are less than the ordinary rates charged for
customers who are not affiliates in arms-length transactions, then
the amount of Audited Net Revenues for purposes of calculating the
Earn-Out Consideration shall be increased by the amount by which
the ordinary rates exceed the actual rates charged. All payments
of the Earn-Out Consideration shall be made in cash or, at the
election of the Purchaser, in a combination of cash and the
Purchaser's common stock, provided that the common stock component
of any payment of the Earn-Out Consideration shall not exceed 50%.
To the extent the Purchaser's common stock is used to make any
payment, each share so issued shall be deemed to have a value
equal to the average of the closing price per share of the
Purchaser's common stock on the Nasdaq National Market for each of
the 20 trading days preceding the payment date. Notwithstanding
the foregoing, payments may only be made in the form of the
Purchaser's common stock if at the time of issuance thereof there
is a registration statement effective under the Securities Act of
1933 covering a resale of such shares by Sellers, the cost of
which shall not be the responsibility of Sellers. The term
`Purchaser's common stock' shall not include any securities of the
Purchaser other than its common stock, or any securities of any
successor of the Purchaser.
The percentage of each Annual Payment of Earn-Out Consideration to
which each Seller is entitled is set forth as follows: Hilnbrand,
79.98%; Xxxxx 20.02%."
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to Stock Purchase Agreement to be executed as of the day
and year first above written.
UNIVERSAL DOCUMENT
MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxxxx X. Present II
Its: Vice-Chairman
/s/ Xxx Xxxxxxxxx
Xxx Xxxxxxxxx
/s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
